Australian Government, the Australian Office of Financial Management

 

Part 5

Financial statements

Contents Page

SIGNED
 

SIGNED
 

M Allen
Chief Executive Officer
23 August 2002

P Raccosta
Chief Finance Officer
23 August 2002

Statement of financial performance
for the period ended 30 June 2001


 

Notes

2000-01

$'000

1999-00

$'000

 

Revenues from ordinary activities

     

Revenues from government

2A

5,845

4,512

Sales of goods and services

 

14

20

Interest

2B

112

43

   

Total revenues from ordinary activities

 

5,971

4,575

   

Expenses from ordinary activities

     

Employees

3A

2,336

1,628

Suppliers

3B

1,639

905

Depreciation and amortisation

3C

82

235

       
   

Total expenses from ordinary activities

 

4,057

2,768

   
       
       

Net surplus (deficit)

 

1,914

1,807

       

Equity interests

     

Net surplus (deficit) attributable to the Commonwealth

 

1,914

1,807

       
   

Total changes in equity other than those resulting from transactions with owners as owners

 

1,914

1,807


The above statement should be read in conjunction with the accompanying notes.

Statement of financial position
as at 30 June 2001


     

    Notes

    2000-01
    $'000

    1999-00
    $'000

     

    ASSETS

         

    Financial assets

         

    Cash

     

    875

    2,344

    Receivables

    4A

    -

    63

    Investments

    4B

    2,000

    750

    Accrued revenues

    4C

    7

    12

       

    Total financial assets

     

    2,882

    3,169

       

    Non-financial assets

         

    Infrastructure, plant and equipment

    5A,5B

    1,304

    8

    Intangibles

    5A,5B

    45

    -

    Other

     

    29

    1

       

    Total non-financial assets

     

    1,378

    9

       

    Total assets

     

    4,260

    3,178

       

    LIABILITIES

         

    Provisions

         

    Capital use charge

     

    81

    -

    Employees

    6

    1,074

    548

       

    Total provisions

     

    1,155

    548

       

    Payables

         

    Suppliers

    7A

    150

    37

    Other

    7B

    -

    1,150

           

    Total payables

     

    150

    1,187

       

    Total liabilities

     

    1,305

    1,735

       

    EQUITY

         

    Parent entity interest

         

    Accumulated surpluses

    8A

    2,955

    1,443

       

    Total parent entity interest

     

    2,955

    1,443

       

    Total equity

    8A

    2,955

    1,443

       

    Current liabilities

     

    533

    1,267

    Non-current liabilities

     

    772

    468

    Current assets

     

    2,911

    3,170

    Non-current assets

     

    1,349

    8


    The above statement should be read in conjunction with the accompanying notes.

Statement of cash flows
for the period ended 30 June 2001


 

Notes

2000-01
$'000

1999-00
$'000

 

OPERATING ACTIVITIES

     

Cash received

     

Appropriations for outputs

 

5,706

5,535

Sale of goods and services

 

14

20

Interest

 

117

31

   

Total cash received

 

5,837

5,586

   

Cash used

     

Employees

 

1,811

1,422

Suppliers

 

1,413

744

Other

 

1,149

-

   

Total cash used

 

4,373

2,166

   

Net cash from operating activities

9

1,464

3,420

   

INVESTING ACTIVITIES

     

Cash received

     

Other

 

-

-

   

Total cash received

 

-

-

   

Cash used

     

Purchase of property, plant and equipment

 

1,423

-

Other

 

1,250

750

   

Total cash used

 

2,673

750

   

Net cash used by investing activities

 

(2,673)

(750)

   

FINANCING ACTIVITIES

     

Cash received

     

Other

 

-

-

   

Total cash received

 

-

-

   

Cash used

     

Dividends paid

 

98

-

Capital use paid

 

162

326

   

Total cash used

 

260

326

   

Net cash used by financing activities

 

(260)

(326)

   

Net increase (decrease) in cash held

 

(1,469)

2,344

Cash at the beginning of the reporting period

 

2,344

-

   

Cash at the end of the reporting period

 

875

2,344


The above statement should be read in conjunction with the accompanying notes.

Schedule of commitments
as at 30 June 2001


 

Notes

2000-01
$'000

1999-00
$'000

   

BY TYPE

     

CAPITAL COMMITMENTS

     

Infrastructure, plant and equipment

 

-

1,097

   

Total capital commitments

 

-

1,097

   

OTHER COMMITMENTS

     

Operating leases(1)

 

5,569

-

Other commitments

 

18

14

   

Total other commitments

 

5,587

14

   

COMMITMENTS RECEIVABLE

 

-

-

   

Net commitments

 

5,587

1,111

   

BY MATURITY

     

All net commitments

     

One year or less

 

362

1,111

From one to five years

 

1,532

-

Over five years

 

3,693

-

   

Net commitments

 

5,587

1,111

   

Operating lease commitments

     

One year or less

 

344

-

From one to five years

 

1,532

-

Over five years

 

3,693

-

   

Net commitments

 

5,569

-


Note: Commitments are GST inclusive where relevant.

(1) Operating leases included are effectively non-cancellable and comprise:


Nature of lease

General description of leasing arrangement

Lease for office accommodation

  • the lease term is for 15 years less one day with no option to renew
  • lease payments are subject to review on each second anniversary of the lease commencement date

The above schedule should be read in conjunction with the accompanying notes.

Schedule of contingencies
as at 30 June 2001


 

2000-01
$'000

1999-00
$'000

The AOFM is not aware of any contingent liabilities or assets as of the signing date which require disclosure in the Financial Statements.

   

Net contingencies

-

-


Schedule of unquantifiable contingencies

The AOFM is not aware of any unquantifiable contingencies as of the signing date that require disclosure in the Financial Statements.

The above schedules should be read in conjunction with the accompanying notes.

Schedule of administered revenues and expenses
for the period ended 30 June 2001

        Notes
      2000-01
      $'000
      1999-00
      $'000

      Revenues from ordinary activities

           

      Non taxation

           

      Revenues from government

      15A

      33,678,529

      55,785,716

      Interest

      15B

      3,137,447

      2,541,508

      Other sources of non-taxation revenue

       

      49

      30

             

      Total non-taxation

       

      36,816,025

      58,327,254

             

      Total revenues from ordinary activities

       

      36,816,025

      58,327,254

             

      Expenses from ordinary activities

           

      Grants

      16A

      56,674

      64,635

      Net foreign exchange losses

      16B

      1,924,157

      1,110,529

      Other

      16C

      613

      121,589

             

      Total expenses from ordinary activities

       

      1,981,444

      1,296,753

             

      Borrowing costs expense

      16D

      8,581,345

      8,384,221

             

      Cash transferred to Official Public Account

       

      (19,349,408)

      (40,190,360)

             

      Extraordinary items

      17

      -

      2,730,000

             

      Net increase (decrease) in administered net assets

       

      6,903,828

      11,185,920

The above schedule should be read in conjunction with the accompanying notes.

Schedule of administered assets and liabilities
as at 30 June 2001

       

      Notes

      2000-01
      $'000

      1999-00
      $'000

             

      ASSETS

           

      Financial assets

           

      Cash

       

      53

      347

      Receivables

      18A

      7,853,763

      8,329,944

      Investments

      18B

      13,400,000

      9,200,000

      Accrued revenues

      18C

      160,187

      145,980

             

      Total financial assets

       

      21,414,003

      17,676,271

             

      Total assets

       

      21,414,003

      17,676,271

             

      LIABILITIES

           

      Interest bearing liabilities

           

      Commonwealth securities

      19A

      67,384,019

      76,496,582

      Other

      19B

      3,794,529

      2,164,760

             

      Total interest bearing liabilities

       

      71,178,548

      78,661,342

             

      Payables

           

      Suppliers

      19C

      3

      10

      Other

      19D

      16,242,979

      11,926,274

             

      Total payables

       

      16,242,982

      11,926,284

             

      Total liabilities

       

      87,421,530

      90,587,626

             

      EQUITY

           

      Accumulated results

       

      (66,007,527)

      (72,911,355)

             

      Total equity

      20A

      (66,007,527)

      (72,911,355)

             

      Current liabilities

       

      27,079,265

      25,595,638

      Non-current liabilities

       

      60,342,265

      64,991,988

      Current assets

       

      17,088,378

      13,127,329

      Non-current assets

       

      4,325,625

      4,548,942

The above schedule should be read in conjunction with the accompanying notes.

