EXPLANATORY STATEMENT
Issued by the authority of the Minister for Finance
Public Governance, Performance and Accountability Act 2013
Public Governance, Performance and Accountability
(Financial Reporting) Amendment Rule 2018
Section 101 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act) provides that the Finance Minister may make rules by legislative instrument to prescribe matters giving effect to the Act.
The Public Governance, Performance and Accountability (Financial Reporting) Amendment Rule 2018 amends the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR). Both rules are legislative instruments for the purpose of the Legislative Instruments Act 2003.
Other Legislative Provisions
The FRR sets out the requirements for preparation of financial statements under the following legislative provisions:
- Subsection 42(2) of the Public Governance, Performance and Accountability Act 2013;
- Subsection 47(1) of the High Court of Australia Act 1979 in relation to how financial statements must be prepared by the High Court of Australia;
- Section 193H of the Aboriginal and Torres Strait Islander Act 2005 in relation to how the accounts and financial statements must be prepared for the Land Account;
- Subsections 50B(2) and (4) of the Defence Service Homes Act 1918 in relation to how financial statements must be prepared by the Defence Service Homes Corporation; and
- Subsections 43(1) and (3) of the Natural Heritage Trust of Australia Act 1997 in relation to how financial statements must be prepared for the Natural Heritage Trust of Australia Account.
Some provisions of the FRR are also made under Subsection 102(1)(b) of the PGPA Act.
2017-18 Amendments
An amendment is required to Subsection 3(2) of the FRR to enable the amendments to the FRR to apply for reporting periods ending on or after 1 July 2017.
A middle column has been added to the table in Subsection 18(3) to further clarify the reporting of specific items. The listed entities under Subsection 18(3) are required to prepare disclosure notes above Tier 2 minimum disclosure requirements, under the relevant accounting standards.
This amendment will provide disclosures that are more targeted to the needs of users of financial statements.
Retrospectivity and Timing
The retrospective commencement date of this legislative instrument does not adversely affect the rights of persons or otherwise impose liabilities, other than onto the Commonwealth or Australian Government entities, and as such, does not contravene Subsection 12 (2) of the Legislative Instruments Act 2003.
A retrospective commencement date has always been used for financial reporting purposes as this ensures that changes are applicable in the same reporting period in which the amendments are made.
For reporting periods ending before 1 July 2017, these amendments to the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 are not applicable.
Consultation
In accordance with Section 17 of the Legislative Instruments Act 2003, all Australian Government entities required to apply the amendments to the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015, including the Australian National Audit Office, have been consulted on the exposure draft and provided with the opportunity to submit comments.
Attachments
The Statement of Compatibility with Human Rights as required by the Human Rights (Parliamentary Scrutiny) Act 2011 is provided in Attachment A.
Explanatory Statement – Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011, section 9
Public Governance, Performance and Accountability (Financial Reporting) Amendment Rule 2018
- The proposed amendments do not engage any of the applicable rights or freedoms outlined in the Human Rights (Parliamentary Scrutiny) Act 2011, such as encompassed in the International Covenant on Civil and Political Rights.
- The proposed amendments do not limit any human rights, nor propose any offences or penalties.
- This legislative instrument is therefore compatible with the human rights and freedoms recognised or declared in the international instruments listed in subsection 3(1) of the Human Rights (Parliamentary Scrutiny) Act 2011.
Senator the Honourable Mathias Cormann, Minister for Finance
Overview
The Public Governance, Performance and Accountability (Financial Reporting) Amendment Rule 2018 is a legislative instrument introduced to amend the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015. Enacted under Section 101 of the Public Governance, Performance and Accountability Act 2013, this amendment rule is designed to enhance the clarity and relevance of financial reporting by certain Australian government entities, thereby improving transparency and accountability. The rule was developed by the Minister for Finance and is effective for reporting periods ending on or after 1 July 2017. It applies to entities specified under various legislative provisions, including the Public Governance, Performance and Accountability Act 2013, the High Court of Australia Act 1979, the Aboriginal and Torres Strait Islander Act 2005, the Defence Service Homes Act 1918, and the Natural Heritage Trust of Australia Act 1997. The policy objective is to ensure that financial statements are more targeted to the needs of users by requiring enhanced disclosure notes. The rule has been subject to consultation with relevant entities as required by the Legislative Instruments Act 2003. Additionally, a Statement of Compatibility with Human Rights has been provided to confirm that the amendments do not engage any of the applicable rights or freedoms under the Human Rights (Parliamentary Scrutiny) Act 2011.
Scope and Application
The Public Governance, Performance and Accountability (Financial Reporting) Amendment Rule 2018 amends the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015, which sets out the requirements for the preparation of financial statements under various legislative provisions, including the Public Governance, Performance and Accountability Act 2013, the High Court of Australia Act 1979, the Aboriginal and Torres Strait Islander Act 2005, the Defence Service Homes Act 1918, and the Natural Heritage Trust of Australia Act 1997. This amendment applies to Australian Government entities required to prepare financial statements for reporting periods ending on or after 1 July 2017. The amendment is designed to improve the clarity and relevance of financial reporting by requiring entities to prepare disclosure notes above Tier 2 minimum disclosure requirements, under the relevant accounting standards, thus providing more targeted disclosures for users of financial statements. The amendment has a retrospective commencement date, ensuring consistency with financial reporting practices, and it does not contravene the rights of persons or impose liabilities beyond the Commonwealth or Australian Government entities. Furthermore, the proposed amendments are compatible with human rights as they do not engage any of the applicable rights or freedoms outlined in the Human Rights (Parliamentary Scrutiny) Act 2011.
Key Provisions
The Public Governance, Performance and Accountability (Financial Reporting) Amendment Rule 2018 amends the existing Public Governance, Performance and Accountability (Financial Reporting) Rule 2015. It is a legislative instrument under Section 101 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The amendment rule applies to financial reporting requirements for certain Australian government entities, including the High Court of Australia, the Land Account, the Defence Service Homes Corporation, and the Natural Heritage Trust of Australia Account. The rule introduces changes that are effective for reporting periods ending on or after 1 July 2017.
These amendments require specific entities to prepare disclosure notes that exceed the Tier 2 minimum disclosure requirements under relevant accounting standards. This is intended to provide more targeted disclosures that better meet the needs of financial statement users. The rule also makes technical amendments to Subsection 3(2) of the FRR to ensure that the changes apply correctly for the specified reporting periods. Furthermore, a middle column has been added to the table in Subsection 18(3) to clarify the reporting of specific items, enhancing the transparency and accuracy of financial reports.
The entities governed by this rule must ensure that their financial statements comply with the new disclosure requirements. This includes preparing additional disclosures as specified in the amended rule. They are also required to ensure that these disclosures are made in accordance with the relevant accounting standards. The amendments aim to improve the quality and relevance of financial information provided to stakeholders by requiring more detailed and targeted disclosures.
There are no specific offences, penalties, or civil/criminal consequences outlined in the amendment rule itself. However, entities that fail to comply with the financial reporting requirements may face consequences under the broader provisions of the PGPA Act. These can include administrative penalties or other enforcement actions taken by the relevant authorities. The retrospective commencement date of this legislative instrument ensures that the amendments apply to the same reporting period in which they are made, without adversely affecting the rights of persons, except as imposed on the Commonwealth or Australian government entities.