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Australian Prudential Regulation Authority

• Notes to the Financial Statements

Section 3: Budgeted Financial Statements

The budgeted financial statements will form the basis of the financial statements that will appear in the Australian Prudential Regulation Authority's 2000-01 Annual Report and form the basis for the input into the Whole of Government Accounts. The financial statements should be read in conjunction with the accompanying notes.

The financial statements are prepared consistent with GST accounting requirements, as outlined by the Urgent Issues Group (UIG) of the Australian Accounting Research Foundation. The UIG consensus requires that expenses and assets be accounted for net of recoverable GST, revenues be accounted for net of GST payable and that cash flows and accounts payable and receivable are reported gross. Appropriations are thus net of recoverable GST amounts.

Budget Statement of Revenues and Expenses (Budget Operating Statement)

This statement provides a picture of the expected financial results for APRA by identifying full accrual expenses and revenues, which highlights whether APRA is operating at a sustainable level.

Budget Statement of Assets and Liabilities (Budget Balance Sheet)

This statement shows the financial position of APRA. It enables decision makers to track the management of APRA's assets and liabilities.

Budget Cash Flow Statement

This statement identifies expected cash flows from operating activities, investing activities and financing activities.

Capital Budget Statement

This statement shows all proposed capital expenditure funded through the Budget as appropriations or from internal sources.

Non-financial Assets - Summary of Movement

This statement shows the movement in APRA's non-financial assets over the Budget year.

Table 3.1: Agency Budget Statement of Revenues and Expenses
(for the period ended 30 June)

	Estimated Actual 1999-00 $'000	Budget Estimate 2000-01 $'000	Forward Estimate 2001-02 $'000	Forward Estimate 2002-03 $'000	Forward Estimate 2003-04 $'000
Operating revenue
Revenues from Government	59,619	48,999	50,047	46,597	47,732
Sales of goods and services	1,803	500	600	600	600
Interest	2,000	827	503	456	620
Other	272	-	-	-	-
Total operating revenues	63,694	50,326	51,150	47,653	48,952
Operating expenses
Employees	34,278	33,952	34,016	33,504	33,505
Suppliers	15,360	13,642	12,308	11,135	11,136
Depreciation and amortisation	3,189	3,538	3,950	4,325	3,949
Total operating expenses	52,827	51,132	50,274	48,964	48,590
Operating surplus or deficit before abnormal and extraordinary items	10,867	-806	876	-1,311	362
Abnormal and extraordinary items	6,313	-	-	-	-
Operating surplus or deficit after abnormal and extraordinary items	4,554	-806	876	-1,311	362
Capital use charge paid	-	-	-	-	-
Operating surplus or deficit after abnormal and extraordinary items and CUC	4,554	-806	876	-1,311	362

Table 3.2: Agency Budget Statement of Assets and Liabilities
(as at 30 June)

	Estimated Actual 1999-00 $'000	Budget Estimate 2000-01 $'000	Forward Estimate 2001-02 $'000	Forward Estimate 2002-03 $'000	Forward Estimate 2003-04 $'000
Assets
Financial assets
Cash	22,673	7,328	754	3,181	5,192
Receivables	700	300	300	300	300
Accrued revenues	-	1,043	1,272	137	-
Total financial assets	23,373	8,671	2,326	3,618	5,492
Non-financial assets
Land and buildings	-	-	-	-	-
Infrastructure, plant and equipment	7,191	6,995	6,635	5,941	5,383
Intangibles	1,749	5,604	6,321	4,438	2,795
Other	900	900	900	901	900
Total non-financial assets	9,840	13,499	13,856	11,280	9,078
Total assets	33,213	22,170	16,182	14,898	14,570
Liabilities
Debt
Loans	10,879	5,440	-	-	-
Leases	2,957	2,360	1,860	1,360	860
Other	2,954	1,087	-	360	-
Total debt	16,790	8,887	1,860	1,720	860
Provisions and payables
Employees	9,993	8,160	8,323	8,490	8,660
Suppliers	1,000	500	500	500	500
Total provisions and payables	10,993	8,660	8,823	8,990	9,160
Total liabilities	27,783	17,547	10,683	10,710	10,020
Equity
Capital	5,255	5,255	5,255	5,255	5,255
Reserves	-	-	-	-	-
Accumulated surplus or deficit	175	-632	244	-1,067	-705
Total equity	5,430	4,623	5,499	4,188	4,550
Current liabilities	10,612	7,013	5,931	6,297	5,947
Non-current liabilities	17,171	10,534	4,752	4,413	4,073
Current assets	24,273	9,571	3,226	4,519	6,392
Non-current assets	8,940	12,599	12,956	10,379	8,178

