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Part 4: Financial statements

INDEPENDENT AUDITOR’S REPORT

Independent Auditor's Report

To the Minister Assisting the Prime Minister for the Public Service and Cabinet

Opinion

In my opinion, the financial statements of the Australian Public Service Commission for the year ended 30 June 2019:

(a) comply with Australian Accounting Standards – Reduced Disclosure Requirements and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015; and

(b) present fairly the financial position of the Australian Public Service Commission as at 30 June 2019 and its financial performance and cash flows for the year then ended.

The financial statements of the Australian Public Service Commission, which I have audited, comprise the following statements as at 30 June 2019 and for the year then ended:

  • Statement by the Australian Public Service Commissioner and Chief Financial Officer;
  • Statement of Comprehensive Income;
  • Statement of Financial Position;
  • Statement of Changes in Equity;
  • Cash Flow Statement;
  • Administered Schedule of Comprehensive Income;
  • Administered Reconciliation Schedule;
  • Administered Cash Flow Statement; and
  • Notes to the financial statements, comprising a summary of significant accounting policies and other explanatory information.

Basis for Opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Australian Public Service Commission in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor–General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) to the extent that they are not in conflict with the Auditor–General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Accountable Authority’s Responsibility for the Financial Statements

As the Accountable Authority of the Australian Public Service Commission, the Australian Public Service Commissioner (the Commissioner) is responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards – Reduced Disclosure Requirements and the rules made under that Act. The Commissioner is also responsible for such internal control as the Commissioner determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Commissioner is responsible for assessing the Australian Public Service Commission’s ability to continue as a going concern, taking into account whether the entity’s operations will cease as a result of an administrative restructure or for any other reason. The Commissioner is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

Auditor’s Responsibilities for the Audit of the Financial Statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian National Audit Office Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

  • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
  • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control;
  • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority;
  • conclude on the appropriateness of the Accountable Authority’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern; and
  • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Australian National Audit Office

Lorena Skipper

A/g Executive Director

Delegate of the Auditor–General

Canberra

20 September 2019

Australian Public Service Commission

Statement by the Australian Public Service Commissioner and Chief Financial Officer

In our opinion, the attached financial statements for the year ended 30 June 2019 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Public Service Commission will be able to pay its debts as and when they fall due.

Peter Woolcott AO Australian Public Service Commissioner

20 September 2019 

Nick Adamson CPA Chief Financial Officer

20 September 2019

Statement of Comprehensive Income

For the period ended 30 June 2019

 

Notes

2019

$’000

2018

$’000

2019 Budget

$’000

NET COST OF SERVICES

       

Expenses

       

Employee benefits

1.1a

26,297

26,013

25,864

Suppliers

1.1b

17,338

17,150

16,240

Depreciation and amortisation

3.2a

1,583

1,690

1,803

Finance costs

 

5

4

5

Impairment loss allowance on financial instruments

1.1c

4

Write–down and impairment of other assets

1.1d

860

Losses from asset sales

 

26

31

Total expenses

 

46,113

44,888

43,912

         

Own–source Income

       

Own–source revenue

       

Sale of goods and rendering of services

1.2a

22,416

20,877

20,903

Resources received free of charge

1.2b

41

40

45

Total own–source revenue

 

22,457

20,917

20,948

         

Gains

       

Reversal of write–downs and impairment

 

1

Total gains

 

1

Total own–source income

 

22,457

20,918

20,948

         

Net cost of services

 

(23,656)

(23,970)

(22,964)

         

Revenue from Government

1.2c

21,299

22,811

21,299

         

Surplus/(Deficit)

 

(2,357)

(1,159)

(1,665)

         

Statement of Comprehensive Income

For the period ended 30 June 2019

 

Notes

2019

$’000

2018

$’000

2019 Budget

$’000

OTHER COMPREHENSIVE INCOME

       

Items not subject to subsequent reclassification to net cost of services

       

Changes in asset revaluation reserve

3.2a

(203)

Total other comprehensive income

 

(203)

         

Total comprehensive income/(loss)

 

(2,560)

(1,159)

(1,665)

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

Budget variances commentary

The following table provides high level commentary of major variances for the APSC between budget information as published in the 2018–19 Portfolio Budget Statements to the 2018–19 final outcome as presented in accordance with Australian Accounting Standards.

