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Part 5: Financial statements

This part includes the independent auditor’s report and the Commission’s financial statements for the year ended 30 June 2011.

Australian Public Service Commission
Statement by the Chief Executive and Chief Finance Officer

In our opinion, the attached financial statements for the year ended 30 June 2011 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister’s Orders made under the Financial Management and Accountability Act 1997, as amended.

Chief Executive
September 2011

David Mylan
Chief Finance Officer
September 2011

Consultancy contracts let during 2010–11 of $10,000 or more (inclusive of GST)

The Commission engages consultancy services in circumstances where it requires particular expertise that is not available internally.
Number of new consultancies let 01 July 2010 to 30 June 2011
Consultant Name Description Contract Price Selection process (1) Justification (2) Start Date End Date Actual Expenditure
(1) Explanation of selection process terms drawn from the Commonwealth Procurement Guidelines December 2008):
Open Tender: A procurement procedure in which a request for tender is published inviting all businesses that satisfy the conditions for participation to submit tenders. Public tenders are listed on the Australian Government AusTender internet site.
Select Tender: A procurement procedure in which the procuring agency selects which potential suppliers are invited to submit tenders. Tenders are invited from a short list of competent suppliers.
Direct Sourcing: A form of restricted tendering, available only under certain defined circumstances, with a single potential supplier or suppliers being invited to bid because of their unique expertise and/or their special ability to supply the goods and
Panel: An arrangement under which a number of suppliers, usually selected through a single procurement process, may each supply property or services to an agency as specified in the panel arrangements.
(2) Justification for decision to use consultancy:
A. skills currently unavailable within agency
B. need for specialised or professional skills
C. need for independent research or assessment
Business Wide Review of APSC leadership, learning and development suite of programs 30,000 Direct sourcing C 16/08/2010 30/11/2010 25,002
Business Wide Report to Commission on Management programs 20,000 Direct sourcing C 4/11/2010 31/12/2010 6,944
Business Wide Program cost analysis 16,000 Direct sourcing C 23/02/2011 31/03/2011 17,394
PricewaterhouseCoopers Review of APSC Products and Services 124,950 Direct sourcing C 7/03/2011 7/06/2011 76,982
PSI Asia Pacific Pty Ltd Probity advice - Executive Search Panel RFT 11,625 Select tender off open approach panel C 11/03/2010 28/02/2011 5,100
PricewaterhouseCoopers Capability Reviews Program 126,385 Direct sourcing B 17/01/2011 30/06/2011 126,385
The Faulkner Family Trust Senior Review Team Chairperson 110,000 Direct sourcing B 10/05/2011 2/09/2011 0
WHON Pty Ltd Senior Review Team Chairperson 66,000 Direct sourcing B 10/05/2011 2/09/2011 0
Business Aspect Pty Ltd IT Consultancy Services 59,400 Select tender B 12/03/2011 11/04/2011 59,400
The Value Creation Group Pty Ltd Value Creation workshops 53,928 Direct sourcing B 8/02/2011 3/03/2011 53,671
Right Management Employee engagement, retention and attraction 20,000 Select tender off open approach panel C 10/06/2011 31/07/2011 0
Fellows Medlock & Associates Pty Ltd Advice for enterprise bargaining 55,000 Direct sourcing B 1/02/2011 30/06/2011 35,331
Gian Wild Web Content Accessibility Guidelines 2.0 conformance testing and training 138,600 Select tender B 12/04/2011 30/06/2011 33,336
Information Professionals Corporate Information Project 69,405 Select tender B 1/04/2011 30/06/2011 22,704
Noetic Solutions Pty Ltd Assist in developing an APSC workforce plan 45,000 Select tender off open approach panel B 16/05/2011 30/06/2011 35,000
Oakton Services Pty Ltd Forecast review & monitoring practice 18,150 Direct sourcing C 14/01/2011 28/02/2011 10,285
Oakton Services Pty Ltd P3M3 Capability Maturity Assessment and Improvement Plan 32,126 Select tender B 3/05/2011 30/06/2011 17,679
Sapere Research Group Limited Management Advisory Services 40,000 Direct sourcing C 11/02/2011 30/04/2011 37,040
SMS Consulting Group Ltd APS Reform Blueprint consultancy 47,309 Select tender off open approach panel B 21/07/2010 10/09/2010 47,309
Tarcus Pty Ltd Development of the Commission's ICT Strategic Plan 61,600 Select tender B 28/07/2010 30/09/2010 55,000
Tarcus Pty Ltd HR web tools review 38,115 Select tender B 1/04/2011 30/06/2011 38,115
The Nous Group Strategic planning consultancy 48,180 Select tender off open approach panel B 11/01/2011 30/04/2011 34,116
Orima Research Pty Ltd Statistical and research services for Citizen Survey 129,380 Select tender C 5/07/2010 15/12/2010 129,380
Noetic Solutions Pty Ltd Develop a draft description of the APS Human Capital Framework 80,000 Select tender off open approach panel B 21/03/2011 15/04/2011 80,000
Noetic Solutions Pty Ltd Development of the Human Capital Framework elements 73,500 Select tender off open approach panel B 30/05/2011 26/05/2011 75,168
Noetic Solutions Pty Ltd Development of the APS Workforce Planning Guide 66,500 Select tender off open approach panel B 16/05/2011 30/06/2011 46,250
Bennelong Resources Pty Ltd Advisory support to the Commonwealth Remuneration Tribunal 25,244 Direct sourcing B 14/09/2010 31/05/2011 0
Australian Institute of Management Support review on leadership development 12,100 Select tender off open approach panel B 15/02/2011 30/06/2011 11,000
Tempo Strategies Workshop facilitation 13,200 Select tender off open approach panel B 22/03/2011 30/04/2011 13,200
The University of New South Wales Support for the design and implementation of an APS wide leadership development strategy 300,000 Select tender off open approach panel C 10/03/2011 30/06/2011 98,554
KPMG Process Mapping for the Centre for Leadership and Learning 16,500 Select tender B 2/05/2011 27/05/2011 16,280
Erwood Accelerated Purchasing Probity advice and project management for the Centre for Leadership and Learning's procurement of learning interventions. 41,720 Select tender B 20/06/2011 30/09/2011 0
Hay Group Pty Ltd Methodology for evaluating SES roles. 96,646 Select tender B 17/03/2011 16/07/2011 66,660
Mercer (Australia) Pty Ltd SES review 424,167 Direct sourcing C 15/07/2010 22/12/2010 424,007
PriceWaterhouseCoopers SES review 69,680 Direct sourcing C 15/07/2010 24/01/2011 69,680
Workplace Research Associates Pty Ltd Consulting services for draft APS work level standards 82,500 Select tender B 20/04/2011 30/06/2011 78,990
Noesis Learning Pty Ltd To design and develop the Career journey program content 55,900 Select tender B 1/06/2011 31/08/2011 0
Fellows Medlock & Associates Pty Ltd Advice on implementation of bargaining arrangements 55,353 Direct sourcing C 15/09/2010 19/05/2011 55,353
Total contracts 38 Total 2,774,163 1,901,314

