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Appendix 4: Financial statements



ANAO Independent Auditor's Report

Statement by the accountable authorities, CEO and CFO


Food Standards Australia New Zealand (FSANZ)
Statement of Comprehensive Income
for the period ended 30 June 2016
2016 2015 Original Budget 2016
  Notes $'000 $'000   $'000 Note
NET COST OF SERVICES
Expenses
Employee Benefits 1.1A 14,687 13,498 14,337
Suppliers 1.1B 4,392 5,757 3,984 1
Depreciation and amortisation 2.2A 1,172 1,174 1,105
Finance Costs 15 16 -
Write-Down and Impairment of Assets  - 164 -
Foreign Exchange Losses  - 3 -
Loss on sale of assets - 2 -
Total expenses 20,266 20,614 19,426
 
Own-Source Income
 
Own-source revenue
Sale of Goods and Rendering of Services 1.2A 2,692 2,612 1,849 2
Interest 1.2B 271 336 320 3
Other Revenue 15 83 -
Total own-source revenue 2,978 3,031 2,169
Gains
Foreign Exchange Gains 2 - -
Reversal of write-downs and impairment 1 - -
Total gains 3 - -
Total own-source income 2,981 3,031 2,169
Net (cost of)/contribution by services (17,285) (17,583) (17,257)
Revenue from Government 1.2C 17,288 17,614 17,257
Total comprehensive income attributable to the Australian Government 3 31 -
 
 
OTHER COMPREHENSIVE INCOME
Items not subject to subsequent reclassification to net cost of services
Changes in asset revaluation surplus 152 - -
Total other comprehensive income after income tax 155 31 -
 
The above statement should be read in conjunction with the accompanying notes.
 
FSANZs original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from FSANZs 2015-16 Portfolio Budget Statements (PBS)).
 
Explanations of variances +/ - 10% between the actual and original budgeted amounts for 2015-16 are provided further below (except for trivial amounts not considered significant to the performance of FSANZ)
 
Explanations of major variances Affected line items (and schedule)
 
1. Suppliers Suppliers
The increase in suppliers expense was due to the increase in project work - refer rendering of services below. (Statement of Comprehensive Income)
 
2.Rendering of Services Rendering of Services
It is not possible to budget for all project work as it is not constant and depends on demand. All the project work was done for other government departments and related to data analysis, labelling and running workshops. (Statement of Comprehensive Income)
 
3.Interest Interest
Interest rates fell lower than anticipated and affected the renewal of the term deposit (Statement of Comprehensive Income)

 

Food Standards Australia New Zealand (FSANZ)
Statement of Financial Position
as at 30 June 2016
2016 2015 Original Budget2016
  Notes $’000 $’000   $’000 Note
ASSETS
Financial assets
Cash and Cash Equivalents 2.1A 3,266 4,417 11,470 1
Trade and Other Receivables 2.1B 199 440 339 2
Investments - Term deposits 2.1C 7,536 7,325 - 1
Total financial assets 11,001 12,182 11,809
 
Non-financial assets
Land and Buildings 2.2A 551 683 600
Plant and equipment 2.2A 370 509 675
Intangibles 2.2A 2,172 2,353 2,004
Prepayments 2.2B 282 124 213 3
Total non-financial assets 3,375 3,669 3,492
Total assets 14,376 15,851 15,301
 
LIABILITIES
Payables
Suppliers 2.3A 313 857 580 4
Other Payables 2.3B 1,671 2,708 1,551
Total payables 1,984 3,565 2,131
 
Provisions
Employee Provisions 4.1A 4,302 4,369 5,530 5
Provision for restoration 2.4A 345 327 312
Total provisions 4,647 4,696 5,842
             
Total liabilities 6,631 8,261 7,973
Net assets 7,745 7,590 7,328
 
EQUITY
Contributed equity 1,823 1,823 1,823
Reserves 2,254 2,102 2,102
Retained surplus/(Accumulated deficit) 3,668 3,665 3,403
Total equity 7,745 7,590 7,328
The above statement should be read in conjunction with the accompanying notes.
 
FSANZs original budgeted financial statement that was first presented to parliament in respect of the reporting period (i.e. from FSANZs 2015-16 Portfolio Budget Statements (PBS)).
 
