3. Financial Position

This section analyses the Department'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.

3.1 Financial Assets

3.1A: Cash and cash equivalents
 2017
$'000
2016
$'000
Cash on hand or on deposit 1,620 1,838
Other 230 300
Total cash and cash equivalents 1,850 2,138
3.1B: Trade and other receivables
 2017
$'000
2016
$'000
Goods and services receivables    
Goods and services 602 923
Total goods and services receivables 602 923
Appropriations receivable    
Existing programs 140,138 126,513
Total appropriations receivable 140,138 126,513
Other receivables    
GST receivable from the Australian Taxation Office 3,375 2,615
Other receivables 145 89
Total other receivables 3,520 2,704
Total trade and other receivables (gross) 144,260 130,140
Less impairment allowance (234) (96)
Total trade and other receivables (net) 144,026 130,044

Credit terms for goods and services were within 28 days (2016: 28 days).

3.1C: Reconciliation of the impairment allowance
Movements in relation to 2017
 Goods and
services
$'000
Other
receivables
$'000

Total
$'000
As at 1 July 2016 96 - 96
Amounts recovered and reversed (6)  - (6)
Increase recognised in net cost of services 84 60 144
Total as at 30 June 2017 174 60 234
Movements in relation to 2016
 Goods and
services
$'000
Other
receivables
$'000

Total
$'000
As at 1 July 2015 38  - 38
Amounts recovered and reversed (119)  - (119)
Increase recognised in net cost of services 177  - 177
Total as at 30 June 2016 96 - 96
3.1D: Accrued revenue
 2017
$'000
2016
$'000
Accrued revenue 1,084 1,314
Total accrued revenue 1,084 1,314

Accounting Policy

Loans and Receivables

Trade receivables, loans and other receivables that have fixed or determinable payments and 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

All financial assets are assessed for impairment at the end of each reporting period. Where recovery of a financial asset is assessed as unlikely, an impairment allowance is made. If there is objective evidence that an impairment loss has been incurred for loans and receivables, the amount of the loss is measured as the difference between the assets 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 impairment allowance. The loss is recognised in the Statement of Comprehensive Income.

3.2 Non-Financial Assets

3.2A: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles
Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2017
 Buildings
$'000
Artwork
$'000
Other
Property,
Plant &
Equipment
$'000
Computer
Software
Internally
Developed
$'000
Computer
Software
Purchased
$'000
Total
$'000
As at 1 July 2016            
Gross book value 20,773 160 12,385 31,029 3,670 68,017
Accumulated depreciation and impairment  - (8) (5,530) (20,556) (2,165) (28,259)
Total as at 1 July 2016 20,773 152 6,855 10,473 1,505 39,758
Additions            
Purchase 1,853  - 2,761  - 54 4,668
Internally developed  -  -  - 3,003  - 3,003
Revaluations recognised in other comprehensive income - 2 (1,203) - - (1,201)
Impairments recognised in net cost of services  -  -  - (146) (42) (188)
Depreciation and amortisation (2,633) (4) (2,728) (3,443) (445) (9,253)
Disposals            
Write-downs (74) - (67) - - (141)
Total as at 30 June 2017 19,919 150 5,618 9,887 1,072 36,646
Total as at 30 June 2017 represented by            
Gross book value 22,473 151 6,148 34,075 3,620 66,467
Accumulated depreciation, amortisation and impairment (2,554) (1) (530) (24,188) (2,548) (29,821)
Total as at 30 June 2017 19,919 150 5,618 9,887 1,072 36,646

Software assets with a carrying value of $0.188 million were impaired as at 30 June 2017 (2016: Nil). No impairment losses were recognised for other property, plant and equipment assets at 30 June 2017 (2016: Nil). A number of other property, plant and equipment assets are expected to be disposed in the 2017–18 financial year as part of a major replacement program. The disposals are not expected to have a material effect on the fair value of the asset class.

