Australian Government
Department of Finance and Deregulation
SUMMARY OF SIGNIFICANT CHANGES
TO THE FINANCE MINISTER’S ORDERS FOR FINANCIAL REPORTING
(INCORPORATING POLICY AND GUIDANCE) AND PRIMA FORMS OF FINANCIAL
STATEMENTS APPLYING TO 2011-12
The purpose of this document is to provide entities with an overview of the significant changes
to the Finance Minister’s Orders for Financial Reporting (FMOs) and PRIMA Forms of
Financial Statements. Additionally, it offers guidance to assist entities in identifying which of
these changes may constitute a change in accounting policy, as required by AASB 108
Accounting Policies, Changes in Accounting Estimates and Errors, and thus might require
disclosure (whilst considering materiality and the entity’s own circumstances).
Reference
Change in
accounting
policy1
Changes
Finance Minister’s Orders
General

Amended – throughout the document:

o sections containing guidance on changes applicable for the first
time in 2010-11 (e.g. to Australian Accounting Standards
(AAS)) have either been removed or condensed;
o divisions have been reworked to improve readability by grouping
related sections under subheadings;
o where required, paragraphs have been moved to more appropriate
divisions or levels (e.g. from policy to black letter or guidance);
and
o guidance not relevant to the preparation of financial statements
has been removed.
No impact.
1
Disclaimer: These changes have been assessed by Finance as likely to constitute a change in accounting policy in
accordance with the principles of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors to
assist entities in preparing and presenting their financial statements. However, entities will need to consider whether
the changes actually constitute a change in accounting policy for their own individual circumstances then work
through the potential reporting implications whilst considering materiality. Hence, not all of the likely changes in
accounting policy might apply to an entity or require disclosure.
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Page 1

Replaced most specific references to Financial Management and
Accountability Act 1997 (FMA Act) agencies and Commonwealth
Authorities and Companies Act 1997 (CAC Act) authorities with
references to the defined term entities in order to ensure items are
reported consistently by all Commonwealth entities where relevant.

Impact: when determining whether an accounting treatment or
disclosure is relevant, entities must consider the substance of the
transaction and/or circumstances (i.e. if you have it, you report it and
disclose in full). For example, references to agency have been
replaced with entity in Divisions 100 – 104 to ensure all
Commonwealth entities to which these requirements apply prepare
appropriation disclosures on a consistent basis.

Information which is inconsistent with the philosophy of the Finance
Minister’s Orders (FMOs) has been removed. The philosophy of the
FMOs being that:

o it will not duplicate or re-state accounting standards;
o they are not a “training tool”;
o they should be logically arranged; and
they should be written as close to “plain English” as is feasible
for a technical document.
No impact.
1 Legislative
Authority

Clarified the scope and source of authority of the FMOs.


Amended division to reflect the move to a single legislative
instrument titled Finance Minister’s Orders (Financial Statements
for reporting periods ending on or after 1 July 2011) for all entities
covered by the FMOs.

No impact.
2 Content,
Philosophy
and Structure

Added sections on content and philosophy of the FMOs, which set
out the principles adhered to when preparing the FMOs and PRIMA
Forms of Financial Statements (PRIMA Forms).

No impact.
4 Definitions

Replaced the defined terms administered items and departmental
items with administered and departmental respectively, as the
previous terms already had a specific meaning under the
Appropriation Acts.


Moved the following definitions from other divisions:

o appropriations for payment to CAC Act bodies (from Division
100);
o commitments (from Division 81); and
o heritage and cultural assets (from Division 37).

Replaced the defined term responsible agency with responsible
entity.
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Page 2


Removed the following definitions which are defined elsewhere (i.e.
in AAS, legislation, Government policy or guidance):

o drawdown;
o FinanceBriefs;
o Portfolio Budget Statements;
o redundancy;
o reimbursement;
o reserves;
o revaluation;
o special account;
o special appropriations; and
o standing appropriations.


