National Archives of Australia
National Archives of Australia Advisory Council
Annual Report 2017–18

Financial Statements

Financial statements and supporting notes for the year ending 30 June 2018


Australian National Audit Officer letterhead

INDEPENDENT AUDITOR'S REPORT

To the Attorney-General

Opinion

In my opinion, the financial statements of the National Archives of Australia for the year ended 30 June 2018:

(a) comply with Australian Accounting Standards – Reduced Disclosure Requirements and the Public
Governance
, Performance and Accountability (Financial Reporting) Rule 2015; and
(b) present fairly the financial position of the National Archives of Australia as at 30 June 2018 and its
financial performance and cash flows for the year then ended.

The financial statements of the National Archives of Australia, which I have audited, comprise the following statements as at 30 June 2018 and for the year then ended:

  • Statement by the Director-General and Chief Financial Officer;
  • Statement of Comprehensive Income;
  • Statement of Financial Position;
  • Statement of Changes in Equity;
  • Cash Flow Statement;
  • Notes to the financial statements, comprising a summary of significant accounting policies and other explanatory information.

Basis for Opinion

I conducted my audit in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the National Archives of Australia in accordance with the relevant ethical requirements for financial statement audits conducted by the Auditor-General and his delegates. These include the relevant independence requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) to the extent that they are not in conflict with the Auditor-General Act 1997. I have also fulfilled my other responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Accountable Authority's Responsibility for the Financial Statements

As the Accountable Authority of the National Archives of Australia the Director-General is responsible under the Public Governance, Performance and Accountability Act 2013 for the preparation and fair presentation of annual financial statements that comply with Australian Accounting Standards – Reduced Disclosure Requirements and the rules made under that Act. The Director-General is also responsible for such internal control as the Director-General determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Director-General is responsible for assessing the National Archives of Australia's ability to continue as a going concern, taking into account whether the entity's operations will cease as a result of an administrative restructure or for any other reason. The Director-General is also responsible for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the assessment indicates that it is not appropriate.

Auditor's Responsibilities for the Audit of the Financial Statements

My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian National Audit Office Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with the Australian National Audit Office Auditing Standards, I exercise professional judgement and maintain professional scepticism throughout the audit. I also:

  • identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
  • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control;
  • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Accountable Authority;
  • conclude on the appropriateness of the Accountable Authority's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the entity to cease to continue as a going concern; and
  • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Australian National Audit Office

Signature of Serna Buchanan, Senior Executive Director

Serena Buchanan
Senior Executive Director

Delegate of the Auditor-General

Canberra
31 August 2018


National Archives of Australia

STATEMENT BY THE DIRECTOR-GENERAL AND CHIEF FINANCIAL OFFICER

In our opinion, the attached financial statements for the period ended 30 June 2018 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 Archives of Australia will be able to pay its debts as and when they fall due.

Signature of David Fricker, Director-General, 31 August 2018 and Jason McGuire, Chief Financial Officer, 31 August 2018

Statement of Comprehensive Income

For the period ended 30 June 2018


Net cost of services

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Expenses
Employee benefits 1.1A 33 400 35 867 34 488
Supplier 1.1B 34 358 34 604 35 792
Depreciation and amortisation 2.2 15 240 17 266 12 183
Grants 20 20 -
Finance costs Blank 186 235 37
Write-down and impairment of assets 1.1C 318 1 523 -
Losses from asset sales Blank - - 500
Other expenses Blank - 86 -
Total expenses Blank 83 522 89 601 83 000

Own-source income

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Own-source revenue
Sale of goods and rendering of services 1.2A 2 581 2 370 1 720
Rental income 1.2B 120 206 90
Other revenue 1.2C 4 967 11 572 10 000
Total own-source revenue Blank 7 668 14 148 11 810
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Gains
Other gains Blank - 1 75
Gains from asset sales Blank - 29 -
Total gains Blank - 30 75
Total own-source income Blank 7 668 14 178 11 885
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Net cost of services Blank 75 854 75 423 71 115
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Revenue from Government Appropriations 3.1A 63 819 71 023 63 819
Surplus/(Deficit) Blank (12 035) (4 400) (7 296)

Other comprehensive income

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Items not subject to subsequent reclassification to net cost of services
Revaluation increment / (decrement) Blank 27 690 (8 168) -
Total other comprehensive income Blank 27 690 (8 168) -
Total comprehensive income/(loss) Blank 15 655 (12 568) (7 296)
Total comprehensive income/(loss) attributable to the Australian Government Blank 15 655 (12 568) (7 296)

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

This statement also represents the results for Outcome 1 as the Archives only has one outcome. Outcome 1 is described at the Overview note.

