Appendix 1: Financial Statements

Federal Court of Australia Annual Report 2017-2018


Australian National Audit Office
Commonwealth crest

Independent Auditor's Report

To the Attorney-General

Opinion

In my opinion, the financial statements of the Federal Court 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 Federal Court of Australia as at 30 June 2018 and its financial performance and cash flows for the year then ended.

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

  • Statement by the Chief Executive Officer and Chief Finance Officer of the Federal Court of Australia;
  • Statement of Comprehensive Income;
  • Statement of Financial Position;
  • Statement of Changes in Equity;
  • Cash Flow Statement;
  • Administered Schedule of Comprehensive Income;
  • Administered Schedule of Assets and Liabilities;
  • Administered Reconciliation Schedule;
  • Administered Cash Flow Statement; and
  • 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 Federal Court 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. l 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 Federal Court of Australia the Chief Executive Officer 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 Chief Executive Officer is also responsible for such internal control as the Chief Executive Officer 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 Chief Executive Officer is responsible for assessing the Federal Court 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 Chief Executive Officer 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 lo 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
Colin Bienke
Senior Director
Delegate of the Auditor-General
Canberra
5 September 2018

 

Federal Court of Australia

Statement by the Chief Executive Officer and Chief Finance Officer of the Federal Court of Australia

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 ground to believe that the Federal Court of Australia will be able to pay its debts as and when they fall due.


[Signed in hard copy]

Ms Kathryn Hunter
Chief Finance Officer
5th September 2018

[Signed in hard copy]

Mr Warwick Soden OAM
Chief Executive Officer/Principal Registrar
5th September 2018

Statement of Comprehensive Income for the period ended 30 June 2018
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
NET COST OF SERVICES    
Expenses    
Judicial benefits1.1A96,70590,79893,388
Employee benefits1.1A110,690110,312113,025
Suppliers1.1B116,005115,056115,885
Depreciation and amortisation3.2A16,25313,72514,431
Finance costs1.1C1319157
Write-Down and impairment of assets1.1D360181-
Total expenses 340,144330,163336,786
     
Own-Source income    
Own-source revenue    
Sale of goods and rendering of services1.2A4,5863,9843,944
Other revenue1.2B507390259
Total own-source revenue 5,0934,3744,203
     
Other gains    
Resources received free of charge 41,82139,60338,826
Liabilities assumed by other entities 27,11125,55426,236
Other gains69,656-
Total gains 1.2C68,93874,81365,062
Total own-source income 74,03179,18769,265
Net cost of services  (266,113)(250,976)(267,521)
     
Revenue from Government1.2D252,620245,343250,590
Deficit on continuing operations (13,493)(5,633)(16,931)
     
OTHER COMPREHENSIVE INCOME    
Items not subject to subsequent reclassification to net cost of services    
Changes in asset revaluation surplus (211)1,817-
Total other comprehensive income (211)1,817-
Total comprehensive loss (13,704)(3,816)(16,931)

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

Budget Variances Commentary

Statement of Comprehensive Income

Judicial benefits
Judicial benefits are higher than the original budget due to a judicial remuneration increase effective 1 July 2017.

Employee benefits
Employee benefits are lower than budget due to staff vacancies during the year.

Depreciation and amortisation
Depreciation is higher than budgeted due to the receipt in 2016-17 of $9.6m of assets in the Sydney Queens Square building that was not known at the time of budgeting. Depreciation for these assets was not part of the original budget.

Sale of goods and rendering of services
The Family and Federal Circuit Courts received funding for additional registrars of $594k that was not expected at the time of the budget.

Other revenue
There was additional funding of $240k received from DFAT to run a program under the Partnership for Justice program. This was not expected at the time of the budget.

Other gains
There was an increase in the resources received free of charge for the Sydney Queens Square building of $1.7m due to an external revaluation of this benefit. Rent received free of charge in the Commonwealth Law Courts Buildings increased by 1.3% once the MOU with the Department of Finance was finalised. Liabilities assumed by other entities relates to judicial pension schemes. This is higher than budget due to a judicial remuneration increase.


 
Statement of Financial Position as at 30 June 2018
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
ASSETS    
Financial assets    
Cash and cash equivalents3.1A1,3531,6752,716
Trade and other receivables3.1B78,99372,49159,651
Accrued revenue1430-
Total financial assets 80,36074,19662,367
     
Non-financial assets    
Buildings3.2A38,05641,81433,711
Plant and equipment3.2A14,44520,61717,643
Computer software3.2A10,4178,5539,247
Inventories3.2B394963
Prepayments2,5632,1452,608
Total non-financial assets 65,52073,17863,272
Total assets 145,880147,374125,639
     
LIABILITIES    
Payables    
Suppliers3.3A7,7227,9103,968
Other payables3.3B2,2682,9641,273
Total payables 9,99010,8745,241
     
Interest bearing liabilities    
Leases3.4A2,5063,2192,341
Total interest bearing liabilities 2,5063,2192,341
     
Provisions    
Employee provisions6.1A59,91558,36964,540
Other provisions3.5A2,8113,0122,969
Total provisions 62,72661,38167,509
Total liabilities 75,22275,47475,091
     
Net assets 70,65871,90050,548
     
EQUITY    
Contributed equity 83,23270,770122,345
Reserves 8,6808,89129,938
Accumulated deficit (21,254)(7,761)(101,735)
Total equity 70,65871,90050,548

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

Budget Variances Commentary

Statement of Financial Position

Trade and other receivables
The budgeted figure assumed that appropriation receivable would decrease in line with approved losses of $5.5m in 2016-17 and $2.5m in 2017-18. Actual results in those years led to an improvement of approximately $10.8m for this item. Capital receivable is also approximately $8m higher than budgeted due to slower than forecast capital expenditure. GST receivable is $1.2m higher than in June 2017, due to high rent payments occurring in June 2018.

