Model Annual Report

Statutory Authority
(Net Cost of Services)

For the year ended 31December2015

Model Annual Report
Statutory Authority (Net Cost of Services) – 31December2015

Foreword

This Model Annual Report has been prepared as a guide and includes the minimum annual reporting requirements of the Financial Management Act2006 and Treasurer’s instructions. However, agencies should be aware that the Models are for general use and are not intended to cover every potential circumstance. Other methods of presenting financial statements may also be suitable.

Further reporting requirements are specified inthe Public Sector Commission’s Annual Reporting Framework available at

31.12.2015Page 1 of 90

Model Annual Report
Statutory Authority (Net Cost of Services) – 31December2015

Table of Contents

Statement of Compliance

Overview

Executive Summary

Operational Structure

Performance Management Framework

Outcome Based Management Framework

Changes to Outcome Based Management Framework

Shared Responsibilities with Other Agencies

Agency Performance

Report on Operations

Actual Results versus Budget Targets

Significant Issues Impacting the Agency

Disclosures and Legal Compliance

Financial Statements

Certification of Financial Statements

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Index of Notes to the Financial Statements

Notes to the Financial Statements

Additional Key Performance Indicator Information

Ministerial Directions

Other Financial Disclosures

Governance Disclosures

Other Legal Requirements

Government Policy Requirements

31.12.2015Page 1 of 90

Model Annual Report
Statutory Authority (Net Cost of Services) – 31December2015

Reference

Statement of Compliance
FMAsec63
TI902 / For year ended 31 December 2015
HON MICHAEL JACKSON
MINISTER FOR INFORMATION TECHNOLOGY
In accordance with section63 of the Financial Management Act2006, we hereby submit for your information and presentation to Parliament, the Annual Report of the Model Statutory Authority for the financial year ended 31December2015.
The Annual Report has been prepared in accordance with the provisions of the Financial Management Act2006 and [any other relevant written law].
(Signature) / (Signature)
B. Gate / H. Norman
Chairman of Accountable Authority / Member of Accountable Authority
1February2016 / 1February2016
AASB101.138(a) / Contacts
Postal / Address / Electronic
PO Box 9999 / 1 William Street / Internet:
Perth WA 6000 / Perth WA 6000 / Email:
Telephone: 61 8 6551 0000
Facsimile: 61 8 6551 1111
Commentary:
AASB101 requires the following disclosures:
  • the domicile and legal form of the entity; and
  • its country of incorporation and the address of its registered office (or principal place of business, if different from the registered office).

TI903 / Overview
Executive Summary
Performance Highlights
  • The Authority received a commendation from the State Government for its services in providing assistance to public sector agencies to complementthe corporate services reforms.
  • Customer surveys indicated that 95per cent of agencies rated the services provided for the implementation of corporate services reforms as exceptional.
  • The Authority’s research and development project on software development for public sector accounting is on schedule and is expected to be completed in 2016.

TI903(5) / Commentary:
Include a statement from the accountable authority that includes performance highlights and/or other significant events impacting on the agency.
Operational Structure
The Model Statutory Authority delivers services through the following divisions:
  • Information Technology;
  • Customer Relations; and
  • Corporate Services.

TI903(6) / Commentary:
Under this section, agencies are required to disclose a summary of activities and responsibilities of each division or its equivalent.
Enabling Legislation
AASB101.138(a)
TI903(6)(ii)) / The Model Statutory Authority was established under section5 of the Enabling Act1990, listed as astatutory authorityon Schedule1 of the Financial Management Act2006 and is subject to the provisions of the Public Sector Management Act1994.
TI903(6) / Responsible Minister
The Hon. Michael Jackson, BCom MLA, Minister for Information Technology.
Organisational Structure
AASB101.138(b) / Mission
To provide leadership, support and services necessary to ensure that Western Australians have easy and affordable access to a diverse range of information technology.
TI903(6) / Organisational Chart