Statement of Comprehensive Income

for the period ended 30 June 2018

Budget Variances Commentary

The original budget is as presented in the 2017–18 Portfolio Budget Statements and provided for comparison against the final financial outcome in accordance with Australian Accounting Standards. The budget is not audited and does not reflect changes to the budget announced by the Commonwealth Government in the Mid-Year Economic and Fiscal Outlook.

Explanation of major variances are provided below. Variances are considered major where the variance between budget and actual is greater than 10% and/or $500,000. An item below this threshold may also be included where an explanation is considered important for the reader's understanding.

Statement of Comprehensive Income

Employee benefits

The variance to the original budget is due to positions being vacant during the year as a result of staff separating from the Archives and the delay in filling vacant positions throughout the year. The average staffing level in 2017–18 was 339 compared to 375 estimated in the original budget.

Depreciation and amortisation

The variance to the budget is due to the revaluation of Infrastructure, Plant and Equipment Assets in 2015–16 which increased the value of
the assets by $3.6 million which was not reflected in the original budget.

Finance cost

The variance to the budget is due to an increase to the make good provision for properties leased by the Archives at the end of June 2016 as a result of an independent assessment, which was not anticipated in the original budget.

Loss from asset sales

Loss from asset sales is primarily a result of changes in the status of Heritage and Cultural assets from Retain National Archives (RNA) to temporary records. Where assets become classified as temporary they are removed from the collection value and disposed. Though this strategy was taken into account in the original budget, it did not occur in 2017–18.

Sale of goods and rendering of services

The variance to the original budget is due to an increase in demand of digitisation services which was greater than that anticipated in the original budget.

Other Revenue

The variance to the original budget is mainly due to a reduced volume of physical records and a change in the valuation rate of Digital Audio Visual items.


Statement of Financial Position

For the period ended 30 June 2018


Assets

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Financial assets
Cash and cash equivalents 2.1A 277 166 199
Trade and other receivables 2.1B 24 608 22 830 19 240
Other financial assets Blank - - 20
Total financial assets Blank 24 885 22 996 19 459
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Non-financial assets
Property, plant and equipment 2.2 1 492 345 1 470 332 1 485 895
Intangibles 2.2 16 146 16 281 16 911
Inventories Blank 140 92 142
Other non-financial assets - Prepayments Blank 1 418 2 296 1 442
Total non-financial assets Blank 1 510 049 1 489 001 1 504 390
Total assets Blank 1 534 934 1 511 997 1 523 849

Liabilities

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Payables
Suppliers 2.3A 7 548 4 151 6 371
Other payables 2.3B 977 1 405 1 111
Total payables Blank 8 525 5 556 7 482
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Provisions
Employee provisions 4.1 11 326 11 146 12 355
Provision for restoration 2.4 7 033 7 532 9 680
Total provisions Blank 18 359 18 678 22 035
Total liabilities Blank 26 884 24 234 29 517
Net assets Blank 1 508 050 1 487 763 1 494 332

Equity

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Contributed equity Blank 46 701 42 070 46 701
Reserves Blank 365 858 338 168 346 337
Retained surplus Blank 1 095 491 1 107 525 1 101 294
Total equity Blank 1 508 050 1 487 763 1 494 332

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

This statement also represents the results for Outcome 1 as the Archives only has one outcome. Outcome 1 is described at the Overview note.

Budget Variances Commentary

The original budget is as presented in the 2017–18 Portfolio Budget Statements and provided for comparison against the final financial outcome in accordance with Australian Accounting Standards. The budget is not audited and does not reflect changes to the budget announced by the Commonwealth Government in the Mid-Year Economic and Fiscal Outlook.

Explanation of major variances are provided below. Variances are considered major where the variance between budget and actual is greater than 10% and/or $500,000. An item below this threshold may also be included where an explanation is considered important for the reader's understanding.

Statement of Financial Position

Trade and other receivables

The value of trade and other receivables was greater than budget primarily due to lower Appropriation drawdown as a result of less than anticipated employee and supplier expenditure.

Property, plant and equipment

The value of property, plant and equipment was greater than budget due to an increased value of the Heritage and Cultural assets as a result of the revaluation in April 2018 offset by a reduction of collection intake value and appropriate withdrawals of collection items.

Suppliers

The value of suppliers was higher than budget as a result of the straight-lining accounting treatment for the National Archives Preservation Facility (NAPF) lease, which was not fully reflected in the original budget.