Explanation of major variances

Affected line items

Sale of goods and services and Suppliers expense are higher than budget as the demand for learning and development activities was higher than the level planned when the budget was prepared.

An impairment loss was recognised for a software development that ceased.

Sale of goods and rendering of services $1,513,000 higher than budget and Suppliers $1,098,000 higher than budget.

Write–down and impairment of other assets $860,000 higher than budget.

Statement of Financial Position

As at 30 June 2019

 

Notes

2019

$’000

2018

$’000

2019

Budget

$’000

ASSETS

       

Financial assets

       

Cash and cash equivalents

 

933

571

750

Trade and other receivables

3.1a

16,960

17,460

14,602

Total financial assets

 

17,893

18,031

15,352

         

Non–financial assets

       

Building leasehold improvements

3.2a

5,119

5,758

5,791

Plant and equipment

3.2a

2,155

1,526

513

Intangibles

3.2a

635

1,696

1,428

Inventories

 

46

Prepayments paid

3.2b

477

561

560

Total non–financial assets

 

8,386

9,541

8,338

Total assets

 

26,279

27,572

23,690

LIABILITIES

       

Payables

       

Suppliers

3.3a

4,140

3,376

3,182

Prepayments received

3.3b

5,899

5,795

4,586

Other payables

3.3c

312

787

Total payables

 

10,351

9,958

7,768

         

Provisions

       

Employee provisions

5.1a

7,622

7,164

7,095

Provision for restoration

3.4a

250

245

250

Total provisions

 

7,872

7,409

7,345

Total liabilities

 

18,223

17,367

15,113

Net assets

 

8,056

10,205

8,577

         

EQUITY

       

Contributed equity

 

2,562

2,151

2,600

Asset revaluation reserve

 

560

763

763

Retained surplus

 

4,934

7,291

5,214

Total equity

 

8,056

10,205

8,577

Statement of Financial Position

As at 30 June 2019

   

2019

$’000

2018

$’000

Aggregate assets and liabilities

     

Assets expected to be recovered in:

     

No more than 12 months

 

18,422

18,571

More than 12 months

 

7,857

9,001

Total assets

 

26,279

27,572

       

Liabilities expected to be recovered in:

     

No more than 12 months

 

12,950

12,578

More than 12 months

 

5,273

4,789

Total liabilities

 

18,223

17,367

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

Budget Variances Commentary

Explanations of major variances

Affected line items

The balance for trade and other receivables is higher than budget due to holding higher than expected level of receivable from government and higher level of trade receivables at year end. The higher level of trade receivables is due to the timing of payments by customers.

Buildings are lower than budget as major office fit–out works in 2018 were budgeted against buildings whilst some of the procurement was for plant and equipment.

Plant and equipment is also higher than budget due to the transition to a new ICT service provider in 2019 which required the purchase of new equipment. This purchase of equipment resulted in a higher level of Suppliers payable at the end of 2019.

Intangibles are lower than budget due to an impairment loss recognised as a result of the cessation of software development.

The balance of prepayments received varies in line with the timing of when invoices are issued to customers and when services are performed.

Trade and other receivables $2,358,000 higher than budget.

Buildings $672,000 lower than budget and Plant and equipment $1,642,000 higher than budget.

Suppliers payable

$958,000 higher than budget.

Intangibles $793,000 lower than budget.

Prepayments received

$1,313,000 higher than budget.

Statement of Changes in Equity

For the period ended 30 June 2019

 

2019

$’000

2018

$’000

2019

Budget

$’000

CONTRIBUTED EQUITY

     

Opening balance

2,151

1,775

2,189

Transactions with owners

     

Distributions to owners

     

Reduction to appropriation

(38)

Contributions by owners

     

Departmental capital budget

411

414

411

Closing balance

2,562

2,151

2,600

       

RETAINED SURPLUS

     

Opening balance

7,291

8,450

6,879

Comprehensive income

     

Surplus/(deficit) for the period

(2,357)

(1,159)

(1,665)

Closing balance

4,934

7,291

5,214

ASSET REVALUATION RESERVE

     

Opening balance

763

763

763

Comprehensive income

     

Other comprehensive income

(203)

