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Annual Report 2013 - Chapter 7

Financial Statements
 
Table of Contents*
Notes
* Administered items are distinguished from departmental items throughout these financial statements by background shading.
 

Statement by Members and the Chief Financial Officer
 
In our opinion, the attached financial statements for the year ended 30 June 2013 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister's Orders made under the Financial Management and Accountability Act 1997, as amended.
 
Signature of Dr John F. Laker
 
Dr John F. Laker
Chairman

3 September 2013
 
Signature of Mr Ian Laughlin
 
Mr Ian Laughlin
Deputy Chairman

3 September 2013
 
Signature of Mrs Helen Rowell
 
Mrs Helen Rowell
Member

3 September 2013
 
Signature of Mr Steve Matthews
 
Mr Steve Matthews
Chief Financial Officer

3 September 2013
 
Statement of comprehensive income for the year ended 30 June 2013
 
Tabular statement of comprehensive income for the year ended 30 June 2013. The total comprehensive income/(loss) for 2013 is shown as $5,102,000. For 2012 it is ($2,640,000).
 
Click on the above image to view the statement of comprehensive income in a larger size.
 
The above statement should be read in conjunction with the accompanying Notes.
 
Balance sheet as at 30 June 2013
 
Tabular balance sheet as at 30 June 2013. The equity for 2013 is listed as $38,663,000. For 2012 it is $28,688,000.
 
Click on the above image to view the balance sheet in a larger size.
 
The above statement should be read in conjunction with the accompanying Notes.
 
Statement of changes in equity for the year ended 30 June 2013
 
Tabular statement of changes in equity for the year ended 30 June 2013. The total equity closing balance for 2013 is listed as $38,663,000. For 2012 it is $28,688,000.
 
Click on the above image to view the statement of changes in equity in a larger size.
 
The above statement should be read in conjunction with the accompanying Notes.
 
Statement of cash flows for the year ended 30 June 2013
 
Tabular statement of cash flows for the year ended 30 June 2013. The cash at the end of the reporting period is listed as $1,360,000 in 2013. For 2012 it is $1,739,000.
 
Click on the above image to view the statement of cash flows in a larger size.
 
The above statement should be read in conjunction with the accompanying Notes.
 

 

Schedule of commitments as at 30 June 2013

 
Tabular schedule of commitments as at 30 June 2013. The net commitments by maturity in 2013 is listed as $30,661,000. For 2012 it is $30,828,000.
 
Click on the above image to view the schedule of commitments in a larger size.
 
The above schedule should be read in conjunction with the accompanying Notes.
 
1 Commitments are stated inclusive of GST where relevant.
 
Schedule of contingencies as at 30 June 2013
 
Tabular schedule of contingencies as at 30 June 2013. No contingent assets and liabilities are shown.
 
Click on the above image to view the schedule of contingencies in a larger size.
 
Details of each class of contingent assets and liabilities, including those not included above because they cannot be quantified or are remote, are disclosed in Note 13: Contingent assets and liabilities.
 
The above schedule should be read in conjunction with the accompanying Notes.
 
Administered schedule of comprehensive income for the year ended 30 June 2013
 
Tabular administered schedule of comprehensive income for the year ended 30 June 2013. The total comprehensive income administered on behalf of Government in 2013 is listed as $288,058,000. In 2012 it is $131,010,000.
 
Click on the above image to view the administered schedule of comprehensive income in a larger size.
 
The above schedule should be read in conjunction with the accompanying Notes.
 
Administered schedule of assets and liabilities as at 30 June 2013
 
Tabular administered schedule of assets and liabilities as at 30 June 2013. The total net assets administered on behalf of Government in 2013 is listed as $775,000. In 2012 it is $2,201,000.
 
Click on the above image to view the administered schedule of assets and liabilities in a larger size.
 
The above schedule should be read in conjunction with the accompanying Notes.
 
Administered reconciliation schedule as at 30 June 2013
 
Tabular administered reconciliation schedule as at 30 June 2013. The closing administered assets less administered liabilities as at 30 June is listed as $775,000. In 2012 it is $2,201,000.
 
Click on the above image to view the administered reconciliation schedule in a larger size.
 
Administered statement of cash flows for the year ended 30 June 2013
 
Tabular administered statement of cash flows for the year ended 30 June 2013. The net increase in cash held is listed as $289,484,000. In 2012 it is $183,364,000.
 
