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Chapter 8: Financial statements

Notes
Statement of comprehensive income for the year ended 30 June 2012
 
Expenses Notes 2012
$'000
2011
$'000
Employee benefits 4A 89,812 82,175
Supplier expenses 4B 26,053 31,785
Depreciation and amortisation 4C 5,131 4,193
Finance costs 4D 97 103
Write-down and impairment of assets 4E - 53
Losses from asset disposals 4F 26 40
Total expenses - 121,119 118,349
 
Less: Own-source income - Own-source revenue Notes 2012
$'000
2011
$'000
Rendering of services 5A 4,212 3,757
Rental income 5B 11 9
Other revenue 5C 568 727
Total own-source revenue - 4,791 4,493
 
Less: Own-source income - Gains Notes 2012
$'000
2011
$'000
Other gains 5D 128 125
Total gains - 128 125
Total own-source income - 4,919 4,618
Net cost of services - 116,200 113,731
Revenue from Government 5E 113,730 102,634
Operating surplus/(deficit) - (2,470) (11,097)
 
Other comprehensive income Notes 2012
$'000
2011
$'000
Changes in asset revaluation reserves 6A (170) 2,828
Total other comprehensive income - (170) 2,828
Total comprehensive income/(loss) - (2,640) (8,269)
 
The above statement should be read in conjunction with the accompanying Notes.
 
Balance sheet as at 30 June 2012
 
Assets: Financial assets Notes 2012
$'000
2011
$'000
Cash 7A 1,739 1,579
Trade and other receivables 7B 46,561 44,010
Total financial assets - 48,300 45,589
 
Assets: Non-financial assets Notes 2012
$'000
2011
$'000
Property, plant and equipment 8A,B 5,823 6,164
Intangibles 8C,D 12,717 11,622
Other non-financial assets 8E 1,964 2,028
Total non-financial assets - 20,504 19,814
Total assets - 68,804 65,403
 
Liabilities: Payables Notes 2012
$'000
2011
$'000
Suppliers 9A 373 388
Unearned fees and charges 9B 1,036 1,133
Other payables 9C 3,826 4,394
Total payables - 5,235 5,915
 
Liabilities: Provisions Notes 2012
$'000
2011
$'000
Employee provisions 10A 32,000 26,135
Other provisions 10B 2,881 2,025
Total provisions - 34,881 28,160
Total liabilities - 40,116 34,075
Net assets - 28,688 31,328
 
Equity Notes 2012
$'000
2011
$'000
Contributed equity - 7,469 7,469
Reserves - 12,467 12,637
Retained surpluses - 8,752 11,222
Total equity - 28,688 31,328
 
The above statement should be read in conjunction with the accompanying Notes.
 
Statement of changes in equity for the year ended 30 June 2012
 
Opening balance 2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
Retained surpluses Asset revaluation reserve Contingency Enforcement Fund Contributed equity/capital Total equity
Balance carried forward from previous period 11,222 22,319 6,637 3,809 6,000 6,000 7,469 6,012 31,328 38,140
Adjusted opening balance 11,222 22,319 6,637 3,809 6,000 6,000 7,469 6,012 31,328 38,140
 
Comprehensive income 2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
Retained surpluses Asset revaluation reserve Contingency Enforcement Fund Contributed equity/capital Total equity
Other comprehensive income - - (170) 2,828 - - - - (170) 2,828
Surplus/(deficit) for the period (2,470) (11,097) - - - - - - (2,470) (11,097)
Total comprehensive income (2,470) (11,097) (170) 2,828 - - - - (2,640) (8,269)
 
Contributions by owners 2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
Retained surpluses Asset revaluation reserve Contingency Enforcement Fund Contributed equity/capital Total equity
Equity injection -appropriations - - - - - - - 1,457 - 1,457
Sub-total: transactions with owners - - - - - - - 1,457 - 1,457
Closing balance as at 30 June 8,752 11,222 6,467 6,637 6,000 6,000 7,469 7,469 28,688 31,328
 
The above statement should be read in conjunction with the accompanying Notes.
 
Statement of cash flows for the year ended 30 June 2012
 
Operating activities: Cash received Notes 2012
$'000
2011
$'000
Appropriations - 119,151 118,751
Rendering of services - 5,023 4,686
Rental income - 11 9
Net GST received - 2,508 2,995
Other - 568 727
Total cash received - 127,261 127,168
 
Operating activities: Cash used Notes 2012
$'000
2011
$'000
Employees - (83,584) (80,736)
Suppliers - (30,589) (34,064)
Section 31 receipts transferred to Official Public Account (OPA) - (8,110) (8,417)
Total cash used - (122,283) (123,217)
Net cash from/(used by) operating activities 12 4,978 3,951
 
Investing activities: Cash used Notes 2012
$'000
2011
$'000
Purchase of property, plant and equipment - (640) (191)
Purchase/development of software intangibles - (4,178) (4,708)
Total cash used - (4,818) (4,899)
Net cash/(used by) investing activities - (4,818) (4,899)
 
Financing activities: Cash received Notes 2012
$'000
2011
$'000
Contributed equity - capital injections - - 1,457
Total cash received - - 1,457
Net cash from financing activities - - 1,457
Net increase/(decrease) in cash held - 160 509
Cash at the beginning of the reporting period - 1,579 1,070
Cash at the end of the reporting period 7A 1,739 1,579
 
The above statement should be read in conjunction with the accompanying Notes.
 
Schedule of commitments as at 30 June 2012
 
By type1: Commitments receivable 2012
$'000
2011
$'000
Net GST recoverable on commitments (2,519) (984)
Total commitments receivable (2,519) (984)
 
By type: Commitments payable 2012
$'000
2011
$'000
Operating leases 27,712 10,825
Total commitments payable 27,712 10,825
Net commitments by type 25,193 9,841
 
1 Commitments are stated inclusive of GST where relevant.
 
By maturity: Commitments receivable - Net GST recoverable on commitments 2012
$'000
2011
$'000
One year or less (600) (657)
From one to five years (1,919) (327)
Total net GST recoverable on commitments (2,519) (984)
 
By maturity: Commitments payable - Operating lease commitments 2012
$'000
2011
$'000
One year or less 6,598 7,229
From one to five years 21,114 3,596
Total operating lease commitments 27,712 10,825
Net commitments by maturity 25,193 9,841
 
Leases for office accommodation
 
Lease payments in Sydney (except for one level) and Perth are subject to prevailing market rates. Leases for all other offices are subject to fixed annual increments. Office leases, with current expiry dates shown in brackets, are current for space in Adelaide (2012), Perth (2014), Canberra (2015), Melbourne (2016), Sydney (2016) and Brisbane (2018).
 
