Clean Energy Regulator · 110 Clean Energy Regulator | 2014–2015 Annual Report 6 FINANCIAL...

2014–2015 Annual Report | Clean Energy Regulator 107

FINANCIAL STATEMENTS 6

Clean Energy Regulator

Statement of comprehensive incomefor the period ended 30 June 2015

Notes 2015$'000

2014$'000

NET COST OF SERVICESExpenses

Employee benefits 4A 38,579 39,684 Suppliers 4B 37,172 37,477 Depreciation and amortisation 4C 12,672 16,585 Finance costs 4D 65 53Write-down and impairment of assets 4E 3,455 731

Total expenses 91,943 94,530

Own-source incomeOwn-source revenue

Sale of goods and rendering of services 5A 50 594Total own-source revenue 50 594

GainsOther gains 5B 438 813

Total gains 438 813Total own-source income 488 1,407 Net contribution by services 91,455 93,123 Revenue from Government 5C 76,648 81,353 Deficit (14,807) (11,770)

OTHER COMPREHENSIVE INCOMEItems not subject to subsequent reclassification to net contribution by services

Changes in asset revaluation surplus 103 302Total other comprehensive income 103 302Total comprehensive loss (14,704) (11,468)The above statement should be read in conjunction with the accompanying notes.

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108 Clean Energy Regulator | 2014–2015 Annual Report

6 FINANCIAL STATEMENTS


Statement of financial position

as at 30 June 2015

Notes 2015$'000

2014$'000

ASSETSFinancial assets

Cash and cash equivalents 7A 307 306Trade and other receivables 7B 29,164 24,044 Other financial assets 7C 51 -

Total financial assets 29,522 24,350

Non-financial assetsLand and buildings 8A,C 4,083 6,209 Property, plant and equipment 8B,C 1,022 870Intangibles 8D,E 27,679 37,732 Other non-financial assets 8F 1,097 639

Total non-financial assets 33,881 45,450 Total assets 63,403 69,800

LIABILITIESPayables

Suppliers 9A 6,687 3,939 Other payables 9B 1,652 1,492

Total payables 8,339 5,431

ProvisionsEmployee provisions 10A 9,384 9,552 Other provisions 10B 1,789 1,827

Total provisions 11,173 11,379 Total liabilities 19,512 16,810 Net assets 43,891 52,990

EQUITYContributed equity 82,540 76,935 Reserves 3,986 3,883 Accumulated deficit (42,635) (27,828)

Total equity 43,891 52,990 The above statement should be read in conjunction with the accompanying notes.

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Notes 2015$000

2014$000

OPERATING ACTIVITIESCash received

Appropriations 74,271 86,685 Sale of goods and rendering of services - 1,186 Net GST received 4,441 3,975

Total cash received 78,712 91,846

Cash usedEmployees 38,637 39,570 Suppliers 39,048 46,757 Section 74 receipts transferred to OPA 770 4,838

Total cash used 78,455 91,165 Net cash from operating activities 11 257 681

INVESTING ACTIVITIESCash used

Purchase of property, plant and equipment 69 3Purchase of intangibles 3,582 10,244

Total cash used 3,651 10,247 Net cash used by investing activities (3,651) (10,247)

FINANCING ACTIVITIESCash received

Contributed equity 3,395 9,575 Total cash received 3,395 9,575 Net cash from financing activities 3,395 9,575

Net increase in cash held 1 9Cash and cash equivalents at the beginning of the reporting period 306 297

Cash and cash equivalents at the end of the reporting period 7A 307 306The above statement should be read in conjunction with the accompanying notes.


Cash flow statement

for the period ended 30 June 2015

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Schedule of commitments

as at 30 June 20152015$'000

2014$'000

BY TYPECommitments receivable

Net GST recoverable on commitments1 3,773 4,335 Total commitments receivable 3,773 4,335

Commitments payableCapital commitments

Intangibles2 1,415 1,102 Total capital commitments 1,415 1,102

Other commitmentsOperating leases3 8,323 12,123 Other4 31,764 35,232

Total other commitments 40,087 47,355 Total commitments payable 41,502 48,457 Net commitments by type 37,729 44,122

BY MATURITYCommitments receivable

Within 1 year 1,728 1,929 Between 1 to 5 years 2,045 2,406

Total commitments receivable 3,773 4,335

Commitments payableCapital commitments

Within 1 year 1,415 1,102 Total capital commitments 1,415 1,102

Operating lease commitmentsWithin 1 year 4,320 4,068 Between 1 to 5 years 4,003 8,055

Total operating lease commitments 8,323 12,123

Other commitmentsWithin 1 year 13,274 16,785 Between 1 to 5 years 18,490 18,447

Total other commitments 31,764 35,232 Total commitments payable 41,502 48,457 Net commitments by maturity 37,729 44,122 1. Commitments are GST inclusive where relevant.2. Intangible commitments relate to the agency's contracts for internally developed software.3. Operating leases included were effectively non-cancellable.

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

4. Other commitments primarily relate to the agency's contracts for IT hosting and data migration.Note: The agency in its capacity as lessee has one lease for office accommodation. Lease payments are subject to an annual increase at a fixed rate. There are no options for renewal.

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Administered schedule of comprehensive income

for the period ended 30 June 2015

Notes 2015$'000

2014$'000


Suppliers 16A 3,707 3,232 Subsidies 16B 16,797 1,297,440 Write-down and impairment of assets 16C 3,226 43,166 Other expenses 16D 148,585 -

Total expenses 172,315 1,343,838

IncomeRevenueTaxation revenue

Other taxes 17A 15,885 4,715,611 Total taxation revenue 15,885 4,715,611

Non-taxation revenueFees and fines 17B 12,431 13,297

Total non-taxation revenue 12,431 13,297 Total revenue 28,316 4,728,908

GainsOther gains 17C 39,012 -

Total gains 39,012 - Total income 67,328 4,728,908 Net (cost of) / contribution by services (104,987) 3,385,070 Surplus (Deficit) (104,987) 3,385,070

Total other comprehensive income - - Total comprehensive income (104,987) 3,385,070 The above schedule should be read in conjunction with the accompanying notes.

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Administered schedule of assets and liabilitiesas at 30 June 2015

Notes 2015$'000

2014$'000


Cash and cash equivalents 18A 416 1,012 Taxation receivables 18B 213 1,721,632 Trade and other receivables 18C 77 64

Total financial assets 706 1,722,708 Total assets administered on behalf of Government 706 1,722,708

LIABILITIESPayables

Suppliers 19A 434 351Other payables 19B 13,805 -

Total payables 14,239 351

ProvisionsOther provisions 20A - 292,410

Total provisions - 292,410 Total liabilities administered on behalf of Government 14,239 292,761 Net assets (13,533) 1,429,947 The above schedule should be read in conjunction with the accompanying notes.

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Administered reconciliation scheduleas at 30 June 2015

2014$'000

Opening assets less liabilities as at 1 July 1,429,947 1,184,035 Net contribution by services

Income 67,328 4,728,908 Expenses

Payments to entities other than corporate Commonwealth entities (172,315) (1,343,838)

Transfers (to) / from the Australian GovernmentAppropriation transfers from Official Public Account

Annual appropriationsPayments to entities other than corporate Commonwealth entities 333,837 1,256,463

Appropriation transfers to Official Public AccountTransfers to Official Public Account (1,672,330) (4,395,621)

Closing assets less liabilities as at 30 June (13,533) 1,429,947 The above schedule should be read in conjunction with the accompanying notes.

2015$'000

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Administered cash flow statementfor the period ended 30 June 2015

2014$'000


Taxes 1,641,562 4,367,769 Fees 17,462 13,807 Other - - Net GST received 7 491

Total cash received 1,659,031 4,382,067

Cash usedSuppliers 11,565 4,457 Subsidies 309,206 1,238,747 Other 363 -

Total cash used 321,134 1,243,204 Net cash from operating activities 21 1,337,897 3,138,863 Net increase in cash held 1,337,897 3,138,863

Cash and cash equivalents at the beginning of the reporting period 1,012 1,305 Cash from Official Public Account

Appropriations 333,837 1,256,465 Special Accounts - -

Total cash from Official Public Account 333,837 1,256,465

Cash to Official Public AccountAppropriations (1,672,330) (4,395,621)Special Accounts - -

Total cash to Official Public Account (1,672,330) (4,395,621)Cash and cash equivalents at the end of the reporting period 18A 416 1,012 This schedule should be read in conjunction with the accompanying notes.

2015$'000Notes

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Administered schedule of commitments

as at 30 June 20152015$'000

2014$'000

BY TYPECommitments receivable

Net GST recoverable on commitments1 22 35Total commitments receivable 22 35

Commitments payableOther2 247 382Purchase of Australian Carbon Credit Units3 584,602 -

Total commitments payable 584,849 382Net commitments by type 584,827 347

BY MATURITYCommitments receivable

Within 1 year 22 35Between 1 to 5 years - - Over five years - -

Total commitments receivable 22 35

Commitments payableWithin 1 year 80,561 382Between 1 to 5 years 255,077 - Over five years 249,211 -

Total commitments payable 584,849 382Net commitments by maturity 584,827 3471. Commitments are GST inclusive where relevant.2. Other commitments relates to inspection and audit services for solar photovoltaic systems.This schedule should be read in conjunction with the accompanying notes.3. Australian Carbon Credit Units are purchased through the Emissions Reduction Fund (see Note 1).

