National Health Funding Body Financial Statements for the year ended 30 June 2015

Independent Auditor's Report
Independent Auditor's Report

STATEMENT BY THE ACCOUNTABLE AUTHORITY AND CHIEF FINANCIAL OFFICER

In our opinion, the attached financial statements for the year ended 30 June 2015 comply with subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), and are based on properly maintained financial records as per subsection 41(2) of the PGPA Act.

In our opinion, at the date of this statement, there are reasonable grounds to believe that the National Health Funding Body will be able to pay its debts as and when they fall due.

Signed

–Signature omitted–

Lynton Norris
Chief Executive Officer

9 October 2015

Signed

–Signature omitted–

Beth Gubbins
Chief Finance Officer

9 October 2015

National Health Funding Body Statement of Comprehensive Income for the period ended 30 June 2015

Statement of Comprehensive Income
Notes
2015
$
2014
$

NET COST OF SERVICES

EXPENSES

Employee benefits

3A

(1,921,213)

(2,489,145)

Suppliers

3B

(2,137,585)

(1,677,921)

Depreciation and amortisation

3C

(26,036)

Write–down and impairment of assets

3D

(16,250)

Total expenses

(4,084,834)

(4,183,316)

LESS

Own–source Income

Other Revenue

4A

223,486

40,000

Total own–source income

223,486

40,000

GAINS

Reversals of previous asset write–downs and impairments

4B

15,070

Total gains

15,070

Net (cost of)/contribution by services

(3,846,278)

(4,143,316)

Revenue from Government

4C

4,348,000

4,360,000

Surplus attributable to the Australian Government

501,722

216,684

OTHER COMPREHENSIVE INCOME

Total comprehensive income attributable to the Australian Government

501,722

216,684

The above statement should be read in conjunction with accompanying notes.

National Health Funding Body Statement of Financial Position for the period ended 30 June 2015

Statement of Financial Position
Notes
2015
$
2014
$

ASSETS

Financial Assets

Cash

5A

12,000

12,000

Trade and other receivables

5B

1,659,566

1,280,964

Total financial assets

1,671,566

1,292,964

Non–Financial Assets

Leasehold Improvement

6A

Other non–financial assets

6C

43,499

5,400

Total non–financial assets

43,499

5,400

Total assets

1,715,065

1,298,364

LIABILITIES

Payables

Suppliers

7A

(253,992)

(193,754)

Other payables

7B

(54,158)

(66,463)

Total payables

(308,151)

(260,217)

Provisions

Employee provisions

8A

(300,412)

(433,366)

Total provisions

(300,412)

(433,366)

Total liabilities

(608,563)

(693,583)

Net assets

1,106,503

604,781

EQUITY

Retained surplus

1,106,503

604,781

Total parent entity interest

1,106,503

604,781

Total equity

1,106,503

604,781

The above statement should be read in conjunction with accompanying notes.

National Health Funding Body Statement of Changes in Equity for the period ended 30 June 2015

Statement of Changes in Equity
Retained earnings
Asset revaluation surplus
Contributed
equity/capital
Total equity
2015
$
2014
$
2015
$
2014
$
2015
$
2014
$
2015
$
2014
$

Opening balance

Balance carried forward from previous period

604,781

388,097

604,781

388,097

Adjusted opening balance

604,781

388,097

604,781

388,097

Comprehensive income

Surplus for the period

501,722

216,684

501,722

216,684

Total comprehensive income

501,722

216,684

501,722

216,684

Closing balance attributable to the Australian Government

1,106,503

604,781

1,106,503

604,781

The statement should be read in conjunction with the corresponding notes.

National Health Funding Body Cash Flow Statement for the period ended 30 June 2015

Cash Flow Statement
Notes
2015
$
2014
$

OPERATING ACTIVITIES

Cash received

Appropriations

4,085,484

8,614,079

Other interagency receivable

Net GST received

186,355

94,165

Other

128,944

116,679

Total cash received

4,400,783

8,824,923

Cash used

Employees

(2,057,417)

(2,186,266)

Suppliers

(2,028,067)

(6,400,770)

Section 74 receipts transferred to OPA

(315,299)

(225,887)

Total cash used

(4,400,783)

(8,812,923)

Net cash from operating activities

9

12,000

Net increase (decrease) in cash held

12,000

Cash and cash equivalents at the beginning of the reporting period

12,000

Cash and cash equivalents at the end of the reporting period

5A

12,000

12,000

The above statement should be read in conjunction with the accompanying notes.

