Therapeutic Goods Administration Index to the Notes to and Forming Part of the Financial Statements

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Note 1: Summary of Significant Accounting Policies

Note 2: Events Occurring after the Balance Sheet Date

Note 3: Expenses

Note 4: Income

Note 5: Financial Assets

Note 6: Non-Financial Assets

Note 7: Payables

Note 8: Provisions

Note 9: Cash Flow Reconciliation

Note 10:Contingent Liabilities and Assets

Note 11:Senior Executive Remuneration

Note 12:Remuneration of Auditors

Note 13:Financial Instruments

Note 14:Compensation and Debt Relief

Note 15:Reporting of Outcomes

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NOTE 1: Summary of Significant Accounting Policies

1.1 Objective of Therapeutic Goods Administration

Therapeutic goods are regulated to ensure that medicinal products and medical devices in Australia meet standards of safety, quality and efficacy at least equal to that of comparable countries. These products and devices should be made available in a timely manner and the regulatory impact on business kept to a minimum. This is achieved through a risk management approach to pre-market evaluation and approval of therapeutic products intended for supply in Australia, licensing of manufacturers and post market surveillance.

The continued existence of the TGA in its present form and with its present programs is dependent on Government policy.

On 12 December 2003, the Australian and New Zealand Governments signed a Treaty to establish a joint scheme for the regulation of therapeutic products and medical devices in both countries.

On 20 June 2011, the Australian and New Zealand Prime Ministers signed a statement of intent on a plan to progressively implement the joint agency over a period of up to five years that will combine the Australian Therapeutic Goods Administration (TGA) and the New Zealand Medicines and Medical Devices Safety Authority (Medsafe).

1.2 Basis of Preparation of the Financial Statements

The financial statements and notes have been prepared in accordance with:

• Finance Minister’s Orders (or FMOs) for reporting periods ending on or after 1 July 2010; and
• Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.

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

Unless an alternative treatment is specifically required by an Accounting Standard or the FMOs, assets and liabilities are recognised in the balance sheet when and only when it is probable that future economic benefits will flow to the entity or a future sacrifice of economic benefits will be required and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under agreements equally proportionately unperformed are not recognised unless required by an accounting standard. Liabilities and assets that are unrealised are reported in the schedule of commitments.

Unless alternative treatment is specifically required by an accounting standard, income and expenses are recognised in the statement of comprehensive income when, and only when, the flow, consumption or loss of economic benefits has occurred and can be reliably measured.

1.3 Significant Accounting Judgements and Estimates

1.4 New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

New standards/revised standards/interpretations/amending standards that were issued prior to the signing of the statement by the Chief Executive and Chief Financial Officer, and are applicable to the current reporting period did not have a material financial impact, and are not expected to have a future financial impact on the TGA.

Future Australian Accounting Standard Requirements

1.5 Revenue

Revenue from Government

Revenues from Sale of Goods and Rendering of Services

Annual charges for entries on the Australian Register of Therapeutic Goods and manufacturing licence charges are recognised as revenue in the financial year to which the charges relate and are non-refundable, except where exemption is given on the basis of low value turnover.

Application fees and minor evaluation fees (less than $10,000) are recognised as revenue on receipt.

Major evaluation and conformity assessment fees are recognised progressively as services are performed.

Other Types of Revenue

• the risks and rewards of ownership have been transferred to the buyer;
• the agency retains no managerial involvement or effective control over the goods;
• the revenue and transaction costs incurred can be reliably measured; and
• it is probable that the economic benefits associated with the transaction will flow to the TGA.

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

Receivables for goods and services are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at end of reporting period. Allowances are made when collectability of the debt is no longer probable.

1.6 Gains

Resources Received Free of Charge

Sale of Assets

1.7 Employee Benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits ) and termination benefits due within twelve months of end of reporting period are measured at their nominal amounts.

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

All other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

(a) Leave

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

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will apply at the time the leave is taken, including the TGA’s employee superannuation contribution rates to the extent that leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave is determined with reference to an actuarial assessment which is prepared every three years and was last conducted on 26 May 2011. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

(b) Separation and Redundancy

Provision is made for separation and redundancy benefit payments. The TGA recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that the terminations will be carried out. No such provision has been made for this financial year.