Buildings, Plant and equipment, Computer software
Subsequent to the budget figures being completed, the Court received $9.6m of assets, free of charge, in relation to the Queens Square building. A revaluation of assets as at 30 June 2017 also resulted in an increase in asset value of $974k. These increases were offset with lower than budgeted expenditure on Buildings, Plant and equipment over the last two financial years. Computer software is higher than expected due to additional expenditure in relation to the Court's digital court program.

Suppliers payable
Other trade creditors of $2.5m were not expected at the time of the budget.

Other payables
Other payables includes $622k in accrued severance payments, due to restructuring within the Court, that was not expected at the time of the budget.

Employee provisions
The budget for the provisions was completed prior to the actuarial assessment of provisions as at 30 June 2017. The budget took a conservative approach to possible liabilities.


Statement of Changes in Equity for the period ended 30 June 2018
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
CONTRIBUTED EQUITY    
Opening balance    
Balance carried forward from previous period 70,77047,825109,883
Adjusted opening balance 70,77047,825109,883
Transactions with owners    
Contributions by owners    
Equity injection  -150-
Departmental capital budget 12,46213,04812,462
Restructuring8.1A -9,747-
Total transactions with owners 12,46222,94512,462
Closing balance as at 30 June 83,23270,770122,345
     
ACCUMULATED DEFICIT    
Opening balance    
Balance carried forward from previous period (7,761)(2,128)(84,804)
Adjusted opening balance (7,761)(2,128)(84,804)
Comprehensive income    
Deficit for the period (13,493)(5,633)(16,931)
Other comprehensive income  ---
Total comprehensive loss (13,493)(5,633)(16,931)
Closing balance as at 30 June (21,254)(7,761)(101,735)
     
ASSET REVALUATION RESERVE    
Opening balance    
Balance carried forward from previous period 8,8917,07429,938
Adjusted opening balance 8,8917,07429,938
Comprehensive income    
Other comprehensive income (211)1,817-
Total comprehensive income/(loss) (211)1,817-
Closing balance as at 30 June 8,6808,89129,938
     
TOTAL EQUITY    
Opening balance    
Balance carried forward from previous period 71,90052,77155,017
Adjusted opening balance 71,90052,77155,017
Comprehensive income    
Deficit for the period (13,493)(5,633)(16,931)
Other comprehensive income / (loss) (211)1,817-
Total comprehensive income/(loss) (13,704)(3,816)(16,931)
Transactions with owners    
Contributions by owners    
Equity injection -150-
Departmental capital budget 12,46213,04812,462
Restructuring -9,747-
Total transactions with owners 12,46222,94512,462
Closing balance as at 30 June 70,65871,90050,548

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

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.

Restructuring of Administrative Arrangements
Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.

Budget Variances Commentary

Statement of Changes in Equity

Accumulated deficit, Reserves and Contributed equity
Equity resulting from restructuring in 2016-17 was budgeted against each individual equity component. This was subsequently all included in Contributed equity. The improved financial results of the Court compared to budget in 2016-17 and 2017-18 have led to a better than expected total equity position.


Cash Flow Statement for the period ended 30 June 2018
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
OPERATING ACTIVITIES    
Cash received    
Appropriations 254,012245,913253,090
Sales of goods and rendering of services 4,7153,6133,944
GST received 6,1708,376-
Other 267390259
Total cash received 265,164258,292257,293
     
Cash used    
Employees 178,993177,436180,322
Suppliers 82,71276,30276,971
Borrowing costs 7888-
Section 74 receipts transferred to OPA 3,7085,472-
Total cash used 265,491259,298257,293
Net cash used by operating activities (327)(1,006)-
     
INVESTING ACTIVITIES    
Cash received    
Proceeds from sales of property, plant and equipment 625-
Total cash received 625-
     
Cash used    
Purchase of property, plant and equipment 3,9236,33511,267
Purchase of intangibles 4,6082,284-
Total cash used 8,5318,61911,267
Net cash used by investing activities (8,525)(8,594)(11,267)
     
FINANCING ACTIVITIES    
Cash received    
Contributed equity 9,2449,15612,462
Total cash received 9,2449,15612,462
     
Cash used    
Repayment of borrowings 7145371,195
Total cash used 7145371,195
Net Cash from financing activities 8,5308,61911,267
     
Net decrease in cash held (322)(981)-
Cash and cash equivalents at the beginning of the reporting period 1,6751,3202,716
Cash and cash equivalents at the beginning of the reporting period - restructuring -1,336-
Cash and cash equivalents at the end of the reporting period3.1A1,3531,6752,716

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

Budget Variances Commentary

Statement of Cash Flow Statement

Cash received – rendering of services
The court received additional cash revenue in relation to funding for additional registrars and international programs. Approximately $1m of revenue in relation to international programs work was received in advance and is reflected in the balance sheet as unearned revenue.

Cash used – suppliers
New IT equipment was purchased outright instead of being leased as was expected at the time of the budget. The budget underestimated supplier costs and overestimated employee costs.

Cash used for investing activities
Budgeted amounts for cash spent on the purchase of property, plant and equipment and intangibles is not split in the budget. Asset purchases were lower than expected for property, plant and equipment.

Contributed equity
Asset purchases were lower than expected in relation to property, plant and equipment.

Repayment of borrowing
New equipment leases anticipated at the time of the budget were not entered into.