The above schedule should be read in conjunction with the accompanying Notes.
 
Schedule of contingencies as at 30 June 2012
 
Contingent assets 2012
$'000
2011
$'000
Claims for damages or costs - -
Total contingent assets - -
 
Contingent liabilities 2012
$'000
2011
$'000
Claims for damages or costs - -
Total contingent liabilities - -
Net contingent assets (liabilities) - -
 
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 2012
 
Expenses Notes 2012
$'000
2011
$'000
Supervisory Levy waivers 19 959 615
Total expenses administered on behalf of Government - 959 615
 
Less: Income - Taxation/levy revenue Notes 2012
$'000
2011
$'000
Financial Institutions Supervisory Levies 20A 131,949 116,382
Financial Assistance Levy 20B 20 54,925
Total taxation/levy revenue - 131,969 171,307
Net cost of (contribution by) services - 131,969 171,307
Total comprehensive income administered on behalf of Government - 131,010 170,692
 
The above schedule should be read in conjunction with the accompanying Notes.
 
Administered schedule of assets and liabilities as at 30 June 2012
 
Assets: Financial assets Notes 2012
$'000
2011
$'000
Receivables 21 2,201 54,555
Total assets administered on behalf of Government - 2,201 54,555
 
Liabilities Notes 2012
$'000
2011
$'000
Liabilities administered on behalf of Government - - -
Total liabilities administered on behalf of Government - - -
Net assets administered on behalf of Government - 2,201 54,555
 
This schedule should be read in conjunction with the accompanying Notes.
 
Administered reconciliation schedule as at 30 June 2012
 
Administered reconciliation schedule 2012
$'000
2011
$'000
Opening administered assets less administered liabilities as at 1 July 54,555 38
Plus: Administered income 131,969 171,308
Less: Administered expenses (959) (615)
 
Administered transfers to/from Australian Government: 2012
$'000
2011
$'000
Plus: Appropriation transfers from Official Public Account 22 75
Less: Transfers to Official Public Account (183,386) (116,251)
Closing administered assets less administered liabilities as at 30 June 2,201 54,555
 
Administered statement of cash flows for the year ended 30 June 2012
 
Operating activities: Cash received Notes 2012
$'000
2011
$'000
Financial Institutions Supervisory Levies - 131,028 115,857
Financial Assistance Levy - 52,358 395
Total cash received - 183,386 116,252
 
Operating activities: Cash used Notes 2012
$'000
2011
$'000
Refunds for overpayment of Supervisory Levies - (21) (75)
Refunds for overpayment of Financial Assistance Levy - (1) -
Total cash used - (22) (75)
Net cash flows from operating activities 22 183,364 116,177
Net increase in cash held - 183,364 116,177
 
Operating activities: Cash at the beginning of the reporting period Notes 2012
$'000
2011
$'000
Cash from Official Public Account for - APRA Special Account: Supervisory Levies - 21 -
Cash from Official Public Account for - Section 28 FMA Act refund appropriations: Supervisory Levies - - 75
Cash from Official Public Account for - Section 28 FMA Act refund appropriations: Financial Assistance Levy - 1 -
Total - 22 75
 
Operating activities: Cash to Official Public Account for: Notes 2012
$'000
2011
$'000
- Financial Institutions Supervisory Levies - (131,028) (115,857)
- Financial Assistance Levy - (52,358) (395)
Total - (183,386) (116,252)
Cash at the end of the reporting period - - -
 
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 2012
 
APRA had no administered commitments as at balance date.
 
Administered schedule of contingencies for the year ended 30 June 2012
 
APRA had no administered contingencies as at balance date.
 
Notes to and forming part of the financial statements for the year ended 30 June 2012
 
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 focusses 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 2012 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 providing market integrity and consumer protection functions for prudentially regulated institutions, functions that are conducted by other Australian Government entities. 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.
 
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.
 
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 2012.
 
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 2010/11).
 
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 2012 2011
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 impairment at the balance date. 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 (2010/11: lesser of five years or assessed useful life).
 
All software assets were assessed for indications of impairment as at 30 June 2012.
 
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.
 
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 statement of cash flow reconciliation in Note 22.
 
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. These administered items are distinguished from departmental items throughout these financial statements by background shading.
 
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 27, 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 2012 or in 2011.
 
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.
 
Details are as follows:
 
Table 1: Summary 2012
$'000
2011
$'000
Current year levies and penalties (see Note 20A, Table 1) 131,949 116,382
Less: Waivers and doubtful debts (see Note 19) (959) (615)
Net current year levies and penalties (see Table 2 below) 130,990 115,767
Less: Amount retained in the CRF (see Table 3 below) (30,610) (26,100)
Total 100,380 89,667
 
Table 2: Net current year levies and penalties by levy type 2012
$'000
2011
$'000
Superannuation funds 46,315 37,198
Authorised deposit-taking institutions 45,650 42,004
Life insurers and friendly societies 12,777 11,429
General insurers 26,248 25,136
Total 130,990 115,767
 
Table 3: Amounts retained in the CRF by levy type1 2012
$'000
2011
$'000
Superannuation funds (20,710) (16,700)
Authorised deposit-taking institutions (4,100) (3,800)
Life insurers and friendly societies (2,100) (2,300)
General insurers (3,700) (3,300)
Total (30,610) (26,100)
 
Table 4: Amounts of levy payable to APRA under the APRA Special Appropriation by levy type 2012
$'000
2011
$'000
Superannuation funds 25,605 20,498
Authorised deposit-taking institutions 41,550 38,204
Life insurers and friendly societies 10,677 9,129
General insurers 22,548 21,836
Total 100,380 89,667
 
1 As determined by the Minister in accordance with subsection 50 (1) of the Australian Prudential Regulation Authority Act 1998.
 