(c) Superannuation

Under the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2004, staffs of the TGA are able to become a member of any complying superannuation fund. A complying superannuation fund is one that meets the requirements under the Income Tax Assessment Act 1997 and the Superannuation Industry (Supervision) Act 1993.

The majority of staff of the TGA is members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap).

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme.

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

The TGA makes employer contributions to the employee superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government of the superannuation entitlements of the TGA’s employees. The TGA accounts for the contributions as if they were contributed to a defined contribution plan.

The liability for superannuation recognised as at 30 June 2011 represents outstanding contributions for the final six days of the financial year.

1.8 Leases

In operating leases, the lessor effectively retains substantially all such risks and benefits. Operating lease payments are expensed on a straight line basis over the term of the lease which is representative of the pattern of benefits derived from the leased assets.

1.9 Prepayments Received

1.10 Cash and Cash Equivalents

1.11 Financial Assets

• financial assets at fair value through profit or loss;
  
• held-to-maturity investments;
  
• available-for-sale financial assets; and
  
• loans and receivables.

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

Effective Interest Method

Income is recognised on an effective interest rate basis except for financial assets that are recognised
‘at fair value through profit or loss’.

Financial Assets at Fair Value Through Profit or Loss

• have been acquired principally for the purpose of selling in the near future;
• are a part of an identified portfolio of financial instruments that the TGA manages together and has a recent actual pattern of short-term profit-taking; or
• are derivatives that are not designated and effective as a hedging instrument.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest earned on the financial asset.

Available-For-Sale Financial Assets

Available-for-sale financial assets are recorded at fair value. Gains and losses arising from changes in fair value are recognised directly in the reserves (equity) with the exception of impairment losses. Interest is calculated using the effective interest method and foreign exchange gains and losses on monetary assets are recognised directly in profit or loss. Where the asset is disposed of or is determined to be impaired, part (or all) of the cumulative gain or loss previously recognised in the reserve is included in profit for the period.

Where a reliable fair value cannot be established for unlisted investments in equity instruments, cost is used. The TGA has no such instruments.

Held-To-Maturity Investments

Loans and Receivables

Impairment of Financial Assets

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

Available-for-sale financial assets – If there is objective evidence that an impairment loss on an available-for-sale financial asset has been incurred, the amount of the difference between its cost, less principal repayments and amortisation, and its current fair value, less any impairment loss previously recognised in expenses, is transferred from equity to the income statement.

Available-for-sale financial assets (held at cost) – If there is objective evidence that an impairment loss has been incurred the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets.

1.12 Financial Liabilities

Financial liabilities at fair value through profit or loss

Other financial liabilities

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

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

1.13 Contingent Liabilities and Contingent Assets

1.14 Acquisition of Assets

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

1.15 Property, Plant and Equipment

Asset Recognition Threshold

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in leasing agreements for premises taken up by the TGA where there exists an obligation to restore the premises to their original condition at the conclusion of the lease. These costs are included in the value of the TGA’s leasehold improvements with a corresponding provision for the ‘make good’ recognised.

Revaluations

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

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

Depreciation

Depreciation rates (useful lives) are reviewed at each reporting date and necessary adjustments are made in the current, or current and future reporting periods, as appropriate. Residual values are re-estimated only when assets are revalued.

The following are minimum and maximum useful lives for the different asset classes. These are not necessarily indicative of typical useful lives for these asset classes.

	2010-11	2009-10
Leasehold improvements	Lease term	Lease term
Property, plant and equipment	3 to 20 years	3 to 20 years

Impairment

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

1.16 Intangibles

Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the TGA’s software are 3 to 10 years.