Administered Schedule of Comprehensive Income for the period ended 30 June 2018
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
NET COST OF SERVICES    
Expenses    
Suppliers2.1A777682883
Write-down and impairment of assets2.1B3,7302,8101,000
Other expenses2.1C536746900
Total expenses 5,0434,2382,783
Income    
Revenue    
Non-taxation revenue    
Fees and fines2.2A107,89081,20675,464
Total non-taxation revenue 107,89081,20675,464
Total revenue 107,89081,20675,464
Total income 107,89081,20675,464
Net contribution by services 102,84776,96872,681
Total comprehensive income 102,84776,96872,681

Budget Variances Commentary

Administered Schedule of Comprehensive Income

Fees and fines
The variance to budget is due to the receipt of $26.8 million in fines that was not budgeted for. In particular, a single fine of $25m was paid to the Court.

Suppliers
The variance to budget is due to a lower than expected amount of clients accessing conciliation and mediation services.

Write-down and impairment of assets
The variance to budget is due to the uncertainty in estimating fees that may become impaired during the period.

Other expenses
Other expenses relates to the refund of fees. The variance to budget is due to the uncertainty in estimating the amount of fees that may require refund during the period.

 


Administered Schedule of Assets and Liabilities as at 30 June 2018

 
Assets
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
Financial Assets    
Cash and cash equivalents4.1A1368649
Trade and other receivables4.1B4,5994,0063,898
Total assets administered on behalf of Government 4,7354,0144,547

 
Liabilities
 Notes2018
$'000
2017
$'000
Original
Budget
$'000
Payables    
Suppliers--40
Other payables4.2A5136629
Total liabilities administered on behalf of Government 51366249
Net assets 4,2223,3524,498
 

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

Budget Variances Commentary

Administered Schedule of Assets and Liabilities

Cash and cash equivalents
There is inherent uncertainty in estimating the cash balance on any particular day.

Trade and other receivables
The variance to budget is due to the uncertainty in estimating the number of unpaid fees.

Other payables
The variance is due to an increase in revenue received in advance for fees relating to future events than originally estimated.


Administered Reconciliation Schedule for the period ended 30 June 2018
 2018
$'000
2017
$'000
Opening assets less liabilities as at 1 July3,352(3,813)
Net contribution by services  
Income107,890 81,206
Expenses  
Payments to entities other than corporate Commonwealth entities(5,043)(4,238)
Transfers (to)/from the Australian Government  
Appropriation transfers from Official Public Account  
Annual appropriations  
Payments to entities other than corporate Commonwealth entities777682
Special appropriations (unlimited) s77 PGPA Act repayments  
Payments to entities other than corporate Commonwealth entities553755
GST increase to appropriations s74 PGPA Act  
Payments to entities other than corporate Commonwealth entities7867
Appropriation transfers to OPA  
Transfers to OPA(103,385)(78,045)
Restructuring -6,738
Closing assets less liabilities as at 30 June4,2223,352

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

Accounting Policy

Administered cash transfers to and from the Official Public Account
Revenue collected by the entity for use by the Government rather than the entity is administered revenue. Collections are transferred to the Official Public Account (OPA) maintained by the Department of Finance. Conversely, cash is drawn from the OPA to make payments under Parliamentary appropriation on behalf of Government. These transfers to and from the OPA are adjustments to the administered cash held by the entity on behalf of the Government and reported as such in the schedule of administered cashflows and in the administered reconciliation schedule.


Administered Cash Flow Statement for the period ended 30 June 2018
 Notes 2018
$'000
2017
$'000
OPERATING ACTIVITIES   
Cash received   
Fees 76,60076,535
Fines 26,8271,223
GST received 8666
Total cash received 103,51377,824
Cash used   
Suppliers 855749
Refunds of fees 536746
Other 1712
Total cash used 1,4081,507
Net cash from operating activities 102,10576,317
Net increase in cash held 102,10576,317
Cash and cash equivalents at the beginning of the reporting period - restructuring -166
Cash and cash equivalents at the beginning of the reporting period866
Cash from Official Public Account for:   
Appropriations 1,4081,504
Total cash from official public account 1,4081,504
Cash to Official Public Account for:   
Transfer to OPA (103,385)(78,045)
Total cash to official public account (103,385)(78,045)
    
Cash and cash equivalents at the end of the reporting period4.1A1368

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

Overview

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:
a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
b) 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.

New Accounting Standards

All new accounting standards 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 Court's financial statements.

Taxation

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

Reporting of Administered activities
Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.
Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Events after the Reporting Period

Departmental

There were no subsequent events that had the potential to significantly affect the ongoing structure and financial activities of the Federal Court of Australia.

Administered

There were no subsequen events that had the potential to significantly affect the ongoing structure and financial activities of the Federal Court of Australia.

2017 Comparative Disclosures

Departmental

Further analysis on Employee Benefits performed during 2018 highlighted some inconsistencies with the 2017 comparative information. In order to provide the reader of the financial statements with consistent comparative data the following adjustments have been made in the disclosure of Employee Benefits:

  • $3.620m of Judicial Super Contributions defined contributions benefits were reclassified as Judicial Benefits which were previously included in Superannuation under employee benefits.
  • $0.237m of Judicial entitlements was reclassified from employee benefits.
  • $4.066m of long service leave and annual leave taken during the year was reclassified from Wages and Salaries to Leave and other entitlements.

 

Notes to the Financial Statements

1. Financial Performance

This section analyses the financial performance of the Federal Court of Australia for the year ended 30 June 2018.

