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Financial Statements 2019-2020

OFFICE OF PARLIAMENTARY COUNSEL

CONTENTS

Primary Financial Statements

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Notes to and forming part of the Financial Statements

Overview

Budget Variance Explanations

1: Financial Performance

1.1 Expenses

1.2 Income

2: Financial Position

2.1 Financial Assets

2.2 Non-Financial Assets

2.3 Payables

2.4 Interest Bearing Liabilities

3: Funding

3.1 Appropriations

3.2 Net Cash Appropriation Arrangements

4: People and Relationships

4.1 Employee Provisions

4.2 Key Management Personnel Remuneration

4.3 Related Party Disclosures

5: Managing Uncertainties

5.1 Financial Instruments

5.2 Fair Value Measurement

6: Other information

6.1 Aggregate Assets and Liabilities

Auditor-General's Report on Financial Statements

Certification of Financial Statements

Contents

Contents

Auditor-General’s Report on Financial Statements

Certification of Financial Statements

Contents

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Cash Flow Statement

Notes to and forming part of the Financial Statements

Statement of Comprehensive Income

OFFICE OF PARLIAMENTARY COUNSEL

STATEMENT OF COMPREHENSIVE INCOME for the period ended 30 June 2020

Actual


Original
Budget


Actual

Notes

2020
$’000

2020
$’000

2019
$’000

NET COST OF SERVICES

Expenses

Employee benefits

1.1A

16,759

18,361

15,853

Supplier expenses

1.1B

3,866

4,484

4,759

Finance Costs

1.1C

75

-

-

Depreciation and amortisation

2.2A

2,102

651

976

Losses from asset sales

-

-

4

Total expenses

22,802

23,496

21,592

Less:

Own-source income

Own-source revenue

Revenue from contracts with customers

1.2A

6,593

5,917

5,952

Other revenue

1.2B

68

64

75

Total own-source revenue

6,661

5,981

6,027

Total own-source income

6,661

5,981

6,027

Net cost of services

(16,141)

(17,515)

(15,565)

Revenue from Government

1.2C

17,298

16,998

15,935

Surplus (deficit) attributable to the Australian Government

1,157

(517)

370

OTHER COMPREHENSIVE INCOME

Changes in asset revaluation surplus

2.2A

-

-

187

Total other comprehensive income attributable to the Australian Government

3.2

1,157

(517)

557

The above statement should be read in conjunction with the accompanying notes.

Statement of Financial Position

OFFICE OF PARLIAMENTARY COUNSEL

STATEMENT OF FINANCIAL POSITION as at 30 June 2020

Actual

Original
Budget


Actual

Notes

2020
$’000

2020
$’000

2019
$’000

ASSETS

Financial Assets

Cash and cash equivalents

772

423

2,348

Trade and other receivables

2.1A

21,284

15,196

17,751

Total financial assets

22,056

15,619

20,099

Non-Financial Assets

Buildings

2.2A

9,345

2,529

3,057

Plant and equipment

2.2A

982

880

766

Intangibles

2.2A

120

3,888

200

Work in progress

2.2A

3,988

-

2,476

Other non-financial assets

2.2B

223

231

277

Total non-financial assets

14,658

7,528

6,776

Total Assets

36,714

23,147

26,875

LIABILITIES

Payables

Suppliers

2.3A

190

1,362

1,508

Employee benefits

2.3B

337

167

230

Other

2.3C

3,870

368

2,491

Total payables

4,397

1,897

4,229

Interest bearing liabilities

Leases

2.4A

6,802

-

-

Total interest bearing liabilities

6,802

-

-

Provisions

Employee provisions

4.1A

7,141

6,097

6,869

Total provisions

7,141

6,097

6,869

Total Liabilities

18,340

7,994

11,098

Net Assets

18,374

15,153

15,777

EQUITY

Parent Entity Interest

Contributed equity

8,202

8,202

7,902

Reserves

457

270

457

Retained surplus

9,715

6,681

7,418

Total Equity

18,374

15,153

15,777

The above statement should be read in conjunction with the accompanying notes.

