department of education, training and employment financial ... · • statement2-...

Department of Education, Training and Employment

Understanding our financial statementsThe financial statements enable readers to assess the department's financial results and cash flows for the 2013-14 financial year andits financial position as at the end of the financial year.

This financial report covers the Department of Education, Training and Employment and its controlled entities.

The Department of Education, Training and Employment is a Queensland Government department established under the PublicService Act 2008.

The department is controlled by the State of Queensland which is the ultimate parent.

The financial statements are composed of a number of components, including:

• Statement 1 - Statement of Comprehensive IncomeThis statement shows revenue and expenses and the results of operations for the financial year, as well as other comprehensiveincome including'asset revaluation adjustments.

• Statement 2 - Statement of Financial PositionThis statement provides information concerning assets, liabilities and the department's equity at the end of the financial year.Assets shown as current are reasonably expected to be converted to cash, sold or consumed in the operations of thedepartment in the next financial year. Similarly, current liabilities are expected to consume cash in the next financial year.

• Statement 3 - Statement of Changes in EquityThis statement provides information on the movement of equity during the financial year.

• Statement 4 - Statement of Cash FlowsThis statement provides information concerning sources and uses of cash during the financial year and available cash at the endof the financial year.

• Statement 5 - Statement of Comprehensive Income by Major Departmental Services - ControlledThis statement provides information on revenue and expenses for each departmental service.

• Statement 6 - Statement of Assets and Liabilities by Major Departmental Services - ControlledThis statement provides information on assets and liabilities for each departmental service.

The financial statements for the department that appear in this annual report are signed by Dr jim Watterson, Director-Generalfor theDepartment of Education, Training and Employment and Adam Black FCPA CA, Assistant Director-General, Finance and Chief FinanceOfficer as at 30 june 2014.

General informationThe principal address of the department is:

Education House30 Mary StreetBrisbane QLD4000

A description of the nature of the department's operations and its principal activities is included in the notes to the financial statements.

For information in relation to the department's financial report please contact Finance Branch on 07 3513 6623, [email protected] visit the departmental website at: www.det.qld.gov.au

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Statement 1 - Statement of Comprehensive Incomefor the year ended 30 June 2014

Notes 2014 2013$'000 $'000

Income from Continuing Operations

Appropriation revenue for service 4 7604826 7394773User charges 5 560497 486131Grants and other contributions 6 145258 156645Interest revenue 7 14012 12445Other revenues 7 35954 159678

Total Income from Continuing Operations 8360547 8209672

Expenses from Continuing OperationsEmployee expenses 8&9 5934253 5756319Supplies and services 10 1549959 1473468Grants and subsidies 11 258483 359991Depreciation and amortisation 12 506716 492804Impairment losses 13 1114 6990Finance/borrow ing costs 14 43631 43124Other expenses 15 66288 76434

Total Expenses from Continuing Operations 8360444 8209130

Operating Result from Continuing Operations 103 542

Other Comprehensive Income

Items that w ill not be -reclassified subseguentl:( to 0f2erating Result:

Increase/(decrease) in asset revaluation surplus 28 ( 571 613) ( 97 191)

Total items that w ill not be reclassified subsequently to Operating Result ( 571 613) ( 97 191)

Total Other Comprehensive Income ( 571 613) ( 97 191)

Total Comprehensive Income ( 571 510) (96649)

The above statement should be read in conjunction with the accompanying notes, which appear on the pages after Statement 6.

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Statement 2 - Statement of Financial Positionas at 30 June 2014

Notes 2014 2013$'000 $'000

623020 250392187165 182798258713679 4222

44093 51447883828 488859

51411 18905935239 507764

86217 8290717428844 17891 27217515061 17974179

18450300 18481 943

Current AssetsGash and cash equivalentsReceivablesOther financial assetsInventoriesOther current assets

Non-current assets classified asheld for sale

Total Current Assets

Non-Current AssetsIntangible assetsProperty, plant and equipment

Total Non-Current Assets

Total Assets

Current LiabilitiesPayablesInterest-bearing liabilitiesAccrued employee benefitsOther current liabilities

Total Current Liabilities

Non-Current LiabilitiesInterest-bearing liabilities

Total Non-Current Liabilities

Total Liabilities

Net Assets

EquityContributed equityAccumulated surplusAsset revaluation surplus

Total Equity

1617181920

21

2223

24252627

367870 32391910692 9906

122735 9137975530 38517

576827 463721

501512 486284501512 486284

1078339 950005

17371961 17531938

25

28

535357244987

11973402

494204044883

1254501517371961 17531 938

The above statement should be read in conjunction with the accompanying notes, which appear on the pages after Statement 6.

Page 4 of 58QAOcertified statements

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Statement 3 - Statement of Changes in Equityfor the year ended 30 June 2014

AssetRevaluation

Accum ulated Surplus Contributed. Notes Surplus (Note 28) Equity Total

$'000 $'000 $'000 $'000

Balance as at 1 July 2012 44341 12642206 5039534 17726081

Operating result from continuing operations 542 542

Other Comprehensive Income

Increase/(decrease) in asset revaluation surplus ( 97 191) (97191)

Total Comprehensive Income for the Year 44883 12545015 5039534 17629432

Transactions wth Owners as Owners- I'vbGchanges - transfer of other assets 26125 26125- Appropriated equity injections 4 (66768) (66768)

- Equity withdrawals 4 ( 57 136) ( 57136)- Non-appropriated equity injections 36 285 285

Net Transactions wth Owners as Owners ( 97494) (97494)

Balance as at 30 June 2013 44883 12545015 4942040 17531938

Balance as at 1 July 2013 44883 12545015 4942040 17531938Operating result from continuing operations 103 103

Other Comprehensive IncomeIncrease/(Decrease) in asset revaluation surplus ( 571 613) ( 571 613)

Total Comprehensive Income for the Year 44987 11 973402 4942040 16960429

Transactions wth Owners as Owners- I'vbGchanges - transfer of other assets 2(b) 168477 168477- Appropriated equity injections 4 239630 239630- Non-appropriated equity injections 3425 3425

Net Transactions wth Owners as Owners 411 532 411532

Balance as at 30 June 2014 44987 11 973402 5353572 17371961

The above statement should be read in conjunction with the accompanying notes. which appear on the pages after Statement 6.

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Statement 4 - Statement of Cash Flowsfor the year ended 30 June 2014

Notes 2014 2013$'000 $'000

Cash Flows from Operating ActivitiesInflows:Service appropriation receipts 7598505 7393683User charges 576015 499544Grants and other contributions 141607 65087Interest receipts 14012 12445GST input tax credits from ATO 139669 128808GST collected from customers 20767 14801Other 36210 159582

Outflows:Employee expenses (5901700) (5756311)Supplies and services (1534961) (1448048)Grants and subsidies (258400) ( 353561)Rnance/borrow ing costs (43631) (43124)GST paid to suppliers ( 144 716) ( 129399)GST rerritted to ATO ( 20764) ( 11895)Other (64221) (63962)

Net Cash Provided by/(Used in) Operating Activities 29 558392 467650

Cash Flows from Investing ActivitiesInflows:Sales of property, plant and equipment 17186 41781Outflows:Payments for property, plant and equipment (462019) ( 370 146)

Net Cash Provided by/(Used in) Investing Activities (444 833) (328365)

Cash Rows from Financing ActivitiesInflows:Borrow ings and finance leases 6347 14796Equity injections 243055 (66483)

Outflows:Equity withdrawals (57136)Repayments of borrow ings/finance lease payments 9667 ( 8 816)

Net Cash Provided by/(Used in) Financing Activities 259069 ( 117639)

Net increase/(decrease) in cash and cash equivalents 372628 21646Cash and cash equivalents at beginning of financial year 250392 228746Cash and Cash Equivalents at End of Financial Year 16 623020 250392

The above statement should be read in conjunction with the accompanyingnotes, which appear on the pages after Statement 6.

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Department of Education, Training and EmploymentNotes to and forming part of the financial statements 2013-14

Note 1:Note 2:Note 3:Note 4:

Note 5:Note 6:Note 7:Note 8:Note 9:Note 10:Note 11:Note 12:Note 13:Note 14:Note 15:Note 16:Note 17:Note 18:Note 19:Note 20:Note 21Note 22:Note 23:Note 24:Note 25:Note 26:Note 27:Note 28:Note 29:Note 30:Note 31:Note 32:Note 33:Note 34:Note 35:Note 36:Note 37:Note 38:Note 39:Note 40:

Objectives and Principal Activities of the DepartmentSummary of Significant Accounting PoliciesMajor Departmental Services of the DepartmentReconciliation of Payments from Consolidated Fund to Appropriation Revenue for Services Recognised inStatement of Comprehensive IncomeReconciliation of Payments from Consolidated Fund to Equity Adjustment Recognised in Contributed EquityUser ChargesGrants and Other ContributionsOther RevenuesEmployee ExpensesKey Management Personnel and Remuneration ExpensesSupplies and ServicesGrants and SubsidiesDepreciation and AmortisationImpairment LossesFinance/Borrowing CostsOther ExpensesCash and Cash EquivalentsReceivablesOther Financial AssetsInventoriesOther Current AssetsNon-Current Assets Classified as Held for SaleIntangibleAssetsProperty, Plant and EquipmentPayablesInterest-Bearing LiabilitiesAccrued Employee BenefitsOther Current LiabilitiesAsset Revaluation Surplus by ClassReconciliation of Operating Surplus to Net Cash from Operating ActivitiesNon-Cash Financing and Investing ActivitiesCommitments for ExpenditurePrivate Provision of Public Infrastructure (PPPI) ArrangementsContingenciesControlled EntitiesEvents Occurring After Balance DateAdministered Transactions and BalancesReconciliation of Payments from Consolidated Fund to Administered RevenueMonies Held in TrustFinancial InstrumentsOperations Transferred through Machinery of Government Changes

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1. Objectives and Principal Activities of the DepartmentThe Department of Education, Training and Employment engages Queenslanders in lifelong learning across the entire continuum, fromearly childhood education and care, through school education, and into training, tertiary education and employment. The department isa diverse organisation, with one of the largest workforces in the state, providing services through three broad service delivery areas

Early childhood educational care;

School education;

Training, tertiary education and employment.

The department is funded for the departmental services it delivers principally by parliamentary appropriations.

2. Summary of Significant Accounting Policies(a) Statement of ComplianceThe Department of Education, Training and Employment has prepared these financial statements in compliance with section 42 of theFinancial and Performance Management Standard 2009.

These financial statements are general purpose financial statements, and have been prepared on an accrual basis in accordancewithAustralian Accounting Standards and Interpretations. In addition, the financial statements comply with Treasury and Trade's MinimumReporting Requirements for the year ending 30 June 2014, and other authoritative pronouncements.With respect to compliance with Australian Accounting Standards and Interpretations, the Department of Education, Training andEmployment has applied those requirements applicable to not-for-profit entities, as the Department of Education, Training andEmployment is a not-for-profit department. Except where stated, the historical cost convention is used.

(b) The Reporting Entity

The financial statements include the value of all revenue, expenses, assets, liabilities and equity of the department. In addition, theDepartment of Education, Training and Employment also controls the following entities:

• Aviation Australia Pty Ltd• BCITF (Qld) Limited• Queensland Education Leadership InstituteAs the financial transactions and balances of the above entities are immaterial in the context of the department, they have not beenconsolidated into the departmental statements. Each of these entities is a reporting entity in its own right - their audited financialstatements are included in their respective annual reports. Full details of these controlled entities are disclosed in Note 34.

Machinery of Government (MoG) changes reported in Statement 3 - Statement of Changes in Equity for 2013-14 relate to:

$127.983 million from the Southbank Institute ofTAFE and Gold Coast Institute ofTAFE.

$ 40.383 million from Department of Housing and PublicWorks for the transfer of 7 cyclone shelters.

$ 0.111 million from Department of State Development for the finalisation of assets related to Employment.

The major departmental services undertaken by the department are disclosed in Note 3.

(c) School financial transactions

In the 2013-14 financial year, data has been sourced from the state-wide OneSchool finance module, covering the twelve (12) monthperiod from July 2013 to June 2014. This aligns school financial reporting periodswith the rest of the department, however thecomparative for financial year 2012-13 includes thirteen (13) months of OneSchool data for the period June 2012 to June 2013 andthere is no significant impact on the department's financial statement line items.

(d) Administered Transactions and Balances

The department administers, but does not control, certain resources on behalf of the Queensland State Government. It is accountablefor the transactions involving administered resources, but does not have the discretion to deploy these resources for the achievementofthe department's objectives. For these resources, the department acts only on behalf of the Queensland State Government.

Administered transactions and balances are disclosed in Note 36. These transactions and balances are not significant in comparisontothe department's overall financial performance/ financial position.

(e) Departmental Services Revenue/Administered Revenue

Appropriations provided under the Appropriation Act 2013 are recognised as revenuewhen received.

Amounts appropriated to the department for transfer to other entities in accordance with legislative or other requirements are reportedas 'administered' item appropriation in Note 36.

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2. Summary of Significant Accounting Policies (cont'd)(f) User Charges

User charges, fees and sales revenue controlled by the department are recognised as revenues when the revenue has been earnedand can be measured reliably with a sufficient degree of certainty. This involves either invoicing for related goods/services and/or therecognition of accrued revenue. Revenue from student fees is recognised as the service is provided. User charges, fees and salesrevenue are controlled by the department where they can be deployed for the achievement of departmental objectives. Propertyincome is recognised as revenue when received.

(g) Grants and ContributionsGrants, contributions, donations and gifts that are non-reciprocal in nature are recognised as revenue in the year in which thedepartment obtains control over them. Control is normally obtained upon their receipt.Where grants are received that are reciprocal in nature, revenue is recognised over the term of the funding arrangements.

Contributed assets are recognised at their fair value. The accounting treatment for contributions of services is explained in Note 2 (aa).

(h) Special Payments

Special payments include ex gratia expenditure and other expenditure that the department is not contractually or legally obligated tomake to other parties. In compliance with the Financial Performance Management Standard 2009, the department maintains a registersetting out details of all special payments greater than $5,000. The total of all special payments (including those of $5,000 or less) isdisclosed separately within Other Expenses (Note 15). However, descriptions of the nature of special payments are only provided forspecial payments greater than $5,000.

