Attachment A: Reporting standards

The 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 for final budget outcome reporting purposes are:

• the Australian Bureau of Statistics' (ABS) accrual Government Finance Statistics (GFS) publication, Australian System of Government Finance Statistics: Concepts, Sources and Methods cat. no. 5514.0, which in turn is based on the International Monetary Fund (IMF) accrual GFS framework; and
• Australian Accounting Standards (AAS), being the Australian Equivalents to International Financial Reporting Standards (AEIFRS) and AAS 31 Financial Reporting by Governments.

Final budget outcome tables, with the exception of tables in Part 2, do not include goods and services tax (GST) collections and equivalent payments to the States and Territories (the States). Under the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, all GST receipts are appropriated to the States and thus are not available for expenditure by the Australian Government. Because the Australian Taxation Office collects GST as an agent for the States, GST receipts are not shown as Australian Government revenue. Estimates of GST receipts are provided in Table A2 of Appendix A.

ABS GFS requires that provisions for bad and doubtful debts be excluded from the balance sheet. This treatment has not been adopted because excluding such provisions would overstate the value of Australian Government assets in the balance sheet (and would, therefore, be inconsistent with the market valuation principle).

The AAS financial statements currently record IMF Special Drawing Rights (SDRs) as a liability. This is consistent with AAS. The GFS statements also record SDRs as a liability. However, in accordance with the IMF's GFS manual, IMF SDRs are not treated as a liability in ABS GFS although the IMF treats them this way in some of its other documentation. The statistical standard underpinning the GFS manual (the System of National Accounts 1993) is currently being updated and includes a proposal to treat SDRs as a liability.

The GFS financial statements also currently adopt the AAS treatment for circulating coins. Under this treatment revenue is recognised upon the issue of coins and no liability is recorded, as there is no legal obligation requiring coins on issue to be repurchased by the Australian Government. However, in ABS GFS, coins on issue are treated as a liability and no revenue is recognised. The treatment of coins on issue is listed for clarification as part of the update of the statistical standard referred to above.

ABS GFS also requires defence weapons be treated as expenses. The update of the statistical standard is expected to change the treatment of defence weapons to assets.

The GFS and AAS financial statements continue to record the Australian Government's obligation for education grants, primarily to the States, when the annual Ministerial determination is made, usually at the beginning of each funding year. This is a departure from the ABS GFS standard which records these expenses when grants are due and payable. The Australian National Audit Office recently changed its interpretation of AAS to be in line with ABS GFS. The accounting treatment of education grants has not been changed in the FBO to maintain consistency with the treatment applied at the 2006‑07 and 2007‑08 Budgets.

Additional information on the reporting standards and budget concepts is provided in Appendix A.