Schedule of administered cash flows
for the period ended 30 June 2001

     

    Notes

    2000-01
    $'000

    1999-00
    $'000

           

    OPERATING ACTIVITIES

         

    Cash received

         

    Cash from Official Public Account

     

    33,590,483

    55,711,816

    Interest

     

    975,306

    2,198,274

    GST refunds

     

    50

    -

    Other

     

    14

    30

           

    Total cash received

     

    34,565,853

    57,910,120

           

    Cash used

         

    Suppliers

     

    -

    543

    Grants

     

    55,079

    64,635

    Interest

     

    6,757,481

    8,428,691

    Cash to Official Public Account

     

    18,807,456

    39,976,845

    GST payments

     

    1

    -

           

    Total cash used

     

    25,620,017

    48,470,714

           

    Net cash from operating activities

    21

    8,945,836

    9,439,406

           

    INVESTING ACTIVITIES

         

    Cash received

         

    Repayments of advances

     

    82,438

    82,786

           

    Total cash received

     

    82,438

    82,786

           

    Cash used

         

    Other

     

    -

    -

           

    Total cash used

     

    -

    -

           

    Net cash from investing activities

     

    82,438

    82,786

           

    FINANCING ACTIVITIES

         

    Cash received

         

    Proceeds from borrowing

     

    16,938,387

    37,243,497

    Other

     

    789,746

    1,417,857

           

    Total cash received

     

    17,728,133

    38,661,354

           

    Cash used

         

    Repayments of debt

     

    25,710,211

    46,505,414

    Other

     

    1,046,490

    1,677,785

           

    Total cash used

     

    26,756,701

    48,183,199

           

    Net cash used by financing activities

     

    (9,028,568)

    (9,521,845)

           

    Net increase (decrease) in cash held

     

    (294)

    347

    Cash at the beginning of the reporting period

     

    347

    -

           

    Cash at the end of the reporting period

     

    53

    347

The above schedule should be read in conjunction with the accompanying notes.

Schedule of administered commitments
as at 30 June 2001

     

    Notes

    2000-01
    $'000

    1999-00
    $'000

    BY TYPE

         

    CAPITAL COMMITMENTS

         

    Infrastructure, plant and equipment

     

    -

    -

           

    Total capital commitments

     

    -

    -

           

    OTHER COMMITMENTS

         

    Other commitments

     

    1,166

    1,244

           

    Total other commitments

     

    1,166

    1,244

           

    COMMITMENTS RECEIVABLE

     

    -

    -

           

    Net commitments

     

    1,166

    1,244

           

    BY MATURITY

         

    All net commitments

         

    One year or less

     

    844

    918

    From one to five years

     

    120

    124

    Over five years

     

    202

    202

           

    Net commitments

     

    1,166

    1,244

           

    Operating lease commitments

         

    One year or less

     

    -

    -

    From one to five years

     

    -

    -

    Over five years

     

    -

    -

           

    Net commitments

     

    -

    -

Note: Commitments are GST inclusive where relevant.

The above schedule should be read in conjunction with the accompanying notes.

Schedule of administered contingencies
as at 30 June 2001

 

2000-01
$'000

1999-00
$'000

The AOFM is not aware of any contingent liabilities or assets as of the signing date which require disclosure in the Financial Statements.

   

Net contingencies

-

-

Schedule of unquantifiable contingencies

The AOFM is not aware of any unquantifiable contingencies as of the signing date that require disclosure in the Financial Statements.

The above schedules should be read in conjunction with the accompanying notes.

Notes to and forming part of the financial statements
for the year ended 30 June 2001

Note

Description

Page

1

Summary of significant accounting policies

86

2

Operating revenues

97

3

Operating expenses

97

4

Financial assets - receivables, investments and accrued revenues

98

5

Non-financial assets - infrastructure, plant and equipment and intangibles

98

6

Provisions

99

7

Payables

100

8

Equity

100

9

Cash flow reconciliation

101

10

Executive remuneration

101

11

Remuneration of auditors

102

12

Average staffing level

102

13

Act of grace payments, waivers and defective administration scheme

102

14

Departmental financial instruments

103

15

Administered revenues

106

16

Administered expenses

107

17

Administered extraordinary items

107

18

Administered financial assets

108

19

Administered liabilities

109

20

Administered equity

110

21

Administered cash flow reconciliation

110

22

Administered financial instruments

111

23

Appropriations

119

24

Reporting of outcomes

125

Note 1: Summary of significant accounting policies

1.1 Objectives of the AOFM

      The Australian Office of Financial Management (AOFM) was established as a `prescribed agency' under the Financial Management and Accountability Act 1997 (FMA Act) on 1 July 1999. At that time it assumed responsibility for the Commonwealth's debt management activities previously undertaken by the Department of the Treasury.

      The objective of the AOFM is to raise, manage, and retire Commonwealth debt at the lowest possible long-term cost, consistent with an acceptable degree of risk exposure.

      The AOFM is structured to meet one outcome, namely to enhance the Commonwealth's capacity to manage its net debt portfolio, offering the prospect of savings in debt servicing costs and an improvement in the net worth of the Commonwealth over time.

      The AOFM has a single output - Debt Management. The AOFM's debt management operations include the issue of various borrowing instruments, the strategic formulation and undertaking of portfolio management, including through swap transactions, and the administration of the Commonwealth debt portfolio.

1.2 Basis of accounting

      The financial statements are required by Section 49 of the Financial Management and Accountability Act 1997 and are a general purpose financial report.

      The statements have been prepared in accordance with:

      - Schedule 1 to Orders made by the Finance Minister (FMOs) for the preparation of Financial Statements in relation to financial years ending on or after 30 June 2001;

      - Australian Accounting Standards and Accounting Interpretations issued by the Australian Accounting Standards Board;

      - other authoritative pronouncements of the Board; and

      - the Consensus Views of the Urgent Issues Group (UIG) of the Australian Accounting Standards Board.

      The financial statements have been prepared having regard to:

      - the Explanatory Notes to Schedule 1 and Guidance Notes issued by the Department of Finance and Administration; and

      - Statements of Accounting Concepts.

      The Statements of Financial Performance and Financial Position have been prepared on an accrual basis and are in accordance with the historical cost convention, except where otherwise stated. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position of the AOFM.

      Assets and liabilities are recognised in the Departmental Statement of Financial Position and the Schedule of Administered Assets and Liabilities when, and only when, it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured.

      Assets and liabilities arising under agreements equally proportionately unperformed are however not recognised unless required by an Accounting Standard. Assets and liabilities that are unrecognised are reported in the Schedule of Commitments or the Schedule of Contingencies.

      Revenues and expenses are recognised in the Departmental Statement of Financial Performance and Schedule of Administered Revenues and Expenses when, and only when, the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

      The continued existence of the AOFM in its present form, and with its present programs, is dependent on Government policy and on continuing appropriations by Parliament for the AOFM's administration and programs.

1.3 Departmental and administered items

      Departmental assets, liabilities, revenues and expenses are those items that are controlled by the AOFM including:

      - computers, plant and equipment used in providing goods and services;

      - liabilities for employee entitlements;

      - revenues from user charging etc, where the proceeds are deemed appropriated under Section 31 of the Financial Management and Accountability Act 1997; and

      - employee expenses and other administrative expenses incurred in delivering outputs.

      Administered items are those items which are controlled by the Government and managed or overseen by the AOFM on behalf of the Government. These items include the repayment and repurchase of Commonwealth debt, principal and interest transactions on swaps, grant payments to other governments, and interest payments on Commonwealth debt.

      The purpose of the separation of administered and departmental items is to enable assessment of the administrative efficiency of the AOFM in providing goods and services.

      The basis of accounting described in Note 1.2 applies to both departmental and administered items.

      Administered items are distinguished from departmental items in the financial statements by shading.

1.4 Changes in accounting policy

      The accounting policies applied in these financial statements are consistent with those used in 1999-00, subject to one exception. The asset recognition threshold for purchases of infrastructure, plant and equipment was changed, effective from 1 July 2000, from $1,000 to $500.

1.5 Departmental revenues

      The revenues described in this Note are revenues relating to the activities of the AOFM.

