NOTES TO THE DEPARTMENTAL FINANCIAL STATEMENTS for the year ended 30 June 2011
1. STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2011
Reporting entity
The Department of the Prime Minister and Cabinet (“the department”) is a government department as defined by the Public Finance Act 1989 and is domiciled in New Zealand.
The primary objective of the department is to provide services to the public rather than making a financial return. Accordingly the Department of the Prime Minister and Cabinet is a public benefit entity for the purposes of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS).
The financial statements of the department are for the year ended 30 June 2011. The financial statements were authorised for issue by the Chief Executive of the department on 24 September 2011.
In addition, the department has reported on Crown activities which it administers.
Basis of preparation
Statement of compliance
The financial statements of the department have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with New Zealand Generally Accepted Accounting Practices (NZ GAAP).
These financial statements have been prepared in accordance with, and comply with, NZ IFRS as appropriate for public benefit entities.
The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
The financial statements have been prepared on historical-cost basis. The accrual basis of accounting has been used.
Functional and presentation currency
The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of the department is New Zealand dollars.
Judgements and estimations
The preparation of financial statements in conformity with NZ IFRS requires judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised (if the revision affects only that period) or in the period of the revision and future periods (if the revision affects both current and future periods).
There is one item where judgements have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year. It is:
Retirement and long-service leave
Note 11 provides an analysis of the exposure in relation to estimates and uncertainties surrounding retirement and long-service leave liabilities.
Changes in accounting policies
Accounting policies are changed only if the change is required by a standard or interpretation, or if it otherwise provides more reliable and more relevant information.
There have been no changes in accounting policies during the financial year.
Standards, amendments and interpretations issued that are not yet effective and have not been adopted early
Standards, amendments and interpretations issued but not yet effective, which have not been adopted early and which are relevant to the department are:
- NZ IAS 24 Related Party Disclosures (Revised 2009) replaces NZ IAS 24 Related Party Disclosures (Issued 2004) and is effective for reporting periods commencing on or after 1 January 2011. The revised standard:
- Removes the previous disclosure concessions applied by the department in relation to arms-length transactions between the department and entities controlled or significantly influenced by the Crown. The effect of the revised standard is that more information is required to be disclosed about transactions between the department and entities controlled or significantly influenced by the Crown.
- Provides clarity on the disclosure of related-party transactions with ministers of the Crown. The clarification could result in additional disclosures should there be any related-party transactions with ministers of the Crown, although the department will be exempted from certain disclosure requirements relating to transactions with ministers (other than the responsible minister).
- Clarifies that related-party transactions include commitments with related parties.
- NZ IFRS 9 Financial Instruments will eventually replace NZ IAS 39 Financial Instruments: Recognition and measurement. NZ IFRS 9 is being introduced in three phases (Classification and Measurement, Impairment Methodology and Hedge Accounting) and is required to be adopted for the year ended 30 June 2014. The department has not yet assessed the effect of NZ IFRS 9 and is unlikely to adopt it early.
Significant accounting policies
Revenue
Revenue is measured at the fair value of consideration received.
Revenue from the Crown is earned in exchange for the provision of outputs and is recognised as revenue when earned. The department receives its revenue through the Crown’s appropriation process.
Revenue from the supply of goods and services is recognised as earned.
Rental income is recognised as other revenue in the Statement of Comprehensive Income when it is earned.
Revenue from the sales of items of property, plant and equipment is recognised when the significant risks and rewards of ownership have been transferred to the buyer.
Capital charge
The capital charge is recognised as an expense in the period to which the charge relates.
Debtors and other receivables
Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate, less impairment changes.
Impairment of a receivable is established when there is objective evidence that the department will not be able to collect amounts due under the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default in payments are considered indicators that the debtor is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the Statement of Comprehensive Income.
Financial instruments
The department is a party to financial arrangements as part of its everyday operations. These include instruments such as cash and cash equivalents, receivables, and creditors and other payables. Financial assets and financial liabilities are initially measured at fair value plus transaction costs. The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.
Cash and cash equivalents
Cash includes cash on hand and bank accounts.
Inventory
Inventories held for distribution for public benefit purposes are recorded at the lower of cost calculated using the first-in first-out method or current replacement cost.
Property, plant and equipment
Overview
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
All individual assets are capitalised if their purchase cost is $2,000 or greater.
The cost of an item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits or service potential associated with the item will flow to the department and if the cost of the item can be measured reliably.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Realised gains and losses arising from disposal of property, plant and equipment are recognised in the Statement of Comprehensive Income in the period in which the transaction occurs.
