2.1 Objectives and funding
The Department of Education is responsible to the Minister for Education. The department commenced a major restructure during the 2006-07 financial year. The objectives detailed below reflect the position as at 30 June 2007. This differs from that disclosed in the 2006-07 Budget Papers. The department provides services through:
Learning Services
A Learning Service supports schools in each of the North, North-West, South and South-East areas of the state. In providing support Learning Services work collaboratively with schools and through a School Improvement Board appointed by the Minister for Education.
Support includes professional learning across teaching, curriculum and assessment, and operational human resource, finance and facilities support. Learning Services have a key role in facilitating the sharing of resources, knowledge, innovation and learning between schools and across the state and respond to schools on the basis of their improvement needs. Each Learning Service has a responsibility for a statewide program area.
Learning Services work with a network of 8 senior secondary colleges and 206 schools - 139 primary schools, 9 special schools, 27 district high schools, and 31 high schools which is organised into 27 educational clusters to support coordinated service delivery particularly for students with high and/or additional needs.
Library and information services
A system of statewide library and information services which delivers its services through a network of 7 city and 40 branch libraries, five reference and specialist collections including the Tasmania Online internet service, and Tasmanian Communities Online, which provides a network of 66 online access centres around the state.
Archives Office of Tasmania
The Archives Office administers a legal framework for government record keeping and is the repository for all Tasmanian state and local government records which are no longer of immediate administrative use, but which are considered worthy of permanent or long-term preservation. The Archives Office also houses a major collection of non-government records and manuscripts.
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Child Care
The Child Care Unit which is responsible for licensing and monitoring all child care services under the Child Care Act 2001.
Organisational support units
The services provided by the department are supported by the following major organisational units: Educational Performance Services (EPS); the Office of Post-Compulsory Education and Training (OPCET); the Tasmanian Qualifications Authority (TQA); Finance, Facilities and Business Support (FFBS); Human Resources Management Branch (HRMB); and Information and Technology Services (ITS).
Outputs of the department
The individual outputs of the Department of Education are provided under the following output groups:
- Output group 1: Pre-compulsory and compulsory education
- Output group 2: Post-compulsory education and training
- Output group 3: Public information services.
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Output group 1: Pre-compulsory and compulsory education
Description
The purpose of this output is to provide a range of educational services that will help students develop intellectually, socially, morally, emotionally and physically in a stimulating, inclusive and supportive environment. These services are focussed on the delivery of education to students in schools enrolled in classes up to Year 10.
The department’s outcomes to which this output group contributes are:
- all students in Tasmanian government schools receive quality teaching leading to effective learning
- all students in Tasmanian government schools receive teaching that appropriately utilises information and communications technology leading to more effective learning
- a fair and just distribution of the benefits of schooling across all students leading to minimal difference in measurable outcomes between identified student groups
- all students participate fully in schooling and complete schooling until the end of Year 12 or the equivalent
- students perform at nationally comparable achievement levels
- parents of students continue to participate in the schooling of their children, and the community and the general public continue to be well informed on educational matters and involved in their school communities
- improved access to child care services that meet state licensing guidelines and national standards for all parents, carers and families.
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Output group 2: Post-compulsory education and training
Description
The purpose of this output group is to facilitate the provision of post-compulsory education and formally recognised Vocational Education and Training (VET) by registered training providers together with non-accredited adult education. This includes the provision of VET by TAFE Tasmania under Agreement.
The outputs in this group directly address the long-term vision and goals set out in Tasmania Together, Tasmania: A State of Learning, as well as the Tasmanian Industry Development Plan and agreed national strategies for vocational education and training including, Bridging Pathways and Partners in a Learning Culture.
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Output group 3: Public information services
Description
The purpose of this output group is to provide statewide library and information services and archival services in accordance with the goals of Tasmania Together.
The department’s outcomes to which this output group contributes are:
- an informed, empowered and technologically literate community of lifelong users of information and information technology
- an improved quality of life for all Tasmanians and a culturally rich community
- sustained economic development in the information age through community and individual innovation
- equity of access to information and to resources for innovation
- the enhanced capacity and increased opportunity for the community to have access to and use its government’s records of continuing value and other Tasmanian archival material.
Departmental activities are classified as either controlled or administered.
Controlled activities involve the use of assets, liabilities, revenues and expenses controlled or incurred by the department in its own right. Administered activities involve the management or oversight by the department on behalf of the government of items controlled or incurred by the government.
