5.7 Finances
The financial management of the National Blood Authority's budget is driven by its responsibilities and resource structure. As a material statutory agency, the organisation has a range of corporate and compliance responsibilities which are defined in and under the National Blood Authority Act 2003, the Financial Management and Accountability Act 1997 and the Public Service Act 1999 and a range of ministerial, parliamentary and financial reporting requirements.
Funding
The National Blood Authority is funded 63 percent by the Australian Government and 37 percent by state and territory governments. The funding is for both the national blood supply and the operations of the National Blood Authority. All governments must approve any changes in the National Supply Plan and Budget for products used in the blood sector, any new products and initiatives, and any change in resources for the National Blood Authority.
The National Blood Authority also received funding for a range of one-off investments, including the establishment of the data and system infrastructure required to drive and inform strategies for demand management.
Financial performance in 2006–07
The following provides a summary of the National Blood Authority's financial performance for 2006–07. Departmental and administered results are shown in the audited financial statements. This summary should be read in conjunction with those statements.
Audit report
The National Blood Authority received an unqualified audit report for 2006–07.
Operating result
The National Blood Authority's income statement reports an operating surplus for the 2006–07 reporting period of $1.166 million. In 2005–06, a $0.565 million operating surplus was reported. Table 16 demonstrates the National Blood Authority's key results for the financial years 2006–07 and 2005–06.
Special Accounts
The National Blood Authority manages the National Blood Account and the National Managed Fund special accounts.
Blood and blood-related products are funded from the National Blood Account, which was established under section 40 of the National Blood Authority Act 2003. The National Blood Authority's activities contribute to outcomes and are classified as either departmental or administered expenses. Departmental activities involve the use of assets, liabilities, revenues and expenses controlled by the National Blood Authority in its own right, that is, for operations. Administered activities involve the management or oversight by the National Blood Authority on behalf of the government of activities and expenses controlled or incurred by the Australian Government. This includes procurement of the products and services which make up the blood supply.
The National Managed Fund (Blood and Blood Products) Special Account was established under section 20 of the Financial Management and Accountability Act 1997. Contributions to the account include annual funding from all governments and the Australian Red Cross Blood Service and special account interest from the Australian Government.
Revenue
Total revenue received in 2006–07 was $10.2 million. It was made up of $6 million from appropriations for outputs, $0.1 million from resources received free of charge, $3.8 million from contributions received from states and territories and $0.3 million from other sources. This represented an increase of $2.03 million over the revenue for 2005–06.
The increase in funding reflects the decision of the Funding Review in 2005–06, which allocated additional funds to enable a range of new activities to be undertaken by the National Blood Authority.
Revenue from other sources includes contributions received under the net appropriation instrument (S31 receipts) arising from officers transferring from other agencies and part receipt of insurance compensation following flood damage to the National Blood Authority's premises in February 2007.
Expenses
The National Blood Authority's expenses for 2006–07 were $9.1 million. This is $1.4 million more than in the previous period due to an increase of $0.6 million in employee expenses as a result of the additional funding received in 2006–07. The increase was still less than expected due to delays in recruitment. There was also an increase in supplier expenses of $0.6 million, as the National Blood Authority commenced a number of projects for which it sought additional funding from governments in 2005–06. The National Blood Authority expects to progress a number of these projects in 2007–08, at which time the expenses and revenues will increase.
Operating surplus
The surplus for 2006–07 was $1.2 million, compared to $0.6 million in 2005–06. The increase is due to expenditure on capital for work in progress on the Integrated Data Management System and the Information Technology Refresh Project, due to be completed in 2007–08, but developed in 2006–07.
Assets
The National Blood Authority's assets are divided into four main categories:
- cash
- infrastructure, plant and equipment
- intangibles (non-physical assets such as software)
- receivables (amounts due to be paid to the NBA).
The proportions of each category of asset are illustrated in Figure 18.
The National Blood Authority had $0.05 million in cash at 30 June 2007. The cash balance is the minimum required to be held in the National Blood Authority's bank account at the end of each month. Funds received from all jurisdictions are transferred into the official public account, held by the Department of Finance and Administration. This is recorded as an appropriation receivable by the National Blood Authority and represents 86 percent of the current asset base. Funds have been set aside to enable the National Blood Authority to implement key information communication technology projects and consultancies on the quality and appropriate use of products in Australia. It is expected that in 2007–08 the National Blood Authority will further use this funding. A schedule of projects that will occur in 2007–08 and 2008–09 is currently being updated.
The National Blood Authority's total assets increased from $8.6 million in 2005–06 to $10.6 million in 2006–07. This increase consisted of $2 million in cash to be used for major information communication technology implementation in 2007–08.
Liabilities
The National Blood Authority's total liabilities increased by $0.4 million to $5.3 million. This was due to an increase in unearned revenue as a result of the delay in information communication technology projects and commencement of other significant projects.
Administered items
The National Blood Authority is funded by all Australian governments for the supply of blood and blood-related products in Australia. The composition of contributions from all governments is illustrated in Figure 19.
Administered expenses
Table 17 provides a comparison of the National Blood Authority's administered expenses between 2006–07 and 2005–06.
An increase in administered expenses in 2006–07 was due to a rise in demand for recombinant and plasma-derived products.
Administered assets
Administered assets comprise inventory held for distribution, including the national reserve of blood products and receivables. The increase in administered assets of $22.5 million in 2006–07 is due to higher levels in inventories held by the National Blood Authority through the recognition of plasma-derived products held by the Australian Red Cross Blood Service and a prepayment of supplier costs. Receivables for the end of 2006–07 decreased by $3.7 million and related to credits raised on all Australian governments to match product demand and the Australian Red Cross Blood Service capital funding.
Inventories increased by $16.2 million. These are under the control of the National Blood Authority but are held by a major supplier and managed by the supplier on behalf of the National Blood Authority.
Prepayments of $10 million were made to a supplier for future unavoidable fixed costs in the production of certain blood products.
Administered liabilities
Administered liabilities comprised accrued expenses, creditors (suppliers) and unearned revenue. In 2006–07 there was a decrease of $14.2 million in liabilities in comparison to the previous year. Supplier liabilities decreased by $26.3 million due to the rollover of capital funding for the Australian Red Cross Blood Service.
Unearned revenue increased by $12.1 million in 2006–07 due to funding received from all Australian governments being held over until 2007–08.
Erratum
The National Blood Authority annual report must include the financial statements of the National Blood Authority for that financial year, together with the independent audit report from the Australian National Audit Office and the statement by the General Manager and the Chief Finance Officer. The 2005–06 annual report included the financial statements for 2005–06. However, the independent audit report published was the electronic presentation of the independent audit report and not the audit report itself. Additionally, the statement by the General Manager and the Chief Finance Officer was missing.