Financial statements

The AEC’s 2017–18 financial results were influenced by expenditure on three by-elections, preparation for the next federal election and electoral integrity reforms. The Australian National Audit Office has issued an unqualified audit opinion for the AEC’s 2017–18 financial statements.

The AEC’s financial reporting consists of a financial performance summary, together with the financial statements and supporting notes. The financial performance summary is a snapshot of the AEC’s deficit, surplus, balance sheet and net asset information.

The financial statements consist of the auditor’s report, the Electoral Commissioner and Chief Finance Officer statement, and various financial statements and administered schedules. Further information on the financial performance of the AEC is provided in the notes section.

Financial performance summary

The AEC’s 2017–18 financial results are positive, spending within allocated funding and achieving an operating surplus at year end. The AEC’s operating surplus was $6.3 million compared to an operating surplus of $36.0 million in 2016–17. The 2017–18 result was influenced by expenditure on three by-elections, preparation for the next federal election and electoral integrity reforms.

The statement of financial position at 30 June 2018 shows total assets of $153.2 million and total liabilities of $37.8 million for a net asset position of $115.4 million. Total assets have increased from the previous year mainly as a result of an increase in appropriation receivables. Additional appropriation received for electoral integrity reforms was not fully spent and work has rolled forward into 2018–19. Liabilities have remained at a similar level to 2016–17.

The Australian National Audit Office has issued an unqualified audit opinion for the AEC’s 2017–18 financial statements.

No significant issues of non-compliance in relation to the finance law were reported to the Special Minister of State in 2017–18. This included any failure to comply with the duties of accountable authorities (section 15–19 of the PGPA Act), significant fraudulent activity and other serious breaches (section 25–29 of the PGPA Act).

The current funding model presents an ongoing challenge for the AEC and poses significant risk in managing the increasing complexity of federal elections and the ongoing growth in the size of the electoral roll. During 2017–18 the AEC successfully secured additional funding for federal elections, however funding received between elections for ongoing operations is insufficient to provide long-term election system sustainability or ongoing innovation. The AEC received funding during 2017–18 to consider the long-term sustainability of election systems and also commenced work with the Department of Finance on an overarching funding review. This review is expected to be completed in 2018–19.

The AEC’s 2017–18 financial results are positive, spending within allocated funding and achieving an operating surplus at year end.

List of financial statements

Certification

Auditor’s report

Statement by the Electoral Commissioner and Chief Finance Officer

Primary financial statements

Statement of comprehensive income for the period ended 30 June 2018

Statement of financial position as at 30 June 2018

Statement of changes in equity for the period ended 30 June 2018

Cash flow statement for the period ended 30 June 2018

Administered schedules

Administered schedule of comprehensive income for the period ended 30 June 2018

Administered schedule of assets and liabilities as at 30 June 2018

Administered reconciliation schedule

Administered cash flow statement for the period ended 30 June 2018

Overview

Basis of preparation

New accounting standards

Accounting judgements and estimates

Taxation

Events after the reporting period

Notes to the financial statements

1 Funding

1.1 Revenue from Government

1.2 Own-source revenue and gains

1.3 Special accounts

1.4 Net cash appropriation arrangements

2. Departmental financial position and managing uncertainties

2.1 Financial instruments

2.2 Other fnancial assets

2.3 Non-financial assets

2.4 Other payables and provisions

2.5 Contingent assets and liabilities

3. People and relationships

3.1 Employee benefits

3.2 Employee provisions

3.3 Key management personnel remuneration

3.4 Related party disclosures

4. Other information

4.1 Expenses

5. Items administered on behalf of Government

5.1 Administered – expenses

5.2 Administered – income

5.3 Administered – assets and liabilities

5.4 Administered – financial instruments

5.5 Administered – contingent assets and liabilities

Certification

Auditor’s report

Statement by the Electoral Commissioner and Chief Finance Officer

Statement by the Electoral Commissioner and Chief Finance Officer

Primary financial statements

Statement of comprehensive income for the period ended 30 June 2018

Notes

2018

$’000

2017

$’000

Original Budget

$’000

NET COST OF SERVICES

Expenses

Employee benefits

3.1

86,679

152,607

83,850

Suppliers

4.1A

75,987

135,675

59,344

Depreciation and amortisation

2.3A

9,500

9,229

8,206

Finance costs

2.4B

52

22

85

Write-down and impairment of assets

4.1B

(6)