      (a) Revenues from Government - agency appropriations

      Since 1 July 1999, the Commonwealth Budget has been prepared in accordance with an accrual accounting framework. Appropriations to the AOFM for its departmental outputs are recognised as revenue to the extent that they have been received into the AOFM's bank account or are entitled to be received at year end.

      The AOFM's policy has been developed on the assumption that there is no prospect of any unspent moneys being withdrawn by the Department of Finance and Administration.

      (b) Resources received free of charge

      Services received free of charge are recognised in the Statement of Financial Performance as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

      Contributions of assets at no cost or for nominal cost are recognised at their fair value when the asset qualifies for recognition, unless received from another government agency as a consequence of a restructuring of administrative arrangements.

      In the latter case, the assets are initially recognised at the amount at which they were recognised by the transferring agency immediately prior to the transfer.

      (c) Other revenue

      Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

1.6 Employee entitlements (Departmental)

      (a) Leave

      The liability for employee entitlements includes provisions for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the AOFM is estimated to be less than the annual entitlement for sick leave.

      The liability for annual leave reflects the value of total annual leave entitlements of all employees at 30 June 2001 and is recognised at its nominal amount.

      The non-current portion of the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2001. In determining the present value of the liability, the AOFM has taken into account attrition rates and pay increases through promotion and inflation.

      (b) Separation and redundancy

      Provision is made for separation and redundancy payments in circumstances where the AOFM has formally identified positions as excess to requirements and a reliable estimate of the amount of the payments can be determined.

      (c) Superannuation

      Staff of the AOFM contribute to the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. Employer contributions amounting to $141,664 were made during 2000-01.

      A liability has been recognised in the Statement of Financial Position for employer superannuation payable on all accrued recreation and long service leave as at 30 June 2001.

      Employer Superannuation Productivity Benefit contributions totalled $52,341 for 2000-01.

1.7 Leases (Departmental)

      A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases under which the lessor effectively retains substantially all such risks and benefits.

      Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value of the minimum lease payments at the inception of the lease and a liability recognised for the same amount. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

      Operating lease payments are charged to the Statement of Financial Performance on a basis which is representative of the pattern of benefits derived from the leased assets.

1.8 Acquisition of assets (Departmental)

      Assets are recorded at cost on acquisition except as stated in Note 1.5 (b).

1.9 Infrastructure, plant and equipment (Departmental)

      Asset recognition threshold

      Purchases of infrastructure, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $500, which are expensed in the year of acquisition. The asset recognition threshold is applied to each functional asset, that is, items or components that form an integral part of an asset are grouped as a single asset.

      Revaluations

      Schedule 1 of the FMOs requires that buildings, infrastructure, plant and equipment be progressively revalued in accordance with the `deprival' method of valuation in successive 3-year cycles. The AOFM expects to implement the requirements of Schedule 1 by commissioning independent valuations during the 2001-02 financial year for:

      - leasehold improvements; and

      - information technology assets.

      In applying the `deprival' method, the AOFM recognises infrastructure, plant and equipment at its depreciated replacement cost. Any assets which would not be replaced or are surplus to requirements are valued at net realisable value (net sale proceeds). At 30 June 2001, the AOFM had no such assets.

      Recoverable amount test

      Schedule 1 requires the application of the recoverable amount test to departmental non-current assets in accordance with AAS 10 Recoverable Amount of Non-Current Assets. The carrying amounts of these non-current assets have been reviewed to determine whether they are in excess of their recoverable amounts. In assessing recoverable amounts, the relevant cash flows have been discounted to their present value.

      Depreciation and amortisation

      Depreciable infrastructure, plant and equipment assets are written off to their estimated residual values over their estimated useful lives to the AOFM using the straight line method of depreciation.

      Depreciation and amortisation rates applying to each category of depreciable assets are as follows:

       

      2000-01

      Leasehold improvements

      10 years

      Computers, plant and equipment
      3-5 years
      Office equipment
      5 years
      Furniture
      10 years
      Software
      3-5 years

      Depreciation and amortisation rates are reviewed at each balance date and necessary adjustments are recognised in the current and future reporting periods as appropriate.

       

1.10 Intangibles - computer software (Departmental)

      Purchases of computer software are recognised at cost in the Statement of Financial Position except for purchases costing less than $10,000 which are expensed in the year of acquisition.

      An item of software represents:

      - a software licence granted for greater than 12 months; or

      - an internally developed software application.

      Internally developed software is brought to account by capitalising all attributable internal and external costs which enhance the software's functionality and therefore service potential.

1.11 Capital usage charge (Departmental)

      A capital usage charge of 12 per cent is imposed by the Commonwealth on the net departmental assets of the AOFM. The charge is adjusted to take account of asset gifts and revaluation increments during the financial year.

1.12 Administered revenue

      All revenues described in this note are revenues relating to the activities performed by the AOFM on behalf of the Commonwealth.

      Revenues from Government - administered appropriations

      Appropriations for administered expenses may be unlimited or limited as to amount. Where the appropriation is an annual appropriation and limited as to amount, revenue is recognised to the extent of the lesser of:

      - the amount appropriated by the Parliament; and

      - an amount determined by the Finance Minister - this amount is determined having regard to the expenses incurred for the reporting period.

      In addition, unlimited (or special) appropriations continue under the accrual appropriations framework and fund the majority of payments from the consolidated revenue fund, including gross debt redemption and gross financial investment activity.

1.13 Administered grants

      Under the Financial Agreement Act 1994, the Commonwealth compensates the State and Territory governments:

      - for additional interest costs of replacing maturing Commonwealth debt with borrowings in their own names, or through their authorities, rather than by the Commonwealth borrowing on their behalf; and

      - for reduction in contributions from the Commonwealth resulting from the new arrangements.

      In addition to the above compensation, the Commonwealth assists the State and Territory governments to redeem maturing debt issued by the Commonwealth on their behalf.

      Payments made to the State and Territory governments under these arrangements are recognised as expenses as and when they fall due and payable.

1.14 Borrowing costs (Administered)

      All borrowing costs are expensed as incurred except to the extent that they are directly attributable to qualifying assets, in which case they are capitalised. The amount capitalised in a reporting period does not exceed the amounts of costs incurred in that period.

      The AOFM does not have any qualifying assets for which funds were specifically borrowed in 2000-01.

1.15 State and Territory advances (Administered)

      Until July 1990, the Commonwealth borrowed on behalf of the State and Territory governments and allocated a portion of the proceeds of its bond raisings to these governments. The States and Territories are responsible for meeting all obligations as to interest and principal on the Commonwealth debt on allocation to them.

      Debt on allocation to the State and Territory governments, and other advances made under Commonwealth - State financing arrangements not evidenced by the issue of securities, are recognised as loans to State and Territory governments.

      Loans to State and Territory governments are measured on an amortised cost basis and reduced to the extent to which they are impaired or uncollectable.

1.16 Administered investments

      The value of Commonwealth issued securities held as an investment in the Treasurer's name through the investment power under the Financial Management and Accountability Act 1997 is deducted from the face value of the administered borrowings liability. Any gain or loss on acquiring investments is reported in the Statement of Financial Performance and recognised at the time the investment is made.

      The net effect of this accounting policy is to report the impact of transactions with external parties only.

1.17 Administered borrowings - Commonwealth Government Securities

      Coupon securities and capital indexed securities are measured on an amortised cost basis. Discount (zero-coupon) securities are measured at their discounted value.

      Where a security is issued at a premium or discount, the premium or discount is recognised at that time and deferred in the Schedule of Administered Assets and Liabilities. The discount or premium is amortised on a straight-line basis over the life of the security.

      Where a security is re-purchased (whether for cancellation or investment) prior to maturity, any unamortised balance of issue discount or premium for the security is fully amortised at that time.

      Net premiums and discounts on the re-purchase of Commonwealth government securities is measured as the difference between:

      - purchase value less accrued interest; and

      - book value.

      Borrowings are recognised on a gross basis, that is, they include borrowings on behalf of the State and Territory governments.

1.18 Derivative transactions (Administered)

      The AOFM undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The AOFM manages this market risk by entering into interest rate swaps and cross-currency swaps.

      Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. The notional principal associated with interest rate swaps is not recognised as an asset or liability.

