Chapter 4—Financial statements
Summary of financial management and performance
How the agency is funded
Parliament, via the Appropriation Acts, provides the agency with two types of operating funding:
- Departmental—resources that are used to deliver the objectives of conserving Old Parliament House as a significant national heritage site and delivering the Museum of Australian Democracy at Old Parliament House.
- Administered—revenues and payments that are administered on behalf of the government. The revenues collected are for museum admissions and building rental which are returned to the Official Public Account. The payments made are used for building and heritage furniture capital works and new exhibitions.
How financial performance is measured
Financial forecasts are published through the year as part of the Budget papers. The key reference point is the Portfolio Budget Statements (PBS), released on Budget night.
The agency’s financial focus is to provide accurate estimates and to achieve a break-even position while ensuring the efficient, effective, ethical and economic use of resources.
Key results in 2012–13
An unmodified audit report was received on the 2012–13 financial statements from the Australian National Audit Office (ANAO) with no findings identified during the year. The ANAO also rated the agency’s financial statement preparation highly against the ANAO Better Practice Guide Preparation of Financial Statements by Public Sector Entities.
Departmental finances
| Budget $m |
Actual $m |
Change | |
|---|---|---|---|
| Income and expenses | |||
| Employee expenses | 7.533 | 7.359 | -2% |
| Supplier expenses | 6.168 | 6.04 | -2% |
| Depreciation and amortisation | 0.422 | 0.358 | -15% |
| Write down and impairment of assets | 0 | 0.002 | 100% |
| Total expenses | 14.123 | 13.759 | -3% |
| Other own-source revenue | 0.05 | 0.141 | 182% |
| Net cost of services | 14.073 | 13.618 | -3% |
| Revenue from government | 13.651 | 13.592 | 0% |
| Operating result | -0.422 | -0.026 | -94% |
| Balance Sheet | |||
| Financial assets | 3.922 | 4.524 | 15% |
| Non-financial assets | 2.297 | 2.765 | 20% |
| Liabilities | 2.473 | 2.541 | 3% |
| Net Assets | 3.746 | 4.748 | 27% |
The PBS forecast a loss of deficit of $0.422 million, or a break even position when adjusted for depreciation and amortisation. The agency achieved a deficit of $0.026 million or $0.332 million when adjusted for depreciation and amortisation (see Note 26 for details). This is within 2 per cent of the appropriation received.
Revenue increased by $0.032 million. Agency own-source revenue was $0.091 million higher than anticipated due to additional sponsorships for travelling exhibitions. Appropriation revenue was $0.059 million below the original PBS due to a change in policy where Comcare reduced the fire levy insurance premium and appropriations were reduced by the same amount of $0.056 million. Portfolio savings announced after the PBS accounted for the remaining difference of $0.003 million.
Agency expenses were $0.364 million lower than anticipated or $0.300 million lower than the PBS when depreciation and amortisation are excluded. This was mainly in employee expenses due to recruitment delays which also resulted in slightly lower project spending.
| 2011–12 $m |
2012–13 $m |
Change | |
|---|---|---|---|
| Income and expenses | |||
| Employee expenses | 8.057 | 7.359 | -9% |
| Supplier expenses | 6.020 | 6.040 | 0% |
| Write down and impairment of assets | 0.004 | 0.002 | -50% |
| Depreciation and amortisation | 0.406 | 0.358 | -13% |
| Total expenses | 14.487 | 13.759 | -5% |
| Other own-source revenue | 0.428 | 0.141 | -67% |
| Net cost of services | 14.059 | 13.618 | -3% |
| Revenue from government | 13.655 | 13.592 | 0% |
| Operating result | -0.404 | -0.026 | >100% |
| Balance sheet | |||
| Financial assets | 4.283 | 4.524 | 6% |
| Non-financial assets | 2.486 | 2.765 | 11% |
| Liabilities | 2.452 | 2.541 | 4% |
| Net assets | 4.317 | 4.748 | 10% |
The agency had a surplus of $0.332 million (adjusted for depreciation and amortisation) in 2012–13, compared to a surplus of $0.002 million in 2011–12. The 2012–13 result is a combination of late interest rate movements which lowered employee costs and savings in salaries that were not utilised in suppliers as expected.
Revenue decreased by $0.350 million in 2012–13 from last year. This was due to a decrease in own-source revenue of $0.287 million and a reduction in revenue from government appropriations of $0.063 million.
