Annual report 2017–18

Independent auditor’s report

Statement by Accountable Authority, Chief Executive and Chief Financial Officer

Australian Institute of Health and Welfare
Statement of Comprehensive Income
for the period ended 30 June 2018

Net cost of services

Expenses	Notes	2018 $'000	2017 $'000	Original Budget $'000
Employee benefits	2A	38,253	36,513	38,432
Supplier	2B	25,176	20,192	22,042
Depreciation and amortisation	6A	1,225	1,063	1,000
Revaluation decrement	—	288	—	—
Total expenses	—	64,942	57,768	61,474

Own-source income

Own-source revenue	Notes	2018 $'000	2017 $'000	Original Budget $'000
Sale of goods and rendering of services	3A	35,096	29,628	32,000
Interest	3B	1,759	1,021	1,000
Other revenues	3C	142	277	30
Total own-source revenue	—	36,997	30,926	33,030
Net cost of services	—	27,945	26,842	28,444
Revenue from government	3D	28,078	26,918	28,078
Surplus / (Deficit)	—	133	76	(366)

Other Comprehensive Income	Notes	2018 $'000	2017 $'000	Original Budget $'000
Change in asset revaluation reserve	—	(433)	—	—
Total other comprehensive income	—	(433)	—	—
Total comprehensive surplus / (deficit) attributable to the Australian Government	—	(300)	76	(366)

The above statement should be read in conjunction with the accompanying notes.

Australian Institute of Health and Welfare
Statement of Financial Position
for the period ended 30 June 2018

Assets

Financial assets	Notes	2018 $'000	2017 $'000	Original Budget $'000
Cash and cash equivalents	—	74,655	59,696	28,402
Trade and other receivables	5	10,456	4,775	30,582
Total financial assets	—	85,111	64,471	58,984

Assets

Non-financial assets	Notes	2018 $'000	2017 $'000	Original Budget $'000
Buildings	6	3,907	4,697	4,362
Property, plant and equipment	6	3,063	3,073	2,935
Intangibles	6	164	253	—
Prepayments	—	1,430	1,042	1,076
Total non-financial assets	—	8,564	9,065	8,373
Total assets	—	93,675	73,536	67,357

Liabilities

Payables	Notes	2018 $'000	2017 $'000	Original Budget $'000
Suppliers	—	(2,622)	(1,467)	(2,983)
Other payables	7	(5,008)	(4,990)	(3,872)
Contract income in advance	—	(42,770)	(24,041)	(15,098)
Total payables	—	(50,400)	(30,498)	(21,953)

Liabilities

Provisions	Notes	2018 $'000	2017 $'000	Original Budget $'000
Employee provisions	—	(12,525)	(11,969)	(11,817)
Makegood on leases	—	(120)	(139)	(3,988)
Total provisions	—	(12,645)	(12,108)	(15,805)
Total liabilities	—	(63,045)	(42,606)	(37,758)
Net assets	—	30,630	30,930	29,599

Equity	Notes	2018 $'000	2017 $'000	Original Budget $'000
Contributed equity	—	27,924	27,924	27,501
Reserves	—	1,977	2,410	2,410
Retained surplus (accumulated deficit)	—	729	596	(312)
Total equity	—	30,630	30,930	29,599

The above statement should be read in conjunction with the accompanying notes.

Australian Institute of Health and Welfare
Statement of Changes in Equity
for the period ended 30 June 2018