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Table of contents - notesNote 1: Summary of significant accounting policiesNote 2: Events after the reporting periodNote 3: Net cash appropriation arrangementsNote 4: ExpensesNote 5: Own-source incomeNote 6: Fair value measurementsNote 7: Financial assetsNote 8: Non-financial assetsNote 9: PayablesNote 10: ProvisionsNote 11: Cash flow reconciliationNote 12: Contingent assets and liabilitiesNote 13: Senior management personnel remunerationNote 14: Financial instrumentsNote 15: Financial assets reconciliationNote 16: Administered - expensesNote 17: Administered - incomeNote 18: Administered - financial assetsNote 19: Administered - payablesNote 20: Administered - provisionsNote 21: Administered - cash flow reconciliationNote 22: Administered - contingent assets and liabilitiesNote 23: Administered - financial instrumentsNote 24: Administered - financial assets reconciliationNote 25: AppropriationsNote 26: Special accountsNote 27: Compliance with statutory conditions for payments from the Consolidated Revenue FundNote 28: Reporting of outcomesNote 29: Cost recovery summaryNote 30: Budgetary reports and explanations of major variances

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Note 1: Summary of significant accounting policies

1.1 Objectives of the Clean Energy Regulator

The Clean Energy Regulator (CER) is an Australian Government controlled entity. It is a non-corporate not-for-profit Commonwealth entity. The objective of the CER is to accelerate carbon abatement for Australia.

The CER is structured to meeting the following outcome:

Outcome 1: Contribute to a reduction in Australia’s net greenhouse gas emissions, including through the administration of market based mechanisms that incentivise reduction in emissions and the promotion of additional renewable electricity generation.

The continued existence of the CER in its present form and with its present programmes is dependent on Government policy and on continuing funding by Parliament for the CER's administration and programs. The CER’s activities contributing toward this outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the CER in its own right. Administered activities involve the management or oversight by the CER, on behalf of the Government, of items controlled or incurred by the Government.

The role of the CER is determined by climate change law. In particular, the CER has administrative responsibilities in relation to the National Greenhouse and Energy Reporting Scheme, Carbon Pricing Mechanism, Emissions Reduction Fund, Australian National Registry of Emissions Units, Carbon Farming Initiative and the Renewable Energy Target.

The responsibilities of the CER include:

collecting, analysing and assessing emissions and energy data, which underpins the reduction ofnet greenhouse gas emissions and supports Australia’s emissions and energy data needs

operating the Australian National Registry of Emissions Units and the Renewable EnergyCertificate Registry

monitoring, facilitating and enforcing compliance with the schemes it administers issuing Australian Carbon Credit Units to projects that reduce greenhouse gas emissions accrediting greenhouse and energy auditors who are engaged by the scheme participants and the

CER to undertake audit activities under the schemes working with other Commonwealth, state and territory law enforcement and regulatory bodies, and providing education and information on the schemes it administers and how they work.

The Carbon Pricing Mechanism legislation was repealed by Parliament on 17 July 2014, effective at 1 July 2014.

The Australian Government continues to have regard to developments in case law, including the High Court’s most recent decision on Commonwealth expenditure in Williams v Commonwealth [2014] HCA 23,as they contribute to the larger body of law relevant to the development of Commonwealth programs. In accordance with its general practice, the Government will continue to monitor and assess risk and decide on any appropriate actions to respond to risks of expenditure not being consistent with constitutional or other legal requirements.

1.2 Basis of preparation of the financial statements

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

The financial statements have been prepared in accordance with:

a) Finance Reporting Rule (FRR) for reporting periods ending on or after 1 July 2014; andb) Australian Accounting Standards and Interpretations issued by the Australian Accounting

Standards Board (AASB) that apply for the reporting period.

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




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

Unless an alternative treatment is specifically required by an accounting standard or the FRR, assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow to the CER 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 executory contracts are not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the schedule of commitments or the contingencies note.

Unless an 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

In the process of applying the accounting policies listed in this note, the CER has made the following judgement that has a significant impact on the amounts recorded in the financial statements:

employee leave provisions were calculated at year end using the shorthand method (refer note1.8) which included discounting amounts to present value using Commonwealth Government bondrates.

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

1.4 New Australian Accounting Standards

Adoption of New Australian Accounting Standard Requirements

With the exception of AASB 2015-7 no accounting standard has been adopted earlier than the application date as stated in the standard:

AASB 2015-7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-for-Profit Public Sector Entities. The objective of this Standard is to make amendments to AASB 13Fair Value Measurement to relieve not-for-profit public sector entities from certain disclosuresapplying to assets within the scope of AASB 116 Property, Plant and Equipment whose futureeconomic benefits are not primarily dependent on the asset’s ability to generate future net cashinflows.

The following standard was issued prior to the signing of the statement by the accountable authority and chief financial officer, was applicable to the current reporting period and had a material effect on the CER’s financial statements:

AASB 1055 Budgetary Reporting (March 2013) (operative from 1 July 2014). The disclosurespecified the financial statements to include the budgeted figures from the Portfolio BudgetStatements (PBS) to be disclosed with material variances against actuals explained. Thisdisclosure will provide users with information relevant to assessing performance of an entity,including accountability for resources entrusted to it.

All other new/revised/amending standards and/or interpretations that were issued prior to the sign-off date and are applicable to future reporting periods are not expected to have a future material impact on the CER’s financial statements.

Future Australian Accounting Standard Requirements

No other new standards, revised standards, interpretations and amending standards that were issued prior to the sign-off date and are applicable to the future reporting periods, are expected to have a future material impact on the CER’s financial statements.




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1.5 Revenue

Revenue from the sale of goods is recognised when:

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

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

a) the amount of revenue, stage of completion and transaction costs incurred can be reliablymeasured; and

b) the probable economic benefits associated with the transaction will flow to the CER.

The stage of completion of contracts at the reporting date is determined by reference to surveys of work performed.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at the end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Revenue from Government

Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the CER gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

1.6 Gains

Resources received free of charge

Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Resources received free of charge are recorded as either revenue or gains depending on their nature. Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (refer to Note 1.7).

Sale of assets

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

1.7 Transactions with the Government as owner

Equity injections

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and the Departmental Capital Budgets are recognised directly in contributed equity in that year.

Restructuring of administrative arrangements

Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity.




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Other distributions to owners

The FRR require that distributions to owners be debited to contributed equity unless it is in the nature of a dividend.

1.8 Employee benefits

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits expected within twelve months of the end of the 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.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the CER 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 be applied at the time the leave is taken, including the CER's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long service leave has been determined using the shorthand method as prescribed in the FRR. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

The CER’s employees are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other superannuation schemes.

The CSS and PSS are defined benefit schemes for the Government. The PSSap and other superannuation schemes are defined contribution schemes.

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 in the Department of Finance’s administered schedules and notes.

The CER makes employer contributions to the employee's superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The CER accounts for the contributions as if they were contributions to defined contribution plans.

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

1.9 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.

The CER does not have any finance leases. Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.

1.10 Fair Value Measurement

The CER deems transfers between levels of the fair value hierarchy to have occurred at the end of the reporting period.




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1.11 Cash

Cash is recognised at its nominal amount. Cash and cash equivalents include:

a) cash on hand;b) demand deposits in bank accounts with an original maturity of three months or less that are readily

convertible to known amounts of cash and subject to insignificant risk or changes in value;

1.12 Financial assets

The CER classifies its financial assets as receivables.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date.

Effective interest method

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

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

Receivables

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

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period.

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

1.13 Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

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).




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1.14 Contingent liabilities and contingent assets

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

1.15 Acquisition of assets

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

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

1.16 Property, plant and equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $2,000 (GST exclusive) which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by the CER where there exists an obligation to restore the property to its original condition. These costs are included in the value of the CER's leasehold improvements with a corresponding provision for the ‘make good’ recognised.

Revaluations

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

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

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

Depreciation

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

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Depreciation rates applying to property, plant and equipment are based on the following useful lives:

2015 2014Leasehold improvements Lease term Lease termPlant and equipment 2 to 9 years 2 to 9 years




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Impairment

All assets were assessed for impairment at 30 June 2015. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.

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

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

1.17 Intangibles

The CER's intangibles comprise internally developed software and purchased software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses. Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the CER's software are 2 to 5 years (2014: 2 to 5 years).

All software assets were assessed for indications of impairment as at 30 June 2015.

1.18 Taxation

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

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

a) where the amount of GST incurred is not recoverable from the Australian Taxation Office, orb) for receivables and payables.




Page 21

Reporting of administered activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the administered schedules and related notes.

Except where otherwise stated below, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards.

Administered significant accounting judgements and estimates

The CER implemented the Emissions Reduction Fund in 2014-15 which is a voluntary scheme that aims to provide incentives for a range of organisations and individuals to reduce their emissions. The scheme is currently implemented through a carbon abatement auction process where the CER contracts with successful participants to purchase Australian Carbon Credit Units (ACCUs).

ACCUs are earned by participants through eligible projects for each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided.

The CER has an accounting policy for ERF transactions with the following key elements:

the CER will recognise a liability under the ERF where it has a present obligation arising from apast event;

the obligating event is ACCU issuance. This is on the basis that it is more likely than not thatACCUs issued will be surrendered in satisfaction of contract deliverables;

where ACCUs issued exceed total contract value they will not be recognised by the CER on thebasis that no contractual obligation exists; and

unperformed contractual obligations will be recognised in a schedule of commitments at nominalvalue, noting that contracts can be for periods of up to ten years.

Administered cash transfers to and from the Official Public Account

Revenue collected by the CER for use by the Government rather than the CER is administered revenue. Collections are transferred to the Official Public Account maintained by the Department of Finance. Conversely, cash is drawn from the Official Public Account to make payments under parliamentary appropriation on behalf of the Government. These transfers to and from the Official Public Account are adjustments to the administered cash held by the CER on behalf of the Government and reported as such in the schedule of administered cash flows and in the administered reconciliation schedule.

Revenue

All administered revenues are revenues relating to ordinary activities performed by the CER on behalf of the Government. As such, administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

Carbon price revenue is recognised when liable entities’ emissions occur, under the economic transaction method, where it is probable that future economic benefits will occur and can be reliably measured. Unit shortfall charges and other penalties are recognised at the time they are imposed.

Renewable energy revenue is generated through the creation and surrender of Renewable Energy Certificates when the underlying transaction occurs. Shortfall charges and interest penalties are recognised at the time they are imposed.

