Australian Prudential Regulation Authority
Section 1:  Overview, variations and measures
Overview
There has been no change to the overview included in the 2001‑02 Portfolio Budget Statements (page 117).
Additional estimates and variations to outcomes
The Australian Prudential Regulation Authority (APRA) is seeking an additional $2.1 million in agency outputs to fund increase supervision of regulated superannuation entities during 2001‑02. A further $4.0 million is required to meet expenses for the Royal Commission into the collapse of HIH.
The explanation for these variations are detailed below.
Measures
Outcome 1  To enhance public confidence in Australia’s financial institutions through a framework of prudential regulation which balances financial safety, efficiency, competition, contestability and competitive neutrality

Funding for HIH Royal Commission related costs
The Government has agreed to provide APRA with $4.0 million to meet its expenses incurred as a result of the Royal Commission into the failure of HIH.  This funding will enable APRA to meet the cost of legal support, specialist technical consultants, general administration costs and the cost of extra staff seconded full time to Royal Commission work.
Other variations to appropriations
APRA is seeking an additional $2.1 million  in agency outputs to fund increased supervision of regulated superannuation entities during 2001‑02.
The increased activity will have an impact of $3.0 million in later years. The increased costs will be met through increases in the levy imposed under the various Supervisory Levy Imposition Acts and collected under the Financial Institutions Supervisory Levies Collection Act 1998, which is administered by APRA. 

Map 2:  Outcomes and output groups for the agency

Measures:  Agency summary
Table 1.1:  Summary of measures since the 2001-02 Budget

Breakdown of additional estimates by appropriations bill
Table 1.2:  Appropriation Bill (No. 3) 2001‑02

Summary of staffing changes
Table 1.4:  Average staffing level (ASL)

Section 2:  Revisions to outcomes and outputs
Outcomes and output groups
There has been no change to APRA’s outcome and output groups since the 2001‑02 Portfolio Budget Statements.
Revised performance information and level of achievement — 2001‑02
The variation to funding is to pre‑existing outputs that will not effect the performance information under Outcome 1 since the 2001‑02 Portfolio Budget Statements.

Section 3:  Budgeted Financial Statements
Budgeted agency statement of revenues and expenses (budget operating statement)
This statement provides a picture of the expected financial results for APRA by identifying full accrual expenses and revenues, which highlights whether APRA is operating at a sustainable level.
Budgeted agency statement of assets and liabilities (budget balance sheet)
This statement shows the financial position of APRA. It enables decision makers to track the management of APRA’s assets and liabilities.
Budgeted agency cash flow statement
This statement identifies expected cash flows from operating activities, investing activities and financing activities.
Agency capital budget statement
This statement shows all proposed capital expenditure funded through the Budget as appropriations or from internal sources.
Agency non-financial assets   summary of movement
This statement shows the budgeted movement in the AOFM’s non‑financial assets for the 2001‑02 budget year.

Table 3.1:  Budgeted agency statement of financial performance
for the period ended 30 June 2002

Table 3.2:  Budgeted agency statement of financial position
as at 30 June 2002

Table 3.3:  Budgeted agency statement of cash flows
for the period ended 30 June 2002

Table 3.4:  Agency capital budget statement

Table 3.5:  Agency non-financial assets  summary of movement (Budget year 2001-02)

Table 3.6:  Note of budgeted administered financial performance
for the period ended 30 June 2002

Table 3.7:  Note of budgeted administered financial position 
as at 30 June 2002

Table 3.8:  Note of budgeted administered cash flows
for the period ended 30 June 2002