National Health Funding Body Schedule of Commitments for the period ended 30 June 2015

Schedule of Commitments
2015
$
2014
$

BY TYPE

Commitments receivable

Net GST receivable on commitments

55,466

247,029

Total commitments receivable

55,466

247,029

Commitments Payable

Operating Lease1

(2,083,161)

Other2

(611,267)

(691,814)

Total other commitments

(611,267)

(2,774,975)

Net commitments by type

(555,801)

(2,527,946)

BY MATURITY

Other commitments receivable

One year or less

55,466

71,771

From one to five years

175,258

Over five years

Total Other receivable on commitments

55,466

247,029

Total Commitment Receivable

55,466

247,029

Commitments payable

Operating Lease Commitments

One year or less

(374,946)

From one to five years

(1,708,215)

Over five years

Total operating lease commitments

(2,083,161)

Other Commitments

One year or less

(611,267)

(452,224)

From one to five years

(239,590)

Over five years

Total other commitments

(611,267)

(691,814)

Total commitments payable

(611,267)

(2,774,974)

Net commitments by maturity

(555,801)

(2,527,945)

Note: Commitments are GST inclusive where relevant.

1 During 2014–15, the NHFB terminated its lease at Canberra House.

2 Other commitments payable, comprises amounts committed under signed agreements where the contracted organisation has yet to perform the services required.

This schedule should be read in conjunction with the accompanying notes.

National Health Funding Body Notes to and forming part of the Financial Statements for the period ended 30 June 2015

Note 1: Summary of Significant Accounting Policies

1.1 Objectives of the National Health Funding Body

The National Health Funding Body (NHFB) is an Australian Government controlled not–for–profit entity. The NHFB was established on 1 July 2012.

The role and functions of the NHFB are set out in the National Health Reform Act 2011. The objective of the NHFB is to assist the Administrator of the National Health Funding Pool to:

  • calculate the Commonwealth contribution to the National Health Funding Pool;
  • develop the Three Year Data Plan and associated funding calculation approach;
  • ensure the National Health Funding Pool operations are in accordance with directions from the responsible State or Territory Minister, and in line with the National Health Reform Agreement (NHRA);
  • transparently report on the operations of the National Health Funding Pool and state managed funds as outlined in the NHRA.

The NHFB is structured to meet one outcome:

Outcome 1 Provide transparent and efficient administration of Commonwealth, state and territory funding of the Australian public hospital system, and support the obligations and responsibilities of the Administrator of the National Health Funding Pool.

The NHFB activities contributing to this outcome are classified as Departmental. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the NHFB in its own right.

The NHFB does not conduct any administered activities on behalf of the Government.

The Australian Government continues to have regard to developments in case law, including the High Court’s recent decision on Commonwealth expenditure in Williams v Commonwealth (2014) HCA 23, as they contribute to the larger body of law relevant to the development of Commonwealth programmes. In accordance with its general practice, the Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of expenditure not being consistent with constitutional or other legal requirements.

The continued existence of the NHFB in its present form and with its present programmes is dependent on Government policy and continuing funding by Parliament for the NHFB’s administration and programmes. In the 2014–15 Budget, the Government announced an intention to consult with states and territories with a view to establishing a new Health Productivity and Performance Commission.

The Government has made a decision to not proceed with the establishment of a Health Productivity and Performance Commission. The NHFB and the Administrator of the National Health Funding Pool will continue to administer and reconcile payments to public hospitals under the NHRA for the 2015–16 and 2016–17 financial years.

1.2 Basis of preparation of the Financial Statements

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

The financial statements have been prepared in accordance with:

  1. Financial Reporting Rule 2015 (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.

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 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 the NHFB 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 Judgments and Estimates

No 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

The following new standards, revised standards, interpretations and amending standards were issued prior to the signing of the statement by the accountable authority and chief financial officer, were applicable to the current reporting period:

Adoption of new Australian accounting standard requirements
Standard/Interpretation
Nature of change in accounting policy, transitional provisions, and adjustment to financial statements

AASB 1055

Budget Reporting – March 2013 (Principal) – this new requirement requires the NHFB to explain significant variance between budget and actual expenditure – this will result in an increased level of explanation.

AASB 2013–1

Amendments to AASB 1049 – Relocation of Budgetary Reporting Requirements – this standard relocates the AASB 1049 budgetary requirements into AASB 1055 to make it the complete reference on the budget reporting.

AASB 1031

Materiality (revised) – The revised standard no longer includes a definition of ‘material’, or guidance on how to assess materiality. Instead, it references AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 101 Presentation of Financial Statements and the Framework.