Subsidies

The CER issues free carbon units through industry assistance programmes. These are recognised as expenses when they are offered for buy-back, or they are approved for issue and it is probable that there will be an outflow of economic benefits in the future that can be reliably measured.




Page 22

Receivables

Where receivables are not subject to concessional treatment, they are carried at amortised cost using the effective interest method. Gains and losses due to impairment derecognition and amortisation is recognised through profit or loss.

1.19 Prior period adjustment

During 2014-15 the CER identified a prior period adjustment relating to the measurement of carbon price revenue and taxation receivables of $318.076 million as at 30 June 2014.

The adjustment relates to facilities that held a financial control liability transfer certificate and were not required to report an interim emissions number in 2013-14. The emissions from these facilities were not considered in estimation of the accrued carbon price revenue at 30 June 2014.

The CER has corrected the prior period by restating the comparative amounts in its administered financial statements and notes for 2013-14. The restatement of comparative amounts reflects an increase in taxation revenue of $318.076 million, with a corresponding increase in taxation receivables, as detailed in the table below:

Notes2014 Adjustment 2014

(Restated)($’000) ($’000) ($’000)

Administered schedule of comprehensive incomeIncomeRevenueTaxation revenueOther taxes 17A 4,397,535 318,076 4,715,611 Total taxation revenue 4,397,535 318,076 4,715,611 Total revenue 4,410,832 318,076 4,728,908 Total income 4,410,832 318,076 4,728,908

Net (cost of) contribution by services 3,066,994 318,076 3,385,070 Surplus (Deficit) 3,066,994 318,076 3,385,070Total comprehensive income 3,066,994 318,076 3,385,070

Administered schedule of assets and liabilitiesASSETSFinancial assetsTaxation receivables 18B 1,403,556 318,076 1,721,632 Total financial assets 1,404,632 318,076 1,722,708 Total assets administered on behalf of Government 1,404,632 318,076 1,722,708

Net assets 1,111,871 318,076 1,429,947

Administered reconciliation scheduleNet contribution by servicesIncome 4,410,832 318,076 4,728,908

Closing assets less liabilities at 30 June 1,111,871 318,076 1,429,947




Page 23

Note 2: Events after the reporting period

Departmental

There was no subsequent event that had the potential to significantly affect the ongoing structure and

financial activities of the entity.

Administered

There was no subsequent event that had the potential to significantly affect the ongoing structure and financial activities of the entity.




Note 3: Net cash appropriation arrangements2015$'000

2014$'000

Total comprehensive income less depreciation/amortisation expenses previously funded through revenue appropriations1

(2,032) 5,117 Plus: depreciation/amortisation expenses previously funded through revenue appropriation (12,672) (16,585)Total comprehensive loss - as per the Statement of comprehensive income (14,704) (11,468)

1. Entities receive a separate capital budget provided through equity appropriations. Capitalbudgets are appropriated in the period when cash payment for capital expenditure is required.

Page 24




Note 4: Expenses2015$'000

2014$’000

Note 4A: Employee benefitsWages and salaries 28,162 29,385 Superannuation

Defined contribution plans 2,738 2,884 Defined benefit plans 3,249 2,724

Leave and other entitlements 3,458 3,886 Separations and redundancies 795 599Other 177 206Total employee benefits 38,579 39,684

Note 4B: SuppliersGoods and services supplied or rendered

Consultants 7,576 7,076 Contractors 10,372 7,619 Third party service providers 8,046 11,870 Travel 505 595Legal expenses 317 417Recruitment and training 1,624 1,363 Office equipment 2,376 1,531 Other 2,242 2,919

Total goods and services supplied or rendered 33,058 33,390

Goods supplied in connection withRelated parties - 1External parties 559 628

Total goods supplied 559 629

Services rendered in connection withRelated parties 1,569 1,964 External parties 30,930 30,797

Total services rendered 32,499 32,761 Total goods and services supplied or rendered 33,058 33,390

Other suppliersOperating lease rentals in connection withExternal parties Minimum lease payments 3,630 3,725 Workers compensation expenses 484 362Total other suppliers 4,114 4,087 Total suppliers 37,172 37,477

Page 25




Note 4: Expenses (continued)2015

$’0002014$’000

Note 4C: Depreciation and amortisationDepreciation

Property, plant and equipment 324 334Buildings 2,126 1,902

Total depreciation 2,450 2,236

AmortisationIntangibles 10,222 14,349

Total amortisation 10,222 14,349 Total depreciation and amortisation 12,672 16,585

Note 4D: Finance costsUnwinding of discount on make-good 65 53Total finance costs 65 53

Note 4E: Write-down and impairment of assetsAsset write-downs and impairments from:

Write-down of property, plant and equipment (20) 84Revaluation decrement for property, plant and equipment - 17Impairment on intangible assets 3,462 358Write-down of intangible assets 13 272

Total write-down and impairment of assets 3,455 731

Page 26




Note 5: Own-source income2015$'000

2014$'000

Own-source revenue

Note 5A: Sale of goods and rendering of servicesRendering of services in connection with

Related parties 50 542External parties - 52

Total rendering of services 50 594Total sale of goods and rendering of services 50 594

Gains

Note 5B: Other gainsResources received free of charge - Remuneration of auditors 395 465Other 43 348Total other gains 438 813

Note 5C: Revenue from GovernmentAppropriations

Departmental appropriations 76,648 81,353 Total revenue from Government 76,648 81,353

Page 27



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Note 7: Financial assets2015$'000

2014$'000

Note 7A: Cash and cash equivalentsCash on hand or on deposit 307 306Total cash and cash equivalents 307 306

Note 7B: Trade and other receivablesGoods and services receivables in connection with

Related parties 100 100External parties 92 26

Total goods and services receivables 192 126

Appropriations receivableExisting programs 28,457 23,099

Total appropriations receivable 28,457 23,099

Other receivablesStatutory receivables 515 819

Total other receivables 515 819Total trade and other receivables (gross) 29,164 24,044

Trade and other receivables (net) expected to be recoveredNo more than 12 months 29,164 24,044

Total trade and other receivables (net) 29,164 24,044

Trade and other receivables (gross) aged as followsNot overdue 29,017 24,019 Overdue by

0 to 30 days 14 7 31 to 60 days - 3 61 to 90 days - 4 More than 90 days 133 11

Total trade and other receivables (gross) 29,164 24,044

Note 7C: Other financial assetsAccrued revenue 51 - Total other financial assets 51 -

Other financial assets expected to be recoveredNo more than 12 months 51 -

Total other financial assets 51 -

Page 30




Note 8: Non-financial assets2015$'000

2014$’000

Note 8A: Land and buildingsLeasehold improvements

Fair value 6,658 6,658 Accumulated depreciation (2,575) (449)

Total leasehold improvements 4,083 6,209 Total land and buildings 4,083 6,209

Note 8B: Property, plant and equipmentProperty, plant and equipment

Fair value 1,347 870Accumulated depreciation (325) -

Total property, plant and equipment 1,022 870

No indicators of impairment were found for property, plant and equipment.No property, plant and equipment is expected to be sold or disposed of within the next 12 months.

No indicators of impairment were found for leasehold improvements.No leasehold improvements are expected to be sold or disposed of within the next 12 months.

All revaluations were conducted in accordance with revaluation policy at Note 1.16. On 30 June 2014, an independent valuer conducted a revaluation of leasehold improvements and property, plant and equipment.

Advice received from an independent valuer deemed the net fair value not to be materially different from the carrying amount as at 30 June 2015.

Revaluations of non-financial assets

A revaluation increment of $ - for leasehold improvements (2014: $664,558) was credited to the asset revaluation surplus and included in the equity section of the balance sheet. The net revaluation increment is $103,054 (2014: $301,886) taking into consideration the provision for makegood. The net amount is reflected in the statement of changes in equity.

Page 31




Note 8: Non-financial assets (continued)Note 8C: Reconciliation of the opening and closing balances of property, plant and equipment

Reconciliation of the opening and closing balances of property, plant and equipment for 2015

Land and Buildings

$’000

Property, plant and equipment

$’000Total $’000

As at 1 July 2014Gross book value 6,658 870 7,528 Accumulated depreciation and impairment (449) - (449)Total as at 1 July 2014 6,209 870 7,079 Additions

Purchase - 413 413Assets found at stocktake - 43 43

Revaluations recognised in other comprehensive income - - - Revaluations recognised in net cost of services - - - Depreciation (2,126) (324) (2,450)Disposals - 20 20Total as at 30 June 2015 4,083 1,022 5,105

Total as at 30 June 2015 represented byGross book value 6,658 1,347 8,005 Accumulated depreciation and impairment (2,575) (325) (2,900)Total as at 30 June 2015 represented by 4,083 1,022 5,105

Land and Buildings

$’000

Property, Plantand Equipment

$’000Total$’000

As at 1 July 2013Gross book value 7,612 950 8,562 Accumulated depreciation and impairment (165) - (165)Total as at 1 July 2013 7,447 950 8,397 Additions

Purchase - 3 3Assets found at stocktake - 348 348

Revaluations recognised in other comprehensive income 664 4 668Revaluations recognised in net cost of services - (17) (17)Depreciation (1,902) (334) (2,236)Disposals - (84) (84)Total as at 30 June 2014 6,209 870 7,079

Total as at 30 June 2014 represented byGross book value 6,658 870 7,528 Accumulated depreciation and impairment (449) - (449)Total as at 30 June 2014 6,209 870 7,079

Reconciliation of the opening and closing balances of property, plant and equipment for 2014

Page 32




Note 8: Non-financial assets (continued)2014$’000

Note 8D: IntangiblesComputer software

Internally developed – in progress 872 9,410 Internally developed – in use 62,483 58,104 Purchased 31 40Accumulated amortisation (32,245) (27,037)Accumulated impairment losses (3,462) (2,785)

Total computer software 27,679 37,732 Total intangibles 27,679 37,732

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

2015$'000

An impairment loss of $3,461,829 was recognised for intangibles no longer required due to the abolishment of the Carbon Pricing Mechanism from 1 July 2014 (2014: $358,000).

