Australian Prudential Regulation Authority

Section 1: Agency overview and resources

1.1 Strategic direction

There has been no significant change to the strategic direction of the Australian Prudential Regulation Authority (APRA) from that outlined in the Portfolio Budget Statements 2012-13 (pages 131-132).

APRA is seeking $0.7 million in departmental funding through Appropriation Bill (No. 3) 2012-13. This relates to an additional $1.3 million to reimburse APRA for a shortfall in interest earned on the APRA special account from 2008-09 to 2011-12, offset by $0.01 million for the Fire Service Levy – reduction measure outlined in Budget Paper No. 2, Budget Measures 2012-13 and $0.5 million for the Targeted savings – public service efficiencies measure outlined in the Mid-Year Economic and Fiscal Outlook 2012-13.

1.2 Agency resource statement

Table 1.1 shows the total resources from all origins. The table summarises how resources will be applied by outcome and by administered and departmental classification.

Table 1.1: Australian Prudential Regulation Authority resource statement — additional
estimates for 2012-13 as at Additional Estimates February 2013

		Estimates as at Budget 2012-13 $'000	+	Proposed Additional Estimates 2012-13 $'000	=	Total estimate at Additional Estimates 2012-13 $'000	Total available appropriation 2011-12 $'000
Ordinary annual services
Departmental appropriation
Departmental appropriation		2,356		722	1	3,078	13,289
Receipts from other sources (s31)		5,210		-		5,210	8,110
Total ordinary annual services	A	7,566		722		8,288	21,399
Other services
Departmental non-operating
Equity injections		4,810		-		4,810	-
Total other services	B	4,810		-		4,810	-
Total available annual appropriations (A+B)		12,376		722		13,098	21,399
Special appropriations
Financial Management and Accountability Act 1997		-		-		-
Total special appropriations	C	-		-		-	-
Total appropriations excluding special accounts (A+B+C)		12,376		722		13,098	21,399
Special accounts
Opening balance		46,845		-		46,845	45,207
Appropriation receipts		2,356		722		3,078	13,289
Non-appropriation receipts to special accounts		112,870		-		112,870	100,397
Total special accounts	D	162,071		722		162,793	158,893
Total resourcing (A+B+C+D)		174,447		1,444		175,891	180,292
Less appropriations drawn from annual or special appropriations above and credited to special accounts		2,356		722		3,078	13,289
Total net resourcing for APRA		172,091		722		172,813	167,003

1. Appropriation Bill (No. 3) 2012-13.

1.3 Agency measures table

Table 1.2 summarises new Government measures taken since the 2012-13 Budget.

Table 1.2: Agency Measures since Budget

	Program	2012-13 $'000	2013-14 $'000	2014-15 $'000	2015-16 $'000
Expense measure
Fire Service Levy - reduction	1.1	(10)	(10)	(11)	(11)
Targeted savings - public service efficiencies	1.1	(527)	(529)	(544)	(567)
Total ex pense measures		(537)	(539)	(555)	(578)
Related revenue
Superannuation - further financial assistance grants to compensate fund members for the failure of Trio(a)	1.1	16,720	-	-	-
SuperStream - reduction in Superannuation Supervisory Levy	1.1	-	(11,600)	(8,400)	(7,300)
Total related revenue		16,720	(11,600)	(8,400)	(7,300)

(a) This measure was agreed after the Mid-Year Economic and Fiscal Outlook.

1.4 Additional estimates and variations

Table 1.3 details the additional estimates resulting from new measures since the 2012-13 Budget. Table 1.4 details the additional estimates resulting from other variations since the 2012-13 Budget.

Table 1.3: Additional estimates and variations to outcomes from measures
since 2012-13 Budget

	Program	2012-13 $'000	2013-14 $'000	2014-15 $'000	2015-16 $'000
Outcome 1
Increase in estimates (departmental)
Fire Service Levy - reduction	1.1	(10)	(10)	(11)	(11)
Targeted savings - public service efficiencies	1.1	(527)	(529)	(544)	(567)
Net impact on estimates for Outcome 1 (departmental)		(537)	(539)	(555)	(578)

Table 1.4: Additional estimates and variations to outcomes from other variations

	Program	2012-13 $'000	2013-14 $'000	2014-15 $'000	2015-16 $'000
Outcome 1
Increase in estimates (departmental)
Reimbursement to APRA for a shortfall in interest earned on the APRA special account	1.1	1,259	-	-	-
Net impact on estimates for Outcome 1 (departmental)		1,259	-	-	-

1.5 Breakdown of additional estimates by Appropriation Bill

The following table details the additional estimates sought for APRA through Appropriation Bills No. 3.

