Content
Accountable Officer’s and Chief Finance and Accounting Officer’s Declaration 2
Independent Auditor’s Report 3
Comprehensive operating statement 5
Balance sheet 6
Statement of changes in equity 7
Cash flow statement 8
Notes to the financial statements 9
Note 1. Summary of significant accounting policies 9
Note 2. Departmental (controlled) outputs 28
Note 3. Administered (non-controlled) items 33
Note 4. Income from transactions 35
Note 5. Expenses from transactions 35
Note 6. Other economic flows included in net result 37
Note 7. Restructuring of administrative arrangements 37
Note 8. Receivables 39
Note 9. Investments and other financial assets 40
Note 10. Inventories 40
Note 11. Non-financial physical assets classified as held for sale 41
Note 12. Property, plant and equipment 42
Note 13. Intangible assets 46
Note 14. Payables 46
Note 15. Borrowings 47
Note 16. Provisions 48
Note 17. Superannuation 50
Note 18. Leases 51
Note 19. Commitments for expenditure 52
Note 20. Contingent assets and contingent liabilities 54
Note 21. Financial instruments 54
Note 22. Cash flow information 63
Note 23. Physical asset revaluation surplus 65
Note 24. Summary of compliance with annual parliamentary appropriations and special appropriations 66
Note 25. Ex-gratia expenses 69
Note 26. Annotated income agreements 69
Note 27. Trust account balances 70
Note 28. Responsible persons 73
Note 29. Remuneration of executives and payments to other personnel 74
Note 30. Remuneration of auditors 75
Note 31. Glossary of terms and style conventions 75
Accountable Officer’s and Chief Finance and Accounting Officer’s Declaration
The attached financial statements for the Department of Justice and Regulation have been prepared in accordance with Direction 4.2 of the Standing Directions of the Minister for Finance under the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations and other mandatory professional reporting requirements.
We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement and notes forming part of the financial statements, presents fairly the financial transactions during the year ended 30 June 2016 and financial position of the department as at 30 June 2016.
At the time of signing, we are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.
We authorise the attached financial statements for issue on 10 October 2016.
Shaun Condron
Chief Finance Officer
Department of Justice and Regulation
Melbourne
10 October 2016
Greg Wilson
Secretary
Department of Justice and Regulation
Melbourne
10 October 2016
Independent Auditor’s Report
To the Secretary, Department of Justice and Regulation
Level 24, 35 Collins Street
Melbourne VIC 3000
Telephone 61 3 8601 7000
Facsimile 61 3 8601 7010
Website www.audit.vic.gov.au
VAGO
Victorian Auditor-General’s Office
The Financial Report
I have audited the accompanying financial report for the year ended 30 June 2016 of the Department of Justice and Regulation which comprises the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement, notes comprising a summary of significant
accounting policies and other explanatory information, and the accountable officer’s and chief finance and accounting officer’s declaration.
The Secretary ‘s Responsibility for the Financial Report
The Secretary of the Department of Justice and Regulation is responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards, and the financial reporting requirements of the Financial Management Act 1994, and for such internal control as the Secretary determines is necessary to enable the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
As required by the Audit Act 1994, my responsibility is to express an opinion on the financial report based on the audit, which has been conducted in accordance with Australian Auditing Standards. Those standards require compliance with relevant ethical requirements relating to audit engagements and that the audit be planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The audit procedures selected depend on judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, consideration is given to the internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but riot for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Secretary, as well as evaluating the overall presentation of the financial report.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Independence
The Auditor-General’s independence is established by the Constitution Act 1975. The Auditor-General is not subject to direction by any person about the way in which his powers and responsibilities are to be exercised. In conducting the audit, I and my staff and delegates have complied with the applicable independence requirements of the Australian Auditing Standards and relevant ethical pronouncements.
Opinion
In my opinion, the financial report presents fairly, in all material respects, the financial position of the Department of Justice and Regulation as at 30 June 2016 and its financial performance and its cash flows for the year then ended in accordance with applicable Australian Accounting Standards, and the financial reporting requirements of the Financial Management Act 1994.
