NATIONAL HEALTH FUNDING BODY
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016

FINANCIAL STATEMENTS CONTENTS

Independent auditor's report page 1

Independent auditor's report page 2

STATEMENT BY THE ACCOUNTABLE AUTHORITY AND CHIEF FINANCIAL OFFICER

In our opinion, the attached financial statements for the year ended 30 June 2016 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 of Svetlana Angelkoska

Svetlana Angelkoska
Acting Chief Executive Officer

Date 30 September 2016

Signed

Signture of Karin van Leeuwen

Karin van Leeuwen
Chief Financial Officer

Date 30 September 2016

National Health Funding Body
Statement of Comprehensive Income
for the period ended 30 June 2016

Notes
2016
$
2015
$
Original Budget

NET COST OF SERVICES

EXPENSES

Employee benefits

2A

2,044,593

1,921,213

2,503,000

Suppliers

2B

2,418,216

2,137,585

1,812,000

Depreciation and amortisation

2C

26,036

TOTAL EXPENSES

4,462,809

4,084,834

4,315,000

OWN–SOURCE INCOME

OWN–SOURCE REVENUE

Other revenue

3A

95,248

223,486

TOTAL OWN–SOURCE REVENUE

95,248

223,486

GAINS

Reversals of previous asset
write–downs and impairments

3B

15,070

TOTAL GAINS

15,070

TOTAL OWN–SOURCE INCOME

95,248

238,556

NET COST OF SERVICES

4,367,561

3,846,278

4,315,000

Revenue from Government

3C

4,314,000

4,348,000

4,315,000

(DEFICIT)/SURPLUS ATTRIBUTABLE TO THE AUSTRALIAN GOVERNMENT

(53,561)

501,722

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE (DEFICIT)/SURPLUS ATTRIBUTABLE TO THE AUSTRALIAN GOVERNMENT

(53,561)

501,722

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 2016

Notes
2016
$
2015
$
Original Budget

ASSETS

FINANCIAL ASSETS

Cash and cash equivalents

4A

25,000

12,000

12,000

Trade and other receivables

4B

1,971,776

1,659,566

1,251,000

TOTAL FINANCIAL ASSETS

1,996,776

1,671,566

1,263,000

NON–FINANCIAL ASSETS

Leasehold improvement

Other non–financial assets

5B

43,499

42,000

TOTAL NON–FINANCIAL ASSETS

43,499

42,000

TOTAL ASSETS

1,996,776

1,715,065

1,305,000

LIABILITIES

PAYABLES

Suppliers

6A

(505,531)

(253,992)

(201,000)

Other payables

6B

(53,973)

(54,158)

(66,000)

TOTAL PAYABLES

(559,504)

(308,150)

(267,000)

PROVISIONS

Employee provisions

7A

(384,330)

(300,412)

(433,000)

TOTAL PROVISIONS

(384,330)

(300,412)

(433,000)

TOTAL LIABILITIES

(943,834)

(608,562)

(700,000)

NET ASSETS

1,052,942

1,106,503

605,000

EQUITY

Retained surplus

1,052,942

1,106,503

(605,000)

TOTAL EQUITY

1,052,942

1,106,503

(605,000)

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 2016

Retained earnings
Original Budget
Asset revaluation reserve
Contributed
equity/capital
Original Budget
Total equity
Original Budget
2016
$
2015
$
$
2016
$
2015
$
2016
$
2015
$
$
2016
$
2015
$
$

OPENING BALANCE

Balance carried forward from previous period

1,106,503

604,781

605,000

1,106,503

604,781

605,000

ADJUSTED OPENING BALANCE

1,106,503

604,781

605,000

1,106,503

604,781

605,000

COMPREHENSIVE INCOME

(Deficit)/Surplus for the period

(53,561)

501,722

(53,561)

501,722

TOTAL
COMPREHENSIVE
INCOME

(53,561)

501,722

(53,561)

