Financial Statements: Notes 1-16

Date

Notes to and forming part of the Financial Statements

for the year ended 30 June 1998


Note No.

Description

1

Reporting Entity and Objectives

2

Summary of Significant Accounting Policies

3

Events Occurring After Balance Date

4

Goods and Services Expenses

5

Grants

6

Extraordinary Items

7

Non-taxation Revenue

8

Reconciliation of Revenue from Independent Sources

9

Revenue from Government

10

Debt

11

Provisions and Payables

12

Equity

13

Financial Assets

14

Non-financial Assets

15

Cash Flow Reconciliation

16

Remote Contingencies

17

Receipts to the Consolidated Revenue Fund

18

Expenditure from Special Appropriations

19

Expenditure from Annual Appropriations

20

Reconciliation of Agency Running Costs

21

Receipts and Expenditure of the Commercial Activities, Reserved Money Funds and Special Public Money

22

Appropriation for Future Reporting Periods

23

Related Parties Transactions

24

Payments to the Commonwealth

25

Executive Remuneration

26

Services Provided by the Auditor-General

27

Act of Grace Payments and Waivers

28

Average Staffing Levels

29

Financial Instruments: Departmental

30

Financial Instruments: Administered

Note 1: Reporting Entity and Objectives

The reporting entity comprises the Department of the Treasury, the Development Allowance Authority (part year), the Foreign Investment Review Board, the Loan Council and the Royal Australian Mint (the Mint), hereafter referred to as ‘the Department’. In these statements, ‘the Department’ does not correspond with the Department of the Treasury.

The Department comprises two programs:

Program 1: Treasury (including the secretariats of the Development Allowance Authority, the Foreign Investment Review Board and the Loan Council).

Program 2: Royal Australian Mint.

The objectives of these programs are respectively:

Program 1: To improve the wellbeing of the Australian community through high, sustainable economic and employment growth with low inflation and efficient and sustainable use of resources.

Program 2: To produce and supply Australia’s coinage needs and to pursue ancillary commercial opportunities in a way that maximises returns to Government.

Treasury is funded predominantly by Parliamentary appropriations. The Royal Australian Mint operates as a government business, and seeks to make a commercial return on investment.

The financial report encompasses various trust accounts and all the Funds through which the Department controls resources to carry on its functions. In the process of reporting on the Department as a single entity all transactions and balances within that entity have been eliminated.

Note 2: Summary of Significant Accounting Policies

2.1 Basis of Accounting

The financial statements are required by section 49 of the Financial Management and Accountability Act 
1997
and are a general purpose financial report.

The financial statements have been prepared in accordance with Schedule 2 to the Financial Management and Accountability (FMA) Orders made by the Minister for Finance and Administration. Schedule 2 requires that the financial statements are prepared:

  • in compliance with Australian Accounting Standards, Accounting Guidance Releases and Urgent Issues Group consensus views; and
  • having regard to Statements of Accounting Concepts.

The financial statements have also been prepared on an accrual basis and in accordance with the historical cost convention. Except where stated they do not take account of changing money values.

The continued existence of the Department in its present form, and with its present programs, is dependent on Government policy and on continuing appropriations by Parliament for the Department’s administration and programs.

2.2 Agency and Administered Items

Agency assets, liabilities, revenues and expenses are those items that are controlled by the Department including:

  • computers, plant and equipment used in providing goods and services;
  • liabilities for employee entitlements;
  • revenues from running cost appropriations;
  • revenues from user charging, etc, where the proceeds are deemed appropriated under section 31 of the Financial Management and Accountability Act 1997; and
  • employee expenses and other administrative expenses incurred in providing goods and services.

Administered items are those items which are controlled by the Government and managed or overseen by the Department on behalf of the Government. These items include grant payments to other governments, interest on public debt and dividend revenue from financial institutions.

The purpose of the separation of administered and agency items is to enable assessment of the administrative efficiency of the Department in providing goods and services. The basis of accounting described in Note 2.1 applies to both agency and administered items.

Administered items are distinguished from agency items in the financial statements by shading.

2.3 Change in Accounting Policy

Schedule 2 requires that the administered transactions be accounted for on a double entry basis. The effect of this requirement is that transfers of cash to and from the Official Commonwealth Public Account (CPA) will be reported on the face of the statement of Administered Revenues and Expenses where operating transactions are involved, and that, where transactions involving financial assets and liabilities not arising from operations are involved, receivables from and payables to the CPA will be recognised in the statement of Administered Assets and Liabilities.

On initial application of this policy as at 1 July 1996, an adjustment of $100,901,393 thousand was made to administered accumulated results.

In 1997-98 financial year, this policy was amended as advised by DoFA, so as to effect all administered transactions to be recognised on the face of the statement of Administered Revenues and Expenses irrespective of their nature. This change in accounting policy has resulted in an adjustment of $101,095,607 thousand to administered accumulated results.

In previous years the costs incurred by the Commonwealth in repurchasing circulating coins were deducted from the seigniorage. This has raised an abnormal expense of $184,000 in this year’s statements.