Between the actual and original budgeted amounts for 2015-16. Explanations of variances above + or - 10% are provided further below.
 
Explanations of major variances Affected line items (and schedule)
 
1. Cash and cash equivalents Cash and cash equivalents
 
The original budget included the term deposit as cash. This has now been reclassified as an investment. The remaining variance is explained by term deposit interest now being reinvested as an investment and employee expenses were higher than budgeted due to being fully staffed for most of the period and some significant leave pay-outs during the period. (Statement of Financial position)
 
2. Trade and Other Receivables Trade and Other receivables
Budget is based on historical trends whereas actual is driven by timing of both the raising of invoices and the receipt of payments from debtors. (Statement of Financial position)
 
3. Non Financial Assets Land & Buildings , Plant & Equipment and Intangibles
Non financial assets were subject to a professional revaluation at 30th June 2016. The revaluation was undertaken late in the year and was not factored into the budget. (Statement of Financial position)
4. Suppliers Suppliers
Expenditure in June was significantly below previous year trends on which the budget was set.. (Statement of Financial position)
5. Employee Provisions Employee Provisions
Employee provision budget had not been adjusted in prior year for the voluntary redundancy program. This was amended in the 2016-17 PBS statements for the estimated Actuals 2015-16. There were also two very large leave terminations/transfers that were not anticipated. (Statement of Financial position)

 

Food Standards Australia New Zealand (FSANZ)
Statement of Changes in Equity
for the period ended 30 June 2016
2016 2015
Original Budget
2016
  Notes $’000 $’000   $’000
CONTRIBUTED EQUITY
Opening balance 1,823 1,823   1,823
Adjusted opening balance 1,823 1,823 1,823
 
Comprehensive income
Transfers between equity components - - -
Closing balance as at 30 June 1,823 1,823 1,823
 
RETAINED EARNINGS
Opening balance 3,665 3,634 3,403
Adjusted opening balance 3,665 3,634 3,403
 
Comprehensive income
Surplus/(Deficit) for the period 3 31 -
Total comprehensive income 3 31 -
Closing balance as at 30 June 3,668 3,665 3,403
 
ASSET REVALUATION RESERVE
Opening balance 2,102 2,102 2,102
Adjusted opening balance 2,102 2,102 2,102
 
Comprehensive income
Other comprehensive income 152 - -
Total comprehensive income 152 - -
Transfers between equity components - - -
Closing balance as at 30 June 2,254 2,102 2,102
 
 
TOTAL EQUITY
Opening balance 7,590 7,559 7,328
Adjusted opening balance 7,590 7,559 7,328
 
Comprehensive income
Surplus/(Deficit) for the period 3 31 -
Other comprehensive income 152 - -
Total comprehensive income 155 31 -
Transactions with owners
Closing balance as at 30 June 7,745 7,590 7,328
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.
 
Budget Variances Commentary
FSANZ budgets for a breakeven position each year and does not budget for asset revaluation adjustments.

 

Food Standards Australia New Zealand (FSANZ)
Cash Flow Statement
for the period ended 30 June 2016
2016 2015 Original Budget 2016
  Notes $’000 $’000   $’000
 
OPERATING ACTIVITIES
Cash received
Receipts from Government 17,257 17,479 17,257
Sale of goods and rendering of services 2,555 3,388 1,673
Interest 272 343 320
Net GST received 385 428 519
Other 15 82 -
Total cash received 20,484 21,720 19,769
 
Cash used
Employees 15,109 13,576 14,273
Suppliers 5,753 6,262 3,872
Net GST paid  - - 519
Other - - -
Total cash used 20,862 19,838 18,664
Net cash from/(used by) operating activities 3.1A (378) 1,882 1,105
 
INVESTING ACTIVITIES
Cash received
Proceeds from sales of property, plant and equipment 1 1 -
Total cash received 1 1 -
 
Cash used
Purchase of property, plant and equipment 568 496 550
Investments 212 259 -
Total cash used 780 755 550
Net cash from/(used by) investing activities (779) (754) (550)
 
 
Net increase/(decrease) in cash held (1,157) 1,128 555
Cash and cash equivalents at the beginning of the reporting period 4,417 3,294 10,915
Effect of exchange rate movements on cash and cash equivalents at the beginning of the reporting period 6 (5) -
Cash and cash equivalents at the end of the reporting period 2.1A 3,266 4,417 11,470
The above statement should be read in conjunction with the accompanying notes.
 