AASB 2012–3

Amendments to Australian Accounting Standards – Offsetting Financial Assets and Liabilities (AASB 132) – this is expected to have a minimum impact on the NHFB’s financial statements.

Future Australian accounting standard requirements

The following new standards, revised standards, interpretations and amending standards were issued by the Australian Accounting Standards Board prior to the signing of the statement by the accountable authority and chief financial officer. No accounting standard has been adopted earlier than the application date as stated in the standard. None are expected to have a material impact on the NHFB’s financial statements for future reporting periods:

Future Australian accounting standard requirements
Standard/ Interpretation
Application date for the entity
Nature of impending change/s in accounting policy and likely impact on initial application

AASB 2015–1

On or after 1 January 2016

Amendment to Australian Accounting Standards – Annual improvements to Australian Accounting Standards 2012–2014.

This is expected to have a minimal impact on the NHFB’s financial statements.

AASB 2015–2

On or after 1 January 2016

Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101.The changes clarify that entities should not be disclosing immaterial information and that the presentation of information in notes can and should be tailored to provide investors and other users with the clearest story of an entity’s financial performance and financial position.

This is expected to have a minimal impact on the NHFB’s financial statements.

AASB 2015–3

On or after 1 July 2015

Amendment to Australian Accounting Standards arising from the Withdrawal of AASB 1031.

Materiality – completes the AASB’s project to remove Australian guidance on materiality from Australian Accounting Standards.

ASB 2013–9

On or after 1 July 2015

Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments (Part C – Financial Instruments)

This is expected to have minimum impact on the NHFB’s financial statements.

1.5 Revenue

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the NHFB 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.

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.

Resources received free of charge are recorded as either revenue or gains depending on their nature.

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, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

1.7 Transactions with the Government as owner

Equity Injections

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCB) 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 expected within twelve 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.

Other long–term employee benefits are measured as 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 the NHFB 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 the NHFB’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 the long service leave has been determined by our best estimates based on the NHFB staff profile. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

Staff of the NHFB are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or employee nominated superannuation funds.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and employee nominated superannuation funds are defined contribution schemes.

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’s administered schedules and notes.

The NHFB 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. The NHFB accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

1.9 Leases

Operating lease payments are expensed on a straight–line basis which is representative of the pattern of benefits derived from the leased assets.

The NHFB entered into one operating lease on 1 July 2014. This lease was originally planned to be completed on 31 August 2019, however, due to unforeseen circumstances, it was terminated on the 31st of January 2015. The NHFB had not entered into any other operating leases as at 30 June 2015.

1.10 Property, Plant and Equipment

Under the ‘shared services arrangements’ with the Department of Health all IT, infrastructure and major office equipment are provided to the NHFB. In July 2014, the NHFB received a leasehold incentive in the form of an office fitout. This asset was subsequently disposed when the lease was terminated. Other Property, Plant and Equipment purchased by NHFB has not been capitalised as at 30 June 2015, as they are low value items, below the threshold of $2000.

Depreciation

Depreciable property, plant and equipment assets are written–off to their estimated residual values over their estimated useful lives to the entity using, in all cases, the straight–line method of depreciation. Leasehold improvements are depreciated over the lesser of the estimated useful life of the improvement or the lease term using the straight–line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date.

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.

As a result of the termination of the lease at Level 1, Canberra House on 31 January 2015, the NHFB adjusted its lease incentive liability and the carrying value of the leasehold fitout asset to zero.

1.11 Cash

Cash is recognised at its nominal amount.

1.12 Financial assets

The NHFB 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.

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 through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis.

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’. Loans and receivables are measured at their nominal value less impairment.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period.

1.13 Financial liabilities

Financial liabilities are classified as other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

1.14 Contingent assets and liabilities

Contingent assets and liabilities are not recognised in the balance sheet but are reported in the notes. They may arise from uncertainty as to the existence of an asset or liability 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. As at 30 June 2015, the NHFB did not have any contingency assets or liabilities (2014: Nil).

1.15 Taxation

NHFB is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).

Revenues, expenses, assets and liabilities are recognised net of GST except:

  1. where the amount of GST incurred is not recoverable from the AustralianTaxation Office; and
  2. for receivables and payables.

1.16 Fair value measurement

NHFB’s financial assets and liabilities are measured at nominal amounts. No fair value measurement disclosures are required.

Note 2: Events After the Reporting Period

There are no events after the reporting period affecting the financial statements.

