Annual Report 2017/18 Finance

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Agency Management Committee's report Independent Auditor's Report Financial statements

Agency Management Committee's report

Overview of results for 2017/18

The Australian Health Practitioner Regulation Agency (AHPRA), working in partnership with the 15 National Boards recorded a result which was consistent with expectations for 2017/18 as part of our multi-year approach to ensuring sustainable financial arrangements.

In 2017/18 with $68.996 million of equity recorded at 30 June 2018, this was a reduction of $11.759 million during 2017/18.

To reduce equity levels, some Boards have used funds to cover operational expenditure during 2017/18, including the replacement of core infrastructure which continued from the previous year.

Income

Total income from transactions was $184.816 million during the 2017/18 financial year, an increase of $11.580 million from 2016/17. Apart from the grant fund ($1.612 million) received for the establishment of the Paramedicine Board of Australia, the growth was due to an increase in the number of registrants throughout the year and varying fee increases for six of the National Boards, with the remaining National Boards maintaining their registration fees during the year.

Expenditure

Total expenses from transactions were $196.575 million, an increase of $17.338 million from the 2016/17 financial year. This was in part due to our enterprise agreement, increases to notification volumes and the introduction and investment in new and modern technology platforms.

Balance sheet

The balance sheet remains healthy at 30 June 2018 with the largest contributor to this being both cash and cash equivalents, and investments held by AHPRA, which largely recognise registration fees paid in advance by registrants. Overall net assets decreased by $11.759 million during 2017/18.

The year ahead

We expect the overall financial performance in 2018/19 to be similar to 2017/18, with a further reduction in equity in 2018/19 before equity then stabilises over the coming years consistent with our five-year financial plan.

It is expected that AHPRA, in partnership with the National Boards, will continue to be solvent throughout 2018/19 including the Aboriginal and Torres Strait Islander Health Practice Board of Australia (ATSIHPBA), which we expect to achieve a breakeven result, and the Paramedicine Board of Australia as national registration commences in 2018/19.

Declaration by Chair, Agency Management Committee, Chief Executive Officer, Executive Director, Business Services and Finance Professional Lead

We certify that the attached financial statements for the Australian Health Practitioner Regulation Agency have been prepared in accordance with Schedule 3, Part 3 of the Health Practitioner Regulation National Law (the National Law), as in force in each state and territory, Australian Accounting Standards and Interpretations, and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the Comprehensive income statement, Balance sheet, Statement of changes in equity, Statement of cash flows and notes to and forming part of the financial statements, presents fairly the financial transactions for the year ended 30 June 2018 and the financial position of the Australian Health Practitioner Regulation Agency as at 30 June 2018.

We are not aware of any circumstance which would render any particulars included in the financial statements to be misleading or inaccurate.

We were authorised by the Agency Management Committee to issue the attached financial statements on this day.

Independent Auditor's Report

Financial statements

Statement of comprehensive income for the year ended 30 June 2018

Continuing operations – Income from transactions	Note	2018 $'000	2017 $'000
Registration fee income	A1	174,290	164,127
Interest income	A2	4,939	5,218
Other income	A3	5,587	3,891
Total income from transactions		184,816	173,236
Continuing operations – Expenses from transactions	Note	2018 $'000	2017 $'000
Board and committee sitting fees	A4	6,009	5,801
Legal and notification costs	A4	11,900	12,706
Office of the Health Ombudsman (OHO, in Queensland)	E5	4,222	2,260
Refund of prior year OHO expense		0	(3,748)
Accreditation expenses (external)	A4	9,484	9,113
Staffing costs	A4	115,716	103,128
Travel and accommodation	A4	6,985	6,681
Systems and communications		9,650	9,861
Property expenses		9,350	9,508
Strategic and project consultant costs		2,159	3,493
Depreciation and amortisation	B5(1)	4,207	4,764
Administration expenses	A4(1)	16,893	15,670
Total expenses from transactions		196,575	179,237
Net result for the year		(11,759)	(6,001)

Balance sheet as at 30 June 2018

Current assets	Note	2018 $'000	2017 $'000
Cash and cash equivalents	C1	5,292	7,136
Investments	C2	54,000	107,000
Prepayments		3,290	3,802
Receivables	B2	4,083	1,247
Accrued income	A2	1,151	2,578
Leased assets	C4	532	0
Total current assets		68,348	121,763
Non-current assets	Note	2018 $'000	2017 $'000
Long-term investments	C2	112,000	60,000
Leased assets	C4	4,475	0
Plant and equipment	B4	11,161	7,187
Intangible assets	B5	438	3,172
Total non-current assets		128,074	70,359
Total assets		196,422	192,122
Current liabilities	Note	2018 $'000	2017 $'000
Payables and accruals	B3	12,307	11,504
Income in advance	A1	85,049	80,243
Employee benefits	D1	14,753	12,338
Lease liability	C4	1,284	0
Make good provision	C4(1)	0	246
Total current liabilities		113,393	104,331
Non-current liabilities	Note	2018 $'000	2017 $'000
Employee benefits	D1	3,537	3,459
Lease liability	C4	9,755	3,084
Make good provision	C4(1)	741	493
Total non-current liabilities		14,033	7,036
Total liabilities		127,426	111,367
Net assets		68,996	80,755
Equity	Note	2018 $'000	2017 $'000
Contributed capital	C3	43,895	43,895
Accumulated surplus	C3	25,101	36,860
Total equity		68,996	80,755
Commitments	C5
Contingent assets and liabilities	B6

Statement of changes in equity for the year ended 30 June 2018

	Note	Contributed capital $'000	Accumulated surplus $'000	Total equity $'000
Balance at 1 July 2016		43,895	42,861	86,756
Net result for the year		0	(6,001)	(6,001)
Balance at 30 June 2017		43,895	36,860	80,755
Net result for the year		0	(11,759)	(11,759)
Balance at 30 June 2018	C3	43,895	25,101	68,996

Statement of cash flows for the year ended 30 June 2018

Cash flows from operating activities	Note	2018 $'000	2017 $'000
Payments to suppliers, employees and others		(193,096)	(178,930)
Receipts relating to registrant fees		179,096	167,397
Net Goods and Service Tax (GST) received from the Australia Taxation Office (ATO)		7,558	6,506
Other receipts		2,751	3,903
Interest received		6,366	5,054
Net cash flows from operating activities	B1	2,675	3,930
Cash flows from investing activities	Note	2018 $'000	2017 $'000
Payments for plant and equipment, intangibles and work-in-progress		(5,519)	(4,215)
Purchase of investments		(124,000)	(68,000)
Return of investments		125,000	72,000
Net cash flows used in investing activities		(4,519)	(215)
Net (decrease)/increase in cash and cash equivalents		(1,844)	3,715
Cash and cash equivalents at the beginning of the year		7,136	3,421
Cash and cash equivalents at end of the year	C1	5,292	7,136

Note A: Funding and cost of delivering our services

Introduction

This section provides a breakdown of income and an account of the expenses incurred by AHPRA in delivering services in partnership with the National Boards.

Income is recognised to the extent that it is probable that the economic benefits will flow to AHPRA and it can be reliably measured.

This section consists of:

• Note A1: Registration fee income
• Note A2: Interest income
• Note A3: Other income
• Note A4: Expenses from transactions, and
• Note A5: Events occurring after the balance sheet date.

Note A1: Registration fee income

Registrations are payable periodically in advance. Only those registration fees that are attributable to the current financial year are recognised as income. Registration fees that relate to future periods are recorded as income in advance within the balance sheet.