Budget Variances Commentary

The original budget included a term deposit as cash . This has now been reclassified to investments and the resulting interest has been reinvested so reduced anticipated cash flows by $0.2m. The net change in cash held during 2015-16 was $1.5 million lower than the original budget (after adjusting for the term deposit interest). The change was predominantly driven by higher than budgeted employee expenses and payments to suppliers . This included 2 large long service leave pay-outs that were not anticipated. and payments to additional staff/consultants from project revenue. The remainder of the net change in cash has been explained in the variance analysis for the Statement of Comprehensive Income and the Statement of Financial Position

 

Food Standards Australia New Zealand (FSANZ)
 
Overview
 
Objectives of Food Standards Australia and New Zealand (FSANZ)
 
Food Standards Australia New Zealand (FSANZ) is an Australian Government controlled entity. It is a not-for-profit corporate Commonwealth entity.
 
The objective of FSANZ is to improve the health of all Australians. FSANZ is structured to meet one outcome - A safe food supply and well informed consumers in Australia and New Zealand, including through the development of food regulatory measures and the promotion of their consistent implementation, coordination of food recall activities and the monitoring of consumer and industry food practices.
 
FSANZ was established under the Food Standards Australia New Zealand Act 1991 FSANZ (Act)
 
The continued existence of FSANZ in its present form and with its present programmes is dependent on Government policy and on continuing funding by Parliament for FSANZ administration and programmes.
 
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) for reporting periods ending on or after 1 July 2015; and
b) Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
 
The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars and rounded to the nearest $'000 unless otherwise specified.
 
Significant Accounting Judgements and Estimates
No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.
 
New Accounting Standards
Adoption of New Australian Accounting Standard Requirements
No new accounting standard has been adopted earlier than the application date as stated in the standard
All new accounting standards, revised standards or amending standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect, and are not expected to have a future material impact on FSANZ’s financial statements.
 
Future Australian Accounting Standard Requirements
The following [new/revised/amending standards and/or interpretations] were issued by the Australian Accounting Standards Board prior to the signing of the statement by the accountable authority and chief financial officer, which are expected to have a material impact on FSANZ’s financial statements for future reporting period(s):
 
FSANZ will apply AASB 124 Related Party Disclosures in 2016-17. This Standard requires the disclosure of significant transactions with related parties. Related parties include key managers of the entity, relevant Ministers, and other Australian Government entities.”
 
FSANZ expects to apply AASB 16 Leases from 2019-20. This Standard will require the net present value of payments under most operating leases to be recognised as assets and liabilities. Currently FSANZ has $7.9m in operating lease commitments.
 
AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers will come into effectfrom 2018-19. FSANZ is currently evaluating the likely impact of adopting both these standards, however the impact is not anticipated to be material.
 
Taxation
FSANZ is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).
Revenues, expenses, assets and liabilities are recognised net of GST, except:
  • where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
  • for receivables and payables.
 
Departmental
There has been no event since 30 June 2016 that had the potential to significantly affect the ongoing structure and financial activities of FSANZ.
 
Foreign Currency
Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency bank account amounts are translated at the exchange rate current as at the reporting date.
 
Comparative Figures
Comparative figures have been adjusted, where required, to conform with any presentation changes made in these financial statements and publishing errors. Figures have been rounded to the nearest $'000.
The accounting policies are consistent with the previous year except where otherwise disclosed.

 

Financial Performance This section analyses the financial performance of Food Standards Australia New Zealand for the year ended 2016.
1.1 Expenses
 
2016 2015
  $’000 $’000
 
1.1A: Employee Benefits
Wages and salaries 11,204 10,384
Superannuation
Defined contribution plans 827 755
Defined benefit plans 1,174 1,153
Leave and other entitlements 1,451 1,165
Other employee expenses 31 41
Total employee benefits 14,687 13,498
 
Accounting Policy
Accounting policies for employee related expenses is contained in the People and relationships section. - Refer Note 4.1
 
