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ii Chief Minister, Treasury and Economic Development Directorate: Annual Report 2018-19 Volume 1

ISSN XXX (Print)

ISSN XXX (Online)

© Australian Capital Territory 2019

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Publication No XXXX

First published October 2019

Accessibility The ACT Government is committed to making its information, services, events and venues accessible to as many people as possible. If you have difficulty reading a standard printed document and would like to receive this publication in an alternative format – such as large print and audio – please call the Canberra Blind Society on (02) 6247 4580.

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ISBN: 978-0-642-60695-2





Publication No 191134


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If you are deaf or hearing impaired and require assistance, please call the National Relay Service on 133 677.


Sustainability The ACT Government aims to lead the nation in achieving sustainable outcomes and to achieve net zero greenhouse gas emissions in its operations by 2020. This report has been printed on paper and card stock which is 100% recycled.



ii Chief Minister, Treasury and Economic Development Directorate: Annual Report 2018-19 Volume 2.1

https://creativecommons.org/licenses/by/4.0/https://www.cmtedd.act.gov.au/open_government/report/annual_reportshttps://www.cmtedd.act.gov.au/open_government/report/annual_reportsmailto:CMTEDDCorporate%40act.gov.au?subject=

CONTENTS

VOLUME 2.1ACT Executive Financial Statements for the Year Ended 30 June 2019 1Management Discussion and Analysis 2

Auditor General Independent Audit Report 8

Statement of Responsibility 10

Statement by the Chief Finance Officer 11

ACT Executive Territorial Financial Statements 12Statement of Income and Expenses on Behalf of the Territory 13

Statement of Assets and Liabilities on Behalf of the Territory 14

Statement of Changes in Equity on Behalf of the Territory 15

Cash Flow Statement on Behalf of the Territory 16

Territorial Statement of Appropriation 17

Territorial Note Index 18

Notes to and Forming Part of the Financial Statements 19

Chief Minister, Treasury and Economic Development Directorate Financial Statements for the Year Ended 30 June 2019 34Management Discussion and Analysis 35

Auditor General Independent Audit Report 48


Statement by the Chief Finance Officer 51

Directorate Controlled Financial Statements 52Operating Statement 53

Balance Sheet 54

Statement of Changes in Equity 55

Cash Flow Statement 57

Controlled Statement of Appropriation 59

Summary of Directorate Output Classes 62

Operating Statement for Output Class 1 – Government Strategy 63

Operating Statement for Output Class 2 – Access Canberra 64

Operating Statement for Output Class 3 – Economic Development 65

Operating Statement for Output Class 4 – Financial and Economic Management 67

Operating Statement for Output Class 5 – Workforce Injury Management and Industrial Relations Policy 68

Operating Statement for Output Class 6 – Revenue Management 69

Operating Statement for Output Class 7 – Shared Services 70

Operating Statement for Output Class 8 – Infrastructure Finance and Capital Works 71

Operating Statement for Output Class 9 – Property Services, Venues and Procurement 72

Disaggregated Disclosure of Assets and Liabilities 73

Controlled Note Index 77


Territorial Financial Statements 129Statement of Income and Expenses on Behalf of the Territory 130

Statement of Assets and Liabilities on Behalf of the Territory 131

Statement of Changes in Equity on Behalf of the Territory 132

Cash Flow Statement on Behalf of the Territory 133

Territorial Statement of Appropriation 134

Territorial Note Index 136


Chief Minister, Treasury and Economic Development Directorate Statement of Performance for the Year Ended 30 June 2019 152Auditor-General Limited Assurance Report 153


Statement of Performance 156

ii Chief Minister, Treasury and Economic Development Directorate: Annual Report 2018-19 Volume 1

ISSN XXX (Print)

ISSN XXX (Online)





Publication No XXXX


Accessibility The ACT Government is committed to making its information, services, events and venues accessible to as many people as possible. If you have difficulty reading a standard printed document and would like to receive this publication in an alternative format – such as large print and audio – please call the Canberra Blind Society on (02) 6247 4580.

If English is not your first language and you require the translating and interpreting service, please call the Telephone Interpreter Service on 131 450. If you are deaf or hearing impaired and require assistance, please call the National Relay Service on 133 677.


Sustainability The ACT Government aims to lead the nation in achieving sustainable outcomes and to achieve net zero greenhouse gas emissions in its operations by 2020. This report has been printed on paper and card stock which is XXX% recycled.



iii

Financial Statements

For the Year Ended

30 June 2019

ACT Executive

iv Chief Minister, Treasury and Economic Development Directorate: Annual Report 2018-19 Volume 2.1

Financial Statements

For the Year Ended

30 June 2019

ACT Executive

1

Management Discussion and Analysis ACT Executive

for the Financial Year Ended 30 June 2019

General Overview For the purpose of this reporting entity, the ACT Executive consists of the Chief Minister and other Ministers appointed by the Chief Minister, and their staff. Ministers govern the Territory and execute and maintain enactments and laws in accordance with the Australian Capital Territory (Self-Government) Act 1988 (Cwlth).

During 2018-19, an eighth Minister was appointed (in August 2018), which required the transfer of a non-Executive Member’s office and the associated funding from the Office of the Legislative Assembly. Funding, in the form of a Treasurer’s Advance, was also received to support the additional costs associated with a Minister’s office.

Risk Management The ACT Executive has minimal risks in relation to its operations and has adopted risk management practices to mitigate these risks. Administrative operations are managed by the Chief Minister, Treasury and Economic Development Directorate (CMTEDD), and the associated internal controls are those used by CMTEDD. Emergency Management is managed by the Office of the Legislative Assembly (OLA), while Business Continuity Arrangements have shared management between OLA and CMTEDD.

The ACT Executive’s financial risks are insured through the ACT Insurance Authority (ACTIA).

Financial Performance

The following financial information is based on the ACT Executive’s audited financial statements for 2017-18 and 2018-19, the 2018-19 Budget, and the forward estimates contained in the 2019-20 Budget Statements.

The 2018-19 Financial Statements and Management Discussion and Analysis (MD&A) use the original budget published in the 2018-19 Budget Statements for comparative purposes.

Operating Result

The ACT Executive’s operating result was a deficit of $0.294 million, which is a $0.204 million lower deficit than the 2018-19 original Budget operating deficit of $0.090 million, and a $0.262 million lower deficit than the 2017-18 operating deficit of $0.032 million. These variances are largely due to the reasons outlined below in relation to the Net Cost of Services.

Table 1: Operating Result

Actual Original Budget Actual

2018 2019 2019 $'000 $'000 $'000

Total Income 12 119 11 993 12 638 Total Expenditure 12 151 12 083 12 932

Operating Surplus/(Deficit) (32) (90) (294)

Net Cost of Services

The net cost of services facilitates an assessment of performance by showing the full cost and composition of resources consumed in conducting the ACT Executive’s operations. The net cost of services also reflects the impost the ACT Executive has on the Territory’s financial performance.

Net cost of services is calculated as total expenditure minus own source revenue. Own source revenue represents total income, less Payment for Expenses on Behalf of the Territory (EBT) appropriation.

Table 2: Net Cost of Services

Actual

Original Budget Actual

Forward Estimate

Forward Estimate

Forward Estimate

Forward Estimate

2017-18 2018-19 2018-19 2019-20 2020-21 2021-22 2022-23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Total Expenditure 12 151 12 083 12 932 14 674 15 096 15 439 15 694 Total Own Source Revenue

2 009 1 373 1 284 2 345 2 404 2 464 2 423

Net Cost of Services 10 142 10 710 11 648 12 329 12 692 12 975 13 271

The ACT Executive’s net cost of services for 2018-19 of $11.648 million was $0.938 million or 8.8 per cent higher than the original 2018-19 Budget, and $1.506 million or 14.8 per cent higher than the 2017-18 result of $10.142 million. This largely reflects the costs related to the appointment of the eighth Minister in August 2018 and the ACT Legislative Assembly Member’s Staff Enterprise Agreement pay increase.

