Skip Ribbon Commands
Skip to main content
 
ARCHIVED CONTENT

Chapter 6: PHIAC's financial reporting and performance 2014-15

 

In 2014-15 PHIAC's total operating expenditure was $7.05 million, compared to the budget figure of $6.93 million.
 
This chapter explains how PHIAC was funded and the way it maintained efficiency, transparency and equity, and includes further details for the 2014-15 financial statements.
 
Funding of PHIAC
 
Council Administration Levy
 
The regulatory activities of PHIAC were funded in 2014-15 through the Council Administration Levy, a cost recovery tax capped in the Private Health Insurance (Council Administration Levy) Act 2003 at $2 per annum for holders of single private health insurance policies and $4 per annum for holders of couple or family policies.
 
Stringent controls remained in place on the utilisation of levy funding throughout 201415, with the Council reviewing expenditure against revenue at every meeting. Regular reporting was also submitted to the transition steering committee and the working group which comprised representatives of DoH, the Departments of Finance and the Treasury, and APRA. Expenditure was also subject to ongoing monitoring by the ANAO.
 
PHIAC was also accountable to the Parliament throughout the year through regular appearances at Senate Estimates Committee hearings.
 
The Risk Equalisation Levy
 
The Risk Equalisation Levy was collected by PHIAC from the PHI industry as part of PHIAC's prudential regulatory functions.
 
All monies collected from the industry by the levy were returned to the industry in the same quarter. No moneys were withdrawn to cover PHIAC's general administrative costs, or its administration of the RETF.
 
The data determining the levy calculations was provided to PHI industry at the same time the levy was calculated. Each insurer was able to check the industry calculations and those for their own fund/s on a state by state basis to verify the calculations as correct.
 
The Risk Equalisation Levy calculations were also audited by the ANAO every quarter, and PHIAC reported the Risk Equalisation Levy in the annual Portfolio Budget Statement.
 
In 2014-15, the Risk Equalisation Levy redistributed $441 million of industry funds.
 
Collapsed Insurer Levy
 
The Collapsed Insurer Levy enables PHIAC to raise a levy from the industry to help meet a collapsed insurer's liabilities to the people insured under its policies where the insurer was unable to meet these liabilities itself.
 
To date, this levy has not been imposed on the PHI industry.
 
Late Payment Penalties
 
Section 307-5 of the PHI Act provides that if a private health insurance levy remains wholly or partly unpaid after it becomes due and payable, the insurer is liable to pay a late payment penalty. This penalty is calculated at the rate specified in the Private Health Insurance (Levy Administration) Rules 2010.
 
PHIAC may waive the whole or a part of a late payment levy if it considered there were good reasons for doing so.
 
In 2014-15, PHIAC imposed no penalty payments.
 
Reserve
 
PHIAC established a reserve in 1998 to finance extreme expenditures such as a prudential crisis, a significant enforcement action, or litigation.
 
Accumulated reserves from operations arising from the Council Administration Levy in 2014-15 totalled $2.8 million, of which $256,044 was in the Asset Revaluation Reserve.
 
Table of Contents for Financial Statements
Independent Auditor's Report
 
Independent Auditor's Report page 1
 
Click on the above image to view the independent auditor's report in a larger size.
 
Independent Auditor's Report page 2
 
Click on the above image to view the independent auditor's report in a larger size.
 
Statement by Members and Executive General Manager - Corporate Services
 
Statement by Members and Executive General Manager Corporate Services.
 
Click on the above image to view the statement by members and executive general manager in a larger size.
 
Statement of comprehensive income for the period ended 30 June 2015
 
Image of a Private Health Insurance Administration Council Statement of Comprehensive Income for the period ended 30 June 2015. Total expenses for 2015 are listed as $7047317. Total comprehensive income attributable to the Australian Government for 2015 is listed as $(2099960).
 
Click on the above image to view the statement of comprehensive income in a larger size.
 
The above statement should be read in conjunction with the accompanying notes.
 
Statement of financial position as at 30 June 2015
 
Image of a Private Health Insurance Administration Council Statement of Financial Position as at 30 June 2015. Total assets for 2015 are listed as $4314772. Net assets for 2015 are listed as $2821148. Total equity for 2015 is listed as $2821148.
 
Click on the above image to view the statement of financial position in a larger size.
 