      Swap interest payable and receivable in relation to interest rate and cross-currency swaps is also recognised on a net basis.

1.19 Cash

      Cash includes notes and coins held, deposits held with a bank or financial institution for a term of three months or less, and balances of commercial trust accounts held in the Official Public Account (OPA).

1.20 Investments

      Deposits held with a bank or financial institution for greater than three months are classified as investments.

1.21 Financial instruments

      Accounting policies for financial instruments are stated at Notes 14 and 22.

1.22 Taxation

      The AOFM is exempt from all forms of taxation except for Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

      The financial statements have been prepared in accordance with the GST accounting guidelines of the UIG. That is, expenses and assets are recognised net of recoverable GST and revenues are recognised net of GST payable.

      The AOFM's activities are 100 per cent input taxed under the GST legislation, however the AOFM is entitled to a reduced input tax credit (equal to 75 per cent of the GST paid) on some purchases such as security transactions services.

1.23 Foreign currency

      Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables are translated at the exchange rates current as at balance date.

      Realised and unrealised exchange gains and losses arising from foreign currency transactions are recognised in the Statement of Financial Performance and Schedule of Administered Revenues and Expenses.

1.24 Insurance

      The Commonwealth's insurable risk management fund, `Comcover', commenced operation in the 1998-99 financial year. The AOFM has insured with the fund for risks other than workers' compensation, which is dealt with via continuing arrangements with `Comcare'.

1.25 Comparative figures

      In certain instances, comparative figures have been re-cast as a result of changes in the form, content and disclosure requirements applicable to the AOFM since the previous financial year.

1.26 Rounding

      Amounts are rounded to the nearest $1,000 except in relation to the following items:

      - appropriations;

      - transactions of Special Accounts;

      - act of grace payments and waivers;

      - remuneration of auditors; and

      - remuneration of executives.

Note 2: Operating revenues


       

      2000-01
      $'000

      1999-00
      $'000

       

      Note 2A: Revenues from government

         

      Appropriations for outputs

      5,706

      4,385

      Resources received free of charge

      139

      127

       

      Total

      5,845

      4,512

       

      Note 2B: Interest

         
      Deposits
      85
      30
      Other
      27
      13
       

      Total

      112

      43


Note 3: Operating expenses


       

      2000-01

      1999-00

       

      $'000

      $'000

           

      Note 3A: Employee expenses

         

      Remuneration (for services provided)

      2,333

      1,625

      Separation and redundancy

      -

      -

           

      Total remuneration

      2,333

      1,625

           

      Other employee expenses

      3

      3

           

      Total

      2,336

      1,628

           

      Note 3B: Suppliers expenses

         

      Supply of goods and services

      1,452

      888

      Operating lease rentals

      187

      17

           

      Total

      1,639

      905

           

      Note 3C: Depreciation and amortisation

         

      Depreciation of infrastructure, plant and equipment

      82

      8

      Amortisation of intangibles

      -

      227

           

      Total

      82

      235

           

      The aggregate amounts of depreciation and amortisation expensed during the reporting period for each class of depreciable asset are as follows:(1)

           

      Computers, plant and equipment

      39

      8

      Leasehold improvements

      43

      -

      Intangibles

      -

      227

           

      Total

      82

      235


(1) No depreciation or amortisation was allocated to the carrying amounts of other assets.

Note 4: Financial assets - receivables, investments and
accrued revenues


       

      2000-01
      $'000

      1999-00
      $'000

       

      Note 4A: Receivables

         

      Other

      -

      63

       

      Total

      -

      63

       

      Gross receivables are aged as follows:

         

          Not Overdue

      -

      63

           

      Note 4B: Investments

         

      Deposits

      2,000

      750

       

      Total

      2,000

      750

       

      Note 4C: Accrued revenues

         

      Interest

      7

      12

       

      Total

      7

      12


Note 5: Non-financial assets - infrastructure, plant and equipment and intangibles


 

2000-01
$'000

1999-00
$'000

     

Note 5A: Infrastructure, plant and equipment & intangibles

   

Computers, plant and equipment - at cost

437

18

Accumulated depreciation

(47)

(10)

     
 

390

8

     

Leasehold improvements - at cost

957

-

Accumulated amortisation

(43)

-

     
 

914

-

     

Total infrastructure, plant and equipment

1,304

8

     

Intangibles - at cost

503

458

Accumulated amortisation

(458)

(458)

     

Total intangibles

45

-

     

Total infrastructure, plant and equipment and intangibles

1,349

8


Note 5: Non-financial assets - infrastructure, plant and equipment and intangibles (continued)

Movement summary 2000-01 for all assets irrespective of valuation basis


Item

Infrastructure, plant
& equipment

Intangibles

Total

 

$'000

$'000

$'000

       

Note 5B: Analysis of infrastructure,
plant and equipment and intangibles

Gross value as at 1 July 2000

18

458

476

Additions

1,378

45

1,423

Transfers in - restructuring

-

-

-

Disposals

(2)

-

(2)

Revaluations

-

-

-

       

Gross value as at 30 June 2001

1,394

503

1,897

       

Accumulated depreciation/amortisation as at 1 July 2000

(10)

(458)

(468)

Depreciation/amortisation charge for assets as at 1 July 2000

(8)

-

(8)

Depreciation/amortisation charge for additions

(74)


-


(74)

Transfers in - restructuring

-

-

-

Adjustment for disposals

2

-

2

Revaluations

-

-

-

       

Accumulated depreciation/amortisation as at 30 June 2001

(90)

(458)

(548)

       

Net book value as at
30 June 2001

1,304

45

1,349

       

Net book value as at 1 July 2000

8

-

8


Note 6: Provisions


       

      2000-01
      $'000

      1999-00
      $'000

       

      Note 6: Employee provisions

         

      Salaries and wages

      273

      37

      Leave

      263

      164

      Long service leave

      453

      283

      Superannuation

      85

      64

       

      Total employee entitlement liability

      1,074

      548


Note 7: Payables


       

      2000-01
      $'000

      1999-00
      $'000

       

      Note 7A: Suppliers

         

      Trade creditors

      42

      37

      Make good liability

      108

      -

       

      Total suppliers

      150

      37

       

        Note 7B: Other

         

        Unearned revenue

      -

      1,150

       

        Total other

      -

      1,150


Note 8: Equity

Note 8A - Equity table


        Item

        Accumulated results

         

        Total equity

         
         
         

        2000-01
        $'000

        1999-00
        $'000

         

        2000-01
        $'000

        1999-00
        $'000

         

        Balance 1 July

        1,443

        -

         

        1,443

        -

        Net surplus (deficit)

        1,914

        1,807

         

        1,914

        1,807

        Restructuring (see note 8B)

        -

        (100)

         

        -

        (100)

        Dividends

        -

        (98)

         

        -

        (98)

        Capital use charge

        (402)

        (166)

         

        (402)

        (166)

         

        Balance 30 June

        2,955

        1,443

         

        2,955

        1,443

                   

Note 8B - Restructuring

      On 1 July 1999, the AOFM assumed responsibility for all functions previously undertaken by the Debt Management Office within the Department of the Treasury, including the assumption of net departmental liabilities of $0.1 million.

Note 9: Cash flow reconciliation


 

2000-01
$'000

1999-00
$'000

 

Reconciliation of cash per Statement of Financial Position to Statement of Cash Flows

   

      Cash at period end per Statement of Cash Flows

875

2,344

    Statement of Financial Position items comprising above cash: `Financial Asset-Cash'


875


2,344

     

Reconciliation of net surplus to net cash from operating activities:

   
     

Net surplus (deficit)

1,914

1,807

Depreciation/amortisation

82

235

Changes in assets and liabilities:

   

      (Increase) decrease in accrued revenues

5

(14)

      (Increase) in other assets

(28)

(1)

      Increase in employee liabilities

526

207

      Increase in suppliers

114

36

      Increase (decrease) in other payables

(1,149)

1,150

 

Net cash from operating activities

1,464

3,420


Note 10: Executive remuneration

The number of Executives who received or were due to receive total remuneration of $100,000 or more:


 

2000-01

Number

1999-00

Number

 

$140,001 to $150,000

1

-

     

$170,001 to $180,000

-

1

     

$300,001 to $310,000

1

-

     

The aggregate amount of total remuneration of Executives shown above

$446,559

-(1)

 

The aggregate amount of separation and redundancy payments during the year to Executives shown above

-

-


(1) The AOFM obtained an exemption from disclosing total remuneration of executives for 1999-00.