501,722

CLOSING BALANCE AS AT 30 JUNE

1,052,942

1,106,503

605,000

1,052,942

1,106,503

605,000

CLOSING BALANCE ATTRIBUTABLE TO THE AUSTRALIAN GOVERNMENT

1,052,942

1,106,503

605,000

1,052,942

1,106,503

605,000

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

National Health Funding Body
Cash Flow Statement
for the period ended 30 June 2016

Notes
2016
$
2015
$
Original Budget

OPERATING ACTIVITIES

CASH RECEIVED

Appropriations

3,662,581

4,085,484

4,214,000

Sale of goods and rendering of services

150,000

Net GST received

215,935

186,355

150,000

Other

346,973

128,944

TOTAL CASH RECEIVED

4,375,489

4,400,783

4,364,000

CASH USED

Employees

(2,006,026)

(2,057,417)

(2,405,000)

Suppliers

(1,859,490)

(2,028,067)

(1,809,000)

Section 74 receipts transferred to OPA

(496,973)

(315,299)

(150,000)

TOTAL CASH USED

(4,362,489)

(4,400,783)

(4,364,000)

NET CASH USED BY OPERATING ACTIVITIES

8

13,000

NET INCREASE IN CASH HELD

13,000

Cash and cash equivalents at the beginning of the reporting period

12,000

12,000

12,000

CASH AND CASH EQUIVALENTS AT THE END OF THE REPORTING PERIOD

4A

25,000

12,000

12,000

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

National Health Funding Body
Notes to and forming part of the Financial Statements
for the period ended 30 June 2016

TABLE OF CONTENTS — NOTES

Note 1: Overview

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); and
  • 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 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.

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. Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) for reporting periods ending on or after 1 July 2015; 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.

1.3. 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. 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:

Standard / Interpretation
Nature of change/s in accounting policy and likely impact on initial application

AASB 2015–1

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

AASB 2015–2

Amendments to Australian Accounting Standards — Disclosure Initiative: Amendments to AASB 101.The changes clarify that entities should not be disclosing immaterial information.

AASB 2015–3

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.

AASB 2013–9

Amendments to Australian Accounting Standards — Conceptual Framework, Materiality and Financial Instruments (Part C — Financial Instruments). This does not have material 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:

Standard / Interpretation
Application date for the entity1
Nature of impending change/s in accounting policy and likely impact on initial application

AASB 9

on or after
1 January 2018

AASB 9 was reissued in December 2014 and now incorporates:

  • the classification and measurement requirements for financial assets (including limited amendments) and for financial liabilities, and the recognition and derecognition requirements for financial instruments (representing the first phase of the three phase project that replaces AASB 139);
  • requirements for impairment of financial assets (representing the second phase); and
  • hedge accounting (representing the third phase).

AASB 15

on or after
1 January 2017

Specifies the accounting treatment for all revenues arising from contracts with customers.

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss.

AASB 16

on or after 1 January 2019

Requires lessees to recognise almost all leases as assets and liabilities.

AASB 2014–7

on or after
1 January 2018

Amends various standards to incorporate the consequential amendments arising from the issuance of AASB 9.

AASB 2015–6

on or after
1 July 2016

Extends the scope of AASB 124 Related Party Disclosures to include application by not–for–profit (NFP) public sector entities and includes implementation guidance for these entities.

AASB 2015–7

on or after
1 July 2016

Amends to AASB 13 Fair value measurement to exempt not–for–profit public sector entities from certain disclosures.

1.4. Events After The Reporting Period

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

1.5. 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 Australian Taxation Office; and
  2. for receivables and payables.

1.6 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 The NHFB expected initial application date is when the accounting standard becomes operative at the beginning of the reporting period.

Note 2: Expenses

2016
$
2015
$

NOTE 2A: EMPLOYEE BENEFITS

Wages and salaries

1,358,652

1,331,057

Superannuation

Defined contribution plans

178,517

184,464

Defined benefit plans

87,709

86,552

Leave and other entitlements

419,715

319,140

TOTAL EMPLOYEE BENEFITS

2,044,593

1,921,213

ACCOUNTING POLICY

The accounting policy for employee benefits is in note 7.