Table 1.5: Appropriation Bill (No. 3) 2012-13

	2011-12 available $'000	2012-13 budget $'000	2012-13 revised $'000	Additional estimates $'000	Reduced estimates $'000
DEPARTMENTAL OUTPUTS
Outcome 1
Enhanced public confidence in Australia's financial institutions through a framework of prudential regulation which balances financial safety and efficiency, competition, contestability and competitive neutrality	13,289	2,356	3,078	722	-
Total	13,289	2,356	3,078	722	-

Section 2: Revisions to agency outcomes and planned performance

2.1 Resources and performance information

There has been no change to outcomes, outcome strategies and performance information for APRA from that included in the Portfolio Budget Statements 2012-13 (pages 135-137).

Table 2.1: Budgeted expenses for Outcome 1

Outcome 1: Enhanced public confidence in Australia's financial institutions through a framework of prudential regulation which balances financial safety and efficiency, competition, contestability and competitive neutrality	2011-12 Actual $'000	2012-13 Revised estimated expenses $'000
Program 1.1: Australian Prudential Regulation Authority
Departmental expenses
Special accounts	100,397	112,870
Departmental appropriation	20,722	8,288
Administered expenses
Superannuation Levy Waivers	959	-
Total for Program 1.1	122,078	121,158
	2011-12	2012-13
Average staffing level (number)	606	613

There has been no change to program objectives, deliverables or key performance indicators for APRA from that included in the Portfolio Budget Statements 2012-13.

Table 2.2: Program expenses

	2011-12    Actuals $'000	2012-13 Budget $'000	2013-14 Forward year 1 $'000	2014-15 Forward year 2 $'000	2015-16 Forward year 3 $'000
Departmental expenses
Departmental items	121,119	121,158	121,093	124,070	128,844
Administered expenses
Administered items	959	-	-	-	-
Total program expenses	122,078	121,158	121,093	124,070	128,844

Section 3: Explanatory tables and budgeted financial statements

Section 3 presents budgeted financial statements which provide a snapshot of APRA’s finances for the budget year 2012-13.

3.1 Explanatory tables

3.1.1 Estimates of special account flows

Special accounts provide a means to set aside and record amounts used for specified purposes. Table 3.1.2 shows the expected additions (receipts) and reductions (payments) for each account used by APRA.

Table 3.1.2: Estimates of special account cash flows and balances

	Outcome	Opening balance 2012-13 2011-12 $'000	Receipts Non- appropriated 2012-13 2011-12 $'000	Receipts appropriated 2012-13 2011-12 $'000	Payments 2012-13 2011-12 $'000	Closing balance 2012-13 2011-12 $'000
Australian Prudential Regulation	1	44,552	112,870	11,839	126,400	42,861
Authority Special Account		41,756	100,397	21,390	118,991	44,552
Financial Claims Scheme	1	293	-	-	-	293
Special Account		1,451	-	200	1,358	293
Lloyd's Deposit Trust	1	2,000	-	-	-	2,000
Special Account		2,000	-	-	-	2,000
Total special accounts 2012-13 Budget estimate		46,845	112,870	11,839	126,400	45,154
Total special accounts 2011-12 actual		45,207	100,397	21,590	120,349	46,845

3.2 Budgeted financial statements

3.2.1 Analysis of budgeted financial statements

The budgeted departmental income statement (refer Table 3.2.1) shows an increase in 2012-13 appropriations from $120.4 million, as disclosed in the Portfolio Budget Statements 2012-13, to $121.2 million; a $0.7 million increase. These funds comprise a shortfall in interest earned on the APRA special account from 2008-09 to 2011-12, offset by the Fire Service Levy – reduction and the Targeted savings – public service efficiencies measures.