Subsequent costs
Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the department and the cost of the item can be measured reliably.
Depreciation
Depreciation is charged on a straight-line basis at rates calculated to allocate the cost or valuation of an asset, less any estimated residual value, over its estimated useful life. The useful life and associated depreciation rates are as follows:
| Fixtures and fittings | 10 years | 10% |
|---|---|---|
| IT equipment | 3–4 years | 20–33% |
| Office equipment | 5 years | 20% |
| Furniture | 5 years | 20% |
| Motor vehicles | 4 years | 25% |
| Kitchen equipment | 5 years | 20% |
| Plant and equipment | 5-10 years | 10-20% |
| Ground improvements | 5 years | 20% |
Intangible assets
Software acquisition and development
Acquired computer software is capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Direct costs include software acquisition and development, and consultancy costs. Staff training costs are recognised as an expense when incurred.
Amortisation
Intangible assets with finite lives are subsequently recorded at cost, less any amortisation and impairment losses.
The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when an asset is available for use and ceases at the date that an asset is de-recognised. The amortisation charge for each period is recognised in the Statement of Comprehensive Income.
The useful life and associated amortisation rate of computer software is as follows:
| Acquired computer software | 3–4 years | 20–33% |
|---|
Impairment of non-financial assets
Property, plant and equipment and intangible assets that have a finite useful life are reviewed at least annually to determine if there is any indication of impairment, i.e. that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value, less costs to sell, and value-in-use.
Value-in-use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.
If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount.
Losses resulting from impairment are recognised in the Statement of Comprehensive Income.
Employee entitlements
Short-term employee entitlements
Short-term employee entitlements expected to be settled within 12 months of balance date are measured at nominal values based on accrued entitlements at current rates of pay.
These include salaries and wages, annual leave, and sick leave and are recognised in the Statement of Comprehensive Income when they accrue to employees. Employee entitlements to be settled within 12 months are reported at the amount expected to be paid.
Termination benefits are recognised in the Statement of Comprehensive Income only when there is a demonstrable commitment, without realistic possibility of withdrawal, either to terminate employment prior to normal retirement date or to provide such benefits as a result of an offer to encourage voluntary redundancy.
The department recognises a liability for sick leave. The amount of the liability is calculated on the unused sick-leave entitlement that can be carried forward at balance date, to the extent that the department anticipates it will be used by staff to cover future sick-leave absences.
Long-term employee entitlements
Entitlements that are payable beyond 12 months, such as long-service leave and retirement leave, have been calculated on an actuarial basis. The calculations are based on:
- likely future entitlements based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement, and contractual-entitlements information
- the present value of the estimated future cash flows. (The discount rate is based on the weighted average of government bonds with terms to maturity similar to those of the relevant liabilities. The inflation factor is based on the expected long-term increase in remuneration for employees.)
Defined-contribution plans
Obligations for contributions to defined-contribution pension plans are recognised as an expense in the Statement of Comprehensive Income when they are due.
Creditors and other payables
Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.
Leases
The department leases office premises and photocopiers. As substantially all risks and rewards incidental to ownership of assets are retained by the lessor, these leases are classified as operating leases. Operating lease costs are expensed in the Statement of Comprehensive Income on a straight-line basis over the term of the lease.
Superannuation schemes
Obligations for contributions to the State Sector Retirement Savings Scheme, KiwiSaver and individual retirement funds are accounted for as defined-contribution schemes and are recognised as expenses in the Statement of Comprehensive Income when they are incurred.
Provisions
The department recognises a provision for future expenditure of uncertain amounts or timing when there is a present obligation (either legal or constructive) as a result of a past event, when it is probable that an outflow of future economic benefits will be required to settle the obligation, and when a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.
Taxpayers’ funds
Taxpayers’ funds are the Crown’s investment in the department and are measured as the difference between total assets and total liabilities. They consist of general funds.
Commitments
Expenses yet to be incurred on non-cancellable contracts that were entered into on or before balance date are disclosed as commitments to the extent that they are equally unperformed obligations.
Cancellable commitments that have, explicit in the agreement, penalty or exit costs on exercising the option to cancel are included in the Statement of Commitments at the value of that penalty or exit cost.
Contingent liabilities and contingent assets
Contingent liabilities and contingent assets are recorded in the Statement of Contingent Liabilities and Contingent Assets at the point at which the contingency is evident. Contingent liabilities are disclosed if the possibility that they will crystallise is not remote. Contingent assets are disclosed if it is probable that the benefits will be realised.
