1. finance
2. accounting and auditing

Local Government Model
Financial Report Manual 2012
Updated by CPA Australia for Local Government Victoria
Department of Planning and Community Development
A message from CPA Australia
It gives me great pleasure to present the Local Government Model Financial Report manual for use by 79 Victorian Councils.
This manual is the result of a fruitful collaboration between CPA Australia and Local Government Victoria, recognising
that Local Governments face many challenges in preparing financial reports. Annual financial reports allow transparency,
consistency and above all, integrity in financial statements.
The purpose of the Model Financial Report Manual is to assist you in preparing annual financial reports in accordance with
Australian Accounting Standards, the Local Government Act 1989, Local Government (Finance and Reporting) Regulations
2004, Local Government (Long Service Leave) Regulations 2002 and Local Government Directions.
The Model Financial Report Manual comprises the Model Financial Statements, including notes and guidance materials.
I would also like to express my appreciation for the working party, consisting of representatives from Local Government
Victoria, FinPro and the Victorian Auditor-General’s Office.
I trust that you find this comprehensive document a valuable tool in preparing end of year financial statements, and an
example of best practice in local government reporting.
Jon Aloni
General Manager - Victoria
CPA Australia
1
Background to the
Model Accounts
Background to the LG Model Financial Report
The LG Model Financial Report illustrates the minimum disclosure requirements for the financial statements and notes that are
representative of the types of transactions and events that may occur in local government councils.
The Model does not purport to exhibit all the possible disclosure requirements and may include some transactions and
accounting treatments that are not applicable to all local government councils. Preparers will need to use their professional
judgment to make appropriate disclosures. While the illustrative financial statements and notes in the Model provide a
valuable guide on the reporting and disclosure requirements of Australian Accounting Standards (AASs), they should not be
used as a substitute for referring to the standards and interpretations themselves.
A list of applicable AASB’s standards can be found on pages 8 - 11 in the Introduction section of this Model. Other
mandatory Reporting requirements are also detailed in this section.
This Model incorporates the necessary financial reporting requirements that are current at the time of publication. Accordingly,
local government agencies should ensure that their annual financial reports comply with all new and revised accounting
pronouncements that may be issued subsequent to the publication of the Model.
Presentation and contents of Financial Report
Minimum general requirements relating to the format of the financial report are included in Accounting Standards AASB 101
Presentation of Financial Statements and AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors and
have been implicitly applied in the Model. These requirements include:
General disclosures
• the financial report shall be presented in the English language (AASB 101.Aus45.1);
• the financial report shall be identified clearly and distinguished from other information in the same published document
(AASB 101.44);
• financial reports shall be presented at least annually (AASB 101.49);
• if the entity’s reporting date changes and the annual financial report is presented for a period longer or shorter than one
year, the entity shall disclose, in addition to the period covered by the financial report (AASB 101.49):
–– the reason for using a longer or shorter period; and
–– the fact that comparative amounts for the statement of comprehensive income, statement of changes in equity, cash
flow statement and related notes are not entirely comparable.
• each component of the financial report shall be clearly identified (AASB 101.46);
• the following information shall be displayed prominently, and repeated where necessary for a proper understanding of the
information presented:
–– the name of the entity that is reporting or other means of identification (AASB 101.46(a)), and any change in that
information from the preceding reporting date (AASB 101.46);
–– whether the financial report covers the individual entity or a group of entities (AASB 101.46(b));
–– the reporting date or the period covered by the financial report, whichever is appropriate to that component of the
financial report (AASB 101.46(c));
–– the presentation currency (AASB 101.46(d)) ; and
–– the level of rounding used in presenting amounts in the financial report (AASB 101.46(e)).
• the presentation and classification of items in the financial report shall be retained from one period to the next unless
(AASB 101.27):
• it is apparent, following a significant change in the nature of the entity’s operations (AASB 101.27(a)) or a review of its
financial report, that another presentation or classification would be more appropriate having regard to the criteria for the
2
selection and application of accounting policies in AASB 108; or
–– an Australian Accounting Standard requires a change in presentation (AASB 101.27(b)).
Specific disclosures
Where the following is not disclosed elsewhere in information published with the financial report, the information shall be
disclosed in the financial report (AASB 101.26):
• the domicile and legal form of the entity, its country of incorporation and the address of the registered office (or principal
place of business, if different from the registered office);
• a description of the nature of the entity’s operations and its principal activities; and
• the name of the parent and the ultimate parent of the group (this is only likely to apply in business units that are also
reporting entities).
Comparative information
Except when an Accounting Standard permits or requires otherwise, comparative information shall be disclosed in respect of
the previous period for all amounts reported in the financial report. Comparative information shall be included for narrative and
descriptive information when it is relevant to an understanding of the current period’s financial report. (AASB 101.36)
Reclassification of financial information
When the presentation or classification of items in the financial report is amended, comparative amounts shall be reclassified
unless the reclassification is impracticable. When comparative amounts are reclassified, an entity shall disclose (AASB
101.38):
• the nature of the reclassification;
• the amount of each item or class of items that is reclassified; and
• the reason for the reclassification.
When it is impracticable to reclassify comparative amounts, an entity shall disclose (AASB 101.39):
• the reason for not reclassifying the amounts; and
• the nature of the adjustments that would have been made if the amounts had been reclassified
Errors made in prior periods
Material prior period errors shall be retrospectively corrected in the first financial report authorised for issue after their
discovery by (AASB 108.42):
• restating the comparative amounts for the prior period(s) presented in which the error occurred; or
• if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and
equity for the earliest prior period presented
Except to the extent that it is impracticable to determine the (AASB 108.43):
• period-specific effects of an error on comparative information for one or more prior periods presented. The entity shall then
restate the opening balances of assets, liabilities and equity for the earliest period for which retrospective restatement is
practicable (which may be the current period); (AASB 108.44) and/or
• cumulative effect, at the beginning of the current period, of an error on all prior periods. The entity shall then restate the
comparative information to correct the error prospectively from the earliest date practicable (AASB 108.45).
Therefore, the correction of a prior period error is excluded from the net result for the period in which the error is discovered.
Any information presented about prior periods, including any historical summaries of financial data, is restated as far back as
is practicable (AASB 108.46).
3
Change in accounting estimates
Where a change in an accounting estimate affects the current reporting period only, the effect of the change shall be
recognised in profit or loss in the reporting period in which the accounting estimate is revised.( AASB 108.36(a))
Where the change in an accounting estimate affects both the current and future reporting periods, the effect of the change
shall be recognised in profit or loss in the reporting period of the revision and in future reporting periods (AASB 108.36(b)).
Fair Presentation and compliance with Australian Accounting Standards
A financial report shall present fairly the financial position, financial performance and cash flows of an entity. Fair presentation
requires the faithful representation of the effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework. The application of
Accounting Standards, with additional disclosure when necessary, is presumed to result in a financial report that achieves a
fair presentation. (AASB 101.13)
In the extremely rare circumstance which management concludes that compliance with a requirement in an Australian
Accounting Standard would be so misleading that it would conflict with the objective of financial reports set out in the
Framework, the entity shall, to the maximum extent possible, reduce the perceived misleading aspects of compliance by
disclosing (AASB 101.21):
• the title of the Australian Accounting Standard in question, the nature of the requirement, and the reason why management
has concluded that complying with that requirement is so misleading in the circumstances that it conflicts with the
objective of financial reports set out in the Framework; (AASB 101.21(a)) and
• for each period presented, the adjustments to each item in the financial reports that management has concluded would be
necessary to achieve a fair presentation (AASB 101.21(b)).
Exclusions
This Model does not and cannot be expected to cover all situations that may be encountered in practice. There may be
unusual events or transactions that are not illustrated, where officers will need to use their professional judgement to make
appropriate disclosures. On the other hand, some disclosures exampled may not be relevant and may be omitted where
appropriate. Therefore, knowledge of the disclosure provisions of Accounting Standards and Australian Interpretations are
pre‑requisites for the preparation of financial reports.
Specifically, this Model does not provide guidance on the disclosure requirements of the following Accounting Standards and
Australian Interpretations:
4
Reference
Title
AASB 2
‘Share-based Payment’
AASB 3
‘Business Combinations’
AASB 4
‘Insurance Contracts’
AASB 6
‘Exploration for and Evaluation of Mineral Resources’
AASB 7
Financial Instruments - Disclosure (para 20)
AASB 112
‘Income Taxes’
AASB 114
‘Segment Reporting’
AASB 120
‘Accounting for Government Grants and Disclosure of Government Assistance’
AASB 124
‘Related Party Disclosures’
AASB 127
‘Consolidated and Separate Financial Statements’ (except for certain disclosure requirements related to
Associates and Joint Ventures that have been transferred from relevant standards into this standard)
AASB 129
‘Financial Reporting in Hyperinflationary Economies’
AASB 133
‘Earnings per Share’
AASB 134
‘Interim Financial Reporting’
AASB 1023
‘General Insurance Contracts’
AASB 1038
‘Life Insurance Contracts’
AASB 1039
‘Concise Financial Reports’
AAS 25
‘Financial Reporting by Superannuation Plans’
Interpretation 7
‘Applying the Restatement Approach under AASB 129 Financial Reporting in Hyperinflationary Economies’
Interpretation 8
‘Scope of AASB 2’
Interpretation 11
‘AASB 2 – Group and Treasury Share Transactions’
Interpretation 12
‘Service Concession Arrangements’
5
AASB Accounting Standards
The Accounting Standards are listed in numeric sequence, beginning with the IFRS equivalent standards (AASB 1 – 99)
followed by the International Accounting Standard (IAS) equivalent standards (AASB 101 – 199) and the Australian
specific standards.