3.2.2 Budgeted financial statements

Departmental financial statements

Table 3.2.1: Budgeted departmental comprehensive income statement
(Showing Net Cost of Services) (for the period ended 30 June)

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
EXPENSES
Employee benefits	89,812	88,200	89,414	93,766	99,195
Suppliers	26,176	28,220	24,303	23,196	24,303
Depreciation and amortisation	5,131	4,738	7,376	7,108	5,346
Total expenses	121,119	121,158	121,093	124,070	128,844
LESS:
OWN-SOURCE INCOME
Revenue
Sale of goods and rendering of services	4,212	4,160	4,160	4,160	4,160
Other revenue	707	1,050	1,050	1,050	1,050
Total revenue	4,919	5,210	5,210	5,210	5,210
Total own-source income	4,919	5,210	5,210	5,210	5,210
Net cost of (contribution by) services	116,200	115,948	115,883	118,860	123,634
Appropriation revenue	113,730	115,948	115,883	118,860	123,634
Surplus (deficit) attributable to the Australian Government	(2,470)	-	-	-	-

Prepared on Australian Accounting Standards basis.

Ta
ble 3.2.2: Budgeted departmental balance sheet
(as at 30 June)

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
ASSETS
Financial assets
Cash	44,554	42,863	43,612	43,604	43,604
Receivables	3,746	3,746	3,746	3,746	3,746
Total financial assets	48,300	46,609	47,358	47,350	47,350
Non-financial assets
Infrastructure, plant and equipment	5,823	3,863	2,880	2,503	3,646
Intangibles	12,717	21,178	25,682	26,175	25,032
Other	1,964	1,998	1,998	1,998	1,998
Total non-financial assets	20,504	27,039	30,560	30,676	30,676
Total assets	68,804	73,648	77,918	78,026	78,026
LIABILITIES
Provisions
Employees	32,000	31,885	31,885	31,885	31,885
Other	2,881	2,923	2,923	2,923	2,923
Total provisions	34,881	34,808	34,808	34,808	34,808
Payables
Suppliers	5,235	5,342	5,342	5,342	5,342
Total payables	5,235	5,342	5,342	5,342	5,342
Total liabilities	40,116	40,150	40,150	40,150	40,150
Net assets	28,688	33,498	37,768	37,876	37,876
EQUITY
Contributed equity	7,469	12,279	16,549	16,657	16,657
Reserves	12,467	12,467	12,467	12,467	12,467
Retained surpluses or accumulated deficits	8,752	8,752	8,752	8,752	8,752
Total equity	28,688	33,498	37,768	37,876	37,876
Current assets	50,264	48,607	49,356	49,348	49,348
Non-current assets	18,540	25,041	28,562	28,678	28,678
Current liabilities	31,396	31,448	31,448	31,448	31,448
Non-current liabilities	8,720	8,702	8,702	8,702	8,702

Prepared on Australian Accounting Standards basis.

Table 3.2.3: Budgeted departmental statement of cash flows
(for the period ended 30 June)

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
OPERATING ACTIVITIES
Cash received
Goods and services	5,023	4,160	4,160	4,160	4,160
Appropriations	113,677	115,948	115,883	119,427	124,212
Other	3,087	1,050	1,050	1,050	1,050
Total cash received	121,787	121,158	121,093	124,637	129,422
Cash used
Employees	83,584	88,200	89,414	93,766	99,195
Suppliers	30,589	28,220	24,303	23,763	24,881
Total cash used	114,173	116,420	113,717	117,529	124,076
Net cash from or (used by) operating activities	7,614	4,738	7,376	7,108	5,346
INVESTING ACTIVITIES
Cash used
Purchase of property, plant and equipment/intangibles	4,818	11,239	10,897	7,224	5,346
Total cash used	4,818	11,239	10,897	7,224	5,346
Net cash from or (used by) investing activities	(4,818)	(11,239)	(10,897)	(7,224)	(5,346)
FINANCING ACTIVITIES
Cash received
Appropriations - contributed equity	-	4,810	4,270	108	-
Total cash received	-	4,810	4,270	108	-
Net cash from or (used by) financing activities	-	4,810	4,270	108	-
Net increase (or decrease) in cash held	2,796	(1,691)	749	(8)	-
Cash at the beginning of the reporting period	41,758	44,554	42,863	43,612	43,604
Cash at the end of the reporting period	44,554	42,863	43,612	43,604	43,604

Prepared on Australian Accounting Standards basis.