NOTE 2B: SUPPLIERS

GOODS AND SERVICES SUPPLIED OR RENDERED

Consumables, printing, recruitment and training

115,418

131,721

Contractors

1,863,433

1,511,930

Information technology and communications

88,852

70,488

Professional fees

60,771

55,607

Property and utilities

15,540

28,469

Travel

105,825

59,465

Other

21,959

20,110

TOTAL GOODS AND SERVICES SUPPLIED OR RENDERED

2,271,798

1,877,790

SETTLEMENT TERMS FOR SUPPLIERS

All payables are expected to be settled within 12 months except where indicated.

ACCOUNTING POLICY — LEASING

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 31 January 2015. The NHFB had not entered into any other operating leases as at 30 June 2016, the lease arrangements are on a month by month.

2016
$
2015
$

GOODS SUPPLIED IN CONNECTION WITH

Related parties

1,332

External parties

4,624

TOTAL GOODS SUPPLIED

5,956

SERVICES RENDERED IN CONNECTION WITH

Related parties

322,517

218,913

External parties

2,095,699

1,652,920

TOTAL SERVICES RENDERED

2,418,216

1,871,833

TOTAL GOODS AND SERVICES SUPPLIED OR RENDERED

2,418,216

1,877,789

OTHER SUPPLIERS

OPERATING LEASE RENTALS IN CONNECTION WITH

Minimum lease payments

126,056

208,364

Workers compensation expenses

20,362

51,432

TOTAL OTHER SUPPLIER EXPENSES

146,418

259,796

TOTAL SUPPLIER EXPENSES

2,418,216

2,137,585

Note 2C: DEPRECIATION AND AMORTISATION

DEPRECIATION

Leasehold improvement

26,036

TOTAL DEPRECIATION

26,036

TOTAL DEPRECIATION AND AMORTISATION

26,036

ACCOUNTING POLICY

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.

Note 3: Income

2016
$
2015
$

OWN–SOURCE REVENUE

NOTE 3A: OTHER REVENUE

Resources received free of charge

Remuneration of auditors

55,000

47,000

Rent received free of charge — Department of Health

66,734

Department of Health

40,248

109,752

TOTAL OTHER REVENUE

95,248

223,486

ACCOUNTING POLICY

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 accounting policy on Note 3C).

Contributions by the Department of Health to the operating costs of the NHFB are recognised as revenues, when it is probable that the economic benefits of the transaction will flow through to the NHFB.

Note 3B: REVERSALS OF PREVIOUS ASSET WRITE–DOWNS AND IMPAIRMENTS

Reversal of impaiment losses

15,070

TOTAL WRITE–DOWN AND IMPAIRMENT OF ASSETS

15,070

NOTE 3C: REVENUE FROM GOVERNMENT

Appropriations

Departmental appropriations

4,314,000

4,348,000

TOTAL REVENUE FROM GOVERNMENT

4,314,000

4,348,000

ACCOUNTING POLICY

Revenues 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.

Note 4: Financial Assets

2016
$
2015
$

NOTE 4A: CASH AND CASH EQUIVALENTS

Cash on hand or on deposit

25,000

12,000

TOTAL CASH AND CASH EQUIVALENTS

25,000

12,000

ACCOUNTING POLICY

Cash and Cash Equivalents

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

  1. cash on hand; and
  2. demand deposits in bank accounts with original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

NOTE 4B: TRADE AND OTHER RECEIVABLES

GOOD AND SERVICES RECEIVABLES IN CONNECTION WITH

Goods and services

109,752

TOTAL GOODS AND SERVICES RECEIVABLES

109,752

APPROPRIATIONS RECEIVABLE

For existing program

1,963,921

1,528,437

TOTAL APPROPRIATIONS RECEIVABLE

1,963,921

1,528,437

OTHER RECEIVABLES

GST receivable from the Australian Taxation Office

7,855

21,377

TOTAL OTHER RECEIVABLES

7,855

21,377

TOTAL TRADE AND OTHER RECEIVABLES (GROSS)

1,971,776

1,659,566

LESS IMPAIRMENT ALLOWANCE

Goods and services

TOTAL IMPAIRMENT ALLOWANCE

TOTAL TRADE AND OTHER RECEIVABLES (NET)