(i) Cash and Cash Equivalents

For the purposes of the Statement of Financial Position and the Statement of Cash Flows, cash and cash equivalents includes cash onhand, cheques receipted but not banked at 30 June and cash in school and central office bank accounts which are used in the day-today cash management function of the department.

(j) Receivables

Receivables are recognised at the amounts due at the time of sale or service delivery i.e. the agreed purchase/contract price.Settlement on trade debtors is required within 30 days from invoice date. The collectability of receivables is assessed at balance datewith adequate allowance made for impairment and all known bad debts written off. Increases in the allowance for impairment arebased on loss events as disclosed in Note 39 (c). As all loans and advances are held with other government departments ordepartmental employees, no collateral is taken.

(k) Inventories

Inventories are valued at the lower of cost and net realisable value.

Cost is assigned on a weighted average basis and includes expenditure incurred in acquiring the inventories and bringing them to theirexisting condition, except for training costs which are expensed as incurred.

Net realisable value is determined on the basis of the department's normal selling pattern.

(I) Non-Current Assets Classified as Held for Sale

Non-current assets held for sale consists of those assets that management has determined are available for immediate sale in theirpresent condition, for which their sale is highly probable within the next twelve months.

In accordancewith AASB 5 Non-current Assets Held for Sale and Discontinued Operations, when an asset is classified as held for sale,its value is measured at the lower of the asset's carrying amount and fair value less costs to sell. Any restatement of the asset's valueto fair value less costs to sell (in compliance with AASB 5) is a non-recurring valuation. Such assets are no longer amortised ordepreciated upon being classified as held for sale.

(m) Acquisitions of Assets

Actual cost is used for the initial recording of all non-current physical and intangible asset acquisitions. Cost is determined as the valuegiven as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use,including architects' fees and engineering design fees. However, any training costs are expensed as incurred.

Where assets are received free of charge from another Queensland Government department (whether as a result of a machinery-ofGovernment change or other involuntary transfer), the acquisition cost is recognised as the gross carrying amount in the books of thetransferor immediately prior to the transfer together with any accumulated depreciation.

Assets acquired at no cost or for nominal consideration, other than from an involuntary transfer from another QueenslandGovernmententity, are recognised as assets and revenues at their fair value at the date of acquisition in accordance with AASB 116Property, Plantand Equipment.

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2. Summary of Significant Accounting Policies (cont'd)(n) Property, Plant and Equipment

Items of property, plant and equipment with a cost or other value equal to or in excess of the following thresholds are recognised forfinancial reporting purposes in the year of acquisition:

Buildings and land improvementsHeritage and cultural buildingsLandOther (including heritage and cultural assets other than buildings)Items with a lesser value are expensed in the year of acquisition.

$10000$10000

$1$5000

Items acquired during the financial year have been judged by management of the department to materially represent their fair value atthe end of the reporting period. Land improvements undertaken by the department are includedwith buildings.

(0) Revaluations of Non-Current Physical and Intangible Assets

Land, buildings (including residential buildings and land improvements such as sports facilities), heritage and cultural assets, andbuildings under a finance lease are measured at fair value in accordance with AASB 116Property, Plant and Equipment,AASB 13 FairValueMeasurement and Queensland Treasury and Trade's Non-Current Asset Policies for the Queensland Public Sector. Theseassets are reported at their revalued amounts, being the fair value at the date of valuation, less any subsequent accumulateddepreciation and impainment losseswhere applicable.

In respect of the abovementioned asset classes, the cost of items acquired during the financial year has been judged by managementof the department to materially represent their fair value at the end of the reporting period.

Assets built privately (PPP assets) are tendered out and the fair value is calculated based on construction of the assets in a privatemarket.

Assets under a finance lease that would otherwise have been included in the classes above are also revalued on the same basis as theassets in the class to which they would have belonged had they not been under a finance lease.

Plant and equipment, other than major plant and equipment, is measured at cost in accordance with Queensland Treasury and Trade'sNon-CurrentAsset Policies. The carrying amounts for such plant and equipment at cost should not materially differ from their fair value.

Fair value for land is detenminedby establishing its market value by reference to observable prices in an active market or recent markettransactions. The fair value for non-residential buildings and heritage and cultural assets is determined by calculating the depreciatedreplacement cost of the asset. The fair value of residences is detenminedby their market value or alternatively where there is no activeand liquid market, fair value is the depreciated replacement cost. The fair value of assets under a finance lease is the depreciatedreplacement cost of these assets.

Where intangible assets have an active market, they are measured at fair value; otherwise they are measured at cost.

Land, buildings (including residential buildings and land improvements such as sports facilities), heritage and cultural assets arerevalued by management each year to ensure that they are reported at fair value. Management valuations incorporate the results fromthe independent revaluation program, and the indexation of the assets not subject to independent revaluation each year.

For the purposes of revaluation, the department has divided the state into 25 districts and each year's selection is chosen to ensure thatmajor urban, provincial and rural characteristics were included. Districts independently valued in each year are as follows:-

2013-14 2014-15Townsville Central WestWarwick ToowoombaMoreton East Brisbane Central andWestBrisbane South Gold CoastSunshine Coast North Wide BayWestWide Bay North

2015-16 2016-17Torres Strait and Cape Tablelands-JohnstoneRoma Mount IsaMackay-Whitsunday The DownsMoretonWest Brisbane NorthSouth East Brisbane Logan-Albert BeaudesertSunshine Coast South Cairns Coastal

Central QueenslandWide Bay South

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2. Summary of Significant Accounting Policies (cont'd)(0) Revaluations of non-current physical and intangibl-; assets (cont'd)

The fair values reported by the department are based on appropriate valuation techniques that maximise the use of available andrelevant observable inputs and minimise the use of unobservable inputs.

Where assets have not been specifically appraised in the reporting period, their previous valuations are materially kept up-to-date viathe application of relevant indices. The department ensures that the application of these indices results in a valid estimation of theasset's fair value at reporting date. The State Valuation Service (SVS) supplies the indices used for various types of assets. Theseindices are derived from market information available to SVS. SVS provides assurance of their robustness, validity and appropriatenessfor application to the relevant assets. The results of interim indexations are compared to the results of the independent revaluationperformed in the year to ensure the results are reasonable. This annual process allows management to assess and confirm therelevance and suitability of indices provided by SVS based on the department's own particular circumstances.

The department reviewed all fair value methodologies in light of the new principles in AASB 13 and some minor adjustments were madeto take into account the more exit-oriented approach to fair value underAASB 13. There has been no material impact on the values ofthe affected Property, Plant and Equipment classes.

Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus of the appropriate class,except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carryingamount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus relating to thatasset class.

On revaluation, accumulated depreciation is restated proportionately with the change in the carrying amount of the asset and anychange in the estimate of remaining useful life.

Materiality concepts under AASB 1031 Materiality are considered in determining whether any difference between the carrying amountand the fair value of each asset class is material.

Separately identified components of assets are measure on the same basis as the assets to which they relate.

(p) Fair Value Measure

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactions between marketparticipants at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directlyderived from observable inputs or estimated using another valuation technique.

Observable inputs are publicly available data that are relevant to the characteristics of the assets/liabilities being valued. Observableinputs used by the department are detailed for each class of asset under Note 23.

Unobservable inputs are data, assumptions and judgements that are not available publicly, but are relevant characteristics of theassets/liabilities being valued. Significant unobservable data to takes account of the characteristics of the department assets/liabilities,and includes internal records of recent construction costs (and/or estimated of such costs) for assets' characteristics/functionality, andassessments of physical condition and remaining useful life. Unobservable inputs are used to the extent that sufficient relevant andreliable observable inputs are not available for similar assets/liabilities.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits byusing the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and bestuse.

All assets and liabilities of the department for which fair value is measured or disclosed in the financial statements are categorised withthe following fair value hierarchy, based on the data and assumptions used in the most recent specific appraisals:

• level 1 - represents fair value measurements that reflect unadjusted quoted market prices in active markets for identicalassets and liabilities;

• level 2 - represents fair value measurements that are substantially derived from inputs (other than quoted prices included inlevel 1) that are observable, either directly or indirectly; and

• level 3 - represents fair value measurements that are substantially derived from unobservable inputs.

None of the department's valuations of assets or liabilities are eligible for categorisation into level 1 of the fair value hierarchy. As 2013-14 is the first year of application of AASB 13 by the department, there were no transfers of assets between fair value hierarchy levelsduring the period.

More specific fair value information about the department's Property, Plant and Equipment is outlined in Note 23.

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2. Summary of Significant Accounting Policies (cont'd)(q) Intangible assets

Intangible assetswith a cost, or other value, greater than $100 000 are recognised in the financial statements; itemswith a lesser valueare expensed.

It has been determined that there is not an active market for any of the department's intangible assets. As such, the assets arerecognised and carried at cost less accumulated amortisation and accumulated impairment losses.

No intangible assets have been classified as held for sale or form part of a disposal group held for sale.

The major software developments held by the department are valued at cost of acquisition. These intangible assets are amortised overuseful lives ranging from seven to ten years on creation.

Expenditure on research activities relating to internally-generated intangible assets is recognised as an expense in the period in which itis incurred.

Rent FreeAgreements and Rights of Access held by the department are recognised at the cost of acquisition. These intangible assetsare amortised over the life of the agreement.

The residual value for intangibles for the department is zero, as the department fully utilises any service potential provided by theseassets.

(r) Amortisation and Depreciation of Property, Plant and Equipment and Intangibles

Land is not depreciated as it has an unlimited useful life.

All intangible assets of the department have finite useful lives and are amortised on a straight-line basis.

Property, plant and equipment are depreciated on a straight-line basis so as to allocate the net cost or revalued amount of each asset,less its estimated residual value, progressively over its estimated useful life to the department.

Assets under construction (capital work-in-progress) are not depreciated until they reach service delivery capability. Service deliverycapability relates to when construction is complete and the asset is first put to use or is installed ready for use in accordancewith itsintended application. These assets are then reclassified to the relevant classes within property, plant and equipment.

Where assets have separately identifiable components that are subject to regular replacement',these components are assigned usefullives distinct from the asset to which they relate and are depreciated accordingly.

It has been determined that the department controls buildings that by their nature require componentisation and the assignment ofseparate useful lives to their component parts. The three components of these buildings are: a) Fabric; b) Fit-out; and c) Plant. Theuseful lives for these assets are disclosed in the table below.

Useful lives for the assets included in the revaluation will be amended progressively as the assets are inspected by the valuers.Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciableamount is depreciated over the remaining useful life of the asset to the department.The depreciable amount of improvements to or on leasehold land is allocated progressively over the estimated useful life of theimprovementsor the unexpired period of the lease, whichever is the shorter. The unexpired period of leases includes any option periodwhere exercise of the option is probable.

Plant and equipment subject to a finance lease is amortised on a straight line basis over the term of the lease, or, where it is likely thatthe departmentwill obtain ownership of the asset, the expected useful life of the asset to the department.

Items comprising the department's library collections are expensed on acquisition.

The estimated useful lives of the assets are reviewed annually and, where necessary, are adjusted to better reflect the pattern ofconsumption of the asset. In reviewing the useful life of each asset, factors such as asset usage and the rate of technical andcommercial obsolescence are considered.

" .~----.----~ Page 14 of 58

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2. Summary of Significant Accounting Policies (cont'd)(r) Amortisation and Depreciation of Property, Plant and Equipment and Intangibles (cont'd)

For each class of depreciable asset the depreciation and amortisation rates are based on the following useful lives:

ClassCurrent usefullife (years)

Buildings - FabricBuildings - Fit OutBuildings - PlantBuildings - Derrountable buildings, sheds and covered areasBuildings - Land improvements (including sporting facilities)Buildings - ResidentialHeritage and Cultural AssetsPlant and equipment - Corrputer equipmentPlant and equipment - Office equipmentPlant and equipment - Artefacts and curiosPlant and equipment - Musical instruments and craft equipmentPlant and equipment - Plant and machineryPlant and equipment - Sporting equipmentPlant and equipment - Major refurbishments to leasehold administrative buildingsLeased plant and equipmentIntangibles - Softw are purchasedIntangibles - Softw are internally generatedIntangibles - Other (based on contract life)

8025254015- 80608055- 2050 - 100205 - 25102 - 125 - 107 - 107 - 105- 25

(s) Impairment of Non-Current Assets

All non-current physical and intangible assets are assessed for indicators of impairment on an annual basis. If an indicator of possibleimpairment exists, the department determines the asset's recoverable amount. Any amount by which the asset's carrying amountexceeds the recoverable amount is recorded as an impairment loss.

The asset's recoverable amount is determined as the higher of the asset's fair value less costs to sell and depreciated replacementcost.

An impairment loss is recognised immediately in the Statement of Comprehensive Income, unless the asset is carried at a revaluedamount. When the asset is measured at a revalued amount, the impairment loss is offset against the asset revaluation surplus of therelevant class to the extent available. .

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of itsrecoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determinedhad no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income, unlessthe asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Referalso Note 2(0).

(t) Leases

A distinction is made in the financial statements between finance leases that effectively transfer from the lessor to the lesseesubstantially all risks and benefits incidental to ownership, and operating leases, under which the lessor retains substantially all risksand benefits.

Where a non-current physical asset is acquired by means of a finance lease, the asset is recognised at an amount equal to the presentvalue of the minimum lease payments. The lease liability is recognised at the same amount

Lease payments are allocated between the principal component of the lease liability and the interest expense.

Operating lease payments are representative of the pattern of benefits derived from the leased assets and are expensed in the periodsin which they are incurred.

Incentives received on entering into operating leases are recognised as liabilities. Lease payments are allocated between rentalexpense and reduction of the liability.

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2. Summary of Significant Accounting Policies (cont'd)(u) Payables

Trade creditors are recognised upon receipt of the goods or services ordered and are measured at the nominal amount i.e. agreedpurchase/contract price, gross of applicable trade and other discounts. Amounts owing are unsecured and are generally settled on 30day terms.

(v) Financial Instruments

Recognition

Financial assets and financial liabilities are recognised in the Statement of Financial Position when the department becomes party tothe contractual provisions of the financial instrument.

