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Section 5 : Budgeted Financial Statements

5.1 Analysis of budgeted financial statements

An analysis of the NCA's budgeted financial statements, as reflected in the budgeted departmental financial statements and administered schedules for 2005-06, is provided below.

Departmental

Statement of Financial Performance

The NCA is budgeting for a loss in the 2005-06 financial year compared to an estimated break even position for 2004-05. The operating deficit is due to no additional supplementation being received from government to fund increases in insurance premium expenses. Similarly, operating deficits are disclosed for future financial years as no insurance premium supplementation has been agreed with government.

The decrease in price of outputs appropriations for 2005-06 is largely due to the removal of the supplementation, offset partially by increases (net of efficiency dividends) from changes in price indices.

Total budgeted revenues for 2005-06 of $18.8m are $1.0m (5%) less than 2004-05. The decrease is the result of items noted above.

Total estimated expenses for 2005-06 of $19.8m (including borrowing costs) are $0.015m (less than 1%) less than 2004-05. Minimal movement reflects the largely unchanged operating environment for the NCA.

Chart 5.1: Total departmental expenses

Chart 5.1: Total departmental expenses

(click on the image to view the larger version)

Statement of Financial Position

The NCA's total departmental assets are budgeted to increase by $0.4m (2%) in 2005-06. This is primarily due to the construction of $3.0m of commemorative works and memorials of which $2.0m will not be transferred to administered activities until 2006-07 thereby causing a large increase in the balance of infrastructure, plant and equipment where the construction work in progress is recorded. Offsetting this increase are a number of items, including:

  • decrease in cash as contributions received for the abovementioned commemorative works and memorials are expended
  • decrease in appropriations receivable to fund operating deficit, and
  • decrease in the carrying values of land and buildings reflecting low levels of capital expenditure in the budget year.

Estimated reductions in total asset balances from 2006-07 through to 2008-09 reflect decreasing appropriation receivable balances resulting from unfunded insurance premium expenses.

Chart 5.2: Budgeted assets as at 30 June 2006

Chart 5.2: Budgeted assets as at 30 June 2006

(click on the image to view the larger version)

The NCA is estimating an increase of $1.4m (17%) in total liabilities at 30 June 2006 compared to 30 June 2005. Major contributors to this increase are a net increase of $1.7m in the provision for construction of commemorative works and memorials and an increase to the forecast balances of employee provisions at year end of $0.2m. The provision for construction of commemorative works and memorials reflects that contributions received and capital work in progress will be transferred to administered activities on completion. These increases will be offset by:

  • decreases to the estimated year end balance of suppliers and other accrued expenses of $0.3m, and
  • decrease in the finance lease liability of $0.2m as a result of scheduled repayments.

Administered

Budgeted Revenues and Expenses

The NCA will receive an appropriation of $8.7m in 2005-06 for activities it administers on behalf of government representing an increase of 4% on 2004-05. This appropriation is directly linked to the estimated depreciation expense on the administered assets managed by the NCA. Depreciation funding is used for capital expenditure. That is, funds will be used to maintain service delivery capability through replacement, conservation, restoration, preservation or renovation of existing assets.

The changes in appropriations and depreciation expense in the forward estimates reflects amendments made to the capital program.

Revenue from administered activities includes lease revenue on diplomatic land, the value of assets funded from external sources, including commemorative works, constructed and transferred from departmental activities to administered assets, and proceeds of asset sales.

There were no estimated sales of diplomatic land in 2005-06 ($3.4m in 2004-05). Commemorative works and memorials transferred from departmental activities will contribute a net increase in revenue of $0.5m in 2005-06. There are no further asset sales included in the budgeted financial statements for 2005-06 and forward estimate years.

Chart 5.3: Total administered expenses

Chart 5.3: Total administered expenses

(click on the image to view the larger version)

Budgeted Assets and Liabilities

Total administered assets are budgeted to increase by $4.8m (1%) in 2005-06. Capital works of $12.5m and commemorative works and memorials transferred in of $1.0m will be offset by estimated depreciation of $8.7m giving a net increase of $4.8m in non financial assets.