1.1 Expenses

Note 1.1A: Judicial and Employee Benefits
 2018
$'000
2017
$'000
Judges remuneration65,75761,624
Judicial superannuation defined contribution3,8373,620
Judges notional superannuation27,11125,554
Total judicial benefits96,70590,798
Wages and salaries80,41081,504
Superannuation  
Defined contribution plans8,7218,253
Defined benefit plans5,8986,680
Leave and other entitlements13,88512,261
Separation and redundancies1,7761,614
Total employee benefits110,690110,312
Total judicial and employee benefits207,395201,110


Accounting Policy
Accounting policies for employee related expenses are contained in the People and Relationships section.


Note 1.1B: Suppliers
 2018
$'000
2017
$'000
Goods and services supplied or rendered  
IT services8,9106,282
Consultants & contractors3,4585,494
Property operating costs9,2358,607
Courts operation and administration13,43212,922
Travel7,5138,103
Library purchases4,2534,281
Other6,6527,099
Total goods and services supplied or rendered53,45352,788
   
Goods supplied5,7903,752
Services rendered47,66349,036
Total goods and services supplied or rendered53,45352,788
Other suppliers  
Operating lease rentals61,59861,073
Workers compensation expenses9541,195
Total other suppliers62,55262,268
Total suppliers116,005115,056

Leasing Commitments

The Federal Court in its capacity as lessee has 12 property leases. Contingent rent is payable for two of those properties on the basis of future movements in the CPI. There are fixed increases in rent on each of those leases ranging between 2.5% and 4% annually. Six of those leases have an option to renew at the end of the lease period.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payables as follows
 2018
$'000
2017
$'000
Within 1 year6,9328,050
Between 1 to 5 years16,11220,127
More than 5 years1,0242,681
Total operating lease commitments24,06830,858

Accounting Policy

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.
Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

Note 1.1C: Finance Costs
 2018
$'000
2017
$'000
Finance leases7888
Unwinding of discount - make good533
Total finance costs13191

Accounting Policy
All borrowing costs are expensed as incurred.

Note 1.1D: Write-Down and Impairment of Assets
 2018
$'000
2017
$'000
Impairment of inventories1513
Impairment on financial instruments-4
Impairment of plant and equipment31980
Impairment on intangible assets2684
Total write-down and impairment of assets360181
 
 

1.2 Own-Source Revenue and Gains

 

Own-Source Revenue

Note 1.2A: Sale of Goods and Rendering of Services
 2018
$'000
2017
$'000
Sale of goods12
Rendering of services4,5853,982
Total sale of goods and rendering of services4,5863,984

Rendering of services includes the provision of services to other agencies in both Australia and overseas. This includes $1.3m received from New Zealand Ministry of Foreign Affairs and Trade (MFAT).

Note 1.2B: Other Revenue
 2018
$'000
2017
$'000
Other507390
Total other revenue507390
 

Accounting Policy

Revenue from the sale of goods is recognised when:
a) the risks and rewards of ownership have been transferred to the buyer;
b) the entity retains no managerial involvement or effective control over the goods;
c) the revenue and transaction costs incurred can be reliably measured; and
d) it is probable that the economic benefits associated with the transaction will flow to the Federal Court of Australia.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:
a) the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
b) the probable economic benefits associated with the transaction will flow to the Federal Court of Australia.

The stage of completion of contracts at the reporting date is determined by reference to the proportion of costs incurred to date compared to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Note 1.2C: Other Gains
 2018
$'000
2017
$'000
Resources received free of charge41,82139,603
Liabilities assumed by other agencies27,11125,554
Assets received free of charge-9,631
Gain on sale of assets625
Total other gains68,93874,813

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.

The major resources received free of charge are the use of property in the Commonwealth Law Courts Buildings in each capital city and the Law Courts Building in Sydney.
Liabilities assumed by other agencies refers to the notional cost of judicial pensions.
Assets received free of charge in 2017 was in relation to the Law Courts Building, Sydney.

Note 1.2D: Revenue from Government
 2018
$'000
2017
$'000
Appropriations  
Departmental appropriation252,620245,343
Total revenue from Government252,620245,343

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 related 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.


2. Income and Expenses Administered on Behalf of Government

This section analyses the activities that the Federal Court of Australia does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

2.1 Administered – Expenses

Note 2.1A: Suppliers
 2018
$'000
2017
$'000
Services rendered  
Supply of primary dispute resolution services777682
Total suppliers777682

Note 2.1B: Write-down and Impairment of Assets
 2018
$'000
2017
$'000
Bad and doubtful debts3,7302,810
Total write-down and impairment of assets3,7302,810

Note 2.1C: Other Expenses
 2018
$'000
2017
$'000
Refunds of fees536746
Total other expenses536746

2.2 Administered – Income

Note 2.2A: Fees and Fines
 2018
$'000
2017
$'000
Fees81,06379,984
Fines26,8271,222
Total fees and fines107,89081,206

Accounting Policy

All administered revenues are revenues relating to the course of ordinary activities performed by the Federal Court of Australia, the Federal Circuit Court and the Family Court of Australia on behalf of the Australian Government. As such administered revenues are not revenues of the Courts. Fees are charged for access to the Courts' services. Administered fee revenue is recognised when the service occurs. The services are performed at the same time as or within two days of the fees becoming due and payable. Revenue from fines is recognised when a fine is paid to the Court on behalf of the Government. Fees and Fines are recognised at their nominal amount due less any impairment allowance. Collectability of debts is reviewed at the end of the reporting period. Impairment allowances are made when collectability of the debt is judged to be less, rather than more, likely.

3. Financial Position

This section analyses the Federal Court of Australia 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.