Click on the above image to view the administered statement of cash flows in a larger size.
 
APRA administers the collection of Financial Institutions Supervisory Levies and Financial Assistance Levies on behalf of the Government. While the revenues from Financial Institutions Supervisory Levies are in part used to fund the operations of APRA, they are not directly available to APRA for its own purposes. The revenues from the Financial Assistance Levy are not available to APRA for its own purposes. All administered collections are remitted to the Official Public Account. Transactions and balances relating to levies are reported in Note 20: Administered income.
 
This schedule should be read in conjunction with the accompanying Notes.
 
Administered schedule of commitments for the year ended 30 June 2013
 
APRA had no administered commitments as at balance date (2012: Nil).
 
Administered schedule of contingencies for the year ended 30 June 2013
 
APRA had no administered contingencies as at balance date (2012: Nil).
 
Notes to and forming part of the financial statements for the year ended 30 June 2013
 
Note 1: Summary of Significant Accounting Policies
 
1.1 Objectives of Australian Prudential Regulation Authority (APRA)
 
The role of APRA is developing and enforcing a robust prudential framework that promotes prudent behaviour by authorised deposit-taking institutions (ADIs), insurance companies, superannuation funds and other financial institutions it supervises, with the key aim of protecting the interests of depositors, policyholders and superannuation fund members. In carrying out its role, APRA's objective is to enhance public confidence in Australia's financial institutions through a prudential framework that balances financial safety and efficiency, competition and competitive neutrality. Prudential regulation focuses on the quality of an institution's systems for identifying, measuring and managing the various risks in its business. In addition, APRA is responsible for administering the Financial Claims Schemes provided for in relevant banking and general insurance legislation.
 
APRA's activities contributing toward these outcomes are classified as either 'departmental' or 'administered'. Departmental activities involve the use of assets, liabilities, revenues and expenses controlled or incurred by APRA in its own right. Administered activities involve the management or oversight by APRA, on behalf of the Government, of items controlled or incurred by the Government.
 
APRA's continued existence in its present form and with its present programs is dependent on Government policy and on continuing appropriations from Parliament.
 
1.2 Basis of preparation of the financial statements
 
The financial statements and notes are required by section 49 of the Financial Management and Accountability Act 1997 and are general purpose financial statements.
 
The financial statements and notes have been prepared in accordance with:
  • Finance Minister's Orders (FMOs) for reporting periods ending on or after 1 July 2011; and
  • Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities 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.
 
Unless an alternative treatment is specifically required by an accounting standard or the FMOs, assets and liabilities are recognised in the Balance Sheet when and only when it is probable that future economic benefits will flow to APRA or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies.
 
Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured.
 
1.3 Significant accounting judgements and estimates
 
In the process of applying the accounting policies listed in this note, APRA has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:
  • the fair value of leasehold improvements has been taken to be the market value of similar installations as determined by an independent valuer in May 2011.
No accounting assumptions and estimates have been identified that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next accounting period.
 
APRA has assessed the value of its non-financial assets as at 30 June 2013 and is satisfied that they reflect the fair value.
 
1.4 Changes in Australian Accounting Standards
 
Adoption of new Australian Accounting Standard requirements
 
No accounting standard has been adopted earlier than the application date as stated in the standard. No new accounting standards, amendments to standards and interpretations issued by the AASB that were issued prior to the signing of the financial statements by Members and the Chief Financial Officer and that are applicable in the current period, have had a material financial effect on APRA or are expected to have a future financial impact on APRA.
 
Future Australian Accounting Standard requirements
 
New accounting standards, amendments to standards and interpretations that were issued prior to the signing of the financial statements by Members and the Chief Financial Officer and are effective for future reporting periods have been issued by the AASB. It is expected that these changes, when effective, will have no material financial impact on future reporting periods.
 
