Financial statements




Statement by Members and the Executive General Manager - Corporate Services

In our opinion, the attached financial statements for the year ended 30 June 2016 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 Australian Prudential Regulation Authority will be able to pay its debts as and when they fall due.

signature Wayne Byres, signature Helen Rowell, signature Geoff Summerhayes, signature



Statement of comprehensive income for the year ended 30 June 2016

Image of a table giving a statement of comprehensive income for the year ended 30 June 2016. The total comprehensive income/(loss) for 2016 is shown as $4239000. For 2014 it is $(8455000).

Statement of financial position as at 30 June 2016

Image of a table giving a statement of financial position as at year 30 June 2016. The total equity for 2016 is shown as $49043000. For 2015 it is $50461000.

Statement of changes in equity for the year ended 30 June 2016

Image of a table giving a statement of changes in equity for the year ended 30 June 2016. The total equity for 2016 is shown as $49043000. For 2015 it is $50461000.

Statement of cashflows for the year ended 30 June 2016

Image of a table giving a statement of cash flows for the year ended 30 June 2016. Cash at the end of the reporting period for 2016 is shown as $1903000. For 2015 it is $1311000.

Administered schedule of comprehensive income for the year ended 30 June 2016

Image of a table giving an administered schedule of comprehensive income for the year ended 30 June 2016. Net contribution by services for 2016 is shown as $237727000. For 2015 it is $231481000.

Administered schedule of assets and liabilities as at 30 June 2016

Image of a table giving an administered schedule of assets and liabilities as at 30 June 2016. Net assets administered on behalf of Government for 2016 is shown as $318000. For 2015 it is $373000.

Administered reconciliation schedule as at 30 June 2016

Image of a table giving an administered reconciliation schedule as at 30 June 2016. Closing administered assets less administered liabilities as at 20 June for 2016 is shown as $318000. For 2015 it is $373000.

Administered statement of cash flows for the year ended 30 June 2016

Image of a table giving an administered statement of cashflow for the year ended 30 June 2016. Net inscrease in cash held for 2016 is shown as $678656000. For 2015 it is 231633000.

Notes to and forming part of the Financial Statements for the year ended 30 June 2016

Note 1: Summary of significant accounting policies

1.1 Objectives of the Australian Prudential Regulation Authority (APRA)

APRA’s mission is to establish and enforce prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions APRA supervises are met within a stable, efficient and competitive financial system. APRA also acts as a national statistical agency for the Australian financial sector and plays a role in preserving the integrity of Australia’s retirement incomes policy. In performing and exercising its functions and powers, APRA is to balance the objectives of financial safety and efficiency, competition, contestability and competitive neutrality and, in balancing these objectives, is to promote financial system stability in Australia.

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.

From 1 July 2015 APRA assumed responsibility for the prudential supervision of private health insurance following the passage of the Private Health Insurance (Prudential Supervision) Act 2015. Previously this responsibility was performed by the former Private Health Insurance Administration Council (PHIAC). The transfer of assets and liabilities on 1 July 2015 have been summarised in Note 25.

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 42 of the Public Governance, Performance and Accountability Act 2013 and are general purpose financial statements.

The financial statements and notes have been prepared in accordance with:

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 FRR, assets and liabilities are recognised in the Statement of financial position 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. Leasing commitments and property, plant and equipment purchase committments that are unrecognised are disclosed in notes 4 and 9B respectively.

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

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 2016 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 Executive General Manager - Corporate Services 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

As a not-for-profit public sector entity, APRA was previously exempt from the requirements of AASB 124 Related Party Disclosures. However for reporting periods commencing on or after 1 July 2016 (previously 1 January 2015), AASB 124 has been extended to apply to all not-for-profit public sector entities and APRA will be required to disclose any related party transactions in accordance with this revised standard. Disclosure of comparative information is not required in the first year of application.

No new or revised pronouncements issued by the Australian Accounting Standards Board prior to the finalisation of the financial statements are expected to have a material financial impact on APRA in future reporting periods, with the exception of AASB 16 - Leases (which comes into effect for reporting periods beginning on or after 1 January 2019). The impact of this new standard has not yet been determined.

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.

APRA also administers the private health insurance risk equalisation levy in accordance with the Private Health Insurance (Risk Equalisation Levy) Act 2003, with levy receipts and payments shown as administered income and expenses during the year.