Note 4: Expenses
 
Note 4A: Employee benefits
 
Employee benefits 2012
$'000
2011
$'000
Salaries and wages 70,297 67,241
Superannuation 7,395 7,044
Leave and other entitlements 11,413 7,586
Separation and redundancies 528 5
Other employee benefits 179 299
Total employee benefits 89,812 82,175
 
Note 4B: Supplier expenses
 
Goods and services 2012
$'000
2011
$'000
Consultants 2,123 4,816
Contractors 886 2,638
Travel-related expenses 2,952 3,737
Operational expenses 11,163 11,359
Training and conference expenses 1,841 2,044
Other professional services 62 67
Total goods and services 19,027 24,661
 
Goods and services are made up of: 2012
$'000
2011
$'000
Provision of goods - external parties 2,583 2,800
Rendering of services - related entities 2,921 2,340
Rendering of services - external parties 13,523 19,521
Total goods and services 19,027 24,661
 
Other supplier expenses 2012
$'000
2011
$'000
Operating lease rentals - external parties: - minimum lease payments 6,779 6,911
Workers' compensation premiums 247 213
Total other supplier expenses 7,026 7124
Total supplier expenses 26,053 31,785
 
Note 4C: Depreciation and amortization
 
Depreciation: 2012
$'000
2011
$'000
Computer hardware 648 756
Leasehold improvements 1,399 1,301
Total depreciation 2,047 2,057
 
Amortisation: 2012
$'000
2011
$'000
Intangibles - computer software 3,084 2,136
Total amortisation 3,084 2,136
Total depreciation and amortisation 5,131 4,193
 
Note 4D: Finance costs
 
Finance costs 2012
$'000
2011
$'000
Unwinding of discount 97 103
Total finance costs 97 103
 
Note 4E: Write-down and impairment of assets
 
Asset write-downs and impairments from: 2012
$'000
2011
$'000
Impairment of internally developed software - 53
Total write-down and impairment of assets - 53
 
Note 4F: Losses from asset sales/disposals
 
 
Computer hardware: 2012
$'000
2011
$'000
Proceeds from sale (2) -
Carrying value of assets disposed 28 40
Total losses from asset sales/disposals 26 40
 
Note 5: Income
 
Note 5A: Rendering of services
 
Rendering of services 2012
$'000
2011
$'000
Rendering of services - government entities 1,580 1,512
Rendering of services - external entities 2,632 2,245
Total rendering of services 4,212 3,757
 
Note 5B: Rental income
 
Rental income 2012
$'000
2011
$'000
Rental income 11 9
Total rental income 11 9
 
Note 5C: Other revenue
 
Other revenue 2012
$'000
2011
$'000
Licence fees from finance sector entities 285 465
Superannuation trustee applications 60 20
Fees from foreign bank representative offices 85 75
Recoveries from RBA for scholarship 19 23
Other 119 144
Total other revenue 568 727
 
Note 5D: Other gains
 
Other gains 2012
$'000
2011
$'000
Resources received free of charge 128 125
Total other gains 128 125
 
Note 5E: Revenue from Government
 
Appropriations: 2012
$'000
2011
$'000
Special Appropriations 100,380 89,667
Departmental outputs 13,349 12,967
Total revenue from Government 113,730 102,634
 
Note 6: Other comprehensive income
 
Note 6A: Changes in asset revaluation reserve
 
Changes in asset revaluation reserve 2012
$'000
2011
$'000
Net asset revaluation - 2,641
Make good revaluation 170 187
Total 170 2,828
 
Note 7: Financial assets
 
Note 7A: Cash
 
Cash 2012
$'000
2011
$'000
APRA official bank accounts 1,737 1,577
Cash on hand 2 2
Total cash and cash equivalents 1,739 1,579
 
Note 7B: Trade and other receivables
 
Goods and services: 2012
$'000
2011
$'000
Goods and services - related entities 203 45
Goods and services - external parties 2,501 2,641
Total receivables for goods and services 2,704 2,686
 
Appropriations receivable: 2012
$'000
2011
$'000
For existing outputs 938 929
Special Appropriations 9 29
APRA Special Account 42,815 40,179
Total appropriations receivable 43,762 41,137
 
Other receivables: 2012
$'000
2011
$'000
GST receivable from the Australian Taxation Office 47 144
Other 48 47
Total other receivables 95 191
Total trade and other receivables (gross) 46,561 44,014
 
Less: impairment allowance account: 2012
$'000
2011
$'000
Appropriations receivable - (4)
Total impairment allowance account - (4)
Total trade and other receivables (net) 46,561 44,010
 
Receivables are expected to be recovered in: 2012
$'000
2011
$'000
No more than 12 months 46,555 44,010
More than 12 months 6 -
Total trade and other receivables (net) 46,561 44,010
 
Receivables are aged as follows: 2012
$'000
2011
$'000
Not overdue 46,509 43,941
Overdue by: 0 to 30 days 1 10
Overdue by: 31 to 60 days 10 9
Overdue by: 61 to 90 days 2 9
Overdue by: more than 90 days 39 45
Total receivables (gross) 46,561 44,014
 
The impairment allowance account is aged as follows: 2012
$'000
2011
$'000
- more than 90 days - (4)
Total impairment allowance account - (4)
 
Reconciliation of the impairment allowance account - Movements in relation to 2012 Other receivables
$'000
Total
$'000
Opening balance (4) (4)
Amounts written off 4 4
Closing balance - -
 
Reconciliation of the impairment allowance account - Movements in relation to 2011 Other receivables
$'000
Total
$'000
Opening balance (6) (6)
Amounts written off 6 6
Increase recognised in net surplus (4) (4)
Closing balance (4) (4)
 
Note 8: Non-financial assets
 
Note 8A: Property, plant and equipment
 
Computer hardware and office equipment 2012
$'000
2011
$'000
- fair value 1,382 1,060
- accumulated depreciation (583) -
Total computer hardware and office equipment 799 1,060
 
Leasehold improvements 2012
$'000
2011
$'000
- fair value 7,717 6,491
- accumulated depreciation (2,693) (1,387)
Total leasehold improvements 5,024 5,104
Total property, plant and equipment 5,823 6,164
 
No property, plant or equipment is expected to be sold or disposed of within the next 12 months.
 
Revaluations of non-financial assets
 
Revaluations are conducted in accordance with the revaluation policy stated in Note 115. The latest revaluation was undertaken by an independent valuer in May 2011.
 
