Financial Management Practice Manual Chapter 4 Financial Reporting Guidance Template Office of Health Statutory Agencies – Queensland Health Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 53 Document control sheet Contact for enquiries and proposed changes If you have any questions regarding this document or if you have a suggestion for improvements, please contact: Office of Health Statutory Agencies Email: statutoryagencies@health.qld.gov.au Telephone: 3234 1228 Version history Version no. Date Changed by Nature of amendment 1.0 July 12 Jesse Lee Final draft 1.1 October 12 James Ronan Financial Policy Review 1.2 October 12 Jesse Lee Final Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 54 Contents 4 Financial Reporting ................................................................................... 56 4.1 Overview ...................................................................................................... 56 4.2 Chart of Accounts ........................................................................................ 56 4.3 Reporting Entities......................................................................................... 57 4.3.1 Specific Definitions used in this section ................................................................................ 57 4.4 Reporting Requirements .............................................................................. 58 4.4.1 4.4.2 4.4.3 Monthly Reporting ................................................................................................................. 58 Annual Financial Statements ................................................................................................. 58 Cash Reporting ...................................................................................................................... 59 4.5 Annual Reports ............................................................................................ 59 4.5.1 Annual Report Content and Timing ....................................................................................... 60 4.6 Audit Reports – Internal and External .......................................................... 60 4.6.1 4.6.2 Internal Audit Reports............................................................................................................ 61 External Audit Reports .......................................................................................................... 61 Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 55 4 Financial Reporting 4.1 Overview Foundations have requirements relating to the preparation, certification and tabling of annual financial statements. See sections 61 & 62 of the Financial Accountability Act 2009. Foundations (including those newly formed) must comply with specific requirements regarding the preparing and timing of delivery of their annual financial statements. See sections 43 to 45 of the Financial and Performance Management Standard 2009. Key documents regarding the financial reporting requirements of Foundations include the Financial Accountability Handbook particularly Information Sheet 5.1 & 5.2 and the Financial Management Tools. In addition, Part B of the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines) outlines the Minimum Reporting Requirements for a Foundation. TIP: Ensure the Foundation is always up to date with key documents contained within the “Level 3 - Financial management instructions” mentioned in Chapter 1. This includes Financial Reporting Requirements issued by Queensland Treasury and Trade and interpretations issued by the Australian Accounting Standards Board and any relevant Australian Accounting Standards. – Provide an outline of the financial reporting of the Foundation. What is the objective of the Foundation’s financial reporting? – What are the principles for financial reporting by the Foundation? – Describe how the financial reporting practices of the Foundation meet the legislated requirements. – How is the financial reporting for the Foundation achieved? Who is responsible? When is it undertaken? – Describe the core activities related to the financial reporting for the Foundation, i.e. planning, budget setting, monitoring, analysis, reporting, auditing, lodging? – How does the financial reporting of the Foundation assist it in achieving the objectives and goals in its Strategic Plan and the deliverables in its Operational Plan? – How is the financial reporting of the Foundation used to indicate the Foundation’s performance throughout the financial year? 4.2 Chart of Accounts Link to (or include) the Foundation’s Chart of Accounts. A list of the foundation’s accounts is called the general ledger Chart of Accounts (CoA). The purpose of preparing a CoA is to keep the financial affairs organised by sorting transactions into groups, which are called ‘accounts’. – What is the purpose of the chart of accounts? What are they used for? Who is responsible for their maintenance, review etc? Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 56 – Describe how the accounts in the chart of accounts are categorised? Are they organised into accounting classes? If so, what are those classes? – Where can the Chart of Accounts be located? 