Australian Prudential Regulation Authority

Date

Section 1: Agency overview and resources

1.1 Strategic direction

There has been no significant change to the strategic direction of the Australian Prudential Regulation Authority (APRA) from that outlined in the Portfolio Budget Statements 2012-13 (pages 131-132).

APRA is seeking $0.7 million in departmental funding through Appropriation Bill (No. 3) 2012-13. This relates to an additional $1.3 million to reimburse APRA for a shortfall in interest earned on the APRA special account from 2008-09 to 2011-12, offset by $0.01 million for the Fire Service Levy – reduction measure outlined in Budget Paper No. 2, Budget Measures 2012-13 and $0.5 million for the Targeted savings – public service efficiencies measure outlined in the Mid-Year Economic and Fiscal Outlook 2012-13.

1.2 Agency resource statement

Table 1.1 shows the total resources from all origins. The table summarises how resources will be applied by outcome and by administered and departmental classification.

Table 1.1: Australian Prudential Regulation Authority resource statement — additional
estimates for 2012-13 as at Additional Estimates February 2013
    Estimates
as
at Budget
2012-13
$'000
+ Proposed
Additional
Estimates
2012-13
$'000
= Total
estimate
at
Additional
Estimates
2012-13
$'000
Total
available
appropriation
2011-12
$'000
Ordinary annual services              
Departmental appropriation              
Departmental appropriation   2,356   722 1 3,078 13,289
Receipts from other sources (s31)   5,210   -   5,210 8,110
Total ordinary annual services A 7,566   722   8,288 21,399
Other services              
Departmental non-operating              
Equity injections   4,810   -   4,810 -
Total other services B 4,810   -   4,810 -
Total available annual appropriations (A+B)   12,376   722   13,098 21,399
Special appropriations              
Financial Management and Accountability Act 1997   -   -   -  
Total special appropriations C -   -   - -
Total appropriations excluding special accounts (A+B+C)   12,376   722   13,098 21,399
Special accounts              
Opening balance   46,845   -   46,845 45,207
Appropriation receipts   2,356   722   3,078 13,289
Non-appropriation receipts to special accounts   112,870   -   112,870 100,397
Total special accounts D 162,071   722   162,793 158,893
Total resourcing (A+B+C+D)   174,447   1,444   175,891 180,292
Less appropriations drawn from annual or special appropriations above and credited to special accounts   2,356   722   3,078 13,289
Total net resourcing for APRA   172,091   722   172,813 167,003

1. Appropriation Bill (No. 3) 2012-13.

1.3 Agency measures table

Table 1.2 summarises new Government measures taken since the 2012-13 Budget.

Table 1.2: Agency Measures since Budget
  Program 2012-13
$'000
2013-14
$'000
2014-15
$'000
2015-16
$'000
Expense measure          
Fire Service Levy - reduction 1.1 (10) (10) (11) (11)
Targeted savings - public service efficiencies 1.1 (527) (529) (544) (567)
Total ex
pense measures
  (537) (539) (555) (578)
Related revenue          
Superannuation - further financial assistance grants to compensate fund members for the failure of Trio(a) 1.1 16,720 - - -
SuperStream - reduction in Superannuation Supervisory Levy 1.1 - (11,600) (8,400) (7,300)
Total related revenue   16,720 (11,600) (8,400) (7,300)

(a) This measure was agreed after the Mid-Year Economic and Fiscal Outlook.

1.4 Additional estimates and variations

Table 1.3 details the additional estimates resulting from new measures since the 2012-13 Budget. Table 1.4 details the additional estimates resulting from other variations since the 2012-13 Budget.

Table 1.3: Additional estimates and variations to outcomes from measures
since 2012-13 Budget
   Program 2012-13
$'000
2013-14
$'000
2014-15
$'000
2015-16
$'000
Outcome 1          
Increase in estimates (departmental)          
Fire Service Levy - reduction 1.1 (10) (10) (11) (11)
Targeted savings - public service efficiencies 1.1 (527) (529) (544) (567)
Net impact on estimates for Outcome 1 (departmental)   (537) (539) (555) (578)
Table 1.4: Additional estimates and variations to outcomes from other variations
  Program 2012-13
$'000
2013-14
$'000
2014-15
$'000
2015-16
$'000
Outcome 1          
Increase in estimates (departmental)          
Reimbursement to APRA for a shortfall in interest earned on the APRA special account 1.1 1,259 - - -
Net impact on estimates for Outcome 1 (departmental)   1,259 - - -

1.5 Breakdown of additional estimates by Appropriation Bill

The following table details the additional estimates sought for APRA through Appropriation Bills No. 3.

