C.2 Financial Statements

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Sensitive: Auditor-General

A16/06

Ms Natalie Howson
Director - General Education Directorate
Level 6, 220 Northbourne Avenue
BRADDON ACT 2612

Dear Ms Howson

EDUCATION DIRECTORATE - AUDIT REPORT
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

The Audit Office has completed the audit of the statement of financial statements of the Education Directorate for the year ended 30 June 2016.

I have attached the audited financial statement and unqualified audit report.

I have provided a copy of the financial statements and audit report to the Minister for Education, Mr Shane Rattenbury MLA.

Yours sincerely

signature of Maxine Cooper

c.c,
Mr Mark Whybrow, Chief Financial Officer
Ms Carol Lilley, Chair, Audit Committee
Ms Megan Young, Chief Internal Auditor


Level 4, 11 Moore Street Canberra City ACT 2601 PO Box 275 Civic Square ACT 2608
T 02 6207 0833 F 02 6207 0826 E actauditorgeneral@act.gov.au W www.audit.act.gov.au external linkAudit Office banner

INDEPENDENT AUDIT REPORT
EDUCATION DIRECTORATE

To the Members of the ACT Legislative Assembly

Report on the financial statements

The financial statements of the Education Directorate (the Directorate) for the year ended 30 June 2016 have been audited. These comprise the following financial statements and accompanying notes:

  • Controlled financial statements - operating statement, balance sheet, statement of changes in equity, cash flow statement and statement of appropriation.
  • Territorial financial statements - statement of income and expenses on behalf of the Territory, statement of assets and liabilities on behalf of the Territory, cash flow statement on behalf of the Territory and territorial statement of appropriation.

Responsibility for the financial statements

The Director-General is responsible for the preparation and fair presentation of the financial statements in accordance with the Financial Management Act 1996. This includes responsibility for maintaining adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and the accounting policies and estimates used in the preparation of the financial statements.

The auditor's responsibility

Under the Financial Management Act 1996, I am responsible for expressing an independent audit opinion on the financial statements of the Directorate.The audit was conducted in accordance with Australian Auditing Standards to obtain reasonable assurance that the financial statements are free of material misstatement.

I formed the audit opinion following the use of audit procedures to obtain evidence about the amounts and disclosures in the financial statements. As these procedures are influenced by the use of professional judgement, selective testing of evidence supporting the amounts and other disclosures in the financial statements, inherent limitations of internal control and the availability of persuasive rather than conclusive evidence, an audit cannot guarantee that all material misstatements have been detected.

Although the effectiveness of internal controls is considered when determining the nature and extent of audit procedures, the audit was not designed to provide assurance on internal controls.

The audit is not designed to provide assurance on the appropriateness of budget information included in the financial statements or to evaluate the prudence of decisions made by the Directorate.

Electronic presentation of the audited financial statements

Those viewing an electronic presentation of the financial statements should note that the audit it does not provide assurance on the integrity of information presented electronically and does not provide an opinion on any other information which may have been hyperlinked to or from the financial statements. If users of the financial statements are concerned with the inherent risks arising from the electronic presentation of information, then they are advised to refer to the printed copy of the audited financial statements to confirm the accuracy of this electronically presented information.

Independence

Applicable independence requirements of Australian professional ethical pronouncements were followed in conducting the audit.

Audit opinion

In my opinion, the financial statements of the Directorate for the year ended 30 June 2016:

  1. are presented in accordance with the Financial Management Act 1996, Australian Accounting Standards and other mandatory financial reporting requirements in Australia and
  2. present fairly the financial position of the Directorate at 30 June 2016 and the results of its operations and cash flows for the year then ended.

The audit opinion should be read in conjunction with other information disclosed in this report.

signature of Maxine Cooper


Level 4, 11 Moore Street Canberra City ACT 2601 PO Box 275 Civic Square ACT 2608
T 02 6207 0833 F 02 6207 0826 E actauditorgeneral@act.gov.au W www.audit.act.gov.au

Financial Statements
For the Year Ended
30 June 2016
Education Directorate

Education Directorate
Financial Statements
For the Year Ended 30 June 2016

Statement of Responsibility

In my opinion, the financial statements are in agreement with the Directorate's accounts and records and fairly
reflect the financial operations of the Directorate for the year ended 30 June 2016 and the financial position of the Directorate on that date.

signature of Natalie Howson

Natalie Howson
Director-General
Education and Training Directorate
7 September 2015

Education Directorate
Financial Statements
For the Year Ended 30 June 2016

Statement by the Chief Finance Officer

In my opinion, the financial statements have been prepared in accordance with generally accepted accounting
principles, and are in agreement with the Directorate's accounts and records and fairly reflect the financial
operations of the Directorate for the year ended 30 June 2016 and the financial position of the Directorate on
that date.

signature of  Mark Whybrow

Mark Whybrow
Chief Finance Officer
Education and Training Directorate
7 September 2016

EDUCATION DIRECTORATE
CONTROLLED FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2016

Education Directorate
Operating Statement
For the Year Ended 30 June 2016

  Note No. Actual
2016
$’000
Original Budget
2016
$’000
Actual
2015
$’000
Income     
Revenue     
Government Payment for Outputs 4 626,616 656,165 591,010
User Charges - ACT Government 5 666 570 461
User Charges - Non - ACT Government 5 17,526 16,328 17,600
Interest 6 1,237 1,252 1,409
Distribution from Investments with the     
Territory Banking Account 7 71 116 82
Resources Received Free of Charge 8 621 485 621
Other Revenue 9 22,203 21,413 21,358
Total Revenue   668,940 696,329 632,541
Gains     
Gains on Investments 10 37 - 29
Other Gains 11 - - 107
Total Gains   37 - 136
Total Income   668,977 696,329 632,677
Expenses     
Employee Expenses 12 466,615 460,503 426,307
Superannuation Expenses 13 65,277 69,216 62,661
Supplies and Services 14 58,234 73,559 64,423
Depreciation and Amortisation 15 60,505 66,340 60,556
Grants and Purchased Services 16 13,201 31,474 21,093
Borrowing Costs 17 - 12 6
School and Other Expenses 18 65,349 65,065 63,699
Total Expenses   729,181 766,169 698,745
Operating (Deficit)   (60,204) (69,840) (66,068)
Other Comprehensive Income     
(Decrease) in the Asset Revaluation Surplus 31 - - (1,300)
Total Other Comprehensive (Deficit)   - - (1,300)
Total Comprehensive (Deficit)   (60,204) (69,840) (67,368)

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

Education Directorate
Balance Sheet
As at 30 June 2016

  Note
No.
Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Current Assets     
Cash and Cash Equivalents 21 80,837 70,627 81,577
Receivables 22 3,267 4,301 5,099
Investments 23 260 259 260
Other Assets 27 1,457 1,045 897
Total Current Assets  85,82176,232 87,833
Non-Current Assets     
Investments 23 1,912 1,846 1,875
Property, Plant and Equipment 24 1,804,207 1,753,926 1,790,347
Intangible Assets 25 977 468 2,618
Capital Works in Progress 26 2,449 63,760 24,524
Total Non-Current Assets  1,809,545 1,820,000 1,819,364
Total Assets  1,895,366 1,896,232 1,907,197
Current Liabilities     
Payables 28 4,540 4,666 6,305
Finance Leases   - 75 -
Employee Benefits 29 136,066 126,957 137,770
Other Liabilities 30 7,282 5,706 4,847
Total Current Liabilities  147,888 137,404 148,922
Non-Current Liabilities     
Finance Leases   - 69 -
Employee Benefits 29 12,053 13,894 12,016
Other Liabilities 30 4,386 2,050 2,589
Total Non-Current Liabilities  16,439 16,013 14,605
Total Liabilities  164,327 153,417 163,527
Net Assets  1,731,039 1,742,815 1,743,670
Equity     
Accumulated Funds   865,704 876,180 878,335
Asset Revaluation Surplus 31 865,335 866,635 865,335
Total Equity  1,731,039 1,742,815 1,743,670

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

Education Directorate
Statement of Changes in Equity
For the Year Ended 30 June 2016

  Note No. Accumulated Funds Actual
2016
$'000
Asset Revaluation Surplus Actual
2016
$'000
Total Equity Actual
2016
$'000
Original Budget
2016
$'000
Balance at 1 July 2015   878,335 865,335 1,743,670 1,753,098
Comprehensive Income      
Operating (Deficit)   (60,204) - (60,204) (69,840)
Total Comprehensive (Deficit)  (60,204) - (60,204)(69,840)
Transactions Involving Owners Affecting Accumulated Funds      
Capital Injections   48,315 - 48,315 59,557
Net Assets transferred out as part of an Administrative Restructure 32 (742) - (742) -
Total Transactions Involving Owners Affecting Accumulated Funds   47,573 - 47,57359,557
Balance at 30 June 2016  865,704865,3351,731,0391,742,815

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

  Note No. Accumulated Funds Actual
2015
$'000
Asset Revaluation Surplus Actual
2015
$'000
Total Equity Actual
2015
$'000
Balance at 1 July 2014   900,172 866,635 1,766,807
Comprehensive Income     
Operating (Deficit)   (66,068) - (66,068)
(Decrease) in the Asset Revaluation Surplus 31 - (1,300) (1,300)
Total Comprehensive (Deficit)   (66,068) (1,300) (67,368)
Transactions Involving Owners Affecting Accumulated Funds     
Capital Injections   90,329 - 90,329
Net Assets transferred out as part of an Administrative Restructure 32 (46,098) - (46,098)
Total Transactions Involving Owners Affecting Accumulated Funds  44,231 - 44,231
Balance at 30 June 2015  878,335865,3351,743,670

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Education Directorate
Cash Flow Statement
For the Year Ended 30 June 2016

  Note
No.
Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Cash Flows from Operating Activities     
Receipts     
Government Payment for Outputs   626,616 656,165 591,010
User Charges   19,491 16,898 17,454
Interest Received   1,243 1,252 1,409
Distribution from Investments with the Territory Banking Account   71 116 87
Schools and Other   23,514 20,000 20,396
Goods and Services Tax Received   17,891 21,100 25,015
Total Receipts from Operating Activities  688,826 715,531655,371
Payments     
Employees   465,001 472,261 421,972
Superannuation   67,806 70,826 62,354
Supplies and Services   57,839 72,727 63,932
Grants and Purchased Services   13,239 31,474 21,457
Borrowing Costs   - 12 6
Schools and Other   66,168 63,850 63,175
Goods and Services Tax Paid   16,324 21,100 24,721
Total Payments from Operating Activities   686,377732,250657,617
Net Cash Inflows/(Outflows) from Operating Activities 38 2,449(16,719)(2,246)
Cash Flows from Investing Activities     
Receipts     
Proceeds from the Sale of Property, Plant and Equipment   1 - 41
Payments     
Purchase of Property, Plant and Equipment   53,301 60,772 76,731
Net Cash (Outflows) from Investing Activities  (53,300)(60,772)(76,690)
Cash Flows from Financing Activities     
Receipts     
Capital Injections   48,315 59,557 90,329
Loan Proceeds   2,591 - -
Payments     
Repayment of Loan   794 423 -
Repayment of Finance Leases   - 50 39
Net Cash Inflows from Financing Activities  50,11259,08490,290
Net (Decrease)/Increase in Cash and Cash Equivalents Held   (739) (18,407) 11,354
Cash and Cash Equivalents at the Beginning of the Reporting Period   81,576 89,034 70,223
Cash and Cash Equivalents at the End of the Reporting Period 38 80,83770,62781,577

The above Cash Flow Statement should be read in conjunction with the accompanying notes.

Education Directorate
Summary of Directorate Output Classes
For the Year Ended 30 June 2016

  Output Class 1
$'000
Output Class 2
$'000
Output Class 3
$'000
Total
$'000
2016     
Total Income 653,114 3,287 12,576 668,977
Total Expenses (712,922) (3,341) (12,918) (729,181)
Operating (Deficit) (59,808)(54)(342)(60,204)
2015     
Total Income 600,881 3,088 28,708 632,677
Total Expenses (668,064) (3,457) (27,224) (698,745)
Operating (Deficit)/Surplus (67,183)(369)1,484(66,068)

Education Directorate
Operating Statement for Output Class 1 - Public School Education
For the Year Ended 30 June 2016

Description

This output contributes to the provision of preschool, primary, high, secondary and special school education in public schools to all enrolled students, and regulation of education and care services.

  Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Income    
Revenue    
Government Payment for Outputs 611,265 617,026 559,656
User Charges – ACT Government 664 570 460
User Charges – Non-ACT Government 17,306 16,296 17,573
Interest 1,226 1,250 1,392
Distribution from Investments with the Territory Banking Account 71 115 82
Resources Received Free of Charge 604 479 615
Other Revenue 21,941 21,024 20,967
Total Revenue 653,077 656,760 600,745
Gains    
Gains on Investments 37 - 29
Other Gains - - 107
Total Gains 37 - 136
Total Income 653,114656,760600,881
Expenses    
Employee Expenses 461,050 453,178 418,985
Superannuation Expenses 64,499 68,095 61,584
Supplies and Services 55,921 70,942 61,242
Depreciation and Amortisation 60,267 65,795 60,377
Grants and Purchased Services 5,955 2,981 2,171
Borrowing Costs - 12 6
School and Other Expenses 65,230 64,952 63,699
Total Expenses 712,922725,955668,064
Operating (Deficit) (59,808)(69,195)(67,183)

Education Directorate
Operating Statement for Output Class 2 - Non Government Education
For the Year Ended 30 June 2016

Description

This output contributes to the maintenance of standards in non-government schools and home education through compliance and registration, accreditation and certification of senior secondary courses, support and liaison with the non-government sector, administration and payment of Commonwealth Government and Territory grants for the non-government sector and the conduct of an annual non-government schools census.

  Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Income    
Revenue    
Government Payment for Outputs 2,787 2,851 2,669
User Charges - ACT Government 2 - 1
User Charges - Non-ACT Government 220 32 27
Interest 7 - 14
Distribution from Investments with the Territory Banking Account - 1 -
Resources Received Free of Charge 17 3 5
Other Revenue 254 360 372
Total Revenue 3,287 3,247 3,088
Total Income 3,287 3,247 3,088
Expenses    
Employee Expenses 1,690 1,468 1,658
Superannuation Expenses 236 247 244
Supplies and Services 1,013 1,093 1,054
Depreciation and Amortisation 87 183 174
Grants and Purchased Services 306 450 327
Other Expenses 9 - -
Total Expenses 3,341 3,441 3,457
Operating (Deficit) (54) (194) (369)

Education Directorate
Operating Statement for Output Class 3 - Vocational Education and Training
For the Year Ended 30 June 2016

Description

This output contributes to the planning, funding, managing and reporting services for Vocational Education and Training (VET) opportunities, programs and initiatives in the ACT.

  Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Income    
Revenue    
Government Payment for Outputs 12,564 36,288 28,685
Interest 4 >2 3
Resources Received Free of Charge - 3 1
Other Revenue 8 29 19
Total Revenue 12,57636,32228,708
Total Income 12,57636,32228,708
Expenses    
Employee Expenses 3,875 5,857 5,664
Superannuation Expenses 542 874 833
Supplies and Services 1,300 1,524 2,127
Depreciation and Amortisation 151 362 5
Grants and Purchased Services 6,940 28,043 18,595
Other Expenses 110 113 -
Total Expenses 12,91836,77327,224
Operating (Deficit) / Surplus (342)(451)1,484

The responsibility for Vocational Education and Training functions associated with this output was transferred to the Chief Minister, Treasury and Economic Development Directorate from 22 January 2016 following changes to Administrative Arrangements.

Education Directorate
Controlled Statement of Appropriation
For the Year Ended 30 June 2016

  Note
No.
Original Budget
2016
$'000
Total Appropriated
2016
$'000
Appropriation Drawn
2016
$'000
Appropriation Drawn
2015  
$'000
Controlled      
Government Payment for Outputs 4 656,165 639,196 626,616 591,010
Capital Injections   59,557 67,782 48,315 90,329
Total Controlled Appropriation  715,722706,978674,931 681,339

The above Controlled Statement of Appropriation should be read in conjunction with the accompanying notes.

Column Heading Explanations

The Original Budget column shows the amounts that appear in the Cash Flow Statement in the Budget Papers. This amount also appears in these financial statements, in the Cash Flow Statement.

The Total Appropriated column is inclusive of all appropriation variations occurring after the Original Budget.

The Appropriation Drawn is the total amount of appropriation received by the Directorate during the year. This amount appears in these financial statements, in the Cash Flow Statement.

Variances between ‘Original Budget’ and ‘Total Appropriated’
Government Payment for Outputs

The difference between the original budget and total appropriated mainly relates to Vocational Education and Training functions. On 22 January 2016, Vocational Education and Training functions were transferred to the Chief Minister, Treasury and Economic Development Directorate ($26.064m). This was partially offset by funding transferred from 2014-15 into 2015-16 ($9.095m), primarily relating to the VET Skills Reform national partnership.

Capital Injection

The difference between the original budget and the total appropriated relates to the transfer of funding from 2014-15 into 2015-16 ($8.225m). The transfer of funding from 2014-15 primarily relates to advance payments of Commonwealth funding for Trade Training Centres and invoices received but not paid at 30 June 2015 for the Sustaining Smarter Schools - Digital Infrastructure for Our Schools initiative which were paid in 2015-16.

Variances between ‘Total Appropriated’ and ‘Appropriation Drawn’
Government Payment for Outputs

The difference between the total appropriated and appropriation drawn relates to funds transferred from 2015-16 to 2016‑17 ($10.162m), lower than budgeted superannuation costs ($1.238m) due to cessation of staff within the Public Sector Superannuation Scheme and Commonwealth Superannuation Scheme, and lower than budgeted Commonwealth grants ($1.180m) associated with Students First funding. The transfer of funds from 2015-16 to 2016-17 primarily relates to delays in commencement of the Schools Administration System upgrade.

Capital Injections

The difference between the total appropriated and appropriation drawn mainly relates to the transfer of funds from 2015-16 to 2016-17 ($11.777m) and savings associated with the Charles Weston P-6 School and the new Canberra College Cares building ($7.690m). The transfer of funds to 2016-17 primarily relates to the delays in the tender and design process for the Modernising Belconnen High School project and minor delays in the rollout of wireless internet for the Supporting our School System - Sustaining ICT project.

EDUCATION DIRECTORATE CONTROLLED NOTE INDEX

General Notes

  • Note 1 Objectives of the Directorate
  • Note 2 Significant Accounting Policies
  • Note 3 Change in Accounting Estimates

Income Notes

  • Note 4 Government Payment for Outputs
  • Note 5 User Charges - ACT and Non-ACT Government
  • Note 6 Interest
  • Note 7 Distribution from Investments with the Territory Banking Account
  • Note 8 Resources Received Free of Charge
  • Note 9 Other Revenue

Gains

  • Note 10 Gains on Investments
  • Note 11 Other Gains

Expense Notes

  • Note 12 Employee Expenses
  • Note 13 Superannuation Expenses
  • Note 14 Supplies and Services
  • Note 15 Depreciation and Amortisation
  • Note 16 Grants and Purchased Services
  • Note 17 Borrowing Costs
  • Note 18 School and Other Expenses
  • Note 19 Act of Grace Payments, Waivers and Write-Offs
  • Note 20 Auditor's Remuneration

Asset Notes

  • Note 21 Cash and Cash Equivalents
  • Note 22 Receivables
  • Note 23 Investments
  • Note 24 Property, Plant and Equipment
  • Note 25 Intangible Assets
  • Note 26 Capital Works in Progress
  • Note 27 Other Assets

Liability Notes

  • Note 28 Payables
  • Note 29 Employee Benefits
  • Note 30 Other Liabilities

Equity Notes

  • Note 31 Equity
  • Note 32 Restructure of Administrative Arrangements
  • Note 33 Disaggregated Disclosure of Assets and Liabilities

Other Notes

  • Note 34 Financial Instruments
  • Note 35 Commitments
  • Note 36 Contingent Liabilities and Contingent Assets
  • Note 37 Interest in a Joint Operation
  • Note 38 Cash Flow Reconciliation
  • Note 39 Budgetary Reporting

Education Directorate
Notes to and Forming Part of the Financial Statements
For the Year Ended 30 June 2016

NOTE 1. OBJECTIVES OF THE DIRECTORATE

Operations and Principal Activities

The Education Directorate (the Directorate) works in partnership with students, parents and the community to ensure that every child, young person and adult in the ACT will benefit from a high quality, accessible education, childcare and training system. The Directorate works closely with government agencies, education and training providers, business and industry to position the ACT as the Education Capital: Leading the Nation.

Services of the Directorate include the provision of public school education, regulation of education and care services, registration of non-government schools and home education, and the planning and coordination of vocational education and training.

The Directorate aims to lift student achievement through connected and inclusive learning across all sectors of the education system combined with a focus on quality learning; inspirational teaching and leadership; high expectations, high performance; connecting with families and the community; and business innovation and improvement.

Vocational Education and Training functions transferred to the Chief Minister, Treasury and Economic Development Directorate on 22 January 2016 following changes to Administrative Arrangements. From this date the Directorate’s name changed from the Education and Training Directorate to the Education Directorate.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