State-ment of Changes in Equity	Retai-ned Earn-ings 2018 $'000	Retai-ned Earn-ings 2017 $'000	Retai-ned Earn-ings Orig-inal Bud-get $'000	Asset Revalu-ation Surplus 2018 $'000	Asset Revalu-ation Surplus 2017 $'000	Asset Revalu-ation Surplus Orig-inal Bud-get $'000	Contri-buted Equity/ Capital 2018 $'000	Contri-buted Equity/ Capital 2017 $'000	Contri-buted Equity/ Capital Orig-inal Bud-get $'000	Total Equity 2018 $'000	Total Equity 2017 $'000	Total Equity Orig-inal Bud-get $'000
Opening balance Balance carried forward from previous period	596	520	54	2,410	2,410	2,410	27,924	2,756	27,501	30,930	5,686	29,965
Adjusted opening balance	596	520	54	2,410	2,410	2,410	27,924	2,756	27,501	30,930	5,686	29,965
Other Compre-hensive Income	—	—	—	(433)	—	—	—	—	—	(433)	—	—
Transfer from National Health Perform-ance Authority (note 14)	—	—	—	—	—	—	—	25,168	—	—	25,168	—
Surplus (Deficit) for the period	133	76	(366)	—	—	—	—	—	—	133	76	(366)
Total compre-hensive income attribut-able to the Austra-lian Govern-ment	133	76	(366)	(433)	—	—	—	25,168	—	(300)	25,244	(366)
Closing balance at 30 June	729	596	(312)	1,977	2,410	2,410	27,924	27,924	27,501	30,630	30,930	29,599

The above statement should be read in conjunction with the accompanying notes.

Australian Institute of Health and Welfare
Cashflow Statement
for the period ended 30 June 2018

Operating Activities

Cash received	Notes	2018 $'000	2017 $'000	Original Budget $'000
Receipts from government	—	28,078	26,918	28,078
Goods and services	—	49,397	37,064	32,000
Interest	—	1,344	902	1,000
Net GST received	—	1,503	1,211	—
Other	—	142	275	30
Total cash received	—	80,464	66,370	61,108

Operating Activities

Cash used	Notes	2018 $'000	2017 $'000	Original Budget $'000
Employees	—	(37,701)	(36,052)	(37,527)
Suppliers	—	(26,748)	(21,805)	(22,527)
Total cash used	—	(64,449)	(57,857)	(60,054)
Net cash from (used by) operating activities	—	16,015	8,513	1,054

Investing Activities

Cash used	Notes	2018 $'000	2017 $'000	Original Budget $'000
Purchase of property, plant and equipment	—	(1,056)	(752)	(572)
Total cash used	—	(1,056)	(752)	(572)
Net cash from (used by) investing activities	—	(1,056)	(752)	(572)

Financing Activities

Cash received	Notes	2018 $'000	2017 $'000	Original Budget $'000
NHPA - Appropriation & Bank Account	—	—	24,715	—
Total cash received	—	—	24,715	0
Net cash from (used by) financing activities	—	—	24,715	0
Net increase (decrease) in cash held	—	14,959	32,476	482
Cash and cash equivalents at the beginning of the reporting period	—	59,696	27,220	27,920
Cash and cash equivalents at the end of the reporting period	—	74,655	59,696	28,402

The above statement should be read in conjunction with the accompanying notes.

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 1: Summary of Significant Accounting Policies

1.1 Objectives of the Australian Institute of Health and Welfare

The Australian Institute of Health and Welfare (AIHW) is an Australian Government controlled entity. It is a not for profit entity and is structured to meet a single outcome:

• A robust evidence-base for the health, housing and community sectors, including through developing and disseminating comparable health and welfare information and statistics. This outcome is included in the Department of Health's (Health) Portfolio Budget Statements.
• The continued existence of AIHW in its present form and with its present programs is dependent on Government policy and on continuing appropriations by Parliament for AIHW’s administration and programs.

1.2 Basis of preparation of the financial statements

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

The financial statements have been prepared in accordance with:

1. Public Governance, Performance and Accountability (Financial reporting Rule 2015); and
2. Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities are recognised in the statement of financial position when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the Statement of Comprehensive Income when and only when the flow, consumption or loss of economic benefits has occurred and can be reliably measured. Financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013.

1.3 Significant accounting judgements and estimates

In the process of applying the accounting policies listed in this note, the AIHW has made the following judgements that have the most significant impact on the amounts recorded in the financial statements:

• the fair value of leasehold improvements and property, plant and equipment has been taken to be the depreciated replacement cost as determined by an independent valuer.