Figure 1: Net Cost of Services, Including Future Trends

As indicated in the 2019-20 Budget Statements, the ACT Executive is forecasting an increase in net cost of services in 2019-20 and across the forward estimates. As indicated above, during 2018-19, the ACT Executive’s net cost of services increased due mainly to additional costs associated with the appointment of the eighth Minister in August 2018. The increase in net cost of services in 2019-20 reflects the full year impact of costs associated with the appointment of the eighth Minister and the new Shared Services Cost Model Review, which results in fixed costs for human resources and finance services being recognised under resources received free of charge (RRFOC) rather than being paid for. The moderate increases across the forward estimates are mostly due to the impact of indexation.

Additionally, a review of RRFOC for legal services provided by GSO has been undertaken and as a result there has been a reporting reallocation across Government. The impact on the ACT Executive for 2018-19 is a reduction in own source revenue for RRFOC and the corresponding expense for legal services. The 2019-20 Budget and forward estimates do not reflect the impact of the review.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2017-18Actual

2018-19Actual

2019-20Estimate

2020-21Estimate

2021-22Estimate

2022-23Estimate

$'000

Total Expenditure Total Own Source Revenue Net Cost of Services

2 Chief Minister, Treasury and Economic Development Directorate: Annual Report 2018-19 Volume 2.1

Management Discussion and Analysis ACT Executive

for the Financial Year Ended 30 June 2019

General Overview For the purpose of this reporting entity, the ACT Executive consists of the Chief Minister and other Ministers appointed by the Chief Minister, and their staff. Ministers govern the Territory and execute and maintain enactments and laws in accordance with the Australian Capital Territory (Self-Government) Act 1988 (Cwlth).

During 2018-19, an eighth Minister was appointed (in August 2018), which required the transfer of a non-Executive Member’s office and the associated funding from the Office of the Legislative Assembly. Funding, in the form of a Treasurer’s Advance, was also received to support the additional costs associated with a Minister’s office.

Risk Management The ACT Executive has minimal risks in relation to its operations and has adopted risk management practices to mitigate these risks. Administrative operations are managed by the Chief Minister, Treasury and Economic Development Directorate (CMTEDD), and the associated internal controls are those used by CMTEDD. Emergency Management is managed by the Office of the Legislative Assembly (OLA), while Business Continuity Arrangements have shared management between OLA and CMTEDD.

The ACT Executive’s financial risks are insured through the ACT Insurance Authority (ACTIA).

Financial Performance

The following financial information is based on the ACT Executive’s audited financial statements for 2017-18 and 2018-19, the 2018-19 Budget, and the forward estimates contained in the 2019-20 Budget Statements.

The 2018-19 Financial Statements and Management Discussion and Analysis (MD&A) use the original budget published in the 2018-19 Budget Statements for comparative purposes.

Operating Result

The ACT Executive’s operating result was a deficit of $0.294 million, which is a $0.204 million lower deficit than the 2018-19 original Budget operating deficit of $0.090 million, and a $0.262 million lower deficit than the 2017-18 operating deficit of $0.032 million. These variances are largely due to the reasons outlined below in relation to the Net Cost of Services.

Table 1: Operating Result

Actual Original Budget Actual

2018 2019 2019 $'000 $'000 $'000

Total Income 12 119 11 993 12 638 Total Expenditure 12 151 12 083 12 932

Operating Surplus/(Deficit) (32) (90) (294)

Net Cost of Services

The net cost of services facilitates an assessment of performance by showing the full cost and composition of resources consumed in conducting the ACT Executive’s operations. The net cost of services also reflects the impost the ACT Executive has on the Territory’s financial performance.

Net cost of services is calculated as total expenditure minus own source revenue. Own source revenue represents total income, less Payment for Expenses on Behalf of the Territory (EBT) appropriation.

Table 2: Net Cost of Services

Actual


Forward Estimate

Forward Estimate

Forward Estimate

Forward Estimate

2017-18 2018-19 2018-19 2019-20 2020-21 2021-22 2022-23 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Total Expenditure 12 151 12 083 12 932 14 674 15 096 15 439 15 694 Total Own Source Revenue

2 009 1 373 1 284 2 345 2 404 2 464 2 423

Net Cost of Services 10 142 10 710 11 648 12 329 12 692 12 975 13 271

The ACT Executive’s net cost of services for 2018-19 of $11.648 million was $0.938 million or 8.8 per cent higher than the original 2018-19 Budget, and $1.506 million or 14.8 per cent higher than the 2017-18 result of $10.142 million. This largely reflects the costs related to the appointment of the eighth Minister in August 2018 and the ACT Legislative Assembly Member’s Staff Enterprise Agreement pay increase.

Figure 1: Net Cost of Services, Including Future Trends

As indicated in the 2019-20 Budget Statements, the ACT Executive is forecasting an increase in net cost of services in 2019-20 and across the forward estimates. As indicated above, during 2018-19, the ACT Executive’s net cost of services increased due mainly to additional costs associated with the appointment of the eighth Minister in August 2018. The increase in net cost of services in 2019-20 reflects the full year impact of costs associated with the appointment of the eighth Minister and the new Shared Services Cost Model Review, which results in fixed costs for human resources and finance services being recognised under resources received free of charge (RRFOC) rather than being paid for. The moderate increases across the forward estimates are mostly due to the impact of indexation.

Additionally, a review of RRFOC for legal services provided by GSO has been undertaken and as a result there has been a reporting reallocation across Government. The impact on the ACT Executive for 2018-19 is a reduction in own source revenue for RRFOC and the corresponding expense for legal services. The 2019-20 Budget and forward estimates do not reflect the impact of the review.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2017-18Actual

2018-19Actual

2019-20Estimate

2020-21Estimate

2021-22Estimate

2022-23Estimate

$'000

Total Expenditure Total Own Source Revenue Net Cost of Services

3

Total Expenditure

The ACT Executive’s expenditure for 2018-19 totalled $12.932 million.

Figure 2: Components of Expenditure for 2018-19

Table 3: Line Item Explanations of 2018-19 Expenditure Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Employee and Superannuation 2 9 423 10 455 1 032 Supplies and Services 2 611 2 398 (213)

Depreciation and Amortisation 49 58 9 Other Expenses - 21 21 Total Expenditure 1 12 083 12 932 849

1 Figures may not add due to rounding. 2 This increase is mostly due to a backpay for staff following the new Enterprise Agreement pay increase and costs associated with the

appointment of the eighth Minister, which include the transfer of employee entitlements along with staff from the Office of the Legislative Assembly and other ACT Government agencies.

In comparison to the 2017-18 result of $12.151 million, expenses were $0.781 million or 6.4 per cent higher, largely for the reasons outlined in the footnotes above.

Employee 72%

Superannuation 9%

Supplies and Services 18%

Depreciation and Amortisation and

Other 1%

Total Own Source Revenue

Table 4: Line Item Explanations of 2018-19 Own Source Revenue Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Resources Received Free of Charge 2 1 373 1 284 (89) Total Income 1 1 373 1 284 (89)

1 Figures may not add due to rounding. 2 This decrease mainly reflects a review of the legal matters the ACT Executive has used the Justice and Community Safety Directorate

(JACSD) Government Solicitor’s Office (GSO) to assist with during the year, which resulted in the reallocation of some matters previously reported by the ACT Executive to be reported by other ACT Government agencies.

In comparison to the 2017-18 result of $2.009 million, own source revenue was $0.725 million or 36.1 per cent lower, for the reasons outlined in the footnotes above, noting that legal services reported has having been received free of charge from GSO during 2017-18 were higher than those included in the 2018-19 Original Budget, and the impact of a 2017-18 transfer of furniture assets from the Office of the Legislative Assembly following the expansion of the Legislative Assembly from 17 to 25 members in 2016-17.