Closing balance

560

763

763

       

TOTAL EQUITY 

     

Opening balance

10,205

10,988

9,831

Comprehensive income

     

Surplus/(deficit) for the period

(2,357)

(1,159)

(1,665)

Other comprehensive income

(203)

– 

Total Comprehensive income

(2,560)

(1,159)

(1,665)

Transactions with owners

     

Distributions to owners

     

Reduction to appropriation

(38)

Contributions by owners

     

Departmental capital budget

411

414

411

Total transactions with owners

411

376

411

Closing balance

8,056

10,205

8,577

Statement of Changes in Equity

For the period ended 30 June 2019

Accounting policy

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.

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

Cash Flow Statement

For the period ended 30 June 2019



 

Notes

2019

$’000

2018

$’000

2019

Budget

$’000

Operating Activities

       

Cash received

       

Appropriations

 

24,700

28,786

21,537

Sale of goods and rendering of services

 

22,588

22,011

20,903

GST received

 

1,465

1,976

1,708

Other cash received

 

1,864

1,025

Total cash received

 

50,617

53,798

44,148

         

Cash used

       

Employees

 

27,928

26,518

25,864

Suppliers

 

19,149

18,439

17,806

Section 74 receipts transferred to OPA

 

2,500

1,000

Other cash used

 

445

320

Total cash used

 

50,022

46,277

43,670

Net cash from operating activities

 

595

7,521

478

         

Investing Activities

       

Cash received

       

Proceeds from sales of property, plant and equipment

 

25

Total cash received

 

25

Cash used

       

Purchase of property, plant and equipment

 

169

7,409

192

Purchase of intangibles

 

500

849

697

Total cash used

 

669

8,258

889

Net cash used by investing activities

 

(644)

(8,258)

(889)

         

FINANCING Activities

       

Cash received

       

Contributed equity

 

411

414

411

Total cash received

 

411

414

411

Net cash from financing activities

 

411

414

411

Cash Flow Statement

For the period ended 30 June 2019



 

Notes

2019

$’000

2018

$’000

2019

Budget

$’000

         

Net increase/(decrease) in cash held

 

362

(323)

Cash and cash equivalents at the beginning of the reporting period

 

571

894

750

Cash and cash equivalents at the end of the reporting period

 

933

571

750

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

Budget Variances Commentary

Explanation of major variances

Affected line items

Appropriations are higher than budget due to returning Section 74 receipts that are above agreed working cash balance limits to the Official Public Account (OPA) and then redrawing funding as required.

Sale of goods and rendering of services is higher than budget as the demand for learning and development activities was higher than budget, combined with higher customer prepayments. This increased demand also contributed to a higher level of supplier payments.

Employee payments are higher than budget due to the payment of separations that were accrued in 2018, and the transfer of leave liability balances to other entities. The transferring of leave liability balances from other entities resulted in a higher level of cash received.

Appropriations

$3,163,000 higher than budget and Section 74 receipts transferred to OPA $2,500,000 higher than budget.

Sale of goods and rendering of services $1,685,000 higher than budget and Suppliers $1,343,000 higher than budget.

Employees $2,064,000 higher than budget and Other cash received $1,864,000 higher than budget.

Administered Schedule of Comprehensive Income

For the period ended 30 June 2019
 

 

Notes

2019

$’000

2018

$’000

2019

Budget

$’000

NET COST OF SERVICES

       

Expenses

       

Employee benefits

2.1a

4,140

33,342

4,170

Total expenses

 

4,140

33,342

4,170

         

Net cost of services

 

(4,140)

(33,342)

(4,170)

         

Total comprehensive loss

 

(4,140)

(33,342)

(4,170)

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

Budget Variances Commentary

Explanation of major variances

Affected line items

There are no major budget variances.