The above statement should be read in conjunction with the accompanying notes.
 
Statement of changes in equity for the period ended 30 June 2015
 
Image of a Private Health Insurance Administration Council Statement of Changes in Equity for the period ended 30 June 2015. The Closing Balance as at 30 June 2015 is listed as $2565104 for retained earnings, $256044 for asset revaluation reserve, and $2821148 for total equity.
 
Click on the above image to view the statement of changes in equity in a larger size.
 
The above statement should be read in conjunction with the accompanying notes.
 
Cash flow statement for the period ended 30 June 2015
 
Image of a Private Health Insurance Administration Council Cash Flow Statement for the period ended 30 June 2015. Operating activities total cash received for 2015 is listed as $5035103. Net cash from/(used by) operating activities for 2015 is listed as $(2467880). Investing activities total cash received is listed as $11385. Net cash used by investing activities is listed as $(53008). Cash at the end of the reporting period is listed as $3794206.
 
Click on the above image to view the cash flow statement in a larger size.
 
The above statement should be read in conjunction with the accompanying notes.
 
Schedule of commitments as at 30 June 2015
 
Image of a Private Health Insurance Administration Council Schedule of Commitments as at 30 June 2015. Net commitments by type for 2015 is listed as $287420. Net commitments by maturity for 2015 is listed as $287420.
 
Click on the above image to view the schedule of commitments in a larger size.
 
Notes:
  1. Commitments are GST inclusive where relevant.
  2. Operating lease included is effectively non-cancellable and comprises a lease for office accommodation.
The above schedule should be read in conjunction with the accompanying notes.
 
Note 1: Summary of Significant Accounting Policies
 
1.1 Objective of the Private Health Insurance Administration Council (PHIAC)
 
PHIAC is an Australian Government controlled entity. PHIAC aims to protect and maintain a viable, prudentially sound, and competitive private health insurance industry. PHIAC ceased on 1 July 2015.
 
PHIAC is structured to meet one outcome which is described in the 2015-16 Portfolio Budget Statement (PBS) as: "Prudential safety and competitiveness of the private health insurance industry in the interests of consumers, including through efficient industry regulation".
 
PHIAC provides reliable and timely private health insurance information to the industry, consumers and the Government. It also manages the Risk Equalisation Trust Fund which supports 'community rating'.
 
PHIAC also maintains prudential and capital standards for the private health insurance industry, and provides direction to the industry on compliance with these standards.
 
With the passage of the Private Health Insurance (Prudential Supervision) (Consequential Amendments and Transitional Provisions) Act 2015, the prudential supervision functions, assets and liabilities of PHIAC were transferred to the Australian Prudential Regulation Authority (APRA) and PHIAC was abolished on 1 July 2015. Responsibility for general private health insurance policy issues remains with the Department of Health.
 
Following the transfer of PHIAC to APRA, the continued performance of PHIAC's functions in their present form and with their present programs is dependent on Government policy and on continuing funding by Parliament for APRA's administration and programs.
 
1.2 Basis of Preparation of the Financial Statements
 
The financial statements are general-purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
 
The Financial Statements have been prepared in accordance with:
  1. the Financial Reporting Rule (FRR) for reporting periods ending on or after 1 July 2014; and
  2. Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
PHIAC's 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 dollar 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 PHIAC (or APRA) or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under executory contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments or the contingencies note.
 
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, PHIAC has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:
 
PHIAC's functions, assets and liabilities were transferred to APRA, and PHIAC abolished, on 1 July 2015.
  • PHIAC has assessed the value of all items of land and buildings and property, plant and equipment to determine the basis that all assets are transferred to APRA and used for their existing purpose. The current lease of premises ceases at 30 June 2016 with two additional one year options. This lease novated to APRA effective at the transition date of 1 July 2015.
  • The liability for employee provisions includes an estimation component in respect of long term employee benefits measured as the present value of estimated future cash outflows on the assumption that current staff follow the roles and functions transferred to APRA.
No other accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.
 
1.4 New 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 accounting standards issued prior to the signing applicable to the current or future reporting periods would have a material financial impact on PHIAC.
 