Added definition of Public Non-Financial Corporations.
No impact.
8
Authoritative
Requirements

Added guidance clarifying the legal meaning of the phrase ‘have
regard to’ in relation to the status of FinanceBriefs, Accounting
Guidance Notes (AGNs), etc.

Impact: While the ‘have regard to’ principle is well established, the
FMOs now clarify that entities must take principles in FinanceBriefs,
etc. into consideration as a fundamental element in decision making.
In rare circumstances where entities are of the view that key
principles should not be applied, they must be able to demonstrate
why and document their reasoning.
9 Financial
Reporting
Structure and
Form

10 Simplified
reporting

Added new requirement for not-for-profit entities to disclose their
basis of operations in accordance with paragraph 8(b) of AASB
1054.

Impact: all entities must disclose whether they operate on a forprofit or not-for-profit basis.
Removed division – provisions moved to other relevant divisions
where appropriate.

No impact.
13 Rounding
off

Clarified that section 13.2 is subject to the exceptions in sections
13.3 to 13.5.

No impact.
15
Departmental
and
Administered
Items:
Classification
and Reporting

Clarified that all special public money is neither departmental nor
administered, including money held in trust, which is a subset of
special public money. See also changes to Division 120.
No impact.
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
16 Exemptions
from this
Schedule

Added section 16.4 to black letter to clarify that even where granted,
exemptions cannot be applied if they do not comply with AAS.


Added section 16.5 to black letter to clarify that entities must prepare
information required for consolidation into the CFS.

Impact: Entities are not able to apply exemptions where they result
in non-compliance with AAS.
17 Approved
Exemptions

Removed exemption - for-profit entities are no longer exempt from
making disclosures under Division 23.

Impact: For-profit entities must make disclosures required under
Division 23, including 2010-11 comparatives.
23 Director/
Executive
Remuneration

General:
o Clarified that references to remuneration are taken to refer to
Table A requirements only, whereas references to reportable
remuneration refer to Table B and C disclosures (in relation to
requirements for staff who were promoted to SES part-way
through the reporting period, etc).

o Added requirements for individuals on secondment.

o Added guidance specifically encouraging entities to include extra
footnote disclosure if any figures appear unusual or otherwise
warrant additional explanation, only where it provides
meaningful information for users.

o Removed exemption for senior executives and other highly paid
staff who worked wholly or mainly outside Australia (excluding
those who are deployed).

Impact: as described above, noting that from 2011-12 for-profit
entities are within scope of Division 23 (see changes to Division 17
above).

Added new requirements for Table B:
o From 2011-12, this table is required to be prepared on a cash
basis. With the exception of superannuation, all other items are
to be based on the payment summary. Superannuation is based
on payslips where available (otherwise entities need to work
with their auditors).
o The table now shows average annual reportable remuneration,
which is comprised of reportable salary, contributed
superannuation, reportable allowances and bonus paid (each
element is disclosed as a separate column).
o Each component of reportable remuneration is a defined term in
Division 23 of the FMOs.
o Bands are now based on the total column (i.e. total reportable
remuneration).
o Table B now applies to all substantive senior executives during
the reporting period, rather than only those employed at 30 June.
o Enhanced footnote disclosures have been added supporting the
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Page 4

table.
Impact: as described above, noting that these disclosures will also
need to be prepared for 2010-11 comparatives.

Added new requirements for Table C:

o Disclosures for other highly paid staff (Table C) have been
aligned with disclosures for senior executives in Table B.
o As in 2010-11, the minimum threshold for other highly paid staff
is $150,000 but it is now to be applied to reportable
remuneration.
Impact: as described above, noting that these disclosures will also
need to be prepared for 2010-11 comparatives.
38 Assets Held
in Trust

Added section 38.2(c)(iv) to black letter to clarify that changes in
fair value must be included in the disclosures to ensure the estimated
value in the bottom line reconciles to the value on the balance sheet.

