Annual Report 2017–18: 4. Financial performance

We are committed to managing our finances responsibly to perform effectively and work towards achieving our purpose

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Financial performance overview

The DTA recorded an operating surplus of $10.1 million in 2017–18, driven by lower than anticipated employee costs, contractor resources and other supplier expenses associated with the Public Service Modernisation measures, namely Platforms and Building Digital Capability. This compares with a surplus of $6.4 million in 2016–17.

In 2017–18 the balance of the Department of Finance’s (Finance) Coordinated Procurement Contracting Special Account relating to ICT procurement functions was transferred to the DTA’s ICT Procurement Special Account, established in June 2017.

This transfer has resulted in significant increases to income, expenses, assets and liabilities reported in the 2017–18 financial statements. This will be the final transfer under the Administrative Arrangements Order (AAO) of 27 October 2016, where responsibilities for the whole-of-government ICT and ICT procurement policy and services transferred from Finance to the DTA.

The Australian National Audit Office issued an unmodified audit report on 24 September 2018.

Table 1 Resource statement
    Actual available appropriation for 2017–18
$’000
(a)
Payments made for 2017–18
$’000
(b)
Remaining balance 2017–18
$’000
(a) – (b)
Ordinary annual services1
Prior year departmental appropriation   15,724 15,724 -
Departmental appropriation2   71,431 36,401 35,030
s. 74 retained revenue receipts   12,249 12,249 -
s. 75 transfers   714 714 -
Total   100,118 65,088 35,030
Total ordinary annual services A 100,118 65,088  
 
Special Accounts3
Opening balance   -    
Balance transfer from Department of Finance   96,063    
Non appropriation receipts to Special Account   127,188    
Payments made     163,987  
Closing balance       59,264
Total Special Accounts B 223,251 163,987  
 
Total resourcing and payments for DTA A+B 323,369 229,075  
  1. Appropriation Act (No.1) 2017–18.
  2. Departmental appropriation combines ordinary annual services (Appropriation Act No 1) and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013.
  3. Does not include ‘special public money’ held in accounts like ‘services for other entities and trust moneys’ special accounts.
Table 2 Expenses for Outcome 1
Outcome 1: To improve the user experience for all Australians accessing government information and services by leading the design, development and continual enhancement of whole-of-government service delivery policies and standards, platforms and joined-up services.
  Budget1 
2017–18
$’000
(a)
Actual expenses 
2017–18
$’000
(a)
Variation 2017–18
$’000
(a) – (b)
Program 1.1: The Digital Transformation Agency
Departmental expenses
Departmental appropriation2 75,051 65,785 9,266
Special Accounts 124,450 74,957 (50,507)
Expenses not requiring appropriation in the budget year 633 1,465 (832)
Total for Program 1.1 200,134 242,207 (42,073)
Total expenses for Outcome 1 200,134 242,207 (42,073)
 
  2016–17 2017–18  
Average staffing level (number) 109 215  
  1. Appropriation Act (No.1) 2017–18.
  2. Departmental appropriation combines ordinary annual services (Appropriation Act No 1) and retained revenue receipts under section 74 of the Public Governance, Performance and Accountability Act 2013.
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Purchasing and procurement

Our purchasing activities were undertaken in accordance with the Public Governance Performance and Accountability Act 2013 (PGPA Act), Commonwealth Procurement Rules and the Indigenous Procurement Policy.

The CEO’s Accountable Authority Instructions (AAIs) support these principles by providing further direction to DTA officials when conducting procurements on behalf of our agency.

The AAIs are based on the principles of a competitive, non-discriminatory procurement processes, proper use of government resources, and making decisions in an accountable and transparent manner.

Our centralised procurement team provides guidance and advice for DTA officials undertaking procurement activities.

In 2017–18, the DTA published the following on the AusTender website:

  • details of publicly available business opportunities with a value of $80,000 or more
  • details of all contracts awarded with a value of $10,000 or more.