Employee provisions

The value of employee provisions was less than budget due to positions being vacant during the year as a result of staff separating from the Archives and the delay in filling these positions throughout the year. The average staffing level in 2017–18 was 339 compared to 375 in the original budget.

Provision for restoration

The provision for restoration was less than budget due to a write-off of the balance provided for the East Block building, Queen Victoria Terrace, Parkes in Canberra as a result of its sale from the Government to a private owner and the cessation of the Archives' lease. A new lease will be entered into between the Archives and the new owner.


Statement of Changes in Equity

For the period ended 30 June 2018


Contributed equity

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Opening balance
Balance carried forward from previous period Blank 42 070 37 267 42 070
Contributions by owners
Equity injection – appropriation Blank - 150 -
Departmental capital budget Blank 4 631 4 653 4 631
Closing balance as at 30 June Blank 46 701 42 070 46 701

Retained earnings

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Opening balance
Balance carried forward from previous period Blank 1 107 524 1 111 924 1 108 590
Comprehensive income
(Deficit) for the period Blank (12 035) (4 400) (7 296)
Closing balance as at 30 June Blank 1 095 491 1 107 524 1 101 294

Asset Revaluation Reserve

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Opening balance
Balance carried forward from previous period Blank 338 170 346 337 346 337
Comprehensive income
Revaluation increment /(decrement) Blank 27 690 (8 168) -
Closing balance as at 30 June Blank 365 859 338 170 346 337

Total Equity

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Opening balance
Balance carried forward from previous period Blank 1 487 764 1 495 528 1 496 997
Comprehensive income
Surplus/(Deficit) for the period Blank (12 035) (4 400) (7 296)
Revaluation increment/(decrement) Blank 27 690 (8 168) -
Total comprehensive income Blank 15 655 (12 568) (7 296)
Transactions with owners
Contributions by owners
Equity injection - appropriation Blank   150 -
Departmental capital budget Blank 4 631 4 653 4 631
Total transactions with owners Blank 4 631 4 803 4 631
Closing balance as at 30 June Blank 1 508 050 1 487 764 1 494 332

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

This statement also represents the results for Outcome 1 as the Archives only has one outcome. Outcome 1 is described at the Overview note.

Significant Accounting Policy

Equity Injections

Amounts appropriated which are designated as 'equity injections' for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

Budget Variances Commentary

The original budget is as presented in the 2017–18 Portfolio Budget Statements and provided for comparison against the final financial outcome in accordance with Australian Accounting Standards. The budget is not audited and does not reflect changes to the budget announced by the Commonwealth Government in the Mid-Year Economic and Fiscal Outlook.

Explanation of major variances are provided below. Variances are considered major where the variance between budget and actual is greater than 10% and/or $500,000. An item below this threshold may also be included where an explanation is considered important for the reader's understanding.

Statement of Changes in Equity

Revaluation increment/(decrement)

The revaluation reserve movement was different to budget as it is difficult for the Archives to anticipate any collection impairment or movements due to revaluation of assets at the time the original budget was prepared.

Deficit for the period

The deficit for the period was greater than budget primarily due to lower than expected revenue from collection intake.


Cash Flow Statement

For the period ended 30 June 2018


Operating activities

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Cash received
Appropriations Blank 65 154 70 459 63 228
Sales of goods and rendering of services Blank 2 429 3 325 1 810
Net GST received Blank 3 144 3 490 3 142
Other Blank - 4 -
Total cash received Blank 70 727 77 278 68 180
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Cash used
Employees Blank 33 191 36 761 34 488
Suppliers Blank 33 459 37 324 33 692
Grants Blank 20 20 -
Section 74 receipts transferred to OPA Blank 3 029 3 579 -
Other Blank 10 95 -
Total cash used Blank 69 709 77 779 68 180
Net cash from / (used by) operating activities Blank 1 018 (501) -

Investing activities

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Cash received
Proceeds from sales of property, plant and equipment Blank - 29 -
Total cash received Blank - 29 -
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Cash used
Purchase of property, plant and equipment Blank 4 411 2 667 3 200
Purchase of intangibles Blank 1 127 1 698 1 431
Total cash used Blank 5 538 4 365 4 631
Net cash used by investing activities Blank (5 538) (4 336) (4 631)

Financing activities

Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Cash received
Contributed equity Blank 4 631 4 803 4 631
Total cash received Blank 4 631 4 803 4 631
Net cash from financing activities Blank 4 631 4 803 4 631
Item Notes 2018
$'000
2017
$'000
Original budget 2018
$'000
Net decrease in cash held Blank 111 (33) -
Cash and cash equivalents at the beginning of the reporting period Blank 166 199 199
Cash and cash equivalents at the end of the reporting period 2.1.A 277 166 199

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

This statement also represents the results for Outcome 1 as the Archives only has one outcome. Outcome 1 is described at the Overview note.