1.5 Revenue
 
Revenue from the sale of goods is recognised when:
  1. the risks and rewards of ownership have been transferred to the buyer;
  2. PHIAC retains no managerial involvement or effective control over the goods;
  3. the revenue and transaction costs incurred can be reliably measured; and
  4. it is probable that the economic benefits associated with the transaction will flow to PHIAC.
Revenue from the rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:
  1. the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
  2. the probable economic benefits associated with the transaction will flow to PHIAC.
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 amount. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.
 
Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.
 
Revenues from Government
 
PHIAC administers the Council Administration Levy collecting monies from industry which are placed into the Consolidated Revenue Fund and then allocated back to PHIAC. For the purposes of these accounts, income from the Levy is shown as Revenue from Government. PHIAC does not receive any direct appropriations.
 
The Minister for Health in conjunction with the Minister for Finance approved the non-collection of the June 2015 quarter of the Council Administration Levy.
 
Section 307-10 (1) of the Private Health Insurance Act 2007 states Levies collected under the following Acts are payable to PHIAC:
  • Private Health Insurance (Risk Equalisation Levy) Act 2003;
  • Private Health Insurance (Council Administration Levy) Act 2003; and
  • Private Health Insurance (Collapsed Insurer Levy) Act 2003.
Section 307-10 (2) of the Private Health Insurance Act 2007 appropriates the Consolidated Revenue Fund for the amounts payable under section 307-10.
 
1.6 Gains
 
Sale of Assets
 
Gains from disposal of assets are recognised when control of the asset has passed to the buyer.
 
1.7 Employee Benefits
 
Liabilities for 'short term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits due within 12 months of the end of the reporting period, 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. PHIAC has adopted the Commonwealth Government bond rates in helping to calculate the present values of employee entitlements.
 
Other long-term employee benefits are measured as the net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.
 
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 PHIAC is estimated to be less than the annual entitlement for sick leave.
 
The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that will be applied at the time the leave is taken, including PHIAC's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.
 
The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2015. In determining the present value of the liability, PHIAC has taken into account attrition rates and pay increases through promotion and certified agreement increases.
 
Superannuation
 
The majority of staff of PHIAC are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap). The CSS and PSS are defined benefit schemes for the Commonwealth. The PSSap is a defined contribution scheme. PHIAC also contributes to other funds where nominated by employees in accordance with Super Choice guidelines.
 
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 by the Department of Finance as an administered item.
 
PHIAC makes employer contributions to the employees' superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. An additional contribution for employer productivity benefits is made in accordance with Employer Productivity Superannuation Contribution rates where applicable. The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.
 
1.8 Leases
 
Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.
 
1.9 Cash
 
Cash and cash equivalents includes notes and coins held and any deposits in bank accounts with an original maturity of 12 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash is recognised at its nominal amount.
 
1.10 Fair Value Measurement
 
PHIAC deems transfers between levels of the fair value hierarchy to have occurred at reporting date.
 
1.11 Financial Assets
 
PHIAC classifies all financial assets as Receivables.
 
Effective interest method
 
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts over the expected life of the financial asset, or, where appropriate, a shorter period.
 
Income is recognised on an effective interest rate basis except for financial assets at fair value through profit or loss.
 
Receivables
 
Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as Receivables. 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 assessed for impairment at the end of each reporting period.
 
Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for receivables or held to maturity investments held at amortised cost, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. 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
 
Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities. Financial liabilities are recognised and derecognised upon 'trade date'.
 
Financial liabilities at fair value through profit or loss
 
Financial liabilities at fair value through profit or loss are initially measured at fair value. Subsequent fair value adjustments are recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability.
 
Other financial liabilities
 
Other financial liabilities, including borrowings, 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.
 
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).
 
1.13 Contingent Liabilities and Contingent Assets
 
Contingent liabilities and contingent assets 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 a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.
 
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.
 
1.15 Property, Plant and Equipment
 
Asset Recognition Threshold
 
Purchases of property, plant and equipment and intangibles are recognised initially at cost in the balance sheet, except for purchases costing less than $1,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which 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 PHIAC where there may exist an obligation to restore the property to its original condition. These costs are included in the value of PHIAC's other non-financial assets with a corresponding provision for the 'make good' recognised.
 
Revaluations
 
Fair values for each class of asset are determined as shown below:
 
Asset class Fair value measured at:
Leasehold improvements Depreciated replacement cost
Property, plant & equipment Market approach and depreciated replacement cost
Heritage and cultural Market approach
 
Following initial recognition at cost, valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially differ with the assets' fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.
 