Statement of Changes in Equity

OFFICE OF PARLIAMENTARY COUNSEL

STATEMENT OF CHANGES IN EQUITY for the period ended 30 June 2020

Contributed Equity

Retained Earnings

Asset Revaluation Reserve

Total Equity

Actual

Original
Budget

Actual

Actual

Original
Budget

Actual

Actual

Original
Budget

Actual

Actual

Original
Budget

Actual

2020
$’000

2020
$’000

2019
$’000

2020
$’000

2020
$’000

2019
$’000

2020
$’000

2020
$’000

2019
$’000

2020
$’000

2020
$’000

2019
$’000

CONTRIBUTED EQUITY

Opening balance

Balance carried forward from previous period

7,902

7,902

7,702

7,418

7,198

7,048

457

270

270

15,777

15,370

15,020

Adjustment on initial application of AASB 16

-

-

-

1,140

-

-

-

-

-

1,140

-

-

Adjusted opening balance

7,902

7,902

7,702

8,558

7,198

7,048

457

270

270

16,917

15,370

15,020

Comprehensive income

Surplus (Deficit) for the period

-

-

-

1,157

(517)

370

-

-

-

1,157

(517)

370

Other comprehensive income

-

-

-

-

-

-

-

-

187

-

-

187

Total comprehensive income

-

-

-

1,157

(517)

370

-

-

187

1,157

(517)

557

Transactions with owners

Contributions by owners

Departmental capital budget

300

300

200

-

-

-

-

-

-

300

300

200

Sub-total transactions with owners

300

300

200

-

-

-

-

-

-

300

300

200

Closing balance at 30 June

8,202

8,202

7,902

9,715

6,681

7,418

457

270

457

18,374

15,153

15,777

The above statement should be read in conjunction with the accompanying notes.

Accounting Policy

Equity Injections

Departmental Capital Budgets (DCBs) are recognised directly in Contributed Equity in that year.

Cash Flow Statement

OFFICE OF PARLIAMENTARY COUNSEL

CASH FLOW STATEMENT for the period ended 30 June 2020

Actual

Original
Budget


Actual

Notes

2020
$’000

2020
$’000

2019
$’000

OPERATING ACTIVITIES

Cash received

Appropriations

23,850

24,100

23,079

Revenue from contracts with customers

5,945

6,049

8,257

Net GST received

456

190

440

Other

3

-

10

Total cash received

30,254

30,339

31,786

Cash used

Employees

16,380

18,361

15,016

Suppliers

4,625

4,782

5,398

Section 74 receipts transferred to the Official Public Account

7,902

6,367

7,850

Interest payments on lease liabilities

75

-

-

Other

-

-

3

Total cash used

28,982

29,510

28,267

Net cash from (used by) operating activities

1,272

829

3,519

INVESTING ACTIVITIES

Cash received

Net proceeds from sale of assets

-

-

-

Total cash received

-

-

-

Cash used

Purchase of leasehold improvements, plant and equipment

503

1,129

259

Purchase of computer software

1,538

-

1,535

Total cash used

2,041

1,129

1,794

Net cash from (used by) investing activities

(2,041)

(1,129)

(1,794)

FINANCING ACTIVITIES

Cash received

Contributed equity

300

300

200

Total cash received

300

300

200

Cash used

Principal payments of lease liabilities

1,107

-

-

Total cash used

1,107

-

-

Net cash from (used by) financing activities

(807)

300

200

Net increase (decrease) in cash held

(1,576)

-

1,925

Cash and cash equivalents at the beginning of the reporting period

2,348

423

423

Cash and cash equivalents at the end of the reporting period

772

423

2,348

The above statement should be read in conjunction with the accompanying notes.

Notes to and Forming Part of the Financial Statements for the year ended 30 June 2019

OVERVIEW

1 Basis of Preparation of the Financial Statements

The Financial Statements and notes are general purpose financial statements, and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The Financial Statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and
  • Australian Accounting Standards and Interpretations, including the reduced disclosure requirements, issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The Financial Statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The Financial Statements are presented in Australian dollars, and values are rounded to the nearest thousand unless otherwise specified.

2 New Australian Accounting Standards

Adoption of new Australian Accounting Standard requirements

Standard

Applicable from

Nature of impending change/s in accounting policy and likely impact on initial application

AASB 15—Revenue from Contracts with Customers /AASB 1058—Income of not-for-profit entities

(Replaces AASB 118—Revenue)

1 July 2019

AASB 15 establishes a comprehensive framework for determining whether, how much, and when revenue is recognised.

