Appendix 2 - Financial statements
Financial statements
Independent audit report
Statement by the Accountable Authority and Chief Financial Officer
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Cash flow statement
Overview
Note 1: Expenses
Note 2: Income
Note 3: Financial assets
Note 4: Non-financial assets
Note 5: Payables
Note 6: Provisions
Note 7: Appropriations
Note 8: Cash flow reconciliation
Note 9: Employee provisions
Note 10: Key management personnel remuneration
Note 11: Related party disclosures
Note 12: Contingent assets and liabilities
Note 13: Financial instruments
Note 14: Fair value measurement
Note 15: Aggregate assets and liabilities
Independent Audit Report
Statement by the Accountable Authority and Chief Financial Officer
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Cash flow statement
Overview
Objectives of the Professional Services Review
Professional Services Review (PSR) is an Australian Government controlled entity. The objective of PSR is to investigate suspected cases of inappropriate practice by health practitioners on request from the Chief Executive Medicare.
PSR has one outcome:
Outcome 1: A reduction of the risks to patients and costs to the Australian Government of inappropriate clinical practice, including through investigating health services claimed under the Medicare and Pharmaceutical Benefits Schemes.
The continued existence of the entity in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for PSR administration and programs.
PSR activities contributing toward this outcome are classified as Departmental activities. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by PSR in its own right.
Basis of Preparation of the Financial Statements
The financial statements 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:
a) The Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
b) 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, except for certain assets and liabilities 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 dollar unless otherwise specified.
Certain comparative amounts have been reclassified or adjusted to comply with current year’s presentation. There are minor changes to Note 1.
Adoption of New Australian Accounting Standard Requirements
No accounting standard has been adopted earlier than the application date as stated in the standard.
Future Australian Accounting Standard Requirements
During the 2018-19 financial year, accounting standards and interpretations were issued or amended by the Australian Accounting Standards Board which are effective for future reporting periods. However, none of these standards or interpretations are expected to have a material impact on PSR’s financial statements.
Accounting Judgements and Estimates
PSR have made the following judgements that have the most significant impact on the amounts recorded in the financial statements:
- The fair value of leasehold improvements is taken to be the depreciated replacement cost as determined by an independent valuer. Make good was determined by taking into consideration the lease term, consumer price index, and the Australian Government Bond rate.
- The long service leave liability is calculated using the shorthand method developed by the Australian Government Actuary. This method is influenced by fluctuations in the Commonwealth Government 10 year Treasury Bond rate and PSR's estimated salary growth rates.
No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities with the next accounting period.
Transactions with the Government as Owner
Equity Injections
Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.
Taxation / Competitive Neutrality
PSR is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
Revenues, expenses and assets are recognised net of GST except:
a) where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
b) for receivables and payables.
Events After the Reporting Period
No events occurred after the balance date that would alter or influence PSR's financial statements and notes.
Explanation of major budget variances
AASB 1055: Budgetary Reporting requires explanations of major variances between the original budget as presented in the 2018-19 PBS. The variance commentary that appears in the face statements should be read in the context of the following:
1. The original budget was prepared before the 2018-19 final outcome could be known. As a result, the opening balance of the Statement of Financial Position was estimated and in some cases, variances between the 2018-19 outcome and budget estimates can be partly attributed to unanticipated movement in prior year figures.
2. PSR considers that major variances are those greater than 10% of the original estimate. Variances below this threshold are not included unless considered significant by their nature. Variances relating to cash flows are a result of factors detailed under expenses, own source income, assets or liabilities. Unless otherwise individually significant or unusual, no additional commentary has been included.