ACT Executive’s Financial Position Net Assets/(Liabilities)

The ACT Executive’s net liabilities for the financial year ended 30 June 2019 were $0.752 million, which is $0.242 million higher than the original budget net liabilities of $0.510 million, and $0.294 million higher than the 30 June 2018 actual net liabilities of $0.458 million. Reasons for these variations are explained in the following sections.

Table 5: Net Assets/(Liabilities)

Actual


2018 2019 2019 $'000 $'000 $'000 Total Assets 653 481 684 Total Liabilities 1 111 991 1 435 Net Assets/(Liabilities) 1 (458) (510) (752)

1 Figures may not add due to rounding.

Total Assets

The ACT Executive’s total asset position as at 30 June 2019 was $0.684 million with the breakdown shown in Figure 3.


Total Expenditure

The ACT Executive’s expenditure for 2018-19 totalled $12.932 million.

Figure 2: Components of Expenditure for 2018-19

Table 3: Line Item Explanations of 2018-19 Expenditure Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Employee and Superannuation 2 9 423 10 455 1 032 Supplies and Services 2 611 2 398 (213)

Depreciation and Amortisation 49 58 9 Other Expenses - 21 21 Total Expenditure 1 12 083 12 932 849

1 Figures may not add due to rounding. 2 This increase is mostly due to a backpay for staff following the new Enterprise Agreement pay increase and costs associated with the

appointment of the eighth Minister, which include the transfer of employee entitlements along with staff from the Office of the Legislative Assembly and other ACT Government agencies.

In comparison to the 2017-18 result of $12.151 million, expenses were $0.781 million or 6.4 per cent higher, largely for the reasons outlined in the footnotes above.

Employee 72%

Superannuation 9%

Supplies and Services 18%

Depreciation and Amortisation and

Other 1%

Total Own Source Revenue

Table 4: Line Item Explanations of 2018-19 Own Source Revenue Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Resources Received Free of Charge 2 1 373 1 284 (89) Total Income 1 1 373 1 284 (89)

1 Figures may not add due to rounding. 2 This decrease mainly reflects a review of the legal matters the ACT Executive has used the Justice and Community Safety Directorate

(JACSD) Government Solicitor’s Office (GSO) to assist with during the year, which resulted in the reallocation of some matters previously reported by the ACT Executive to be reported by other ACT Government agencies.

In comparison to the 2017-18 result of $2.009 million, own source revenue was $0.725 million or 36.1 per cent lower, for the reasons outlined in the footnotes above, noting that legal services reported has having been received free of charge from GSO during 2017-18 were higher than those included in the 2018-19 Original Budget, and the impact of a 2017-18 transfer of furniture assets from the Office of the Legislative Assembly following the expansion of the Legislative Assembly from 17 to 25 members in 2016-17.

ACT Executive’s Financial Position Net Assets/(Liabilities)

The ACT Executive’s net liabilities for the financial year ended 30 June 2019 were $0.752 million, which is $0.242 million higher than the original budget net liabilities of $0.510 million, and $0.294 million higher than the 30 June 2018 actual net liabilities of $0.458 million. Reasons for these variations are explained in the following sections.

Table 5: Net Assets/(Liabilities)

Actual


2018 2019 2019 $'000 $'000 $'000 Total Assets 653 481 684 Total Liabilities 1 111 991 1 435 Net Assets/(Liabilities) 1 (458) (510) (752)

1 Figures may not add due to rounding.

Total Assets

The ACT Executive’s total asset position as at 30 June 2019 was $0.684 million with the breakdown shown in Figure 3.

5

Figure 3: Total Assets as at 30 June 2019

As at 30 June 2019, the ACT Executive’s total asset position was $0.203 million higher than the original budget of $0.481 million, largely due to the reasons provided in the footnotes following Table 6 below.

Table 6: Line Item Explanations of 30 June 2019 Asset Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Cash 2 117 322 205 Receivables 86 64 (22) Plant and Equipment 229 236 7 Intangible Assets 49 62 13 Total Assets 1 481 684 203

1 Figures may not add due to rounding. 2 The increase reflects the timing of cash flows around the end of the financial year.

In comparison to the 30 June 2018 result of $0.653 million, total assets were $0.031 million higher.

Total Liabilities

The ACT Executive’s total liabilities position as at 30 June 2019 was $1.435 million. Most of the ACT Executive’s liabilities relate to employee benefits, i.e. accumulated leave and accrued salaries.

As at 30 June 2019, the ACT Executive’s total liability position was $0.444 million higher than the original budget of $0.991 million, for the reasons provided in the footnotes following Table 7.

Cash 47%

Receivables 9%

Plant and Equipment 35%

Intangible Assets 9%

Table 7: Line Item Explanations of 30 June 2019 Liability Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Payables 138 97 (41)

Employee Benefits 2 853 1 338 485

Total Liabilities 1 991 1 435 444

1 Figures may not add due to rounding. 2 This increase is mainly due to the transfer of staff with pre-existing employee entitlements from the Office of the Legislative Assembly

and other ACT Government agencies following the appointment of the eighth Minister in August 2018 and staff not using their full entitlement for leave during the year.

In comparison to the 30 June 2018 result of $1.111 million, total liabilities were $0.324 million higher, largely due to movements in employee benefits, as outlined above.


Figure 3: Total Assets as at 30 June 2019

As at 30 June 2019, the ACT Executive’s total asset position was $0.203 million higher than the original budget of $0.481 million, largely due to the reasons provided in the footnotes following Table 6 below.

Table 6: Line Item Explanations of 30 June 2019 Asset Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Cash 2 117 322 205 Receivables 86 64 (22) Plant and Equipment 229 236 7 Intangible Assets 49 62 13 Total Assets 1 481 684 203

1 Figures may not add due to rounding. 2 The increase reflects the timing of cash flows around the end of the financial year.

In comparison to the 30 June 2018 result of $0.653 million, total assets were $0.031 million higher.

Total Liabilities

The ACT Executive’s total liabilities position as at 30 June 2019 was $1.435 million. Most of the ACT Executive’s liabilities relate to employee benefits, i.e. accumulated leave and accrued salaries.

As at 30 June 2019, the ACT Executive’s total liability position was $0.444 million higher than the original budget of $0.991 million, for the reasons provided in the footnotes following Table 7.

Cash 47%

Receivables 9%

Plant and Equipment 35%

Intangible Assets 9%

Table 7: Line Item Explanations of 30 June 2019 Liability Variations from the Original Budget


2018-19 2018-19 Variance 1 $'000 $'000 $'000 Payables 138 97 (41)

Employee Benefits 2 853 1 338 485

Total Liabilities 1 991 1 435 444

1 Figures may not add due to rounding. 2 This increase is mainly due to the transfer of staff with pre-existing employee entitlements from the Office of the Legislative Assembly

and other ACT Government agencies following the appointment of the eighth Minister in August 2018 and staff not using their full entitlement for leave during the year.

In comparison to the 30 June 2018 result of $1.111 million, total liabilities were $0.324 million higher, largely due to movements in employee benefits, as outlined above.

7

INDEPENDENT AUDITOR’S REPORT To the Members of the ACT Legislative Assembly

Opinion

I have audited the financial statements of the ACT Executive for the year ended 30 June 2019 which comprise the statement of income and expenses on behalf of the Territory, statement of assets and liabilities on behalf of the Territory, statement of changes in equity on behalf of the Territory, cash flow statement on behalf of the Territory, territorial statement of appropriation and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In my opinion, the financial statements:

(i) present fairly, in all material respects, the ACT Executive's financial position as at 30 June 2019, and its financial performance and cash flows for the year then ended; and

(ii) are presented in accordance with the Financial Management Act 1996 and comply with Australian Accounting Standards.

Basis for opinion

I conducted the audit in accordance with the Australian Auditing Standards. My responsibilities under the standards are further described in the ‘Auditor’s responsibilities for the audit of the financial statements’ section of this report.

I am independent of the ACT Executive in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code). I have also fulfilled my other ethical responsibilities in accordance with the Code.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my opinion.

