Department of Sustainability, Environment, Water, Population and Communities
New Australian Accounting Standards
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- Bu səhifədəki naviqasiya:
- Future Australian Accounting Standard Requirements
- Principles of Consolidation (Natural Heritage Trust of Australia Account)
- Gains Resources Received Free of Charge
- Transactions with the Government as Owner Equity Injections
- Restructuring of Administrative Arrangements
- Separation and Redundancy
- Borrowing Costs All borrowing costs are expensed as incurred. Cash
- Contingent Liabilities and Contingent Assets
- Property, Plant and Equipment Asset Recognition Threshold
- Asset Class Recognition Threshold
- Asset Class Fair value measurement
New Australian Accounting Standards Adoption of New Australian Accounting Standard Requirements No accounting standard has been adopted earlier than the application date as stated in the standard. The following amending standard was issued prior to the sign-off date, was applicable to the current reporting period and had a financial impact on the Department.
This Standard amends AASB 101 Presentation of Financial Statements to require entities to group together items within other comprehensive income (OCI) on the basis of whether they will eventually be reclassified to the profit or loss section. Its aim is to provide users with clarity about the nature of items presented as OCI and their future impact. It also amends the standard title of the financial statement from ‘Statement of Comprehensive Income’ to ‘Statement of Profit or Loss and Other Comprehensive Income’, although use of alternative titles is allowed. Other new standards, revised standards, interpretations and amending standards that were issued prior to the sign-off date and are applicable to the current reporting period did not have a financial impact, and are not expected to have a future financial impact on the Department. Future Australian Accounting Standard Requirements The following new, revised and amending standards were issued by the Australian Accounting Standards Board prior to the sign-off date, which are expected to have a financial impact on the Department for future reporting periods.
AASB 10 provides a single consolidation model that identifies control as the basis for consolidation for all types of entities. This Standard replaces the consolidation requirements previously included in AASB 127 Consolidated and Separate Financial Statements. The major changes are the introduction of a broader concept of control and inclusion of detailed application guidance. The AASB has issued ED 238 Consolidated Financial Statements – Australian Implementation Guidance for Not-for-Profit Entities that proposes to explain how not-for-profit entities should apply AASB 10.
This Standard has been issued as a result of the International Accounting Standards Board (IASB)’s project to ensure consistency of fair value measurement and disclosure within financial statements. AASB 13 defines fair value, sets out a framework for measuring fair value, and requires disclosures about fair value measurements. The definition of fair value focuses on assets and liabilities because they are a primary subject of accounting measurement. However, the Standard does not specify when fair value should be applied. Guidance on when fair value measurements are to be applied is set out in other standards (e.g. AASB 116 Property, Plant and Equipment). Key features included in AASB 13 are the requirement to value non-financial assets at their highest and best use; identification of a principal (or most advantageous) market; and disclosure of all fair value measurements based on the fair value hierarchy.
The revised version of AASB 119 aims to improve the useability and comparability of post employment benefits. The amendments change the accounting for defined benefits plans, amend the definition of short term and long term employee benefits (such that annual leave balances not expected to be used within twelve months will require discounting) and change the timing of the recognition of termination benefits.
The Australian Accounting Standards Board (AASB) has issued a new AASB 1055. This new Standard requires reporting of budgetary information and explanation of significant variance between actual and budgeted amounts by not-for-profit entities within the General Government Sector. The new Standard applies to reporting periods beginning on or after 1 July 2014.
This Standard relocates the budgetary requirements currently in AASB 1049 Whole of Government and General Government Sector Financial Reporting into AASB 1055 to make it the complete reference on this topic.
This Standard makes amendments arising from the IASB’s annual improvements process. The Standard clarifies that a balance sheet as at the beginning of the comparative period only needs to be presented where it is materially affected by a retrospective change resulting from an error, changed accounting policy or reclassification. When such a balance sheet is presented, notes to that balance sheet are not necessary, except as required by AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The Standard also clarifies that spare parts, stand-by equipment and servicing equipment are accounted for as property, plant and equipment whenever they meet the definition of property, plant and equipment in AASB 116 Property, Plant and Equipment. Otherwise, such items are classified as inventory. Spare parts and servicing equipment are no longer automatically treated as property, plant and equipment because they can be used only in connection with an item of property, plant and equipment. Other new standards, revised standards, interpretations and amending standards that were issued prior to the sign-off date and are applicable to the future reporting period are not expected to have a future financial impact on the Department.