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 through the operating result. Revaluation decrements for a class of assets are recognised directly through the operating result 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 is restated to the revalued amount.
 
Depreciation
 
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to PHIAC (or 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:
 
Leasehold improvements 2015 Lease term 2014 Lease term
Property, plant & equipment
Office equipment 3-10 years 3-10 years
Computer equipment 3-10 years 3-10 years
Office furniture & fittings 5-13 years 5-13 years
Heritage and cultural 50 years 99 years
Intangibles 3 years 3 years
 
PHIAC has reassessed the useful life of its assets during 2014-15 to reflect the future economic benefits expected.
 
Impairment
 
All assets were assessed for impairment at 30 June 2015. 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 PHIAC (or 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.
 
Heritage and Cultural Assets
 
PHIAC has artwork with an aggregated fair value of $1,400 (2014: $7,000). PHIAC has classified its artwork as heritage and cultural assets as they were primarily used for purposes that relate to their cultural significance.
 
1.16 Intangibles
 
PHIAC'S intangibles comprise commercially developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.
 
Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of PHIAC's software is 3 years.
 
All software assets were assessed for indications of impairment as at 30 June 2015.
 
Purchases of intangibles are recognised initially at cost in the Balance Sheet, except for purchases costing less than $1,000 per item, which are expensed in the year of acquisition.
 
1.17 Reporting of Risk Equalisation Activities
 
Cash Transfers to and from the Official Public Account
 
Revenue collected by PHIAC through the levy arrangements described in 'Revenues from Government' is considered by the Government as Administered revenue and expenses for the Department of Health. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. These monies are drawn down from the OPA to the Risk Equalisation Trust Fund (RETF) in order to make payments from the Trust Fund. Detail of the movements within the RETF is disclosed in Note 19.
 
Note 2: Events After the Reporting Period
 
The legislation transferring PHIAC to APRA was passed in June and subsequently received Royal Assent. All functions have transferred to APRA on 1 July 2015.
 
Note 3: Expenses
 
Image of a financial statement showing expenses. In 2015, total employment benefits are listed as $4823916. Total goods and services are listed as $1619971. Total supplier expenses are listed as $1992019.
 
Click on the above image to view the note 3 in a larger size.
 
In order to give effect to the Government decision to abolish PHIAC and transfer the majority of its functions to APRA, PHIAC incurred significant and unbudgeted costs in preparing for the transfer. These are detailed in Goods and services - transition above.
 
Image of a financial statement showing expenses. In 2015, total depreciation and amortisation is listed as $231174. Total losses from asset sales are listed as $208.
 
Click on the above image to view the note 3 in a larger size.
 
Note 4: Income
 
Image of a financial statement showing income. Total revenue from government is listed as $4664250.
 
Click on the above image to view the note 4 in a larger size.
 
Note 5: Income Tax Expense (Competitive Neutrality)
 
PHIAC is not subject to Competitive Neutrality.
 
Note 6: Financial Assets
 
Image of a financial statement showing financial assets. Total cash and cash equivalents is listed as $3794206. Total trade and other receivables is listed as $62825.
 
Click on the above image to view the note 6 in a larger size.
 
PHIAC held $4,957 in the Risk Equalisaiton Trust Fund (RETF) account to maintain a mimimum balance (Note 19). This amount was returned to the administration account in June 2015.
 
Note 7: Fair Value Measurement
 
The following tables provide an analysis of assets and liabilities that are measured at fair value. The different levels of the fair value hierarchy are defined below.
 
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date.
 
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
 
Level 3: Unobservable inputs for the asset or liability.
 
Image of a financial statement showing fair value measurements. In 2015, total non-financial assets are listed as $300489.
 
Click on the above image to view the note 7 in a larger size.
 
1. PHIAC did not measure any non-financial assets at fair value on a non-recurring basis as at 30 June 2015.
 
2. There has been changes to the valuation techniques for assets in the property, plant and equipment class. In instances where sufficient observable inputs, such as market transactions of similar assets, were (not) identified in this financial year, the valuation technique was changed from a DRC (Market) approach to a Market (DRC) approach.
 
3. Fair value measurements - highest and best use differs from current use for non-financial assets (NFAs).
PHIAC's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all NFAs is considered their highest and best use.
 