Note 8B: Reconciliation of the opening and closing balances of property, plant and equipment – 2012
 
As at 1 July 2011 Computer hardware and office equipment
$'000
Leasehold improvements
$'000
Total
$'000
Gross book value 1,060 6,491 7,551
Accumulated depreciation - (1,387) (1,387)
Net book value 1 July 2011 1,060 5,104 6,164
 
Additions: Computer hardware and office equipment
$'000
Leasehold improvements
$'000
Total
$'000
By purchase 398 242 640
By capital incentive or additional make good provision - 1,094 1,094
Depreciation expense (648) (1,399) (2,047)
Disposals: Write-off (at cost) (76) (110) (186)
Disposals: Write-off (accumulated depreciation) 65 93 158
Net book value 30 June 2012 799 5,024 5,823
 
Net book value as of 30 June 2012 represented by: Computer hardware and office equipment
$'000
Leasehold improvements
$'000
Total
$'000
Gross book value 1,382 7,717 9,099
Accumulated depreciation (583) (2,693) (3,276)
Net book value 30 June 2012 799 5,024 5,823
 
Note 8B: Reconciliation of the opening and closing balances of property, plant and equipment - 2011
 
As at 1 July 2010 Computer hardware and office equipment
$'000
Leasehold improvements
$'000
Total
$'000
Gross book value 4,727 6,696 11,423
Accumulated depreciation (3,027) (2,997) (6,024)
Net book value 1 July 2010 1,700 3,699 5,399
 
Additions: Computer hardware and office equipment
$'000
Leasehold improvements
$'000
Total
$'000
By purchase 191 - 191
Revaluations and impairments recognised in other comprehensive income (65) 2,706 2,641
Depreciation expense (756) (1,301) (2,057)
Disposals: Write-off (at cost) (311) (19) (330)
Disposals: Write-off (accumulated depreciation) 301 19 320
Net book value 30 June 2011 1,060 5,104 6,164
 
Net book value as of 30 June 2011 represented by: Computer hardware and office equipment
$'000
Leasehold improvements
$'000
Total
$'000
Gross book value 1,060 6,491 7,551
Accumulated depreciation - (1,387) (1,387)
Net book value 30 June 2011 1,060 5,104 6,164
 
Note 8C: Intangibles
 
Computer software: 2012
$'000
2011
$'000
- internally developed - in progress 3,375 4,258
- internally developed - in use 18,076 13,950
- purchased - in progress - 64
- purchased - in use 6,501 5,865
- accumulated amortisation (15,235) (12,515)
Total computer software 12,717 11,622
Total intangibles 12,717 11,622
 
No intangibles are expected to be sold or disposed of within the next 12 months.
 
Note 8D: Reconciliation of the opening and closing balances of intangibles – 2012
 
As at 1 July 2011 Computer software internally developed
$'000
Computer software purchased
$'000
Total
$'000
Gross book value 18,208 5,929 24,137
Accumulated amortisation (8,425) (4,090) (12,515)
Net book value 1 July 2011 9,783 1,839 11,622
 
Additions: Computer software internally developed
$'000
Computer software purchased
$'000
Total
$'000
By purchase - 625 625
Internally developed 3,553 - 3,553
Amortisation (2,354) (729) (3,083)
Disposals: Write-off (at cost) (310) (53) (363)
Disposals: Write-off (accumulated amortisation) 310 53 363
Net book value 30 June 2012 10,982 1,735 12,717
 
Net book value as of 30 June 2012 represented by: Computer software internally developed
$'000
Computer software purchased
$'000
Total
$'000
Gross book value 21,451 6,501 27,952
Accumulated amortisation (10,469) (4,766) (15,235)
Total 10,982 1,735 12,717
 
Note 8D: Reconciliation of the opening and closing balances of intangibles - 2011
 
As at 1 July 2010 Computer software internally developed
$'000
Computer software purchased
$'000
Total
$'000
Gross book value 14,213 5,432 19,645
Accumulated amortisation (7,016) (3,496) (10,512)
Net book value 1 July 2010 7,197 1,936 9,133
 
Additions: Computer software internally developed
$'000
Computer software purchased
$'000
Total
$'000
By purchase - 659 659
Internally developed 4,049 - 4,049
Impairments of internally developed software (53) - (53)
Amortisation (1,410) (726) (2,136)
Disposals: Write-off (at cost) - (163) (163)
Disposals: Write-off (accumulated amortisation) - 133 133
Net book value 30 June 2011 9,783 1,839 11,622
 
Net book value as of 30 June 2011 represented by: Computer software internally developed
$'000
Computer software purchased
$'000
Total
$'000
Gross book value 18,208 5,929 24,137
Accumulated amortisation and impairment (8,425) (4,090) (12,515)
Total 9,783 1,839 11,622
 
Note 8E: Other non-financial assets
 
Other non-financial assets 2012
$'000
2011
$'000
Prepayments 1,964 2,028
Total other non-financial assets 1,964 2,028
 
Total other non-financial assets are expected to be recovered in: 2012
$'000
2011
$'000
- less than 12 months 1,917 1,944
- more than 12 months 47 84
Total other non-financial assets 1,964 2,028
 
Note 9: Payables
 
Note 9A: Suppliers
 
Suppliers 2012
$'000
2011
$'000
Operating lease rentals 373 388
Total supplier payables 373 388
 
Operating lease rentals payable relate to external parties and are expected to be settled in less than 12 months.
 
Note 9B: Unearned fees and charges
 
Unearned fees and charges 2012
$'000
2011
$'000
Unearned revenue 1,036 1,133
Total unearned fees and charges 1,036 1,133
 
Unearned fees and charges are expected to be settled in less than 12 months.
 
Note 9C: Other payables
 
Other payables 2012
$'000
2011
$'000
Accrued expenses 995 2,289
Salaries and wages 2,279 1,917
Lease incentives 552 188
Total other payables 3,826 4,394
 
Other payables are expected to be settled in: 2012
$'000
2011
$'000
- less than 12 months 3,383 4,242
- more than 12 months 443 152
Total other payables 3,826 4,394
 
Note 10: Provisions
 
Note 10A: Employee provisions
 
Employee provisions 2012
$'000
2011
$'000
Leave 26,953 21,520
Bonus 4,693 4,534
Other 354 81
Total employee provisions 32,000 26,135
 
Employee provisions are expected to be settled in: 2012
$'000
2011
$'000
- less than 12 months 26,155 21,334
- more than 12 months 5,845 4,801
Total employee provisions 32,000 26,135
 
Note 10B: Other provisions
 
Other provisions 2012
$'000
2011
$'000
Provisions for make good 2,881 2,025
Total other provisions 2,881 2,025
 
Other provisions are expected to be settled in: 2012
$'000
2011
$'000
- less than 12 months 44 117
- more than 12 months 2,837 1,908
Total other provisions 2,881 2,025
 
Reconciliation of other provisions Provision for make good
$'000
Total
$'000
Carrying amount 1 July 2011 2,025 2,025
Additional provisions made 89 89
Amounts used (110) (110)
Unwinding of discount or change in rate 877 877
Closing balance 30 June 2012 2,881 2,881
 
APRA leases premises in Sydney, Melbourne, Canberra, Brisbane, Perth and Adelaide.
 
