Section 3: Explanatory tables and budgeted financial statements
Section 3 presents budgeted financial statements which provide a comprehensive snapshot of agency finances for the budget year 2008‑09. It explains how budget plans are incorporated into the financial statements and provides details of the special account managed by the AOFM.
3.1 Explanatory tables
3.1.1 Reconciliation of total available appropriation and outcomes
The Agency Resource Statement (Table 1.1) details the total available appropriation to the AOFM from all sources. For departmental operating appropriations (outputs) this includes carry‑forward amounts as well as amounts appropriated at budget. As the AOFM incurs and is funded for future liabilities, generally depreciation and employee entitlements, the total amount of departmental operating appropriation available to the AOFM is unlikely to be fully utilised in the budget year. The difference between the agency resource statement and the sum of all payments made at the departmental outputs level is the expected carry‑forward amount of resources for the 2009‑10 budget year, including amounts related to meeting future obligations to maintain the AOFM's asset base and to meet employee entitlement liabilities.
Table 3.1.1: Reconciliation of total available appropriation and outcomes
3.1.2 Movement of administered funds between years
Table 3.1.2: Movement of administered funds between years
The AOFM has not moved any administered funds between years.
3.1.3 Special accounts
Special accounts provide a means to set aside and record amounts used for specified purposes. Special accounts can be created by a Finance Minister's Determination under the Financial Management and Accountability Act 1997 (FMA Act) or under separate enabling legislation. The AOFM operates one special account, the Debt Retirement Reserve Trust Account. Table 3.1.3 shows the expected additions (receipts) and reductions (payments) for the AOFM's special account in 2007‑08 and 2008‑09.
Table 3.1.3: Estimates of special account cash flows and balances
Until July 1990, the Australian Government borrowed on behalf of the State and Territory Governments and allocated a portion of its Treasury Bond raisings to those governments to fund the redemption of previous allocations of bond raisings. Until 1986, the Australian Government also borrowed on behalf of the State and Territory Governments to raise new borrowings. In addition there are outstanding balances of various loans raised by the State Governments.
The annual funding of the redemption of the State and Territory allocated debt is governed by the Financial Agreement Act 1994 which requires the Australian Government to establish and maintain the Debt Retirement Reserve Trust Account (DRRTA) for the States and the Northern Territory. Moneys standing to the credit of a State or the Northern Territory are applied by the Australian Government in connection with the repurchase and repayment of the debt of that State or the Northern Territory.
3.1.4 Australian Government Indigenous Expenditure
Table 3.1.4: Australian Government Indigenous Expenditure
The AOFM does not have any Australian Government Indigenous Expenditure.
3.2 Budgeted financial statements
3.2.1 Differences in agency resourcing and financial statements
There are no differences between agency resourcing and financial statements.
3.2.2 Analysis of budgeted financial statements
Departmental
The budget and forward estimates reflect an expectation that the AOFM's resourcing levels are to remain relatively stable over the next four years. However, the AOFM forecasts that during the forward estimates period it will need to make renewed capital investment in agency infrastructure. Capital expenditure on the AOFM's specialist debt management systems, both for development and replacement, represents the majority of this expenditure. This expenditure will be met from unspent output appropriations carried forward from previous financial years.
Administered
Following the former government's decision in the 2003‑04 Budget to maintain the market in Australian Government Securities, the volume of Treasury Bonds on issue during the budget and forward estimates period is expected to be between $43 billion and $50 billion. In the 2003‑04 Budget, the former government also suspended new issuance of Treasury Indexed Bonds. The August 2010 Treasury Indexed Bond series will mature in the 2010‑11 financial year (at an estimated maturity value of $2,310 million).
Projected government surpluses in the budget and forward estimates that have not been earmarked for transfer to special purpose funds, are assumed to be held by the AOFM on deposit with the RBA.
3.2.3 Budgeted financial statements tables
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)
1. Included in this balance are $10.1 million in undrawn output appropriation and $0.9 million in undrawn equity injections from 30 June 2008 to 30 June 2011. As of 30 June 2012, undrawn output appropriation is estimated at $9.7 million and undrawn equity injections are estimated at $0.9 million.
