Analysis of budgeted financial statements

An analysis of the AIRC/AIR budgeted financial statements, as reflected in
the AIRC/AIR budgeted departmental financial statements and administered notes for 2004-05, is provided below.

Departmental

Statement of Financial Performance



The Registry is budgeting for a loss of $5.026m in 2004-05 and then for a break-even result for the three forward years.

Total revenue is estimated to be $51.136m, an increase of $0.447m from the 2004-05 budget. The increase is the result of:

• the funding impact of supplementation for the Workplace Dispute Settlement Pilot Programme ($0.400m); and
   
• the funding impact of supplementation for increases in rent for the Commonwealth Law Court Building in Tasmania ($0.047m).

Total expenses are estimated to be $56.162m in 2004-05.

Statement of Financial Position

The Registry’s budgeted net asset position of ($3.074m) for 2004-05 is expected to remain the same for the three forward years.

Total assets for 2004-05 is estimated to be $9.107m comprising $6.195m in financial assets and $2.912m in non-financial assets.

Total liabilities for 2004-05 is estimated to be $12.181m with the primary liability being accrued employee entitlements which total $11.684m.


FINANCIAL STATEMENTS

Budgeted Departmental Statement of Financial Performance

This statement provides a picture of the expected financial results for the AIRC/AIR by identifying full accrual expenses and revenues which shows whether the AIRC/AIR is operating at a sustainable level (see Table 3.1).

Budgeted Departmental Statement of Financial Position

This statement shows the financial position of the AIRC/AIR. It helps decision-makers to track the management of the AIRC/AIR assets and liabilities (see Table 3.2).

Budgeted Departmental Statement of Cash Flows

Budgeted cash flows,as reflected in the statement of cash flows, provides important information on the extent and nature of cash flows by categorising them into expected cash flows from operating activities, investing activities and financing activities
(see Table 3.3).

Departmental Capital Budget Statement

Shows all planned capital expenditure (on non financial assets), whether funded either through capital appropriations or additional equity or borrowings, or from funds from internal sources (see Table 3.4) .

Departmental Non-financial Assets – Summary of Movement

Shows budgeted acquisitions and disposals of non-financial assets during the budget year (see Table 3.5) .

NOTES TO FINANCIAL STATEMENT

1. Accounting Policy

The budgeted financial statements have been prepared in accordance with the requirements of the Finance Minister’s Orders issued by the Minister for Finance and Administration.

The statements have been prepared:

• on an accrual accounting basis;
• in compliance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Boards and the Consensus Views of the Urgent Issues Group, and
• having regard to Statements of Accounting Concepts.

2. Departmental and Administered Items

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

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

Administered assets, liabilities, revenues and expenses are those items which are controlled by the government and managed or oversighted, by the AIRC/AIR on behalf of the government. These items include Judges’ pension payments and termination of employment lodgement fees.

3. Departmental Revenue from Government - Ordinary Annual Appropriations

Revenue from government represents the purchase of outputs from the AIRC/AIR by the government. The changes reflected in the ordinary annual appropriations are as a result of those new measures and variations that are explained in Section 1: Overview, variations and measures.

4. Departmental Revenue from Other Sources

Revenue from the sale of goods and services and is recognised upon the delivery of the goods or services to the customer.

5. Departmental Expenses - Employees

This item represents payments and net increases or decreases in entitlements owed to employees for services provided in the financial year.

6. Departmental Expenses - Suppliers

This item represents payments to suppliers for goods and services.

7. Departmental Expenses - Depreciation and Amortisation

Depreciable property plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the AIRC/AIR using, in all cases, the straight-line method of depreciation.

Leasehold improvements are amortised over the lesser of the estimated useful life of the improvements or the unexpired period of the lease and Property, Plant and equipment and Intangibles at between three and ten years.

8. Departmental Assets and Liabilities - Financial Assets - Receivables

Receivables represent amounts owing to the AIRC/AIR for goods and services that it has provided to external parties and cash reserves held in the Official Public Account which are recorded as a receivable.

9. Departmental Assets and Liabilities - Non-Financial Assets

These items represent future economic benefits that the AIRC/AIR will consume in producing outputs. The reported value represents the purchase price paid, less depreciation incurred to date in using that asset.

Property, Plant and equipment and Intangibles are brought to account at cost, except for purchases costing less than $10,000 for leasehold improvements and internally developed computer software and less than $1,000 for all other classes, 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). Asset purchases will be sourced from existing AIRC/AIR resources.

10. Departmental Assets and Liabilities - Provisions and Payables - Employees

Provision has been made for the AIRC/AIR liability for employee entitlements arising from services rendered by employees to balance date. This liability encompasses unpaid salaries, annual leave, long service leave and Judges’ leave. No provision is made for sick leave.

The liability for leave expected to be settled within 12 months have been measured at the nominal amount.

Other employee entitlements payable later than one year have been estimated at the present value of the expected future cash outflows in relation to those entitlements. Attrition rates and pay rises through promotion and salary agreements have been taken into account.