Table 1.5: Appropriation Bill (No. 3) 2012-13
  2011-12
available
$'000
2012-13
budget
$'000
2012-13
revised
$'000
Additional
estimates
$'000
Reduced
estimates
$'000
DEPARTMENTAL OUTPUTS          
Outcome 1          
Enhanced public confidence in Australia's financial institutions through a framework of prudential regulation which balances financial safety and efficiency, competition, contestability and competitive neutrality 13,289 2,356 3,078 722 -
Total 13,289 2,356 3,078 722 -

Section 2: Revisions to agency outcomes and planned performance

2.1 Resources and performance information

There has been no change to outcomes, outcome strategies and performance information for APRA from that included in the Portfolio Budget Statements 2012-13 (pages 135-137).

Table 2.1: Budgeted expenses for Outcome 1
Outcome 1: Enhanced public confidence in Australia's financial institutions through a framework of prudential regulation which balances financial safety and efficiency, competition, contestability and competitive neutrality 2011-12

Actual
$'000

2012-13
Revised
estimated
expenses
$'000
Program 1.1: Australian Prudential Regulation Authority    
Departmental expenses    
Special accounts 100,397 112,870
Departmental appropriation 20,722 8,288
Administered expenses    
Superannuation Levy Waivers 959 -
Total for Program 1.1 122,078 121,158
     
  2011-12 2012-13
Average staffing level (number) 606 613

Program 1.1: Australian Prudential Regulation Authority

There has been no change to program objectives, deliverables or key performance indicators for APRA from that included in the Portfolio Budget Statements 2012-13.

Table 2.2: Program expenses
  2011-12 
 
Actuals
$'000
2012-13

Budget
$'000

2013-14
Forward
year 1
$'000
2014-15
Forward
year 2
$'000
2015-16
Forward
year 3
$'000
Departmental expenses          
Departmental items 121,119 121,158 121,093 124,070 128,844
Administered expenses          
Administered items 959 - - - -
Total program expenses 122,078 121,158 121,093 124,070 128,844

Section 3: Explanatory tables and budgeted financial statements

Section 3 presents budgeted financial statements which provide a snapshot of APRA’s finances for the budget year 2012-13.

3.1 Explanatory tables

3.1.1 Estimates of special account flows

Special accounts provide a means to set aside and record amounts used for specified purposes. Table 3.1.2 shows the expected additions (receipts) and reductions (payments) for each account used by APRA.

Table 3.1.2: Estimates of special account cash flows and balances
  Outcome  Opening balance
2012-13
2011-12
$'000
Receipts
Non- appropriated
2012-13
2011-12
$'000
Receipts
appropriated
2012-13
2011-12
$'000
Payments
2012-13
2011-12
$'000
Closing balance
2012-13
2011-12
$'000
Australian Prudential Regulation 1 44,552 112,870 11,839 126,400 42,861
Authority Special Account   41,756 100,397 21,390 118,991 44,552
Financial Claims Scheme 1 293 - - - 293
Special Account   1,451 - 200 1,358 293
Lloyd's Deposit Trust 1 2,000 - - - 2,000
Special Account   2,000 - - - 2,000
Total special accounts 2012-13 Budget estimate   46,845 112,870 11,839 126,400 45,154
Total special accounts 2011-12 actual   45,207 100,397 21,590 120,349 46,845

3.2 Budgeted financial statements

3.2.1 Analysis of budgeted financial statements

The budgeted departmental income statement (refer Table 3.2.1) shows an increase in 2012-13 appropriations from $120.4 million, as disclosed in the Portfolio Budget Statements 2012-13, to $121.2 million; a $0.7 million increase. These funds comprise a shortfall in interest earned on the APRA special account from 2008-09 to 2011-12, offset by the Fire Service Levy – reduction and the Targeted savings – public service efficiencies measures.