The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to a customer, in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods and services.

AASB 1058 is relevant where AASB 15 does not apply.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

AASB 16—Leases

(Replaces AASB 117—Leases, Interpretation 4—Determining whether an Arrangement contains a Lease, Interpretation 115—Operating Leases — Incentives and Interpretation 127—Evaluating the Substance of Transactions Involving the Legal Form of a Lease)

1 July 2019

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 15—Revenue from contracts with customers

OPC adopted AASB 15—Revenue from contracts with customers (AASB 15) using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.

Under the new income recognition model, OPC determined whether an enforceable agreement exists, and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists, and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), OPC applied the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria were not met, OPC considered whether AASB 1058 should be applied.

OPC elected to apply the new standard to all new and uncompleted contracts from the date of initial application. OPC aggregated the effect of all of the contract modifications that occurred before the date of initial application.

The impact on transition has been minimal and is limited to additional disclosures only.

Application of AASB 16—Leases

OPC adopted AASB 16—Leases (AASB 16) using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117—Leases (AASB 117), and related interpretations.
OPC elected to apply the practical expedient to not reassess whether a contract is, or contains, a lease at the date of initial application. Contracts entered into before the transition date, that were not identified as a lease under AASB 117, were not reassessed. The definition of a lease under AASB 16 was applied to current contracts entered into before and after 1 July 2019.
AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. OPC applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:

 excluded initial direct costs from the measurement of right-of-use assets, at the date of initial application for leases, where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date; and

 relied on previous assessments on whether leases are onerous, as opposed to preparing an impairment review under AASB 136 Impairment of Assets as at the date of initial application.

As a lessee, OPC previously classified leases as operating leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership.

Lease for office accommodation and car parking

On adoption of AASB 16, OPC recognised a right-of-use asset and a lease liability in relation to the lease of office space, which had previously been classified as an operating lease.

The lease liability was measured at the present value of the remaining lease payments, discounted using OPC’s incremental borrowing rate as at 1 July 2019. OPC’s incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.02%.

The right-of-use asset for the office space was measured at an amount equal to the lease liability, adjusted by the amount of any prepaid lease payments.

Licence agreement for offsite parking

On adoption of AASB 16, this arrangement did not meet the definition of a lease under AASB 16, which had previously been classified as operating lease.

OPC has no low value assets or short-term leases with a lease term of 12 months or less.

Impact on transition

On transition to AASB 16, OPC recognised an additional right-of-use asset and additional lease liability, and recognised the adjustment of rent payable in retained earnings. The impact on transition is summarised below:

Departmental

1 July 2019

$‘000

Right-of-use assets - building

7,997

Lease liabilities

7,902

Increase in retained surplus

1,140

The following table reconciles the Departmental minimum lease commitments disclosed in OPC's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:

1 July 2019 $’000

Minimum operating lease commitment at 30 June 2019

9,186

Less: GST

(835)

Less: Offsite parking not recognised as a lease

(101)

Undiscounted lease payments

8,250

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

(348)

Lease liabilities recognised at 1 July 2019

7,902

Future Australian Accounting Standard requirements

All new standards, any amendments to standards and interpretations that have been issued, and are applicable to future reporting periods, have been reviewed.

The following standard has been issued and is applicable to future reporting periods, and may have a material effect on OPC’s Financial Statements.

Standard

Applicable from

Nature of impending changes/s in accounting policy and likely impact on initial application

AASB 1060—General Purpose Financial Statements - Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities

1 July 2020

Entities are to follow the recognition and measurement requirements under Australian Accounting Standards, and apply the simplified disclosure requirements in AASB 1060. This new standard will only effect disclosures.

3 Contingent Liabilities and Contingent Assets

OPC has no quantifiable or unquantifiable contingent assets or liabilities as at 30 June 2020.

4 Taxation

OPC is exempt from all forms of taxation except fringe benefits tax (FBT) and goods and services tax (GST). Revenues, expenses, and assets are recognised net of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office, and except for receivables and payables.

5 Events after the Reporting Date

There is no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the entity.

BUDGET VARIANCE EXPLANATIONS

Under the Legal Services Directions, certain drafting work is tied to OPC. Agencies must use OPC's drafting services for all Government Bills and regulations, Ordinances and regulations of external Territories and Jervis Bay Territory, and other legislative instruments made or approved by the Governor-General. OPC is budget funded for this tied work.OPC delivers drafting and advisory services for Bills and subordinate legislation, prepares compilations of laws as amended, and registers laws and instruments on behalf of more than 70 Commonwealth entities.