1,502

Losses from asset disposals

2.3A

315

658

Total expenses

172,527

299,693

151,485

OWN-SOURCE INCOME

Own-source revenue

Sale of goods and rendering of services

1.2A

17,285

18,235

11,038

Other revenue

1.2B

273

219

Total own-source revenue

17,558

18,454

11,038

Gains

Other gains

1.2C

47

48

85

Total gains

47

48

85

Total own-source income

17,558

18,454

11,123

Net (cost of) services

(154,922)

(281,191)

(140,362)

Revenue from Government

Revenue from Government

1.1A

161,198

317,187

132,156

Surplus/(Deficit) on continuing operations

6,276

35,996

(8,206)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net cost of services

Changes in asset revaluation surplus

178

(311)

Total other comprehensive income

178

(311)

Total comprehensive income/(loss)

1.4

6,454

35,685

(8,206)

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

Budget Variances Commentary

Statement of comprehensive income

The AEC’s expenditure, both employee and supplier expenses, were higher than anticipated due to the conduct of three by-elections, preparation for the next federal election, the payment of a number of redundancies and also expenditure on electoral integrity reforms. The AEC’s own-source revenue was higher than anticipated as there was increased activity on industrial and commercial elections, particularly in relation to protected action ballots. Revenue from Government was also higher than anticipated as additional funding was secured in order to deliver electoral integrity reforms.

Statement of financial position as at 30 June 2018

Notes

2018

$’000

2017

$’000

Original Budget

$’000

ASSETS

Financial assets

Cash and cash equivalents

2.1A

1,715

4,220

17,932

Receivables for goods and services

2.1A

896

1,687

1,343

Appropriations receivable

2.2A

117,564

83,179

89,105

Other receivables

2.2B

963

674

5,190

Total financial assets

121,138

89,760

113,570

Non-financial assets

Leasehold Improvements

2.3A

6,757

8,424

9,082

Plant and equipment

2.3A

7,273

6,603

11,305

Computer software

2.3A

8,477

9,071

14,261

Intellectual property

2.3A

1,663

1,912

Inventories

2.3B

5,104

3,909

14,599

Other non-financial assets

2.3C

2,773

3,135

7,115

Total non-financial assets

32,047

33,054

56,362

Total assets

153,185

122,814

169,932

LIABILITIES

Payables

Suppliers

2.1A

9,894

5,506

72,637

Other payables

2.4A

3,908

3,947

4,103

Total payables

13,802

9,453

76,740

Provisions

Employee provisions

3.2

22,251

25,130

31,757

Other provisions

2.4B

1,780

1,570

1,525

Total provisions

24,031

26,700

33,282

Total liabilities

37,833

36,153

110,022

Net assets

115,352

86,661

59,910

EQUITY

Contributed equity

82,743

60,373

71,157

Asset revaluation surplus

22,852

22,674

22,985

Retained earnings

9,757

3,614

(34,232)

Total equity

115,352

86,661

59,910

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

Budget Variances Commentary

Statement of financial position

Total payables and cash are significantly lower than expected as suppliers were paid in the financial year and cash was not required to be on hand for payment immediately following end of financial year. The lower cash balance offsets a large proportion of the higher appropriation receivable balance, with the further increase in appropriation receivable resulting from the receipt of additional funding during the year for electoral integrity reforms that was not full spent.

Non-financial assets are lower than budgeted mainly due to a decrease in inventory as it was expected that in preparation for the next federal election the AEC would have purchased additional inventory during the financial year. Employee provisions were lower than expected due to the payment of a number of redundancies as a result of the organisational design review.

Statement of changes in equity for the period ended 30 June 2018

2018

$’000

2017

$’000

Original Budget

$’000

CONTRIBUTED EQUITY

Opening balance

Balance carried forward from previous period

60,373

54,202

60,373

Adjusted opening balance

60,373

54,202

60,373

Transactions with owners

Contributions by owners

Departmental Capital Budget

22,370

6,171

10,784

Total transactions with owners

22,370

6,171

10,784

Closing balance as at 30 June

82,743

60,373

71,157

RETAINED EARNINGS

Opening balance

Balance carried forward from previous period

3,614

(32,382)

(26,026)

Adjustment to opening balance

(133)

Adjusted opening balance

3,481

(32,382)

(26,026)

Comprehensive income

Surplus / (deficit) for the period

6,276

35,996

(8,206)

Total comprehensive income

6,276

35,996

(8,206)

Closing balance as at 30 June

9,757

3,614

(34,232)

ASSET REVALUATION RESERVE

Opening balance

Balance carried forward from previous period

22,674

22,985

22,985

Adjusted opening balance

22,674

22,985

22,985

Comprehensive income

Other comprehensive income

178

(311)

Total comprehensive income

178

(311)