Note 1: Expenses
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 1A: Employee Benefits |
||
Wages and salaries |
2,319,688 |
2,014,617 |
Superannuation |
||
Defined contribution plans |
303,006 |
263,927 |
Defined benefit plans |
64,641 |
68,912 |
Leave and other entitlements |
344,777 |
261,609 |
Separation and redundancies |
- |
- |
Total employee benefits |
3,032,112 |
2,609,065 |
Accounting Policy
Accounting policies for employee related expenses are contained in Note 9.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 1B: Suppliers |
||
Goods and services supplied or rendered |
||
Legal expenses |
222,756 |
149,418 |
Case related fees |
923,629 |
637,784 |
Other case related expenses |
824,612 |
624,384 |
Consultant fees |
641,067 |
415,758 |
Contractor expenses |
372,996 |
133,171 |
Telephone and internet |
75,863 |
74,146 |
Recruitment expenses |
11,678 |
5,317 |
Other expenses |
430,487 |
453,645 |
Total goods and services supplied or rendered |
3,503,088 |
2,493,623 |
Other suppliers |
||
Operating lease rentals |
307,676 |
303,333 |
Workers compensation expenses |
185,671 |
210,508 |
Total other suppliers |
493,347 |
513,841 |
Total suppliers |
3,996,435 |
3,007,464 |
PSR currently has an operating lease agreement which consists of the lease premises and car parking at the Canberra Airport from the Capital Airport Group Pty Ltd. PSR entered into a five year lease from 1 August 2017.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Commitments for minimum lease payments in relation to non-cancellable |
||
operating leases are payable as follows: |
||
Within 1 year |
365,678 |
354,642 |
Between 1 to 5 years |
747,893 |
1,128,812 |
More than 5 years |
- |
- |
Total operating lease commitments |
1,113,571 |
1,483,454 |
Accounting Policy
Leasing commitments
Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 1C: Finance Costs |
||
Unwinding of discount |
1,908 |
1,776 |
Total finance costs |
1,908 |
1,776 |
Accounting Policy
Borrowing Costs
All borrowing costs are expensed as incurred.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 1D: Impairment Loss Allowance on Financial Instruments |
||
Impairment on trade and other receivables |
7,000 |
7,000 |
Total impairment on financial instruments |
7,000 |
7,000 |
Note 1E: Losses on Disposal of Assets |
||
Dispose of property, plant and equipment |
- |
979 |
Dispose of intangibles |
9,858 |
- |
Total losses on disposal of assets |
9,858 |
979 |
Note 2: Income
2019 |
2018 |
|
---|---|---|
Own-Source Revenue |
$ |
$ |
Note 2A: Rendering of Services |
||
Settlement from litigations |
45,000 |
- |
Total rendering of services |
45,000 |
- |
Accounting Policy
Revenue
Revenue from the sale of goods is recognised when:
a) the risks and rewards of ownership have been transferred to the buyer;
b) the entity retains no managerial involvement or effective control over the goods;
c) the revenue and transaction costs incurred can be reliably measured; and
d) it is probable that the economic benefits associated with the transaction will flow to the entity.
Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:
a) the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
b) the probable economic benefits associated with the transaction will flow to the entity.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 2B: Other Revenue |
||
Resources received free of charge |
35,000 |
32,500 |
Total other revenue |
35,000 |
32,500 |
Accounting Policy
Resources Received Free of Charge
Resources received free of charge are recognised as gains 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.
Resources received free of charge are recorded as either revenue or gains depending on their nature.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Gains |
||
Note 2C: Other Gains |
||
Insurance refunds received and other |
3,183 |
20,858 |
Total other gains |
3,183 |
20,858 |
Revenue from Government |
||
Note 2D: Revenue from Government |
||
Appropriations |
||
Departmental appropriations |
6,946,000 |
5,518,000 |
Total revenue from Government |
6,946,000 |
5,518,000 |
Accounting Policy
Revenue from Government
Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the entity gains control of the appropriation. Appropriations receivable are recognised at their nominal amounts.
Note 3: Financial assets
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 3A: Cash and Cash Equivalents |
||
Cash on hand or on deposit |
78,925 |
79,764 |
Total cash and cash equivalents |
78,925 |
79,764 |
Accounting Policy
Cash
Cash is recognised at its nominal amount. Cash and cash equivalents include cash on hand.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 3B: Trade and Other Receivables |
||
Good and services receivables |
||
Settlement from litigations and leave transfers |
33,963 |
27,943 |
Other |
941,340 |
340 |
Total goods and services receivables |
975,303 |
28,283 |
Appropriations receivable |
||
Existing programs |
1,221,141 |
1,911,286 |
Departmental capital budget |
81,550 |
282,316 |
Total appropriations receivable |
1,302,691 |
2,193,602 |
Other receivables |
||
GST receivable from the Australian Taxation Office |
26,892 |
28,005 |
Total other receivables |
26,892 |
28,005 |
Total trade and other receivables (gross) |
2,304,886 |
2,249,890 |
Less impairment loss allowance |
||
Goods and services |
(14,000) |
(7,000) |
Total impairment loss allowance |
(14,000) |
(7,000) |
Total trade and other receivables (net) |
2,290,886 |
2,242,890 |
Accounting Policy
Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment loss 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.