Classification

Financial instruments are classified and measured as follows:

• Cash and cash equivalents - held at fair value through profit or loss

• Receivables - held at amortised cost

• Held to maturity investment (Fixed Term Deposits) - held at amortised cost

• Payables - held at amortised cost

• Borrowings - held at amortised cost

Borrowings are initially recognised at fair value, plus any transaction costs directly attributable to the borrowings, and then subsequentlyheld at amortised cost using the effective interest method. The effective interest rate is the rate that exactly discounts estimated futurecash payments or receipts through the expected life of a financial instrument (or, when appropriate, a shorter period) to the net carryingamount of that instrument.

Any borrowing costs are added to the carrying amount of the borrowing to the extent they are not settled in the period in which theyarise. Borrowings are classified as non-current liabilities to the extent that the department has an unconditional right to defer settlementuntil at least 12 months after reporting date.

The department does not enter transactions for speculative purposes, nor for hedging. Apart from cash and cash equivalents, thedepartment holds no financial assets classified at fair value through profit or loss.

All other disclosures relating to the measurement and financial risk management of financial instruments held by the department areincluded in Note 39.

(w) Employee Benefits

Employer superannuation contributions, annual leave levies and long service leave levies are regarded as employee benefits.

Payroll tax and workers' compensation insurance are a consequence of employing employees, but are not counted in an employees'total remuneration package. They are not employee benefits and are recognised separately as employee related expenses.

Wages, Salaries, and Sick Leave

Wages and salaries due but unpaid at reporting date are recognised in the Statement of Financial Position at the current salary rates.

As the department expects such liabilities to be wholly settled within 12months of reporting date, the liabilities are recognised atundiscounted values.

Prior history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected tocontinue into future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liabilityfor unused sick leave entitlements is recognised.

As sick leave is non-vesting, an expense is recognised for this leave as it is taken.

Annual Leave

The entitlement for annual leave includes a component for accrued leave loading for teaching staff working at schools, but does notinclude recreation leave, which is not an entitlement under their award.

The QueenslandGovernment's Annual Leave Central Scheme (ALCS) became operational on 30 June 2008 for departments,commercialised business units and shared service providers. Under this scheme, a levy is made on the department to cover the cost ofemployees' annual leave (including leave loading and on-costs). The levies are expensed in the period in which they are payable.Amounts paid to employees for annual leave are claimed back from the scheme quarterly in arrears.

No provision for annual leave is recognised in the department's financial statements as the liability is held on a whole-of-governmentbasis and reported in those financial statements pursuant to AASB 1049Whole of Government and General Government SectorFinancial Reporting.

Long Service Leave

Under the Queensland Government's Long Service Leave Central Scheme (LSLCS), a levy is made on the department to cover thecost of employees' long service leave. Levies are expensed in the period in which they are paid or payable. Amounts paid toemployees for long service leave are claimed from the scheme quarterly in arrears.

QAO" certified statements---------- Page 16 of 58

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2. Summary of Significant Accounting Policies (cont'd)(w) Employee Benefits (cont'd)

No provision for long service leave is recognised in the department's financial statements, the liability being held on a whole-ofGovernment basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General GovernmentSector Financial Reporting.

Superannuation

Employer superannuation contributions are paid to QSuper, the superannuation scheme for Queensland Government employees, atrates determined by the Treasurer on the advice of the State Actuary. Contributions are expensed in the period in which they are paidor payable. The department's obligation is limited to its contribution to QSuper.

The QSuper scheme has defined benefits and defined contribution categories. The liability for defined benefits is held on a whole-ofGovernment basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General GovernmentSector Financial Reporting.

Key Management Personnel and Remuneration

Key management personnel and remuneration disclosures are made in accordance with the section 5 to the Financial ReportingRequirements for Queensland Government Agencies issued by Queensland Treasury and Trade. Refer to Note 9 for the disclosureson key management personnel and remuneration.

(x) Financing/Borrowing Costs

Borrowing costs are recognised as expenses in the period in which they are incurred.

Borrowing costs include:

• Interest on bank overdrafts and short-term and long-term borrowings;• Finance lease charges;• Amortisation of discounts or premiums relating to borrowings; and• Ancillary administration charges.

No borrowing costs are capitalised into qualifying assets.

(y) Allocation of Revenues and Expenses from Ordinary Activities to Corporate Services

The department discloses revenues and expenses attributable to corporate services in the Statement of Comprehensive Income byMajor Departmental Services - Controlled.

(z) Insurance

The department's non-current physical assets and other risks are insured through the Queensland Government Insurance Fund (QGIF),premiums being paid on a risk assessment basis. In addition, the department pays premiums to WorkCover Queensland in respect ofits obligations for employee compensation.

(aa) Services Received Free of Charge or for Nominal Value

Contributions of services are recognised only if the services would have been purchased if they had not been donated and their fairvalue can be measured reliably. Where this is the case, an equal amount is recognised as revenue and an expense.

(ab) Contributed Equity

Non-reciprocal transfers of assets and liabilities between wholly-owned Queensland State Public Sector entities as a result ofmachinery-of-Government changes are adjusted to 'Contributed Equity' in accordance with Interpretation 1038 Contributions by OwnersMade to Wholly Owned Public Sector Entities. Appropriations for equity adjustments are similarly designated.

(ac) Taxation

The department is a State body as defined under the Income TaxAssessment Act 1936 and is exempt from all forms of Commonwealthtaxation with the exception of Fringe Benefits Tax (FBT), and Goods and Services Tax (GST). FBT and GST are the only taxesaccounted for by the department. GST credits receivable from, and GST payable to the Australian Taxation Office are recognised andaccrued (refer to Note 17).

(ad) Issuance of Financial Statements

The financial statements are authorised for issue by the department's Director-General and the Chief Finance Officer at the date ofsigning the Management Certificate.

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2. Summaryof Significant Accounting Policies (cont'd)(ae) Accounting Estimates and Judgements

The preparation of financial statements necessarily requires the determination and use of certain critical accounting estimates,assumptions and management judgements that have the potential to cause a material adjustment to the carrying amount of assets andliabilities within the next financial year. Such estimates, judgements and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which the estimate lsrevlsed and in future periods as relevant.

Estimates and assumptions that have a potential significant effect are outlined in the following financial statement notes:

Valuation of Property, Plant and Equipment - Note 2(0) - (p) and Note 23;Contingencies - Note 33; andDepreciation and Amortisation - Note 2(r) and Note 12.

The Australian government passed its Clean Energy Act in November2011 which resulted in the introduction of a price on carbonemissions made by Australian businesses from 1 July 2012.

The Australian government has abolished the carbon tax, with effect from 1 July 2014. The withdrawal of the carbon pricing mechanismis not expected to have a significant impact on the department's critical accounting estimates, assumptions and managementjudgements.

(at) Rounding and Comparatives

Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where thatamount is $500 or less, to zero, unless disclosure of the full amount is specifically required. Sub-totals and totals may not add due torounding, but the overall discrepancy is no greater than two.

Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period.

(ag) New and Revised Accounting Standards

The department did not voluntarily change any of its accounting policies during 2013-14. The only Australian Accounting Standardchanges applicable for the first time as from 2013-14 that have had a significant impact on the department's financial statements arethose arising from AASB 13 Fair Value Measurement, as explained below.

AASB 13 Fair ValueMeasurement became effective from reporting periods beginning on or after 1 January 2013. AASB 13 sets out anew definition on 'fair value' as well as new principles to be appliedwhen determining the fair value of assets and liabilities. The newrequirements apply to all of the department's assets and liabilities (excluding leases) that are measured and or disclosed at fair value oranother measurement based on fair value. The impacts of AASB 13 related to the fair value measurement methodologies used andfinancial statement disclosures made in respect of such assets and liabilities.

The department reviewed its fair value methodologies (including instructions to valuers, data used and assumptions made) for all itemsof property, plant and equipment measured at fair value to assesswhether those methodologies comply with AASB 13. To the extentthat the methodologieswere not in compliance with AASB 13valuation methodologies were revised accordingly to be in linewith AASB13. The revised valuation methodologies have not resulted in material differences from the previous methodologies.

AASB 13 has required an increased amount of information to be disclosed in relation to fair value measurements for both assets andliabilities. For those fair value measurements of assets or liabilities that substantially are based on data that is not 'observable' (i.e.accessible outside the department), the amount of information disclosed has significantly increased. Note 2(p) explains some of theprinciples underpinning the additional fair value information disclosed. Most of this additional information is set out in Note 23 Property,Plant and Equipment.

A revised version of AASB 119 Employee Benefits became effective for reporting periods beginning on or after 1 January 2013. Theonly implications for the department were the revised concept of 'termination benefits' and the recognition criteria for liabilities fortermination benefitswill be different. If termination benefits meet the timeframe criterion for 'short-term employee benefits', they will bemeasured according to the AASB 119 requirements for 'short-term employee benefits'. Otherwise, termination benefits will need to bemeasured according to the AASB 119 requirements for 'other long-term employee benefits'. Under the revised standard, the recognitionand measurement of employer obligations for 'other long-term employee benefits' will need to be accounted for according to most of therequirements for defined benefit plans.

The revisedAASB 119 includes changed criteria for accounting for employee benefits as 'short-term employee benefits'. However, asthe department is a member of the Queensland Government central schemes for annual and long service leave, this change in criteriahas no impact on the department's financial statements as the employer liability is held by the central scheme. The revisedAASB 119also includes change requirements for the measurement and presentation of changes in such liabilities/assets. The department makesemployer superannuation contributions only to the QSuper defined benefit plan, and the corresponding QSuper employer benefitobligation is held by the State. Therefore, those changes to AASB 119will have no impact on the department.

AASB 1053Application of Tiers of Australian Accounting Standardsapplies as from reporting periods beginning on or after 1 July 2013.AASB 1053 establishes a differential reporting framework for those entities that prepare general purpose financial statements,consisting of two Tiers of reporting requirements - Australian Accounting Standards (commonly referred to as 'Tier 1') and AustralianAccounting Standards - Reduced Disclosure Requirements (commonly referred to as 'Tier 2"). Tier 1 requirements comprise the fullrange of AASB recognition, measurement, presentation and disclosure requirements that are currently applicable to reportingentities inAustralia. The only difference between the Tier 1 and Tier 2 requirements is that Tier 2 requires fewer disclosures than Tier 1.

Pursuant to AASB 1053, public sector entities like the department may adopt Tier 2 requirements for their general purpose financialstatements. However,AASB 1053 acknowledges the power of a regulator to require application of the Tier 1 requirements. In the caseof the department, Queensland Treasury and Trade is the regulator. Queensland Treasury and Trade has advised that its policydecision is to require adoption of Tier 1 reporting by all QueenslandGovernment departments (including the Department of Education,Training and Employment) and statutory bodies that are consolidated into the whole-of-Government financial statements. Therefore,the release of AASB 1053 and associated amending standards will have no impact on the department.


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2. Summary of Significant Accounting Policies (cont'd)(ag) Newand Revised Accounting Standards (cont'd)

The department is not permitted to early adopt a new or amended accounting standard ahead of the specified commencementdateunless approval is obtained from the Queensland Treasury and Trade. Consequently, the department has not applied any AustralianAccounting Standards and Interpretations that have been issued but are not yet effective. The department applies standards andinterpretations in accordance with their respective commencement dates.

At the date of authorisation of the financial report, the expected impacts of new or amended Australian Accounting Standardswith futurecommencement dates are as set out below:

AASB 1055 Budgetary Reporting applies from reporting periods beginning on or after 1 July 2014. The department will need to includein its 2014-15 financial statements the original budgeted figures from the Statement of Comprehensive Income, Statement of FinancialPosition, Statement of Changes in Equity, and Statement of Cash Flows as published in the 2014-15 Queensland Government's ServiceDelivery Statements. The budgeted figures will need to be presented consistently with the corresponding (actuals) financial statements,and will be accompanied by explanations of major variances between the actual amounts and the corresponding original budgetedfigures.

In addition, the department will need to include the original budgeted information for major classes of administered income and expense,and major classes of administered assets and liabilities. This budgeted information will need to be presented consistently with thecorresponding (actuals) administered information, and will be accompanied by explanations of major variances between the actualamounts and the corresponding budgeted financial information.

The following new and revised standards apply as from reporting periods beginning on or after 1 January 2014-

• AASB 10 ConsolidatedFinancial Statements;

• AASB 11 Joint Arrangements;

AASB 10 redefines and clarifies the concept of control of another entity, and is the basis for determining which entities should beconsolidated into an entity's financial statements. AASB 2013-8 applies the various principles in AASB 10 for determiningwhether anot-for-profit entity controls another entity. On the basis of those accounting standards, the department has reviewed the nature of itsrelationship with entities that the department is connected with, including entities that are not currently consolidated, to determine theimpact of AASB 2013-8. The department's conclusion is that it will not have any control over any additional entities nor will there be aloss of currently controlled entities.

AASB 11 deals with the concept of joint control and sets out new principles for determining the type of joint arrangement that exists,which in turn dictates the accounting treatment. The new categories of joint arrangements under AASB 11 are more aligned to theactual rights and obligations of the parties to the arrangement. The department has assessed its arrangements with other entities todetermine whether a joint arrangement exists in terms of AASB 11. Currently the department has one (1) joint venture treated as a jointoperation.

AASB 9 Financial Instruments (December 2010) and AASB 2010-7 Amendments to Australian Accounting Standards arising fromAASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023& 1038andInterpretations 2, 5, 10, 12, 19 & 127]will become effective from reporting periods beginning on or after 1 January 2017. The mainimpacts of these standards on department are that they will change the requirements for the classification, measurement anddisclosures associated with financial assets. Under the new requirements, financial assets will be more simply classified according towhether they are measured at either amortised cost or fair value. Pursuant to AASB 9, financial assets can only be measured atamortised cost if two conditions are met. One of these conditions is that the asset must be held within the business model whoseobjective is to hold assets in order to collect contractual cash flows. The other condition is that the contractual terms of the asset giverise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The department has commenced reviewing the measurement of its financial assets against the new AASB 9 classification andmeasurement requirements. However, as the classification of financial assets at the date of initial application of AASB 9 will depend onthe facts and circumstances existing at the date, the department's conclusions will not be confirmed until closer to that time. At thisstage, and assuming no change in the types of transactions the department enters into, it is not expected that any of the department'sfinancial assets will meet the criteria in AASB 9 to be measured at amortised cost. Therefore, as from the 2017-18 financial statements,all of the department's financial assets are expected to be required to be measured at fair value, and classified accordingly (instead ofthe measurement classification presently used in Notes 2(v) and 39). The same classification will be used for net gains/lossesrecognised in the Statement of Comprehensive Income in respect of those financial assets. In the case of the department's currentreceivables, as they are short-term in nature, the carrying amount is expected to be a reasonable approximation of fair value.