Closing balance as at 30 June

22,852

22,674

22,985

TOTAL EQUITY

Opening balance

Balance carried forward from previous period

86,661

44,805

57,332

Adjustment to opening balance

(133)

Adjusted opening balance

86,528

44,805

57,332

Comprehensive income

Surplus/(deficit) for the period

6,276

35,996

(8,206)

Other comprehensive income

178

(311)

Total comprehensive income

6,454

35,685

(8,206)

Transactions with owners

Contributions by owners

Departmental Capital Budget

22,370

6,171

10,784

Total transactions with owners

22,370

6,171

10,784

Closing balance as at 30 June

115,352

86,661

59,910

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

ACCOUNTING POLICY

Contributions by owners

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

BUDGET VARIANCES COMMENTARY

Statement of changes in equity

The AEC incurred a higher than anticipated equity position as additional Departmental Capital Budget was received during the year and the financial result was higher than expected with a surplus of $6.276 million achieved against an expected deficit of $8.206 million. This occurred as additional funding was received during the year and was not fully spent.

Cash flow statement for the period ended 30 June 2018

Notes

2018

$’000

2017

$’000

Original Budget

$’000

OPERATING ACTIVITIES

Cash received

Appropriations

144,757

311,069

132,156

Sales of goods and rendering of services

19,316

19,984

11,038

Net GST received

5,849

19,604

Total cash received

169,922

350,657

143,194

Cash used

Employees

86,859

157,530

83,850

Suppliers

86,966

206,335

59,344

Total cash used

173,825

363,865

143,194

Net cash (used by)/from operating activities

(3,903)

(13,208)

INVESTING ACTIVITIES

Cash used

Purchase of property, plant and equipment

3,028

1,800

10,784

Purchase of intangibles

1,844

Total cash used

3,028

3,644

10,784

Net cash (used by) investing activities

(3,028)

(3,644)

(10,784)

FINANCING ACTIVITIES

Cash received

Contributed equity

10,784

Departmental Capital Budget

4,426

3,140

Total cash received

4,426

3,140

10,784

Net cash from financing activities

4,426

3,140

10,784

Net (decrease) in cash held

(2,505)

(13,712)

Cash and cash equivalents at the beginning
of the reporting period

4,220

17,932

17,932

Cash and cash equivalents at the end
of the reporting period

2.1A

1,715

4,220

17,932

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

BUDGET VARIANCES COMMENTARY

Cash flow statement

The AEC’s operating cash received was higher than anticipated as there was increased activity on industrial and commercial elections, particularly in relation to protected action ballots and also, additional funding was secured from Government in order to deliver electoral integrity reforms. Operating cash used was higher than budgeted as a result of the three by-elections, preparation for the next federal election, the payment of a number of redundancies and also expenditure on electoral integrity reforms. Investing and financing cash used and received was lower than anticipated as capital works were not completed during the financial year and work rolled forward into 2018–19.

Administered schedules

Administered schedule of comprehensive income for the period ended 30 June 2018

Notes

2018

$’000

2017

$’000

Original Budget

$’000

NET COST OF SERVICES

EXPENSES

Other expenses

5.1A

618

62,883

Total expenses

618

62,883

INCOME

Revenue

Non-taxation revenue

Electoral fines/penalties

5.2A

276

3,746

33

Other

5.2A

6

Total non-taxation revenue

282

3,746

33

Total revenue

282

3,746

33

Net contribution by services

(337)

(59,137)

33

(Deficit)/Surplus

(337)

(59,137)

33

This schedule should be read in conjunction with the accompanying notes.

BUDGET VARIANCES COMMENTARY

Schedule of comprehensive income

The AEC’s administered expenditure and revenue was higher than anticipated due to the three by-elections conducted during the financial year.

Administered schedule of assets and liabilities as at 30 June 2018

Notes

2018

$’000

2017

$’000

Original Budget

$’000

ASSETS

Financial assets

Cash and cash equivalents

5.3A

1,328

3,560

Total financial assets

1,328

3,560

Total assets administered on behalf of Government

1,328

3,560

Net assets

1,328

3,560

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

Administered reconciliation schedule

2018

$’000

2017

$’000

Opening assets less liabilities as at 1 July

3,560

2,268

Net cost of/(contribution by) services:

Income

337

3,748

Expenses

(630)

(63,815)

Transfers (to)/from the Australian Government:

Appropriation transfers from Official Public Account

Special appropriations (limited)

730

65,105

Appropriation transfers to OPA

Transfers to OPA

(2,669)

(3,746)

Closing assets less liabilities as at 30 June

1,328

3,560

This schedule should be read in conjunction with the accompanying notes.