1.5 Revenue
 
Revenue from Government
 
APRA is funded primarily through levies imposed on the industries it supervises. These levies, known as the Financial Institutions Supervisory Levies, are administered transactions collected on behalf of the Government and paid into the Consolidated Revenue Fund (CRF). An amount equal to the net levy revenue, less an amount specified by the Minister in an annual determination made under subsection 50(1) of the Australian Prudential Regulation Authority Act 1998 (APRA Act), is credited to the APRA Special Account as a Special Appropriation, in accordance with subsections 50(2), (3) and (5) of the APRA Act. The amounts specified in the Minister's Determinations are retained in the CRF to cover: the costs of activities of the Australian Taxation Office (ATO) for unclaimed monies, lost member functions and for the implementation of the Stronger Super - SuperStream reforms; the Australian Securities and Investments Commission (ASIC) for consumer protection and market integrity functions; and the Department of Human Services (DHS) for the administration of claims for early release of superannuation benefits on compassionate grounds. The calculation of the Special Appropriation is shown at Note 3.
 
Amounts appropriated for APRA's outputs for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when APRA 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.
 
Other revenue
 
Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:
  • the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  • the probable economic benefits associated with the transaction will flow to APRA.
The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.
 
Revenue and receipts from sources other than an appropriation Act are classified as Section 31 receipts.
 
Receivables for goods and services, which have 30-day terms, are recognised at the nominal amounts due less any impairment allowance. Collectability of debts is reviewed at balance date. Allowances are made when collectability of the debt is no longer probable.
 
Parental leave payments scheme
 
Amounts received under the Parental Leave Payments Scheme not yet paid to employees are presented gross as cash and a liability (payable) by APRA.
 
1.6 Gains
 
Resources received free of charge
 
Resources received free of charge are recognised as gains 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.
 
Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition.
 
Resources received free of charge are recorded as either revenue or gains depending on their nature.
 
Sale of assets
 
Gains or losses from disposal of assets are recognised when control of the asset has passed to the buyer.
 
1.7 Transactions with the Government as owner
 
Equity injections
 
Amounts appropriated as 'equity injections' for a year (less any formal reductions) are recognised directly in contributed equity in that year.
 
1.8 Employee benefits
 
Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits due within 12 months of the balance date are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.
 
All other long-term employee benefits are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.
 
Leave
 
The liability for employee benefits includes provision for annual leave and long service leave. 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 APRA is estimated to be less than the annual entitlement for sick leave.
 
The annual and long service 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 APRA's employer superannuation contribution rates, assuming that the leave is likely to be taken during service rather than paid out on termination.
 
The liability for long service leave has been recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at the end of the financial year. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.
 
Separation and redundancy
 
Provision is made for separation and redundancy benefit payments, in cases where APRA has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.
 
Superannuation
 
Certain employees of APRA are members of the Commonwealth Superannuation Scheme (CSS) and the Public Sector Superannuation Scheme (PSS). The CSS and PSS are defined benefit schemes for the Australian Government. 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 and Deregulation's administered schedules and notes. APRA makes employer contributions to the employees' superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlement of APRA's employees. APRA accounts for the contributions as if they were contributions to defined contribution plans.
 
APRA also makes employer contributions to the Reserve Bank Officers' Superannuation Fund and to State-based superannuation schemes for former employees of the Reserve Bank of Australia and State-based regulators, respectively. These are defined benefit schemes and the liability for the defined benefits are recognised in the financial statements of the relevant entity.
 
For all other employees, employer contributions are made to other superannuation (accumulation) funds, as nominated by the employee.
 
The liability for superannuation recognised at the balance date represents outstanding contributions for the remaining days following the last payroll in June 2013.
 
1.9 Leases
 
A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. In operating leases, the lessor effectively retains substantially all such risks and benefits.
 
Operating lease payments are expensed on a straight-line basis that is representative of the pattern of benefits derived from the leased assets. APRA has no finance leases.
 
1.10 Cash
 
Cash includes cash on hand and cash at bank.
 
1.11 Financial assets
 
APRA classifies its financial assets as loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.
 
Loans and receivables
 
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.
 
Impairment of financial assets
 
Financial assets are individually assessed for impairment at each balance date. Where there is sufficient evidence to suggest that an impairment loss has been incurred, the carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.
 
1.12 Financial liabilities
 
APRA classifies its financial liabilities as 'payables'. 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).
 
Other payables are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
 
1.13 Contingent assets and contingent liabilities
 
Contingent assets and contingent liabilities are not recognised in the Balance Sheet but are reported in the relevant Schedules and Notes. They may arise from uncertainty as to the existence of an asset or liability, 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 the probability of settlement is greater than remote.
 
1.14 Acquisition of assets
 
Assets are recorded at cost on acquisition, except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.
 
