The consolidated financial statements (CFS) present whole-of-government financial results inclusive of all Australian Government–controlled entities. Also presented are the financial statements of the general government sector (GGS) and disaggregated information on each of the sectors of government.

Consolidated financial statements — overview

The Australian Government comprises departments of state, parliamentary departments, other non-corporate Commonwealth entities, corporate Commonwealth entities, and companies in which the Australian Government holds a controlling interest.

Entities are grouped into portfolios that are aligned to a minister’s area of responsibility as established through the Administrative Arrangements Order. Three types of portfolio entities are accountable to the Parliament – Commonwealth entities (non-corporate or corporate) and Commonwealth companies. These entities are classified into the following three sectors of government:

  • general government sector – all government-controlled entities that provide public services that are mainly non-market in nature, are mainly for the collective consumption of the community, and are financed mainly through taxes and other compulsory levies;
  • public financial corporations sector – government-controlled corporations and quasi-corporations mainly engaged in financial intermediation or provision of auxiliary financial services; and
  • public non-financial corporations sector – government-controlled corporations and quasi-corporations mainly engaged in the production of market goods and/or non-financial services.

The consolidated financial statements (CFS) of the Australian Government are required under section 48 of the Public Governance, Performance and Accountability Act 2013. The CFS are prepared in accordance with Australian accounting standard AASB 1049 Whole of Government and General Government Sector Financial Reporting. The CFS present whole-of-government financial results inclusive of all Australian Government–controlled entities. Also presented are the financial statements of the general government sector (GGS) and disaggregated information on each of the sectors of government.

The Finance Minister is required to prepare and deliver the CFS to the Auditor-General by 30 November each year. The Department of Finance has operational responsibility for preparing the CFS for the Finance Minister.

To assist in the preparation of the CFS, the Department of Finance classifies entities as material or non-material, based on their contribution to the GGS. In aggregate, material entities comprise 99 per cent of revenues, expenses, assets and liabilities of the total GGS. All departments of state are considered material.

Budgeted expenditure for entities within the GGS is anticipated to total $684.085 billion for 2023–24, with the net worth deficiency budgeted to be $559.085 billion as at 30 June 2024.

Figure 1 shows the level of budgeted expenditure by portfolio for the 2023–24 Budget. The size of each ‘bubble’ represents the level of expenditure relative to the total GGS. The placement of each bubble is dependent on the number of entities within the portfolio and the average staffing level of the respective portfolio.

Figure 1: Budgeted expenditure by portfolio, 2023–24


Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

Note: Defence average staffing level excludes Australian Defence Force and Reserves.

Note. The Australian Security Intelligence Organisation, Australian Signals Directorate and Australian Secret Intelligence Services average staffing levels are not for publication and are not included in Figure 1.

The financial statements audit planning process examines each entity’s environment and governance arrangements, its system of internal control, and prior-year financial and performance audit findings. These planning processes are undertaken on a whole-of-organisation basis with the aim of identifying key risks that may significantly impact on the integrity of the financial statements.

When planning the audits of entities’ 2022–23 financial statements, the ANAO identified 184 financial statement risks for those Commonwealth entities classified as material. Of these risks, 86 were rated higher risks and 98 were rated moderate risks.

Figure 2 presents the total number of financial statement risks identified for the 2022–23 financial statements of material entities.

Figure 2: Risk profile by portfolio for 2022–23 financial statements


Source: ANAO analysis of 2022–23 audit strategy documents.

Audit focus

Government accountability and transparency are supported by the preparation and audit of the Australian Government’s consolidated financial statements (CFS). The CFS and the associated financial analysis provide information to assist users in assessing the annual financial performance and position of the Australian Government. The seven key risks for the 2022–23 CFS that the ANAO has highlighted for specific audit coverage, all of which the ANAO considers key audit matters (KAMs), are the:

  • accuracy of taxation revenue, due to the estimation processes adopted by the Australian Government for financial reporting of taxation revenue, given the value of the transactions and the complexity and judgement involved in the estimation process and calculations. The reliable estimation of taxation revenue is complex due to uncertain timing of tax return assessments, payments and forecasting of likely taxation return outcomes.
  • accuracy and occurrence of personal benefits expenses, given the dependence on the correct self-disclosure of personal circumstances by recipients. The accuracy of personal benefits expenses is also reliant on a complex information technology system for the processing of a high volume of payments across the numerous personal benefit types with varying conditions for determining the payment amount.
  • valuation of superannuation liabilities, due to the measurement of the liabilities being complex and requiring significant judgement and estimation in the selection of long-term assumptions, including the salary growth and discount rates and actuarial factors such as mortality, life expectancy and disability, to which the valuation of the superannuation liability is highly sensitive.
  • valuation of advances paid and receivables, comprising advances paid in respect of student loans and receivables reflecting amounts due from taxation, personal benefits and other items. The valuation of advances paid in respect of student loans involves a high level of judgement required in estimating the fair value of loans, including loans not expected to be repaid. These judgements include assumptions about discount factors, future employment and salary rates and future collectability of repayments that contain a significant degree of uncertainty and are influenced by the economic environment. The valuation of receivables also involves a high level of judgement because of inherent complexity and uncertainty in estimating recoverability. Estimation methodologies are based on assumptions including taxpayer compliance and lodgement history, the existence of dispute over a receivable and the taxpayer’s capacity to pay.
  • valuation of collective investment vehicles, due to the size of the investments, the inherent subjectivity, and the significant judgements and estimates required where market data is not available to determine the fair value of these investments.
  • valuation of specialist military equipment and other plant, equipment and infrastructure, due to the inherent subjectivity and need for significant judgements in the valuation, including challenges in determining the costs to be capitalised and allocated on large complex projects, the inherent subjectivity in valuation assessments due to the absence of active markets and selection of indices, the determination and assessment of useful lives, the identification of indicators of impairment and with respect to specialist military equipment, the complexity and high degree of judgement in the cost attribution model that allocates accumulated capitalised costs on large scale acquisition projects between individual platform assets, associated spares and inventory.
  • valuation of Government Securities, due to the significance of the value of Government Securities to the Australian Government’s net worth, the range of Government Securities held, and the different methodologies used to determine the fair value of Government Securities. These methodologies include assumptions about the expected return on securities which can extend for long periods into the future.