MELBOURNE
11 October 2016
Andrew Greaves
Auditor-General
Comprehensive operating statement
for the financial year ended 30 June 2016
/ Note / 2016$’000 / 2015
$’000 /
Income from transactions
Output appropriations / 24(a) / 5,506,669 / 5,129,248
Special appropriations / 24(b) / 3,947 / 49,171
Interest / 4(a) / 35,308 / 39,579
Grants / 4(b) / 7,775 / 3,976
Other income (i) / 4(c) / 63,557 / 61,304
Total income from transactions (i) / 5,617,256 / 5,283,278
Expenses from transactions
Employee expenses / 5(a) / (682,296) / (605,223)
Depreciation and amortisation (i) / 5(b) / (108,626) / (96,576)
Interest expense / 5(c) / (20,678) / (21,542)
Grants and other transfers / 5(d) / (3,906,440) / (3,743,721)
Capital asset charge (ii) / (133,421) / (102,213)
Supplies and services (i) / 5(e) / (756,046) / (708,534)
Total expenses from transactions (i) / (5,607,507) / (5,277,809)
Net result from transactions (net operating balance) (i) / 9,749 / 5,469
Other economic flows included in net result
Net gain/(loss) on non-financial assets (iii) / 6(a) / (2,204) / (11,970)
Net gain/(loss) on financial instruments (iv) / 6(b) / 1,421 / 710
Other gains/(losses) from other economic flows / 6(c) / (1,584) / (2,644)
Total other economic flows included in net result / (2,367) / (13,904)
Net result (i) / 7,382 / (8,435)
Other economic flows - other comprehensive income
Items that will not be reclassified to net result
Changes in physical asset revaluation surplus / 23 / 82,784 / (5,000)
Total other economic flows - other comprehensive income / 82,784 / (5,000)
Comprehensive result (i) / 90,166 / (13,435)
(i) The 2014-15 comparative has been adjusted (refer to note 1V).
(ii) Further information on the capital asset charge is provided in note 1G.
(iii) Includes realised gains/(losses) from impairments and disposals of physical assets and intangible assets.
(iv) Includes bad and doubtful debts from other economic flows, and realised and unrealised gains/(losses) from financial instruments.
The above comprehensive operating statement should be read in conjunction with the accompanying notes included on pages 74 to 147.
Balance sheet
as at 30 June 2016
/ Note / 2016$’000 / 2015
$’000 /
Assets
Financial assets
Cash and deposits / 22(a) / 255,471 / 280,556
Receivables / 8 / 744,956 / 848,863
Investments and other financial assets / 9 / 271,180 / 233,564
Total financial assets / 1,271,607 / 1,362,983
Non-financial assets
Prepayments / 14,373 / 2,435
Inventories / 10 / 7,397 / 6,932
Non-financial physical assets classified as held for sale / 11 / 746 / 1,608
Property, plant and equipment (i) / 12 / 2,134,113 / 2,202,701
Intangible assets / 13 / 11,805 / 20,649
Total non-financial assets (i) / 2,168,434 / 2,234,325
Total assets (i) / 3,440,041 / 3,597,308
Liabilities
Payables / 14 / 618,195 / 724,790
Borrowings / 15 / 188,765 / 200,671
Provisions / 16 / 177,966 / 159,578
Total liabilities / 984,926 / 1,085,039
Net assets (i) / 2,455,115 / 2,512,269
Equity (ii)
Accumulated surplus/(deficit) (i) / 1,086,945 / 1,008,781
Physical asset revaluation surplus / 23 / 615,233 / 603,231
Contributed capital (i) / 752,937 / 900,257
Net worth (i) / 2,455,115 / 2,512,269
Commitments for expenditure / 19
Contingent assets and contingent liabilities / 20
(i) The 2014-15 comparative has been adjusted (refer to note 1V).
(ii) Refer to the Statement of Changes in Equity for movements in the equity amounts.
The above balance sheet should be read in conjunction with the accompanying notes included on pages 74 to 147.