Administered Reconciliation Schedule

 

Notes

2019

$’000

2018

$’000

Opening assets less liabilities as at 1 July

 

       

Net cost of services

     

Expenses

     

Payments to entities other than corporate Commonwealth entities

 

(4,140)

(33,342)

       

Transfers from the Australian Government

     

Appropriation transfers from Official Public Account

     

Special appropriations (unlimited)

     

Payments to entities other than corporate Commonwealth entities

4.1c

4,140

33,342

       

Closing assets less liabilities as at 30 June

 

Accounting policy

Administered cash transfers to and from the Official Public Account

Revenue collected by the APSC for use by the Government rather than the APSC is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the APSC on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

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

Administered Cash Flow Statement

For the period ended 30 June 2019



 
 

2019

$’000

2018

$’000

2019

Budget $’000

Operating Activities

       

Cash used

       

Employees

 

4,140

33,342

4,170

Total cash used

 

4,140

33,342

4,170

Net cash used by operating activities

 

(4,140)

(33,342)

(4,170)

         

Net decrease in cash held

 

(4,140)

(33,342)

(4,170)

         

Cash and cash equivalents at the beginning of the reporting period

 

         

Cash from Official Public Account

Appropriations

 

4,140

33,342

4,170

Total cash from Official Public Account

 

4,140

33,342

4,170

         

Cash and cash equivalents at the end of the reporting period

 

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

Budget Variances Commentary

Explanation of major variances

Affected line items

There are no major budget variances.

Notes to the Financial Statements

The basis of preparation

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:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
  • 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 operating result or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

New accounting standards

A number of new and revised standards, interpretations and amending standards were issued by the Australian Accounting Standards Board prior to the sign–off date but are not applicable until future years.
New accounting standard AASB 16 Leases, will have a material effect on the APSC’s financial statements:

  • ‘Right of use’ lease assets and lease liabilities of $10.1 million will be recognised on 1 July 2019.
  • Existing operating lease rental payables of $0.4 million and operating lease prepayments of $0.1 million will be derecognised on 1 July 2019.
  • During 2019–20, operating lease rental expense of $1.6 million will be derecognised, with right of use asset depreciation of $1.6 million and lease interest of $0.1 million to be recognised.

All other new and revised standards, interpretations and amending standards are not expected to have a material effect on the APSC’s financial statements.

Accounting Judgements and Estimates

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 within the next reporting period.

Notes to the Financial Statements

Cash

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  • cash on hand and
  • cash held by outsiders.

Taxation

The APSC is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses, assets and liabilities are recognised net of GST except:

  • where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  • for receivables and payables.

Reporting of administered activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Events after the Reporting Period

There were no subsequent events that had the potential to affect the ongoing structure and financial activities of the APSC for either departmental or administered activities.

Notes to the Financial Statements

NOTE 1: DEPARTMENTAL FINANCIAL PERFORMANCE

This section analyses the financial performance of the APSC for the year ended 2019.

Note 1.1: Expenses

 

2019

$’000

2018

$’000

Note 1.1a: Employee benefits

   

Wages and salaries

19,874

19,236

Superannuation

   

  Defined contribution plans

1,882

1,771

  Defined benefit plans

1,920

1,939

Leave and other entitlements

2,536

2,359

Separation and redundancies

85

708

Total employee benefits

26,297

26,013

Accounting policy

The accounting policy for employee related expenses is contained in note 5.1 Employee provisions.

Note 1.1b: Suppliers

   

Goods and services supplied or rendered

   

Consultants

1,049

729

Contractors

8,179

8,233

Travel

903

748

Venue hire and catering

1,119

901

Training

300

300

Information and communications technology

2,759

2,759

Facilities expense

199

191

Other goods and services

748

828

Total goods and services supplied or rendered

15,256

14,689

     

Other suppliers

   

Operating lease rentals

1,622

2,023

Workers compensation expenses

460

438

Total other suppliers

2,082

2,461

     

Total suppliers

17,338

17,150

Notes to the Financial Statements

Leasing commitments

The APSC in its capacity as lessee has three leases for office accommodation and one vehicle lease. Each office accommodation lease has annual fixed percentage increases in the lease payments. For all three accommodation leases, the initial period of office accommodation is still current and these leases do not have purchase options. The lease for the head office has the option to renew for two five year periods, whilst the other two accommodation leases do not have renewal options.

The lease for the head office commenced in July 2017 and the commitment is approximately $11.3 million over a lease term of 9 years and 8 months.

 

2019

$’000

2018

$’000

Commitments for minimum lease payments in relation to non–cancellable operating leases are payable as follows:

   

Within 1 year

1,562

1,501

Between 1 to 5 years

5,528

5,840

More than 5 years

3,362

4,595

Total operating lease commitments

10,452

11,936

Commitments are disclosed net of GST.