OPC delivers legislative publishing services to, and on behalf of, the whole of the Australian Government, through the Federal Register of Legislation (the Register).

OPC recovers the cost of core services from Government entities that publish legislation on the Register through annual fees.

OPC provides drafting services for legislative instruments and other publishing services on a fee for service basis. The demand for these services is client driven and therefore difficult to budget accurately.

The following is an explanation of the major variances between the original budget presented in the 2019-20 Portfolio Budget Statements and the 2019-20 final outcome, as presented in accordance with Australian Accounting Standards for OPC.

Variances are considered to be major if the variance is greater than 10% between budget and actual.

Statement of Comprehensive Income

Sale of goods and rendering of services

Actual sale of goods and rendering of services is higher than budget, due to additional express registrations as a result of urgent COVID-19 legislation, and reclassification of secondment reimbursements as revenue.

Suppliers

Actual suppliers is lower than budget, mainly due to the reclassification of lease costs under AASB 16—Leases, offset by an increase in labour hire costs.

Depreciation and amortisation

Actual depreciation and amortisation is higher than budget, due to the recognition of the office building leased asset (right of use asset) and depreciation under AASB16—Leases, and higher than expected depreciation for leasehold improvements due to a revaluation at 30 June 2019 and minor fitout completed during the prior financial year.

Finance costs

Actual finance costs are higher than budget, due to the recognition of the interest expense under AASB16—Leases.

Statement of Financial Position


Trade and other receivables

Actual trade and other receivables is higher than budget, mainly due to higher appropriations receivable, due to unbudgeted surplus for the 2018-19 year ($1.087 million), and the 2019-20 year ($2,083 million), and higher trade receivables ($2.4 million).

Buildings

Actual buildings is higher than budget, due to the recognition of the office building leased asset (right of use asset) under AASB16—Lease ($7.997 million).

Intangibles and work in progress

Actual intangibles is lower than budget, and work in progress is higher than budget, due to the delay of the redevelopment of the new Register.

Payables - suppliers

Actual suppliers is lower than budget, due to the reversal of rent payable required under AASB16—Leases ($1.14 million).

Payables - Personal benefits

Actual personal benefits is higher than budget, due to the end of year salary and superannuation accrual being high than expected.

Other payables- unearned income

Actual unearned income is higher than budget, mainly due to all 2020-21 annual fees invoiced during 2019-20 being recognised as unearned revenue.

Leases- Interest bearing liabilities

Actual interest bearing liabilities is higher than budget, due to the recognition of the lease liability for the office building lease under AASB16—Leases.

Employee provisions

Actual employee provisions is higher than budget, due to a fall in the long term bond rate, which resulted in a higher discount factor being applied to the long service leave calculations.

Cash Flow Statement

Operating Activities - Net GST received

Actual net GST received is higher than budget, due to higher than expected capitalised contractor costs for the redevelopment of the Register.

Operating Activities - Employees

Actual employees is lower than budget, due to lower than expected employee benefits.

Operating Activities - Section 74 receipts transferred to the Official Public Account

Actual Section 74 receipts is higher than budget, due to higher than expected cash received for the Register 2020-21 annual fees.

Investing Activities - Purchase of leasehold improvements, and plant and equipment

Actual purchase of leasehold improvements, and plant and equipment, is higher than budget, due to minor fit-out works to OPC’s office.

Investing Activities - Intangibles

Actual intangibles is higher than budget, due to the delay in the commencement of the redevelopment of the Register.

Financing Activities - Principal payments of lease liabilities

Actual principal lease payments is for the office building lease under AASB16—Leases.

1. FINANCIAL PERFORMANCE

1.1 Expenses

2020

2019

$’000

$’000

1.1A: Employee benefits

Wages and salaries

12,695

11,363

Superannuation:

Defined contribution plans

855

796

Defined benefit plans

1,632

1,508

Leave and other entitlements

1,577

2,186

Total employee benefits

16,759

15,853

Accounting Policy

Accounting policies for employee related expenses are contained in the People and Relationships section.