Australian Public Service Commission - Statement of comprehensive income for the period ended 30 June 2011

EXPENSES Notes 2011 $’000 2010
$’000
The above statement should be read in conjunction with the accompanying notes.
Employee benefits 3a 26,627 21,312
Supplier expenses 3b 22,571 17,120
Depreciation and amortisation 3c 1,378 1,376
Finance costs 3d 21 22
Write-down and impairment of assets 3e - 2
Losses from asset sales 3f 47 61
Total expenses - 50,644 39,893
LESS:
OWN-SOURCE INCOME
Own-source revenue
Sale of goods and rendering of services 4a 22,420 19,922
Total own-source revenue - 22,420 19,922
Gains
Resources received free of charge 4b 39 39
Reversals of previous asset write-downs and impairments 4c 1 -
Total gains - 40 39
Total own-source income - 22,460 19,961
Net cost of services - 28,184 19,932
Revenue from Government 4d 30,096 20,731
Surplus - 1,912 799
OTHER COMPREHENSIVE INCOME
Changes in asset revaluation reserves - 264 -
Total other comprehensive income - 264 -
Total comprehensive income - 2,176 799

Australian Public Service Commission - Balance sheet

ASSETS Notes 2011 $’000 2010 $’000
The above statement should be read in conjunction with the accompanying notes.
Financial assets
Cash and cash equivalents 5a 1,291 469
Trade and other receivables 5b 24,282 18,017
Total financial assets - 25,573 18,486
Non-financial assets
Land and buildings 6a,d 3,542 3,244
Property, plant and equipment 6b,d 1,821 1,812
Intangibles 6c,d 451 691
Inventories 6e 88 189
Prepayments paid 6f 506 449
Total non-financial assets - 6,408 6,385
Total assets - 31,981 24,871
LIABILITIES
Payables
Suppliers 7a 5,879 4,042
Prepayments received 7b 7,153 5,844
Other payables 7c 729 633
Total payables - 13,761 10,519
Interest bearing liabilities
Lease incentives 8a 1,431 1,597
Total interest bearing liabilities - 1,431 1,597
Provisions
Employee provisions 9a 6,139 4,850
Provision for restoration obligations 9b 458 332
Total provisions - 6,597 5,182
Total liabilities - 21,789 17,298
NET ASSETS - 10,192 7,573
EQUITY
Contributed equity - (857) (1,300)
Asset revaluation reserve - 1,566 1,302
Retained surplus / (accumulated deficit) - 9,483 7,571
Total equity - 10,192 7,573

