Australian Prudential Regulation Authority
Section 1: Agency overview and resources
1.1 Strategic direction
There has been no significant change to the strategic direction of the Australian Prudential Regulation Authority (APRA) from that outlined in the Portfolio Budget Statements 2008‑09 (pages 107‑108).
APRA is seeking an additional $8.3 million through Appropriation Bill (No. 3) 2008-09. This relates to an additional $9.0 million for the global financial crisis – additional funding for regulators and the Treasury measure; $0.4 million for a reversal of the 2007‑08 efficiency dividend; and offset by a reduction of $1.1 million to be transferred to the Department of the Treasury as part of a reallocation of funds for Standard Business Reporting. The reallocation will have no net impact on the Budget.
There is also a reduction of $1.0 million in 2008-09 for equity injections as part of a reallocation of funds for Standard Business Reporting. The reallocation will have no net impact on the Budget.
1.2 Agency resource statement
Table 1.1 outlines the total resourcing available from all sources for the 2008‑09 Budget year, including variations through Appropriation Bill No. 3, equity injections and special accounts.
Table 1.1: Australian Prudential Regulation Authority resource
statement — additional
estimates for 2008‑09 as at Additional Estimates
December 2008
1. Appropriation Bill (No. 3) 2008‑09.
1.3 Agency measures table
Table 1.2 summarises new Government measures taken since the 2008‑09 Budget.
Table 1.2: Australian Prudential Regulation Authority 2008‑09 measure since
Budget
Note: Details of this measure appear in the Mid-Year Economic and Fiscal Outlook 2008‑09 on page 185.
1.4 Additional estimates and variations
Table 1.3 details the additional estimates and variations resulting from new measures since the 2008‑09 Budget in Appropriation Bill No. 3. Table 1.4 details additional estimates or variations from other variations.
Table 1.3: Additional estimates and variations to outcomes from measures
since 2008‑09 Budget
Table 1.4: Additional estimates and variations to outcomes from other variations
1.5 Breakdown of additional estimates by Appropriation Bill
The following tables detail the additional estimates sought for APRA through Appropriation Bills No. 3 and No. 4.
Table 1.5: Appropriation Bill (No. 3) 2008‑09
Table 1.5: Appropriation Bill (No. 3) 2008‑09
Section 2: Revisions to agency outcomes and planned performance
2.1 Outcomes and performance information
There has been no change to outcomes and performance information for APRA from that included in the Portfolio Budget Statements 2008‑09 (pages 111‑114).
Section 3: Explanatory tables and budgeted financial statements
3.1 Explanatory tables
3.1.1 Estimates of special account flows
Special accounts provide a means to set aside and record amounts used for specified purposes. Table 3.1.1 shows the expected additions (receipts) and reductions (payments) for each account used by APRA. The corresponding table in the Portfolio Budget Statements 2008‑09 is Table 3.1.3.
Table 3.1.1: Estimates of special account flows
Note: Lloyd's Deposit Trust Special Account was transferred to APRA from 23 May 2008. This was previously reported by the Department of the Treasury.
3.1.2 Estimates of variations to Average Staffing Level
Changes in Average Staffing Level (ASL) are presented in the Portfolio Additional Estimates Statements at the whole of agency level to demonstrate any movements since Budget.
Table 3.1.2: Average Staffing Level
3.2 Budgeted financial statements
3.2.1 Analysis of budgeted financial statements
Budgeted departmental income statement
The budgeted departmental income statement (refer Table 3.2.1) shows an increase in 2008‑09 appropriations from $98.7 million, as disclosed in the Portfolio Budget Statements 2008‑09, to $107.1 million; an $8.4 million change. The increase reflects the impacts of additional estimates, as shown in Tables 1.3 and 1.4.
$45.5 million is sought across 2008‑09 and the forward estimates to meet the government's budget measure for the global financial crisis — additional funding for regulators and the Treasury.
APRA's funding to support its contribution to Standard Business Reporting (SBR) has been reduced by $1.1 million, and is fully offset by a corresponding reduction in 2008‑09 related SBR expenditure.
Budgeted departmental balance sheet
The budgeted departmental balance sheet (Table 3.2.2) shows that APRA will maintain sufficient financial assets to meet all employee and supplier commitments as and when they fall due.
Continued investment in core supervisory and corporate infrastructure, coupled with investment in SBR, will see non‑financial asset balances increase in 2008‑09 and beyond.
Contributed equity increases over 2008‑09 and 2009‑10 reflect government equity injections for SBR.
Retained surpluses are budgeted to maintain general reserves at a level sufficient to accommodate unforeseen business needs which may arise from supervision of at‑risk institutions.
Budgeted departmental statement of cash flows
The budget departmental statement of cash flows (Table 3.2.3) reflects the increase in 2008‑09 appropriations as detailed in Tables 1.3 and 1.4.
Departmental statement of changes in equity — summary of movement
Table 3.2.4 shows the expected changes in equity between 2007‑08 and 2008‑09. Note that the opening 2008‑09 position is some $3.4 million higher than that reflected in the Portfolio Budget Statements 2008‑09 reflecting asset revaluations completed in the last quarter of 2007‑08.
