Section 3: Budgeted financial statements

Analysis of budgeted departmental financial statements

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

Departmental

The Department of the Treasury is budgeting towards a breakeven operating result for 2004-05.

The Department of the Treasury will receive additional revenues in 2004-05 of $10.6 million. This increase relates to increased sales of good and services by the Royal Australian Mint and new funding provided to the Department of the Treasury for Budget measures (see Table 1.2).

The Department of the Treasury has a sound financial position and currently has sufficient cash to fund provisions and payables, and asset replacement.

Administered

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

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 indicates the sustainability of the Department of the Treasury’s finances.

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 Australian Government.

Note of budgeted administered financial position

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

Note of budgeted administered cash flows

This note shows cash flows administered on behalf of the Australian 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

1. K1 shows the link back to Table 1.1.

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 3.4: Departmental Capital Budget Statement

1. K3 shows the link back to Table 1.1.

Table 3.5: Departmental 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

1. K2 shows the link back to Table 1.1.

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

Table 3.9: Note of Administered Capital Budget

1. K4 shows the link back to Table 1.1.

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 Australian Government’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 Australian 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 (the Mint). Any profit earned by the Mint, taking into account working capital requirements, is returned to the Australian Government.

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

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