When a person pays an application fee, the fee is recognised in the financial year in which it is received.

Registration fee income	2018 $'000	2017 $'000
Registration fees	162,842	154,676
Application fees	11,448	9,451
Total registration fee income	174,290	164,127

Income in advance	2018 $'000	2017 $'000
Aboriginal and Torres Strait Islander Health Practice Board of Australia (ATSIHPBA)	41	31
Chinese Medicine Board of Australia (CMBA)	867	853
Chiropractic Board of Australia (ChiroBA)	1,026	1,000
Dental Board of Australia (DBA)	4,381	4,108
Medical Board of Australia (MBA)	16,959	15,985
Medical Radiation Practice Board of Australia (MRPBA)	1,001	970
Nursing and Midwifery Board of Australia (NMBA)	47,663	44,666
Occupational Therapy Board of Australia (OTBA)	853	792
Optometry Board of Australia (OptomBA)	599	583
Osteopathy Board of Australia (OsteoBA)	317	294
Paramedicine Board of Australia (ParaBA)	0	202
Pharmacy Board of Australia (PharmBA)	3,474	3,310
Physiotherapy Board of Australia (PhysioBA)	1,189	1,131
Podiatry Board of Australia (PodBA)	707	678
Psychology Board of Australia (PsyBA)	5,968	5,640
Other	4	0
Total income in advance	85,049	80,243

Regulation of paramedics will begin in late 2018.

AHPRA received $211,874 from the Australian Health Ministers' Advisory Council (AHMAC) in the financial year 2016/17. A further $1.4 million was received in the 2017/18 financial year for the costs of establishing the regulation of paramedics and the new Paramedicine Board of Australia. At 30 June 2017, unspent funds were recorded on the balance sheet. At the establishment of the Board, these funds were transferred to the Board's comprehensive income statement as grant income.

Note A2: Interest income

Interest income is accrued by reference to the principal of a financial asset at the effective interest rate when earned.

Interest income	2018 $'000	2017 $'000
Interest on term deposits	4,939	5,218
Total interest income	4,939	5,218

Interest earned but not received in the bank is recorded as accrued income in the balance sheet.

Accrued income	2018 $'000	2017 $'000
Accrued interest on term deposits	1,115	2,554
Other accrued income	36	24
Total accrued income1	1,151	2,578

Note A3: Other income

Other income includes income that is not registration fees or interest. Key items of other income include certificates of registration status requested by registrants, legal fee recoveries and fees related to the Pharmacy Board of Australia's examinations.

Other income	2018 $'000	2017 $'000
Accreditation	256	277
Certificate of registration status	334	438
Government grants	1,612	20
Legal fee recovery	961	1,165
Pharmacy Board of Australia examinations	741	756
Other	1,683	1,235
Total other income	5,587	3,891

Note A4: Expenses from transactions

Expenses from transactions are recognised in the statement of comprehensive income when they are incurred.

Board and committee sitting fees

Board and committee sitting fee costs include national, state and regional board expenditure relating to meetings held by the National Boards and their committees.

Legal and notification costs

Legal costs include external costs relating to managing the notification (complaint) process by AHPRA. These costs include legal fees paid to external firms and costs of civil tribunals. They do not include the costs associated with AHPRA staff in the assessment and investigation of notifications, or the cost of legal staff employed by AHPRA.

Accreditation expenses (external)

Accreditation expenses (external) relate to payments to external accreditation bodies to exercise accreditation functions, as defined in section 42 of the National Law. Staff costs and committee sitting fees when these functions are carried out by board committees are not included.

ATSIHPBA, CMBA and MRPBA have assigned accreditation functions under section 42 of the National Law to accreditation committees administered by AHPRA.

Accrediting activities relating to registration of health practitioners under section 52 of the National Law are disclosed separately. During 2017/18, funding for MBA accrediting activities of $872k (2017: $966k) was incurred for intern training accreditation authorities (refer to Note A4(1)).

Pooled costs

AHPRA incurs all the following expenses and then proportionally allocates the expenditure to the National Boards, based on an agreed formula. The formula is based on an analysis of historical and financial data to estimate the proportion of AHPRA costs required to regulate each profession. Costs include salaries, systems and communication, property and administration costs. AHPRA supports the work of the National Boards by employing all staff and providing systems and infrastructure to manage registration, compliance and notification functions, as well as the support services necessary to run a national organisation with eight state and territory offices.

Staffing costs

Staffing costs relate to all AHPRA employment costs, including wages and salaries, fringe benefit tax, leave entitlements and on-costs, termination payments, WorkCover premiums, superannuation and contractors.

Travel and accommodation

Travel and accommodation relates to flights, taxis and hotel costs incurred by AHPRA, National Boards and their committees for travel attending scheduled board and committee meetings.

Systems and communication

Systems and communication costs relate to the technology systems of AHPRA.

Property expenses

Property expenses include rental, outgoings and maintenance of all properties.

Strategic and project consultant costs

Strategic and project consultant costs relate to project costs incurred in the year for both National Boards and AHPRA projects.

A4(1): Administration expenses

Administration expenses include corporate legal, bank charges and merchant fees, postage, freight and couriers, printing and stationery, insurance and recruitment.

Administration expense	2018 $'000	2017 $'000
Bank charges and merchant fees	1,027	772
Criminal history checks	1,330	1,217
External contract services	2,840	3,048
Funding for intern training accreditation authorities for registration of health practitioners (section 52)	872	966
Health programs	3,234	2,131
Insurance	1,187	1,149
Internal audit fees	414	217
Legal – corporate	534	366
Meals and catering	453	388
National Health Practitioner Ombudsman and Privacy Commissioner Office	750	600
Pharmacy Board of Australia examinations1	480	429
Printing, postage, freight and courier	2,375	2,160
Publications	372	309
Recruitment	556	667
Other	469	1,251
Total administration expenses	16,893	15,670

A4(2): Summary of income and expenses by board

The AHPRA annual financial statements are a report of the Agency Fund under the National Law and include transactions of all 15 National Boards administered by AHPRA.

Under the National Law, the National Boards are unable to enter into transactions themselves, with AHPRA administering all income and expenditure transactions on behalf of each National Board, as set out in each Health Profession Agreement.

The total amount transacted is reflected in the comprehensive statement of income and accompanying financial statements. The aggregated total income and total expenditure transacted and attributed to each National Board is shown in the table below for 2017/18.

Board	Income $'000	Expenses $'000	Total $'000
ATSIHPBA	503	503	0
CMBA	2,427	1,615	812
ChiroBA	2,646	1,648	998
DBA	10,963	10,999	(36)
MBA	69,640	73,160	(3,520)
MRPBA	2,967	3,749	(782)
NMBA	58,036	65,091	(7,055)
OTBA	2,449	3,167	(718)
OptomBA	1,572	1,676	(104)
OsteoBA	863	851	12
ParaBA	1,612	910	702
PharmBA	9,634	11,423	(1,789)
PhysioBA	3,365	4,716	(1,351)
PodBA	1,867	1,457	410
PsyBA	15,417	14,755	662
Other	855	855	0
Total	184,816	196,575	(11,759)

Note A5: Events occurring after the balance sheet date

Assets, liabilities, income or expenses arise from past transactions or other past events.

Where the transactions result from an agreement between AHPRA and other parties, the transactions are only recognised when the agreement is irrevocable at or before the end of the reporting period.

For events that occur between the end of the reporting period and the date when the financial statements are authorised for issue, where those events provide information about conditions that existed at the reporting date, adjustments are made to amounts recognised in the financial statements.