ACCOUNTING POLICY

Administered cash transfers to and from the Official Public Account

Revenue collected by the AEC for use by the Government rather than the AEC is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the entity on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

Administered cash flow statement for the period ended 30 June 2018

Notes

2018

$’000

2017

$’000

OPERATING ACTIVITIES

Cash received

Electoral fines/penalties

276

3,746

Other

61

2

Total cash received

337

3,748

Cash used

Political Parties/Candidates

630

63,710

Refund of Electoral fines/penalties

105

Total cash used

630

63,815

Net cash flows (used by)/from operating activities

(293)

(60,067)

Cash from Official Public Account

Appropriations

730

65,105

Total cash from official public account

730

65,105

Cash to Official Public Account

Appropriations

(2,669)

(3,746)

Total cash to official public account

(2,669)

(3,746)

Cash and cash equivalents at the beginning of the reporting period

3,560

2,268

Cash and cash equivalents at the end of the reporting period

1.3

1,328

3,560

This schedule should be read in conjunction with the accompanying notes.

Overview

Basis of preparation

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with:

  1. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR)
  2. Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

New accounting standards

Future Australian Accounting Standard requirements

The following new/revised/amending standards and/or interpretations were issued by the Australian Accounting Standards Board prior to the signing of the statement by the accountable authority and chief finance officer, which are expected to have an impact on the entity’s financial statements for future reporting period(s):

Accounting Standards

Effective date

Nature of impending change/s in accounting policy and likely impact on initial application

Possible impact

AASB 9 Financial Instruments (December 2014)

1 Jan 2019

The new standard AASB 9 includes revised guidance on the classification and measurement of financial assets, including a new expected credit loss model for calculating impairment, and supplements the new general hedge accounting requirements previously published. It supersedes AASB 9 (issued in December 2009 – as amended) and AASB 9 (issued in December 2010 – as amended).

Minimal

AASB 15 Revenue from Contracts with Customers

1 Jan 2019

AASB 15 contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. The compiled AASB 15 does not apply mandatorily to not-for-profit entities. However, earlier application is permitted for annual reporting periods beginning before 1 January 2019.

Moderate

AASB 16 Leases

1 Jan 2019

AASB 16 removes the classification of leases as either operating leases or finance leases – for the lessee – effectively treating all leases as finance leases. AASB 16 requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments.

AASB 16 requires enhanced disclosures for both lessees and lessors to improve information disclosed about an entity’s exposure to leases.

Moderate – High

AASB 1058 Income of Not-for-Profit Entities

1 Jan 2019

AASB 1058 replaces the income recognition requirements relating to private sector not-for-profit (NFP) entities, as well as the majority of income recognition requirements relating to public sector NFP entities previously reflected in AASB 1004 Contributions.

Moderate

1. The entity’s expected initial application date is when the accounting standard becomes operative at the beginning of the entity’s reporting period

All other new/revised/amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to future reporting period(s) are not expected to have a future material impact on the entity’s financial statements.

Accounting judgements and estimates

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to the carrying amounts of any assets or liabilities within the next reporting period.

Taxation

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

REPORTING OF ADMINISTERED ACTIVITIES

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

In accordance with the FRR Special Account cash balances held in AEC bank accounts and in the Official Public Account are included in the Administered assets, liabilities, reconciliation schedule and cash flows.

Events after the reporting period

Departmental

There are no events after the reporting date that will materially affect the financial statements.

ADMINISTERED

There are no events after the reporting date that will materially affect the financial statements.

Notes to the Financial Statements

1. Funding

This section identifies the AEC’s funding structure and the funds available to the AEC.

1.1 Revenue from Government

Accounting Policy

Revenue from Government

Revenue collected by the AEC for use by the Government rather than the AEC is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the entity on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

1.1A: Revenue from Government

Notes

2018

$’000

2017

$’000

Appropriations

Departmental appropriation – operating1

1.1B

146,298

308,187

Departmental Special Appropriations

1.1D

14,900

9,000

Total Revenue from Government

161,198

317,187

1.1B: Annual appropriations (recoverable GST exclusive)

2018

$’000

2017

$’000

Ordinary annual services

Annual appropriation

Operating

Operating 1

146,298

308,187

Section 74 receipts of PGPA Act

18,043

18,754

Total operating appropriation

164,341

326,941

Capital Budget

22,370

6,171

Total

186,711

333,112

Appropriation applied

Operating

(147,900)

(320,823)

Capital

Departmental Capital Budget

(4,426)

(3,140)

Total capital appropriation applied

(4,426)

(3,140)