1.17 Taxation

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

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

1.18 Rounding

1.19 Comparative Figures

1.20 Bad and Doubtful Debts

1.21 Insurance

NOTE 2: Events Occurring after the Balance Sheet Date

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NOTE 3: Expenses

Note 3A: Employee Benefits

	2011 $’000	2010 $’000
Wages and salaries	49,429	44,360
Superannuation:
Defined contribution plans	2,541	2,039
Defined benefit plans	6,838	6,567
Leave and other entitlements	8,492	9,137
Separations and redundancies	227	324
Total employee benefits	67,527	62,427

Note 3B: Suppliers

	2011 $’000	2010 $’000
Goods and services
Consultants and contractors	7,290	6,071
Property operating expenses	4,082	4,375
Travel	2,966	2,816
Information Technology costs	5,629	5,881
Advertising and Media expenses	223	315
Committee expenses	580	534
Legal expenses	827	1,221
Library and laboratory expenses	1,115	1,292
Office records and general expenses	1,126	1,010
Staff related expenses	907	986
Other	1,828	1,452
Total goods and services	26,573	25,953
Goods and services are made up of:
Provision of goods – external parties	988	1,118
Rendering of services – related entities	2,518	2,225
Rendering of services – external parties	23,067	22,610
Total goods and services	26,573	25,953
Other supplier expenses
Operating lease rentals – external parties:
Minimum lease repayments	8,677	8,474
Workers compensation expenses	592	258
Total other supplier expenses	9,269	8,732
Total supplier expenses	35,842	34,685

NOTE 3: Expenses

Note 3C: Depreciation and Amortisation

	2011 $’000	2010 $’000
Depreciation
Property, plant and equipment	949	749
Buildings – leasehold improvements	711	789
Total depreciation	1,660	1,538
Amortisation
Intangibles	1,185	1,620
Total amortisation	1,185	1,620
Total depreciation and amortisation	2,845	3,158

Note 3D: Finance Costs

	2011 $’000	2010 $’000
Unwinding of discount for the makegood provision	0	19
Total finance costs	0	19

Note 3E: Write-Down and Impairment of Assets

	2011 $’000	2010 $’000
Asset write-downs and impairments from:
Impairment on financial instruments	31	957
Impairment of property, plant and equipment	21	63
Total write-down and impairment of assets	52	1,020

The TGA conducts an annual review of assets for impairment in accordance with the principles of Australian Accounting Standards (AASB 136 Impairment of Assets and AASB 139 Financial Instruments: Recognition and Measurement) to ensure that the TGA does not carry assets at a value above their recoverable amount.

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NOTE 4: Income

Note 4A: Sale of Goods and Rendering of Services

	2011 $’000	2010 $’000
Revenue
Rendering of services – related entities	925	980
Rendering of services – external parties	104,398	100,917
Total sale of goods and rendering of services	105,323	101,897

Note 4B: Other Revenue

	2011 $’000	2010 $’000
Other minor revenues	90	32
Total other revenue	90	32

Gains

Note 4C: Other Gains

	2011 $’000	2010 $’000
Resources received free of charge	110	110
Total other gain	110	110

Revenue from Government

Note 4D: Revenue from Government

	2011 $’000	2010 $’000
Revenue from Government	1,680	1,943
Total revenue from Government	1,680	1,943

Note 5: FINANCIAL ASSETS

Note 5A: Cash and Cash Equivalents

	2011 $’000	2010 $’000
Cash in TGA Special Account	1,014	1,106
Total cash and cash equivalents	1,014	1,106

Note 5B: Trade and Other Receivables

	2011 $’000	2010 $’000
Goods and Services
Goods and services - related entities	18	265
Goods and services - external parties	4,499	6,680
Total receivables for goods and services	4,517	6,945
Receivable from DoHA
Transfers from the Official Public Account	45,140	43,609
Total receivable from DoHA	45,140	43,609
Other receivables:
GST receivable from the Australian Taxation Office	450	466
Total other receivables	450	466
Total trade and other receivables (gross)	50,107	51,020
Less impairment allowance account:
Goods and services	(614)	(583)
Total impairment allowance account	(614)	(583)
Total trade and other receivables (net)	49,493	50,437
Receivables are expected to be recovered in:
No more than 12 months	49,493	50,437
Total trade and other receivables (net)	49,493	50,437
Receivables are aged as follows:
Not overdue	48,047	47,687
Overdue by:
0 to 30 days	509	951
31 to 60 days	460	192
61 to 90 days	33	769
More than 90 days	1,058	1,421
Total receivables (gross)	50,107	51,020
The impairment allowance account is aged as follows:
Overdue by:
More than 90 days	(614)	(583)
Total impairment allowance account	(614)	(583)

