Opening Statement of Financial Position of the Federal Government of Austria as at 1 January 2013
Sustained positive growth in public finances requires the utmost clarity about the financial consequences of decisions at the political and administrative levels. Therefore, a central objective of the Austrian federal budget reform is achieving the true and fair view of the financial position of the Federal Government required under the Bundesverfassung (Austrian Federal Constitutional Law – B-VG).
This requires that information on assets and liabilities be provided in addition to information on cash flows and financial resources. The Federal Government of Austria has satisfied this constitutional requirement by preparing an opening statement of financial position as at 1 January 2013, thereby performing a valuation of federal assets and liabilities for the first time. Only a statement of financial position allows a full and transparent presentation of federal assets and liabilities.
The goal when preparing the statement was to fully report federal assets and liabilities while avoiding major administrative expenses as far as possible. The Eröffnungsbilanzverordnung (Austrian Opening Statement of Financial Position Regulation) provides a number of exceptions and simplifications to reduce administrative expense while preparing the opening statement of financial position without reducing the quality of the information it contains.
For practical considerations, appropriate flat-rate and comparative parameters were used for measurements in order to keep administrative expenses at a reasonable level. Measurement alternatives were permitted if this was the only way to perform a reliable measurement.
For example, choices were permitted and value limits used for initial measurements. In addition, groups were formed for provisions, e.g. risk groups for guarantees and formation of a single provision for a group of similar legal disputes.
This allowed the use of expensive external experts to be avoided while at the same time building up measurement expertise within the administration.
Key Figures from the Opening Statement of Financial Position of the Federal Government of Austria
Condensed Statement of Financial Position of the Federal Government of Austria as at 1 January 2013
The asset side of the statement of financial position presents non-current and current assets, and shows how resources are used. The liabilities side presents non-current and current liabilities, together with the net assets as a balancing item. It shows where the financial resources come from and gives an overview of the payables and other future (advance) charges in the form of provisions.
The largest items on the asset side are property, plant and equipment (property, buildings, cultural assets) and federal equity investments (around 180), while long-term financial liabilities is by far the largest item on the liabilities side. Long-term financial liabilities include all federal monetary liabilities that were assumed in order to give the Federal Government the ability to dispose of funds, together with currency swaps. These are used to manage the federal debt portfolio by hedging interest rate and foreign currency risks, i.e. they are federal hedge transactions. Hedge transactions are always accounted for together with the corresponding hedged item.
The net assets item in the statement of financial position is the difference between the assets reported on the asset side of the statement of financial position and the total liabilities reported on the liabilities side of the statement of financial position. The negative value for net assets clearly shows that federal liabilities are significantly greater than federal assets. The significance of this item lies more in the changes over time rather than its value at any given point in time.
Even though the Federal Government of Austria may use future financial measures to gradually reduce the large negative value of net assets, the current situation shows that the it cannot afford to reduce its efforts to achieve sustainable public finances.
The Federal Republic of Austria based its federal budget reform on the well established International Public Sector Accounting Standards (IPSAS). Inquiries from many countries show that the international professional community is following the Austrian budget reform with great interest. The Austrian budget reform has become a highly regarded example of modern budget management and is often used as a source of best practice.
Preparation of the opening statement of financial position represents the next important milestone in modern budgeting. The federal government opening statement of financial position will therefore meet with broad national and international interest.
Documents available for download:
- Opening Statement of Financial Position of the Federal Government of Austria (only in German)
- Annual Report (in English)