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Section 5 : Budgeted Financial Statements


5.1: ANALYSIS OF BUDGETED FINANCIAL STATEMENTS

An analysis of the Department's budgeted financial statements, as reflected in the budgeted departmental financial statements and administered schedules for 2007-08, is provided below.

Departmental

Budgeted departmental income statement

The Department is budgeting for approved operating losses in each financial year from 2006-07 to 2009-10. The losses are attributable to costs associated with planned, but non ongoing, National Office leasehold improvements and activities the Department has been asked to implement from previous year surpluses.

Total expenses are estimated to be $249.2m in 2007-08, an increase of $23.8m from the 2006-07 estimated actual. The increase is primarily due to measures disclosed in the 2007-08 Budget ($20.0m).

Chart 5.1: Total departmental expenses

(click on the image to view the larger version)

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 increase in expenses between 2004-05 and 2005-06 largely reflects measures associated with transport security activities. The subsequent increase in 2007-08 reflects the impact of new measures.

Budgeted departmental balance sheet

The Department's budgeted net asset position of $94.9m represents an increase of $4.9m from the 2006-07 estimated actual. The increase is primarily attributable to appropriation receivables ($5.9m) associated with the increase in employee entitlements and the timing of asset asquisitions.

Total assets are expected to increase by $5.6m to $149.1m, reflecting the increase in appropriation receivables ($5.6m).

Chart 5.2: Budgeted assets for 2007-08

(click on the image to view the larger version)

The Department's primary liability continues to be accrued employee leave entitlements estimated to be $38.8m.

Administered

Schedule of budgeted income and expenses administered on behalf of government

The Department administers the collection of taxes, fees and fines, other non-taxation revenue and interest and dividends estimated at $220.8m, representing an increase of $9.2m from the 2006-07 estimated actual. The increase is primarily due to increased revenue from levies collected under the Protection of the Sea (Shipping Levy) Collection Act 1981 ($7.5m) and fees collected under the Interstate Road Transport Act 1985 ($2.8m). This increase is partially offset by reduced revenue from noise levies collected at Sydney Airport ($4.6m).

Administered expenses, such as for grants and subsidies programmes, are budgeted at $5 441.5m, representing an increase of $1 040.2m from the 2006-07 estimated actual and will be incurred for the programmes set out at Section 3, Table 3.2.1 for Outcome 1 and Table 3.2.2 for Outcome 2. The increase is due to:

  • the impact of measures announced in the 2006-07 Budget associated with the AusLink programme ($469.9m)
  • the impact of new measures announced in the 2007-08 Budget ($243.0m)
  • the movement of funds between years for administered expense programmes ($235.9m), resulting in a lower level of expenses in 2006-07 ($85.5m); and higher expenses in 2007-08 ($150.3m), and
  • changes in the unding profile of several administered expense programmes.

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 assets are expected to decrease by $786.5m to $4 016.9m from the 2006-07 estimated actual. The decrease relates mainly to the timing of payments to the states and territories associated with the AusLink programme ($702.8m) and the transfer of the Australian Maritime College to the University of Tasmania ($61.4m).

Total liabilities are expected to decline by $3.2m from the 2006-07 estimated actual to $20.2m. The decrease primarily reflects the reduction in grants payable, in particular the Local Government Financial Assistance Grants programme ($3.2m).

5.2: BUDGETED FINANCIAL STATEMENTS TABLES

Table 5.1: Budgeted departmental income statement (for the 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 2007-08)

Table 5.5: Departmental capital budget statement

Table 5.6: Departmental property, plant, equipment and intangibles - summary of movement (Budget year 2007-08)

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 2007-08)

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 Department that are used by the Department 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 the Department by the government and is recognised to the extent that it has been received into the Department's bank account.

    Revenue from other sources, representing sales from goods and services, is recognised when:
    • the risks and rewards of ownership have been transferred to the buyer
    • the seller retains no managerial involvement nor effective control over the goods
    • the revenue and transaction costs incurred can be reliably measured; and
    • it is probable that the economic benefits associated with the transaction will flow to the Entity.

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

  7. Departmental assets - financial assets
    The primary financial asset relates to receivables. Financial assets are used to fund the Department's 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
    The main interest bearing liabilities are information technology assets that the Department has procured under finance leases. These are written-off over the life of the lease.

  10. Departmental liabilities - provisions and payables
    Provision has been made for the Department's liability for employee entitlements arising from services rendered by employees. This liability includes unpaid annual leave and long service leave.

    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 the Department are provided at Appendix 5.1.

  12. Administered expenses
    The majority of the Department's 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.

Appendix 5.1: Administered income

Appendix 5.2: Administered loan repayments

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Budget 2006-07