In the lease conditions of all locations except Canberra, there is a requirement for APRA, upon expiration of the lease, to restore the premises to the condition they were in at the commencement of the lease. The required level of 'make good' provision is being accumulated for each location over the terms of the various leases.
 
Note 11: Restructuring
 
Note 11A: Departmental restructuring
 
Income 2012
$'000
Recognised by the receiving entity 2,710
Recognised by the losing entity - APRA 1,355
Total Income 4,065
 
Expenses 2012
$'000
Recognised by the receiving entity 2,710
Recognised by the losing entity - APRA 1,355
Total Expenses 4,065
 
Assets relinquished 2012
$'000
Cash paid (performance bonuses transferred to DHS) 178
Office equipment 6
Total assets relinquished 184
 
Liabilities relinquished 2012
$'000
Performance bonuses to staff transferred to DHS 178
Total liabilities relinquished 178
Net assets/(liabilities) relinquished 6
 
1 Responsibility for the early release of superannuation benefits on compassionate grounds was transferred to the Department of Human Services (DHS) from November 2011. To reflect this transfer, APRA's Special Appropriation was reduced by $2.71 million.
 
2 APRA transferred $216,720 in accrued annual and long service leave to DHS in 2010/11.
 
Note 11B: Administered restructuring
 
There was no administered restructuring in 2011/12.
 
Note 12: Statement of cash flows reconciliation
 
Reconciliation of cash and cash equivalents as per Balance sheet to Statement of cashflows: Cash as per 2012
$'000
2011
$'000
Statement of cash flows 1,739 1,579
Balance sheet 1,739 1,579
Difference - -
 
Reconciliation of cash and cash equivalents as per Balance sheet to Statement of cashflows: Reconciliation of net cost of services to net cash from operating activities 2012
$'000
2011
$'000
Net cost of services (116,200) (113,731)
Add: revenue from Government 113,730 102,634
 
Reconciliation of cash and cash equivalents as per Balance sheet to Statement of cashflows: Adjustments for non-cash items 2012
$'000
2011
$'000
Depreciation/amortisation 5,131 4,193
Loss on disposal of assets 26 40
Impairment of internally developed software - 53
Make good (868) 187
Lease incentives (395) -
 
Reconciliation of cash and cash equivalents as per Balance sheet to Statement of cashflows: Change in assets/liabilities 2012
$'000
2011
$'000
(Increase)/decrease in net receivables (2,551) 8,829
Decrease in other non-financial assets 64 146
Increase in employee provisions 5,865 1,010
Increase/(decrease) in supplier payables (15) 60
(Decrease) in unearned fees and charges (97) (585)
Increase/(decrease) in other payables (568) 1,308
Increase/(decrease) in other provisions 856 (193)
Net cash from/(used by) operating activities 4,978 3,951
 
Note 13: Contingent assets and liabilities
 
Contingent assets Claims for damages or costs
2012
$'000
2011
$'000
Balance from previous period - -
New contingent assets recognised - -
Expired - -
Total contingent assets - -
 
Contingent liabilities Claims for damages or costs
2012
$'000
2011
$'000
Balance from previous period - -
New contingent liabilities recognised - -
Obligations expired - -
Total contingent liabilities - -
Net contingent assets/(liabilities) - -
 
Quantifiable contingencies
 
APRA has no quantifiable contingencies as at balance date.
 
Unquantifiable contingencies
 
At 30 June 2012, APRA had one workplace relations claim. The costs that might be incurred relate mainly to legal counsel and those associated with any legal proceedings. It is not possible to estimate the amount of any eventual payments that may be required in relation to this claim and therefore no amount has been included in the schedule of contingencies.
 
Significant remote contingencies
 
APRA has no significant remote contingencies as at balance date.
 
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 2011/12 was Chairman $800,000 (2010/11: $646,710); Deputy Chairman $640,000 (2010/11: $541,120); and Member $600,200 (2010/11: $514,750). 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.
 
The remuneration of APRA Members, measured in terms of the cost to APRA, is shown in the relevant remuneration bands: 2012 2011
$510,000 to $539,999 - 1
$540,000 to $569,999 - 1
$600,000 to $629,999 1 -
$660,000 to $689,999 1 1
$900,000 to $929,999 1 -
Total 3 3
Total remuneration of APRA Members $2,223,959 $1,745,596
 
Note 15: Remuneration of senior executives
 
Note 15A: Remuneration expenses for senior executives1
 
Short-term employee benefits: 2012
$
2011
$
Salary (including annual leave) 6,918,998 6,548,279
Movement in annual leave provision 125,739 27,266
Performance bonus 413,601 392,907
Allowances 2,508 3,175
Total short-term employee benefits 7,460,846 6,971,627
 
Post-employment benefits: 2012
$
2011
$
Superannuation 766,986 800,745
Total post-employment benefits 766,986 800,745
 
Other long-term benefits: 2012
$
2011
$
Long-service leave accrued 817,801 235,489
Total other long-term benefits 817,801 235,489
Total 9,045,633 8,007,861
 
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 $150,000.
 