3.1 Financial Assets

Note 3.1A: Cash and Cash Equivalents
 2018
$'000
2017
$'000
Cash at bank1,3361,658
Cash on hand1717
Total cash and cash equivalents1,3531,675

Note 3.1B: Trade and Other Receivables
 2018
$'000
2017
$'000
Goods and services receivables
Goods and services488750
Total goods and services receivables488750
Appropriations receivable
Appropriation receivable - operating65,20962,893
Appropriation receivable - departmental capital budget11,3428,124
Total appropriations receivable76,55171,017
Other receivables
Net Statutory receivables (GST)1,961731
Total other receivables1,961731
Total trade and other receivables (gross)79,00072,498
Less impairment allowance(7)(7)
Total trade and other receivables (net)78,99372,491


Accounting Policy

Receivables Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'Receivables'.

Reconciliation of the Impairment Allowance Account:

Movements in relation to 2018
 Goods and services
$'000
Other receivables
$'000
Total
$'000
As at 1 July 20177-7
Amounts written off - --
Amounts recovered and reversed(4) -(4)
Increase recognised in net surplus 4 -4
Total as at 30 June 20187-7

Movements in relation to 2017
 Goods and services
$'000
Other receivables
$'000
Total
$'000
As at 1 July 20167-7
Amounts written off---
Increase/decrease recognised in net surplus---
Total as at 30 June 20177-7

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

3.2 Non-Financial Assets

Note 3.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles Reconciliation of the opening and closing balances of property, plant and equipment and intangibles for 2018
 Buildings - Leasehold Improvements
$'000
Plant and equipment
$'000
Computer software1
$'000
Total
$'000
As at 1 July 2017    
Gross book value42,29023,51726,43192,238
Accumulated depreciation, amortisation and impairment(476)(2,900)(17,878)(21,254)
Total as at 1 July 201741,81420,6178,55370,984
Additions    
Purchase2813,6424,6088,531
Reclassification22,266(2,248)(18)-
Depreciation and amortisation(6,002)(7,551)(2,700)(16,253)
Disposals(303)(15)(26)(344)
Total as at 30 June 201838,05614,44510,41762,918
Total as at 30 June 2018 represented by
Gross book value45,84422,83727,34096,021
Accumulated depreciation and impairment(7,788)(8,392)(16,923)(33,103)
Total as at 30 June 201838,05614,44510,41762,918

1. The carrying amount of computer software includes $4 million purchased software and $6.4 million internally generated software.
2. The reclassification relates to assets that were held as at 30 June 2017.

No indicators of impairment were found for property, plant and equipment and intangibles.

No property, plant and equipment and intangibles are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets
All revaluations were conducted in accordance with the revaluation policy. On 30 June 2017, an independent valuer conducted the revaluations and management conducted a review of the underlying drivers of the independent valuation.

Contractual commitments for the acquisition of property, plant, equipment and intangible assets
Capital commitments for property, plant and equipment are $0.12 million (2017: $0.161 million). Plant and equipment commitments were primarily contracts for purchases of furniture and IT equipment.

Accounting Policy

Property, plant and equipment
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in and liabilities undertaken.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor's accounts immediately prior to the restructuring.

Asset Recognition Threshold
Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases of:
- assets other than information technology equipment costing less than $2,000; and
- information technology equipment costing less than $1,500.
which are expensed in the year of acquisition.
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 Federal Court of Australia where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Federal Court of Australia's leasehold improvements with a corresponding provision for the 'make good' recognised.

Revaluations
Following initial recognition at cost, property plant and equipment are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. 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 previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly through the Income Statement except to the extent that they reverse a previous revaluation 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 restated to the revalued amount.

Depreciation
Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Federal Court of Australia using, in all cases, the straight-line method of depreciation.
Depreciation 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 for each class of depreciable asset are based on the following useful lives:

 20182017
Leasehold improvements 10 to 20 years or lease term10 to 20 years or lease term
Plant and equipment – excluding library materials3 to 100 years 3 to 100 years
Plant and equipment – library materials5 to 10 years 5 to 10 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 adjustment made 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 Federal Court of Australia were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

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.

Intangibles
The Federal Court of Australia's intangibles comprise externally and internally developed software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Software is amortised on a straight-line basis over its anticipated useful life of 5 years (2017: 5 years).

Note 3.2B: Inventories
 2018
$'000
2017
$'000
Inventories held for distribution3949
Total inventories 3949

During 2017-18, $14,513 of inventory held for distribution was recognised as an expense (2017: $13,106).

Accounting Policy

Inventories held for sale are valued at the lower of cost and net realisable value.

Inventories held for distribution are valued at cost, adjusted for any loss of service potential.

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:
a) raw materials and stores - purchase cost on a first-in-first-out basis; and
b) finished goods and work in progress - cost of direct materials and labour plus attributable costs that can be
allocated on a reasonable basis.

Inventories acquired at no cost or nominal consideration are initially measured at current replacement cost at the date of acquisition.

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

3.3 Payables

Note 3.3A: Suppliers
 2018
$'000
2017
$'000
Trade creditors and accruals6,3136,450
Operating lease rentals1,4091,460
Total suppliers7,7227,910

Settlement was usually made within 30 days.

 
Note 3.3B: Other Payables
 2018
$'000
2017
$'000
Salaries and wages652677
Superannuation113114
Separations and redundancies622372
Unearned income83925
Other798876
Total other payables2,2682,964

3.4 Interest Bearing Liabilities

In 2018, two finance leases existed in relation to building and property, plant and equipment assets. The leases were non-cancellable and for fixed terms averaging 6 years, with a maximum of 8 years. The interest rate implicit in the leases averaged 2.54% (2017: 2.54%). The lease assets secured the lease liabilities. The Federal Court of Australia guaranteed the residual values of all assets leased.