 
1.1B: Suppliers
Goods and services supplied or rendered
Consultants 658 1,334
Travel 806 863
Computer expenses 457 566
Contractors 271 430
Subscriptions 200 167
Legal Fees 17 51
Training 135 306
ISFR Project Officer 139 133
Building Running Costs 107 115
Photocopying Printing & Stationery 78 70
Payroll Processing Costs 64 56
Audit Fee - ANAO 40 39
Venue Hire and Working Lunches 62 97
Acturarial and Internal Audit Fees 53 61
Other 267 403
Total goods and services supplied or rendered 3,357 4,691
 
Goods supplied 671 665
Services rendered 2,686 4,026
Total goods and services supplied or rendered 3,357 4,691
 
Other suppliers
Operating lease rentals in connection with
Minimum lease payments 1,007 1,002
Workers compensation expenses 28 64
Total other suppliers 1,035 1,066
Total suppliers 4,392 5,757
 
Leasing commitments
FSANZ in its capacity as lessee has leases for its offices in Canberra and Wellington which run to 2018.
 
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within 1 year 1,311 1,351
Between 1 to 5 years 4,714 4,876
More than 5 years 1,898 3,036
Total operating lease commitments 7,923 9,263
 
Accounting Policy

Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets. FSANZ has no finance leases.

Lease incentives taking the form of 'free' leasehold improvements and rent holidays are recognised as liabilities. These liabilities are reduced on a straight-line basis by allocating lease payments between rental expense and reduction of the lease incentive liability.

 

1.2 Own-Source Revenue and gains
2016 2015
  $’000 $’000
 
Own-Source Revenue
 
1.2A: Sale of Goods and Rendering of Services
New Zealand Government funding 1,912 1,953
Fee for service 260 211
Surveys 164 82
Asia Pacific Economic Corporation (APEC) 85 67
Labelling 120 148
Other 151 151
Total sale of goods and rendering of services 2,692 2,612
 
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) FSANZ 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 FSANZ.

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 FSANZ.
The stage of completion of contracts at the reporting date is determined by reference the proportion that costs incurred to date bear 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 end of the reporting period. Allowances are made when collectability of the debt is no longer probable.
 
1.2B: Interest
Deposits 58 83
Investments 213 253
Total interest 271 336
 
Accounting Policy
Interest revenue is recognised using the effective interest method. FSANZ only invests in term deposits or bank accounts with Authorised Deposit-taking Institutions (ADIs)
 
1.2C: Revenue from Government
Corporate entity payment 17,288 17,614
Total revenue from Government 17,288 17,614
 
Accounting Policy
Revenue from Government
Funding received or receivable from non-corporate Commonwealth entities (appropriated to the non-corporate Commonwealth entity as a corporate Commonwealth entity payment item for payment to FSANZ) is recognised as Revenue from Government by the corporate Commonwealth entity unless the funding is in the nature of an equity injection or a loan.
 

 

Financial Position This section analyses FSANZs 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
 
2016 2015
    $’000 $’000
 
2.1A: Cash and Cash Equivalents
AUSTRALIA
Cash on hand or on deposit 3,246 4,345
NEW ZEALAND
Cash on hand or on deposit 20 72
Total cash and cash equivalents 3,266 4,417
 
Accounting Policy
Cash is recognised at its nominal amount. Cash and cash equivalents includes:
    a) cash on hand;
    b) 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.
 
2.1B: Trade and Other Receivables
Goods and services receivables 91 244
Other receivables
Interest 31 32
GST receivable 53 95
Other receivables 52 69
Total other receivables 136 196
Total trade and other receivables (gross) 227 440
Less impairment allowance (28) -
 
Total trade and other receivables (net) 199 440
 
Trade and other receivables are expected to be recovered in no more than 12 months.
 
Trade and other receivables (gross) aged as follows
Not overdue 180 411
Overdue by
0 to 30 days  - -
31 to 60 days 19 29
61 to 90 days  - -
More than 90 days 28 -
Total trade and other receivables (gross) 227 440
 
2016 2015
    $’000 $’000
Impairment allowance aged as follows
Not overdue  - -
Overdue by
0 to 30 days  - -
31 to 60 days  - -
61 to 90 days  - -
More than 90 days 28 -
Total impairment allowance 28 -
 
Credit terms for goods and services were within 30 days (2015: 30 days).
 
Accounting Policy
Loans and Receivables
Trade receivables, loans and other receivables that have fixed or determinable payments and that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method less impairment.