Note 15B: Average annual reportable remuneration paid to senior executives during the reporting period
 
Average annual reportable remuneration1: Total remuneration (including part-time arrangements) 2012
Senior Executives
No.
Reportable salary2
$
Contributed superannuation3
$
Reportable allowances4
$
Bonus paid5 Total6
$
Less than $150,000 3 88,268 14,120 - - 102,388
$150,000 to $179,999 2 132,488 29,768 - 10,174 172,430
$240,000 to $269,999 7 218,170 27,058 - 12,242 257,470
$270,000 to $299,999 13 235,028 36,375 - 11,614 283,017
$300,000 to $329,999 1 234,417 48,724 - 18,373 301,514
$360,000 to $389,999 1 283,090 50,000 - 38,935 372,025
$390,000 to $419,999 2 332,982 65,793 258 14,664 413,697
$420,000 to $449,999 1 376,226 35,274 1,992 15,709 429,201
Total 30 - - - - -
 
Average annual reportable remuneration1: Total remuneration (including part-time arrangements) 2011
Senior Executives
No.
Reportable salary2
$
Contributed superannuation3
$
Reportable allowances4
$
Bonus paid5 Total6
$
Less than $150,000 2 107,610 27,488 - 6,953 142,051
$150,000 to $179,999 1 164,021 14,672 - - 178,693
$180,000 to $209,999 2 159,878 41,983 83 408 202,352
$240,000 to $269,999 10 212,493 35,905 - 7,842 256,240
$270,000 to $299,999 8 233,447 32,941 - 15,993 282,381
$300,000 to $329,999 1 243,535 50,723 - 18,103 312,361
$390,000 to $419,999 3 324,605 63,870 1,003 18,324 407,802
$420,000 to $449,999 1 348,048 72,880 - 25,872 446,800
Total 28 - - - - -
  1. This table reports on 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' to account for tax benefits); and
    3. exempt foreign employment income.
  3. 'Contributed superannuation' is the average actual superannuation contributions paid to senior executives in that reportable remuneration band during the reporting period, including any salary sacrificed amounts.
  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. Salary sacrifice benefits are reported in the 'reportable salary' column, excluding salary sacrificed superannuation, which is reported in the 'contributed superannuation' column.
    Senior executives have the following leave entitlements:
    • annual leave 20 days (2010/11: 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.
Note 15C: Other highly paid staff
 
Average annual reportable remuneration1,2: Total remuneration (including part-time arrangements) 2012
Staff No. Reportable salary
$
Contributed superannuation
$
Reportable allowances
$
Bonus paid Total
$
$150,000 to $179,999 86 134,987 20,301 58 8,746 164,092
$180,000 to $209,999 45 162,131 23,117 57 9,874 195,179
$210,000 to $239,999 29 179,527 29,153 - 13,496 222,176
$240,000 to $269,999 6 197,942 39,019 162 12,803 249,926
Total 166 - - - - -
 
Average annual reportable remuneration1,2: Total remuneration (including part-time arrangements) 2011
Staff No. Reportable salary
$
Contributed superannuation
$
Reportable allowances
$
Bonus paid Total
$
$150,000 to $179,999 69 133,184 21,439 70 9,878 164,571
$180,000 to $209,999 49 159,619 25,136 51 9,767 194,573
$210,000 to $239,999 14 177,345 33,323 - 15,169 225,837
$240,000 to $269,999 4 186,595 44,810 - 12,908 244,313
$300,000 to $329,999 1 226,787 47,418 - 29,277 303,482
Total 137 - - - - -
  1. This table reports staff:
    1. who were employed by APRA during the reporting period;
    2. whose reportable remuneration was $150,000 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
 
Financial statement audit services were provided free of charge to APRA in 2011/12. 2012
$'000
2011
$'000
Fair value of the services provided by: The Australian National Audit Office 128 125
Total 128 125
 
No other services were provided by the auditors of the financial statements.
 
Note 17: Financial instruments
 
Note 17A: Categories of financial instruments
 
Financial assets Notes 2012
$'000
2011
$'000
Loans and receivables: Cash - 1,739 1,579
Loans and receivables: Trade receivables - 2,704 2,686
Carrying amount of financial assets 18 4,443 4,265
 
Financial liabilities Notes 2012
$'000
2011
$'000
At amortised cost: Suppliers - 373 388
At amortised cost: Other payables - 3,274 4,206
Carrying amount of financial liabilities - 3,647 4,594
 
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 Not past due nor impaired 2012
$'000
Not past due nor impaired 2011
$'000
Past due or impaired 2012
$'000
Past due or impaired 2011
$'000
Cash 1,739 1,579 -  
Trade receivables 2,652 2,626 52 60
Total 4,391 4,205 52 60
 
Ageing of financial assets that were past due but not impaired for 2012 0 to 30 days
$'000
31 to 60 days
$'000
61 to 90 days
$'000
90+ days
$'000
Total
$'000
Trade receivables 1 10 2 39 52
Total 1 10 2 39 52
 
Ageing of financial assets that were past due but not impaired for 2011 0 to 30 days
$'000
31 to 60 days
$'000
61 to 90 days
$'000
90+ days
$'000
Total
$'000
Trade receivables 2 8 9 41 60
Total 2 8 9 41 60
 
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
 
Financial assets Notes 2012
$'000
2011
$'000
Total financial assets as per balance sheet - 48,300 45,589
Less: non-financial instrument components: Other GST receivable - 95 191
Less: non-financial instrument components: Appropriation receivable - 43,762 41,137
Less: non-financial instrument components: Impairment allowance - - (4)
Total non-financial instrument components - 43,857 41,324
Total financial assets as per financial instruments note 17 4,443 4,265
 
Note 19: Administered expenses
 
Note 19: Waivers
 
Waivers 2012
$'000
2011
$'000
Supervisory Levy waivers 963 616
Impairment allowance adjustment (4) (1)
Total waivers 959 615
 
Levies and late payment penalties waived by levy type 2012
$'000
2011
$'000
Superannuation funds 890 511
General insurers 19 102
Other 50 2
Total 959 615
 
Note 20: Administered income
 
Note 20A: Financial Institutions Supervisory Levies
 
Revenue: Taxation revenue 2012
$'000
2011
$'000
Current year levies and penalties (see Table 1) 131,949 116,382
Total Financial Institutions Supervisory Levies 131,949 116,382
 
Table 1: Financial Institutions Supervisory Levies revenue by type
 
Levy: 2012
$'000
2011
$'000
Superannuation funds 46,984 37,658
Authorised deposit-taking institutions 45,695 42,006
Life insurers and friendly societies 12,783 11,429
General insurers 26,267 25,233
Total levies 131,729 116,326
 
Late payment penalties: 2012
$'000
2011
$'000
Superannuation funds 220 56
Total late payment penalties 220 56
Total current year levies and penalties 131,949 116,382
 