2020

2019

$’000

$’000

1.1B: Supplier benefits

Goods and services supplied and rendered

IT & telecommunications

1,406

1,217

Printing & digitisation

666

823

Human resources

561

333

Other

313

404

Accounting/audit services

304

241

Staff training & development

265

233

Property

180

160

Library

123

126

Total goods and services supplied and rendered

3,818

3,537

Goods supplied

87

77

Services rendered

3,731

3,460

Total goods and services supplied and rendered

3,818

3,537

Other supplier expenses

Operating lease rentals1

-

1,161

Workers compensation expenses

48

61

Total other supplier expenses

48

1,222

Total supplier expenses

3,866

4,759

1. OPC has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117 requirements.

The above lease disclosures should be read in conjunction with notes 1.1C, 2.3A and 2.4A.

1.1 Expenses

2020

2019

$’000

$’000

1.1C: Finance costs

Interest on lease liabilities

75

-

Total finance costs

75

-

The above lease disclosures should be read in conjunction with notes 1.1B, 2.3A and 2.4A.

Accounting Policy

All borrowing costs are expensed as incurred.

1.2: Income

2020

2019

Own-source Revenue

$’000

$’000

1.2A: Sale of goods and rendering of services

Sale of goods

31

66

Rendering of services

6,562

5,886

Total sale of goods and rendering of services

6,593

5,952

Disaggregation of revenue from contracts with customers

Registration Annual Fees

3,846

Billable instrument drafting

1,401

Peak & Express Registrations

691

Secondment

246

Compilation preparation

216

Courses

163

Print on Demand

30

6,593

Type of customer:

Australian Government entities (related parties)

6,593

6,593

Timing of transfer of goods and services:

Over time

5,709

Point in time

884

6,593

1.2: Income

Accounting Policy

Revenue from the sale of goods is recognised when control has been transferred to the buyer .

All contracts are in scope of AASB15, and the performance obligations are sufficiently specific to enable OPC to determine when they have been satisfied.

The following is a description of principal activities from which OPC generates its revenue:

Registration annual fees

The annual fee is for the management and registration of legislative documents on the Federal Register of Legislation. Clients are invoiced in advance . OPC recognises a liability, and allocates the revenue amount evenly over a 12 month period.

Instrument drafting, editorial services and compilation preparation

Revenue is recognised for the actual hours a drafter, editor, or complier has worked. Time spent is tracked on a per job basis. Revenue is recognised on a monthly basis, or when invoices are issued for work completed to date.

Express and peak fees

Revenue is recognised once the registration has been completed.

Secondment

Secondment revenue is invoiced in arrears and recognised over the period of the secondment.

Drafting training courses

Participants are invoiced in advance. OPC recognises revenue once the course has been delivered.

Print on demand

Revenue is based on past sales and is recognised at a point in time.

The transaction price is the total amount of consideration to which OPC expects to be entitled, in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

1.2: Income

2020

2019

$’000

$’000

1.2B: Other revenue

Reimbursement of expenses

3

10

Remuneration of auditors

65

65

Total other revenue

68

75

Accounting Policy

Other Revenue

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined, and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

1.2: Income

2020

2019

$’000

$’000

Revenue from Government

1.2C: Revenue from Government

Appropriations:

Departmental appropriation

17,298

15,935

Total revenue from Government

17,298

15,935

Accounting Policy

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as revenue when OPC gains control of the appropriation.

1.2D: Unsatisfied obligations

OPC expects to recognise as income, any liability for unsatisfied obligations associated with revenue from contracts with customers within the following periods: 1 July 2020 to 30 June 2021.

2. FINANCIAL POSITION

2.1: Financial Assets

2020

2019

$’000

$’000

2.1A: Trade and other receivables

Goods and services receivable

Goods and services1

2,452

329

Contract assets2

85

-

GST receivable from the Australian Taxation Office

112

137

Total goods and services receivable

2,649

466

Appropriations receivable

Appropriations receivable

18,635

17,285

Total appropriations receivable

18,635

17,285

Total trade and other receivables

21,284

17,751

1 Credit terms are 30 days.

2 Associated with instrument drafting and compilation preparation.

Accounting Policy

Goods and services receivable

Goods and services, and contract assets, are held for the purpose of collecting contractual cash flows. Receivables for goods and services are recognised at the nominal amounts due, less any impairment allowance. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Appropriations receivable

Appropriations receivable are appropriations controlled by OPC, but held in the Official Public Account, under the Government's just-in-time draw down arrangements. Appropriations receivable are recognised at their nominal amounts.