  1. Basis of Preparation
    The Financial Management Act 1996 (FMA) requires the preparation of annual financial statements for the Directorate.  
    The FMA and the Financial Management Guidelines issued under the Act, requires the Directorate’s financial statements to include:
    1. an Operating Statement for the year;
    2. a Balance Sheet at the end of the year;
    3. a Statement of Changes in Equity for the year;
    4. a Cash Flow Statement for the year;
    5. a Statement of Appropriation for the year;
    6. an Operating Statement for each class of output for the year;
    7. the significant accounting policies adopted for the year; and
    8. such other statements as are necessary to fairly reflect the financial operations of the Directorate during the year and its financial position at the end of the year.
    These general purpose financial statements have been prepared in accordance with ‘Generally Accepted Accounting Principles’ (GAAP) as required by the FMA. The financial statements have been prepared in accordance with:
    1. Australian Accounting Standards; and
    2. ACT Accounting and Disclosure Policies.
    The financial statements have been prepared using the accrual basis of accounting, which recognises the effects of transactions and events when they occur. The financial statements have also been prepared according to the historical cost convention, except for assets such as those included in property, plant and equipment and financial instruments which were valued at fair value in accordance with the revaluation policies applicable to the Directorate during the reporting period.
    At 30 June 2016, the Directorate’s current assets are insufficient to meet its current liabilities. However, this is not considered a liquidity risk as its cash needs are funded through appropriation from the ACT Government on a cash-needs basis. This is consistent with the whole-of-government cash management regime, which requires excess cash balances to be held centrally rather than within individual Directorate bank accounts.
    These financial statements are presented in Australian dollars, which is the Directorate’s functional currency.
    The Directorate is an individual reporting entity.
  2. Controlled and Territorial Items
    The Directorate produces Controlled and Territorial financial statements. The Controlled financial statements include income, expenses, assets and liabilities over which the Directorate has control. The Territorial financial statements include income, expenses, assets and liabilities that the Directorate administers on behalf of the ACT Government, but does not control, for example on passing of grants to non government schools.
    The purpose of the distinction between Controlled and Territorial is to enable an assessment of the Directorate’s performance against the decisions it has made in relation to the resources it controls, while maintaining accountability for all resources under its responsibility.
    The basis of preparation described in Note 2(a) above applies to both Controlled and Territorial financial statements except where specified otherwise.
  3. The Reporting Period
    These financial statements state the financial performance, changes in equity and cash flows of the Directorate for the year ending 30 June 2016 and the financial position of the Directorate at 30 June 2016.
  4. Comparative Figures
    Budget Figures
    To facilitate a comparison with Budget Papers, as required by the Financial Management Act 1996, budget information for 2015-16 has been presented in the financial statements. Budget numbers in the financial statements are the original budget numbers that appear in the Budget Statements.
    Prior Year Comparatives
    Comparative information has been disclosed in respect of the previous period for amounts reported in the financial statements, except where an Australian Accounting Standard does not require comparative information to be disclosed.
    Where the presentation or classification of items in the financial statements is amended, the comparative amounts have been reclassified where practical. Where a reclassification has occurred, the nature, amount and reason for the reclassification is provided.
  5. Rounding
    All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000). Use of the “‑” symbol represents zero amounts or amounts rounded to zero.
  6. Revenue Recognition
    Revenue is recognised at the fair value of the consideration received or receivable in the Operating Statement. Revenue is recognised from Active Leisure Centre under User Charges as the Directorate controls the facilities. In addition, the following specific recognition criteria must be met before revenue is recognised:
    Government Payment for Outputs
    Government Payment for Outputs are recognised as revenues when the Directorate gains control over the funding. Control over appropriated funds is normally obtained upon the receipt of cash.
    Payment for Expenses on Behalf of the Territory
    The Payment for expenses on behalf of the Territory is recognised on an accrual basis. Due to the nature of territorial accounting, the Statement of Assets and Liabilities on Behalf of the Territory includes (as applicable) liabilities to, and receivables from, the Territory Banking Account.
    User charges
    Revenue for user charges is recorded when received except for international private students revenue which is recognised when the fee is earned.
    Interest
    Interest revenue is recognised using the effective interest rate.
    Distribution from investment with the Territory Banking Account
    Distribution revenue is received from investments with the Territory Banking Account. This is recognised on an accrual basis.
    Revenue Received in Advance
    Revenue received in advance is recognised as a liability if there is a present obligation to return the funds received, otherwise all are recorded as revenue.
  7. Resources Received and Provided Free of Charge
    Resources received free of charge are recorded as a revenue and as an expense in the Operating Statement at fair value. The revenue is separately disclosed under resources received free of charge, with the expense being recorded in the line item to which it relates. Assets received free of charge as a result of administrative restructure are recorded as a net increase in assets from administrative restructure.
  8. Repairs and Maintenance
    The Directorate undertakes major cyclical maintenance on its assets. Where the maintenance leads to an upgrade of the asset, and increases the service potential of the existing asset, the cost is capitalised. Maintenance expenses which do not increase the service potential of the asset are expensed.
  9. Borrowing Costs
    Borrowing costs are expensed in the period in which they are incurred.
  10. Waivers of Debt
    Debts that are waived during the year under Section 131 of the Financial Management Act 1996 are expensed during the year in which the right to payment was waived. Further details of waivers are disclosed at Note 19 – Act of Grace Payments, Waivers and Write-offs.
  11. Current and Non-Current Items
    Assets and liabilities are classified as current or non-current in the Balance Sheet and in the relevant notes. Assets are classified as current where they are expected to be realised within 12 months after the reporting date. Liabilities are classified as current when they are due to be settled within 12 months after the reporting date or when the Directorate does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
    Assets or liabilities which do not fall within the current classification are classified as non-current.
  12. Impairment of Assets
    The Directorate assesses, at each reporting date, whether there is any indication that an asset may be impaired. Assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
    Any resulting impairment losses for land, buildings and improvements are recognised against the relevant class of asset in the Asset Revaluation Surplus with corresponding reduction to the carrying amount in the Balance Sheet. Where the impairment loss is greater than the balance in the Asset Revaluation Surplus, the difference is expensed in the Operating Statement.
  13. Cash and Cash Equivalents
    Cash includes cash at bank and cash on hand. Directorate money held in the Territory Banking Account Cash Fund is classified as a Cash Equivalent.
    Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included in cash and cash equivalents in the Cash Flow Statement and are included as borrowings in the Balance Sheet.
  14. Receivables
    Accounts receivable (including trade receivables and other trade receivables) are initially recognised at fair value and are subsequently measured at amortised cost, with any adjustments to the carrying amount being recorded in the Operating Statement.
    The allowance for impairment losses represents the amount of trade receivables and other trade receivables the Directorate estimates will not be repaid. The allowance for impairment losses is based on objective evidence and a review of overdue balances. The Directorate considers the following is objective evidence of impairment:
    • becoming aware of financial difficulties of debtors;
    • default payments; or
    • debts more than 90 days overdue.
    The amount of the allowance is recognised in the Operating Statement.
  15. Investments
    Short-term investments are held with the Territory Banking Account in a unit trust called the Cash Enhanced Portfolio. Long-term investments are held with the Territory Banking Account in a unit trust called the Fixed Interest Portfolio. The price of units in both these unit trusts fluctuates in value. The net gains or losses do not include interest or dividend income.
    The price of units in both these unit trusts fluctuates in value. The net gain or loss on investments consists of the fluctuation in price of the unit trust between the end of the last reporting period and the end of this reporting period as well as any profit on the sale of units in the trust (the profit being the different between the price at the end of the last reporting period and the sale price).
    These short-term and long term investments are measured at fair value with any adjustments to the carrying amount recorded in the Operating Statement. Fair value is based on an underlying pool of investments which have quoted market prices at the reporting date.
  16. Acquisition and Recognition of Property, Plant and Equipment
    Property, plant and equipment is initially recorded at cost.
    Where property, plant and equipment are acquired at no cost, or minimal cost, cost is its fair value as at the date of acquisition. However property, plant and equipment acquired at no cost or minimal cost as part of a Restructuring of Administrative Arrangements is measured at the transferor’s book value.
    Property, plant and equipment with a minimum value of $5,000 (exclusive of GST) are capitalised. Assets below $5,000 are expensed in the reporting period of purchase. Assets that are individually below the threshold, but for which the aggregate value is material, may be capitalised depending on the nature of the assets.
  17. Measurement of Property, Plant and Equipment after Initial Recognition
    Land, buildings and improvements to land are measured at fair value. Plant and equipment including leasehold improvements are measured at cost. Land and buildings are revalued every three years. However, if at any time management considers that the carrying amount of an asset materially differs from its fair value, then the asset will be revalued regardless of when the last valuation took place. The most recent complete revaluation of the Directorate’s land, buildings and land improvements was performed in 2013-14. The next revaluation will be undertaken in 2016-17.
    Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is measured using the market approach or the cost approach valuation techniques as appropriate. In estimating the fair value of an asset or liability, the Directorate takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
    Fair value for land and non-specialised buildings is measured using the market approach valuation technique. This approach uses prices and other relevant information generated by market transactions involving identical or similar assets. Fair value for specialised assets is measured using the cost approach that reflects the current cost to construct a comparable asset less accumulated depreciation.
  18. Intangible Assets
    The Directorate’s intangible assets are comprised of internally generated software and externally acquired software for internal use. Externally acquired software is recognised and capitalised when:
    1. it is probable that the expected future economic benefits attributable to the software will flow to the Directorate;
    2. the cost of the software can be measured reliably; and
    3. the acquisition cost is equal to or exceeds $50,000.
    Internally generated software is recognised when it meets the above general recognition criteria and where it meets the specific recognition criteria relating to intangible assets arising from the development phase of an internal project.
    Capitalised software has a finite useful life. Software is amortised on a straight line basis over its useful life, over a period not exceeding five years. Intangible assets are measured at cost.
  19. Depreciation and Amortisation of Non - Current Assets
    Amortisation is used in relation to intangible assets and depreciation is applied to physical assets such as buildings. Non-current assets with a limited useful life are systematically depreciated or amortised over their useful lives in a manner that reflects the consumption of their service potential.
    Land has an unlimited useful life and is therefore not depreciated
    Depreciation or amortisation for non - current assets is determined as follows:
    Class of Asset Depreciation/Amortisation Useful Life (Years)
    Buildings and Land Improvements Straight Line 50
    Leasehold Improvements Straight Line 5
    Plant and Equipment Straight Line 2-20
    Intangibles Straight Line 2-5
    The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 15 - Depreciation and Amortisation.
  20. Payables
    Payables are initially recognised at fair value based on the transaction cost and subsequent to initial recognition at amortised cost, with any adjustments to the carrying amount being recorded in the Operating Statement. All amounts are normally settled within 30 days after the invoice date.
    Payables include Trade Payables, Accrued Expenses and Other Payables.
  21. Joint Arrangements
    The Directorate is involved in a joint operation with the Catholic Education Office at Gold Creek Primary School and its share of assets, liabilities, income and expenses have been recognised in the Directorate’s financial statements under appropriate headings consistent with AASB 11 ‘Joint Arrangements’. Further details are disclosed in Note 37 – Interest in a Joint Operation.
  22. Leases
    The Directorate has entered into operating leases.
    Operating Leases
    Operating leases do not effectively transfer to the Directorate substantially the entire risks and rewards incidental to ownership of the asset under an operating lease. Operating lease payments are recorded as an expense in the Operating Statement on a straight-line basis over the term of the lease.
    Motor Vehicle Leasing Arrangements 2014 - 15
    Changes were made to the whole-of-government motor vehicle leasing arrangements with SG Fleet as a result of which all such leases were classified as operating leases rather than finance leases from 23 April 2015.
  23. Employee Benefits
    Employee benefits include:
    • Short-term employee benefits such as wages and salaries, annual leave loading, and applicable on costs, if expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services;
    • Other long-term benefits such as long service leave and annual leave; and
    • Termination benefits.
    On-costs include annual leave, long service leave, superannuation and other costs that are incurred when employees take annual and long service leave.
    Wages & Salaries
    Accrued salaries and wages are measured at the amount that remains unpaid to employees at the end of the reporting period.
    Annual and Long Service Leave
    Annual and long service leave including applicable on-costs that are not expected to be wholly settled within twelve months are measured at the present value of estimated future payments to be made in respect of services provided by employees up to the end of the reporting period. Consideration is given to the future wage and salary levels, experience of employee departures and periods of service. At the end of each reporting period end, the present value of annual leave and long service leave payments is estimated using market yields on Commonwealth Government bonds with terms to maturity that match, as closely as possible, the estimated future cash flows.
    Annual leave liabilities have been estimated on the assumption that they will be wholly settled within three years. In 2015-16 the rate used to estimate the present value of future annual leave payments is 101.4% (101.0% in 2014-15).
    The long service leave liability is estimated with reference to the minimum period of qualifying service. For employees with less than the required minimum period of seven years of qualifying service, the probability that employees will reach the required minimum period has been tprovision for long service leave and applicable on-costs. In 2015-16, the rate used to estimate the present value of future payments for long service leave is 114.7% (104.2% in 2014-15).
    The provision for annual leave and long service leave includes estimated on-costs. As these on-costs only become payable if the employee takes annual and long service leave while in-service, the probability that employees will take annual and long service leave while in service has been taken into account in estimating the liability for on-costs.
    Annual leave and long service leave liabilities are classified as current liabilities in the Balance Sheet where there are no unconditional rights to defer the settlement of the liability for at least 12 months. Conditional long service leave liabilities are classified as non-current because the Directorate has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.
  24. Superannuation
    The Directorate receives funding for superannuation payments as part of the Government Payment for Outputs. The Directorate then. makes payments on a fortnightly basis to the Territory Banking Account, to cover the Directorate's superannuation liability for the Commonwealth Superannuation Scheme (CSS) and the Public Sector Superannuation Scheme (PSS). This payment covers the CSS/PSS employer contribution, but does not include the productivity component. The productivity component is paid directly to the Commonwealth Superannuation Corporation (CSC) by the Directorate. The CSS and PSS are defined benefit superannuation plans meaning that the defined benefits received by employees are based on the employee's years of service and average final salary.
    Superannuation payments have also been made directly to superannuation funds for those members of the Public Sector who are part of superannuation accumulation schemes. This includes the Public Sector Superannuation Scheme Accumulation Plan (PSSAP) and schemes of employee choice. The total Territory
    superannuation liability for the CSS and PSS is recognised in the Chief Minister, Treasury and Economic Development Directorate's Superannuation Provision Account and the CSS and the external schemes recognise the superannuation liability for the PSSAP and other schemes respectively. This superannuation liability is not recognised at individual. agency level.
    The ACT Government is liable for the reimbursement of the emerging costs of benefits paid each year to members of the CSS and PSS in respect of service provided after 1 July 1989. These reimbursement payments are made from the Superannuation Provision Account.
  25. Equity Contributed by the ACT Government
    Contributions made by the ACT Government, through its role as owner of the Directorate, are treated as contributions of equity.
    Increases or decreases in net assets as a result of Administrative Restructures are also recognised in equity.
  26. Insurance
    The Directorate insures its major risks through the ACT Insurance Authority. The excess payable, under this arrangement, varies depending on each class of insurance held.
  27. Taxation
    The Directorate's activities are exempt from all forms of taxation except Fringe Benefits Tax (FBT) and Goods and Services Tax (GST). The amount of FBT paid in the year is recorded in the Operating Statement under employee expenses.
    Revenue, expenses and assets are recognised net of GST except to the extent that the amount of GST incurred by the purchaser is not recoverable from the Australian Taxation Office.
    Cash flows relating to GST are included in the Cash Flow Statement on a gross basis. The GST component of cash flows arising from investing and financing activities that are recoverable from, or payable to, the Australian Taxation Office are classified as operating cash flows. The net amount of GST recoverable from, or
    payable to, the Australian Taxation Office is included as part of receivables or payables in the Balance Sheet.
  28. Contingent Liabilities and Assets
    Contingent liabilities include all provisions not meeting both of the recognition criteria of a liability. These criteria are: whether it is probable that the future sacrifice of economic benefits will be required; and whether the amount of the liability can be measured reliably. Contingent assets include any assets that do not meet both of the recognition criteria for an asset. These criteria are: whether it is probable that the future economic benefits embodied in the asset will eventuate: and the asset possesses a cost or other value that can be measured reliably. The contingent liabilities are disclosed in Note 36 - Contingent Liabilities and Contingent Assets. There are no contingent assets.
  29. Budgetary Reporting
    Explanations of Major Variance between the 2015-16 original budget and 30 June 2016 actual results are presented in Notes 39 and 49 - Budgetary Reporting. The definition of 'major variances' and the 'original budget' are also provided in Notes 39 and 49 - Budgetary Reporting.
  30. Significant Accounting Judgements and Estimates
    In the process of applying the accounting policies listed in this note, the Directorate has made the following judgements and estimates that have the most significant impact on the amounts recorded in the financial statements:
    1. Fair Value of Land and Buildings: The Directorate has made a significant estimate regarding the fair value of its land and buildings. Land and buildings have been recorded at the market value of similar properties less accumulated depreciation as determined by an independent valuer. The fair value of assets is subject to management assessment between formal valuations. Note 2(q) - Measurement of Property, Plant and Equipment after Initial Recognition.
    2. Employee Benefits: Significant judgements have been applied in estimating the liability for employee benefits. The estimated liability for annual and long service leave requires a consideration of the future wages and salary levels, experience of employee departures, probability that leave will be taken in service and periods of service. The estimate also includes an assessment of the probability that employees will meet the minimum service period required to qualify for long service leave and that on costs will become payable. Further information on this estimate is provided in Note 2(w) - Employee Benefits.
      The significant judgements and assumptions included in the estimation of annual and long service leave liabilities include an assessment by an actuary. The Australian Government Actuary performed this assessment in May 2014. The assessment by an actuary is performed every five years. However it may be performed more frequently if there is a significant contextual change in the parameters underlying the 2014 report. The next actuarial review is expected to be undertaken by May 2019.
    3. Useful Lives of Property, Plant & Equipment: Property, Plant and Equipment is systematically depreciated over its estimated useful life. The estimated useful life of Property, Plant and Equipment is based on historical experience of similar assets and in some cases has been based on assessment by an independent valuer. The estimated useful life of Property, Plant and Equipment is reassessed each year and adjusted when the condition and other factors affecting the useful life of Property, Plant and Equipment indicate an adjustment is warranted.
    4. Impairment: Property, Plant and Equipment is annually assessed for impairment. If this assessment indicates an asset is impaired, then an assessment of the asset's recoverable amount must be estimated to determine whether an impairment loss must be recognised. The Directorate has undertaken an assessment in relation to the school buildings and other property plant and equipment. The Directorate's impairment policy states that schools buildings used at less than 65% capacity are impaired. An adjustment is reflected in the financial statements if the overall impairment is material. There has been no adjustment for impairment in 2015-16 (2014-15 a reduction of $0.487 million).
    5. Budgetary Reporting: Judgements have been applied in determining what variances are considered as 'major variances' requiring explanations in Notes 39 and 49 - Budgetary Reporting. Variances are considered to be major if both of the following criteria are met:
      • The line item is a significant line item: the line item actual accounts for more than 10% of the relevant associated category of the financial statements; and
      • The variances (original budget to actual) are greater than plus(+) or minus H 10% of the budget for the financial statement line item.
  31. After Balance Date Events
    There are no known events occurring after 30 June 2016 that will materially affect the financial statements
  32. Accounting Standards Adopted Early for the 2015-16 Reporting Period
    AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 and AASB 2015-7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-For -Profit Public Sector Entities have been early adopted for the 2015-16 reporting period, even though the standards are not required to be applied until annual reporting periods beginning on or after 1 July 2016.
    AASB 2015-2 amends AASB 101 Presentation of Financial Statements including clarifying that agencies should not be disclosing immaterial information and that the presentation of information in notes can and should be tailored to provide users with the clearest view of an agency’s financial performance and financial position.
    AASB 2015-7 amends AASB 13 Fair Value Measurement to provide disclosure relief to not-for profit public sector agencies from certain disclosures about the fair value measurements of property, plant and equipment held for their current service potential rather than to generate net cash inflows. This includes relief from disclosures of quantitative information about the significant unobservable inputs used in fair value measurements and of the sensitivity of certain fair value measurements to changes in unobservable inputs.
  33. Impact of Accounting Standards Issued but yet to be applied
    All other new standards, amendments to standards and interpretations that were issued prior to the sign off date and are applicable to future reporting periods are not expected to have a material financial impact on the Directorate.