Table 3.2.4: Departmental statement of changes in equity — summary of
movement (budget year 2012-13)

	Retained surpluses $'000	Asset revaluation reserve $'000	Other reserves $'000	Contributed equity/ capital $'000	Total equity $'000
Opening balance as at 1 July 2012
Balance carried forward from previous period	8,752	6,467	6,000	7,469	28,688
Adjusted opening balance	8,752	6,467	6,000	7,469	28,688
Comprehensive income
Surplus (deficit) for the period	-	-	-	-	-
Total comprehensive income recognised directly in equity	-	-	-	-	-
Transactions with owners
Equity Injection	-	-	-	4,810	4,810
Total transactions with owners	-	-	-	4,810	4,810
Estimated closing balance as at 30 June 2013	8,752	6,467	6,000	12,279	33,498

Prepared on Australian Accounting Standards basis.

Table 3.2.5: Departmental capital budget statement

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
NEW CAPITAL APPROPRIATIONS
Total equity injections	-	4,810	4,270	108	-
Total new capital appropriations	-	4,810	4,270	108	-
Provided for:
Purchase of non-financial assets	-	4,810	4,270	108	-
Total Items	-	4,810	4,270	108	-
PURCHASE OF NON-FINANCIAL ASSETS
Funded by capital appropriations	-	4,810	4,270	108	-
Funded internally from departmental resources	4,818	6,429	6,627	7,116	5,346
TOTAL	4,818	11,239	10,897	7,224	5,346
RECONCILIATION OF CASH USED TO ACQUIRE ASSETS TO ASSET MOVEMENT TABLE
Total purchases	4,818	11,239	10,897	7,224	5,346
Total cash used to acquire assets	4,818	11,239	10,897	7,224	5,346

Prepared on Australian Accounting Standards basis.

Table 3.2.6: Statement of asset movements — Departmental (2012-13)

	Other infrastructure, plant and equipment $'000	Intangibles $'000	Total $'000
As at 1 July 2012
Gross book value	9,099	27,952	37,051
Accumulated depreciation/amortisation and impairment	3,276	15,235	18,511
Opening net book balance	5,823	12,717	18,540
Capital asset additions
By purchase - other	1,043	10,196	11,239
Total additions	1,043	10,196	11,239
Other movements
Depreciation/amortisation expense	3,003	1,735	4,738
Total other movements	3,003	1,735	4,738
As at 30 June 2013
Gross book value	10,142	38,148	48,290
Accumulated depreciation/amortisation and impairment	6,279	16,970	23,249
Closing net book balance	3,863	21,178	25,041

Prepared on Australian Accounting Standards basis.

Table 3.2.7: Schedule of budgeted income and expenses administered on
behalf of Government (for the period ended 30 June)

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
EXPENSES ADMINISTERED ON BEHALF OF GOVERNMENT
Waivers and write-offs	959	-	-	-	-
Total expenses administered on behalf of government	959	-	-	-	-
LESS:
OWN-SOURCE INCOME
Own-source revenue
Non-taxation revenue
Other sources of non-taxation
Financial Institutions SupervisoryLevies Collection Act 1998	131,949	269,818	250,607	224,966	217,239
Financial Assistance Levy	20	16,720	-	-	-
Total non-taxation revenue	131,969	286,538	250,607	224,966	217,239
Total revenues administered on behalf of Government	131,969	286,538	250,607	224,966	217,239
Total own-sourced income administered on behalf of Government	131,969	286,538	250,607	224,966	217,239
Net Cost of (contribution by) services	(131,010)	(286,538)	(250,607)	(224,966)	(217,239)
Surplus (Deficit)	131,010	286,538	250,607	224,966	217,239

Prepared on Australian Accounting Standards basis.

