Financial Overview

Page Index

• Audit report
• Operating result
• Special accounts
• Statement of financial performance
• Statement of financial position
• Administered Items
• Factors affecting future performance

This section provides an overview of the department’s financial performance for 2004–05. Departmental and administered item results are shown in the audited financial statements, and this summary should be read in conjunction with those statements. The total resources for the department’s outcome are shown in some detail in Table 1.

Audit report

The department received an unqualified audit report for 2004–05.

Operating result

The department’s Statement of Financial Performance reports an operating surplus for 2004–05 of $0.9 million comparable to the $0.2 million operating surplus reported in 2003–04. The result was an increase on the operating result of $0.5 million forecast in the 2004–05 Portfolio Budget Statements.

Table 2 demonstrates the department’s key results for the financial years 2003–04 and 2004–05.

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Special accounts

The Campaign Advertising Special Account is administered by the Central Advertising System within the department, which manages all government campaign advertising to ensure that the government obtains the best possible advertising rates. It does this by gaining economies of scale and removing the potential for competition between agencies. The account derives revenue through the imposition of a 1.5 per cent levy on all government campaign advertising. These expenses are included in tables 1 and 2 above. The account achieved a small surplus for the 2004–05 financial year.

The Other Trust Monies Special Account is a generic departmental special account for moneys temporarily held on trust for the benefit of a person other than the Commonwealth. The account is not frequently used and the balance as at 30 June 2005 was $23,928.

The Services for Other Government and Non-agency Bodies Account is maintained for expenditure in connection with services performed on behalf of other governments and bodies that do not fall within the jurisdiction of the Financial Management and Accountability Act 1997. At 30 June 2005 the account held $1.1 million; however, these funds will be returned to the Official Public Account during 2005–06.

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Statement of financial performance

Revenue

Total revenue received in 2004–05 was $64.0 million, made up of $58.9 million from appropriations for outputs, $1.8 million from resources received free of charge and $3.3 million from revenue from other sources. This represented a total increase of revenue of $4.0 million from 2003–04.

Appropriation revenue increased by $4.0 million from that provided in 2003–04. This was to fund additional functions, including the establishment of the APEC 2007 Taskforce; taskforces associated with health and welfare activities, and a water policy unit; additional indigenous administration and security functions; and research into counter-terrorism technology.

Revenue from other sources remained constant.

Expenses

The department’s total expenses for 2004–05, $63.2 million, were $3.4 million higher than those for 2003–04. This was due to increased activity within the department, represented by additional employee, grant and depreciation expenses.

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Statement of financial position

Equity

The department’s total equity decreased by $3.8 million from $12.5 million in 2003–04 to $8.7 million in 2004–05. The decrease in equity was largely due to the transfer of $5.0 million in cash from the departmental special accounts to consolidated revenue.

Assets

The department’s assets are broken into four main categories:

• cash
• infrastructure, plant and equipment
• intangibles (non-physical assets such as software)
• receivables (amounts due to be paid to the department).

‘Other departmental assets’ relates to prepayments and ‘Other administered assets’ relates to prepayments and inventories. The proportions of each type held during 2004–05 are illustrated in Figure 6.

Figure 6 Departmental assets shown by category

Text description of figure 6

Financial assets

Financial assets increased by $1.1 million to reach $14.8 million in 2004–05. The increase comprised an additional $0.5 million in cash and $0.5 million in receivables.

Non-financial assets

Non-financial assets decreased by $2.3 million when compared to those for 2003–04. The value of infrastructure, plant and equipment declined from $11.3 million in 2003–04 to $8.9 million for 2004–05, mainly because of the acceleration of depreciation of fit-out to ensure it is fully written off before the department moves into the new purpose-built building in 2006–07. The value of intangibles and other financial assets remained relatively constant.

Liabilities

The department’s total liabilities increased by $2.6 million to reach $16.9 million in 2004–05. Employee entitlements increased by $1.5 million and payables by $1.2 million.

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Administered items

‘Administered items’ are those assets, liabilities, revenues and expenses that are controlled by the Australian Government but managed or overseen by the department on the government’s behalf.

Expenses

Table 3 enables comparisons between the department’s 2003–04 and 2004–05 administered expenses.

Note: Expenses from the Media Commissions Special Account do not form part of administered expenses as these are funded from revenue earned by the account and not from appropriations.

Significant variations in expenses

Activities undertaken by ‘women’s programmes’ reduced by $21.1 million during 2004–05, because that function was transferred to the Department of Family and Community Services, under the revised Administrative Arrangements Order issued on 26 October 2004.

The department made a one-off grant to the Australia and New Zealand School of Government (ANZSOG) in 2004–05. The funding is an administered capital grant, meaning ANZSOG must invest the capital under the terms of a deed of agreement and use the interest earned to meet certain operating expenses of the ANZSOG Foundation.

Expenses relating to ‘state occasions and official visits’ increased by $1.05 million over the previous financial year with noteworthy events including the visits of the Prince of Wales, the Crown Prince and Crown Princess of Denmark, the President of Israel, the President of Singapore, the President of Indonesia, the President of Pakistan and the President of Bosnia and Herzegovina.

Special account

The department administers the Media Commissions Special Account on behalf of the Australian Government. Revenue to the account is derived from the commission paid by the media to the Australian Government when it places its advertising. The funds in the account are used to pay for activities performed by media agencies, advertising agencies and related agencies, and for related incidental activities. Refer to Note 19 of the financial statements for more details.

Assets

The majority of the department’s administered assets are comprised of land and buildings which are collectively valued at $32 million. The total value of administered assets reduced slightly during 2004–05.

Factors affecting future performance

The department is budgeting for revenue of $87.5 million in 2005–06, which represents an increase of $23.5 million from 2004–05. This increase is mainly due to an additional $30 million allocated to the APEC 2007 Taskforce, offset by a reduction of $3.1 million arising from the transfer of the Office of the Status of Women to the Department of Family and Community Services in 2004–05 and the absence of some ad hoc taskforces.

The department will receive two equity injections in 2005–06. They are $4.8 million for preparatory work on the department’s new accommodation in Canberra and $5.6 million to enable the APEC 2007 Taskforce to fit out and equip its new office accommodation in Sydney.