Impact: As outlined above.
42 Provisions

Removed division as it contained no black letter and sections merely
paraphrased or referred to AAS and AGNs.

No impact.
44
Measurement
and Disclosure
of Post
Employment
Plans

Relocated guidance on PSS, CSS and military superannuation
schemes from Division 90, which has been removed.

No impact.

Clarified the requirement to reference Australian Government bonds
when determining a discount rate for employee benefits under AASB
119.

No impact.
50 Statement
of Changes in
Equity

75 Schedule of
Administered
Items

81
Commitments

Removed division, as it contained no black letter and the guidance
was covered by Division 85.

No impact.
Removed division as the requirements were covered by Division 85.

No impact.
Amended Division 81 to ensure commitment requirements were
unchanged following the removal of paragraph Aus 138.6 from
AASB 101.

No impact.
82 Asset
Additions


Removed division.
Impact: Entities are no longer required to prepare the schedule of
asset additions.
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Page 5
85
Administered
Reporting

The treatment of administered transactions is unchanged from 201011, with the following amendments to disclosures:

o Added the requirement to prepare a schedule of administered
comprehensive income;
o Net assets line added to the schedule of administered assets and
liabilities;
o Added requirement to prepare an administered cash flow
reconciliation; and
o Former administered reconciliation table has been given greater
prominence and renamed as a schedule.
Impact: As outlined above (also refer to administered reporting
changes in PRIMA Forms detailed below).
86 Income and
Expenses
Administered
on Behalf of
Government

89 Impairment
of
Administered
Assets

90 Liabilities
Administered
on Behalf of
the
Government

91 Transfer
Payments

100
Recognition of
Approps –
General

Clarified that quarantining in itself has no impact on
recognition/disclosure of appropriations.


Removed former section 100.51P as part of principles-based
approach and focus on substance over form. If entities have
appropriations then they must report them, regardless of their
enabling legislation.

Removed division, as it only referred to other divisions.

No impact.
Removed division and relocated guidance to Division 85.

No impact.
Removed division, black letter relocated to Division 44.

No impact.
Removed division and relocated guidance to Division 85.

No impact.
No impact.
103
Recognition of
Appropriations
– CAC
Entities

Removed division as guidance is inconsistent with principles-based
approach and focus on substance over form. Policy is sufficiently
covered by Division 102 and FinanceBrief 38.
No impact.
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Page 6

104 Disclosure
of Approps

Table A Annual appropriations – where applicable, a list of Finance
Minister’s determinations supporting numbers in the table must be
disclosed showing date of effect and amounts for administered as
well as departmental appropriations.


Added requirement to prepare new Table B Departmental and
Administered Capital Budgets (refer to changes to Note 35
Appropriations below).


Added new requirement to disclose unspent annual administered
appropriations in Table C Unspent annual appropriations in addition
to existing departmental disclosures.

Removed former 104.67P, which previously gave entities the choice
not to disclose Table F Reduction in administered items if no
reduction was required (an additional change to Table F is detailed in
the changes to Note 35 below).


Impact: Entities must now:
o disclose information on Finance Minister’s determinations
supporting administered appropriations as well as departmental
appropriations;
o disclose total unspent administered appropriations as well as
departmental, noting that 2010-11 comparatives must also be
prepared;
o disclose details of departmental and/or administered capital
budgets (where relevant); and
o publish Table F, regardless of whether an administered reduction
is required.
120 Special
Accounts

Amended disclosures for Table A Special accounts and B
Investments made under FMA Act section 39 (see detail in changes to
Note 36 below).

Impact: As outlined above.
123
Competitive
Neutrality and
Cost Recovery

Receipts derived from cost recovery arrangements must be disclosed
in accordance with PRIMA Forms (see detail in changes to Note 40
below).
Impact: As outlined above.
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Page 7

PRIMA Forms of Financial Statements
Note 1
Summary of
Significant
Accounting
Policies

The summary of significant accounting policies will now be
published as an attachment to PRIMA Forms.