Budget Variances Commentary

The original budget is as presented in the 2017–18 Portfolio Budget Statements and provided for comparison against the final financial outcome in accordance with Australian Accounting Standards. The budget is not audited and does not reflect changes to the budget announced by the Commonwealth Government in the Mid-Year Economic and Fiscal Outlook.

Explanation of major variances are provided below. Variances are considered major where the variance between budget and actual is greater than 10% and/or $500,000. An item below this threshold may also be included where an explanation is considered important for the reader's understanding.

Cash Flow Statement

Appropriations

The variance for appropriations received is due to the actuals including amounts relating to revenue from Section 74 of the PGPA Act which was not included in the budgeted amount.

Sales of goods and rendering of services

Sales of goods and rendering of services is more than budget due to new charges applied to Commonwealth agencies for digitisation services from October 2017.

Employees

Employees is less than budget due to positions being vacant during the year as a result of staff separating from the Archives and the delay in filling vacant positions throughout the year.

Purchase of property, plant and equipment

Cash used for purchase of property, plant and equipment is greater than budget due to earlier than expected commencement of the Digital Archive Storage project.


Overview

Objectives of the National Archives of Australia

The National Archives of Australia (the Archives) is an Australian Government controlled not-for-profit entity. The Archives' role is to preserve Australia's most valuable government records, encourage their use by the public and to promote good records management by Australian Government agencies.

The Archives is structured to meet the single outcome as follows:

Outcome 1: To promote the creation, management and preservation of authentic, reliable and useable Commonwealth records and to facilitate Australians' access to the archival resources of the Commonwealth.

The Archives Statement of Comprehensive Income and Statement of Financial Position represents the outcome statement as all Income, Expenditure, Assets and Liabilities related to Outcome 1 above.

The continued existence of the Archives in its present form and with its present program is dependent on Government policy and on continuing funding by Parliament for the Archives' administration and program.

The Basis of Preparation

The financial statements are general purpose financial statements and are required by section 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 2017; and
  2. Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements 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 thousand dollars 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 entity 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.

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.

New Accounting Standards

All new/revised/amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on the entity's financial statements.

Adoption of New Australian Accounting Standard Requirements

No accounting standard has been adopted earlier than the application date as stated in the standard.

Future Australian Accounting Standard Requirements

The following new standard was issued by the Australian Accounting Standards Board prior to the signing of the statement by the accountable authority and chief financial officer, which is expected to have a material impact on the Archives' financial statements for future reporting period(s):

Standard/ InterpretationApplication date for the ArchivesNature of impending change/s in accounting policy and likely impact on initial application
AASB 16: Leases1 July 2019

AASB 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance leases under AASB 117 Leases. The standard includes two recognition exemptions for lessees – leases of 'low-value' assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less).

At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting is substantially unchanged from today's accounting under AASB 117. Lessors will continue to classify all leases using the same classification principle as in AASB 117 and distinguish between two types of leases: operating and finance leases.

The Archives is yet to fully assess the impact of this new accounting standard however the likely impact will be that most current operating leases of the Archives will be recorded on the balance sheet as a liability with a corresponding right of use asset.

 

Taxation

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

Revenues, expenses and assets 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.

Events After the Reporting Period

There was no subsequent event that had the potential to significantly affect the ongoing structure or financial activities of the Archives.


Financial performance

This section analyses the financial performance of the Archives for the year ended 30 June 2018.

1.1 Expenses

Item 2018
$'000
2017
$'000
1.1A: Employee Benefits
Wages and salaries 23 578 24 982
Superannuation
Defined contribution plans 1 899 1 846
Defined benefit plans 3 100 3 384
Leave and other entitlements 4 558 4 329
Separation and redundancies 100 1 170
Other 165 156
Total employee benefits 33 400 35 866
Item 2018
$'000
2017
$'000
1.1B: Suppliers
Goods and services supplied or rendered
Office equipment and supplies 1 864 4 153
Communications 618 663
Professional services 3 696 6 078
Travel 891 815
Exhibitions and advertising 226 264
Employee related expenses 1 143 1 248
Utilities 690 1 164
Other property operating expenses 3 276 4 338
Other 948 407
Total goods and services supplied or rendered 13 351 19 129
Item 2018
$'000
2017
$'000
Goods supplied 1 164 1 016
Services rendered 12 187 18 122
Total goods and services supplied or rendered 13 351 19 129
Item 2018
$'000
2017
$'000
Other suppliers
Operating lease rentals in connection with
Minimum lease payments 17 819 11 998
Contingent rentals 3 036 3 098
Workers compensation expenses 152 379
Total other suppliers 21 007 15 475
Total suppliers 34 358 34 604

Leasing commitments payable

The Archives in its capacity as lessee has agreements for office accommodation, which are effectively non-cancellable. Contingent rental payments are determined by market reviews and changes in the Consumer Price Index (CPI). Several of these agreements include options to extend the existing lease term.