Table 3.3: Agency Budget Cash Flow Statement
(for the period ended 30 June)

	Estimated Actual 1999-00 $'000	Budget Estimate 2000-01 $'000	Forward Estimate 2001-02 $'000	Forward Estimate 2002-03 $'000	Forward Estimate 2003-04 $'000
Operating activities
Cash received
Appropriations for outputs	62,573	46,089	48,731	48,092	47,509
Sales of goods and services	1,590	900	600	600	600
Interest	2,000	827	503	457	620
Total cash received	66,163	47,816	49,834	49,149	48,729
Cash used
Employees	44,929	35,785	33,853	33,339	33,336
Suppliers	18,579	14,739	12,808	11,635	11,634
Total cash used	63,508	50,524	46,661	44,974	44,970
Net cash from operating activities	2,655	-2,708	3,173	4,175	3,759
Investing activities
Cash received	-	-	-	-	-
Total cash received	-	-	-	-	-
Cash used
Purchase of property, plant and equipment	3,184	7,198	4,307	1,748	1,748
Total cash used	3,184	7,198	4,307	1,748	1,748
Net cash from investing activities	-3,184	-7,198	-4,307	-1,748	-1,748
Financing activities
Cash received
Proceeds from debt	3,998	-	-	-	-
Total cash received	3,998	-	-	-	-
Cash used
Repayments of debt	5,438	5,439	5,440	-	-
Total cash used	5,438	5,439	5,440	-	-
Net cash from financing activities	-1,440	-5,439	-5,440	-	-
Net increase in cash held	-1,969	-15,345	-6,574	2,427	2,011
Cash at the beginning of the reporting period	24,642	22,673	7,328	754	3,181
Cash at the end of the reporting period	22,673	7,328	754	3,181	5,192

Table 3.4: Agency Capital Budget Statement
(for the period ended 30 June)

	Estimated Actual 1999-00 $'000	Budget Estimate 2000-01 $'000	Forward Estimate 2001-02 $'000	Forward Estimate 2002-03 $'000	Forward Estimate 2003-04 $'000
Purchase of non-current assets
Funded by capital appropriations	-	-	-	-	-
Funded internally by agency resources	2,946	7,248	8,740	3,560	1,798

Table 3.5: Agency Non-financial Assets - Summary of Movement

	Land $'000	Buildings $'000	Total Land and Buildings $'000	Other Infrastructure, Plant and Equipment $'000	Total Infrastructure, Plant and Equipment $'000	Intangibles $'000	Total $'000
Gross value
As at 1 July 2000 (opening)	-	-	-	10,288	10,288	3,076	13,364
Additions	-	-	-	2,065	2,065	5,183	7,248
Disposals	-	-	-	50	50	-	50
Other movements	-	-	-	-	-	-	-
As at 30 June 2001 (closing)	-	-	-	12,303	12,303	8,259	20,562
Accumulated depreciation
As at 1 July 2000 (opening)	-	-	-	3,098	3,098	1,327	4,425
Disposals	-	-	-	-	-	-	-
Charge for the reporting period	-	-	-	2,210	2,210	1,328	3,538
Other movements	-	-	-	-	-	-	-
As at 30 June 2001 (closing)	-	-	-	5,308	5,308	2,655	7,963
Net book value as at 30 June 2001 (Closing book value)	-	-	-	6,995	6,995	5,604	12,599
Net book value as at 1 July 2000 (Opening book value)	-	-	-	7,191	7,191	1,749	8,940