Note 20B: Financial Assistance Levy
 
Financial Assistance Levy 2012
$'000
2011
$'000
Current year levies - 54,925
Total Financial Assistance Levy - 54,925
Late payment penalties 20 -
Total late payment penalties 20 -
Total current year levies and penalties 20 54,925
 
Note 21: Administered financial assets
 
Financial assets: Receivables 2012
$'000
2011
$'000
Financial Institutions Supervisory Levies 9 29
Financial Assistance Levy 2,192 54,530
Total receivables (gross) 2,201 54,559
 
Less: impairment allowance account 2012
$'000
2011
$'000
Supervisory Levies - (4)
Total receivables (net) 2,201 54,555
 
Receivables were aged as follows: 2012
$'000
2011
$'000
Not overdue 9 54,546
Overdue by: 0 to 30 days - 8
Overdue by: 31 to 60 days - 1
- more than 90 days 2,192 4
Total receivables (gross) 2,201 54,559
 
The impairment allowance account is aged as follows: 2012
$'000
2011
$'000
- more than 90 days - (4)
Total impairment allowance account - (4)
 
Reconciliation of the impairment allowance account: Movements in relation to 2012 Receivables
$'000
Total
$'000
Opening balance (4) (4)
Amounts written off 4 4
Closing balance - -
 
Reconciliation of the impairment allowance account: Movements in relation to 2011 Receivables
$'000
Total
$'000
Opening balance (6) (6)
Amounts written off 6 6
(Increase) recognised in net surplus (4) (4)
Closing balance (4) (4)
 
Note 22: Administered statement of cash flows reconciliation
 
Reconciliation of cash as per Administered schedule of assets and liabilities to Administered statement of cash flows: Cash as per: 2012
$'000
2011
$'000
Administered statement of cash flows - -
Administered schedule of assets and liabilities - -
Difference - -
 
Reconciliation of cash as per Administered schedule of assets and liabilities to Administered statement of cash flows: Reconciliation of net cost of services to net cash from operating activities: 2012
$'000
2011
$'000
Net cost of services 131,010 170,692
 
Reconciliation of cash as per Administered schedule of assets and liabilities to Administered statement of cash flows: Changes in assets / liabilities 2012
$'000
2011
$'000
(Increase) / decrease in net receivables 52,354 (54,515)
Net cash from operating activities 183,364 116,177
 
Note 23: Administered - financial instruments
 
Note 23A: Categories of financial instruments
 
Financial assets Notes 2012
$'000
2011
$'000
Loans and receivables: Receivables 24 2,201 54,559
Carrying amount of financial assets - 2,201 54,559
 
The carrying amounts of the financial instruments are a reasonable representation of their fair value.
 
Note 23B: Credit risk
 
The maximum exposure to credit risk at the reporting date is the carrying amount of levy receivable as recognised in the Administered schedule of assets and liabilities. There is no significant exposure to any other concentrations of credit risk.
 
Credit quality of financial instruments not past due or individually determined as impaired Not past due nor impaired 2012
$'000
Not past due nor impaired 2011
$'000
Past due or impaired 2012
$'000
Past due or impaired 2011
$'000
Receivables 9 54,546 2,192 13
Total 9 54,546 2,192 13
 
Ageing of financial assets that were past due but not impaired for 2012 0 to 30 days
$'000
31 to 60 days
$'000
61 to 90 days
$'000
90+ days
$'000
Total
$'000
Receivable - - - 2,192 2,192
Total - - - 2,192 2,192
 
Ageing of financial assets that were past due but not impaired for 2011 0 to 30 days
$'000
31 to 60 days
$'000
61 to 90 days
$'000
90+ days
$'000
Total
$'000
Receivable 8 1 - 4 13
Total 8 1 - 4 13
 
Note 23C: Liquidity risk
 
There are no administered financial liabilities and therefore there is no exposure to any liquidity risk.
 
Note 23D: Market risk
 
There is no exposure to any form of currency risk, interest rate risk or other price risk.
 
Note 24: Administered financial assets reconciliation
 
Financial assets Notes 2012
$'000
2011
$'000
Total financial assets as per Administered schedule of assets and liabilities - 2,201 54,555
Less: non-financial instrument components - Impairment allowance - - (4)
Total non-financial instrument components - - (4)
Total financial assets as per financial instruments note 23 2,201 54,559
 
Note 25: Appropriations
 
Table A: Annual appropriations ('recoverable GST exclusive')
 
Departmental 2012 Appropriations Appropriation applied in 2012 (current and prior years)
$'000
Variance1
$'000
Appropriation Act FMA Act Total appropriation
$'000
Annual Appropriation
$'000
Appropriations reduced
$'000
Section 31
$'000
Ordinary annual services 13,289 - 8,110 21,399 21,390 9
Other services: Equity - - - - - -
Total departmental 13,289 - 8,110 21,399 21,390 9
 
Administered 2012 Appropriations Appropriation applied in 2012 (current and prior years)
$'000
Variance1
$'000
Appropriation Act FMA Act Total appropriation
$'000
Annual Appropriation
$'000
Appropriations reduced
$'000
Section 31
$'000
Other services: New administered outcomes - - - - - -
Total administered - - - - - -
 
Departmental 2011 Appropriations Appropriation applied in 2011 (current and prior years)
$'000
Variance1
$'000
Appropriation Act FMA Act Total
appropriation $'000
Annual Appropriation
$'000
Appropriations reduced
$'000
Section 31
$'000
Ordinary annual services 12,575 - 8,417 20,992 20,786 206
Other services: Equity 1,457 - - 1,457 1,457 -
Total departmental 14,032 - 8,417 22,449 22,243 206
 
Administered 2011 Appropriations Appropriation applied in 2011 (current and prior years)
$'000
Variance1
$'000
Appropriation Act FMA Act Total
appropriation $'000
Annual Appropriation
$'000
Appropriations reduced
$'000
Section 31
$'000
Other services: New administered outcomes - - - - - -
Total administered - - - - - -
 
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.
 