Australian Public Service Commission - Statements of changes in equity for the period ended 30 June 2011

* See notes 6a and 9b for details of revaluation adjustments.
Item Retained earnings Asset revaluation reserve Contributed equity / capital Total equity
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
 
Opening balance 7,571 6,772 1,302 1,302 (1,300) (1,300) 7,573 6,774
Comprehensive income  
Other comprehensive income* - - 264 - - - 264 -
Surplus / (deficit) for the period 1,912 799 - - - - 1,912 799
Total comprehensive income 1,912 799 264 - - - 2,176 799
Transactions with owners  
Returns of Capital  
Returns of contributed equity - - - - (3,560) - (3,560) -
Contributions by owners:  
Equity injection - appropriations - - - - 3,333 - 3,333 -
Departmental capital budget         559 - 559 -
Restructuring - - - - 111 - 111 -
Sub-total transactions with owners - - - - 443 - 443 -
Closing balance as at 30 June 9,483 7,571 1,566 1,302 (857) (1,300) 10,192 7,573

Australian Public Service Commission - Cash flow statement for the year ended 30 June 2011

The above statement should be read in conjunction with the accompanying notes.
Operating Activities Notes 2011
$’000
2010
$’000
Cash received
Appropriations   30,096 20,731
Goods and services   26,236 23,921
Cash received from the OPA   7,523 14,494
Other cash received   966 496
Total cash received   64,821 59,642
Cash used
Employees   27,683 22,732
Suppliers   22,876 18,778
Net GST paid   254 128
Cash transferred to the OPA   11,896 17,294
Other cash used   547 511
Total cash used   63,256 59,443
Net cash from / (used by) operating activities 11 1,565 199
Investing Activities
Cash received
Proceeds from sales of property, plant and equipment   - 12
Total cash received   - 12
Cash used
Purchase of property, plant and equipment   963 71
Purchase of intangibles   112 114
Total cash used   1,075 185
Net cash from / (used by) investing activities   (1,075) (173)
FINANCING Activities
Cash received
Contributed equity   559 -
Total cash received   559 -
Cash used
Return of capital   227 -
Total cash used   227 -
Net cash from / (used by) financing activities   332 -
Net increase / (decrease) in cash held   822 26
Cash and cash equivalents at the beginning of the reporting period   469 443
Cash and cash equivalents at the end of the reporting period 5a 1,291 469

Australian Public Service Commission - Schedule of commitments as at 30 June 2011

NB: Commitments are GST inclusive where relevant.
1Operating leases included are effectively non-cancellable and include leases for office accommodation and motor vehicles.
1Other commitments comprise amounts committed for fee for service, policy and administrative activities.
The above schedule should be read in conjunction with the accompanying notes.
BY TYPE 2011
$’000
2010
$’000
Commitments receivable  
Sublease rental income (270) -
GST recoverable on commitments (3,299) (3,770)
Total commitments receivable (3,569) (3,770)
Commitments payable  
Capital commitments  
Property, plant and equipment - 98
Intangibles 171 -
Total capital commitments 171 98
Other commitments  
Operating leases1 28,847 28,874
Other commitments1 7,520 12,499
Total other commitments 36,367 41,373
Net commitments by type 32,969 37,701
Nature of lease General description of leasing arrangement
Leases for office accommodation
  • Lease payments are subject to rent reviews in accordance with the lease agreement.
  • The initial periods of office accommodation leases are still current.
Agreements for the provision of motor vehicles to senior executive officers
  • No contingent rentals exist.
  • There are no purchase options available to the APSC.
NB: Commitments are GST inclusive where relevant.
The above schedule should be read in conjunction with the accompanying notes.
By maturity 2011
$’000
2010
$’000
Commitments receivable  
Operating lease income  
One year or less (135) -
From one to five years (135) -
Over five years - -
Total operating lease income (270) -
GST recoverable on commitments  
One year or less (682) (846)
From one to five years (1,306) (1,371)
Over five years (1,311) (1,553)
Total GST recoverable on commitments (3,299) (3,770)
Commitments payable
Capital commitments
One year or less 171 98
From one to five years - -
Over five years - -
Total capital commitments 171 98
Operating lease commitments
One year or less 2,941 2,309
From one to five years 11,697 9,722
Over five years 14,209 16,843
Total operating lease commitments 28,847 28,874
Other commitments
One year or less 4,520 6,901
From one to five years 2,793 5,355
Over five years 207 243
Total other commitments 7,520 12,499
Net commitments by maturity 32,969 37,701