Note that disclosure is made about events between the end of the reporting period and the date the financial statements are authorised for issue where the events relate to conditions that arose after the end of the reporting period, which are considered to be of material interest.

No subsequent events are identified for disclosure in this report.

Note B: Operating assets and liabilities

Introduction

AHPRA controls plant and equipment that are used in fulfilling our objectives and conducting our activities. Along with other financial assets, they present a key resource we used in the delivery of services. This section also includes information on AHPRA's financial liability towards external suppliers.

This section consists of:

• Note B1: Reconciliation of net result for the year to operating cash flows
• Note B2: Receivables
• Note B3: Payables and accruals
• Note B4: Plant and equipment
• Note B5: Intangible assets and amortisation, and
• Note B6: Contingent assets and liabilities.

Judgement required

The assets included in this section are carried at cost, less accumulated depreciation and impairment.
Judgement has also been applied in assessing the useful lives of plant and equipment.

Note B1: Reconciliation of net result for the year to operating cash flows

	2018 $'000	2017 $'000
Net result for the year	(11,759)	(6,001)
Adjustments for:	2018 $'000	2017 $'000
Depreciation	4,207	4,764
Write off work in progress/assets	72	425
Recognition of lease assets	(5,007)	0
Make-good provision	2	62
Provision for doubtful debts	71	102
Changes in assets and liabilities	2018 $'000	2017 $'000
(Increase) in receivables	(2,907)	(90)
Decrease/(increase) in prepayments	512	(1,443)
Decrease/(increase) accrued income	1,427	(164)
Increase in income in advance	4,806	3,270
Increase in payables and accruals	803	1,819
Increase in employee benefits	2,493	1,077
Increase in lease liability	7,955	109
Net cash flows from operating activities	2,675	3,930

Note B2: Receivables

Receivables consist of:

• contractual receivables, such as debtors in relation to goods and services, and
• statutory receivables, such as Goods and Services Tax (GST) input tax credits recoverable.

The terms of trade are 30 days from invoice date. Receivables are recognised and carried at original invoice amount less any allowance for any uncollectable amounts. Receivables are subject to annual impairment testing. A provision for doubtful receivables is recognised when collection of the full amount is no longer probable. Bad debts are written off when identified, and recognised as an expense in the statement of comprehensive income.

	Note	2018 $'000	2017 $'000
Trade receivables	E2	4,064	1,443
Less allowances for doubtful debts		(775)	(783)
GST receivable		794	587
Total receivables		4,083	1,247

Movement in the allowance for doubtful debts	2018 $'000	2017 $'000
Balance at beginning of year	783	681
Increase in allowance recognised in net result for the year	74	102
Decrease in amounts collected during the year	(79)	0
Decrease in amounts written off as uncollectable	(3)	0
Balance at end of year	775	783

Note B3: Payables and accruals

Payables are recognised at fair value. Payables represent liabilities for goods and services provided to AHPRA prior to the end of the financial year that are unpaid, and arise when AHPRA is obliged to make future payments in respect of the purchase of goods and services. Terms of settlement are generally 30 days from the date of invoice.

	Note	2018 $'000	2017 $'000
Trade creditors1	E2	4,428	5,453
Accrued expenses1	E2	7,879	6,051
Total payables and accruals		12,307	11,504

Note B4: Plant and equipment

Plant and equipment are measured at cost less accumulated depreciation and impairment. These assets are depreciated at rates based on their expected useful lives, using the straight-line method, which is reviewed annually.

The annual depreciation rates used for major assets in each class are as follows:

Asset class	2018	2017
Furniture and fittings	13%	13%
Computer equipment	20–40%	20–40%
Office equipment	15%	15%

Leasehold improvements are amortised over the term of the lease, or the life of the assets, whichever is shorter.

At cost	Leasehold improvements $'000	Furniture and fittings $'000	Computer equipment $'000	Office equipment $'000	Total plant and equipment $'000
Balance at 30 June 2016	9,232	709	2,407	241	12,589
Additions	3,187	198	526	44	3,955
Disposals/write-offs	(1,416)	(145)	(9)	(5)	(1,575)
Balance at 30 June 2017	11,003	762	2,924	280	14,969
Additions	3,448	850	2,057	101	6,456
Disposals/write-offs	(55)	(238)	(93)	(30)	(416)
Balance at 30 June 2018	14,396	1,374	4,888	351	21,009
Accumulated depreciation	Leasehold improvements $'000	Furniture and fittings $'000	Computer equipment $'000	Office equipment $'000	Total plant and equipment $'000
Balance at 30 June 2016	(4,511)	(396)	(1,788)	(139)	(6,834)
Depreciation charge during the year	(1,435)	(99)	(527)	(38)	(2,099)
Disposals/write-offs	1013	127	7	4	1,151
Balance at 30 June 2017	(4,933)	(368)	(2,308)	(173)	(7,782)
Depreciation charge during the year	(1,419)	(133)	(825)	(33)	(2,410)
Disposals/write-offs	39	206	80	19	344
Balance at 30 June 2018	(6,313)	(295)	(3,053)	(187)	(9,848)
Net book value	Leasehold improvements $'000	Furniture and fittings $'000	Computer equipment $'000	Office equipment $'000	Total plant and equipment $'000
At 30 June 2017	6,070	394	616	107	7,187
At 30 June 2018	8,083	1,079	1,835	164	11,161

B4(1): Written-down value of non-financial assets written off

All non-financial assets are assessed annually for indications of impairment. If there is an indication of impairment, the asset concerned is tested as to whether its carrying amount exceeds its possible recoverable amount. The difference is written off as an expense (Administration expenses – other) except to the extent that the write-down can be debited to an asset revaluation surplus account applicable to that same class of asset.

	2018 $'000	2017 $'000
Computer equipment	13	2
Office equipment	11	1
Furniture and fittings	32	18
Leasehold improvement	16	404
Total written down value of non-current assets written off	72	425

B4(2): Net gains/(loss) on disposal of non-financial assets

The net gain or loss arising from the sale of non-current assets is included as revenue (Other income) or expenses (Administration expenses – other) at the date control passes to the buyer, usually when an unconditional contract of sale is signed.

The net gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of the disposal and the net proceeds on disposal. No assets were disposed in sales during 2017/18.

Note B5: Intangible assets and amortisation

When the recognition criteria in AASB138 Intangible Assetsis met, internally generated intangible assets are recognised and measured at cost less accumulated amortisation and accumulated impairment.

An internally generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following are demonstrated:

1. the technical feasibility of completing the intangible asset so that it will be available for use or sale
2. an intention to complete the intangible asset and use it
3. the ability to use the intangible asset
4. the intangible asset will generate probable future economic benefits
5. the availability of adequate technical, financial and other resources to complete the development and to use the intangible asset, and
6. the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Intangible assets are amortised annually at a rate of between 10% and 40% depending on their useful life. Work in progress is not depreciated until it reaches service delivery capacity.

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Intangible assets not yet available for use are tested annually for impairment and whenever there is an indication that the asset may be impaired.

