Section 3: Explanatory tables and budgeted financial

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 further details of the reconciliation between the agency and outcome resource statements, movements in administered funds, special accounts and government Indigenous expenditure.

3.1 Explanatory Tables

3.1.1 Reconciliation of total available appropriation and outcomes

The Agency Resource Statement (Table 1.1) details the total appropriation available to an agency from all sources. For departmental operating appropriations (outputs) this includes carry-forward amounts as well as amounts appropriated at Budget. As agencies incur and are funded for future liabilities, generally depreciation and employee entitlements, the total amount of departmental operating appropriation available to an agency is unlikely to be fully utilised in the Budget year. The difference between the agency-level 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 agency’s asset base and to meet employee entitlement liabilities.

Table 3.1.1 reconciles the total available appropriation and amounts attributable to all outcomes.

3.1.2 Movement of administered funds between years

Administered funds can be provided for a specified period, for example under annual Appropriation Acts. Funds not used in the specified period are subject to review by the Minister for Finance and Deregulation, and may be moved to a future period, in accordance with provisions in legislation. Table 3.1.2 shows the movement of administered funds from 2007–08 approved since the 2007–08 Additional Estimates.

Table 3.1.2: Movement of 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 or under separate enabling legislation. Table 3.1.3 shows the expected additions (receipts) and reductions (payments) for each account used by the Department of Agriculture, Fisheries and Forestry.

Table 3.1.3: Estimates of Special Account cash flows and balances

3.1.4 Australian Government Indigenous expenditure

Table 3.1.4: Australian Government Indigenous expenditure

3.2 Budgeted Financial Statements

3.2.1 Differences in agency resourcing and financial statement

The financial statements are prepared on an accrual basis where revenues and expenses are recognised as and when the resources are received and used. The agency resourcing table recognises the cash resources available to be used during the period and includes amounts recognised as revenue in previous periods.

3.2.2 Analysis of budgeted financial statements

An analysis of the primary causes of movements in the budgeted financial statements and administered schedules is provided below. The 2007–08 estimated actual results are used as the comparative year in the analysis.

Departmental

Income statement

DAFF is budgeting for a small operating surplus of $0.4 million in 2008–09. This compares with an approved budgeted loss of $15.0 million in 2007–08. The loss relates to the recognition of expenses associated with the department’s relocation to its new office accommodation in Canberra in October 2007.

Total income is estimated to be $609.8 million and expenses are estimated to be $609.4 million. This represents a decrease in revenue of $31.1 million and a decrease in expenses of $46.5 million from the 2007–08 estimated actual results.

The decrease in revenue is due to:

• a decrease of $1.0 million as a result of new measures announced in the 2008–09 Budget
• a decrease of $31.5 million associated with funding for prior year measures such as drought assistance and other adjustments such as changes in economic parameters
• an increase of $1.4 million in revenue from independent sources.

The decrease in expenses is primarily due to:

• a decrease of $1.0 million as a result of new measures announced in the 2008–09 Budget
• a decrease of $45.5 million associated with funding for prior year measures such as drought assistance and other operating expenses including costs associated with the department’s relocation to its new office accommodation.

The following chart shows the trend in DAFF expenses over the forward estimates period. The variations in expenses primarily relate to the funding patterns associated with government measures and the application of economic parameters to the expense estimates.

Figure 2: Total departmental expenses, 2007–08 to 2011–12

Balance sheet

The budgeted net asset position for 2008–09 of $16.9 million represents an increase of $0.4 million from the 2007–08 estimated actual. The increase is due to the budgeted operating surplus.

The structure of the agency’s balance sheet is typical of an organisation where the key attributes are its employees, computer software (included in intangibles) and leasehold fit-out.

Administered

Income and expenses

It is estimated that DAFF will receive non-appropriation revenue on behalf of the government of $597.6 million, an increase of $19.4 million from the 2007–08 estimated actual. The change is due to:

• an increase of $17.3 million in agricultural production taxes
• an increase of $2.5 million in other non-tax revenue
• a decrease of $0.5 million in interest revenue.

Administered expenses are estimated to be $1,978.9 million, a decrease of $1,035.5 million from the 2007–08 estimated actual. The change is primarily due to a reduction in the funding associated with a large number of government measures, including exceptional circumstances relief payments, equine influenza, drought assistance and the National Action Plan for Salinity and Water Quality.

The following chart shows the trend in administered expenses over the forward estimates period. The decrease in the forward estimates is primarily due to the funding patterns associated with government measures, including the dairy industry restructure package, exceptional circumstances relief payments and drought assistance.

Figure 3: Total administered expenses, 2007–08 to 2011–12

Assets and liabilities

Administered assets as at 30 June 2009 are estimated to be $226.6 million, a decrease of $0.2 million from the 2007–08 estimated actual. The change is primarily due to a reduction in the amount of cash held in special accounts offset by a small increase in receivables.

Administered liabilities as at 30 June 2009 are estimated to be $82.6 million, which is the same as the 2007–08 estimated actual.

