2003-04 Commonwealth Budget – Portfolio Budget Statements

Section 3: Budgeted financial statements

Analysis of budgeted departmental financial statements

A brief analysis of the Department's budgeted financial statements is provided below.

Departmental

The Department is budgeting towards a breakeven operating result for 2003-04.

While total revenue is expected to remain similar to 2002-03, there are movements between the types of revenue received by Treasury. These movements include an increase in goods and services in 2003-04, reduced interest revenue due to the cessation of the Agency Banking Incentive Scheme and reduced appropriations.

Total expenses are budgeted to increase by $3.1 million from 2002-03 to 2003-04 mainly due to increased superannuation expenses and expenses for the Financial Reporting Council.

Funds have been provided to the Treasury as an interim measure for the purposes of the Inspector General of Taxation. Funds will be transferred to the Inspector General, which is being established as a separate portfolio agency, when operations commence in 2003-04.

The Department's capital budget displays increased capital appropriations in 2003-04. This is attributable to budget measures relating to additional capital acquisitions for the Royal Australian Mint and an equity injection to the Australian Reinsurance Pool Corporation (to be repaid in the same year).

Administered

Goods and services tax (GST) related items are treated as negative in the Department of the Treasury's administered budget statements.

For constitutional reasons the GST is levied by the Commonwealth, and can therefore be technically considered Commonwealth revenue under the reporting standards. The clear policy intent of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (the IGA), however, is that it is a State tax collected by the Commonwealth in an agency capacity. Accordingly, GST related items are treated as negative in Treasury's administered budget statements. This fully offsets GST related items recorded by the Australian Taxation Office so that at a consolidated level the GST is not recorded by the Commonwealth.

Departmental financial statements

Budgeted departmental statement of financial performance

This statement provides a picture of the expected financial results for the Department of the Treasury by identifying full accrual expenses and revenues, which highlights whether the Department is operating at a sustainable level.

Budgeted departmental statement of financial position

This statement shows the financial position of the Department of the Treasury. It helps decision-makers to track the management of assets and liabilities.

Budgeted departmental statement of cash flows

Budgeted cash flows, as reflected in the statement of cash flows, provide important information on the extent and nature of cash flows by categorising them into expected cash flows from operating activities, investing activities and financing activities.

Departmental capital budget statement

Shows all planned departmental capital expenditure (capital expenditure on non-financial assets), whether funded through capital appropriations for additional equity or borrowings, or from funds from internal sources.

Departmental non-financial assets - summary of movement

Shows budgeted acquisitions and disposals of non-financial assets during the budget year.

Notes of administered activity

Note of budgeted administered financial performance

This note identifies the main revenues and expenses administered on behalf of the Government.

Note of budgeted administered financial position

This note shows the assets and liabilities administered on behalf of the Government.

Note of budgeted administered cash flows

This note shows cash flows administered on behalf of the Government.

Note of administered capital budget statement

This note shows details of planned administered capital expenditure.

Table 3.1: Budgeted Departmental Statement of Financial Performance -
for the period ended 30 June

Table 3.1: Budgeted Departmental Statement of Financial Performance - for the period ended 30 June

(1) K1 shows the link back to Table 1.1 on page 10.

Table 3.2: Budgeted Departmental Statement of Financial Position -
as at 30 June

Table 3.2: Budgeted Departmental Statement of Financial Position - as at 30 June

Table 3.3: Budgeted Departmental Statement of Cash Flows -
for the period ended 30 June

Table 3.3: Budgeted Departmental Statement of Cash Flows - for the period ended 30 June

Table 3.4: Departmental Capital Budget Statement

(1) K3 shows the link back to Table 1.1 on page 10.

Table 3.5: Departmental Non-financial Assets - Summary of Movement (Budget year 2003-04)

Table 3.6: Note of Budgeted Financial Performance Administered on behalf of Government - for the period ended 30 June

(1) K2 shows the link back to Table 1.1 on page 10.

Table 3.7: Note of Budgeted Financial Position Administered on behalf of the Government - as at 30 June

Table 3.8: Note of Budgeted Administered Cash Flows -
for the period ended 30 June

Table 3.8: Note of Budgeted Administered Cash Flows - for the period ended 30 June

Table 3.9: Note of Administered Capital Budget Statement

(1) K4 shows the link back to Table 1.1 on page 10.

Notes to the financial statements

Basis of accounting

The Department of the Treasury's budget statements have been prepared on an accrual basis and in accordance with the goods and services tax (GST) accounting guidelines of the Urgent Issues Group (UIG) of the Australian Accounting Standards Board. The UIG consensus requires that expenses and assets be accounted for net of recoverable GST, revenues be accounted for net of GST payable and that cash flows and accounts payable and receivable be reported gross. Appropriations are thus net of recoverable GST amounts.

Departmental and administered financial statements

Under the Commonwealth's accrual budgeting framework, and consistent with Australian Accounting Standards, transactions that departments control (departmental transactions) are separately budgeted for and reported on from transactions departments do not have control over (administered transactions). This ensures that departments are only held accountable for the transactions over which they have control.

Departmental assets, liabilities, revenues and expenses are those items that are controlled by the department. Departmental expenses include employee and supplier expenses and other administrative costs, which are incurred by the department in providing its goods and services.

Administered items are revenues, expenses, assets or liabilities which are managed by the department on behalf of the Government according to set Government directions. Administered expenses include subsidies, grants, and personal benefit payments and administered revenues include taxes, fees, fines and excises.

Royal Australian Mint

The Department of the Treasury's departmental budget statements are aggregated to include the financial operations of the Royal Australian Mint (RAM). Any profit earned by RAM, taking into account working capital requirements, is returned to the Commonwealth.

Seigniorage is collected by RAM on behalf of the Commonwealth. Seigniorage represents the difference between the face value of coinage sold to the Reserve Bank of Australia and its cost of production to RAM. Seigniorage is treated as an administered item within the Department of the Treasury budget statements.