At cost	Computer software $'000	Work in progress $'000	Total $'000
Balance at 30 June 2016	12,134	1,144	13,278
Additions	204	152	356
Disposals/write-offs	0	0	0
Transfer to additions	0	(96)	(96)
Balance at 30 June 2017	12,338	1,200	13,538
Additions	145	337	482
Disposals/write-offs	0	(989)	(989)
Transfer to additions	0	(430)	(430)
Balance at 30 June 2018	12,483	118	12,601
Accumulated amortisation	Computer software $'000	Work in progress $'000	Total $'000
Balance at 30 June 2016	(7,701)	0	(7,701)
Amortisation during the year	(2,665)	0	(2,665)
Balance at 30 June 2017	(10,366)	0	(10,366)
Amortisation charge during the year	(1,797)	0	(1,797)
Balance at 30 June 2018	(12,163)	0	(12,163)
Net book value	Computer software $'000	Work in progress $'000	Total $'000
At 30 June 2017	1,972	1,200	3,172
At 30 June 2018	320	118	438

B5(1): Depreciation and amortisation

Depreciation	2018 $'000	2017 $'000
Leasehold improvements	1,419	1,435
Furniture and fittings	133	99
Computer equipment	825	527
Office equipment	33	38
Amortisation	2018 $'000	2017 $'000
Computer software	1,797	2,665
Total depreciation and amortisation	4,207	4,764

Note B6: Contingent assets and liabilities

Contingent assets and contingent liabilities are not recognised in the statement of financial position, but are disclosed by way of note and, if quantifiable, are measured at nominal value. Contingent assets and contingent liabilities are presented inclusive of GST receivable or payable respectively.

Contingent assets	2018 $'000	2017 $'000
Legal proceedings and disputes	0	0

No claim for damages was lodged during the year.

Contingent liabilities	2018 $'000	2017 $'000
Legal proceedings and disputes	0	0

Claims for damages were lodged during the year. Liabilities have been disclaimed and the actions have been defended. Insurers are involved in defending these matters. The extent to which an outflow of funds is required in excess of insurance is dependent on the case outcomes being more or less favourable than currently expected.

Note C: Equity, investment and commitments

Introduction

This section provides information on AHPRA's cash and investment position along with a detailed breakdown of equity by National Boards.

This section consists of:

• Note C1: Cash and cash equivalents
• Note C2: Investments
• Note C3: Equity by board
• Note C4: Leased assets and liabilities, and
• Note C5: Commitments.

Judgement required

Judgements have been made in determining the make-good provision for each office lease. It is based on current market condition and AHPRA's property leasing strategy.

Note C1: Cash and cash equivalents

Cash and cash equivalents include cash on hand and cash at bank, deposits held at call, and other short-term liquid deposits with an original maturity of three months or less, which are readily convertible to known amounts of cash with an insignificant risk of changes in value.

	Note	2018 $'000	2017 $'000
Cash and cash equivalents, at bank		5,292	7,136
Total cash and cash equivalents	E2	5,292	7,136

Note C2: Investments

Investments include term deposits that AHPRA has the positive intent and ability to hold to maturity at fixed or repricing interest rates.

Current	Note	2018 $'000	2017 $'000
Term deposits less than 90 days		18,000	37,000
Bank term deposits more than 90 days but less than 1 year		36,000	70,000
Total current investments		54,000	107,000
Non-current	Note	2018 $'000	2017 $'000
Bank term deposits greater than 1 year		112,000	60,000
Total non-current investments		112,000	60,000
Total investments	E2	166,000	167,000

Note C3: Equity by board

Consistent with the requirements of AASB 1004 Contributions, contributions by owners (that is, contributed capital) are treated as equity transactions and, therefore, do not form part of the income and expenses of AHPRA.

Additions to net assets designated as contributions by government or statutory bodies are recognised as contributed capital.

Summary of contributed capital, equity and net result by board

Board	Contributed capital $'000	Accumulated net result to 30 June 2017 $'000	Equity at 30 June 2017 $'000	2017/18 net result $'000	2017/18 result funded from equity $'000	Total $'000	Accumulated net result to 30 June 2018 $'000	Equity at 30 June 2018 $'000
ATSIHPBA	276	(275)	1	0	0	0	(275)	1
CMBA	1,293	3,254	4,547	812	0	812	4,066	5,359
ChiroBA	1,164	1,022	2,186	998	0	998	2,020	3,184
DBA	3,120	915	4,035	0	(36)	(36)	879	3,999
MBA	12,257	11,155	23,412	0	(3,520)	(3,520)	7,635	19,892
MRPBA	2,218	3,165	5,383	0	(782)	(782)	2,383	4,601
NMBA	12,816	3,037	15,853	0	(7,055)	(7,055)	(4,018)	8,798
OTBA	3,574	3,525	7,099	0	(718)	(718)	2,807	6,381
OptomBA	1,061	878	1,939	0	(104)	(104)	774	1,835
OsteoBA	996	201	1,197	12	0	12	213	1,209
ParaBA	0	0	0	702	0	702	702	702
PharmBA	2,716	1,898	4,614	0	(1,789)	(1,789)	109	2,825
PhysioBA	2,728	2,738	5,466	0	(1,351)	(1,351)	1,387	4,115
PodBA	420	2,043	2,463	410	0	410	2,453	2,873
PsyBA	2,194	366	2,560	662	0	662	1,028	3,222
Other	(2,938)	2,938	0	0	0	0	2,938	0
Total	43,895	36,860	80,755	3,596	(15,355)	(11,759)	25,101	68,996

(a) Contributed capital	2018 $'000	2017 $'000
Balance at the beginning of the financial year	43,895	43,895
Capital contributions from former boards	0	0
Balance at end of the financial year	43,895	43,895

(b) Accumulated surplus	2018 $'000	2017 $'000
Balance at the beginning of the financial year	36,860	42,861
Net result for the year	(11,759)	(6,001)
Balance at end of the financial year	25,101	36,860

Note C4: Leased assets and liabilities

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. AHPRA is not party to a finance lease.

In the event that lease incentives are received to enter into operating leases, the aggregate cost of incentives is recognised as a reduction of rental expense over the lease term on a straight-line basis.

During 2017/18, AHPRA entered into three office lease agreements. The lease contracts include lease incentive clauses. AHPRA has recognised these as a lease liability and/or asset that is reduced over the term of the lease. The lease incentive comprised reimbursement for the fit-out of the new premises (liability) and/or rental abatement (asset).

	2018 $'000	2017 $'000
Leased assets	5,007	0
Lease liabilities	11,039	3,084

C4(1): Make-good provision

Provisions are recognised when AHPRA has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation.

During the calculation of make-good provision, assumptions and estimations have been applied to work out the average make-good cost per square metre, the chance of moving office and the local market conditions in re-negotiating an incentive at lease expiration for each office.

The make-good provision is recognised in accordance with the lease agreement over the offices' leases.

	2018 $'000	2017 $'000
Opening balance	739	677
Additional provisions required	252	53
Reductions arising from payments	(250)	9
Closing balance	741	739
Current	0	246
Non-current	741	493
Total	741	739

Note C5: Commitments

Commitments include operating and capital commitments arising from non-cancellable contractual or statutory obligations. It primarily relates to office leases with terms between three and ten years. These contracts do not allow AHPRA to purchase the office after the lease ends, but AHPRA can renew the lease for a further period.

Operating lease commitments

Commitments (including GST) in relation to operating leases are payable as:

Non-cancellable:	2018 $'000	2017 $'000
Not later than 1 year	9,633	9,051
Later than 1 year but not later than 5 years	35,232	18,804
Later than 5 years	23,231	14,997
Total operating leases	68,096	42,852

Note D: Employee benefits

Introduction

This section provides information on liabilities AHPRA set aside to meet employment terms and conditions.

This section consists of:

• Note D1: Employee benefits and on-costs
• Note D2: Accountable officer and executive director remuneration, and
• Note D3: Superannuation.

Judgement required

Judgements have been applied in the calculations of employee benefits provisions based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates.

