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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 2006-07, is provided below.

Departmental

Budgeted departmental income statement

The NCA is budgeting for a breakeven position for the 2006-07 financial year compared to an estimated loss of $0.5m for 2005-06 (approved by the Finance Minister) because there will be no additional supplementation from government to fund increased insurance premium expenses.

Approximately 90 per cent of the total insurance premium is for public liability or loss of administered assets associated with public and ceremonial areas and major infrastructure assets of the National Capital. This component of the premium will in future years be met from an administered appropriation, resulting in a transfer of $0.5m from departmental appropriation to administered.

Total revenue for 2006-07 is estimated to be $19.1m, an increase of $0.2m from the 2005-06 estimate. The price of outputs appropriation for 2006-07 accounts for an additional appropriation of $0.5m to develop several Griffin Legacy urban planning initiatives for the nation's capital and a reduction through the transfer of $0.5m to administered appropriation for the insurance premium component attributable to administered assets. The increase also includes parameter adjustments.

Total expenses for 2006-07 are estimated to be $19.1m (including borrowing costs), a decrease of $0.4m (2%) from the 2005-06 estimate. The decrease is primarily due to the transfer of the insurance premium expense attributable to administered assets.

Chart 5.1: Total departmental expenses

Chart 5.1: Total departmental expenses

(click on the image to view the larger version)

Budgeted departmental balance sheet

The NCA's total departmental assets are budgeted to decrease by $4.0m (21%) in 2006-07. This is primarily due to commemorative works and memorials constructed in departmental work in progress ($4.4m) and then transferred to administered assets. The decrease is further impacted by a decrease in the carrying values of land and buildings reflecting low levels of capital expenditure in the budget year.

Chart 5.2: Budgeted assets as at 30 June 2007

Chart 5.2: Budgeted assets as at 30 June 2007

(click on the image to view the larger version)

The NCA is estimating a decrease of $4.0m (59%) in total liabilities at 30 June 2007 compared to 30 June 2006, primarily due to the reduction in the liability provision for construction of assets funded from external sources, including commemorative works ($4.4m). This liability is recognised when contributions are received to construct commemorative works. Upon completion of the asset the work in progress and the provision are offset and the completed asset is transferred to administered assets.

Administered

Schedule of budgeted income and expenses administered on behalf of government

In 2006-07 the NCA will receive appropriations of:

  • $9.2m for activities it administers on behalf of government, representing an increase of 7% from 2005-06. This appropriation is directly linked to the estimated depreciation expense on the administered assets managed by the NCA and depreciation funding is used for capital expenditure; and
  • $0.8m (including transfer of $0.5m from departmental appropriation) for insurance premiums associated with administered assets.

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 from the sale of National Land for diplomatic purposes.

There are no estimated sales of diplomatic land in 2006-07 (compared with $0.6m in 2005-06). There are no further asset sales included in the budgeted financial statements for 2006-07 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)

Schedule of budgeted assets and liabilities administered on behalf of government

Total administered assets are budgeted to increase by $6.7m (1.6%) in 2006-07. Capital works of $11.5m and commemorative works and memorials of $4.4m (transferred from departmental work in progress to administered assets) will be offset by depreciation estimated at $9.2m, giving a net increase of $6.7m in non-financial assets.

Chart 5.4: Administered asset base

Chart 5.4: Administered asset base

(click on the image to view the larger version)

Note: Assets were revalued on a fair value basis at 30 June 2005.

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5.2 Budgeted financial statements tables

Table 5.1: Budgeted departmental income statement (for period ended 30 June)

Table 5.2: Budgeted departmental balance sheet (as at 30 June)

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

Table 5.4: Departmental statement of changes in equity - summary of movement (Budget year 2006-07)

Table 5.5: Departmental capital budget statement

Table 5.6: Departmental property, plant, equipment and intangibles - summary of movement (Budget year 2006-07)

Table 5.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

Table 5.8: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

Table 5.9: Schedule of budgeted administered cash flows (for the period ended 30 June)

Table 5.10: Schedule of administered capital budget

Table 5.11: Schedule of property, plant, equipment and intangibles - summary of movement (Budget year 2006-07)

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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, assets and liabilities that are controlled by the government and managed, or oversighted, 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. Insurance

    The insurance premium component for public liability or loss of administered assets associated with public and ceremonial areas and major infrastructure assets of the National Capital will in future years be met from an administered appropriation.

    The NCA has been an effective manager of Commonwealth assets and a model Risk Manager. During 2003-04 and 2004-05 the NCA achieved a rating of four out of five for its overall approach to risk management in the Comcover Benchmarking Surveys on Risk Management across the public sector. In addition it achieved a highly commended award in the Small Agency Category of Comcover's 2003 Awards for Excellence in Risk Management, won the same category in November 2004 and achieved a highly commended award in 2005.

  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 were valued on a fair value basis at 30 June 2005. Fair value essentially reflects the current market value of an asset.

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