4. Recurring and non-recurring Level 3 fair value measurements - valuation processes
PHIAC tests the procedures of the valuation model as an asset materiality review at least once every 12 months (with a formal revaluation undertaken once every three years). If a particular asset class experiences significant and volatile changes in fair value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period), that class is subject to specific valuation in the reporting period, where practicable, regardless of the timing of the last specific valuation. The entity engaged Australian Valuation Solutions (AVS) to undertake a full revaluation and confirm that the models developed comply with AASB 13.
 
Significant Level 3 inputs utilised by the entity are derived and evaluated as follows:
 
Property, Plant & Equipment - Adjusted Market Transactions
 
The significant unobservable inputs used in the fair value measurement of PPE assets relates to the market demand and valuers judgement to determine the fair value measurement of these assets. A significant increase (decrease) in the transaction price would result in a significantly higher (lower) fair value measurement.
 
Leasehold Improvements, Property, Plant and Equipment - 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 cost (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.
 
Note 7B: Level 1 and Level 2 transfers for recurring fair value measurements
 
There have been no transfers between levels 1 and 2 of the hierarchy during the year (2014: nil).
 
Note 7C: Reconciliation for recurring Level 3 fair value measurements
 
Recurring Level 3 fair value measurements - reconciliation for assets
 
Image of a financial statement showing reconciliation for recurring Level 3 fair value measurements. In 2015, the totals as at 30 June are listed as $122850 for leasehold improvements, $59800 for property, plant and equipment, and $182650 total.
 
Click on the above image to view the note 7 in a larger size.
 
1. These losses are presented in the Statement of Comprehensive Income under Depreciation expense.
 
2. These gains are presented in the Statement of Comprehensive Income under Changes in asset revaluation surplus.
 
3. There have been transfers of property, plant and equipment asset fair value measurements into Level 3 during the year due to changes in the valuation technique from a market approach to DRC.
 
Note 8: Non-Financial Assets
 
Image of a financial statement showing non-financial assets. In 2015, total leasehold improvements are listed as $122850. Total property, plant and equipment is listed as $177639. Total intangibles are listed as $74832. Total other non-financial assets are listed as $82420.
 
Click on the above image to view the note 8 in a larger size.
 
Image of a financial statement showing non-financial assets. Net book value as of 30 June 2015 is listed as $122850 for leasehold improvements, $177639 for property, plant & equipment, and $300489 total. Net book value at 30 June 2014 is listed as $74716 for leasehold improvements, $159354 for property, plant & equipment, and $234070 total.
 
Click on the above image to view the note 8 in a larger size.
 
Image of a financial statement showing non-financial assets. Net book value at 30 June 2015 is listed as $74832 for computer software purchased, compared to $184421 at 30 June 2014.
 
Click on the above image to view the note 8 in a larger size.
 
Note 9: Payables
 
Image of a financial statement showing payables. In 2015, total suppliers payable are listed as $161364. Total other payables are listed as $127347.
 
Click on the above image to view the note 9 in a larger size.
 
Note 10: Provisions
 
Image of a financial statement showing provisions. In 2015, total employee provisions are listed as $1099013. Total other provisions are listed as $105900. Closing balance 2015 is also listed as $105900.
 
Click on the above image to view the note 10 in a larger size.
 
PHIAC currently has an agreement (2014: 1 agreement) for the leasing of its premises which has a provision requiring PHIAC to restore the premises to its original condition at the conclusion of the lease.
 
Note 11: Cash Flow Reconciliation
 
Reconciliation of cash and cash equivalents as per Balance Sheet to Cash Flow Statement
 
Image of a financial statement showing cash flow reconciliation. In 2015, net cash from operating activities is listed as $2467880.
 
Click on the above image to view the note 11 in a larger size.
 
Note 12: Contingent Liabilities and Assets
 
Quantifiable Contingencies
 
There were no qantifiable contingencies at 30 June 2015. (Nil at 30 June 2014).
 
Unquantifiable Contingencies
 
There are no unquantifiable contingencies at 30 June 2015. (Nil at 30 June 2014).
 
Significant Remote Contingencies
 
There are no significant remote contingencies at 30 June 2015. (Nil at 30 June 2014).
 
Note 13: Council Remuneration
 
Image of a financial statement showing council remuneration. In 2015, the total remuneration received or due and receivable by council members is listed as $302510.
 
Click on the above image to view the note 13 in a larger size.
 