Note D1: Employee benefits and on-costs

(a) Annual leave

Employee benefits including non-monetary benefits and annual leave are recognised in the provision for employee benefits as current liabilities.

When the annual leave is expected to wholly settle within 12 months of the reporting date, it is measured at its nominal value. Those liabilities not expected to be wholly settled within 12 months of the reporting date are measured at the present value of the amounts expected to be paid when the liabilities are settled using remuneration rates expected to apply at the time of settlement.

(b) Long service leave

The long service leave entitlement under existing arrangements is recognised from an employee's start date and becomes payable according to the employment arrangements in place. The valuation of long service leave for employees who have met the conditions of service to take long service leave is recognised as a current liability, while the valuation for those employees still to meet the conditions of service is recognised as a non-current liability.

Part of the current liability is measured at nominal value when it is expected to wholly settle within 12 months of the reporting date. When liabilities are not expected to wholly settle within 12 months of the reporting date, it is measured at the present value of the expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using interest rates on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

(c) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date or when an employee accepts voluntary redundancy in exchange for these benefits. AHPRA recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

(d) Employee benefits on-costs

Employee benefits on-costs include payroll tax, WorkCover insurance premiums and superannuation entitlements. The benefits on-costs are recognised as liabilities when the employee benefits to which they relate are recognised.

Current employee benefits and on-costs	2018 $'000	2017 $'000
Unconditional annual leave expected to be settled within 12 months	6,436	5,733
Unconditional annual leave expected to be settled after 12 months	1,831	1,682
Unconditional long service leave expected to be settled within 12 months	6,486	4,923
Total current employee benefits and on-costs	14,753	12,338
Non-current employee benefits and on-costs	2018 $'000	2017 $'000
Conditional long service leave entitlements expected to be settled after 12 months	3,537	3,459
Total non-current employee benefits and on-costs	3,537	3,459
Total employee benefits and on-costs	18,290	15,797

Current employee benefits	2018 $'000	2017 $'000
Annual leave	7,214	6,316
Long service leave	5,669	4,154
Non-current employee benefits	2018 $'000	2017 $'000
Long service leave	3,074	2,919
Total employee benefits	15,957	13,389
On-costs	2018 $'000	2017 $'000
Current on-costs	1,870	1,868
Non-current on-costs	463	540
Total on-costs	2,333	2,408
Total employee benefits and on-costs	18,290	15,797

(e) Movement in employee benefit provision

	Annual leave $'000	Long service leave $'000	Total $'000
Opening balance	7,415	8,382	15,797
Additional provisions required	7,480	2,303	9,783
Reductions arising from payments	(6,628)	(662)	(7,290)
Closing balance	8,267	10,023	18,290
Current	8,267	6,486	14,753
Non-current	0	3,537	3,537
Total	8,267	10,023	18,290

Note D2: Accountable officer and executive director remuneration

Remuneration of Chief Executive Officer and Executive Directors

The Chief Executive Officer (CEO) is Mr Martin Fletcher who held the position throughout the period 1 July 2017 to 30 June 2018.

The aggregate compensation made to the CEO and Executive Directors is set out below:

	2018 $	2017 $
Short-term employee benefits	1,357,849	1,226,762
Long-term employee benefits	36,794	19,582
Post-employment benefits	94,789	86,141
Total	1,489,432	1,332,485

	2018	2017
Total number of executives	5	4
Total annualised employee equivalents	4.25	4

Note D3: Superannuation

The amount expensed in respect of superannuation represents AHPRA contributions for members of both defined benefit and defined contribution superannuation plans that are paid or payable during the reporting period.

Employees of AHPRA are entitled to receive superannuation benefits and AHPRA contributes to both defined benefit and defined contribution plans. The defined benefit plans provide benefits based on years of service and final average salary.

AHPRA does not recognise any defined benefit liability in respect of the plans because it has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due.

Superannuation contributions paid or payable for the reporting period are included as part of staffing costs in AHPRA's statement of comprehensive income.

The name, details and amounts expensed in relation to the major employee superannuation funds and contributions made by AHPRA are as follows:

Fund – Defined benefit plans	Paid contribution for the year 2018 $'000	Paid contribution for the year 2017 $'000	Contribution at year end 2018 $'000	Contribution at year end 2017 $'000
Gold State Super	164	236	22	8
QSuper	179	223	8	7
Other	31	31	4	1
Fund – Defined contribution plans	Paid contribution for the year 2018 $'000	Paid contribution for the year 2017 $'000	Contribution at year end 2018 $'000	Contribution at year end 2017 $'000
Australian Super	3,495	2,920	1	116
First State accumulation fund	527	403	0	17
QSuper accumulation V2	464	381	0	12
VicSuper FutureSaver	506	474	0	18
Sunsuper superannuation	367	399	0	13
Other	5,570	5,176	38	186
Total	11,303	10,243	73	378

Note E: Other

Introduction

This section sets out financial instrument specific information (including exposures to financial risks) as well as additional material disclosures required by accounting standards or otherwise, for the understanding of these statements.

This section consists of:

• Note E1: Summary of significant accounting policies
• Note E2: Financial instruments
• Note E3: Related party disclosures
• Note E4: Remuneration of external auditor, and
• Note E5: Co-regulatory jurisdictions.

Judgement required

At the end of each reporting period, AHPRA assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets are subject to an annual review for impairment.

Note E1: Summary of significant accounting policies

Statement of compliance

These financial statements are referred to as a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AAS) and Interpretations and other mandatory requirements. AAS include Australian equivalents to the International Financial Reporting Standards.

The financial statements have also been prepared in accordance with the relevant requirements of the Health Practitioner Regulation National Law (the National Law), as in force in each state and territory.

For the purpose of preparing the financial statements, AHPRA is a not-for-profit entity.

These financial statements were authorised to be issued by the Agency Management Committee on 4 September 2018.

(a) Reporting entity

AHPRA is the organisation responsible for the administration of the National Scheme across Australia.

AHPRA's operations are governed by the National Law, which came into effect on 1 July 2010 and on 18 October 2010 in Western Australia. This law means that registered health professions are regulated by nationally consistent legislation.

AHPRA supports the National Health Practitioner Boards in the administration of the National Scheme. National Boards are responsible for regulating their respective health professions. The primary role of the National Boards is to protect the public and set standards and policies that all registered health practitioners must meet.

The Agency Management Committee oversees the work of AHPRA. The Chair of the Agency Management Committee is Mr Michael Gorton. The Chief Executive Officer is Mr Martin Fletcher.

The financial statements include the controlled activities of AHPRA.

AHPRA's corporate address is 111 Bourke Street, Melbourne, Victoria, 3000.

(b) Basis of accounting preparation and measurement

Accounting policies are selected and applied in preparing the financial statements for the year ended 30 June 2018 in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is appropriately reported.

The financial statements, other than the statement of cash flows, have been prepared using the accrual basis of accounting. Under the accrual basis, items are recognised as assets, liabilities, equity, income or expenses when they satisfy the definition and recognition criteria for those items; that is, they are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

The financial report is prepared in accordance with the historical cost convention.

The estimates and underlying assumptions used in preparing these financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in the application of AAS that have significant effects on the financial statements and estimates relate to:

• assumptions for employee benefit provisions based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates, and
•  the fair value of intangible assets.

(c) Corporate structure

AHPRA is a statutory body governed by the National Law.

(d) Prepayments

Prepaid expenditure is recognised when payments are made in advance of receipt of goods or services or expenditure made in one accounting period that covers a term extending beyond that period. It is then recognised as expenditure to the period in which the service relates.