The most significant impact of the new measurement requirements on the department is that the 'held to maturity' investment describedin Notes 2(v), 18 and 39 will need to be measured at fair value. In addition, that investment will no longer be classified as 'held tomaturity'. The department is not yet able to reliably estimate what the fair value of this investment will be at the date of initial applicationof AASB 9. The difference between the carrying amount of this investment and its initial fair value will be recognised as an adjustmentto the balance of Accumulated Surplus on initial application of AASB 9. AASB 9 allows the entity to make an irrevocable election at thedate of initial recognition to present in 'other comprehensive income' subsequent changes in the fair value of such an asset.Queensland Treasury and Trade is currently considering mandating this accounting treatment when AASB 9 becomes effective.

The department will not need to restate comparative figures for financial instruments on adopting AASB 9 as from 2017-18. However,changed disclosure requirementswill apply from that time. A number of one-off disclosures will be required .inthe 2017-18 financialstatements to explain the impact of adopting AASB 9. Assuming no change in the types of financial instruments that the departmententers into, the most significant ongoing disclosure impacts are expected to relate to investments in equity instrumentsmeasured at fairvalue through other comprehensive income (eg. the 'held to maturity' investment described in Note 2(v» and derecognition of these.

All other Australian Accounting Standards and interpretations with future commencement dates are either not applicable to thedepartment's activities, or have no material impact on the department.

Page 19 0[58

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3. Major Departmental Services of the DepartmentThe identity and purpose of the major departmental services undertakenby the department during the year are summarised below:

Early Childhood Education and Care

Providing childrenwith access to quality early childhood education and care through establishing and funding kindergartensandintegrated early years services as well as a range of parent and family support programs, and regulating, approving and qualityassessing early childhood services.

School Education

Delivering Preparatory to Year 12 in Queensland state schools to prepare young people for successful transitions into further education,training and/or work and administering funding for Queensland non-state schools.

Training, Tertiary Education and Employment

Supporting the skilling needs of Queensland through the funding, delivery and quality assurance of vocational education, training, andproviding information, advice and support to higher education providers, employers, apprentices and trainees to improveworkforceparticipation.

01\0(~ified statements---- Page 20 of 58

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Notes2014$'000

2013$'000

4. Reconciliation of Payments from Consolidated Fundto Appropriation Revenue for Services Recognised inStatement of Comprehensive Income

Budgeted appropriation revenue for servicesTransfers from'(to) other headings - Variation in HeadingsLapsed appropriation revenue for servicesTotal Appropriation Revenue for Services Receipts (Cash)Less: Opening balance of appropriation revenue receivableAus: Oosing balance of appropriation revenue receivableAus: Oosing balance of appropriation revenue payableNet Appropriation Revenue

Appropriation Revenue for Services recognised in Statement ofComprehensive Income

7931608 7626802(248711) ( 19018)(84 392) ( 249 801)

7598505 7357983( 1 090)7411 1090

357007604826 7394773

7604 826 7394773

Reconciliation of Payments from Consolidated Fund to EquityAdjustment Recognised in Contributed EquityBudgeted equity adjustment appropriationTransfers from'(to) other headings - Variation in HeadingsE"quity adjustment receipts(payments)Less: Opening balance equity adjustment receivableE"quityadjustment recognised in Contributed E"quity

( 9081)248711

( 107222)19018

239630 (88204)(35700)

239630 ( 123904)

• Equity adjustments recognised in the Contributed Equity vary from year to year depending on the size of the capital works programand depreciation expense.

5. User Charges

Student fees 127053 72660General fees 369379 339757Refunds ( 512) ( 355)Other fees and comrnssions 22 18Property income 8331 9089Sales revenue 56224 64962Total 560497 486131

6. Grants and Other ContributionsCommonwealth receiptsSpecific purpose

Contributions received from external partiesGrants from other State Government departmentsGoods and services received below fair valueDonations - cashDonations - other assetsTotal

20822 23014

31651 3834325792 165281066 2813

48 551 53154

"" 17376 22793145258 156645

• Donations - cash has been separated from donations - other assets to reflect a change in schools financial data reportingduringfinancial year 2013-14.MThe department's policy is to only record assets with a value of $10000 or more for buildings and $5 000 for plant and equipment.Plant and equipment contributed by Parents and Citizens' Associations were recorded on the department's Fixed Asset Register:

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2014 2013Notes $'000 $'000

7. Other RevenuesInterest revenue 14012 12445Other expenditure recovered 35954 159678Total 49966 172123

* Other expenditure recovered includes $9.093 million (2012-13 $5.045million) for insurance compensation from the QueenslandGovernment Insurance Fund.

8. Employee ExpensesEmployee BenefitsTeachers' salaries and allowancesPublic servants' and other salaries and allowancesTeacher aides' salariesCleaners' salaries and allowancesJanitors'/groundstaff salaries and allowances

Errployer superannuation contributionsAnnual leave expensesLong service leave levyRedundancy payrrents

2(w)2(w)2(w)

3351750 3227743686066 700311370293 337956167921 15942648472 47414

585098 562164211039 203319101692 9789451251 71 193

260212 25079558352 5809011920 11 2144140 4119

26047 246815934253 5756319

Employee Related ExpensesPayroll tax and fringe benefits taxWorkers' compensationStaff transfer costsStaff rental accorrrmdatlonStaff trainingTotal

2(w)2(w)

The number of employees as at 30 June, including both full-time employees and part-time employees measured on a full-timeequivalent basis (reflecting Minimum Obligatory Human Resource Information (MOHRI» is:

Number of employees: 67952 66629

QAO\, certified statements----------- Page 22 ofSS

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9. Key Management Personnel and Remuneration Expenses (cont'd)(c) Performance Payments

The remuneration package for the Director-General includes a potential perfonmancepayment.Public service CEOs have part of their total remuneration package placed "at risk" and paid only if they meet or exceed the agreedperformance standards. The chief executive performance evaluation process comprises:• reporting on end of year achievement and self-assessment by each chief executive against their performance agreemenUintended

outcomes;• analysis by the Commission Chief Executive (Public Service Commission), the Under Treasurer (Queensland Treasury and Trade)

and the Director-General (Department of the Premier and Cabinet) of relevant perfonmancedata;• a rigorous, independent and objective assessment of CEOs perfonmanceat the end of each financial year using, amongst other

things, infonmationprovided from above two steps. This performance assessment is undertaken by a Chief ExecutivePerfonmanceEvaluation Committee (CEPEC);

• recommendations from the CEPEC to the Premier; and• the Premier's ultimate discretion regarding whether the CEO will be paid an At Risk Component payment and, if so, howmuch.As at the date of management certification of these financial statements, the eligibility to a perfonmancepayment for the DirectorGeneral in respect of the 2013-14 financial year had not yet been confirmed. With respect to the process to detenmineeligibility, forchief executive officers, recommendations are yet to be made by the Chief Executive PerfonmanceEvaluation Committee to thePremier. Therefore, any perfonmancepayment approved will be reported as an expense within 2014-15.

2014 2013Notes $·000 $'000

10. Supplies and Servi.ces

Building maintenance 293500 246597Utilities 188769 207684Equipment and building refurbishment 229596 231 879Consultants and contractors 113148 106172Materials and running costs 542789 487317Payments to shared service provider/inter-agency services 12244 15325Computer costs 93312 110680Travel 43950 44286Operating lease rentals 32651 23528

Total 1549959 1473468

11. Grants and SubsidiesRecurrentState Government

Grants and allowances to external organisations 240716 321 169

CapitalState Government

Tertiary organisations 17767 38822Total 258483 359991

QAOcertified statements

Page 28 of 58

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Notes2014$'000

2013$'000

12. Depreciation and AmortisationDepreciation and amortisation were incurred in respect of:BuildingsHeritage assetsPlant and equipmentLeased assetsIntangibles - computer softw are developmentIntangibles - rightsTotal

422984 418714873 924

48628 545134522 4516

28179 128051530 1332

506716 492804

Increase in depreciation expense for intangibles by $15.374 million is due change in life for ISAS2 (Institutes' Student AdministeredSystem) which has an impact of $9.174 million.

13, Impairment LossesAlysical and intangible assetsImpairrrent losses on trade receivablesTotal

1 1141

69891 114 6990

Refer to Note 23 for details of the recognised impairment loss.

14. Finance/Borrowing CostsInterestAdninistration chargesFinance charges relating to finance leasesTotal

336460

40207

363565

3942443631 43124

15. Other ExpensesInsurance - QGIFExternal audit feesOther certification feesLosses - public monies and public propertyLoss on disposal of property, plant and equipment and

non-current assets held for saleSpecial payments:

Ex-gratia payrrentsCourt awarded damages

Payments to other Govt DepartmentsOtherTotal

23789 22508788 817148 3614 8

1888 12463

339 4139 24

1111 37229 361532084 4012

66288 76434

*The total external audit fees relating to the 2013-14 financial year are estimated to be $0.820 million (2012-13: $0.817 million). Thereare no non-audit services included in this amount. Currently paid and accrued audit fees for the department are $0.788 million.

** Certain losses of public property are insured by the Queensland Government Insurance Fund (QGIF). The claims made in respect ofthese losses have yet to be assessed by QGIF and the amount recoverable cannot be estimated reliably at reporting date. Uponnotification by QGIF of the acceptance of the claims, revenue will be recognised for the agreed settlement amount and disclosed as'Other Revenues - Other expenditure recovered' (refer Note 7).

*** Special Payments

- The department made one-off ex-gratia payments totalling $0.256million for UnifonmAllowance to parents of students attending sixschools which penmanentlyclosed at the end of the 2013 school year.

- Court awarded damages were paid by the department in settlement of five (5) personal injury claims.

1111 Payments to other Government Department is related to School Transport arrangements with Department of Transport and MainRoads.

Page 29 of 58

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2014 2013Notes $'000 $'000

16. Cash and Cash EquivalentsGash on hand 321 370Gash at bank 622699 250022Total 623020 250392

Departmental bank accounts (excluding school bank accounts) are groupedwithin the whole-of-Government set-off arrangementwiththe QueenslandTreasury Corporation and do not earn interest on surplus funds. Interest earned on the aggregate set-off arrangementbalance accrues to the Consolidated Fund.On 14 January 2013, an overdraft facility with the QueenslandTreasury Corporation was approved on the department's main bankaccount. This facility is limited to $250 million and remains in effect permanently. This facility remained fully undrawn at 30 June 2014,whereas the department's main bank account was overdrawn by $140.451 million at 30 June 2013.Cash management arrangements provide access to cash for the department to meet its obligations in regard to financial liabilities, referto Note 39(d) Financial Instruments (Liquidity Risk) for an analysis of risk for the department's financial liabilities.

17. Receivables

CurrentDebtors of an operational nature 162824 158917Less: Allowance for irrpairrrent loss (27879) (27784)

134945 131 133

Loans and advances 35 116GST input tax credits receivable 25356 19885GSTpayable 43 46Mscellaneous debtors 24478 27820Errployee claims receivable 2308 3798Total 187165 182798

Refer to Note 39(c) Financial Instruments (Credit Risk Exposure) for an analysis of movements in the allowance for impairment loss.

18. Other Financial AssetsCurrent

CSA Fixed DepositTotal

2587125871

CSA Fixed DepositA 30 day fixed term deposit with the Commonwealth Sank of Australia (CSA) of $25 million has been in place since 29July 2013 andhas been renewedcontinuously for the principal and interest amount. The maturity date of the current term deposit is 3 July 2014 withan interest rate of 3.26%. The fixed term deposit was undertaken to maximise the rate of return on surplus cash held by SouthbankInstitute ofTAFE.

19. InventoriesGoods for resaleTotal

3679 42223679 4222

Page 30 of 58

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2014 2013Notes $'000 $'000

20. Other Current AssetsCurrentR"epayments 44078 51447Security deposits 15Total 44093 51447

21. Non-Current Assets classified as Held for SaleLandBuildingsTotal

50496915

144044501

51411 18905

The department currently controls 32 properties that it is actively seeking to dispose of during the 2014-15 financial year. Theseproperties have been identified as surplus to current operating requirements due to changes in enrolment demographics.

These sales are part of the department's ongoing review of its asset base and support reinvestment in capital works and maintenancepriorities. Properties reported in this category have been independently valued using comparable market selling prices.

Losses on disposals from assets held for sale during 2013-14 are disclosed in Note 15.

Note 2(1) explains the accounting treatment of non-current assets held for sale.

22. Intangible AssetsSoftw are purchased:

At cost 30352 29586Less: Accumulated amortisation ( 25342) (23765)

5010 5821Softw are internally generated:

At cost 147256 119321Less: Accumulated amortisation ( 77 663) ( 51413)

69593 67908Other intangible assets:

At cost 14446 12984Less: Accumulated amortisation ( 5336) ( 3806)

9110 9178Softw are WIP

At cost 25042504

Total intangible assets - net book value 86217 82907

Page3lof58

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2013$'000

23, Property, Plant and EquipmentLand: At fair value

Gross 5144 327 52852945144 327 5285294

17449995 18067854(6169291) (6334 470)11280704 11733384

53911 63116( 38010) (43275)15901 19841

573777 524021(312753) (276020)261024 248001

496747 470619( 26801) (22235)469946 448384

256942 15636817428844 17891 272

Buildings: At fair valueGrossLess: Accumulated depreciation

Heritage and cultural assets At fair valueGrossLess: Accumulated depreciation

Plant and equipment At costGrossLess: Accumulated depreciation

Leased assets: At fair valueGrossLess: Accumulated amortisation

Capital works in progress:At cost

Total property, plant and equipment - net book value

Land

Approximately one quarter of the department's land was independently valued by State Valuation Service as at 30 June 2014.

