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Notes to the financial statements

Note 1: Summary of significant accounting policies

1.1 Basis of preparation of the financial report

The financial statements are general purpose, not-for-profit financial statements and are prepared in accordance with section 42 of the Public Governance, Performance and Accountability Act 2013, which in turn requires the statements to comply with the:

  1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) and
  2. Australian Accounting Standards and Interpretations - 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 in accordance with the historical cost convention. 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.

1.2 Significant accounting judgements and estimates

In the process of applying the accounting policies, the PBO has made the following judgements that have a significant impact on the amounts recorded in the financial statements.

Employee leave provision

The Department of Finance shorthand method is used to estimate the provision for annual leave and long service leave. This method calculates the provision using current leave balances, discounted using the 10-year government bond rate. Additional costs are applied for superannuation and leave accrued while on leave, based on the percentage of leave taken while in service. In addition, the Department of Finance probability factor (based on length of service) is applied to the long service leave balances. Historical data is used to calculate the average additional cost for superannuation, and to calculate the percentage of leave taken in service.

1.3 Employee benefits

2019

2018

Employee benefits

$

$

Wages and salaries

4,915,988

4,918,722

Superannuation

Defined benefit plans

421,796

472,835

Defined contribution plans

427,257

413,878

Leave and other entitlements

969,175

1,017,653

Total employee benefits

6,734,216

6,823,088

Key management personnel compensation

The key management personnel in the PBO comprise the Parliamentary Budget Officer and the three senior executives who directly report to this position. During 2018–19, the total compensation of the five officers who held these four positions was $1,395,057 (comprising short-term employee benefits of $1,204,512, long-term employee benefits of $35,262 and post-employment benefits of $155,283).

During 2017–18 the total compensation of the five officers who held these four positions, was $1,335,107 (comprising short-term employee benefits of $1,109,771, long-term employee benefits of $71,588 and post-employment benefits of $153,748).

1.4 Supplier expenses

Supplier expenses

2019

2018

Supplier expenses

$

$

Professional services

168,705

180,167

Enhanced capability

579,920

110,454

Corporate services outsourced

374,866

362,592

Employee related

122,845

97,011

Accommodation expenses

302,683

294,553

Travel

25,883

15,688

Software licences

117,233

136,963

Other

77,133

43,024

Workers compensation expenses

18,888

23,321

Total supplier expenses

1,788,156

1,263,773

1.5 Revenue

Revenue from Government

2019

2018

$

$

Annual appropriation

7,238,000

6,753,000

Section 74 PGPA Act receipts

442,386

236,462

Total appropriation

7,680,386

6,989,462

Less Appropriation applied (current and prior years)

(6,955,531)

(6,870,000)

Variance (a)

724,855

119,462

(a) In 2019, the variance between appropriation provided and applied is largely due to retained funding for future leave entitlements.

Amounts appropriated for the year are recognised at their nominal amount as Revenue from Government when the PBO gains control of the appropriation.

The PBO may draw upon the following appropriations:

  1. Annual appropriations providing for the ordinary course of business are noted below. The amount of unspent appropriations is equal to the sum of the cash and appropriation receivable balances, as at 30 June.
    1. Appropriation (Parliamentary Departments) Act (No.1) 2017–18
      Unspent balance as at 30 June 2019: nil (2018: $2,266,849 )
    2. Appropriation (Parliamentary Departments) Act (No.1) 2018–19
      Unspent balance as at 30 June 2019: $3,025,787
  2. A Special appropriation, of a limited amount, to provide for payments in relation to the Parliamentary Budget Officer or the Parliamentary Budget Office. Special appropriation revenue is recognised for the year when amounts are expended or to meet obligations incurred during the reporting period.
  1. Parliamentary Service Act 1999
    Limited to $6,000,000, unspent balance as at 30 June 2019: $1,850,947 (2018: $2,782,636)

2019

Special appropriation balance

$

As at 1 July 2018

2,782,636

Special appropriation applied

931,689

Balance as at 30 June 2019

1,850,947

Resources received free of charge

Resources received free of charge are recognised as other revenue when fair value can be reliably determined and the services would have been purchased if they had not been donated. These revenues are measured at their fair value and the use is recognised as an expense.

1.6 Property, plant and equipment

2019

$

As at 1 July 2018

Gross book value

2,075,799

Accumulated depreciation

(391,018)

Total as at 1 July 2018

1,684,781

Depreciation expense

(78,219)

Total as at 30 June 2019

1,606,562

Total as at 30 June 2019 represented by:

Gross book value

2,075,799

Accumulated depreciation

(469,237)

Total as at 30 June 2019

1,606,562

Revaluations and impairment

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. As at 30 June 2019 there were no indicators of impairment.

Fair value measurement

All property, plant and equipment non-financial assets are measured at fair value using the cost approach (depreciated replacement cost). The inputs used to determine the fair value include historical actual cost information and costing guides to estimate the current replacement cost. Appropriate useful life profiles have been adopted to depreciate the replacement cost to reflect the expended life.

Note 2: Events after the reporting period

There were no significant events following the reporting period that impact on the PBO’s financial statements for the year ended 30 June 2019.

Note 3: Budget variance

The comparison of the unaudited original budget as presented in the 2018–19 Portfolio Budget Statements to the 2018–19 final outcome as presented in accordance with Australian Accounting Standards is included in the statement of comprehensive income, the statement of financial position and the cash flow statement. The major variance detailed below is in relation to the management of resources, to ensure the performance of the PBO in achieving its mandate during the course of the year.

Major variances

The PBO’s intangible assets were transferred to the Department of Parliamentary Services on 1 June 2018, after the 2019 Budget was determined. This resulted in a variance to the budget for amortisation expenses and other gains in the statement of comprehensive income and for intangible assets in the statement of financial position.

The 10-year government bond rate decreased during the year, which increased employee leave provisions and employee benefit expenses. This resulted in variances to the budget for the appropriation receivable and employee items in the statement of comprehensive income, the statement of financial position and the cash flow statement.