Glossary

Accrual Accounting:

the system of accounting in which items are brought to account as they are earned or incurred (and not necessarily as money is received or paid) and included in the financial statements for the accounting periods to which they are related.

Additional Estimates:

a Government process to update the annual Budget for the Department for issues which have emerged since it brought down the Budget.

Administered Appropriation:

revenues, expenses, assets and liabilities administered by an agency for the Commonwealth generally (such as taxes, benefits payments and public debt) which are not concerned with running the agency or its commercial activities.

Administered Items:

resources administered on behalf of the Commonwealth, including grants, subsidies and benefits. Such resources may be used by third party organisations.

Agency:

assets, liabilities, revenues and expenses which are controlled by Defence or a subsidiary. Includes officials allocated to the department.

Appropriation:

is an authorisation by Parliament to spend money from the Consolidated Revenue Fund.

Assets:

future economic benefits controlled by Defence as a result of past transactions or other past events. Physical assets are initially recognised at the cost of acquisition. They are periodically revalued on the basis of their written-down current replacement cost.

Australian Accounting Standard (AAS):

Australian Accounting Standards specify techniques of accounting practice and the method of presenting financial information about a reporting entity.

Balanced Scorecard:

an approach to performance measurement that translates an organisation's strategic objectives into a useful set of performance measurements. It supplements the traditional financial measures with information on three additional perspectives of organisational performance: customer satisfaction, internal business processes, and innovation and learning. The Defence version is known as Defence Matters.

Business Plan:

the operational plan for the organisation which sets in place the specific strategies and action plans which will enable the organisation to achieve its overall corporate plan targets.

Capital Budget:

all proposed capital expenditure funded by appropriation for outputs, by equity injections or loans and/or appropriations for administered capital, or by other sources.

Capital Use Charge:

the Government's required return, or dividend, on its capital investment in departments. The objective of this charge is to better reflect the true costs of outputs and to encourage good asset management practices. The Capital Use Charge is imposed by multiplying the closing net assets (ie. total assets minus total liabilities) of Defence by the Government-specified rate of 12 per cent, based on the long-term bond rate (currently around 6 per cent) plus a margin of risk (6 per cent). The charge ceased on 30 June 2003.

Chief Executive Instruction:

instructions issued by the Chief Executive of Defence for the administration of the department. These instructions are issued under the authority of the Financial Management and Accountability Act 1997 and carry the force of the law.

Chief of the Defence Force's Preparedness Directive:

see Preparedness Concepts and Planning.

Combined Exercise:

an exercise/activity involving one or more Services of the ADF with the forces of other countries.

Customer-Supplier Arrangement:

an agreement between internal customers and suppliers for the supply of a service at an agreed quantity, standard and price.

Defence Assistance to the Civil Community:

is a program which provides Defence resources, in exceptional circumstances, for the performance of emergency or non-emergency tasks which are the responsibility primarily of the civil community. While a high priority is given to civil emergencies and natural disasters where lives or property are at risk, other tasks include flyovers and displays at significant public events and various support tasks for local authorities and charitable organisations around Australia.

Defence Matters scorecard:

see Balanced Scorecard.

Defence Management and Finance Plan:

this is extracted from the Defence Plan and will form part of the Portfolio Budget submission to Government.

Defence Plan:

Defence's principal internal planning document which satisfies whole-of-Government budget requirements. It provides a 'whole-of-business' focus with important links between the strategic resource and capability planning.

Departmental Items:

resources directly controlled by Defence including salaries, allowances, military equipment and costs associated with the Defence organisation. Such resources, including outsourced activities funded and controlled by Defence, are used to produce outputs for the Government.

Employee:

any Australian Public Service (APS) officer of Defence or serving Defence force member who receives a salary or wage, along with other benefits, for the provision of services whether on a full-time, part-time, permanent, casual or temporary basis.

Equity Injection:

an additional contribution to Defence by the Commonwealth as owner. It is determined on the basis of the amount additional to the departmental output appropriation required to fund Defence up to the Government-agreed level of global funding. Within Defence's global flexibilities, the injection can be used for any purpose that increases the net assets of Defence. The injection is not tied to any specific capital projects.