Goods and services tax (GST)
All items in the financial statements, including the appropriation statements, are GST exclusive – except for receivables and payables, which are on a GST-inclusive basis.
The net amount of GST recoverable from or payable to the Inland Revenue Department (IRD) is included as part of receivables or payables in the Statement of Financial Position.
The net GST paid to or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the Statement of Cash Flows.
Commitment and contingencies are disclosed exclusive of GST.
Income tax
Government departments are exempt from income tax as public authorities. Accordingly, no charge for income tax has been provided for.
Budget figures
The budget figures are those included in the department’s Budget Estimates for the year ended 30 June 2011, which are consistent with the financial information in the Main Estimates. In addition, the financial statements also present the updated budget information from the Supplementary Estimates.
Statement of cost accounting policies
The department has determined the cost of outputs using the cost allocation system that follows:
- Direct costs are expenses incurred from activities in producing outputs. These costs are charged directly to the related output classes.
- Indirect costs are expenses incurred by Corporate Services and by the Office of the Chief Executive. Indirect costs are allocated to each output class based on cost drivers, related activity, and usage information.
There have been no changes in cost accounting policies since the date of the last audited financial statements.
Comparatives
When presentation or classification of items in the financial statements is amended or accounting policies are changed voluntarily, comparative figures are restated to ensure consistency with the current period unless it is impracticable to do so.
Related parties
The department is a wholly owned entity of the Crown. The government significantly influences the roles of the department as well as its source of revenue.
The department undertakes transactions with other departments, Crown entities, and state-owned enterprises. These transactions are carried out at an arm’s length basis and are not considered to be related-party transactions.
Apart from those transactions described above, the department has not entered into any related-party transactions.
2. BUDGET COMPOSITION
| 30.6.11 | 30.6.11 | ||
|---|---|---|---|
| Budget Forecast $000 | Supplementary Estimates Changes $000 | Final Budget Total $000 | |
| Revenue | |||
| Crown | 16,117 | 1,050 | 17,167 |
| Other | 40 | (10) | 30 |
| Total Revenue | 16,157 | 1,040 | 17,197 |
| Expenditure | |||
| Personnel | 11,275 | 675 | 11,950 |
| Operating | 4,212 | 512 | 4,724 |
| Depreciation | 520 | (50) | 470 |
| Capital charge | 140 | (87) | 53 |
| Total expenses | 16,147 | 1,050 | 17,197 |
| Net surplus | 10 | (10) | _ |
3. REVENUE – OTHER
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 31 | Rental income | 27 |
| 31 | Total revenue – other | 27 |
4. PERSONNEL COSTS
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 1 Other includes recruitment, staff training and attendance at conferences and seminars. | ||
| 10,443 | Salaries and wages | 11,347 |
| 390 | Employer contributions to defined-contribution plans | 465 |
| (23) | Increase/(decrease) in employee entitlements | (24) |
| 323 | Other1 | 317 |
| 11,133 | Total personnel costs | 12,105 |
5. CAPITAL CHARGE
The department pays a capital charge on its taxpayers’ funds at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2011 was 7.5 per cent. (2009/10: 7.5 per cent)
6. OTHER OPERATING EXPENSES
Other operating expenses include:
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 1 The premises rental expenses do not include the costs of accommodation for personnel located on two floors of the Beehive, which is provided by the Parliamentary Service (estimated annual rental for this furnished accommodation is $350,000). | ||
| 50 | Audit fees for audit of financial statements | 53 |
| 401 | Premises rental1 | 622 |
| 149 | Contract for photocopying services | 149 |
| 89 | Inventories consumed | 103 |
7. PROPERTY, PLANT AND EQUIPMENT
| Fixtures and fittings | Furniture | Office equipment | Motor vehicles | Plant and equipment | IT equipment | Kitchen equipment | Ground improvement | Total | |
|---|---|---|---|---|---|---|---|---|---|
| Cost | |||||||||