By publishing on AusTender, we ensure that information is available to industry, including small and medium enterprises (SMEs) while simplifying the way business interacts with government online.

Procurement initiatives to support small business

We support small business participation in the Commonwealth Government Procurement market. SMEs and small enterprise participation statistics are available on the Department of Finance’s website at www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/.

In addition, the DTA operates the Digital Marketplace. The Digital Marketplace is an initiative under the National Innovation and Science Agenda, with the purpose of making it easier for smaller businesses to compete for the government’s ICT products and services.

Our own procurement practices support SMEs by adopting whole-of-government solutions to simplify interactions with SMEs. This includes using the Commonwealth Contracting Suite for low-risk procurements valued under $200,000. This reduces process costs for SMEs by creating contracting consistency and simplifying liability, insurance and indemnity requirements.

We recognise the importance of ensuring that small businesses are paid on time. The DTA applies the Government’s Supplier Pay on Time or Pay Interest Policy to pay invoices no later than 30 days following the receipt of a correctly rendered tax invoice valued at $1 million or less.

Australian National Audit Office access clauses

There were no instances of contracts that precluded the Auditor-General from accessing the contractor’s premises (17AG(8)).

Exempt contracts

There were no contracts in 2017–18 that were exempt from being reported on AusTender.

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Consultancies

The DTA engages consultants where specialist or technical expertise is required. Consultants are typically engaged to:

  • investigate or diagnose a defined issue or problem
  • carry out independent reviews or evaluations
  • provide professional, independent, expert and objective advice
  • provide recommendations to assist in decision making.

The engagement of consultants is assessed to ensure value for money and compliance with the PGPA Act, the Commonwealth Procurement Rules (CPRs) and AAIs.

During 2017–18, five new consultancy contracts were entered into involving a total actual expenditure of $2,548,967. There were no ongoing consultancy contracts active during the period.

Annual reports contain information about actual expenditure on consultancy contracts. Information on the value of the contracts is available on the AusTender website: www.tenders.gov.au.

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Advertising and market research

During 2017–18, the DTA did not conduct any advertising campaigns. We did make payments for market research services as shown below:

Advertising and market research
Firm Service provided 2017–18
Payments made in $ (incl. GST)
Farron Research User research and testing sessions 24,500
Thinkplace Platforms user research 321,749
Redrollers User research and testing sessions 41,150
ChitChat Research User research and incentives 16,307
Paper Giant User research and testing sessions 24,372
CityGroup User research facilities 7,883
Meld User research sourcing transformation 32,500
Total   468,461
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Financial statements

for the period ending 30 June 2018

Read the full text of the Independent Auditor’s Report

Page 1 of the Auditor's report.

Page 2 of the Auditor's Report.

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Statement by the Chief Executive Officer and Chief Finance Officer

In our opinion, the attached financial statements for the year ended 30 June 2018 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the Digital Transformation Agency will be able to pay its debts as and when they fall due.

Signature of Randall Brugeaud

Randall Brugeaud
Chief Executive Officer
21 September 2018

Signature of George-Philip de Wet

George-Philip de Wet
Chief Finance Officer
21 September 2018

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Statement of Comprehensive Income

for the period ending 30 June 2018

  Notes 2018
$’000
2017
$’000
Original Budget
$’000
NET COST OF SERVICES
Expenses
Employee benefits 1.1A 31,816 17,207 33,944
Suppliers 1.1B 209,284 39,560 165,742
Depreciation and amortisation 2.2A 1,085 1,138 448
Write-down and impairment of assets 2.2A 12 3 -
Finance costs 2.4A 10 11 -
Total expenses   242,207 57,919 200,134
Own-source revenue
Contributions 1.2A - 10,000 -
Rendering of Services   179,803 5,431 130,475
Other revenue 1.2B 358 577 185
Total own-source revenue   180,161 16,008 130,660
Net cost of service   62,046 41,911 69,474
Revenue from Government   72,145 48,292 71,431
Surplus attributable to the Australian Government   10,099 6,381 1,957
OTHER COMPREHENSIVE INCOME
 