Note 3: Expenses

Note 3: Expenses
2015
$
2014
$

Note 3A: Employee Benefits

Wages and salaries

(1,331,057)

(1,724,996)

Superannuation

Defined contribution plans

(184,464)

(298,211)

Defined benefit plans

(86,552)

(11,541)

Leave and other entitlements

(319,140)

(454,397)

Total employee benefits

(1,921,213)

(2,489,145)

Note 3B: Suppliers

Goods and services supplied or rendered

Consumables, printing, recruitment and training

(131,721)

(121,342)

Contractors

(1,511,930)

(956,804)

Information technology and communications

(70,488)

(153,214)

Professional fees

(55,607)

(69,613)

Property and utilities

(28,469)

(178,137)

Travel

(59,465)

(76,135)

Other

(20,110)

(73,369)

Total goods and services supplied or rendered

(1,877,790)

(1,628,614)

Goods supplied in connection with

Related parties

(1,332)

External parties

(4,624)

(18,635)

Total goods supplied

(5,956)

(18,635)

Services rendered in connection with

Related parties

(218,913)

(698,122)

External parties

(1,652,920)

(911,857)

Total services rendered

(1,871,833)

(1,609,978)

Total goods and services supplied or rendered

(1,877,790)

(1,628,614)

Other suppliers

Operating lease rentals in connection with

Minimum lease payments

(208,364)

Workers compensation expenses

(51,432)

(49,307)

Total other supplier expenses

(259,795)

(49,307)

Total supplier expenses

(2,137,585)

(1,677,921)

Note 3C: Depreciation and Amortisation

Depreciation

Leasehold Improvement

(26,036)

Total depreciation

(26,036)

Total depreciation and amortisation

(26,036)

Note 3D: Write–Down and Impairment of Assets

Asset write–downs and impairments from

Other – Write–down of other receivables

(16,250)

Total write–down and impairment of assets

(16,250)

Note 4: Own–Source Income

Note 4: Own–Source Income
2015
$
2014
$

Own–Source Revenue

Note 4A: Other Revenue

Resources received free of charge

Remuneration of auditors

47,000

40,000

Rent received free of charge – Department of Health

66,734

Department of Health

109,752

Total other revenue

223,486

40,000

Note 4B: Reversals of Previous Asset Write–Downs and Impairments

Reversal of impaiment losses

15,070

Total write–down and impairment of assets

15,070

Note 4C: Revenue from Government

Appropriations

Departmental appropriations

4,348,000

4,360,000

Total revenue from Government

4,348,000

4,360,000

Note 5: Financial Assets

Note 5: Financial Assets
2015
$
2014
$

Note 5A: Cash

Cash on hand or on deposit

12,000

12,000

Total cash

12,000

12,000

Note 5B: Trade and Other Receivables

Good and Services receivables in connection with

Related entities

109,752

External parties

15,070

Total goods and services receivables

109,752

15,070

Appropriations receivable

For existing programme

1,528,437

1,265,921

Total appropriations receivable

1,528,437

1,265,921

Other receivables

GST receivable from the Australian Taxation Office

21,377

15,043

Total other receivables

21,377

15,043

Total trade and other receivables (gross)

1,659,566

1,296,034

Less impairment allowance

Goods and services

(15,070)

Total impairment allowance

(15,070)

Total trade and other receivables (net)

1,659,566

1,280,964

Receivables are expected to be recovered in

No more than 12 months

1,659,566

1,280,964

More than 12 months

Total trade and other receivables

1,659,566

1,280,964

Receivables are aged as follows

Not overdue

1,659,566

1,280,964

Overdue by

0 to 30 days

31 to 60 days

61 to 90 days

15,070

More than 90 days

Total trade and other receivables (gross)

1,659,566

1,296,034

Impairment allowance aged as follows

Not overdue

Overdue by

0 to 30 days

31 to 60 days

61 to 90 days

(15,070)

More than 90 days

Total impairment allowance

(15,070)

Credit terms for goods and services were within 30 days.