| Balance at 1 July 2009 | 726 | 216 | 231 | 218 | 493 | 1,187 | 98 | 33 | 3,202 |
| Additions | 16 | – | 2 | 10 | – | 370 | – | – | 398 |
| Disposals | – | – | (89) | (54) | – | (306) | – | – | (449) |
| Other movement | – | – | – | – | – | 11 | – | – | 11 |
| Balance at 30 June 2010 | 742 | 216 | 144 | 174 | 493 | 1,262 | 98 | 33 | 3,162 |
| Balance at 1 July 2010 | 742 | 216 | 144 | 174 | 493 | 1,262 | 98 | 33 | 3,162 |
| Additions | 17 | – | – | – | – | 313 | – | – | 330 |
| Disposals | (628) | (14) | (32) | – | (21) | (187) | – | – | (882) |
| Other movement | – | – | – | – | 9 | – | – | – | 9 |
| Balance at 30 June 2011 | 131 | 202 | 112 | 174 | 481 | 1,388 | 98 | 33 | 2,619 |
| Accumulated Depreciation and Impairment Losses | |||||||||
| Balance at 1 July 2009 | 489 | 182 | 201 | 110 | 446 | 946 | 85 | 27 | 2,486 |
| Depreciation expense | 72 | 17 | 16 | 39 | 35 | 115 | 5 | 3 | 302 |
| Eliminated on disposal | – | – | (89) | (54) | – | (306) | – | – | (449) |
| Other movement | – | – | – | – | – | 9 | – | – | 9 |
| Balance at 30 June 2010 | 561 | 199 | 128 | 95 | 481 | 764 | 90 | 30 | 2,348 |
| Balance at 1 July 2010 | 561 | 199 | 128 | 95 | 481 | 764 | 90 | 30 | 2,348 |
| Depreciation expense | 45 | 13 | 11 | 43 | 11 | 150 | 5 | 3 | 281 |
| Eliminated on disposal | (568) | (14) | (33) | – | (21) | (141) | – | – | (777) |
| Balance at 30 June 2011 | 38 | 198 | 106 | 138 | 471 | 773 | 95 | 33 | 1,852 |
| Carrying value | |||||||||
| At 30 June and 1 July 2010 | 181 | 17 | 16 | 80 | 12 | 498 | 8 | 3 | 815 |
| AT 30 JUNE 2011 | 93 | 4 | 6 | 36 | 10 | 615 | 3 | – | 767 |
8. INTANGIBLE ASSETS
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| Acquired software | ||
| Cost | ||
| 160 | Opening balance 1 July | 436 |
| 276 | Additions | 291 |
| – | Disposal | (26) |
| 436 | Closing balance 30 June | 701 |
| Accumulated amortisation and impairment losses | ||
| 38 | Opening balance 1 July | 119 |
| 81 | Amortisation expenses | 105 |
| 119 | Closing balance 30 June | 224 |
| Carrying value | ||
| 317 | At 30 June | 477 |
9. CREDITORS AND OTHER PAYABLES
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 881 | Trade creditors | 737 |
| 46 | Creditors relating to capital expenditure | 16 |
| 628 | Accrued expenses | 761 |
| 66 | GST payable | 110 |
| 1,621 | Total creditors and other payables | 1,624 |
10. PROVISION FOR REPAYMENT OF SURPLUS TO THE CROWN
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 97 | Current year net surplus | 44 |
| 97 | Total provision for repayment of surplus | 44 |
11. EMPLOYEE ENTITLEMENTS
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| Current employee entitlements | ||
| 441 | Annual leave | 436 |
| 32 | Long-service leave | 24 |
| 103 | Retirement leave | 201 |
| 50 | Sick leave | 38 |
| 626 | Total current liabilities | 699 |
| Non-current employee entitlements | ||
| 37 | Long-service leave | 43 |
| 334 | Retirement leave | 231 |
| 371 | Total non-current liabilities | 274 |
| 997 | Total employee entitlements | 973 |
The present value of the retirement and long-service leave obligations depend on a number of factors that are determined on an actuarial basis using some assumptions. Two key assumptions used in calculating this liability include the discount rate and the salary-inflation factor. Any changes in these assumptions will have an impact on the carrying amount of the liability.
In determining the appropriate discount rate the department adopts the central table of risk-free discount rates and CPI assumptions provided by the Treasury.
If the discount rate were to differ by 1 per cent from the department’s estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $3,000 higher/lower.
If the inflation factor were to differ by 1 per cent from the department’s estimates, with all other factors held constant, the carrying amount would be an estimated $4,000 higher/lower.
12. PROVISIONS
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| Lease make-good | ||
| 120 | Opening balance 1 July | 120 |
| – | Provision used | (60) |
| 120 | Closing balance 30 June | 60 |
| Assets write-off | ||
| 121 | Opening balance 1 July | 138 |
| 17 | Additional provision made | 10 |
| – | Provision used | (68) |
| 138 | Closing balance 30 June | 80 |
| 258 | Total Provisions | 140 |
In respect of its leased premises, the department has made provision to make good any damages and to remove fixtures and fittings as required by the lessor at the expiry of the lease term.