The department is predominantly funded through parliamentary appropriations. It also provides services on a fee for service basis, as outlined in note 5.4. The financial report encompasses all funds through which the department controls resources to carry on its functions.
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2.2 Basis of accounting
The financial statements are a general purpose financial report and have been prepared in accordance with:
- the Treasurer’s Instructions issued under the provisions of the Financial Management and Audit Act 1990
- Australian Accounting Standards issued by the Australian Accounting Standards Board. In particular, AAS29 ‘Financial reporting by Government Departments’ has been applied.
Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AEIFRS). Compliance with AEIFRS may not result in compliance with International Financial Reporting Standards (IFRS), as AEIFRS includes requirements and options available to not-for-profit organisations that are inconsistent with IFRS. The department is considered to be not-for-profit and has adopted some accounting policies under AEIFRS that do not comply with IFRS.
The financial statements have been prepared on an accrual basis and, except where stated, are in accordance with the historical cost convention. The accounting policies are generally consistent with the previous year except for those changes outlined in note 2.5 below.
The financial statements are presented in Australian dollars.
The continued existence of the department in its present form, undertaking its current activities, is dependent on government policy and on continuing appropriations by parliament for the department’s administration and activities.
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2.3 Reporting entity
The financial statements include all the controlled activities of the department. The financial statements aggregate material transactions and balances of the department and entities included in its output groups. Material transactions and balances between the department and such entities have been eliminated.
The department, through a purchaser-provider model, predominately funds the operations of TAFE Tasmania. However, it operates as a statutory authority under the provisions of the TAFE Tasmania Act 1997. Accordingly, it has been determined that TAFE Tasmania is a separate reporting entity and its transactions are not consolidated into the Department of Education’s Financial Statements.
The Tasmanian Qualifications Authority transactions and balances are included in these financial statements.
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2.4 Fair presentation
No departure from Australian Accounting Standards has been made in the preparation of these financial statements.
2.5 Changes in accounting policies
- Impact of new accounting standards
There are no new accounting standards that have been applied to these financial statements.
- Impact of new accounting standards yet to be applied
There are no new accounting standards that are yet to be applied within these financial statements.
- Voluntary changes in accounting policy
The department has not adopted any new accounting policies.
2.6 Administered transactions and balances
The department administers, but does not control, certain resources on behalf of the government as a whole. It is accountable for the transactions involving such administered resources, but does not have the discretion to deploy resources for the achievement of the department’s objectives.
Administered assets, liabilities, expenses and revenues are disclosed in the notes to the financial statements.
The administered items are disclosed on the same basis as is described for the financial statements of the department.
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2.7 Activities undertaken in a trustee or agency relationship
Transactions relating to activities undertaken by the department in a trust or fiduciary (agency) capacity do not form part of the department’s activities. Trustee and agency arrangements, and transactions/balances relating to those activities, are neither controlled nor administered.
Fees, commissions earned and expenses incurred in the course of rendering services as a trustee or through an agency arrangement are recognised as controlled transactions.
Transactions and balances relating to trustee or an agency arrangement are not recognised as departmental revenues, expenses, assets or liabilities in these financial statements. Details of these transactions are provided in note 15.
2.8 Transactions by the government as owner - restructuring of administrative arrangements
Net assets received under a restructuring of administrative arrangements are designated as contributions by owners and adjusted directly against equity. Net assets relinquished are designated as distributions to owners. Net assets transferred are initially recognised at the amounts at which they were recognised by the transferring agency immediately prior to the transfer. Details of these transactions are provided in note 10.3.
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2.9 Income
Income is recognised in the Income Statement when an increase in future economic benefits related to an increase in an asset or a decrease in a liability has arisen that can be measured reliably.
a) Appropriation revenue
Appropriations, whether recurrent or capital, are recognised as revenues in the period in which the department gains control of the appropriated funds. Except for any amounts identified as carried forward in note 5.1 and 14.1, control arises in the period of appropriation.
b) Grants
Grants payable by the Australian Government are recognised as revenue when the department gains control of the underlying assets. Where grants are reciprocal, revenue is recognised as performance occurs under the grant. Non-reciprocal grants are recognised as revenue when the grant is received or receivable. Conditional grants may be reciprocal or non-reciprocal depending on the terms of the grant.
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c) Sales of goods and services
Amounts earned in exchange for the provision of goods are recognised when the good is provided and title has passed. Revenue from the provision of services is recognised when the service has been provided.
d) Fees and fines
Revenue from fees and fines is recognised upon the time the obligation to pay arises, pursuant to the issue of a notice or invoice.
