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Section 5 : Budgeted Financial Statements

5.1: ANALYSIS OF BUDGETED FINANCIAL STATEMENTSNATIONAL CAPITAL AUTHORITY

An analysis of the NCA's budgeted financial statements, as reflected in the budgeted departmental financial statements and administered schedules for 2007-08, is provided below.

Departmental

Budgeted departmental income statement

The NCA is budgeting for a breakeven position for the 2007-08 financial year compared to an approved estimated loss of $0.8m for 2006-07 (due to increased irrigation costs resulting from the continuing drought conditions and significant ActewAGL price increases for potable water).

Total revenue for 2007-08 is estimated to be $22.1m, an increase of $3.0m from the 2006-07 estimate, largely due to increased appropriation funding for the Griffin Legacy Infrastructure.

The NCA is introducing measures to increase use of second class water from Lake Burley Griffin that will reduce the need for potable water.

Total expenses for 2007-08 are estimated to be $22.1m (including borrowing costs), an increase of $3.0m (11%) from the 2006-07 estimate. The increase is largely due to the Griffin Legacy Infrastructure measure and covers 2 additional staff ($0.165m) to manage the maintenance of new assets, at a cost of $2.981m in the first year.

Chart 5.1: Total departmental expenses

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Budgeted departmental balance sheet

The NCA's total departmental assets are budgeted to increase by $3.7m (25%) in 2007-08.

Chart 5.2: Budgeted assets as at 30 June 2008

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The NCA is estimating an increase of $3.7m (53%) in total liabilities at 30 June 2008 compared to 30 June 2007. Primarily due to the increase in the liability provision for construction of assets funded from external sources, including commemorative works. This liability is recognised when contributions are received to construct commemorative works. Upon completion of the asset, the work in progress and the provision are offset and the completed asset is transferred to administered assets.

Administered

Schedule of budgeted income and expenses administered on behalf of government

In 2007-08 the NCA will receive appropriations of:

• $11.0m for activities it administers on behalf of government, representing an increase of 18% from 2006-07. This appropriation is directly linked to the estimated depreciation expense on the administered assets managed by the NCA and depreciation funding is used for capital expenditure, and
• $0.9m supplier expenses.

Revenue from administered activities includes lease revenue on Diplomatic land, the value of assets funded from external sources, including commemorative works constructed and transferred from departmental activities to administered assets, and proceeds from the sale of National Land for diplomatic purposes. Revenues associated with the Diplomatic estate are paid directly to the Official Public Account.

Chart 5.3: Total administered expenses

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Schedule of budgeted assets and liabilities administered on behalf of government

Total administered assets are budgeted to increase by $5.3m (1%) in 2007-08 as a result of new construction of assets ($16.4m) offset by depreciation ($11.0m).

Chart 5.4: Administered asset base

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Note: Assets were revalued on a fair value basis at 30 June 2005.

5.2: BUDGETED FINANCIAL STATEMENTS TABLES

Table 5.1: Budgeted departmental income statement (for the period ended 30 June)

Table 5.2: Budgeted departmental balance sheet (as at 30 June)

Table 5.3: Budgeted departmental statement of cash flows (for the period ended 30 June)

Table 5.4: Departmental statement of changes in equity - summary of movement (Budget year 2007-08)

Table 5.5: Departmental capital budget statement

Table 5.6: Departmental property, plant, equipment and intangibles - summary of movement (Budget year 2007-08)

Table 5.7: Schedule of budgeted income and expenses administered on behalf of government (for the period ended 30 June)

Table 5.8: Schedule of budgeted assets and liabilities administered on behalf of government (as at 30 June)

Table 5.9: Schedule of budgeted administered cash flows (for the period ended 30 June)

Table 5.10: Schedule of administered capital budget

Table 5.11: Schedule of property, plant, equipment and intangibles - summary of movement (Budget year 2007-08)

5.3: NOTES TO THE FINANCIAL STATEMENTS

1. Accounting policy
   The budgeted financial statements have been prepared on an accrual accounting basis, having regard to Statements of Accounting Concepts, and in accordance with:
   • the Finance Minister's Orders
   • Australian Accounting Standards
   • Other authoritative pronouncements of the Australian Accounting Standards Board, and
   • The Consensus Views of the Urgent Issues Group.
     
     
2. Departmental and administered items
   Agency assets, liabilities, revenues and expenses are those items that are controlled by the NCA and are used by the NCA in producing its outputs and include:
   • computers, plant and equipment used in providing goods and services
   • liabilities for employee entitlements
   • revenue from appropriations or independent sources in payment for outputs, and
   • employee, supplier and depreciation expenses incurred in providing agency outputs.
     
     
   Administered items are revenues, expenses, assets and liabilities that are controlled by the government and managed, or oversighted, by an agency on behalf of the government according to set government directions. Administered expenses included grants, subsidies and personal benefit payments. Administered revenues include taxes, levies, fees, fines and excises.
   
   
3. Departmental revenue
   Revenue from government represents the purchase of outputs from the NCA by the government and is recognised to the extent that they are available for drawing down from the Official Public Account.
   
   Revenue from other sources, representing sales from goods and services, is recognised when:
   • the risks and rewards of ownership have been transferred to the buyer
   • the seller retains no managerial involvement nor effective control over the goods
   • the revenue and transaction costs incurred can be reliably measured, and
   • it is probable that the economic benefits associated with the transaction will flow to the Entity.
     
     
4. Departmental expenses - employees
   Payments and net increases in entitlements to employees for services rendered in the financial year.
   
   
5. Departmental expenses - suppliers
   Payments to suppliers for goods and services used in providing agency outputs.
   
   
6. Departmental expenses - depreciation and amortisation
   Depreciable property plant and equipment, buildings and intangible assets are written-off to their estimated residual values over their estimated useful life to the NCA, using the straight line calculation method.
   
   
7. Departmental assets - financial assets
   Financial assets are used to fund the NCA's minor capital programme, employee entitlements, creditors and working capital.
   
   
8. Departmental assets - non-financial assets
   These items represent future economic benefits that the NCA will consume in producing outputs. The reported value represents the purchase price or an independent valuation less depreciation incurred to date in using the asset.
   
   
9. Departmental liabilities - provisions and payables
   Provision has been made for the NCA's liability for employee entitlements arising from services rendered by employees. This liability includes unpaid annual leave and long service leave. No provision has been made for sick leave because the level of sick leave taken is less on average than the amount which employees are entitled to each year.
   
   Provision has also been made for unpaid supplier expenses as at balance date.
   
   
10. Administered revenue
    Revenue from administered activities includes lease revenue on diplomatic land, the value of assets funded from external sources, including commemorative works and memorials, constructed and transferred from departmental activities to administered assets.
    
    
11. Administered expenses - depreciation and amortisation
    Depreciable property infrastructure, plant & equipment, buildings and heritage assets are written-off to their estimated residual values over their estimated useful life, using straight line calculation method.
    
    
12. Asset valuation for departmental and administered
    Assets were valued on a fair value basis at 30 June 2005. Fair value essentially reflects the current market value of an asset.

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