1,971,776

1,659,566

RECEIVABLES ARE EXPECTED TO BE RECOVERED IN

No more than 12 months

1,971,776

1,659,566

More than 12 months

TOTAL TRADE AND OTHER RECEIVABLES

1,971,776

1,659,566

RECEIVABLES ARE AGED AS FOLLOWS

Not overdue

1,971,776

1,659,566

Overdue by

0 to 30 days

31 to 60 days

61 to 90 days

More than 90 days

TOTAL TRADE AND OTHER RECEIVABLES (GROSS)

1,971,776

1,659,566

IMPAIRMENT ALLOWANCE AGED AS FOLLOWS

Not overdue

Overdue by

0 to 30 days

31 to 60 days

61 to 90 days

More than 90 days

TOTAL IMPAIRMENT ALLOWANCE

Credit terms for goods and services were within 30 days.

ACCOUNTING POLICY

Trade and Other Receivables

Trade receivables, loans and other receivables that have a 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. 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.

Impairment of financial assets

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

Note 5: Non–Financial Assets

2016
$
2015
$

NOTE 5A: RECONCILIATION OF THE OPENING AND CLOSING BALANCES OF PROPERTY, PLANT AND EQUIPMENT

The value of Property, Plant and Equipment for the NHFB was nil.

NOTE 5B: OTHER NON–FINANCIAL ASSETS

Prepayments

43,499

TOTAL OTHER NON–FINANCIAL ASSETS

43,499

TOTAL OTHER NON–FINANCIAL ASSETS —
ARE EXPECTED TO BE RECOVERED IN

No more than 12 months

43,499

More than 12 months

TOTAL OTHER NON–FINANCIAL ASSETS

43,499

No indicators of impairment were found for other non–financial assets.

Note 6: Payables

2016
$
2015
$

Note 6A: SUPPLIERS

Trade creditors and accruals

(505,531)

(253,992)

TOTAL SUPPLIER PAYABLES

(505,531)

(253,992)

SUPPLIERS EXPECTED TO BE SETTLED WITHIN 12 MONTHS

Related entities1

(262,079)

(23,973)

External parties

(243,452)

(230,019)

TOTAL

(505,531)

(253,992)

Settlement was usually made within 30 days.

NOTE 6B: OTHER PAYABLES

Wages and salaries

(8,672)

(46,732)

Superannuation

(958)

(7,426)

Leave provisions payable

(44,343)

TOTAL OTHER PAYABLES

(53,973)

(54,158)

TOTAL OTHER PAYABLES ARE EXPECTED TO BE SETTLED IN

No more than 12 months

(53,973)

(54,158)

TOTAL OTHER PAYABLES

(53,973)

(54,158)

ACCOUNTING POLICY

Financial liabilities are recognised and derecognised upon ‘trade date’. The NHFB’s financial liabilities are measured at nominal amounts. No fair value measurement disclosures are required.

1 For the years ended 30 June 2016 and 30 June 2015, 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 7: Provisions

2016
$
2015
$

NOTE 7A: EMPLOYEE PROVISIONS

Leave

(384,330)

(300,412)

TOTAL EMPLOYEE PROVISIONS

(384,330)

(300,412)

EMPLOYEE PROVISIONS ARE EXPECTED TO BE SETTLED

No more than 12 months

(268,644)

(214,315)

More than 12 months

(115,686)

(86,097)

TOTAL EMPLOYEE PROVISIONS

(384,330)

(300,412)

ACCOUNTING POLICY

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.