No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.

1.4 New Australian Accounting Standards

Adoption of new Australian Accounting Standard requirements

No Australian Accounting Standard has been adopted earlier than the application date as stated in the standard.

New standards, revised standards, interpretations or amending standards that were issued prior to the signing off date and are applicable to the current reporting period did not have financial impact and are not expected to have a future financial impact on the AIHW.

Future Australian Accounting Standard requirements

New standards, revised standards and interpretations that were issued by the Australian Accounting Standards Board prior to the signing off date and are applicable to the future reporting period and may have a financial impact on the AIHW financial statements are:

• AASB 15 Revenue from Contracts with Customers establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers, with revenue recognised once performance obligations are satisfied. The new requirements will impact revenue recognition from rendering of services. AIHW is currently assessing the impact, if any, the new requirements will have on revenue recognition.
• AASB 16 Leases requires all lessees to account for their leases (except those at low value or less than 12 months) on the Statement of Financial Position. This will impact the recognition, measurement and disclosure of AIHW operating leases for office accommodation in Canberra and Sydney.

These new standards are effective for reporting periods commencing on or after 1 July 2019.

1.5 Revenue

Revenue from the sale of goods is recognised when:

• the risks and rewards of ownership have been transferred to the buyer;
• the entity retains no managerial involvement nor effective control over the goods;
• the revenue and transaction costs incurred can be reliably measured; and
• it is probable that the economic benefits associated with the transaction will flow to the entity.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:

• the amount of revenue, stage of completion and transaction costs incurred can be reliably measured; and
• the probable economic benefits with the transaction will flow to the AIHW.

The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any allowance for impairment. Collectability of debts is reviewed at balance date. Allowances are made when collectability of the debt is no longer probable. Interest revenue is recognised using the effective interest method.

Revenues from government

Funding received or receivable from Health is recognised as Revenue from government unless they are in the nature of an equity injection or a loan.

1.6 Gains

Sale of assets

Gains from disposal of assets are recognised when control of the asset has passed to the buyer.

1.7 Transactions with the government as owner

Equity injections

Amounts that are designated as equity injections for a year are recognised directly in contributed equity in that year.

1.8 Employee benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for 'short-term employee benefits' (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of balance date are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Other long-term employee benefits are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the AIHW is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employees’ remuneration, including the AIHW’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2018. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. AIHW recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

AIHW staff are members of the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme or the Public Sector Superannuation Scheme accumulation plan.

The first two are defined benefit schemes for the Australian Government. The third is a defined contribution scheme.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance as an administered item.

The AIHW makes employer contributions to the employee superannuation scheme at rates determined by an actuary to be sufficient to meet the cost to the government of the superannuation entitlements of the AIHW’s employees. The AIHW accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.

1.9 Leases

Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased assets.

1.10 Borrowing costs

All borrowing costs are expensed as incurred.

1.11 Cash

Cash and cash equivalents includes notes and coins held and any deposits in bank accounts that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash is recognised at its nominal amount.

1.12 Financial assets

The AIHW classifies its financial assets as loans and receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Financial assets are recognised and derecognised upon 'trade date'.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Receivables

Trade receivables and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'receivables'. Receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of financial assets

Financial assets are assessed for impairment at each balance date.

Financial assets held at amortised cost: if there is objective evidence that an impairment loss has been incurred for loans and receivables held at amortised cost, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the statement of comprehensive income.

1.13 Financial liabilities

Financial liabilities are classified as other financial liabilities.

Financial liabilities are recognised and derecognised upon ‘trade date’.

Other financial liabilities

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

1.14 Contingent liabilities and contingent assets

Contingent liabilities and contingent assets are not recognised in the balance sheet but are reported in the relevant notes. They may arise from uncertainty as to the existence of a liability or asset, or represent a liability or asset in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain, and contingent liabilities are disclosed when settlement is greater than remote.