Australian Public Service Commission - Schedule of contingencies as at 30 June 2011

The above schedule should be read in conjunction with the accompanying notes.
  2011
$’000
2010
$’000
Contingent assets - -
Contingent liabilities - -
Net contingent assets / (liabilities) - -

Australian Public Service Commission - Schedule of asset additions for the year ended 30 June 2011

The following non-financial non-current assets were added in 2010-11:
  Buildings Other property, plant & equipment Intangibles Total
$’000 $’000 $’000 $’000
Additions funded in the current year - -    
By purchase – appropriation ordinary annual services  
Departmental capital budget 439 29 - 468
Ordinary operating costs - 426 104 530
By purchase – appropriation other services     
Equity injections - - 6 6
Other - - - -
From acquisitions of entities or operations(including restructuring) 34 19 - 53
Total funded additions in the current year 473 474 110 1,057
Additions recognised in current year to be funded in future years  
Make-good 186 - - 186
Other - - - -
Total future years/unfunded additions 186 - - 186
Total additions 659 474 110 1,243
The following non-financial non-current assets were added in 2009-10:
  Buildings Other property, plant & equipment Intangibles Total
$’000 $’000 $’000 $’000
Additions funded in the current year  
By purchase – appropriation ordinary annual services  
Ordinary operating costs 41 45 81 167
By purchase – appropriation other services     
Equity injections - - 24 24
Other - - - -
From acquisitions of entities or operations(including restructuring) - - - -
Total funded additions in the current year 41 45 105 191
Additions recognised in current year to be funded in future years  
Make-good - - - -
Other - - - -
Total future years/unfunded additions - - - -
Total additions 41 45 105 191

Australian Public Service Commission - Schedule of administered items*

* The APSC conducts the administered activity “Parliamentarians' and Judicial Office Holders' remuneration and entitlements” on behalf of Government.

Expenses administered on behalf of government for the year ended 30 June 2011

The above schedules should be read in conjunction with the accompanying notes.
  Notes 2011
$’000
2010
$’000
Employee benefits 16a 35,677 -
Total expenses   35,677 -

Assets and liabilities administered on behalf of government as at 30 June 2011

There are no material assets or liabilities administered on behalf of government.

Administered cash flows for the year ended 30 June 2011
The above schedules should be read in conjunction with the accompanying notes.
Operating Activities
Cash used
Employees 35,677 -
Total cash used 35,677 -
Net cash from / (used by) operating activities (35,677) -
Net increase / (decrease) in cash held (35,677) -
Cash and cash equivalents at the beginning of the reporting period - -
Cash from Official Public Account for appropriations 35,677 -
Cash and cash equivalents at the end of the reporting period - -
The above schedules should be read in conjunction with the accompanying notes.
Operating Activities
Cash used
Employees 35,677 -
Total cash used 35,677 -
Net cash from / (used by) operating activities (35,677) -
Net increase / (decrease) in cash held (35,677) -
Cash and cash equivalents at the beginning of the reporting period - -
Cash from Official Public Account for appropriations 35,677 -
Cash and cash equivalents at the end of the reporting period - -

Administered commitments as at 30 June 2011

There are no administered commitments.

Administered contingencies as at 30 June 2011

There are no administered contingencies.

Administered asset additions for the year ended 30 June 2011

There are no administered asset additions.

Australian Public Service Commission - Notes to and forming part of the financial statements for the year ended 30 June 2011

Note Description
1 Summary of significant accounting policies
2 Events occurring after reporting date
3 Expenses
4 Income
5 Financial assets
6 Non-financial assets
7 Payables
8 Interest bearing liabilities
9 Provisions
10 Restructuring
11 Cash flow reconciliation
12 Contingent liabilities and assets
13 Senior executive remuneration
14 Remuneration of Auditors
15 Financial instruments
16 Expenses administered on behalf of Government
17 Administered reconciliation table
18 Administered contingent liabilities and assets
19 Administered financial instruments
20 Appropriations
21 Special accounts
22 Compensation and debt relief
23 Reporting of outcomes
24 Comprehensive income / (loss) attributable to the entity

Note 1. Summary of significant accounting policies

1.1 Objective of the APSC

The APSC’s mission is to lead and shape a unified, high-performing APS.

The APSC is structured to meet one outcome, increased awareness and adoption of best practice public administration by the public service through leadership, promotion, advice and professional development, drawing on research and evaluation.

The continued existence of the APSC in its present form and with its present programs is dependent on Government policy and on continuing funding by Parliament for the APSC’s administration and programs.

APSC activities contributing toward this outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the APSC in its own right. Administered activities involve the management or oversight by the APSC, on behalf of the Government, of items controlled or incurred by the Government.