Subsection 43(1) of the Natural Heritage Trust of Australia Act 1997 requires financial statements to be prepared for the Natural Heritage Trust of Australia Account (NHT). Reporting by the NHT reflects the NHT as a separate reporting entity, with all transactions between the NHT and parties outside the NHT being reported. Reporting of the NHT as part of the Department’s administered disclosure in these financial statements takes account of the treatment of administered items as a whole and the administered presentation rules as prescribed in the FMOs. The financial statements of the NHT are consolidated into the Department's administered financial statements. Where accounting policies and disclosure requirements differ between the NHT and the Department adjustments are made on consolidation to bring any dissimilar accounting policies and disclosures into alignment.
Revenue from the sale of goods is recognised when:
Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is recognised when:
The stage of completion of contracts at the reporting date is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction. Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable. Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.
Amounts appropriated for departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the Department gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.
Resources Received Free of Charge Resources received free of charge are recognised as gains when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature. Contributions of assets at no cost of acquisition or for nominal consideration are recognised as gains at their fair value when the asset qualifies for recognition, unless received from another Government entity as a consequence of a restructuring of administrative arrangements (Refer to Note 1.8). Sale of Assets Gains from disposal of assets are recognised when control of the asset has passed to the buyer.
Equity Injections Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year. Restructuring of Administrative Arrangements Net assets received from or relinquished to another Government entity under a restructuring of administrative arrangements are adjusted at their book value directly against contributed equity. Other Distributions to Owners The FMOs require that distributions to owners be debited to contributed equity unless in the nature of a dividend. In 2012-13, there were no distributions to owners. In 2011-12, by agreement with the Department of Finance and Deregulation, the Department relinquished control of surplus appropriation funding of $496,000 which was returned to the Official Public Account.
Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of reporting period are measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Department is estimated to be less than the annual entitlement for sick leave. The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the Department’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The liability for long service leave has been determined by reference to the work of an actuary as at 30 June 2013. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. Separation and Redundancy Provision is made for separation and redundancy benefit payments. The Department recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations. Superannuation The Department’s staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap), the Australian Government Employees Superannuation Trust (AGEST) or other superannuation schemes held outside the Commonwealth. The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap is a defined contribution scheme. The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported by the Department of Finance and Deregulation’s administered schedules and notes. The Department makes employer contributions to the employees’ superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Department accounts for the contributions as if they were contributions to defined contribution plans. The liability for superannuation recognised as at 30 June represents outstanding contributions for the final fortnight of the year.
A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits. Where an asset is acquired by means of a finance lease, the asset is capitalised at either the fair value of the lease property or, if lower, the present value of minimum lease payments at the inception of the contract and a liability is recognised at the same time and for the same amount. The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense. Operating lease payments are expensed on a straight-line basis which is representative of the pattern of benefits derived from the leased assets.
All borrowing costs are expensed as incurred.
Cash is recognised at its nominal amount. Cash and cash equivalents includes:
The Department classifies its financial assets as ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Financial assets are recognised and derecognised upon trade date. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest rate basis except for financial assets that are recognised at fair value through profit or loss.
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate. Impairment of Financial Assets Financial assets are assessed for impairment at the end of each reporting period. Financial assets held at amortised cost - if there is objective evidence that an impairment loss has been incurred for loans and receivables held at amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount is reduced by way of an allowance account. The loss is recognised in the Statement of Comprehensive Income.
The Department classifies its financial liabilities as ‘other financial liabilities’. Financial liabilities are recognised and derecognised upon ‘trade date’. Other Financial Liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).
Contingent liabilities and contingent assets are not recognised in the balance sheet but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate. Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.
Asset Recognition Threshold Purchases of property, plant and equipment are recognised initially at cost in the balance sheet, except for purchases costing less than the following asset thresholds, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).
The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by the Department where there exists an obligation to restore the property to its original condition and restitution obligations in the Antarctic where there exists an international obligation to clean-up abandoned work sites, buildings and infrastructure. These costs are included in the value of the Department’s leasehold improvements and property, plant and equipment assets with a corresponding provision for the ‘make good’ recognised. Revaluations Fair values for each class of asset are determined as shown below:
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