6
Reference
Title
Framework
Framework for the Preparation and Presentation of Financial Statements
AASB 1
First‑Time Adoption of Australian Equivalents to International Financial Reporting Standards
AASB 2
Share‑based Payment
AASB 3
Business Combinations
AASB 4
Insurance Contracts
AASB 5
Non‑Current Assets Held for Sale and Discontinued Operations
AASB 6
Exploration for and Evaluation of Mineral Resources
AASB 7
Financial Instruments: Disclosures
AASB 101
Presentation of Financial Statements
AASB 102
Inventories
AASB 107
Cash Flow Statements
AASB 108
Accounting Policies, Changes in Accounting Estimates and Errors
AASB 110
Events After the Balance Sheet Date
AASB 111
Construction Contracts
AASB 112
Income Taxes
AASB 114
Segment Reporting
AASB 116
Property, Plant and Equipment
AASB 117
Leases
AASB 118
Revenue
AASB 119
Employee Benefits
AASB 120
Accounting for Government Grants and Disclosure of Government Assistance
AASB 121
The Effects of Changes in Foreign Exchange Rates
AASB 123
Borrowing Costs
AASB 124
Related Party Disclosures
AASB 127
Consolidated and Separate Financial Statements
AASB 128
Investments in Associates
AASB 129
Financial Reporting in Hyperinflationary Economies
AASB 131
Interests in Joint Ventures
AASB 132
Financial Instruments: Presentation
AASB 133
Earnings per Share
AASB 134
Interim Financial Reporting
AASB 136
Impairment of Assets
AASB 137
Provisions, Contingent Liabilities and Contingent Assets
AASB 138
Intangible Assets
AASB 139
Financial Instruments: Recognition and Measurement
AASB 140
Investment Property
AASB 141
Agriculture
AASB 1004
Contributions
AASB 1023
General Insurance Contracts
Reference
Title
AASB 1031
Materiality
AASB 1038
Life Insurance Contracts
AASB 1039
Concise Financial Reports
AASB 1048
Interpretation and Application of Standards
AASB 1049
Whole of government and General Government Sector Financial Reporting
AASB 1050
Administered Items
AASB 1051
Land Under Roads
AASB 1052
Disaggregated Disclosures
AAS 25
Financial Reporting by Superannuation Plans
Australian Interpretations
The Australian Interpretations are listed in numeric sequence, beginning with the IFRIC equivalent interpretations
(Interpretation 1 – 99) followed by the SIC equivalent interpretations (Interpretation 101 – 199) and finally the Australian
specific interpretations (Interpretation 1001 – 1099).
Reference
Title
Interpretation 1
Changes in Existing Decommissioning, Restoration and Similar Liabilities
Interpretation 2
Members’ Shares in Co‑operative Entities and Similar Instruments
Interpretation 4
Determining whether an Arrangement Contains a Lease
Interpretation 5
Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
Interpretation 6
Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment
Interpretation 7
Applying the Restatement Approach under AASB 129 ‘Financial Reporting in Hyperinflationary
Economies’
Interpretation 8
Scope of AASB 2 (Share‑based Payment)
Interpretation 9
Reassessment of Embedded Derivatives
Interpretation 10
Interim Financial Reporting and Impairment
Interpretation 11
AASB 2 - Group and Treasury Share Transactions
Interpretation 12
Service Concession Arrangements – applicable to annual reporting periods on or after 1 Jan 2010
Interpretation 13
Customer Loyalty Programmes
Interpretation 14
AASB 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction –
applicable to annual reporting periods on or after 1 Jan 2010
Interpretation 15
Hedges of a Net Investment in a Foreign Operation
Interpretation 16
Distributions of Non-cash Assets to Owners Interpretation 17
Transfers of Assets from Customers
Interpretation 18
Extinguishing Financial Liabilities with Equity Instruments
Interpretation 107
Introduction of the Euro
Interpretation 110
Government Assistance – No Specific Relation to Operating Activities
Interpretation 112
Consolidation – Special Purpose Entities
Interpretation 113
Jointly Controlled Entities – Non‑Monetary Contributions by Venturers
Interpretation 115
Operating Leases – Incentives
Interpretation 121
Income Taxes – Recovery of Revalued Non‑Depreciable Assets
Interpretation 125
Income Taxes – Changes in the Tax Status of an Entity or its Shareholders
Interpretation 127
Evaluating the Substance of Transactions involving the Legal Form of a Lease
7
Reference
Title
Interpretation 129
Service Concession Arrangements: Disclosures
Interpretation 131
Revenue – Barter Transactions Involving Advertising Services
Interpretation 132
Intangible Assets – Web Site Costs
Interpretation 1001
Consolidated Financial Reports in relation to Pre‑Date‑of‑Transition Duel Listed Company Arrangements
Interpretation 1002
Post‑Date‑of‑Transition Stapling Arrangements
Interpretation 1003
Australian Petroleum Resource Rent Tax
Interpretation 1013
Consolidated Financial Reports in relation to Pre‑Date‑Of‑Transition Stapling Arrangements
Interpretation 1017
Developer and Customer Contributions for Connection to a Price‑Regulated Network
Interpretation 1019
The Superannuation Contributions Surcharge
Interpretation 1030
Depreciation of Long‑lived Physical Assets: Condition‑Based Depreciation and Related Methods
Interpretation 1031
Accounting for the Goods and Services Tax (GST)
Interpretation 1038
Contributions by Owners Made to Wholly‑Owned Public Sector Entities
Interpretation 1039
Substantive Enactment of Major Tax Bills in Australia
Interpretation 1042
Subscriber Acquisition Costs in the Telecommunications Industry
Interpretation 1047
Professional Indemnity Claims Liabilities in Medical Defence Organisations
Interpretation 1052
Tax Consolidation Accounting
Interpretation 1055
Accounting for Road Earthworks
Other Mandatory Reporting Requirements
Reference
Title
Local Government (Finance and Reporting) Regulations 2004
Local Government (Long Service Leave) Regulations 2002
8
Model Council
Local Government Model
Annual Financial Report
For the year ending 30 June 2012
9
Example Council
Financial Report
Table of Contents
Reference
AAS/AASB
Act
Financial Report
LGR 5
Standard Statements
Standard Statement of Financial Performance
Standard Statement of Financial Position
Standard Statement of Cash Flows
Standard Statement of Capital Works
Basis of Preparation of the Standard Statements
LGR 12
Certification of the Standard Statements
LGR 13
General Purpose Financial Statements
101
Comprehensive Income Statement
101
Statement of Financial Position
101
Statement of Changes in Equity
101
Cash Flow Statement
Notes to Financial Statements
Introduction
101, 108
118
Note 2Rates and charges
118
Note 3Statutory fees and fines
118
10
Note 1Significant accounting policies
LGR 14
Note 4User fees
118
Note 5Grants
118
Note 6Contributions
118
Note 7Reimbursements
118
Note 8Other revenue
101
Note 9Employee benefits
101
Note 10
Materials and services
101
Note 11
Bad and doubtful debts
101
Note 12
Depreciation and amortisation
101
Note 13
Finance costs
101
Note 14
Other expenses
101
Note 15
Investments in associates
101
Note 16
Cash and cash equivalents
101
Note 17
Trade and other receivables
101
Note 18
Financial assets
101
Note 19
Inventories
101
Note 20
Assets held for Sale
101
Note 21
Other assets
101
Note 22
Property, plant, equipment and infrastructure
101
Note 23
Investment property
101
Note 24
Intangible assets
Reference
AAS/AASB
Act
Notes to Financial Statements Cont.