Page 33




Note 8: Non-financial assets (continued)Note 8E: Reconciliation of the opening and closing balances of intangibles

Reconciliation of the opening and closing balances of intangibles for 2015

Computer software internally developed

Computer software purchased Total

$’000 $’000 $’000As at 1 July 2014Gross book value 67,513 41 67,554 Accumulated amortisation and impairment (29,798) (24) (29,822)Total as at 1 July 2014 37,715 17 37,732 Additions

Purchase or internally developed 3,644 - 3,644 Impairments recognised in net cost of services (3,462) - (3,462)Amortisation (10,219) (3) (10,222)Disposals ( 3) (10) (13)Total as at 30 June 2015 27,675 4 27,679

Total as at 30 June 2015 represented byGross book value 63,355 31 63,386 Accumulated amortisation and impairment (35,680) (27) (35,707)

Total as at 30 June 2015 represented by 27,675 4 27,679

Reconciliation of the opening and closing balances of intangibles for 2014Computer software

internally developedComputer software

purchased Total

$’000 $’000 $’000As at 1 July 2013Gross book value 59,554 44 59,598 Accumulated amortisation and impairment (15,312) (20) (15,332)Total as at 1 July 2013 44,242 24 44,266 Additions

Purchase or internally developed 8,435 10 8,445 Impairments recognised in net cost of services (358) - (358)Amortisation (14,334) (15) (14,349)Disposals (270) (2) (272)Total as at 30 June 2014 37,715 17 37,732

Total as at 30 June 2014 represented byGross book value 67,513 41 67,554 Accumulated amortisation and impairment (29,798) (24) (29,822)

Total as at 30 June 2014 represented by 37,715 17 37,732

Page 34




Note 8: Non-financial assets (continued)2015$'000

2014$’000

Note 8F: Other non-financial assetsPrepayments 1,097 639Total other non-financial assets 1,097 639

Other non-financial assets expected to be recoveredNo more than 12 months 1,081 629More than 12 months 16 10

Total other non-financial assets 1,097 639

No indicators of impairment were found for other non-financial assets.

Page 35




Note 9: Payables2015$'000

2014$’000

Note 9A: SuppliersTrade creditors and accruals 6,687 3,939 Total suppliers 6,687 3,939

Suppliers expected to be settledNo more than 12 months 6,687 3,939

Total suppliers 6,687 3,939

Suppliers in connection withRelated entities 296 205External parties 6,390 3,734

Total suppliers 6,687 3,939

Settlement was usually made within 30 days.

Note 9B: Other payablesWages and salaries 1,106 998Superannuation 200 171Lease liability 346 323Total other payables 1,652 1,492

Other payables expected to be settledNo more than 12 months 1,306 1,169 More than 12 months 346 323

Total other payables 1,652 1,492

Page 36




Note 10: Provisions2015$'000

2014$’000

Note 10A: Employee provisionsLeave 9,384 9,552 Total employee provisions 9,384 9,552

Employee provisions expected to be settledNo more than 12 months 4,133 4,181 More than 12 months 5,251 5,371

Total employee provisions 9,384 9,552

Note 10B: Other provisionsProvision for restoration 1,789 1,827 Total other provisions 1,789 1,827

Other provisions expected to be settledMore than 12 months 1,789 1,827

Total other provisions 1,789 1,827

Provision for restorationAs at 1 July 2014 1,827

Unwinding of discount or change in discount rate 65Change in discount rate (103)

Total as at 30 June 2015 1,789

The CER currently has one (2014: 1) agreement for the leasing of premises which have provisions requiring the CER to restore the premises to their original condition at the conclusion of the lease. The CER has made a provision to reflect the present value of this obligation.

Page 37




Note 11: Cash flow reconciliation2015$'000

2014$’000

Reconciliation of cash and cash equivalents as per statement Cash and cash equivalents as per

Cash flow statement 307 306Statement of financial position 307 306

Discrepancy - -

Reconciliation of net contribution by services to net cash from operating activities

Net contribution by services (91,455) (93,123)Revenue from Government 76,648 81,353

Adjustments for non-cash itemsDepreciation/amortisation 12,672 16,585 Net write-down of non-financial assets 3,455 731Finance costs 65 53Other gains (43) (348)

Movements in assts and liabilitiesAssets

(Increase) / decrease in net receivables (2,909) 691(Increase) / decrease in other financial assets (51) 162(Increase) / decrease in prepayments (458) (266)

LiabilitiesIncrease / (decrease) in supplier payables 2,341 (5,428)Increase / (decrease) in other payables 160 149Increase / (decrease) in employee provisions (168) 122Increase / (decrease) in other provisions - -

Net cash from operating activities 257 681

Page 38




Note 12: Contingent assets and liabilities

Quantifiable contingencies

Unquantifiable contingenciesThere were no unquantifiable contingent assets or liabilities as at 30 June 2015 (2014: Nil).

Significant remote contingenciesThere were no significant remote contingent assets or liabilities as at 30 June 2015 (2014: Nil).

There were no quantifiable contingent assets or liabilities as at 30 June 2015 (2014: Nil).

Page 39




Note 13: Senior management personnel remuneration2015

$2014

$Short-term employee benefits

Salary 2,678,462 2,874,311 Other allowances 92,120 76,508

Total short-term employee benefits 2,770,582 2,950,819

Post-employment benefitsSuperannuation 522,760 359,749

Total post-employment benefits 522,760 359,749

Other long-term employee benefitsAnnual leave 242,666 194,748 Long-service leave 74,565 58,114

Total other long-term employee benefits 317,231 252,862

Termination benefitsVoluntary redundancy payments - 94,487

Total termination benefits - 94,487 Total senior management personnel remuneration expenses 3,610,573 3,657,917

The total number of senior management personnel that are included in the above table are 13 (2014: 11).

Page 40




Note 14: Financial instruments2015$'000

2014$’000

Note 14A: Categories of financial instrumentsFinancial assetsLoans and receivables:

Cash and cash equivalents 307 306Receivables for goods and services 192 126

Total loans and receivables 499 432Total financial assets 499 432

Financial liabilitiesFinancial liabilities measured at amortised cost

Suppliers payables 6,687 3,939 Total financial liabilities measured at amortised cost 6,687 3,939 Total financial liabilities 6,687 3,939

Note 14B: Net gains or losses on financial assetsThere has been no income gained or expense incurred from financial assets (2014: Nil).

Note 14C: Net gains or losses on financial liabilitiesThere has been no income gained or expense incurred from financial liabilities (2014: Nil).

Page 41



Cle

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The

CE

R h

eld

no c

olla

tera

l to

miti

gate

aga

inst

cre

dit r

isk.

Cre

dit q

ualit

y of

fina

ncia

l ass

ets

not p

ast d

ue o

r ind

ivid

ually

det

erm

ined

as

impa

ired

Not

pas

t due

nor

im

paire

dN

ot p

ast d

ue n

or

impa

ired

Past

due

or

impa

ired

Pas

t due

or

impa

ired

2015

2014

2015

2014

$'00

0$'

000

$'00

0$'

000

Cas

h an

d ca

sh e

quiv

alen

ts30

730

6 -

- R

ecei

vabl

es fo

r goo

ds a

nd s

ervi

ces

4510

114

725

Tota

l35

240

714

725

Agei

ng o

f fin

anci

al a

sset

s th

at w

ere

past

due

but

not

impa

ired

in 2

015 0 to

30

days

31

to 6

0 da

ys61

to 9

0 da

ys90

+ da

ysTo

tal

$'00

0$'

000

$'00

0$'

000

$'00

0R

ecei

vabl

es fo

r goo

ds a

nd s

ervi

ces

14 -

- 13

314

7To

tal

14 -

- 13

314

7

Age

ing

of fi

nanc

ial a

sset

s th

at w

ere

past

due

but

not

impa

ired

in 2

014

0 to

30

days

31

to 6

0 da

ys61

to 9

0 da

ys90

+ da

ysTo

tal

$'00

0$'

000

$'00

0$'

000

$'00

0R

ecei

vabl

es fo

r goo

ds a

nd s

ervi

ces

73

411

25To

tal

73

411

25

The

CE

R w

as e

xpos

ed to

min

imal

cre

dit r

isk

as lo

ans

and

rece

ivab

les

repr

esen

t cas

h an

d re

ceiv

able

s fo

r goo

ds a

nd s

ervi

ces.

The

max

imum

ex

posu

re to

cre

dit r

isk

was

the

risk

that

aris

es fr

om p

oten

tial d

efau

lt of

a d

ebto

r. T

his

amou

nt w

as e

qual

to th

e to

tal a

mou

nt o

f tra

de re

ceiv

able

s of

$19

2,20

8 (2

014:

$12

5,95

8).

The

CE

R h

as a

sses

sed

the

risk

of th

e de

faul

t on

paym

ent a

nd d

ecid

ed n

ot to

allo

cate

an

impa

irmen

t allo

wan

ce a

ccou

nt.

The

CE

R m

anag

es it

s cr

edit

risk

by e

nsur

ing

that

it h

as p

olic

ies

and

proc

edur

es in

rela

tion

to d

ebt m

anag

emen

t.

