Overview

The Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with:

  1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) and
  2. Australian Accounting Standards and Interpretations—Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars.

New Australian Accounting Standards

There have been no new standards issued prior to the signing of the Statement by the Secretary and Chief Financial Officer, that were applicable to the current reporting period and had a material effect on the Department's financial statements.

Taxation

The Department 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:

  1. the amount of GST incurred is not recoverable from the Australian Taxation Office and
  2. 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.

Revenue is recognised when it is probable that the economic benefit comprising the consideration will flow to the Government and it can be reliably measured.

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the relevant asset.

Dividend revenue is recognised when the right to receive a dividend has been established.

Change in Accounting Policy

During 2017–18, the Department changed its accounting policy with respect to commitments to provide a loan at a below-market interest rate under Australian Accounting Standard AASB 139 Financial Instruments: Recognition and Measurement. The change in policy arose from a review of accounting arrangements associated with the transition to AASB 9 Financial Instruments and improved certainty and experience in the WestConnex concessional loan payment forecasts.

Under the Department's previous accounting policy, concessional loan expenses were recognised at the time each advance was paid.

Under the new policy, a provision and concessional loan expense are recognised at the time the Department enters into an agreement to provide a loan at a below-market interest rate, unless the cash flows and/or the prevailing market interest rate cannot be reliably estimated.  The provision is initially measured at fair value as the present value of cash flows associated with loan advances committed, but not paid, discounted at the market interest rate.  The provision is subsequently measured at amortised cost and reduced by the concessional component of each advance as it is paid.

The Department had the following commitments for undrawn concessional loan advances at 30 June in previous financial years:

2015
$000
2016
$000
2017
$000
States and Territories (ACT Government) 250,000 - -
Commercial entities (WestConnex Stage 2) - 2,000,000 1,382,787
Total commitments 250,000 2,000,000 1,382,787
Fair value of commitment to provide loan at below-market interest rate (liability) 4,448 312,181 213,280

The change in accounting policy has been applied retrospectively and affects the recognition of administered liabilities and concessional loan expenses in prior periods. The change does not affect the fair value of administered assets for loan advances reported in previous years.

The following table summarises the impact of the restatement of the comparative amounts reported for the 2015–16 and 2016–17 financial years:

Administered Schedule of Comprehensive Income

2016
Reported
$000
2016
Adjustment
$000
2016
Restated
$000
2017
Reported
$000
2017
Adjustment
$000
2017
Restated
$000
Expenses
Concessional loans 4,448 307,733 312,181 117,593 (98,901) 18,692
Total expenses 3,287,497 307,733 3,595,230 6,088,402 (98,901) 5,989,501
Net (cost of) services (2,828,099) (307,733) (3,135,832) (5,674,224) 98,901 (5,575,323)

Administered Schedule of Assets and Liabilities

2016
Reported
$000
2016
Adjustment
$000
2016
Restated
$000
2017
Reported
$000
2017
Adjustment
$000
2017
Restated
$000
LIABILITIES
Provisions
Employee provisions 3,863 - 3,863 3,477 - 3,477
Concessional loans - 312,181 312,181 - 213,280 213,280
Other provisions 3,092 - 3,092 3,065 - 3,065
Total provisions 6,955 312,181 319,136 6,542 213,280 219,822
Total liabilities 55,464 312,181 367,645 56,944 213,280 270,224
Net assets 6,213,367 (312,181) 5,901,186 7,395,093 (213,280) 7,181,813

Events After the Reporting Period

Administered

On 31 July 2018 the Department acquired around 12 hectares of land in the vicinity of the Western Sydney Airport site. The additional land will initially form part of the administered land asset class at fair value, subject to finalisation of valuation advice. The land may be incorporated into the Western Sydney Airport lease at a later date.

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