Accounting Policy

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease.

Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount.

The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

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

3.5 Other Provisions

Note 3.5A: Other Provisions
 2018
$'000
2017
$'000
Provision for restoration obligations2,3712,107
Provision for NSO unused office space440905
Total other provisions2,8113,012

 

 Provision for restoration
$'000
Provision for NSO unused office space
$'000
Total
$'000
As at 1 July 20172,1079053,012
Change in provisions264 -264
Amounts used -(465)(465)
Total as at 30 June 20182,3714402,811

The Federal Court of Australia currently has 8 agreements for the leasing of premises which have provisions requiring the Federal Court of Australia to restore the premises to their original condition at the conclusion of the lease. The Federal Court of Australia has made a provision to reflect the present value of this obligation.

4. Assets and Liabilities Administered on Behalf of Government

This section analyses assets used to generate financial performance and the operating liabilities incurred as a result. The Federal Court of Australia does not control but administers these assets on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for departmental reporting.

4.1 Administered – Financial Assets

 2018
$'000
2017
$'000
Note 4.1A: Cash and Cash Equivalents
Cash on hand or on deposit1368
Total cash and cash equivalents1368
Note 4.1B: Trade and Other Receivables
Goods and services receivables7,1706,937
Total goods and services receivables7,1706,937
Other receivables
Statutory receivable (GST)613
Total other receivables613
Total trade and other receivables (gross)7,1766,950
Less impairment allowance account:
Goods and services(2,577)(2,944)
Total impairment allowance(2,577)(2,944)
Total trade and other receivables (net)4,5994,006

Credit terms for goods and services receivable were in accordance with the Federal Courts Legislation Amendment (Fees) Regulation 2015 and the Family Law (Fees) Regulation 2012.

Reconciliation of the Impairment Allowance Account:


 
Movements in relation to 2018
 Goods and services
$'000
Total
$'000
As at 1 July 20172,9442,944
Amounts recovered and reversed(260)(260)
Amounts written off(2,443)(2,443)
Increase recognised in net contribution by services2,3362,024
Total as at 30 June 20182,5772,265

 
Movements in relation to 2017
 Goods and services
$'000
Total
$'000
As at 1 July 2016780780
Restructure489489
Amounts recovered and reversed(10)(10)
Amounts written off(742)(742)
Increase recognised in net contribution by services2,4272,427
Total as at 30 June 20172,9442,944

Accounting Policy

Trade and other receivables

Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collection of debts is judged to be less rather than more likely. Credit terms for goods and services were within 30 days (2017: 30 days).

4.2 Administered – Payables

Note 4.2A: Other Payables
 2018
$'000
2017
$'000
Unearned income513662
Total other payables513662

5. Funding

This section identifies the Federal Court of Australia funding structure.

5.1 Appropriations

Note 5.1A: Annual Appropriations ('Recoverable GST exclusive') 

Annual Appropriations for 2018
 Annual Appropriation1
$'000
Adjustments to Appropriation3
$'000
Total appropriation
$'000
Appropriation applied in 2018 (current and prior years)
$'000
Variance2
$'000
Departmental 
Ordinary annual services252,6203,708256,328254,3331,995
Capital Budget12,462 -12,4629,2453,217
Total departmental265,0823,708268,790263,5785,212
Administered
Ordinary annual services     
Administered items883-883777106
Total administered883  -883 777 106

1. Departmental Capital Budgets are appropriated through Appropriation Acts (No. 1, 3). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.
2. The variance in the expenditure for ordinary annual services is due to timing differences of payments.
3. Receipts collected under Section 74 of the PGPA Act.


Annual Appropriations for 2017
 Annual Appropriation1
$'000
Adjustments to Appropriation3
$'000
Total appropriation
$'000
Appropriation applied in 2017 (current and prior years)
$'000
Variance2
$'000
Departmental
Ordinary annual services245,34316,334261,677255,7265,951
Capital Budget13,04886813,9169,1574,759
Other services     
Equity150-150-150
Total departmental258,54117,202275,743264,88310,860
Administered
Ordinary annual services     
Administered items894-894682212
Total administered894-894682212

1. Departmental Capital Budgets are appropriated through Appropriation Acts (No. 1, 3). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.

2. The variance in the expenditure for ordinary annual services is due to timing differences of payments. The underspend of capital appropriation is due to capital projects related to the
amalgamation with the Family Court and Federal Circuit Court not taking place until after the amalgamation on 1 July 2016.

3. Receipts collected under Section 74 of the PGPA Act.

Note 5.1B: Unspent Annual Appropriations ('Recoverable GST exclusive')
 2018
$'000
2017
$'000
Departmental  
Appropriation Act (No. 1) 2016-17 -59,948
Appropriation Act (No. 1) 2016-17 - Capital budget -7,611
Appropriation Act (No. 2) 2016-17 - Equity injection150150
Appropriation Act (No. 3) 2016-17 -2,945
Supply Act 1 2016-17 - Capital budget -363
Appropriation Act (No. 1) 2017-1863,180-
Appropriation Act (No. 1) 2017-18 - Capital budget11,192-
Appropriation Act (No. 3) 2017-182,030-
Cash at bank1,3531,670
Total departmental77,90572,687
Administered  
Appropriation Act (No 1) 2016-17-212
Appropriation Act (No 1) 2017-18106-
Total administered106 212

 