Impairment of Financial Assets
All assets were assessed for impairment at 30 June 2019. 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.
Note 4: Non-financial assets
Note 4A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles for 2019
Leasehold improvements |
Plant & equipment |
Computer software |
Total |
|
---|---|---|---|---|
$ |
$ |
$ |
$ |
|
As at 1 July 2018 |
||||
Gross book value |
493,551 |
409,560 |
707,386 |
1,610,497 |
Accumulated depreciation, amortisation and impairment |
- |
(64,917) |
(338,905) |
(403,822) |
Net book value as at 1 July 2018 |
493,551 |
344,643 |
368,481 |
1,206,675 |
Additions |
||||
Purchase or internally developed |
1,200 |
71,703 |
135,995 |
208,898 |
Revaluations and impairments recognised in other comprehensive income |
1,412 |
8,639 |
- |
10,051 |
Revaluations recognised in net cost of services |
- |
- |
- |
- |
Reversal of revaluation previously recognised in other comprehensive income |
- |
- |
- |
- |
Impairments recognised in net cost of services |
- |
- |
- |
- |
Reversal of impairments recognised in net cost of services |
- |
- |
- |
- |
Depreciation and amortisation |
(120,862) |
(78,023) |
(69,118) |
(268,003) |
Disposals |
||||
Other |
(1) |
1 |
(9,858) |
(9,858) |
Net book value as at 30 June 2019 |
375,300 |
346,963 |
425,500 |
1,147,763 |
Net book value as at 30 June 2019 represented by |
||||
Gross book value |
375,300 |
346,963 |
550,122 |
1,272,385 |
Accumulated depreciation and impairment |
- |
- |
(124,622) |
(124,622) |
Net book value as at 30 June 2019 |
375,300 |
346,963 |
425,500 |
1,147,763 |
The carrying amount for buildings of $375,300 (2018: $493,551) and plant and equipment of $346,963 (2018: $344,643) were included in the valuation figures above. No indicators of impairment were found for property, plant and equipment.
During the year, PSR completed work on upgrading its ICT servers and Standard Operating Environment. No other property, plant and equipment, or intangible assets are expected to be sold or disposed of within the next 12 months.
Revaluations of non-financial assets
All revaluations were conducted in accordance with the revaluation policy stated at Note 4. At 30 June 2019, an independent valuer, B&A Valuers, conducted a desktop valuation of PSR's leasehold improvements and property, plant & equipment.
Contractual commitments for the acquisition of property, plant, equipment and intangible assets
No contractual commitments were entered into for property, plant and equipment at 30 June 2019. (2017-18: $147,096)
Accounting Policy
Acquisition of Assets
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.
Asset Recognition Threshold
Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for individual purchases costing less than $1,000, which are expensed in the year of acquisition.
The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by PSR where there exists an obligation to restore the property to its original condition. These costs are included in the value of PSR’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.
Revaluations
Following initial recognition at cost, property, plant and equipment 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 depended upon the volatility of movements in market values for the relevant assets.
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 reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed 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.
Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to PSR 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:
2019 |
2018 |
|
---|---|---|
Leasehold improvements |
Lease term |
Lease term |
Plant and equipment |
3 to 10 years |
3 to 10 years |
Impairment
All assets were assessed for impairment at 30 June 2019. 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.
The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
Intangibles
PSR’s intangibles comprise of purchased and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of PSR's software are 4 to 10 years (2018: 4 to 10 years).
All software assets were assessed for indications of impairment as at 30 June 2019.
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 4B: Other Non-Financial Assets |
||
Prepayments |
51,709 |
44,898 |
Total other non-financial assets |
51,709 |
44,898 |
No indicators of impairment were found for other non-financial assets.