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor entity's accounts immediately prior to the restructuring.
 
1.15 Property, plant and equipment
 
Asset recognition threshold
 
Purchases of property, plant and equipment are recognised initially at cost in the Balance Sheet, except for purchases costing less than $5,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items that are significant in total).
 
The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to 'make good' provisions in property leases taken up by APRA where there exists an obligation to restore the property to its original condition. These costs are included in the value of APRA's leasehold improvements with a corresponding provision for the 'make good' recognised. Adjustments to the value of the provision are recognised in the Statement of Comprehensive Income as expenses or gains as incurred.
 
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 such that the carrying amount of each class of asset is not materially different, at reporting date, from its fair value. Valuations are undertaken every three years as at 30 June (last valuation May 2011).
 
Fair values for each class of asset are determined as shown below:
 
Asset Class Fair Value measured at:
Leasehold improvements Depreciated replacement cost
Computer hardware and office equipment Market selling price
 
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the Statement of Comprehensive Income. Revaluation decrements for a class of assets are recognised directly in the Statement of Comprehensive Income except to the extent that they reversed a previous revaluation increment for that class.
 
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.
 
Depreciation
 
Depreciable plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to APRA using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.
 
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:
 
Asset Class 2013 2012
Leasehold improvements Lesser of 10 years or lease term Lesser of 10 years or lease term
Computer hardware and office equipment 3 to 12 years 3 to 12 years
 
Impairment
 
All assets were assessed for indications of impairment as at 30 June 2013. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment adjustment made if the asset's recoverable amount is less than its carrying amount.
 
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if APRA were deprived of the asset, its value in use is taken to be its depreciated replacement cost.
 
Derecognition
 
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
 
1.16 Intangibles
 
APRA's intangibles comprise internally developed software and purchased 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 its anticipated useful life. The useful lives of APRA's software are the lesser of five years or assessed useful life (2011/12: lesser of five years or assessed useful life).
 
All software assets were assessed for indications of impairment as at 30 June 2013.
 
1.17 Taxation
 
APRA is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
 
Revenues, expenses and assets are recognised net of GST except where the amount of GST incurred is not recoverable from the Australian Taxation Office. Receivables and payables are recognised inclusive of GST.
 
1.18 Reporting of administered activities
 
Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the Administered Schedules and related Notes. These administered items are distinguished from departmental items throughout these financial statements by background shading.
 
Except where otherwise stated below, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.
 
Administered cash transfers to and from the Official Public Account (OPA)
 
Revenue collected by APRA for use by the Government rather than by APRA is administered revenue. Collections are transferred to the OPA maintained by the Department of Finance and Deregulation. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of the Government. These transfers to and from the OPA are adjustments to the administered cash held by APRA on behalf of the Government and reported as such in the Administered statement of cash flows and in the Administered reconciliation schedule.
 
Revenue
 
All administered revenues relate to the ordinary activities performed by APRA on behalf of the Government. These revenues are not directly available to be used by APRA for its own purposes and are remitted to the OPA.
 
APRA undertakes the collection of certain levies on behalf of the Government. These comprise Financial Institutions Supervisory Levies, the Financial Assistance Levy and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998.
 
Administered revenue arising from levies (including the Financial Assistance Levy) is recognised on an accrual basis, in line with the Minister's regulations and determinations. The collectability of debts is reviewed at balance date. Provisions are made when collection of the debt is judged to be less, rather than more, likely.
 
Expenses
 
Administered expenses arising from waivers of levy debts are recognised at the time of approval by delegated APRA officials.
 
Waivers of levies under the Financial Institutions Supervisory Levies Collection Act 1998 are shown at Note 25, as required by the FMOs. Waivers generally occur due to a change of status of a supervised entity during the year, resulting in the annual levy being wholly or partly waived.
 
Contingent assets and liabilities
 
There were no administered contingent assets or liabilities in 2013 or in 2012.
 
1.19 Compliance with statutory conditions for payments from the Consolidated Revenue Fund
 
The Australian Government continues to have regard to developments in case law, including the High Court's most recent decision on Commonwealth expenditure in Williams v Commonwealth (2012) 288 ALR 410, as they contribute to the larger body of law relevant to the development of Commonwealth programs. In accordance with its general practice, the Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of expenditure not being consistent with constitutional or other legal requirements.
 
