Determinations by Finance Minister
Despite amendments to the Administrative Arrangements Order (AAO) providing for a transfer of functions between entities, under subsection 17K(2) of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule),the Finance Minister can determine, for the purposes of reporting under sections 17A–17J of the PGPA Rule, that a transfer of functions is taken not to have occurred.
This would usually mean that the old entity would prepare its own statements and reports for the reporting period, rather than the new entity (or a reporting entity) reporting on the transferred functions.
Example 10: Finance Minister determination - PGPA Rule, section 17K
A MoG change may involve the formal transfer of some or all functions from the old entity to one or more other entities with the date of effect being close to the end of a reporting period. For this scenario, section 17K of the PGPA Rule enables the Finance Minister to make a determination that the old entity must prepare the required reports and documents for the full reporting period, as the best-placed entity for this.
It is important to note that a determination under section 17K of the PGPA Rule does not alter the effect or content of the AAO — it only changes the allocation of reporting responsibilities for the reporting period in which the transfer of functions has occurred.
Key management personnel reporting following MoG changes
Where key management personnel (KMP) reporting is affected by a MoG change, for clarity, transparency and accuracy in remuneration reporting in annual reports and annual financial statements entities should include notes, footnotes and cross references in KMP reports and disclosures.
Professional judgement is required in determining the positions that meet the KMP definition in AASB 124 Related Party Disclosures, in the context of an entity’s structure, before and after a MoG change.
For more information, see RMG-138 Commonwealth entities' executive and RMG-139 Commonwealth companies' executive remuneration reporting guide for annual reports.
Entities should also ensure that there is no duplication of the reporting of KMP remuneration, and the reporting of executive remuneration more broadly.
Following a MoG change, the annual report is expected to include explanations on any discrepancies that arise, between the:
- KMP executive remuneration reported in an entity’s annual report, and
- the KMP disclosure note in that entity’s annual financial statements.
For more information on who constitutes KMP for the purposes of executive remuneration reporting in entity annual reports, see RMG-138 Commonwealth entities' executive and RMG-139 Commonwealth companies' executive remuneration reporting guide for annual reports.
The following arrangements relate to KMP disclosures in annual financial statements.
Standard arrangements for KMP disclosures
Apart from the scenario outlined at special arrangements for KMP disclosures, the reporting of KMP remuneration in entity financial statements should be consistent with the requirements for annual financial statements as outlined in this RMG for various scenarios.
Following a MoG change, the annual financial statements are expected to include notes and/or footnotes to explain any discrepancies that arise, between the:
- KMP executive remuneration reported in an entity’s annual report, and
- KMP disclosure note in that entity’s annual financial statements.
Special arrangements for KMP disclosures
The following special arrangements apply to the reporting of KMP remuneration in entity financial statements where an old entity has ceased to exist, and some functions of the old entity have been transferred to 2 or more (new) entities.
For the:
- old entity — annual financial statements that are prepared by the entity nominated by the Finance Minister (the reporting entity), the KMP disclosures should include:
- remuneration of the KMP that remained with the old entity prior to its cessation
- a cross-reference to associated disclosures made by other entities relating to the KMP that transferred as a result of the MoG change
- reporting entity — the KMP disclosures in the annual financial statements should include:
- a separate note or footnote that discloses details of the remuneration of the KMP that transferred with the transferred functions from the old entity to new entities, from the commencement of the reporting period to the transfer date
- remuneration of transferred KMP position(s), from the transfer date until the end of the reporting period, where the transferred KMP position is determined as KMP by the reporting entity
- a cross-reference to the associated disclosure notes of the new entity (see below) about the MoG change
- new entity (that is, not the reporting entity nominated by the Finance Minister) — the KMP disclosures should include:
- remuneration details of transferred KMP position(s), from the transfer date until the end of the reporting period, where the KMP position is determined as KMP by the new entity
- a cross-reference to the associated disclosure notes about the MoG change including the KMP remuneration disclosure by the reporting entity as outlined above.
Entity responsibilities
For the reporting entity(s) to meet Division 4 of the PGPA Rule requirements, following a MoG change, it is expected that the old entity(s) would provide the reporting entity(s) with records relating to of transferred functions, for the full reporting period, including:
- transactions and information on the old entity’s financial position
- non-financial performance information.
The Public Governance, Performance and Accountability Act 2013 (PGPA Act), in section 37, requires the accountable authority of entities to cause records to be kept in a manner that properly records and explains the entity’s performance in achieving its purposes.
The PGPA Act, in section 41, sets out the requirements for the keeping of accounts and records of entities and section 17 of the PGPA Act requires accountable authorities to encourage entity officials to cooperate with others to achieve common objectives, where practicable.
Providing full and ready access to data and information is essential to enable the reporting entity to meet their responsibilities. All entities impacted by MoG changes are encouraged to establish agreed protocols or arrangements as soon as practical after MoG changes are announced or as they take effect. Where necessary, Finance will discuss reporting arrangements with entities and facilitate access arrangements.
Several decision trees are provided in Determining reporting requirements to assist entities in determining the appropriate reporting requirements that apply in different situations and the relevant sections of Division 4 of the PGPA Rule.