Revaluations of non-financial assets

All revaluations were conducted in accordance with the revaluation policy below. An independent valuer conducted a revaluation of the artworks and other property, plant and equipment asset classes as at 31 March 2017. 

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

At 30 June 2017, the Department had contractual commitments of $5.595 million for buildings (2016: Nil), $1.082 million for other property, plant and equipment (2016: Nil) and $1.510 million for intangible assets (2016: Nil). All contractual commitments relate to acquisitions in the 2017–18 financial year.

Accounting Policy

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 entity'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 costing less than $5,000, 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 ‘make good’ provisions in property leases taken up by the Department where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Department's leasehold improvements with a corresponding provision for the ‘make good’ recognised.

Revaluations

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

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation surplus 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 values over their estimated useful lives to the Department 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:

 20172016
Buildings on freehold land 15 to 60 years 15 to 60 years
Leasehold improvements Shorter of lease term or expected useful economic life Shorter of lease term or expected useful economic life
Plant and equipment 3 to 100 years 3 to 100 years
Departmental artworks 3 to 100 years 3 to 100 years
Administered artworks Indefinite Indefinite
Other Heritage and Cultural Indefinite Indefinite

Impairment

All assets were assessed for impairment at 30 June 2017. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment adjustment made if the asset's recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles

The Department's intangibles comprise internally developed software over $50,000 and purchased software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the entity's software are from 3 to 9 years (2016: 3 to 9 years). All software assets were assessed for indications of impairment as at 30 June 2017.

Accounting Judgements and Estimates

Buildings

Buildings represent the fair value of leasehold improvements in office leases and the related make good requirements. The fair value has been taken to be the depreciated replacement cost as determined by an independent qualified valuer as at 30 June 2016, adjusted for subsequent depreciation. The Department has assessed that the carrying value of these assets continue to approximate their fair value at 30 June 2017.

Other property, plant and equipment assets

The fair value of other property, plant and equipment assets has been taken to be the depreciated replacement cost as determined by an independent qualified valuer as at 31 March 2017. The valuer advised there were no material changes in the fair value of these assets at 30 June 2017.

3.2B: Other non-financial assets
 2017
$'000
2016
$'000
Prepayments 3,744 3,345
Lease incentive assets 251 366
Total other non-financial assets 3,995 3,711

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

3.3 Payables

3.3A: Suppliers
 2017
$'000
2016
$'000
Trade creditors 2,885 963
Accrued expenses 20,037 15,812
Operating lease rentals 670 587
Total suppliers 23,592 17,362

Settlement was usually made within 30 days.

 2017
$'000
2016
$'000
3.3B: Other payables
Unearned revenue 49 135
Lease incentives 1,226 724
Wages and salaries 828 364
Superannuation 146 80
Separations and redundancies 465 153
Other 347 317
Total other payables 3,061 1,773

3.4 Other Provisions

 Provision for restoration
$'000
Provision for surplus lease space
$'000
Provision for legal costs
$'000
Total
$'000
As at 1 July 2016 1,208 1,728 422 3,358
Amounts used (395) (1,055)  - (1,450)
Reversal and other movements 17 1 (123) (105)
Total as at 30 June 2017 830 674 299 1,803

The Department had eight agreements at 30 June 2017 (2016: ten) for the lease of office premises which have provisions requiring the Department to restore the premises to their original condition at the conclusion of the lease. The Department has made a provision to reflect the present value of these obligations.

The Department holds several leases for office accommodation that include components that are surplus to its requirements. The Department sub-leases this space where possible. Where the space cannot be sub-leased, or the sub-lease is a lesser value than the head lease, the Department has recognised a provision for the present value of the net future lease payments.

Accounting Judgements and Estimates

Surplus Lease Space

The measurement of the surplus lease space provision is based on discounted cash flows for the remaining term the space is expected to be surplus, less any sub-lease revenue.

Prev. Contents of financial statements notes Next