Accounting Judgements and Estimates
There are no material accounting judgements and estimates that impact on the above.
 
Reconciliation of the Impairment Allowance
 
Movements in relation to 2016
Goods andservices Other receivables Total
  $'000 $'000 $'000
As at 1 July 2015  -  -  -
Amounts written off  -  -  -
Amounts recovered and reversed  -  -  -
Increase/(Decrease) recognised in net cost of services 28  - 28
Total as at 30 June 2016 28  - 28
 
Accounting Policy
Financial assets are assessed for impairment at the end of each reporting period.
 
2016 2015
    $’000 $’000
2.1C: Investments - Term deposits
Deposits 7,536 7,325
Total other investments 7,536 7,325
 
Accounting Policy
FSANZ only invests in Authorised Deposit-Taking Institutions (ADIs). Deposits for period great than 3 months are classifed as investments.
 

 

2.2 Non-Financial Assets
 
2.2A: 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 for 2016
Buildings - Leasehold Improvements Plant and equipment Intangibles Total
  $’000 $’000 $’000 $’000
As at 1 July 2015
Gross book value 987 509 3,971 5,467
Accumulated depreciation, amortisation and impairment (304)  - (1,618) (1,922)
Total as at 1 July 2015 683 509 2,353 3,545
Additions
Purchase or internally developed 30 52 486 568
Revaluations and impairments recognised in other comprehensive income 161 (9)  - 152
Depreciation and amortisation (323) (182) (667) (1,172)
Disposals  -
Total as at 30 June 2016 551 370 2,172 3,093
 
Total as at 30 June 2016 represented by
Gross book value 911 370 4,457 5,738
Accumulated depreciation, amortisation and impairment (360) (2,285) (2,645)
Total as at 30 June 2016 551 370 2,172 3,093
 
The carrying amount of computer software included $0.137m purchased software and $2.034m internally generated software.
No indicators of impairment were found for property, plant and equipment and intangibles at 30 June 2016.
No property, plant or equipment is held for sale, however, some assets may be sold as part of the normal refresh process within the next 12 months.
An independent valuation of all asset categories was carried out by Pickles Valuation Services as at 30 June 2016. Refer to note 5.3.
Reconciliation of the opening and closing balances of property, plant and equipment for 2015
Buildings - Leasehold Improvements Plant and equipment Intangibles Total
  $’000 $’000 $’000 $’000
As at 1 July 2014
Gross book value 1,248 576 3,806 5,630
Accumulated depreciation, amortisation and impairment (248) - (993) (1,241)
Total as at 1 July 2014 1,000 576 2,813 4,389
Additions
Purchase or internally developed - 168 329 497
Impairments recognised in net cost of services - - (164) (164)
Reversal of impairments recognised in net cost of services - - - -
Depreciation and amortisation (317) (232) (625) (1,174)
Disposals
Other disposals - (3) - (3)
Total as at 30 June 2015 683 509 2,353 3,545
 
Total as at 30 June 2015 represented by
Gross book value 987 509 3,971 5,467
Accumulated depreciation, amortisation and impairment (304) - (1,618) (1,922)
Total as at 30 June 2015 683 509 2,353 3,545

 

Accounting Policy
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate. 
 
Asset Recognition Threshold
Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than [$5,000], which are 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 FSANZ where there exists an obligation to restore the property to prescribed conditions. These costs are included in the value of FSANZ's leasehold improvements with a corresponding provision for the 'make good' recognised.

Revaluations
Leasehold improvement, property plant & equipment are carried at fair value, being revalued with sufficient frequency such that the carrying amount of each asset class is not materially different at reporting date from its fair value. An independent valuation of all asset categories was carried out by Pickles Valuation Services as at 30 June 2016.

Fair values for each class of asset are determined as shown below:
Asset class Fair value measurement
Leasehold Depreciated replacement cost
Improvements  
Property, plant & equipment Market selling price

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 did not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depended 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 reversed 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 reversed 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 FSANZ using, in all cases, the straight-line method of depreciation. Leasehold improvements are depreciated on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

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 rates applying to each class of depreciable asset are based on the following useful lives:
  2016 2015
Leasehold improvements Lease term Lease term
Purchased 3-10 years 3-10 years
Impairment
All assets were assessed for impairment at 30 June 2016. 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 of disposal 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 entity 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
FSANZ's intangibles comprise internally developed software for internal use and purchased software. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.