Pag

e 42



Cle

an E

nerg

y R

egul

ator

Not

e 14

: Fin

anci

al in

stru

men

ts (c

ontin

ued)

Not

e 14

E: L

iqui

dity

risk

Mat

uriti

es fo

r non

-der

ivat

ive

finan

cial

liab

ilitie

s 20

15

Not

esO

n de

man

dW

ithin

1 ye

ar1

to 2

year

s2

to 5

year

s>

5ye

ars

Tota

l

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

Sup

plie

rs p

ayab

le9A

- 6,

687

- -

- 6,

687

Tota

l -

6,68

7 -

- -

6,68

7

Mat

uriti

es fo

r non

-der

ivat

ive

finan

cial

liab

ilitie

s 20

14

Not

esO

n de

man

dW

ithin

1 ye

ar1

to 2

year

s2

to 5

year

s>

5ye

ars

Tota

l

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

Sup

plie

rs p

ayab

le9A

- 3,

939

- -

- 3,

939

Tota

l -

3,93

9 -

- -

3,93

9 Th

e ag

ency

had

no

deriv

ativ

e fin

anci

al li

abili

ties

in 2

014-

15 (2

014:

Nil)

.

Not

e 14

F: M

arke

t ris

kTh

e C

ER

hel

d ba

sic

finan

cial

inst

rum

ents

that

do

not e

xpos

e it

to c

erta

in m

arke

t ris

ks, s

uch

as 'c

urre

ncy

risk'

or '

othe

r pric

e ris

k'.

The

CE

R is

not

exp

osed

to a

ny

'inte

rest

rate

risk

'.

The

CE

R's

fina

ncia

l lia

bilit

ies

are

supp

lier p

ayab

les.

The

exp

osur

e to

liqu

idity

risk

was

bas

ed o

n th

e no

tion

that

the

CE

R w

ill e

ncou

nter

diff

icul

ty in

mee

ting

its

oblig

atio

ns a

ssoc

iate

d w

ith fi

nanc

ial l

iabi

litie

s. T

his

is h

ighl

y un

likel

y as

the

CE

R is

app

ropr

iate

d fu

ndin

g fro

m th

e A

ustra

lian

Gov

ernm

ent a

nd th

e C

ER

man

ages

its

budg

eted

fund

s to

ens

ure

it ha

s ad

equa

te fu

nds

to m

eet p

aym

ents

as

they

fall

due.

The

CE

R m

anag

es it

s liq

uidi

ty ri

sk b

y en

surin

g th

at it

has

pol

icie

s in

pla

ce to

en

sure

tim

ely

paym

ents

are

mad

e w

hen

due

and

has

no p

ast e

xper

ienc

e of

def

ault.

Pag

e 43




Notes 2015$'000

2014$'000

Total financial assets as per statement of financial position 29,522 24,350 Less: non-financial instrument components

Appropriation receivable 7B 28,457 23,099 Statutory receivables 7B 515 819Accrued revenue 7C 51 -

Total non-financial instrument components 29,023 23,918 Total financial assets as per financial instruments note 14A 499 432

Note 15: Financial assets reconciliation

Page 44




Note 16: Administered - expenses2015$'000

2014$'000

Note 16A: SuppliersGoods and services supplied or rendered

Contractors 3,707 3,232 Total goods and services supplied or rendered 3,707 3,232

Services rendered in connection withExternal parties 3,707 3,232

Total services rendered 3,707 3,232 Total goods and services supplied or rendered 3,707 3,232

Note 16B: SubsidiesSubsidies in connection with

External partiesBuy-back of carbon units 16,797 1,297,440

Total subsidies 16,797 1,297,440

Note 16C: Write-down and impairment of assetsImpairment on financial assets 3,226 43,166 Total write-down and impairment of assets 3,226 43,166

Note 16D: Other expensesPenalty interest remission 362 - Purchase of Australian Carbon Credit Units 13,033 - Adjustment to accrued carbon price revenue estimate 135,191 - Total other expenses 148,585 -

Page 45




Note 17: Administered - income2015$'000

2014$'000

Revenue

Taxation revenueNote 17A: Other taxesCarbon price revenue - 4,664,347 Carbon price revenue - shortfall charges and penalties 14,165 50,875 Renewable energy - shortfall charges and interest 1,720 389Total other taxes 15,885 4,715,611

Non-taxation revenueNote 17B: Fees and finesRenewable energy fees 12,161 13,265 Other fees 96 32Fines 174 - Total fees and fines 12,431 13,297

GainsNote 17C; Other gainsTrue-up on the issue of carbon units 39,012 - Total other gains 39,012 -

Page 46




Note 18: Administered - financial assets2015$'000

2014$'000

Note 18A: Cash and cash equivalentsCash in special accounts - - Cash on hand or on deposit 416 - Cash held by outsiders - 1,012 Total cash and cash equivalents 416 1,012

Note 18B: Taxation receivablesOther taxes

Carbon price revenue - 1,719,834 Carbon price revenue - shortfall charges and penalties 46,219 44,375 Renewable energy - shortfall charges and interest 208 589

Total taxation receivables (gross) 46,427 1,764,798

Less: impairment allowanceImpairment allowance (46,214) (43,166)Total impairment allowance (46,214) (43,166)Total taxation receivables (net) 213 1,721,632

Taxation receivables (gross) aged as followsNot overdue 202 1,719,834 Overdue by

0 to 30 days - - 31 to 60 days - - 61 to 90 days - - More than 90 days 46,225 44,964

Total taxation receivables (gross) 46,427 1,764,798

Impairment allowance aged as followsOverdue by

0 to 30 days - (2,469)31 to 60 days - - 61 to 90 days - - More than 90 days (46,214) (40,697)

Total impairment allowance (46,214) (43,166)

Note 18C: Trade and other receivablesOther receivables

Fines 383 209Statutory receivables 77 64

Total trade and other receivables (gross) 460 273

Less: impairment allowanceImpairment allowance (383) (209)

Total impairment allowance (383) (209)Total trade and other receivables (net) 77 64

Page 47




Note 18: Administered - financial assets (continued)2015$'000

2014$'000

Note 18C: Trade and other receivables (continued)Receivables were aged as followsNot overdue 77 64Overdue by

0 to 30 days - - 31 to 60 days - - 61 to 90 days - - More than 90 days 383 209

Total trade and other receivables (gross) 460 273

Impairment allowance aged as followsOverdue by

More than 90 days (383) (209)Total impairment allowance (383) (209)

Reconciliation of the impairment allowanceMovements in relation to 2015

Taxation receivables

$'000

Other receivables

$'000Total$'000

As at 1 July 2014 43,166 209 43,375 Amounts written off - - - Amounts recovered and reversed - (4) (4)Increase recognised in net cost of services 3,048 178 3,226 Total as at 30 June 2015 46,214 383 46,597

Movements in relation to 2014Taxation

receivables$'000

Other receivables

$'000Total$'000

As at 1 July 2013 - 209 209Amounts written off - - - Amounts recovered and reversed - - - Increase recognised in net cost of services 43,166 - 43,166 Total as at 30 June 2014 43,166 209 43,375

Page 48




Note 19: Administered - payables2015$'000

2014$'000

Note 19A: SuppliersTrade creditors and accruals 434 351

Total suppliers 434 351

Suppliers expected to be settledNo more than 12 months 434 351More than 12 months - -


Suppliers in connection withRelated entities - - External parties 434 351


Note 19B: Other payablesRefund for Carbon Pricing Mechanism shortfall charges 2,130 - Other 11,675 -

Total other payables 13,805 -

Other payables expected to be settledNo more than 12 months 13,805 -

Total other payables 13,805 -

Page 49




Note 20: Administered - provisions2015$'000

2014$'000

Note 20A: Other provisionsProvision for refund of large-scale generation shortfall charges - - Provision for buy-back of carbon units - 292,410

Total other provisions - 292,410

Other provisions expected to be settledNo more than 12 months - 292,410 More than 12 months - -

Total other provisions - 292,410

Page 50




Note 21: Administered - cash flow reconciliation2015$'000

2014$'000

Reconciliation of cash and cash equivalents as per administered

Cash and cash equivalents as per:Schedule of administered cash flows 416 1,012 Schedule of administered assets and liabilities 416 1,012

Discrepancy - -

Reconciliation of net cost of services to net cash from operating activities

Net (cost of)/contributions by services (104,987) 3,385,070

Movements in assets and liabilitiesAssets

(Increase) / decrease in net taxation receivables 1,721,420 (347,561)(Increase) / decrease in net trade receivables (14) 43,674

LiabilitiesIncrease / (decrease) in suppliers payables 83 (3,316)Increase / (decrease) in other payables 13,805 - Increase / (decrease) in other provisions (292,410) 60,996

Net cash from operating activities 1,337,897 3,138,863

Page 51




Note 22: Administered - contingent assets and liabilities

Note 22: Contingent assets and liabilities

2015 2014 2015 2014$’000 $’000 $’000 $’000

Contingent assetsBalance from previous period - - - -New contingent assets recognised - - - -Re-measurement - - - -Assets realised - - - -Rights expired - - - -

Total contingent assets - - - -

Contingent liabilitiesBalance from previous period - - - -New contingent liabilities recognised (552) - (552) -Re-measurement - - - -Liabilities realised - - - -Obligations expired - - - -

Total contingent liabilities (552) - (552) -Net contingent assets/(liabilities) (552) (552) -

Quantifiable contingencies

Unquantifiable contingenciesThere were no unquantifiable contingent assets or liabilities as at 30 June 2015 (2014: Nil).

Significant remote contingenciesThere were no significant remote contingent assets or liabilities as at 30 June 2015 (2014: Nil).

Liabilities Total

The above table contains $551,821 of contingent liabilities disclosed in respect to payments in lieu of additional free carbon units under the Jobs and Competitiveness Program (2014: Nil). This amount represents an estimate of the CER's liability based on possible applications.

Page 52




Note 23: Administered - financial instruments2015$'000

2014$'000

Note 23A: Categories of financial instrumentsFinancial Assets

Loans and receivablesCash and cash equivalents 416 1,012 Trade and other receivables - -

Total loans and receivables 416 1,012 Total financial assets 416 1,012

Financial LiabilitiesFinancial liabilities measured at amortised cost

Suppliers payables 434 351Other payables 10,599 -

Total financial liabilities measured at amortised cost 11,033 351Total financial liabilities 11,033 351

Note 23B: Net gains or losses on financial assetsThere were no gains or losses on financial assets (2014: Nil).