The above remuneration figures do not include performance pay for the period 1 February 2001 to 30 June 2001 inclusive, as a determination in relation to performance pay had not been made at the time of finalising the financial statements.

Remuneration means any money, consideration or benefit including wages, salaries, performance pay, accrued leave entitlements, superannuation contributions, the cost of motor vehicles, housing and allowances. Remuneration does not include out-of-pocket expenses.

Note 11: Remuneration of auditors

Financial statement audit services are provided free of charge to the AOFM. The fair value of the audit services received was:

2000-01
$

1999-00
$


139,150

126,500

Auditors' remuneration is GST inclusive where relevant.

No other services were provided by the Auditor-General.

Note 12: Average staffing level

The average staffing level for the AOFM during the year was:

2000-01
Number

1999-00
Number


23

20

Note 13: Act of grace payments, waivers and defective administration scheme

  No act of grace payments were made during the reporting period (Nil for 1999-00).

Two waivers of amounts owing to the Commonwealth were made pursuant to subsection 34(1) of the Financial Management and Accountability Act 1997 during the reporting period totalling $12 (Nil for 1999-00).

No payments were made under the Defective Administration Scheme during the reporting period
(Nil for 1999-00).

Note 14: Departmental financial instruments

Note 14A: Terms, conditions and accounting policies - departmental


Financial Instruments

Notes

Accounting Policies and Methods

Nature of Underlying Instruments


Financial Assets

 

Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.

 

Cash

 

Deposits are recognised at their nominal amounts. Interest is credited to revenue as it accrues.

The AOFM maintains an operational bank account with the Reserve Bank of Australia. Monies in the account are swept into the Official Public Account nightly and interest is earned on the daily balance at a fixed annual rate of 2 per cent. Interest is paid quarterly.

Receivables - goods and services

4A

These receivables are recognised at the nominal amounts due less any provision for bad and doubtful debts. Collectability of debts is reviewed at balance date. Provisions are made when collection of the debt is judged to be less rather than more likely.

Credit sales are normally on 30 day terms.

Investments - deposits

4B

Deposits held with financial institutions for terms of greater than 3 months are recognised as `investments' and at their nominal amounts. Interest is credited to revenue as it accrues.

The AOFM invests surplus funds in fixed term deposits with the Reserve Bank of Australia. Interest rates have averaged 5.61 per cent for the year. Interest is paid on maturity of each deposit.

Financial Liabilities

 

Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.

 

Payables

7A

7B

Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Trade liabilities are normally settled on 30 day terms.


Note 14: Departmental financial instruments (continued)

Note 14B: Interest rate risk - departmental

The AOFM's exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out below:

Financial Instrument

Floating
Interest Rate

Fixed Interest Rate

Non-Interest Bearing

Total

Weighted Average Effective Interest Rate

   

1 year or less

1 to 2 years

2 to 5 years

> 5 years

     
 

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

%

%

Financial assets

                               

Cash

-

2,344

875

-

-

-

-

-

-

-

-

-

875

2,344

2.00

4.22

Accrued revenues

-

8

7

4

-

-

-

-

-

-

-

-

7

12

4.05

4.66

Term deposits

-

-

2,000

750

-

-

-

-

-

-

-

-

2,000

750

4.95

6.03

Other receivables

-

-

-

-

-

-

-

-

-

-

-

63

-

63

-

-

                                 

Total financial assets (Recognised)

-

2,352

2,882

754

-

-

-

-

-

-

-

63

2,882

3,169

   
                                 

Total assets

                       

4,260

3,178

   
                                 

Financial liabilities

                               

Trade creditors

-

-

-

-

-

-

-

-

-

-

150

37

150

37

-

-

Unearned revenue

-

-

-

-

-

-

-

-

-

-

-

1,150

-

1,150

-

-

Capital use charge

-

-

-

-

-

-

-

-

-

-

81

-

81

-

-

-

                                 

Total financial liabilities (Recognised)

-

-

-

-

-

-

-

-

-

-

231

1,187

231

1,187

   
                                 

Total liabilities

                       

1,305

1,735

   

Note 14: Departmental financial instruments (continued)

Note 14C: Net fair values of financial assets and liabilities


   

Total Carrying
Amount

 

Aggregate Net Fair Value

   

2000-01

1999-00

 

2000-01

1999-00

 

Note

$'000

$'000

 

$'000

$'000

   

Financial assets (Recognised)

           

Cash at bank

 

875

2,344

 

875

2,344

Receivables

4A

-

63

 

-

63

Investments

4B

2,000

750

 

2,000

750

Accrued revenues

4C

7

12

 

7

12

 

Total financial assets (Recognised)

 

2,882

3,169

 

2,882

3,169

 

Financial liabilities (Recognised)

           

Suppliers

7A

150

37

 

150

37

Capital use charge

 

81

-

 

81

-

Unearned revenue

7B

-

1,150

 

-

1,150

 

Total financial liabilities (Recognised)

 

231

1,187

 

231

1,187


Note 14: Departmental financial instruments (continued)

Note 14C: Net fair values of financial assets and liabilities (continued)

Financial assets

The net fair values of cash, non-interest bearing monetary financial assets and short-term investments approximate their carrying amounts.

Financial liabilities

The net fair values for suppliers are short-term in nature and are approximated by their carrying amounts.

Note 14D: Credit risk exposures

The AOFM's maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statement of Financial Position.

Note 15: Administered revenues

 

2000-01
$'000

1999-00
$'000

     

Note 15A: Revenues from government

   

Transfers from Official Public Account

33,590,483

55,711,816

Appropriations accrued

88,046

73,900

     

Total

33,678,529

55,785,716

     

Note 15B: Interest

   

Loans

   

      State and Territory governments:

   

    State and Territory debt

52,479

122,006

    Housing agreements

172,262

175,152

Deposits

523,396

285,044

Swaps

2,389,310

1,959,306

     

Total

3,137,447

2,541,508

Note 16: Administered expenses

     

    2000-01

    1999-00

     

    $'000

    $'000

         

    Note 16A: Grants

       

    Grants to State and Territory governments

    56,674

    64,635

         

    Total

    56,674

    64,635

         

    Note 16B: Net foreign exchange losses

       

    Non-speculative

    1,924,157

    1,110,529

         

    Total

    1,924,157

    1,110,529

         

    Note 16C: Other

       

    Other - assumption of debt

    -

    119,012

    Other

    613

    2,577

         

    Total

    613

    121,589

         

    Note 16D: Borrowing costs expense

       

    Commonwealth securities interest

    6,148,639

    6,548,025

    Swaps interest

    2,431,258

    1,834,338

    Other

    1,448

    1,858

         

    Total

    8,581,345

    8,384,221

Note 17: Administered extraordinary items

As from 1 July 1999, with the introduction of the accrual framework and the abolition of funds accounting, the Loan Consolidation and Investment Reserve (a trust account within the Reserved Money Fund) and the Loan Fund were abolished.

This resulted in the assumption by the Department of Finance and Administration of a liability of $2,730 million from the AOFM for Internal Treasury Bills issued by the Loan Fund to Commonwealth Agencies on 30 June 1999.