The main item of change across 2008‑09 will be the reduced equity injection related to SBR.
3.2.2 Budgeted financial statements
Departmental financial statements
Table 3.2.1: Budgeted departmental income statement
(for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.2: Budgeted departmental balance sheet
(as at 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.4: Departmental statement of changes in equity — summary of
movement (Budget 2008‑09)
Prepared on an Australian Accounting Standards basis.
Schedule of administered activity
Schedule of budgeted income and expenses administered on behalf of government
The schedule of budgeted income and expenses administered on behalf of government (Table 3.2.5) shows the amounts APRA collects in supervisory levies from the finance industry on behalf of the government under the Financial Institutions Supervisory Levies Collection Act 1998. In addition to the amount required to fund APRA, the levies also include amounts to fund the activities of the Australian Taxation Office (ATO) for unclaimed moneys and lost member functions and the Australian Securities and Investments Commission (ASIC) for consumer protection and market integrity functions. The expenses shown are an estimate of the amount of levies and penalties that will be waived or written off in the year.
Schedule of budgeted assets and liabilities administered on behalf of government
Table 3.2.6 refers to amounts of administered income that may not have been collected at year end. The balance at 30 June 2008 reflected disputed levies which have subsequently been resolved and collected.
Schedule of budgeted administered cash flows
As indicated in the schedule of budgeted administered cash flows (Table 3.2.7), the cash collected is swept daily from the APRA account to the Official Public Account, from which APRA, in turn, draws down the amounts appropriated to it by the Parliament, and applies these as shown in Table 3.2.3.
APRA does not administer any non financial assets on behalf of the government.
Table 3.2.5: Schedule of budgeted income and expenses administered on
behalf of government (for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.6: Schedule of budgeted assets and liabilities administered on
behalf of government (as at 30 June)
Prepared on an Australian Accounting Standards basis.
Table 3.2.7: Schedule of budgeted administered cash flows
(for the period ended 30 June)
Prepared on an Australian Accounting Standards basis.
Notes to the financial statements
Basis of accounting
The financial statements have been prepared on an accrual basis in accordance with historical cost convention.
Departmental
Budgeted departmental statement of financial performance
Revenues from Government
APRA is funded by a special appropriation for levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported by APRA is net of the levies retained in the Official Public Account to fund ASIC for consumer protection and market integrity functions, and the ATO, for unclaimed moneys and lost member functions.
Other revenue
Revenue from rendering of specific services is recognised by reference to the stage of completion of contracts or other agreements. Revenue from licence fees is recognised on receipt of the application and licence fee.
Note that current period reported revenue may include amounts for past years' levies and penalties as legislative restrictions require the lodgement of annual returns by institutions to APRA before billing can occur.
Depreciation and amortisation
APRA's depreciation expense remains in balance with the capital program aimed at maintaining APRA's processes and infrastructure to an appropriate standard.
Budgeted departmental statement of financial position
Financial assets
Receivables include levies invoiced but still outstanding at the financial year end and accrued revenues, being fees prorated over the periods to which they relate.
All accounts receivable are recorded at their estimated recoverable amount.
Non‑financial assets
Non‑financial assets include leasehold improvements, furniture and fittings, computer hardware and office equipment. All of the foregoing assets are shown at fair value. Intangible assets comprise capitalised software, including works in progress and are shown at cost. APRA does not own any land or buildings.
Other non‑financial assets include prepayments.
Provisions and payables
Provisions and payables represent liabilities for miscellaneous accruals and employee benefits, including accrued salary and leave entitlements, provisions for making good leased premises and payments to trade creditors.
Equity
Contributed equity of $3.1 million at 30 June 2008 represented the net value of assets and liabilities transferred from the Reserve Bank of Australia and the Insurance and Superannuation Commission on the formation of APRA on 1 July 1998, less an amount of $2.1 million returned to the Consolidated Revenue Fund as a return of unused appropriation in 2004‑05. Contributed equity is planned to increase by $0.9 million in 2008‑09 and $0.8 million in 2009‑10 reflecting capital injections related to SBR (Table 3.2.4).
Budgeted departmental statement of cash flows
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 industry fees and charges and government funding of special measures.
Administered
Schedule of budgeted revenues and expenses administered on behalf of Government
Revenues
Non‑taxation revenues are the levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported in this statement is higher than that reported by APRA in the budgeted agency statement of financial position reflecting the amount retained in the Official Public Account to fund ASIC and ATO activities described above.
Note that current period reported revenue may include amounts for past years' levies and penalties as legislative restrictions require the lodgement of annual returns by institutions to APRA before billing can occur.
Expenses
Actual waivers and write‑offs are the net position after adjusting for movements in doubtful debt provisions.
Schedule of budgeted assets and liabilities administered on behalf of Government
Financial assets
The financial assets include levy debt invoiced and still outstanding at year end.
Schedule of budgeted administered cash flows
All cash collected by APRA for levies, late lodgement and late payment penalties under the Financial Institutions Supervisory Levies Collection Act 1998 is transferred to the Official Public Account at the close of business each day.
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