13. TAXPAYERS’ FUNDS
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| General funds | ||
| 703 | Balance at 1 July | 703 |
| 97 | Net surplus | 44 |
| (97) | Provision for repayment of surplus to the Crown | (44) |
| 703 | General funds at 30 June | 703 |
14. RELATED-PARTY TRANSACTIONS AND KEY MANAGEMENT PERSONNEL
Related-party transactions
The department is a wholly owned entity of the Crown. The government significantly influences the roles of the department as well as its source of revenue.
The department undertakes transactions with other departments, Crown entities and state-owned enterprises. These transactions are carried out at an arm’s length basis and are not considered to be related-party transactions. Apart from those transactions described above, the department has not entered into any related-party transactions.
Key management personnel compensation
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 1 Key management personnel are the Chief Executive and the seven senior managers. | ||
| 2,018 | Salaries and other short-term employee benefits | 2,155 |
| 2,018 | Total key management personnel1 compensation | 2,155 |
15. FINANCIAL-INSTRUMENT RISKS
The department is a party to financial arrangements as part of its everyday operations.
Credit risk
Credit risk is the risk that a third party will default on its obligations to the department, causing the department to incur a loss. In the normal course of its operations, the department incurs credit risk from sundry debtors, prepayments, bank deposits, and transactions with financial institutions and the New Zealand Debt Management Office (NZDMO).
The department does not require any collateral or security to support financial instruments with the financial institutions it deals with, or with NZDMO, as these entities have high credit ratings. For other financial instruments, the department does not have significant concentrations of credit risk.
The department’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and cash equivalents, debtors and other receivables.
Currency risk and interest-rate risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
Interest-rate risk is the risk that the fair value of a financial instrument will fluctuate, or the cash flows from a financial instrument will fluctuate, because of changes in market interest rates.
The department has no significant exposure to currency risk or interest-rate risk on its financial instruments.
Liquidity risk
Liquidity risk is the risk that the department will encounter difficulty in raising liquid funds to meet commitments as they fall due.
In meeting its liquidity requirements, the department closely monitors its forecast cash requirements with expected cash drawdowns from the NZDMO. The department maintains a target level of available cash to meet liquidity requirements.
All of the department’s financial liabilities (i.e. creditors and other payables – see note 9) are expected to be settled within 12 months. The contractual undiscounted cash flows equal the carrying values disclosed in note 9.
16. CATEGORIES OF FINANCIAL INSTRUMENTS
The carrying amounts of financial assets and financial liabilities in each of the NZ IAS 39 categories are as follows:
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| Loans and receivables | ||
| 2,017 | Cash and cash equivalent | 1,806 |
| 109 | Other receivables | 50 |
| 2,126 | Total loans and receivables | 1,856 |
| Financial liabilities measured at amortised cost | ||
| 1,621 | CREDITORS AND OTHER PAYABLES (SEE NOTE 9) | 1,624 |
17. CAPITAL MANAGEMENT
The department’s capital is its equity (or taxpayers’ funds), which comprise the general funds. Equity is represented by the net assets.
The department manages its revenues, expenses, assets, liabilities and general financial dealings prudently. The department’s equity is largely managed as a by-product of managing income, expenses, assets and liabilities and complying with the government Budget processes and Treasury instructions.
The objective of managing the department’s equity is to ensure that the department is effective in achieving the goals and objectives for which it has been established, while remaining a going concern.
18. EXPLANATIONS OF MAJOR VARIANCES AGAINST BUDGET
D1 – Policy advice and secretariat and coordination services
The appropriation for this output class decreased by $1.378 million in the Supplementary Estimates. The change is largely a result of fiscally neutral transfers to D2 – Support services to the Governor-General and maintenance of the residences ($120,000) and to D3 – Intelligence coordination and national security priorities ($1.293 million).
D2 – Support services to the Governor-General and maintenance of the residences
The appropriation for this output class increased by $757,000 in the Supplementary Estimates. The change is largely a result of an increase in Crown Revenue ($600,000), which has been transferred from Crown Capital, combined with a fiscally neutral transfer from D1 – Policy advice and secretariat and coordination services ($120,000).
D3 – Intelligence coordination and national security priorities
The appropriation for this output class increased by $1.701 million in the Supplementary Estimates. The change is largely a result of fiscally neutral transfers from D1 – Policy advice and secretariat and coordination services ($1.293 million) and new funding for the establishment of the Intelligence Coordination Group ($436,000).
Appropriations for capital expenditure
The appropriation for capital expenditure increased by $466,000 in the Supplementary Estimates; this is a result of a carry-forward from 2009/10. The variance between actual and budgeted capital expenditure for 2010/11 was due to delay in the implementation of planned IT upgrades.