Note 23C: Net gains or losses on financial liabilitiesThere were no gained or losses on financial liabilities (2014: Nil).

Page 53



Cle

an E

nerg

y R

egul

ator

Not

e 23

: Adm

inis

tere

d- f

inan

cial

inst

rum

ents

(con

tinue

d)N

ote

23D

: Cre

dit r

isk

The

CE

R h

eld

no c

olla

tera

l to

miti

gate

aga

inst

cre

dit r

isk.

Cre

dit q

ualit

y of

fina

ncia

l ass

ets

not p

ast d

ue o

r ind

ivid

ually

det

erm

ined

as

impa

ired

Not

pas

t due

nor

im

paire

dN

ot p

ast d

ue

nor i

mpa

ired

Past

due

or

impa

ired

Pas

t due

or

impa

ired

2015

2014

2015

2014

$'00

0$'

000

$'00

0$'

000

Cas

h an

d ca

sh e

quiv

alen

ts41

61,

012

- -

Trad

e an

d ot

her r

ecei

vabl

es -

- 38

320

9To

tal

416

1,01

2 38

320

9

Agei

ng o

f fin

anci

al a

sset

s th

at w

ere

past

due

but

not

impa

ired

in 2

015 0 to

30

days

31

to 6

0 da

ys61

to 9

0 da

ys90

+ da

ysTo

tal

$'00

0$'

000

$'00

0$'

000

$'00

0Tr

ade

and

othe

r rec

eiva

bles

- -

- -

- To

tal

- -

- -

-

Age

ing

of fi

nanc

ial a

sset

s th

at w

ere

past

due

but

not

impa

ired

in 2

014

0 to

30

days

31

to 6

0 da

ys61

to 9

0 da

ys90

+ da

ysTo

tal

$'00

0$'

000

$'00

0$'

000

$'00

0Tr

ade

and

othe

r rec

eiva

bles

- -

- -

- To

tal

- -

- -

-

The

CE

R is

exp

osed

to m

inim

al c

redi

t ris

k as

loan

s an

d re

ceiv

able

s ar

e ca

sh a

nd tr

ade

and

othe

r rec

eiva

bles

. Th

e m

axim

um e

xpos

ure

to

cred

it ris

k is

the

risk

that

aris

es fr

om p

oten

tial d

efau

lt of

a d

ebto

r. T

his

amou

nt is

equ

al to

the

tota

l am

ount

of t

rade

rece

ivab

les

$178

,900

(2

014:

$20

9,40

0).

The

CE

R h

as a

sses

sed

the

risk

of th

e de

faul

t on

paym

ent a

nd a

lloca

ted

$178

,900

to a

n im

pairm

ent a

llow

ance

acc

ount

.

Pag

e 54



Cle

an E

nerg

y R

egul

ator

Not

e 23

: Adm

inis

tere

d- f

inan

cial

inst

rum

ents

(con

tinue

d)N

ote

23E:

Liq

uidi

ty ri

sk

Mat

uriti

es fo

r non

-der

ivat

ive

finan

cial

liab

ilitie

s in

201

5

Not

esO

n de

man

dW

ithin

1 ye

ar1

to 2

year

s2

to 5

year

s>

5ye

ars

Tota

l

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

Sup

plie

rs p

ayab

les

19A

- 43

4 -

- -

434

Oth

er p

ayab

les

19B

- 10

,599

-

- -

10,5

99

Tota

l -

11,0

33

- -

- 11

,033

Mat

uriti

es fo

r non

-der

ivat

ive

finan

cial

liab

ilitie

s in

201

4w

ithin

11

to 2

2 to

5>

5ye

arye

ars

year

sye

ars

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

Sup

plie

rs p

ayab

les

- 35

1 -

- -

351

Tota

l19

A -

351

- -

- 35

1Th

e ag

ency

had

no

deriv

ativ

e fin

anci

al li

abili

ties

in e

ither

the

curre

nt o

r prio

r per

iod.

Not

e 23

F: M

arke

t ris

k

The

CE

R h

eld

basi

c fin

anci

al in

stru

men

ts th

at d

o no

t exp

ose

it to

cer

tain

mar

ket r

isks

. Th

e C

ER

is n

ot e

xpos

ed to

'cur

renc

y ris

k', '

inte

rest

rate

risk

' or '

othe

r pric

e ris

k'.

The

CE

R's

fina

ncia

l lia

bilit

ies

are

supp

liers

and

oth

er p

ayab

les.

The

exp

osur

e to

liqu

idity

risk

is b

ased

on

the

notio

n th

at th

e C

ER

will

enc

ount

er d

iffic

ulty

in m

eetin

g its

ob

ligat

ions

ass

ocia

ted

with

fina

ncia

l lia

bilit

ies.

Thi

s is

hig

hly

unlik

ely

as th

e C

ER

is a

ppro

pria

ted

fund

ing

from

the

Aus

tralia

n G

over

nmen

t and

the

CE

R m

anag

es it

s bu

dget

ed fu

nds

to e

nsur

e it

has

adeq

uate

fund

s to

mee

t pay

men

ts a

s th

ey fa

ll du

e. T

he C

ER

man

ages

its

liqui

dity

risk

by

ensu

ring

that

it h

as p

olic

ies

in p

lace

to

ensu

re ti

mel

y pa

ymen

ts a

re m

ade

whe

n du

e an

d ha

s no

pas

t exp

erie

nce

of d

efau

lt.

On

dem

and

Tota

l

Pag

e 55




Notes 2015$'000

2014$'000

Total financial assets as per administered schedule of assets and liabilities 706 1,404,632

Less: Non-financial instrument componentsTaxation receivables 18B 213 1,403,556 GST receivable 18C 77 64

Total non-financial instrument components 290 1,403,620 Total financial assets as per administered financial instruments note 23A 416 1,012

Note 24: Administered - financial assets reconciliation

Page 56



Cle

an E

nerg

y R

egul

ator

Not

e 25

A: A

nnua

l app

ropr

iatio

ns ('

Rec

over

able

GST

exc

lusi

ve')

Annu

al a

ppro

pria

tions

for 2

015

Annu

al

appr

opria

tion

Sect

ion

74Se

ctio

n 75

$'00

0$'

000

$'00

0$'

000

$'00

0$'

000

$'00

0D

epar

tmen

tal

Ord

inar

y an

nual

ser

vice

s77

,896

77

0 -

78,6

66

74,2

70

4,39

6 (4

9)O

ther

ser

vice

s E

quity

4,40

6 -

4,40

6 3,

395

1,01

1 -

Tota

l dep

artm

enta

l82

,302

77

0 -

83,0

72

77,6

65

5,40

7 (4

9)Ad

min

iste

red

Ord

inar

y an

nual

ser

vice

s

Adm

inis

tere

d ite

ms

79,2

69

- -

79,2

69

6,25

0 73

,019

-

Tota

l adm

inis

tere

d79

,269

-

- 79

,269

6,

250

73,0

19

-

1.Th

e va

rianc

e is

due

to th

e fin

alis

atio

n of

the

carb

on p

ricin

g m

echa

nism

and

the

pass

age

for t

he E

mis

sion

s R

educ

tion

Fund

legi

slat

ion

occu

ring

late

r tha

nes

timat

ed d

urin

g bu

dget

dev

elop

men

t.

Not

e 25

: App

ropr

iatio

ns

App

ropr

iatio

n A

ctPG

PA A

ct

Tota

l ap

prop

riatio

n

2.In

acc

orda

nce

with

the

Com

mun

icat

ions

and

Pub

lic A

ffairs

Fun

ctio

ns ta

rget

ed s

avin

gs m

easu

re th

e C

ER

per

man

ently

lost

con

trol o

f $49

,000

und

er s

ectio

n 51

of th

e P

GP

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Pag

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2015$'000

2014$'000

Balance brought forward from previous period 1Increases:

Receipts from buyers - - Total increases - - Available for paymentsDecreases:Administered

Payments to sellers (63,406) (185)Receipts from buyers 63,759 186

Total administered 353 1Total balance carried to the next period 354 1

1. Appropriation: Public Governance, Performance and Accountability Act 2013 section 80.Establishing Instrument: Renewable Energy (Electricity) Act 2000, section 30R.


Note 26: Special accounts ('Recoverable GST exclusive')

Renewable Energy Special Account1

Page 62




Note 27: Compliance with statutory conditions for payments from the Consolidated Revenue Fund

Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation made by law. The Department of Finance provided information to all entities in 2011-12 and 2012-13 regarding the need for risk assessments to be conducted in relation to compliance with statutory requirements on payments from Special Appropriations, including Special Accounts.

During 2014-15, the CER reviewed its exposure to risks of not complying with statutory requirements on payments from appropriations. The following payment types were reviewed:

• Special Account payments;• Special Appropriation payments;• Long service leave payments;• Goods and services tax (GST) payments; and• Payments under determinations of the Remuneration Tribunal.

Special AccountsThe CER identified the following Special Accounts which contain statutory requirements for payments:

• Renewable Energy Special Account - established under the Renewable Energy (Electricity) Act 2000

Payments from this Special Account during 2014-15 totalled $63.406 million, with payments assessed as low risk. No breaches were identified.

Special AppropriationsThe CER identified the following legislation as having Special Appropriations involving statutory requirements for payment:

• Renewable Energy (Electricity) Act 2000;• Clean Energy Act 2011; and• Carbon Credits (Carbon Farming Initiative) Act 2011.

Payments from these Special Appropriations during 2014-15 totalled $318.159 million. Payments from these Special Appropriations were initially assessed as medium risk, however, existing controls and processes in place reduce the assessed risk to low. No breaches were identified.