Note 18: Administered financial assets

       

      2000-01
      $'000

      1999-00
      $'000

           

      Note 18A: Receivables

         

      Loans to State and Territory governments

      4,516,765

      5,074,441

      Less: provision for doubtful debts

      -

      -

           

      Net loans to State and Territory governments

      4,516,765

      5,074,441

           

      Appropriations

      3,304,187

      3,222,785

      Swap principal

      32,761

      32,718

      GST receivable

      37

      -

      Other

      13

      -

           

      Total

      7,853,763

      8,329,944

           

      Loans to State and Territories receivable:

         

        within one year

      222,657

      558,216

        in one to two years

      109,108

      223,501

        in two to five years

      744,487

      643,470

        in more than five years

      3,440,513

      3,649,254

           
       

      4,516,765

      5,074,441

           

      Note 18B: Investments

         

      Deposits

      13,400,000

      9,200,000

           

      Total

      13,400,000

      9,200,000

           

      Note 18C: Accrued revenues

         

      Interest

      160,187

      145,980

           

      Total

      160,187

      145,980

Note 19: Administered liabilities

     

    2000-01
    $'000

    1999-00
    $'000

         

    Note 19A: Commonwealth securities

       

      Securities issued on behalf of the Commonwealth

    65,596,865

    74,203,922

      Securities issued on behalf of the States and Territories

    690,894

    1,183,442

         
     

    66,287,759

    75,387,364

         

      Unamortised net premiums on Commonwealth Government Securities on issue


    1,096,260

    1,109,218

         

    Total Commonwealth securities

    67,384,019

    76,496,582

         

    Payable:

       

      within one year

    9,797,815

    13,479,177

      in one to two years

    3,763,962

    6,769,966

      in two to five years

    19,158,511

    14,926,876

      in more than five years

    33,567,471

    40,211,345

         
     

    66,287,759

    75,387,364

         

    Note 19B: Other

       

      Swaps

    3,794,529

    2,164,760

         

    Total swaps

    3,794,529

    2,164,760

         

    Payable:

       

      within one year

    1,012,643

    185,533

      in one to two years

    623,123

    575,457

      in two to five years

    1,295,393

    916,581

      in more than five years

    863,370

    487,189

         
     

    3,794,529

    2,164,760

         

    Note 19C: Suppliers

       

    Trade creditors

    3

    10

         

    Total

    3

    10

         

    Note 19D: Other

       

    Interest payable on interest bearing securities and swaps

    2,842,979

    2,726,274

    Payable to the Department of Finance and Administration

    13,400,000

    9,200,000

         

    Total

    16,242,979

    11,926,274

Note 20: Administered equity

Note 20A - Movements in equity

        Item

        Accumulated results

         

        Total equity

         

        2000-01
        $'000

        1999-00
        $'000

         

        2000-01
        $'000

        1999-00
        $'000

                   

        Balance 1 July

        (72,911,355)

        -

         

        (72,911,355)

        -

        Net increase (decrease) in administered net assets


        6,903,828


        11,185,920

         


        6,903,828


        11,185,920

        Restructuring (see note 20B)

        -

        (84,097,275)

         

        -

        (84,097,275)

                   

        Balance 30 June

        (66,007,527)

        (72,911,355)

         

        (66,007,527)

        (72,911,355)

                   

Note 20B - Restructuring

        On 1 July 1999, the AOFM assumed responsibility for all functions previously undertaken by the Debt Management Office within the Department of the Treasury, including the assumption of net administered liabilities of $84,097.3 million.

Note 21: Administered cash flow reconciliation

 

2000-01
$'000

1999-00
$'000

     

Reconciliation of cash per Schedule of Administered Assets and Liabilities and Administered Cash Flows

   

      Cash at year end per Statement of Administered Cash Flows

53

347

    Schedule of Administered Assets and Liabilities items comprising above cash: `Financial Asset-Cash'


53


347

     

Reconciliation of `Net increase (decrease) in administered net assets' from Schedule of Administered Revenues and Expenses to net cash from operating activities:

   

Net increase (decrease) in administered net assets

6,903,828

11,185,920

Foreign exchange losses

1,924,157

1,110,529

Amortisation of net premium on issue of debt

(212,877)

(220,322)

Premium on redemption of debt

314,333

101,952

Assumption of debt of Australian National Railways Commission

-

119,012

Other

1,999

2,023

Change in assets and liabilities:

   

      (Increase) decrease in interest receivable

(14,207)

16,801

      (Increase) in appropriations receivable

(88,045)

(73,900)

    (Increase) in other receivables

(50)

-

      Increase (decrease) in interest payable

116,705

(72,619)

      Increase (decrease) in supplier payables

(7)

10

Extraordinary items

-

(2,730,000)

     

Net cash from operating activities

8,945,836

9,439,406

Note 22: Administered financial instruments

Note 22A: Terms, conditions and accounting policies

Financial Instruments

Notes

Accounting Policies and Methods

Nature of Underlying Instruments

Financial Assets

 

Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.

 

Cash - at bank

 

Deposits are recognised at their nominal amounts.

The AOFM maintains two operational bank accounts with the Reserve Bank of Australia. Interest is not paid on these accounts.

Accrued revenues

18C

Interest is credited to revenue as it accrues.

Interest is receivable on swaps and loans to State and Territory Governments.

Deposits

18B

Deposits are recognised at their nominal amounts. Interest is credited to revenue as it accrues.

Under s.39(2) of the FMA Act, the AOFM invests public money in authorised investments for the purpose of managing the Commonwealth debt.

Loans to State and Territory governments

18A

Loans are recognised at the amounts lent. Interest is credited to revenue as it accrues. In relation to non Commonwealth Government Securities, collectability of amounts outstanding is reviewed at balance date. Provision is made for bad and doubtful loans where collection of the loan or part thereof is judged to be less rather than more likely. In rare circumstances, loan repayments may be waived.

Until July 1990, the Commonwealth borrowed on behalf of the State and Territory Governments and allocated a portion of the proceeds of its Treasury Fixed Coupon Bond raisings to those Governments to fund the redemption of previous allocations of Commonwealth Government Securities (CGS). The States and Territories are responsible for meeting all obligations as to interest and principal on the CGS on allocation to them in accordance with the provisions of the Financial Agreement Act 1994. In addition to the CGS, there are outstanding balances of loans raised specifically for the States. State and Territory Government loans include advances, not evidenced by the issue of securities, made for housing and specific purpose capital payments.

Note 22: Administered financial instruments (continued)

Note 22A: Terms, conditions and accounting policies (continued)

Financial Instruments

Notes

Accounting Policies and Methods

Nature of Underlying Instruments

Swaps

18A

19B

Swap principal associated with cross-currency swaps is recognised on a net basis using the cost method. Interest revenue and expense is recognised as it accrues. The notional principal associated with interest rate swaps is not recognised as assets or liabilities.

The AOFM undertakes derivative transactions on behalf of the Commonwealth to assist with the management of market risk associated with the Commonwealth debt portfolio. The two main sources of market risk in respect of the Commonwealth debt portfolio are interest rate risk and exchange rate risk. The AOFM manages this market risk by managing the Commonwealth debt portfolio to a benchmark which reflects a portfolio composition that, ex ante, can be expected to minimise the cost of Commonwealth debt over the long term, subject to an acceptable degree of volatility in annual debt service costs. Derivative transactions offer a cost-effective means of managing the Commonwealth debt portfolio more closely in line with the benchmark than would otherwise be possible. Derivative transactions are currently limited to interest rate swaps and cross-currency swaps.

Financial Liabilities

 

Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.

 

Interest payable

19D

Interest expense is recognised as it accrues.

Interest is payable on Commonwealth Government Securities, swaps and other loans.

Commonwealth Government Securities

19A

Coupon securities are measured at face value and discount securities are measured at cash value. Premiums and discounts in relation to such borrowings are netted and amortised over the life of the borrowing on a straight line basis.

The AOFM is responsible for advising the Treasurer on all aspects of debt management on behalf of the Commonwealth, including the issue of various borrowing instruments and the administration of the redemption of debt. The AOFM also administers the redemption of Commonwealth Government security debt on allocation to the States and Territories.

Note 22: Administered financial instruments (continued)

Note 22B: Derivatives

 

30 June 2001

$'000

30 June 2000
$'000

 

(i) Interest Rate Swap Contracts - Notional Principal Amounts

   
     

The AOFM has entered into interest rate contracts under which it is obliged to receive and pay interest at fixed and/or floating interest rates.

   
     

The notional principal amounts of the interest rate swaps, which have not been recognised as assets or liabilities, and their associated maturity are as follows:

   
     

within one year

1,600,000

1,500,000

in one to two years

3,375,000

1,600,000

in two to five years

11,150,000

8,775,000

in more than five years

14,450,000

12,350,000

     

Total

30,575,000

24,225,000

     

(ii) Cross-Currency Swap Contracts

Swap principal and interest payable/receivable in relation to cross-currency swaps are disclosed in the financial statements on a net basis.