Responsibilities of the ACT Executive for the financial statements

The Director-General of the Chief Minister, Treasury and Economic Development Directorate is responsible for:

• preparing and fairly presenting the financial statements in accordance with the Financial Management Act 1996, and relevant Australian Accounting Standards;

• determining the internal controls necessary for the preparation and fair presentation of the financial statements so that they are free from material misstatements, whether due to error or fraud; and

• assessing the ability of the ACT Executive to continue as a going concern and disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting in preparing the financial statements.


Auditor’s responsibilities for the audit of the financial statements

Under the Financial Management Act 1996, the Auditor-General is responsible for issuing an audit report that includes an independent opinion on the financial statements of the ACT Executive.

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Australian Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

• obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the ACT Executive’s internal controls;

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the ACT Executive;

• conclude on the appropriateness of the ACT Executive’s use of the going concern basis of accounting and, based on audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ACT Executive’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in this report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. I base my conclusions on the audit evidence obtained up to the date of this report. However, future events or conditions may cause the ACT Executive to cease to continue as a going concern; and

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether they represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with the Director-General of the Chief Minister, Treasury and Economic Development Directorate regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Ajay Sharma Assistant Auditor-General, Financial Audit 9 August 2019

9

These are hidden on purpose

12

ACT Executive

Territorial Financial Statements

For the Year Ended 30 June 2019

ACT Executive Statement of Income and Expenses on Behalf of the Territory

For the Year Ended 30 June 2019 Hidden word

13

Original Actual Budget Actual Note 2019 2019 2018 No. $’000 $’000 $’000 Income Revenue Payment for Expenses on Behalf of the Territory # 11 354 10 620 10 110 Resources Received Free of Charge 3 1 284 1 373 1 913 Total Revenue 12 638 11 993 12 023 Gains Gains - - 96 Total Gains - - 96 Total Income 12 638 11 993 12 119 Expenses Employee Expenses 4 9 312 8 262 7 985 Superannuation Expenses 5 1 143 1 161 1 035 Supplies and Services 6 2 398 2 611 3 089 Depreciation and Amortisation 8, 9 58 49 42 Other Expenses 21 - - Total Expenses 12 932 12 083 12 151 Operating Surplus/(Deficit) (294) (90) (32) Total Comprehensive Income/(Deficit) (294) (90) (32)

The above Statement of Income and Expenses on Behalf of the Territory should be read in conjunction with the accompanying notes.

# Refer to the Statement of Appropriation.


These are hidden on purpose

12

ACT Executive

Territorial Financial Statements

For the Year Ended 30 June 2019

ACT Executive Statement of Income and Expenses on Behalf of the Territory

For the Year Ended 30 June 2019 Hidden word

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Original Actual Budget Actual Note 2019 2019 2018 No. $’000 $’000 $’000 Income Revenue Payment for Expenses on Behalf of the Territory # 11 354 10 620 10 110 Resources Received Free of Charge 3 1 284 1 373 1 913 Total Revenue 12 638 11 993 12 023 Gains Gains - - 96 Total Gains - - 96 Total Income 12 638 11 993 12 119 Expenses Employee Expenses 4 9 312 8 262 7 985 Superannuation Expenses 5 1 143 1 161 1 035 Supplies and Services 6 2 398 2 611 3 089 Depreciation and Amortisation 8, 9 58 49 42 Other Expenses 21 - - Total Expenses 12 932 12 083 12 151 Operating Surplus/(Deficit) (294) (90) (32) Total Comprehensive Income/(Deficit) (294) (90) (32)

The above Statement of Income and Expenses on Behalf of the Territory should be read in conjunction with the accompanying notes.

# Refer to the Statement of Appropriation.

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ACT Executive Statement of Assets and Liabilities on Behalf of the Territory

As at 30 June 2019 Hidden words

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Original Actual Budget Actual Note 2019 2019 2018 No. $’000 $’000 $’000 Current Assets Cash 7 322 117 280 Receivables 64 86 47 Total Current Assets 386 203 327 Non-Current Assets Plant and Equipment 8 236 229 253 Intangible Assets 9 62 49 73 Total Non-Current Assets 298 278 326 Total Assets 684 481 653 Current Liabilities Payables 10 97 138 121 Employee Benefits 11 1 318 797 949 Total Current Liabilities 1 415 935 1 070 Non-Current Liabilities Employee Benefits 11 20 56 41 Total Non-Current Liabilities 20 56 41 Total Liabilities 1 435 991 1 111 Net Assets/(Liabilities) (752) (510) (458)

Equity Accumulated Surpluses/(Deficits) (758) (516) (464) Asset Revaluation Surplus 6 6 6 Total Equity (752) (510) (458)

The above Statement of Assets and Liabilities on Behalf of the Territory should be read in conjunction with the accompanying notes.

ACT Executive Statement of Changes in Equity on Behalf of the Territory

For the Year Ended 30 June 2019 Hidden words

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Asset Accumulated Revaluation Total Funds Surplus Equity Original Actual Actual Actual Budget 30 JUNE 2019 2019 2019 2019 2019 $’000 $’000 $’000 $’000 Balance at 1 July 2018 (464) 6 (458) (420) Comprehensive Income Operating Surplus/(Deficit) (294) - (294) (90) Total Comprehensive Income/(Deficit) (294) - (294) (90) Balance at 30 June 2019 (758) 6 (752) (510)

Asset Accumulated Revaluation Total Funds Surplus Equity Actual Actual Actual 30 JUNE 2018 2018 2018 2018 $’000 $’000 $’000 Balance at 1 July 2017 (432) 6 (426) Comprehensive Income Operating Surplus/(Deficit) (32) - (32) Total Comprehensive Income/(Deficit) (32) - (32) Balance at 30 June 2018 (464) 6 (458)

The above Statement of Changes in Equity on Behalf of the Territory should be read in conjunction with the accompanying notes.


ACT Executive Statement of Assets and Liabilities on Behalf of the Territory

As at 30 June 2019 Hidden words

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Original Actual Budget Actual Note 2019 2019 2018 No. $’000 $’000 $’000 Current Assets Cash 7 322 117 280 Receivables 64 86 47 Total Current Assets 386 203 327 Non-Current Assets Plant and Equipment 8 236 229 253 Intangible Assets 9 62 49 73 Total Non-Current Assets 298 278 326 Total Assets 684 481 653 Current Liabilities Payables 10 97 138 121 Employee Benefits 11 1 318 797 949 Total Current Liabilities 1 415 935 1 070 Non-Current Liabilities Employee Benefits 11 20 56 41 Total Non-Current Liabilities 20 56 41 Total Liabilities 1 435 991 1 111 Net Assets/(Liabilities) (752) (510) (458)

Equity Accumulated Surpluses/(Deficits) (758) (516) (464) Asset Revaluation Surplus 6 6 6 Total Equity (752) (510) (458)

The above Statement of Assets and Liabilities on Behalf of the Territory should be read in conjunction with the accompanying notes.

ACT Executive Statement of Changes in Equity on Behalf of the Territory


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Asset Accumulated Revaluation Total Funds Surplus Equity Original Actual Actual Actual Budget 30 JUNE 2019 2019 2019 2019 2019 $’000 $’000 $’000 $’000 Balance at 1 July 2018 (464) 6 (458) (420) Comprehensive Income Operating Surplus/(Deficit) (294) - (294) (90) Total Comprehensive Income/(Deficit) (294) - (294) (90) Balance at 30 June 2019 (758) 6 (752) (510)

Asset Accumulated Revaluation Total Funds Surplus Equity Actual Actual Actual 30 JUNE 2018 2018 2018 2018 $’000 $’000 $’000 Balance at 1 July 2017 (432) 6 (426) Comprehensive Income Operating Surplus/(Deficit) (32) - (32) Total Comprehensive Income/(Deficit) (32) - (32) Balance at 30 June 2018 (464) 6 (458)

The above Statement of Changes in Equity on Behalf of the Territory should be read in conjunction with the accompanying notes.