2.2: Non-Financial Assets

2.2A: Reconciliation of opening and closing balances of property, plant and equipment, and intangibles 2020

Buildings

Plant and Equipment

Internally developed software

Computer software purchased

Total

$’000

$’000

$’000

$’000

$’000

As at 1 July 2019

Gross book value

3,061

984

4,477

207

8,729

Accumulated depreciation and impairment

(4)

(218)

(4,342)

(142)

(4,706)

Net book value 1 July 2019

3,057

766

135

65

4,023

Recognition of right of use asset on initial application of AASB 16

7,997

-

-

-

7,997

Adjusted total as at 1 July 2019

11,054

766

135

65

12,020

Additions:

By purchase

82

416

-

31

529

Depreciation and amortisation

(512)

(200)

(76)

(35)

(823)

Depreciation on right-of-use assets

(1,279)

-

-

-

(1,279)

Disposals:

Other

-

-

-

-

-

Net book value 30 June 2020

9,345

982

59

61

10,447

Net book value as at 30 June 2020 represented by:

Gross book value

11,140

1,391

4,477

238

17,246

Accumulated depreciation and impairment

(1,795)

(409)

(4,418)

(177)

(6,799)

9,345

982

59

61

10,447

Work in Progress

As at 1 July 2019

Gross book value

-

-

2,476

-

2,476

Additions:

By purchase

5

-

1,507

-

1,512

Net book value 30 June 2020

5

-

3,983

-

3,988

Gross book value

5

-

3,983

-

3,988

Accumulated depreciation and impairment

-

-

-

-

-

5

-

3,983

-

3,988

1 Includes leasehold improvements and a leased right of use asset.

2.2: Non-Financial Assets

Accounting Policy

Asset Recognition Threshold

Purchases of leasehold improvements, plant and equipment, and intangibles, are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

Leased Right of Use (ROU) Assets

Leased ROU assets are capitalised at the commencement date of the lease, and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease, less any lease incentives received. These assets are accounted for by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

Leased ROU assets continue to be measured at cost after initial recognition in Commonwealth agency, General Government Sector and Whole of Government financial statements.

Derecognition

All items of leasehold improvements, plant and equipment, and intangibles, are derecognised upon disposal, or when no further future economic benefits are expected from their use.

Revaluations

See Accounting Policy in Note 5.2A.

Impairment

All leasehold improvements, plant and equipment, and intangibles, were assessed for impairment at 30 June 2020. Where indications of impairment exist, the asset’s recoverable amount is estimated, and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

No indicators of impairment were identified for leasehold improvements, plant and equipment, or intangibles.

Leasehold improvements, and plant and equipment

Depreciation

Depreciable leasehold improvements, and plant and equipment assets, are written-off to their estimated residual values over their estimated useful lives to OPC using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values, and methods, are reviewed at each reporting date, and necessary adjustments are recognised in the current, or current and future, reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

2020 2019

Leasehold improvements Lease term Lease term

Plant and equipment 3 to 25 years 3 to 25 years

Leased ROU assets

The depreciation rates for leased ROU assets are based on the commencement date to the end of the lease term.

Intangibles

Intangibles are carried at cost less accumulated amortisation and accumulated impairment losses.

Amortisation

Intangibles are amortised on a straight-line basis over their anticipated useful life.

The useful life of OPC’s intangibles are as follows:

2020 2019

Purchased software 4 to 5 years 4 to 5 years

Internally generated software 10 years 9 years

1

2.2: Non-Financial Assets

2020

2019

$’000

$’000

2.2B: Other non-financial assets

Prepayments

223

277

Total other non-financial assets

223

277

No indicators of impairment were found for other non-financial assets.

2.3: Payables

2020

2019

$’000

$’000

2.3A: Suppliers

Trade creditors and accruals1

190

368

Rent Payable2

0

1,140

Total suppliers

190

1,508

1 Settlement is usually made in 20 days.

2 OPC has applied AASB16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

The above disclosures should be read in conjunction with notes 1.1B, 1.1C and 2.4A.