Total appropriation applied

(152,326)

(323,963)

Variance 1,2

34,385

9,149

  1. An amount of $4 million is held in quarantine from the Departmental Appropriation Act (No.1) – Operating
  2. $17.944 million of the variance of $34.385 million outlined in table 1.1B relates to DCB funding. This amount will be drawn down in 2018–19 as capital accruals are paid and delayed works are completed. $12.441 million of the variance relates to using prior year non-lapsed appropriations to fund operating expenditure incurred in the current financial year. The remaining $4 million variance is due to the $4 million held in quarantine from the Departmental Appropriation Act (No.1) – Operating
1.1C: Unspent annual appropriations (recoverable GST exclusive)

2018

$’000

2017

$’000

Departmental

Cash and cash equivalents

Appropriation Act 1 – 2017–18 – Cash

1,715

Appropriation Act 1 – 2016–17 – Cash

4,220

Total Cash and cash equivalents

1,715

4,220

Appropriations Receivable

Appropriation Act 1 – 2017–18

70,416

Appropriation Act 3 – 2017–18

23,142

Appropriation Act 1 – 2017–18 – Departmental Capital Budget

9,389

Appropriation Act 3 – 2017–18 – Departmental Capital Budget

11,586

Appropriation Act 1 – 2016–17

3,031

76,308

Appropriation Act 3 – 2016–17

3,840

Supply Act 1 – 2016–17 – Departmental Capital Budget

3,031

Total Appropriations Receivable

117,564

83,179

Total departmental

119,279

87,399

1.1D: Special appropriations (recoverable GST exclusive)

Authority

Appropriation applied

2018

$’000

2017

$’000

Commonwealth Electoral Act 1918 (Departmental)

14,900

9,000

Commonwealth Electoral Act 1918 (Administered)

730

65,105

Public Governance, Performance and Accountability Act 2013 - s77

Total special appropriations applied

15,630

74,105

No entities spent money from the Consolidated Revenue Fund on behalf of the AEC.

1.2 Own-source revenue and gains

1.2A: Sale of goods and rendering of services

2018

$’000

2017

$’000

Sale of goods

9,950

10,720

Rendering of services

7,335

7,515

Total sale of goods and rendering of services

17,285

18,235

ACCOUNTING POLICY

Revenue from the sale of goods is recognised when:

  1. the risks and rewards of ownership have been transferred to the buyer; and
  2. the AEC retains no managerial involvement or effective control over the goods.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date compared with the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at the end
of the reporting period. Allowances are made when collectability of the debt is no longer probable.

1.2B: Other revenue

2018

$’000

2017

$’000

Other

90

55

Resources received free of charge

Remuneration of auditors

85

85

Other

98

79

Total other revenue

273

219

Accounting Policy

Resources received free of charge

Resources received free of charge are recognised 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. Resources received free of charge are recorded as either revenue or gains depending on their nature.

1.2C: Gains

2018

$’000

2017

$’000

Makegood Gains

46

48

Gains from sale of assets

1

Total gains

47

48

1.3 Special accounts

2018

$’000

2017

$’000

Services for other Entities and Trust Monies (SOETM)1

Balance brought forward from previous period

1,285

2,268

Increases

55

2

Total increases

55

2

Available for payments

1,340

2,270

Decreases

Administered

12

932

Total Administered

12

932

Total decreases

12

932

Total balance carried to the next period

1,328

1,338

Balance represented by:

Cash held in AEC bank accounts

53

Cash held in the Official Public Account

1,328

1,285

1. Appropriation: Public Governance, Performance and Accountability Act 2013 section 80. Establishing Instrument: Financial Management and Accountability Act 1997 section 20. Purpose: for the expenditure of monies temporarily held in trust or otherwise for the benefit of a person other than the Commonwealth. For example, candidate deposits.

2. These amounts are included in the Administered Schedule of Asset and Liabilities, Administered Reconciliation Schedule and Administered Cash Flow Statement.

Accounting Policy

Resources received free of charge

Resources received free of charge are recognised 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. Resources received free of charge are recorded as either revenue or gains depending on their nature.

1.4 Net cash appropriation arrangements

2018

$’000

2017

$’000

Total comprehensive income/(loss) less depreciation/amortisation expenses previously funded through revenue appropriations

15,954

44,914

Plus: depreciation/amortisation expenses previously funded through revenue appropriation

(9,500)

( 9,229)

Total comprehensive income/(loss) – as per the Statement of Comprehensive Income

6,454

35,685

2. Departmental financial position and managing uncertainties

This section analyses the AEC’s assets used to conduct its operations and the operating liabilities incurred as a result and how the AEC manages financial risks related to these and its operating environment. Employee related information is disclosed in the People and Relationships section.