Note 8: Cash Flow Reconciliation

2016
$
2015
$

RECONCILIATION OF CASH AND CASH EQUIVALENTS AS PER STATEMENT OF FINANCIAL POSITION TO CASH FLOW STATEMENT

CASH AND CASH EQUIVALENTS AS PER

Cash flow statement

25,000

12,000

Statement of Financial Position

25,000

12,000

DISCREPANCY

RECONCILIATION OF NET COST OF SERVICES TO NET CASH FROM OPERATING ACTIVITIES

Net cost of services

(4,367,561)

(3,846,278)

Add revenue from Government

4,314,000

4,348,000

ADJUSTMENT FOR NON–CASH ITEMS

Depreciation

(26,036)

Minimum lease payment (amortisation of lease incentive liability)

26,036

MOVEMENTS IN ASSETS AND LIABILITIES

ASSETS

(Increase in net receivables)

(312,210)

(378,602)

(Increase)/decrease in prepayments

43,499

(38,099)

LIABILITIES

Increase/(decrease) in employee provisions

83,918

(132,954)

Increase in supplier payables

251,539

60,238

(Decrease in other payables)

(185)

(12,305)

NET CASH FROM OPERATING ACTIVITIES

13,000

Note 9: Contingent Assets And Liabilities

Quantifiable Contingencies

As at 30 June 2016, 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 2016.

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 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 2016, the NHFB had no significant remote contingencies. (2015: Nil)

ACCOUNTING POLICY

Contingent assets and liabilities are not recognised in the balance sheet but are reported in this note. 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 2016, the NHFB did not have any contingency assets or liabilities (2015: Nil).

Note 10: Senior Management Personnel Remuneration

2016
$
2015
$

SHORT–TERM EMPLOYEE BENEFITS

Salary

304,527

294,985

Other

50,117

60,626

TOTAL SHORT–TERM EMPLOYEE BENEFITS

354,644

355,611

POST–EMPLOYMENT BENEFITS

Superannuation

45,613

59,344

TOTAL POST–EMPLOYMENT BENEFITS

45,613

59,344

OTHER LONG–TERM BENEFITS

Annual leave

21,665

22,578

Long–service leave

10,427

7,362

TOTAL OTHER LONG–TERM BENEFITS

32,092

29,940

TOTAL EMPLOYMENT BENEFITS

432,349

444,895

Notes

The total number of senior management personnel that are included in the above table is two (2015: 2).

Note 11: Financial Instruments

2016
$
2015
$

NOTE 11A: CATEGORIES OF FINANCIAL INSTRUMENTS

FINANCIAL ASSETS

LOANS AND RECEIVABLES

Cash and Equivalents

25,000

12,000

Trade and other receivables

109,752

TOTAL

25,000

121,752

CARRYING AMOUNT OF FINANCIAL ASSETS

25,000

121,752

FINANCIAL LIABILITIES

AT AMORTISED COST

Trade creditors and accruals

(505,531)

(253,992)

TOTAL

(505,531)

(253,992)

CARRYING AMOUNT OF FINANCIAL LIABILITIES

(505,531)

(253,992)

NOTE 11B: NET INCOME AND EXPENSE FROM FINANCIAL ASSETS

There is no income or expense from financial assets in 2015–16. (2014–15: Nil)

NOTE 11C: NET INCOME AND EXPENSE FROM FINANCIAL LIABILITIES

There is no net income or expense from financial liabilities in 2015–16. (2014–15: Nil)

NOTE 11D: FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of all financial assets and liabilities equals its carrying amount in 2015–16 and 2014–15.

ACCOUNTING POLICY

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

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.

Financial liabilities

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

NOTE 11E: CREDIT RISK

The 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 2015–16: $0 (2015: $109,752). 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.

Not past due nor impaired
2016
$
Not Past due or impaired
2015
$
Past due or impaired
2016
$
Past due or impaired
2015
$

Receivables for goods and services

109,752

TOTAL

109,752

NOTE 11F: 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.

Supplier expenses are payable on demand.

Note 12: Financial Assets Reconciliation

Notes
2016
$
2015
$

FINANCIAL ASSETS

Total financial assets as per balance sheet

1,996,776

1,671,566

Less: non–financial instrument components

Appropriations receivable

4B

1,963,921

1,528,437

GST Receivable from the Australian Taxation Office

4B

7,855

21,377

TOTAL NON–FINANCIAL INSTRUMENT COMPONENTS

1,971,776

1,549,814

TOTAL FINANCIAL ASSETS AS PER FINANCIAL INSTRUMENTS NOTE

25,000

121,752

Note 13: Appropriations

Note 13a: Annual Appropriations (Recoverable Gst Exclusive)