The gross amounts together with their carrying amounts in the financial statements are as follows:

 

Total Carrying Amount

Gross Amount (Cost)

 

30 June 2001
$'000

30 June 2000
$'000

30 June 2001
$'000

30 June 2000
$'000

         

Financial assets

       

Swaps

32,761

32,718

9,317,389

8,983,007

Interest receivable - Swaps

12,082

15,530

158,896

181,167

         

Total

44,843

48,248

9,476,285

9,164,174

         

Financial liabilities

       

Swaps

3,794,529

2,164,760

13,079,156

11,115,049

Interest payable - Swaps

32,592

27,926

179,406

193,563

         

Total

3,827,121

2,192,686

13,258,562

11,308,612

Note 22: Administered financial instruments (continued)

Note 22C: Foreign exchange risk

    The AOFM is open to foreign exchange risk as a result of contractual obligations in relation to:

    - cross-currency swap contracts; and

    - foreign currency loans.

    As a matter of portfolio benchmark policy, the exposure to the movement in the Australian dollar is not hedged.

    As at 30 June 2001, the following foreign currency assets and liabilities were not hedged:

 

30 June 2001
AUD $'000

30 June 2000
AUD $'000

 

Monetary liabilities

   

    Current

   

    United States Dollars

1,012,643

185,533

    Pounds Sterling

151

138

    Japanese Yen

7

23,745

    Swiss Francs

56

52

    Deutsche Marks

9

9

    Netherlands Guilders

-

23,863

 

1,012,866

233,340

Non-current

   

    United States Dollars

3,040,197

2,352,612

    Pounds Sterling

121,590

111,162

 

3,161,787

2,463,774

Total monetary liabilities

4,174,653

2,697,114

Monetary assets

   

Current

   

    United States Dollar

1,244

-

    Pounds Sterling

5

5

     
 

1,249

5

     

Non-current

   

    United States Dollars

31,517

32,718

    Pounds Sterling

1,398

1,278

     
 

32,915

33,996

     

Total monetary assets

34,164

34,001

Note 22: Administered financial instruments (continued)

Note 22D: Interest rate risk

The AOFM's exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out below:

Financial Instrument

Floating

Interest Rate

Fixed Interest Rate

Non-Interest Bearing

Total

Weighted
Average
Effective
Interest Rate

   

1 year or less

1 to 2 years

2 to 5 years

> 5 years

     
 

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

%

%

Financial
assets

                               

Cash

-

-

-

-

-

-

-

-

-

-

53

347

53

347

-

-

Accrued
revenues

5,155

6,597

155,032

139,383

-

-

-

-

-

-

-

-

160,187

145,980

5.72

6.11

Swap principal

-

-

-

-

-

-

31,517

32,718

-

-

1,244

-

32,761

32,718

7.39

6.37

Loans to State
and Territory governments

261,048

308,607

173,338

509,237

78,255

174,324

563,468

431,598

3,440,514

3,650,532

142

143

4,516,765

5,074,441

4.78

5.45

Term deposits

-

-

13,400,000

9,200,000

-

-

-

-

-

-

-

-

13,400,000

9,200,000

4.87

5.93

Other
receivables

986

7,630

-

-

-

-

-

-

-

-

3,303,251

3,215,155

3,304,237

3,222,785

4.90

5.30

                                 
                                 

Total financial
assets (Recognised)

267,189

322,834

13,728,370

9,848,620

78,255

174,324

594,985

464,316

3,440,514

3,650,532

3,304,690

3,215,645

21,414,003

17,676,271

   
                                 
                                 

Total assets

                       

21,414,003

17,676,271

   

Note 22: Administered financial instruments (continued)

Note 22D: Interest rate risk (continued)

Financial Instrument

Floating

Interest Rate

Fixed Interest Rate

Non-Interest Bearing

Total

Weighted
Average
Effective
Interest Rate

   

1 year or less

1 to 2 years

2 to 5 years

> 5 years

     
 

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

00-01

99-00

 

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000

%

%

Financial liabilities

                               

Swap principal

2,788,749

1,542,265

244,729

120,815

-

146,609

343,660

132,960

396,335

222,111

21,056

-

3,794,529

2,164,760

5.18

6.45

Interest payable

16,884

63,461

2,826,095

2,662,813

-

-

-

-

-

-

-

-

2,842,979

2,726,274

6.69

7.45

Commonwealth
government
securities

261,048

2,826,107

9,741,801

10,906,525

3,733,110

6,720,789

18,977,492

14,715,005

33,567,461

40,211,334

6,847

7,604

66,287,759

75,387,364

7.58

7.88

Other

-

-

-

-

-

-

-

-

-

-

13,400,003

9,200,010

13,400,003

9,200,010

-

-

                                 
                                 

Total financial
liabilities (Recognised)

3,066,681

4,431,833

12,812,625

13,690,153

3,733,110

6,867,398

19,321,152

14,847,965

33,963,796

40,433,445

13,427,906

9,207,614

86,325,270

89,478,408

   
                                 
                                 

Total liabilities

                       

87,421,530

90,587,626

   
                                 

Note 22: Administered financial instruments (continued)

Note 22E: Net fair values of financial assets and liabilities

   

Total Carrying Amount

 

Aggregate
Net Fair Value

   

2000-01

1999-00

 

2000-01

1999-00

 

Note

$'000

$'000

 

$'000

$'000

             
             

Administered financial assets (Recognised)

           

Cash

 

53

347

 

53

347

Accrued revenues

18C

160,187

145,980

 

160,187

145,980

Swap principal

18A

32,761

32,718

 

43,024

18,196

Loans to State and Territory Governments

18A

4,516,765

5,074,441

 

4,487,824

5,068,765

Term deposits

18B

13,400,000

9,200,000

 

13,400,000

9,200,000

Other receivables

18A

3,304,237

3,222,785

 

3,304,237

3,222,785

             
             

Total financial assets (Recognised)

 

21,414,003

17,676,271

 

21,395,325

17,656,073

             
             
             

Financial liabilities (Recognised)

           

Swap principal

19B

3,794,529

2,164,760

 

3,633,448

1,875,874

Interest payable

19D

2,842,979

2,726,274

 

2,842,979

2,726,274

Commonwealth government securities

19A

66,287,759

75,387,364

 

73,900,367

81,003,918

Trade Creditors

19C

3

10

 

3

10

Other

19D

13,400,000

9,200,000

 

13,400,000

9,200,000

             
             

Total financial liabilities (Recognised)

 

86,325,270

89,478,408

 

93,776,797

94,806,076

             

Note 22: Administered financial instruments (continued)

Note 22E: Net fair values of financial assets and liabilities (continued)

Financial assets

The net fair values of cash, non-interest bearing monetary financial assets and short-term investments, approximate their carrying amounts.

The net fair value of the swap principal is based on discounted cash flows using market swap rates as at balance date.

Loans to State and Territory Governments are carried at cost, which is above their net fair value, as it is intended to hold them to maturity.

Financial liabilities

The net fair value of the swap principal is based on discounted cash flows using market swap rates as at balance date.

The net fair values for trade creditors are short-term in nature, and are approximated by their carrying amounts.

The net fair values of Commonwealth Government Securities are based on discounted cash flows using a zero coupon curve valuation methodology. The valuation of Australian dollar denominated debt is based on market yields on Treasury Notes and Treasury Fixed Coupon Bonds which are the most liquid components of the domestic debt portfolio. As the secondary market for the Commonwealth's foreign currency denominated debt is largely illiquid, the valuation approach is based upon deposit and swap rates in each relevant foreign currency.

Note 22F: Credit risk exposures

The AOFM's exposure to credit risk at reporting date in relation to each class of recognised financial assets is the aggregate net fair value of those assets as indicated in Note 22E.

There is no credit risk in relation to the notional principal associated with interest rate swaps.