Note 5B: Trade and Other Receivables

Reconciliation of the impairment allowance account:
Movement in relation to 2011

	Goods and services $’000	Total $’000
Opening balance	583	583
Amounts recovered and reversed	(519)	(519)
Increase/decrease recognised in net surplus	550	550
Closing balance	614	614

Movement in relation to 2010

	Goods and services $’000	Total $’000
Opening balance	115	115
Amounts written off	(27)	(27)
Amounts recovered and reversed	(88)	(88)
Increase/decrease recognised in net surplus	583	583
Closing balance	583	583

Note 5C: Other Financial Assets

	2011 $’000	2010 $’000
Accrued revenue	3,086	2,244
Total other financial assets	3,086	2,244
Total other financial assets are expected to be recovered in:
No more than 12 months	3,086	2,244
Total other financial assets	3,086	2,244

NOTE 6: Non-Financial Assets

Note 6A: Land and Buildings

	2011 $’000	2010 $’000
Leasehold improvements:
Gross book value	6,634	5,867
Accumulated depreciation	(2,228)	(1,517)
Total leasehold improvements	4,406	4,350
Total land and buildings	4,406	4,350

No indicators of impairment were found for land and buildings.

No land or buildings are expected to be sold or disposed of within the next 12 months.

Note 6B: Property, Plant and Equipment

	2011 $’000	2010 $’000
Gross book value (at fair value)	8,060	5,920
Accumulated depreciation	(2,808)	(2,013)
Total property, plant and equipment	5,252	3,907

No property, plant or equipment is expected to be sold or disposed of within the next 12 months.

Note 6C: Analysis of Property, Plant and Equipment
TABLE A – Reconciliation of the opening and closing balances of property, plant and equipment (2010-11)

	Leasehold Improvements $’000	Property, Plant and Equipment $’000	Total $’000
As at 1 July 2010
Gross book value	5,867	5,920	11,787
Accumulated depreciation/amortisation and impairment	(1,517)	(2,013)	(3,530)
Net book value 1 July 2010	4,350	3,907	8,257
Additions:
By purchase	767	2,315	3,082
Depreciation/amortisation expense	(711)	(949)	(1,660)
Other disposals	0	(21)	(21)
Net book value 30 June 2011	4,406	5,252	9,658
Net book value as of 30 June 2011 represented by:
Gross book value	6,634	8,060	14,694
Accumulated depreciation/amortisation	(2,228)	(2,808)	(5,036)
Closing net book value at 30 June 2011	4,406	5,252	9,658

TABLE B – Reconciliation of the opening and closing balances of property, plant and equipment (2009-10)

	Leasehold Improvements $’000	Property, Plant and Equipment $’000	Total $’000
As at 1 July 2009
Gross book value	5,834	4,775	10,609
Accumulated depreciation/amortisation and impairment	(737)	(1,297)	(2,034)
Net book value 1 July 2009	5,097	3,478	8,575
Additions:
By purchase	42	1,241	1,283
Depreciation/amortisation expense	(789)	(749)	(1,538)
Other disposals	0	(63)	(63)
Net book value 30 June 2010	4,350	3,907	8,257
Net book value as of 30 June 2010 represented by:
Gross book value	5,867	5,920	11,787
Accumulated depreciation/amortisation	(1,517)	(2,013)	(3,530)
Closing net book value at 30 June 2010	4,350	3,907	8,257

	2011 $’000	2010 $’000
Computer software:
Internally developed – in progress	859	751
Internally developed – in use	18,444	17,261
Purchased	2,265	2,265
Total computer software (gross)	21,568	20,277
Accumulated amortisation	(17,846)	(16,661)
Total computer software (net)	3,722	3,616
Total intangibles	3,722	3,616

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NOTE 6: Non-Financial Assets