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ACT Executive Cash Flow Statement on Behalf of the Territory


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Original Actual Budget Actual Note 2019 2019 2018 No. $’000 $’000 $’000 Cash Flows from Operating Activities Receipts Payment for Expenses on Behalf of the Territory 11 354 10 620 10 110 Goods and Services Tax Input Tax Credits from the Australian Taxation Office

99 99 138

Total Receipts from Operating Activities 11 453 10 719 10 248 Payments Employees 8 970 8 264 7 805 Superannuation 1 142 1 161 1 035 Supplies and Services 1 145 1 195 1 140 Goods and Services Tax Paid to Suppliers 104 99 105 Total Payments from Operating Activities 11 361 10 719 10 085 Net Cash Inflows/(Outflows) from Operating Activities 14 92 - 163 Cash Flows from Investing Activities Payments Purchase of Plant and Equipment and Intangibles 51 - 89 Total Payment from Investing Activities 51 - 89 Net Cash Inflows/(Outflows) from Investing Activities (51) - (89) Net Increase/(Decrease) in Cash and Cash Equivalents 41 - 74 Cash at the Beginning of the Reporting Period 280 117 206 Cash at the End of the Reporting Period 14 322 117 280

The above Cash Flow Statement on Behalf of the Territory should be read in conjunction with the accompanying notes.

ACT Executive Territorial Statement of Appropriation


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Under the Financial Management Act 1996 (FMA) funds can be appropriated for Expenses on Behalf of the Territory (EBT). EBT is recognised as revenue when the ACT Executive gains control over the funding, which occurs upon the receipt of cash. The ACT Executive receives EBT appropriation to fund expenses incurred on behalf of the Territory relating to the provision of executive services to enable Ministers and their staff to undertake their duties. This includes the payment of employee related expenses.

In the following table the:

• Original Budget column shows the amounts that appear in the Changes to Appropriation table in the 2018-19 Budget Statements (This amount also appears in the Cash Flow Statement on Behalf of the Territory of the ACT Executive);

• Total Appropriated column includes all appropriation variations occurring after the Original Budget; and

• Appropriation Drawn is the total amount of appropriation received during the year (These amounts also appear in the Cash Flow Statement on Behalf of the Territory of the ACT Executive).

Original Total Appropriation Appropriation Budget Appropriated Drawn Drawn 2019 2019 2019 2018 $’000 $’000 $’000 $’000 Territorial Payment for Expenses on Behalf of the Territory 1 10 620 11 530 11 354 10 110 Total Territorial Appropriation 10 620 11 530 11 354 10 110

1 The increase in appropriation drawn in 2018-19 compared to 2017-18 largely reflects the appointment of the eighth Minister in August 2018 and the ACT Legislative Assembly Member’s Staff Enterprise Agreement pay increase.

Reconciliation of Appropriation Table for 2018-19

The following table and associated footnotes explain the movements between the:

• Original Budget and the Total Appropriated; and

• Total Appropriated and the Appropriation Drawn.

Payment for Expenses on Behalf of the Territory $’000 Original Budget 10 620 s16 - Transfer of Functions after Appropriation Act Passed 2 361 s18 - Treasurer's Advance 3 549 Total Change in Appropriation during 201819 910 Total Appropriated 11 530 Undrawn Funds (176) Total Appropriation Drawn 11 354

Variances between 'Original Budget' and 'Total Appropriated' 2 Appropriation was transferred from the Office of the Legislative Assembly to support the August 2018 appointment of the eighth

Minister.

3 A Treasurer’s Advance was received following the appointment of the eighth Minister for the additional costs required to support a Minister and associated staff compared to a non-Executive Member’s office.


ACT Executive Cash Flow Statement on Behalf of the Territory


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Original Actual Budget Actual Note 2019 2019 2018 No. $’000 $’000 $’000 Cash Flows from Operating Activities Receipts Payment for Expenses on Behalf of the Territory 11 354 10 620 10 110 Goods and Services Tax Input Tax Credits from the Australian Taxation Office

99 99 138

Total Receipts from Operating Activities 11 453 10 719 10 248 Payments Employees 8 970 8 264 7 805 Superannuation 1 142 1 161 1 035 Supplies and Services 1 145 1 195 1 140 Goods and Services Tax Paid to Suppliers 104 99 105 Total Payments from Operating Activities 11 361 10 719 10 085 Net Cash Inflows/(Outflows) from Operating Activities 14 92 - 163 Cash Flows from Investing Activities Payments Purchase of Plant and Equipment and Intangibles 51 - 89 Total Payment from Investing Activities 51 - 89 Net Cash Inflows/(Outflows) from Investing Activities (51) - (89) Net Increase/(Decrease) in Cash and Cash Equivalents 41 - 74 Cash at the Beginning of the Reporting Period 280 117 206 Cash at the End of the Reporting Period 14 322 117 280

The above Cash Flow Statement on Behalf of the Territory should be read in conjunction with the accompanying notes.

ACT Executive Territorial Statement of Appropriation


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Under the Financial Management Act 1996 (FMA) funds can be appropriated for Expenses on Behalf of the Territory (EBT). EBT is recognised as revenue when the ACT Executive gains control over the funding, which occurs upon the receipt of cash. The ACT Executive receives EBT appropriation to fund expenses incurred on behalf of the Territory relating to the provision of executive services to enable Ministers and their staff to undertake their duties. This includes the payment of employee related expenses.

In the following table the:

• Original Budget column shows the amounts that appear in the Changes to Appropriation table in the 2018-19 Budget Statements (This amount also appears in the Cash Flow Statement on Behalf of the Territory of the ACT Executive);

• Total Appropriated column includes all appropriation variations occurring after the Original Budget; and

• Appropriation Drawn is the total amount of appropriation received during the year (These amounts also appear in the Cash Flow Statement on Behalf of the Territory of the ACT Executive).

Original Total Appropriation Appropriation Budget Appropriated Drawn Drawn 2019 2019 2019 2018 $’000 $’000 $’000 $’000 Territorial Payment for Expenses on Behalf of the Territory 1 10 620 11 530 11 354 10 110 Total Territorial Appropriation 10 620 11 530 11 354 10 110

1 The increase in appropriation drawn in 2018-19 compared to 2017-18 largely reflects the appointment of the eighth Minister in August 2018 and the ACT Legislative Assembly Member’s Staff Enterprise Agreement pay increase.

Reconciliation of Appropriation Table for 2018-19

The following table and associated footnotes explain the movements between the:

• Original Budget and the Total Appropriated; and

• Total Appropriated and the Appropriation Drawn.

Payment for Expenses on Behalf of the Territory $’000 Original Budget 10 620 s16 - Transfer of Functions after Appropriation Act Passed 2 361 s18 - Treasurer's Advance 3 549 Total Change in Appropriation during 201819 910 Total Appropriated 11 530 Undrawn Funds (176) Total Appropriation Drawn 11 354

Variances between 'Original Budget' and 'Total Appropriated' 2 Appropriation was transferred from the Office of the Legislative Assembly to support the August 2018 appointment of the eighth

Minister.

3 A Treasurer’s Advance was received following the appointment of the eighth Minister for the additional costs required to support a Minister and associated staff compared to a non-Executive Member’s office.

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ACT Executive Territorial Note Index


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Introductory Notes Note 1 Objectives of the ACT Executive Note 2 Basis for Preparation of the Financial Statements Income Notes Note 3 Resources Received Free of Charge Expense Notes Note 4 Employee Expenses Note 5 Superannuation Expenses Note 6 Supplies and Services Asset Notes Note 7 Cash Note 8 Plant and Equipment Note 9 Intangible Assets Liability Notes Note 10 Payables Note 11 Employee Benefits Other Notes Note 12 Financial Instruments Note 13 Commitments Note 14 Cash Flow Reconciliation Note 15 Related Party Disclosures Note 16 Budgetary Reporting

ACT Executive Notes to and Forming Part of the Financial Statements


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INTRODUCTORY NOTES

NOTE 1. OBJECTIVES OF THE ACT EXECUTIVE

Operations and Principal Activities

For the purpose of this reporting entity, the ACT Executive consists of the Chief Minister and other Ministers appointed by the Chief Minister, and their staff. The ACT Executive has powers under the Australian Capital Territory (Self-Government) Act 1988 to govern the Territory and execute and maintain enactments and laws.