Reconciliation of the Impairment Allowance Movements in relation to 2014–15

Goods and Services $
Total
$

Opening Balance

Amounts written off

(15,070)

Closing Balance

(15,070)

Note 6: Non–Financial Assets

Note 6: Non–Financial Assets
2015
$
2014
$

Note 6A: Leasehold Improvements

Leasehold improvements

Fair value

Accumulated depreciation

Accumulated impairment losses

Total leasehold improvements

Note 6: Non–Financial Assets (continued)
Leasehold Improvement
$

Note 6B: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment

Reconciliation of the opening and closing balances of property, plant and equipment for 2015

As at 1 July 2014

Gross book value

Accumulated depreciation and impairment

Total as at 1 July 2014

Additions

Leasehold fitout incentive received

230,600

Depreciation

(26,036)

Other

(204,564)

Total as at 30 June 2015

Total as at 30 June 2015 represented by

Gross book value

Accumulated depreciation and impairment

Total as at 30 June 2015

The NHFB received a leasehold incentive in the form of a office fitout in respect of its lease at Canberra House in July 2014. That lease was subsequently terminated on 31 January 2015, and accordingly the leasehold fitout asset carrying value was adjusted to zero.

Note 6: Non–Financial Assets (continued)
2015
$
2014
$

Note 6C: Other Non–Financial Assets

Prepayments

43,499

5,400

Total other non–financial assets

43,499

5,400

Total other non–financial assets – are expected to be recovered in

No more than 12 months

43,499

5,400

More than 12 months

Total other non–financial assets

43,499

5,400

Note 7: Payables

Note 7: Payables
2015
$
2014
$

Note 7A: Suppliers

Trade creditors and accruals

(253,992)

(193,754)

Total supplier payables

(253,992)

(193,754)

Suppliers expected to be settled within 12 months:

Related entities1

(23,972)

(84,712)

External parties

(230,019)

(109,042)

Total

(253,991)

(193,754)

Settlement was usually made within 30 days.

Note 7B: Other Payables

Wages and salaries

(46,732)

(56,492)

Superannuation

(7,426)

(9,971)

Total other payables

(54,158)

(66,463)

Total other payables are expected to be settled in:

No more than 12 months

(54,158)

(66,463)

Total other payables

(54,158)

(66,463)

1 For the year ended 30 June 2015 and 30 June 2014, this amount relates to payables to the Department of Health under a shared services arrangement and some small payables to other Commonwealth government agencies.

Note 8: Provisions

Note 8: Provisions
2015
$
2014
$

Note 8A: Employee Provisions

Leave

(300,412)

(433,366)

Total employee provisions

(300,412)

(433,366)

Employee provisions are expected to be settled

No more than 12 months

(214,315)

(245,830)

More than 12 months

(86,097)

(187,536)

Total employee provisions

(300,412)

(433,366)

Note 9: Cash Flow Reconciliation

Note 9: Cash Flow Reconciliation
2015
$
2014
$

Reconciliation of cash as per statement of financial position to cash flow statement

Cash

Cash flow statement

12,000

12,000

Statement of Financial Position

12,000

12,000

Discrepancy

Reconciliation of net cost of services to net cash from operating activities

Net cost of services

(3,846,278)

(4,143,316)

Add revenue from Government

4,348,000

4,360,000

Adjustment for non–cash items

Depreciation

26,036

Minimun lease payment (amortisation of lease incentive liability)

(26,036)

Movements in assets and liabilities

Assets

(Increase) / decrease in net receivables

(378,602)

4,376,428

(Increase) / decrease in prepayments

(38,099)

(5,400)

Liabilities

Increase / (decrease) in employee provisions

(132,954)

238,342

Increase / (decrease) in supplier payables

60,238

(4,800,004)

Increase / (decrease) in other payables

(12,305)

(14,050)

Net cash from (used by) operating activities

12,000

Note 10: Contingent Assets and Liabilities

Quantifiable Contingencies

As at 30 June 2015, the NHFB had no quantifiable contingencies.

Unquantifiable Contingencies

As at 30 June 2013, the NHFB had entered into an arrangement for an indemnity with the New South Wales Health Administration Council (HAC). No change has occurred during 2013–14, 2014–15 and remains current as of 30 June 2015.

The HAC is a statutory body whose functions include entering into contracts to support the functions of the NSW Minister for Health. HAC has a banking contract for its Pool accounts with the RBA. HAC has provided the RBA with an indemnity that places obligations upon HAC to accept risks on persons not in its direct control, being the staff of the NHFB. The HAC has in turn sought a ‘back to back’ indemnity from the Commonwealth. The indemnity is limited to cover the actions of NHFB staff in their capacity as users of Pool account information.

The most probable cost of the indemnity if called upon would be over $20,000,000 (inclusive of GST).

A risk assessment has been undertaken in accordance with the Department of Finance’s Guidelines for Issuing and Managing Indemnities, Guarantees, Warranties and Letters of Comfort. The contingent liability includes risks which are assessed as being either significant or non–remote. The NHFB will make every effort to limit the risk to the Commonwealth under the arrangement through the adoption and implementation of appropriate risk management procedures.

