6.7 Financial Management
The financial management of the NBA’s budget is driven by both our responsibilities and our resource structure. As a material statutory agency, the NBA has a range of corporate and compliance responsibilities under the National Blood Authority Act 2003, the Financial Management and Accountability Act 1997, the Public Service Act 1999 and a range of ministerial, parliamentary and financial reporting requirements.
Funding
The NBA is funded 63% by the Australian Government and 37% by the state and territory governments (the jurisdictions). The funding is for both the national blood supply and the operations of the NBA. All jurisdictions must approve any changes in the supply plan for products used in the blood sector, new products and initiatives and any change in resources for the NBA. Once agreement is reached by the jurisdictions, they must then seek agreement for the funds from their individual treasury or finance departments. Budgets related to these funding requests must then be approved by the AHMC. Once agreement is provided the funding request must be implemented and performance monitored.
The functions of the NBA are outlined in the National Blood Authority Act 2003 and the National Blood Agreement.
The NBA also received funding for a range of one-off investments to establish in particular, the data and system infrastructure that will be required to drive and inform strategies for demand management. The first stage of this process was the implementation of the Integrated Data Management System (IDMS) that went live 30 June 2008.
The NBA has a number of key initiatives underway that will enable the NBA to meet all legislated and mandated requirements and to drive demand management strategies to influence the rate of growth of administered outlays. In 2007–08, the delay in some of these projects was due to delays in recruiting, other priorities and the lack of key resources to drive some of the projects. The NBA is also redeveloping the Australian Bleeding Disorders Registry (ABDR) and this is expected to go live later in 2008. Further work continues on data strategy and systems that may be required to capture sector data to inform the clinical community.
Overview of financial performance in 2007–08
This section provides a summary of the NBA’s financial performance for 2007–08. Departmental and administered results are shown in the audited financial statements, and this summary should be read in conjunction with those statements.
Audit report
The NBA received an unqualified audit report for 2007–08, with no more than category ‘C’ findings.
Operating result
The NBA’s Income Statement reports an operating surplus for 2007–08 of $1.38 million (in 2006–07 a $1.166 million operating surplus was reported).
Table 6.5 shows the NBA’s key results for the financial years 2006–07 and 2007–08.
Table 6.5 Key results in financial performance
| 2007–08 $’000 |
2006–07 $’000 |
Movement (per cent) |
|
| Contributions from the Australian Government | 6 107 | 6 161 | –1% |
| Contributions from States and Territories and Other Revenue | 4 294 | 4 064 | 6% |
| Total Revenue | 10 401 | 10 225 | 2% |
| Employee Expenses | 5 826 | 5 712 | 2% |
| Supplier Expenses | 2 621 | 2 941 | –11% |
| Other Expenses | 574 | 406 | 41% |
| Total Expenses | 9 021 | 9 059 | 0% |
| Operating Result | 1 380 | 1 166 | 18% |
Special accounts
The NBA manages the National Blood Accounts and National Managed Fund Special Account.
The NBA was established on 1 July 2003 with the principal role of managing the national blood arrangements, ensuring sufficient supply and to provide a new focus on the quality and appropriate use of blood and blood-related products. The funding for blood and blood-related products are funded from a special account (the National Blood Account) established under Section 40 of the National Blood Authority Act 2003 . The NBA’s activities contributing to its outcome are classified as either departmental or administered expenses. Departmental activities involve the use of assets, liabilities, revenues and expenses controlled by the agency in its own right, that is, for the operations of the NBA. Administered activities involve the management or oversight by the NBA on behalf of the government of activities and expenses controlled or incurred by Australian governments; mainly procurement of the products and services that make up the blood supply.
The National Managed Fund (Blood and Blood Products) Special Account, established under Section 20 of the Financial Management and Accountability Act 1997, was set up for the purpose of receipting monies and payment of all expenditure related to the management of blood and blood-related products liability claims against the Australian Red Cross Society in relation to the activities undertaken by the operating division of the Society known as the Australian Red Cross Blood Service (ARCBS). Contributions to the Account include annual funding from all governments and the ARCBS and special account interest from the Australian Government.
Income statement
Revenue
Total revenue received in 2007–08 was $10.401 million, made up of $5.993 million from appropriations for outputs, $0.114 million from resources received free of charge, $4.294 million from contributions received from states and territories. This represented an increase of $0.176 million over the revenue for 2006–07.
Revenue from other sources are 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 NBA premises in February 2007.
Expenses
The NBA’s expenses for 2007–08 were $0.038 million less than 2006–07.
Balance sheet
Assets
The NBA’s assets may be divided into four main categories:
- cash
- infrastructure, plant and equipment
- intangibles (nonphysical assets such as software)
- receivables (amounts due to be paid to the NBA).
The proportions of each category of asset held during 2007–08 are illustrated in Figure 6.1.
The NBA had $0.063 million in cash as at 30 June 2008. The cash balance is the minimum required to be held in the NBA bank account at the end of each month. Funds received from all jurisdictions are swept into the Official Public Account held by the Department of Finance and Administration. Under the NBA special account, this is recorded as appropriation receivable and represents 74% of our asset base. The funds have been set aside to enable the NBA to implement key IT projects and consultancies on the quality and appropriate use of products in Australia. 2008–09 should see the NBA further utilise this funding.
The NBA’s total assets increased from $10.6 million in 2006–07 to $11.9 million in 2007–08. This increase was due to increased intangibles as a result of the IT implementation undertaken in the NBA.
Liabilities
The NBA’s total liabilities decreased by $0.266 million to $5.1 million, down from $5.3 million in 2006–07.
Administered items
The NBA is funded by states and territories and the Australian Government for the supply of blood and blood-related products in Australia. The total funding received for 2007–08 is depicted in Figure 6.2.
Administered expenses
Table 6.6 provides for comparison between the NBA’s administered expenses in 2007–08 and 2006–07.
Administered expenses in 2007-08 have increased over 2006–07 due to increased demand for most products and a change in mix of product issued.
Table 6.6 Key results of administered expenses
| Administered Expense | 2007–08 $’000 |
2006–07 $’000 |
Movement (per cent) |
| Grants to the Private Sector – Non Profit Organisation | 385 029 | 305 770 | 26% |
| Rendering of goods and services – external entities | 340 322 | 303 080 | 12% |
| Total Administered expenses | 725 351 | 608 850 | 19% |
Figure 6.1 Composition of NBA assets at 30 June 2008
Figure 6.2 Composition of contributions from all governments, 2007–08
Administered assets
Administered assets are comprised of inventory held for distribution, including the National Reserve of blood products, and Receivables. The decrease in Administered Assets of $12.5 million in 2007–08 over 2006–07 is due to a decrease in Inventories held by the NBA through the recognition of plasma derived products held by the ARCBS and a prepayment of supplier costs. Receivables for the end of 2007–08 increased by $2.1 million and related to an increase in GST receivable from the Australian Taxation Office due to an increase in supplier expense accruals at year end.
Inventories decreased by $4.9 million and are under the control of the NBA but held by a major supplier and managed by them on behalf of the NBA.
The NBA has no Administered prepayments for 2007–08.
Administered liabilities
Administered liabilities are comprised of accrued expenses, creditors (suppliers) and unearned revenue. There was a decrease of $10.7 million in liabilities in 2007–08 over 2006–07. Supplier liabilities increased by $6.2 million due increased demand in 2007–08.
Unearned revenue decreased by $16.9 million in 2007-08, this is due to funding received from jurisdictions being held over until 2008–09.
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