9. Other disclosures

Under Australian Accounting Standards Board (AASB) 108 Accounting Policies, Changes in Accounting Estimates and Errors (AASB 108), reclassification of an item between outcomes may result in a change in accounting policy and require:

• restatement of comparative data
• disclosure in the notes of entities’ financial statements, in accordance with AASB 108.

Outcomes tables

AASB 1050 Administered Items and AASB 1052 Disaggregated Disclosures (AASB 1052) use the term ‘activities’ that generally equates to the term ‘outcomes’ for departmental and administered items.

Paragraph 16 of AASB 1052 requires the disclosure of departmental assets and liabilities to each major activity where they are reasonably attributable – this guide includes the same disclosure for administered assets and liabilities. Where particular assets and liabilities cannot be reliably attributed, this matter is to be determined through professional judgement.

Accountable authorities are required to disclose the following information:

• expenses, income, assets and liabilities at the outcome level (however, entities may choose to report some or all of this information at a lower level)
• major classes applicable to the disclosing entity.

Administered income does not include administered appropriations (subsection 41(3) of the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR).

Payments to corporate Commonwealth entities (CCEs) are not related to the paying entity’s outcomes and, therefore, these are not attributed. These need to be included in the disclosures for completeness.

Outcome disclosures need to agree to the:

• corresponding totals in the entity’s statement of comprehensive income
• statement of financial position and administered schedules.

This means the disclosure note may need to include items not allocated to an outcome.

Following the introduction of the Australian Government Charging Framework, the note referred to in section 34A of the FRR relates to regulatory charging activities only.

All regulatory charging activities must be reported, regardless of their financial value (section 34A(1) of the FRR).

Under paragraph 34A(2)(aa) of the FRR, entities must include a list of their regulatory charging activities. This may be presented as a full list of all activities, or a summary of the types of activities with a link to the full list on their website.

The FRR sets out the requirements for reporting regulatory charging activities. To provide users with further information, entities can also:

• provide information relating to amounts written off
• provide link(s) to the websites containing relevant cost recovery documentation.

Financial information included in the note under subsection 34A(1) of the FRR:

• needs to be prepared as an aggregate (that is, the total of the entity’s regulatory charging activities)
• is a subset of information contained elsewhere in the financial statements (for example, the external revenue reported in this note is a subset of the entity’s total external revenue)
• is also reported in the Digital Annual Reporting Tool (see RMG-135 and RMG-136 Annual report for corporate Commonwealth entities (RMG-136)).

Where entities do not manage all parts of the regulatory charging activity (for example, deliver the activity but do not collect receipts or vice versa), entities need to disclose those parts of the activity that they manage.

Resource and commercial charging activities do not need to be reported, nor do inter‑government or intra-government charges.

The FRR requirements for reporting regulatory charging activities do not imply that entities reporting regulatory charging activities are necessarily subject to AASB 14 Regulatory Deferral Accounts. The requirements in Australian Accounting Standards (AAS) need to be considered when determining which AAS applies to a transaction, other event or condition.

Reference to other entities involved in the activity needs to be included in the 'regulatory charging activities'. For more information, see PRIMA forms or email Charging Policy.

Regulatory charging summary disclosure note

The reporting of ‘appropriations applied’ (for non-corporate Commonwealth entities (NCEs)) and ‘payments from portfolio bodies’ (for CCEs) is to provide a connection between the external receipts collected and the amount appropriated to the entity to undertake the regulatory charging activity:

• CCEs need to complete the ‘payments from portfolio bodies’ line, as shown in PRIMA forms, to report any funding received via their portfolio department to undertake regulatory charging activities
• NCEs need to complete the relevant appropriation line(s).

Total amounts expensed and external revenue recognised:

• can be attributed to regulatory charging activities
• are split between departmental and administered items
• are also reported in the Digital Annual Reporting Tool (see RMG-135 and RMG-136).

Revenue only relates to revenue that can be attributed to external sources (that is, it does not include appropriation revenue).

CCEs need to complete the ‘payments to portfolio departments’ line, as shown in PRIMA forms, if they collect revenue on behalf of the Commonwealth and return receipts to the consolidated revenue fund (CRF), such as through their portfolio department.

‘Amounts written off’ allow entities to provide information about whether receivables are being recovered. Entities need to report any receivables that have been written off, consistent with PGPA Act requirements. Amounts written off comprise receivables only, and are split between departmental and administered items.

‘Regulatory charging activities’ allows entities to list the regulatory charging activities that are reported in the note and direct readers to more detailed information. All regulatory charging activities reported in this note are to be listed, accompanied by link(s) to the web location of relevant documentation (for example, a link to the entity’s published Cost Recovery Implementation Statement(s)).

Budgetary reporting

Entities should ensure their budgeted financial statements are prepared consistent with AAS and other relevant external reporting standards.

