40Formal additions and reductions

40 Formal additions and reductions

Guide to this section

The purpose of this section is to establish what qualifies as a formal addition or reduction to appropriation revenue. This is determined by an entity losing or gaining control of an appropriation during the reporting period.

Reporting entities have to report all appropriations recognised in the reporting period in their primary financial statements.

Reporting entities also have to disclose actual appropriations received and applied in the reporting period in the appropriation disclosure notes.

It may arise when there is a formal reduction or addition to an appropriation so that the appropriation revenue recognised in the primary statements is affected, but where there is no legal instrument to change the actual amount appropriated so that the amount disclosed in the appropriation note is not affected.

This would arise in the situation where an appropriation is withheld under Section 51 of the PGPA Act. In this example, the appropriation revenue recognised is reduced but the actual available appropriation in the disclosure note is not reduced and still includes the amount withheld.

(1) Formal additions or reductions necessitate adjustments to the recognition and disclosure of appropriations to the extent they have not already resulted in adjustments in previous years. (2) To be a formal addition or reduction, the gain or loss of control event, as outlined below, must be evidenced in writing from the appropriate authority. Formal additions and reductions are as follows: (a) transfers of current year appropriation under section 75 of the PGPA Act; (b) departmental supplementation; (c) adjustments as stipulated by any agreement that provides for additional funding for over‑delivery or a reduction of funding for under‑delivery (such as purchasing, workload or other agreements), as well as funding arrangements that are specifically designed to not financially advantage or disadvantage an entity (appropriation on a no‑win/no‑loss basis). The agreements, at a minimum, must: (i) set out one or more quantifiable deliverable(s) and/or a specific amount of appropriation relating to each; and (ii) be approved by, or arise from, Ministerial or Cabinet decisions prior to the funding being given; (d) amounts determined by the Finance Minister under any legislation that allows for additions or reductions to appropriations; (e) an Advance to the Finance Minister or Advance to the responsible Presiding Officer as per the Appropriation Acts; (f) amounts withheld under section 51 of the PGPA Act; and (g) all other adjustments made as a consequence of a decision of the Cabinet or the Prime Minister about the amount of appropriation or other funding available to a reporting entity. (3) Unless there is a Government approved legal instrument that formally reduces or increases the appropriation for one of the gain or loss of control events in subsection (2), then the reporting entity must still include the amount of formal reduction or exclude the amount of formal addition in their appropriation disclosure note as a legally available appropriation. (4) For the purposes of this section, ‘Government approved legal instrument’ means any of the following: (a) an Advance to the Finance Minister under an annual Appropriation Act; (b) an Advance to the responsible Presiding Officer under an annual Appropriation Act; (c) a determination under section 75 of the PGPA Act.