Table 3.2.8: Schedule of budgeted assets and liabilities administered on
behalf of Government (as at 30 June)

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
ASSETS ADMINISTERED ON BEHALF OF GOVERNMENT
Financial assets
Cash - Financial Claims Scheme special account	293	293	-	-	-
Receivables	2,201	2,201	-	-	-
Total financial assets	2,494	2,494	-	-	-
Total assets administered on behalf of government	2,494	2,494	-	-	-

Prepared on Australian Accounting Standards basis.

Table 3.2.9: Schedule of budgeted administered cash flows
(for the period ended 30 June)

	Actual 2011-12 $'000	Revised budget 2012-13 $'000	Forward estimate 2013-14 $'000	Forward estimate 2014-15 $'000	Forward estimate 2015-16 $'000
OPERATING ACTIVITIES
Cash or equivalents recei ved
Transfer from Official Public Account	22	-	-	-	-
Administered revenue	183,386	286,538	252,808	224,966	217,239
Total cash or equivalents received	183,408	286,538	252,808	224,966	217,239
Cash or equivalents used
Cash to Official Public Account	183,386	286,538	252,808	224,966	217,239
Administered expenses	22	-	-	-	-
Total cash or equivalents used	183,408	286,538	252,808	224,966	217,239
Net cash or equivalents from or (used by) operating activities	-	-	-	-	-

Prepared on Australian Accounting Standards basis.

Notes to the financial statements

Basis of accounting

The financial statements have been prepared on an accrual basis in accordance with historical cost convention.

Budgeted departmental comprehensive income statement

Revenues from Government

APRA is funded by appropriation to its special account for levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported by APRA is net of the levies retained in the Official Public Account to fund the Australian Securities and Investments Commission (ASIC) for consumer protection and market integrity functions, the Australian Taxation Office (ATO) for superannuation administration, unclaimed moneys and lost member functions and the Department of Human Services (DHS) for administration of early release of superannuation benefits on compassionate grounds.

Other revenue

Revenue from rendering of specific services is recognised by reference to the stage of completion of contracts or other agreements. Revenue from licence fees is recognised on receipt of the application and licence fee.

Depreciation and amortisation

APRA’s depreciation expense is applied to supporting the capital program that aims to maintain APRA’s processes and infrastructure at an appropriate standard.

Budgeted departmental balance sheet

Financial assets

Receivables include levies invoiced but still outstanding at the financial year-end and accrued revenues, being fees prorated over the periods to which they relate.

All accounts receivable are recorded at their estimated recoverable amount.

Non-financial assets

Non-financial assets include leasehold improvements, furniture and fittings, computer hardware and office equipment. All of the foregoing assets are shown at fair value. Intangible assets comprise capitalised software, including works in progress and are shown at cost. APRA does not own any land or buildings.

Other non-financial assets include prepayments.

Provisions and payables

Provisions and payables represent liabilities for miscellaneous accruals and employee benefits, including accrued salary and leave entitlements, provisions for making good leased premises and payments to trade creditors.

Equity

The opening balance of contributed equity includes the net value of assets and liabilities transferred from the Reserve Bank of Australia and the Insurance and Superannuation Commission on the formation of APRA on 1 July 1998, less an amount of $2.1 million returned to the Consolidated Revenue Fund as a return of unused appropriation in 2004-05.

Budgeted departmental statement of cash flows

Cash received from operating activities includes the appropriation for levies collected from industry less amounts collected on behalf of the ATO, ASIC and DHS and cash from fees and charges.

Schedule of budgeted income and expenses administered on behalf of Government

Revenues

Non-taxation revenues are the levies and late payment penalties collected under the Financial Institutions Supervisory Levies Collection Act 1998. The revenue reported in this statement is higher than that reported by APRA in the budgeted agency statement of financial position by the amount retained in the Official Public Account to fund ATO, ASIC and DHS activities described above.

Schedule of budgeted assets and liabilities administered on behalf of Government

Financial assets

The financial assets include levy debt invoiced and still outstanding at year-end.

Schedule of budgeted administered cash flows

All cash collected by APRA for levies, late lodgement and late payment penalties under the Financial Institutions Supervisory Levies Collection Act 1998 is transferred to the Official Public Account at the close of business each day.