Capital management plans
The capital management plan (CMP) is a strategic planning document that details an entity’s actual and anticipated capital expenditure, and how the entity proposes to fund it. The CMP increases entities’ financial management accountability, particularly their balance sheet management by:
- providing government with visibility of planned capital expenditure
- assisting internal budget decision-making by entities and providing information to support the entity’s capital expenditure estimates in CBMS.
It is generally assumed that any request for capital funding would have been preceded by a need for funding identified in the CMP.
Entities that must prepare CMPs
CMPs must be prepared by all GGS entities (except for GBEs) that:
- own assets
- plan to purchase new assets
- plan to replace existing assets
- incur other capital expenditure across the budget and forward-year estimates.
Entities that do not meet these requirements should advise their AAU that a CMP is not required.
The CMP template is available to Australian Government officials through CBMS from:
Minimum requirements and presentation for CMPs
CMPs should reflect the entity’s strategic budget priorities, as agreed by the government, and must:
- align with other internal plans, e.g. the entity’s corporate plans and internal budgets
- be consistent with capital expenditure estimates in CBMS.
For entities with significant long-lived asset holdings or future budget pressures, budgeted capital expenditure data beyond the FEs should be included in their CMP.
Portfolio departments should ensure that the CMPs across the portfolio are presented consistently to aid analysis and comparability across the portfolio.
Assets under construction should be recorded against the relevant asset class.
To aid reconciliation of the CMP with CBMS, entities that do not budget for assets under construction in the CBMS ‘Asset Movement Table’ until they are capitalised, should note this in their CMP.
Right of Use (RoU) Assets should be excluded from the CMP as, even though they are being recorded onto the balance sheet, they are not funded through capital appropriations.
When a CMP must be revised
All entities are required to provide Finance with a CMP in February prior to the commencement of the Budget update. The update will reflect any subsequent changes since the previous Budget or MYEFO update or other decisions discussed with your AAU.
Where material entities have significant changes they should provide Finance with an updated CMP in October at the commencement of the MYEFO update. This revision should take into account actual capital expenditure for the prior year, revised year-to-date estimates and any major funding decisions from the last Budget.
Outside these two formal updates, material entities should also provide Finance with revised CMPs whenever there are significant changes encompassing:
- government decisions or measures
- approved movement of capital expenditure requests
- reallocations between operating and capital expenditure
- MoG changes
- other changes – such as the restructuring of an entity’s expenditure due to emerging priorities or changes to the corporate structure.
Finance does not require the submission of revised CMPs at MYEFO for changes arising from indexation or FE3 creation.
Revised CMPs are to be provided to the relevant AAU and CMP-PCEF@finance.gov.au. Entities are encouraged to include an updated PCEF.
The submission of a CMP and PCEF, does not constitute agreement by Finance (or the government) to the planned capital expenditure or additional funding.
Property capital expenditure forecasts
All GGS entities are encouraged to prepare and maintain a PCEF.
The PCEF focuses on and supports the management of property related, long-term capital expenditure according to discrete capital works over forward estimates. It assists with capital planning and feeds into the CMP.
A PCEF should include:
- four years of actual capital expenditure
- ten years of budgeted capital expenditure on property
- other non-financial property information.
The PCEF template is available to Australian Government officials from CBMS at:
Providing a PCEF to the relevant AAU does not constitute an agreement by Finance or the government to the planned capital expenditure, or the provision of additional funding.
For further information, contact your AAU. For guidance on technical accounting policy, email email@example.com.
Capital budget reporting
Entities must report their planned and actual capital expenditure in their PB statements and PAES (where required). Budgeted and actual capital expenditure data is available through various reports in CBMS and should be consistent with information in the:
- PB statements or PAES
- corporate plan (if relevant).
The relevant tables or sections of the PB statement include the:
- Capital budget statement – that shows appropriation funding provided for assets, compared to the budgeted capital expenditure across the current, budget and forward year estimates
- Asset movement table – that shows budgeted capital expenditure (accrual) by asset class across all funding sources for the budget year only
- Equity movement table – that shows equity injections from government for the budget year only
- Cash flow statement – that shows budgeted cash purchases of assets across the current, budget and forward year estimates.
To run these reports, go to CBMS:
- ‘Purchases of non-financial assets’ in the Capital budget statement, should reconcile to ‘total additions (accrual)’ in the asset movement table.
- RoU assets arising from leasing transactions are not purchased assets for the purposes of the Capital budgeting statement or the Equity movement table.
- ‘Non-RoU depreciation’ is to be reported as an ‘Expenses not requiring appropriation’, with the RoU depreciation component included as part of the entity’s departmental appropriation expenses.
- ‘Purchases of plant, property, equipment and intangibles’ in the Cash flow statement should reconcile to ‘Total cash used to acquire assets’ in the Capital budget statement.
CBMS operational reports
Capital budget reconciliation report – reconciles the Capital budget statement, Asset movement table and Cash flow statement, and advises of inconsistencies that require remediation of budget estimates in CBMS. To run this report, go to CBMS:
Capital budget threshold report– provides an analysis of estimates adjustments entered by entities throughout the year and advises where the entity may need to seek the Finance Minister’s approval for a movement of capital expenditure. This report also assists with identifying transactions that impact calculations associated with the creation of a new FE3 estimate in CBMS. To run this report, go to CBMS:
Capital budget statement – shows appropriation funding provided for assets compared to the budgeted capital expenditure across the current, budget and forward year estimates. To run this report, go to CBMS:
Examples for updating capital expenditure estimates in CBMS journals.