101
Note 25
Trade and other payables
Note 26
Trust funds and deposits
101
Note 27
Provisions
101
Note 28
Interest bearing loans and borrowings
101
Note 29
Reserves
101
Note 30
Adjustments directly to equity
107
Note 31
Reconciliation of cash flows from operating activities to surplus (deficit)
107
Note 32
Reconciliation of cash and cash equivalents
132
Note 33
Financing arrangements
107
Note 34
Non-cash financing and investing activities
Note 35
Restricted assets
119
Note 36
Superannuation
101, 116
Note 37
Commitments
117
Note 38
Operating leases
137
Note 39
Contingent liabilities and contingent assets
7, 132
Note 40
Financial instruments
101
Note 41
Auditor’s remuneration
110
Note 42
Events occurring after balance date
LGD 5
Note 43
Related party transactions
LGR 14
Note 44
Joint venture information
Note 45
Revenue, expenses and assets by functions/activities
LGR 15
Note 46
Financial ratios (Performance indicators)
BP
Note 47
Capital expenditure
Note 48
Special committees and other activities
101
LGR 14
LGR14
101
131
LG LSL
Reg
101
LGR16
Certification of the Financial Report
Audit Opinion
Commentary – Contents page
A contents page for notes is not mandatory; however it may assist readers to understand the financial report
11
Standard Statement of Financial Performance
For the year ending 30 June 2012
Budget
$’000
Variance
$’000
Actual
%
Ref
Revenues from operations
Rates
Operating grants and contributions
Grants and contributions
Interest
User charges
Statutory fees
Other
[Specify as needed]
Total revenues from operations
Expenses from operations
Employee costs
Materials and consumables
External contracts
Utilities
Depreciation and amortisation
Other
[Specify as needed]
Total expenses from operations
Net surplus (deficit) from operations
Fair value adjustments
Asset revaluation increments
Contributed assets
Capital Grants
Gain on disposal of assets
Increase (decrease) in accumulated surplus on
adoption of new Accounting Standard
Surplus/Deficit for the Period
Other changes in equity
Total change in equity
12
$’000
Standard Statement of Financial Performance
For the year ending 30 June 2012
Variance Explanation Report
Ref.
Item
Commentary
Commentary on the Standard Statements of Financial Performance for
the Annual Report:
The Standard Statement of Financial Performance for the Annual Report shows what has happened during the year in terms
of revenue, expenses and other adjustments from all activities. The Standard Statement of Financial Performance must be
presented in the same format as that which was presented in Council’s budget
The Standard Statement of Financial Performance requires revenues to be separately disclosed where the item is of such a
size, nature or incidence that its disclosure is relevant in explaining the performance of the council.
The Standard Statement of Financial Performance for the Annual Report also shows the movement in equity, so that a
separate Statement of Changes in Equity is not necessary.
13
D-2 comparison report
Standard Statement of Financial Position
As at 30 June 2012
Budget
$’000
Current assets
Cash assets
Receivables
Investments
Other financial assets
Other
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Other
Total non-current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Employee benefits
Other
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Employee benefits
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Accumulated surplus
Asset revaluation reserve
Other reserves
Total equity
14
Variance
$’000
%
Actual
Ref
$’000
Standard Statement of Financial Position
As at 30 June 2012
Variance Explanation Report
Ref.
Item
Commentary
Commentary on the Standard Statement of Financial Position for the Annual Report:
The Standard Statement of Financial Position for the Annual Report shows a snap shot of the financial situation as at the
end of the year. It shows the total of what is owned (assets) less what is owed (liabilities). The bottom line of this statement is
net assets, which is the net worth of Council. The Standard Statement of Financial Position must be presented in the same
format as that which was presented in Council’s budget
The change in net assets between two year’s Standard Statements of Financial Position shows how the financial position has
changed over that period which is described in more detail in the Standard Statement of Financial Performance.
The assets and liabilities are separated into current and non-current. Current means those assets or liabilities which will fall
due in the next twelve months.
15
D-3 comparison report
Standard Statement of Cash Flows
For the year ending 30 June 2012
Budget
Cash flows from operating activities
Receipts from customers
Payments to suppliers
Net cash inflow (outflow) from customers/suppliers
Interest received
Government receipts
Other
[Specify as needed]
Net cash inflow (outflow) from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of investments
Payments for property, plant and equipment
Other
[Specify as needed]
Net cash inflow (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Other
[Specify as needed]
Net cash inflow (outflow) from financing activities
Net increase (decrease) in cash held
Cash at the beginning of the year
Cash at the end of the year
Reconciliation of Operating Result and Net Cash
Flows from Operating Activities
For the year ending 30 June 2012
Net surplus (deficit) from operations
Depreciation and amortisation
(Profit) Loss on sale of property, plant and equipment
Net movement in current assets and liabilities
Net cash inflow (outflow) from operating activities
16
$’000
Variance
$’000
%
Actual
Ref
$’000
D-3 comparison report
Standard Statement of Cash Flows
For the year ending 30 June 2012
Variance Explanation Report
Ref.
Item
Commentary
Commentary on the Standard Statement of Cash Flows for the Annual Report:
A Standard Statement of Cash Flows for the Annual Report shows what has happened during the year in terms of cash. It
explains what cash movements have resulted in the difference in the cash balance at the beginning and the end of the year.
The net cash flows from operating activities, shows how much cash remains, after paying for providing services to the
community, which may be invested in things such as capital works. The Standard Statement of Cash Flows must be
presented in the same format as that which was presented in Council’s budget
The information in the Standard Statement of Cash Flows assists users in the assessment of the ability to generate cash
flows, meet financial commitments as they fall due including the servicing of borrowings, fund changes in the scope or nature
of activities and obtain external finance.
A reconciliation of operating result and net cash flows from operating activities has been added to highlight non-cash items of
significance.
17
D-4 comparison report
Standard Statement Of Capital Works
For the year ending 30 June 2012
Budget
Capital Works Areas
$’000
Variance
$’000
%
Actual
Ref
$’000
Roads
Drains
Open space
Buildings
Plant, equipment and other
Feasibility studies
Other
Total capital works
Represented by:
Renewal
Upgrade
Expansion
New assets
Feasibility studies
Total capital works
Budget
Property, Plant & Equipment movement
Reconciliation Worksheet
The movement between the previous year and the
current year in property, plant and equipment as
shown in the Statement of Financial Position links to
the net of the following items:
Total capital works
Asset revaluation movement
Depreciation and amortisation
Written down value of assets sold
Net movement in property, plant and equipment
18
$’000
Variance
$’000
%
Actual
Ref
$’000
D-4 comparison report
Standard Statement of Capital Works
For the year ending 30 June 2012
Variance Explanation Report
Ref.
Item
Commentary
Commentary on the Standard Statements of Capital Works for the Annual Report:
The Standard Statement of Capital Works for the Annual Report sets out all the actual capital expenditure in relation to
non-current assets for the year. It also shows the amount of capital works expenditure which is expected to be renewing,
upgrading, expanding or creating new assets. This is important because each of these categories has a different impact on
Council’s future costs.
• Capital expansion expenditure extends an existing asset to a new group of users. It is discretionary expenditure which
increases future operating and maintenance costs, because it increases council’s asset base, but may be associated with
additional revenue from the new user group.
• Capital renewal expenditure reinstates existing assets, it has no impact on revenue, but may reduce future operating and
maintenance expenditure if completed at the optimum time.
• Capital upgrade expenditure enhances an existing asset to provide a higher level of service or expenditure that will increase
the life of the asset beyond that which it had originally. Upgrade expenditure is discretional and often does not result in
additional revenue unless direct user charges apply. It will increase operating and maintenance expenditure in the future
because o the increase in the council’s asset base.
• New capital expenditure does have any element of renewal, expansion or upgrade of existing assets. New capital
expenditure may or may not result in additional revenue for council and will result in an additional burden for future
operation, maintenance and capital renewal.
The property, plant and equipment movement reconciliation worksheet is included to show how the Standard Statement of
Capital Works figures relate to the Standard Statement of Financial Position movement in property, plant and equipment.
19
Notes to the Standard Statements
1. Basis of preparation of Standard Statements
Council is required to prepare and include audited Standard Statements within its Annual Report. Four Statements are
required - Standard Operating Statement, Standard Balance Sheet, Standard Cash Flow Statement, and a Standard
Statement of Capital Works, together with explanatory notes.
These statements and supporting notes form a special purpose financial report prepared to meet the requirements of the
Local Government Act 1989 and Local Government (Finance and Reporting) Regulations 2004.
The Standard Statements have been prepared on accounting bases consistent with those used for General Purpose Financial
Statements and the Budget. The result reported in these statements are consistent with those reported in the General
Purpose Financial Statements.
OR
The Standard Statements have been prepared on a differing basis to that adopted in the General Purpose Financial
Statements and the Budget. Differences in preparation are as follows:
Include details of any differences in accounting between the Standard Statements and the GPFR and Budget.
The Standard Statements are not a substitute for the General Purpose Financial Statements. They have not been prepared in
accordance with all Australian Accounting Standards or other authoritative pronouncements.
The Standard Statements compare Council’s financial plan, expressed through its budget, with actual performance. The
Local Government Act 1989 requires explanation of any material variances. The City has adopted a materiality threshold of
ten per cent or a positive or negative dollar variance of $<<insert value>>. Explanations have not been provided for variations
below the materiality threshold unless the variance is considered to be material because of its nature.
The budget figures included in the Statements are those adopted by Council on <<insert date>>. The budget was based
on assumptions that were relevant at the time of adoption of the budget. The City set guidelines and parameters for revenue
and expense targets in this budget in order to meet its business plan and financial performance targets for both the short
and long term. The budget did not reflect any changes to equity resulting from assets revaluations, as their impacts were not
considered predictable.
Detailed information on the actual financial results are contained in the General Purpose Financial Statements. The detailed
budget can be obtained by contacting Council. The Standard Statements must be read with reference to these documents.