Under the National Health Reform Agreement (NHRA), each of the States agreed to open a Reserve Bank of Australia (RBA) account (a ‘State Pool Account’) for the purpose of receiving all Commonwealth and activity–based State public hospital funding. The Administrator of the National Health Funding Pool (the Administrator) is responsible for making payments from each State Pool Account, at the direction of each State Health Minister. This process is supported by the NHFB.

Significant Remote Contingencies

As at 30 June 2015, the NHFB had no significant remote contingencies. (2014: Nil)

Note 11: Senior Management Personnel Remuneration

Note 11: Senior Management Personnel Remuneration
2015
$
2014
$

Short–term employee benefits

Salary

294,985

293,442

Other

60,626

71,984

Total short–term employee benefits

355,611

365,426

Post–employment benefits

Superannuation

59,344

49,874

Total post–employment benefits

59,344

49,874

Other long–term benefits

Annual leave

22,578

22,578

Long–service leave

7,362

25,084

Total other long–term benefits

29,940

47,662

Total employment benefits

444,895

462,962

Notes: The total number of senior management personnel that are included in the above table are two (2014: 2).

Note 12: Financial Instruments

Note 12: Financial Instruments
2015
$
2014
$

Note 12A: Categories of Financial Instruments

Financial Assets

Loans and Receivables

Cash

12,000

12,000

Trade and other receivables

109,752

Total

121,752

12,000

Carrying amount of financial assets

121,752

12,000

Financial Liabilities

At amortised cost

Trade creditors and accruals

(253,992)

(193,754)

Total

(253,992)

(193,754)

Carrying amount of financial liabilities

(253,992)

(193,754)

Note 12B: Net Income and Expense from Financial Assets

There is no income or expense from financial assets in 2014–15. (2013–14: Nil)

Note 12C: Net Income and Expense from Financial Liabilities

There is no net income or expense from financial liabilities in 2014–15. (2013–14: Nil)

Note 12D: Fair Value of Financial Instruments

The fair value of all financial assets and liabilities equals its carrying amount in 2014–15 and 2013–14.

Note 12e: Credit Risk

NHFB is exposed to minimal credit risk as receivables were cash and other receivables. The maximum exposure to credit risk for other receivables is the risk that arises from potential default of a debtor. This amount was equal to the total amount of trade receivables 2014–15: $109,752 (2014: Nil). The NHFB has endorsed policies and procedures for debt management, to reduce the incidence of credit risk. NHFB has no significant exposures to any concentrations of credit risk.

No collateral is held in relation to the NHFB’s gross credit risk.

Credit quality of financial instruments not past due or individually determined as impaired
Credit quality of financial instruments not past due or individually determined as impaired
Not past due nor impaired
Not Past due or impaired
Past due or impaired
Past due or impaired
2015
$
2014
$
2015
$
2014
$

Receivables for goods and services

109,752

15,070

Total

109,752

15,070

Note 12f: Liquidity Risk

The NHFB’s financial liabilities only include suppliers. Any exposure to liquidity risk is based on the notion that the NHFB will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to appropriation funding from the Australian Government and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations.

Suppliers expenses are payable on demand.

Note 13: Financial Assets Reconciliation

Note 13: Financial Assets Reconciliation
Financial assets
Notes
2015
$
2014
$

Total financial assets as per balance sheet

1,671,566

1,292,964

Less: non–financial instrument components

Appropriations receivable

5B

1,528,437

1,265,921

GST Receivable from the Australian Taxation Office

5B

21,377

15,043

Total non–financial instrument components

 

1,549,814

1,280,964

Total financial assets as per financial instruments note

121,752

12,000

Note 14: Appropriations

Note 14A: Annual Appropriations (‘Recoverable GST exclusive’)

Annual Appropriation for 2015
Annual Appropriation for 2015
Appropriation Act
PGPA Act
Total appropriation
$
Appropriation applied in 2015 (current and prior years)
$
Variance1
$
Section 51 determination
$
Annual Appropriation
$
AFM
$
Section 74
$
Section 75
$

DEPARTMENTAL

Ordinary annual services

4,348,000

128,944

4,476,944

(4,214,428)

262,516

Total departmental

4,348,000

128,944

4,476,944

(4,214,428)

262,516

Annual Appropriation for 2014
Annual Appropriation for 2014
Appropriation Act
Section 30
Section 31
Total appropriation
$
Appropriation applied in 2014
(current and prior years)
$
Vairance2
$
Section 51 determination
$
Annual Appropriation
$
AFM
$
Section 74
$
Section 75
$

DEPARTMENTAL

Ordinary annual services

4,360,000

116,679

4,476,679

(8,730,758)

(4,254,079)

Total departmental

4,360,000

116,679

4,476,679

(8,730,758)

(4,254,079)

1 The variance of $262,516 is due to the lower drawdown during FY14–15. It will be available for drawdown in forward years for current year–end accruals and/or employee entitlements payout.

