Analysis of budgeted financial statements

An analysis of the primary causes of movements in the financial statements from those published in the 2007-08 Portfolio Budget Statements (PBS) is provided below.

Budgeted financial statements

Departmental financial statements

Budgeted departmental income statement

The Australian Industrial Relations Commission/Australian Industrial Registry is budgeting for a break-even result in 2007-08 and for the three forward years.

Total revenue and expenses for 2007-08 are both estimated to be $53.992 million which is unchanged from the 2007-08 Budget.

Budgeted departmental balance sheet

The Australian Industrial Relations Commission/Australian Industrial Registry’s budgeted net asset of $21.831 million which is expected to remain the same for the three forward years.

Total assets for 2007-08 is estimated to be $41.284 million comprising $34.658 million in financial assets and $6.626 million in non-financial assets.

Total liabilities for 2007-08 is estimated to be $19.453 million with the primary liabilities being accrued employee entitlements which total $10.833 million and leasehold incentive of $7.285 million.

Budgeted departmental statement of cash flows

The Australian Industrial Relations Commission/Australian Industrial Registry is budgeting for a nil change in the bank account in 2007-08 and for the three forward years.

The net difference for cash from operating activities which is estimated to be $1.101 million will be used to fund the investment activities of the Commission and Registry.

Departmental statement of changes in equity — summary of movement

The Australian Industrial Relations Commission/Australian Industrial Registry is budgeting for nil movements in equity in 2007-08.

Departmental capital budget statement

The Australian Industrial Relations Commission/Australian Industrial Registry is budgeting for $1.010 million in 2007-08 and in each of the three forward years to be used for the purchase of non financial assets.  These capital purchases will be funded internally by departmental resources.

Departmental property, plant, equipment and intangibles — summary of movement

The Australian Industrial Relations Commission/Australian Industrial Registry is budgeting that the net value of departmental property, plant, equipment and intangibles will remain the same at 30 June 2008 as it did at 1 July 2007 which totals $5.481 million.

Table 3.8:  Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

The AIRC/AIR has no assets and liabilities administered on behalf of government in the 2007-08 financial year.

Table 3.10:  Schedule of administered capital budget

The Australian Industrial Relations Commission/Australian Industrial Registry has no administered capital budget.

Table 3.11:  Schedule of administered property, plant, equipment and intangibles — summary of movement (Budget year 2007‑08)

The Australian Industrial Relations Commission/Australian Industrial Registry has no administered property, plant, equipment or intangibles.

Notes to the financial statements

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 Deregulation.

The statements have been prepared:

• on an accrual accounting basis;
• in compliance with Australian Accounting Standards XE "Australian Accounting Standards"  and Australian Equivalents to International Financial Reporting Standards XE "Australian Equivalents to International Financial Reporting Standards"  (AEIFRS) and other authoritative pronouncements of the Australian Accounting Standards Board XE "Australian Accounting Standards Boards"  and the Consensus Views of the Urgent Issues Group.

Departmental Revenue from Government

Revenue from government represents the purchase of outputs from the Australian Industrial Relations Commission/Australian Industrial Registry by the government. The changes reflected in the ordinary annual appropriations are a result of those new measures and variations that are explained in Section 1: Agency overview and resources, variations and measures.

Departmental Revenue from Other Sources

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

Departmental Expenses – Employees

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

Departmental Expenses – Suppliers

This item represents payments to suppliers for goods and services.

Departmental Expenses – Depreciation and Amortisation

Property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Australian Industrial Relations Commission/Australian Industrial Registry using, in all cases, the straight-line method of depreciation.

Computing equipment assets are depreciated over their useful lives between three and seven years. Office machines are depreciated over five years (20 per cent). 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. 

Forward estimates of depreciation expense are made using forecasts of net capital acquisition requirements over the forward years.

Departmental Assets – Financial Assets – Receivables

Receivables represent amounts owing to the Australian Industrial Relations Commission/Australian Industrial Registry for goods and services it has provided to external parties and cash reserves held in the Official Public Account.

Departmental Assets – Non-Financial Assets

These items represent future economic benefits that the Australian Industrial Relations Commission/Australian Industrial Registry will consume in producing outputs. Apart from re-valued assets, the reported value represents the purchase price paid less depreciation incurred to date in using that asset.

Land and Buildings, and Infrastructure, Plant and Equipment are initially brought to account at cost, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of the group of similar items which are significant in total).

Computer software, disclosed in the Departmental Balance Sheet as Intangibles, are expensed in the year of acquisition except for purchases or internally developed software costing more than $200,000 which are capitalised at cost.

The Australian Industrial Relations Commission/Australian Industrial Registry annually reassesses and adjusts the values of Land and Buildings (leasehold improvements), Infrastructure, Plant and Equipment.

Departmental Liabilities – Provisions – Employees

Provision has been made for the Australian Industrial Relations Commission/Australian Industrial Registry’s liability for employee entitlements arising from services rendered by Australian Industrial Commission Members and Australian Industrial Registry employees to balance date. This liability encompasses unpaid wages and salaries, annual and long service leave and Judges’ leave. No provision is made for sick leave.

The liability for leave expected to be settled within 12 months has 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 wage/salary agreements have been taken into account.

Departmental Liabilities – Payables – Suppliers

This item mainly comprises trade creditors and operating lease rentals.

Administered Items

Administered assets, liabilities, revenues and expenses are those items which are controlled by the Government and managed, or overseen, by the Australian Industrial Relations Commission/Australian Industrial Registry on behalf of the Government.  The only administered item is the collection of termination of employment lodgement fees.