NOTE 3. CHANGE IN ACCOUNTING ESTIMATES

  1. Change in Accounting Estimates
    As disclosed in Note 2(w) – Employee Benefits, annual leave and long service leave, including applicable on‑costs that do not fall due in the next 12 months are measured at the present value of estimated payments to be made in respect of services provided by employees up to the reporting date. The rate used to estimate the present value of employee benefit liabilities is based on an assessment made by the Australian Government Actuary.

    Last financial year the rate used to estimate the present value of future long service leave and annual leave payments was 104.2% for long service leave and 101.0% for annual leave. The rate for 2015-16 is 114.7% for long service leave and 101.4% for annual leave. As such the estimate of the long service leave and annual leave liabilities has changed. This change has resulted in an increase in the estimate of the long service leave liability and expense in the current reporting period of approximately $10.164 million and an increase to the estimate of the annual leave liability and expense in the current reporting period of approximately $0.138 million.

NOTE 4. GOVERNMENT PAYMENT FOR OUTPUTS

  2016
$’000
2015
$’000
Government Payment for Outputs   
Government Payment for Outputs1 626,616 591,010
Total 626,616 591,010

1. The increase primarily relates to additional funding for pay increases associated with the teaching staff enterprise agreement and administrative and other staff enterprise agreements and enrolment increases in public schools.

NOTE 5. USER CHARGES - ACT AND NON-ACT GOVERNMENT

  2016 
$’000
2015
$’000
User Charges - ACT Government   
User Charges - ACT Government 666 461
Total 666461
User Charges - Non-ACT Government   
International Private Students Program1 9,002 8,146
Active Leisure Centre, Hire of Facilities and Recreational Activities 3,567 3,656
Commonwealth Agreements2 3,694 4,678
Commonwealth Own Purpose Payments (COPE) / Specific Projects 1,167 940
Other 96 180
Total 17,52617,600

1 The increase mainly relates to a higher number of international student enrolments combined with fee increases for international students.

2 In 2014-15 payments from the French Government for the French Australia School program at Telopea Park School were paid to the Directorate and recorded as User Charges – Non-ACT Government. In 2015-16, a new operational agreement was entered into with French Government payments now made directly to the Telopea Park School. This change has resulted in a decrease in this line item. These payments are now recorded as Schools Revenue at Note 9 – Other Revenue.

NOTE 6. INTEREST

  2016
$’000
2015
$’000
Interest   
Interest earned from Schools Bank Accounts and Other Cash Held1 1,237 1,409
Total 1,237 1,409

1 The decrease relates to lower interest rates in 2015-16 compared to 2014-15.

NOTE 7. DISTRIBUTION FROM INVESTMENTS WITH THE TERRITORY BANKING ACCOUNT

  2016
$’000
2015
$’000
Revenue from ACT Government Entities   
Distribution from Investments with the Territory Banking Account 71 82
Total 71 82

NOTE 8. RESOURCES RECEIVED FREE OF CHARGE

This relates to legal advice and other legal services provided by the ACT Government Solicitor’s Office.

  2016
$’000
2015
$’000
Revenue from ACT Government Entities   
Resources Received Free of Charge 621 621
Total 621621

NOTE 9. OTHER REVENUE

Mainly comprises schools revenue from voluntary contributions, fund raising revenue and excursion funds.

  2016
$’000
2015
$’000
Other Revenue   
School Revenue1 20,939 19,861
ACT Teacher Quality Institute 803 793
Other 461 704
Total 22,203 21,358

1In 2014-15 payments from the French Government for the French Australia School program at Telopea Park School were paid to the Directorate and recorded as User Charges – Non-ACT Government. In 2015-16, a new operational agreement was entered into with French Government payments now made directly to the Telopea Park School. This change has resulted in an increase in this line item. These payments were previously recorded as User Charges at Note 5 – User Charges ACT and Non-ACT Government.

NOTE 10. GAINS ON INVESTMENTS

  2016
$’000
2015
$’000
Gains on Investments   
Unrealised Gains on Investments with the Territory Banking Account 37 29
Total 3729

NOTE 11. OTHER GAINS

Other gains are transactions that are not part of the Directorate’s core activities. Other gains are distinct from other revenue, as other revenue arises from the core activities of the Directorate.

  2016
$’000
2015
$’000
Gain from De-recognition of Finance Lease Liabilities1 - 107
Total -107

1.There were no other gains in 2015-16.

NOTE 12. EMPLOYEE EXPENSES

  2016
$’000
2015
$’000
Wages and Salaries1 436,871 410,080
Movement in Employee Benefits2 17,524 4,796
Workers' Compensation Insurance Premium 12,220 11,431
Total466,615426,307

1 The increase is mainly due to wage increases provided through the teaching staff enterprise agreement and administrative and other staff enterprise agreements.

2 The increase is primarily related to an increase in the rate used to estimate the present value of long service leave liabilities (refer Note 2(w) - Employee Benefits and 3(a) - Change in Accounting Estimate).

NOTE 13. SUPERANNUATION EXPENSES

  2016
$’000
2016
$’000
Superannuation Contributions to the Territory Banking Account 33,964 34,641
Productivity Benefit 4,782 4,973
Superannuation Payment to ComSuper (for the PSSAP) 1,267 1,190
Superannuation to External Providers 25,264 21,857
Total65,27762,661

NOTE 14. SUPPLIES AND SERVICES

  2016
$’000
2015
$’000
Property and Maintenance1 13,923 20,737
Materials and Services 28,539 27,619
Travel and Transport 6,649 6,711
Administrative 3,336 3,146
Financial 4,407 4,501
Operating Lease Costs 1,199 1,505
Audit Fees 173 137
Write-Off of Assets 8 67
Total58,23464,423

1 The decrease in 2015-16 primarily relates to the early delivery of projects in May and June 2015, reducing the 2015-16 repairs and maintenance program.

NOTE 15. DEPRECIATION AND AMORTISATION

  2016
$’000
2016
$’000
Depreciation   
Buildings and Land Improvements 49,758 49,450
Plant and Equipment 10,217 10,756
Leasehold Improvements 192 194
Community and Heritage Assets - 8
Total Depreciation 60,16760,408
Amortisation   
Intangible Assets 338 148
Total Amortisation 338 148
Total Depreciation and Amortisation 60,50560,556

NOTE 16. GRANTS AND PURCHASED SERVICES

  2016
$’000
2016
$’000
Grant Payments - educational, apprenticeships, and VET skills reform1 13,201 21,093
Total13,20121,093

1 The decrease mainly relates to the transfer of Vocational Education and Training functions to Chief Minister, Treasury and Economic Development Directorate on 22 January 2016.

NOTE 17. BORROWING COSTS

  2016
$’000
2016
$’000
Finance Charges on Finance Leases - 6
Total -6

NOTE 18. SCHOOL AND OTHER EXPENSES

Mainly comprise utilities, cleaning, security and maintenance costs in schools as well as educational enrichment activities.