2 The variance of $4,254,079 is due to the NHFB drawing down on its prior year appropriation during 13–14 to pay its 12–13 trade creditors and accruals.

Table B: Departmental and Administered Capital Budgets (‘Recoverable GST exclusive’)

There was no Departmental Capital Budget appropriated to NHFB in 2014–15 or in 2013–14.

Table C: Unspent Annual Appropriations (‘Recoverable GST exclusive’)
Table C: Unspent Annual Appropriations (‘Recoverable GST exclusive’)
Authority
2015
$
2014
$

DEPARTMENTAL

Appropriation Act (No 1) 2014–15

1,528,737

Appropriation Act (No 1) 2013–14

539,450

Appropriation Act (No 1) 2012–13

738,471

Total

1,528,737

1,277,921

Note 15: Reporting of Outcomes

Note 15: Reporting of Outcomes
Outcome 11
2015
$
Outcome 11
2014
$

Note 15A: Net Cost of Outcome Delivery

Departmental

Expenses

(4,084,834)

(4,183,316)

Own–source income

223,486

40,000

Net (cost)/contribution of outcome delivery

(3,861,347)

(4,143,316)

1 Outcome 1 is described in Note 1.1. Net costs shown included intra–government costs that were eliminated in calculating the actual Budget Outcome.

The NHFB had one Outcome in the 2014–15 financial year. All revenues, expenses, assets and liabilities are in relation to achieving this Outcome.

Note 16: Budgetary Reports and Explanations of Major Variances

The following tables provide a comparison between the 2014–15 Portfolio Budget Statement (PBS) budget and the 2014–15 final financial outcome in the 2014–15 financial statements. The budget is not audited and does not reflect additional estimates provided as part of the 2015–16 PBS. Material changes have been explained as part of the variance analysis.

The actuals are prepared in accordance with Australian Accounting Standards.

Due to the size and nature of the NHFB budget, the impact of an individual event can result in a material variance.

Note 16A: Departmental Budgetary Reports

Statement of Comprehensive Income for the period ended 30 June 2015

Statement of Comprehensive Income
Actual
Budget estimate
2015
$
Original1 2015
$
Variance2 2015
$

NET COST OF SERVICES

Expenses

Employee benefits

(1,921,213)

(2,836,000)

914,787

Suppliers

(2,137,585)

(1,512,000)

(625,585)

Depreciation and amortisation

(26,036)

(26,036)

Total expenses

(4,084,834)

(4,348,000)

263,165

Own–Source Income

Own–source revenue

Other revenue

223,486

223,486

Total own–source revenue

223,486

223,486

Gains

Reversals of previous asset write–downs and impairments

15,070

15,070

Total gains

15,070

15,070

Total own–source income

238,556

238,556

Net (cost of)/contribution by services

(3,846,278)

(4,348,000)

501,722

Revenue from Government

4,348,000

4,348,000

Surplus/(Deficit) attributable to the Australian Government

501,722

501,722

OTHER COMPREHENSIVE INCOME

Total comprehensive income/ (loss) attributable to the Australian Government

501,722

501,722

1 The NHFB’s budgeted financial statement first presented to Parliament in respect of the reporting period, being the 2014–15 Portfolio Budget Statements (PBS).

2 Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided at Note 16B.

Statement of Financial Position for National Health Funding Body as at 30 June 2015

Statement of Financial Position
Actual
Budget estimate
2015
$
Original1 2015
$
Variance2 2015
$

ASSETS

Financial assets

Cash

12,000

333,000

(321,000)

Trade and other receivables

1,659,566

1,156,000

503,566

Total financial assets

1,671,566

1,489,000

182,566

Non–financial assets

Other non–financial assets

43,499

43,499

Total non–financial assets

43,499

43,499

Total assets

1,715,065

1,489,000

226,065

LIABILITIES

Payables

Suppliers

(253,992)

(540,000)

286,008

Other payables

(54,158)

(107,000)

52,842

Total payables

(308,151)

(647,000)

338,849

Provisions

Employee provisions

(300,412)

(454,000)

153,588

Total provisions

(300,412)

(454,000)

153,588

Total liabilities

(608,563)

(1,101,000)

492,437

Net assets

1,106,503

388,000

718,503

EQUITY

Parent entity interest

Retained surplus

1,106,503

388,000

718,503

Total parent entity interest

1,106,503

388,000

718,503

Total equity

1,106,503

388,000

718,503

1 The NHFB’s budgeted financial statement first presented to Parliament in respect of the reporting period, being the 2014–15 Portfolio Budget Statements (PBS).