1.15 Acquisition of assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and revenues at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor authority’s accounts immediately prior to the restructuring.

1.16 Property, plant and equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the balance sheet, except for purchases costing less than $3,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘makegood’ provisions in property leases taken up by the AIHW where there exists an obligation to restore the property to its original condition. These costs are included in the value of the AIHW’s leasehold improvements with a corresponding provision for the makegood recognised.

Revaluations

Fair values for each class of asset are determined as shown below:

Asset class	Fair value measured at:
Buildings-leasehold improvements	Depreciated replacement cost
Property, plant and equipment	Market selling price

Following initial recognition at cost, property, plant and equipment are carried at fair value less accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through surplus and deficit. Revaluation decrements for a class of assets are recognised directly through surplus and deficit except to the extent that they reverse a previous revaluation increment for that class.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.

A formal revaluation of assets was completed by Allbids.com.au Pty Ltd as at 30 June 2018.

Depreciation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the AIHW using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

Depreciation rates applying to each class of depreciable asset are based on the following useful lives:

Asset class	2018	2017
Leasehold improvements	Lease term	Lease term
Property, plant and equipment	3 to 10 years	3 to 10 years

Impairment

All assets were assessed for impairment at 30 June 2018. Where indications of impairment exist, the asset's recoverable amount is estimated and an impairment adjustment made if the asset's recoverable amount is less than its carrying amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset's ability to generate future cash flows, and the asset would be replaced if the AIHW were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

1.17 Intangibles

The AIHW's intangibles comprise internally developed and purchased software for internal use. These assets are carried at cost less accumulated amortisation.

Intangibles are recognised initially at cost in the balance sheet, except for purchases costing less than $50,000, which are expensed in the year of acquisition.

Software is amortised on a straight-line basis over its anticipated useful life. The useful life of the AIHW's software is 3 to 5 years (2016–17: 3 to 5 years).

All software assets were assessed for indications of impairment as at 30 June 2018.

1.18 Taxation

The AIHW is exempt from all forms of taxation except Goods and Services Tax (GST) and Fringe Benefits Tax.

Revenues, expenses, assets and liabilities are recognised net of GST except:

• where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
• for receivables and payables.

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 2: Expenses

Note 2A: Employees benefits

Employees benefits	2018 $'000	2017 $'000
Wages and salaries	(29,099)	(27,863)
Superannuation: Defined contribution plans	(2,793)	(2,295)
Superannuation: Defined benefit plans	(2,666)	(2,900)
Leave and other entitlements	(3,695)	(3,455)
Total employee benefits	(38,253)	(36,513)

Note 2B: Suppliers

Goods and services supplied or rendered	2018 $'000	2017 $'000
Consultants and contractors	(12,302)	(7,923)
Collaborating centres	(1,273)	(780)
Information technology	(3,493)	(3,766)
Printing and stationery	(163)	(182)
Training	(463)	(267)
Travel	(839)	(761)
Telecommunications	(206)	(215)
Other	(2,717)	(2,473)
Total goods and services supplied or rendered	(21,456)	(16,367)

Other supplier	2018 $'000	2017 $'000
Operating lease rentals — lease payments	(3,290)	(3,355)
Workers compensation premiums	(430)	(470)
Total other supplier expenses	(3,720)	(3,825)
Total supplier expenses	(25,176)	(20,192)

The Canberra office lease has a fixed annual 3% rent increase. This increase has been averaged over the 15 year term of the lease.

Leasing commitments

The Commission in its capacity as lessee has obligations for accommodation. The lease payments the AIHW has for accommodation are subject to annual increases of 3%.

