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

Budgeted departmental income statement

The Workplace Ombudsman is budgeting to break-even in 2007-08.  Total revenue and expenses are estimated to be $69.713 million, an increase of $8.778 million from the 2007-08 PBS estimates.  The measures and other variations contributing to this increase are outlined in Table 1.2 and Table 1.3.

Budgeted departmental balance sheet

The budgeted net asset position for 2007-08 of $41.917 million represents an increase of $6.111 million from the 2007-08 PBS estimates.  This increase is due to:

• An equity injection of $3.950 million relating to the establishment of the Office of the Workplace Ombudsman; and
• The net equity movement resulting from the organisation’s operations in 2006‑07 – a surplus of $4.319 million less a return of unspent appropriation of $2.154 million. 

Departmental capital budget statement

The 2007-08 capital expenditure budget has increased by $3.950 million, representing an equity injection for office fit-outs to accommodate additional staff and software development costs.

Table 3.10:  Schedule of administered capital budget

The Workplace Ombudsman has no administered capital budget.

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

The Workplace Ombudsman 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; and
• 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.

Agency Revenue from Government

Revenue from government represents the purchase of outputs from the Workplace Ombudsman 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 2: Revisions to agency outcomes.

Agency Revenue from Other Sources

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

Agency 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.

Agency Expenses – Suppliers

This item represents payments to suppliers for goods and services.

Agency Expenses – Depreciation and Amortisation

Property, plant, equipment and intangible assets are written-off to their estimated residual values over their estimated useful lives to the Workplace Ombudsman using, in all cases, the straight-line method of depreciation.

Computing equipment assets are depreciated over their useful lives which are 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.

Agency Assets – Financial Assets – Cash

Cash represents notes and coins held and deposits at call with a bank or financial institution.

Agency Assets – Financial Assets – Receivables

Receivables represent amounts owing to the Workplace Ombudsman for goods and services it has provided to external parties and cash reserves held in the Official Public Account.

Agency Assets – Non-Financial Assets

These items represent future economic benefits that the Workplace Ombudsman 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.

Infrastructure, Plant and Equipment is 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 a group of similar items which are significant in total).

Internally developed or purchased computer software, disclosed in the Departmental Balance Sheet as Intangibles, is expensed in the year of acquisition except for purchased software costing more than $2,000 or for internally developed software costing more than $200,000 which are capitalised at cost.

Land and Buildings (leasehold improvements) are initially brought to account at cost, except for purchases costing less than $2,000, which are expensed in the year of acquisition.  The Workplace Ombudsman annually reassesses and adjusts the values of Land and Buildings (leasehold improvements), Infrastructure, Plant and Equipment.

Agency Liabilities – Provisions – Employees

Provision has been made for the Workplace Ombudsman’s liability for employee entitlements arising from services rendered by employees to balance date. This liability encompasses unpaid wages and salaries, annual and long service 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 in calculating the provision for employee entitlements.

Agency Liabilities – Payables – Suppliers

This item mainly comprises trade creditors and operating lease rentals.

Administered Non-Taxation Revenue – Other Sources

This revenue comprises court awarded penalties relating to breaches of the Workplace Relations Act 1996.  The penalties are administered by the Workplace Ombudsman on behalf of government.

Administered Assets – Financial Assets – Receivables

These assets comprise receivables relating to court awarded penalties for breaches of the Workplace Relations Act 1996.  The penalties are administered by the Workplace Ombudsman on behalf of government.

Administered Cash Flows

These cash flows relate to court awarded penalties for breaches of the Workplace Relations Act 1996.  The penalties are administered by the Workplace Ombudsman on behalf of government and are paid directly into the Consolidated Revenue Fund.