Statement of changes in equity
for the financial year ended 30 June 2016
/ ($’000) // Note / Physical asset revaluation surplus / Accumulated surplus / (deficit) / Contributed Capital / Total /
Balance at 1 July 2014 (i) / 957,633 / 667,814 / 1,084,939 / 2,710,386
Net result for the year (i) / 0 / (8,435) / 0 / (8,435)
Other comprehensive income for the year / 23 / (5,000) / 0 / 0 / (5,000)
Transfer to accumulated surplus / 23 / (349,402) / 349,402 / 0 / 0
Transactions with the State in its capacity as owners / 0 / 0 / 554,612 / 554,612
Capital contribution passed onto agencies within the Justice Portfolio / 0 / 0 / (83,280) / (83,280)
Equity transfer within Government / 0 / 0 / (26,266) / (26,266)
Administrative restructure - net assets transferred / 7 / 0 / 0 / (627,203) / (627,203)
Prior period adjustment (i) / 1V / 0 / 0 / (2,545) / (2,545)
Balance at 30 June 2015 (i) / 603,231 / 1,008,781 / 900,257 / 2,512,269
Net result for the year / 0 / 7,382 / 0 / 7,382
Other comprehensive income for the year (ii) / 23 / 82,784 / 0 / 0 / 82,784
Transfer to accumulated surplus (ii) / 23 / (70,782) / 70,782 / 0 / 0
Transactions with the State in its capacity as owners / 0 / 0 / 128,597 / 128,597
Capital contribution passed onto agencies within the Justice Portfolio / 0 / 0 / (27,091) / (27,091)
Equity transfer within Government / 0 / 0 / (195,390) / (195,390)
Administrative restructure - net assets transferred / 7 / 0 / 0 / (53,436) / (53,436)
Balance at 30 June 2016 / 615,233 / 1,086,945 / 752,937 / 2,455,115
(i) The 2014-15 comparative has been adjusted (refer to note 1V).
(ii) The physical asset revaluation surplus relating to assets transferred to Court Services Victoria under a restructure of administrative arrangements (refer to note 7) and the Victorian Institute of Forensic Medicine under another arrangement has been reclassified to accumulated surplus (refer to note 23). The resulting net change in the physical asset revaluation surplus of $70.782 million in 2015-16 and $349.402 million in 2014-15 does not affect the Comprehensive Operating Statement, but is reflected in the Statement of Changes in Equity. The remaining net change in the physical asset revaluation surplus of $82.784 million in 2015-16 mainly relates to the revaluation of the department’s land and building assets, which does affect and is reflected in the Comprehensive Operating Statement.
The above statement of changes in equity should be read in conjunction with the accompanying notes included on pages 74 to 147.
Cash flow statement
for the financial year ended 30 June 2016
Note / 2016$’000 / 2015
$’000
Cash flows from operating activities
Receipts
Receipts from Government / 5,468,426 / 5,133,260
Receipts from other entities / 7,775 / 3,976
Goods and services tax recovered from the ATO (i) / 98,687 / 118,665
Interest received / 35,446 / 41,281
Dividends received / 11,023 / 10,059
Other receipts / 62,617 / 32,902
Total receipts / 5,683,974 / 5,340,143
Payments
Payments of grants and other transfers / (3,906,440) / (3,743,720)
Payments to suppliers and employees (ii) / (1,513,313) / (1,385,954)
Capital asset charge payments / (133,421) / (102,213)
Interest and other costs of finance paid / (20,678) / (21,542)
Total payments (ii) / (5,573,852) / (5,253,429)
Net cash flows from/(used in) operating activities (ii) / 22(b) / 110,122 / 86,714
Cash flows from investing activities
Payments for investments / (130,121) / (87,229)
Proceeds from sale of investments / 119,484 / 103,522
Purchases of non-financial assets (ii) / (298,910) / (411,723)
Sales of non-financial assets / 4,125 / 3,281
Net cash flows from/(used in) investing activities (ii) / (305,422) / (392,149)
Cash flows from financing activities
Owner contributions by State Government / 234,846 / 457,398
Capital contribution passed on to agencies with government / (27,091) / (83,280)
Equity transfers within government / (25,777) / (27,429)
Proceeds from borrowings / 6,320 / 5,314
Repayment of borrowings and finance leases / (18,083) / (16,527)
Net cash flows from/(used in) financing activities / 170,215 / 335,476
Net increase/ (decrease) in cash and cash equivalents / (25,085) / 30,041
Cash and cash equivalents at beginning of financial year / 280,556 / 250,515
Cash and cash equivalents at end of financial year / 22(a) / 255,471 / 280,556
Reconciliation of non-cash transactions are disclosed in note 22(b).
(i) GST received from ATO is presented on a net basis.
(ii) The 2014–15 comparative has been adjusted (refer to note 1V)
The above cash flow statement should be read in conjunction with the accompanying notes included on pages 74 to 147.
Notes to the financial statements