2.1 Financial instruments

2.1A: Categories of financial instruments

2018

$’000

2017

$’000

Financial Assets

Cash and cash equivalents

Cash on hand or on deposit

1,715

4,220

Total cash and cash equivalents

1,715

4,220

Loans and receivables

Receivables

Receivables for goods and services

896

1,697

Less impairment allowance

(10)

Total receivables

896

1,687

Total loans and receivables

896

1,687

Total financial assets

2,611

5,907

Financial Liabilities

Financial liabilities measured at amortised cost

Supplier payables

7,252

5,506

Finance Lease rentals

2,642

-

Total financial liabilities measured at amortised cost

9,894

5,506

Total financial liabilities

9,894

5,506

Credit terms for goods and services were within 30 days (2017: 30 days). Settlement of suppliers payable is usually made within 30 days.

Decrease in Impairment allowance for the period of $10,000 (2017: $8,000) has been recognised in relation to loans and receivables and included in the net cost of service. $4,000 (2017: nil) has been written off.

Accounting Policy

Financial assets

The AEC classifies its financial assets in the following categories:

  1. financial assets at fair value through profit or loss
  2. held-to-maturity investments
  3. available-for-sale financial assets
  4. loans and receivables

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments and that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment.

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  1. cash on hand
  2. demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value
  3. cash in special accounts

Effective interest method

Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period.

Financial assets held at amortised cost – if there is objective evidence that an impairment loss has been incurred for loans and receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

2.2 Other financial assets

2.2A: Appropriation receivable

2018

$’000

2017

$’000

Appropriation receivables

117,564

83,179

Total Appropriation receivable

117,564

83,179

Accounting Policy

Refer to Note 1.1.

2.2B: Other receivables

2018

$’000

2017

$’000

Statutory receivables

861

674

Comcare Payments

102

Total other receivables

963

674

Other receivables are not past due or impaired.

Accounting Policy

Statutory receivables are amounts owed to the AEC from the Australian Taxation Office in relation to the refund of GST collected.

2.3 Non-financial assets

2.3A: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles

Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2018.

Leasehold Improvements

$’000

Plant & Equipment

$’000

Computer Software1

$’000

Intellectual Property

$’000

Total

$’000

As at 1 July 2017

Gross book value

8,424

6,603

54,248

2,304

71,579

Accumulated depreciation, amortisation and impairment

(45,177)

(392)

(45,569)

Total as at 1 July 2017

8,424

6,603

9,071

1,912

26,010

Additions

Purchase

1,195

692

2,228

4,115

Lease2

3,791

3,791

Revaluations and impairments recognised in other comprehensive income

(611)

730

119

Impairments recognised in net cost of services

Depreciation and amortisation

(2,251)

(2,474)

(4,526)

(249)

(9,500)

Other movements

Asset transfers

(1,754)

1,704

(50)

Disposals

(315)

(315)

Total as at 30 June 2018

6,757

7,273

8,477

1,663

24,170

Total as at 30 June 2018 represented by

Gross book value

7,023

7,485

58,180

2,304

74,992

Accumulated depreciation, amortisation and impairment

(266)

(212)

(49,703)

(641)

(50,822)

Total as at 30 June 2018 represented by

6,757

7,273

8,477

1,663

24,170

1. The carrying amount of computer software included $1,899,710 of purchased software and $6,576,723 of internally generated software
2. Leased Plant & Equipment is measured at cost less depreciation

No indicators of impairment were found for property, plant and equipment and intangibles (2017: nil).

No property, plant and equipment and intangibles are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets

All revaluations were conducted in accordance with the revaluation policy stated in this note. On 30 June 2018, an independent valuer conducted the revaluations.

A revaluation decrement of $611,244 for leasehold improvements (2017: $364,976 decrement) was debited to the asset revaluation surplus by asset class and included in the equity section of the statement of financial position. A revaluation decrement for provision for restoration of $58,489 (2017: $249,331) was credited to the asset revaluation surplus. An increment of $729,892 for property, plant and equipment (2017: $129,513) was credited to the asset revaluation surplus and included in the equity section of the statement of financial position.

Contractual commitments for the acquisition of property, plant, equipment and intangible assets

At 30 June 2018 there were no significant contractual commitments for the acquisition of property, plant, equipment and intangible assets.

Fair value measurement1, 2, 3

The following tables provide an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the statement of financial position do not apply the fair value hierarchy.