2.4 Principles of Aggregation

In the process of reporting the Department as a single unit, and in the preparation of the program statements, all intra- and inter-program transactions and balances have been eliminated in full.

The financial statements of the Mint are aggregated into the Department’s financial statements. Where accounting policies differ between the business operations and the Department, adjustments are made on consolidation to bring any dissimilar accounting policies into alignment.

2.5 Appropriations

Appropriations for agency operations other than running costs are recognised as revenue to the extent that the appropriations are spent.

Schedule 2 requires that amounts received as appropriations for running costs operations are to be recognised according to their nature under the Running Costs Arrangements. Under these arrangements, the Department receives a base amount of funding by way of appropriation for running costs each year. The base amount may be supplemented in any year by a carryover from the previous year of unspent appropriations up to allowable limits, as well as by borrowings at a discount against future appropriations of the base amount. The repayment of a borrowing is effected by an appropriate reduction in the appropriation actually received in the year of repayment. Interest may be charged on borrowings.

The Department now recognises:

  • as revenue an amount equal to the base funding spent in the year or carried over to the next year;
  • as a receivable, an amount equal to the amount of unspent appropriation carried over to the next financial year; and
  • as a liability, outstanding amounts of running costs borrowings. The interest cost of the borrowing is expensed over the life of the borrowing.

2.6 Resources Received Free of Charge

Services received free of charge are recognised in the statement of Agency Revenues and Expenses as revenue when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised in the ‘Net cost of services’.

Contribution of assets at nil cost of acquisition or for nominal consideration are recognised at their fair value when the asset qualifies for recognition, unless received from another government agency as a consequence of a restructuring of administrative arrangements. In the latter case, assets are initially recognised at the amounts at which they were recognised by the transferring agency immediately prior to the transfer.

2.7 Employee Entitlements

Liability for employee entitlements includes provisions for annual leave and long service leave. No provision is made for sick leave as all sick leave is non-vesting and the average sick leave taken by employees of the Department is estimated to be less than the annual entitlement for sick leave.

The provision for annual leave reflects the value of total annual leave entitlements of all employees at 30 June 1998 and is recognised at its nominal value.

The non-current portion of the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 1998. In determining the present value of the liability, the Department has taken into account attrition rates and pay increases through promotion and inflation.

2.8 Superannuation

Staff of the Department contribute to the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. Employer contributions have been expensed in these financial statements.

No liability is shown for superannuation in the statement of Agency Assets and Liabilities as the employer contributions fully extinguish the accruing liability which is assumed by the Commonwealth.

Employer Superannuation Productivity Benefit contributions have been expensed in these financial statements.

2.9 Leases

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value of
minimum lease payments at the inception of the lease and a liability recognised for the same amount. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

Operating lease payments are charged to the statement of Agency Revenues and Expenses on a basis which is representative of the pattern of benefits derived from the leased assets.

2.10 Cash

Cash includes notes and coins held, deposits held at call with a bank or financial institution and balances of commercial trust accounts held in the Official Commonwealth Public Account (CPA).

2.11 Financial Instruments and Specific Disclosures by Financial Institutions

The Department is complying with the requirements of the following Australian Accounting Standards, which became operative for the first time during the financial year:

(a) AAS 23 Set-off and Extinguishment of Debt;

(b) AAS 32 Specific Disclosures by Financial Institutions; and

(c) AAS 33 Presentations and Disclosure of Financial Instruments.

Where practicable, comparative information has been disclosed.

2.12 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken.

Assets acquired at no cost or for nominal consideration are initially recognised as assets and revenue at their fair value at the date of acquisition, unless acquired as a consequence of restructuring administrative arrangements. In the latter case, assets are initially recognised at the amounts at which they were recognised in the transferor agency’s accounts immediately prior to the restructuring.

2.13 Property Plant and Equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of Agency Assets and Liabilities, except for purchases costing less than $2,000 which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

Revaluation

Schedule 2 requires that property, plant and equipment be progressively revalued in accordance with the deprival method of valuation by 1 July 1999. Thereafter they are to be revalued progressively on that basis every three years.

Revaluations of property, plant and equipment are accounted for by separately restating the gross amount and the related accumulated depreciation of the revalued asset.

The carrying amounts of property, plant and equipment held by the Mint have been reviewed to determine whether they are in excess of their recoverable amounts. In assessing recoverable amounts the relevant cash flows have not been discounted to their present value.

The Department is implementing its progressive revaluations as follows:

  • leasehold improvements will continue to be revalued progressively every three years; the current revaluation commenced in 1995-96; and
  • plant and equipment will be initially revalued over the financial year 1998-99, and thereafter over successive three-year periods. (Previous policy was to carry these assets on the basis of the value recognised on acquisition).

Assets in each class acquired after the commencement of the progressive revaluation cycle will be reported on the basis of the value initially recognised on acquisition for the duration of the progressive revaluation then in progress.