Leasing commitments	2018 $'000	2017 $'000
Within 1 year	3,555	3,345
Between 1 to 5 years	17,670	16,228
More than 5 years	19,377	22,921
Total operating lease commitments	40,602	42,494

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 3: Revenue

Note 3A: Sale of goods and rendering of services

Sale of goods and rendering of services	2018 $'000	2017 $'000
Sale of goods	3	16
Rendering of services	35,093	29,612
Total sale of goods and rendering services	35,096	29,628

Note 3B: Interest

Interest	2018 $'000	2017 $'000
Deposits	1,759	1,021
Total interest	1,759	1,021

Note 3C: Other revenues

Other revenues	2018 $'000	2017 $'000
Other	142	277
Total other revenues	142	277

Note 3D: Revenue from government

Revenue from government	2018 $'000	2017 $'000
Corporate Commonwealth entity payment item	28,078	26,918
Total revenue from government	28,078	26,918

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 4: Fair Value Measurements

The following tables provide an analysis of assets and liabilities that are measured at fair value.

Note 4A: Fair Value Measurements, Valuation Techniques and Inputs Used

Fair value measurements at the end of the reporting period by hierarchy for assets and liabilities in 2018

Fair value measurements at the end of the reporting period using:	Fair Value 2018	Fair Value 2017
Leasehold improvements	3,907	4,697
Other property, plant and equipment	3,063	3,073
Total non-financial assets	6,970	7,770
Total fair value measurements of assets in the statement of financial position	6,970	7,770

Fair value measurements - highest and best use differs from current use for non-financial assets (NFAs)

The highest and best use of all non-financial assets are the same as their current use.

There are no liabilities measured at fair value.

In 2018 the AIHW procured valuation services from All Bids and relied on valuation models provided by All Bids. All Bids provided written assurance to the entity that the model developed is in compliance with AASB 13. All assets were valued using the Fair Market Value Technique.

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 5: Financial Assets

Receivables

Receivables are aged as follows:	2018 $'000	2017 $'000
Not overdue	10,355	4,712
Overdue by: 0 to 30 days	95	60
Overdue by: 31-60 days	1	3
Overdue by: 61-90 days	5	—
Total receivables (gross)	10,456	4,775

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 6: Non-Financial Assets

Revaluations of non-financial assets

In 2018 there was a revaluation decrement of $433,000 (2017: nil) for leasehold improvements and property, plant and equipment of $288,000 (2017: nil).

Note 6: Analysis of property, plant and equipment

Reconciliation of the opening and closing balances of property, plant and equipment (2017-18)

Reconciliation of the opening and closing balances	Buildings- leasehold improvements $'000	Property, plant and equipment $'000	Intangibles $'000	Total $'000
As at 1 July 2017: Gross book value	5,250	3,570	267	9,087
As at 1 July 2017: Accumulated depreciation	(553)	(497)	(14)	(1,064)
Net book value 1 July 2017	4,697	3,073	253	8,023
Additions by purchase	194	862	—	1,056
Revaluations recognised in operating results	—	(288)	—	(288)
Revaluations recognised in Asset Revaluation Reserve	(440)	7	—	(433)
Depreciation expense	(544)	(592)	(89)	(1,225)
Net book value 30 June 2018	3,907	3,062	164	7,133
Net book value as at 30 June 2018 represented by: Gross book value	3,914	3,064	267	7,245
Net book value as at 30 June 2018 represented by: Accumulated depreciation	(7)	(2)	(103)	(112)
Net book value 30 June 2018	3,907	3,062	164	7,133

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 7: Payables

Other payables

Other payables	2018 $'000	2017 $'000
Wages and salaries	(261)	(266)
Superannuation	(43)	(43)
Lease incentive - Canberra	(2,750)	(3,000)
Lease incentive - Sydney	—	(128)
Operating lease	(1,954)	(1,553)
Total other payables	(5,008)	(4,990)

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 8: Contingent Assets and Liabilities

As at 30 June 2018 the AIHW has no contingent assets, remote contingencies or unquantifiable contingencies (2017: nil).