Note 2: Events After the Balance Sheet Date
 
There were no significant events occurring after the balance sheet date that have the potential to significantly affect the ongoing structure or financial activities of APRA.
 
Note 3: Calculation of APRA Special Appropriation
 
The APRA Special Appropriation is calculated in accordance with the provisions of s50 of the Australian Prudential Regulation Authority Act 1998.
 
Tabular calculation of APRA Special Appropriation. The total appropriation in 2013 is listed as $116,896,000. For 2012 it is $100,380,000.
 
Click on the above image to view the note 3 in a larger size.
 
1 Including amounts as determined by the Minister in accordance with subsection 50 (1) of the Australian Prudential Regulation Authority Act 1998.
 
Note 4: Expenses
 
Tabular description of employee benefits and supplier expenses in 2012 and 2013. The total supplier expenses in 2013 is listed as $23,868,000. For 2012 it is $26,053,000.
 
Click on the above image to view the note 4 in a larger size.
 
Tabular description of depreciation and amortisation, finance costs, write-down and impairment of assets, and losses from asset sales/disposals in 2012 and 2013.
 
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Note 5: Income
 
Tabular description of rendering of services, rental income, other revenue, other gains and revenue from government in 2012 and 2013.
 
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Note 6: Other Comprehensive Income
 
Tabular description of changes in asset revaluation reserve. The make good revaluation was worth $63,000 in 2013 and ($170,000) in 2012.
 
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Note 7: Financial Assets
 
Tabular description of cash and trade and other receivables in 2012 and 2013. The total trade and other receivables in 2013 is given as $6,552,000 in 2013 and $46,561,000 in 2012.
 
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Tabular description of trade and other receivables in 2012 and 2013. The total receivables in 2013 is given as $6,552,000 in 2013 and $46,561,000 in 2012.
 
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Tabular description of amounts written off in relation to 2012. Total amounts written off is given as $4,000.
 
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Note 8: Non-Financial Assets
 
Tabular description of property, plant and equipment in 2012 and 2013. The total property, plant and equipment in 2013 is given as $5,472,000 in 2013 and $5,792,000 in 2012.
 
Click on the above image to view the note 8 in a larger size.
 
Tabular description of the reconciliation of the opening and closing balances of property, plant and equipment in 2013. The total net book value as of 30 June 2013 is given as $5,472,000 compared with $5,792,000 in 2012.
 
Click on the above image to view the note 8 in a larger size.
 
Tabular description of the reconciliation of the opening and closing balances of property, plant and equipment in 2012, and details of intangibles in 2012 and 2013. The total net book value as of 30 June 2012 is given as $5,792,000 compared with $6,164,000 in 2011. Total intangibles is given as $16,124,000 in 2013 compared with $12,717,000 in 2012.
 
Click on the above image to view the note 8 in a larger size.
 
Tabular description of the reconciliation of the opening and closing balances of intangibles in 2013. The total net book value as of 30 June 2013 is given as $16,124,000.
 
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Tabular description of the reconciliation of the opening and closing balances of intangibles in 2012, and of other non-financial assets in 2012 and 2013. The total net book value as of 30 June 2012 is given as $12,717,000. Total other non-financial assets are listed as $2,102,000 in 2013 compared with $1,995,000 in 2012.
 
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Note 9: Payables
 
Tabular description of supplier payables, unearned fees and charges, and other payables in 2012 and 2013. Total supplier payables are given as $683,000 in 2013 and $373,000 in 2012.
 
Click on the above image to view the note 9 in a larger size.
 
Note 10: Provisions
 
Tabular description of employee and other provisions 2012 and 2013. Total employee provisions are given as $32,580,000 in 2013 and $32,000,000 in 2012. Total other provisions are given as $2,900,000 in 2013 and $2,881,000 in 2012.
 
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Note 11: Restructuring
 
Tabular description of departmental restructuring in 2012 and 2013. No data is shown for 2013. In 2012 total income is given as $4,065,000. There was no administered restructuring in 2011/12 or 2012/13.
 
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Note 12: Statement of Cash Flows Reconciliation
 
Tabular description of the reconciliation of cash and cash equivalents as per Balance sheet to Statement of cash flows in 2012 and 2013. Total net cash from/(used by) operating activites is listed as $3,833,000 in 2013 compared with $4,978,000 in 2012.
 