The financial effect of the move to progressive revaluation is that the carrying amounts of assets will reflect current values and depreciation charges will reflect the current cost of the service potential consumed in each period.

Depreciation and amortisation rates and methods are reviewed at each balance date and necessary adjustments are recognised in the current and future reporting periods as appropriate.

Intangible assets

Where recognised, intangible assets are reported at the lower of cost or recoverable amount. They are amortised on a straight line basis over their anticipated useful lives.

Depreciation and amortisation

Depreciable property, plant and equipment are written off to their estimated residual values over their estimated useful lives to the Department using the straight line method of depreciation. Leasehold improvements are amortised on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation and amortisation rates applying to each class of depreciable assets are as follows:

1997-98

1996-97

Computers, plant and equipment

3 - 20 years

3 - 20 years

Leasehold improvements

5 years

5 years

Motor vehicles

7 years

7 years

Buildings

10 years

10 years

Office equipment

5 years

5 years

Capitalised software

3 - 5 years

3 - 5 years

2.14 Inventories

Inventories are brought to account at the lower of cost and net realisable value. Work in progress and finished goods are brought to account at actual costs to include direct costs and a proportion of direct labour and overhead. Prior to May 1998, leased precious metals were brought to account at the commodity price for the weight of silver and gold held at balance date. All precious metals are now purchased and brought to account at cost and expensed as used. Indirect materials are expensed at the time of purchase.

2.15 Taxation

The Department is exempt from all forms of taxation, except for fringe benefits tax and sales tax on the Mint’s non-coin products.

2.16 Insurance

In accordance with Commonwealth Government policy, assets are not insured and losses are expensed as they are incurred.

2.17 Bad and Doubtful Debts

Bad debts are written off during the year in which they are identified to the extent to which they have not been provided for.

A provision is raised for any doubtful debts based on a review of all outstanding accounts as at year end.

2.18 Comparative Figures

Where necessary, comparative figures have been adjusted to conform with changes in presentation in these financial statements.

2.19 Statement of Significant Accounting Policies for Administered Items

Administered items include:

(i) Unclaimed Moneys

Moneys from bank accounts inactive for seven years are transferred to the Commonwealth from banking institutions. These unclaimed moneys are deposited in the Consolidated Revenue Fund and are recognised as administered revenue. A provision representing the expected recovery of the
se moneys less refunds paid, based on an analysis of historical transactions, is recognised.

(ii) Guarantees

Guarantees provided under legislation within the portfolio responsibility of the Treasurer are recognised as liabilities when it is probable that the guarantee will be called and it can be reliably measured. In all other instances such guarantees are disclosed in statement of Administered Remote Contingencies (Note 16).

(iii) State and Territory Advances

Advances made to the States and Territories are recognised at their expected recoverable amount at balance date.

(iv) Royal Australian Mint - Seigniorage and Repurchase of Circulating Coins

Seigniorage is collected by the Mint on behalf of the Commonwealth. Seigniorage represents the difference between the face value of coinage sold to the Reserve Bank of Australia and its cost of production to the Mint.

The Mint repurchases circulating coins on behalf of the Commonwealth. The costs incurred by the Mint in repurchasing circulating coins are offset to an extent by the sale of scrap metal and the balance is supplemented by the Commonwealth via a reduction in the total amount paid to the Commonwealth.

(v) Loan Consolidation and Investment Reserve

The value of Commonwealth issued securities held in the Loan Consolidation and Investment Reserve is deducted from the face value of the administered borrowings liability. Any gain or loss on repurchase is reported in the statement of Administered Revenues and Expenses. The net effect is to report the impact of transactions with external parties.

(vi) Dividends

Dividends are recognised as revenue at the time the dividend is declared.

(vii) Profit Distributions Receivable

Profit distributions receivable by the Commonwealth from the Reserve Bank of Australia are recognised in the financial year in which the profit is earned.

If a profit distribution has not been determined prior to finalisation of the Department’s financial statements, it is recognised as revenue only where it can be reliably measured.

(viii) Investments

(a) Development Banks

Investments in development banks are classified as non-monetary assets.

Where the information is available, these investments are recognised at historical cost. Where historical cost records are not readily obtainable, a notional cost was established at 30 June 1993 by reference to the Development Banks’ financial statements and exchange rates at that time.

The investment in the European Bank for Reconstruction and Development (EBRD) is recognised at historical cost, whereas the investments in the Asian Development Bank (ADB), the International Finance Corporation (IFC) and the International Bank for Reconstruction and Development (IBRD) are recognised at notional cost.

Owing to their nature, these investments are not to be revalued periodically.

(b) International Monetary Fund (IMF)

The quota is the current value in Australian dollars of Australia’s subscription to the IMF.

The Special Drawing Rights (SDR) allocation liability reflects the current value in Australian dollars of the liability to repay to the IMF Australia’s cumulative allocation of SDRs, and is classified as an ‘Other Provisions and Payables’.