  2016
$’000
2015
$’000
School Expenses 63,996 61,919
Other Expenses 1,353 1,569
Loss on Derecognition of Motor Vehicle Lease - 211
Total65,34963,699

NOTE 19. ACT OF GRACE PAYMENTS, WAIVERS AND WRITE-OFFS

2016
$’000
2016
$’000
Write-Off of Assets 8 67
Total867

1.The expense associated with the write-off of assets is reported under Note 14 – Supplies and Services.

NOTE 20. AUDITOR’S REMUNERATION

Auditor’s remuneration consists of financial audit services provided to the Directorate by the ACT Audit Office. No other services were provided by the ACT Audit Office.

  2016
$’000
2016
$’000
Audit Services   
Audit Fees Paid or Payable to the ACT Audit Office 156 126
Total 156126

NOTE 21. CASH AND CASH EQUIVALENTS

The Directorate holds a number of bank accounts with the Westpac Bank as part of the whole-of-government banking arrangements.

2016
$’000
2016
$’000
Central Office Bank Accounts 36,789 40,764
School Management Accounts1 43,544 39,787
ACT Teacher Quality Institute Bank Account 457 733
Other Operations Bank Accounts 37 283
Cash on Hand 10 10
Total80,83781,577

1.The increase mainly relates to the impact of the new Teachers’ Enterprise Agreement which requires the provision of funding to schools to address change in administrative workload. This funding was paid late in the 2015-16 financial year and a significant portion remained unspent at year-end. Further, additional cash was held at year-end due to the impact of the new operational agreement for the French Australia Program at Telopea Park School. Refer Note 5 – User Charges and Note 9 – Other Revenue.

NOTE 22. RECEIVABLES

2016
$’000
2015
$’000

Current Receivables

Trade Receivables

705

998

Less: Allowance for Impairment Losses

(187)

(143)

518

855

Other Trade Receivables1

265

815

Less: Allowance for Impairment Losses

-

-

265

815

Accrued Revenue

657

35

Net Goods and Services Tax Receivable

1,827

3,394

2,484

3,429

Total Current Receivables

3,267

5,099

1.Related to school receivables.

Ageing of Receivables

  Not Overdue Overdue Total
   Less than 30 Days 30 to 60 Days Greater than 60 Days  
  $'000 $'000 $'000 $'000 $'000
2016      
Not Impaired      
Receivables 2,762 90 49 366 3,267
Impaired      
Receivables - - - 187 187
2015      
Not Impaired      
Receivables 3,838 695 30 536 5,099
Impaired      
Receivables - - - 143 143
2016
$'000
2015
$'000
Reconciliation of the Allowance for Impairment Losses   
Allowance for Impairment Losses at the Beginning of the Reporting Period 143 147
Additional/ (Less) Allowance Recognised During the Reporting Period 44 (4)
Allowance for Impairment Losses at the End of the Reporting Period 187 143
Classification of ACT Government/Non-ACT Government Receivables   
Receivables from ACT Government Entities   
Trade Receivables 116 52
Other Trade Receivables 23 220
Accrued Revenue 16 21
Total Receivables from ACT Government Entities 155 293
Receivables from Non-ACT Government Entities   
Trade Receivables 589 946
Other Trade Receivables 242 595
Accrued Revenue 641 14
Net Goods and Services Tax Receivable 1,827 3,394
Less: Allowance for Impairment Losses (187) (143)
Total Receivables from Non-ACT Government Entities 3,112 4,806
Total Receivables 3,267 5,099

NOTE 23. INVESTMENTS

Short-term investments were held with the Territory Banking Account in the Cash Enhanced Portfolio throughout the year. These funds are able to be withdrawn upon request.

The purpose of the investment in the Fixed Interest Portfolio is to hold it for a period of longer than 12 months. The total carrying amount of the Fixed Interest Portfolio investment below has been measured at fair value.

2016
$'000
2015
$'000
Current Investments   
Investments with the Territory Banking Account - Cash Enhanced Portfolio 260 260
Total Current Investments 260 260
Non-Current Investments   
Investments with the Territory Banking Account - Fixed Interest Portfolio 1,912 1,875
Total Non-Current Investments 1,912 1,875
Total Investments 2,172 2,135

NOTE 24.   PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment includes the following classes of assets – land, buildings, improvement to land, leasehold improvements and plant and equipment.

2016  
$'000
2015
$'000
Land   
Land at Fair Value 316,745 316,745
Total Land Assets 316,745316,745
  
Buildings and Improvements to Land at Fair Value 1,556,490 1,492,913
Less: Accumulated Depreciation (103,100) (53,342)
Total Written-Down Value of Buildings and Improvements to Land 1,453,3901,439,571
  
Total Land and Written Down Value of Buildings and Improvements to Land 1,770,1351,756,316
  
Leasehold Improvements   
Leasehold Improvements at Cost 5,643 5,643
Less: Accumulated Depreciation (4,700) (4,508)
  
Total Written-Down Value of Leasehold Improvements 9431,135
Plant and Equipment   
Plant and Equipment at Cost 115,046 105,650
Less: Accumulated Depreciation (81,917) (72,754)
Total Written-Down Value of Property, Plant and Equipment 33,129 32,896
  
Total 1,804,207 1,790,347
Reconciliation of Property, Plant and Equipment

The following table shows the movement of Property, Plant and Equipment during 2015-16.

Land
$'000
Buildings and Improvements to Land
$'000
Leasehold Improvements
$'000
Plant and Equipment
$'000
Total
$'000
Carrying Amount at the Beginning of the Reporting Period316,7451,439,5711,13532,8961,790,347
Additions - 63,598 - 10,034 73,632
Depreciation - (49,758) (192) (10,217) (60,167)
Assets Transferred Out - - - (5) (5)
Write-offs/Impairment/Other - (21) - 421 400
     
Carrying Amount at the End of the Reporting Period316,7451,453,39094333,1291,804,207
Reconciliation of Property, Plant and Equipment

The following table shows the movement of Property, Plant and Equipment during 2014-15.

Land
$'000
Buildings and Improvements to Land
$'000
Leasehold Improvements
$'000
Plant and Equipment
$'000
Community and Heritage Assets
$'000
Total
$'000
Carrying Amount at
the Beginning of
the Reporting
Period
330,8141,473,7601,32927,1519601,834,014
Additions - 41,682 - 16,730 - 58,412
Assets Transferred Out (15,429) (24,739) - - (948) (41,116)
Revaluation Increment/(Decrement) 1,360 (2,453) - - - (1,093)
Depreciation - (49,446) (194) (10,756) (12) (60,408)
Derecognition of Leased Vehicles - - - (171) - (171)
Write Offs/Impairment/Other - 767 - (58) - 709
Carrying Amount at the End of the Reporting Period316,7451,439,5711,13532,896-1,790,347
Fair Value Hierarchy

The Directorate is required to classify property, plant and equipment into a Fair Value Hierarchy that reflects the significance of the inputs used in determining their fair value. The Fair Value Hierarchy is made up of the following three levels:

  • Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the Directorate can access at the 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; and
  • Level 3 - inputs that are unobservable for particular assets or liabilities.

Details of the Directorate’s property, plant and equipment at fair value and information about the Fair Value Hierarchy at 30 June 2016 are as follows:

  Classification According to Fair Value Hierarchy
  Level 1
$'000
Level 2
$'000
Level 3  
$'000
Total  
$'000
2016     
Property, Plant and Equipment at Fair Value     
Land - - 316,745 316,745
Buildings and Improvements to Land - - 1,453,390 1,453,390
  - - 1,770,135 1,770,135
  Classification According to Fair Value Hierarchy
  Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
2015     
Property, Plant and Equipment at Fair Value     
Land - - 316,745 316,745
Buildings and Improvements to Land - - 1,439,571 1,439,571
  - - 1,756,316 1,756,316
Transfers Between Categories

There have been no transfers between Levels 1, 2 and 3 during the current or previous reporting period.

Valuation Techniques, inputs and processes
Level 2 Valuation Techniques and Inputs

Valuation Technique: The valuation technique used to value land and buildings is the market approach that reflects recent transaction prices for similar properties and buildings (comparable in location and size).

Inputs: Prices and other relevant information generated by market transactions involving comparable land and buildings were considered. Regard was taken of the Crown Lease terms and tenure, The Australian Capital Territory Plan and the National Capital Plan, where applicable, as well as current zoning.

Level 3 Valuation Techniques and Inputs

Valuation Technique: Land where there is no active market or significant restrictions is valued through the market approach which values a selection of land with similar approximate utility.

Valuation Technique: Buildings, and improvements to land were considered specialised assets by the valuers and measured using the cost approach that reflects the cost to a market participant to construct assets of comparable utility adjusted for obsolescence. For buildings, historical cost per square metre of floor area was also used in measuring fair value.Inputs: In determining the value of land with similar approximate utility significant adjustment to market based data was required.
Inputs: In determining the value of buildings and improvements to land, regard was given to the age and condition of the assets, their estimated replacement cost and current use. This required the use of data internal to the Education Directorate.

There has been no change to the above valuation techniques during the year.
Transfers in and out of a fair value level are recognised on the date of the event or change in circumstances that caused the transfer.

Fair Value measurements using significant unobservable inputs (Level 3)

Description and Fair Value at
30 June 2016
$'000
Valuation Technique(s)Significant Unobservable Inputs
Land
$316,745
Market  Approach -Direct comparison Selection of land with similar approximate utility
Buildings and Improvements to Land  $1,453,390 Depreciated
Replacement
Cost
Consumed economic benefit/ obsolescence of asset
Description and Fair Value at
30 June 2015
$'000
Valuation Technique(s)Significant Unobservable Inputs
Land
$316,745
Market  Approach -Direct comparison Selection of land with similar approximate utility.
Buildings and Improvements to Land
$1,439,571
Depreciated
Replacement
Cost
Consumed economic benefit/ obsolescence of asset

NOTE 25. INTANGIBLE ASSETS

The Directorate has internally generated software and externally purchased software.

2016
$'000
2015
$'000
Computer Software
Internally Generated/Externally Purchased Software  
Computer Software at Cost1 1,592 3,043
Less: Accumulated Amortisation (615) (425)
Total Computer Software9772,618

1The movement primarily relates to the transfer of computer software associated with Vocational Education and Training functions to Chief Minister, Treasury and Economic Development Directorate on 22 January 2016.

NOTE 26. CAPITAL WORKS IN PROGRESS

Capital works in progress are assets being constructed over periods of time in
excess of the present reporting period.


Capital Works in Progress
2,449 24,524
Total2,44924,524

Reconciliation of Capital Works in Progress

The following table shows the movement of Capital Works in Progress during the reporting periods.

Balance at the Beginning of the Reporting Period 24,524 16,238
Additions 2,189 21,775
Capital Works in Progress Completed and Transferred to
Property, Plant and Equipment1
(24,264) (10,980)
Capital Works in Progress Completed and Transferred to
Chief Minister, Treasury and Economic Development Directorate
- (2,509)
Carrying Amount at the End of the Reporting Period2,44924,524

1Primarily relates to capitalisation of expenditure associated with the construction of the Charles Weston School.

NOTE 27.OTHER ASSETS

Other Current Assets
Prepayments1 1,457 897
Total 1,457897

1Increase primarily relates to higher prepayments in schools.

NOTE 28. PAYABLES

2016
$'000
2015
$'000
Current Payables
Payables - ACT Government Entities 64 33
Payables - Non-ACT Government Entities 301 277
Accrued Expenses 4,175 5,995
Total Current Payables4,5406,305
Payables are aged as followed
Not Overdue 4,514 6,250
Overdue for Less than 30 Days 14 28
Overdue for 30 to 60 Days 6 -
Overdue for More than 60 Days 6 27
Total4,5406,305
Classification of ACT Government/Non-ACT Government Payables  
Payables with ACT Government Entities   
Payables 64 33
Accrued Expenses 2,952 3,693
Total Payables with ACT Government Entities3,0163,726
Payables with Non-ACT Government Entities  
Payables 301 277
Accrued Expenses 1,223 2,302
Total Payables with Non-ACT Government Entities1,5242,579
Total4,5406,305

Education Directorate Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016

NOTE 29. EMPLOYEE BENEFITS

  2016
$'000
2015
$'000
Current Employee Benefits   
Annual Leave 35,128 33,375
Long Service Leave1 98,970 83,236
Accrued Salaries2 1,968 21,159
Total Current Employee Benefits 136,066 137,770
Non-Current Employee Benefits   
Long Service Leave 12,053 12,016
Total Non-Current Employee Benefits 12,053 12,016
Total 148,119 149,786
Estimate of when Leave is Payable   
Estimated Amount Payable within 12 months   
Annual Leave 29,733 26,848
Long Service Leave 6,825 6,821
Accrued Salaries 1,968 21,159
Total Employee Benefits Payable within 12 months 38,526 54,828
Estimated Amount Payable after 12 months   
Annual Leave 5,395 6,527
Long Service Leave 104,198 88,431
Total Employee Benefits Payable after 12 months 109,593 94,958
Total 148,119 149,786

1The increase primarily relates to an increase in the rate used to estimate the present value of future long service leave payments.