4.3 Reporting Entities The Foundation is a reporting entity as defined by within the Statement of Accounting Concepts 1. It should therefore prepare general purpose financial statements in accordance with the Statement of Accounting Concepts 2 and any relevant Australian Accounting Standards or Australian Accounting Standards Board Interpretations produced by the Australian Accounting Standards Board. Foundations should also have regard to the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines) for further information. If the Foundation controls another entity, the annual financial statements must reflect a consolidation with the controlled entity’s financial statements. – Is the Foundation a sole reporting entity? If not, are the other reporting entities controlled by the Foundation? If other entities are required to be reported on, they should be noted here. – Describe how the Foundation’s financial reporting complies with the requirements indicated above for reporting entities. 4.3.1 Specific Definitions used in this section The Foundation should include additional definitions considered appropriate for their business and remove those not applicable. Associated Entity is an entity, including an unincorporated entity such as a partnership, over which the Foundation has significant influence and which is neither a subsidiary nor an interest in a joint venture. Refer to AASB 128 - Investments in Associates and Joint Ventures for specific information. Capacity means the ability or power, either direct or indirect that is exercisable as a result of: trusts; relevant agreements; and/or historical practices whether or not these are legally enforceable. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, according to AASB 128 - Investments in Associates and Joint Ventures. Economic Entity means a group of entities comprising the parent entity and each of its subsidiaries or controlled entities. Entity means any legal, administrative or fiduciary arrangement, or organisational structure or other party having the capacity to deploy scarce resources in order to achieve objectives. Refer to AASB 101 - Presentation of Financial Statements. Reporting Entity means an entity, including an economic entity, for which there are expected to be users who rely on general purpose financial reports for information about that Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 57 entity, where such information is useful for making and evaluating decisions about the allocation of resources. Refer to section 9 of the Financial Accountability Act 2009 for further clarification of the definition of a statutory body. 4.4 Reporting Requirements Foundation should have regard to the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines) for further information. Link to the Foundation’s financial reporting calendar (if applicable). – Describe the Foundation’s general reporting requirements. – Who is responsible for the development, review and evaluation of these requirements? How are staff made aware of any changes? – How does the Foundation ensure it is made aware of any mandatory changes to the reporting requirements, i.e. AASB amendments, Treasury amendments etc? – Does the Foundation have a financial reporting calendar? If so, where is this kept? Who is responsible for it? 4.4.1 Monthly Reporting Regular reporting is a vital component of a sound Internal Control Structure for the Foundation. – Describe the Foundation’s monthly reporting requirements. – What does the Foundation report on monthly? – What are the Foundation’s internal reporting policies and processes? – How are these reports compiled? Who is responsible? What is done with the information provided by the monthly reporting? – Who is responsible for the Foundation’s monthly reporting? How can the requirement for these reports change? – Is the Foundation’s monthly reporting requirements used to assess progression on the goals in its Strategic Plan and deliverables in its Operational plan? 4.4.2 Annual Financial Statements Foundations have requirements relating to the preparation, certification and tabling of annual financial statements. Foundations must also have regard to the minimum standards set out in the Financial Reporting Requirements for Queensland Government agencies (including Accounting Policy Guidelines), and the ‘prescribed accounting standards’ when preparing annual financial statements. See sections 59 & 61-62 of the Financial Accountability Act 2009. Foundations must comply with specific requirements regarding the preparation and timing of delivery of their annual financial statements. Foundations must have their annual financial statements audited as required by the Auditor-General Act 2009. The audit report must be completed no later than two months after the end of the financial year to which the statements relate. See sections 43-45 of the Financial and Performance Management Standard 2009. Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 58 Foundations must also have regard to Financial Accountability Handbook - Information Sheet 5.2, Financial Management Tools - Information Sheet 5.2 and the Non-Current Asset Policies for the Queensland Public Sector in preparing their annual financial statements. Annual Financial Statements are part of the Performance Management Framework (public reporting) discussed in Chapter 3.2. TIP: Ensure the Foundation is always up to date with key documents contained within the “Level 3 - Financial management instructions” mentioned in Chapter 1. – Provide an outline of the annual financial statements of the Foundation. What is the objective and purpose of these statements? – What is the timeline and work schedules for preparation of the financial statements? – Who is responsible for developing, reviewing and approving the annual financial statements of the Foundation? – Describe how the annual financial statements of the Foundation meet the legislated requirements. – Describe the link between the Foundation’s annual financial statements and its Performance Management Framework. – Describe the core activities related to the annual financial statements the Foundation, i.e. preparation, analysis, reporting, auditing and lodging. – What procedures are in place to ensure the annual financial statements of the Foundation are prepared, audited and lodged on time? 4.4.3 Cash Reporting A Foundation is required to have a cash management system to efficiently, effectively and economically manage its financial resources. See section 15 of the Financial and Performance Management Standard 2009. Foundations should have regard to the Cash Management Handbook for Departments and Agencies produced by Queensland Treasury. – What are the Foundation’s practices for cash reporting? How often is cash reported on – daily, weekly, monthly etc? – Who is responsible for cash reporting? – What controls and security is in place for cash management? 