Note 5: Payables
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 5A: Suppliers |
||
Trade creditors and accruals |
292,829 |
308,998 |
Operating lease rentals |
13,950 |
8,728 |
Total suppliers |
306,779 |
317,726 |
Settlement is made within 30 days. |
||
Note 5B: Other Payables |
||
Wages and salaries |
54,985 |
51,769 |
Superannuation |
2,983 |
2,506 |
Lease incentive |
61,667 |
81,667 |
Total other payables |
119,635 |
135,942 |
Settlement is made within 30 days. |
Note 6: Provisions
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 6: Provision for restoration obligations |
||
Make good obligation |
96,300 |
95,400 |
Total provision for restoration obligations |
96,300 |
95,400 |
Provision for restoration |
||
$ |
||
Carrying amount 1 July 2018 |
95,400 |
|
Additional provisions made |
- |
|
Amounts used |
- |
|
Amounts reversed |
(1,008) |
|
Finance cost - unwinding discount |
1,908 |
|
Closing balance 2019 |
96,300 |
PSR currently has an agreement for the leasing of premises which include provisions requiring PSR to restore the premises to its original condition at the conclusion of the lease. PSR has made a provision to reflect the present value of this obligation.
Note 7: Appropriations
7A: Annual Appropriations ('Recoverable GST exclusive')
Annual Appropriations for 2019 |
|||||
---|---|---|---|---|---|
Annual Appropriation1 |
Adjustment to appropriation2 |
Total appropriation |
Appropriation applied in 2019 (current and prior years) |
Variance3 |
|
$ |
$ |
$ |
$ |
$ |
|
DEPARTMENTAL |
|||||
Ordinary annual services |
6,946,000 |
86,149 |
7,032,149 |
(6,782,295) |
249,854 |
Capital Budget4 |
62,000 |
- |
62,000 |
(262,766) |
(200,766) |
Total departmental |
7,008,000 |
86,149 |
7,094,149 |
(7,045,061) |
49,088 |
Notes:
1. In 2018-19, PSR received $6,006,000 under Appropriation Bill (No. 1) 2018-19 and an additional $940,000 which is to be received under Appropriation Bill (No.1) 2019-20.
2. Adjustment includes PGPA Act section 74 receipts.
3. Departmental appropriations were underspent by $249,854. The variance was due to the delayed announcement of the Medicare Compliance Expansion of Data Matching Activities Measure.
4. Departmental Capital Budgets are appropriated through Appropriation Acts (No.1). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts. Payments made on non-financial assets include purchases of assets, and expenditure on assets which have been capitalised.
Annual Appropriations for 2018 |
|||||
---|---|---|---|---|---|
Annual Appropriation1 |
Adjustment to appropriation2 |
Total appropriation |
Appropriation applied in 2018 (current and prior years) |
Variance3 |
|
$ |
$ |
$ |
$ |
$ |
|
DEPARTMENTAL |
|||||
Ordinary annual services |
5,518,000 |
99,309 |
5,617,309 |
(5,567,139) |
50,170 |
Capital Budget4 |
649,000 |
- |
649,000 |
(509,863) |
139,137 |
Total departmental |
6,167,000 |
99,309 |
6,266,309 |
(6,077,002) |
189,307 |
1. In 2017-18, PSR received $476,000 under Appropriation Bill (No. 5) 2017-18.
2. Adjustment includes PGPA Act section 74 receipts.
3. Departmental appropriations were underspent by $139,137. During the year, PSR's lessor contributed $100K as a lease incentive towards the office fitout.
4. Departmental Capital Budgets are appropriated through Appropriation Acts (No.1). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts. Payments made on non-financial assets include purchases of assets, and expenditure on assets which have been capitalised.