The fair value of land involved physical inspection and reference to publicly available data on recent sales of similar land in nearbylocalities in accordance with Industry standards. In determining the values, adjustments were made to the sales data to take intoaccount the location of the department's land, its size, street/road frontage and access, and any significant restrictions. The extent ofthe adjustments made varies in significance for each parcel of land.

The remaining three quarters of the land assets, have been indexed to ensure that values reflect fair value as at reporting date. Thisinvolved the selection of a random sample of 179 properties from the 18 districts across the state that were not independentlyvalued in2013-14. State Valuation Service then provided indices for each of these sites based on recent market transactions for local land sales.These indices increased the value of land in these districts by 0.3 percent.

Buildings

Approximately one quarter of the department's buildings were independently valued by State Valuation Service as at 30 June 2014. Allpurpose-built facilities are valued using a depreciated replacement cost approach, as there is no active market for these facilities. StateValuation Service conducted physical inspections and have sourced building price information from the Department of Housing andPublicWorks. The depreciated replacement cost was based on a combination of published construction rates for various standardcomponents of buildings and specialised fit-out constructed by the department, adjusted for more contemporary design/constructionapproaches. Significant judgement was also used to assess the remaining service potential of these facilities, given the current physicalcondition of the facility.

The remaining three quarters were indexed using the Building Price Index provided by GRC Quantity Surveyors. The change in theBuilding Price Index (June 2013 to June 2014) was a 1.93 percent increase. State Valuation Service have certified that the BuildingPrice Index is the most appropriate measure for reflecting price changes in the department's buildings in the years when an independentvaluation is not undertaken. The Building Price Index is based on the former Department of Housing and Public Works BPIwhich wasbased on tender prices for typical government buildings. Management is of the opinion that the continuing investment in general andspecific priority maintenance would prevent any abnormal deterioration in asset values in the period between independent valuations.

Due to the restructure of the administrative arrangements relating to the provision of Vocational Education and Training (VET), theTAFE operational business has been transferred to TAFE Queensland, and the property, plant and equipment assets, at certain sites,have been transferred to the Queensland Training Assets Management Authority (QTAMA) on 1 July 2014. QTAMA's primary objectiveis to manage and commercially exploit training assets. The change in use of these assets has required a change in their valuation to anincome-based approach. Projects Queensland engaged Aurecon Australia Pty Ltd to supply valuations, including on an assessedvacant possession basis.Aurecon sourced valuations in each region using the following firms: - Jones Lange La Salle, LandmarkWhite(Gold Coast and Sunshine Coast), Heron Todd White Toowoomba, and Knight Frank Townsville. QTAMA management have providedadjustments to these valuations to include five years of estimated rental incomes discounted at 15 percent, and adjusted for a 40percent occupancy rate to reflect historical usage. This resulted in land and buildings with a net book value of $982.6 million beingwritten down to $391.0 million. Land and building assets at other training sites are being retained by the department pending finalisationof land sub-division matters (at multi-use sites), and clarification of funding arrangements for the Southbank Education and TrainingPrecinct - Public Private Partnership.

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23. Property, Plant and Equipment (cont'd)Heritage and Cultural Assets

Approximately one quarter of the department's heritage and cultural assets were independently valued by State Valuation Service as at30 June 2014. As there is no active market for these assets, fair value was determined using a depreciated replacement cost approachby estimating the cost to reproduce the items with the features and materials of the original items, with substantial adjustmentsmade totake into account the items heritage restrictions and characteristics.

The remaining three quarters were indexed to ensure that values reflect fair value as at reporting date using the Building Price Indexprovided by GRC Quantity Surveyors. Management of the department has judged that the above valuations continue to materiallyrepresent fair value as at 30 June 2014.

Leased Assets

Leased assets were last independently valued as follows:

State Valuation Service performed an independent valuation of Moore Park State School in 2009-2010

APV Valuers and Asset Management performed an independent valuation of the Southbank Training Precinct in 2009-2010

As there have been no material changes in construction prices since these were independently valued, indexation based on the BuildingPrice Index has not been applied.

,. OAO'.,-~certified statements-._-_----

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23, Property, Plant and Equipment (cont'd)

Categorisation of fair value recognised as at 30 June 2014 (refer to note 2 (p»

Level 2 Level 3 Total$'000 $'000 $'000

Land 5 144327 - 5144327

Buildings 311335 10969369 11280704

Heritage and Cultural Assets - 15901 15901

Leased Assets - 469946 469946

Level 3 significant valuation inputs and relation to fair value

The fair value of the below buildings has been determined by independentvaluer, State Valuation Service, using a depreciatedreplacementcost valuationtechnique,and adjusted for price changes. The followingtable highlightsthe key unobservable(Level 3) inputsassessedduring the valuationprocessand the relationship to estimated fair value.

Fair Value at Significant Possible alternative Sensitivity of fa i r

Description 30 June 2014 unobservable inputs values for level 3 value to change inused in valuation inputs level 3 inputs

$'000Buildings 10969369 Construction Costs 4% + or- Increase/ decrease in- Schools and Early Childhood these factors would

increase/decrease thefair value by 6% + or -

Estimates of the 12% + or- Increase/ decrease inremaining service these factors wouldpotential based on increase/decrease theassessment of current fair value by 6% + or -physical conditions, anddifferences infunctionality.

Heritage and Cultural Buildings 15901 Construction Costs 4% + or- Increase/ decrease inthese factors wouldincrease/decrease thefair value by 13% + or -

Estimates of the 12% + or- Increase/ decrease inremaining servce these factors wouldpotential based on increase/decrease theassessment of current fair value by 28% + or -physical conditions, anddifferences infunctionality.

Leased Buildings 469697 Construction Costs 4% + or- Increase/ decrease inthese factors wouldincrease/decrease thefair value by 4% + or-

Estimates of the 12% + or- Increase/ decrease inremaining service these factors wouldpotential based on increase/decrease theassessment of current fair value by 1% + or -physical conditions, anddifferences infunctionality.

Usage of alternativelevel3 inputs (as per the above table) that are reasonablein the circumstances as at the revaluationdate would notresult inmaterialchanges in the reported fair value. There are no significant inter-relationshipsbetween unobservable inputsthat materiallyimpact fair value.

Asset where current use is not highest and best use

The currentvalue in use is consideredto materially reflect highest and best use for all property, plant and equipment items.

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Notes2014$'000

2013$'000

24. PayablesCurrentTrade creditorsCapital creditorsFBT and payroll taxOther creditorsGrants and subsidies payableTotal

214826 19218589060 7305260042 54356

463 10223479 3304

367870 323919

25. Interest-Bearing LiabilitiesCurrent:Lease liabilityQueensland Treasury Corporation (QTC) borrow ingsTotal

31 52305462

47365170

10692 9906

Non-Current:Lease liabilityQueensland Treasury Corporation (QTC) borrow ingsTotal

31 45043051082

42974056544

501512 486284

Lease liabilities are effectively secured, as the right to the leased assets revert to the lessor in the event of default.No assets have been pledged as security for any liabilities.All borrowings are in $A denominated amounts, and no interest has been capitalised during the current reporting period. There havebeen no defaults or breaches of the loan agreement during the period.Interest rates on borrowings range from 5.21% to 5.79% (2012-13: 5.21% to 5.79%).As it is the intention of the department to hold its borrowings for their full term, no fair value adjustment is made to the carrying amountof the borrowings.Interest on finance leases is recognised as an expense as it accrues. No interest has been capitalised during the current orcomparative reporting period.The implicit interest rate for finance leases range from 6.54 % to 10.64 % (2012-13: 6.07% to 10.64%).The majority of finance leases relate to the South Bank PPP Project and the South-east Queensland School PPP Project. Refer toNotes 31 and 32 for details.

26. Accrued Employee BenefitsAnnual leave levy payableLong service leave levy payableWages outstandingPaid parental leaveTotal

2(w) 5846527555355731142

56342257298426882

122735 91379

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2014 2013Notes $'000 $'000

27. Other Current Liabilities

CurrentUnearned grant revenue and revenue in advance 74284 37769Advances and deposits payable 1246 748Total 75530 38517

28. Asset Revaluation Surplus by Class

Land Buildings Heritage and Leased TotalCultural Assets

Notes $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2012 5247281 7373386 18963 2576 12642206

Revaluation increrrents 7948 222241 1154 231343Revaluation decrerrents ( 267173) (59970) ( 1 391) (328534)

( 259 225) 162271 ( 237) ( 97191)

Balance at 30 June 2013 4988056 7535657 18726 2576 12545015

Heritage and LeasedLand Buildings Cultural Assets Total

Notes $'000 $'000 $'000 $'000 $'000

Balance at 1 July 2013 4988056 7535657 18726 2576 12545015

Revaluation increrrents 33786 447433 12306 493525Revaluation decrerrents ( 183627) (866 020) ( 15491) (1 065 138)

( 149841) ( 418 587) ( 3 185) ( 571 613)

Balance at 30 June 2014 4838215 7117070 15541 2576 11 973402

The asset revaluation surplus represents the net effect of upwards and downwards revaluations of assets to fair value.

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Notes2014$'000

2013$'000

29. Reconciliation of Operating Surplus to Net Cashfrom Operating Activities

Operating surplus/( deficit) 103 542

Depreciation and arrortisation expense 506716 492804Net gains on disposal of property, plant and equiprrent 1888 12463Loss of public property 14 8Donated assets received ( 17376) (75801)Bad and irrpairrrent losses 1114 6990

Change in assets/liabilities (net of I\t'oGtransfers):(Increase)/decrease in GST input tax credits receivable ( 5048) 2361(Increase)/decrease in net operating receivables (7427) 31 081(Increase)/decrease in other receivables ( 20242)(Incraase)/decrease in inventories 577 ( 198)(Increase)/decrease in other current assets 8272 46763Increase/(decrease) in other current liabilities 18153 (38702)Increase/ (decrease) in GST payable 2 ( 46)Increase/(decrease) in payables 43094 ( 8 873)Increase/(decrease) in accrued errployee benefits 28552 ( 1 742)

Net cash from operating activities 558392 467650

30. Non-CashFinancing and Investing Activities

Assets and liabilities received or donated/transferred by the department and recognised as revenues and expenses are set out in Notes6 and 15 respectively.

31. Commitments for Expenditure

(a) Finance lease commitments

Lease liabilities recognised in the Statement of Financial Position

CurrentNon-current

Total

5230450430

4736429740

455660 434476

Commitments under finance leases at the reporting date are inclusive of anticipated GST and are payable as follows:

Not later than one year 50687 49679Later than one and not later than five years 202091 193283Later than five years 1025961 1025730

1278739 1268692Less: anticipated input tax credits ( 116249) (115335)Less: future finance charges (706830) ( 718 881)

Total 455660 434476


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Notes2014$'000

2013$'000

31, Commitments for Expenditure (cont'd)(b) Non-cancellable operating lease commitments

Commitments in relation to non-cancellable operating leases are inclusive of anticipated GST and are payable as follows:

Not later than one yearLater than one and not later than five yearsLater than five years

Total commitments

215917708578363

61886466330

177039 12984

The increase in finance lease commitments is mainly due to the South-East Queensland Schools - Aspire - Public Private PartnershipProject (refer to Note 32).

Other finance leases are entered into as a means of funding the acquisition of certain plant and equipment. Lease payments aregenerally fixed. Leases for photocopiers have a contingent rental obligation dependent on the volume of usage.

No leases have escalation clauses except for Moore Park State School lease which will be reviewed after 10 years. A small number ofleases have renewal or purchase options. Where such options exist, they are all exercisable at market prices. No lease arrangementscreate restrictions on other financing transactions.

On 17 December 2013, the department entered into the Queensland Schools - Plenary - Public Private Partnership (QSPPP)arrangement with Plenary Schools Pty Ltd for the construction and management of 10 schools in South East Queensland. Due to thestaged construction schedule, the finance lease commitment will need to be calculated separately for each stage of each school andrecognised on the respective Stage Availability Date (SAD) and as such has not been recognised in the financial statementcommitments for 2013-14. However it is anticipated a Finance Lease commitment will commence in November 2014 with the estimatedtotal value of the Finance Lease commitment being $530.473 million ($197.704M Principal and $332.769M Interest) and will be shownunder Note 31 (a) Finance lease commitment in future financial years.

Operating leases are entered into as a means of acquiring access to office accommodation and storage facilities. Lease payments aregenerally fixed, but with inflation escalation clauses on which contingent rentals are detenmined.

No renewal or purchase options exist in relation to operating leases and no operating leases contain restrictions on financing or otherleasing activities.

(c) Capital expenditure commitments

Materialclasses of capital expenditure commitments inclusiveof anticipatedGST, contracted for at reportingdate but not recognised in theaccounts are payableas follows:

Land$'000

Buildings$'000

Plant andEquipment

$'0002014

Payable:Not later than one yearLater than one and not later than five years

Total

69 22126847580

743

69 268848 743

2013

Payable:Not later than one yearLater than one and not later than five years

Total

520 1058731455

520 107328

QAO

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Notes2014$'000

2013$'000

31, Commitments for Expenditure (cont'd)

(d) Other commitments (Public Private Partnership, Priority Purchasing Program and other)

Other expenditurecommitted at the end of the period but not recognisedin the accounts are payableas follows:

Not later than one yearLater than one and not later than five yearsLater than five years

Total commitments

36010117877915448

75125110933911943

1069335 1098001

Fixed operating costs for Public Private Partnerships for Southbank Education and Training Precinct - Axiom and South-EastQueensland Schools - Aspire have been included in the estimates of other commitments. Estimated other fixed operating commitmentsrelated to QSPPPwill be shown under other commitments in future financial years.

32, Private Provision of Public Infrastructure (PPPI)Arrangements(a) Southbank Education and Training Precinct - Axiom - Public Private Partnership

InApril 2005, the department entered into a contractual arrangementwith Axiom Education Queensland Pty Ltd (Axiom) to design,construct, operate, maintain, and finance the Southbank Education and Training Precinct for a period of 34 years on departmental land.This is a social infrastructure arrangement whereby the department pays for the third-party use of the infrastructure asset throughregular service payments to Axiom over the life of the contract. The arrangement involved the refurbishment or demolition of existingbuildings and the development of new buildings.