Items not subject to subsequent reclassification to net cost of services
Changes in asset revaluation surplus   - 239 -
Total comprehensive income attributable to the
Australian Government
  10,099 6,620 1,957

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

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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 60,058 557 395
Trade and other receivables 2.1B 156,292 21,129 44,905
Total financial assets   216,350 21,686 45,300
Non-financial Assets
Leasehold improvements 2.2A 1,953 2,063 591
Plant and equipment 2.2A 1,779 647 209
Intangibles 2.2A - - 97
Prepayments   7,511 595 505
Total non-financial assets   11,243 3,305 1,402
Total assets   227,593 24,991 46,702
LIABILITIES
Payables
Suppliers 2.3A 43,727 4,896 4,218
Other payables 2.3B 127,874 1,196 1,419
Total payables   171,601 6,092 5,637
Provisions
Employee provisions 4.1A 8,129 6,313 1,968
Make good provisions 2.4A 559 549 325
Total provisions   8,688 6,862 2,293
Total liabilities   180,289 12,954 7,930
Net assets   47,304 12,037 38,772
EQUITY
Contributed equity   28,660 3,492 33,553
Asset revaluation reserve   239 239 -
Retained surplus   18,405 8,306 5,219
Total equity   47,304 12,037 38,772

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

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Statement of Changes in Equity

for the period ending 30 June 2018

  2018
$’000
2017
$’000
TOTAL EQUITY—OPENING BALANCE
Balance carried forward from previous period
Contributed equity 3,492 3,492
Asset revaluation reserve 239 -
Retained earnings 8,306 1,925
Adjusted opening balance 12,037 5,417
COMPREHENSIVE INCOME
Retained earnings
Surplus/(Deficit) for the period 10,099 6,381
Asset revaluation reserve
Other comprehensive income - 239
Total comprehensive income 10,099 6,620
CONTRIBUTED EQUITY
Transactions with owners—contributed equity
Contributions by owners
Restructuring1 25,168 -
Total transactions with owners 25,168 -
TOTAL EQUITY
Contributed equity 28,660 3,492
Asset revaluation reserve 239 239
Retained earnings 18,405 8,306
Closing balance as at 30 June 47,304 12,037
  1. In 2017 a restructure with the Department of Finance for the transfer to the Digital Transformation Agency (DTA) of whole-of-government ICT and ICT procurement policy and services functions. This restructure was finalised in 2018, transferring special account related balances (2017: nil), see note 6.1.

Accounting Policy

Restructuring of Administrative Arrangements

Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

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

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Cash Flow Statement

for the period ended 30 June 2018

Notes   2018
$’000
2017
$’000
Original Budget
$’000
OPERATING ACTIVITIES
Cash received
Appropriations   53,076 42,391 71,431
Contributions   - 10,000 -
Net GST received   9,785 3,294 -
Rendering of services   140,009 5,414 128,070
Total cash received   202,870 61,099 199,501
Cash used
Employees   35,482 16,153 33,926
Suppliers   201,831 43,532 165,575
Total cash used   237,313 59,685 199,501
Net cash from/(used by) operating activities   (34,443) 1,414 -
INVESTING ACTIVITIES
Cash used
Purchase of leasehold improvements 2.2A 714 790  
Purchase of plant and equipment 2.2A 1,405 212 -
Total cash used   2,119 1,002 -
Net cash used by investing activities   (2,119) (1,002) -
FINANCING ACTIVITIES
Cash received
Restructuring – transfer of special account cash   96,063 - -
Total cash received   96,063 - -
Net cash from financing activities   96,063 - -
Net increase in cash held   59,501 412 -
Cash and cash equivalents at the beginning of the reporting period 2.1A 557 145 395
Cash and cash equivalents at the end of the reporting period   60,058 557 395

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

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Notes to and forming part of the financial statements

for the period ended 30 June 2018

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Overview

Basis of preparation of the financial statements

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) for reporting periods ending on or after 1 July 2015; and
  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 where certain assets and liabilities are recorded 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 Australian accounting standards

All new, revised or amended standards and interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material financial impact on the DTA’s financial statements.