The collectability of debts is assessed at balance date and specific provision is made for doubtful debts.
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e) Gain/(loss) from the sale of non-financial assets
Income from the sale of non-financial assets is recognised when control of the asset has passed to the buyer.
f) Resources received free of charge
Services received free of charge by the department, are recognised as income when a fair value can be reliably determined and at the time the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.
Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value when the asset qualifies for recognition, unless received from another government agency as a consequence of restructuring of administrative arrangements, where they are recognised as contributions by owners directly within equity. In these circumstances, book values from the transferor agency have been used.
g) Other revenue
Revenue from other sources, including revenue generated from school activities, is recognised as revenue when the department obtains control over the assets comprising the contributions. Control is normally obtained upon their receipt.
2.10 Expenses
Expenses are recognised in the Income Statement when a decrease in future economic benefits related to a decrease in asset or an increase of a liability has arisen that can be measured reliably.
a) Employee entitlements
Employee entitlements include entitlements to wages and salaries, annual leave, sick leave, long service leave, superannuation and other post-employment benefits.
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b) Depreciation and amortisation
All non-current assets having a limited useful life are systematically depreciated over their useful lives in a manner which reflects the consumption of their service potential. Land, being an asset with an unlimited useful life, is not depreciated. Heritage assets are also not depreciated as their value does not diminish.
Depreciation is provided for on a straight-line basis, using rates which are reviewed annually. Major depreciation periods are:
| Plant and equipment |
3-30 years |
| Buildings (masonry) |
60 years |
| Buildings (timber framed) |
40 years |
| Buildings (steel framed) |
40 years |
| Sundry structures |
30 years |
| Infrastructure |
80 years |
| Library book stock |
10-25 years |
| Heritage |
Not depreciated |
| Major amortisation rates are: Computer software |
20% |
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The department undertook a revaluation of its land, building, and heritage assets during 2004-05. As part of this revaluation exercise the department reviewed and amended the useful lives of its buildings and related assets, as per the lives in the above list. These amendments were made based on advice from the valuers, Liquid Pacific Holdings Pty Ltd. In 2006-07, these assets were indexed with values provided by Liquid Pacific.
c) Grants and subsidies
Grants are recognised to the extent that:
- the services required to be performed by the grantee have been performed; or
- the grant eligibility criteria have been satisfied.
A liability is recorded when the department has a binding agreement to make grants but services have not been performed or criteria satisfied. Where grant monies are paid in advance of performance or eligibility, a prepayment is recognised.
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d) Write down of assets
A revaluation decrement is recognised as an expense in the Income Statement except to the extent that the decrement reverses a revaluation increment previously credited to, and still included in the balance of, an asset revaluation reserve in respect of that same class of asset. In this case, it is debited directly to that revaluation reserve.
Where an increment reverses a revaluation decrement previously recognised as an expense in the Income Statement, in respect of that same class of non-current assets, the revaluation increment is recognised as revenue.
e) Resources provided free of charge
Services provided free of charge by the department, to another entity, are recognised as an expense when fair value can be reliably determined.
f) Other expenses
Other expenses are recognised when the associated service and supply has been provided.
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2.11 Assets
a) Cash and deposits
Cash means notes, coins and deposits held at call with a bank or financial institution, for the department and schools, as well as funds held in the Special Deposits and Trust Fund. Deposits are recognised at their nominal amounts. Interest is credited to revenue as it accrues.
b) Receivables
Receivables are recognised at the amounts receivable as they are due for settlement. Impairment of receivables is reviewed on an annual basis. Impairment losses are recognised when there is an indication that there is a measurable decrease in the collectability of receivables.
c) Assets held for sale
Assets held for sale are measured at the lower of carrying amount and fair value less costs to sell.
d) Property, plant and equipment, library book stock and heritage assets
(i) Valuation basis
Land and Buildings: Land is valued at fair value. Buildings (including sundry structures and infrastructure assets) have been valued on a fair value basis, being market value or where a market does not exist on a written down current cost (WDCC) basis.
Plant and Equipment: Plant and equipment assets are valued at cost.
Library Book Stock: The department’s library book stocks are valued at cost.
Heritage: The department’s heritage assets are valued at fair value.
(ii) Asset recognition threshold
The asset capitalisation threshold adopted by the department is $150,000 for intangible assets and major capital works, and $10,000 for all other assets. Assets valued at less than these thresholds are charged to the Income Statement in the year of purchase (other than where they form part of a group of similar items which are significant in total).