Notes to the financial statements
Basis of accounting
The agency budgeted statements are prepared in compliance with Australian Accounting Standards, Accounting Guidance Releases and having regard to Statements of Accounting Concepts.
Budgeted agency statement of financial performance
Revenue from government
APRA is funded by a special appropriation for levies, late lodgment and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported by APRA is net of the levies retained in the Official Public Account to fund the Australian Securities and Investments Commission (ASIC) for consumer protection and market integrity functions, and to the Australian Taxation Office (ATO), for unclaimed moneys and lost member functions. 
APRA is seeking to increase the level of regulatory activity of the superannuation industry. The increased activity will have an impact of $3.0 million in later years, with a forecast impact on the 2001‑02 financial year of $2.1 million. The increased costs in the outer years will be met through increased levies.
Additional funding of $4.0 million is also being sought in the current year to meet the costs of preparing submissions to the Royal Commission.
Sales of goods and services
The revenue from sales of goods and service includes revenue from fee-for-service and cost-recovery activities, as well as revenue from the sub-letting of surplus accommodation leased by APRA.
Depreciation and amortisation
APRA’s depreciation expense is increasing over time due to the development and implementation of infrastructure that will provide APRA staff with accurate and timely financial information about regulated entities and that will allow APRA to act as the central repository for this information. The introduction of this system has resulted in a shorter useful life and increased depreciation for some of APRA’s legacy software systems.
Write down of assets
The write‑down of assets in 2000‑01 relates to a change in APRA’s policy for recognition of assets. All assets which no longer met the new criteria or asset threshold were written down as at 1 July 2000.
Budgeted agency statement of financial position
Financial assets
These include cash, levies deposited in the Consolidate Revenue Fund but not drawn down at year end, levies invoiced but still outstanding at year end, and sundry agency debtors. All accounts receivable are recorded at their estimated recoverable amount.
Non-financial assets
Non-financial assets include leasehold improvements, furniture and fittings, computer hardware and office equipment. Intangible assets comprise capitalised software, including work‑in‑progress. APRA does not own any land or buildings.
Other non‑financial assets include prepayments.
Debt
The loan represents the balance of $16.1 million appropriated in 1998-99 and $4.0 million appropriated in 1999‑00 for the establishment of APRA. The final repayment is to be made before 30 June 2002.
Other debt includes lease incentives.
Provisions and payables
Provisions and payables represent liabilities for miscellaneous accruals and employee benefits, including accrued salary and leave entitlements.
Equity
The opening balance represents the net value of assets and liabilities transferred from the Reserve Bank of Australia (RBA) and the Insurance and Superannuation Commission (ISC) on the formation of APRA on 1 July 1998.
Budgeted agency statement of cash flows
Cash received from operating activities includes the appropriation for levies collected from industry less amounts collected on behalf of ATO and ASIC, cash from fees and charges, and interest earned on cash balances and investments held as government backed securities.
Cash used in investing activities includes cash spent on property, plant and equipment.
Cash used for financing activities is the cash used to repay the establishment funds.
Administered
Budgeted administered financial performance
Revenues
The taxation revenues are the levies, late lodgment and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported in this statement is higher than that reported by APRA in the budgeted agency statement of financial position by the amount retained in the Official Public Account to fund ASIC for consumer protection and market integrity functions, and to the ATO, for unclaimed moneys and lost member functions. 
Budgeted administered financial position
Financial assets
The financial assets include levy debt invoiced and still outstanding at year end .
The accrued revenue is for levies on returns lodged but not invoiced at the end of the financial year.
Provisions and Payables
The ‘Other’ provisions and payables is revenue in advance for 2001‑02 levies collected before the end of the 2000‑01 financial year.
Budgeted administered cash flows
All cash collected by APRA for levies, late lodgment and late payment penalties under the Financial Institutions Supervisory Levies Collection Act 1998 and transferred to the Official Public Account at the close of business each day.

Appendices 1 and 2
Appendix 1
Non-appropriation agency and administered revenue

Agency other income is derived from fees and charges and interest income. The increase in the estimated fees and charges is for the sub-lease of excess accommodation leased by APRA. In the 2001‑02 Portfolio Budget Statements the estimated rental had been netted out against the cost of the accommodation.
Administered revenue is the levies collected under the Financial Institutions Supervisory Levies Collection Act 1998 from bodies regulated by APRA. Each year an amount determined by the Treasurer is retained in CRF to fund certain activities undertaken by ASIC and the ATO ($14.9 million in 2000‑01 and $14.7 million in 2001‑02). The balance is transferred to APRA as a special appropriation.
The increase in the reported revenue recognised in relation to the Financial Institutions Supervisory Levies Collection Act 1998 is due to a change in accounting policy since the 2001‑02 Portfolio Budget Statements were prepared. After discussions with the Australian National Audit Office, the policy of recognising over‑ and under‑collections of revenue as liabilities and assets, respectively, is no longer applied. This will result in an increase in revenue recognised for the 2001‑02 financial year.
The increase in other revenue is for refunds of levies to financial institutions which have been made by APRA on behalf of the Commonwealth.

Appendix 2
Estimates of expenses from special appropriations