2The decrease primarily relates to less salary accrual days in 2015-16.

NOTE 30. OTHER LIABILITIES

  2016
$'000
2015
$'000
Current Other Liabilities   
International Students Revenue Received in Advance1 5,042 4,296
Schools Revenue Received in Advance2 2,240 551
Total 7,282 4,847
Non-Current Other Liabilities   
Other Loans3 4,386 2,589
Total 4,386 2,589
Total Other 11,668 7,436

1The increase relates to higher international student numbers combined with increased fees.
2The increase primarily relates to the advance payment from the Embassy of France for the French Australia School at Telopea Park School.
3Relates to loans from the Environment and Planning Directorate for environmentally sustainable projects in schools.

NOTE 31. EQUITY

Asset Revaluation Surplus

The Asset Revaluation Surplus is used to record the increments and decrements in the value of Property, Plant and Equipment.

Balance at the Beginning of the Reporting Period865,335866,635
Increment in Land due to Revaluation  - 1,000
Decrement in Buildings and Improvements due to Revaluation - (2,300)
Total (Decrease) in the Asset Revaluation Surplus - (1,300)
Balance at the End of the Reporting Period865,335 865,335

1There were no revaluations of assets in 2015-16.

Education Directorate
Notes to and Forming Part of the Financial Statements
For the Year Ended 30 June 2016

NOTE 32. RESTRUCTURE OF ADMINISTRATIVE ARRANGEMENTS

On 22 January 2016, a restructuring of administrative arrangements occurred between the Education Directorate and Chief Minister, Treasury and Economic Development Directorate involving the transfer of the Education Directorate’s responsibility for Vocational Education and Training functions. The income and expenses and assets and liabilities transferred as part of the restructuring of administrative arrangements at the date of transfer were as follows:

Amounts Relating to Function when held by the Education Directorate
1 July 2015 to 22 January 2016
$'000
Amounts Transferred to the Chief Minister, Treasury and Economic Development Directorate
22 January 2016 to 30 June 2016
$'000
Revenue
Government Payment for Outputs 11,303 26,064
Resources Received Free of Charge - 3
Other Revenue 23 -
Total Revenue11,32626,067
Expenses
Employee Expenses 2,790 1,948
Superannuation Expenses 324 228
Supplies and Services 1,061 1,057
Depreciation and Amortisation 149 107
Grants and Purchased Services 6,969 22,834
Total Expenses11,29326,174
Transferred Amounts 2015-16
$'000
Assets
Intangible Assets 1,628
Plant and Equipment 5
Total Assets Transferred Out1,633
Liabilities 
Employee Provisions - Current 794
Employee Provisions – Non Current 97
Total Liabilities Transferred Out891
Total Net Assets Transferred Out742

On 31 January 2015, a restructuring of administrative arrangements occurred between Education Directorate and Chief Minister, Treasury and Economic Development Directorate involving the transfer of Education Directorate’s responsibility for the management of child care centres. The income and expenses and assets and liabilities transferred as part of the restructuring of administrative arrangements at the date of transfer were as follows:

  Amounts Relating to Function when held by the Education Directorate
1 July 2014 to 31 January 2015
$'000
Amounts Transferred to the Chief Minister, Treasury and Economic Development Directorate
31 January 2015 to 30 June 2015
$'000
Revenue   
Government Payment for Outputs 287 285
Total Revenue 287 285
Expenses   
Employee Expenses 99 71
Superannuation Expenses 11 8
Supplies and Services 177 206
Depreciation and Amortisation 477 360
Total Expenses 764 645
  Transferred Amounts 2014-15
$'000
Assets  
Land 15,429
Buildings and Improvements to Land 24,739
Community and Heritage Assets 948
Capital Works in Progress 4,982
Total Assets Transferred Out 46,098
Total Net Assets Transferred Out 46,098

NOTE 33. DISAGGREGATED DISCLOSURE OF ASSETS AND LIABILITIES

At 30 June 2016 Output Class 1
$'000
Output Class 2
$'000
Output Class 3
$'000
Unallocated
$'000
Total
$'000
Current Assets      
Cash and Cash Equivalents 43,585 457 - 36,7951 80,837
Investments 260 - - - 260
Receivables 3,230 37 - - 3,267
Other Assets 1,448 9 - - 1,457
Total Current Assets 48,523 503 - 36,795 85,821
Non-Current Assets      
Investments 1,350 - - 562 1,912
Property, Plant and Equipment 1,804,207 - - - 1,804,207
Intangible Assets 977 - - - 977
Capital Works in Progress 2,449 - - - 2,449
Total Non-Current Assets 1,808,983 - - 562 1,809,545
Total Assets 1,857,506 503 - 37,357 1,895,366
Current Liabilities      
Payables 4,536 4 - - 4,540
Employee Benefits 135,573 493 - - 136,066
Other Liabilities 7,282 - - - 7,282
Total Current Liabilities 147,391 497 - - 147,888
Non - Current Liabilities      
Employee Benefits 12,009 44 - - 12,053
Other Liabilities 4,386 - - - 4,386
Total Non-Current Liabilities 16,395 44 - - 16,439
Total Liabilities 163,786 541 - - 164,327
Net Assets / (Liabilities) 1,693,720 (38) - 37,357 1,731,039
At 30 June 2015 Output Class 1
$'000
Output Class 2
$'000
Output Class 3
$'000
Unallocated
$'000
Total
$'000
Current Assets      
Cash and Cash Equivalents 39,885 733 - 40,9591 81,577
Investments 260 - - - 260
Receivables 5,051 2 46 - 5,099
Other Assets 892 - 5 - 897
Total Current Assets 46,088 735 51 40,959 87,833
Non-Current Assets      
Investments 1,324 - - 551 1,875
Property, Plant and Equipment 1,790,347 - - - 1,790,347
Intangible Assets 842 - 1,776 - 2,618
Capital Works in Progress 24,524 - - - 24,524
Total Non-Current Assets 1,817,037 - 1,776 551 1,819,364
Total Assets 1,863,125 735 1,827 41,510 1,907,197
Current Liabilities      
Payables 6,261 4 40 - 6,305
Employee Benefits 135,403 536 1,831 - 137,770
Other Liabilities 4,847 - - - 4,847
Total Current Liabilities 146,511 540 1,871 - 148,922
Non-Current Liabilities      
Employee Benefits 11,810 46 160 - 12,016
Other Liabilities 2,589 - - - 2,589
Total Non-Current Liabilities 14,399 46 160 - 14,605
Total Liabilities 160,910 586 2,031 - 163,527
Net Assets / (Liabilities) 1,702,215 149 (204) 41,510 1,743,670

1. Cash and cash equivalents have been included in the 'Unallocated' column above as this class cannot be reliably attributed to the
Directorate's output classes. As the amount in cash and cash equivalents held by the Directorate is comprised of a number of
disparate components, no single allocation driver can be used to reliably attribute this asset class. The components include working capital, cash for un-presented cheques and for specific purpose payments.

NOTE 34. FINANCIAL INSTRUMENTS

Terms, Conditions and Accounting Policies

Details of the significant policies and methods adopted, including the criteria for recognition, the basis of measurement, with respect to each class of financial asset and financial liability are disclosed in Note 2. Significant Accounting Policies.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Directorate’s financial assets consist of cash and cash equivalents, investments and receivables. Its financial liabilities are comprised of payables. The Directorate’s exposure to interest rate risk relating to these financial assets and liabilities is shown below in the table later in this note on ‘Maturity Analysis and Exposure to Interest Rates’.

As receivables and payables are held in non-interest bearing arrangements, the Directorate is not exposed to movements in interest rates in respect of these financial assets and liabilities.

A significant proportion of the Directorate’s financial assets consist of cash and cash equivalents. As these are held in floating interest arrangements with the Territory’s banking provider, the Directorate is exposed to movements in the amount of interest it may earn on cash and cash equivalents.

There have been no changes in risk exposure or processes for managing risk since the last financial reporting period.

As the Directorate’s operating cash flows are not significantly dependent on interest earned from cash and cash equivalents, a sensitivity analysis of interest rate risk has not been performed.

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.

Financial assets consist of cash, investments and receivables. The Directorate’s maximum exposure to credit is limited to the amount of these financial assets net of any allowance made for impairment. This is shown below in the table ‘Maturity Analysis and Exposure to Interest Rates’.

Cash and investment accounts are held with high credit quality financial institutions under whole of government banking arrangements. Cash at bank is held with the Westpac Bank and cash not immediately required is invested with the Territory Banking Account. Chief Minister, Treasury and Economic Development Directorate coordinates the investment of this money with various fund managers. These fund managers have the discretion to invest money in a variety of different investments within certain parameters.

The majority of receivables consist of Goods and Services Tax (GST) refund due from the Australian Taxation Office (ATO) and ACT Government Agencies which have a strong credit history. Credit risk for investments is managed by the Directorate through only investing with the Territory Banking Account, which has appropriate investment criteria for the external fund manager engaged to manage the Territory’s surplus funds and therefore the credit risk is considered low.

There have been no changes to credit risk exposure since the last reporting period.

Liquidity Risk

Liquidity risk is the risk that the Directorate will not be able to meet its financial obligations as they fall due.

The Directorate’s exposure to liquidity risk is shown in the table later in this note on ‘Maturity Analysis and Exposure to Interest Rates’. This note discloses when the Directorate expects its financial assets and financial liabilities to mature.

Appropriations received to fund operations are drawn down progressively throughout the year to meet the operating requirements. Under the cash management framework, the Directorate cannot hold excess cash, however, in the event of cash pressure, access to additional appropriation from the Territory Bank Account can be obtained.

The Directorate’s exposure to liquidity risk has not changed since the last reporting period.

Price Risk

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market price (other than arising from interest rate risk or currency risk).

The only price risk which the Directorate is exposed to results from its investments in the Fixed Interest and Cash Enhanced Portfolio. The Directorate has units in the Fixed Interest Portfolio that fluctuate in value. The price fluctuations in the units of the Fixed Interest Portfolio are caused by movements in the underlying investments of the portfolio. To limit price risk, all bonds that make up the underlying investments of the Fixed Interest Portfolio must have a long term credit rating of BBB – or greater.

Cash and cash equivalents do not have a price risk.

The Directorate’s exposure to price risk and the management of this risk has not significantly changed since last reporting period. A sensitivity analysis has not been undertaken for the price risk of the Directorate as it has been determined that the possible impact on profit and loss or total equity from fluctuations in price is immaterial.

Currency Risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes to foreign currency rates.

The Directorate is not exposed to currency risk as all of its transactions are conducted in Australian dollars.

Fair Value of Financial Assets and Liabilities

The carrying amounts and fair values of financial assets and financial liabilities at the end of the reporting period are:

  Carrying Amount 2016
$'000
Fair Value 2016
$'000
Carrying Amount 2015
$'000
Fair Value 2015
$'000
Financial Assets     
Cash and Cash Equivalents 80,837 80,837 81,577 81,577
Investments with the Territory Banking Account 2,172 2,172 2,135 2,135
Receivables1 1,440 1,440 1,705 1,705
Total 84,449 84,449 85,417 85,417
Financial Liabilities     
Payables 4,540 4,540 6,305 6,305
Other Loans 4,386 4,386 2,589 2,589
Total 8,926 8,926 8,894 8,894

1. Receivables reported under Financial Instruments do not include receivables relating to goods and service tax.

Fair Value Hierarchy

The carrying amount of financial assets measured at fair value, as well as the methods used to estimate the fair value are summarised in the table below. All other financial assets and liabilities are measured, subsequent to initial recognition, at amortised cost and as such are not included in the table below.