(e) Goods and services tax (GST)

All application, registration and late fees are exempt from GST legislation. Income, expenses and assets are recognised net of GST except where the amount of GST incurred is not recoverable, in which case it is recognised as part of the cost of acquisition of an asset or part of an item of expense or revenue. GST receivable from or payable to the Australian Taxation Office (ATO) is included in the statement of financial position. The GST component of a receipt or payment is recognised on a gross basis in the statement of cash flows in accordance with AASB 107 Statement of Cash Flows.

(f) Income tax

Tax effect accounting has not been applied as AHPRA is exempt from income tax under section 50–25 of the Income Tax Assessment Act 1997.

(g) Functional and presentation currency

All amounts specified in these statements are presented in Australian dollars.

(h) Rounding of amounts

Amounts in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated. Figures in the financial statements may not equate due to rounding.

(i) Changes in accounting policy

Subsequent to the 2016/17 reporting period, no new or revised AAS or AHPRA accounting policies have been adopted in the current period.

(j) New accounting standards and interpretations

Certain new Australian accounting standards and interpretations that are not mandatory for the 30 June 2018 reporting period have been published.

As at 30 June 2018, the following standards and interpretations had been issued but were not effective for the 2017/18. AHPRA has not adopted, and does not intend to adopt, these standards early.

AASB 108 requires disclosure of the impact on AHPRA's financial statements of these changes. These are set out below.

Standard/interpretation1	Summary	Applicable for annual reporting periods beginning on or after	Impact on AHPRA financial statements
AASB 9 Financial instruments	The key changes include the simplified requirements for the classification and measurement of financial assets, a new hedging accounting model, and a revised impairment loss model to recognise impairment losses earlier, as opposed to the current approach that recognises impairment only when incurred.	1 January 2018	While the preliminary assessment has not identified any material impact arising from AASB 9, it will continue to be monitored and assessed.
AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9	Amends various AASs to incorporate the consequential amendments arising from the issuance of AASB 9.	1 January 2018	The assessment has indicated that there will be no significant impact for the public sector or not-for-profit entities.
AASB 15 Revenue from contracts with customers	The core principle of AASB 15 requires an entity to recognise revenue when the entity satisfies a performance obligation by transferring a promised good or service to a customer.	1 January 2018	The changes in revenue recognition requirements in AASB 15 may result in changes to the timing and amount of revenue recorded in the financial statements. We are waiting to complete our assessment based on the outcomes of AASB 15's exposure draft relating to public sector licences, expected to be completed in December 2018.
AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15	This standard defers the mandatory effective date of AASB 15 from 1 January 2017 to 1 January 2018.	1 January 2018	This amending standard will defer the application period of AASB 15 to the 2018/19 reporting period in accordance with the transition requirements.
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB15	Amends the measurement of trade receivables and the recognition of dividends as follow: Trade receivables that don't have a significant financing component, are to be measured at their transaction price, at initial recognition.	1 January 2018	The impact will be the same as identified in AASB 15.
AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15	This standard amends AASB 15 to clarify the requirements on identifying performance obligations, principal versus agent considerations and the timing of recognising revenue from granting a licence. The amendments require: a promise to transfer to a customer a good or service that is 'distinct' to be recognised as a separate performance obligation for items purchased online, the entity is a principal if it obtains control of the good or service prior to transferring to the customer, and for licences identified as being distinct from other goods or services in a contract, entities need to determine whether the licence transfers to the customer over time (right to use) or at a point in time (right to access).	1 January 2018	The impact will be the same as identified in AASB 15.
AASB 2016-7 Amendments to Australian Accounting Standards – Deferral of AASB 15 for Not-for-Profit Entities	This standard defers the mandatory effective date of AASB 15 for not-for-profit entities from 1 January 2018 to 1 January 2019.	1 January 2019	This amended standard will defer the application period of AASB 15 to the 2019/20 reporting period in accordance with the transition requirements.
AASB 2014-1 Amendments to Australian Accounting Standards [Part E financial instruments]	Amends various AASs to reflect the AASB's decision to defer the mandatory application date of AASB 9 to annual reporting periods beginning on or after 1 January 2018 as a consequence of Chapter 6 Hedge accounting, and to amend reduced disclosure requirements.	1 January 2018	This amended standard will defer the application period of AASB 9 to the 2018/19 reporting period in accordance with the transition requirements.
AASB 16 Leases	The key changes introduced by AASB 16 include the recognition of most operating leases (which are currently not recognised) on the balance sheet.	1 January 2019	Our assessment indicates that all our property leases will be affected and some other minor leases. This will affect our statement of financial position and other disclosures. The amount of expense recognised will be affected by net present value calculation.
AASB 1058 Income of Not-for-Profit Entities	This standard will replace AASB 1004 Contributions and establishes principles for transactions that are not within the scope of AASB 15, where the consideration to acquire an asset is significantly less than fair value to enable not-for-profit entities to further their objectives. The restructure of administrative arrangement will remain under AASB 1004.	1 January 2019	Undertake further review and assessment on whether the registration fee collection within the scope of AASB 15 or AASB 1058. This will involve reviewing the terms and conditions of these arrangements in more detail to identify the existence of any performance obligations once the public sector licensing exposure draft is completed.

Note E2: Financial instruments

Financial instruments arise out of contractual agreements that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Due to the nature of AHPRA's activities, certain financial assets and financial liabilities arise under statute rather than contract. Such financial assets and financial liabilities do not meet the definition of financial instruments in AASB 132 Financial Instruments: Presentation.

Where relevant, for note disclosure purposes, a distinction is made between those financial assets and financial liabilities that meet the definition of financial instruments in accordance with AASB 132 and those that do not.

Categories of financial instruments include:

• cash and cash equivalents
• investments, and
• receivables.

Receivables are financial instrument assets with fixed and determinable payments that are not quoted on an active market. These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial measurement, receivables are measured at amortised cost using the effective interest method, less any impairment.

Contractual receivables are classified as financial instruments and categorised as receivables. Statutory receivables are recognised and measured similarly to contractual receivables (except for impairment), but are not classified as financial instruments because they do not arise from a contract.

Receivables category includes cash and deposits (refer to Note C1), term deposits with maturity greater than three months, trade receivables and other receivables, but not statutory receivables such as GST.

Impairment of financial assets

At the end of each reporting period, AHPRA assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. All financial instrument assets are subject to annual review for impairment. Any impairment loss is recognised in the statement of comprehensive income.

Financial liabilities at amortised cost

Financial instrument liabilities are initially recognised on the date they originate. They are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in the comprehensive income statement over the period of the interest-bearing liability, using the effective interest rate method.

Financial instrument liabilities measured at amortised cost include all of AHPRA's contractual payables.

(a) Financial risk management

AHPRA's principal financial instruments consist of at call variable interest deposits, fixed and repricing term deposits and trade receivables and payables. AHPRA has no exposure to foreign exchange rate risk.

(b) Credit risk exposure

Credit risk is the risk that a party will fail to fulfil its obligations to AHPRA resulting in financial loss. The maximum exposure to credit risk, excluding the value of any collateral or other security at balance date, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. AHPRA does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the entity.

There are no material amounts of collateral held as security at 30 June 2018 (2017: $nil).

Credit risk is managed by the entity and reviewed regularly. It arises from exposures to debtors as well as through deposits with major financial institutions.

AHPRA monitors the credit risk by actively assessing the rating quality and liquidity of counterparties.