Note 5.1C: Special Appropriations ('Recoverable GST exclusive')
 Appropriation applied
2018
$'000
2017
$'000
Authority  
Public Governance, Performance and Accountability Act 2013, Section 77, Administered553755
Total553755

5.2 Special Accounts

Note 5.2A: Special Accounts ('Recoverable GST exclusive')

Departmental
 Services for other entities and Trust Moneys Special Account1
 2018
$'000
2017
$'000
Balance brought forward from previous period-820
Increases161211
Total increases161211
Available for payments1611,031
Decreases  
Departmental1391,031
Total departmental1391,031
Decreases  
Administered --
Total administered --
Total decreases1391,031
Total balance carried to the next period22-
Balance represented by:  
Cash held in entity bank accounts22-
Cash held in the Official Public Account-
Total balance carried to the next period22-

Administered
  Federal Court Of Australia Litigants Fund Special Account2 Family Court and Federal Circuit Court Litigants Fund Special Account3
2018
$'000
2017
$'000
2018
$'000
2017
$'000
Balance brought forward from previous period22,87829,809969411
Increases27,25013,0501,6152,595
Total increases27,25013,0501,6152,595
Available for payments50,12842,8592,5843,006
Decreases    
Departmental--
Total departmental----
Decreases    
Administered27,90319,9811,5102,037
Total administered27,903 19,9811,510 2,037
Total decreases27,90319,9811,5102,037
Total balance carried to the next period22,22522,8781,074969
Balance represented by:    
Cash held in entity bank accounts22,22522,8781,074969
Cash held in the Official Public Account--
Total balance carried to the next period22,22522,8781,074969

1. Appropriation: Public Governance Performance and Accountability Act section 78. Establishing Instrument: FMA Determination 2012/11. Purpose: To disburse amounts held in trust or otherwise for the benefit of a person other than the Commonwealth.

2. Appropriation: Public Governance Performance and Accountability Act section 78. Establishing Instrument: PGPA Act Determination (Establishment of FCA Litigants' Fund Special Account 2017). Purpose: The purpose of the Federal Court of Australia Litigants' Fund Special Account in relation to which amounts may be debited from the Special Account are:
a) In accordance with:
(i) An order of the Federal Court of Australia or a Judge of that Court under Rule 2.43 of the Federal Court Rules; or
(ii) A direction of a Registrar under that Order; and
b) In any other case in accordance with the order of the Federal Court of Australia or a Judge of that Court.

3. Appropriation: Public Governance Performance and Accountability Act section 78. Establishing Instrument: Determination 2013/06.
The Finance Minister has issued a determination under Subsection 20(1) of the FMA ACT 1997 (repealed) establishing the Federal Court of Australia Litigants' Fund Special Account when the Federal Circuit Court of Australia and Family Court of Australia merged on 1 July 2014.
Purpose: Litigants Fund Special Account
(a) for amounts received in respect of proceedings of the Family Court of Australia or the Federal Circuit Court of Australia (formerly the Federal Magistrates Court of Australia);
(b) for amounts received in respect of proceedings that have been transferred from another court to the Family Court of Australia or to the Federal Circuit Court of Australia (formerly the Federal Magistrates Court of Australia);
(c) for amounts received from the Family Court of Australia Litigants' Fund Special Account or the Federal Magistrates Court Litigants' Fund Special Account;
(d) to make payments in accordance with an order (however described) made by a court under the Family Law Act 1975, the Family Court of Australia, or a Judge of that Court;
(e) to make payments in accordance with an order (however described) made by a court under the Federal Circuit Court of Australia Act 1999 (formerly the Federal Magistrates Act 1999), the Federal Circuit Court of Australia (formerly the Federal Magistrates Court of Australia), or a Judge (formerly Federal Magistrate) of that Court;
(f) to repay amounts received by the Commonwealth and credited to this Special Account where an Act of Parliament or other law requires or permits the amount to be repaid; and
g) to reduce the balance of this Special Account without making a real or notional payment.


5.3 Net Cash Appropriation Arrangements
 2018
$'000
2017
$'000
Total comprehensive income less depreciation/amortisation expenses previously funded through revenue appropriations2,5499,909
Plus: depreciation/amortisation expenses previously funded through revenue appropriation(16,253)(13,725)
Total comprehensive loss - as per the Statement of Comprehensive Income(13,704)(3,816)

6. 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.

Note 6.1A: Employee Provisions
 2018
$'000
2017
$'000
Leave27,11926,406
Judges leave32,79631,963
Total employee provisions59,91558,369

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.
Other long-term judge and 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.
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 Federal Court of Australia'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 annual leave and long service leave has been determined by reference to the work of an actuary as at 30 June 2017. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and Redundancy
Provision is made for separation and redundancy benefit payments. The Federal Court of Australia recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation
The Federal Court of Australia's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap), or other 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 entity 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 entity 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.

Judges' Pension
Under the Judges' Pension Act 1968, Federal Court and Family Court Judges are entitled to a non-contributory pension upon retirement 10 years service (Federal Court and Family Court Judges). As the liability for these pension payments is assumed by the Australian Government, the entity has not recognised a liability for unfunded superannuation liability. The Federal Court of Australia does, however, recognise a revenue and corresponding expense item, "Liabilities assumed by other agencies", in respect of the notional amount of the employer contributions to Judges' pensions for the reporting period amounting to $27.111 million (2017: $25.554 million). The contribution rate has been provided by the Department of Finance following an actuarial review.

6.2 Key Management Personnel Remuneration

Key management personnel are those persons having a uthority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The entity has determined the key management personnel to be the Chief Executive Officers, Executive Directors, Chief Justices and the Chief Judge.