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 9: Key Management Personnel Remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the AIHW, directly or indirectly, including any director (whether executive or otherwise) of the AIHW. The AIHW has determined the key management personnel to be the Director, Board of Directors and Group Heads. Key management personnel remuneration is reported in the table below.

Personnel remuneration	2018 $'000	2017 $'000
Short-term employee benefits	2,423	2,227
Post-employment benefits	361	325
Other long term benefits	33	133
Total key management remuneration expenses	2,817	2,685

The total number of key management personnel included in the above table is 17 (2017: 18). Note 9 is prepared on an accrual basis.

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 10: Related Party Disclosures

Related party relationships:

The AIHW is an Australian Government controlled entity. Related parties to this entity are the Minister for Health, Directors, Key Management Personnel and Executive, and other Australian Government entities.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. The AIHW’s arrangements with the government sector are conducted under contracts as normal business with the same conditions as with private enterprise. These transactions have not been separately disclosed in this note.

There were no related party transactions during the financial year (2016-17: $0)

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 11: Remuneration of Auditors

Remuneration of Auditors	2018	2017
Remuneration for auditing the financial statements for the reporting period	$37,000	$35,000

No other services were provided by the Australian National Audit Office.

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 12: Financial Instruments

Note 12A: Categories of financial instruments

Financial assets	2018 $'000	2017 $'000
Loans and receivables: Cash at bank	74,655	59,696
Loans and receivables: Receivables for goods and services	9,316	4,196
Total loans and receivables	83,971	63,892
Total financial assets	83,971	63,892

Financial liabilities	2018 $'000	2017 $'000
Financial liabilities measured at amortised cost: Trade creditors	4,011	1,467
Financial liabilities measured at amortised cost	4,011	1,467
Total financial liabilities	4,011	1,467

The AIHW holds basic financial instruments in the form of cash and cash equivalents, receivables for goods and services and trade creditors. The carrying value of financial instruments reported in the balance sheet is a reasonable approximation of fair value.

Note 12B: Net gains and losses from financial assets

Loans and receivables	2018 $'000	2017 $'000
Interest revenue	1,759	1,021
Net gain loans and receivables	1,759	1,021
Net gain from financial assets	1,759	1,021

The AIHW is exposed to minimal credit risk as the majority of loans and receivables are receivables from other government organisations. The maximum exposure to credit risk is the risk that arises from potential default of a debtor. This amount is equal to the total amount of trade receivables (2018: $9,339,000 and 2017: $4,196,000). The AIHW has assessed the risk of the default on payment and has allocated $0 in 2018 (2017: $0) to an allowance for impairment account.

The AIHW has no significant exposure to any concentrations of credit risk.

Note 12C: Liquidity risk

The AIHW is funded by appropriation and the sale of goods and services. It uses these funds to meet its financial obligations.

Note 12D: Market risk

The AIHW holds basic financial instruments that do not expose the AIHW to certain market risks. The AIHW is not exposed to 'currency risk' or 'other price risk'.

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 13: Net assets transferred to the AIHW

During 2016-17 the National Health Performance Authority was abolished and its net assets transferred to the AIHW as follows:

Assets Recognised	2018 $'000	2017 $'000
Cash	—	24,715
Leasehold Improvements	—	450
Property, Plant & Equipment	—	3
Total Assets Recognised	—	25,168

Australian Institute of Health and Welfare
Notes to and Forming Part of the Financial Statements
Note 14: Major budget variances

Expenses

Explanations of major variances	Affected line items (and statement)
Supplier costs have increased to service the higher than budgeted fee for service work.	Supplier expenses and sale of goods and rendering of services (statement of comprehensive income)

Financial assets

Explanations of major variances	Affected line items (and statement)
Cash and cash equivalents have increased as the income received in advance was higher than budgeted and the receivables were lower than budgeted. The higher cash balances during the year also reflected an increase in interest income.	Cash and cash equivalents, trade and other receivables and Contract Income in Advance (statement of financial position), Cash received (cash flow statement), Interest (statement of comprehensive income)