Note 6E: Analysis of Intangibles
TABLE A – Reconciliation of the opening and closing balances of intangibles (2010-11)

	Computer Software - Internally Developed $’000	Computer Software – Purchased $’000	Total $’000
As at 1 July 2010
Gross book value	18,012	2,265	20,277
Accumulated depreciation/amortisation and impairment	(14,858)	(1,803)	(16,661)
Net book value 1 July 2010	3,154	462	3,616
Additions:
Internally developed	1,291	0	1,291
Amortisation	(992)	(193)	(1,185)
Net book value 30 June 2011	3,453	269	3,722
Net book value as of 30 June 2011 represented by:
Gross book value	19,303	2,265	21,568
Accumulated depreciation/amortisation	(15,850)	(1,996)	(17,846)
Closing net book value at 30 June 2011	3,453	269	3,722

TABLE B – Reconciliation of the opening and closing balances of intangibles (2009-10)

	Computer Software - Internally Developed $’000	Computer Software – Purchased $’000	Total $’000
As at 1 July 2009
Gross book value	17,585	2,265	19,850
Accumulated depreciation/amortisation and impairment	(13,553)	(1,489)	(15,042)
Net book value 1 July 2009	4,032	776	4,808
Additions:
Internally developed	427	0	427
Amortisation	(1,306)	(314)	(1,620)
Net book value 30 June 2010	3,154	462	3,616
Net book value as of 30 June 2010 represented by:
Gross book value	18,013	2,265	20,278
Accumulated depreciation/amortisation	(14,858)	(1,803)	(16,661)
Closing net book value at 30 June 2010	3,154	462	3,616

Note 6F: Other Non-Financial Assets

	2011 $’000	2010 $’000
Prepayments	782	953
Total other non-financial assets	782	953
Total other non-financial assets are expected to be recovered in:
No more than 12 months	758	953
More than 12 months	24	0
Total other non-financial assets	782	953

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NOTE 7: Payables

Note 7A: Suppliers

	2011 $’000	2010 $’000
Trade creditors	4,885	5,570
Total suppliers payable	4,885	5,570
Supplier payables expected to be settled within 12 months:
Related entities	531	963
External parties	4,354	4,607
Total suppliers payable	4,885	5,570

Note 7B: Employee

	2011 $’000	2010 $’000
Salaries and wages	2,264	1,786
Superannuation	222	170
Total employee payables	2,486	1,956

Note 7C: Other Payables

	2011 $’000	2010 $’000
Unearned income	12,811	13,230
Other	898	371
Total other payables	13,709	13,601

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NOTE 8: Provisions

Note 8A: Employee Provisions

	2011 $’000	2010 $’000
Leave	18,554	18,488
Total employee provisions	18,554	18,488
Employee provisions are expected to be settled in:
No more than 12 months	5,574	5,477
More than 12 months	12,980	13,011
Total employee provisions	18,554	18,488

Note 8B: Other Provisions

	2011 $’000	2010 $’000
Provision for low value/low volume	464	368
Restoration obligations	209	210
Provision for lease increases	142	51
Total other provisions	815	629
Other provisions are expected to be settled in:
No more than 12 months	464	368
More than 12 months	351	261
Total other provisions	815	629

Reconciliation of other provisions:
Movement in relation to 2011

	Provision for low value/low volume exceptions $’000	Restoration obligations $’000	Provision for lease increases $’000	Total $’000
Carrying amount 1 July 2010	368	210	51	629
Additional provisions made	464	0	91	555
Amounts reversed	(368)	(1)	0	(369)
Closing balance 30 June 2011	464	209	142	815

Movement in relation to 2010

	Provision for low value/low volume exceptions $’000	Restoration obligations $’000	Provision for lease increases $’000	Total $’000
Carrying amount 1 July 2009	462	190	35	687
Additional provisions made	368	20	16	404
Amounts reversed	(462)	0	0	(462)
Closing balance 30 June 2010	368	210	51	629