Commentary on the Notes to the Standard Statements:
The standard statements are to be accompanied by a note explaining the composition of the standard statements. It should
also inform the user of the relationship to the general purpose financial report, budget and other Council documents.
20
Example City Council
Certification of Standard Statements
In my opinion, the accompanying standard statements have been prepared on accounting bases consistent with the
financial statements and in accordance with the Local Government Act 1989 and the Local Government (Finance and
Reporting) Regulations 2004.
<<INSERT NAME>>
PRINCIPAL ACCOUNTING OFFICER
<<INSERT DATE>>
In our opinion, the accompanying standard statements have been prepared on accounting bases consistent with the
financial statements and in accordance with the Local Government Act 1989 and the Local Government (Finance and
Reporting) Regulations 2004.
As at the date of signing, we are not aware of any circumstances which would render any particulars in the standard
statements to be misleading or inaccurate.
We have been authorised by the Example City Council on <<insert date>> to certify the standard statements in their final form.
<<INSERT NAME>>
MAYOR/COUNCILLOR
<<INSERT DATE>>
<<INSERT NAME>>
COUNCILLOR
<<INSERT DATE>>
<<INSERT NAME>>
CHIEF EXECUTIVE OFFICER
<<INSERT DATE>>
Commentary on the certification of the Standard Statements:
The standard statements are to be certified by the principal accounting Officer and two councillors nominated by Council
in a resolution adopting the standard statements and authorising the Councillors to sign.
21
Model Council
General Purpose
Financial Report
22
Comprehensive Income Statement
For the Year Ended 30 June 2012
Reference
Note
2012
2011
$’000
$’000
AASB
LGR
Para
101
82
Income
118
35
Rates and charges
2
45,794
43,357
118
35
Statutory fees and fines
3
2,818
2,703
118
35
User fees
4
7,828
7,442
1004
12
Contributions - cash
6 (a)
1,562
1,254
1004
12
Contributions - non-monetary assets
6 (b)
449
359
LGR
14
Grants - recurrent
5
12,000
13,000
LGR
14
Grants - non-recurrent
5
9,000
3,500
116
68
Net gain/(loss) on disposal of property, infrastructure, plant and
equipment
7
479
-
118
35
Other income
8
3,204
3,542
140
75
Fair value adjustments for investment property
23
1,000
-
101
82(c)
Share of net profits/(losses) of associates and joint
ventures accounted for by the equity method
15
-
-
84,134
75,157
101
99
Expenses
101
99
Employee benefits
9
(35,367)
(34,421)
101
99
Materials and services
10
(17,939)
(19,843)
101
99
Bad and doubtful debts
11
(2,167)
(2,940)
101
104
Depreciation and amortisation
12
(15,187)
(14,809)
101
82
Finance costs
13
(247)
(320)
101
99
Other expenses
14
(8,309)
(6,485)
(79,216)
(78,818)
4,918
(3,661)
Total income
Total expenses
Profit/(loss)
101
82(g)
7
20
116
40.1
Other comprehensive income
Fair value adjustments for financial assets at fair value
Net asset revaluation increment(decrement)
Share of other comprehensive income of associates and joint
ventures accounted for by the equity method
101
82(f)
Comprehensive result
-
-
6,637
-
-
-
11,555
(3,661)
The above comprehensive income statement should be read in
conjunction with the accompanying notes.
23
Reference
Commentary – Comprehensive Income statement
AASB 101.Aus1.1(b) (c)
AASB 101 Presentation of Financial Statements applies to general purpose financial reports of each
reporting entity, and financial reports that are, or are held out to be, general purpose financial reports.
AASB 101.5
AASB 101 uses terminology that is suitable for profit-oriented entities, including public sector business
entities. Local Government agencies applying the Standard may need to amend the descriptions used
for particular line items in the financial statements and for the financial statements themselves.
AASB 101.78
All items of income and expense recognised in a period shall be included in profit or loss unless an
Australian Accounting Standard requires otherwise.
AASB 101. 81
An entity shall present all items of income and expense recognised in a period:
(a)
in a single statement of comprehensive income; or
(b)in two statements: a statement displaying components of profit or loss (separate income
statement) and a second statement beginning with profit or loss and displaying components of
other comprehensive income (statement of comprehensive income).
This model account adopts the approach of a single comprehensive statement of income
Alternate Formats
Additional line items, headings and subtotals may be included in the statement of comprehensive
income and the separate income statement (if presented), when such presentation is relevant to an
understanding of the entity’s financial performance.
AASB 101.85
Given the limitations on alternate formats it is strongly recommended that prior to
preparing an alternate format of comprehensive income statement the Council engages
with the Victorian Auditor-General’s Office to determine any potential implications of
the proposed format.
Information to be presented On the face of the comprehensive income statement
AASB 101.82
As a minimum, the face of the comprehensive income statement shall include line items that present
the following amounts for the period:
(a) revenue;
(b)
finance costs;
(c) share of the profit or loss of associates and joint ventures accounted
for using the equity method;
(f) profit or loss;
(g) each component of other comprehensive income classified by nature
(excluding amounts in (h));
(h) share of the other comprehensive income of associates and joint
ventures accounted for using the equity method; and
(i) total comprehensive income.
24
Reference
Commentary – Comprehensive Income statement
AASB 101.7
Other Comprehensive Income
Other comprehensive income comprises items of income and expense (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted by other Australian
Accounting Standards.
The components of other comprehensive income include:
(a) changes in revaluation surplus (see AASB 116 Property,
Plant and Equipment and AASB 138 Intangible Assets);
(b) actuarial gains and losses on defined benefit plans recognised
in accordance with paragraph 93A of AASB 119 Employee Benefits;
(c) gains and losses arising from translating the financial statements of a foreign
operation (see AASB 121 The Effects of Changes in Foreign Exchange Rates);
(d) gains and losses on remeasuring available-for-sale financial assets
(see AASB 139 Financial Instruments: Recognition and Measurement); and
(e) the effective portion of gains and losses on hedging instruments in a cash flow
hedge (see AASB 139).
Revenue
The revenues required to be disclosed by AASB 101 (the revenue line item) include all revenues
recognised in accordance with AASB 118 Revenue.
AASB 118.35 (c)
Disclosure is also required for the amount of revenue arising from exchanges of goods or services
included in each significant category of revenue.
Offsetting
AASB 101.32 Income and expenses shall not be offset unless required by an Australian Accounting
Standard
Information to be Presented either on the face of the operating statement or in the Notes
Material items of income and expense
AASB 101.86 requires that when items of income and expense are material, their nature and amount
shall be disclosed separately either on the face of the operating statement or in the notes to the
financial statements.
25
Reference
Commentary – Comprehensive Income statement
AASB 7.20
For items of income, expense, gains or losses arising from financial instruments, an entity shall
disclose the following either on the face of the operating statement or in the notes:
(a) net gains or net losses on:
(i) financial assets or financial liabilities at fair value through profit or loss, showing
separately those on financial assets or financial liabilities designated as such upon initial
recognition, and those on financial assets or financial liabilities that are classified as held
for trading in accordance with AASB 139;
(ii) available-for-sale financial assets, showing separately the amount of gain or loss
recognised directly in equity during the period and the amount removed from equity
and recognised in profit or loss for the period;
(iii) held-to-maturity investments;
(iv) loans and receivables; and
(v) financial liabilities measured at amortised cost;
(b) total interest income and total interest expense for financial assets and financial
liabilities that are not at fair value through profit or loss;
(c) fee income and expense (other than amounts included in determining the
effective interest rate) arising from:
(i) financial assets or financial liabilities that are not at fair value through profit or loss; and
(ii) trust and other fiduciary activities that result in the holding or investing of assets on
behalf of individuals, trusts, retirement benefit plans, and other institutions;
(d) interest income on impaired financial assets accrued in accordance with
paragraph AG93 of AASB 139; and
(e) the amount of any impairment loss for each class of financial asset.
Classification of expenses by nature or function
AASB 101.88 and 89
An entity shall present an analysis of expenses using a classification based on either the nature of
expenses or their function, whichever provides information that is reliable and more relevant. Entities
are encouraged to present the analysis on the face of the income statement.
AASB 101.29,
Regardless of whether expenses are classified by nature or by function, each material class of
similar items is separately presented. Unclassified expenses that are immaterial both individually and
in aggregate may be combined and presented as a single line item. Items of a dissimilar nature or
function shall be presented separately unless they are immaterial.
It follows that the total of unclassified expenses is unlikely to exceed 10 per cent of total expenses
classified by nature or by function.
Other presentation issues
Consistency of presentation
AASB 101.27
The presentation and classification of items in the financial report shall be retained from one
period to the next unless:
(a) it is apparent, following a significant change in the nature of the entity’s operations or a review
of its financial report, that another presentation or classification would be more appropriate
having regard to the criteria for the selection and application of accounting policies in AASB
108 Accounting Policies, Changes in Accounting Estimates and Errors; or
(b) an Australian Accounting Standard requires a change in presentation.
26
Reference
Commentary – Comprehensive Income statement
Materiality and aggregation
AASB 101.29
Each material class of similar items shall be presented separately in the financial report. Items of a
similar nature or function shall be presented separately unless they are immaterial.