3.2.3 Budgeted financial statements tables

Table 3.2.1: Budgeted departmental income statement (for the period ended 30 June)

Table 3.2.2: Budgeted departmental balance sheet (as at 30 June)

Table 3.2.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

Table 3.2.4: Departmental statement of changes in equity—summary of movement (Budget year 2008–09)

Table 3.2.5: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

Table 3.2.6: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

Table 3.2.7: Schedule of budgeted administered cash flows (for the period ended 30 June)

3.2.4 Notes to the financial statements

Departmental financial statements

The departmental financial statements include financial information for all operations controlled by the department, including the Australian Quarantine and Inspection Service (AQIS) and the National Residue Survey (NRS). All transactions between these operations have been eliminated in the financial statements.

Revenues from government

Revenues from government represents the purchase of outputs from the department by the government.

Revenue from the sale of goods and services

Revenue from the sale of goods and services is recognised upon the delivery of goods and services to customers.

Employees expenses

Represents payments made and net increases or decreases in entitlements owed to employees for their services provided in the financial year.

Suppliers expenses

Represents payments to suppliers for goods and services. It includes operating lease rental expenses and payments made to Centrelink for the delivery of certain services on behalf of the department.

Depreciation and amortisation

Depreciable infrastructure, plant and equipment assets are written down to their estimated residual values over their estimated useful lives to the department using, in all cases, the straight line method of depreciation. Leasehold improvements are depreciated on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease. Intangibles (computer software) are amortised over their useful lives of between three and five years.

Forward estimates of depreciation and amortisation expense are made using forecasts of net capital acquisition requirements over the forward years.

Grants

Grant expenses include payments made to support the production of documentation for distribution to producers as part of the Livestock Production Assurance Program, and to state governments to support surveillance activities.

Receivables

Represents amounts owing to the department for goods and services that it has 0provided to external parties and cash reserves held in the Official Public Account which are recorded as an appropriation receivable. Receivables are recorded at their nominal amounts less any allowance for doubtful debts. Normal credit terms are 28 days and interest can accrue on overdue accounts.

Investments

Represents cash investments attributable to the National Residue Survey Special Account. Interest is credited to revenue as it accrues.

Non-financial assets

Represents future economic benefits that the agency will consume in producing outputs. Apart from revalued assets, the reported value represents the cost less depreciation incurred to date in using that asset.

Land and buildings, and infrastructure, plant and equipment are initially brought to account at cost, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total, in which case they may be capitalised).

Intangibles include purchased and internally developed software such as the department’s cargo management, export documentation and financial information management systems.

Employee provisions

Provision has been made for the agency’s liability for employee entitlements arising from services rendered by employees. This liability encompasses unpaid wages and salaries, annual and long service leave. No provision is made for sick leave.

The liability for leave expected to be settled within twelve months is measured at the nominal amount. Other employee entitlements payable later than one year have been estimated at the present value of the expected future cash outflows in relation to those entitlements.

Supplier payables

Represents amounts payable to trade creditors. Settlement is usually made within 30 days.

Other payables

Represents amounts payable for accrued expenses and unearned revenue and includes moneys held in Income Equalisation Accounts for AQIS and NRS cost-recovered activities.

Schedules of administered items

The Schedules of Administered Items largely reflect the government’s transactions, through the department, with parties outside of the government. Administered revenue is collected by the department and remitted to the Official Public Account (OPA) for use by the government. These funds are not available to be used by the department for its own purposes. Conversely, funds are drawn from the OPA to make payments under Parliamentary appropriations on behalf of the government.

Taxation revenue

Represents the collection of taxes, levies and fees on behalf of the government.

Levies are recognised as revenue when the economic activity of the fee payer gives rise to the Commonwealth’s right to levy the charges.

Non-taxation revenue

Represents non-taxation revenues collected by the department. It includes interest on loans made to state/territory governments and industry bodies, AQIS fees and charges, and industry contributions.

Grants

The department administers a number of grant schemes on behalf of the government. Grant expenses include payments made for rural and industry assistance schemes, natural resource development activities and research and development programs.

Personal benefits

Represents payments to individuals based on specific entitlement criteria. It includes expenses associated with payments for exceptional circumstances relief, equine influenza, farm household support and irrigation management.

Suppliers

Represents payments to suppliers for goods and services. It includes international organisation contributions and consultancy fees associated with administered programs.

Receivables

Represents amounts owing to the government for taxes, levies, fees, charges, loans and goods and services that have been provided to external parties. Receivables are recorded at their nominal amounts less any allowance for doubtful debts. Interest can accrue on overdue accounts.

Investments

Represents the net assets of the Commonwealth Authorities within the Agriculture, Fisheries and Forestry portfolio. Administered investments in controlled entities are not consolidated because their consolidation is relevant only at the whole of government level.

Other financial assets

Represents accrued primary industry levies and charges.

Grant liabilities

Grant liabilities are recognised to the extent that the services required to be performed by the grantee have been performed or the grant eligibility criteria has been satisfied but settlement remains outstanding.