Accounting policy

Operating lease payments are expensed on a straight–line basis which is representative of the pattern of benefits derived from the leased assets.

Note 1.1c: Impairment loss allowance on financial instruments

   

Impairment on goods and services receivable

4

Total write–down and impairment of assets

4

Note 1.1d: Write–down and impairment of other assets

   

Impairment of intangibles

860

Total write–down and impairment of other assets

860

Notes to the Financial Statements

Note 1.2: Own–source revenue

 

2019

$’000

2018

$’000

Own–source revenue

   
     

Note 1.2a: Sale of goods and rendering of services

   

Sale of goods

2

3

Rendering of services

22,414

20,874

Total sale of goods and rendering of services

22,416

20,877

Accounting policy

Revenue from the sale of goods is recognised when:

the risks and rewards of ownership have been transferred to the buyer

the APSC retains no managerial involvement nor effective control over the goods.

The stage of completion of contracts at the reporting date is determined by reference to services performed to date as a percentage of total services to be performed.

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

Note 1.2b: Resources received free of charge

   

Audit services

41

40

     

Accounting policy

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. Resources received free of charge are recorded as either revenue or gains depending on their nature.

Notes to the Financial Statements

Revenue from Government

 

2019

$’000

2018

$’000

Note 1.2c: Revenue from Government

   

Appropriations

   

Departmental appropriations

21,299

22,811

Total revenue from Government

21,299

22,811

Accounting policy

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the APSC gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

NOTE 2: EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT

This section analyses the activities that the APSC does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

Note 2.1: Administered – expenses

Note 2.1a: Employee Benefits

 

2019

$’000

2018

$’000

Employee benefits

   

Wages and salaries

4,140

33,342

Total employee benefits

4,140

33,342

Notes to the Financial Statements

NOTE 3: DEPARTMENTAL FINANCIAL POSITION

This section analyses the APSC’s assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in the People and Relationships section, Note 5.

Note 3.1: Financial assets

Note 3.1a: Trade and other receivables


 

2019

$’000

2018

$’000

Trade and other receivables

   

Goods and services

1,983

1,576

Appropriation receivable

14,458

15,359

GST receivable from the Australian Taxation Office

523

525

Total trade and other receivables (gross)

16,964

17,460

Less impairment loss allowance – Goods and services

(4)

Total trade and other receivables (net)

16,960

17,460

Credit terms for goods and services are within 30 days (2018: 30 days).

Accounting policy

Trade receivables that are held for the purpose of collecting the contractual cash flows, where the cash flows are solely payments of principal and interest, that are not provided at below–market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

Notes to the Financial Statements

Notes 3.2 Non financial assests

 

Notes to the Financial Statements

Revaluation of non–financial assets

Revaluations are conducted in accordance with the revaluation policy contained in this note. Plant and equipment was revalued by an independent valuer during 2019 (2018: nil). There was a revaluation decrement of $203,000 (2018: nil). All increments and decrements, to the extent that they reverse a previous increment, are transferred to the asset revaluation reserve by asset class and included in the equity section of the statement of financial position. No decrements due to revaluation were expensed in 2019 (2018: nil).

Contractual commitments for the acquisition of property, plant, equipment and intangible assets

There are no significant contractual commitments for the acquisition of property, plant and equipment and intangible assets (2018: nil).

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.

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 purchases of property, plant and equipment costing less than $2,000, or leasehold improvements costing less than $60,000, 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).

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 the provision for restoration in property leases taken up by the APSC where there exists an obligation to restore the property to its original condition. These costs are included in the value of the APSC’s leasehold improvements with a corresponding provision for restoration 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 materially differ 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.

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 in the surplus or deficit. Revaluation decrements for a class of assets are recognised directly in the surplus or deficit except to the extent that they reverse a previous revaluation increment for that class.

Notes to the Financial Statements

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 the APSC 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:

Asset class 2019                        2018                       

Leasehold improvements           Expected lease term  Expected lease term

Property, plant and equipment  1 to 13 years                             1 to 13 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.

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

The APSC’s intangibles comprise intellectual property, purchased software and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses where the value of the asset exceeds $2,000 for purchased software and $60,000 for internally developed software and intellectual property.