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Note 13: Contingent Assets and Liabilities
 
Tabular description of contingent assets and liabilities in 2012 and 2013. None are listed.
 
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Note 14: Remuneration of APRA Members
 
APRA Members are appointed by the Governor General under Part 3 of the Australian Prudential Regulation Authority Act 1998 and remuneration is set by the Remuneration Tribunal under the Remuneration Tribunal Act 1973. Total remuneration as determined by the Tribunal for 2012/13 was Chairman $800,000 (2011/12: $800,000); Deputy Chairman $640,000 (2011/12: $640,000); and Member $600,000 (2011/12: $600,000). Any difference between the Tribunal determination and the cost to APRA is due to changes in unused annual and long service leave entitlements accumulated in the year and funding changes to defined benefit superannuation schemes where relevant.
 
Tabular description of the remuneration of APRA Members in 2012 and 2013. Total remuneration in 2013 is listed as $2,225,234 compared with $2,223,959 in 2012.
 
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Note 15: Remuneration of Senior Executives
 
Tabular description of the remuneration of Senior Executives in 2012 and 2013. Total senior executive remuneration expenses is listed as $8,691,416 in 2013 compared with $9,045,633 in 2012.
 
Click on the above image to view the note 15 in a larger size.
 
1 Note 15A was prepared on an accrual basis (therefore the performance bonus expenses disclosed above may differ from the cash 'Bonus paid' in Note 15B). Note 15A excludes acting arrangements and part-year service where total remuneration expensed for a senior executive was less than $180,000.
 
Table describing the average annual reportable renumeration paid to senior executives during the 2012 and 2013 reporting period. In 2013 there was a total of 28 executives compared to 30 in 2012, with remuneration ranging between $143,841 and $431,225.
 
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  1. This table reports on substantive senior executives who received remuneration during the reporting period. Each row is an averaged figure based on headcount for individuals in the band.
  2. Reportable salary' includes the following:
    1. gross payments (less any bonuses paid, which are separated out and disclosed in the 'bonus paid' column);
    2. reportable fringe benefits (at the net amount prior to 'grossing up' for tax purposes);
    3. exempt foreign employment income; and
    4. salary sacrificed benefits.
  3. 'Contributed superannuation' is the average cost to APRA for the provision of superannuation benefits to substantive senior executives in that reportable remuneration band during the reporting period.
  4. 'Reportable allowances' are the average actual allowances paid as per the 'total allowances' line on individuals' payment summaries.
  5. 'Bonus paid' represents average actual bonuses paid during the reporting period in that reportable remuneration band. The 'bonus paid' within a particular band may vary between financial years due to various factors such as individuals commencing with or leaving APRA during the financial year.
  6. Various salary sacrifice arrangements are available to senior executives including superannuation, motor vehicle and expense payment fringe benefits.
Senior executives have the following leave entitlements:
  • annual leave 20 days (2011/12: 20 days) each full year worked (pro-rata for part-time senior executives);
  • unlimited personal leave; and
  • long service leave (LSL) in accordance with Long Service Leave (Commonwealth Employees) Act 1976.
Table describing the average annual reportable renumeration paid to other highly paid staff during the 2012 and 2013 reporting period. In 2013 there was a total of 97 staff in this category compared with 80 in 2012. 2013 remuneration ranged between $192,717 and $272,172.
 
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  1. This table reports staff:
    1. who were employed by APRA during the reporting period;
    2. whose reportable remuneration was $180,000 or more for the financial period; and
    3. were not required to be disclosed in Notes 15A or 15B.
      Each row is an averaged figure based on headcount for individuals in the band.
  2. Disclosures for other highly paid staff in Note15C are aligned with disclosures for senior executives in Note 15B.
Note 16: Remuneration of Auditors
 
Table describing the renumeration of auditors in 2012 and 2013. The total of the fair value services provided by The Australian National Audit Office in 2013 is listed as $131,000, compared with $128,000 in 2012.
 
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No other services were provided by the auditors of the financial statements.
 
Note 17: Financial Instruments
 
Tabular description of financial instruments in 2012 and 2013. The total carrying amount of financial assets in 2013 is listed as $4,131,000, compared with $4,491,000 in 2012. The total carrying amount of financial liabilities in 2013 is listed as $6,714,000 compared with $3,647,000 in 2012.
 