No impact.

Consistent with changes in terminology throughout the FMOs, the
PRIMA Forms no longer refer to FMA only and CAC only notes
(refer to the general comments on the FMOs above for further
details).

Impact: Entities must prepare all disclosures that are relevant,
regardless of whether they are a FMA Act agency, CAC Act body,
etc.
Administered
reporting
(various notes)

Amended administered reporting requirements:
o Subheadings added to the administered reconciliation schedule to
clarify linkages to the schedule of administered comprehensive
income;
o Added administered disclosures to the following notes in PRIMA
Forms – Note 2 Events after the reporting period, Note 40
Competitive neutrality and cost recovery, and added Note 23:
Administered - Income Tax Expense (Competitive Neutrality).


Impact: As outlined above (refer to changes to Division 85 above
for additional details).
Cash flow
statement

Guidance inserted clarifying that appropriations designated as
contributions by owners are required to be disclosed as cash flows
from financing activities.

Impact: Entities must continue to disclose appropriations designated
as contributions by owners as cash flows from financing activities.
Schedule of
Asset
Additions

Note 8 NonFinancial
Assets

Schedule of asset additions has been removed.
Impact: Entities are no longer required to disclose the schedule of
asset additions. As a consequence, some line items have been added
back to Note 8 (see below).
The requirement to disaggregate asset additions by type (purchase,
finance lease, etc.) has been added back to due to the removal of the
schedule of asset additions (see above).
See Div 82
above

Impact: As described above.
Note 12
Restructuring

The restructuring note has been reformatted into a table, and now
requires disclosures to be prepared by entity and function for both
the current and previous reporting period.

Impact: As outlined above.
Note 17

Substantial changes to Tables B and C disclosures (refer to Division
23 above for additional information).
Impact: As outlined above.
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Page 8
See Div 23
above
Notes 19 and
33 Financial
Instruments

Amended disclosures in relation to the fair value hierarchy and
accompanying reconciliation in accordance with the requirements of
AASB 7.

Impact: As described above.
Notes 20 and
34 Financial
Assets
Reconciliation

Added new departmental and administered financial assets
reconciliation notes. These notes reconcile financial instruments
(assets) back to the financial assets shown on the balance sheet or
administered schedule of assets and liabilities for departmental and
administered, respectively.

Impact: As outlined above.
Note 30
Administered
cash flow
reconciliation

Note 35
Appropriations

Removed the requirement to split between spent and retention
amounts for the

amount required in Table F Reduction of administered items.
New requirement to prepare a cash flow reconciliation for
administered cash flows.
See Div 85
above
Impact: As described above.
See Div
104 above
Impact: As outlined above (see changes to Division 104 above for
additional changes to appropriation disclosures).
Note 36
Special
Accounts

Disclosures for special accounts amended:
o Disclosures split into Note 36A Special accounts (presented as a
single table) and Note 36B Investments made under section 39
of the FMA Act.
See Div
120 above
o New requirement added that amounts debited from special
accounts are required to be split into administered, departmental
and special public money; and
o New policy added to PRIMA Forms specifying that amounts
transferred back to the OPA because they are no longer
required, regardless of the dollar amount, must be disclosed as a
major class named reduction transfer to the OPA.
Impact: As outlined above.
Note 40
Competitive
Neutrality and
Cost Recovery

Competitive neutrality and cost recovery disclosures are no longer
part of the outcomes note, they are to be disclosed in a separate note.
Furthermore, income subject to Cost Recovery Policy is now
required to be disaggregated by cost recovery arrangements.
See Div
123 above
Impact: As outlined above.
Note 41 Net
Cash
Appropriation
Arrangements

The former Note 34 – Comprehensive Income/(Loss) attributable to
the agency has been amended.
Impact: Entities must prepare the disclosures in the format
prescribed in PRIMA Forms and are not permitted to present the note
elsewhere in their financial statements.
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Page 9