Table B: Unspent departmental annual appropriations ('recoverable GST exclusive')
 
Authority: Departmental 2012
$'000
2011
$'000
Appropriation Act (No. 1) 2011/12 938 -
Appropriation Act (No. 1) 2010/11 - 929
Appropriation Act (No. 2) 2010/11 - 1,457
Appropriation Act (No. 2) 2009/10 - 30
Appropriation Act (No. 3) 2009/10 - 60
Total 938 2,476
 
Table C: Special appropriations ('recoverable GST exclusive')
 
Authority Type Purpose Appropriation applied
2012
$'000
2011
$'000
Australian Prudential Regulation Authority Act 1998 -section 50, Departmental Unlimited To provide an appropriation for levy money received that exceeds the amount determined by the Minister under section 50(1) of the Australian Prudential Regulation Act 1998. 100,397 89,682
Financial Management and Accountability Act 1997 -section 28, Administered Refund To provide an appropriation for the repayment of overpaid levies and incorrect deposits received by APRA. 1 75
Total - - 100,398 89,757
 
Table D: Reduction in administered items ('recoverable GST exclusive')
 
There were no reductions of administered items in 2012 or in 2011.
 
Note 26: Special Accounts
 
Special Accounts APRA Special Account
(Departmental)1
Financial Claims Scheme Special Account (Administered)2 Lloyd's Deposit Trust Special Account (Special Public Money)3 Services for Other Entities and Trust Moneys (Special Public Money)4
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
Balance brought forward from previous period 41,756 49,530 1,451 1,524 2,000 2,000 - -
 
Increases: APRA Special Account
(Departmental)1
Financial Claims Scheme Special Account (Administered)2 Lloyd's Deposit Trust Special Account (Special Public Money)3 Services for Other Entities and Trust Moneys (Special Public Money)4
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
Departmental: Special appropriation for reporting period 100,397 89,682 - - - - - -
Departmental: Appropriation Act No1 21,390 20,063 - - - - - -
Departmental: Appropriation Act No.2 - 1,457 - - - - - -
Departmental: Appropriation Act No.3 - 723 - - - - - -
Total departmental increases 121,787 111,925 - - - - - -
Administered: Special appropriation for reporting period - - 200 - - - - -
Total administered increases - - 200 - - -   -
Available for payments 163,543 161,455 1,651 1,524 2,000 2,000 - -
 
Decreases: APRA Special Account
(Departmental)1
Financial Claims Scheme Special Account (Administered)2 Lloyd's Deposit Trust Special Account (Special Public Money)3 Services for Other Entities and Trust Moneys (Special Public Money)4
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
2012
$'000
2011
$'000
Departmental: Payments made - employees (83,584) (80,736) - - - - - -
Departmental: Payments made - suppliers (30,589) (34,064) - - - - - -
Departmental: Payments made - purchase assets (4,818) (4,899) - - - - - -
Total departmental decreases (118,991) (119,699) - - - -   -
Administered: Repayments made from the Special Account - - (1,358) (73) - - - -
Total administered decreases - - (1,358) (73) - - - -
Total balance carried to the next period 44,552 41,756 293 1,451 2,000 2,000 - -
  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 2012 for Lloyd's inscribed stock is $2,078,380 (2011: $2,078,740).

  4. Appropriation: Financial Management and Accountability Act 1997, section 20.
    Establishing Instrument: Financial Management and Accountability Determination 2007/09.
    Purpose: To distribute amounts temporarily held on trust for the benefit of another person other than the Commonwealth; disburse amounts in connection with services performed on behalf of other Governments and bodies that are not FMA Act agencies; and repay amounts where an Act or other law requires or permits the repayment of an amount received.
Note 27: Compensation and debt relief
 
Compensation and debt relief - Departmental 2012
$'000
2011
$'000
Nil payments were made during the reporting period (2011: Nil payments made). - -
 
Compensation and debt relief - Administered 2012
$'000
2011
$'000
31 waivers of amounts owing to the Government were made pursuant to section 12 of the Financial Institutions Supervisory Levies Collection Act 1998 (2011: 144 waivers). 958,856 614,598
 
No other debt relief was made during the reporting period (2011: Nil payments made).
 
Note 28: 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.
 
Lloyd's inscribed stock 2012
$'000
2011
$'000
Total amount held at the beginning of the reporting period 2,000 2,000
Receipts 130 115
Payments (130) (115)
Total amount held at the end of the reporting period 2,000 2,000
Total 2,000 2,000
 
The market valuation as at 30 June 2012 for Lloyd's inscribed stock is $2,078,380 (2011: $2,078,740).
 
Note 29: Reporting of outcomes
 
Note 29A: 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.
 
Departmental 2012
$'000
2011
$'000
2012
$'000
2011
$'000
Outcome 1 Total
Expenses 121,119 118,349 121,119 118,349
Own-source income 4,919 4,618 4,919 4,618
 
Administered 2012
$'000
2011
$'000
2012
$'000
2011
$'000
Outcome 1 Total
Expenses 959 615 959 615
Own-source income 131,969 171,307 131,969 171,307
Net cost/(contribution) of outcome delivery (14,810) (56,961) (14,810) (56,961)
 
Note 30: Competitive neutrality and cost recovery
 
Receipts Subject to Cost Recovery Policy: Other cost recovery arrangements 2012
$'000
2011
$'000
Statistical information provided to RBA 493 250
Statistical information provided to ABS 323 442
Assessment of models-based capital adequacy requirements for ADIs - Basel II 2,100 2,200
Total receipts subject to cost recovery policy 2,916 2,892
 
Note 31: 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 provided information to all agencies in 2011 regarding the need for risk assessments in relation to compliance with statutory conditions on payments from Special Appropriations, including Special Accounts.
 
During 2011/12, APRA reviewed its exposure to risks of not complying with statutory conditions on payments from appropriations. The review involved:
  • identifying each Special Appropriation and Special Account;
  • determining the risk of non-compliance by assessing the difficulty of administering the statutory conditions and assessing the extent to which existing payment systems and processes satisfy those conditions;
  • determining procedures to confirm risk assessments in medium risk cases and to quantify the extent of non-compliance, if any, in higher risk situations;
  • obtaining legal advice as appropriate to resolve questions of potential non-compliance; and
  • considering legislative or procedural changes to reduce the risk of non-compliance in the future to an acceptably low level.
APRA's appropriations involving statutory conditions for payment comprise:
  • APRA Special Appropriations;
  • refunds of receipts (s28 FMA);
  • APRA Special Account;
  • Financial Claims Scheme Special Account;
  • Lloyd's Deposit Trust Special Account; and
  • Services for Other Entities and Trust Moneys (Special Public Money) Account.
As at 30 June 2012, the review had been completed in respect of all appropriations with statutory conditions for payment.
 
The review identified no issues of compliance with Section 83.
 
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