NOTE 2. BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS

Legislative Requirement The Financial Management Act 1996 (FMA) requires the preparation of annual financial statements for ACT Government Agencies.

The FMA and the Financial Management Guidelines issued under the FMA, requires the ACT Executive’s financial statements to include: i. a Statement of Income and Expenses on Behalf of the Territory for the year;

ii. a Statement of Assets and Liabilities on Behalf of the Territory at the end of the year;

iii. a Statement of Changes in Equity on Behalf of the Territory for the year;

iv. a Cash Flow Statement on behalf of the Territory for the year;

v. a Territorial Statement of Appropriation for the year;

vi. significant accounting policies adopted for the year; and

vii. such other statements as are necessary to fairly reflect the financial operations of the ACT Executive during the year and its financial position at the end of the year.

These general-purpose financial statements have been prepared to comply with Australian Accounting Standards as required by the FMA. The financial statements have been prepared in accordance with:

i. Australian Accounting Standards; and

ii. ACT Accounting and Disclosure Policies.

Accrual Accounting The financial statements have been prepared using the accrual basis of accounting, which recognises the effects of transactions and events when they occur. The financial statements have also been prepared according to the historical cost convention, except for community and heritage assets included in plant and equipment, which are valued at fair value in accordance with the revaluation policies applicable to the ACT Executive during the reporting period, where applicable.

Currency These financial statements are presented in Australian dollars, which is the ACT Executive’s functional currency.

Individual Reporting Entity The ACT Executive is an individual reporting entity.


ACT Executive Territorial Note Index


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Introductory Notes Note 1 Objectives of the ACT Executive Note 2 Basis for Preparation of the Financial Statements Income Notes Note 3 Resources Received Free of Charge Expense Notes Note 4 Employee Expenses Note 5 Superannuation Expenses Note 6 Supplies and Services Asset Notes Note 7 Cash Note 8 Plant and Equipment Note 9 Intangible Assets Liability Notes Note 10 Payables Note 11 Employee Benefits Other Notes Note 12 Financial Instruments Note 13 Commitments Note 14 Cash Flow Reconciliation Note 15 Related Party Disclosures Note 16 Budgetary Reporting



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INTRODUCTORY NOTES

NOTE 1. OBJECTIVES OF THE ACT EXECUTIVE

Operations and Principal Activities

For the purpose of this reporting entity, the ACT Executive consists of the Chief Minister and other Ministers appointed by the Chief Minister, and their staff. The ACT Executive has powers under the Australian Capital Territory (Self-Government) Act 1988 to govern the Territory and execute and maintain enactments and laws.

NOTE 2. BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS

Legislative Requirement The Financial Management Act 1996 (FMA) requires the preparation of annual financial statements for ACT Government Agencies.

The FMA and the Financial Management Guidelines issued under the FMA, requires the ACT Executive’s financial statements to include: i. a Statement of Income and Expenses on Behalf of the Territory for the year;

ii. a Statement of Assets and Liabilities on Behalf of the Territory at the end of the year;

iii. a Statement of Changes in Equity on Behalf of the Territory for the year;

iv. a Cash Flow Statement on behalf of the Territory for the year;

v. a Territorial Statement of Appropriation for the year;

vi. significant accounting policies adopted for the year; and

vii. such other statements as are necessary to fairly reflect the financial operations of the ACT Executive during the year and its financial position at the end of the year.

These general-purpose financial statements have been prepared to comply with Australian Accounting Standards as required by the FMA. The financial statements have been prepared in accordance with:

i. Australian Accounting Standards; and

ii. ACT Accounting and Disclosure Policies.

Accrual Accounting The financial statements have been prepared using the accrual basis of accounting, which recognises the effects of transactions and events when they occur. The financial statements have also been prepared according to the historical cost convention, except for community and heritage assets included in plant and equipment, which are valued at fair value in accordance with the revaluation policies applicable to the ACT Executive during the reporting period, where applicable.

Currency These financial statements are presented in Australian dollars, which is the ACT Executive’s functional currency.

Individual Reporting Entity The ACT Executive is an individual reporting entity.

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NOTE 2. BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS - CONTINUED

Territorial Items The ACT Executive only produces Territorial financial statements. The Territorial financial statements include income, expenses, assets and liabilities that the ACT Executive administers on behalf of the ACT Government, but does not control.

Comparative Figures To facilitate a comparison with the budget, as required by the FMA, budget information for 2018-19 has been presented in the financial statements. Budget numbers in the financial statements are the original budget numbers that appear in the 2018-19 Budget Statements. Rounding

All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000). Use of the “-” symbol represents zero amounts or amounts rounded up or down to zero. Some totals throughout this report may not add due to rounding.

Going Concern As at 30 June 2019, the ACT Executive’s current assets are insufficient to meet its current liabilities, and its total assets are insufficient to meet its total liabilities. The Statement of Assets and Liabilities on Behalf of the Territory shows that the ACT Executive’s:

• current liabilities of $1.415 million exceed its current assets of $0.386 million by $1.029 million; and

• total liabilities of $1.435 million exceed its total assets of $0.684 million by $0.752 million.

This is not considered a liquidity risk, as the ACT Executive’s cash needs are funded through appropriation from the ACT Government on a cash-needs basis. This is consistent with the whole of government cash management framework, which requires excess cash balances to be held centrally rather than within individual agency bank accounts.

The 2018-19 financial statements have been prepared on a going concern basis as the ACT Executive has been funded in the 2019-20 Budget and the Budget Statements include forward estimates for the ACT Executive.

INCOME NOTES Revenue Recognition

Revenue is recognised at the fair value of the consideration received or receivable in the Statement of Income and Expenses on Behalf of the Territory. In addition, the specific recognition criteria in the following revenue note must also be met before revenue is recognised.



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NOTE 3. RESOURCES RECEIVED FREE OF CHARGE Revenue relating to resources received free of charge is separately disclosed in this note, with expenses being recorded in the line item to which it relates. Services that are received free of charge are only recorded in the Statement of Income and Expenses on Behalf of the Territory if they can be reliably measured and would have been purchased if not provided to the ACT Executive free of charge. 2019 2018 $’000 $’000 Resources Received Free of Charge from ACT Government Entities Corporate and Accounting Services from the Chief Minister, Treasury and Economic Development Directorate (CMTEDD)

59 52

Rent, Building Maintenance and Other Services Provided by the Office of the Legislative Assembly (OLA)

1 207 1 227

Legal Services Provided by the Justice and Community Safety Directorate (JACSD) 1

18 634

Total Resources Received Free of Charge 1 284 1 913

1 This decrease mainly reflects a review of the legal matters the ACT Executive has used the Justice and Community Safety Directorate (JACSD) Government Solicitor’s Office (GSO) to assist with during the year, which resulted in the reallocation of some matters previously reported by the ACT Executive to be reported by other ACT Government agencies.

EXPENSE NOTES

NOTE 4. EMPLOYEE EXPENSES Employee expenses include: • short-term employee expenses such as wages and salaries, annual leave loading, and applicable

on-costs, settled within the annual reporting period in which the employees render the related services;

• other long-term expenses such as long service leave and annual leave; and

• termination expenses.

On-costs include annual leave, long service leave, superannuation and other costs that are incurred when employees take annual leave and long service leave. See Note 11, ‘Employee Benefits’, for information on accrued wages and salaries, and annual and long service leave. Salaries and Wages 1 8 696 7 527 Annual Leave Expenses 480 275 Long Service Leave Expenses 84 150 Termination Expenses 26 - Other Employee Benefits and On-Costs 26 33 Total Employee Expenses 9 312 7 985

1 This increase is mainly due to a backpay for staff following the new Enterprise Agreement pay increase and costs associated with the appointment of the eighth Minister, which includes the transfer of employee entitlements along with staff from the Office of the Legislative Assembly and other ACT Government agencies.