The APSC conducts the administered activity “Parliamentarians' and Judicial Office Holders' remuneration and entitlements” on behalf of Government.

1.2 Basis of preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 49 of the Financial Management and Accountability Act 1997.

The Financial Statements have been prepared in accordance with:

  • Finance Minister’s Orders (or FMO) for reporting periods ending on or after 1 July 2010 and
  • Australian Accounting Standards and Interpretations 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.

Unless an alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are recognised in the balance sheet when and only when it is probable that future economic benefits will flow to the APSC or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executor contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the schedule of contingencies.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the statement of comprehensive income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

Administered revenues, expenses, assets and liabilities and cash flows reported in the Schedule of Administered items and related notes are accounted for on the same basis and using the same policies as for departmental items, except where otherwise stated at note 1.24.

1.3 Significant 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 accounting period.

1.4 Changes in accounting standards

Adoption of new Australian Accounting Standard requirements

No accounting standard has been adopted earlier than the application date as stated in the standard.

New and revised standards, interpretations and amending standards that were issued prior to the signing of the statement by the chief executive and chief financial officer and are applicable to the current reporting period did not have a material financial impact, and are not expected to have a material future financial impact on the APSC.

Future Australian Accounting Standard requirements

New and revised standards, interpretations and amending standards that were issued prior to the signing of the statement by the chief executive and chief financial officer and are applicable to the future reporting period are not expected to have a material future financial impact on the APSC.

Revenue

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 revenue and transaction costs incurred can be reliably measured; and
  • It is probable that the economic benefits associated with the transaction will flow to the APSC.

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:

  • the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  • the probable economic benefits with the transaction will flow to the APSC.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

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 end of reporting period. Allowances are made when the collectability of the debt is no longer probable.

Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: recognition and measurement.

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 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.

1.6 Gains

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.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

Sale of assets

Gains from the disposal of assets are recognised when control of the asset has passed to the buyer.

1.7 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.

Restructuring of Administrative Arrangements

Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Other distributions to owners

The FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend.

In 2009-10, by agreement with the Department of Finance and Deregulation, the APSC relinquished control of surplus departmental appropriation funding of $250,000. On 30 June 2010, the Finance Minister issued a determination to reduce departmental appropriations by $250,000.

In 2010-11, by agreement with the Department of Finance and Deregulation, the APSC relinquished control of surplus departmental appropriation funding of $227,000. On 7 June 2011, the Finance Minister issued a determination to reduce departmental appropriations by $227,000.

In 2010-11, as announced in the 2010-11 Mid Year and Fiscal Economic Outlook, by agreement with the Department of Finance and Deregulation, the APSC relinquished control of surplus departmental appropriation funding of $11,500,000. On 7 June 2011, the Finance Minister issued a determination to reduce departmental appropriations by $11,500,000. The amount of the reduction under Appropriation Act (No. 1) of 2010-11 was $8,167,000 and under Appropriation Act (No. 2) of 2010-11 was $3,333,000.

Employee benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within 12 months of balance date 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 minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

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 is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2011. In determining the present value of the liability, the APSC has used the Australian Government shorthand method.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. The APSC 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

Staff of the APSC 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 by the Department of Finance and Deregulation as an administered item.

The APSC 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 of the superannuation entitlements of the APSC’s employees. The APSC accounts for the contributions as if they were contributions to defined contribution plans.

The superannuation payable (note 7c) recognised as at 30 June represents outstanding contributions for the final fortnight of the financial year. The provision for superannuation (note 9a) recognised as at 30 June represents the estimated superannuation payable on the provision for annual leave and long service leave.

1.9 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

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

Lease incentives taking the form of “free” leasehold improvements, contributions and rent holidays are recognised as liabilities. These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability.

1.10 Borrowing costs

All borrowing costs are expensed as incurred.

1.11 Cash

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

  • cash on hand
  • demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
  • cash held by outsiders
  • cash in special accounts

Financial assets

The APSC classifies its financial assets in the following categories:

  • financial assets at fair value through profit or loss
  • held-to-maturity investments
  • available-for-sale financial assets; and
  • loans and receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets are recognised and derecognised upon trade date.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts over the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss where the financial assets:

  • have been acquired principally for the purpose of selling in the near future
  • are derivatives that are not designated and effective as a hedging instrument; or
  • are a part of an identified portfolio of financial instruments that the APSC manages together and has a recent actual pattern of short-term profit-taking.

Assets in this category are classified as current assets.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the reserves (equity) with the exception of impairment losses. Interest is calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognised directly in profit or loss. Where the asset is disposed of or is determined to be impaired, part (or all) of the cumulative gain or loss previously recognised in the reserve is included in profit for the period.