Taxation

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

Events after the reporting period

There are no known events occurring after the reporting period that could impact on the financial statements.

Revenue from Government

Amounts appropriated for departmental ordinary annual services for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when DTA gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

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1. Financial Performance

This section analyses the financial performance of the DTA for the year ended 30 June 2018.

1.1 Expenses

  2018
$’000
2017
$’000
Note 1.1A: Employee benefits
Wages and salaries 22,074 11,529
Superannuation
Defined contribution plans 2,221 1,247
Defined benefit plans 1,945 887
Leave and other entitlements 3,735 2,774
Separation and redundancies 1,134 564
Other1 707 206
Total employee benefits 31,816 17,207
  1. Other relates to employee allowances including higher duties, individual flexible arrangements, emergency warden, departmental liaison and first aid officer.

Accounting Policy

Accounting policies for employee related expenses is contained in the People and Relationships section.

  2018
$’000
2017
$’000
Note 1.1B: Suppliers
Goods and services supplied or rendered
Consultants, contractors and legal 26,592 24,725
Information technology and commutnication1 170,746 3,421
Payments to other government agencies2 175 3,002
Secondments 1,978 2,331
Training, recruitment and other staff costs 3,053 1,471
Travel 942 1,366
Other3 2,897 1,526
Total goods and services supplied or rendered 206,383 37,842
Goods supplied - 414
Services rendered 206,383 37,428
Total goods and services supplied or rendered 206,383 37,842
Other suppliers
Operating lease rentals 2,716 1,665
Workers compensation expenses 185 53
Total other supplier expenses 2,901 1,718
Total suppliers 209,284 39,560
Leasing commitments
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within 1 year 2,629 2,134
Between 1 to 5 years 8,458 2,391
More than 5 years 4,462 -
Total operating lease commitments 15,549 4,525
  1. The increase in Information technology and communications relates to the whole-of-government ICT procurement arrangements transferred to the DTA in 2017–18.
  2. Relates to collaboration with other government agencies on digital capability design.
  3. Relates to corporate services fees, low value assets, advertising and office supplies.

Note: Commitments are GST inclusive where relevant.

Operating lease commitment—leases for office accommodation

Office accommodation lease payments are subject to periodic increases in accordance with the rent review provisions in the lease agreements. The three leases entered into by the DTA all have renewal options which vary from 1 to 5 years. The DTA has entered into a revised lease arrangement for the head office accommodation that is effective 1 July 2018 and is reflected in the above commitment values.

Accounting Policy

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

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1.2 Own-Source Revenue and Gains

Own-Source Revenue 2018
$’000
2017
$’000
Note 1.2A: Contributions
Contribution from PM&C1 - 10,000
Total Contributions - 10,000

PM&C transferred $10 million to the DTA in 2017. PM&C was reimbursed for this transfer through the Trusted Digital Identity expense measure in the 2017 Mid-Year Economic and Fiscal Outlook (MYEFO). No further contribution has been received in 2018.

Note 1.2B: Other Revenue
Resources received free of charge—secondments 260 519
Resources received free of charge—audit fee 84 58
Royalties 14 -
Total resources received free of charge 358 577

Accounting Policy

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.

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2. Financial Position

This section analyses the DTA’s assets used to generate financial performance and the operating liabilities incurred as a result.

Leasehold improvements and plant and equipment are carried at fair value in accordance with AASB 13 Fair Value Measurement. The remaining assets and liabilities disclosed in the statement of financial position do not apply the fair value hierarchy.

Employee related information is disclosed in the People and Relationships section.