(c) Portfolio Agencies

The Commonwealth’s investment in other controlled authorities and companies in this portfolio is valued at the aggregate of the Commonwealth’s share of the net assets and net liabilities of each entity as at 30 June 1997.

(ix) Promissory Notes

Promissory notes which have been issued in foreign currencies are translated at the spot rate at balance date. Foreign currency gains and losses are recognised where applicable. Promissory notes have been issued to the International Monetary Fund, International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development and the Asian Development Bank.

(x) Payments to the States

Grants are recognised as expenses at the time that conditions under the grant agreement have been satisfied or payment has been made.

(xi) Borrowings

Borrowings are measured at face value. Premiums and discounts in relation to borrowings are netted and amortised over the life of the borrowings on a straight line basis.

Borrowings are recognised on a gross basis, including borrowings on behalf of the State and Territory Governments. Receivables relating to borrowings on behalf of the State and Territory Governments are recognised as administered assets.

(xii) Foreign Currency Transactions

Foreign currency transactions are converted into Australian currency at the spot rate on the date of the transaction.

Amounts payable and receivable in foreign currencies are converted into Australian currency at the spot rates applicable at balance date. Resulting exchange differences are recognised as administered items.

Where a purchase is specifically hedged, exchange gains or losses on hedging transactions arising up to the date of purchase or sale and costs, premiums and discounts relative to the hedging transactions are included with the purchase or sale. Exchange gains and losses arising on the hedge transactions after that date are taken to the statement of Revenues and Expenses.

(xiii) Derivative Transactions

The Department undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The Department manages this market risk by entering into interest rate swaps and cross-currency swaps.

Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. The notional principal associated with interest rate swaps are not recognised as assets or liabilities.

Swap interest payable and receivable in relation to interest rate and cross-currency swaps is also recognised on a net basis.

In previous financial years swap contracts were recognised on a gross cost basis.

(xiv) Mortgage insurance policies written by Housing Loans Insurance Corporation (HLIC) up to 12 December 1997

The HLIC was sold by the Commonwealth on 12 December 1997. Terms and conditions of the sale included that the Commonwealth shall remain responsible for the mortgage insurance policies written up to the time of the sale.

The sale of the HLIC was conducted by the Office of Asset Sales and Information Technology Outsourcing.

Accounting policies adopted are:

(a) Premiums

Premium comprises amounts charged to the policyholder or other insurer, excluding amounts collected on behalf of third parties, principally stamp duties. The earned portion of premiums received and receivable is recognised as revenue. Premium is treated as earned from the date of attachment of risk.

Premiums received in respect of insured loans are apportioned over a number of years in accordance with an actuarial determination of the pattern of risk in relation to the loans. Premium amounts carried forward in this way are credited to ‘Provision for unearned premiums’.

(b) Claims

Claims incurred expense and a liability for outstanding claims are recognised in respect of insurance policies. The liability is assessed on an actuarial basis and covers claims incurred but not yet paid, incurred but not reported and the anticipated direct and indirect costs of settling those claims.

(c) Acquisition Costs

A portion of acquisition costs relating to unearned premium revenue is deferred in recognition that it represents future benefits. Deferred acquisition costs are amortised on an actuarial basis over the reporting periods expected to benefit from the expenditure.

2.20 Investment in Sydney 2000 Olympic Coin Program (STOCP)

(i) General

The Royal Australian Mint and the Perth Mint have formed an equal partnership to market and distribute Sydney 2000 Olympic Coins. This partnership will conclude in 2001 after the Sydney Olympics.

The Royal Australian Mint’s interest in STOCP is carried forward at the lower of cost and recoverable amount.

The Sydney 2000 Olympic Coin Program consists of 28 base metal coins, 16 silver coins and 8 gold coins.

(ii) Profit distribution

The distribution of any profit is made on the following basis:

Royal Australian Mint Perth Mint
Base metal

60%

40%

Silver

40%

60%

Gold

40%

60%

(iii) Foreign Currency Hedge

The STOCP entered into a foreign currency hedge (the hedge) on 25 June 1997 to the value of $US34 million for the purpose of reducing the risk of foreign currency exposure on overseas sales. The currency hedge matures on 11 March 1999 and is expected to cover all overseas revenues. At present the STOCP has a commitment to the hedge of $US33 million.

The hedge has been accounted for in accordance with AAS 20 (Part A) ‘Foreign Currency Transaction’. Pursuant to this accounting standard the hedge has been classified as a specific hedge, being a specific hedge of all future overseas sales of the STOCP.

2.21 Rounding

Amounts are rounded to the nearest $1,000 except in relation to the following items:

  • transactions of the Consolidated Revenue Fund , the Commercial Activities Fund, the Reserve Money Fund and Special Public Moneys;
  • Act of Grace Payments, Waivers and Write-offs;
  • remuneration of executives; and
  • remuneration of auditors.

It should be noted that in some cases totals may not add due to rounding.

Note 3: Events Occurring After Balance Date

No events have occurred after balance date that effect the financial statements.