Credit quality of contractual assets that are neither past due nor impaired

2018 Financial assets	Financial institutions (AA- credit rating)1 $'000	Other $'000	Total $'000
Cash and cash equivalents	5,292	0	5,292
Investments	166,000	0	166,000
Receivables	0	3,290	3,290
Accrued income	1,115	36	1,151
Total	172,407	3,326	175,733
2017 Financial assets	Financial institutions (AA- credit rating)1 $'000	Other $'000	Total $'000
Cash and cash equivalents	7,136	0	7,136
Investments	167,000	0	167,000
Receivables	0	660	660
Accrued income	2,554	24	2,578
Total	176,690	684	177,374

Ageing analysis of financial assets

2018 Financial assets	Carrying amount $'000	Not past due and not impaired $'000	Past due but not impaired Less than 1 month $'000	Past due but not impaired 1–3 months $'000	Past due but not impaired 3–12 months $'000	Past due but not impaired More than 1 year $'000	Impaired financial assets $'000
Cash and cash equivalents	5,292	5,292	0	0	0	0	0
Investments	166,000	0	0	18,000	36,000	112,000	0
Receivables	4,064	2,734	41	110	256	923	(775)
Accrued income	1,151	1,151	0	0	0	0	0
Total	176,507	9,177	41	18,110	36,256	112,923	(775)
2017 Financial assets	Carrying amount $'000	Not past due and not impaired $'000	Past due but not impaired Less than 1 month $'000	Past due but not impaired 1–3 months $'000	Past due but not impaired 3–12 months $'000	Past due but not impaired More than 1 year $'000	Impaired financial assets $'000
Cash and cash equivalents	7,136	7,136	0	0	0	0	0
Investments	167,000	0	0	37,000	70,000	60,000	0
Receivables	1,443	206	181	45	224	787	(783)
Accrued income	2,578	2,578	0	0	0	0	0
Total	178,157	9,920	181	37,045	70,224	60,787	(783)

(c) Liquidity risk exposure

Liquidity risk is the risk that AHPRA will encounter difficulty in meeting obligations associated with financial liabilities. AHPRA manages liquidity risk by monitoring cash flows' forecast and ensuring that adequate liquid funds are available to meet current obligations.

The following tables disclose the maturity analysis of AHPRA's financial liabilities.

2018 Payables	Carrying amount $'000	Maturity dates Less than 1 month $'000	Maturity dates 1–3 months $'000	Maturity dates 3–12 months $'000
Trade creditors	4,428	4,313	102	13
Accrued expenses	7,879	7,879	0	0
Total	12,307	12,192	102	13
2017 Payables	Carrying amount $'000	Maturity dates Less than 1 month $'000	Maturity dates 1–3 months $'000	Maturity dates 3–12 months $'000
Trade creditors	5,453	5,114	352	(13)
Accrued expenses	6,051	6,051	0	0
Total	11,504	11,165	352	(13)

The maximum exposure to liquidity risk is the total carrying amount of the financial liabilities as shown above.

(d) Market risk exposure

Currency risk

AHPRA has no exposure to currency risk at 30 June 2018 or at 30 June 2017.

Equity price risk

AHPRA has no exposure to equity price risk at 30 June 2018 or at 30 June 2017.

Interest rate risk

Exposure to interest rate risk is limited to assets bearing variable interest rates. AHPRA has a combination of deposits with floating and fixed interest rates. Exposure to variable interest rate risk is with financial institutions with AA- credit rating.¹

Interest rate exposure of financial instruments

2018 Financial assets	Weighted average interest rate	Non- interest bearing $'000	Floating interest rate $'000	Fixed interest rate $'000	Total $'000
Cash and cash equivalents	1.50%	0	0	5,292	5,292
Investments	2.79%	0	89,000	77,000	166,000
Receivables	0.00%	3,290	0	0	3,290
Total		3,290	89,000	82,292	174,582
2018 Financial liabilities	Weighted average interest rate	Non- interest bearing $'000	Floating interest rate $'000	Fixed interest rate $'000	Total $'000
Payables	0.00%	4,428	0	0	4,428
Accrued expenses	0.00%	7,879	0	0	7,879
Total		12,307	0	0	12,307

2017 Financial assets	Weighted average interest rate	Non-interest bearing $'000	Floating interest rate $'000	Fixed interest rate $'000	Total $'000
Cash and cash equivalents	1.50%	0	0	7,136	7,136
Investments	2.98%	0	69,000	98,000	167,000
Receivables	0.00%	660	0	0	660
Accrued income	0.00%	2,578	0	0	2,578
Total		3,238	69,000	105,136	177,374
2017 Financial liabilities	Weighted average interest rate	Non-interest bearing $'000	Floating interest rate $'000	Fixed interest rate $'000	Total $'000
Payables	0.00%	5,453	0	0	5,453
Accrued expenses	0.00%	6,051	0	0	6,051
Total		11,504	0	0	11,504

Sensitivity analysis

Taking into account past performance, future expectations, economic forecasts, and management's knowledge and experience of the financial markets, AHPRA believes the following movements are 'reasonably possible' over the next 12 months:

• A parallel shift of +0.5% and -0.5% (2017: +1.0% and -0.5%) in market interest rates (AUD) from year-end rates of 1.5% and 2.53% due to an overall more stable environment.

The following table discloses the impact on net operating result and equity for each category of financial instrument held by AHPRA at year end as presented to key management personnel, if changes in the market interest rates occur.

Financial assets – 2018	Carrying amount $'000	At +0.5% $'000 Surplus	At +0.5% $'000 Equity	At -0.5% $'000 Surplus	At -0.5% $'000 Equity
Cash and cash equivalents	5,292	26	26	(26)	(26)
Investments	166,000	576	576	(576)	(576)
Total		602	602	(602)	(602)
Financial assets – 2017	Carrying amount $'000	At +0.5% $'000 Surplus	At +0.5% $'000 Equity	At -0.5% $'000 Surplus	At -0.5% $'000 Equity
Cash and cash equivalents	7,136	71	71	(36)	(36)
Investments	167,000	1,157	1,157	(579)	(579)
Total		1,228	1,228	(615)	(615)

Other market risk

AHPRA has no exposure to other market risk at 30 June 2018 or at 30 June 2017.

(e) Fair value

The fair values and net fair values of financial instrument assets and liabilities are determined as follows:

• Level 1 – the fair value of financial instruments with standard terms and conditions and traded in active liquid markets is determined with reference to quoted market prices.
• Level 2 – the fair value is determined using inputs other than quoted prices that are observable for the financial asset or liability, either directly or indirectly.
• Level 3 – the fair value is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using unobservable market inputs.

AHPRA considers that the carrying amount of financial instrument assets and liabilities recorded in the financial statements to be a fair approximation of their fair values, because of the short-term nature of the financial instruments and the expectation that they will be settled in full.

The following table shows that the fair values of the contractual financial assets and liabilities are the same as the carrying amounts other than receivables where there is a provision for doubtful debts.

Comparison between carrying amount and fair value

Contractual financial assets	Note	Carrying amount $'000 2018	Fair value $'000 2018	Carrying amount $'000 2017	Fair value $'000 2017
Cash and cash equivalents		5,292	5,292	7,136	7,136
Investments		166,000	166,000	167,000	167,000
Receivables	B2	4,064	3,290	1,443	660
Accrued income		1,151	1,151	2,578	2,578
Total contractual financial assets		176,507	175,733	178,157	177,374
Contractual financial liabilities	Note	Carrying amount $'000 2018	Fair value $'000 2018	Carrying amount $'000 2017	Fair value $'000 2017
Payables		4,428	4,428	5,453	5,453
Accrued expenses		7,879	7,879	6,051	6,051
Total contractual financial liabilities		12,307	12,307	11,504	11,504

Note E3: Related party disclosures

(a) Ministerial Council

The Ministerial Council comprises Ministers of the governments of the participating jurisdictions and the Commonwealth with portfolio responsibility for health.
The following Ministers were members of the Ministerial Council during the year 1 July 2017 to 30 June 2018,
unless otherwise noted.