Board of the Authority
Board members are appointed for a three year period by the Minister for Information Technology. Members are appointed according to their expertise and experience in areas relevant to the Model Statutory Authority’s activities.
Board Profiles
Mr Bill Gate (Chairman)
Mr Gate was reappointed Chairman of the Model Statutory Authority for a second threeyear termin April2014. Mr Gate is currently a Director of Microsoft Corporation and a member of the Word for Windows Commission. He has had a long involvement with the computer manufacturing sector and is a past Chairman of the State Government’s Information Technology Advisory Committee.He is also a member or patron of a number of community organisations.
Mr Harvey Norman
Mr Norman was reappointed to the Board for a second threeyear termin April2013. Mr Norman, formerly managing director of IBM, is also a Board member of the April May Trust. In 2005Mr Norman was awarded the Order of Australia for services to the Western Australian community.
Mrs Jessica Rabbit
Mrs Rabbit was reappointed to the Board for a second threeyear termin April2013. Mrs Rabbit has a Bachelor of Commerce from the University of Western Australia and is a Member of the Institute of Public Accountants (IPA). She has worked within the information technology industry for many years and has a high level of expertise at both operational and managerial levels.
Senior Officers
Dr Bill King PhD (Chief Executive Officer)
Mr King has extensive experience in corporate management and public sector information technology.
Elliot JamesBCom CA (Director Information Technology)
Mr James has 7years public sector management experience and 15years corporate advisory experience in the private sector.
Chris FlemingBCom FCPA (Director Corporate Services, Chief Finance Officer)
Mr Fleming has 17years experience in public sector finance, in addition to experience in the private sector.
Kevin Smith BA (Hons) (Director Customer Relations)
Mr Smith has 10years experience in public sector customer relations.
Administered Legislation
The Authority assists the Minister for Information Technology in administration the following Acts:
  • Information Technology Act1951-1983; and
  • Information Protection Act1959.

TI903(6)(v)-(vii) / Commentary:
Include the name of and authority for establishment of each subsidiary, related and affiliated body and information about the legislation administered pertaining to each subsidiary and related body.
Other Key Legislation Impacting on the Model Statutory Authority’s Activities
In the performance of its functions, the Model Statutory Authority complies with the following relevant written laws:
  • Auditor General Act2006;
  • Contaminated Sites Act2003;
  • Disability Services Act1993;
  • Equal Opportunity Act1984;
  • Financial Management Act2006;
  • Freedom of Information Act1992;
  • Industrial Relations Act1979;
  • Minimum Conditions of Employment Act1993;
  • Occupational Safety and Health Act1984;
  • Public Sector Management Act1994;
  • Salaries and Allowances Act1975;
  • State Records Act2000; and
  • State Supply Commission Act1991.

Commentary:
In addition to the abovementioned legislations, where applicable agencies may consider disclosing specialised legislation that impacts upon their area of operations. Although the above information is not mandatory, listing the key legislation impacting on the agency’s activities provides useful information to users.
TI904(2), 903(7) / Performance Management Framework
AASB101.138(b) / Outcome Based Management Framework