Key management personnel remuneration
 2018
$'000
2017
$'000
Short-term employee benefits3,7843,446
Post-employment benefits1,3791,121
Other long-term employee benefits389484
Total key management personnel remuneration expenses15,5525,051

The total number of senior management personnel that are included in the above table are 15 (2017: 11).

1. The above key management personnel remuneration excludes the remuneration and other benefits of the Attorney-General. The Attorney-General's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the Court.

6.3 Related Party Disclosures

Related party relationships:
The entity is an Australian Government controlled entity within the Attorney-General's portfolio. Key Management Personnel includes the Executive 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 the payment or refund of taxes, receipt of a Medicare rebate or higher educational loans. 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 entity, it has been determined that there are no related party transactions to be separately disclosed.

The Courts have no transactions with related parties to disclose as at 30 June 2018 (2017: none).

7. Managing Uncertainties

This section analyses how the Federal Court of Australia manages financial risks within its operating environment.

7.1 Contingent Liabilities and Assets

Note 7.1A: Contingent Liabilities and Assets

Quantifiable Contingencies
The Federal Court of Australia has no quantifiable contingent assets or liabilities as at 30 June 2018 (2017: none).

Unquantifiable Contingencies
The Federal Court of Australia has no unquantifiable contingent assets or liabilities as at 30 June 2018 (2017: none).

Accounting Policy

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or 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.

Note 7.1B: Administered Contingent Assets and Liabilities

The Courts have no quantifiable or unquantifiable administered contingent liabilities or assets as at 30 June 2018 (2017: none).

7.2 Financial Instruments

Note 7.2A: Categories of Financial Instruments

Financial Assets
 2018
$'000
2017
$'000
Financial Assets  
Loans and receivables  
Cash and cash equivalents1,3531,675
Goods and services receivable less impairment481743
Total financial assets1,8342,418

Financial Liabilities
 2018
$'000
2017
$'000
Financial liabilities measured at amortised cost  
Trade creditors7,7227,910
Finance leases2,5063,219
Total financial liabilities10,22811,129


Accounting Policy

Financial Assets
The Federal Court of Australia has financial assets only in the nature of cash 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.

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

Financial Liabilities
Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other financial liabilities. Financial liabilities are recognised and derecognised upon 'trade date'.

Other Financial Liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

The fair value of financial instruments approximates its carrying value.

Note 7.2B: Net Gains or Losses on Financial Liabilities
 2018
$'000
2017
$'000
Financial liabilities measured at amortised cost  
Interest expense7888
Net losses on financial liabilities measured at amortised cost7888

7.3 Administered – Financial Instruments

Note 7.3A: Categories of Financial Instruments
 2018
$'000
2017
$'000
Financial Assets  
Loans and receivables  
Cash and cash equivalents1368
Other receivables4,5994,006
Carrying amount of financial assets4,7354,014

7.4 Fair Value Measurement

Accounting Policy

AASB 2015-7 provides relief for not-for –profit public sector entities from making certain specified disclosures about the fair value measurement of assets measured at fair value and categorised within Level 3 of the fair value hierarchy.

Valuations are performed regularly so as to ensure that the carrying amount does not materially differ from fair value at the reporting date. A valuation was made by an external valuer in 2017. The Federal Court of Australia reviews the method used by the valuer annually.


Note 7.4A: Fair Value Measurement
 Fair value measurements at the end of the reporting period
2018
$'000
2017
$'000
Non-financial assets  
Leasehold improvements38,05641,814
Plant and equipment14,44520,617

The Court's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of these assets is considered to be the highest and best use.

There have been no transfers between the levels of the hierarchy during the year. The Court deems transfers between levels of the fair value hierarchy to have occurred when advised by an independent valuer or a change in the market for particular items.

8. Other Information

This section provides other disclosures relevant to the Federal Court of Australia financial information environment for the year.

8.1 Restructuring

Note 8.1A: Departmental Restructuring

On 1 July 2016, the Family Court and Federal Circuit Court merged with the Federal Court of Australia.

As a part of the merger process the assets and liabilities of the Family Court and Federal Circuit Court were transferred into the Federal Court and are reflected in the Courts' accounts for 2016-17 and 2017-18. As a result of merger occurring from 1 July 2016, there were no incomes or expenses transferred.

FUNCTIONS ASSUMEDFamily Court and Federal Circuit Court 1 July 2016
$'000
Assets Recognised 
Financial Assets 
Cash and cash equivalents 1,336
Trade and other receivables 12,856
Total Financial Assets 14,192
  
Non-financial Assets 
Land and building 25,205
Property, plant and equipment 9,344
Computer software 5,809
Inventories 64
Other Non-financial assets 1,917
Total non-financial assets 42,339
Total Assets Recognised 56,531
  
Liabilities recognised 
Payables 
Suppliers 2,731
Other payables 3,717
Total payables 6,448
Interest bearing liabilities 
Leases 2,879
Total interest bearing liabilities 2,879
Provisions 
Employee provision 34,594
Other provisions 2,863
Total provisions 37,457
Total liabilities recognised 46,784
Net assets assumed1 9,747

 

Note 8.1B: Administered Restructuring
 Family Court and Federal Circuit Court to the Federal Court 1 July 2016
$'000
FUNCTIONS ASSUMED 
Assets recognised 
Cash and cash equivalents166
Trade and other receivables7,025
Total assets recognised7,191
Liabilities recognised 
Suppliers -
Unearned income453
Total liabilities recognised453
Net assets assumed6,738

1. In respect of the function assumed, the net book values of assets and liabilities were transferred to the Court for no consideration.


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