Internally developed software and purchased software with values of $25,000 or greater are capitalised. Any purchases under these thresholds are expensed in the year of acquisition (other than when they form part of a group of similar items which are significant in total).

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the entity's software are
  2016 2015
Internally developed software 10 Years 10 Years
Purchased 4 years 4 years
All software assets were assessed for indications of impairment as at 30 June 2016.

 

2.2 Non-Financial Assets Cont'd
 
2016 2015
  $’000 $’000
 
2.2B: Prepayments
Prepayments 282 124
Total other non-financial assets 282 124
 

 

2.3 Payables
 
2016 2015
  $’000 $’000
 
2.3A: Suppliers
Trade creditors and accruals 313 857
Total suppliers 313 857
 
Suppliers include trade creditors and accruals. Suppliers expected to be settled in no more than 12 months. Settlement was usually made within 30 days.
 
2.3B: Other Payables
Salaries and wages 96 381
Superannuation 7 61
Performance based pay 220 280
Unearned income 1,120 1,588
Lease incentive 228 327
Other 0 71
Total other payables 1,671 2,708
 
Other payables to be settled
No more than 12 months 1,603 2,541
More than 12 months 68 167
Total other payables 1,671 2,708
 
Accounting Policy
Unearned Income
Amounts received in advance for services not yet provided or work not yet undertaken are recorded as unearned income,unless the revenue is a non reciprocal contribution as defined in AASB1004 - Contributions. As the work is completed the revenue is taken to account as sale of goods and rendering of services - Refer Note 1.2A.
Parental Leave Payments Scheme
Amounts received under the Parental Leave Payments Scheme by the entity not yet paid to employees were presented gross as cash and a liability (payable). The total amount received under this scheme was $26,251 (2015: $26,905). 

 

2.4 Other Provisions
 
2016 2015
  $’000 $’000
 
2.4A: Provision for restoration    
Provision for restoration Provision for restoration
  $’000 $’000
As at 1 July 327 312
Additional provisions made -
Restatement of New Zealand balance 3 (2)
Unwinding of discount or change in discount rate 15 17
Total as at 30 June 345 327
 
FSANZ currently has 2 (2015: 2) agreements for the leasing of premises which have provisions requiring the entity to restore the premises to their original condition at the conclusion of the lease. FSANZ has made a provision to reflect the present value of this obligation.

 

3.1 Cash Flow Reconciliation
 
3.1A: Cash Flow Reconciliation
2016 2015
  $’000 $’000
Reconciliation of cash and cash equivalents as per statement of financial position and cash flow statement
Cash and cash equivalents as per
Cash flow statement 3,266 4,417
Statement of financial position 3,266 4,417
Discrepancy - -
 

 
Reconciliation of net cost of services to net cash from/(used by) operating activities
Net(cost of)/contribution by services (17,285) (17,583)
Revenue from Government 17,288 17,614
 
Adjustments for non-cash items
Depreciation/amortisation 1,172 1,173
Net write down of non-financial assets  - 164
Foreign Exchange loss/(gain) (2) 3
Loss/(gain) on sale of assets (1) 2
Unwinding of discount on provision 15 17
 
Movement in assets and liabilities
Assets
(Increase)/Decrease in net receivables 241 (102)
(Increase)/Decrease in prepayments (158) 89
Liabilities
Increase/(Decrease) in employee provisions (67) 44
Increase/(Decrease) in suppliers payables (544) 20
Increase/(Decrease) in other payables (1,036) 441
Net cash from/(used by) operating activities (378) 1,882

 

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
 
2016 2015
  $’000 $’000
 
4.1A: Employee Provisions
Leave 4,302 4,369
Total employee provisions 4,302 4,369
 
Employee provisions expected to be settled
No more than 12 months 1,256 1,233
More than 12 months 3,046 3,136
Total employee provisions 4,302 4,369
 
Accounting policy
Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.
Leave
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of FSANZ is estimated to be less than the annual entitlement for sick leave.
The leave liabilities are calculated on the basis of employees' remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the entity'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 by reference to the shorthand method as prescribed by the FRR. 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 entity 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
FSANZ staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS) or the PSS accumulation plan (PSSap) or a complying superannuation fund. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other complying superannuation funds are 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.
FSANZ 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. FSANZ accounts for the contributions as if they were contributions to defined contribution plans.
The liability for superannuation recognised as at 30 June represents outstanding contributions for the final pay of the year.
 