Name	Portfolio	Jurisdiction
Ms Meegan Fitzharris MLA	Minister for Health and Wellbeing Minister for Transport and City Services Minister for Higher Education, Training and Research Chair, Ministerial Council from August 2017	Australian Capital Territory
The Hon Greg Hunt MP	Minister for Health	Commonwealth
The Hon Bradley Hazzard MP	Minister for Health Minister for Medical Research	New South Wales
The Hon Natasha Fyles MLA	Attorney-General and Minister for Justice Minister for Health	Northern Territory
The Hon Dr Steven Miles MP	Minister for Health and Minister for Ambulance Services from December 2017	Queensland
The Hon Cameron Dick MP	Minister for Health and Minister for Ambulance Services from July to December 2017	Queensland
The Hon Stephen Wade MLC	Minister for Health and Wellbeing from March 2018	South Australia
The Hon Peter Malinauskas MLC	Minister for Health Minister for Mental Health and Substance Abuse September 2017 to March 2018	South Australia
The Hon Jack Snelling MP	Minister for Health to September 2017	South Australia
The Hon Michael Ferguson MP	Minister for Health Minister for Police Fire and Emergency Management Minister for Science and Technology	Tasmania
The Hon Jill Hennessy MP	Minister for Health Minister for Ambulance Services Chair, Ministerial Council to August 2017	Victoria
The Hon Roger Cook MLA	Deputy Premier Minister for Health Minister for Mental Health	Western Australia

Amounts relating to responsible ministers' remuneration are reported in the financial statements of the relevant minister's jurisdiction.

(b) Agency Management Committee members

Name	Period
Mr Michael Gorton AM, Chair	1/07/2017 – 30/06/2018
Adjunct Prof. Karen Crawshaw PSM	1/07/2017 – 30/06/2018
Mr Ian Smith PSM	1/07/2017 – 30/06/2018
Ms Jenny Taing	1/07/2017 – 30/06/2018
Ms Barbara Yeoh AM	1/07/2017 – 30/06/2018
Dr Peggy Brown AO	1/07/2017 – 30/06/2018
Dr Susan Young	1/07/2017 – 30/06/2018
Ms Philippa Smith AM	1/07/2017 – 30/06/2018

(c) Related party transactions

Key management personnel (KMP) of AHPRA include the responsible minister in each jurisdiction that forms parts of the Ministerial Council under the National Law, members of the Agency Management Committee, Chief Executive Officer and members of the National Executive team, which includes:

• Executive Director, Regulatory Operations, Kym Ayscough
• Executive Director, Strategy and Policy, Chris Robertson
• Executive Director, Business Services, Sarndrah Horsfall
• Interim Executive Director, People and Culture, Judith Pettitt.

Other than the responsible Ministers, the remuneration for KMP is disclosed as follows.

	2018 $	2017 $
Short-term employee benefits	1,501,785	1,318,533
Long-term employee benefits	36,794	19,582
Post-employment benefits	108,463	94,859
Total	1,647,042	1,432,974

Outside of normal citizen type transactions with AHPRA, there were no related party transactions that involved KMP, their close family members and their personal business interests other than those disclosed below. No provision has been required, nor any expense recognised, for impairment of receivables from related parties.

All other transactions that have occurred with KMP and their related parties have not been considered material for disclosure. In this context, transactions are only disclosed when they are considered necessary to draw attention to the possibility that AHPRA's financial position and profit or loss may have been affected by the existence of related parties, and by transactions and outstanding balances, including commitments, with such parties.

Mr Michael Gorton AM is Chair of the Agency Management Committee. He is a principal of Russell Kennedy Solicitors which provides legal services on notification matters to AHPRA on normal commercial terms and conditions.

	2018 $'000	2017 $'000
Russell Kennedy Solicitors	102	140

The following transactions have involved the Ministerial Council during 2017/18.

Funding of $1.4 million in 2017/18 was provided by Australian Governments to support the implementation of national regulation of paramedics under the National Scheme. Australian Health Ministers decided that paramedicine is to be regulated under the National Scheme, and the initial grant is to support AHPRA to start its work in partnership with the soon-to-be-established Paramedicine Board of Australia.

Note E4: Remuneration of external auditor

	2018 $'000	2017 $'000
Victorian Auditor-General's Office	164	159
Total	164	159

Note E5: Co-regulatory jurisdictions

The Health Practitioner Regulation National Law (NSW) No. 86a and the Queensland Health Ombudsman Act 2013 allow for co-regulation of registered health practitioners at the discretion of the respective member jurisdictions. Both New South Wales (NSW) and Queensland (Qld) have determined that co-regulation applies.

NSW Health Professional Councils Authority (HPCA)

In NSW, the Health Minister informs AHPRA and the National Boards of the amount to be collected per registrant on behalf of the NSW Health Professional Councils Authority (HPCA), for the purpose of handling notifications related to NSW-based practitioners. AHPRA collects these amounts and passes them onto the various Health Profession Councils, via HPCA. As this amount is set per registrant and collected by AHPRA and remitted to HPCA within seven days after the end of the month, it is treated as an administered item in these financial statements. These amounts are not recorded within the statement of comprehensive income or statement of financial position.

Transactions relating to this activity are reported as administered (non-controlled) items per this table.

Summary of HPCA fee collected and payable

Board	2018	2017
ATSIHPBA	6	4
CMBA	457	490
ChiroBA	392	209
DBA	2,664	3,437
MBA	13,745	13,379
MRPBA	333	348
NMBA	8,476	8,015
OTBA	250	233
OptomBA	225	219
OsteoBA	200	194
ParaBA	0	0
PharmBA	1,932	1,848
PhysioBA	618	595
PodBA	319	304
PsyBA	1,696	1,596
Total	31,313	30,871

Office of the Health Ombudsman (Queensland)

In Queensland, the Health Minster informs AHPRA and the National Boards of the amount to be paid to the Office of the Health Ombudsman (Queensland). This payment is included in the statement of comprehensive income as an expense. In 2017/18, AHPRA was required to pay $2.91 million to the Office of the Health Ombudsman (Queensland) under these arrangements.

A further $1.389 million provision has been made for additional Queensland Civil and Administrative Tribunal (QCAT) cases occurring during this financial year, which is over and above the costs included in the Minister's determined $2.91 million. The breakdown of the payment and provision is shown in the table below.

Board	2018 Minister's determination $'000	2018 QCAT accrual $'000	2017 Reported $'000	2017 Adjusted and other $'000	2018 Total reported $'000
ATSIHPBA	0	0	0	0	0
CMBA	20	0	19	(7)	13
ChiroBA	8	0	88	(118)	(110)
DBA	135	0	151	(118)	17
MBA	1,171	160	1,125	(173)	1,158
MRPBA	2	0	19	(18)	(16)
NMBA	1238	695	648	256	2,189
OTBA	2	0	3	(1)	1
OptomBA	13	53	11	(3)	63
OsteoBA	10	0	2	5	15
ParaBA	0	0	0	0	0
PharmBA	93	321	89	91	505
PhysioBA	53	107	29	1	161
PodBA	22	0	4	14	36
PsyBA	142	53	72	(5)	190
Total	2,909	1,389	2,260	(76)	4,222