Commentary:
Include a description of the links between the relevant government goals, agency level government desired outcomes and services.
Changes to Outcome Based Management Framework
The Model Statutory Authority’s Outcome Based Management Framework did not change during2015.
Commentary:
Include a discussion of any changes to agency level government desired outcomes, services and key performance indicators from the previous year. This segment should be included even if there is a nil return.
Shared Responsibilities with Other Agencies
The Model Statutory Authority did not share any responsibilities with other agencies in 2015.
Commentary:
Include a statement of which services are being delivered jointly with other agencies and how the agency is contributing to other agencies’ government desired outcomes. This segment should be included even if there is a nil return.
Agency Performance
Report on Operations
FMA sec61(1)(c)
TI903(8)
TI808(4) / Commentary:
The Report on Operations must be prepared in accordance with section61(1)(c) of the FMA and TI903.
Include a brief discussion of agency performance, including references to key achievements and other key highlights about agency performance during the year.
A brief discussion of the reason(s) for any material variations between actual performance and the targets specified in the agency’s resource agreement, budget statements, statement of corporate intent or any equivalent document should also feature in this section, as well as the impact of any external factors.
Include any narrative necessary to explain the results and describe the agency’s performance, including any material variations and the impact of any external factors.
Statutory authorities submitting resource agreements as part of the annual budget process are required to apply TI808 Resource Agreements and encouraged to use a format similar to that shown in the Guidelines. Agencies may modify the content in the tables below according to the agency’s structure and reporting needs.
Actual Results versus Budget Targets
Financial Targets
2015Target(1)$000 / 2015Actual$000 / Variation(2)
$000
Total cost of services (expense limit)
(sourced from Statement of Comprehensive Income) / 804,482 / 799,899 / 4,583(a)
Net cost of services
(sourced from Statement of Comprehensive Income) / 773,708 / 766,798 / 6,910(b)
Total equity
(sourced from Statement of Financial Position) / 1,358,941 / 1,459,592 / 100,651(c)
Net increase / (decrease) in cash held
(sourced from Statement of Cash Flows) / (3,127) / (2,950) / 177
Approved full time equivalent (FTE) staff level / 423 / 420 / 3
(1)As specified in the Budget Statements.
(2)Further explanations are contained inNote43‘Explanatory statement’ to the financial statements.
(a)The variation is mainly due to implementing tighter cost controls ($14,593,000), which was partially offset by additional costs ($11,220,000) in hiring consultants to deliver services.
(b)In addition to the explanation above regarding expenses, the variation was mainly due to an increase in user charges and fees, and sales revenue ($2,050,000) as a result of better than expected demand.
(c)The variation is mainly due to a greater than expected asset revaluation increments for land and buildings ($60,000,000) and infrastructure ($40,000,000).
Commentary:
More detailed information, including long term trends and supporting footnotes, may be disclosed either in this section or in the section ‘Disclosures and Legal Compliance’. If further information is disclosed elsewhere, a cross reference to the page number would be required.
Summary of Key Performance Indicators
2015Target(1) / 2015Actual / Variation(2)
Outcome 1: Sustainability of the provision of information technology
Key Effectiveness Indicator(s):
The proportion (%) of government agencies using sustainable information technology plans / 85% / 86% / 1%
Service 1: Information Technology
Key Efficiency Indicator(s):
Cost per sustainable IT plan / $22,700 / $21,950 / $750
Outcome 2: The improvement to the level of information technology for the public sector
Key Effectiveness Indicator(s):
The proportion (%) of government agencies upgrading their information technology / 75% / 76% / 1%
Service 2: Training and Assistance
Key Efficiency Indicator(s):
Clients assisted per staff member
Cost per hour of service delivered / 0.36
$5,000 / 0.39
$5,311 / 0.03
($311)
Outcome 3: Improvement to the competitiveness of the Western Australian technology industry
Key Effectiveness Indicator(s):
Gross value of goods and services produced
Uptake of new technology (%) / $200m
66% / $206m
68% / $6m
2%
Service 3: Competition Policy
Key Efficiency Indicator(s):
Cost per advisory program
Cost per hour of service delivered / $19,300
$5,000 / $18,900
$5,155 / $400
($155)
(1)As specified in the Budget Statements.
(2)Explanations for the variations between target and actual results are presented in Note43 ‘Explanatory statement’ to the financial statements.
Commentary:
More detailed information, including long term trends and supporting footnotes, may be disclosed either in this section or in the section ‘Disclosures and Legal Compliance’. The report on operations shall include any narrative necessary to explain the results and describe the agency’s performance, including any material variations and the impact of any external factors.
If further information is disclosed elsewhere, a cross reference to the page number would be required.
Where there is no resource agreement, the key performance indicators approved under TI904 are to be used in this reporting process by reporting, at a minimum, a summary assessment of actual performance relative to target performance as set in the budget statements, statement of corporate intent or any equivalent document in accordance with TI903(8).
Significant Issues Impacting the Agency
Current and emerging issues and trends
The rapid pace of technological advancement is leading to a reduction in agency costs and creates opportunities to deliver enhanced services.
Economic and social trends
There is an expectation in society that services delivered by the Model Statutory Authority will be enhanced to take advantage of technological advances.
Changes in written law
There were no changes in any written law that affected the Authority during the financial year.
Likely developments and forecast results of operations
It is likely that Authority operations will undergo a period of consolidation during 2016as a result of the full impact of changes made during the 2015financial year. The most significant areas for change will be in:
  • continuation of the research and development project on software development for public sector accounting. This project is expected to deliver significant cost savings to the public sector; and
  • measures taken in the current period with respect to information technology services should begin to deliver significant cost savings and greater sales growth.

