REQUIREMENTS AND GUIDANCE FOR THE PREPARATION OF FINANCIAL STATEMENTS OF COMMONWEALTH AGENCIES AND AUTHORITIES
Financial years ending on or after 30 June 2002
COMMONWEALTH OF AUSTRALIA
Department of Finance and Administration
I Introduction
This document is issued as a set of accounting and budgeting policies to be applied across the Commonwealth public sector. As such, it is intended that the same policies will apply to all reporting entities covered by section 49 of the Financial Management and Accountability Act 1997 (FMA) and by clause 1, Schedule 1, to the Commonwealth Authorities and Companies Act 1997 (CAC). The guidance set out in this document is to apply for the financial year 2001-02 and for subsequent financial years until it is amended.
The “black letter” (ie. text in bold) sets out the Finance Minister’s Orders under the respective FMA and CAC.
The “grey letter” (ie. text that is not in bold) comprises “explanatory notes and guidance” which does not form part of the formal Schedule but is intended to assist in its interpretation. The “grey letter” also provides, where necessary, additional guidance on the particular requirements of Budget preparation or monthly reporting. This guidance may be modified from time to time by the Department of Finance and Administration (Finance) as the need arises (for example, in response to requests by agencies or authorities for further clarification of particular policies).
This document aims to facilitate the integrated budgeting, management and reporting framework for the Commonwealth. This framework involves:
preparing annual consolidated financial statements on an accrual basis for the whole of the Commonwealth Government (including statements for the General Government, Public Trading Enterprise and Public Finance Enterprise sectors), audited by the Auditor-General (commenced in 1996–97);
presenting the Budget on a full accrual basis;
consistent with the Charter of Budget Honesty Act 1998, extending the coverage of the Budget to include all agencies and authorities in the ‘general government sector’ (that is, those entities predominantly funded from taxation);
funding general government sector entities on a basis that more closely reflects that of private sector businesses, in accordance with the price, quantity and quality of outputs produced by the entity (termed an ‘outputs–outcomes framework’);
appropriating money on an accrual basis without unspent amounts automatically lapsing;
presenting monthly financial information;
accrual accounting systems of agencies and authorities, co-ordinated by a central accrual accounting system (AIMS), including a Cash and Appropriation Management Module (CAMM); and
devolved financial exchange and banking arrangements for agencies.
The policies and guidance in the manual provide a consistent basis for preparing financial reports and budgets by all agencies and authorities. This assists:
users in assessing and comparing financial performance of individual agencies and authorities;
the Government in presenting the Budget on a full accrual basis; and
the Finance Minister in preparing reliable consolidated financial statements.
An important aim of the framework is to provide comparability between ex post and ex ante (budgeted) financial reports. This document will assist in achieving that aim.
The framework for the requirements in this document incorporate:
Australian Accounting Standards and other authoritative pronouncements of the Standard Setting Boards (including guidance releases);
Urgent Issues Group consensus views;
Australian Statements of Accounting Concepts;
financial reporting policy; and
guidance on financial reporting.
This document addresses the legislative requirements for financial reporting, and includes financial reporting policies and guidance.
The financial reporting policies are the mandatory principles, bases or rules adopted in preparing and presenting general-purpose financial reports, including budgets. The policies:
cover issues not dealt with in Australian Accounting Standards or legislation;
specify the preferred alternative(s) when the standards or legislation permit choice; and
clarify any ambiguity in the standards or legislation.
The document mandates Australian Accounting Standards and is concerned with providing relevant and reliable information for users of financial reports and enabling the discharge of accountability by chief executives and directors.
The guidance to the financial reporting policies provide the rationale and concepts underlying the financial reporting policies and are intended to assist in their interpretation and consistent application.
II Preliminary
The policy and guidance included in this section relates to:
1 Commencement
2 Application
3 Certification
4 Exemptions
5 Comparatives
6 Rounding Off
1 Commencement
1.1 The requirements set out in these Orders shall apply for the financial year ending on or after 30 June 2002, unless amended.
2 Application
2.1 The financial statements of agencies and authorities must:
(a) include the primary statements, schedules and notes in the form prescribed in appendix A of this Schedule;
(b) include all note disclosures specified in the policies of this Schedule;
(c) comply with accounting standards and accounting interpretations issued by:
the Australian Accounting Standards Board (established under section 226 of the Australian Securities and Investment Commission Act 1989); and
the former Public Sector Accounting Standards Board, not yet reissued by the present Board;
(d) have regard to the Explanatory Notes to Commonwealth Accounting Policies as issued by the Department of Finance and Administration; and
(e) have regard to Finance Briefs issued by the Department of Finance and Administration.
2.2 The financial statements must be presented in the following order:
(a) primary statements;
(b) schedules of contingencies and commitments;
(c) notes to the financial statements
2.3 Requirements in this Schedule should only be included in the financial statements of the entity if they are relevant or applicable to a reporting period or comparative reporting period.
3 Certification
3.1 There must be attached to the front of the financial statements:
(a) a copy of the auditor’s report on the statements;
(b) a statement by the chief executive or directors, as the case may be, as to whether, in their opinion, the financial statements give a true and fair view of the matters required by this Schedule; and
(c) If the Commonwealth agency or authority is a Public Trading Enterprise or a Statutory Marketing Authority the directors must state whether or not, in their opinion, there are, when the statement is made, reasonable grounds to believe that the agency or authority will be able to pay its debts as and when they fall due.