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 stage of completion of contracts at the reporting date is determined by reference to the proportion of 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 74 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.

Resources received free of charge

Resources received free of charge are recognised as revenue or 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. Resources received free of charge are recorded as either revenue or gains depending on their nature. The only resources received free of charge by APRA are audit services from the ANAO of $196,000 (2015: $188,000).

1.6 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.

1.7 Employee benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected 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 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’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 fund.

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 2016.

1.8 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. APRA has no finance leases. 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.

1.9 Fair Value Measurement

APRA deems transfers between levels of the fair value hierarchy to have occurred between Level 1 and Level 2 if an asset has observable inputs other than quoted prices. An asset moves from Level 2 to Level 3 when inputs are no longer observable and are valued using depreciated replacement cost.

1.10 Cash

Cash is recognised at its nominal amount. 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 Statement of financial position but are reported in the relevant 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 Statement of financial position, 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. Unwinding of the discount for the make good provision is recognised in the Statement of comprehensive income as expenses.

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 in 2014).

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 and depreciated replacement cost

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 reverse 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) and residual values 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:

  2016 2015
Leasehold improvements Lesser of 10 years or lease term Lesser of 10 years or lease term
Computer hardware and office equipment 3 to 5 years 3 to 5 years
Impairment

All assets were assessed for indications of impairment as at 30 June 2016. 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 (2015: lesser of five years or assessed useful life).

All software assets were assessed for indications of impairment as at 30 June 2016.

1.17 Taxation

APRA is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and 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 (OP A)

Revenue collected by APRA for use by the Government is administered revenue. Collections are transferred to the OPA maintained by the Department of Finance. 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 Schedule of administered 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, or in the case of the private health insurance risk equalisation levies, returned to the relevant industry participants in accordance with the Private Health Insurance (Risk Equalisation Policy) Rules 2015 (the Rules).

APRA undertakes the collection of certain levies on behalf of the Government. These comprise Financial Institutions Supervisory Levies, Financial Assistance Levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. Administered revenue arising from levies (including Financial Assistance Levies) 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 17, as required by the FRR. 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. Private health insurance risk equalisation expenses reflecting amounts returned to relevent industry participants in accordance with the Rules are recognised at the time of payment as administered expenses.

Contingent assets and liabilities

There were no administered contingent assets or liabilities in 2016 or in 2015.

1.19 Reporting of Risk Equalisation activities

Risk equalisation collections are notionally transferred to the Official Public Account (OPA) maintained by the Department of Finance and held in the Risk Equalisation Special Account (RESA) before being notionally drawn down in order to make risk equalisation payments. Details of the actual movements within the RESA are disclosed in notes 18 and 20.

Note 2: Events after the reporting period

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

Image of a table giving a calculation of APRA Special Appropriation. The total appropriation in 2016 is listed as $125227000. For 2015 it is $119581000.

Note 4: Expenses

Image of a table giving a description of employee benefits and supplier expenses in 2015 and 2016. The total supplier expenses in 206 is listed as $29987000 in 2015 it is listed as $21827000.
Image of a table giving a description of employee benefits and supplier expenses in 2015 and 2016. The total losses from asset disposals in 2016 is listed as $64000 in 2015 it is listed as $32000.

Note 5: Income

Image of a table giving a description of rendering of services (total for 2016 $3735000), other revenue (total for 2016 $712000), and revenue from government (total for 2016 $126466000) in 2016 and 2015.

Note 6: Other Comprehensive Income

Image of a table giving a statement of other comprehensive income for the year ended 30 June 2016. The total comprehensive changes in asset revaluation reserve for 2016 is shown as $20000. For 2015 it is $384000.

Note 7: Fair Value Assesment

Image of a table giving fair value measurements at the end of the reporting period by hierarchy for assets and liabilities in 2016. The total fair value for non-financial assets in 2016 is $22027000.The total fair value measurements of assets in the statement of financial position is $22027000.
Fair value measurements - best use

APRA’s assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all controlled assets is considered their best use.

Recurring Level 3 fair value measurements - valuation processes

APRA conducts an internal management review of asset valuations at least once every 12 months (with a formal revaluation undertaken once every three years). During 2013-14, APRA procured the service of the Australian Valuation Services (AVS) to undertake a comprehensive valuation of all non-financial assets at 30 June 2014.