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NOTE 2. BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS - CONTINUED

Territorial Items The ACT Executive only produces Territorial financial statements. The Territorial financial statements include income, expenses, assets and liabilities that the ACT Executive administers on behalf of the ACT Government, but does not control.

Comparative Figures To facilitate a comparison with the budget, as required by the FMA, budget information for 2018-19 has been presented in the financial statements. Budget numbers in the financial statements are the original budget numbers that appear in the 2018-19 Budget Statements. Rounding

All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000). Use of the “-” symbol represents zero amounts or amounts rounded up or down to zero. Some totals throughout this report may not add due to rounding.

Going Concern As at 30 June 2019, the ACT Executive’s current assets are insufficient to meet its current liabilities, and its total assets are insufficient to meet its total liabilities. The Statement of Assets and Liabilities on Behalf of the Territory shows that the ACT Executive’s:

• current liabilities of $1.415 million exceed its current assets of $0.386 million by $1.029 million; and

• total liabilities of $1.435 million exceed its total assets of $0.684 million by $0.752 million.

This is not considered a liquidity risk, as the ACT Executive’s cash needs are funded through appropriation from the ACT Government on a cash-needs basis. This is consistent with the whole of government cash management framework, which requires excess cash balances to be held centrally rather than within individual agency bank accounts.

The 2018-19 financial statements have been prepared on a going concern basis as the ACT Executive has been funded in the 2019-20 Budget and the Budget Statements include forward estimates for the ACT Executive.

INCOME NOTES Revenue Recognition

Revenue is recognised at the fair value of the consideration received or receivable in the Statement of Income and Expenses on Behalf of the Territory. In addition, the specific recognition criteria in the following revenue note must also be met before revenue is recognised.



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NOTE 3. RESOURCES RECEIVED FREE OF CHARGE Revenue relating to resources received free of charge is separately disclosed in this note, with expenses being recorded in the line item to which it relates. Services that are received free of charge are only recorded in the Statement of Income and Expenses on Behalf of the Territory if they can be reliably measured and would have been purchased if not provided to the ACT Executive free of charge. 2019 2018 $’000 $’000 Resources Received Free of Charge from ACT Government Entities Corporate and Accounting Services from the Chief Minister, Treasury and Economic Development Directorate (CMTEDD)

59 52

Rent, Building Maintenance and Other Services Provided by the Office of the Legislative Assembly (OLA)

1 207 1 227

Legal Services Provided by the Justice and Community Safety Directorate (JACSD) 1

18 634

Total Resources Received Free of Charge 1 284 1 913

1 This decrease mainly reflects a review of the legal matters the ACT Executive has used the Justice and Community Safety Directorate (JACSD) Government Solicitor’s Office (GSO) to assist with during the year, which resulted in the reallocation of some matters previously reported by the ACT Executive to be reported by other ACT Government agencies.

EXPENSE NOTES

NOTE 4. EMPLOYEE EXPENSES Employee expenses include: • short-term employee expenses such as wages and salaries, annual leave loading, and applicable

on-costs, settled within the annual reporting period in which the employees render the related services;

• other long-term expenses such as long service leave and annual leave; and

• termination expenses.

On-costs include annual leave, long service leave, superannuation and other costs that are incurred when employees take annual leave and long service leave. See Note 11, ‘Employee Benefits’, for information on accrued wages and salaries, and annual and long service leave. Salaries and Wages 1 8 696 7 527 Annual Leave Expenses 480 275 Long Service Leave Expenses 84 150 Termination Expenses 26 - Other Employee Benefits and On-Costs 26 33 Total Employee Expenses 9 312 7 985

1 This increase is mainly due to a backpay for staff following the new Enterprise Agreement pay increase and costs associated with the appointment of the eighth Minister, which includes the transfer of employee entitlements along with staff from the Office of the Legislative Assembly and other ACT Government agencies.

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NOTE 5. SUPERANNUATION EXPENSES Employees of the ACT Executive

Employees of the ACT Executive have different superannuation arrangements due to the type of superannuation scheme available at the time of commencing employment, including both defined benefit and defined contribution superannuation scheme arrangements.

For employees who are members of the defined benefit Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS) the ACT Executive makes employer superannuation contribution payments to the Territory Banking Account (TBA) at a rate determined by the Chief Minister, Treasury and Economic Development Directorate (CMTEDD). The ACT Executive also makes productivity superannuation contribution payments on behalf of these employees to the Commonwealth Superannuation Corporation (CSC), which has responsibility for the administration of these schemes.

For employees who are members of defined contribution superannuation schemes (the Public Sector Superannuation accumulation plan (PSSap) and schemes of employee choice (funds of choice)) the ACT Executive makes employer superannuation contribution payments directly to the employees’ relevant superannuation fund.

Members of the Legislative Assembly

There are two superannuation arrangements for Members of the Legislative Assembly (MLAs). Members who were elected before the 2008 general election and have a relevant period of service, and no discontinuance, are members of a defined benefit superannuation arrangement (DB Scheme), prescribed under the Legislative Assembly (Members’ Superannuation) Act 1991. This DB Scheme operates in the same manner to the PSS and CSS mentioned above. Those Members elected at or after the 2008 general election, and who were not an existing member of the DB Scheme prior to the election, assume membership of a defined contribution fund of choice scheme. The Territory is required to contribute the equivalent of 14% of the Member’s eligible salary. The ACT Government will contribute an additional 1% for Members who contribute 3% or more of their salary to the fund. Other than the contribution rate, the Members’ fund of choice arrangement operates in the same manner as the fund of choice arrangements mentioned above. Superannuation Expense and Liability Recognition The accruing superannuation liability obligations are expensed as they are incurred and extinguished as they are paid, and superannuation liabilities are not recognised at an individual agency level. The ACT Executive’s superannuation liability is recognised by:

• the Superannuation Provision Account (SPA) for CSS and PSS liabilities;

• the CSC for the productivity component and PSSap liabilities; and

• external schemes for liabilities associated with fund of choice arrangements. 2019 2018 $’000 $’000 Contributions to the Territory Banking Account for CSS and PSS 287 321 Payments to the CSC for the Superannuation Productivity Benefit and PSSap 77 57 Superannuation to External Providers 779 657 Total Superannuation Expenses 1 143 1 035



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NOTE 6. SUPPLIES AND SERVICES 2019 2018 $’000 $’000 Audit Services a 27 27 Office and ICT Expenses 598 542 Resources Received Free of Charge (refer Note 3, 'Resources Received Free of Charge')

1 284 1 913

Travel 310 337 Other 179 270 Total Supplies and Services 2 398 3 089

a Audit fees are paid to the ACT Audit Office for the audit of the ACT Executive’s financial statements. No other services were provided by the ACT Audit Office.

ASSET NOTES Assets – Current and Non-Current

Assets are classified as current where they are expected to be realised within 12 months after the reporting date. Assets that do not fall within the current classification are classified as non-current.

NOTE 7. CASH The ACT Executive holds one bank account with the Westpac Banking Corporation as part of the whole of government banking arrangements. As part of these arrangements, the ACT Executive does not receive any interest on this account.

Cash at Bank 321 279 Cash on Hand 1 1 Total Cash 322 280




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NOTE 5. SUPERANNUATION EXPENSES Employees of the ACT Executive

Employees of the ACT Executive have different superannuation arrangements due to the type of superannuation scheme available at the time of commencing employment, including both defined benefit and defined contribution superannuation scheme arrangements.