Goods and Services Tax (GST)
AASB Interpretation
1031.6 and 7
AASB Interpretation 1031 Accounting for the Goods and Services Tax (GST) provides that revenues and
expenses must be recognised net of the amount of GST, except that where GST incurred by a purchaser
relating to expense items is not recoverable from the taxation authority it must be recognised as part of the
cost of acquisition of an asset or as part of any item of expense. Entities that are not able to recover GST
relating to particular expense items should include an accounting policy note indicating which expense
items disclosed in the financial report are inclusive of non-recoverable GST.
27
Statement of Financial Position
As at 30 June 2012
Reference
AASB
Para
Note
2011
$’000
$’000
101
51
Assets
101
51
Current assets
101
68
Cash and cash equivalents
16
18,254
18,033
101
68
Trade and other receivables
17
4,319
3,827
101
68
Other financial assets
18
-
-
101
68
Inventories
19
216
173
101
68
Non-current assets classified as held for sale
20
6
6
101
74
Other assets
21
482
683
101
69
Total current assets
23,277
22,722
101
76
Non-current assets
101
68
Trade and other receivables
17
-
338
101
68
Financial assets
18
200
196
101
68
Investments in associates accounted for using the equity method
15
-
-
101
68
Property, infrastructure, plant and equipment
22
510,681
499,432
101
68
Investment property
23
8,000
10,000
101
68
Intangible assets
24
-
-
101
74
Other assets
21
102
83
101
69
Total non-current assets
518,983
510,049
101
69
Total assets
542,260
532,771
101
51
Liabilities
101
51
Current liabilities
101
68
Trade and other payables
25
6,876
6,273
101
14
Trust funds and deposits
26
588
574
101
68
Provisions
27
5,872
5,825
101
68
Interest-bearing loans and borrowings
28
1,161
2,704
101
69
Total current liabilities
14,497
15,376
101
51
Non-current liabilities
101
68
Provisions
27
1,090
1,138
101
68
Interest-bearing loans and borrowings
28
2,565
3,344
101
69
Total non-current liabilities
3,655
4,482
101
69
Total liabilities
18,152
19,858
101
69
Net Assets
524,468
512,913
398,622
393,704
125,846
119,209
524,468
512,913
Equity
101
101
68
Accumulated surplus
101
68
Reserves
101
69
Total Equity
The above balance sheet should be read in conjunction with the
accompanying notes.
28
2012
29
Reference
Commentary – Balance Sheet
Information to be presented
On the face of the balance sheet
AASB 101.68, 68A
Paragraphs 68 and 68A of AASB 101 set out the line items that shall, as a minimum, be presented
on the face of the balance, which are the following:
Assets:
• cash and cash equivalents;
• trade and other receivables;
• inventories;
• assets held for sale;
• investment property;
• biological assets;
AASB 131.Aus 57.4
• investments accounted for using the equity method
(must be recognised as a non-current asset);
• tax assets;
• financial assets (excluding cash and cash equivalents, trade and other receivables,
inventories and investments accounted for using the equity method);
• property, plant and equipment; and
• intangible assets.
Liabilities:
• trade and other payables;
• liabilities held for sale;
• current tax liabilities;
• deferred tax liabilities;
• financial liabilities; and
• provisions.
Note that where a Council has no amounts applicable to any individual line item, that line item should
be omitted from the balance sheet.
Additional Disclosures
AASB 101.69
Additional line items, headings and subtotals shall be presented on the face of the balance sheet
when such presentation is relevant to an understanding of the entity’s financial position.
Offsetting
AASB 101.32
Assets and liabilities shall not be offset unless required or permitted by
an Australian Accounting Standard
29
Reference
Commentary – Balance Sheet
Offset of financial assets and financial liabilities
AASB 132.42
A financial asset and a financial liability shall be offset and the net amount presented in the balance
sheet when, and only when, an entity:
(a) currently has a legally enforceable right to set off the recognised amounts; and
(b) intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity shall
not offset the transferred asset and the associated liability. (See AASB 139, paragraph 36).
Either on the face of the balance sheet or in the notes
AASB 101.74 and 75
An entity shall disclose, either on the face of the balance sheet, or in the notes, further subclassifications of the line items presented, classified in a manner appropriate to the entity’s operations.
The detail provided in sub-classifications depends on the requirements of Australian Accounting
Standards and on the size, nature and function of the amounts involved.
Categories of financial assets and financial liabilities
AASB 7.8
Paragraph 8 of AASB 7 requires that an entity disclose the carrying amounts of each category of
financial instruments either on the face of the balance sheet or in the notes. For the purposes of this
Model, the carrying amounts for each category of financial instruments are disclosed in Note 40.
Presentation issues
Current/Non-current Distinction
AASB 101.51
An entity shall present current and non-current assets, and current and non-current liabilities, as
separate classifications on the face of its balance sheet except when a presentation based on liquidity
provides information that is reliable and is more relevant. When that exception applies, all assets and
liabilities shall be presented broadly in order of liquidity. The term ‘current’ is defined for:
AASB 101.57
(a) assets, as an asset that is:
(i) expected to be realised in, or is intended for sale or consumption in,
the entity’s normal operating cycle; or
(ii) held primarily for the purpose of being traded; or
(iii) expected to be realised within 12 months after the reporting date; or
(iv) cash or a cash equivalent unless it is restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting date; and
AASB 101.60
(b) liabilities, as a liability that:
(i) is expected to be settled in the entity’s normal operating cycle; or
(ii)is held primarily for the purpose of being traded; or
(iii) is due to be settled within 12 months after the reporting date; or
(iv) the entity does not have an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
Consistency
AASB 101.27
The presentation and classification of items in the financial report shall be retained from one period to
the next unless:
(a)it is apparent, following a significant change in the nature of the entity’s operations or a review
of its financial report, that another presentation or classification would be more appropriate
having regard to the criteria for the selection and application of accounting policies in AASB
108 Accounting Policies, Changes in Accounting Estimates and Errors; or
(b) an Australian Accounting Standard requires a change in presentation.
30
Reference
Commentary – Balance Sheet
Materiality and aggregation
AASB 101.29
Each material class of similar items shall be presented separately in the financial report. Items
of a similar nature or function shall be presented separately unless they are immaterial.
Presentation of a non-current asset or disposal group classified as held for sale
AASB 5.40
An entity shall not reclassify or re-present amounts for non-current assets or for the assets and
liabilities of disposal groups classified as held for sale in the balance sheets for prior periods to reflect
the classification in the balance sheet for the latest period presented.
Refinancing liabilities
AASB 101.63
Where current and non-current liabilities are presented separately, financial liabilities shall be
categorised as current when they are due to be settled within 12 months of reporting date, even if:
(a) the original term was for a period longer than 12 months; and
(b) an agreement to refinance, or to reschedule payments, on a long term basis is completed after
the reporting date and before the financial report is authorised for issue.
AASB 101.64
However, if an entity expects, and has the discretion, to refinance or roll over an obligation for at
least 12 months after the reporting date under an existing loan facility, it classifies the obligation as
non-current, even if it would otherwise be due within a shorter period. However, when refinancing or
rolling over the obligation is not at the discretion of the entity (for example, there is no agreement to
refinance), the potential to refinance is not considered and the obligation is classified as current.
Breach of loan covenants
AASB 101.65
Where current and non-current liabilities are presented separately and an undertaking, including a
covenant included in a borrowing agreement, is breached such that the liability becomes payable on
demand, the liability shall be categorised as current even if the lender has agreed, after the reporting
date, and before the authorisation of the financial report for issue, not to demand payment as a
consequence of the breach.
AASB 101.66
However, the liability is classified as non-current if the lender agreed by the reporting date to provide a
period of grace ending at least 12 months after the reporting date, within which the entity can rectify
the breach and during which the lender cannot demand immediate repayment.
Goods and Services Tax (GST)
AASB Interpretation 1031 Accounting for the Goods and Services Tax (GST) provides that assets shall
be recognised net of the amount of goods and services tax (GST), except where:
AASB Interpretation
1031.7
• the amount of GST incurred by a purchaser that is not recoverable from the taxation
authority shall be recognised as part of the cost of acquisition of an asset or as part of
an item of expense; and/or
AASB Interpretation
1031.8
• the interpretation provides that receivables and payables shall be stated with the
amount of GST included.
AASB Interpretation
1031.9
The gross amount of GST recoverable from, or payable to, the taxation authority shall be included as
part of either receivables or other liabilities in the balance sheet.