Note 23: Appropriations

Note 23A: Annual appropriations for departmental items (price of outputs)


 

2000-01
$

1999-00
$

 

Appropriation Acts Nos 1 & 3 credits:

   

Section 7: Act 1 - basic appropriations (budget)

5,706,000

5,535,000

Section 7: Act 3 - basic appropriations

-

-

 

Total current appropriation acts

5,706,000

5,535,000

Add: FMA Act appropriations

   

      s31 appropriations

131,480

50,880

 

Total appropriated in the year

5,837,480

5,585,880

     

Balance brought forward from previous period

3,093,580

-

 

Total appropriations available for payments

8,931,060

5,585,880

     

Payments during the year

6,055,772

2,492,300

 

Balance of appropriations (unspent) at 30 June
carried to next period

2,875,288

3,093,580


Note 23: Appropriations (continued)

Note 23B: Annual appropriations for administered expense items

Outcome 1 - Enhance the Commonwealth's capacity to manage its net debt portfolio


 

Administered
expenses

 

Total

 
 
 

Appropriation Act No 1 & 3 2000-01

$

Appropriation Act No 1 & 3 1999-00

$

 

Appropriation Act No 1 & 3 2000-01

$

Appropriation Act No 1 & 3 1999-00

$

 

Appropriation acts credits:

         

    Act 1/2 - basic appropriations (Budget)

4,429,000

8,078,000

 

4,429,000

8,078,000

    Act 3/4 - Basic appropriations

-

125,475,000

 

-

125,475,000

    Section 11 - Advance to the Finance Minister

-

-

 

-

-

    Section 12 - Comcover receipts

-

-

 

-

-

           

Total current appropriation acts

4,429,000

133,553,000

 

4,429,000

133,553,000

Add: FMA act appropriations

         

      s30 appropriations

-

-

 

-

-

      s31 appropriations

-

-

 

-

-

 

Total appropriated for the year

4,429,000

133,553,000

 

4,429,000

133,553,000

           

Less: Amounts lapsed by Ministerial determination(1)

(2,852,696)

(130,943,009)

 

(2,852,696)

(130,943,009)

           

Balance available at 1 July brought forward from previous period

821,458

-

 

821,458

-

 

Total appropriations available for payments

2,397,762

2,609,991

 

2,397,762

2,609,991

           

Payments during the year

1,591,682

1,788,533

 

1,591,682

1,788,533

 

Balance of appropriations at 30 June carried to next period

806,080

821,458

 

806,080

821,458


(1) 1999-00 total includes ANR debt assumption and debt servicing costs transferred to Special Appropriations.

Note 23: Appropriations (continued)

Note 23C: Annual appropriations for administered capital items


     

    Capital
    2000-01
    $

    Capital
    1999-00
    $

     

    Appropriation Act No 2 & 4 credits:

       

    Section 10 - Act No 2 (Budget)

    505,000

    80,195,000

    Section 10 - Act No 4

    -

    (66,000)

    Advance to the Finance Minister

    -

    -

     

    Total current appropriation acts

    505,000

    80,129,000

    Add: FMA Act

    -

    -

      s30 appropriations

    -

    -

     

    Total appropriated in the year

    505,000

    80,129,000

    Balance available at 1 July brought forward from previous period

    2,895,000

    -

     

    Total appropriations available for payments

    3,400,000

    80,129,000

    Payments during the year

    -

    -

     

    Balance of appropriations at 30 June carried to next period

    3,400,000

    2,895,000


Note 23: Appropriations (continued)

Note 23D: Special appropriations (unlimited) for administered items


Special appropriation (Act/section)

2000-01

$

1999-00(1)
$


Airports (Transitional) Act 1996 - Former debts of the Federal Airports Corporation - Principal and Interest

   

Budget estimate (expenses)

37,550,000

44,550,000

Payments made (expenditure)

143,985,656

262,703,103

     

Commonwealth Inscribed Stock Act 1911, Loans Securities Act 1919, Loans Redemption and Conversion Act 1921 - Interest

   

Budget estimate (expenses)

6,211,385,000

6,313,197,000

Payments made (expenditure)

5,868,991,506

6,711,288,960

     

Loans Securities Amendment Act 1988 (Swaps) - Interest

   

Budget estimate (expenses)

2,357,339,000

1,775,607,000

Payments made (expenditure)

862,766,190

1,658,350,562

     

Financial Agreement Act 1994 - Assistance for debt redemption

   

Budget estimate (expenses)

53,400,000

59,626,000

Payments made (expenditure)

53,417,269

59,625,322

     

Loans Redemption and Conversion Act 1921 - Other

   

Budget estimate (expenses)

5,000

5,000

Payments made (expenditure)

-

-

     

Moomba - Sydney Pipeline System Sale Act 1994 - Principal and Interest

   

Budget estimate (expenses)

-

1,000

Payments made (expenditure)

-

431

     

Financial Agreement Act 1994 - Commonwealth contribution to Debt Retirement Reserve Trust Account on State and Northern Territory debt

   

Budget estimate (expenses)

3,244,000

5,010,000

Payments made (expenditure)

3,256,809

5,010,114

     

Financial Agreement Act 1994 - Interest on Debt Retirement Reserve Trust Account balances

   

Budget estimate (expenses)

829,000

829,000

Payments made (expenditure)

403,727

383,724

     

Commonwealth Inscribed Stock Act 1911, Treasury Bills Act 1914 - Payment of special bond premiums on redemption

   

Budget estimate (expenses)

5,000

5,000

Payments made (expenditure)

-

68

     

Qantas Sale Act 1992 - Principal and Interest

   

Budget estimate (expenses)

920,000

1,920,000

Payments made (expenditure)

25,766,220

25,414,184


(1) 1999-00 budget estimate figures relate to Additional Estimates

Note 23: Appropriations (continued)

Note 23D: Special appropriations (unlimited) for administered items (continued)


Special appropriation (Act/section)

2000-01

$

1999-00(1)
$


Australian National Railways Commission Act 1983 - Principal and Debt Servicing Costs

   

Budget estimate (expenses)

10,426,000

-

Payments made (expenditure)

94,660,024

87,632,000

     

Other

   
     

Loan Flotation Expenses

   

Budget estimate (expenses)

422,000

563,000

Payments made (expenditure)

179,788

206,973

     

Loans Redemption and Conversion Act 1921 - Principal

   

Budget estimate (expenses)

-

-

Payments made (expenditure)

25,486,981,785

46,186,879,283

     

Loans Securities Amendment Act 1988 (Swaps) - Principal

   

Budget estimate (expenses)

-

-

Payments made (expenditure)

1,046,489,446

1,677,785,124

     

Loans Securities Amendment Act 1988 (Swaps) - Principal

   

Budget estimate (expenses)

-

245,988,000

Payments made (expenditure)

-

-

 

Total budget estimate

8,675,525,000

8,447,301,000

Total payments made

33,586,898,420

56,675,279,848


(1) 1999-00 budget estimate figures relate to Additional Estimates

Note 23: Appropriations (continued)

Note 23E : Special accounts

Debt Retirement Reserve Trust Account

- Legal Authority - Financial Management and Accountability Act 1997, section 20.

- Purpose - for the payment and receipt of moneys in accordance with the Financial Agreement Act 1994.


 

2000-01
Actual
$

1999-00
Actual
$

 

Balance carried forward

7,630,273

7,131,920

Add: Appropriations credited during the year

3,660,536

5,393,838

    Other revenue credited during the year

469,694,648

620,833,371

 

Total available for expenditure

480,985,457

633,359,129

Less: Payments made during the year

479,999,431

625,728,856

 

Appropriation available at year end

986,026

7,630,273


Note 24: Reporting of outcomes


 

Outcome 1

Outcome 1

Reporting by outcomes

Budget
00-01
$'000

Actual
00-01
$'000


Net subsidies, benefits and grants expenses

56,644

56,674

Other administered expenses

8,623,310

10,506,115

 

Total net administered expenses

8,679,954

10,562,789

     

Add net cost of AOFM outputs

5,380

3,931

 

Outcome before extraordinary items

8,685,334

10,566,720

Extraordinary items

-

-

 

Net cost to Budget Outcome

8,685,334

10,566,720


Outcome - specific assets deployed as at 30/6/01

7,473,026

21,418,263

Assets that are not outcome specific deployed as at 30/6/01

-

-



Major departmental revenues and expenses by outcome

Outcome 1 Budget
$'000

Outcome 1
Actual
$'000


Major expenses

   

Employees

3,300

2,336

Suppliers

2,043

1,639

Depreciation

154

82

     

Major sources of revenues

   

Revenues from government

5,706

5,706

Interest

162

112



Major administered revenues and expenses by outcome

Outcome 1 Budget
$'000

Outcome 1
Actual
$'000


Major expenses

   

Interest

8,622,481

8,579,897

Net Foreign Exchange Losses
 

-

1,924,157

Major sources of revenues

   

Revenues from government

60,907,476

33,678,529

Interest

2,973,265

3,137,447


 

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