7. Administrative Arrangements Restructures

FRR section 26 – Restructures of administrative arrangements

This section of the FRR sets out reporting and disclosure requirements for when a restructure of administrative arrangements has occurred.

Restructures of administrative arrangements include a:

  • transfer of responsibility for delivery of goods and services, including delivery of advice to the Australian Government
  • transfer of responsibility for managing assets and liabilities
  • reclassification between ‘departmental’ and ‘administered’ items.

Accounting entries do not need to be processed by the date of the transfer for an entity to make the disclosures required.

Section 75 of the PGPA Act provides for adjustments to annual appropriations related to the transfer of functions between non-corporate Commonwealth entities (NCEs). For further information, see RMG-116 Accounting for annual appropriations

Disclosures and notes for financial statements

In preparing financial statements to reflect a restructure of administrative arrangements:

a transfer of appropriations representing prior years’ unspent appropriations – is accounted for against equity in the same way as other assets transferred as part of the restructure of administrative arrangements. Section 75 determinations under the PGPA Act need to be in place to enable the receiving entity to access and spend annual appropriations. For more information, email Annual.Appropriations@finance.gov.au.
prior year disclosure – restructures that occurred in the current and previous financial reporting periods should be disclosed in the restructuring note. In the rare event that a single restructure crosses two consecutive financial reporting periods, comparative figures should also be disclosed.
assumed functions (disclosure of income and expenses) – the notes to financial statements should disclose the full annual expense/income of the functions, which have been transferred to the entity. The statement of comprehensive income recognises only those expenses/income incurred/earned whilst the functions were under the control of the reporting entity.

Transfer of assets and/or liabilities

Transfers of assets and/or liabilities for no consideration to a wholly-owned Commonwealth entity, must be recognised by the transferee as a contribution by owners when, and only when, it satisfies the definition of contributions by owners in AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities. For more information, see RMG-123 Deeming or designating transfers of assets and liabilities as 'contributions by owners' (equity).

For not-for-profit entities, where an asset is acquired at no cost or nominal cost, the cost is its fair value as at the date of acquisition.

Special reporting requirements following machinery of government changes

Division 4 of Part 2-3 of the PGPA Rule provides special reporting requirements for Commonwealth entities that have ceased to exist or whose functions have been transferred following machinery of government changes. Under subsection 26(1A) of the FRR, where these circumstances occur, the relevant reporting entity must prepare financial statements accordingly.

For guidance on the special reporting requirements under the Division 4 of Part 2-3 of the PGPA Rule, see RMG-119 Reporting requirements following machinery of government changes.

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