Entities need to exercise professional judgement in explaining variances, particularly where variance explanations are of a security or sensitive nature. Under paragraph 15 of AASB 1055 Budgetary Reporting (AASB 1055), explanations are to focus on a high-level explanation of the cause, not merely the nature, of the major variance(s) and are not to simply focus on the numerical difference between the original budget and the actual amounts.

NFP entities in the general government sector (GGS) are to disclose:

• the original budgeted financial statements presented to the current parliament by the current Government, with
• explanations for major variances between the actual amounts presented in the financial statements that corresponds with information in the original Budget.

Entity financial statements are subject to audit and require adequate working papers to support budget information disclosed.

Examples of appropriate working papers include:

• appropriate Budget authority documentation
• Central Budget Management System (CBMS) reconciliations and chief financial officer sign-offs (comparative budgetary information for the previous period is not required).

The Australian National Audit Office (ANAO) audit variances between actual and original budget amounts only, not the budget amount. Reporting entities need to understand and explain the underlying basis of the budget amount to provide an appropriate explanation for any variance.

Budgetary reporting, under AASB 1055 (Tier 1 reporting) or AASB 1060 General Purpose Financial Statements - Simplified Disclosures for For-Profit and Not-For-Profit Tier 2 Entities (AASB 1060) (Tier 2 reporting), can be presented in a note to the financial statements or on the primary statements.

Explanations for major variances are to be disclosed, particularly those relevant to performance analysis of a reporting entity and the use of resources entrusted to it.

Reporting entities need to consider the materiality of variances. As a general guide, a variance may be considered material or major if it is:

• more than +/- 10 per cent of the line item for both departmental and administered, or
• more than +/- 2 per cent of total expenses or total own-source revenue for departmental only
• more than +/- 2 per cent of the relevant sub-total for total expenses, revenue, assets or liabilities for administered only.

Reporting entities need to be aware that discussions with auditors may conclude that more or fewer variance explanations are required and entities will need to use judgement. For example, a line item budget might be so small, in the overall context of the financial statements, that explaining a variation above 10 per cent would not be useful in analysing the entity’s performance. Other factors to be considered could include:

• the sensitivity of particular line items and transaction, and/or
• large offsetting movements within a line item.
   

Current and non-current distinction for assets and liabilities 

Tier 1 and Tier 2 reporting entities must provide current (amounts to be settled or recovered within 12 months) and non-current (all other) distinction for assets and liabilities under section 34B of the FRR.

Entities should classify and disclose line items in the current and non-current distinction for assets and liabilities note, consistent with the entity’s:

• statement of financial position
• administered schedule of assets and liabilities.

Under the net cash appropriation arrangements:

• NCEs receive full or partial departmental capital budget (DCB) funding in Appropriation Acts (No. 1/3/5), in lieu of an appropriation for depreciation/amortisation
• designated collection institutions (CIs) receive a collection development acquisition budget (CDAB) funding as equity injections in Appropriation Acts (No. 2/4/6)
• entities that are fully cost recovered or primarily funded from external revenue do not receive government funding for their assets as they self-fund asset purchases and replacements.

For more information on capital budgeting, see RMG-124 Capital budgeting by Commonwealth entities in the general government sector (RMG-124).

The ‘net cash appropriation arrangements note’ in the financial statements is:

• used to identify whether operating loss applications are required by the entities that receive DCB and CDAB funding
• included in their entity’s financial statements to ensure alignment with their Portfolio Budget Statements and Portfolio Additional Estimates Statements.

Disclosure requirements

An entity is required to prepare this note if:

• it receives DCB/ CDAB funding or equity injections through appropriations to fund asset purchases and replacements; and/or
• it is a lessee with right-of-use assets and lease liabilities.

For assets funded through external revenue sources including cost recovery, depreciation/amortisation of these assets are excluded from this calculation.

For depreciation of right-of-use assets and lease principal repayments, if the expense is recovered through cost recovery, it is excluded from this calculation.

In preparing the net cash appropriation arrangements note, entities are required to disclose the following. For:

• entities with a DCB:
  • depreciation/amortisation expenses excluding amounts related to assets/functions funded through cost recovery arrangements or external revenue
  • include a footnote explaining the amount of depreciation/amortisation expenses that have been excluded from the note and the assets/functions they relate to.
• entities with a CDAB:
  • depreciation expenses related to heritage and cultural asset collections only
  • include a footnote to explain which depreciation expenses have been included and why.
• entities with lessee transactions (including CCEs):
  • depreciation expenses related to right-of-use (ROU) leased assets
  • lease principal repayments cash amount, excluding the amounts recovered through cost recovery arrangements.

No other expenses are shown in the note as it may impair the user’s understanding of the entity’s operating  surplus or deficit.