Intangibles are amortised on a straight–line basis over their anticipated useful life. The useful lives of the APSC’s intangibles are between 2 to 10 years (2018: 2 to 10 years).

All intangible assets were assessed for impairment as at 30 June 2019.

Note 3.2b: Prepayments paid

 

2019

$’000

2018

$’000

Prepayments paid

   

Suppliers

477

561

Total prepayments paid

477

561

No indicators of impairment were found for prepayments paid.

Notes to the Financial Statements

Note 3.3: Payables


 

2019

$’000

2018

$’000

Note 3.3a: Suppliers

   

Trade creditors and accruals

3,769

3,101

Operating lease rentals

371

275

Total suppliers

4,140

3,376

     

Note 3.3b: Prepayments received

   

Rendering of services

5,899

5,795

Total prepayments received

5,899

5,795

     

Note 3.3c: Other payables

   

Wages and salaries

166

152

Superannuation

28

26

Separations and redundancies

47

536

Other

71

73

Total other payables

312

787

     

Accounting policy

Suppliers 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). Supplier and other payables are recognised and derecognised upon trade date.

Operating lease rentals are expensed on a straight–line basis, which is representative of the pattern of benefits derived from the leased assets.

Prepayments received are recognised for payments received for services that are not yet fully performed. This is measured in accordance with the accounting policy in note 1.2a for own–source revenue.

The wages and salaries payable and superannuation payable represent outstanding contributions for a portion of the final fortnight of the financial year.

The APSC recognises a payable for separation and redundancy benefit payments when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Notes to the Financial Statements

Note 3.4: Other provisions

Note 3.4a: Provision for restoration


 

2019

$’000

2018

$’000

     

As at 1 July

245

285

Additional provisions made

95

Amounts used

(139)

Unwinding of discount or change in discount rate

5

4

Total as at 30 June

250

245

     

The APSC currently has two (2018: two) leasing agreements which have provisions requiring the APSC to restore the premises to their original condition at the conclusion of the lease. The APSC has made provisions to reflect the present value of these obligations.

There was no revaluation of the provision for restoration (2018: no revaluation).

Notes to the Financial Statements

NOTE 4: FUNDING

This section identifies the APSC’s funding structure.

Note 4.1: Appropriations

Note 4.1a: Annual Appropriations ('Recoverable GST exclusive')

Departmental

2019

$'000

2018

$'000

Annual Appropriation

   

Ordinary annual services

21,299

22,811

Capital Budget 1

411

414

Total Annual Appropriation

21,710

23,225

Adjustments to appropriation

   

PGPA Act section 74 receipts

24,447

23,004

Total adjustments to appropriation

24,447

23,004

Total Appropriation

46,157

46,229

Appropriation applied (current and prior years)

(46,771)

(51,473)

Variance 2

(614)

(5,244)

1. Departmental Capital Budgets are appropriated through Appropriation Acts (No. 1, 3, 5). They form part of ordinary annual services and are not separately identified in the Appropriation Acts.

2. The variance in 2019 occurred due to the payment of accrued separation and redundancies.

The variance in 2018 occurred due to payments for major fit–out works, which resulted in higher cash outflows for the year.

Notes to the Financial Statements

Note 4.1b: Unspent Departmental Annual Appropriations (‘Recoverable GST exclusive’)

 

2019

$’000

2018

$’000

Departmental

   

Appropriation Act (No. 1) 2015–16 1

9

Appropriation Act (No. 1) 2016–17 2

7

7

Appropriation Act (No. 1) 2017–18

16,320

Appropriation Act (No. 1) 2018–19

15,707

Total departmental

15,714

16,336

1. In 2016, as announced in the 2015–16 Mid–year and Fiscal Economic Outlook, by agreement with the Department of Finance, the APSC relinquished control of surplus departmental appropriation funding of $9,000. This unused appropriation was permanently withheld by direction of a delegate for the Minister for Finance under section 51 of the PGPA Act during June 2016. This appropriation lapsed on 1 July 2018.

2. In 2017, by agreement with the Department of Finance, the APSC relinquished control of surplus departmental appropriation funding of $7,131. This unused appropriation was permanently withheld by direction of a delegate for the Minister for Finance under section 51 of the PGPA Act during June 2017. This appropriation lapsed on 1 July 2019.