30 June 2016 Classification According to Fair Value Hierarchy
  Level 1
$'000
Level 2  
$'000
Level 3  
$'000
Total  
$'000
Financial Assets     
Investment with the Territory Banking Account - Cash Enhanced Portfolio - 260 - 260
Investment with the Territory Banking Account - Fixed Interest Portfolio - 1,912 - 1,912
 - 2,172 - 2,172
30 June 2015 Classification According to Fair Value Hierarchy
  Level 1
$'000
Level 2
$'000
Level 3
$'000
Total
$'000
Financial Assets     
Investment with the Territory Banking Account - Cash Enhanced Portfolio - 260 - 260
Investment with the Territory Banking Account - Fixed Interest Portfolio - 1,875 - 1,875
 - 2,135 - 2,135
Transfer between Categories

The carrying amount of financial assets measured at fair value, as well as the methods used to estimate the fair value are summarised in the table below. All other financial assets and liabilities are measured, subsequent to initial recognition, at amortised cost and as such are not included in the table below.

There have been no transfers of financial assets or financial liabilities between Level 1 and Level 2 during the current and previous reporting period.

Maturity Analysis and Exposure to Interest Rate

The following tables set out the Directorate’s maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including the weighted average interest rates by maturity period at 30 June 2016 and 30 June 2015. Except for non-current payables, financial assets and liabilities which have a floating interest rate or are non-interest bearing will mature in 1 year or less. All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

The Directorate does not hold any collateral as security relating to financial assets.

At 30 June 2016 Note No. Weighted Average Interest Rate Floating Interest Rate Fixed Interest Maturing In:   
     1 Year or Less
$'000
Over 1 Year to 5 years  
$'000
Over 5 years  
$'000
Non-Interest Bearing  
$'000
Total  
$'000
Financial Instruments         
Financial Assets         
Cash and Cash Equivalents 21 1.94% 44,038 - - - 36,799 80,837
Investments with the Territory Banking Account 23 - - - - - 2,172 2,172
Receivables 22 - - - - - 1,440 1,440
Total Financial Assets    44,038 - - - 40,411 84,449
Financial Liabilities         
Payables 28 - - - - - (4,540) (4,540)
Other Liabilities 30 - - - - - (4,386) (4,386)
Total Financial Liabilities    - - - - (8,926) (8,926)
Net Financial Assets    44,038 - - - 31,485 75,523
At 30 June 2015 Note No. Weighted Average Interest Rate Floating Interest Rate Fixed Interest Maturing In:   
     1 Year or Less
$'000
Over 1 Year to 5 Years
$'000
Over 5 Years
$'000
Non-Interest Bearing
$'000
Total
$'000
Financial Instruments         
Financial Assets         
Cash and Cash Equivalents 21 2.02% 40,794 - - - 40,783 81,577
Investments with the Territory Banking Account 23   - - - - 2,135 2,135
Receivables 22   - - - - 1,705 1,705
Total Financial Assets   40,794 - - - 44,623 85,417
Financial Liabilities         
Payables 28   - - - - (6,305) (6,305)
Other Liabilities 30   - - - - (2,589) (2,589)
Total Financial Liabilities    - - - - (8,894) (8,894)
Net Financial Assets   40,794 - - - 35,729 76,523
  2016
$'000
2015
$'000
Carrying Amount of Each Category of Financial Asset and Financial Liability   
Financial Assets   
Financial Assets at Fair Valuethrough the Profit and Loss   
Designated upon Initial Recognition 2,172 2,135
Loans and Receivables at AmortisedCost 1,440 1,705
Financial Liabilities   
Financial Liabilities Measured atAmortised Cost 8,926 8,894

The Directorate does not have any financial assets in the ‘Available for Sale’ category or the ‘Held to Maturity’ category and as such these categories are not included above. Also, the Directorate does not have any financial liabilities in the ‘Financial Liabilities at Fair Value through Profit and Loss’ category and, as such, this category is not included above.

Gains/ (Losses) on Each Category of Financial Asset and Financial Liability
Gains/ (Losses) on Financial Assets   
Financial Assets at Fair Value through the Profit and Loss 37 29

NOTE 35. COMMITMENTS

Capital Commitments contracted at reporting date that have not been recognised as liabilities, are payable as follows:

2016
$'000
2015
$'000
Capital Commitments - Property, Plant and Equipment
Payable:  
Within one year 1,952 25,570
Later than one year but not later than five years 124 10,574
Later than five years - 18
Total12,07636,162

1.The decrease is due to the completion of a number of major projects including the Charles Weston Primary School and the new Canberra College Cares building.

Other Commitments1
Other commitments contracted at reporting date that have not been recognised as liabilities are payable as follows:   
Within one year 39,748 46,927
Later than one year but not later than five years 8,392 50,989
Later than five years - 53
Total 48,14097,969

1. The decrease primarily relates to the transfer of Vocational Education and Training functions to Chief Minister, Treasury and Economic Development Directorate on 22 January 2016.

Operating Lease Commitments
Within one year 4,227 1,764
Later than one year but not later than five years 7,141 1,886
Total 1 11,3683,650

1. The increase primarily relates to the rollout of a large number of ICT assets in schools in 2015-16

NOTE 36. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Contingent Liabilities

At 30 June 2016 the Directorate had contingent liabilities in relation to known personal injury cases not settled of $2.52m. At 30 June 2015 the liability was $5.22m.

2016
$'000
2015
$'000
The estimated liability for known personal injury litigation1 2,515 5,218
Total2,5155,218

1. The liability will be offset by insurance and the amount is unknown as at 30 June 2016.

There were no contingent assets at 30 June 2016 or 30 June 2015.

NOTE 37. INTEREST IN A JOINT OPERATION

Gold Creek Primary School operates adjacent to the Holy Spirit Primary School that is operated by the Catholic Education Office. Both schools share joint facilities including a hall/gymnasium, canteen, library, car park and meeting rooms. The shared facilities are managed by a Joint Facilities Management Committee which was created under a formal agreement in December 1995 between the ACT Government and the Catholic Education Office. All assets and liabilities relating to the shared facilities are owned by the ACT Government and Catholic Education Office in accordance with the participating share of each party, which is 53% for the ACT Government and 47% for the Catholic Education Office.

  2016
$'000
2015
$'000
Share of the Jointly Controlled Operation is as follows:   
Revenue 76 104
Expenses (129) (153)
Operating (Deficit) (53) (49)
Share of Asset in the Jointly Controlled Operation   
Current Asset 69 104
Non-Current Assets 3,273 3,312
Total Assets 3,342 3,416
Current Liabilities 6 28
Total Liabilities 6 28
Net Assets 3,336 3,388
Share of the Jointly Controlled Operation 53 87

NOTE 38. CASH FLOW RECONCILIATION

  2016  
$'000
2015
$'000
(a) Reconciliation of Cash and Cash Equivalents at the End of the Reporting Periodin the Cash Flow Statement to the Equivalent Items in the Balance Sheet   
Total Cash and Cash Equivalents Recorded in the Balance Sheet 80,837 81,577
Cash and Cash Equivalents at the End of the Reporting Period as Recorded in the Cash Flow Statement 80,837 81,577
(b) Reconciliationof Operating (Deficit) to Net Cash Inflows from Operating Activities to the Activities   
Operating (Deficit) (60,204) (66,068)
Add/(Less)Non-Cash Items   
Depreciation 60,505 60,556
Assets Written Off/Other AssetAdjustments 8 171
(Gain) from Sale of Assets (1) (41)
Unrealised (Gain) on Investments (37) (29)
Cash Before Changes in Operating Assets and Liabilities 271 (5,411)
Changes in Operating Assets and Liabilities   
Decrease/(Increase) in Receivables 1,832 (791)
(Increase)/Decrease in Other Assets (560) 148
(Decrease) in Payables (754) (129)
(Decrease)/Increase in EmployeeBenefits (774) 4,796
Increase/(Decrease) in RevenueReceived in Advance 2,434 (859)
NetChanges in Operating Assets and Liabilities 2,178 3,165
NetInflows/(Outflows) from Operating Activities 2,449 (2,246)
(c) Non-Cash Financing and Investing Activities   
The Directorate has entered into finance lease arrangements for plant and equipment.   
Plant and Equipment - 40

NOTE 39. BUDGETARY REPORTING

The following are brief explanations of major line item variances between budget estimates and actual outcomes. Variances are considered to be major variances if both of the following criteria are met:

  1. The line item is a significant line item: the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) of the financial statements; and
  2. The variances (original budget to actual) are greater than plus (+) or minus (-) 10% of the budget for the financial statement line item.
Cash Flow Statement Line Items Actual
2015 -16
$'000
Original Budget 1
2015-16
$'000
Variance
$'000
Variance
%
Variance Explanation
Purchase of Property, Plant andEquipment 53,301 60,772 (7,470) (12) The variance against budgetprimarily relates to savings in capital works projects and the re-profilingof works into 2016-17 and 2017-18.

1 Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements). These amounts have not been adjusted to reflect supplementary appropriation or appropriation instruments.

2 Statement of Changes in Equity line items are covered in other financial Statements.

Explanations for variations from budget for Government Payment for Outputs, and Capital Injection are provided in the Statements of Appropriation.

EDUCATION DIRECTORATE
TERRITORIAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016


Education Directorate Statement of Income and Expenses on Behalf of the Territory For the Year Ended 30 June 2016

  Note No. Actual 2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Income     
Revenue     
Payments for Expenses on Behalf ofthe Territory 40 259,956 247,328 250,085
Fees 41 - - 3
Total   259,956 247,328 250,088
Expenses     
Grants and Purchased Services 42 259,956 247,328 250,085
Transfer to Government 43 - - 3
Total   259,956 247,328 250,088
Operating Result   - - -

The above Statement of Income andExpenses on Behalf of the Territory should be read in conjunction with theaccompanying notes.

Education Directorate Statement of Assets and Liabilities on Behalf of the Territory As at 30 June 2016

Note No.Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Current Assets    
Cash and Cash Equivalents 44 208 80 -
Receivables 45 2 - 10
Total Current Assets 2108010
TotalAssets 2108010
Current Liabilities    
Payables 46 210 80 10
Total Current Liabilities 2108010
Total Liabilities 2108010
Net Assets ---
Equity    
Accumulated Funds   - - -
Total ---

Net Assets and Total Equity hasremained nil, therefore a Statement of Changes in Equity on Behalf of theTerritory has not been prepared.

The above Statement of Assets and Liabilities on Behalf of the Territory should be read in conjunction with the accompanying notes.

Education Directorate Cash Flow Statement on Behalf of the Territory For the Year Ended 30 June 2016

  Note No. Actual
2016
$'000
Original Budget
2016
$'000
Actual
2015
$'000
Cash Flows from Operating Activities     
Receipts     
Cash from Government for Expenseson Behalf of the Territory   260,174 265,934 250,015
Fees   - - 3
Goods and Services Tax Received   5,830 6,046 5,665
Total Receipts from Operating Activities   266,004 271,980 255,683
Payments     
Grants and Purchased Services   259,954 265,934 250,112
Transfer of Territory Receipts to the ACT Government   - - 3
Goods and Services Tax Paid   5,842 6,046 5,648
Total Payments from Operating Activities  265,796 271,980 255,763
Net Cash Inflows/(Outflows) from Operating Activities 48 208 - (80)
Net Increase/(Decrease) in Cash and Cash Equivalents Held   208 - (80)
Cash and Cash Equivalents at the Beginning of the Reporting Period   - 80 80
Cash and Cash Equivalents at the End of the Reporting Period 48 208 80 -

The above Cash Flow Statement on Behalf of the Territory should be read in conjunction with the accompanying notes.

Education Directorate Territorial Statement of Appropriation For the Year Ended 30 June 2016

  Note No. Original Budget
2016
$'000
Total
Appropriated
$'000
Appropriation Drawn
2016
$'000
Appropriation Drawn
2015
$'000
Expenses on Behalf of the Territory      
Expenses on Behalf of the Territory 40 265,934 267,583 260,174 250,015
Total Territorial Appropriation   265,934 267,583 260,174 250,015

The above Territorial Statement of Appropriation should be read in conjunction with the accompanying notes.