Long Service Leave PaymentsThe CER is required to review compliance with section 83 of the Constitution and the Long Service Leave (Commonwealth Employees) Act 1976 (LSL Act).In relation to the CER's Long Service Leave (LSL) payments, the review concluded a risk rating of low. No breaches were identified.

Goods and Service Tax PaymentsA breach of section 83 due to GST payment would only occur if the following two conditions are met:

• the correct amount of the total departmental and administered appropriation has been exhausted; and• that there was no other appropriation which would support the withdrawal.

As the CER has not exhausted any of its appropriations and written to the Department of Finance requesting more funds to be appropriated, no s83 breaches were identified. The risk rating is low.

Determinations of the Remuneration TribunalLegal advice confirmed that the Financial Framework Legislation Amendment Act (No 2) 2013 (FFLA Act) has materially affected the preparation of section 83 on determinations made by the Remunerations Tribunal and reduced the circumstances in which a payment under the Remuneration Tribunal Act 1973 in respect of a 'benefit' as defined in ss16A(6) and 16B(6) of the FFLA Act would involve a breach of section 83. No breaches were identified. The risk rating is low.

Other AppropriationsThe CER identified the following legislation as having an Other Appropriation involving statutory requirements for payment:

• Public Governance, Performance and Accountability Act 2013 - section 77Payments from these Other Appropriations during 2014-15 totalled $9.047 million, with payments being assessed as low risk. No breaches were identified.

Page 63




Note 28: Reporting of outcomes

Note 28A: Net cost of outcome delivery

2015$'000

2014$'000

2015$'000

2014$'000

DepartmentalExpenses 91,943 94,530 91,943 94,530 Own-source income (488) (1,407) (488) (1,407)

AdministeredExpenses 172,315 1,343,838 172,315 1,343,838 Income (28,316) (4,410,832) (28,316) (4,410,832)

Net contribution of outcome delivery 235,454 (2,973,871) 235,454 (2,973,871)

TotalOutcome 1

Page 64




2015$'000

2014$'000

2015$'000

2014$'000

ExpensesEmployee benefits 38,579 39,684 38,579 39,684 Suppliers 37,172 37,477 37,172 37,477 Depreciation and amortisation 12,672 16,585 12,672 16,585 Finance costs 65 53 65 53Write-down and impairment of assets 3,455 731 3,455 731

Total expenses 91,943 94,530 91,943 94,530 Own-source income

Sale of goods and rendering of services 50 594 50 594Revenue from Government 76,648 81,353 76,648 81,353 Other gains 438 813 438 813

Total own-source income 77,136 82,760 77,136 82,760 Assets

Cash and cash equivalents 307 306 307 306Trade and other receivables 29,164 24,044 29,164 24,044 Other financial assets 51 - 51 - Land and buildings 4,083 6,209 4,083 6,209 Property, plant and equipment 1,022 870 1,022 870Intangibles 27,679 37,732 27,679 37,732 Other non-financial assets 1,097 639 1,097 639

Total assets 63,403 69,800 63,403 69,800 Liabilities

Suppliers payables 6,687 3,939 6,687 3,939 Other payables 1,652 1,492 1,652 1,492 Employee provisions 9,384 9,552 9,384 9,552 Other provisions 1,789 1,827 1,789 1,827

Total liabilities 19,512 16,810 19,512 16,810

TotalOutcome 1

Note 28: Reporting of outcomes (continued)

Note: Outcome 1 is described in Note 1.1. Net costs shown included intra-government costs that were eliminated in calculating the actual budget outcome. Refer to Outcome 1 resourcing table of this annual report.

Note 28B: Major classes of departmental expense, income, assets and liabilities by outcome

Page 65




Note 28: Reporting of outcomes (continued)

2015$'000

2014$'000

2015$'000

2014$'000

ExpensesSuppliers 3,707 3,232 3,707 3,232 Subsidies 16,797 1,297,440 16,797 1,297,440 Write-down and impairment of assets 3,226 43,166 3,226 43,166

Total expenses 23,730 1,343,838 23,730 1,343,838 Income

Other taxes 15,885 4,397,535 15,885 4,397,535 Fees and fines 12,431 13,297 12,431 13,297

Total income 28,316 4,410,832 28,316 4,410,832 Assets

Cash and cash equivalents 416 1,012 416 1,012 Taxation receivables 213 1,403,556 213 1,403,556 Trade and other receivables 77 64 77 64

Total assets 706 1,404,632 706 1,404,632 Liabilities

Suppliers payables 434 351 434 351Subsidies payables - - - - Other payables 13,805 - 13,805 - Other provisions - 292,410 - 292,410

Total liabilities 14,239 292,761 14,239 292,761

Note: Outcome 1 is described in Note 1.1. Net costs shown included intra-government costs that were eliminated in calculating the actual budget outcome.

Outcome 1 Total

Note 28C: Major classes of administered expenses, income, assets and liabilities by outcome

Page 66



Note 29A: Cost recovery summary

2015$'000

2014$'000

RevenuePayments to portfolio departments - -

Administered 12,431 13,297 Total revenue 12,431 13,297

Cost recovered activities:Registration, application, accreditation and renewable energy certificate fees.


Note 29: Cost recovery

Page 67




Note 30: Budgetary Report and Explanations of Major Variances (continued)

The Clean Energy Regulator has disclosed major variances against budget on the following basis:

departmental: a variance greater than 10% and $0.250 million of an individual class, and administered: a variance greater than 10% and $0.500 million of an individual class.

The Clean Energy Regulator implemented two significant policy changes in 2014-15 which account for the majority of variances against budget. They are as follows:

Carbon Pricing Mechanism RepealThe Clean Energy Regulator finalised the Carbon Pricing Mechanism (CPM) following the repeal of related legislation on 1 July 2014. This resulted in reduced departmental expenditure for staff and related costs in administering the scheme as well as impacting on administered expenses and revenue. There was also an impact on administered items as a result of a correction made to CPM revenue from 2013-14.

Administered expense and revenue items reported for the CPM at 30 June 2014 included accrued values based on agreed accounting methodologies and estimates.

Subsequent to the 2013-14 financial year it was discovered that the accrued values contained a methodology error and change in accounting estimate. The methodology error meant that the 2013-14 revenue was understated and has been corrected through a restatement of prior period comparatives as detailed in Note 1. The change in accounting estimate meant that the 2013-14 accrued revenue had been overstated and when reversed in 2014-15 resulted in ‘negative revenue’ which was expensed through the schedule of comprehensive income.

The process for developing Budget estimates for the CPM for 2014-15 resulted in no estimates for revenue and expense items on the basis of the CPM repeal and was correct based on information available at the time.

The reversal of accrual estimates and subsequent recognition of actual revenue and expenditure, as well as the finalisation (true-up) of 2013-14 allocations under the Jobs and Competitiveness Program following the repeal of the CPM, resulted in a range of variances against budget as detailed further in this note.

Emission Reduction Fund implementationThe Clean Energy Regulator implemented the Emission Reduction Fund (ERF) during 2014-15, an incentive based approach to support abatement activities across the economy, contributing to Australia meeting its target of reducing emissions to 5 per cent below year 2000 levels by 2020. The implementation of the ERF resulted in increased departmental expenditure for staff and contractors and related costs. Administered expenses were lower than budgeted broadly as a result of changes to the anticipated passage of legislation.

Budget estimates for the ERF were developed in the lead up to the 2014-15 budget and assumed early passage of related legislation. On 24 November 2014, an amended Carbon Farming Initiative Amendment Bill 2014 was passed by the Parliament, and royal assent was received on 25 November 2014.

Page 68




Note 30: Budgetary Report and Explanations of Major Variances

Note 30A: Departmental Budgetary Reports

Statement of Comprehensive Incomefor the period ended 30 June 2015

ActualOriginal 1 Variance 2

2015$'000

2015$'000

2015$'000


Employee benefits 38,579 44,660 (6,081)Suppliers 37,172 32,447 4,725 Depreciation and amortisation 12,672 12,751 (79)Finance costs 65 55 10Write-down and impairment of assets 3,455 - 3,455

Total expenses 91,943 89,913 2,030

Own-Source IncomeOwn-source revenue

Sale of goods and rendering of services 50 - 50Total own-source revenue 50 - 50

GainsOther gains 438 465 (27)

Total gains 438 465 (27)Total own-source income 488 465 23Net contribution by services 91,455 89,448 2,007

Revenue from Government 76,648 76,697 (49)

Deficit (14,807) (12,751) (2,056)

OTHER COMPREHENSIVE INCOME

Items not subject to subsequent reclassification to net Changes in asset revaluation surplus 103 - 103

Total other comprehensive income 103 - 103Total comprehensive loss (14,704) (12,751) (1,953)

2. The variance between the actual and original budgeted amounts for the reporting period.

1. The CER's original budgeted financial statement that was first presented to parliament in respect of thereporting period.

Budget estimate

Page 69





Note 30A: Departmental Budgetary Reports (continued)

Statement of Financial Positionas at 30 June 2015


2015$'000

2015$'000

2015$'000


Cash and cash equivalents 307 297 10Trade and other receivables 29,164 14,332 14,832 Other financial assets 51 - 51

Total financial assets 29,522 14,629 14,893

Non-financial assetsLand and buildings 4,083 3,638 445Property, plant and equipment 1,022 344 678Intangibles 27,679 39,051 (11,372)Other non-financial assets 1,097 424 673

Total non-financial assets 33,881 43,457 (9,576)Total assets 63,403 58,086 5,317

LIABILITIESPayables

Suppliers 6,687 9,278 (2,591)Other payables 1,652 1,524 128

Total payables 8,339 10,802 (2,463)

ProvisionsEmployee provisions 9,384 10,614 (1,230)Other provisions 1,789 1,515 274

Total provisions 11,173 12,129 (956)

Total liabilities 19,512 22,931 (3,419)Net assets 43,891 35,155 8,736

EQUITYContributed equity 82,540 77,442 5,098 Reserves 3,987 3,581 406Accumulated deficit (42,635) (45,868) 3,233

Total equity 43,892 35,155 8,737

Budget estimate

1. The CER's original budgeted financial statement that was first presented to parliament in respect of thereporting period.2. The variance between the actual and original budgeted amounts for the reporting period.