2.3: Payables

2020

2019

$’000

$’000

2.3B Employee benefits

Salaries and wages

267

129

Bonuses

26

67

Salary packaging

29

30

FBT payable

15

4

Total employee benefits

337

230

Accounting Policy

Accounting policies for employee payables are contained in the People and Relationships section.

2020

2019

$’000

$’000

2.3C: Other

Unearned income1

3,870

2,491

Total other

3,870

2,491

1 The Parliamentary Counsel Act 1970 provides OPC with statutory authority to charge fees.

2

2.4 Interest Bearing Liabilities

2020

2019

$’000

$’000

2.4A: Leases

Lease Liabilities

6,802

-

Total leases

6,802

-

The total cash outflow for the year ended 30 June 2020 was $1.182 million.

The above disclosures should be read in conjunction with notes 1.1B, 1.1C and 2.3A.

Accounting Policy

Refer to Overview section for accounting policy on leases.

3. FUNDING

3.1: Appropriations

2020
$'000

2019
$'000

3.1A: Annual Departmental Appropriations ('Recoverable GST exclusive')

Ordinary annual services

Annual Appropriation

17,298

15,935

PGPA Act - section 74

7,902

7,850

Capital Budget

300

200

Total appropriation

25,500

23,985

Appropriation applied

(23,845)

(21,354)

Variance 1

1,655

2,631

1The variance is mainly due to the surplus for the year, after adding back non-cost recovered depreciation, offset by the use of prior year departmental appropriation for the Federal Register of Legislation redevelopment.

2020
$'000

2019
$'000

3.1B: Unspent Annual Departmental Appropriations ('Recoverable GST exclusive')

Appropriation Act (No. 1) 2018-19

-

17,285

Appropriation Act (No. 1) 2019-20

11,303

-

Appropriation Act (No. 3) 2019-20

300

-

Supply Act (No. 1) 2019-20

7,032

-

Cash at bank

772

2,348

Total

19,407

19,633

3.2: Net Cash Appropriation Arrangements

2020

2019

$’000

$’000

Total Comprehensive Income less depreciation/amortisation expenses previously funded through revenue appropriation

2,083

1,274

Less:

Depreciation previously funded through revenue appropriation

Depreciation and amortisation for the period

(2,102)

(976)

Depreciation right-of-use asset

1,279

-

Cost recovered amortisation

76

259

(747)

(717)

Less:

Impact of AASB 16 Leases 1

Depreciation right-of-use asset

(1,279)

-

Less: Principal repayments - leased assets

1,100

-

(179)

-

Total comprehensive income as per the Statement of Comprehensive Income

1,157

557

In 2010-11, the Government introduced net cash appropriation arrangements where revenue appropriations for depreciation/amortisation expenses ceased. OPC receives a separate Departmental Capital Budget (DCB) provided through Departmental appropriation. DCBs are appropriated in the period when cash payment for capital expenditure is required.

The inclusion of amortisation expenses related to ROU leased assets, and the lease liability principal repayment amount, reflects the cash impact on implementation of AASB 16 Leases. It does not directly reflect a change in appropriation arrangements.

4. PEOPLE AND RELATIONSHIPS

4.1: Employee Provisions

2020

2019

$’000

$’000

4.1A: Employee provisions

Leave

7,141

6,869

Total employee provisions

7,141

6,869

Accounting Policy

Employee provisions

Liabilities for ‘short-term employee benefits’, and termination benefits expected within twelve months of the end of the reporting period, are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Long-term employee benefits are measured at total net present value of the defined benefit obligation at the end of the reporting period.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave, as all sick leave is non-vesting, and the average sick leave taken in future years by employees of OPC is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including OPC's employer superannuation contribution rates, to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to paragraph 24(a) of the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 using the shorthand method. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy

Provision is made for separation and redundancy benefit payments. OPC recognises a provision for termination when it has developed a detailed formal plan for terminations, and has informed those employees affected that it will carry out the terminations.

Superannuation

Staff of OPC are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap), or a complying fund chosen by the employee.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other funds are defined contribution schemes.

