Section 3: Budgeted financial statements

Budgeted agency and administered financial statements and related notes for the Australian Office of Financial Management (AOFM) are presented in this section. The financial statements are produced for 2003-04 (actual results), 2004-05 (revised budget estimate) and three forward years. The financial statements should be read in conjunction with the accompanying notes.

Analysis of budgeted financial statements

There have been no changes to the analysis of AOFM’s budgeted financial statements since the 2004-05 Portfolio Budget Statements.

Agency financial statements

Budgeted agency statement of financial performance

This statement provides a picture of the expected financial results for the AOFM by identifying full accrual expenses and revenues.

Budgeted agency statement of financial position

This statement shows the financial position of the AOFM. It enables decision-makers to track the management of the agency’s assets and liabilities.

Budgeted agency statement of cash flows

This statement provides information on the amount and nature of budgeted cash flows, categorised into expected cash flows from operating activities, investing activities and financing activities.

Agency capital budget statement

This statement shows all proposed capital expenditure on non-financial assets, whether funded through capital appropriations (equity or borrowings) or from internally sourced funds.

Agency non-financial assets — summary of movement

This statement shows the budgeted movement in the AOFM’s non-financial assets during the budget year 2004-05.

Note of administered activity

Details of transactions administered by the AOFM on behalf of the Australian Government are shown in the following notes to the financial statements.

Note of budgeted administered financial performance

This schedule identifies the revenues and expenses administered by the AOFM on behalf of the Australian Government.

Note of budgeted administered financial position

This schedule shows the assets and liabilities administered by the AOFM on behalf of the Australian Government.

Note of budgeted administered cash flows

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

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

(1) For 2003-04 only, includes resources received free of charge from Australian National Audit Office.

Table 3.2: Budget agency statement of financial position
(as at 30 June)

(1) ‘Equity’ is the residual interest in assets after deduction of liabilities.

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

Table 3.4: Agency capital budget statement

Table 3.5: Agency non-financial assets  Summary of movement (Budget year 2004-05)

Table 3.6: Note of budgeted financial performance administered on behalf of government (for the period ended 30 June)

Table 3.7: Note of budgeted financial position administered on behalf of government (as at 30 June)

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

(1) The reporting of 2003-04 actual balances under the Finance Minister's Orders requires a presentation different to that required for budget purposes. The key presentation difference relates to the categorisation of cash flows to and from the Official Public Account.

Notes to the financial statements

Basis of accounting

The financial statements have been prepared on an accrual basis and are in accordance with the historical cost convention. No allowance is made for the effect of changing prices on the results or the financial position of the AOFM.

Administered internal transactions

Administered transactions between the AOFM and other agencies within the general government (administered internal transactions) are not reported in the note of budgeted administered financial performance or the note of administered financial position.

However, for the purposes of disclosing all cash flows through AOFM’s administered bank accounts, cash flows in the note of budgeted administered cash flows are reported inclusive of administered internal transactions.

Goods and services tax (GST)

All supplies provided by the AOFM are input taxed under A New Tax System (Goods and Services Tax) Act 1999.

Budgeted agency and administered financial statements

The budgeted financial statements contain estimates prepared in accordance with the requirements of the Australian Government’s financial budgeting and reporting framework, including the principles of Australian Accounting Standards and Statements of Accounting Concepts, as well as specific guidelines issued by the Department of Finance and Administration.

Under the Australian Government’s accrual budgeting framework, transactions that agencies control (agency transactions) are separately budgeted for and reported from transactions agencies do not have control over (administered transactions). This ensures that agencies are only held fully accountable for the transactions over which they have control.

• Agency assets, liabilities, revenues and expenses are those which are controlled by the agency. Agency expenses include employee and supplier expenses and other administrative costs, which are incurred by the agency in providing its goods and services to government.
• assets, liabilities, revenues and expenses are those which are managed on behalf of the Australian Government according to set government directions. Administered expenses include interest incurred on Commonwealth debt. Administered revenues include interest earned on housing agreement loans, interest on investments and interest from swaps.

Appropriations in the accrual budgeting framework

Under the Australian Government’s accrual budgeting framework, separate annual appropriations are provided to the AOFM for:

• agency price of outputs appropriations: representing the Australian Government’s purchase of outputs; and
• administered expense appropriations: for the repayment of interest on lapsed coupons not supported by special appropriation.

Special appropriations continue under the accrual budgeting framework and fund the majority of administered payments made by the AOFM, including debt redemption, interest payments and financial investment activity.

Budgeted agency financial performance

Appropriations

Price of outputs appropriation estimates are not based on market price indicators. The agreed price of outputs appropriation is based on budgeted expenses.

In August 2004 the AOFM applied to, and received approval from the Minister for Finance and Administration to budget for an operating loss of up to $450,000 for 2004-05 on its departmental activities. The anticipated loss was due to one-off costs associated with the repurchase of foreign currency denominated debt. The AOFM’s most recent forecasts point to a break-even result for 2004-05.

Budgeted agency financial position

Cash

The estimated cash reserves will be maintained to ensure that the AOFM is well placed to:

• settle employee liabilities as they fall due;
• make asset replacements (from depreciation funding); and
• repay liabilities.

Budgeted financial statements have been prepared on the assumption that unspent monies will not be withdrawn by the Department of Finance and Administration.

Administered notes of budgeted financial statements

Revenues and expenses

Non-taxation revenue — interest

Interest from other sources includes interest from swaps and investments.

Expenses — grants

Expenses — interest and financing costs

Assets and Liabilities

Debt — Australian Government Securities

For 2004-05 and onwards, Australian Government Securities represent the capital value of government securities on issue, net of investments.

Financial assets — receivables

---