Axiom is owned by AMP Capital Community Infrastructure Trust (CommIF). AMP Capital Funds Management Ltd (AMPCFM)wasappointed as the responsible entity for the CommlF in 2013. AMPCFM is 100% owned subsidiary of AMP Capital Holdings Ltd.

Constructionwork commenced in July 2005 and was completed on 31 October 2008. The department has entered into a Head Leaseand Subleasewith Axiom for the Southbank Education and Training Precinct. The department will pay an abatable, undissectedservice payment to Axiom for the operation, maintenance and provision of the precinct. The Head Lease and Sublease recognise theobligations under the Southbank Education and Training Precinct Project Deed in relation to the 30 year operating phase. This periodrequiresAxiom to maintain the facilities to a high standard. Services include facilities (including furniture, fittings and equipment)maintenance and lifecycle replacement, cleaning, security, waste management, fire safety and other associated facilities managementservices.

The land on which the facility was constructed is owned and recognised as an asset by the department. The Head Leasewith Axiomprovides Axiom with the right to enter and operate on the site. The land under the Head Lease is classified as an operating lease. Thislease expires on 30 June 2039.

The fair value of the buildings was recognised as finance lease assets with the corresponding recognition for future payments asfinance lease liability. The lease assets will be depreciated over the economic useful life and the lease liability will be reduced, aspayment for the buildings are made. The monthly service payments are split between the capital component to affect the systematicwrite-down of the liability over the term of the lease and the financing component which will be recognised as an expensewhen paid.Other components such as facilities management, maintenance and insurance will be expensed when incurred. At the expiry of the 34year period, the buildings will revert to the State for nil consideration.

In September 2011 the department entered into a lease arrangementwith the Southbank Institute of Technology leasing the SouthbankEducation and Training Precinct to the Institute until 28 June 2039. Due to machinery of government changes as of 1 July 2014 thePPPwill remainwith the department for the foreseeable future, however the lease with the Institute will be transferred to theQueenslandTraining Asset Management Authority (refer Note 35).

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32. Private Provision of Public Infrastructure (PPPI)Arrangements (cont'd)(a) Southbank Education and Training Precinct - Axiom - Public Private Partnership (cont'd)

2014Notes $'000

2013$'000

EStimated cash flows - Fixed costsOutflowsNot later than 1 yearLater than 1 year but not later than 5 yearsLater than 5 years but not later than 10 yearsLater than 10 years

EStimated net cash flow - Fixed costs

(36826)( 158450)( 178215)(429646)

(38085)( 155412)( 171 830)(462705)

( 803137) (828032)

* Based on risk free rate of 3.70 per cent (2013: 3.54 per cent).

Under the contractual agreement for the Southbank Education and Training Precinct - Axiom - Public Private Partnership the paymentsscheduled are solely of a fixed nature and no variable costs are anticipated for the life of the contract.

During the concession period, the department will carry the following risks and rewards, which include:

Risks Impact to the departmentSite risks Axiom has accepted site risk includingexisting structureswith the exception of

non-identifiedpre-existingcontamination. Where non-identifiedpre-existingcontaminationis discovered, investigationand remediationcosts will beshared on an equal basis betweenAxiom and the State.

The department has defined its performancespecifications. The departmentis exposedto the risk that these performancespecificationsfail to meet currentor future requirements, however processesare in place to monitorperformanceand identifyany issues as early as possible to minimiseexposure.

The department has specified the level of operatingand maintenanceperformance. The department is exposed to the risk thatoperating/maintenanceperformancespecificationsfail to meet current orfuture requirements,however processes are in place to monitor performanceand identifyany issues as early as possible to minimise exposure.

The department has entered into a fixed price contract, subjectto CPI andmarket rates. The department is exposed to the risk that the Consortiumfailsto complywith the requirementsof the Deed and/or fails to be a goingconcern. In this event the department is exposedto the risk of replacingtheconsortiumwith suitable operators to continue providing infrastructurefinancing, capital,maintenanceand operating requirements. The departmenthasmonitoringprocesses in place to identifyany issues as early as possible. to minimiseexposure.

Performancedesign, constructionand commissioningrisks (performancespecificationadequatelydescribing the department's requirementsandchangesto performancespecifications)

Operatinq/maintenancerisks (networkand interfaceand changes to performancespecification)

Sponsor and financial risks

Early termination Should the department wish to terminate the Deed, it is expectedthat thedepartmentwould be requiredto pay the Consortiumcompensation;howeverany compensationpayablewould be a key variable in the considerationof anydecision to terminate the contract prior to its planned completion.

At the end of the concession period the facilitieswill be handedback to thedepartmentat no additional cost. The departmentwill receivethe benefit ofthe receiptof the fair value of the infrastructureand any associatedassets.

At the end of the concession period the departmentwill be responsiblefor theremovalof any future contaminationof the site and other ancillary land andwillalso be responsiblefor the future removal of infrastructureandany siterehabilitation. On-going monitoring of the site is within the department'splansfor managing the contract to ensure that any rehabilitationrequirementsarepromptly identifiedand costs are minimised.

Market value risk

Rehabilitationrisk

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(b) South-East Queensland Schools - Aspire - Public Private Partnership

32. Private Provision of Public Infrastructure (PPPI)Arrangements (cont'd)

In May 2009, the department entered into a contractual arrangementwith Aspire Schools (QLD) Pty Limited (Aspire) to design,construct, commission, maintain and partially finance seven schools for a period of 30 years on departmental land. This is a socialinfrastructure arrangement whereby the department pays for the third-party use of the infrastructure asset through regular servicepayments to Aspire Schools (QLD) Pty Ltd over the life of the contract.

Aspire is wholly owned by Aspire Schools Holdings (Qld) Pty Ltd which is owned by Leighton Infrastructure InvestmentsPty Limited(LlPL), H.R.L. Morrison & Co Private Markets Pty Limited as Trustee of Public Infrastructure Partners Australia Unit Trust (PIPA),Commonwealth Investments Pty Limited (CIPL) and AMP Capital Community Infrastructure Fund (AMP). Finance during the designand construction phase was provided by CIPL, Bank of Tokyo-Mitsubishi and the National Australia Bank. QueenslandTreasuryCorporation provided the remaining 70% of the projects financial requirementsduring the operating phase (from January 2010 to 31December 2039).

Constructionwork commenced in April 2009 and was finalised in January 2014 with the completion of Stage 2 constructions at two ofthe schools. The State will lease back these schools from Aspire and will pay an abatable, undissected service payment to Aspire forthe operation,maintenance and provision of the schools. The Head Lease, Sublease and Interim Leases' recognise the obligationsunder the South-East Queensland Schools Project Deed in relation to the 25 year operating phase. This period requiresAspire tomaintain the facilities to a high standard. Services include facilities maintenance and lifecycle replacement, cleaning, security, andother associated facilities management services.

In 2012 approvalwas received to undertake construction of halls at all six SEQ PPP primary schools as a variation to the existing SEQPPP Schools contract, with financing provided by DETE for the construction ($25.624M), lifecycle and maintenance of these facilities($17.629M) to be maintained by Aspire Schools. The constructionwas completed in May 2014.

The land on which the schools are constructed is owned and recognised as assets by the department. The Head Leasewith AspireprovidesAspire with the right to enter and operate on the site. The land under the Head Lease is classified as an operating lease. Thislease expires on 31 December 2039.

The fair value of the buildings were recognised as finance lease assetswith the corresponding recognition for future payments as afinance liability. The assets will be depreciated over the economic useful life and the lease liability will be reduced, as payment for thebuildings are made. The monthly service payments are split between the capital component to effect the systematicwrite-down of theliability over the term of the lease and the financing component which will be recognised as an expense when paid. Other componentssuch as facilities management, maintenance and insurancewill be expensedwhen incurred. At the expiry of the 30 year period, thebuildingswill revert to the State for nil consideration.

Notes2014$'000

2013$'000

EStimated cash flows - Fixed CostsOutflowsNot later than 1 yearLater than 1 year but not later than 5 yearsLater than 5 years but not later than 10 yearsLater than 10 years

EStimated net cash flow - Fixed Costs

( 28410)( 108639)( 127587)(324639)

(28372)( 113555)( 126727)( 346604)

(589275) (615258)

0/\0certified statements

\

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32. Private Provision of Public Infrastructure (PPPI) Arrangements (cont'd)(b) South·East Queensland Schools - Aspire - Public Private Partnership (cont'd)

2014 2013Notes $'000 $'000

Estimated cash flows - Variable CostsInflowsNot later than 1 year 1331Later than 1 year but not later than 5 years 5141Later than 5 years but not later than 10 years 6035Later than 10 years 16705

OutflowsNot later than 1 year (2699) ( 1 789)Later than 1 year but not later than 5 years ( 8420) ( 9132)Later than 5 years but not later than 10 years ( 8335) (8305)Later than 10 years ( 21 026) (22356)

Estimated net cash flow - Variable Costs ( 11268) (41 582)

Total Estimated Net Cashflow ( 600543) (656840)

* Based on risk free rate of 3.70 per cent (2012-13: 3.54 per cent)..

•• Under the contractual agreement for the South-East Queensland Schools - Aspire - Public Private Partnership the paymentsscheduled as variable costs change according to the number of module units in use at the individual sites, utilities, car parkingagreements and other service payment adjustments.

Inflows related to the South-East Queensland Schools - Aspire - Public Private Partnership relate to cleaning, grounds maintenanceand janitorial services. To deliver these services at the seven new schools, Aspire is required to use staff provided (employed) by theState. Aspire manage and supervise the staff as per the Management and Supervision Agreement which is in accordance to existingcertified agreements.

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32. Private Provision of Public Infrastructure (PPPI) Arrangements (cont'd)(b) South-East Queensland Schools - Aspire - Public Private Partnership (cont'd)

RisksDuring the concession period, the department will carry the following risks and rewards, which include:

Impact to the department

Site risks

Performancedesign, constructionand commissioningrisks (performancespecificationadequatelydescribingthe department's requirements andchangesto performancespeCifications)

Operating/maintenancerisks (network and interfaceand changesto performancespecification)

Sponsorand financial risks

Early termination

Marketvalue risk

Rehabilitationrisk

Aspire has acceptedthe sites in their current state and condition. Thisincludesresponsibilityfor pre-existingcontamination, nativetitle applicationsand artefacts. The State has however undertakento procure remediationrelatingto two sites in accordancewith acquisition/developmentagreementsentered into by the State for the acquisition of those sites. If the two sites arenot remediatedin accordancewith the respectiveacquisition/developmentagreementand this impacts performance byAspire of its obligationsundertheprojectdeed, then the State will compensateAspire.

The departmenthas defined its performancespecifications. The departmentis exposedto the risk that these performancespecificationsfail to meet currentor future requirements,howeverprocesses are in place to monitorperformanceand identifyany issues as early as possibleto minimiseexposure.

The departmenthas specifiedthe level of operatingand maintenanceperformancewhich is linkedto an abatement regimeand key performanceindicators. The department is exposed to the risk that operating/maintenanceperformancespecificationsfail to meet current or future requirements,howeverprocesseswill be instituted to monitor performanceand identifyanyissuesas earlyas possible to minimise exposure.

The departmentbears the risks associated to interest,CPI andmarket rates.The departmentis exposedto the risk that the Consortiumfails to complywiththe requirementsof the Deedand/or fails to be a going concern. In this eventthe department is exposed to the risk of replacingthe consortiumwith suitableoperatorsto continueproviding infrastructurefinancing, capital,maintenanceandoperatingrequirements. The department hasmonitoringprocessesinplace to identifyany issues as early as possible to minimiseexposure.

Shouldthe departmentwish to terminate the Deed, it is expectedthat thedepartmentwould be requiredto pay the Consortiumcompensation;howeverany compensationpayablewould be a key variable in the considerationof anydecisionto terminatethe contract prior to its planned completion.At the end of the concessionperiod the facilitieswill be handedback to thedepartmentat no additionalcost. The departmentwill receivethe benefitofthe receiptof the fair value of the infrastructureand any associatedassets.At the end of the concessionperiod the departmentwill be responsiblefor theremovalof any future contaminationof the site and other ancillary landandwillalso be responsiblefor the future removal of infrastructureand any siterehabilitation. On-goingmonitoring of the site is within the department'splansfor managingthe contract to ensure that any rehabilitationrequirementsarepromptly identifiedand costs are minimised.

(c) Queensland Schools - Plenary - Public Private Partnership

On 17 December 2013, the department entered into the QueenslandSchools Public Private Partnership arrangement with PlenarySchools Pty Ltd for the construction and management of 10 schools in South East Queensland, Under the Project, the department isscheduled to pay a series of capital contributions during the construction phase of the project towards the construction costs totalling$190 million. These contribution payments result in the lower service payments over the period of the concession. This is socialinfrastructure arrangementswhereby the department pays for the third-party use of the infrastructure asset through regular servicepayments to Plenary Schools Pty Ltd over the life of the contract. The project period is for 30 years and is expected to end in December2043.

Plenary Schools Pty Limited as Trustee for Plenary Schools Unit Trust is wholly owned by Plenary Schools Holdings Pty Limited asTrustee for Plenary Schools Holdings Unit Trust which is wholly owned by Plenary Group Pty Limited as Trustee of PlenaryGroup UnitTrust.

The project involves the construction of eight (8) Prep-6 primary schools and two (2) 7-12 secondary schools over a 5 year period in 3stages. Due to the staged construction schedule, the lease asset and lease liability will need to be calculated separately for each stageof each school and recognised on the respective Stage Availability Date (SAD). The timing of capital contribution payments overagainst the SAD determines the accounting treatment at recognitionof each stage.

The land on which the schools are/will be constructed is owned and recognised as assets by the department. The Licencewith Plenaryprovides Plenary with the right to enter, construct and operate on the site, this licence expires on 31 December 2043.


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32. Private Provision of Public Infrastructure (PPPI) Arrangements (cont'd)(c) Queensland Schools - Plenary - Public Private Partnership (cont'd)

Upon the completionof the construction,the fair value of the buildingswill be recognisedas finance leased assetswith the correspondingrecognitionfor future payments as finance liability. The assets will be depreciatedover the economic useful life and the lease liabilitywill bereduced,as payment for the buildingsare made. The monthly service payments are split between the capital component to affect thesystematic write-down of the liability over the term of the lease and the financing component which will be recognised as an expensewhen paid. Other components such as facilities management, maintenance and insurance will be expensed when incurred. Theestimated costs for the Queensland Schools - Plenary - Public Private Partnership is anticipated to be $506.367 million fixed costs and$10.597 million variable costs, basedon a risk free rate of 3.70 percent. At the expiry of the 30 year period, the buildingswill revert to theState for nil consideration.