Note 4: Goods and Services Expenses

1997-98


$’000

1996-97

$’000

Note 4A: Employee expenses
Remuneration (for services provided)

31,470

33,404

Separation and redundancy

416

263

Total employee expenses

31,886

33,667

Note 4B: Suppliers expenses
Supply of goods and services

13,654

11,727

Operating lease rentals

3,797

4,383

Total supplier expenses

17,451

16,110

Note 4C: Depreciation and amortisation
Depreciation of property, plant and equipment

1,546

1,859

Amortisation of leased assets

97

-

Total expenses

1,643

1,859

Note 4D: Write down of assets
Write down of receivables

-

(96)

Total write down of assets

-

(96)

Note 4E: Expenses of businesses operations
Employees

6,007

6,535

Suppliers

17,811

17,635

Loss on sale of assets

-

63

Write down of assets

18

-

Interest

-

36

Depreciation and amortisation

500

475

Prior year adjustment to seigniorage - abnormal expense

184

-

Total expenses of businesses operations

24,520

24,744

Note 4F: Interest and other financing costs
Government securities

7,942,026

9,697,429

Swaps

786,464

617,744

Total interest and other financing costs

8,728,490

10,315,173

Note 4G: Other administered expenses    
Revenue replacement payments under safety net
arrangements with States and Territories

5,217,767

-

Payments to States in lieu of stamp duty on airport sales

94,400

-

Assumption of debt of Australian National Railways
Commission

460,812

-

Premium paid on redemption of debt

1,302,973

124,622

Payment of Tax Receipts (Victoria) Act 1996

-

555,618

Assumption of debt of Federal Airports Corporation

-

626,410

Other

49,057

33,073

Total other administered expenses

7,125,009

1,339,723

Note 5: Grants

1997-98


$’000

1996-97

$’000

Grants to other sectors
(appropriations to other Commonwealth entities)

258,573

130,615

Grants to State and Territory governments

16,672,977

16,567,033

Other – International Monetary Fund

-

30,000

Total Grants

16,931,550

16,727,648

Note 6: Extraordinary Items

Note 6A: Restructuring

During the year the DAA was transferred to the Australian Taxation Office (ATO).

Assets with a gross value of $154,152 and a written down value of $62,358 were transferred to ATO during 1997-98.

Note 6B: Administered net revenues from extraordinary items

On 12 December 1997 the Commonwealth sold the Housing Loans Insurance Corporation. As part of the sale the Commonwealth assumed the following assets and liabilities in relation to insurance policies written up to the point of sale:

   

1997-98
$’000

Assets: Cash

261,673

  Deferred acquisition costs

28,988

  Premiums receivable

9,698

   

300,359

     
Liabilities: Outstanding claims

29,557

  Unearned premiums

174,892

   

204,449

     
Net revenues from extraordinary items  

95,910

Note 7: Non-taxation Revenue

1997-98


$’000

1996-97

$’000

Note 7A: Net gains from asset sales
Net gains from sale of assets

2

31

Note 7B: Revenues of business operations
Sales of goods and services

23,583

25,983

Other

1,729

748

Total revenues of business operations

25,312

26,731

Note 7C: Administered interest revenue
Interest from other governments:
Housing agreements

241,894

245,403

State and Territory debt

473,827

449,832

Total interest from other governments

715,721

695,235

Interest from other sources:
Other loans

3,578

5,761

Swaps

973,525

870,477

Other

89

1,623

Total interest from other sources

977,192

877,861

Total interest revenue

1,692,913

1,573,096

Note 7D: Administered dividend revenue
Commonwealth authorities

2,729,654

1,705,426

Total dividend revenue

2,729,654

1,705,426

Note 7E: Revenues arising from securities other than trading securities
Amortisation of premiums for Commonwealth Government
Securities on issue

246,267

363,674

Note 7: Non-taxation Revenue (Continued)

1997-98


$’000

1996-97

$’000

Note 7F: Other Administered Revenue
Transfer from Consolidated Revenue Fund
to Trust Fund (LCIR)

8,305,125

1,442,613

Australian Securities Commission regulation fees
and receipts

326,015

297,918

State Fiscal Contributions

406,593

395,225

Other

98,782

82,022

Total other administered revenue

9,136,515

2,217,778

Note 8: Revenue from Independent Sources

Gross revenue earned:    
Sale of goods and services

568

926

Other

404

456

Total revenue earned

972

1,382

Note 9: Revenues from Government

Note 9A: Appropriations    
Appropriations

46,294

48,192

Parliamentary appropriations carried over to following year

3,843

3,333

     
Ordinary annual services

50,137

51,525

     
Note 9B: Resources Received Free of Charge    
ANAO Audit fees

200

210

OPG: Contribution to lease payments


61

339

Australian Archives: file storage

18

18

Attorney General’s: Legal advice

40

-

DOFA: Internal audit

200

139

DOFA: Payroll, accounting and printing

15

33

 