Note 14: Related Party Disclosures
 
The Members of the Council during the year were:
 
Member Date Appointed Date Appointment Ceased
or Date Resigned
Lynn Ralph - Commissioner 29-Nov-10 30-Jun-15
John Barrington 29-Nov-10 10-Nov-14
Barry Catchlove 27-Feb-12 26-Feb-15
Terry Downing 29-Nov-10 30-Jun-15
John McGee - Deputy Commissioner
(previous term 17-Mar-05 to 17-Dec-11)
27-Feb-12 30-Jun-15
 
Other than that shown in Note 13, during the year no member of the Council has received, or become entitled to receive, a material benefit by way of a contract made by PHIAC with a member of the Council or with an organisation in which he or she is a member or has a substantial financial interest. No loans or grants were made by PHIAC to directors or to the entities of which they are directors.
 
Note 15: Senior Management Personnel Remuneration
 
Image of a financial statement showing senior management personnel remuneration. In 2015, the total senior executive remuneration expenses are listed as $985585.
 
Click on the above image to view the note 15 in a larger size.
 
The total number of senior management personnel that are included in the above table are three (2014: Three).
 
Note 16: Financial Instruments
 
Image of a financial statement showing financial instruments. In 2015, the carrying amount of total assets is listed as $3794206. The carrying amount of financial liabilities is listed as $161364. The net gain/(loss) from financial assets is listed as $168760.
 
Click on the above image to view the note 16 in a larger size.
 
Note 16C: Fair value of financial instruments
 
The carrying value of all financial instruments as recognised in the statement of financial position approximates the fair value of these assets and liabilities.
 
Note 16D: Credit Risk
 
PHIAC is exposed to minimal credit risk as all exposures are in cash or cash equivalents largely from the Westpac Institutional Bank.
 
At 30 June 2015, no financial instruments were past due or impaired (2014: nil).
 
Note 16E: Liquidity risk
 
PHIAC's financial liabilities were payables, and finance leases. The exposure to liquidity risk was based on the notion that PHIAC will encounter difficulty in meeting its obligations associated with financial liabilities. This was highly unlikely due to appropriation funding and mechanisms available to PHIAC and internal policies and procedures put in place to ensure there were appropriate resources to meet its financial obligations.
 
Image of a financial statement showing financial instruments. In 2015, the carrying amount of total assets is listed as $3794206. The carrying amount of financial liabilities is listed as $161364. The net gain/(loss) from financial assets is listed as $168760.
 
Click on the above image to view the note 16 in a larger size.
 
Image of a financial statement showing financial instruments. In 2015, the total liquidity risk is listed as $272957, compared to $650414 in 2014.
 
Click on the above image to view the note 16 in a larger size.
 
PHIAC revenue was paid into consolidated revenue and then appropriated back to PHIAC by the Australian Government. PHIAC managed its funds to ensure it had adequate funds to meet payments as they fell due. In addition, PHIAC had policies in place to ensure timely payments were made when due and had no past experience of default.
 
Note 16F: Market Risk
 
PHIAC held basic financial instruments that did not expose it to certain market risks. PHIAC was not exposed to 'currency risk' or 'other price risk'.
 
Interest rate risk
 
The only interest-bearing items on the balance sheet were bank accounts held with Westpac (2014: Westpac and NAB) as such, there is no material interest rate risk.
 
Note 17: Financial Assets Reconciliation
 
Image of a financial statement showing financial assets reconciliation. In 2015, the total financial assets as per financial instruments note are listed as $3794206.
 
Click on the above image to view the note 17 in a larger size.
 
Note 18: External Financing Arrangements
 
Image of a financial statement showing external financing arrangements. In 2015, there was no facility available.
 
Click on the above image to view the note 18 in a larger size.
 
Note 19: Trust Money
 
Image of a financial statement showing trust money. In 2015, the total balance carried forward to next year held by PHIAC is not given.
 
Click on the above image to view the note 19 in a larger size.
 
Note 20: Reporting of Outcomes
 
Image of a financial statement showing reporting of outcomes. In 2015, the total net cost of outcome delivery is given as $6878000.
 
Click on the above image to view the note 20 in a larger size.
 
Note 21: Budgetary Reports and Explanations of Major Variances
 
The following tables provide a comparison of the original budget as presented in the 2014-15 Portfolio Budget Statements (PBS) to the 2014-15 final outcome as presented in accordance with Australian Accounting Standards for PHIAC. The Budget is not audited.
 