 

4.2 Senior Management Personnel Remuneration
 
2016 2015
  $’000 $’000
 
Short-term employee benefits
Salary 1,327 1,167
Performance bonuses 77 117
Motor vehicle and other allowances 158 132
Total short-term employee benefits 1,563 1,416
 
Post-employment benefits
Superannuation 211 179
Total post-employment benefits 211 179
 
Other long-term employee benefits
Annual leave 84 64
Long-service leave 27 26
Total other long-term employee benefits 111 90
 
Termination benefits 199 -
 
Total senior executive remuneration expenses 2,084 1,685
 
The above table includes paid part time directors of 11 : (2015: 11:) board positions. The total number of senior management personnel that are included in the above table are 6 (2015: 4).
 
4.3 Related Party Disclosures
FSANZ had no related party transactions during the year . (2015:Nil)

 

Managing uncertainties This section analyses how Food Standards Australia New Zealand manages financial risks within its operating environment.
 
5.1 Contingent Assets and Liabilities
 
FSANZ did not have any contingent assets or liabilities to report as at 30 June 2016. (2015:Nil)
 
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. FSANZ did not have any contingent assets or liabilities to report as at 30 June 2016. (2015:Nil)

 

5.2 Financial Instruments
 
2016 2015
        $’000 $’000
 
5.2A: Categories of Financial Instruments
Financial Assets
Receivables
Cash and cash equivalents 3,266 4,417
Trade and other receivables 174 345
Investments 7,536 7,325
Total receivables 10,976 12,087
Total financial assets 10,976 12,087
 
Financial Liabilities
Financial liabilities measured at amortised cost
Trade creditors 313 857
Total financial liabilities measured at amortised cost 313 857
Total financial liabilities 313 857
 
 
Accounting Policy
Financial Assets

Financial assets are classified depending on the nature and purpose of the financial assets and determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.
Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'receivables'.

Impairment of Financial Assets
Financial assets are assessed for impairment at end of each reporting period.
Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables, 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.
Financial liabilities
Financial liabilities are classified as other financial liabilities. Financial liabilities are recognised and derecognised upon 'trade date'.   
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).
 
 
5.2B: Net Gains or Losses on Financial Assets
Receivables
Interest revenue 271 336
Exchange gains/(losses) 2 (3)
Net gains/(losses) on receivables 273 333
Net gains on financial assets 273 333
 
5.2C: Fair Value of Financial Instruments
 
Carrying Fair Carrying Fair
amount value amount value
2016 2016 2015 2015
$'000 $'000 $'000 $'000
Financial Assets
Receivables 10,976 10,976 12,087 12,087
Total financial assets 10,976 10,976 12,087 12,087
 
Financial Liabilities
Trade creditors 313 313 857 857
Total financial liabilities 313 313 857 857
 
 
5.2D: Credit Risk
 
FSANZ was exposed to minimal credit risk as loans and receivables were cash and trade receivables. The maximum exposure to credit risk was the risk that arises from potential default of a debtor. The amount was equal to the total amount of trade receivables 2016: $174k (2015: $344k). FSANZ has assessed the risk of the default on payment as minimal, except in one circumstance which has had an allowance for impairment made.
 
 
Credit quality of financial assets not past due or individually determined as impaired
Not past due nor impaired Not past due nor impaired Past due or impaired Past due or impaired
2016 2015 2016 2015
$’000 $’000 $’000 $’000
Receivables
Cash and cash equivalents   3,266   4,417 -
Trade and other receivables   127   316 47 29
Investments   7,536   7,325  - -
Total 10,929 12,058 47 29
 
 
Ageing of financial assets that were past due but not impaired in 2016
0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total
$’000 $’000 $’000 $’000 $’000
Receivables
Trade and other receivables  - 19  - 28 47
Total  - 19  - 28 47
 
Ageing of financial assets that were past due but not impaired in 2015
0 to 30 days 31 to 60 days 61 to 90 days 90+ days Total
$’000 $’000 $’000 $’000 $’000
Receivables
Trade and other receivables  - 29  -  - 29
Total - 29 - - 29

 

5.2 Financial Instruments
5.2E: Liquidity Risk
Liquidity risk is the risk that FSANZ will not be able to meet its obligations as they fall due.
FSANZ's financial liabilities were trade creditors and other payables. The exposure to liquidity risk is based on the notion that FSANZ will encounter difficulty in meeting its obligations associated with financial liabilities. This is highly unlikely due to government funding and other mechanisms available to FSANZ and internal policies and procedures put in place to ensure there are appropriate resources to meet its financial obligations.
 