2 Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided at Note 16B.

Statement of Changes in Equity for National Health Funding Body for the period ended 30 June 2015

Statement of Changes in Equity
Retained earnings
Total Equity
Actual
Budget estimate
Actual
Budget estimate
2015
$
Original1 2015
$
Variance2 2015
$
2015
$
Original1 2015
$
Variance2 2015
$

Opening balance

Balance carried forward from previous period

604,781

388,000

216,781

Adjusted opening balance

604,781

388,000

216,781

Comprehensive income

Surplus/(Deficit)
for the period

501,722

501,722

Total comprehensive income

501,722

501,722

Closing balance attributable to Australian Government

1,106,503

388,000

718,503

1 The NHFB’s budgeted financial statement first presented to Parliament in respect of the reporting period, being the 2014–15 Portfolio Budget Statements (PBS).

2 Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided at Note 16B.

Cash Flow Statement for National Health Funding Body for the period ended 30 June 2015

Cash Flow Statement
Actual
Budget estimate
2015
$
Original1 2015
$
Variance2 2015
$

OPERATING ACTIVITIES

Cash received

Appropriations

4,085,484

4,348,000

(262,516)

Net GST received

186,355

144,000

42,355

Other

128,944

128,944

Total cash received

4,400,783

4,492,000

(91,217)

Cash used

Employees

(2,057,417)

(2,830,000)

772,583

Suppliers

(2,028,067)

(1,508,000)

(520,067)

Section 74 receipts transferred to OPA

(315,299)

(144,000)

(171,299)

Total cash used

(4,400,783)

(4,482,000)

81,217

Net cash from/(used by) operating activities

10,000

(10,000)

Net increase/(decrease) in cash held

10,000

(10,000)

Cash at the beginning of the reporting period

12,000

323,000

(311,000)

Cash at the end of the reporting period

12,000

333,000

(321,000)

1 The NHFB’s budgeted financial statement first presented to Parliament in respect of the reporting period, being the 2014–15 Portfolio Budget Statements (PBS).

2 Between the actual and original budgeted amounts for 2015. Explanations of major variances are provided at Note 16B.

Note 16B: Departmental Major Budget Variances for 2015

Note 16B: Departmental Major Budget Variances for 2015
Explanations of major variances
Affected line items (and statement)

The decrease in Employee Expenses compared to Budget resulted from the departure of ongoing staff members who were replaced by temporary and contract staff.

This change in resourcing was determined in response to the Government’s 2014–15 Budget announcement to merge six national health bodies, including the NHFB, into a Health Performance and Productivity Commission.

Employee Benefits and Supplier expenses / Statement of Comprehensive Income

Cash used / Employees and Suppliers / Cash Flow Statement

The Depreciation and Amortisation expense arose from the depreciation of the fit–out (leasehold improvement) of Canberra House from July 2014 to January 2015. Prior to entering this lease and subsequent to its termination, the NHFB’s accommodation was provided by the Department of Health on a commercial basis under a Memorandum of Understanding.

Depreciation expense / Statement of Comprehensive Income

The Cash variance relates to a decision by the Department of Finance that the NHFB could maintain a small on–going cash balance. This decision occurred after the orginal 2014–15 Budget information had been submitted.

Cash / Statement of Financial Position

The Trade and other receivables variance reflects a higher appropriation receivable carried forward from the prior year and a lower than budgeted drawdown for 2014–15, and grants received by the Department of Health.

Trade and other receivables / Statement of Financial Position

The Other non–financial assets variance relates to a prepayment for services.

Prepayement / Statement of Financial Position

The lower than budgeted Payables – Suppliers liability relates to more timely processing of invoices.

Total Payables / Statement of Financial Position

The lower Employee provisions liability reflects the reduction in APS staff employed by the NHFB and the transfer of entitlements for staff departures during 2014–15.

Employee Provisions / Statement of Financial Position