Recurring Level 3 fair value measurements - sensitivity of inputs

Significant Level 3 inputs used by APRA are derived and evaluated as follows:

Computer hardware, office equipment and leasehold improvements - consumed economic benefit / obsolescence of asset

Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the Depreciated Replacement Cost (or DRC) approach. Under the DRC approach the estimated cost to replace the asset is calculated and then adjusted to take into account its consumed economic benefit / asset obsolescence (accumulated depreciation). Consumed economic benefit / asset obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration.

The weighted average is determined by assessing the fair value measurement as a proportion of the total fair value for the class against the total useful life of each asset.

Recurring Level 3 fair value measurements - sensitivity analysis for financial assets
Computer hardware, office equipment and leasehold improvements

The significant unobservable inputs used in the fair value measurement of APRA’s leasehold improvements asset class relate to the consumed economic benefit / obsolescence of the asset. A significant increase (decrease) in this input would result in a significantly higher (lower) fair value measurement. There were no significant inter-relationships between unobservable inputs that materially affect fair value.

Note 7B: Level 1 and Level 2 transfers for recurring fair value measurements

There have been no transfers between levels of the hierarchy during the year.


Note 8: Financial assets

Image of a table giving a description of cash, trade and other receivables in 2015 and 2016. The total cash and cash equivalents is given as $1903000 in 2016 and $1311000 in 2015. The total trade and other receivables in 2016 is $73656000 and in 2015 it was $67833000.
Image of a table giving a description of trade and other receivables in 2016. The total receivables in 2016 is given as $73656000 and $67833000 in 2015.

Note 9: Non-financial assets

Image of a table giving a description of property, plant and equipment in 2016. The total property, plant and equipment in 2016 is given as $22027000 in 2015 it was $5323000.
Image of a table giving a description of the reconciliation of the opening and closing balances of property, plant and equipment in 2016. The total net book value as of 30 June 2016 is given as $22027000.
Image of a table giving a description of the reconciliation of the opening and closing balances of property, plant and equipment in 2015. The total net book value as of 30 June 2015 is given as $5323000. Image of a table giving details of intangibles in 2016 and 2015. Total intangibles is given as $1794000 in 2016 compared with $15524000 in 2015.
Image of a table giving a description of the reconciliation of the opening and closing balances of property, plant and equipment in 2016. The total net book value as of 30 June 2016 is given as $17974000.
Image of a table giving a description of the reconciliation of the opening and closing balances of intangibles of 2015. The total net book value as of 30 June 2015 is given as $15524000 comapred with $16869000 in 2014. Image of a table giving a description of other non-financial assets in 2016 and 2015. Total other non-financial assets are listed as $1858000 in 2016 compared with $2400000 in 2015.

Note 10: Payables

Image of a table giving a description of supplier payables, unearned fees and charges, and other payables in 2016 and 2015. Total supplier payables are given as $- in 2016 and $1000 in 2015.

Note 11: Provisions

Image of a table giving a description of employee and provision for make good 2016 and 2015. Total employee provisions are given as $39185000 in 2015 and $33155000 in 2015. Total provision for make good is given as $2855000 in 2016 and $2596000 in 2015.

Note 12: Statement of cash flows reconciliation

Image of a table giving a description of the reconciliation of cash and cash equivalents as per Statement of Financial Position to Statement of Cash Flows in 2016 and 2015. Total net cash from operating activites is listed as $21507000 in 2016 compared with $6885000 in 2014.

Note 13: Contingent assets and liabilities

Image of a table giving a description of ocntigent assets and liabilities.

Note 14: Senior management personnel remuneration

Image of a table giving a description of the remuneration of Senior Management Personnel in 2016 and 2015. Total senior executive remuneration expenses is listed as $11564563 in 2016 compared with $10916954 in 2015.

Note 15: Financial instruments

Image of a table giving a description of financial instruments in 2016 and 2015. The total carrying amount of financial assets in 2016 is listed as $18223000 compared with $3313000 in 2015. The total amount of credit quality of financial instruments not past due or individually determined as impaired is (not past due nor impared 2016 $17873000 compared with $1800000 in 2015) and (past due or impaired $386000 in 2016 comapred with $1513000 in 2015.
Image of table giving a description of ageing of financial assets that were past due but not impaired for 2016. The total trade recievables for 2016 is $386000 compared with $1513000 in 2015.