31
Statement of Changes in Equity
For the Year Ended 30 June 2012
Reference
AASB
Para
101
96
101
8c
Accumulated
Note
2012
Balance at beginning of the
financial year
30
Total
Revaluation
Other
Reserve
Reserves
Surplus
2012
2012
2012
2012
$’000
$’000
$’000
$’000
512,913
393,704
107,840
11,369
-
-
-
-
-
-
101
96
Adjustment on change in
accounting policy
1051
9
- Land under roads
101
96a
Comprehensive result
29
11,555
4,918
6,637
136
126
Impairment losses on
revalued assets
30
-
-
-
136
126
Reversal of impairment losses
on revalued assets
30
-
-
-
-
524,468
398,622
114,477
11,369
-
Balance at end of the
financial year
Accumulated
Note
2011
Balance at beginning of the
financial year
Adjustment on change in
accounting policy
30
Comprehensive result
101
96d
Revaluation
Other
Total
Surplus
Reserve
Reserves
2011
2011
2011
2011
$’000
$’000
$’000
$’000
516,574
397,365
107,840
11,369
-
-
-
-
(3,661)
(3,661)
-
-
29(a)
-
-
-
-
Impairment losses on revalued
assets
30
-
-
-
-
Reversal of impairment losses on
revalued assets
30
-
-
-
-
512,913
393,704
107,840
11,369
Net asset revaluation
increment(decrement)
Balance at end of the
financial year
The above statement of changes in equity should be read in conjunction with the accompanying notes
32
Reference
Commentary – Statement of Changes in Equity
AASB 101.
Accounting standards for the statement of changes in equity are set out in AASB 101 Presentation
of Financial Statements. The standard applies to general purpose financial reports of each reporting
entity, and financial reports that are, or are held out to be, general purpose financial reports.
Information to be disclosed
On the face of the statement
AASB 101.96
An entity shall present a statement of changes in equity showing on the face of the statement:
(a)
profit or loss for the period;
(b) each item of income and expense for the period that, as required by other Standards, is
recognised directly in equity, and the total of these items;
(c)total income and expense (or comprehensive result) for the period (calculated as the sum of (a)
and (b)), showing separately the total amounts attributable to equity holders of the parent and
to minority interest; and
(d) for each component of equity, the effects of changes in accounting policies and corrections of
errors recognised in accordance with AASB 108 Accounting Policies, Changes in Accounting
Estimates and Errors.
A statement of changes in equity that comprises only these items shall be titled a ‘statement of
recognised income and expense’.
Either on the face of the statement or in the notes
AASB 101.97
An entity shall also present, either on the face of the statement of changes in equity or in the notes to
the financial statements:
(a) the amounts of transactions with equity holders acting in their capacity as equity holders,
showing separately distributions to equity holders;
(b) the balance of accumulated funds at the beginning of the period and at the reporting date, and
the changes during the period; and
(c) a reconciliation between the carrying amount of each class of contributed equity and each
reserve at the beginning and the end of the period, separately disclosing each change.
Reconciliation of each class of equity should be included in equity note.
Other
AASB 101.98
Changes in an entity’s equity between two reporting dates reflect the increase or decrease in its net
assets during the period. Except for changes resulting from transactions with equity holders acting in
their capacity as equity holders and transaction costs directly related to such transactions, the overall
change in equity during a period represents the total amount of income and expenses, including gains
and losses, generated by the entity’s activities during that period (whether those items of income and
expenses are recognised in profit or loss or directly as changes in equity).
AASB 101.99
All items of income and expense recognised in a period are to be included in profit or loss unless
another Australian Accounting Standard requires otherwise. Other Accounting Standards require
some gains and losses (for example revaluation increases and decreases) to be recognised directly
as changes in equity.
33
Statement of Cash Flows
For the Year Ended 30 June 2012
Reference
2012
2011
AASB
Para
Inflows/
Inflows/
101
102
(Outflows)
(Outflows)
101
8d
$’000
$’000
107
10
Cash flows from operating activities
107
18
Rates
46,123
42,983
651
2,703
7,826
7,442
21,000
16,500
Developer contributions (inclusive of GST)
1,562
1,254
Note
Statutory fees and fines
1031
11
User charges and other fines (inclusive of GST)
Grants (inclusive of GST)
107
31
Interest
1,264
1,179
1031
11
Other receipts (inclusive of GST)
2,099
2,363
-
816
Payments to suppliers (inclusive of GST)
(35,368)
(23,328)
Payments to employees (including redundancies)
(17,834)
(34,421)
(8,309)
(5,940)
31
19,014
11,551
47
(22,420)
(21,381)
3,561
3,174
(2,000)
-
5,000
-
Net GST refund/payment
Other payments
Net cash provided by (used in) operating activities
107
10
Cash flows from investing activities
Payments for property, infrastructure, plant and equipment
Proceeds from sale of property, infrastructure,
plant and equipment
Payments for investment property
Proceeds from sale of investment property
Payments for other financial assets
Proceeds from sale of other financial assets
Loans and advances to community organisations
Repayment of loans and advances from community organisations
107
10
Net cash provided by (used in) investing activities
(4)
-
-
187
(160)
(120)
148
118
(15,875)
(18,022)
Cash flows from financing activities
Finance costs
(228)
(320)
Trust funds and deposits
-
-
Proceeds from interest bearing loans and borrowings
-
-
Repayment of interest bearing loans and borrowings
(2,690)
(1,161)
Net cash provided by (used in) financing activities
(2,918)
(1,481)
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
32
7
31
Financing arrangements
33
107
43
Non-cash financing and investing activities
34
107
48
Restrictions on cash assets
35
The above cash flow statement should be read with the accompanying notes.
34
221
(7,952)
18,033
25,985
18,254
18,033
Reference
Commentary – Statement of Cash Flows
AASB 107 Aus1.1(b)
and (c)
Accounting standards for cash flow statements are set out in AASB 107 Cash Flow Statements. The
standard applies to general purpose financial reports of each reporting entity, and financial reports that
are, or are held out to be, general purpose financial reports.
Definitions
AASB 107.6
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value. Cash flows are inflows and outflows of cash and cash
equivalents. Financing activities are activities that result in changes in the size and composition of the
contributed capital and borrowings of the entity. Investing activities are the acquisition and disposal
of long-term assets and other investments not included in cash equivalents. Operating activities are
the principal revenue- producing activities of the entity and other activities that are not investing or
financing activities.
AASB 107.7
Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes. For an investment to qualify as a cash equivalent it must be readily
convertible to a known amount of cash and be subject to an insignificant risk of changes in value.
Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of,
say, three months or less from the date of acquisition. Equity investments are excluded from cash
equivalents unless they are, in substance, cash equivalents, for example in the case of preferred
shares acquired within a short period of their maturity and with a specified redemption date.
Operating activities
AASB 107.14
Cash flows from operating activities are primarily derived from the principal revenue-producing
activities of the entity. Therefore, they generally result from the transactions and other events that
enter into the determination of profit or loss. Examples of cash flows from operating activities are:
(a) cash receipts from the sale of goods and the rendering of services;
(b) cash receipts from royalties, fees, commissions and other revenue;
(c) cash payments to suppliers for goods and services;
(d) cash payments to and on behalf of employees;
(e) cash receipts and cash payments of an insurance entity for premiums and claims, annuities
and other policy benefits;
(f) cash payments or refunds of income taxes unless they can be specifically identified with
financing and investing activities; and
(g) cash receipts and payments from contracts held for dealing or trading purposes.
Some transactions, such as the sale of an item of plant, may give rise to a gain or loss which is
included in the determination of profit or loss. However, the cash flows relating to such transactions
are cash flows from investing activities.
AASB 107.18 (a)
AASB 2007-04 has amended AASB 107.18 to allow an entity to report cash flows from operating
activities using either the direct method, whereby major classes of gross cash receipts and gross cash
payments are disclosed, or the indirect method, whereby profit or loss is adjusted for the effects of
transactions of a non-cash nature (any deferrals or accruals of past or future operating cash receipts
or payments and items of income or expense associated with investing or financing cash flows).
AASB 107.19
This Model uses the direct method, consistent with the encouragement in AASB 107.19.
35
Reference
Commentary – Statement of Cash Flows
Investing activities
AASB 107.16
The separate disclosure of cash flows arising from investing activities is important because the cash
flows represent the extent to which expenditures have been made for resources intended to generate
future income and cash flows. Examples of cash flows arising from investing activities are:
(a) cash payments to acquire property, plant and equipment, intangibles and other long-term
assets. These payments include those relating to capitalised development costs and selfconstructed property, plant and equipment;
(b) cash receipts from sales of property, plant and equipment, intangibles and other long-term
assets;
(c) cash payments to acquire equity or debt instruments of other entities and interests in joint
ventures (other than payments for those instruments considered to be cash equivalents or
those held for dealing or trading purposes);
(d) cash receipts from sales of equity or debt instruments of other entities and interests in joint
ventures (other than receipts for those instruments considered to be cash equivalents and
those held for dealing or trading purposes);
(e) cash advances and loans made to other parties (other than advances and loans made by a
financial institution);
(f) cash receipts from the repayment of advances and loans made to other parties (other than
advances and loans of a financial institution); classified as financing activities; and
(g) cash payments for futures contracts, forward contracts, option contracts and swap contracts
except when the contracts are held for dealing or trading purposes, or the payments are
classified as financing activities: and
(h) cash receipts from futures contracts, forward contracts, option contracts and swap contracts
except when the contracts are held for dealing or trading purposes, or the receipts are
classified as financing activities.
When a contract is accounted for as a hedge of an identifiable position, the cash flows of the contract
are classified in the same manner as the cash flows of the position being hedged.