Page 70



Cle

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Pag

e 71





Note 30A: Departmental Budgetary Reports (continued)


2015$'000

2015$'000

2015$'000


Appropriations 74,271 76,373 (2,102)Sale of goods and rendering of services - 88 (88)Net GST received 4,441 - 4,441

Total cash received 78,712 76,461 2,251

Cash usedEmployees 38,637 43,961 (5,324)Suppliers 39,048 32,500 6,548 Section 74 receipts transferred to OPA 770 - 770

Total cash used 78,455 76,461 1,994 Net cash from operating activities 257 - 257

INVESTING ACTIVITIESCash used

Purchase of property, plant and equipment 69 - 69Purchase of intangibles 3,582 5,605 (2,023)

Total cash used 3,651 5,605 (1,954)Net cash used by investing activities (3,651) (5,605) 1,954

FINANCING ACTIVITIESCash received

Contributed equity 3,395 5,605 (2,210)Total cash received 3,395 5,605 (2,210)Net cash from financing activities 3,395 5,605 (2,210)

Net increase in cash held 1 - 1Cash and cash equivalents at the beginning of the reporting period 306 297 9Cash and cash equivalents at the end of the reporting period 307 297 10

Cash Flow Statementfor the period ended 30 June 2015

Budget estimate

1. The CER's original budgeted financial statement that was first presented to parliament in respect of thereporting period.2. The variance between the actual and original budgeted amounts for the reporting period.

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Note 30B: Departmental Major Budget Variances for 2015

Explanation of major variances Affected line items (and statement)EmployeesEmployee numbers decreased with the finalisation of the Carbon Pricing Mechanism and did not increase as early as budgeted for the Emissions Reduction Fund. Lower employee provisions are a direct result of lower employee numbers, and changes in the discount rates used to calculate provision totals.

Employee benefits expense (Statement of comprehensive income), Employee provisions (Statement of financial position), Operating cash used - employees (Cash flow statement)

SuppliersImplementation of the Emissions Reduction Fund was achieved through the engagement of a contingent workforce (short-term contractors), rather than ongoing employees due to compressed timeframes. In relation to supplier payables the CER accrues expenditure and payables at year end for work performed but not invoiced. The amount of work undertaken near year end that needs to be accrued changes from year to year.

Supplier expense (Statement of comprehensive income), Supplier payables (Statement of financial position), Operating cash used - suppliers (Cash flow statement)

Write-down and impairmentThe CER maintained a number of systems to support the management of the Carbon Pricing Mechanism. Following its repeal a review of these systems was undertaken and those with no ongoing value were impaired (written-off).

Write-down and impairment expense (Statement of comprehensive income), Intangibles (Statement of financial position)

Trade and other receivablesThe CER budgeted for a number of capital projects to support the implementation of the Emissions Reduction Fund. Legislation passed later than anticipated deferring project commencement and associated expenditure which increased appropriation receivable.

Trade and other receivables (Statement of financial position), Operating cash received - appropriations (Cash flow statement)

Land and buildingsLand and buildings, as well as the associated provision for restoration were revalued in late May 2014. Timing differences between the budget and the valuation resulted in the adjusted values not flowing through to the 2014-15 budget.

Land and buildings (Statement of financial position), Other provisions (Statement of financial position)

Property, plant and equipmentMaturing asset management practices and the annual stocktake identified a number of additional assets which were recognised in the asset register.

Property, plant and equipment (Statement of financial position)

IntangiblesThe CER budgeted for a number of capital projects to support the implementation of the Emissions Reduction Fund. Legislation passed later than anticipated deferring project commencement and associated expenditure

Intangibles (Statement of financial position), Investing cash used - purchase of intangibles (Cash flow statement), Contributed equitry (Cash flow statement)

Other non-financial assetsThe CER has a range of contractual arrangements which include prepayment for goods and services such as support and maintenance for IT systems or office accommodation rent. The number of these arrangements changes from time to time in the normal course of business.

Other non-financial assets (Statement of financial position)

Contributed EquityIn 2012-13 the CER had an amount of $5.098 million associated with a capital equity injection quarantined in anticipation of it being permanently reduced to nil through the budget process. Permanent reduction has not yet occurred. As the CER has a legal appropriation over this funding it has been included in reported actuals.

Contributed equity (Statement of financial position), Contributed equity (Cash flow statement)

Cash received - Net GST receivedThe budget was prepared net of GST.

Cash received - NET GST received (Cash flow statement)

Cash used - Section 31 transfers to OPAThe budget was prepared net of section 31 transfer to the Official Public Account.

Cash received - Section 31 transfers to OPA (Cash flow statement)

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Note 30: Budgetary Report and Explanations of Major Variances

Note 30C: Administered Budgetary Reports

Administered Schedule of Comprehensive Incomefor the period ended 30 June 2015


2015$'000

2015$'000

2015$'000


Suppliers 3,707 6,405 (2,698)Subsidies 16,797 - 16,797 Write-down and impairment of assets 3,226 - 3,226 Other expenses 148,585 75,452 73,133

Total expenses 172,315 81,857 90,458

IncomeRevenueTaxation revenue

Other taxes 15,885 5,817 10,068 Total taxation revenue 15,885 5,817 10,068

Non-taxation revenueFees and fines 12,431 12,015 416

Total non-taxation revenue 12,431 12,015 416Total revenue 28,316 17,832 10,484

GainsOther gains 39,012 - 39,012

Total gains 39,012 - 39,012 Total income 67,328 17,832 49,496 Net (cost of) contribution by services (104,987) (64,025) (40,962)Surplus (Deficit) (104,987) (64,025) (40,962)

Total other comprehensive income - - - Total comprehensive income (104,987) (64,025) (40,962)

Budget estimate

1. The Clean Energy Regulator's original budgeted financial statement that was first presented toparliament in respect of the reporting period.2. The variance between the actual and original budgeted amounts for the reporting period.

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Clean Energy RegulatorNote 30: Budgetary Report and Explanations of Major Variances (continued)

Note 30C: Administered Budgetary Reports (continued)

Administered Schedule of Assets and Liabilitiesas at 30 June 2015


2015$'000

2015$'000

2015$'000


Cash and cash equivalents 416 1,305 (889)Taxation receivables 213 - 213Trade and other receivables 77 81 (4)

Total financial assets 706 1,386 (680)Total assets administered on behalf of Government 706 1,386 (680)

LIABILITIESPayables

Suppliers 434 3,667 (3,233)Other payables 13,805 - 13,805

Total payables 14,239 3,667 10,572

ProvisionsOther provisions - 262 (262)

Total provisions - 262 (262)Total liabilities administered on behalf of Government 14,239 3,929 10,310 Net assets (13,533) (2,543) (10,990)

2. The variance between the actual and original budgeted amounts for the reporting period.

1. The CER's original budgeted financial statement that was first presented to parliament in respect of thereporting period.

Budget estimate

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180 Clean Energy Regulator | 2014–2015 Annual Report180 Clean Energy Regulator | 2014–2015 Annual Report




Note 30D: Administered Major Budget Variances for 2015

Explanation of major variances Affected line items (and statement)SuppliersHigh levels of participation in the large-scale Renewable Energy Target sector has meant there have been no shortfall charges applied in 2013-14 and 2014-15 and subsequently there have been no refunds (where legislative conditions are met).

Suppliers expense (Administered schedule of comprehensive income)

SubsidiesThe reversal of 2013-14 accrual estimates did not match actual expenditure in 2014-15 which included the finalisation (true-up) of allocations under the Jobs and Competitiveness Program.

Subsidies expense (Administered schedule of comprehensive income)

Other expensesRevenue accruals for 2013-14 included a change in accounting estimate which overstated the Carbon Pricing Mechanism revenue and did not match corresponding receipts in 2014-15. This resulted in 'negative' revenue which was accounted for by the CER as an expense.

Other expenses also includes the impact of the emissions reduction fund legislation passing later than anticipated. The CER ran one auction during 2014-15 and did not require the full budget allocation of funds.

Other expense (Administered schedule of comprehensive income), Other payables (Administered schedule of assets and liabilities)

Other taxesThe budget allocation for Other taxes assumes a level of non-participation with the Renewable Energy Target. As discussed this was not the case in 2013-14 and 2014-15. However, the finalisation of the Carbon Pricing Mechanism did include the recognition of shortfall charges and late payment penalties.

Other taxes (Administered schedule of comprehensive income)

Other gainsAs part of the finalisation of the Carbon Pricing Mechanism a true-up process was undertaken for industry assistance provided under the Jobs and Competitiveness Program (JCP). The true-up identified entities that were issued too many JCP units. Entities were required to relinquish those units or pay back to the agency the true-up short fall levy.

Other gains (Administered schedule of comprehensive income)

Cash and cash equivalentsThis is a result of changes to internal financial management processes that saw a more efficient process for transferring funds to the Official Public Account resulting in lower cash holdings by the CER.

Cash and cash equivalents (Administered schedule of assets and liabilities)

Supplier payableThe CER has a number of arrangements with suppliers for the provision of goods and services. At year end work performed but not invoiced is accrued so that the expense is recognised in the period in which it occurred. The amount of work undertaken near year end that needs to be accrued changes from year to year.

Suppliers payable (Administered schedule of assets and liabilities)

Other payablesThe finalisation of the Carbon Pricing Mechanism included a number of refunds that were payable to liable entities which had not been paid at year end. In addition the issuance of Australian Carbon Credit Units at 30 June 2015 made it more likely than not that they would be used to satisfy Emissions Reduction Fund delivery milestones under contract at 1 July 2015. On this basis they were recognised as a liability and an expense at year end.

Other payables (Administered schedule of assets and liabilities)

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