Where a reliable fair value cannot be established for unlisted investments in equity instruments, these instruments are valued at cost. The APSC has no such instruments.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the APSC has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less impairment, with revenue recognised on an effective yield basis.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period.

  • Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the statement of comprehensive income.
  • Available-for-sale financial assets - if there is objective evidence that an impairment loss on an available-for-sale financial asset has been incurred, the amount of the difference between its cost, less principal repayments and amortisation, and its current fair value, less any impairment loss previously recognised in expenses, is transferred from equity to the statement of comprehensive income.
  • Available-for-sale financial assets (held at cost) - If there is objective evidence that an impairment loss has been incurred the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets.

1.13 Investments in Associates

The APSC’s investment in its associates is accounted for using the equity method.

Under the equity method, investments in the associates are carried in the APSC's balance sheet at cost as adjusted for post-acquisition changes in the APSC's share of net assets of the associates. Goodwill relating to an associate is included in the carrying amount of the investment. After the application of the equity method, the APSC determines whether it is necessary to recognise any impairment loss with respect to the net investment in associates.

The APSC has no investments in Associates.

1.14 Jointly Controlled Entities

Interests in jointly controlled entities in which the APSC is a venturer (and so has joint control) are accounted for using the equity method. The APSC has no joint controlled entities.

1.15 Financial Liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or as other financial liabilities.

Financial liabilities are recognised and derecognised upon trade date.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.

Other financial liabilities

Other 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 yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

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).

1.16 Contingent liabilities and contingent assets

Contingent liabilities and contingent assets are not recognised in the balance sheet but are reported in the relevant schedules and 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.

1.17 Financial Guarantee Contracts

Financial guarantee contracts are accounted for in accordance with AASB 139 Financial Instruments: Recognition and Measurement. They are not treated as a contingent liability, as they are regarded as financial instruments outside the scope of AASB 137 Provisions, Contingent Liabilities and Contingent Assets.

1.18 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 agency’s accounts immediately prior to the restructuring.

1.19 Property, plant and equipment

Asset recognition threshold

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

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 obligations 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 obligations recognised.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset class Fair value measured at:
Leasehold improvements Depreciated replacement cost
Property, plant and equipment Market selling price

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

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

Depreciation

Depreciable property, plant and equipment assets are written off to their estimated residual value 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 and amortisation rates applying to each class of depreciable asset are based on the following useful lives:

Asset class 2011 2010
Leasehold improvements Lease term Lease term
Plant and equipment 1 to 7years 1 to 7 years

Impairment

All assets were assessed for impairment at 30 June 2011. 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 to sell 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 APSC 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.

1.20 Investment Properties

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which is based on active market prices, adjusted if necessary, for any difference in the nature, location or condition of the specific asset at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

Where an investment property is acquired at no cost or for nominal cost, its cost is deemed to be its fair value as at the date of acquisition.

Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn form use and no future economic benefit is expected from its disposal. Any gain or losses on disposal of an investment property are recognised in profit or loss in the year of disposal.

1.21 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 software and $10,000 for 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 (2009-10: 2 to 10 years).

All intangible assets were assessed for impairment as at 30 June 2011.

1.22 Inventories

Inventories held for sale are valued at the lower of cost and net realisable value.

Inventories held for distribution are valued at cost, adjusted for any loss in service potential.

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:

  • raw materials and stores – purchase cost on a first-in-first-out basis and
  • finished goods and work-in-progress – cost of direct materials and labour plus attributable costs that are capable of being allocated on a reasonable basis.

Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost at the date of acquisition.

1.23 Taxation / Competitive Neutrality

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.

The APSC is not subject to competitive neutrality arrangements.

1.24 Reporting of administered activities

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

Except where otherwise stated below, 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.

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 and Deregulation. 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 statement of cash flows in the schedule of administered items and in the administered reconciliation table in Note 17.

Revenue

All administered revenues are revenues relating to ordinary activities performed by the APSC on behalf of the Australian Government.

Loans and Receivables

Where loans and receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment, derecognition and amortisation are recognised through profit or loss.

Administered Investments

Administered investments in subsidiaries, joint ventures and associates are not consolidated because their consolidation is relevant only at the Whole of Government level.

Administered investments other than those held for sale are classified as available-for-sale and are measured at their fair value as at 30 June 2011. Fair value has been taken to be the Australian Government's proportional interest in the net assets of the entities as at end of reporting period.

Financial Guarantee Contracts

Financial guarantee contracts are accounted for in accordance with AASB 139 Financial Instruments: Recognition and Measurement. They are not treated as a contingent liability, as they are regarded as financial instruments outside the scope of AASB 137 Provisions, Contingent Liabilities and Contingent Assets.

