Financial Statements

Statement by the Inspector-General of Intelligence and Security and the Assistant Inspector-General

Certification

We certify that the attached financial statements for the year ended 30 June 1996 are in agreement with the accounts and records of the Office of the Inspector-General of Intelligence and Security and, in our opinion, the financial statements present fairly the information required by the Financial Statements of Departments Guidelines issued by the Minister for Finance for reporting periods ending on and after 30 June 1995.

Signed

R N McLeod
Inspector-General of
Intelligence and Security

August 1996

Signed

Philip Moss
Assistant Inspector-General

22 August 1996

Operating Statement for the year ended 30 June 1996

	Notes	1995-96 $	1994-95 $
Net cost of services	3
Expenses
Employee expenses		477,545	407,721
Other administrative expenses		189,421	629,439
Total expenses		666,966	1,037,160

Revenues from independent sources
Other revenues from independent sources		6,649	1,258
Total revenues from independent sources		6,649	1,258

Total net cost of services		660,317	1,035,902

Revenues from Government	3
Parliamentary appropriations used for:
Ordinary annual services		637,887	779,227
Other annual services		-	210,320
Liabilities assumed by government		-	52,456
Resources received free of charge		65,214	67,595
Total revenues from government		703,101	1,109,598

Excess revenues from government		42,784	73,696
Over net cost of services

Accumulated expenses less revenues at begining of financial year		(253,689)	(327,385)
Accumulated expenses less revenues at end of financial Year		(210,905)	(253,689)
The above Statement should be read in conjunction with the accompanying notes.

Statement of Assets and Liabilities for the year ended 30 June 1996

	Notes	1995-96 $	1994-95 $
Current Assets
Cash	4	389	1,003
Receivables	5	139	1,400
Other	6	37,624	1,025
Total current assets		38,152	3,428

Non-Current Assets
Property, plant and equipment	7	29,626	17,372
Total non-current assets		29,626	17,372

Total assets		67,778	20,800

Current Liabilities
Creditors	8	9,477	12,319
Provisions	9	40,046	73,510
Total current liabilities		49,523	85,829

Non-Current Liabilities
Provisions	10	229,160	188,660
Total non-current liabilities		229,160	188,660

Total liabilities		278,683	274,489

Net Liabilities		(210,905)	(253,689)
The above Statement should be read in conjunction with the accompanying notes.

Statement of Cash Flows for the year ended 30 June 1996

	Notes	1995-96 $	1994-95 $
Cash Flows from Operating
Activities

Inflows:
Parliamentary appropriations		637,887	940,227
Advance from the Minister for Finance		-	49,320
Other revenue from independent sources		1,176	1,258
Total cash inflows		639,063	990,805

Outflows:
Employee expenses		(470,175)	(345,268)
Other administrative expenses		(154,723)	(641,788)
Total cash outflows		(624,898)	(987,056)

Net cash provided by operating activities	11	14,165	3,749

Cash Flows from Investing
Activities

Outflows:
Acquisition of non-current assets		(14,779)	(3,080)
Net cash provided by or used in investing activities		(14,779)	(3,080)
Net increase/(decrease) in cash held		(614)	669

Cash at beginning of financial year		1,003	334
Cash at end of financial year		389	1,003
The above Statement should be read in conjunction with the accompanying notes.

Statement of Transactions by Fund for the year ended 30 June 1996

Consolidated Revenue Fund
	Notes	1995-96 Budget $	1995-96 Actual $	1994-95 Actual $
Receipts 12
Section 35 receipts		1,000	1,176	1,258
Total receipts		1,000	1,176	1,258

Expenditure 13
Appropration Act (No. 1)		584,000	637,887	990,805
Receipts under Section 35 of the Audit Act 1901		1,000	-	-
Total expenditure		585,000	637,887	990,805
The above Statement should be read in conjunction with the accompanying notes.

Notes to and forming part of the Financial Statements for the year ended 30 June 1996

Note 1: Objectives
The objectives of the Office are to help the Ministers responsible for the Australian Security Intelligence Organization, Australian Secret Intelligence Service, Defence Signals Directorate, Defence Intelligence Organisation and Office of National Assessments to oversee and review the activities of those agencies, and to ensure that the agencies act legally and with propriety, comply with ministerial guidelines and directives and respect human rights.

Note 2: Summary of significant accounting policies

(a) Basis of accounting
The financial statements are required by Section 50 of the Audit Act 1901 and are a general purpose financial report. The financial statements have been prepared in accordance with the Financial Statements of Departments Guidelines issued by the Minister for Finance for reporting periods on or after 30 June 1995. The Guidelines require compliance with Statements of Accounting Concepts, Australian Accounting Standards, and related Guidance Releases. Compliance with consensus views of the Urgent Issues Group of the Australian Accounting Research Foundation is also required.

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

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

(d) Depreciation of non-current assets
Depreciation on property, plant and equipment is calculated on a straight line basis, so as to write off the cost of each item less its estimated residual value, progressively over its estimated useful life.

(e) Employee entitlements
The provision for employee entitlements encompasses annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Office is estimated to be less than the annual entitlement for sick leave. The provision for annual leave reflects the value of the total annual leave entitlements of all employees at 30 June 1996 and is recognised at the nominal amount. The provision for long service leave reflects the value of the estimated future cash flows to be made in respect of all employees. In determining the present value of the liability, the Office has taken into account attrition rates and pay increases through promotion and inflation.