534

739

Note 10: Debt

1997-98

$’000

1996-97

$’000

Note 10A: Leases
Finance Lease Commitments:
Not later than one year

22

99

Later than one year and not later than two years

-

98

Later than two years and not later than five years

-

51

Minimum lease payments

22

248

Deduct: future finance charges

-

29

Lease liability

22

219

Total Lease liability is represented by:
Current

22

81

Non-current

-

138

Note 10B: Administered Debt    
Government securities:    
Securities issued on behalf of the Commonwealth

94,514,019

106,708,387

Securities issued on behalf of the States and Territories

1,890,552

3,717,821

 

96,404,571

110,426,208

Unamortised net premiums on Commonwealth Government
Securities on issue

1,341,803

778,541

Total government securities

97,746,374

111,204,749

Maturity schedule for government securities as at 30 June 1998 is as follows:
Payable:    
within one year

19,405,769

 
in one to two years

9,825,720

 
in two to five years

23,077,014

 
in more than five years

44,096,068

 
 

96,404,571

 
Note 10C: Loans
Maturity schedule for loans is as follows:

3,523,963

3,778,141

Payab
le:
within one year

7,728

6,365

in one to two years

12,554

6,365

in two to five years

18,836

21,878

in more than five years*

3,484,845

3,743,533


3,523,963

3,778,141

Payable to CPA – Loans to States

-

5,612,780

Total loans

3,523,963

9,390,921

(a) IMF promissory notes have been disclosed in this category as the ageing analysis could not be reliably performed for this item.

 

Note 11: Provisions and Payables

1997-98


$’000

1996-97

$’000

Note 11A: Employee liabilities
Salaries and wages

599

496

Annual leave

4,310

4,577

Long service leave

7,666

7,813

Superannuation

74

10

Separation and redundancies

93

67

Total employee entitlement liability

12,742

12,963

Note 11B: Suppliers
Trade creditors

1,044

3,310

Total suppliers

1,044

3,310

Note 11C: Other
Other creditors

1,110

1,435

Unearned income

37

65

Total other

1,147

1,500

Note 11D: Grants
Grants – International Monetary Fund

27,500

30,000

Maturity schedule for grants is as follows:
Payable:
within one year

2,500

2,500

in one to two years

2,500

2,500

in two to five years

7,500

7,500

in more than five years

15,000

17,500


27,500

30,000

Note 11E: Payables due to other financial institutions
Swap principal

2,761,134

11,275,384

Swap interest

22,493

196,571


2,783,627

11,471,955

Maturity schedule for payables due to other financial institutions as at 30 June 1998 is as follows:
Payable:
within one year

632,273

in one to two years

288,373

in two to five years

926,968

in more than five years

936,013


2,783,627

NOTE 11F: Provisions and payables - Other
Interest payable

3,083,987

3,653,373

IMF SDR allocation

1,019,157

880,017

Provisions for unclaimed moneys repayments

41,392

34,521

Provision for insurance claims

29,533

-

Provision for unearned premiums

141,384

-

Other

7,569

26,136

Total other

4,323,022

4,594,047

Note 12: Equity

Note 12A: Equity - Departmental

Item

Accumulated
results

$’000

Asset revaluation
reserve

$’000

Total


$’000

Balance 1 July 1997

6,845

4,463


11,308

Operating result

1,495


-


1,495

Balance 30 June 1998

8,340


4,463


12,803

Note 12B: Equity – Administered      
Balance 1 July 1997

(127,687)

8,112,510


7,984,823

Net change in administered net assets

8,769,984

-


8,769,984

Net revaluation increase

-

229


229

Net decrease in investment

-

(73,099)


(73,099)

Change in accounting policy

(101,095,607)

-


(101,095,607)

Balance 30 June 1998

(92,453,310)


8,039,640


(84,413,670)

Note 13: Financial Assets

1997-98


$’000

1996-97

$’000

Note 13A: Cash
Cash at bank and on hand

36

6,287

Note 13B: Receivables
Trade debtors

1,414

602

Other debtors

3,856

3,333

Less provision for doubtful debts

(24)

(21)

Total receivables

5,246

3,914

Receivables (gross) are aged as follows:

5,270

3,935

Not overdue

4,818

3,744

Over due by:
Less than 30 days

93

74

30 to 60 days

133

35

More than 60 days

226

82

Note 13C: Financial Assets - Cash
Cash at bank

8,792

-

Cash in trust accounts

2,641

2,305,164


11,433

2,305,164

Note 13D: Investments
RAM Interest in the STOCP at cost

618

-

RAM Interest in ITBs

750

-


1,368

-

Note 13E: Financial Assets - Receivables due from other financial institutions
Swap principal

26,899

10,883,395

Swap interest

62,120

264,519


89,019

11,147,914

Maturity schedule for receivables due from other financial institutions as at 30 June 1998 is as follows:
Payable:
Within one year

65,592

In one to two years

-

In two to five years

-

In more than five years

23,427


89,019

Note 13F: Financial Assets - Loans and advances
Loans to State and Territory governments