NOTE 9: Cash Flow Reconciliation

	2011 $’000	2010 $’000
Reconciliation of cash and cash equivalents as per Balance Sheet to Cash Flow Statement
Report cash and cash equivalents as per:
Cash Flow Statement	1,014	1,106
Balance Sheet	1,014	1,106
Difference	0	0
Reconciliation of net cost of services to net cash from operating activities:
Net cost of services	(743)	730
Add revenue from Government	1,680	1,943
Less non-cash items
Depreciation and amortisation	2,845	3,158
Net write-down of assets	21	63
Changes in assets/liabilities
Decrease/(increase) in net receivables and other financial assets	102	(11,200)
Decrease/(increase) in inventories	0	76
Increase/(decrease) in other non-financial assets	171	(457)
Increase/(decrease) in employee provisions	66	1,652
Increase/(decrease) in suppliers payable	(685)	2,126
Increase/(decrease) in other provisions	186	(59)
Increase/(decrease) in other payables	638	2,754
Net cash from operating activities	4,281	786

NOTE 10: Contingent Liabilities and Assets

As at 30 June 2011

2. The TGA has provided an indemnity to its transactional banker in relation to any claims made against the bank resulting from errors in the TGA’s payment files.

As at 30 June 2010

2. The TGA was involved in a number of litigation cases before the courts. The TGA has been advised by its solicitors that it is not possible to estimate the amounts of any eventual payment or receipt relating to these cases. Therefore, in accordance with Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the information usually required by the Standard is not disclosed on the grounds that it may seriously prejudice the outcomes of these cases.

3. The TGA provided an indemnity to its transactional banker in relation to any claims made against the bank resulting from errors in the TGA’s payment files.

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NOTE 11: Senior Executive Remuneration

Note 11A: Actual Remuneration expensed during the reporting period

	2011 $’000	2010 $’000
Short-term employee benefits
Salary (including annual leave taken)	4,057	3,527
Annual leave accrued	(3)	16
Performance bonus	248	195
Other	603	570
Total short-term employee benefits	4,905	4,308
Post-employment benefits
Superannuation	752	651
Total post-employment benefits	752	651
Other long-term benefits
Long-service leave	96	124
Total other long-term benefits	96	124
Total	5,753	5,083

Note 11B: Average Annual Remuneration Packages for Substantive Senior Executives as at the end of the reporting period

Average Annual Remuneration Packages for Substantive Senior Executives as at 30 June 2011
Total Fixed Remuneration¹ (including part-time arrangements)

Relevant remuneration bands	SES No.	Salary $’000	Allowances2 $’000	Total3 $’000	Bonus4 $’000
$150,000 to $179,999	10	143,572	22,410	165,982	6,708
$180,000 to $209,999	12	175,716	20,508	196,224	8,543
$210,000 to $239,999	3	197,569	26,100	223,669	3,400
$240,000 to $269,999	1	228,094	26,100	254,194	4,545
$360,000 to $389,999	1	331,319	30,200	361,519	22,517
Total	27

Average Annual Remuneration Packages for Substantive Senior Executives as at 30 June 2010
Total Fixed Remuneration¹ (including part-time arrangements)

Relevant remuneration bands	SES No.	Salary $’000	Allowances2 $’000	Total3 $’000	Bonus4 $’000
$150,000 to $179,999	6	142,658	22,000	164,658	7,679
$180,000 to $209,999	13	168,382	22,946	191,328	7,341
$210,000 to $239,999	4	198,723	25,075	223,798	4,603
$330,000 to $359,999	1	321,669	30,200	351,869	21,861
Total	24

¹ Banding for this note is based on salary and fixed allowances only. The average annualised values disclosed in this table are only fixed remuneration and bonus paid.
² Fixed allowances predominately include motor vehicle allowance. Variable allowances, mainly superannuation, are excluded from this column are detailed over.
³ This represents the total of salary and fixed allowances and does not represent the total remuneration, but only fixed components.
⁴ Bonus paid is the average amount paid, per band, in the prior year.

The 2010 note has been restated to meet new reporting requirements.

Variable Elements:

With the exception of performance bonuses, variable elements are not included in the ‘Fixed Elements and Bonus Paid’ table above. The following variable elements are available as part of senior executives’ remuneration package:

(a) Performance bonuses:

• most senior executive officers participate in a performance bonus scheme that is assessed annually based on the individual’s performance against their contributions to the outcomes of the Department. Performance bonuses are assessed and paid after the completion of the financial year.