The liability for defined benefits is recognised in the financial statements of the Australian Government, and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes. OPC makes employer contributions to the employees’ defined benefit superannuation scheme, at rates determined by an actuary to be sufficient to meet the current cost to the Government. OPC accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

4.2: Key Management Personnel Remuneration

Key Management Personnel are those persons having authority and responsibility for planning, directing, and controlling, the activities of the entity, directly or indirectly. OPC has determined the Key Management Personnel to be the First Parliamentary Counsel, the two Second Parliamentary Counsel, the General Manager Corporate Services, the General Manager Corporate Services and Chief Information Officer, the General Manager Publications, and three SES Drafters. The General Manager Corporate Services was replaced by the General Manager Corporate Services and Chief Information Officer. These SES drafters were part of the Key Management Personnel for a period of more than three months, but no more than five months. Key Management Personnel remuneration is reported in the table below:

2020

2019

$’000

$’000

Short-term employee benefits1

2,012

1,690

Post- employment benefits2

336

249

Other long-term employee benefits3

75

199

Total key management personnel remuneration expenses

2,423

2,138

The total number of Key Management Personnel that are included in the above table are 9 full-time employees.

¹Includes salary, performance bonuses, motor vehicle allowances, annual leave and SES experience loading.

2Includes superannuation.

3Includes long service leave.

4.3: Related Party Disclosures

Related party relationships:

OPC is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate, or higher education loans. These transactions have not been separately disclosed in this note.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the entity, it has been determined that there are no related party transactions to be separately disclosed.

5. MANAGING UNCERTAINTIES

5.1: Financial Instruments

Notes

2020

2019

$’000

$’000

5.1A: Categories of financial instruments

Financial Assets

Financial Assets at amortised cost

Cash and cash equivalents

772

2,348

Goods and services receivables

2.1A

2,453

329

Contract assets

2.1A

85

-

Total financial asset at amortised cost

3,310

2,677

Total financial assets

3,310

2,677

Financial Liabilities

Financial Liabilities measured at amortised cost

Payables - suppliers

2.3A

190

1,508

Lease Liability

2.4A

6,802

-

Total financial liabilities measured at amortised cost

6,992

1,508

Total financial liabilities

6,992

1,508

Accounting Policy

Financial assets

Goods and services receivables, and contract assets, are held in order to collect the contractual cash flows. Goods and services receivables are recorded at face value less any impairment. They are recognised when OPC becomes party to a contract, and has a legal right to receive cash, and are derecognised on payment.

Financial assets at amortised cost are assessed for impairment at the end of each reporting period. Allowances are made when collectability of the debt is no longer probable. Comparatives have not been restated on initial application.

Financial liabilities

Suppliers are recognised at amortised cost to the extent that the goods or services have been received, irrespective of having been invoiced. Suppliers are derecognised on payment.

The lease is recognised at fair value, net of transaction costs. This liability is subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective interest basis.

The net fair values of the financial assets and liabilities are at their carrying amounts. OPC derived no interest income from financial assets in either the current or prior year.

5.2: Fair Value

2020
$'000

2019
$'000

Non-financial assets1

Plant and equipment

Recurring

982

766

Non Recurring

-

-

Leasehold improvements

Recurring

2,628

3,057

Non Recurring

-

-

Total non-financial assets

3,610

3,823

1OPC's assets are held for operational purposes and not held for the purposes of deriving a profit.

Accounting Policy

Fair Value Measurement

OPC deems transfers between levels of the fair value hierarchy to have occurred at the end of each reporting period.

Revaluations

All leasehold improvements, and plant and equipment, are measured at fair value in the Statement of Financial Position.

Following initial recognition at cost, leasehold improvements, and plant and equipment (excluding leased ROU assets), are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Each year, a review of the carrying amounts of assets is conducted. Where it is considered that the carrying amount of an asset at the date of reporting would materially differ from the fair value, an independent valuation is recommended. All leasehold improvements, and plant and equipment, is subject to a formal valuation at least once every three years.

An independent desktop valuation was undertaken in 2019-20 by AON Australia.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve, except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through operating result. Revaluation decrements for a class of assets are recognised directly through operating result, except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

A reconciliation of movements and impact of the valuation on leasehold improvements, and plant and equipment, has been included in Note 2.2A.

6. OTHER INFORMATION

6.1: Aggregate Assets and Liabilities

2020
$'000

2019
$'000

6.1: Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

22,280

20,358

More than 12 months

14,434

6,517

Total assets

36,714

26,875

Liabilities expected to be recovered in:

No more than 12 months

6,524

3,976

More than 12 months

11,816

7,122

Total liabilities

18,340

11,098