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 year 2008‑09)
Prepared on an Australian Accounting Standards basis.
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.
3.2.4 Notes to the financial statements
Basis of accounting
The financial statements contain estimates prepared in accordance with the requirements of the Australian Government's financial budgeting and reporting framework, including Australian Accounting Standards and Statements of Accounting Concepts, as well as specific guidelines issued by the Department of Finance and Deregulation.
The departmental financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention, except for infrastructure, plant and equipment assets and employee entitlements.
With the exception of loans to the States and the Northern Territory, the administered financial statements have been prepared on a fair value basis in accordance with international financial reporting standards. Loans to the States and the Northern Territory are measured on an amortised cost basis, after initial recognition at fair value.
Fair value is synonymous with market value and represents the estimated exchange equivalent price using relevant inputs from reference markets and valuation techniques. Fair value is determined on the presumption of normal market conditions and that the reporting entity is not undertaking transactions on adverse terms.
On behalf of the Department of Broadband, Communications and the Digital Economy (DBCDE), the AOFM currently manages the investments made by the Communications Fund. These investments and their earnings are reported by DBCDE and not the AOFM.
Budgeted departmental and administered financial statements
Under the Australian Government's accrual budgeting framework, transactions that agencies control (agency transactions) are separately budgeted for and reported from transactions agencies do not have control over (administered transactions). This ensures that agencies are only held fully accountable for the transactions over which they have control:
- agency assets, liabilities, revenues and expenses are those which are controlled by the agency. Agency expenses include employee and supplier expenses and other administrative costs, which are incurred by the agency in providing its goods and services to government; and
- administered assets, liabilities, revenues and expenses are those which are managed on behalf of the Australian Government according to set government directions. Administered expenses include interest incurred on Commonwealth Government Securities. Administered revenues include interest earned on housing agreement loans, interest on investments and interest from swaps.
Administered internal transactions
Administered transactions between the AOFM and other agencies within the General Government Sector (administered internal transactions) are not reported in the schedule of budgeted administered income and expenses or the schedule of budgeted administered assets and liabilities.
However, for the purposes of disclosing all cash flows through the AOFM's administered bank accounts, cash flows in the schedule of budgeted administered cash flows are reported inclusive of administered internal transactions.
Goods and services tax (GST)
Supplies provided by the AOFM are predominantly input taxed under A New Tax System (Goods and Services Tax) Act 1999.
Budgeted departmental income statement
Appropriations
Price of output appropriation estimates are not based on market price indicators. The agreed price of output appropriation is generally adjusted for wage cost indexation less an efficiency dividend.
Budgeted departmental balance sheet
Cash and undrawn appropriations
The estimated cash reserves and undrawn appropriations will be maintained to ensure that the AOFM is well placed to:
- settle employee liabilities as they fall due;
- make future asset replacements; and
- repay liabilities.
Budgeted financial statements have been prepared on the assumption that unspent moneys will not be withdrawn by the Department of Finance and Deregulation.
Administered schedule of budgeted income and expenses
Non‑taxation revenue — interest
Note: Interest from other sources includes interest from swaps and investments.
Expenses — interest and financing costs
Net market valuation gains/losses
Net market valuation gains/losses represents the estimated unrealised fair value gains or losses on the net debt portfolio. This valuation gain or loss represents the change in financial exposures due to changes in market conditions and the passage of time.
In a passive 'issue and hold to maturity' strategy, such as that relating to the AOFM's debt issuance and management activities, the revaluation effect will net to zero over the life of a financial instrument.
Administered schedule of budgeted assets and liabilities
Financial assets — receivables
1. At amortised cost.
2. At fair value.
Financial assets — investments
The AOFM, on behalf of the Australian Government, holds surplus funds as term deposits with the RBA. Estimates of the fair value of these asset holdings are disclosed as administered investments. The asset holdings of the Future Fund and other government agencies are not included in these estimates.
Interest bearing liabilities — Commonwealth Government Securities
Commonwealth Government Securities represent the fair value of government securities on issue, including Treasury Bonds and Treasury Indexed Bonds.
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