Fair value measurements at the end of the reporting period

2018

$’000

2017

$’000

Non-financial assets

Leasehold improvements

6,757

8,424

Plant and equipment

7,273

6,603

1. Fair value measurements occur each financial year
2. There are no changes in valuation techniques
3. The remaining assets and liabilities reported by the AEC are not measured at fair value in the Statement of Financial Position

ACCOUNTING POLICY

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

Asset Recognition Threshold

Purchases of plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘makegood’ provisions in property leases taken up by the AEC where there exists an obligation to restore the property to its original condition. These costs are included in the value of the AEC’s leasehold improvements with a corresponding provision for ‘make good’ recognised.

Revaluations

Following initial recognition at cost, plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets did not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depended upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reversed a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed a previous revaluation increment for that class. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

Depreciation

Depreciable plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the AEC, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

  2018 2017
Leasehold improvements Lesser of lease term/useful life Lesser of lease term/useful life
Plant and equipment 5 to 10 years 5 to 10 years
IT Equipment 3 to 5 years 3 to 5 years

Impairment

All assets were assessed for impairment at 30 June 2018. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the AEC were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles

The AEC’s intangibles comprise internally developed software, purchased software and intellectual property for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets are amortised on a straight-line basis over its anticipated useful life.The useful lives of the AEC’s software are 1 to 10 years (2017: 1 to 10 years) and the useful lives of the AEC’s intellectual property are 0 to 4 years (2017: 0 to 4 years).

All intangible assets were assessed for indications of impairment as at 30 June 2018.

2.3B: Inventories

2018

$’000

2017

$’000

Inventories held for distribution

5,104

3,909

Total inventories

5,104

3,909

Accounting Policy

Inventories held for distribution are valued at cost, adjusted for any loss of service potential.

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:

  1. raw materials and stores – purchase cost on a first-in-first-out basis
  2. finished goods and work-in-progress – cost of direct materials and labour plus attributable costs that can be allocated on a reasonable basis

Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost at the date of acquisition.

2.3C: Other non-financial assets

2018

$’000

2017

$’000

Prepayments

2,773

3,135

Total other non-financial assets

2,773

3,135

No indicators of impairment were found for other non-financial assets (2017: nil).

2.4 Other payables and provisions

2.4A: Other payables

2018

$’000

2017

$’000

Salaries and wages

708

492

Superannuation

88

398

Separations and redundancies

152

433

Lease incentives

2,378

2,255

Straight-line leases

582

369

Total other payables

3,908

3,947

Accounting Policy

Parental leave payments scheme

Amounts received under the Parental Leave Payments Scheme by the AEC not yet paid to employees were presented as cash and a liability (payable). The total amount received under this scheme was $56,407 (2017: $81,862).

Employee benefits

Refer to Note 3.2.

Leases

Refer to Note 4.1A.

2.4B: Other provisions

Provision for restoration

$’000

As at 1 July 2017

1,570

Additional provisions made

262

Amounts used

Amounts reversed

(46)

Revaluation of provision

(58)

Unwinding of discount or change in discount rate

52

Total as at 30 June 2018

1,780

The AEC currently has 32 (2017: 31) agreements for the leasing of premises which have provisions requiring the AEC to restore the premises to their original condition at the conclusion of the lease. The AEC has made a provision to reflect the present value of this obligation.

2.5 Contingent assets and liabilities

Contingent Assets

At 30 June 2018, the AEC had no contingent assets (2017: nil).

Contingent Liabilities

At 30 June 2018, the AEC had no contingent liabilities (2017: nil).

Quantifiable Contingencies

At 30 June 2018, the AEC had no quantifiable contingencies (2017: nil).

Unquantifiable Contingencies

At 30 June 2018, the AEC had no unquantifiable contingencies (2017: nil).

Significant Remote Contingencies

The AEC has no significant remote contingencies (2017: nil).

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

3. People and relationships

This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

3.1 Employee benefits

2018

$’000

2017

$’000

Wages and salaries

64,334

128,594

Superannuation:

Defined contribution plans

5,693

8,436

Defined benefit plans

6,022

6,978

Leave and other entitlements

6,502

7,803

Separation and redundancies

4,128

796

Total employee benefits

86,679

152,607

3.2 Employee provisions

2018

$’000

2017

$’000

Leave

22,251

25,130

Total employee provisions

22,251

25,130

Accounting Policy

Liabilities for short-term employee benefits and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. The leave liabilities are calculated on the basis of employees remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the entity’s superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined by reference to the shorthand method as at 30 June 2018. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

The AEC’s staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The AEC makes employer contributions to the employees’ defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The AEC accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions.

