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Note 8. Other information

This section provides other disclosures relevant to DVA's financial information environment for the year.

Note 8.1. Explanations of Major Departmental Budget Variances

Explanations are provided for major variances between actual results and the original budget. Variances are considered to be 'major' based on the following criteria:

  • the variance between budget and actual is greater than 10% for departmental; and
  • the variance between budget and actual is greater than 2% for administered; or
  • an item below this threshold but is considered important for the readers' understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of DVA.
Explanation of major variances Affected line items (and schedule)
Trade and other receivables is higher than budget $29.2 million, and largely reflects appropriations receivable relating to capital funding, delays in project activity ($17.1 million), and timing of payment to suppliers ($10.1 million). Cash and cash equivalents and Trade and other receivables (Statement of Financial Position)
The variance of $13.7 million for land and buildings, property, plant and equipment, intangibles and the related depreciation and amortisation is a result of timing of capital projects. Land and buildings (Statement of Financial Position), Changes in asset revaluation surplus (Statement of Comprehensive Income), Equity Reserves (Statement of Financial Position), Depreciation and amortisation (Statement of Comprehensive Income), Property, Plant and Equipment and Intangibles (Statement of Financial Position)
Other non-financial assets are lower than original budget ($1.0 million) and is a result of timing of information technology and rental prepayments. Other non-financial assets (Statement of Financial Position)
No budget was provided against the land, reclassified in the prior year to assets held for sale. Assets held for sale (Statement of Financial Position)
The suppliers cost is higher than budget $10.1 million which reflects the additional costs associated with project related work and increase in the ICT infrastructure cost. Suppliers (Statement of Financial Position)
Claims expenses were higher than budget due to several small storms, plus the Cyclone Debbie catastrophe which occurred in March 2017. The budget only included three moderate events. Claims expense (Statement of Comprehensive Income), Claim payments (Cash Flow Statement)
DVA received unbudgeted IT resources free of charge from DHS to the value of $4.3 million. Other revenue (Statement of Comprehensive Income), Rendering of services (Cash Flow Statement)
Employee provision is $9.2 million above the original budget due to budgeting for reductions in FTEs. This was further impacted by the increase in oncosts as a result of the actuary review. Employee provision (Statement of Financial Position)
The outstanding claims provision is higher than budget ($2.1 million) due to the catastrophe event discussed above. The budget included three moderate catastrophe events totalling $3.0 million. Gross outstanding claims (Statement of Financial Position)
Interest rates continue to remain at record lows and have impacted on the investment revenue earned by the Scheme. Investments revenue (Statement of Comprehensive Income), Purchase of investments (Cash Flow Statement)

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Note 8.2. Explanations of Major Administered Budget Variances

Explanations are provided for major variances between actual results and the original budget. Variances are considered to be 'major' based on the following criteria:

  • the variance between budget and actual is greater than 10% for departmental; and
  • the variance between budget and actual is greater than 2% for administered; or
  • an item below this threshold but is considered important for the readers' understanding or is relevant to an assessment of the discharge of accountability and to an analysis of performance of DVA.

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Explanation of major variances Affected line items (and schedule)
The variance of $222 million is mainly related to the movements for the following personal benefits programs:

 

  • Adjustment to the Military Rehabilitation and Compensation Acts—Income Support and Compensation. The increase of $165 million reflects the military compensation liability provision adjustment calculated by the Australian Government Actuary (AGA) outlined at Note 4.4A.
  • Military Rehabilitation and Compensation Acts—Income Support and Compensation. More claims were processed compared to what was predicted due to the size of the cohort increasing, greater knowledge of entitlements and claims processing time improvements. This has led to increased expenditure of $104 million.
Personal Benefits (Administered Schedule of Comprehensive Income)
The variance of $140 million is mainly related to the movements for the following health care programs:

 

  • Adjustment to the Military and Compensation Acts Liability Provision—Health and Other Care Services. The increase of $585 million reflects the military compensation liability provision adjustment calculated by the AGA outlined at Note 4.4B.
  • Veterans' Hospital Services. There was a $121 million underspend due to a declining treatment population and the impact of the introduction of the National Efficient Price (NEP) methodology set by the Independent Hospital Pricing Authority (IHPA).
  • Veterans' Community Care and Support. There was a $155 million underspend mainly due to Residential Care. This is consistent with the decreasing number of veteran clients in residential aged care.Rehabilitation
  • General Medical Consultations and Services. There was a $31 million underspend due to a decline in the population and fewer Local Medical Officer Consultation related items processed compared with what was predicted.
  • Veterans' Pharmaceuticals Benefits. There was a $32 million underspend due to a decline in the treatment population combined with the ongoing impact of reduction in prices for the Pharmaceuticals Benefits items.
  • Veterans' Counselling and Other Health Services. There was an underspend of $42 million mainly due to Travel for Treatment. This was a result of the implementation of new contracts with taxi and hire car providers which have lower fare structures than previously estimated.
Health care payments (Administered Schedule of Comprehensive Income)
The increase of $31 million includes an additional cash drawdown that occurred on 30 June 2017, as well as the recognition of special accounts balances as cash resulting from changes in the special accounts reporting requirements during the current financial year. Cash and cash equivalents (Administered Statement of Financial Position)
The decrease of $7 million is primarily driven by the reduction of cash advances to the Repatriation Pharmaceutical Benefits Scheme in the current year in relation to pharmaceutical and medical payments made to clients. Receivables (Administered Statement of Financial Position)
The increase of $160 million primarily reflects the increase in the net asset position of the Australian War Memorial as at 30 June 2017. Equity accounted investments (Administered Statement of Financial Position); Revaluations transferred from reserves (Administered Statement of Comprehensive Income)
The variance is mainly related to the adjustment to the military compensation provisions calculated by the AGA as outlined in Note 4.4. Provisions and payables (Administered Statement of Financial Position)

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