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
2018
$'000
2017
$'000
Cash on hand or on deposit 2,827 1,620
Other 183 230
Total cash and cash equivalents 3,010 1,850
3.1B: Trade and other receivables
2018
$'000
2017
$'000
Goods and services receivables
Goods and services 3,593 602
Total goods and services receivables 3,593 602
Appropriations receivable
Existing programs 133,954 140,138
Total appropriations receivable 133,954 140,138
Other receivables
GST receivable from the Australian Taxation Office 2,761 3,375
Other receivables 101 145
Total other receivables 2,862 3,520
Total trade and other receivables (gross) 140,409 144,260
Less impairment allowance (85) (234)
Total trade and other receivables (net) 140,324 144,026

Credit terms for goods and services were within 30 days (2017: 30 days).

3.1C: Reconciliation of the impairment allowance

Movements in relation to 2018

Goods and
services
$'000
Other
receivables
$'000
Total
$'000
As at 1 July 2017 174 60 234
Amounts written off (75) (60) (135)
Increase recognised in net cost of services (14)  - (14)
Total as at 30 June 2018 85 - 85
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

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 2018
Buildings
$'000
Artwork
$'000
Other
Property,
Plant &
Equipment
$'000
Computer
Software
Internally
Developed
$'000
Computer
Software
Purchased
$'000
Total
$'000
As at 1 July 2017
Gross book value 22,473 151 6,148 34,075 3,620 66,467
Accumulated depreciation and impairment (2,554) (1) (530) (24,188) (2,548) (29,821)
Total as at 1 July 2017 19,919 150 5,618 9,887 1,072 36,646
Additions
Purchase 7,369  - 4,672  - 84 12,125
Acquisitions at nominal value 323  - 115  -  - 438
Internally developed  -  -  - 3,694  - 3,694
Impairments recognised in other comprehensive income (209) - - - - (209)
Impairments recognised in net cost of services  -  -  - (340) (15) (355)
Depreciation and amortisation (2,906) (4) (2,184) (2,568) (433) (8,095)
Other movements
Reclassifications - - (9) (80) 89 -
Disposals
From disposals of entities or operations (including restructuring) (3,251) - (351) (2,425) (7) (6,034)
Write-downs (3,841) - (151) (6) - (3,998)
Assets sold - - (17) - - (17)
Total as at 30 June 2018 17,404 146 7,693 8,162 790 34,195
Total as at 30 June 2018 represented by
Gross book value 21,224 151 10,129 31,095 3,734 66,333
Accumulated depreciation, amortisation and impairment (3,820) (5) (2,436) (22,933) (2,944) (32,138)
Total as at 30 June 2018 17,404 146 7,693 8,162 790 34,195

Impairment losses of $0.209 million were recognised for buildings (2017: Nil) and $0.361 million for software assets (2017: $0.188 million).

No material disposals of assets are expected to occur in the 2018–19 financial year.

The Buildings, Artwork and Other Property, Plant & Equipment assets classes are measured at fair value in accordance with AASB 13 Fair Value Measurement.

Revaluations of non-financial assets

No revaluations were conducted during the 2017–18 financial year.

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

At 30 June 2018, the Department had contractual commitments of $1.385 million for buildings (2017: $5.595 million), $0.442 million for other property, plant and equipment (2017: $1.082 million) and $2.667 million for intangible assets (2017: $1.510 million). Contractual commitments relate to acquisitions in the 2018–19 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 ‘makegood’ 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 ‘makegood’ 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 down 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:

20182017
Buildings on freehold land 1 to 60 years 1 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 1 to 100years 1 to 100 years
Departmental artworks 1 to 100 years 1 to 100 years
Administered artworks Indefinite Indefinite
Other heritage and cultural Indefinite Indefinite

Impairment

All assets were assessed for impairment at 30 June 2018 for events that occurred since the last valuation. 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 Department were deprived of the asset, its value in use is taken to be its depreciated current 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 Department's software are from 3 to 9 years (2017: 3 to 9 years). All software assets were assessed for indications of impairment as at 30 June 2018.

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 current cost as determined by an independent qualified valuer as at 30 June 2016, adjusted for subsequent depreciation, acquisitions and disposals. 

Other property, plant and equipment assets

The fair value of other property, plant and equipment assets (including artwork) has been taken to be the depreciated current cost as determined by an independent qualified valuer as at 31 March 2017, adjusted for subsequent depreciation, acquisitions and disposals. 

Fair value assessment

The Department conducted an internal review of the buildings, artworks and other property, plant & equipment asset classes during 2017–18 with reference to changes in economic and other factors that could affect the fair value of each class. The Department assessed that the risk of a material difference between the carrying value and fair value of each asset class at 30 June 2018 was low.

3.2B: Other non-financial assets
2018
$'000
2017
$'000
Prepayments 3,481 3,744
Sub-lease rentals 179 -
Lease incentive assets - 251
Total other non-financial assets 3,660 3,995

3.3 Payables

3.3A: Suppliers
2018
$'000
2017
$'000
Trade creditors 3,134 2,885
Accrued expenses 17,889 20,037
Operating lease rentals 1,905 670
Total suppliers 22,928 23,592

Settlement is usually made within 30 days.

3.3B: Other payables
2018
$'000
2017
$'000
Unearned revenue 41 49
Lease incentives 537 1,226
Wages and salaries 692 828
Superannuation 118 146
Separations and redundancies 781 465
Other - 347
Total other payables 2,169 3,061

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 2017 830 674 299 1,803
Amounts used (141) (243) (200) (584)
Restructuring (290)  -  - (290)
Reversal and other movements (70)  -  - (70)
Total as at 30 June 2018 329 431 99 859

The Department had four agreements at 30 June 2018 (2017: eight) 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 one lease for office accommodation that includes space that is surplus to requirements. The Department sub-leases this space where possible. The Department has recognised a provision for surplus lease space measured at the present value of future lease payments for the term the space is expected to be surplus, less any sub-lease revenue.

A provision is recognised for legal costs where costs and/or damages have been, or are likely to be, awarded against the Department and the amount can be reliably estimated.

Prev. Contents of financial statements notes Next