Note 21A: Departmental Budgetary Reports
 
Image of a financial statement showing a statement of comprehensive income for the period ended 30 June 2015. It shows the 2015 budgeted net cost of services ($6930000) compared to the actual cost ($7047000). The budgeted total own-source revenue is given as $163000 compared to the actual revenue $169000. The surplus/(deficit) attributable to the Australian government is listed as $(2214000). The total comprehensive income attributable to the Australian government is listed as $(2100).
 
Click on the above image to view the note 21 in a larger size.
 
1. PHIAC's original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from PHIAC's 2014-15 Portfolio Budget Statements (PBS)).
 
2. Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided further below.
 
Image of a financial statement showing a statement of financial position as at 30 June 2015. In 2015, the total actual assets are listed as $4314000. The net assets are listed as $2821000. Total equity is listed as $2821000.
 
Click on the above image to view the note 21 in a larger size.
 
1. PHIAC's original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from PHIAC's 2014-15 Portfolio Budget Statements (PBS)).
 
2. Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided further below.
 
Image of a financial statement showing a statement in changes in equity for the period ended 30 June 2015. The 2015 actual closing balance at 30 June is listed as $2565000 for retained earnings, $256000 for asset revaluation, and $2821000 for total equity.
 
Click on the above image to view the note 21 in a larger size.
 
1. PHIAC's original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from PHIAC's 2014-15 Portfolio Budget Statements (PBS)).
 
2. Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided further below.
 
Image of a financial statement showing a cash flow statement for the period ended 30 June 2015. The 2015 actual net cash from/(used by) operating activities is listed as $(2468000). Actual net cash from/(used by) investing activities is listed as $(53000). Actual cash and cash equivalents at the end of the reporting period is listed as $3794000.
 
Click on the above image to view the note 21 in a larger size.
 
1. PHIAC's original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from PHIAC's 2014-15 Portfolio Budget Statements (PBS)).
 
2. Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided further below.
 
Note 21B: Departmental Major Budget Variances for 2015
 
Explanations of major variances Affected line items (and statement)
Suppliers
This variance relates to costs incurred by PHIAC (including invoices submitted by APRA for associated expenses accepted as reasonably necessary) in the transition including project management, IT resourcing and infrastructure, travel and legal fees.
Suppliers (Statement of Comprehensive Income), Suppliers payable (Statement of Financial Position), Operating cash used -suppliers (Cash Flow Statement)
Other expenses
This variance relates to Consumer Information and Industry Information project costs which were not incurred this year following the announcement to transfer PHIAC to APRA.
Expenses (Statement of Comprehensive Income)
Revenue from Government
This represents the Council Administration Levy income. The variance was caused by two factors. First, the Minister for Health approved a levy amount which was $549,000 less than the amount agreed in the PBS. Second, the Minister for Health, in conjunction with the Minister for Finance, approved the non-collection of the June 2015 quarter of the Council Administration Levy. These items led to a decrease in the cash balance.
Revenue From Government (Statement of Comprehensive Income), Cash and cash equivalents (Statement of Financial Position), Operating cash received - Receipts from Government (Cash Flow Statement)
Employees
The variance is due to the resignation or expiration of the term of appointment of Council members and staff during the year. Replacement staff and Council members were not recruited or appointed given the timing of the transfer of PHIAC to APRA. Also reflected is the redundancy of staff not transferred to APRA.
Employee provisions (Statement of Financial Position) Employee benefits (Statement of Comprehensive Income)
Trade and other receivables
The figure relates to interest receivable. Due to the transition of PHIAC to APRA, all term deposits have been closed upon maturity. No interest is receivable as at 30 June 2015.
Trade and other receivables (Statement of Financial Position), Interest (Cash Flow Statement)
Other non-financial assets
The figure relates to prepayments. Due to the transition of PHIAC to APRA, fewer courses, memberships and subscriptions were prepaid as at 30 June 2015 than the budgeted amount. This reduction was offset by the prepayment of 3 months performance pay bonuses to staff.
Other non-financial (Statement of Financial Position)
Other payables
The figure relates to wage and superannuation accruals for nine days in 2015. The budgeted figure was based on previous years.
Other payables (Statement of Financial Position)