Section 3 : Budgeted Financial Statements
Analysis of Budgeted Financial Statements
An analysis of DOTARS budgeted financial statements, as reflected in the budgeted departmental financial statements and administered schedules for 2005-06, is provided below.
DOTARS is budgeting for a break even operating result for 2005-06.
Total revenues and expenses are estimated to be $220.9m, an increase of $14.1m from Budget. The increase is primarily as a result of increased funding from measures disclosed since the 2005-06 Budget ($13.0m) and estimates adjustments ($1.5m). The increase is partially offset by revised estimates for independent revenue ($0.4m).
Chart 3.1: Total departmental expenses
The significant drop in expenses from 2003-04 to 2004-05 largely reflects two factors:
- expenses associated with the provision of services to the Indian Ocean Territories, which were transferred from departmental to administered appropriation, and
- the one-off impact in 2003 04 of expenses related to the recognition of a provision for asbestos-related disease claims.
The DOTARS budgeted net asset position of $115.4m represents an increase of $48.7m from the 2004-05 actual. The increase is primarily attributable to the transfer of a provision for asbestos related disease claims to the Department of Employment and Workplace Relations on 1 July 2005 ($31.8m) and equity injections for accommodation and information technology associated with measures ($16.9m).
Total assets are expected to increase by $16.8m to $157.5m from the 2004-05 actual. The increase reflects the reconfiguration of the department's head office and leasehold and information technology investment flowing from measures.
Chart 3.2: Budgeted assets for 2005-06
The DOTARS primary liability continues to be accrued employee leave entitlements of $29.4m.
Income and expenses
DOTARS administers the collection of taxes, fees and fines, other non-taxation revenue and interest and dividends estimated at $276.2m, representing an increase of $25.8m from Budget. The increase is primarily due to:
- increased revenue from dividends received from Airservices Australia ($19.7m)
- increased revenue from Dairy Regional Assistance Programme reimbursements ($3.8m) and the Indian Ocean Territories programme ($1.0m), and
- the transfer of the conservation levy on Christmas Island from departmental ($1.0m).
Administered expenses, such as for grants and subsidies programmes, are budgeted at $3 975.5m, representing a decrease of $14.5m from the Budget and will be incurred for the programmes set out at Section 2, Table 2.2.1 for Outcome 1 and Table 2.2.2 for Outcome 2. The decrease is largely due to the movement of funding for programmes between years, resulting in a lower level of expenses in 2005-06 ($29.8m). The decrease was partially offset by increased expenses due to:
- parameter adjustments ($6.1m)
- measures disclosed since the 2005-06 Budget ($4.9m)
- the transfer of the Christmas Island rehabilitation programme from departmental ($3.1m), and
- other estimates adjustments ($1.2m).
Chart 3.3: Total administered expenses
Assets and Liabilities
Total assets are expected to increase by $58.0m from the 2004-05 actual to $1 068.5m. The increase relates mainly to:
- increased non-financial asset acquisitions associated with the Indian Ocean Territories ($66.6m) and Sydney West Airports - land acquisition and works ($2.8m) programmes; and
- increased receivables associated with the Norfolk Island - Norfolk Island Airport runway resurfacing ($10.9m) and Natural Disaster Relief loans ($5.0m) loans
This increase is partially offset by depreciation charges for the year ($12.2m), loan repayments ($10.3m) and disposals ($3.6m).
Total liabilities are expected to decline by $43.0m from the 2004-05 actual to $27.6m. The decrease primarily reflects the reduction in payables attributable to MIFCo ($32.4m) and other adjustments, including the flow on effects of the 2004-05 actuals ($10.6m).
Budgeted Financial Statements
(a) 'Equity' is the residual interest in assets after deduction of liabilities.
Notes to the Budgeted 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 DOTARS that are used by DOTARS 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 those items incurred in providing programmes that are controlled by the government and managed, or oversighted, by the department on behalf of the government. Administered expenses included grant payments and subsidies, and administered revenues include levies, fees and fines.
3. Departmental revenue
Revenue from government represents the purchase of outputs from DOTARS by the government and is recognised to the extent that it has been received into DOTARS bank account.
Revenue from other sources, representing sales from goods and services, is recognised at the time that it is imposed on customers.
4. Departmental expenses - employees
Payments and net increases in entitlements to employees for services rendered in the financial year.
5. Departmental expenses - suppliers
Payments to suppliers for goods and services used in providing agency outputs.
6. 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 department, using straight-line calculation method.
7. Departmental assets - financial assets
The primary financial asset relates to receivables. Financial assets are used to fund DOTARS capital programme, employee entitlements, creditors and to provide working capital.
8. Departmental assets - non-financial assets
These items represent future economic benefits that the department will consume in producing outputs. The reported value represents the purchase price paid less depreciation incurred to date in using the asset.
9. Departmental liabilities - interest bearing liabilities
Property lease incentives that DOTARS has received. These incentives are written-off over the life of the lease.
10. Departmental liabilities - provisions and payables
Provision has been made for DOTARS 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
Details of the range of taxation and non-taxation revenue collected by DOTARS are provided at Appendix 5.1.
12. Administered expenses
The majority of DOTARS administered programmes are classified as grants, the most significant being: Local Government Financial Assistance Grants; AusLink; Natural Disaster Relief Arrangements; and Regional Partnerships.
13. Administered assets - financial assets
Comprise primarily the Australian Government's investments in Portfolio agencies.