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The carrying amounts of the financial instruments are a reasonable representation of their fair value.
 
Note 17B: Credit risk
 
APRA's maximum exposure to credit risk at the reporting date is the carrying amount of the trade receivables reported in the Balance Sheet. APRA has no significant exposures to any other concentrations of credit risk.
 
Credit quality of financial instruments not past due or individually determined as impaired
 
Tabular description of credit risk including ageing of financial assets that were past due but not impaired for 2012 and 2013. In 2013 $157,000 worth of assets fell in to this category.
 
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Note 17C: Liquidity risk
 
APRA is funded annually by appropriations from Government based on the actual cost of regulation of the financial sector, fee for service activities and other activities that APRA may be required to perform from time to time. In addition, APRA maintains reserves and a Contingency Enforcement Fund. These arrangements, along with strictly controlled cash flow monitoring and forecasting, expose APRA to negligible liquidity risk.
 
Note 17D: Market risk
 
APRA is not exposed to any form of currency risk, interest rate risk or other price risk.
 
Note 18: Financial Assets Reconciliation
 
Tabular description of financial assets in 2012 and 2013. The total financial assets as per financial instruments note in 2013 is listed as $4,131,000, compared with $4,491,000 in 2012.
 
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Note 19: Administered Expenses
 
Tabular description of administered expenses in 2012 and 2013. The waivers total for 2013 is listed as $3,536,000, compared with $959,000 in 2012.
 
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Note 20: Administered Income
 
Tabular description of financial institution supervisory levies in 2012 and 2013. The total current year levies and penalties in 2013 are listed as $273,932,000, compared with $131,949,000 in 2012.
 
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Tabular description of financial assistance levies in 2012 and 2013. The total current year levies and penalties for 2013 are listed as $17,662,000, compared with $20,000 for 2012.
 
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1 Financial institutions supervisory levies are detailed in the annual consultation paper released by Treasury. The increase in superannuation fund levies for 2013 is largely attributable to the Government's SuperStream measure.
 
Note 21: Administered Financial Assets
 
Tabular description of financial assets in 2012 and 2013. Total receivables (gross) in 2013 is listed as $775,000, compared with $2,201,000 for 2012.
 
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Tabular description of the reconciliation of the impairment allowance amount. The total amount written of was $4,000.
 
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Note 22: Administered Statement of Cash Flows Reconciliation
 
Tabular description of the reconciliation of cash as per Administered schedule of assets and liabilities to Administered statement of cash flows in 2012 and 2013. The net cash from operating activites in 2013 is given as $289,484,000 compared with $183,364,000 in 2012.
 
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Note 23: Appropriations
 
Tabular description of annual appropriations in 2012 and 2013. Total departmental appropriation is listed as $13,185,000 in 2013.
 
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1 The variance between the total appropriation and the appropriation applied is made up of the prior year appropriation receivable applied in the current year less the current year appropriation receivable.
 
2 Whilst the 2013 government equity contribution of $3,197,000 was physically returned to consolidated revenue in March 2013, the Finance Minister's approval for extinguishing the underlying appropriation is outstanding.
 
There were no advances to the Finance Minister under the Appropriation Acts in 2013 or in 2012.
 
There were no transactions for section 30 or section 32 of the FMA Act in 2013 or in 2012.
 
Tabular description of unspent annual appropriations and special appropriations in 2012 and 2013. Total unspent annual appropriations is listed as $3,923,000 in 2013 compared with $938,000 in 2012. There was no reduction in administered items in 2013 or 2012.
 
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Note 24: Special Accounts
 
Tabular description of special accounts in 2012 and 2013 including the APRA Special Account and the Financial Claims Scheme Special Account.
 