7B: Unspent Annual Appropriations ('Recoverable GST exclusive')
Authority |
2019 |
2018 |
---|---|---|
$ |
$ |
|
DEPARTMENTAL |
||
Appropriation Act (No. 1) 2018-19 |
1,283,140 |
- |
Appropriation Act (No. 1) 2017-18 |
19,550 |
1,709,977 |
Appropriation Act (No. 5) 2017-18 |
- |
476,000 |
Cash balance |
78,925 |
79,764 |
Total |
1,381,615 |
2,265,741 |
Note 8: Cash flow reconciliation
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Reconciliation of cash and cash equivalents as per Statement of Financial Position to Cash Flow Statement |
||
Cash and cash equivalents as per: |
||
Cash flow statement |
78,925 |
79,764 |
Statement of financial position |
78,925 |
79,764 |
Discrepancy |
- |
- |
Reconciliation of net cost of services to net cash from/ (used by) operating activities: |
||
Net cost of services |
(7,232,133) |
(5,756,359) |
Add revenue from Government |
6,946,000 |
5,518,000 |
Adjustments for non-cash items |
||
Depreciation / amortisation |
268,003 |
183,433 |
Net write down of non-financial assets |
7,000 |
7,000 |
Loss on disposal of assets |
9,858 |
979 |
Finance costs |
1,908 |
1,776 |
Changes in assets / liabilities |
||
(Increase) / decrease in net receivables |
(255,762) |
7,225 |
(Increase) / decrease in prepayments |
(6,811) |
15,802 |
Increase / (decrease) in employee provisions |
234,484 |
1,197 |
Increase / (decrease) in supplier payables |
(10,947) |
29,868 |
Increase / (decrease) in other payables |
(16,307) |
92,908 |
Net cash from/ (used by) operating activities |
(54,707) |
101,829 |
Note 9: Employee provisions
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 9: Employee Provisions |
||
Leave |
789,514 |
555,030 |
Total employee provisions |
789,514 |
555,030 |
Accounting Policy
Employee benefits
Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 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.
Other long-term employee benefits are measured as net total of the 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 leaves is non-vesting and the average sick leave taken in future years by employees of PSR 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 PSR employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.
The long term leave liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees as at 30 June 2019. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. The other factors which have been considered in determining the long term leave liability for long service leave include salary growth, probability factors and on costs.
Separation and Redundancy
Provision is made for separation and redundancy benefit payments. The entity recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.
Superannuation
PSR's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap).
The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.
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.
PSR makes employer contributions to the employees' superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. PSR 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.
Note 10: Key management personnel remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of PSR, directly or indirectly, including any director (whether executive or otherwise) of PSR. PSR has determined the key management personnel to be the Director, Executive Officer, Special Counsel, and the Chief Finance Officer. Key management personnel remuneration is reported in the table below:
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Short-term employee benefits |
908,242 |
887,603 |
Post-employment benefits |
121,274 |
116,959 |
Other long-term employee benefits |
105,879 |
92,540 |
Total key management personnel remuneration expenses1 |
1,135,395 |
1,097,102 |
The total number of key management personnel included in the above table represents 5 individuals (2018: 5 individuals). During the reporting period, 1 of the 5 individuals was on acting arrangements.
1. The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.
Note 11: Related party disclosures
Related party relationships:
PSR is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel including the Portfolio Minister and Executive, and other Australian Government entities.
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.
The following transactions with related parties occurred during the financial year:
The entity transacts with other Australian Government controlled entities consistent with normal day-to-day business operations provided under normal terms and conditions, including the payment of workers compensation and insurance premiums. These are not considered individually significant to warrant separate disclosure as related party transactions (2018: nil).
Refer to Note 9 Employee Provisions for details on superannuation arrangements with the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), and the PSS accumulation plan (PSSap).
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 (2018: nil).
Note 12: Contingent assets and liabilities
Quantifiable Contingencies
At 30 June 2019, PSR did not have any quantifiable contingencies (2018: nil).
Unquantifiable Contingencies
PSR is currently involved in a litigation case before the Federal Court which may result in costs awarded in favour of PSR. PSR has been advised by its solicitors that the amount cannot be reliably estimated. No further disclosure has been made on the grounds that it can be expected to prejudice seriously the outcome of the litigation (2018: nil).
Significant Remote Contingencies
At 30 June 2019 PSR did not have any significant remote contingencies (2018: nil).
Accounting Policy
Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.