Notes to the Financial Statements

Note 4.1c: Special Appropriations Applied ('Recoverable GST exclusive')

 

Appropriation applied

Authority

2019

$’000

2018

$’000

Administered

   

Remuneration Tribunal Act 1973 – section 7(13) 1

4,140

33,342

Remuneration and Allowances Act 1990 – section 8 2

Judicial and Statutory Officers (Remuneration and Allowances) Act 1984 – section 7(2) 3

Total special appropriations applied

4,140

33,342

1. The Attorney–General’s Department drew from the Remuneration Tribunal Act 1973 – section 7(13) for the purpose of making payments of Judicial Office Holders' remuneration and entitlements.

The Department of the House of Representatives and the Department of the Senate drew from the Remuneration Tribunal Act 1973 – section 7(13) for the purpose of making payments of Parliamentarians' remuneration and entitlements.

From 1 January 2018, the payment of Parliamentarians’ remuneration and entitlements by the Department of the House of Representatives and the Department of the Senate is funded by the Parliamentary Business Resources Act 2017, which is reported by the Department of Finance.

2. Due to amendments made in 2011 to the Remuneration Tribunal Act 1973, from 15 March 2012 payments are no longer made under this special appropriation.

3. No payment has been made under this special appropriation since it was transferred to the APSC in September 2010.

Note 4.2: Net cash appropriation arrangements

 

2019

$’000

2018

$’000

Total comprehensive income less depreciation and amortisation expenses previously funded through revenue appropriations

(1,048)

298

Plus: depreciation and amortisation expenses previously funded through revenue appropriations

(1,512)

(1,457)

Total comprehensive income/(loss) – as per the Statement of Comprehensive Income

(2,560)

(1,159)

Notes to the Financial Statements

NOTE 5: PEOPLE AND RELATIONSHIPS

This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

Note 5.1: Employee provisions


Note 5.1a: Employee provisions

   
 

2019

$’000

2018

$’000

Employee provisions

   

Leave

7,622

7,164

Total employee provisions

7,622

7,164

     

Accounting policy

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.

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 the APSC 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 that the leave is taken, including the APSC’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 using the Australian Government shorthand method for all employees as at 30 June 2019. The estimate of the present value of the liability takes into account attrition rates and pay rises through promotion and inflation.

Superannuation

APSC employees are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation funds held outside the Australian Government.

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.

The APSC 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. The APSC accounts for the contributions as if they were contributions to defined contribution plans.

Notes to the Financial Statements

Note 5.2: Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the APSC, directly or indirectly. The APSC has determined the key management personnel to be the Minister Assisting the Prime Minister for the Public Service and personnel within the APSC holding the following positions:

• Australian Public Service Commissioner

• Deputy Australian Public Service Commissioner

• Merit Protection Commissioner

• First Assistant Public Service Commissioner

Remuneration of key management personnel within the APSC is reported in the table below:

 

2019

2018

 

$’000

$’000

Short–term employee benefits

1,531

1,590

Post–employment benefits

205

169

Other long–term benefits

34

74

Termination benefits

Total key management personnel remuneration expenses 1

1,770

1,833

     

The total number of key management personnel that are included in the above table are seven (2018: six) due to changes in staff during the year. The KMP expense is lower in 2019 due to one position being unfilled for a portion of the year.

1. The above key management personnel remuneration excludes the remuneration and other benefits of the Minister Assisting the Prime Minister for the Public Service. The Minister's remuneration and other benefits are set by the Remuneration Tribunal and is paid through administered special appropriations of the Department of Finance.

Note 5.3: Related party disclosures

Related party relationships

The APSC is an Australian Government controlled entity. Related parties to the APSC are key management personnel including the Minister Assisting the Prime Minister for the Public Service 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.

Other than the remuneration disclosed in note 5.2, there were no significant transactions with key management personnel (2018: nil).

The APSC undertakes a number of functions on behalf of the Australian Government. In performing these functions, the APSC transacts with other Australian Government controlled entities for normal day–to–day business operations provided either under normal terms and conditions or on a cost recovery basis.