RisksDuring the concession period, the department will carry the following risks and rewards, which include:

Impact to the department

Site risks

Performancedesign, constructionand commissioningrisks (performancespecificationadequatelydescribing the department's requirementsandchanges to performancespecifications)

Operating/mainteriancerisks (networkand interfaceand changes to performancespecification)

Sponsorand financial risks

Early termination

Market value risk

Rehabilitationrisk

Plenaryhas acceptedsite risk includingexisting structureswith the exceptionof non-identifiedpre-existingcontamination. Where non-identifiedpre-existingcontaminationis discovered, investigationand remediationcostswill beshared on an equal basis betweenPlenary and the State..

The department has defined its performance specifications. The departmentis exposedto the risk that these performance specflcatlons fail to meet currentor future requirements,howeverprocesses are in place to monitorperformanceand identifyany issues as early as possible to minimiseexposure.

The department has specifiedthe level of operating and maintenanceperformancewhich is linkedto an abatement regime and key performanceindicators. The department is exposed to the risk that operating/maintenanceperformancespecificationsfail to meet current or future requirements,however processeswill be institutedto monitor performanceand identifyanyissues as early as possibleto minimise exposure.

The departmentbears the risks associated to interest, CPI andmarket rates.The department is exposedto the risk that the Consortiumfails to complywiththe requirementsof the Deedand/or fails to be a going concern. In this eventthe department is exposedto the risk of replacing the consortiumwith suitableoperators to continueproviding infrastructure financing, capital,maintenanceand operating requirements. The department has monitoringprocesses inplace to identifyany issuesas early as possible to minimiseexposure.

Should the departmentwish to terminate the Deed, it is expectedthat thedepartmentwould be requiredto pay the Consortium compensation;howeverany compensationpayablewould be a key variable in the considerationof anydecision to terminate the contract prior to its planned completion.At the end of the concessionperiod the facilities will be handedback to thedepartment at no additionalcost. The department will receivethe benefit ofthe receipt of the fair value of the infrastructure and any associatedassets.At the end of the concessionperiod the department will be responsiblefor theremovalof any future contaminationof the site and other ancillary land and willalso be responsiblefor the future removal of infrastructureandany siterehabilitation. On-goingmonitoring of the site is within the department'splansfor managingthe contract to ensure that any rehabilitationrequirementsarepromptly identifiedand costs are minimised.

(d) Accounting treatment - Public Private Partnerships

The current accounting treatment applied to these arrangements is based upon the requirements of AASB 117 Leases. There is currentlyno Australian Accounting Standard that specifically addresses the accountingtreatment to be adopted by grantors for capital costs incurredunder a public private partnership arrangement. Queensland Treasury and Trade have developed APG 17 - Service ConcessionArrangements: Grantor to assist departments in identifying the accounting treatment, financial reporting and disclosure of public privatepartnership arrangements. Additional disclosures are included for each individual arrangement in accordance with AASB Interpretation129 Service Concession Arrangements: Disclosures and Queensland Treasury and Trade's minimum reporting requirements underSection 9 - Notes to the financial statements.

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33. ContingenciesLitigation in Progress

At 30 June 2014, the following cases were before the Courts:

2014No. of cases

2013No. of cases

District CourtMagistrates Court

41

41

5 5

The department's legal advisers and management believe that it is not possible to reliably determine the value of payouts in respect ofthis litigation which, in the majority of instances, represent insurable events in terms of the policy held with the Queensland GovernmentInsurance Fund.

The maximum exposure of the department under this policy is $10000 for each insurable event.

There are currently 150 (2012-13: 190) cases of general liability and 65 (2012-13: 86)WorkCover common law claims beingmanaged bythe department.

Financial Guarantees

(a) The department has provided 62 (2012-13: 59) financial guarantees to Parents and Citizens' Associations, 5 guarantees toUniversities (2012-13: 5), and 8 (2012-13: 8) guarantees to grammar schools for a variety of loans. These guarantees have beenprovided over a period of time and have various maturity dates.

2014Remaining

balance$'000

2013Remaining

balance$'000

Enabling legislation

Parents and Citizens' Associations 2548 2645 Education (General Provisions) Act 1989s.96

214705 193762 Australian National University Act 1991s.44

114510 95359 GrammarSchoolsAct1975s.20-----------------------------331763 291766

Universities

Grammar Schools

(b) The department has previously acted as a guaranfor for Aviation Australia Pty Ltd in the event of default lease payments in relation toa training centre leased from Brisbane Airport Corporation Ltd. Under new lease arrangements the department is no longer required toprovide a guarantee.

(c) The department also acts as a guarantor for Aviation Australia Pty Ltd in the event of default loan payments owed to QueenslandTreasury Corporation. The guarantee is limited to $1.728 million (2012-13: $1.920 million), which represents 100% of the outstandingloan balance as at 30 June 2014. No default loan repayments have been recognised since the inception of the loan agreement,and thedepartment's management does not expect that the guarantee will be called upon in the near future.

(d) The department paid a total of $10.65 million to the Construction Industry Skills Centre Pty Ltd (CISC) between 1994 -1998. Theamount is only recoverable in circumstances contingent upon the winding up of CISC and the related trust. The department and theQueensland Training Construction Fund (QTCF) (a trust) are equal shareholders ($1 share each) in CISC and founders of the fund.

Native Title Claims over Departmental LandThere are native title claims which have the potential to impact upon properties of the department, however most departmental propertiesare occupied under a "reserve" tenure, validly created prior to 23 December 1996, and therefore any development undertaken inaccordance with gazetted purposes should minimise the potential of native title claims.

At reporting date it is not possible to make an estimate of any probable outcome of such claims, or any financial effect however it shouldbe noted that native title would not arise as an issue until the property has been declared surplus and attempts are made for the propertyto be sold or transferred. Native title would need to be addressed as part of the disposal process. The department would necessarilyrecognise any cost implications arising from such claims at that time.

01-\0certified statements

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34. Controlled Entitiesa) In October 2001, Aviation Australia Pty Ltd was formed to provide aviation training. Aviation Australia Pty Ltd is 100%owned by theDepartment of Education, Training and Employment. Aviation Australia Ply Ltd prepares and publishes separate financial statementswhich are audited by the Auditor-General of Queensland.

Summary of financial transactions and balances are as follows (financial year 2013-14 are not currently audit agreed):Aviation Australia Pty Ltd 2014

$'0002013$'000

RevenueExpensesNet surplus/( deficit)

15867( 16495)

18154( 17422)

( 628) 732

AssetsLiabilitiesNet assets

20430( 6639)

20495(6076)

13791 14419

b) The BCITF (Qld) Limited ('the Company') was established on 1 January 1999 to assist in the acquisition and enhancement of theknowledge, skills, training and education of workers in the building and construction industry. The Company is established as a publiccompany, limited by guara·ntee,and the Minister is the sole shareholder. The Company does not trade and is controlled by the department,and is audited by the Auditor-General of Queensland. .

The Company is the sole trustee of the Building and Construction IndustryTraining Fund ('the Trust'). The Trust is established to advancethe education and skills of persons and organisations involved in the building and construction industry, and is audited by the AuditorGeneral of Queensland. The Trust is not controlled by the department.

c) The Queensland Education Leadership Institute (QELi) was established on 1 June 2010 to provide a range of professional learningservices to school leaders. QELi is established as a not-for-profit public company, limited by guarantee, jointly owned by the Minister forEducation, Training and Employment the Department of Education, Training and Employment, Queensland Catholic EducationCommission (QCEC) and Independent Schools Queensland (ISQ). The Company is controlled by the department, and is audited byGrant Thornton Australia Pty Ltd.

Summary of audited financial transactions and balances are as follows:Queensland Education Leadership Institute 2014 2013

$'000 $'000

3142 2708( 3403) ( 3028)( 261) ( 320)

2596 2567( 1 257) ( 967)1339 1600

RevenueExpensesNet surplus/( deficit)

AssetsLiabilitiesNet assets

The assets, liabilities, revenues and expenses of the three entities listed above have not been consolidated in these financial statementsas they would not materially affect the reported financial position and operating revenue and expenses.

d) The Australian Music Examinations Board (AMEB) was constituted by agreement between the Ministers for Education of the statesof Queensland, New South Wales and Tasmania and the Universities of Melbourne, Adelaide and Western Australia. The financialactivities of AMEB (Queensland) have been incorporated into the financial transactions of the department.

e) The Queensland Schools Planning Commission was established as a Ministerial Advisory Committee under section 412 of theEducation (General Provisions) Act 2006. The Commission will operate from establishment in July 2012 until termination on 30 June2015. The Government has committed to provide $4 million over three years for the Commission. DETE will administer the Commission'sfunding based on advice from the Commission and in accordance with relevant Government policies. The Director-General DETE willretain overall accountability for administration of government funds and the DETE annual report to Parliament will include details of theCommission's budget and expenditures. The financial activities of the Queensland Schools Planning Commission are incorporated intothe financial transactions of the department.

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35. Events Occurring After Balance DateThe following matters have been announced:-

a) Amendment to the Vocation Education Training and Employment Act 2000 and the Central Queensland UniversityAct 1998toestablish the framework for the Transfer Legislationwhich allows for the transfer of Assets and theAssumed Liabilitiesof CentralQueensland Institute ofTAFE (CQIT) to Central Queensland University (CQU) on 1 July 2014.

Subject to certification of the Completion statement by the respectiveAccountable Officers, net assets estimated at $121million have been transferred, consisting mainly of property, plant and equipment.

b) Queensland TrainingAssets Management Authority Act 2014was commenced 1 July 2014. A regulation was passed on 27June 2014 to provide for the transfer of the State's training infrastructureand equipment from the Department of Education,Training and Employment to the Queensland Training Assets ManagementAuthority (QTAMA), a new specialist commercialasset manager, on 1 July 2014. QTAMA will be responsible for the efficient management of the State's training infrastructure,and will report to the Minister for Housing and PublicWorks. The authority's role includes providing access to the State'straining infrastructure for all registered training organisations on commercial terms.

Subject to certification by the respective Accountable Officers, assets estimated at $418 million have been transferred,consisting mainly of property, plant and equipment.

c) On 1 July 2014 TAFE Queensland will commence the managementofTAFE Queensland's operations following its transfer fromthe Department of Education, Training and Employment. Although TAFE Queensland was formally established by legislationfrom 1 July 2013, it did not operate during the 2013-14 financial year and all functions were substantively conducted throughthe department. As the TAFE Queensland entity did not operate there is no requirement to produce separate financialstatements or an annual report.

Subject to certification by the respective Accountable Officers, assets estimated at $281 million and liabilities estimated at$128 million have been transferred.

d) On 1 July 2014, as part of the Government Employee Housing Centralisation Project, the department will transfer 1360 ofGovernment Employee properties to the Department of Housing and PublicWorks (HPW). The final market rents have beenagreed and leasing agreements are in place for the transferred properties that DETE and TAFE Queensland continue to occupyto ensure a smooth transition to HPW. The transfer is at arm's length basis and the value of these properties at 30 June 2014is $311 million.

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36. Administered Transactions and BalancesAdministered revenues

Grants and contributions

RecurrentSpecific purpose - Cornrnonwealth

CapitalSpecific purpose - Government and industry

Administered itemappropriationOtherTotal administered revenues

Administered expenses

Grants and subsidies

RecurrentCommonwealth Government

CornrnonwealthrecurrentState Government

Grants and allowances to external organisationsTextbook allowancesGrants to statutory bodies (curriculum, tertiary and training)

CapitalState Government

Non-state and other external organisations

Supplies and servicesTotal administered expenses before transfers to Government

Net surplus or deficit before transfers to Government

Transfers to GovernmentNet surplus/{deficit)

Administered current assetsCash at bankTrade receivableGST input tax credits receivable

Total administered current assets

Total administered assets

Adm inistered current liabilities

Overdraft facilitiesRevenue payable to GovernmentOther payableGrant payable

Total administered current liabilities

Total administered liabilities

Notes2014$'000

2013$'000

1962368 1821868

63861962368

2736002

1828254

25328141107

4698370 4362175

*

1962368 1821868

561989 53272949137 4793834438 43208

128049 870482735981 2532791

20 222736001 2532813

1962369 1829362

1962368 18293621

525119 '202

119 728

119 728

118359

369119 728

119 728

* Infinancialyear2012-13a balanceof $0.285millionrelatedto previousfinancialyearsassetand liabilitieswas transferredfromthedepartment'sadministeredbalancesand is recordedasa Non-appropriatedequity injection.

r:". 0,[\0~ertJfied statements-.._._-._----

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Notes2014$'000

2013$'000

37. Reconciliation of Payments from Consolidated Fund to Administered Revenue

Budgeted appropriationLapsed Adrrinistered Appropriation

Total adrrinistered receipts

2739315( 3 313)

2611162(78345)

2736002 2532817

Less opening balance of adrrinistered revenue receivableAdrrinistered revenue recognised in Note 36

( 3)2736002 2532814

38. Monies Held in TrustTrust Account - Educational bequestsTotal

333 325333 325

39. Financial Instruments(a) Categorisation of Financial Instruments

The department has the following categories of financial assets and financial liabilities:

Category

Financial AssetsCash and cash equivalentsReceivablesOther financial assets (CBA Fixed Term Deposit)Total

161718

62302018716525871

250392177169

836056 427561

Financial LiabilitiesFinancial liabilities measured at aroortised cost:

PayablesQueensland Treasury Corporation borrow ingsFinancial lease liabilities

Total

242525

36787056544455660

32391961714

434476880074 820109

(b) Financial Risk ManagementThe department's activities expose it to a variety of financial risks - interest rate risk, credit risk, liquidity risk and market risk.Financial risk management is implemented pursuant to Government policy and seeks to minimise potential adverse effects on thefinancial performance of the department. The department measures risk exposure using a variety of methods as follows:-

Risk exposureCredit riskLiquidity riskMarket risk

Measurement methodAgeing analysisSensitivity analysisInterest rate sensitivity analysis

(c) Credit Risk ExposureCredit risk exposure is the potential financial loss due to another party to a financial instrument failing to discharge their obligation.The maximum exposure to credit risk at balance date in relation to each class of recognised financial asset is the carrying amount ofthose assets net of any allowances for impairment as indicated in the Statement of Financial Position.

