Financial review
Five-year financial summary
2013
$’000
2012*
$’000
2011*
$’000
2010*
$’000
2009*
$’000
Income from government(1)
1,045,240
1,083,674
998,223
1,084,119
1,434,048
Total income from transactions
1,278,847
1,375,567
1,240,658
1,395,494
1,650,477
Total expenses from transactions
1,264,680
1,315,285
1,250,108
1,339,348
1,563,368
14,167
60,282
(9,450)
56,146
87,109
243,820
12,621
(3,857)
(107,846)
72,416
46,255
127,780
19,369
139,028
98,123
7,853,608
7,592,046
7,786,571
8,686,920
9,108,818
295,157
283,242
367,412
366,273
454,178
Net result from transactions(2)
Net result for the period
Net cash flow from operating activities
Total assets
Total liabilities
Notes:
1. Income from government includes both output and special appropriations.
2. The ‘net result from transactions’ is identical to the ‘net operating balance’ for the general government sector.
* Amended for impact of prior period errors and a change in accounting policy.
Current year financial review
Overview
The Victorian Government considers the net result from transactions to be the appropriate measure of financial
management that can be directly attributed to government policy. This measure excludes the effects of
revaluations (holding gains or losses) arising from changes in market prices and other changes in the volume of
assets shown under ‘other economic flows’ on the comprehensive operating statement, which are outside the
control of the department.
In 2012–13, the department recorded a net result from transactions of $14.2 million, which was $46.1 million
lower than in 2011–12. This change is largely because the department received $42.6 million of appropriation
funding in 2011–12 to repay advances made under section 37 of the Financial Management Act 1994. The
department did not receive any such advances in 2012–13.
The overall net result of $243.8 million is the highest in the five-year period as a result of Crown land recognised
for the first time.
Financial performance and business review
The department recorded a lower net result from transactions in 2012-13, primarily due to decreases in income.
The key falls in income related to the cessation of flood recovery funding, for which $72.5 million had been
received in 2011–12, and appropriation funding, to take into account the advances repaid in 2011–12 referred to
above. These decreases were slightly offset by increased income from the Metropolitan Parks Improvement
Rate.
Expenditure was materially consistent with 2011–12, being 4 per cent lower. The most significant changes were
the cessation of two grant funding programs in 2011–12: contributions to the Snowy Joint Government Enterprise
and grants to the Rural Finance Corporation of Victoria for floodplain restoration.
The net result after other economic flows for the period was a surplus of $243.8 million compared to the net result
of $12.6 million in 2011–12.
Financial position – balance sheet
Total assets increased by $261.6 million to $7,853.6 million (up 3.4 per cent) primarily due to the recognition of
Crown land river frontages as part of an ongoing exercise by Land Victoria. Intangible assets also increased as
work continued on the Fire and Emergency Management Portal, which is expected to be completed in 2015.
Total liabilities increased by $11.9 million primarily due to increases in accrued payables.
Consequently the department’s net assets increased by
3.4 per cent from last year to $7,558.4 million.
Cash flows
The department’s net cash inflow from operating activities decreased by $81.5 million to $46.3 million. This
reduction in cash reflects the department’s net result from transactions for the year, the impact of non-cash items
such as depreciation and movements in financial assets and liabilities.
Controlled expenses from transactions by output
Payments for outputs
(controlled)
$’000
%
Effective Water Management
and Supply
261,699
20.7%
Public Land
109,868
8.7%
Biodiversity
59,963
4.7%
Natural Resources
82,949
6.6%
Land and Fire Management
383,526
30.3%
Forests and Parks
198,967
15.7%
Environmental Policy and
Climate Change
47,673
3.8%
Land Administration and
Property Information
120,035
9.5%
1,264,680
100%
Financial governance
DEPI diligently exercises its various financial management obligations. The Minister for Finance has implemented
various financial governance frameworks to ensure effective, efficient and responsible financial management of
public resources, including the Financial Management Compliance Framework (FMCF). The FMCF governs
compliance with the provisions of the Financial Management Act 1994, Taxation Compliance Rules, Purchasing
Card Rules for Use and Administration and Thefts and Losses Rules.
The FMCF provides assurance that all public entities:
• have implemented appropriate systems for the effective, efficient and responsible financial management of
public resources and provides a mechanism for government to monitor and review compliance with legislation
• are complying with legislation in relation to the major federal taxes including GST, FBT and PAYG
• have implemented efficient and effective use of purchasing cards
• report all instances of thefts and losses to the Minister for Finance on an annual basis.
DEPI’s compliance with the Direction Requirements of the FMCF is formally assessed at 30 June each year and
the tax compliance component is subject to an independent review.
DEPI also maintains a number of financial policies, procedures and guidelines to ensure consistency in financial
transactions and financial reporting. These are reviewed and updated on an annual basis to ensure ongoing
relevance and conformance to external reporting requirements.
Financial transactions are subject to regular compliance reviews by the compliance team within the Finance and
Planning division. Compliance reviews include Financial Data Quality Assurance Reviews and Purchasing Card
transaction reviews. Exceptions identified during the compliance reviews are reported to the Executive Director
Finance and Planning (who is also the department’s Chief Finance and Accounting Officer for the purposes of
section 43(1)(a) of the Financial Management Act 1994).
Governance of Financial Management training is provided online to all staff applying for the right to exercise
financial delegations within the department. All financial delegates are required to repeat the training every three
years.
There is active participation in financial management amongst leadership teams throughout DEPI and financial
compliance continues to be embedded into revised work practices. Regular communication of the requirements
will continue through financial forums and daily work practices.
Budget portfolio outcome statements
A comparison of the budget portfolio outcome statements for the department, as published in the 2012–13
Budget Paper No. 5, and the actual results for the year can be found at Appendix 2.
Enhanced forecasting capability
In 2012–13 the department’s Budget Management System, Business Objects Planning, was further developed to
include forecasting and budget update functionality. The system’s enhanced capability enables the department to
efficiently collect, process and analyse forecasts and budget update requirements for both internal and
Department of Treasury and Finance (DTF) purposes.
Previously, this type of information was handled through the manual completion of Excel spreadsheets, with data
often transferred and replicated many times.
The added functionality allows budget update requests to be entered into the department’s Budget Management
System and then automatically submitted to the DTF State Resource Information Management System (SRIMS).
An added benefit has been the ability to eliminate errors at the data entry point and to automate required
calculations.
Internal budget reporting is now more comprehensive and reflective of business expectations, with the system
able to report both officially approved budgets as well as changes pending submission to, or approval by, DTF.
The implementation of these initiatives has enhanced the department’s ability to provide robust and timely advice
about its forecast financial position.