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2.1 Financial Assets

  2018
$’000
2017
$’000
Note 2.1A: Cash and Cash Equivalents
Cash on hand or on deposit 794 557
Special account - cash at bank 2,124 -
Special account - held in the OPA 57,140 -
Total cash and cash equivalents 60,058 557
Note 2.1B: Trade and Other Receivables
Goods and services receivables
Goods and services 121,518 3,838
Total goods and services receivables 121,518 3,838
 
Appropriations receivables
Existing programs 34,236 15,167
Total appropriations receivable 34,236 15,167
Other receivables
Statutory receivables 526 317
Other receivables 12 1,807
Total other receivables 538 2,124
Total trade and other receivables 156,292 21,129

Credit terms for goods and services were within 30 days (2017: 30 days).

Receivables have been assessed for impairment at the end of each reporting period. The majority of receivables managed by the DTA are with other Commonwealth entities therefore currently no allowance for impairment has been made as at 30 June 2018 (2017: nil).

Accounting Policy

(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.

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2.2 Non-Financial Assets

Note 2.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles
  Leasehold
improvements
$’000
Plant and
equipment
$’000
Intangibles
$’000
Total
$’000
As at 1 July 2017
Gross book value 2,206 647 841 3,694
Accumulated depreciation/amortisation and impairment (143) - (841) (984)
Total as at 1 July 2017 2,063 647 - 2,710
Additions
Purchase 714 1,405   2,119
Depreciation and amortisation (812) (273) - (1,085)
Write-down and impairments recognised in net cost of services (12) - - (12)
Total as at 30 June 2018 1,953 1,779 - 3,732
Total as at 30 June 2018 represented by
Gross book value
Fair value 2,570 812 841 4,223
Assets under construction 334 1,240 - 1,574
Accumulated depreciation/amortisation and impairment (951) (273) (841) (2,065)
Total as at 30 June 2018 1,953 1,779 - 3,732

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

As at 30 June 2018, the value of contractual commitments for the acquisition of leasehold improvements and plant and equipment is $2.5 million (2016–17: Nil).

Accounting Policy

(Asset recognition threshold )

Property, plant and equipment is the generic term that covers leasehold improvements and plant and equipment. Purchases of property, plant and equipment and intangibles 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.

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 ‘make good’ provisions in property leases taken up by the DTA where there is an obligation to restore the asset to its original condition. These costs are included in the value of the DTA’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.

Intangibles

The DTA’s intangibles comprise internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. Software is amortised on a straight-line basis over an anticipated useful life of 2 to 3 years.

Revaluations

Following initial recognition at cost, property, 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, generally this will be on a three year cycle unless a significant event occurs that would impact the fair value of assets.

Fair values for each class of asset are determined as shown below:

Asset Class Fair value measurement 2018
$’000
2017
$’000
Leasehold improvements Current replacement cost 1,953 2,063
Plant and equipment – Desktop hardware Market selling price 653 71
Plant and equipment – other categories Current replacement cost 1,126 576

In 2017 a valuation of property, plant and equipment assets was undertaken by International Valuation & Property Services (IVPS).

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the DTA using, 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 Lease term Lease term
Plant and equipment 3 to 10 years 3 to 10 years
Impairment

All assets were assessed for impairment during 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.

A write-down of $12,000 was recognised in 2018 for leasehold improvement assets which were not WHS compliant. In 2017 $3,000 of plant and equipment assets were disposed as a result of the annual asset stocktake process.

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2.3 Payables

  2018
$’000
2017
$’000
Note 2.3A: Suppliers
Trade creditors and accruals 43,727 4,896
Total suppliers 43,727 4,896

Settlement is usually made within 30 days.

Note 2.3B: Other payables
Unearned revenue 126,627 765
Salaries and wages 204 158
Superannuation 34 27
Lease liability - 23
Statutory payable 22 54
Other payables 987 169
Total other payables 127,874 1,196

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2.4 Other Provisions

  2018
$’000
Note 2.4A: Provision for Make Good Obligations
As at 1 July 2017 549
Unwinding of discount or change in discount rate 10
Total as at 30 June 2018 559

The DTA has entered into three lease arrangements (one under a Memorandum of Understanding agreement) for the leasing of premises. These arrangements have provisions requiring the DTA to restore the premises to the original condition at the conclusion of the lease.