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  1. Appropriation: Financial Management and Accountability Act 1997, section 21.
    Establishing Instrument: Australian Prudential Regulation Authority Act 1998, section 52.
    Purpose: To pay the costs and other obligations incurred by APRA in the performance of its functions or the exercise of its powers; to pay any remuneration or allowances payable to persons appointed or engaged under the APRA Act; and to make any other payments that APRA is authorised or required to make under the APRA Act or any other law of the Commonwealth.
  2. Appropriation: Financial Management and Accountability Act 1997, section 21.
    Establishing Instrument: Australian Prudential Regulation Authority Act 1998, section 54A.
    Purpose: To meet account-holders' entitlements under Subdivision C (Payment of account-holders with declared ADI) of Division 2AA of Part II of the Banking Act 1959; meet persons' entitlements under Division 3 (Early payment of claims) of Part VC of the Insurance Act 1973; pay APRA's agents or delegates amounts equal to the entitlements the agents or delegates meet on APRA's behalf or in the performance of APRA's delegated functions; and repayment of principal, interest and other costs connected with the borrowings under Division 2 of the APRA Act.
  3. Appropriation: Financial Management and Accountability Act 1997, section 20.
    Establishing Instrument: Financial Management and Accountability Determination 2006/26.
    Purpose: To disburse amounts in accordance with section 92Q of the Insurance Act 1973.
    Responsibility for the administration of the Lloyd's Deposit Trust Special Account was transferred from the Department of Treasury to APRA with effect from 26 May 2008.
    The market valuation as at 30 June 2013 for Lloyd's inscribed stock is $2,111,020 (2012: $2,078,380).
  4. The 'Services for Other Entities and Trust Moneys (Special Public Money)' was abolished on 22 Nov 2012 under Financial Management and Accountability Determination 2012/17.
Note 25: Compensation and Debt Relief
 
Tabular description of Administered and Departmental compensation and debt relief in 2012 and 2013. In 2013 the administered compensation and debt relief is given as $3,535,916 compared with $958,856 in 2012.
 
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No other debt relief was made during the reporting period (2012: Nil payments made).
 
Note 26: Assets Held in Trust
 
Monetary assets
 
Lloyd's inscribed stock is held by APRA in trust. Responsibility for the administration of the Lloyd's Deposit Trust Special Account was transferred from the Department of Treasury to APRA with effect from 26 May 2008. The purpose is to disburse amounts in accordance with section 92Q of the Insurance Act 1973.
 
Non-monetary assets
 
APRA has no non-monetary assets held in trust.
 
Tabular description of Lloyd's inscribed stock in 2012 and 2013. The total is listed as $2,000,000 for both years.
 
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The market valuation as at 30 June 2013 for Lloyd's inscribed stock is $2,111,020 (2012: $2,078,380).
 
Note 27: Reporting of Outcomes
 
Note 27A: Net cost of outcome delivery
 
APRA is structured to meet the following outcome:
 
Outcome 1: To enhance public confidence in Australia's financial institutions through a framework of prudential regulation that balances financial safety and efficiency, competition, contestability and competitive neutrality.
 
Tabular description of departmental and administered net cost of outcome delivery for 2012 and 2013. The total net cost/(contribution) of outcome delivery in 2013 is listed as ($176,383,000) compared with ($14,811,000) in 2012.
 
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Note 28: Competitive Neutrality and Cost Recovery
 
Tabular description of receipts subject to cost recovery policy in 2012 and 2013. The total receipts subject to cost recovery policy in 2013 is listed as $3,009,000 compared with $2,916,000 in 2012.
 
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Note 29: Compliance With Statutory Conditions for Payments from the Consolidated Revenue Fund
 
Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation made by law. The Department of Finance and Deregulation (DoFaD) provided initial guidance in March 2012 regarding the need for risk assessments in relation to compliance with statutory conditions on payments from Special Appropriations, including Special Accounts.
 
In 2012/13, APRA reviewed its exposure to risks of not complying with statutory conditions on payments from appropriations. The review involved:
  • implementing procedural changes to reduce the risk of non-compliance to an acceptably low level, such as tracking payment drawdowns from each Special Appropriation and Special Account; and
  • managing the risk of non-compliance by monitoring statutory conditions ensuring that existing payment systems and processes satisfy those conditions.
In May 2013, additional guidance was provided by DoFaD around generic payments, drawing upon advice provided by the Australian Government Solicitor (AGS). As a result, APRA also reviewed its compliance with section 83 of the constitution against certain payment scenarios arising from specified legislation as identified by the AGS; namely:
  • Remuneration Tribunal Act 1973 and associated determination 2012/24: Remuneration and Allowances for Holders of Full-time Public Office;
  • Long Service Leave (Commonwealth Employees) Act 1976; and
  • A New Tax System (Goods & Services) Act 1999.
These reviews identified no issues of compliance with section 83.
 
Independent Auditor's Report - Page 1
 
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Independent Auditor's Report - Page 2
 
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