1. Introduction

1.1 The Financial Statements Better Practice Guide

This Department of Finance (Finance) Financial Statements Better Practice Guide (BPG) replaces the withdrawn Australian National Audit Office (ANAO) Public Sector Financial Statements Better Practice Guide. The BPG focuses on financial statements preparation, as distinct from accounting treatments or disclosures and complements the:

Additionally the ANAO now provides audit insights, which identify and discuss common recurring issues, shortcomings and good practice examples, identified through financial statement and performance audit work. The objective of audit insights is consistent with the objectives of better practice guides—improved public sector administration.

1.1.1 Intended audience

This BPG has been developed for use by all Commonwealth entities and companies. For ease of reference and presentation, the BPG uses ‘entities’ to mean Commonwealth entities and Commonwealth companies as defined by the Public Governance, Performance and Accountability Act 2013 ( PGPA Act ).

The preparation of financial statements is a complex annual project that requires a significant investment of time and resources throughout the year. The BPG aims to support entities to efficiently prepare high-quality financial statements and to continuously improve financial statements practices and processes.

The primary audience of the BPG is financial reporting staff. However, some information is likely to also be of interest to Chief Financial Officers (CFO) and/or audit committees.

1.1.2 Better practice indicators

In the context of this BPG, ‘better practice’ refers to the structured and repeatable practices and processes that entities have applied to produce clear, succinct and timely financial statements, that comply with requirements and meet the needs of users.

The following are indicators of an entity that applies financial statements better practice:

  • The accountable authority, CFO and senior management demonstrate their commitment to and actively promote financial management policies, principles and practices.

  • Sound financial governance arrangements are in place across the entity, with:

    •  clearly defined financial management roles and responsibilities
    • sound financial management/reporting practices being consistently applied
    • internal control frameworks, including information and communication technology (ICT) controls, being regularly reviewed to ensure these remain strong and effective
    • rigorous assurance processes, particularly for reviewing information from an expert or third party, and
    • the maturity of the entity’s financial statements processes being regularly reviewed, taking account of the entity’s risk management framework.
  • Significant changes to the entity or its environment that impact on the financial statements are identified, communicated and addressed in a timely manner.

  • The financial reporting team collectively has the appropriate skills and knowledge to deliver its role and responsibilities, with opportunities for continuous learning and/or professional development.
  • Sound professional judgement is exercised in the preparation of financial statements, such as in the application of materiality.
  • Good project management skills, processes and practices are applied to support the timely preparation of financial statements.

  • Stakeholder relationships are constructive, genuine and proactively maintained.

  • As year-end financial statements are completed, a rigorous review is conducted on both the financial statements and their preparation process, to identify those practices or process that should be replicated and areas for improvement in the year ahead.

1.1.3 Applying this guide to general and special purpose financial statements

Financial statements are an important means of demonstrating how Commonwealth entities, both at an individual and whole-of-government level, meet their financial management responsibilities. The requirement to include the audited year-end financial statements in the entity’s annual report, reflects the importance of financial statements for reporting the entity’s financial performance and operational efficiency.

This BPG has been prepared with reference to general purpose financial statements, which are typically prepared at year-end. However, certain aspects may be helpful for preparing special purpose financial statements, which meet the needs of specific users.

1.1.4 Using this guide

The better practice principles contained in this BPG and the accompanying practical resources are guidance material, rather than mandatory requirements. When preparing their financial statements, entities may elect to use the BPG by:

  • adopting the better practice principles, and/or

  • utilising the practical resources.

However, the extent to which different entities refer to the guide would vary depending on factors such as the size and classification of the entity, as well as the maturity of their financial statement processes.

1.1.5 Structure of this guide

The BPG is structured to include both better practice principles and practical resources. For ease of navigation:

  • topics are divided into sub-topics, as detailed in the table of contents, and

  • resources are located at the end of the relevant topic.

    The guide includes a number of hyperlinks. Where the link is shown in ‘underlined blue font’ the link is to a website. Where the link is shown in ‘underlined aqua font’ the link is to information or resources within this BPG.

A number of acronyms and abbreviations are used in this Guide. For the:

  • PDF version —for each chapter, the title or words are spelled in full when first used. The acronym or abbreviation then appears in brackets and is subsequently used throughout.

  • online version —some pages may include unexplained acronyms or abbreviations. To assist readers, a full list of acronyms and abbreviations is provided.

The majority of resources are available in Microsoft Word or Excel, to enable them to be readily customised by entities.

1.1.6 Limitations

The purpose of this BPG is to synthesise and promote better practices for preparing and presenting financial statements. Entities are encouraged to consider this BPG in the context of other guidance material that may be produced by Finance, the ANAO, Department of the Prime Minister and Cabinet, Attorney-General’s Department and the Australian Public Service Commission (APSC).

The BPG is not intended to be a definitive point of reference for the legislative and policy requirements pertaining to entities. Each entity should ensure its own familiarity with the relevant requirements of applicable financial reporting frameworks including legislation, policy requirements and related guidance that may affect its financial management and reporting responsibilities.

Finance will regularly review the quality and currency of the information included in this BPG, and information will be refreshed periodically. However, Finance recommends that users exercise their own skill and care with respect to their use of this BPG and that users carefully evaluate the accuracy, currency, completeness and relevance of the material for their purposes.

1.1.7 Resources

Resource name

Resource description


A compilation of the FRR that shows the text of the law as amended and in force on the compilation date.

RMG 125

Provides extracts of relevant legislative requirements from the FRR; and additional ‘guidance’ paragraphs to assist in applying the FRR and supporting policies.

PRIMA Forms of Financial Statements

A Finance site that includes the current PRIMA forms and guides.

Audit insights

An ANAO site that provides discussions on recurring issues, shortcomings and good practice examples, identified through financial statement and performance audit work.


This online resource links sections of the PGPA Act to related rules and guidance.

BPG Resources Map

This diagram sets out a suggested order and timing for the use of BPG resources.

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