Chart 5.4: Administered asset base

Chart 5.4: Total administered expenses

(click on the image to view the larger version)

5.2 Budgeted financial statements tables

Table 5.1:  Budgeted departmental statement of financial performance (for period ended 30 June)

Table 5.2: Budgeted departmental statement of financial position (as at 30 June)

Table 5.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

Table 5.4: Departmental capital budget statement

Table 5.5: Departmental property, plant, equipment and intangibles - summary of movement (Budget year 2005-06)

Table 5.6: Schedule of budgeted revenue and expenses administered on behalf of government (for the period ended 30 June)

Table 5.7: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

Table 5.8: Schedule of budgeted administered cash flows (for the period ended 30 June)

Table 5.9: Schedule of administered capital budget

Table 5.10: Scedule of property, plant, equipment and intangibles - summary of movement (Budget year 2005-06)

5.3 Notes to the financial statements

  1. Accounting Policy

    The budgeted financial statements have been prepared on an accrual accounting basis, having regard to Statements of Accounting Concepts, and in accordance with:

    • the Finance Minister's Orders
    • Australian Accounting Standards
    • Other authoritative pronouncements of the Australian Accounting Standards Board, and
    • The Consensus Views of the Urgent Issues Group.
  2. Departmental and Administered items

    Agency assets, liabilities, revenues and expenses are those items that are controlled by the NCA and are used by the NCA in producing its outputs and include:

    • computers, plant and equipment used in providing goods and services
    • liabilities for employee entitlements
    • revenue from appropriations or independent sources in payment for outputs, and
    • employee, supplier and depreciation expenses incurred in providing agency outputs.

    Administered items are revenues, expenses, expenses, assets and liabilities that are controlled managed by an agency on behalf of the government according to set government directions. Administered expenses included grants, subsidies and personal benefit payments. Administered revenues include taxes, levies, fees, fines and excises.

  3. Departmental Revenue

    Revenue from government represents the purchase of outputs from the NCA by the government and is recognised to the extent that they are available for drawing down from the Official Public Account.

    Revenue from other sources, representing sales from goods and services, is recognised at the time of invoicing customers.

  4. Departmental Expenses - Employees

    Payments and net increases in entitlements to employees for services rendered in the financial year.

  5. Cost of insurance

    There was a 200% increase in insurance premiums from 2001-02 to 2004-05. The government partially supplemented (on a year by year at a time basis) the 2002-03 to 2004-05 premium increase with repricing of outputs. There is no guarantee of a continuing repricing. The financial statements therefore disclose operating losses for budget and forward years in expectation of the premium remaining near the current level and no repricing of outputs occurring.

  6. Departmental Expenses - Suppliers

    Payments to suppliers for goods and services used in providing agency outputs.

  7. Departmental Expenses - Depreciation and Amortisation

    Depreciable property plant and equipment, buildings and intangible assets are written-off to their estimated residual values over their estimated useful life to the NCA, using straight-line calculation method.

  8. Departmental Assets - Financial Assets

    Financial assets are used to fund the NCA's minor capital programme, employee entitlements, creditors and working capital.

  9. Departmental Assets - Non-Financial Assets

    These items represent future economic benefits that the NCA will consume in producing outputs. The reported value represents the purchase price or an independent valuation less depreciation incurred to date in using the asset.

  10. Departmental Liabilities - Provisions and Payables

    Provision has been made for the NCA's liability for employee entitlements arising from services rendered by employees. This liability includes unpaid annual leave and long service leave. No provision has been made for sick leave because the level of sick leave taken is less on average than the amount which employees are entitled to each year.

    Provision has also been made for unpaid supplier expenses as at balance date.

  11. Administered Revenue

    Revenue from administered activities includes lease revenue on diplomatic land, the value of assets funded from external sources, including commemorative works and memorials, constructed and transferred from departmental activities to administered assets.

  12. Administered Expenses - Depreciation and Amortisation

    Depreciable property infrastructure, plant & equipment, buildings and heritage assets are written-off to their estimated residual values over their estimated useful life, using straight-line calculation method.

  13. Asset valuation for departmental and administered

    Assets are valued at the deprival method of valuation, however, asset valuations for 2004-05 are being done on the fair value basis.

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