ANNUAL APPROPRIATION FOR 2016

Appropriation Act
PGPA Act
Total appropriation
$
Appropriation applied in 2016
(current and prior years)
$
Variance1
$
Section 51 determination
$
Annual Appropriation
$
AFM
$
Section 74
$
Section 75
$

DEPARTMENTAL

Ordinary annual services

4,315,000

496,973

4,811,973

(4,375,488)

436,485

1,000

TOTAL DEPARTMENTAL

4,315,000

496,973

4,811,973

(4,375,488)

436,485

1,000

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

4,476,944

(4,214,428)

262,516

1 The variance of $436,485 is due to the NHFB drawing down on its prior year appropriation during
15–16 to pay its 14–15 trade creditors and accruals.

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

TABLE B: DEPARTMENTAL AND ADMINISTERED CAPITAL BUDGETS (RECOVERABLE GST EXCLUSIVE)

There was no Departmental Capital Budget appropriated to the NHFB in 2015–16 (2014–15: nil)

TABLE C: UNSPENT ANNUAL APPROPRIATIONS (RECOVERABLE GST EXCLUSIVE)

Authority
2016
$
2015
$

DEPARTMENTAL

Appropriation Act (No 1) 2015–16

1,988,921

Appropriation Act (No 1) 2014–15

1,540,437

Appropriation Act (No 1) 2013–14

Appropriation Act (No 1) 2012–13

TOTAL

1,988,921

1,540,437

Note 14: Reporting Of Outcomes

Note 14: Net Cost Of Outcome Delivery

Outcome 11
2016
$
Outcome 11
2015
$

DEPARTMENTAL

Expenses

(4,462,809)

(4,084,834)

Own–source income

95,248

223,486

NET (COST)/CONTRIBUTION OF OUTCOME DELIVERY

(4,367,561)

(3,861,348)

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 2015–16 financial year. All revenues, expenses, assets and liabilities are in relation to achieving this Outcome.

Note 15: Departmental Major Budget Variance Explanations For 2015–16

Explanations of major variances
Affected line items (and statement)

The decrease in employee expenses and increase in supplier expenses compared to Budget resulted from the departure of some employees who were replaced by contract staff, and budgeted pay increases not having been effected.

Employee Benefits and Supplier expenses /
Statement of Comprehensive Income

Other revenue comprise resources received free of charge and unearned income from 2014–15 financial year which were not included in the budget.

Other revenue /
Statement of Comprehensive Income

The variance is due to the increase of cash balances to minimise the risk of the account being overdrawn.

Cash and Cash Equivalents /
Statement of Financial Position

The trade and other receivables variance reflects a higher appropriation receivable brought forward from 2014–15.

Trade and other receivables /
Statement of Financial Position

The decrease in non–financial assets compared to Budget is due to prepayments from 2014–15 being moved to expenditure in the 2015–16 financial year.

Other non–financial assets /
Statement of Financial Position

The increase in suppliers payable is due to amounts payable to the Department of Health under the Memorandum of Understanding being withheld for payment, while discussions were underway to agree pricing and invoicing matters.

Suppliers Payable /
Statement of Financial Position

Employee provisions are lower than Budget due to a number of employees transfering to other agencies and replaced by contractors.

Employee Provisions /
Statement of Financial Position

The increase in retained surplus reflects the 2014–15 surplus.

Retained surplus /
Statement of Financial Position

The variance relates to amounts of cash received from the Department of Health for Data Modelling and the Transformation Plan, leave provision for employees transferred from other agencies, and cost recovery from NHPA for the share of office accommodation.

Cash received /
Sale of goods and rendering
of services, and Other /
Cash Flow Statement

The variance is a result of the departure of some employees.

Cash used / Employees /
Cash Flow Statement

The variance is due to receipts not included in the Budget for leave provisions for employees transferred from other agencies, cost recovery from NHPA for the share of office accommodation and an amount of money from the Department of Health for the Transformation Plan.

Cash used /
Section 74 receipts transferred to OPA /
Cash Flow Statement

End of General Purpose Financial Statements