3.2.2 Budgeted financial statements

Departmental financial statements

Table 3.2.1: Budgeted departmental comprehensive income statement
(Showing Net Cost of Services) (for the period ended 30 June)
   Actual
2011-12
$'000 
Revised budget
2012-13
$'000 
Forward estimate
2013-14
$'000 
Forward estimate
2014-15
$'000 
Forward estimate
2015-16
$'000 
EXPENSES          
Employee benefits 89,812 88,200 89,414 93,766 99,195
Suppliers 26,176 28,220 24,303 23,196 24,303
Depreciation and amortisation 5,131 4,738 7,376 7,108 5,346
Total expenses 121,119 121,158 121,093 124,070 128,844
LESS:          
OWN-SOURCE INCOME          
Revenue          
Sale of goods and rendering of services 4,212 4,160 4,160 4,160 4,160
Other revenue 707 1,050 1,050 1,050 1,050
Total revenue 4,919 5,210 5,210 5,210 5,210
Total own-source income 4,919 5,210 5,210 5,210 5,210
Net cost of (contribution by) services 116,200 115,948 115,883 118,860 123,634
Appropriation revenue 113,730 115,948 115,883 118,860 123,634
Surplus (deficit) attributable to the Australian Government (2,470) - - - -

Prepared on Australian Accounting Standards basis.

Ta
ble 3.2.2: Budgeted departmental balance sheet
(as at 30 June)
  Actual
2011-12
$'000
Revised budget
2012-13
$'000
Forward estimate
2013-14
$'000
Forward estimate
2014-15
$'000
Forward estimate
2015-16
$'000
ASSETS          
Financial assets          
Cash 44,554 42,863 43,612 43,604 43,604
Receivables 3,746 3,746 3,746 3,746 3,746
Total financial assets 48,300 46,609 47,358 47,350 47,350
Non-financial assets          
Infrastructure, plant and equipment 5,823 3,863 2,880 2,503 3,646
Intangibles 12,717 21,178 25,682 26,175 25,032
Other 1,964 1,998 1,998 1,998 1,998
Total non-financial assets 20,504 27,039 30,560 30,676 30,676
Total assets 68,804 73,648 77,918 78,026 78,026
LIABILITIES          
Provisions          
Employees 32,000 31,885 31,885 31,885 31,885
Other 2,881 2,923 2,923 2,923 2,923
Total provisions 34,881 34,808 34,808 34,808 34,808
Payables          
Suppliers 5,235 5,342 5,342 5,342 5,342
Total payables 5,235 5,342 5,342 5,342 5,342
Total liabilities 40,116 40,150 40,150 40,150 40,150
Net assets 28,688 33,498 37,768 37,876 37,876
EQUITY          
Contributed equity 7,469 12,279 16,549 16,657 16,657
Reserves 12,467 12,467 12,467 12,467 12,467
Retained surpluses or accumulated deficits 8,752 8,752 8,752 8,752 8,752
Total equity 28,688 33,498 37,768 37,876 37,876
Current assets 50,264 48,607 49,356 49,348 49,348
Non-current assets 18,540 25,041 28,562 28,678 28,678
Current liabilities 31,396 31,448 31,448 31,448 31,448
Non-current liabilities 8,720 8,702 8,702 8,702 8,702

Prepared on Australian Accounting Standards basis.

Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)
  Actual
2011-12
$'000
Revised
budget
2012-13
$'000
Forward
estimate
2013-14
$'000
Forward
estimate
2014-15
$'000
Forward
estimate
2015-16
$'000
OPERATING ACTIVITIES          
Cash received          
Goods and services 5,023 4,160 4,160 4,160 4,160
Appropriations 113,677 115,948 115,883 119,427 124,212
Other 3,087 1,050 1,050 1,050 1,050
Total cash received 121,787 121,158 121,093 124,637 129,422
Cash used          
Employees 83,584 88,200 89,414 93,766 99,195
Suppliers 30,589 28,220 24,303 23,763 24,881
Total cash used 114,173 116,420 113,717 117,529 124,076
Net cash from or (used by) operating activities 7,614 4,738 7,376 7,108 5,346
INVESTING ACTIVITIES          
Cash used          
Purchase of property, plant and equipment/intangibles 4,818 11,239 10,897 7,224 5,346
Total cash used 4,818 11,239 10,897 7,224 5,346
Net cash from or (used by) investing activities (4,818) (11,239) (10,897) (7,224) (5,346)
FINANCING ACTIVITIES          
Cash received          
Appropriations - contributed equity - 4,810 4,270 108 -
Total cash received - 4,810 4,270 108 -
Net cash from or (used by) financing activities - 4,810 4,270 108 -
Net increase (or decrease) in cash held 2,796 (1,691) 749 (8) -
Cash at the beginning of the reporting period 41,758 44,554 42,863 43,612 43,604
Cash at the end of the reporting period 44,554 42,863 43,612 43,604 43,604

Prepared on Australian Accounting Standards basis.