Item 2018
$'000
2017
$'000
Commitments for lease payments in relation to non-cancellable Operating leases are payable as follows:
Within 1 year 12 289 16 204
Between 1 to 5 years 36 468 38 942
More than 5 years 9 645 9 332
Total operating lease commitments 58 402 64 478

Significant Accounting Policy

Operating lease payments for leases with fixed increases are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

Item 2018
$'000
2017
$'000
1.1C: Write-Down and Impairment of Assets
Impairment of property, plant and equipment 318 301
Impairment of intangible assets - 1 224
Bad and Doubtful Debts - (2)
Total write-down and impairment of assets 318 1 523

1.2: Own-Source Revenue and gains

Own-Source Revenue
Item 2018
$'000
2017
$'000
1.2A: Sale of Goods and Rendering of Services
Sale of goods 999 755
Rendering of services 1 582 1 615
Total sale of goods and rendering of services 2 581 2 370

Significant Accounting Policy

Sale of goods

Revenue from the sale of goods is recognised when:

  1. the risks and rewards of ownership have been transferred to the buyer;
  2. the entity retains no managerial involvement or effective control over the goods.

Rendering of services

Revenue from the rendering of services is recognised by reference to the stage of completion of contracts at the reporting date, which is determined by the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Item 2018
$'000
2017
$'000
1.2B: Rental Income
Operating lease
Rental income from sub-leases 120 206
Total other revenue 120 206

Subleasing rental income commitments receivable

The Archives in its capacity as lessor has sublease agreements for rental properties for fixed terms and amounts.

Item 2018
$'000
2017
$'000
Commitments for sublease rental income receivables are as follows:
Within 1 year 63 200
Between 1 to 5 years - 63
More than 5 years - -
Total sublease rental income commitments 63 263
Item 2018
$'000
2017
$'000
1.2C: Other Revenue
Resources received free of charge
Acquisition of heritage and cultural assets at no cost 4 892 11 493
Remuneration of auditors 75 75
Other - 4
Total other revenue 4 967 11 572

The National Archives collects official Commonwealth government records, and the personal records of governors-general, prime ministers, ministers, federal and High Court judges and some senior Commonwealth public servants. Our collection grows through the transfer of records from the custody of government agencies and Commonwealth persons into the Archives. Once the records have been transferred into the Archives' custody, they are recognised as revenue received free of charge at fair value as assessed by an independent valuer.

Significant Accounting Policy

Resources Received Free of Charge

Resources received free of charge are recognised as revenue 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 revenue at their fair value when the asset qualifies for recognition, unless received from another Government agency or authority as a consequence of a restructuring of administrative arrangements.

Financial position

This section analyses the Archives' assets used to conduct its operations and the operating liabilities incurred as a result. Employee related information is disclosed in the People and Relationships section.

2.1 Financial Assets

Item 2018
$'000
2017
$'000
2.1A: Cash and Cash Equivalents
Cash on hand or on deposit 277 166
Total cash and cash equivalents 277 166

Accounting Policy

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

  1. cash on hand;
  2. demand deposits in bank accounts with an 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.
Item 2018
$'000
2017
$'000
2.1B: Trade and Other Receivables
Appropriations receivable 23 841 22 146
Trade receivables 80 164
GST receivable from the Australian Taxation Office 685 526
Accrued income - 1
Other 1 (7)
Total trade and other receivables (gross) 24 608 22 830

The Archives' trade and other receivables included $38,000 of past due amounts and $17,000 impairment as at 30 June 2018 (2017: $26,000; $17,000 respectively).

Accounting Policy

The Archives' financial assets are cash, and trade and other receivables, and are classified as 'loans and receivables'.

Receivables are recognised upon trade date.

Receivables for goods and services have 30 day terms.

Loans and Receivables

Loans and receivables are measured at fair value and subsequently at amortised cost using the effective interest method less impairment.

Effective Interest Rate Method

The effective interest method is a method of calculating the amortised cost of a financial asset or liability and of allocating interest expense/income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts/payments through the expected life of the financial asset/liability, or, where appropriate, a shorter period.