Note 13: Financial instruments
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 13A: Categories of Financial Instruments |
||
Financial Assets under AASB 139 |
||
Loans and receivables |
||
Cash and cash equivalents |
- |
79,764 |
Trade and other receivables |
- |
21,283 |
Total loans and receivables |
- |
101,047 |
Total financial assets |
- |
101,047 |
Financial Assets under AASB 9 |
||
Financial assets at amortised cost |
||
Cash and cash equivalents |
78,925 |
- |
Trade and other receivables |
961,303 |
- |
Total financial assets at amortised cost |
1,040,228 |
- |
Total financial assets |
1,040,228 |
- |
Financial Liabilities |
||
Financial liabilities measured at amortised cost |
||
Payables - Suppliers |
306,779 |
317,726 |
Total financial liabilities |
306,779 |
317,726 |
Classification of financial assets on the date of initial application of AASB 9 |
|||||
---|---|---|---|---|---|
AASB 139 Original classification |
AASB 9 New classification |
AASB 139 carrying amount at 30 June 2018 |
AASB 9 carrying amount at 1 July 2018 |
||
$ |
$ |
||||
Financial Assets Class |
Note |
||||
Cash and cash equivalents |
3A |
Loans and receivables |
Amortised cost |
79,764 |
79,764 |
Trade and other receivables |
3B |
Loans and receivables |
Amortised cost |
21,283 |
21,283 |
Total financial assets |
101,047 |
101,047 |
|||
Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9 |
|||||
AASB 139 carrying amount at 30 June 2018 |
Reclassification |
Remeasurement |
AASB 9 carrying amount at 1 July 2018 |
||
Financial Assets at amortised cost |
$ |
$ |
$ |
$ |
|
Loans and receivables |
|||||
Cash and cash equivalents |
79,764 |
- |
- |
79,764 |
|
Trade and other receivables |
21,283 |
- |
- |
21,283 |
|
Total Financial Assets at amortised cost |
101,047 |
- |
- |
101,047 |
|
- |
|||||
- |
1. The carrying amount of cash and trade and other receivables under AASB 139 has not changed on transition to AASB 9.
Accounting Policy
Financial Assets
With the implementation of AASB 9 Financial Instruments for the first time in 2019, PSR classifies its financial assets as financial assets measured at amortised cost.
The classification depends on both the entity's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are
transferred upon trade date.
Comparatives have not been restated on initial application.
Financial Assets at Amortised Cost
Financial assets included in this category need to meet two criteria:
1. the financial asset is held in order to collect the contractual cash flows; and
2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.
Amortised cost is determined using the effective interest method.
Effective Interest Method
Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.
Impairment of Financial Assets
Financial assets are assessed for impairment at the end of each reporting period based on expected credit losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased.
The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.
A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.
Financial Liabilities
PSR classifies its financial liabilities as financial liabilities at amortised cost. Financial liabilities are recognised and derecognised upon ‘trade date’.
Financial Liabilities at Amortised Cost
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.
Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).
Note 14: Fair value measurement
Accounting Policy
Fair Value Measurement
PSR deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period.
Note 14: Fair Value Measurements |
||
---|---|---|
Fair value measurements at the end of the reporting period |
Fair value measurements at the end of the reporting period |
|
2019 |
2018 |
|
$ |
$ |
|
Non-financial assets |
||
Leasehold improvements |
375,300 |
493,551 |
Other property, plant and equipment |
346,963 |
344,643 |
Total non-financial assets |
722,263 |
838,194 |
Total fair value measurements of assets in the statement of financial position |
722,263 |
838,194 |
1. No change in valuation technique occurred during the period
2. Recurring level 3 fair value measurements reconciliation - valuation process
PSR procured valuation services from B&A Valuers and relied on valuation models provided by B&A Valuers. PSR tests the procedures of the valuation model at least once every 12 months. B&A Valuers has provided written assurance to PSR that the model developed is in compliance with AASB 13.
Note 15: Aggregate assets and liabilities
2019 |
2018 |
|
---|---|---|
$ |
$ |
|
Note 15: Aggregate Assets and Liabilities |
||
Assets expected to be recovered in |
||
No more than 12 months |
2,422,487 |
2,368,363 |
More than 12 months |
1,146,796 |
1,205,864 |
Total assets |
3,569,283 |
3,574,227 |
Liabilities expected to be settled in |
||
No more than 12 months |
545,632 |
523,124 |
More than 12 months |
766,596 |
580,974 |
Total liabilities |
1,312,228 |
1,104,098 |
Visit
https://www.transparency.gov.au/annual-reports/professional-services-review-scheme/reporting-year/2018-2019-46