(f) Superannuation payments
Staff of the Office contribute to the Commonwealth Superannuation Scheme and the Public Service Superannuation Scheme. Total employer contributions to these Schemes for the year ended 30 June 1996 was $66,537, and have been expensed in these financial statements.

The costs of superannuation in the 1994-95 year (other than productivity contributions), were a liability assumed by government.

(g) Resources received free of charge
Resources received free of charge are recognised as revenue where the amounts can be reliably measured. Use of those resources is recognised as an expense (see Note 3).

(h) Program Statement
The Office of the Inspector-General of Intelligence and Security is a sub-program of the Prime Minister and Cabinet Portfolio (Program 7, sub-program 4) having no other component and is therefore not required to prepare a Program Statement.

(i) Taxation
The Office's activities are exempt from all forms of taxation except Fringe Benefits Tax.

(j) Administered items
The Office does not have any administered assets and liabilities and is not responsible for any administered financial transactions.

(k) Cash
For the purposes of the Statement of Cash Flows, cash balances include cash on hand and at bank.

Note 3: Items of expense and revenue
The amounts and particulars of the following classes of expenses and revenues are included in the aggregate amounts shown in the Operating Statement:

	1995-96 $	1994-95 $
In relation to operating expenses:
Employee entitlements	40,102	43,593
Depreciation - Property, plant and equipment	6,547	12,880
Loss on disposal of property, plant and equipment	420	3,406

In relation to revenue:
Appropriation carryover from the preceding financial year	58,000	58,483
Resources received free of charge:
Department of the Prime Minister and Cabinet - an amount identified for office space	48,672	50,856
Australian National Audit Office - provision of auditing services for the preparation of the 1995-96 Financial Statements	16,000	16,020
Department of Finance - provision of accounting and budgetary services	542	719

The following resources received free of charge are not recognised in the Operating Statement.

Resources received free of charge from the Department of the Prime Minister and Cabinet are significant to the operation of the Office. These resources include: the administration of the Office's payroll and personnel functions, accommodation support, financial and other advice, information technology support, security advice and other assistance by the Department's Agency Security Adviser.

The Department of Defence provided the Office with the use of a secure Local Area Network (LAN) in 1995-96. The cost of the LAN is approximately $69,000. The equipment remains the property of the Department of Defence.

	1995-96 $	1994-95 $
Note 4: Current Assets - Cash
Cash on hand	68	151
Cash at bank	321	852
Total	389	1,003

Note 5: Current Assets - Receivables
Other debtors
Other Commonwealth entities	139	1,400
Receivables were less than 30 days overdue as at 30 June 1996.

Note 6: Current Assets - Other
Prepayments	37,624	1,025

Note 7: Non-Current Assets - Property, plant and equipment
Plant and equipment at cost	77,732	74,109
Less accumulated depreciation	(48,106)	(56,737)
Written down value	29,626	17,372

Note 8: Current Liabilities - Creditors
Trade creditors	4,859	8,035
Other creditors	4,618	4,284
Total	9,477	12,319

Note 9: Current Liabilities - Provisions
Employee entitlements	40,046	73,510

Note 10: Non-Current Liabilities - Provisions
Employee entitlements	229,160	188,660

Note 11: Cash Flow Reconciliation Reconciliation of net cost of services to net cash provided by operating activities
Net cost of services - (loss)	(660,317)	(1,019,882)
Revenues from Government	703,101	1,093,578
Depreciation - Property, plant and equipment	6,547	12,880
Increase in provision for employee entitlements	7,036	7,502
Decrease in creditors	(2,842)	(93,392)
(Increase) in other assets	(36,599)	(343)
Decrease in receivables	1,261	-
Net loss on disposal of property plant and equipment	420	3,406
Revenue from independent sources - asset previously not recognised	(4,442)	-
Net cash flow from operating activities	14,165	3,749

	1995-96 Budget $	1995-96 Actual $	1994-95 Actual $
Note 12: Receipts to Consolidated Revenue Fund
Section 35 of the Audit Act 1901- to be credited to Running Costs Division 505	1,000	1,176	1,504

Note 13: Expenditure from Annual Appropriations
Appropriation Acts Nos. 1 and 3 Division 505	1995-96 Appropriation $	1995-96 Actual $	1994-95 Actual $
1 Running Costs (Annotated Appropriation)	670,000	637,887	831,063
2 Other Services Compensation and Legal Expenses	-	-	159,742
Total Appropriation Acts Nos. 1 and 3	670,000	637,887	990,805
Represented by:
Appropriation Act (No. 1)	585,000	637,887
Appropriation Act (No. 3)	85,000

Note 14: Agreements equally proportionately unperformed (AEPUs)
No AEPUs existed as at 30 June 1996.

Note 15: Remuneration of executives
The number of executive officers who received, or were due to receive fixed remuneration of $100,000 or more, directly or indirectly, from the Office or any related body is disclosed in the following bands:

$100,000 to $110,000 1
$210,000 to $220,000 1.

The aggregate amount of fixed remuneration of executive officers received or due and receivable during the financial year was $319,766 (1994-95: $250,244).

Note 16: Auditor's remuneration
Services provided free of charge by the Auditor-General for auditing the 1995-96 Financial Statements of the Office is estimated at $16,000 (1994-95: $16,020) and have been included in Resources Received Free of Charge (see also Note 3). No other services were provided by the Auditor-General.

Note 17: Appropriations made for future reporting periods
Appropriations relating to future reporting periods at 30 June 1996 totalled $262,000 under the Supply Act (No. 1) 1996-1997.

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