FSANZ has no past experience of default.
 
All non-derivative financial liabilities are expected to mature within 1 year (2015: 1 year)
 
FSANZ had no derivative financial liabilities in either 2016 or 2015.
 
 
5.2F: Market Risk
FSANZ held basic financial instruments that did not expose FSANZ to certain market risks. FSANZ holds assets and liabilities in New Zealand dollars and is exposed to normal currency fluctuations in the Australian/New Zealand dollar exchange rate, however no other material exposures existed at year end.

 

5.3 Fair Value Measurement
 
The following tables provide an analysis of assets and liabilities that are measured at fair value. The remaining assets and liabilities disclosed in the statement of financial position do not apply the fair value hierarchy.
The different levels of the fair value hierarchy are defined below.
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
 
Accounting Policy
Recurring and non-recurring Level 3 fair value measurements - valuation processes
FSANZ procured valuation services from Pickles Valuation Services (PVS) and relied on valuation models provided by PVS. FSANZ’s asset policy requires that a formal independent valuation process is conducted at least once every three to four years. In years when an independent valuation is not conducted, an assessment is performed by management to ensure that the fair value criterion is reasonable. This assessment normally focuses on ‘indicators’ to determine whether there has been a material movement in the carrying amount of the assets since the last reporting date. PVS provided written assurance to FSANZ that the model developed is in compliance with AASB 13.

No change in valuation technique occurred during the period. The highest and best use of all non-financial assets are the same as their current use.
 
 
5.3A: Fair Value Measurement
Fair value measurements at the end of the reporting period Valuation Technique(s) and Inputs Used
2016 2015 Category (Level 1, 2 or 3) 3,4
$'000 $'000
Non-financial assets 2
Leasehold improvements 461 704 Level 3 Cost Approach - depreciated replacement cost
Other property, plant and equipment 369 509 Level 2 Market Approach
Total fair value measurements of assets in the statement of financial position 830 1,213
 
There were no transfers between level 1 and level 2 during 2015-16.
FSANZ deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period.
 
5.3B: Reconciliation for Recurring Level 3 Fair Value Measurements
  Financial assets Total
Land & Buildings
2016 2015 2016 2015
$'000 $'000 $'000 $'000
As at 1 July 704 965 704 965
Total gains/(losses) recognised in other comprehensive income1 (7) - (7) -
Purchases 30 - 30 -
Depreciation (266) (261) (266) (261)
Total as at 30 June 461 704 461 704
 
 
1. These gains/(losses) are presented in the Statement of Comprehensive Income under changes in asset revaluation surpluses.

 

6.1 Reporting of Outcomes
 
FSANZ operates primarily in a single industry and has operations in both Canberra, Australia and Wellington, New Zealand.
 
FSANZ objectives, in developing or reviewing food standards as set down in legislation, are to: protect public health and safety; ensure the provision of adequate information relating to food to enable informed consumer choice; and prevent misleading and deceptive conduct.
Outcome 1: A safe food supply and well-informed consumers in Australia and New Zealand, including through the development of food regulatory measures and the promotion of their consistent implementation, coordination of food recall activities and the monitoring of consumer and industry food practices.
     
Outcome 11
2016 2015
  $’000 $’000
Expenses 20,266 20,614
Income from non-government sector
Activities subject to cost recovery 260 211
Other 2,183 2,371
Total 2,443 2,582
Other income 538 449
Net cost/(contribution) of outcome delivery 17,285 17,583
 
Assets
Financial assets 11,001 12,182
Non-financial assets 3,375 3,669
Total assets 14,376 15,851
Liabilities
Payables 1,984 3,565
Provisions 4,647 4,696
Total liabilities 6,630 8,261
 
Outcome 1 is described in the overview note.

 

 

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