Impairment of Financial Assets

Financial assets are assessed for impairment at the end of each reporting period. Allowances are made when collectability of the debt is no longer possible.

If there is objective evidence that impairment loss has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.

2.2 Non-Financial Assets

 
Item Heritage and cultural1
$'000
Property, plant and equipment
$'000
Computer Software2
$'000
Other Intangibles
$'000
Total
$'000
2.2: Reconciliation of the Opening and Closing Balances of Heritage and cultural, Plant and equipment and Intangibles
As at 1 July 2017
Gross book value 1 479 846 25 074 21 525 14 979 1 541 425
Accumulated depreciation and impairment (24 889) (9 698) (15 640) (4 584) (54 812)
Total as at 1 July 2017 1 454 957 15 375 5 885 10 396 1 486 613
Additions:
Purchase - 4 411 203 924 5 538
Donation/gift 4 892 - - - 4 892
Revaluations and impairments recognised in other comprehensive income(4) 27, 006 - - - 27 006
Depreciation and amortisation (6 181) (7 797) (1 262) - (15,240)
Disposals(3) (310) (8) - - (318)
Total as at 30 June 2018 1 480 365 11 980 4 826 11 320 1 508 491
Total as at 30 June 2018 represented by
Gross book value 1 481 690 28 389 21 151 15 903 1 547 133
Accumulated depreciation and impairment (1 326) (16 409) (16 325) (4 584) (38 643)
Total as at 30 June 2017 1 480 365 11 980 4 826 11 320 1 508 491
  1. Other property, plant and equipment that met the definition of a heritage and cultural item were disclosed in the heritage and cultural asset class.
  2. The carrying amount of computer software included $1,531,712 purchased software and $3,294,323 internally generated software.
  3. Disposals are primarily related to the appropriate destruction of assets in the heritage and cultural assets class.
  4. Revaluations and impairments of heritage and cultural assets included a $31.2 m revaluation increment (2017 $nil) partially offset by $4.1M impairment (2017: $9.4M).

No indicators of impairment were found for plant and equipment and intangibles assets. Indicators of impairment were found for Heritage and cultural assets due to the transfer of records back to agencies during 2017–18. An annual assessment was undertaken internally to determine whether there is any indicators of impairment for Heritage and cultural, plant and equipment and intangibles assets.

No intangibles assets are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets

On 30 April 2018, an independent valuer conducted a valuation of the heritage and cultural asset class.

A revaluation increment of $31,161,000 for heritage and cultural assets (2017: nil), was credited to the asset revaluation surplus by asset class and included in the equity section of the Statement of Financial Position. No decrements or increments were expensed (2017: nil).

No revaluation has been undertaken for property, plant and equipment asset, therefore the increment for property, plant and equipment asset was nil in 2018 (2017: nil).

All revaluations were conducted in accordance with the revaluation policy.

Contractual commitments for the acquisition of property, plant, equipment and intangible assets

As at 30 June 2018, the Archives has contractual commitments for acquisition of software assets of $66,000, and acquisition of property, plant, equipment assets of $2,539,000.

Accounting Policy
Asset Recognition Threshold

Asset purchases are recognised initially at cost in the statement of financial position with an asset recognition threshold for Information Technology (IT) equipment of $1,000 (exc. GST) and a threshold of $2,000 (exc. GST) for all other assets. Where the cost of purchasing IT equipment and other assets is below the respective threshold, the amount is expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to 'make good' provisions in property leases taken up by the Archives where there exists an obligation to restore the premises to its original condition. These costs are included in the value of the Archives' plant and equipment with a corresponding provision for the 'make good' recognised. (Refer to the provision for restoration obligations in note 2.4).

Revaluations

Following initial recognition at cost, heritage and cultural and plant and equipment assets are carried at fair value. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset is
restated to the revalued amount.

Depreciation and Amortisation

Depreciable property, plant and equipment assets and intangibles (excluding the digital collection in other intangibles assets) are written-off to their estimated residual values over their estimated useful lives to the Archives using, in all cases, the straight-line method of depreciation.

Depreciation and amortisation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary
adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation and amortisation rates applying to each class of depreciable asset are based on the following useful lives:

Assets class Useful life
Plant and equipment 2 – 26 years
Heritage and cultural 29 – 349 years
Intangibles (exclude digital collection) 2 – 20 years
Impairment

All assets were assessed for impairment at 30 June 2018. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment loss recognised if the asset's recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the Archives were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

Non-financial assets are derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Heritage and Cultural Assets

The national archival collection includes records in a wide variety of media including files and card records, account books and ledgers, architectural models, photographs, films and video tapes, optical disks and computer tapes. High value records are stored in specially designed temperature and humidity controlled environments (where required).