7,305,705

9,584,919

Less provision for doubtful debts

-

(328,939)


7,305,705

9,255,980

Maturity schedule for Loans to State and Territory governments as at 30 June 1998 is as follows:
Payable:
Within one year

125,910

In one to two years

731,613

In two to five years

974,304

In more than five years

5,473,878


7,305,705

Note 13G: Financial assets - Other receivables
Receivable from CPA Commonwealth securities

-

106,708,387

Profit transfer/Dividends owing

2,726,000

1,703,074

IMF related moneys owing

7,411

198,452

Other loans

-

69,400

Interest receivable

71,520

167,428

Other

1,136

752

Total receivables

2,806,067

108,847,493

 

1997-98


$’000

1996-97

$’000

Note 13H: Investments
International Financial Institutions
Asian Development Bank

281,430

281,430

European Bank for Reconstruction and Development

51,486

51,486

International Finance Corporation

52,760

45,868

International Bank for Reconstruction and Development

265,082

265,082


650,758

643,866

Quota
International Monetary Fund

5,053,498

4,363,568

Investment in Commonwealth Entities
Reserve Bank of Australia

8,035,041

8,035,041

Housing Loans Insurance Corporation

-

73,099

Australian Securities Commission

4,267

4,267

Companies and Securities Advisory Committee

332

103


8,039,640

8,112,510

Government Securities
Internal Treasury Bills

12,880

-

Total Investments

13,756,776

13,119,944

Note 14: Non-financial Assets

1997-98


$’000

1996-97

$’000

Note 14A: Infrastructure, plant and equipment
Computers, plant and equipment - at valuation

6,284

7,191

Accumulated depreciation

(2,220)

(2,552)


4,065

4,639

Computers, plant and equipment - at cost

6,842

6,276

Accumulated depreciation

(3,422)

(2,884)


3,420

3,392

Computers, plant and equipment under finance lease

35

313

Accumulated amortisation

(13)

(61)


22

252

Leasehold improvements - at valuation

897

897

Accumulated amortisation

(732)

(553)


164

344

Leasehold improvements - at cost

910

837

Accumulated amortisation

(496)

(349)


414

488

Total Infrastructure, Plant and Equipment

8,085

9,115

Note: Intangibles have not been included in infrastructure, plant and equipment in the above table.

Intangibles

787

529

Accumulated depreciation

(421)

(286)


366

243

Note 14B: Analysis of Infrastructure, Plant, Equipment and Intangibles

Table A: Movement summary 1997-98 for all assets irrespective
of valuation basis

Item

Leasehold Improvements


$’000


Computers,
plant & equipment

$’000

Intangibles


$’000

Total


$’000

Gross value as at
1 July 1997

1,734

13,780

529

16,043

Additions

111

1,321

257

1,689

Disposals

(38)

(1,940)

(1)

(1,979)

Gross value as at
30 June 1998

1,807

13,161

785

15,753

Accumulated
Depreciati
on/Amortisation
as at 1 July 1997

902

5,499

286

6,687

Depreciation/amortisation
charge for assets held
1 July 1997

352

1,650

134

2,136

Depreciation/amortisation
charge for additions

-

5

-

5

Adjustment for Disposals

(26)

(1,499)

(1)

(1,526)

Accumulated
Depreciation/Amortisation
as at 30 June 1998

1,228

5,655

419

7,302

Net book value as at
30 June 1998

579

7,506

366

8,451

Net book value as at
1 July 1997

832

8,283

243

9,358

Note 14: Non-financial Assets (Continued)

Table B: Summary of balances of assets at valuation as at 30 June 1998

Item  

Leasehold Improvements


$’000

Infra-structure, plant & equipment


$’000

Total


$’000

As at 30 June 1998
Gross value  

896

6,284

7,180

Accumulated
Depreciation/Amortisation
 

(732)

(2,220)

(2,952)

Net book value

164

4,064

4,228

As at 30 June 1997
Gross value  

896

7,191

8,087

Accumulated
Depreciation/Amortisation
 

(553)

(2,552)

(3,105)

Net book value

343

4,639

4,982

Table C: Summary of finance leases at 30 June 1998

Item

Finance lease


$’000

 

Total


$’000

As at 30 June 1998
Gross value

35

 

35

Accumulated Depreciation/Amortisation

(13)

 

(13)

Net book value

22

22

As at 30 June 1997
Gross value

313

 

313

Accumulated Depreciation/Amortisation

(61)

 

(61)

Net book value

252

252

Note 14: Non-financial Assets

1997-98


$’000

1996-97

$’000

Note 14C: Inventories
Raw materials

3,559

3,017

Work in progress

165

368

Finished goods

2,238

1,188

less provision for irrecoverable amount

-

-

Total inventories

5,962

4,573

Note 14D: Other
Coin Collection

3,100

3,168

Prepayments

3,595

1,322

Total other

6,695

4,490

Note 15: Cash Flow Reconciliation

1997-98


$’000

1996-97

$’000

Note 15A: Departmental Reconciliation
Reconciliation of net cost of services to net cash provided
by operating activities:
Net Cost of Services including business operations