For employees who are members of the defined benefit Commonwealth Superannuation Scheme (CSS) or Public Sector Superannuation Scheme (PSS) the ACT Executive makes employer superannuation contribution payments to the Territory Banking Account (TBA) at a rate determined by the Chief Minister, Treasury and Economic Development Directorate (CMTEDD). The ACT Executive also makes productivity superannuation contribution payments on behalf of these employees to the Commonwealth Superannuation Corporation (CSC), which has responsibility for the administration of these schemes.

For employees who are members of defined contribution superannuation schemes (the Public Sector Superannuation accumulation plan (PSSap) and schemes of employee choice (funds of choice)) the ACT Executive makes employer superannuation contribution payments directly to the employees’ relevant superannuation fund.

Members of the Legislative Assembly

There are two superannuation arrangements for Members of the Legislative Assembly (MLAs). Members who were elected before the 2008 general election and have a relevant period of service, and no discontinuance, are members of a defined benefit superannuation arrangement (DB Scheme), prescribed under the Legislative Assembly (Members’ Superannuation) Act 1991. This DB Scheme operates in the same manner to the PSS and CSS mentioned above. Those Members elected at or after the 2008 general election, and who were not an existing member of the DB Scheme prior to the election, assume membership of a defined contribution fund of choice scheme. The Territory is required to contribute the equivalent of 14% of the Member’s eligible salary. The ACT Government will contribute an additional 1% for Members who contribute 3% or more of their salary to the fund. Other than the contribution rate, the Members’ fund of choice arrangement operates in the same manner as the fund of choice arrangements mentioned above. Superannuation Expense and Liability Recognition The accruing superannuation liability obligations are expensed as they are incurred and extinguished as they are paid, and superannuation liabilities are not recognised at an individual agency level. The ACT Executive’s superannuation liability is recognised by:

• the Superannuation Provision Account (SPA) for CSS and PSS liabilities;

• the CSC for the productivity component and PSSap liabilities; and

• external schemes for liabilities associated with fund of choice arrangements. 2019 2018 $’000 $’000 Contributions to the Territory Banking Account for CSS and PSS 287 321 Payments to the CSC for the Superannuation Productivity Benefit and PSSap 77 57 Superannuation to External Providers 779 657 Total Superannuation Expenses 1 143 1 035



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NOTE 6. SUPPLIES AND SERVICES 2019 2018 $’000 $’000 Audit Services a 27 27 Office and ICT Expenses 598 542 Resources Received Free of Charge (refer Note 3, 'Resources Received Free of Charge')

1 284 1 913

Travel 310 337 Other 179 270 Total Supplies and Services 2 398 3 089

a Audit fees are paid to the ACT Audit Office for the audit of the ACT Executive’s financial statements. No other services were provided by the ACT Audit Office.

ASSET NOTES Assets – Current and Non-Current

Assets are classified as current where they are expected to be realised within 12 months after the reporting date. Assets that do not fall within the current classification are classified as non-current.

NOTE 7. CASH The ACT Executive holds one bank account with the Westpac Banking Corporation as part of the whole of government banking arrangements. As part of these arrangements, the ACT Executive does not receive any interest on this account.

Cash at Bank 321 279 Cash on Hand 1 1 Total Cash 322 280

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NOTE 8. PLANT AND EQUIPMENT Acquisition and Recognition of Plant and Equipment Plant and equipment is initially recorded at cost.

Where plant and equipment is acquired at no cost, or minimal cost, cost is its fair value as at the date of acquisition. However, plant and equipment acquired at no cost or minimal cost as a result of a transfer from another ACT Government agency is measured at the transferor’s book value.

Plant and equipment with a minimum value of $5,000 is capitalised.

Measurement of Plant and Equipment after Initial Recognition Plant and equipment, including furniture and fittings, is measured at cost.

Community and heritage assets, consisting solely of a Kimono, is measured at fair value.

Significant Accounting Judgements and Estimates – Useful Lives of Plant and Equipment The ACT Executive has made a significant estimate in determining the useful lives of its plant and equipment. The estimation of useful lives of plant and equipment is based on the historical experience of similar assets. The useful lives are assessed on an annual basis and adjustments are made when necessary.

Depreciation of Assets Non-current assets with a limited useful life are systematically depreciated over their useful lives in a manner that reflects the consumption of their service potential. The useful life commences when an asset is ready for use. When an asset is revalued, it is depreciated over its newly assessed remaining useful life.

All depreciation is calculated after first deducting any residual values that remain for each asset, and is determined as follows.

Class of Asset Depreciation Method Useful Life (Years) Plant and Equipment Straight Line Depreciation 5- 10 Community and Heritage Assets Not Depreciated -

The useful lives of all major assets held are reassessed on an annual basis. Impairment of Assets The ACT Executive assesses at each reporting date whether there is any indication that an asset may be impaired. Assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset’s ‘fair value less cost of disposal’ and its ‘value in use’. An asset’s ‘value in use’ is its current replacement cost, where the asset would be replaced if the ACT Executive were deprived of it.

If an impairment loss is to be recognised, it is first applied against the Asset Revaluation Surplus for the relevant asset class. Once the Asset Revaluation Surplus for that asset class is exhausted or the asset class does not have an Asset Revaluation Surplus, the impairment loss is expensed in the Statement of Income and Expenses on Behalf of the Territory.



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NOTE 8. PLANT AND EQUIPMENT - CONTINUED 2019 2018 $’000 $’000 Plant and Equipment Plant and Equipment at Cost 275 245 Less: Accumulated Depreciation (69) (39) Total Written Down Value of Plant and Equipment 206 206 Community and Heritage Assets Community and Heritage Assets at Fair Value 30 47 Total Written Down Value of Community and Heritage Assets 30 47 Total Written Down Value of Plant and Equipment 1 236 253

1 The movements from 2017-18 to 2018-19 are explained in the following table.

Valuation of Non-Current Assets

Independent valuers perform revaluations on the ACT Executive’s community and heritage assets on a 3 year rolling basis. The latest valuations were undertaken by Independent Accredited Art Valuer, Helen Maxwell, in June 2017.

Reconciliation of Plant and Equipment

The following tables show the movement of Plant and Equipment during 2018-19 and 2017-18.

Community Plant and and Heritage 2019 Equipment Assets Total $’000 $’000 $’000 Carrying Amount at the Beginning of the Reporting Period 206 47 253 Additions 1 35 - 35 Assets transferred (to)/from the Office of the Legislative Assembly 2 - (17) (17) Disposals (5) - (5) Depreciation (30) - (30) Carrying Amount at the End of the Reporting Period 206 30 236

1 This is mainly due to additional furniture purchases associated with the appointment of the eighth Minister. 2 All artworks held by the ACT Executive were transferred to the Office of the Legislative Assembly (OLA) during the year, so that they can

be managed collectively with the remainder of the artwork displayed in the Legislative Assembly building.

2018 Carrying Amount at the Beginning of the Reporting Period 59 47 106 Additions 1 71 - 71 Assets transferred (to)/from the Office of the Legislative Assembly 1 96 - 96 Depreciation (20) - (20) Carrying Amount at the End of the Reporting Period 206 47 253

1 These increases reflect the transfer of furniture assets from the Office of the Legislative Assembly and furniture purchases associated with fitouts following the expansion of the Legislative Assembly from 17 to 25 members in 2016-17.




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NOTE 8. PLANT AND EQUIPMENT Acquisition and Recognition of Plant and Equipment Plant and equipment is initially recorded at cost.

Where plant and equipment is acquired at no cost, or minimal cost, cost is its fair value as at the date of acquisition. However, plant and equipment acquired at no cost or minimal cost as a result of a transfer from another ACT Government agency is measured at the transferor’s book value.

Plant and equipment with a minimum value of $5,000 is capitalised.

Measurement of Plant and Equipment after Initial Recognition Plant and equipment, including furniture and fittings, is measured at cost.

Community and heritage assets, consisting solely of a Kimono, is measured at fair value.

Significant Accounting Judgements and Estimates – Useful Lives of Plant and Equipment The ACT Executive has made a significant estimate in determining the useful lives of its plant and equipment. The estimation of useful lives of plant and equipment is

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