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Notes to and forming part of the financial statements

Note 1 – Overview

1.1 Basis of Preparation of the Financial Statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The Financial Statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) for reporting periods ending on or after 1 July 2015; and
  • Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest dollar.

1.2 Significant Accounting Judgments and Estimates

In the process of applying the accounting policies listed in this note, OIGIS has made judgments in relation to leave provisions that have a significant impact on the amounts recorded in the financial statements. Leave provisions involve assumptions on the likely tenure of existing staff, future salary movements and future discount rates.

1.3 New Australian Accounting Standards

New or revised standards, interpretations and amending standards that were issued prior to the sign-off date and are applicable in the current reporting period did not have a material effect, and are not expected to have a future material effect, on OIGIS's financial statements.

1.4 Taxation

OIGIS is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and Goods and Services Tax (GST).

Revenues, expenses and assets are recognised net of GST except:

  • where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  • for receivables and payables.

1.5 Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when OIGIS gains control of the appropriation. Appropriations receivable are recognised at their nominal amounts.

1.6 Events after the Reporting Period

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of OIGIS.

Note 2 – Expenses

2017
$

2016
$

Note 2A – Employee Benefits

Wages and salaries

1 897 944

1 547 700

Superannuation:

Defined benefit plans

119 336

136 643

Defined contribution plans

210 021

173 166

Leave and other entitlements

195 960

490 341

Separations and redundancies

167 181

-

Total employee benefits

2 590 442

2 347 850

Accounting Policy

Accounting policies for employee related expenses are contained in Note 8.

2017
$

2016
$

Note 2B – Suppliers

Goods and services supplied or rendered

Consultants

19 448

-

ICT support

46 000

46 000

Legal expenses

5 702

-

Printing non publications

8 022

9 483

Resources received free of charge:

Notional Rent Charge

128 000

102 000

Notional Audit Fees

21 000

18 000

Notional IT Support Costs

4 545

4 545

Stationery

9 158

13 932

Training

18 899

13 868

Travel

14 222

9 200

Overseas Travel

44 981

-

Security Vetting Expenses

6 380

10 482

Other

17 523

15 584

Total goods and services supplied or rendered

343 880

243 094

Other suppliers

Motor Vehicle Lease – minimum lease payments

15 863

14 675

Workers compensation premiums

6 163

5 380

Total other supplier

22 026

20 055

Total supplier

365 906

263 149

Leasing Commitments

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

2017
$

2016
$

Within 1 year

11 134

11 134

Between 1 to 5 years

1 856

12 990

Total operating lease commitments

12 990

24 124

Note 3 – Own-Source Revenue

2017
$

2016
$

Note 3A – Other Revenue

Employee FBT Contributions
Other

3 880
280

3 966
114

Resources Received Free of Charge:

Department of the Prime Minister & Cabinet

128 000

102 000

Australian National Audit Office

21 000

18 000

Australian Signals Directorate

4 545

4 545

Total other own-source revenue

157 705

128 625

Accounting Policy

Resources Received Free of Charge

Resources received free of charge are recognised 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 as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

The main resources received free of charge in 2016-17 are the provision of office space (from the Department of the Prime Minister and Cabinet) and the installation and maintenance of the OIGIS owned internal secure computer network (from Australian Signals Directorate).

Note 4 – Financial Assets

2017
$

2016
$

Trade and other receivables

Appropriations receivable

3 827 406

3 314 181

GST receivable from the Australian Taxation Office

2 817

176

Other receivables

-

10 446

Total trade and other receivables (net)

3 830 223

3 324 803

All receivables are expected to be recovered in less than 12 months.

Accounting Policy

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed as at end of reporting period. Allowances are made when collectability of the debt is no longer probable. All financial assets have been assessed for impairment at 30 June 2017. No indicators or impairment have been identified.

Note 5 – Non-Financial Assets

Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment

Item

Property, plant & equipment
$

As at 1 July 2016

Gross book value

120 685

Accumulated depreciation and impairment

(42 979)

Total as at 1 July 2016

77 706

Additions
by purchase

26 242

Depreciation expense

(19 562)

Disposals

-

Revaluations and impairments

5 014

Total as at 30 June 2017

89 400

Total as at 30 June 2017 represented by:

Gross book value

89 400

Accumulated depreciation and impairment

-

Total as at 30 June 2017

89 400

Accounting Policy

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. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, 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).

Fair Value Measurement

The fair values of property plant and equipment are determined using either the market selling price or depreciated replacement cost. The valuation of property plant and equipment at 30 June 2017 included $61,400
Level 2 assets (including office equipment and furniture) and $28,000 Level 3 assets (including computer equipment and office furniture.

The unobservable inputs (Level 3 fair value hierarchy) used to determine the fair value, include historical actual cost information and costing guides to estimate the current replacement cost. Useful life profiles have been applied to the replacement cost to reflect the expended life of the asset.

Revaluations

Following initial recognition at cost, property plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

All revaluations are independent and are conducted in accordance with the stated revaluation policy. The most recent revaluation was conducted by the B&A Valuers as at 30 June 2017.

All assets were examined for indicators of impairment during the stocktake completed on 30 June 2017. No indicators of impairment have been identified.

Depreciation

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

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates of depreciable assets are based on useful lives of 1 – 11 years (2016: 1 – 14 years).

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Note 6 – Payables

2017
$

2016
$

6A - Suppliers

Trade creditors and accruals

13 198

21 344

Total suppliers

13 198

21 344

Supplier payables expected to be settled in no more than 12 months.

