Reserve Bank of Australia Annual Report – 1974 Financial Statements Report of the Auditor-General

As required by section 81 (1.) of the Reserve Bank Act 1959–1973, the Reserve Bank Board has prepared and submitted for my examination financial statements for the year ended 30 June 1974, comprising–

Aggregate Balance Sheet;
Profit and Loss Appropriation Statement;
and Balance Sheets in respect of–

Central Banking Business,
Note Issue Department,
Rural Credits Department.

The financial statements prepared by the Board are in accordance with the forms prescribed by the Reserve Bank Regulations.

I now report in terms of section 81 (2.) (a) of the Act that the financial statements have been examined and are in agreement with the accounts and records of the Bank and, in my opinion, show fairly the financial operations for the year ended 30 June 1974 and the state of the affairs of the Bank as at that date.

Additionally, section 81 (2.)(b) of the Act requires that the Auditor-General ‘shall report on such other matters arising out of the statements as the Auditor-General considers should be made known to the Parliament’.

Accordingly, I now report that–

  1. The net earnings of the Bank from Central Banking Business and Note Issue Department (after deducting amounts approved to be written off bank premises) were transferred to reserves for contingencies with the approval of the Treasurer in terms of section 78 of the Act.

  2. The item in the Aggregate Balance Sheet–‘All other assets (including unfunded adjustments arising from fluctuations in exchange rates)’ includes an amount of $811 million representing unfunded adjustments at 30 June 1974, an increase of $251 million over the corresponding figure at 30 June 1973. During 1973–74 as a result of reductions in the Australian currency value of holdings of gold, International Monetary Fund special drawing rights, foreign currencies and foreign currencies delivered under forward exchange contracts, net book losses totalling $390 million were recorded in the books of the Bank. The net book loss in 1972–73 from similar circumstances was $766 million. These net book losses were excluded from profit and loss accounts because of their extraordinary nature and charged to an exchange valuation adjustment account.

    For the year ended 30 June 1974 amounts totalling $139 million, including substantial amounts allocated from 1973–74 earnings, have been applied from the reserves for contingencies of Central Banking Business and Note Issue Department towards reduction of that account.

  3. At 30 June 1974 the unfunded exchange valuation adjustments (after taking into account transfers from the respective contingencies reserves) have been shared in the Bank's books as to $343 million by Central Banking Business and $468 million by the Note Issue Department.

  4. In the Balance Sheets at 30 June 1974–

    Gold and International Monetary Fund special drawing rights are included on the basis of official parity relationships, and foreign currency holdings are included at current market rates of exchange.

    Foreign currency investments include accrued interest and where applicable are valued at current market values.

    Australian Government securities are valued at the lower of cost or face value.

6 August 1974

D. R. Steele Craik
Auditor-General