Table 3.2.4: Departmental statement of changes in equity — summary of
movement (budget year 2012-13)
  Retained
surpluses
$'000
Asset
revaluation
reserve
$'000
Other
reserves
$'000
Contributed
equity/
capital
$'000
Total
equity
$'000
Opening balance as at 1 July 2012          
Balance carried forward from previous period 8,752 6,467 6,000 7,469 28,688
Adjusted opening balance 8,752 6,467 6,000 7,469 28,688
Comprehensive income          
Surplus (deficit) for the period - - - - -
Total comprehensive income recognised directly in equity - - - - -
Transactions with owners          
Equity Injection - - - 4,810 4,810
Total transactions with owners - - - 4,810 4,810
Estimated closing balance as at 30 June 2013 8,752 6,467 6,000 12,279 33,498

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Departmental capital budget statement
  Actual
2011-12
$'000
Revised
budget
2012-13
$'000
Forward
estimate
2013-14
$'000
Forward
estimate
2014-15
$'000
Forward
estimate
2015-16
$'000
NEW CAPITAL APPROPRIATIONS          
Total equity injections - 4,810 4,270 108 -
Total new capital appropriations - 4,810 4,270 108 -
Provided for:          
Purchase of non-financial assets - 4,810 4,270 108 -
Total Items - 4,810 4,270 108 -
PURCHASE OF NON-FINANCIAL ASSETS          
Funded by capital appropriations - 4,810 4,270 108 -
Funded internally from departmental resources 4,818 6,429 6,627 7,116 5,346
TOTAL 4,818 11,239 10,897 7,224 5,346
RECONCILIATION OF CASH USED TO ACQUIRE ASSETS TO ASSET MOVEMENT TABLE          
Total purchases 4,818 11,239 10,897 7,224 5,346
Total cash used to acquire assets 4,818 11,239 10,897 7,224 5,346

Prepared on Australian Accounting Standards basis.

Table 3.2.6: Statement of asset movements — Departmental (2012-13)
  Other
infrastructure,
plant and
equipment
$'000
Intangibles
$'000
Total
$'000
As at 1 July 2012      
Gross book value 9,099 27,952 37,051
Accumulated depreciation/amortisation and impairment 3,276 15,235 18,511
Opening net book balance 5,823 12,717 18,540
Capital asset additions      
By purchase - other 1,043 10,196 11,239
Total additions 1,043 10,196 11,239
Other movements      
Depreciation/amortisation expense 3,003 1,735 4,738
Total other movements 3,003 1,735 4,738
As at 30 June 2013      
Gross book value 10,142 38,148 48,290
Accumulated depreciation/amortisation and impairment 6,279 16,970 23,249
Closing net book balance 3,863 21,178 25,041

Prepared on Australian Accounting Standards basis.

Table 3.2.7: Schedule of budgeted income and expenses administered on
behalf of Government (for the period ended 30 June)
  Actual
2011-12
$'000
Revised
budget
2012-13
$'000
Forward
estimate
2013-14
$'000
Forward
estimate
2014-15
$'000
Forward
estimate
2015-16
$'000
EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT          
Waivers and write-offs 959 - - - -
Total expenses administered on behalf of government 959 - - - -
LESS:          
OWN-SOURCE INCOME          
Own-source revenue          
Non-taxation revenue          
Other sources of non-taxation          
Financial Institutions SupervisoryLevies Collection Act 1998 131,949 269,818 250,607 224,966 217,239
Financial Assistance Levy 20 16,720 - - -
Total non-taxation revenue 131,969 286,538 250,607 224,966 217,239
Total revenues administered on behalf of Government 131,969 286,538 250,607 224,966 217,239
Total own-sourced income administered on behalf of Government 131,969 286,538 250,607 224,966 217,239
Net Cost of (contribution by) services (131,010) (286,538) (250,607) (224,966) (217,239)
Surplus (Deficit) 131,010 286,538 250,607 224,966 217,239

Prepared on Australian Accounting Standards basis.