Curatorial and preservation policies for heritage and cultural assets can be accessed at: http://www.naa.gov.au/about-us/organisation/op-policies.aspx.

Intangibles

The Archives' intangibles comprise internally developed software for internal use, purchases of licensed software and a digitised collection that is both internally and externally digitised.

Significant accounting estimates and judgements

The fair value of plant and equipment has been taken to be the depreciated replacement cost or market value of similar assets as assessed by an independent valuer every three years.

The fair value of heritage and cultural assets is based on market observations as assessed by an independent valuer every three years. The Archival Collection is diverse with many objects being iconic with limited markets for comparison. Values for the sample are determined by reference to the archival materials markets .The Archives has made significant estimates in measuring the impact of providence to the value of collection objects. A sampling methodology is adopted for some collection categories whereby a sample of objects is selected from each collection category and an average value applied to the entire collection category. Furthermore some collection categories are valued with reference to the value by shelf metre or file size.

Effective 1 July 2012 the intangible digital collections are not amortised as their useful lives have been determined as indefinite. The useful lives of these collections are reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment for that collection.

2.3 Payables

Item 2018
$'000
2017
$'000
2.3A: Suppliers
Trade creditors and accruals 362 2 149
Operating lease rentals 7 186 2 002
Total suppliers 7 548 4 151
Suppliers expected to be settled
No more than 12 months 378 2 171
More than 12 months 7 170 1 980
Total suppliers 7 548 4 151
Item 2018
$'000
2017
$'000
2.3B: Other Payables
Wages and salaries 304 276
Superannuation 40 40
Prepayments received/unearned income 633 1 089
Total other payables 977 1 405
Other payables to be settled
No more than 12 months 977 1 130
More than 12 months - 275
Total suppliers 977 1 405

Accounting Policy

Suppliers and other payables are initially measured at fair value net of transaction costs and subsequently at amortised cost by using the Effective Interest Rate Method.

2.4: Other Provisions

Item 2018
$'000
2017
$'000
2.4A: Other Provisions
Provision for restoration 7 033 7 532
Total other provisions 7 033 7 532
Other provisions expected to be settled in:
No more than 12 months 6 145 1 405
More than 12 months 888 6 127
Total other provisions 7 033 7 532
Item Provision for restoration
$'000
As at 1 July 2017 7 532
Amounts written-off following lease expiration negotiations (685)
Unwinding of discount or change in discount rate 186
Total as at 30 June 2018 7 033

Accounting Policy

Restoration provisions are recognised when the Archives has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be incurred to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Restoration provisions are discounted using the government bond rate that reflects the risks specific to the liability. The increase in the provisions due to the passage of time (unwinding the discount) is recognised as a finance cost.

As the restoration provisions relate to assets at fair value, any increment/decrement from changes in the estimate of costs required to remediate is recognised in other comprehensive income except to the extent that it reverses an increment/decrement previously recognised in profit or loss.

The Archives currently has 11 (2017: 9) agreements for the leasing of premises which have provisions requiring the Archives to restore the premises to their original condition at the conclusion of the lease. The Archives has made a provision to reflect the present value of this obligation.

Accounting Judgements and Estimates

The Archives has made a significant estimate of the cost to make good or remediate its storage and accommodation premises to bring them back to the condition and orientation they were prior to occupancy by the Archives. The make good provision is informed by independent valuation and was assessed on 30 June 2017 by a qualified independent valuer (Australian Valuation Solutions).

Funding

This section identifies the Archives' funding structure.

3.1: Appropriations

3.1A: Annual Appropriations ('Recoverable GST exclusive')
Annual Appropriations for 2018
Item Appropriation Act PGPA Act Item Item Item
Item Annual Appropriation1
$'000
Advance to the Finance Minister
$'000
Section 74 Receipts
$'000
Section 75
$'000
Total Appropriation
$'000
Appropriation Applied in 2018 (current and prior years)
$'000
Variance2
$'000
Departmental
Ordinary annual services (Revenue from Government) 63 819 - 3 029 - 66 848 61 155 5 693
Capital Budget3 4 631 Blank Blank Blank 4 631 5 538 (907)
Equity injection - - - - - - -
Total departmental 68 450 - 3 029 - 71 479 66 693 4 786