Column Heading Explanations

The Original Budget column shows the amounts that appear in the Cash Flow Statement in the Budget Papers.

This amount also appears in these financial statements, in the Cash Flow Statement.

The Total Appropriated column is inclusive of all appropriation variations occurring after the Original Budget.

The Appropriation Drawn is the total amount of appropriation received by the Directorate during the year. This amount appears in these financial statements, in the Cash Flow Statement.

Variances between ‘Original Budget’ and ‘Total Appropriated’

Expenses on Behalf of the Territory

The difference between the Original Budget and Total Appropriated relates to the transfer of funds from 2014‑15 for the Interest Subsidy Scheme ($1.594m) and the Supporting Non-Government Preschools initiative ($0.139m), partially offset by the transfer of funds to the Chief Minister, Treasury and Economic Development Directorate ($0.084m) associated with the transfer of Vocational Education and Training functions.

Variances between ‘Total Appropriated’ and ‘Appropriation Drawn’

Expenses on Behalf of the Territory

The difference between the Total Appropriated and the Appropriation Drawn mainly relates to lower than budgeted Commonwealth grants for the National Education Reform Agreement (Students First) ($3.377m), rollovers into 2016-17 for the Interest Subsidy Scheme ($1.400m) due to lower interest rates and finalisation of loans, the Supporting Non-Government Preschools initiative ($0.183m) and undrawn appropriation ($2.449m).

TERRITORIAL NOTE INDEX

Income Notes

  • Note 40. Payment for Expenses on behalf of the Territory
  • Note 41. Fees

Expenses Notes

  • Note 42. Grants and Purchased Services
  • Note 43. Transfer to Government

Assets Notes

  • Note 44. Cash and Cash Equivalents
  • Note 45. Receivables

Liabilities Note

  • Note 46. Payables

Other Notes

  • Note 47. Financial Instrucments - Territorial
  • Note 48. Cash Flow Recobciliation - Territorial
  • Note 49. Budgetary Reporting - Territorial
  • Note 50. Restructure of Administrative Arrangements - Territorial

Education Directorate Notes to and Forming Part of the Financial Statements For the Year Ended 30 June 2016

NOTE 40. PAYMENT FOR EXPENSES ON BEHALF OF THE TERRITORY

Under the Financial Management Act 1996, funds can be appropriated for expenses incurred on behalf of the Territory. The Directorate receives this appropriation to fund a number of expenses incurred on behalf of the Territory, the main one being the payment of grants to non-government schools. Refer Note 42 - Grants and Purchased Services for the details of the expenses.

2016
$'000
2015
$'000
Funding Received to Meet Expenses Incurred on Behalf of the Territory1 259,956 250,085
Total Payment for Expenses on Behalf of the Territory259,956250,085

1 The increase from 2014-15 primarily relates to increased Commonwealth and ACT Government grants in accordance with the National Education Reform Agreement: Australian Capital Territory Bilateral Agreement’s ‘Schooling Resource Standard.

NOTE 41. FEES

Fees
Fees for Regulatory Services – Training1 - 3
Total -3

1.The decrease from 2014-15 relates to the removal of fees associated with Training Regulatory Services as of 20 November 2014.

NOTE 42. GRANTS AND PURCHASED SERVICES

2016
$'000
2015
$'000
Grants and Purchased Services  
Payments for grants and subsidies were as follows:   
Grants - Non-Government Schools1 259,268 249,343
Junior Bursary Scheme 681 722
Block Release Grants2 7 20
Total259,956250,085

The increase from 2014-15 primarily relates to increased Commonwealth and ACT Government grants in accordance with the National Education Reform Agreement: Australian Capital Territory Bilateral Agreement’s ‘Schooling Resource Standard’.

The administration of Block Release grants transferred to the Chief Minister, Treasury and Economic Development Directorate from 22 January 2016 following changes to Administrative Arrangements.

NOTE 43. TRANSFER TO GOVERNMENT

Transfers to Government primarily relates to fees that are collected on behalf of the Territory – refer to Note 41 - Fees.

Transfer to Government1-3
Total -3

NOTE 44. CASH AND CASH EQUIVALENTS

Cash at Bank1 208 -
Total208-

1.The Territorial accounts are programs administered by the Directorate on behalf of the Territory. Territorial accounts cannot generate an operating result and must hold a nil equity balance. This means cash held at year-end must be taken up as a payable owed to the Territory Banking Account.

2.Under whole-of-government banking arrangements interest is not earned on cash at bank held with the Territorial Bank Account.

NOTE 45. RECEIVABLES

  2016
$'000
2015
$'000
Current Receivables   
Other Receivables - ACT Government - 10
Goods and Services Tax Receivable from the Australian Taxation Office 2 -
Total 2 10

NOTE 46. Payables

All payables at 30 June 2016 are current and not overdue.

Current Payables   
Payable to the Territory Bank Account (cash held at year-end) 208 -
Current Payables 2 -
Goods and Services Tax Payable to the Australian Taxation Office - 10
Total Current Payables 210 10
Total 210 10

NOTE 47. FINANCIAL INSTRUMENTS - TERRITORIAL

Terms, Conditions and Accounting Policies

Details of the significant policies and methods adopted, including the criteria for recognition, the basis of measurement, with respect to each class of financial asset and financial liability are disclosed in 
Note 2 - Significant Accounting Policies.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The financial assets held by the Directorate on behalf of the Territory consist of cash and cash equivalents and receivables. Its financial liabilities are comprised of payables. As cash, receivables and payables are held in non-interest bearing arrangements, the Directorate on behalf of the Territory is not exposed to movements in interest rates in respect of these financial assets and liabilities.

As the Territory’s operating cash flows are not dependant on interest earned from cash and cash equivalents, a sensitivity analysis of interest rate risk has not been performed.

Credit Risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. All receivables relate to either Commonwealth, ACT or non-government agencies which have strong credit histories (most receivables consist of Goods and Services Tax refunds due from the Australian Taxation Office). Credit risk is therefore considered to be low.

Financial assets consist of cash and receivables. The Directorate on behalf of the Territory’s exposure to credit risk is limited to the amount of these financial assets net of any allowance made for impairment. This is shown below in the table ‘Maturity Analysis and Exposure to Interest Rates’.

Liquidity Risk

Liquidity risk is the risk that the Directorate on behalf of the Territory will not be able to meet its financial obligations as they fall due.

Expenses on behalf of the Territory appropriations are drawn down progressively throughout the year to meet operating requirements. In the event of cash pressure, access to additional funding may be obtained from the Chief Minister, Treasury and Economic Development Directorate.

Price Risk

Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market price.
The Directorate on behalf of the Territory is not exposed to price risk as its financial assets, consisting of cash and receivables are not affected by movements in market price.

Currency Risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes to foreign currency rates.

The Directorate on behalf of the Territory is not exposed to currency risk as all of its transactions are made in Australian dollars.

Unrecognised Financial Assets and Financial Liabilities

There were no unrecognised financial assets and liabilities.

Fair Value of Financial Assets and Liabilities

  Carrying Amount
2016
$'000
Fair Value
2016
$'000
Carrying Amount
2015
$'000
Fair Value
2015
$'000
Financial Assets     
Cash and Cash Equivalents 208 208 - -
Receivables - - 10 10
Total 208 208 10 10
Financial Liabilities     
Payables 210 210 - -
Total 210 210 - -

The following tables set out the maturity analysis for financial assets and liabilities as well as the exposure to interest rates, including the weighted average interest rates by maturity period. All financial assets and liabilities which are non-interest bearing will mature in 1 year or less. All amounts appearing in the following maturity analysis are shown on an undiscounted cash flow basis.

As at 30 June 2016 Note No. Floating Interest rate Fixed Interest Maturing In:   
  Interest Rate
$'000
1 Year or Less
$'000
Over 1 Year to 5 Years
$'000
Over 5 years
$'000
Non-Bearing
$'000
Total
$'000
Financial Instruments        
Financial Assets        
Cash and Cash Equivalents 44 - - - - 208 208
Receivables 45 - - - - - -
Total Financial Assets   - - - - 208 208
Financial Liabilities        
Payables 46 - - - - 210 210
Total Financial Liabilities   - - - - 210 210
Net Financial Assets / (Liabilities)   - - - - - -
As at 30 June 2015 Note No. Floating Interest rate Fixed Interest Maturing In:   
  Interest Rate
$'000
1 Year or Less
$'000
Over 1 Year to 5 Years
$'000
Over 5 years
$'000
Non-Bearing
$'000
Total
$'000
Financial Instruments        
Financial Assets        
Cash and Cash Equivalents 44 - - - - - -
Receivables 45 - - - - 10 10
Total Financial Assets   - - - - 10 10
Financial Liabilities        
Payables 46 - - - - - -
Total Financial Liabilities   - - - - - -
Net Financial Assets/(Liabilities)   - - - - 10 10

All financial assets and liabilities are measured, subsequent to initial recognition at amortised cost and as such no fair value hierarchy disclosures have been made.

NOTE 48.   CASH FLOW RECONCILIATION

(a) Reconciliation of Cash and Cash Equivalents at the end of the Reporting Period in the Cash Flow Statement on Behalf of the Territory to the Related Items in the Statement of Assets and Liabilities on Behalf of the Territory.

  2016
$'000
2015
$'000
Total Cash Disclosed on the Statement of Assets and Liabilities on Behalf of the Territory 208 -
Cash at the end of the Reporting Period as Recorded in the Cash Flow Statement on   
Behalf of the Territory 208 -
(b) Reconciliation of Net Cash Inflows from Operating Activities to the Operating Surplus/(Deficit)   
Operating Result - -
Cash Before Changes in Operating Assets and Liabilities - -
Changes in Operating Assets and Liabilities   
Decrease/(Increase) in Receivables 8 (3)
Increase/(Decrease) in Payables 200 (77)
Net Changes in Operating Assets and Liabilities 208 (80)
Net Cash Inflows/(Outflows) from Operating Activities 208 (80)

NOTE 49. BUDGETARY REPORTING

The following are brief explanations of major line item variances betweenbudget estimates and actual outcomes. Variances are considered to be major variances if both of the following criteria are met:

  • The line item is a significant line item: the line item actual amount accounts for more than 10% of the relevant associated category (Income, Expenses and Equity totals) of the financial statements; and
  • The variances (original budget to actual) are greater thanplus (+) or minus (-) 10% of the budget for the financial statement line item.
Statement of Assets and Liabilities on Behalf of The Territory Line ItemsActual 2015-16
$'000
Original Budget1 2015-16
$'000
Variance
$'000
Variance
%
VarianceExplanation
Cash and Cash Equivalents 208 80 128 160 The Territorial accounts areprograms administered on behalf of the Territory. Territorial accounts cannotgenerate an operating result and must hold a nil equity balance. This means cash held at year-end must be taken up as a payable owed to the TerritoryBanking Account.
Payables (210) (80) (130) 163 The Territorial accounts are programs administered on behalf of the Territory. Territorial accounts cannotgenerate an operating result and must hold a nil equity balance. This means cash held at year-end must be taken up as a payable owed to the Territory Banking Account.

1. Original Budget refers to the amounts presented to the Legislative Assembly in the original budgeted financial statements in respect of the reporting period (2015-16 Budget Statements).

2. There were no variations against budget in the Statement of Income and Expenses on Behalf of the Territory or the Cash Flow Statement on Behalf of the Territory in accordance with the criteria (a) and (b) above.

NOTE 50. RESTRUCTURE OF ADMINISTRATIVE ARRANGEMENTS

On 22 January 2016, a restructuring of administrative arrangements occurred between the Education Directorate and Chief Minister, Treasury and Economic Development Directorate involving the transfer of the Block Release Program as part of the Education Directorate’s responsibility for Vocational Education and Training functions. The income and expenses transferred as part of the restructuring of administrative arrangements at the date of transfer were as follows:

  Amounts Relating to Function when held by the Education Directorate
1 July 2015 to 22 January 2016
$'000
Amounts Transferred to the ChiefMinister, Treasury and Economic Development Directorate
22 January 2016 to 30 June 2016
$'000
Revenue   
Payments for Expenses on Behalf of the Territory 5 84
Total Revenue 5 84
Expenses   
Grants and Purchased Services 5 84
Total Expenses 5 84

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