Accounting Policy

Provision for the restoration of leased premises (make good) is based on future obligations relating to the underlying assets. The provision is disclosed at the present value of the obligation utilising the appropriate Government bond rate.

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3. Funding

This section identifies the DTA’s funding structure.

3.1 Appropriations

Note 3.1A: Annual Appropriations (‘Recoverable GST exclusive’)

Annual appropriations for 2018
  Appropriation Act   PGPA Act      
  Annual appropriation Section 74 receipts Section 75 Transfers Total appropriation Appropriation
applied in 2018
(current and
prior years)1
Variance2
  $’000 $’000 $’000 $’000 $’000 $’000
Departmental
Ordinary annual services
71,431 12,439 714 84,394 (65,088) 19,306
Total departmental 71,431 12,249 714 84,394 (65,088) 19,306
  1. The Department of Employment (until 31 August 2017) spent money from the Consolidated Revenue Fund (CRF) on behalf of DTA.
  2. The variance in departmental ordinary annual services is mainly attributable to underspend on the Public Service Modernisation Fund.

 

Annual appropriations for 2017
  Appropriation Act PGPA Act
  Annual Appropriation Section 74 receipts Section 75 Transfers Total appropriation Appropriation applied in
2017 (current and prior years)1
Variance2
$’000 $’000 $’000 $’000 $’000 $’000
Departmental
Ordinary annual services
45,217 15,414 3,075 63,706 (57,393) 6313
Total departmental 45,217 15,414 3,075 63,706 (57,393) 6313
  1. The Department of Employment (until 31 August 2017) spent money from the Consolidated Revenue Fund (CRF) on behalf of DTA.
  2. The variance in departmental ordinary annual services is mainly attributable to underspend on the Trusted Digital Identity second pass business case which was funded in MYEFO.
Note 3.1B: Unspent Annual Appropriations (‘Recoverable GST exclusive’)
  2018
$’000
2017
$’000
Departmental
Appropriation Act (No. 1) 2016–17 - 8,406
Appropriation Act (No. 1) 2016–17—cash held by the department - 557
Appropriation Act (No. 3) 2016–17 - 6,761
Appropriation Act (No. 1) 2017–18 34,236 -
Appropriation Act (No. 1) 2017–18—cash held by the department 794 -
Total departmental 35,030 15,724
Note 3.2A: Special Accounts
ICT Coordinated Procurement Special Account1
  2018
$’000
2017
$’000
Balance brought forward from previous period - -
Balance Transfer from Department of Finance
Increases
Total increases2 223,251 -
Available for payments 223,251 -
Departmental Decreases
Total departmental (163,987) -
Total decreases (163,987) -
Total balance carried to the next period 59,264 -
Balance represented by:
Cash held in entity bank accounts 2,124 -
Cash held in the Official Public Account 57,140 -
Total balance carried to the next period 59,264 -
  1. Appropriation: Public Governance, Performance and Accountability Act 2013 (PGPA Act) section 78.
    Establishing Instrument: PGPA Act Determination (Establishment of ICT Coordinated Procurement Special Account 2017).
    Purpose: The ICT Coordinated Procurement Special Account has been established for the purpose of administering the operations of centralised ICT procurement for the Australian Government.
  2. Increases in the special account includes $96.1 million transferred from Department of Finance, refer note 6.1A Restructuring.

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4. 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.

4.1 Employee Provisions

  2018
$’000
2017
$’000
Note 4.1A: Employee Provisions
Leave 8,129 6,313
Total employee provisions 8,129 6,313

Accounting Policy

Liabilities for ‘short-term employee benefits’ and termination benefits due within 12 months of the end of reporting period are measured at their nominal amounts.

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 DTA’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The provision is disclosed at the present value of the obligation using the short hand method that utilises the appropriate Government bond rate.

No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the DTA is estimated to be less than the annual entitlement for sick leave.

Superannuation

The DTA’s staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or another fund of their choice.