TI903(9) / Commentary:
Include a brief description of current and emerging issues and trends impacting on the agency’s operations, as well as the operations of any subsidiary and/or related bodies, and how the agency and bodies intend to address them. This may include economic and social trends and changes in any written law and significant judicial decisions affecting the agency or bodies. Any likely developments in the operations of the agency or bodies and the forecast results of those developments should also be disclosed, unless the disclosure is likely to be prejudicial to the agency.
Disclosures and Legal Compliance
Financial Statements
FMAsec62(2)
TI947
AASB110.17 / Certification of Financial Statements
For the year ended 31 December 2015
The accompanying financial statements of the Model Statutory Authority have been prepared in compliance with the provisions of the Financial Management Act2006 from proper accounts and records to present fairly the financial transactions for the financial year ended31December2015and the financial position as at 31December2015.
At the date of signing we are not aware of any circumstances which would render the particulars included in the financial statements misleading or inaccurate.
(Signature) / (Signature)
C. Fleming / H. Norman
Chief Finance Officer / Member of Accountable Authority
1February2016 / 1February2016
(Signature)
B. Gate
Chairman of Accountable Authority
1February2016
FMA sec62(1) / Commentary:
Financial statements are to be prepared in accordance with the accounting standards and other requirements issued by the AASB.
FMA sec62(2) / Financial statements include any financial statements and information prescribed by the Treasurer’s instructions and any other financial information required by a written direction given by the Minister.
AASB110.17 / Disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the entity’s owners or others have the power to amend the financial statements after issue, the entity shall disclose that fact.
FMA sec61(1)(a), 62(1), TI1102, AASB101.10(b), 81105 / Statement of Comprehensive Income
For the year ended 31 December 2015
AASBFramework / Note / 2015
$000 / 2014
$000
COST OF SERVICES
AASB101.85, 88, 89, 99, 102, 104 / Expenses
AASB101.102 / Employee benefits expense / 7 / 669,757 / 599,002
Supplies and services / 8 / 61,980 / 56,345
Depreciation and amortisation expense / 9 / 33,330 / 33,820
AASB101.82(b) / Finance costs / 10 / 263 / 347
AASB101.85 / Accommodation expenses / 11 / 6,963 / 6,330
AASB101.85 / Grants and subsidies / 12 / 9,801 / 8,910
Cost of sales / 15 / 5,560 / 3,700
AASB101.98(c) / Loss on disposal of non-current assets / 18 / - / -
AASB101.102 / Other expenses / 13 / 12,245 / 13,074
Total cost of services / 799,899 / 721,528
AASB101.88, 89 / Income
AASB101.82(a), AASB118.35 / Revenue
AASB118.35(b)(i)-(ii) / User charges and fees / 14 / 16,497 / 14,997
AASB118.35(b)(i) / Sales / 15 / 14,267 / 12,970
AASB1004.18 / Commonwealth grants and contributions / 16 / 1,100 / 1,000
AASB118.35(b)(iii) / Interest revenue / 17 / 990 / 900
Other revenue / - / -
Total Revenue / 32,854 / 29,867
Gains
AASB101.98(c) / Gain on disposal of non-current assets / 18 / 170 / 4,700
Other gains / 19 / 77 / 70
Total Gains / 247 / 4,770
Total income other than income from State Government / 33,101 / 34,637
NET COST OF SERVICES / 766,798 / 686,891
Income from State Government / 20
Service appropriation / 796,234 / 702,101
TI1102(11)(i) / Liabilities assumed / - / -
TI1102(11)(ii), AASB1004.18 / Assets transferred / - / -
TI1102(11)(ii), AASB1004.62 / Services received free of charge / 4,400 / 4,000
Royalties for Regions Fund / - / -
AASB101.85 / Total income from State Government / 800,634 / 706,101
AASB101.81A(a) / SURPLUS/(DEFICIT) FOR THE PERIOD / 33,836 / 19,210
AASB101.81A(b) / OTHER COMPREHENSIVE INCOME
Items not reclassified subsequently to profit or loss
AASB101.85, 96 / Remeasurements of defined benefit liability / - / -
Changes in asset revaluation surplus / 37 / 100,000 / 25,500
Total other comprehensive income / 100,000 / 25,500
AASB101.81A(c) / TOTAL COMPREHENSIVE INCOME FOR THE PERIOD / 133,836 / 44,710
See alsoNote52‘Schedule of Income and Expenses by Service’.
The Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Commentary:
Supplies and services – includeadministrative expenses.
Finance costs –includeborrowing costs. AASB123.5 defines borrowing costs as interest and other costs incurred by an entity in connection with the borrowing of funds. Other finance costs would include discounting expense incurred under AASB5.17 and AASB137. The discounting of employee benefits should be recognised under employee benefits expense rather than separately as a finance cost.
Cost of sales–Australian Accounting Standards do not allow the disclosure of a net trading result in the Statement of Comprehensive Income. However, where immaterial, sales and the cost of goods sold would be included under other revenue and other expense respectively.
Lossesor gains on disposal of non-current assets or other assets – subjectto materiality, gains or losses may be displayed separately such as losses or gains on disposal of noncurrent and other assets. Groups of similar transactions would normally be reported on a net basis. Immaterial losses or gains can be included in other expenses or other gains.
Assets transferred – Thisis for transfers made at the transferor agency’s discretion and represents an expense to the transferor and revenue to the transferee.
Other comprehensive income–AASB101.82A requiresseparate line item for each class of other comprehensive income which are grouped on the basis of whether or not they will be reclassified subsequently to profit or loss. AASB101.7 – Othercomprehensive income may also include gains and losses arising from translating the financial statements of a foreign operation, gains and losses on remeasuring available for sale financial assets and the effective portion of gains and losses on hedging instruments in a cash flow hedge.