Total additions

Self funded	-	-	-	2,065	2,065	5,183	7,248
Appropriations	-	-	-	-	-	-	-
Total	-	-	-	2,065	2,065	5,183	7,248

Notes to the Financial Statements

Budget Statement of Revenues and Expenses (Budgeted Operating Statement)

Ordinary Annual Appropriation

The ordinary annual appropriation in 1999-2000 is the appropriation provided to oversight Self-Managed Superannuation Funds (SMSF's) on behalf of the Australian Taxation Office (ATO). The ATO was responsible for the supervision of SMSF's from 1 July 1999, but administrative arrangements during the transition period required APRA to provide support until 30 June 2000.

Special Appropriation

The special appropriation relates to the levies, late lodgement and late payment penalties collected by APRA across all industries except SMSF's. The revenue reported by APRA is net of the levies retained in the Official Public Account to be directed to the Australian Securities and Investments Commission (ASIC) ($11.6 million) for consumer protection and market integrity functions, and to the ATO ($2.4 million) for unclaimed moneys and lost members functions. The revenue recognised in 1999-2000 is less than the estimated cash to be transferred to APRA by $2.9 million. This amount has been carried forward as revenue in advance and deducted from estimated cash requirements in the calculation of 2000-01 levies.

Sales of Goods and Services

Estimated sales from other goods and services drop in future years because of the transfer of the Australian Government Actuary (AGA) to the Treasury on 1 April 2000.

Abnormal Item

The abnormal item is restructuring expenses directly attributable to the restructuring of APRA and include expenditure on separation and redundancy, surplus lease space, employee entitlements and relocation.

Capital Use Charge

There is no capital use charge on APRA, which is funded mainly by industry levies.

Budget Statement of Assets and Liabilities

Financial Assets

Financial assets include cash that may be held in government-backed securities, receivables for miscellaneous income derived by the agency and accrued revenue.

Non-financial Assets

Non-financial assets include assets held as leasehold improvements, furniture and fittings, computer hardware and office equipment. Intangible assets comprise capitalised software, including work-in-progress. APRA does not own any land or buildings.

Other non-financial assets includes prepayments.

Debt

The loan represents the prepayment of levies of $16.1 million appropriated in 1998-1999 and $4 million appropriated in 1999-2000 less the repayments made. This funding was provided to support the establishment of APRA.

Other debt is levy revenue received in advance.

Provisions and Payables

Provisions and payables represent liabilities for employee benefits including leave and miscellaneous accruals.

Equity

Equity reflects accumulated results for 1998-99 and 1999-2000 in addition to the opening balance of $5.3 million being the net value of assets and liabilities transferred from the Reserve Bank and the Insurance and Superannuation Commission on the formation of APRA on 1 July 1998.

Budget Cash Flow Statement

Cash received from operating activities includes the appropriation for levies collected from industry less amounts collected on behalf of the ATO and ASIC, cash from fees and charges; and interest payments from cash held as government backed investments.

Cash used in investing activities includes cash spent on property, plant and equipment.

Cash received from financing activities includes the prepayment of levies received to support the establishment of APRA.

Cash used for financing activities is the cash used to repay the establishment funds.

Appendix 1

Non-appropriation Agency and Administered Revenue

	Estimated Revenue 1999-00 $'000	Estimated Revenue 2000-01 $'000
Agency other income	4,075	1,327
Total estimated revenue	4,075	1,327

Agency other income is derived from fees and charges, including those of the AGA, and interest earned on investments. The income drops from 2000-01 due to the transfer of the AGA on 1 April 2000.

Appendix 2

Estimates of Expenses from Special Appropriations

	Estimated Expense 1999-00 $'000	Estimated Expense 2000-01 $'000
Australian Prudential Regulation Authority Act 1999	59,619	48,999
Total estimated expenses	59,619	48,999