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 DTA makes employer contributions to the employees’ superannuation scheme. For Commonwealth defined benefits schemes, these rates are determined by an actuary to be sufficient to meet the current cost to the Government. The DTA accounts for the contributions as if they were contributions to defined contribution plans.

4.2 Key Management Personnel Remuneration

Note 4.2A: Key Management Personnel Remuneration
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the DTA, directly or indirectly, including any director (whether executive or otherwise). KMP remuneration is reported in the table below:
  2018
$’000
2017
$’000
Short-term employee benefits 2,254 1,716
Post-employment benefits 268 245
Other long-term employee benefits 256 226
Termination benefits 186 414
Total key management personnel remuneration expenses1,2,3 2,964 2,601
  1. The DTA has determined the KMP to be the Chief Executive Officer (CEO) and 6 Executive Officers as at 30 June 2018. The KMP in 2016–17 included the CEO and 4 executive officers.
  2. The total number of KMP that are included in the above table is 10 (2017: 12) representing the people who individually occupied the KMP positions during the year.
  3. The above KMP remuneration excludes the remuneration and other benefits of the Portfolio Ministers. The Portfolio Ministers’ remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.
Related party relationships:

(The DTA is an Australian Government controlled entity. Related parties to the DTA are Key Management Personnel including the Portfolio Ministers and other Australian Government entities.)

Transaction 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 and services
  • asset purchases, sales transfers or leases
  • debts forgiven
  • guarantees.

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

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5. Managing Uncertainties

This section analyses how the DTA manages financial risks within its operating environment.

5.1 Contingent Asset and Liabilities

Note 5.1A: Contingent Assets and Liabilities

(The DTA is not aware of any material departmental quantifiable or unquantifiable contingent assets or liabilities as at the signing date that would require disclosure in the financial statements. )

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.)

5.2 Financial Instruments

  2018
$’000
2017
$’000
Note 5.2A: Categories of Financial Instruments
Financial Assets
Held-to-maturity investments
Cash and cash equivalents 794 557
Total held-to-maturity investments 794 557
Loans and receivables
Goods and services receivables 121,518 3,838
Total loans and receivables 121,518 3,838
Total financial assets 122,312 4,395
Financial Liabilities
Financial liabilities measured at amortised cost
Trade creditors and accruals 43,727 4,896
Total financial liabilities measured at amortised cost 43,727 4,896
Total financial liabilities 43,727 4,896

Note 5.2B: Net Gains or Losses on Financial Assets and Liabilities

The DTA has no gains or losses on financial instruments.

Accounting Policy

(Financial assets)

The DTA classifies its financial assets in the following categories:

  1. held-to-maturity investments
  2. 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.

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).

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6. Other Information

6.1 Restructuring

Note 6.1A: Restructuring

Net assets received from or relinquished to another Australian Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

As part of the Administrative Arrangement Orders issued by the Government on 27 October 2016, responsibility for whole of government ICT and ICT procurement policy and services transferred from the Department of Finance (Finance) to the DTA. Assets and liabilities for this restructure occurred in two phases with phase one transferring on 15 December 2016 and phase 2 transferring on 18 May 2017

The DTA’s ICT Procurement Special Account was established on 6 June 2017 to facilitate the final transfer of assets and liabilities from Finance’s Coordinated Procurement Contracting Special Account which occurred during 2018.

  2018 2017
  Transfer from
Department of Finance
$’000
Transfer from
Department of Finance
$’000
Functions assumed
Assets recognised
Cash - special account 96,063 -
Appropriation receivable - 3,088
Accounts receivable 68,937 356
Accrued revenue 174 -
Total asset recognised 165,174 3,444
Liabilities recognised
Employee provisions - 2,637
Unearned revenue 130,416 807
Trade creditors and accruals 9,590 -
Total liabilities recognised 140,006 3,444
Net assets recognised 25,168 -
Income Assumed
Recognised by DTA 175,805 713
Recognised by Department of Finance - 972
Total income assumed 175,805 1,685
Expenses assumed
Recognised by DTA 174,957 3,528
Recognised by Department of Finance - 3,793
Total expenses assumed 174,957 7,321

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6.2 Budgetary Explanation of Major Variances

Note 6.2A: Budgetary reporting

The DTA’s financial statements report the original budget as published in the Department of Prime Minister and Cabinet 2017–18 Portfolio Budget Statements.