4.5 Annual Reports Foundations are required to prepare an annual report and provide this report to the Minister. See section 63 of the Financial Accountability Act 2009 and section 49 of the Financial and Performance Management Standard 2009. TIP: – Annual reports are part of the Performance Management Framework (public reporting) discussed in Chapter 3.2. Refer to Financial Management Tools Information Sheet 5.5 – Annual Reports and the Annual Report Requirements for Queensland Government Agencies for guidance material. Provide an outline of the annual report of the Foundation. What is the objective and purpose of the report? Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 59 – Describe how the annual report of the Foundation meets the legislated requirements. – Describe the core elements of the annual report of the Foundation. – How is the annual reporting for the Foundation achieved? Who is responsible? How is it undertaken? – Describe how the annual report assists the Foundation in achieving the objectives and goals in its Strategic Plan and the deliverables in its Operational Plan? – Describe the link between the Foundation’s annual report and its Performance Management Framework. – How is the annual report of the Foundation used to indicate the Foundation’s overall performance throughout the financial year? 4.5.1 Annual Report Content and Timing Foundations must have regard to the Annual report requirements for Queensland Government agencies when developing their annual report, in particular, Part A – Minimum Content Requirements and section 23 – Timeframes (approval and tabling process). Foundations must include specific content in their annual report and must have it tabled in the Legislative Assembly within three months after the end of the financial year. See sections 49 & 50 of the Financial and Performance Management Standard 2009. – When is the Annual Report due for completion? – Who is responsible for developing, reviewing, publishing and approving the Annual Report of the Foundation? – Describe the process that ensures the Foundation’s annual report is provided to the Minster within the required timeframe? Who is responsible for this process? – How is the content of the annual report determined? Who is responsible for this? – Describe how the content of the Foundation’s annual report meets the requirements set out in the Annual report requirements for Queensland Government agencies document. 4.6 Audit Reports – Internal and External Internal audits are not mandatory requirements for Statutory Bodies. Conversely, Foundations are required to be externally audited annually. Refer to section 30 of the Auditor-General Act 2009 for information on public sector audits. Refer to Information Sheet 2.8 - External Audit of the Financial Accountability Handbook for further information. TIP: Further information on the internal and external audit requirements can be found in Chapter 2, sections 2.10 and 2.11. It is recommended to keep a Register of Audit Findings as per Financial Management Tools Information Sheet 4.5 (inclusive of internal and external audit findings. – Who are the audit reports provided to? – What levels of confidentiality are required for these reports? Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 60 4.6.1 Internal Audit Reports Refer to sections 32-33 of the Financial and Performance Management Standard 2009 for more information on Internal Audits. TIP: If Internal Audits or not undertaken by the Foundation, it should be noted here. – Who is responsible for responding to the internal audit reports? – What is the response if a recommendation is accepted or rejected? – How is the report stored? How are the responses stored? 4.6.2 External Audit Reports Refer to section 30 of the Auditor-General Act 2009 for information on Public Sector Audits. Refer to Information Sheet 2.8 - External Audit of the Financial Accountability Handbook for further information. Foundations are required to consider the Auditor-General’s report at the first ordinary meeting after the financial statements have been certified. See section 46 of the Financial and Performance Management Standard 2009. Where ‘significant’ recommendations are not adopted, the Auditor-General may include details in a report to Parliament (refer to Information Sheet 4.5 - Audit Findings and Resolution). – Who is responsible for responding to the external audit reports? – Is there a Register of Audit Findings? If so, who maintains it? – What is the response if a recommendation is accepted or rejected? Rejection of external audit recommendations must be clearly documented. – What is the timeframe for responding to recommendations? – How is the report stored? How are the responses stored? Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 61 This page is intentionally left blank. Financial Management Practice Manual - Guidance Template Chapter 4 – Financial Reporting 62