• annual leave: entitled to 20 days (2010: 20 days) each year worked (pro-rata for part-time SES);
• personal leave: entitled to 18 days (2010: 18 days) or part-time equivalent; and
• long service leave: in accordance with Long Service Leave (Commonwealth Employees) Act 1976.

(d) Variable allowances:

• car parking;
• Fringe Benefits Tax (FBT);
• reunion and rental allowances; and
• motor vehicle allowance for leased vehicles. Lease cost subject to leased vehicle chosen by SES.

Note 11C: Other Highly Paid Staff

Note 12: Remuneration of Auditors

	2011 $’000	2010 $’000
The fair value of services provided was:	110	110
Total of fair value of services provided	110	110

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NOTE 13: Financial Instruments

Note 13A: Categories of Financial Instruments

	2011 $’000	2010 $’000
Financial Assets
Loans and receivables:
Cash and cash equivalents	1,014	1,106
Goods and services receivable	3,903	6,362
Receivable from Official Public Account	45,140	43,609
Carrying amount of financial assets	50,057	51,077
Financial Liabilities
At amortised cost:
Payables – suppliers	4,885	5,570
Unearned income	12,811	13,230
Other payables	898	371
Carrying amount of financial liabilities	18,594	19,171

Note 13B: Fair Value of Financial Instruments

	Carrying amount 2011 $’000	Carrying amount 2010 $’000	Fair value 2011 $’000	Fair value 2010 $’000
Financial Assets
Cash and cash equivalents	1,014	1,106	1,014	1,106
Goods and services receivable	3,903	6,362	3,903	6,362
Receivable from Official Public Account	45,140	43,609	45,140	43,609
Total	50,057	51,077	50,057	51,077
Financial Liabilities
Payables – suppliers	4,885	5,570	4,885	5,570
Unearned income	12,811	13,230	12,811	13,230
Other payables	898	371	898	371
Total	18,594	19,171	18,594	19,171

Note 13C: Credit Risk

The maximum exposure to credit risk is the risk that arises from potential default of a debtor.

	2011 $’000	2010 $’000
Financial assets
Cash and cash equivalents	1,014	1,106
Trade receivables	5,131	7,528
Total	6,145	8,634

Credit quality of financial instruments not past due or individually determined as impaired

	Not Past Due Nor Impaired 2011 $’000	Not Past Due Nor Impaired 2010 $’000	Past Due Or Impaired 2011 $’000	Past Due Or Impaired 2010 $’000
Goods and services receivable	2,497	3,612	2,060	3,333
Total	2,497	3,612	2,060	3,333

The TGA holds no collateral to mitigate against risk.

Ageing of financial assets that are past due but not impaired for 2011

	0 to 30 days $’000	31 to 60 days $’000	61 to 90 days $’000	90+ days $’000	Total $’000
Goods and services receivable	509	460	33	1,058	2,060
Total	509	460	33	1,058	2,060

Ageing of financial assets that are past due but not impaired for 2010

	0 to 30 days $’000	31 to 60 days $’000	61 to 90 days $’000	90+ days $’000	Total $’000
Goods and services receivable	951	192	769	838	2,750
Total	951	192	769	838	2,750

Note 13D: Liquidity Risk

The following table illustrates the maturities for financial liabilities.

Maturities for non-derivative financial liabilities 2011

	Within 1 year $’000	Total $’000
Payables – suppliers	4,885	4,885
Other payables	12,811	12,811
Total	17,696	17,696

Maturities for non-derivative financial liabilities 2010

	Within 1 year $’000	Total $’000
Payables – suppliers	5,570	5,570
Other payables	13,230	13,230
Total	18,800	18,800

Note 13E: Market Risk

The TGA is not exposed to ‘Currency risk’ or ‘Other price risk’.

The TGA has no interest bearing items on the Balance Sheet.

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NOTE 14: Compensation and Debt Relief

NOTE 15: Reporting of Outcomes

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