Accounting Policy

OIGIS’ financial liabilities comprise trade and other payables and are recognised at amortised costs. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

2017
$

2016
$

6B - Other Payables

Salaries and wages

16 681

5 142

Superannuation

2 211

873

Leave liability transfers payable

-

44 119

Salary reimbursements for seconded officers

47 564

53 582

Redundancy payment

301 740

-

Other

2 507

3 761

Total other payables

370 703

107 477

Other Payables are expected to be settled in no more than 12 months.

Accounting Policy

Superannuation

The liability for superannuation recognised as at 30 June represents outstanding contributions.

Note 7 – Employee Provisions

2017
$

2016
$

Employee Provisions

Leave

575 062

597 217

Total employee provisions

575 062

597 217

Accounting Policy

Liabilities for ‘short-term employee benefits’ and termination benefits expected within twelve months of the end of the reporting period are measured at their nominal amounts.

Leave

The liability for employee benefits includes provision for 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 OIGIS is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including OIGIS’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by using the Short Hand Method per the Financial Reporting Rules. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

Staff of OIGIS are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) and other industry super funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

OIGIS makes employer contributions to the employees’ superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. OIGIS accounts for the contributions as if they were contributions to defined contribution plans.

The PSSap is a defined contribution scheme.

Note 8 – Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of OIGIS, directly or indirectly. OIGIS has determined the key management personnel to be the Chief Executive and the Deputy Chief Executive. Key management personnel remuneration is reported in the table below:

2017
$

2016
$

Short-term employee benefits:

Salary

615 485

626 182

Annual leave1

-

2 983

Allowances

41 752

43 775

Total short-term employee benefits

657 237

672 940

Post-employment benefits:

Superannuation

106 719

94 626

Total post-employment benefits

106 719

94 626

Other long-term employee benefits:

Annual Leave

47 792

43 850

Long Service Leave

6 582

9 171

Total other long-term employee benefits

54 374

53 021

Total senior executive remuneration expenses

818 330

820 587

Accounting Policy

This note is prepared on an accrual basis. The total number of key management personnel that are included in the above table are 3 individuals (2016: 4 individuals). The 2017 figure includes two of the officers for part of the year.

  1. Annual Leave expected to be taken within 12 months.

Note 9 – Related Party Disclosures

Related Party Relationships

OIGIS is an Australian Government controlled entity. Related parties to OIGIS are:

  • Key Management Personnel, their close family members and entities controlled or jointly controlled by either;
  • the members of the Executive – key management personnel for the whole of government financial statements; and
  • other Australian Government entities.

Transactions with Related Parties

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

The following transactions with related parties occurred during the financial year:

  • The Department of Prime Minister and Cabinet provided OIGIS with access to the Department’s unclassified IT system. OIGIS made a $46,000 contribution towards the operating costs of the system. There is no balance outstanding at year end.
  • OIGIS received resources received free of charge from the Department of Prime Minister and Cabinet relating to office lease expenses, The estimated value of $128,000 is reflected in the Statement of Comprehensive Income as both ‘other revenue’ and a ‘suppliers’ expense.

Note 10 - Contingent Assets and Liabilities

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the relevant notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

OIGIS has no contingencies to report at 30 June 2017 (2016: Nil).

Note 11 – Financial Instruments

2017
$

2016
$

Categories of Financial Instruments

Financial Assets

Loans and Receivables

Loans and receivables

Cash and cash equivalents

200 498

154 879

Trade and other receivables

-

10 446

Total financial assets

200 498

165 325

Financial Liabilities

At amortised cost

Suppliers

13 198

21 344

Total financial liabilities

13 198

21 344

The net fair values of the financial assets and liabilities are at their carrying amounts. OIGIS derived no interest income from financial assets in either the current and prior year.

Financial Assets

OIGIS classifies its financial assets as ‘loans and receivables’. Financial assets are recognised and derecognised upon trade date.

Financial assets are assessed for impairment at the end of each reporting period.

Credit terms are net 30 days (2015–16: 30 days).

Financial Liabilities

Financial liabilities are classified as other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Settlement is usually made net 30 days.

Note 12 – Appropriations

Note 12A – Annual Appropriations (‘Recoverable GST exclusive’)

Ordinary Annual Services

2017
$

2016
$

Annual Appropriation

3 118 000

3 050 000

PGPA Act – Section 74 Receipts

113 705

185 044

Annual Departmental Capital Budget1

25 000

25 000

Total appropriation

3 256 705

3 260 044

Appropriation applied (current and prior years)

2 743 480

2 933 018

Variance2

513 225

327 026

  1. Departmental Capital Budgets are appropriated through Appropriation Acts (No 1,3,5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.
  2. Variance between Total Appropriation and Appropriation Applied is due to section 74 receipts and recruitment delays associated with security clearance requirements.

Note 12B: Unspent Annual Appropriations (‘Recoverable GST exclusive)

2017
$

2016
$

Departmental

Appropriation Act (No 1) 2013-14 - DCB

2 843

3 085

Appropriation Act (No 3) 2014-15

-

241 040

Appropriation Act (No 1) 2014-15 – DCB

-

26 000

Appropriation Act (No 1) 2015-16

541 858

3 018 055

Appropriation Act (No 1) 2015-16 – DCB

25 000

25 000

Appropriation Act (No 1) 2016-17

1 913 825

-

Supply Act 1 2016-17

1 317 879

-

Appropriation Act (No 1) 2016-17 – DCB

14 000

-

Supply Act 1 2016-17 – DCB

11 000

-

Cash

200 498

154 879

Total Departmental

4 026 903

3 468 059

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