Expenses:

consumptions or losses of future economic benefits, in the form of reductions in assets or increases in liabilities of Defence, other than those relating to distributions to the Commonwealth, that result in a decrease in equity during the reporting period.

Financial Management and Accountability Act 1997:

the Act replaced the Audit Act on 1 January 1998. It establishes the regulatory framework for financial management within Defence and other public sector agencies. Agencies are agents of the Commonwealth, in that they do not own monies or assets separately from the Commonwealth.

Force Element:

a component of a unit, a unit or an association of units having common prime objectives and activities.

Force Element Group:

a grouping of force elements with an appropriate command and control structure for a specified role or roles.

Force Structure:

see Preparedness Concepts and Planning.

Forward Estimates:

the level of proposed expenditure for future years (based on relevant demographic, economic and other future forecasting assumptions). The Government requires forward estimates for the following three financial years to be published in each annual Budget paper.

Group:

an organisational grouping of functions and activities used by the Defence Executive as its primary management grouping.

Infrastructure:

ancillary items owned, leased or otherwise under the control of Defence in support of activities on land and within buildings. Infrastructure includes items such as runways, roads, car parks, parade grounds, ovals, lighting, water, sewerage and other general service related items. It does not include land upon which, or within which, it is constructed or those fixed items integral to, and under buildings.

Interoperability:

the ability of systems, units or forces to provide the services to, and accept services from, other systems, units or forces and to use the services so exchanged to enable them to operate effectively together.

Joint Exercise:

an exercise/activity involving two or more Services of the ADF.

Liabilities:

sacrifices of future economic benefits that Defence is presently obliged to make to other entities as a result of past transactions or other past events.

Military Capability:

see Preparedness Concepts and Planning.

Other Property, Plant and Equipment:

comprises the following sub classes; Administrative Assets, Commercial Vehicles, General Military Assets, Heritage Assets and Other (includes all items not specific to one of the classes or sub-classes referred to above and can include testing equipment and non-specific non rotable spares.)

Outcome:

the result, impact or consequence of actions by the Australian Government for the Australian community, including for the Government, in return for appropriations to deliver outputs.

Output:

the product or service produced by Defence.

Portfolio Additional Estimates Statements:

similar to the Portfolio Budget Statements and prepared at Additional Estimates time to support an update on the Government's original annual Budget for the Department.

Portfolio Budget Statement:

a document presented by the Minister to Parliament to inform Senators and Members of the basis for the Defence Budget appropriations in support of the provisions in Appropriation Bills 1 and 2. The statements summarise the Defence Budget and provides detail of Output performance forecasts and resources in order to justify expenditure for Defence.

Preparedness Concepts and Planning:

Military capability is achieved by developing a force structure appropriately prepared for operations. Preparedness is a measure of how ready (readiness) and how sustainable (sustainability) the ADF is to undertake military operations. Preparedness, therefore, is of fundamental importance to Defence, which must be able to manage it effectively and communicate its status to the Government.

Qualifying Assets:

assets under construction.

Readiness:

see Preparedness Concepts and Planning.

Revenues:

inflows or other enhancements, or savings in outflows, of future economic benefits in the form of increases in assets or reductions in liabilities of Defence, other than those relating to contributions by the Commonwealth, that result in an increase in equity during the reporting period.

Risk Management:

at the highest level, it involves the identification and mitigation of those risks that have the potential to affect adversely the achievement of agreed output performance at the agreed output price.

Specialist Military Equipment:

items of a specific military nature and that are not available though the normal external market in their current form to other than government military purchasers. It includes the prime military equipment plus the direct support items associated with the equipment.

Sustainability:

see Preparedness Concepts and Planning.

Theatre:

the area in which military operations/activities take place.

Write Offs:

the recording in the accounting records of losses of public moneys, irrecoverable and uneconomic to recover debts, overpayments and revenues and losses of public property.