Guarantees to Subsidiaries, Joint Ventures and Associates

The amounts guaranteed by the Commonwealth have been disclosed in the schedule of administered items and Note 16. At the time of completion of the financial statements, there was no reason to believe that the guarantees would be called upon, and recognition of a liability was therefore not required. The guarantees are in relation to lease obligations and are measured at the present value of future lease payments.

Other Guarantees

As for guarantees to controlled entities.

Indemnities

The maximum amounts payable under the indemnities given is disclosed in the schedule of administered items - contingencies. At the time of completion of the financial statements, there was no reason to believe that the indemnities would be called upon, and no recognition of any liability was therefore required.

Grants and Subsidies

The APSC does not administer any grant or subsidy schemes on behalf of the Government.

Grant and subsidy liabilities are recognised to the extent that:

(i) the services required to be performed by the grantee have been performed or
(ii) the grant eligibility criteria have been satisfied, but payments due have not been made.

A commitment is recorded when the Government enters into an agreement to make these grants but services have not been performed or criteria satisfied.

Payments to CAC Act Bodies

Payments to CAC Act bodies from amounts appropriated for that purpose are classified as either administered expenses, equity injections or loans of the relevant portfolio department. The appropriation to the APSC is disclosed in Table A in of the appropriations note.

Note 2. Events occurring after reporting date

No matter or occurrence has come to the APSC’s attention which would materially affect the accounts or disclosures therein or which are likely to materially affect the future results or operation of the APSC.

Note 3. Expenses

1These comprise minimum lease payments only.
  2011
$’000
2010
$’000
3a Employee benefits
Wages and salaries 20,434 15,769
Superannuation :
Defined benefit plans 1,258 727
Defined contribution plans 2,337 2,181
Leave and other entitlements 2,264 1,834
Separation and redundancies 326 801
Other employee expenses 8 -
Total employee benefits 26,627 21,312
3b Suppliers
Goods and Services
Consultants 2,491 747
Contractors 8,994 6,742
Stationery 172 149
Travel 2,108 1,644
Venue hire and catering 1,378 1,477
Publications and printing 403 436
Advertising and communications 104 362
Training 521 399
Information and communications technology 2,409 1,877
Facilities expense 590 287
Other supplier expense 459 359
Total goods and services 19,629 14,479
Goods and services are made up of:  
Provision of goods - related entities 19 4
Provision of goods - external parties 831 667
Rendering of services - related entities 2,501 2,207
Rendering of services - external parties 16,278 11,601
Total goods and services 19,629 14,479
Other supplier expenses
Operating lease rentals - external parties 1 2,809 2,599
Worker compensation expenses 133 42
Total other supplier expenses 2,942 2,641
 
Total supplier expenses 22,571 17,120
* For full disclosure on the impairment of financial assets see note 15b.
  2011
$’000
2010
$’000
3c Depreciation and amortisation  
Depreciation:  
Buildings 602 568
Property, plant and equipment 432 433
Total depreciation 1,034 1,001
 
Amortisation:  
Intangibles 344 375
Total amortisation 344 375
 
Total depreciation and amortisation 1,378 1,376
 
3d Finance costs  
Unwinding of discount on provision for restoration obligations 21 22
Total finance costs 21 22
 
3e Write-down and impairment of assets  
Asset write-downs and impairment from:  
Impairment on goods and services receivable* - 2
Property, plant and equipment – write-off on disposal - -
Total write-down and impairment of assets - 2
3f Sale of assets  
Buildings:  
Proceeds from sale - -
Carrying value of assets sold 8 13
Net loss from sale of buildings 8 13
 
Property, plant and equipment:  
Proceeds from sale - 12
Carrying value of assets sold 33 60
Net loss from sale of property, plant and equipment 33 48
 
Intangibles:  
Proceeds from sale - -
Carrying value of assets sold 6 -
Net loss from sale of buildings 6 -
 
Net loss from sale of assets 47 61

Note 4. Income

*No payments have been received under the paid parental scheme (2010: nil).
  2011
$’000
2010
$’000
Own-source revenue  
4a Sale of goods and rendering of services  
Provision of goods - related entities 16 22
Provision of goods - external parties 4 3
Rendering of services - related entities 21,228 18,677
Rendering of services - external parties 1,172 1,220
Total sale of goods and rendering of services 22,420 19,922
 
Gains  
4b Resources received free of charge  
Resources received free of charge 39 39
 
4c Reversals of previous asset write-downs and impairments  
Reversal of impairment losses 1 -
 
Revenue from Government*  
4d Revenue from Government  
Appropriations:  
Departmental appropriation 30,096 20,731
Total revenue from Government 30,096 20,731

