Annual Report 2013–14—Chapter 4: Financial performance

Summary of financial performance

Tables 12–15 give an overview of APVMA financial performance for 2013–14. Full details are in the audited financial statements on the following pages.

Income

The APVMA's total income for 2013–14 financial year was $28.275 million (Table 12), a decrease of $2.137 million (7.03 per cent) from the previous year. This decrease is largely is due to the returning of $2.0 million to the budget as part of the Better Regulation reform funding agreement.

Table 12 Income, 2013–14
Income source Income ($'000) %
Receipts from industry    
Application fees 5 087 16.80
Levies 17 059 56.35
Annual fees (renewal fees) 4 793 15.83
Other receipts from industry 2 031 6.71
Industry funds returned to the budget (2 000) n/a
Parliamentary appropriation 981 3.24
Other revenue 324 1.07
Total income 28 275 100.00
Table 13 Agency Resourcing Statement, 2013–14
  Actual available appropriation for 2013–14
($'000)
Payments made in 2013–14
($'000)
Balance remaining in 2013–14
($'000)
Ordinary annual service      
Department expenses      
Prior year departmental appropriation 2 145 2 145 0
Departmental appropriations 981 981 0
Revenue from independent sources (s. 31) 278 278 0
Total 3 404 3 404 0
Special appropriation 26 713 26 713 0
Special account      
Opening balance 20 104    
Appropriation receipts 29 327    
Payments made   30 852  
Total Special Account 49 431 30 852 18 579
Total resourcing and payments 79 548 60 969 18 579
Less appropriations drawn from special appropriations above and credited to the special account 26 713 26 713 0
Total net resourcing and payments 52 835 34 256 18 579

Expenditure

Total operating expenses for 2013–14 were $31.997 million (Tables 14 and 15), an increase of $0.693 million (2.21 per cent) from the previous year.

Table 14 Expenditure, 2013–14 (including comparison with Portfolio Budget Statement)
  2013–14 actual expenditure
($'000)
% of expenditure 2013–14 budget
(per PBS) ($'000)
Employee benefits 21 441 67.01 22 719
Supplier expenses 9 691 30.29 10 441
Depreciation 841 2.63 691
Other 24 0.07 0
Total expenditure 31 997 100.00 33 851

PBS = Portfolio Budget Statement

Table 15 Expenses for Outcome 1
Outcome 1: Protection of the health and safety of people, animals, the environment, and agricultural and livestock industries through regulation of pesticides and veterinary medicines 2013–14
budget
($'000)
2013–14
actual
($'000)
2013–14
variance
($'000)
2012–13
actual
($'000)
Department expenses        
Ordinary annual service (Appropriation Bill 1) 981 981 - 1 009
Revenue from independent sources (s. 31) 435 278 157 243
Special appropriation 31 695 29 861 1 834 30 714
Expenses not requiring appropriation 740 877 (137) 549
Total expenses for Outcome 1 33 851 31 997 1 854 32 515

Equity

We recorded a net operating deficit of $3.722 million for 2013–14. This was primarily due to the spending of unspent funding for the Better Regulation reforms that had been received in previous years as well as the returning of $2.0 million to the budget as part of the reform funding agreement as mentioned above. As at 30 June 2014, the Better Regulation reform funding has been fully expensed.

Our equity at 30 June 2014 was $8.798 million.

Audit results

The APVMA achieved an unqualified audit result, and there were no adverse findings.

Financial reserve

Our revenue can vary significantly from year to year as a result of fluctuations in sales of pesticides and veterinary medicines, due to changing environmental conditions. To manage this, we aim to hold a financial reserve (which forms part of our equity). Without this financial reserve, we would risk periods where our liabilities would exceed our assets (negative equity).

The financial reserve is based on three months of operating expenses and is currently set at $7.0 million.

Cost-recovery

New cost-recovery arrangements commenced on 1 July 2013, following the development and subsequent approval of a cost-recovery impact statement (CRIS) during 2012–13.

Implementation of the arrangements outlined in the CRIS was intended to coincide with the commencement of the Agricultural and Veterinary Chemicals Legislation Amendment Bill 2012. This was proposed to commence on 1 July 2013; however, amendments to the Bill in the House of Representatives revised the commencement date to 1 July 2014.

The key changes to the APVMA's fees and charges from 1 July 2013 were:

  • returning application fees to 40 per cent cost-recovery level
  • recovering close to 100 per cent of the costs associated with compliance with good manufacturing pratice
  • implementing reductions in the levy rate.

The fees and charges relating to the legislative reforms that will commence on 1 July 2014 include those for:

  • pre-application advice and subsequent advice
  • electronic conversion of hard-copy applications.

In 2013–14, we continued to provide input into the Australian Government Department of Agriculture's first-principles review of the cost-recovery arrangements for the APVMA. This review seeks to examine and recommend options to strengthen the financial sustainability, transparency and accountability of the APVMA's cost-recovery arrangements.

Advertising and market research

No advertising or market research was conducted during 2013–14.

Consultancies

In 2013–14, 40 new consultancy contracts were entered into, involving total actual expenditure (including capitalisation) of $1 495 000. In addition, 19 ongoing consultancy contracts were active, involving total actual expenditure of $1 623 000..

Selection processes are described in terms drawn from the Commonwealth Procurement Guidelines. 'Direct sourcing' refers to a selection process in which neither a tender nor a panel is used. In these situations, multiple quotes were obtained, the number of quotes depending on the value of the procurement. APVMA Finance Procedure 4 ('Purchasing') outlines the number of quotes required:

  • Purchase of goods/services to $2000 One quote
  • Purchase of goods/services $2001 to $10 000 Two written quotes
  • Purchase of goods/services $10 001 to $80 000 Three written quotes
  • Purchase of goods/services $80 000 and over Tender

Exemptions to these requirements may be approved in some circumstances.

Annual reports contain information about actual expenditure on contracts for consultancies. Information on the value of contracts and consultancies is available on the AusTender website (tenders.gov.au).

Independent Auditor's Report

 

Statement by the Chief Executive Officer and Chief Financial Officer

 

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