Table 3.2.8: Schedule of budgeted assets and liabilities administered on
behalf of Government (as at 30 June)
   Actual
2011-12
$'000 
Revised
budget
2012-13
$'000 
Forward
estimate
2013-14
$'000 
Forward
estimate
2014-15
$'000 
Forward
estimate
2015-16
$'000 
ASSETS ADMINISTERED ON BEHALF OF GOVERNMENT          
Financial assets          
Cash - Financial Claims Scheme special account 293 293 - - -
Receivables 2,201 2,201 - - -
Total financial assets 2,494 2,494 - - -
Total assets administered on behalf of government 2,494 2,494 - - -

Prepared on Australian Accounting Standards basis.

Table 3.2.9: Schedule of budgeted administered cash flows
(for the period ended 30 June)
   Actual
2011-12
$'000 
Revised
budget
2012-13
$'000 
Forward
estimate
2013-14
$'000 
Forward
estimate
2014-15
$'000 
Forward
estimate
2015-16
$'000 
OPERATING ACTIVITIES          
Cash or equivalents recei
ved
         
Transfer from Official Public Account 22 - - - -
Administered revenue 183,386 286,538 252,808 224,966 217,239
Total cash or equivalents received 183,408 286,538 252,808 224,966 217,239
Cash or equivalents used          
Cash to Official Public Account 183,386 286,538 252,808 224,966 217,239
Administered expenses 22 - - - -
Total cash or equivalents used 183,408 286,538 252,808 224,966 217,239
Net cash or equivalents from or (used by) operating activities - - - - -

Prepared on Australian Accounting Standards basis.

Notes to the financial statements

Basis of accounting

The financial statements have been prepared on an accrual basis in accordance with historical cost convention.

Budgeted departmental comprehensive income statement
Revenues from Government

APRA is funded by appropriation to its special account for levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported by APRA is net of the levies retained in the Official Public Account to fund the Australian Securities and Investments Commission (ASIC) for consumer protection and market integrity functions, the Australian Taxation Office (ATO) for superannuation administration, unclaimed moneys and lost member functions and the Department of Human Services (DHS) for administration of early release of superannuation benefits on compassionate grounds.

Other revenue

Revenue from rendering of specific services is recognised by reference to the stage of completion of contracts or other agreements. Revenue from licence fees is recognised on receipt of the application and licence fee.

Depreciation and amortisation

APRA’s depreciation expense is applied to supporting the capital program that aims to maintain APRA’s processes and infrastructure at an appropriate standard.

Budgeted departmental balance sheet
Financial assets

Receivables include levies invoiced but still outstanding at the financial year-end and accrued revenues, being fees prorated over the periods to which they relate.

All accounts receivable are recorded at their estimated recoverable amount.

Non-financial assets

Non-financial assets include leasehold improvements, furniture and fittings, computer hardware and office equipment. All of the foregoing assets are shown at fair value. Intangible assets comprise capitalised software, including works in progress and are shown at cost. APRA does not own any land or buildings.

Other non-financial assets include prepayments.

Provisions and payables

Provisions and payables represent liabilities for miscellaneous accruals and employee benefits, including accrued salary and leave entitlements, provisions for making good leased premises and payments to trade creditors.

Equity

The opening balance of contributed equity includes the net value of assets and liabilities transferred from the Reserve Bank of Australia and the Insurance and Superannuation Commission on the formation of APRA on 1 July 1998, less an amount of $2.1 million returned to the Consolidated Revenue Fund as a return of unused appropriation in 2004-05.

Budgeted departmental statement of cash flows

Cash received from operating activities includes the appropriation for levies collected from industry less amounts collected on behalf of the ATO, ASIC and DHS and cash from fees and charges.

Schedule of budgeted income and expenses administered on behalf of Government
Revenues

Non-taxation revenues are the levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported in this statement is higher than that reported by APRA in the budgeted agency statement of financial position by the amount retained in the Official Public Account to fund ATO, ASIC and DHS activities described above.

Schedule of budgeted assets and liabilities administered on behalf of Government
Financial assets

The financial assets include levy debt invoiced and still outstanding at year-end.

Schedule of budgeted administered cash flows

All cash collected by APRA for levies, late lodgement and late payment penalties under the Financial Institutions Supervisory Levies Collection Act 1998 is transferred to the Official Public Account at the close of business each day.