Note 5. Financial assets

  2011
$’000
2010
$’000
5a Cash and cash equivalents  
Cash at bank 1,287 466
Cash on hand 4 3
Total cash and cash equivalents 1,291 469
 
5b Trade and other receivables  
Goods and services:  
Goods and services – related entities 3,423 3,243
Goods and services – external parties 174 161
Total goods and services receivable 3,597 3,404
 
Appropriations receivable:  
For existing programs 20,469 14,600
Total appropriations receivable 20,469 14,600
 
Other receivables:  
GST receivable from the Australian Taxation Office 199 -
Incentive receivable 25 25
Total other receivables 224 25
 
Total trade and other receivables (gross) 24,290 18,029
Less: impairment allowance account - goods and services (8) (12)
Total trade and other receivables (net) 24,282 18,017
 
All receivables are expected to be recovered in no more than 12 months.  
 
Receivables are aged as follows:  
Not overdue 23,617 17,077
Overdue by:  
0 to 30 days 423 394
31 to 60 days 84 456
61 to 90 days 52 33
More than 90 days 114 69
  673 952
Total goods and services receivables (gross) 24,290 18,029
  2011
$’000
2010
$’000
5b Trade and other receivables (continued)  
 
The impairment allowance account is aged as follows:  
Overdue by:  
more than 90 days (8) (12)
Total impairment allowance account (8) (12)
 
Reconciliation of impairment allowance account  
Opening balance (12) (10)
Amounts written-off 5 2
Amounts recovered and reversed 7 6
(Increase) / decrease recognised in net surplus (8) (10)
Closing balance (8) (12)

Note 6. Non-financial assets

Leasehold improvements were subject to revaluation. All revaluations were conducted in accordance with the revaluation policy stated at Note 1.
On 30 June 2011 an independent valuer conducted a revaluation of leasehold improvements. A revaluation increment of $249,000 (2010: nil) for leasehold improvements was credited to the asset revaluation reserve by asset class and included in the equity section of the balance sheet.
No indicators of impairment were found for land and buildings.
No land and buildings is expected to be sold or disposed of within the next 12 months.
Property, plant and equipment was last revalued by an independent valuer on 30 June 2009. All property, plant and equipment acquired since 1 July 2009 are carried at cost, which is materially reflective of their fair value.
No indicators of impairment were found for property, plant and equipment.
No property, plant or equipment is expected to be sold or disposed of within the next 12 months.
  2011
$’000
2010
$’000
6a Land and buildings  
Leasehold improvements:  
Fair value 3,553 3,722
Accumulated depreciation (11) (478)
Total leasehold improvements 3,542 3,244
Total Land and buildings 3,542 3,244
6b Property, plant and equipment  
Other property, plant and equipment:  
Fair value 2,588 2,224
Accumulated depreciation (767) (412)
Total other property, plant and equipment 1,821 3,244
Total property, plant and equipment 1,821 1,812
No indicators of impairment were found for intangible assets.
No intangibles are expected to be sold or disposed of within the next 12 months.
  2011
$’000
2010
$’000
6c Intangibles
Computer software:  
Internally developed - in use 1,170 1,178
Internally developed - in progress - -
Purchased 130 41
Accumulated amortisation (892) (670)
Total computer software 408 549
 
Intellectual property:  
Internally developed - in use 1,005 1,048
Accumulated amortisation (962) (906)
Total intellectual property 43 142
Total intangibles 451 691
6d Reconciliation of the opening and closing balances of property, plant and equipment and intangibles (2010-11)
* Disaggregated additions information are disclosed in the Schedule of Asset Additions.
Item Buildings leasehold improvements Other property, plant & equipment Computer software purchased Computer software internally developed Intellectual property Total intangibles Total
  $’000 $’000 $’000 $’000 $’000 $’000 $’000
As at 1 July 2010  
Gross book value 3,722 2,224 40 1,179 1,048 2,267 8,213
Accumulated depreciation / amortisation and impairment (478) (412) (19) (651) (906) (1,576) (2,466)
Net book value 1 July 2010 3,244 1,812 21 528 142 691 5,747
Additions* 659 474 96 14 - 110 1,243
Revaluations and impairments through equity 249 - - - - - 249
Depreciation / amortisation expense (602) (432) (22) (223) (99) (344) (1,378)
Disposals  
Other disposals (8) (33) (6) - - (6) (47)
Net book value 30 June 2011 3,542 1,821 89 319 43 451 5,814
Net book value as at 30 June 2011 represented by:  
Gross book value 3,553 2,588 130 1,170 1,005 2,305 8,446
Accumulated depreciation / amortisation and impairment (11) (767) (41) (851) (962) (1,854) (2,632)
Net book value 30 June 2011 3,542 1,821 89 319 43 451 5,814
Last reviewed: 
8 June 2018