3.3 Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the AEC, directly or indirectly, including any director (whether executive or otherwise) of the AEC. The AEC has determined the key management personnel to be the Electoral Commissioner, Deputy Electoral Commissioner and the two First Assistant Commissioners. Key management personnel remuneration is reported in the table below:

2018

$’000

2017

$’000

Short-term employee benefits

1,300

1,478

Post-employment benefits

309

387

Other long-term employee benefits

122

133

Total key management personnel remuneration expenses1

1,731

1,998

1.The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister’s remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the AEC.

The total number of key management personnel that are included in the above table is 4 (2017: 7).

During the year the number of positions included in key management personnel was 4 (2017:4.5).

3.4 Related party disclosures

Related party relationships:

The AEC is an Australian Government controlled entity. Related parties to the AEC are Key Management Personnel, the Portfolio Minister and Executive, and other Australian Government entities.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

  • the payments of grants or loans
  • purchases of goods or services
  • receipts to provide services
  • payments for superannuation
  • asset purchases, sales transfers or leases

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the entity, it has been determined that there are no related party transactions to be separately disclosed.

4. Other information

This section includes additional financial information that is either required by AAS or the PGPA FRR or is relevant to assist users in understanding the financial statements.

4.1 Expenses

4.1A: Suppliers

2018

$’000

2017

$’000

Goods and services supplied or rendered

Consultants

914

2,312

Contractors

18,433

35,110

Travel

4,464

4,378

IT services

14,577

19,809

Employee related expenses

2,249

1,811

Inventory

3,349

8,786

Furniture and venue hire

726

8,919

Property

4,826

9,046

Mail and freight

6,049

18,062

Office supplies

1,091

854

Advertising

1,520

2,313

Printing

511

6,071

Other

1,131

3,170

Total goods and services supplied or rendered

59,840

120,641

Goods supplied

17,149

53,104

Services rendered

42,691

67,537

Total goods and services supplied or rendered

59,840

120,641

Other suppliers

Operating lease rentals

13,288

12,295

Lease restoration

262

15

Workers compensation expenses

2,597

2,724

Total other suppliers

16,147

15,034

Total suppliers

75,987

135,675

Leasing commitments

The AEC in its capacity as a lessee, leases office accommodation and storage that are effectively non-cancellable. The lease payments can be varied periodically to take account of an annual Consumer Price Index increase, a fixed increase or a market increase. Commitments are GST inclusive where relevant.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

2018

$’000

2017

$’000

Within 1 year

15,061

14,432

Between 1 to 5 years

30,569

30,076

More than 5 years

2,569

Total operating lease commitments

45,630

47,077

Accounting Policy

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

4.1B: Write-down and impairment of assets

2018

$’000

2017

$’000

Impairment on financial instruments

(6)

8

Impairment on intangible assets

1,494

Total write-down and impairment of assets

(6)

1,502

5. Items administered on behalf of Government

This section analyses the activities that the AEC does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

5.1 Administered – expenses

5.1A: Other expenses

2018

$’000

2017

$’000

Refunds - electoral fines/penalties

105

Political Party funding

618

62,778

Total other expenses

618

62,883

5.2 Administered – income

5.2A: Fees and fines

2018

$’000

2017

$’000

Revenue

Non–Taxation Revenue

Electoral fines/penalties

276

3,746

Party Registration

6

Total fees and fines

282

3,746

Accounting Policy

All administered revenues are revenues relating to ordinary activities performed by the AEC on behalf of the Australian Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

Fines are charged for non-voters of federal elections, by-elections and referendums. Administered fee revenue is recognised when received.

Each nomination for the Senate and the House of Representatives must be accompanied by a deposit.

5.3 Administered – assets and liabilities

5.3A: Cash and cash equivalents

2018

$’000

2017

$’000

Cash on hand or on deposit

2,222

Cash on hand - special account

53

Cash held at the OPA - special account

1,328

1,285

Total cash and cash equivalents

1,328

3,560

5.4 Administered – financial instruments

2018

$’000

2017

$’000

Financial Assets

Cash and Cash Equivalents

Cash on hand or on deposit

2,222

Cash on hand - special account

53

Cash held at the OPA - special account

1,328

1,285

Total cash and cash equivalents

1,328

3,560

Total financial assets

1,328

3,560

Receivables (net) are expected to be recovered within 12 months (2017: within 12 months).

Credit terms for goods and services were within 30 days (2017: 30 days). Settlement of suppliers payable is usually made within 30 days.

5.5 Administered – contingent assets and liabilities

There are no administered contingencies, remote or quantifiable, for the AEC (2017: nil).