(49,227)

(48,155)

Revenue from government (Appropriation Receipts)

50,249

51,655

Abnormal item seigniorage

184

-

Resources received free of charge

534

739

Operating result

1,740

4,239

Pr
ofit distribution

(618)

-

Depreciation/Amortisation

2,143

2,334

Asset write-off

72

-

Transfer of inventory to coin collection

(4)

-

Loss of sale on disposal of infrastructure, plant and
equipment

-

63

Profit on sale of infrastructure, plant and equipment

(47)

(31)

Changes in assets and liabilities
Increase in receivables

(1,332)

(1,503)

Increase in other assets

(2,273)

352

Increase in inventories

(1,389)

1,499

Decrease in employee liabilities

(221)

46

Decrease in suppliers

(1,588)

(863)

Decrease in other liabilities

(32)

1,382

Decrease in finance lease liability

(46)

(51)

Asset adjustments

(20)

(31)

Net cash provided by operating activities

(3,615)

7,435

Note 15B: Administered Reconciliation
Reconciliation of net change in administered assets
to net cash provided by operating activities:
Net cost to government

(21,678,093)

(22,922,218)

Cash from the Commonwealth Public Account - gross

106,369,105

32,404,081

Cash to the Commonwealth Public Account - gross

(76,016,938)

(10,085,155)

Net revenue from extraordinary items

95,910


-

Net change in administered net assets

8,769,984

(603,292)

Cash from the Official Commonwealth Public Account

(74,527,726)

(4,754,676)

Cash to the Official Commonwealth Public Account

71,259,019

5,123,217

Transfer of funds from Consolidated Revenue to Trust Fund

(8,305,125)

(1,442,613)

Assumption of non cash assets of Housing Loans Insurance

Corporation


(38,686)


-

Assumption of liabilities of Housing Loans Insurance Corporation

204,449


-

Assumption of debt of Australian National Railways Commission

460,812


-

Assumption of debt of Federal Airports Corporation

-

626,410

Foreign exchange losses

2,698,393

399,648

Amortisation of net premium on issue of debt

(246,267)

(363,673)

Premium on redemption of debt

1,302,973

124,620

Other

5,128

3,831

Change in assets and liabilities:
(Increase)/decrease in dividend and interest receivables

(724,379)

422,741

(Increase)/decrease in IMF remuneration receivables

(5,467)

449,088

(Increase)/decrease in premiums receivable

9,312


-

(Increase)/decrease in non-financial assets

7,173


-

Increase/(decrease) in insurance claims and unearned
premium provisions and payables

(33,532)


-

Increase/(decrease) in unclaimed moneys provisions and
payables

6,871

3,112

Increase/(decrease) in grant provisions and payables

(2,500)

30,000

Increase/(decrease) in interest provisions and payables

(743,464)

(34,918)

Increase/(decrease) in IMF provisions and payables

1,806

16,505

Net Cash from Operating Activities

98,774


-

Note 16: Administered Remote Contingencies

Note 16: Guarantees

The following borrowings have been guaranteed by the Commonwealth in respect of authorities within the Treasury portfolio:

Borrower Legislation Authorising
Guarantee

Balance
Outstanding

Balance
Outstanding


1997-98

1996-97


$’000

$’000

Papua New
Guinea
PNG Act 1949-75 & PNG
Loans Guarantee Act 1975

5,775

6,130

Commonwealth
Bank of
Australia (a)

CBA Act 1959 s117


 

99,745,900

104,174,000

Commonwealth
Bank of
Australia
Superannuation
Corporation (a) (d)

CBA Act 1959 s117


4,017,000

-

Commonwealth
Development
Bank (a)

CBA Act 1959 s117


 

472,500

1,102,000

Reserve Bank of
Australia (b)

RBA Act s77

34,755,086

41,190,050

Housing Loans
Insurance
Corporation (c)

HLIC Act 1965 s30, 31(b)


-


-

(a) In relation to the Commonwealth Bank of Australia, the Commonwealth Bank of Australia Superannuation Corporation and the Commonwealth Development Bank, the Commonwealth guarantees all moneys that are, or may at any time become, payable to a person other than the Commonwealth. Such guarantee will be progressively phased out following the Government sell-down on 19 July 1996.

(b) In relation to the Reserve Bank of Australia, the Commonwealth guarantees all moneys that are, or may at any time become, payable to a person other than the Commonwealth.

(c)The HLIC was sold during the year and residual contingencies have been assumed by the Commonwealth. The principal amount covered by the guarantee and the balances outstanding are unable to be reliably measured. The guarantee relates essentially to the Housing Loans Insurance Corporation’s (HLIC) contracts of mortgage insurance and any borrowings approved by the Treasurer up to 12 December 1997.

(d)This amount became available following the competition of the 1996-97 financial statements.