Financing activities
AASB 107.17
The separate disclosure of cash flows arising from financing activities is important because it is useful
in predicting claims on future cash flows by providers of capital to the entity. Examples of cash flows
arising from financing activities are:
(a) cash proceeds from issuing shares or other equity instruments;
(b) cash payments to owners to acquire or redeem the entity’s shares;
(c) cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other
short or long-term borrowings;
(d) cash repayments of amounts borrowed; and
(e) cash payments by a lessee for the reduction of the outstanding liability relating
to a finance lease.
AASB 107.21
36
An entity shall report separately major classes of gross cash receipts and gross cash payments arising
from financing activities, except to the extent that cash flows described in paragraphs 22 and 24 of
AASB 107 are reported on a net basis (refer to paragraphs below).
Reference
Commentary – Statement of Cash Flows
Reporting cash flows on a net basis
AASB 107.22
Cash flows arising from the following operating, investing or financing activities are to be
reported on a net basis:
(a) cash receipts and payments on behalf of customers when the cash flows reflect the activities
of the customer rather than those of the entity; and
(b) cash receipts and payments for items in which the turnover is quick, the amounts are large,
and the maturities are short.
AASB 107.24
Cash flows arising from each of the following activities of a financial institution are to be reported
on a net basis:
(a) cash receipts and payments for the acceptance and repayment of deposits with
a fixed maturity date;
(b) the placement of deposits with and withdrawal of deposits from other financial institutions; and
(c) cash advances and loans made to customers and the repayment of those advances
and loans.
Goods and Services Tax (GST)
AASB Interpretation
1031.10
Cash flows shall be included in the cash flow statement on a gross basis, subject to the paragraph
below and AASB 107.
AASB Interpretation
1031.11
The GST component of cash flows arising from investing and financing activities which is recoverable
from, or payable to, the taxation authority shall be classified as operating cash flows and will be
included in receipts from customers or payments to suppliers, as appropriate.
Interest and dividends
AASB 107.31
Cash flows from interest and dividends received and paid shall each be disclosed separately.
Each shall be classified in a consistent manner from period to period as operating, investing or
financing activities.
Investments in subsidiaries, associates and joint ventures
AASB 107.37
When accounting for an investment in an associate or a subsidiary, which is accounted for by use of
the equity or cost method, an investor restricts its reporting in the cash flow statement to the cash
flows between itself and the investee, for example, to dividends and advances.
AASB 107.38
An entity reports its interest in a jointly controlled entity using the equity method and includes in its
cash flow statement the cash flows in respect of its investments in the jointly controlled entity, and
distributions and other payments or receipts between it and the jointly controlled entity.
Non-cash transactions
AASB 107.43
Investing and financing transactions that do not require the use of cash or cash equivalents shall be
excluded from a cash flow statement. Such transactions shall be disclosed elsewhere in the financial
report in a way that provides all the relevant information about these investing and financing activities.
37
Notes to the Financial Report
Reference
AASB
Para
Introduction
101
126(a)
(a)
The Model Council was established by an Order of the Governor in Council on 1 January
2000 and is a body corporate.
The Council’s main office is located at 1 Main St Council Town.
101
126(b)
(b)
The purpose of the Council is to:
• provide for the peace, order and good government of its municipal district;
• to promote the social, economic and environmental viability and sustainability of the
municipal district;
• to ensure that resources are used efficiently and effectively and services are provided
in accordance with the Best Value Principles to best meet the needs of the local
community;
• to improve the overall quality of life of people in the local community;
• to promote appropriate business and employment opportunities;
• to ensure that services and facilities provided by the Council are accessible
and equitable;
• to ensure the equitable imposition of rates and charges; and
• to ensure transparency and accountability in Council decision making.
The following information could also be provided here:
External Auditor - Auditor-General of Victoria
Internal Auditor – Crowe Horwath
Solicitors – Sneaky and Sly
Bankers - Nabwest
Website address – www.modeltown.vic.gov.au
101
13
This financial report is a general purpose financial report that consists of a Comprehensive
Income Statement, Atatement of Financial Position, Statement of Changes in Equity,
Cash Flow Statement, and notes accompanying these financial statements. The general
purpose financial report complies with Australian Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board, the Local Government Act
1989, and the Local Government (Finance and Reporting) Regulations 2004.
Note 1 Significant accounting policies
(a)
Basis of accounting
101
38
101
108(a)
This financial report has been prepared under the historical cost convention, except where
specifically stated in notes 1(h), 1(j), 1(l), 1(t), 1(w), 1(x) and 1(y).
108
13, 27
Unless otherwise stated, all accounting policies are consistent with those applied in the prior
year. Where appropriate, comparative figures have been amended to accord with current
presentation, and disclosure has been made of any material changes to comparatives.
127.12
All entities controlled by Council that have material assets or liabilities, such as Special
Committees of Management, have been included in this financial report. All transactions
between these entities and the Council have been eliminated in full. Details of entities not
included in this financial report are detailed in note 48.
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
108
28, 29
(b)
Change in accounting policies
There have been no changes in accounting policy during the financial year.
Note – Any council adopting a revised Land Under Roads policy in line with LGV
preferred policy should include a change in accounting policy note such as the
following.
From 1 July 2011 Model Council has elected to recognise all land under roads at fair value.
This represents a change from our previous policy that only saw the recognition of land under
road that was contributed to Council since 1 July 2009.
The policy change was undertaken to comply with guidance issued by Local Government
Victoria that will lead to improved financial information across the Local Government Sector.
The impact of the change was to increase the value of land under roads by $2.8m as of 1
July 2010. The impact is reflected in an increased opening balance of Land under roads
(2011) and an equivalent increase in opening accumulated surpluses.
118
35(a)
(c)
Revenue recognition
Rates, grants and contributions
Rates, grants and contributions (including developer contributions) are recognised as
revenues when the Council obtains control over the assets comprising these receipts.
Control over assets acquired from rates is obtained at the commencement of the rating year
as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of
the rates.
A provision for doubtful debts on rates has not been established as unpaid rates represents a
charge against the rateable property that will be recovered when the property is next sold.
118
35(a)
Control over granted assets is normally obtained upon their receipt (or acquittal) or upon
earlier notification that a grant has been secured, and are valued at their fair value at the date
of transfer.
1004
12
Income is recognised when the Council obtains control of the contribution or the right to
receive the contribution, it is probable that the economic benefits comprising the contribution
will flow to the Council and the amount of the contribution can be measured reliably.
Where grants or contributions recognised as revenues during the financial year were obtained
on condition that they be expended in a particular manner or used over a particular period
and those conditions were undischarged at balance date, the unused grant or contribution is
disclosed in note 5. The note also discloses the amount of unused grant or contribution from
prior years that was expended on Council’s operations during the current year.
A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the
requisite service has not been provided at balance date.
User fees and fines
118
35(a)
User fees and fines (including parking fees and fines) are recognised as revenue when the
service has been provided, the payment is received, or when the penalty has been applied,
whichever first occurs.
A provision for doubtful debts is recognised when collection in full is no longer probable.
Sale of property, plant and equipment, infrastructure
118
35(a)
The profit or loss on sale of an asset is determined when control of the asset has irrevocably
passed to the buyer.
39
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
118
Rental
35(a)
Rents are recognised as revenue when a payment is due or is received, which ever first occurs.
Rental payments received in advance are recognised as a prepayment until they are due.
Interest
118
35(a)
Interest is recognised as it is earned.
Dividends
118
35(a)
Dividend revenue is recognised when the Council’s right to receive payment is established.
102
Aus 9
Trade and other receivables and inventories
Trade receivables
Receivables are carried at amortised cost using the effective interest rate method. A provision
for doubtful debts is recognised when there is objective evidence that an impairment has
occurred.Inventories
Inventories held for distribution are measured at cost adjusted when applicable for any loss of
service potential.
Other inventories are measured at the lower of cost and net realisable value.
116 (138)
43 (74)
(e)
Depreciation and amortisation of property, plant and equipment, infrastructure,
intangibles
Buildings, land improvements, plant and equipment, infrastructure, heritage assets, and other
assets having limited useful lives are systematically depreciated over their useful lives to the
Council in a manner which reflects consumption of the service potential embodied in those
assets. Estimates of remaining useful lives and residual values are made on a regular basis
with major asset classes reassessed annually. Depreciation rates and methods are reviewed
annually.
Where assets have separate identifiable components that are subject to regular replacement,
these components are assigned distinct useful lives and residual values and a separate
depreciation rate is determined for each component.
AAI 1055
6
Road earthworks are not depreciated on the basis that they are assessed as not having a
limited useful life.
Artworks are not depreciated.
116 (138)
73(b)
(118(b))
40
Straight line depreciation is charged based on the residual useful life as determined each year.