The decrease in own-source revenue of $0.287 million is primarily due to sponsorship of $0.298 million from BHP Billiton received in the previous financial year to tour an exhibition to the Pilbara. This was partly offset this year by an extra $0.020 million from National Collecting Institutions Touring and Outreach Program for travelling exhibitions this year.
Expenses were 5 per cent lower than last year by 0.728 million. This is mainly in salaries as last year included redundancies and the additional staff costs for the Pilbara project (funded by sponsorships). The redundancies also resulted in lower salary costs this year and the higher interest rate resulted in lower leave expenses. Supplier expenses were essentially the same as last year even though the savings in salaries had been allocated in the budget to suppliers for projects which did not eventuate due to staff changes in a key area.
Net equity increased by $0.431 million due to asset revaluations of $0.263 million and equity injections for capital of $0.194 million. This was partly offset by the deficit for the period of $0.026 million (due to changes in the net cash arrangements for depreciation and amortisation).
The agency’s financial assets at 30 June 2013 of $4.524 million are adequate to cover liabilities of $2.541 million.
Net equity increased by $1.002 million compared to the budget as the PBS did not anticipate an increase in the asset revaluation reserve of $0.612 million ($0.349 million last year and $0.263 million this year) and the accumulated deficit was lower by $0.390 million as it was lower than the anticipated deficit of $0.396 million partly offset by opening balance differences of $0.006 million.
Administered finances
| Budget $m |
Actual $m |
Change | |
|---|---|---|---|
| Income and expenses | |||
| Revenue | 1.274 | 1.269 | 0% |
| Other gains | 0 | 0.072 | 100% |
| Total income | 1.274 | 1.341 | 5% |
| Depreciation and amortisation | 4.465 | 5.394 | 21% |
| Write down and impairment of assets | 0 | 0.052 | 100% |
| Total expenses | 4.465 | 5.446 | 22% |
| Net cost of services | 3.191 | 4.105 | 29% |
| Balance Sheet | |||
| Financial assets | 0.158 | 0.119 | -25% |
| Non-financial assets | 89.697 | 89.684 | 0% |
| Liabilities | 0.165 | 0.262 | 59% |
| Net Assets | 89.69 | 89.541 | 0% |
The PBS forecast the net cost of services at $3.191 million; however, the actual net cost of services was $4.105 million. After the release of the PBS, the museum acted on a recommendation from its valuers to change the method of depreciation applied to the Old Parliament House building from straight line to reducing balance. The negative variance of $0.914 million in net cost of services was mainly due to this change in method of depreciation.
| 2011–12 $m |
2012–13 $m |
Change | |
|---|---|---|---|
| Income and expenses | |||
| Revenue | 1.340 | 1.269 | -5% |
| Other gains | 0.066 | 0.072 | 9% |
| Total income | 1.406 | 1.341 | -5% |
| Depreciation and amortisation | 4.340 | 5.394 | -24% |
| Write down and impairment of assets | 0.054 | 0.052 | 4% |
| Total expenses | 4.394 | 5.446 | -24% |
| Net cost of services | 2.988 | 4.105 | -37% |
| Balance sheet | |||
| Financial assets | 0.117 | 0.119 | 2% |
| Non-financial assets | 91.473 | 89.684 | -2% |
| Liabilities | 0.302 | 0.262 | 13% |
| Net assets | 91.288 | 89.541 | -2% |
The net cost of services has increased by $1.117 million from $2.988 million in 2011–12 to $4.105 million in 2012–13. The primary reason for the increase is the change in depreciation method on the Old Parliament House building.
Revenue is also lower than last year by $0.065 million, primarily due to a drop in catering turnover and a subsequent reduction in the value of the caterer’s variable licence fee ($0.092 million). This has been partly offset by an insurance refund for lighting ($0.028 million).
Expenses are also higher by $1.052 million due to a change in the depreciation method from straight line to reducing balance for the building, in line with valuation recommendations.
Net assets reduced by $1.747 million from $91.288 million in 2011–12 to $89.541 million in 2012–13. The main reason for this reduction is that the value of non-financial assets is reducing each year. Asset replacements are not occurring at the same rate as the assets are being consumed as the Administered Capital Budget is lower than the annual depreciation and amortisation expense.