|
|
| Home | Search | Site Map | Help | |
Attachment A
External reporting standards
The Commonwealth Charter of Budget Honesty Act 1998 requires that the Final Budget Outcome be based on external reporting standards, and that departures from applicable external reporting standards be identified.
The major external standards used in the Final Budget Outcome are the ABS accrual Government Finance Statistics (GFS) framework and Australian Accounting Standards, including Australian Accounting Standard No. 31 Financial Reporting by Governments (AAS31).
The GFS reporting framework is a specialised statistical system designed to support economic analysis of the public sector. It allows comprehensive assessments to be made of the economic impact of government and is consistent with international statistical standards. The major budget aggregates are drawn from the GFS framework.
AAS31 requires governments to prepare accrual-based general purpose financial reports, including in relation to the assets they control, any liabilities incurred, and their revenues and expenses. This reporting is intended to provide a consolidated overview of the financial performance and position of government, including in the area of financing and investing activities. Users are not able to obtain this overview by analysing all of the individual financial reports of the many entities controlled by Commonwealth, State and Territory governments due to the existence of intra-government transactions.
Under AAS31, governments must prepare an operating statement (also known as a statement of revenues and expenses, or profit and loss statement), a statement of financial position (or balance sheet) and a statement of cash flows.
Attachment B provides a reconciliation between GFS and AAS31 aggregates.
The GFS and AAS31 financial statements in the Final Budget Outcome are generally consistent with the ABS GFS framework and accounting policies in AAS31 respectively.
The GFS framework requires that flows and stocks are valued at current market prices (or where these are not observable, a suitable proxy indicator). While this is the case for flows in the operating statement and the cash flow statement, not all assets and liabilities in the GFS balance sheet are currently valued at current market prices. This is principally because Australian Accounting Standards allow asset and liability valuation methods other than current market prices (such as historic cost). In the early years of accrual budgeting the focus has been on preparing robust GFS operating and cash flow statements. Refinements to the GFS balance sheet valuations of assets and liabilities will be considered over time, in consultation with the ABS, as the new framework is bedded down.
Additional information on the consistency of the Final Budget Outcome with AAS31 is provided in Part II (see Note 1 to the financial statements).