Significant Accounting Policy

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 entity 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. In 2017–18, $211,000 of appropriation (Appropriation Act No. 1) have been withheld under Section 51 of the PGPA Act.
  2. Variance in 2017–18 is mainly due to the increase in supplier payables during the year resulting in the Appropriation being applied that related to expenditure recognised in 2016–17.
  3. Departmental Capital Budgets are appropriated through Appropriation Act (No.1) and Supply Act (No. 1). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.
Annual Appropriations for 2017
Item Appropriation Act PGPA Act Item Item Item
Item Annual Appropriation1
$'000
Advance to the Finance Minister
$'000
Section 74 Receipts
$'000
Section 75
$'000
Total Appropriation
$'000
Appropriation Applied in 2018 (current and prior years)
$'000
Variance2
$'000
Departmental
Ordinary annual services (Revenue from Government) 71 023 - 3 579 - 74 602 67 885 6 717
Capital Budget3 4 653 Blank Blank Blank 4 653 4 365 288
Equity 150 - - - 150 - 150
Total departmental 75 826 - 3 579 - 79 405 72 250 7 155
  1. In 2016–17, there was no appropriation withheld under Section 51 of the PGPA Act.
  2. Variance in 2016–17 is mainly due to the increase in supplier payables during the year resulting in the Appropriation being applied that related to expenditure recognised in 2015–16.
  3. Departmental Capital Budgets are appropriated through Appropriation Acts (No.1). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.
3.1B: Unspent Annual Appropriations ('Recoverable GST exclusive')
Authority
Item 2018
$'000
2017
$'000
Departmental
Act 2 – Non Operating – Equity Injection 150 150
Appropriation Bill (No. 1) 2016–2017 - 19 492
Appropriation Bill (No. 1) 2016–2017 – DCB - 548
Supply Act (No. 1) 2016–17 – DCB - 1 939
Appropriation Act (No.1) Temporary Quarantined prior to 2016–17 17Blank
Appropriation Bill (No. 1) 2017–18 20 976 Blank
Appropriation Bill (No. 1) 2017–18 – DCB 2 487 Blank
Appropriation Act (No.1) 2017–18 Temporary Quarantined 211 Blank
Total 23 841 22 129

People and relationships

This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

4.1: Employee Provisions

Item 2018
$'000
2017
$'000
Note 4.1: Employee Provisions
Annual leave 3 217 3 214
Long service leave 8 109 7 932
Total employee provisions 11 326 11 146
Item 2018
$'000
2017
$'000
Employee provisions expected to be settled in:
No more than 12 months 3 164 3 227
More than 12 months 8 162 7 919
Total employee provisions 11 326 11 146

Accounting policy

Liabilities for annual leave and long service leave expected to be settled within twelve months are measured at their nominal amounts.

Leave liabilities expected to be settled after twelve months are measured at the present value of the estimated future cash outflow.

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 Archive's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined using present value techniques in accordance with the shorthand method as per FRR 24.1(a) as at 30 June 2018. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

The Archives' staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other complying superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

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 in the Department of Finance's administered schedules and notes.

The Archives makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Archives accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June 2018 represents outstanding contributions and is recognised in other payables.

Note 4.2: Key Management Personnel Remuneration

Item 2018
$'000
2017
$'000
Short-term employee benefits
Salary 1 008 1 036
Total short-term employee benefits 1 008 1 036
Item 2018
$'000
2017
$'000
Post-employment benefits
Superannuation 202 196
Total post-employment benefits 202 196
Item 2018
$'000
2017
$'000
Other long-term employee benefits
Annual leave 89 85
Long-service leave 36 82
Total other long-term employee benefits 125 167
Item 2018
$'000
2017
$'000
Total key management personnel remuneration expenses 1 335 1 399

The total number of key management personnel that are included in the above table are 6 (2017: 5).

Key Management Personnel

Key management personnel are those persons who have authority and responsibilities for planning, directing and controlling the activities of the Archives directly or indirectly. The Archives has determined the key management personnel to be the Executive Leadership Team and Portfolio Minister. Key management personnel remuneration is reported in the table above.

The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.

Note 4.3: Related Party Disclosures

Related party relationships:

The National Archives of Australia is an Australian Government controlled entity. Related parties to the Archives are Key Management Personnel reported at 4.2, and also the Portfolio Minister and other Australian Government Entities.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include exhibition entry fees, Archival record services and donations. These transactions have not been separately disclosed in this note.

Significant transactions with related parties can include:

  • the payments of grants or loans;
  • purchases of goods and services;
  • asset purchases, sales transfers or leases;
  • debts forgiven; and
  • guarantees.

Giving consideration to relationships with related entities, and transactions entered into during the reporting period by the Archives, it has been determined that there are no related party transactions to be separately disclosed.