Where required, the original budget has been adjusted to align with the presentation and classification adopted in the final outcome.

Explanations of major variances between the actual and original budgeted amounts for 2018 (that are greater than +/- 10 per cent of the original budget for a line item and greater than +/- $1 million) are provided below.

Explanations of major variances Affected line items
Statement of Comprehensive Income
Total expenses for 2017–18 were $242.2m, an increase of $42.1m compared to the original budget. This variance reflects additional expenditure relating to the special account activities transferring as part of the whole of government ICT procurement function from the Department of Finance as part of the 27 October 2016 machinery of government change. Suppliers
Total own-source income for 2017–18 was $180.2m, an increase of $49.5m compared to the original budget. This increase in revenue corresponds to the above increase in expense relating to the ICT procurement function. The variance is also attributable to an increase in rendering of services for the contract administration fee for the ICT hardware panel arrangement. Additional revenue was recorded to reflect ICT apprenticeship/cadetship costs recovered from participating agencies. Rendering of Services
The surplus reported in 2017–18 is due to an underspend as a result of less than anticipated engagement of staff, contractor resources and other supplier expenses associated with Public Service Modernisation funding received for platforms and building digital capability. Surplus/(Deficit) attributable to the Australian Government
Statement of Financial Position
The increase in cash of $60.0m is due to the establishment of the ICT Coordinated Procurement Special Account. At Budget the special account was reported against receivables. Cash
The increase in Trade and other receivables of $111.4m is mostly due to the invoicing arrangements under the whole of government ICT procurement function for SAP and VSA arrangements. Also, as mentioned above the special account was remapped to Cash in 2017–18 actuals. Trade and other receivables
The increase in Leasehold improvements of $1.4m relates to purchases for the fit-out of the Canberra and Sydney offices and a revaluation of leasehold improvements that was included in later budget rounds. Leasehold improvements
The increase in Plant and Equipment of $1.6m is mostly due to the IT refresh project that included purchases of AV equipment and laptops. Plant and equipment
The increase in prepayments relates to software licenses contracted as part of the whole of Government ICT Coordinated procurement arrangements. Prepayments
The increase in Suppliers of $40.0m mostly relates to accrued expenses associated with the whole of government ICT procurement function for SAP and IBNCS. Suppliers
The increase in Other payables of $126.5m mostly relates to unearned revenue associated with the whole of government ICT procurement function for SAP and VSA arrangements. Other payables
The increase in Employee provisions of $6.2m is mostly attributable to the increase in ASL from the 2016–17 MoG transfer recognised in DTA in May 2017 after Budget was published. A revaluation increase of $0.130m was recognised in 2017–18 which was partially offset by commencements and terminations during the year. Employee provisions
Statement of Cash Flows
The decrease of $18.4m in appropriations reflects the underspend reported in the income statement as well as additional appropriation revenue for Public service modernisation $18.3 million, $2.8 million to establish a Cyber Security Advisory office and $4 million transferred from the Department of Finance. Appropriations
The increase in GST receivable of $9.8m reflects the increase of payments to suppliers during the year. Net GST received
The increase in payments to suppliers of $36.2m mostly reflects payments made in July 2017 for accruals recognised at 30 June. Suppliers
The increase in purchases of plant and Equipment of $1.4m is mostly due to the IT refresh project that included purchases of AV equipment and laptops. Purchase of property, plant and equipment
The restructure in 2017–18 relates to the AAO from 27 October 2016. This phase of the MoG relates to the transfer of the ICT procurement special account balance which was delayed due to the late creation of the special account. Restructuring—special account
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Get in touch

If you have any questions you can send an email to info@dta.gov.au or call 0427 136 791