Note 16: Financial assets reconciliation

Image of a table giving a description of financial assets in 2016 and 2015. The total financial assets as per financial instruments note in 2016 is listed as $18223000, compared with $3313000 in 2015.

Note 17: Administered expenses

Image of a table giving a description of administered expenses in 2016 and 2015. The waivers total for 2016 is listed as $7000, compared with $5000 in 2015.

Note 18: Administered income

Image of a table giving a description of administered income penalties and levies in 2016 and 2015. The total current year levies and penalties in 2016 are listed as $2377346000, compared with $231486000 in 2015.

Note 19: Administered financial assets

Image of a table giving a description of administered financial assets in 2016 and 2015. Total receivables in 2016 is listed as $318000, compared with $373000 for 2015.

Note 20: Administered statement of cash flows reconciliation

Image of a table giving a description of the reconciliation of cash as per Administered schedule of assets and liabilities to Administered statement of cash flows in 2016 and 2015. The net cash from operating activities in 2015 is given as $678656000 compared with 231633000 in 2015.

Note 21: Administered contingent assets and liabilities

Unquantifiable administered contingencies

APRA is responsible for the administration of the Financial Claims Scheme (FCS). The FCS provides depositors of authorised deposit taking institutions (ADIs) and claimants of general insurers (GIs) with timely access to their funds in the event of a financial institution failure.

Under the Banking Act 1959 the scheme provides a mechanism for making payments to depositors under the Government’s guarantee of deposits in ADIs. Payments are capped at $250,000 per account-holder per ADI. As at 31 December 2015, deposits eligible for coverage under the Scheme were estimated to be $777 billion, compared to $766 billion as at 31 December 2014, reflecting overall deposit growth in the financial system.

Under the Insurance Act 1973 the scheme provides a mechanism for making payments to eligible beneficiaries with a valid claim against a failed GI. It is not possible to estimate these claims. In the very unlikely event of an ADI or GI failure, any payments made under the FCS would be recovered through the liquidation of the failed institution. If there was a shortfall in the amount recovered through the liquidation of the failed institution, a levy could be applied to the relevant industry to recover the difference between the amount expended and the amount recovered in the liquidation.

Under the FCS, any payments to account-holders with protected accounts or eligible claimants would be made from APRA’s FCS Special Account. Under the legislation, initial amounts available to meet payments, in the event of activation, are up to $20 billion per institution and up to $100 million for administration. It is not possible to estimate the amounts of any eventual payments that may be required in relation to either the ADI FCS or GI FCS and as such no amount is included in this note.


Note 22: Appropriations

Image of a table giving a description of annual appropriations in 2016. Total departmental appropriation is listed as $1237000 in 2016 compared with  $1061000 in 2015.
Image of a table giving a description of unspent annual appropriations in 2016 and 2015. Total unspent annual appropriations is listed as $0 in 2016 compared with $1177000 in 2015. Special annual appropriations in 2016 and 2014. The total appropriation applied is listed as $125295000 in 2016 compared with $119609000 in 2015.

Note 23: Special accounts

Image of a table giving a description of special accounts in 2016 and 2015 including the APRA Special Account, the Financial Claims Scheme Special Account and the Lloyd’s Deposit Trust Special Account. The total balance carried to the next period in 2016 was $59230000 for the APRA Special Account, $835000 for the Financial Claims Scheme Special Account and $2000000 for the Lloyd’s Deposit Trust Special Account.
  1. Appropriation: Public Governance, Performance and Accountability Act 2013, section 80. 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: Public Governance, Performance and Accountability Act 2013, section 80. Establishing Instrument: Australian Prudential Regulation Authority Act 1998, section 54A. There were no transactions debited or credited to the Financial Claims Scheme Special Account in the current reporting period. 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: Public Governance, Performance and Accountability Act 2013, section 78. 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 on 26 May 2008. The market valuation as at 30 June 2016 for Lloyd’s inscribed stock is $2,087,351 (2015: $2,034,920).

Note 24: Assets held in trust

Image of a table giving a description of assets held in trust for 2016 and 2015. The total amount held at the end of the reporting period was $2000000 for 2016 and 2015.

Note 25: Restructuring

Image of a table giving a description of restructuring for 2016 and 2015 (2016 machinery of Government (Private health insurance). The Total financial assets for 2016 is shown as $3857000, total assets recognised is shown at $4314000, total payables $288000, net assets recognised 2821000 and total equity recognised $2821000.