(iii) Revaluations
The department revalues applicable assets on a rolling program of five years. In accordance, with AASB116 Property, Plant and Equipment, in years between valuations, indices supplied by qualified valuers are used to establish fair value.
Assets are grouped on the basis of having a similar nature or function in the operations of the department.
Those assets that are restricted by legislation and or government directives are disclosed in the Balance Sheet as administered assets.
The department’s land, buildings and heritage asset classes were independently valued during 2004–05 with an effective date of 1 July 2004 by Liquid Pacific Holdings Pty Ltd. The revaluation of these assets was on a fair value basis in accordance with relevant accounting standards and Treasurer’s Instructions. In 2006–07, these assets were indexed using indices provided by Liquid Pacific.
During 2007, Mr Simon Storey (MA VAA) of Simon Storey Valuers, valued the collection of the Allport Library and Museum of Fine Arts to fair value, as at 30 June 2007. The collection had not previously been valued. The valuation as at 30 June 2007, of $29.503 million, was recognised as income in the Income Statement for the 2007 financial year.
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e) Intangibles
An intangible asset is recognised where:
- it is probable that an expected future benefit attributable to the asset will flow to the department
- the cost of the asset can be reliably measured.
Intangible assets held by the department are valued at fair value where an active market exists and are amortised on a straight line basis over their estimated useful life. Where no active market exists, intangibles are valued at cost.
f) Impairment
All assets are assessed to determine whether any impairment exists. Impairment exists when the recoverable amount of an asset is less than its carrying amount. Recoverable amount is the higher of fair value less costs to sell and value in use. The department’s assets are not used for the purpose of generating cash flows; therefore value in use is based on depreciated replacement cost where the asset would be replaced if deprived of it.
g) Other assets
The department recognises some other small assets such as prepayments of expenditure and GST input tax credits received.
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2.12 Liabilities
Liabilities are recognised in the Balance Sheet when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably.
a) Payables
Payables, including goods received and services incurred but not yet invoiced, are recognised at the nominal amount when the department becomes obliged to make future payments as a result of a purchase of assets or services.
b) Employee entitlements
Liabilities for wages and salaries and annual leave are recognised when the employee becomes entitled to receive the benefit. Those liabilities expected to be realised within 12 months are measured as the amount expected to be paid. Other employee entitlements are measured as the present value of the benefit at 30 June 2007, where the impact of discounting is material, and at the amount expected to be paid if discounting is not material.
A liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date.
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c) Superannuation
No superannuation liability is recognised for the accruing superannuation benefits of departmental employees. This liability is held centrally and recognised within the Finance-General Division of the Department of Treasury and Finance.
d) Other liabilities
Other liabilities, includes revenue received in advance, where the department has received funds for which goods or services have not yet been provided or where specific conditions have not been met. The revenue will be recognised in the following financial year when the department gains control of the funds when the goods or services have been provided or when specific conditions have been met.
2.13 Leases
The department has entered into a number of operating lease agreements for buildings, office equipment and plant and equipment, where the lessors effectively retain all of the risks and benefits incidental to ownership of the items leased. Equal instalments of lease payments are charged to the Income Statement over the lease term, as this is representative of the pattern of benefits to be derived from the leased property.
The department is prohibited under Treasurer’s Instruction 502 from holding finance leases.
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2.14 Unrecognised financial instruments
The department has no unrecognised financial instruments.
2.15 Judgements and assumptions
In the application of Australian Accounting Standards, the department is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements made by the department that have significant effects on the financial statements are disclosed in the relevant notes to the financial statements.
The department has made no assumptions concerning the future that may cause a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.
2.16 Foreign currency
Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables are translated at the exchange rates current as at balance date. Associated gains and losses are not material.
2.17 Comparative figures
Comparative figures have been adjusted to reflect any changes in accounting policy or the adoption of new standards.
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2.18 Budget information
Budget information refers to original estimates as disclosed in the 2006-07 Budget Papers and has not been subject to audit.
2.19 Rounding
All amounts in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated. Where the result of expressing amounts to the nearest thousand dollars would result in an amount of zero, the financial statement will contain a note expressing the amount to the nearest whole dollar.
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2.20 Departmental taxation
The department is exempt from all forms of taxation except fringe benefits tax, payroll tax and the goods and services tax (GST).
In the Cash Flow Statement, the GST component of cash flows arising from investing or financing activities which is recoverable from, or payable to, the Australian Taxation Office is, in accordance with the Australian Accounting Standards, classified as operating cash flows.
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Employment
Income Statement
Note 1