The following significant transactions with related parties occurred during the financial year:

About 99% of the APSC’s sale of goods and rendering of services revenue was earned from other Australian Government controlled entities (2018: 99%).

The APSC leases its head office accommodation from the Department of Finance
(2018: the APSC entered an office lease commitment with the Department of Finance of approximately $11.3 million over 9 years and 8 months, with lease payments commencing in July 2017).

Information and communications technology services were provided by the Department of Employment, Skills, Small and Family Business and the Department of Prime Minister and Cabinet (2018: the Department of Jobs and Small Business provided information and communications technology services).

Notes to the Financial Statements

NOTE 6: MANAGING UNCERTAINTIES­­

This section analyses how the APSC manages financial risks within its operating environment.

Note 6.1: Contingent assets and liabilities

Departmental

 

Restoration obligations

 

2019

$'000

2018

$'000

Contingent liabilities

   

Balance from previous period

561

New contingent liabilities recognised

561

Re–measurement

14

Total contingent liabilities

575

561

The above table contains $575,000 of quantifiable contingent liabilities in respect of obligations to restore office premises to their original condition at the conclusion of the lease (2018: $561,000). The amount represents an estimate of the APSC’s liability based on the estimated per square metre restoration cost for the office. In accordance with the terms of the lease agreement, the restoration obligation only arises if requested by the landlord.

The APSC had no quantifiable or unquantifiable contingent assets as at 30 June 2019 (2018: nil).

The APSC had no unquantifiable contingent liabilities as at 30 June 2019 (2018: nil).

Administered

The APSC had no quantifiable or unquantifiable administered contingent assets or liabilities as at 30 June 2019 (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.

Notes to the Financial Statements

Note 6.2: Financial instruments

Note 6.2a: Categories of financial instruments

 

Notes

2019

$’000

2018

$’000

Financial Assets under AASB 9

     

Financial assets at amortised cost

     

Cash and cash equivalents

 

933

571

Goods and services receivables (net)

3.1a

1,979

1,576

Total financial assets at amortised cost

 

2,912

2,147

       

Total financial assets

 

2,912

2,147

       

Financial Liabilities

     

Financial liabilities measured at amortised cost

     

Trade creditors and accruals

3.3a

3,769

3,101

Other payables

3.3c

71

73

Total financial liabilities measured at amortised cost

 

3,840

3,174

       

Total financial liabilities

 

3,840

3,174

       

Classification of financial assets on the date of initial application of AASB 9

Financial assets class

Note

AASB 139 original classification

AASB 9 new classification

AASB 139 carrying amount at 1 July 2018
$'000

AASB 9 carrying amount at 1 July 2018
$'000

Cash

 

Loans and receivables

Amortised Cost

571

571

Trade and other receivables

3.1a

Loans and receivables

Amortised Cost

1,576

1,576

Total financial assets

     

2,147

2,147

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

 

AASB 139 carrying amount at
1 July 2018

$'000

Reclassifi–cation

$'000

Remeasure–ment

$'000

AASB 9 carrying amount at
1 July 2018

Financial assets at amortised cost

       

Loans and receivables

       

Cash

571

571

Trade and other receivables

1,576

1,576

Total financial assets

2,147

   

2,147

Notes to the Financial Statements

Accounting Policy

Financial Assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, the APSC classified its financial assets as ‘financial assets measured at amortised cost’. This classification was based on the APSC’s business model for managing the financial assets and contractual cash flows at the time of initial recognition.

Financial assets are recognised when the APSC 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’ 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 on the principal outstanding amount.

Amortised cost is determined using the effective interest method. Income is recognised on an effective interest rate basis for financial assets that are recognised at 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

The accounting policy for financial liabilities is contained in note 3.3 Payables.

Notes to the Financial Statements

Note 6.3: Fair value measurement

Note 6.3a: Fair value measurement

 

Fair value

 

2019
$'000

2018

$'000

Non–financial assets

   

Leasehold improvements

5,119

5,758

Plant and equipment

2,155

1,526

Accounting Policy

All property, plant and equipment is measured at fair value, in accordance with the accounting policy.

The APSC’s assets are held for operational purposes and not held for the purposes of deriving a profit.

Fair value is estimated using replacement cost, which is depreciated based upon the expended and remaining useful life of each asset.