Note 26: Reporting of outcomes

Image of a table giving a description of reporting of outcomes for 2016 and 2015. The total net (contribution) of outcome delivery for 2016 $107022000 compared with $119018000 in 2015.

Note 28: Budgetary reports and expla nations of major variances

Image of a table giving a statement of comprehensive income for the year ended 30 June 2016. Actual total expenses for 2016 are listed as $135411000. Actual net cost of services for 2016 is listed as $130725000. Operating surplus/(deficit) is listed as $4259000.
Image of a table giving a statement of comprehensive income for the year ended 30 June 2016. Total comprehensive income/(loss) 2016 is listed as $4259000. Image of a table giving a statement of financial position for the year ended 30 June 2016. Actual total assets for 2016 is listed as $117418000. In Liabilities, actual total payables for 2016 is listed as $24335000.
Image of a table giving a statement of financial position for the year ended 30 June 2016. Actual net assets for 2016 is listed as $49043000. Actual total equity for 2016 is listed as $49043000.
Image of a table giving a statement of changes in equity for the year ended 30 June 2016. Actual closing balances at 30 June 2016 are listed as $18974000 for retained surpluses, $7412000 for asset revaluation reserve, $6000000 for contingency enforcement, $16657000 for contributed equity/capital, and $49043000 for total equity.
Image of a table giving a statement of cash flows for the year ended 30 June 2016. Operating activities total cash received is listed as $153805000. Operating activities total cash used is listed as $(21507000). Investing activities total cash used is listes as $(23736000). Financing activities total cash received is listed as $2821000. Cash at the end of the reporting period is listed as $1903000.

Note 28B: Departmental major budget variances for 2016

Summary of key statement of comprehensive income differences to budget

During 2015-16 APRA’s budget was updated to reflect the transition of the assets and liabilities and associated income and costs of the former PHIAC. This increased APRA’s 2015-16 departmental budget for: income and expenses by approximately $5.7 million, assets by $4.3 million and liabilities by $1.5 million.

These budget changes were applied subsequent to the publication of the Portfolio Budget Statement and therefore are not included in the budget comparatives presented in these statements.

In addition to the above, APRA also incurred:

The additional costs above were offset by operational underspends arising from an 18.4 lower average staffing level (ASL) during the year of $4.1 million.

These factors combine to drive the reported operating loss of $4.3 million for the year.

Explanations of major variances Affected line items(and statement)
  Statement of comprehensive income
Machinery of Government change (Private health insurance) costs, property-related accounting impacts, staff redundancies and bond-rate related leave impacts. Offset by 18.4 lower ASL during the year. Expenses
Less licencing activity than budgeted. Own source income
Machinery of Government change (Private health insurance) additional levies. Revenue from Government
Summary of key statement of financial position differences to budget

The transition of the former PHIAC to APRA on 1 July 2015 increased financial assets by $3.9 million, non financial assets by $0.5 million, payables by $0.3 million and provisions by $2.8 million. Equity in the form of a revaluation reserve and retained surplus of $2.8 million also arose.

Other key balance sheet variances were:

Explanations of major variances Affected line items (and statement)
  Statement of financial position
Machinery of Government change (Private health insurance) receivables, a higher appropriation receivable arising from the lower than budgeted ASL and a higher opening balance from the prior year surplus. Financial assets
Machinery of Government change (Private health insurance) non-financial assets. Leasehold improvements from property-related accounting impacts. Non-financial assets
Machinery of Government change (Private health insurance) payables. Lease capital incentive, minimum lease liability and surplus space provision. Payables
Higher property-related provisions. Provisions
  Statement of changes in equity
Machinery of Government change (Private health insurance) retained surpluses, offset by operational loss for the year. Retained surpluses
Machinery of Government change (Private health insurance) asset revaluation reserve. Asset revaluation reserve
  Statement of cash flows
Special account draw down to fund No.1 Martin Place fitout expenditure. Operating activities net cash
No.1 Martin Place fit-out and make-good asset plus higher project activity. Investing activities net cash
Machinery of Government change (Private health insurance) equity. Financing activities net cash
Image of a table giving an administered schedule of comprehensive income for the year ended 30 June 2016. Actual total expenses administered on behalf of the government in 2016 are listed as $440872000. Actual net contributions by services are listed as $237727000.

Independent auditor's report

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