Disclosure of service costs and achievements by government departments
Paragraphs 15 to 21 only apply to government departments.
15
The complete set of financial statements of a government department shall disclose:
(a) in summarised form, the identity and purpose of each major activity undertaken by the government department during the reporting period;
(b) if not otherwise disclosed in, or in conjunction with, the government department’s complete set of financial statements, a summary of the government department’s objectives;
(c) expenses reliably attributable to each of the activities identified in (a) above, showing separately each major class of expenses; and
(d) income reliably attributable to each of the activities identified in (a) above, showing separately user charges, income from government and other income by major class of income.
16
The complete set of financial statements of a government department shall also disclose the assets deployed and liabilities incurred that are reliably attributable to each of the activities identified in paragraph 15(a).
17
Government departments are required to achieve service delivery as well as financial objectives. Accordingly, a government department’s performance is assessed by reference to the effectiveness, economy and efficiency with which the government department achieves its service delivery and financial objectives. Financial information is therefore only a subset of the information necessary to enable an adequate assessment of a government department’s performance. Accordingly, the complete set of financial statements is presented as part of an annual report that discloses information about such matters as the government department’s objectives and service delivery achievements during the reporting period. To enhance the quality of information available for assessing performance, paragraph 15 requires that a summary of the government department’s objectives be disclosed in the complete set of financial statements where the government department’s annual report does not include this disclosure.
18
Paragraphs 15 and 16 require disclosure of information about the expenses, income, assets and liabilities attributable to the major activities of a government department for the reporting period. This information is relevant in assessing the effectiveness, efficiency and economy of operations and of resource allocation decisions. It is also necessary for reviewing existing expenditure commitments and service delivery arrangements, and for considering the long-term funding implications of new initiatives.
19
However, in some instances it may not be possible to reliably attribute all expenses, income, assets and liabilities to each of the major activities of a government department. Paragraphs 15 and 16 require that the complete set of financial statements of a government department only disclose, on an activity by activity basis, information about the expenses, income, assets and liabilities that can be reliably attributed to major activities.
Identifying major activities of government departments
20
Judgement is required to identify those activities of a government department that warrant separate disclosure in the complete set of financial statements. Exercising this judgement involves a consideration of the following:
(a) the objectives of the government department;
(b) the likely users of the general purpose financial statements;
(c) the activity level that may be relevant to users’ assessments of the performance of the government department; and
(d) the concept of materiality. AASB 101 Presentation of Financial Statements defines information as material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.