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Appendix A: Financial Statements

The budget financial statements consist of an operating statement, including other economic flows, a balance sheet, and a cash flow statement for the Australian Government general government sector (GGS).

The Charter of Budget Honesty Act 1998 (the Charter) requires that the budget be based on external reporting standards. These 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 accrual GFS framework; and
• Australian Accounting Standards (AAS), being AASB 1049 Whole of Government and General Government Sector Financial Reporting and other applicable Australian Equivalents to International Financial Reporting Standards.

The financial statements have been prepared on the same basis as the budget papers reflecting the Government's accounting policy that ABS GFS remains the basis of budget accounting policy, except where the Government applies the AAS because it provides a better conceptual basis for presenting information of relevance to users of public sector financial reports.

Budget reporting focuses on the GGS. The GGS provides public services that are mainly non market in nature and for the collective consumption of the community, or involve the transfer or redistribution of income. These services are largely financed through taxes and other compulsory levies, user charging and external funding. This sector comprises all government departments, offices and some other bodies. In preparing financial statements for the GGS all material transactions and balances between entities within the GGS have been eliminated.

Further information on the reporting frameworks and departures are provided in Statement 9 of Budget Paper No. 1, Budget Strategy and Outlook 2010‑11.

Table A1: Australian Government general government sector operating statement

1. Consistent with ABS GFS classification, other employee related expenses are reported under other operating expenses. Total employee expenses equal wages and salaries plus other operating expenses.
2. Reflects changes in the market valuation of investments and any revaluations at the point of disposal or sale.
3. Largely reflects other revaluation of assets and liabilities.
4. The term fiscal balance is not used by the ABS.

Table A2: Australian Government general government sector balance sheet

1. Net worth is calculated as total assets minus total liabilities.
2. Net financial worth equals total financial assets minus total liabilities. That is, it excludes non‑financial assets.
3. Net financial liabilities equals total liabilities less financial assets other than investments in other public sector entities.
4. Net debt equals the sum of deposits held, government securities, loans and other borrowing, minus the sum of cash and deposits, advances paid, and investments, loans and placements.

Table A3: Australian Government general government sector cash flow statement^(a)

Table A3: Australian Government general government sector cash flow statement (continued)^(a)

1. A positive number denotes a cash inflow; a negative sign denotes a cash outflow.
2. The acquisition of assets under finance leases decreases the underlying cash balance. The disposal of assets previously held under finance leases increases the underlying cash balance.
3. The term underlying cash balance is not used by the ABS.

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