/" QAO-, certified statements...._~----- Page 52 of 58

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39. Financial Instruments (cont'd)

(c) Credit Risk Exposure (cont'd)

The following table represents the department's maximum exposure to credit risk based on contractual amounts net of any allowances.

Maximum exposure to credit risk

Category Notes2014

$'0002013

$'000

Financial LiabilitiesGuaranteesTotal

33 333491 293686333491 293686

Financial assets

The carrying amount of receivables represents the maximum exposure to credit risk. As such, receivables are not included in theabove disclosure.

No collateral is held as security and no credit enhancements relate to financial assets held by the department.

The department manages credit risk through the use of a credit management strategy. This strategy aims to reduce the exposure tocredit default by ensuring the department monitors all funds owed on a timely basis. No financial assets and financial liabilities havebeen offset and presented net in the Statement of Financial Position.

The method for calculating any allowance for impairment is based on past experience, current and expected changes in economicconditions and changes in client credit ratings.

No financial assets have had their terms renegotiated so as to prevent them from being past due or impaired, and are stated at thecarrying amounts as indicated.

The allowance for impairment reflects the occurrence of loss events. The most readily identifiable loss event is where a debtor isoverdue in paying a debt to the department, according to the due date (normally terms of 30 days). Economic changes impacting onthe department's debtors, and relevant industry data, also form part of the department's documented risk analysis.

If no loss events have arisen in respect of a particular debtor or group of debtors, no allowance for impairment is made in respect of thatdebUgroup of debtors. If the department determines that an amount owing by such a debtor does become uncollectable (afterappropriate range of debt recovery actions), that amount is recognised as a Bad Debt expense and written-off directly againstReceivables. In other cases where a debt becomes uncollectable but the uncollectible amount exceeds the amount already allowed forimpairment of that debt, the excess is recognised directly as a Bad Debt expense and written-off directly against Receivables.

Impairment loss expenses for the current year regarding the department's receivables is $0.095 million (2012-13: $5.475 million). Thisis a decrease movement of $5.385 million from 2013 and is due to relatively little movement in the value of schools receivables.

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Department of Education, Training and EmploymentNotes to and forming part ofthe financial statements 2013-14

39. Financial Instruments (cont'd)(c) Credit Risk Exposure (cont'd)Agingof pastdue but not impairedaswell as impairedfinancialassetsare disclosedin the followingtables:

2014Individually Impaired Financial Assets

OverdueLess than 30 30 - 60 days 61 - 90 days More than 90 Total

days days$'000 $'000 $'000 $'000 $'000

Receivables (gross) 29766 29766Allowance for irlllairrrent (27879) (27879)Total 1887 1887

2013Individually Impaired Financial Assets

OverdueLess than 30 30 - 60 days 61 - 90 days rvtJrethan 90

days days Total$'000 $'000 $'000 $'000 $'000

Receivables (gross) 29493 29493Allowance for irlllairrrent (27784) (27784)Total 1709 1709

2014 2013Notes $'000 $'000

27784 22309( 1 018) ( 1 514)1114 6989

27879 27784

Movement in the Allowance of Impairment Loss

Balance at 1JulyAmounts written off during the yearIncrease/(decrease) in allowance recognised in the operating resultBalance at 30 June

QAOcertified statements--------

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39. Financial Instruments (cont'd)Financial Liabilities

The guarantees given by the Department of Education, Training and Employment meets the definition of a guarantee contract as perAASB 139 and as such the maximum exposure to the department is disclosed above. Details of guarantees can be found in Note 33.

The Department of Education, Training and Employment assesses the fair value of financial guarantees annually as at 30 June. It hasbeen determined that the fair value of all financial guarantees is nil as at 30 June as no defaults have been recognised since theinception of all guarantees, and the department's management does not expect that the guarantees will be called upon in the nearfuture. As such, the fair value of the guarantees has not been recognised in the Statement of Financial Position.

(d) Liquidity Risk

Liquidity risk refers to the situation where the department may encounter difficulty in meeting obligations associated with financialliabilities that are settled by delivering cash or another financial asset.

The department is exposed to liquidity risk in respect of its payables, lease liabilities, and borrowings from Queensland TreasuryCorporation (QTC).

The department aims to reduce the exposure to liquidity risk in payables by ensuring the department has minimum but sufficient fundsavailable to meet employee and supplier obligations as they fall due. This is achieved by ensuring minimum levels of cash are heldwithin the various bank accounts so as to match the expected duration of the various employee and supplier liabilities.

The following table also sets out the liquidity risk of financial liabilities held by the department. It represents the contractual maturity offinancial liabilities, calculated based on cash flows relating to the repayment of principal amount outstanding at balance date.

2014Payable in Total<1year 1 - 5 years > 5 years

Note $'000 $'000 $'000 $'000Financial LiabilitiesPayables 24 367870 367870Queensland Treasury Corporation borrow ing 25 5462 20852 30230 56544Lease liability 25 5230 25302 425128 455660Total 378562 46154 455358 880074

2013 Payable in Total

<1 year 1 - 5 years > 5 years$'000 $'000 $'000 $'000

Financial LiabilitiesPayables 24 323919 323919Queensland Treasury Corporation borrow ing 25 5170 18341 38203 61714Lease liability 25 4736 20830 408910 434 476Total 333825 39171 447113 820109


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39. Financial Instruments (cont'd)(e) Market Risk

The department does not trade in foreign currency and is not materially exposed to commodity price changes. The department isexposed to interest rate risk through its finance leases, borrowings from Queensland Treasury Corporation (QTC) and cash depositedin interest bearing accounts. The department does not undertake any hedging in relation to interest risk and manages its risk as per theliquidity risk management strategy.

(f) Interest Rate Sensitivity Analysis

The following interest rate sensitivity analysis is based on a report similar to that provided to management, depicting the outcome onprofit or loss if interest rates would change by +/- 1 per cent from the year-end rates applicable to the department's financial assets andliabilities. With all other variables held constant, the department would have a surplus and equity increase/ (decrease) of $5.92 million(2012-13: $1.89 million).

The department's sensitivity to interest has increased in the current period due to an increase in cash and fixed term deposits.

2014 Interest rate riskCarrying -1 % + 1 %

Financial Instruments amount Profit Equity Profit Equity$'000 $'000 $'000 $'000 $'000

Cash 623020 ( 6230) ( 6230) 6230 6230CSA Fixed Term Deposit 25871 ( 259) ( 259) 259 259QTC borrow ings 56544 565 565 ( 565) ( 565)

Pote ntial im pact ( 5 924) (5924) 5924 5924

2013 Interes t rate riskCarrying - 1 % + 1 %

Financial Instruments amount Profit Equity Profit Equity$'000 $'000 $'000 $'000 $'000

Cash 250392 (2504) (2504) 2504 2504QTC borrow ings 61714 617 617 ( 617) ( 617)

Potential impact ( 1 887) ( 1 887) 1887 1887

(g) Fair Value

The fair value of trade receivables and payables is assumed to approximate the value of the original transaction, less any allowance forimpairment.

The fair value of borrowings is notified by the Queensland Treasury Corporation. It is calculated using discounted cash flow analysisand the effective interest rate (refer Note 25) and is disclosed below:

2014 2013Carrying Fair value Carrying Fair valueamount amount

Note $'000 $'000 $'000 $'000

Financial LiabilitiesFinancial liabilities at amortised cost:

QTC borrow ings 25 56544 62569 61714 65869Total 56544 62569 61714 65869

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40. Operations Transferred through Machinery of Government Changes(a) Statutory Authorities

The TAFEQueensland Act 2013 commenced on 1 July 2013 and the TAFE Queensland Regulation 2013 was made. This Actestablished the new statutory body, TAFE Queensland, to act as the public provider of vocational education and training in Queensland.This Act repealed Chapter 6A of the VETE Act and the regulation dissolved the two statutory TAFE institutes which were establishedunder Chapter 6A.

On 1 July 2013 the operation of SBIT and GCIT including their assets and liabilities were transferred to the department. The auditedassets and liabilities transferred to the department are as follows:

Southbank Institute of TAFEand Gold Coast Institute of TAFE SBiT ocrr$'000 $'000

48814 122919(27725) ( 16025)21089 106894

43199 141 047( 22 110) ( 34 153)21089 106894

Total AssetsTotal LiabilitiesNet Assets

Accumulated funds (retained earnings)Operating surplus I(deficit)Total Equity

(b) TAFE Queensland

On 1 July 2013 TAFE Queensland was established under TAFE Queensland Act 2013 as a body corporate and is a statutory authorityunder the.Financial Accountability Act 2009 and the Statutory Bodies Financial Arrangements Act 1982. On 15 August 2013 the TAFEQueensland Board was appointed by Governor-in-Council. The Board remunerations have been paid by the department. During theperiod 1 July 2013 to 30 June 2014, the entire operations of TAFE Queensland including all financial transactions have been managedthrough the department's accounts. Total Board expenses for TAFE Queensland for the 2013-14 financial year were $0.269 million.Refer Note 35 for operations of TAFE Queensland from 1 July 2014.

(c) Skills Queensland J

The Vocational Education, Training and Employment Act 2000, legislated the dissolution of Skills Queensland on 22 November 2013.The assets and liabilities of Skills Queensland transferred to the department at the values held by Skills Queensland at the date ofdissolution. The audited Skills Queensland assets and liabilities transferred to the department are as follows:

Skills Queensland 1July 2013 to22 Nov 2013

$'000AssetsCash at bankReceivablesTotal Assets

LiabilitiesAccounts payable8nployee entitlementsTotal Liabilities

355958

3617

( 279)( 233)( 512)

EquityAccumulated funds (retained earnings)Operating surplus I( deficit)Total Equity

3751( 646)3105


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Certificate of the Department of Education, Training and Employment

These general purpose financial statements have been prepared pursuant to section 62(1) of the FinancialAccountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard2009 and other prescribed requirements. In accordance with section 62(1)(b) of the Act we certify that in ouropinion:

(a) the prescribed requirements for establishing and keeping the accounts have been complied with inall material respects; and

(b) the statements have been drawn up to present a true and fair view, in accordance with theprescribed accounting standards, of the transactions of the Department of Education, Training andEmployment for the financial year ended 30 June 2014, and of the financial position of thedepartment at the end of that year.

(c) these assertions are based on an appropriate system of internal controls and risk managementprocesses being effective, in all material respects, with respect to financial reporting throughout thereporting period.

Jim Watterstonrector-General

Department of Education, Trainingand Employment

Adam Black FCPA CAAssistant Director-General, FinanceChief Finance OfficerDepartment of Education, Trainingand Employment

Date: ~ /8/llf


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INDEPENDENT AUDITOR'S REPORT

To the AccountableOfficer of the Departmentof Education,Training and Employment

Report on the Financial Report

I have audited the accompanying financial report of Department of Education, Training andEmployment, which comprises the statement of financial positionand statement of assets andliabilities by major departmental services as at 30 June 2014, the statement of comprehensiveincome, statement of changes in equity, statement of cash flows and statement ofcomprehensive income by major departmental services for the year then ended, notescomprising a summary of significant accounting policies and other explanatory information,and the certificates given by the Director-General and the Chief Finance Officer.

TheAccountable Officer's Responsibility for the Financial Report

The Accountable Officer is responsible for the preparation of the financial report that gives atrue and fair view in accordance with prescribed accounting requirements identified in theFinancial Accountability Act 2009 and the Financial and Performance Management Standard2009, including compliance with Australian Accounting Standards. The Accountable Officer'sresponsibility also includes such internal control as the Accountable Officer determines isnecessary to enable the preparation of the financial report that gives a true and fair view andis free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express an opinion on the financial report based on the audit. The auditwas conducted in accordance with the Auditor-General of Queensland Auditing Standards,which incorporate the Australian Auditing Standards. Those standards require compliancewith relevant ethical requirements relating to audit engagements and that the audit is plannedand performed to obtain reasonable assurance about whether the financial report is free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial report. The procedures selected depend on the auditor'sjudgement, including the assessment of the risks of material misstatement of the financialreport, whether due to fraud or error. In making those risk assessments, the auditor considersinternal control relevant to the entity's preparation of the financial report that gives a true andfair view in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity's internal control,other than in expressing an opinion on compliance with prescribed requirements. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by the Accountable Officer, as well asevaluating the overall presentation of the financial report including any mandatory financialreporting requirements approved by the Treasurer for application in Queensland.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis formy audit opinion.

Independence

The Auditor-General Act 2009 promotes the independence of the Auditor-General and allauthorised auditors. The Auditor-General is the auditor of all Queensland public sector entitiesand can be removed only by Parliament.

The Auditor-General may conduct an audit in any way considered appropriate and is notsubject to direction by any person about the way in which audit powers are to be exercised.The Auditor-General has for the purposes of conducting an audit, access to all documentsandproperty and can report to Parliament matters which in the Auditor-General's opinion aresignificant.

Opinion

In accordancewith sAOof the Auditor-GeneralAct 2009 -(a) I have received all the information and explanationswhich I have required; and(b) in my opinion-

(i) the prescribed requirements in relation to the establishment and keeping ofaccounts have been compliedwith in all material respects; and

(ii) the financial report presents a true and fair view, in accordance with theprescribed accounting standards, of the transactions of the Department ofEducation, Training and Employment for the financial year 1 July 2013 to30 June 2014 and of the financial positionas at the end of that year.

Other Matters· Electronic Presentation of the Audited Financial Report

Those viewing an electronic presentation of these financial statements should note that auditdoes not provide assurance on the integrity of the information presented electronically anddoes not provide an opinion on any information which may be hyperlinked to or from thefinancial statements. If users of the flnanclal statements are concerned with the inherent risksarising from electronic presentation of information, they are advised to refer to the printed copyof the audited financial statements to confirm the accuracy of this electronically presentedinformation.

department of education, training and employment financial ... · • statement2-...

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