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
116
76(c)
Major depreciation periods used are listed below and are consistent with the prior year unless
otherwise stated:
Property Period 2012
Land land improvements 25 years
Buildings buildings 50 years
building improvements 10 years
leasehold building improvements 10 years
heritage buildings 50 years
Plant and Equipment plant, machinery and equipment 5-10 years
fixtures, fittings and furniture 3-10 years
computers and telecommunications 3-10 years
leased plant and equipment 5 years
heritage plant and equipment 7 years
library books 4 years
Infrastructure Roads road pavements and seals 13 years
road substructure 50 years
road formation and earthworks 50 years
road kerb, channel and minor culverts 50 years
road other <insert details> 15 years
Bridges
138
118(a)
bridges deck 50-75 years
bridges substructure 50-75 years
bridges other <insert details> 25 years
footpaths and cycleways 50 years
drainage 30 years
recreational, leisure and community facilities 25 years
waste management 15 years
parks, open space and streetscapes 25 years
off street car parks 25 years
other infrastructure <insert details> 25 years
Intangible assets
intangible assets 25 years
41
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
(116)
(76)
108
39
(f)
116
12
123
26(b)
Repairs and maintenance
Routine maintenance, repair costs, and minor renewal costs are expensed as incurred.
Where the repair relates to the replacement of a component of an asset and the cost exceeds
the capitalisation threshold the cost is capitalised and depreciated. The carrying value of the
replaced asset is expensed.
(g)
Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred,
except where they are capitalised as part of a qualifying asset constructed by Council.
Except where specific borrowings are obtained for the purpose of specific asset acquisition,
the weighted average interest rate applicable to borrowings at balance date, excluding
borrowings associated with superannuation, is used to determine the borrowing costs to be
capitalised.
Borrowing costs include interest on bank overdrafts, interest on borrowings, and finance
lease charges.
(h)
116
Recognition and measurement of assets
Acquisition
The purchase method of accounting is used for all acquisitions of assets, being the fair
value of assets provided as consideration at the date of acquisition plus any incidental
costs attributable to the acquisition. Fair value is the amount for which the asset could be
exchanged between knowledgeable willing parties in an arm’s length transaction.
42
116
73(a)
Where assets are constructed by Council, cost includes all materials used in construction,
direct labour, borrowing costs incurred during construction, and an appropriate share of
directly attributable variable and fixed overheads.
116
73(a)
The following classes of assets have been recognised in note 22. In accordance with Council’s
policy, the threshold limits detailed below have applied when recognising assets within an
applicable asset class and unless otherwise stated are consistent with the prior year:
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
Threshold Limit
$’000
Property Land land 10
land under roads 10
land improvements 10
Buildings buildings 10
building improvements 10
leasehold building improvements 10
heritage buildings 10
Plant and Equipment plant, machinery and equipment 1
fixtures, fittings and furniture 1
computers and telecommunications 1
leased plant and equipment 1
heritage plant & equipment 1
library books 1
Infrastructure Roads road pavements and seals 10
road substructure 10
road formation and earthworks 10
road kerb, channel and minor culverts 10
road other <insert details> 10
Bridges bridges deck 10
bridges substructure 10
bridges other <insert details> 10
footpaths and cycleways 10
drainage 10
recreational, leisure and community facilities 10
waste management 10
parks, open space and streetscapes 10
aerodromes 10
off street car parks 10
other infrastructure <insert details> 10
Intangible assets intangible assets 1
43
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
Revaluation
116
73(a)
Subsequent to the initial recognition of assets, non-current physical assets, other than plant
and equipment (and <name other classes>), are measured at their fair value, being the
amount for which the assets could be exchanged between knowledgeable willing parties
in an arms length transaction. At balance date, the Council reviewed the carrying value of
the individual classes of assets measured at fair value to ensure that each asset materially
approximated its fair value. Where the carrying value materially differed from the fair value at
balance date the class of asset was revalued.
In addition, Council undertakes a formal revaluation of land, buildings, and infrastructure
assets on a regular basis ranging from < > to < > years. The valuation is performed either by
experienced council officers or independent experts.
Where the assets are revalued, the revaluation increments are credited directly to the asset
revaluation reserve except to the extent that an increment reverses a prior year decrement
for that class of asset that had been recognised as an expense in which case the increment
is recognised as revenue up to the amount of the expense. Revaluation decrements are
recognised as an expense except where prior increments are included in the asset revaluation
reserve for that class of asset in which case the decrement is taken to the reserve to the
extent of the remaining increments. Within the same class of assets, revaluation increments
and decrements within the year are offset.
Land under roads
1051
Council recognises land under roads it controls at fair value.
11
(i)
107
46
For the purposes of the cash flow statement, cash and cash equivalents include cash on
hand, deposits at call, and other highly liquid investments with original maturities of three
months or less, net of outstanding bank overdrafts.
(j)
101
108(a)
108(a)
101
108(a)
LGR
14(a)
Accounting for investments in associates
Council’s investment in associates is accounted for by the equity method as the Council
has the ability to influence rather than control the operations of the entities. The investment
is initially recorded at the cost of acquisition and adjusted thereafter for post-acquisition
changes in the Council’s share of the net assets of the entities. The Council’s share of the
financial result of the entities is recognised in the comprehensive income statement.
(m)
Tender deposits
Amounts received as tender deposits and retention amounts controlled by Council are
recognised as Trust funds until they are returned or forfeited (refer to note 26).
(n)
119
Investments
Investments, other than investments in associates, are measured at cost.
(l)
128
Financial assets
Managed funds are valued at fair value, being market value, at balance date. Any unrealised
gains and losses on holdings at balance date are recognised as either a revenue or expense.
(k)
101
Cash and cash equivalents
Employee benefits
Wages and salaries
101, 119
44
108(a),
10,11
Liabilities for wages and salaries and rostered days off are recognised and measured as
the amount unpaid at balance date and include appropriate oncosts such as workers
compensation and payroll costs.
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
Annual leave
101, 119
108(a)
10, 11
Annual leave entitlements are accrued on a pro rata basis in respect of services provided by
employees up to balance date.
Annual leave expected to be paid within 12 months is measured at nominal value based on
the amount, including appropriate oncosts, expected to be paid when settled.
Annual leave expected to be paid later than one year has been measured at the present
value of the estimated future cash outflows to be made for these accrued entitlements.
Commonwealth bond rates are used for discounting future cash flows.
119
128
101
108(a)
Long service leave
Long service leave entitlements payable are assessed at balance date having regard to
expected employee remuneration rates on settlement, employment related oncosts and
other factors including accumulated years of employment, on settlement, and experience of
employee departure per year of service.
Long service leave expected to be paid within 12 months is measured at nominal value based
on the amount expected to be paid when settled.
Long service leave expected to be paid later than one year has been measured at the present
value of the estimated future cash outflows to be made for these accrued entitlements.
Commonwealth bond rates are used for discounting future cash flows.
(l)
128
101
108(a)
Council’s investment in associates is accounted for by the equity method as the Council
has the ability to influence rather than control the operations of the entities. The investment
is initially recorded at the cost of acquisition and adjusted thereafter for post-acquisition
changes in the Council’s share of the net assets of the entities. The Council’s share of the
financial result of the entities is recognised in the comprehensive income statement.
(m)
LGR
14(a)
Tender deposits
Amounts received as tender deposits and retention amounts controlled by Council are
recognised as Trust funds until they are returned or forfeited (refer to note 26).
(n)
119
Accounting for investments in associates
Employee benefits
Wages and salaries
101, 119
108(a),
10,11
Liabilities for wages and salaries and rostered days off are recognised and measured as
the amount unpaid at balance date and include appropriate oncosts such as workers
compensation and payroll costs.
Annual leave
101, 119
108(a)
10, 11
Annual leave entitlements are accrued on a pro rata basis in respect of services provided by
employees up to balance date.
Annual leave expected to be paid within 12 months is measured at nominal value based on
the amount, including appropriate oncosts, expected to be paid when settled.
Annual leave expected to be paid later than one year has been measured at the present
value of the estimated future cash outflows to be made for these accrued entitlements.
Commonwealth bond rates are used for discounting future cash flows.
45
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
119
128
101
108(a)
Long service leave
Long service leave entitlements payable are assessed at balance date having regard to
expected employee remuneration rates on settlement, employment related oncosts and
other factors including accumulated years of employment, on settlement, and experience of
employee departure per year of service.
Long service leave expected to be paid within 12 months is measured at nominal value based
on the amount expected to be paid when settled.
Long service leave expected to be paid later than one year has been measured at the present
value of the estimated future cash outflows to be made for these accrued entitlements.
Commonwealth bond rates are used for discounting future cash flows.
Classification of employee benefits
119
101
108(a),
119/8
An employee benefit liability is classified as a current liability if the Council does not have an
unconditional right to defer settlement of the liability for at least 12 months after the end of the
period. This would include all annual leave and unconditional long service leave entitlements.
Superannuation
119
101
108(a)
The superannuation expense for the reporting year is the amount of the statutory contribution
the Council makes to the superannuation plan which provides benefits to its employees. In
addition Council may, periodically be required to contributed to the defined benefits schemes
for current and former employees. Details of these arrangements are recorded in note 36.
(o)
117
Leases
Finance leases
101
108(a)
Leases of assets where substantially all the risks and rewards incidental to ownership of
the asset, are transferred to the Council are classified as finance leases. Finance leases are
capitalised, recording an asset and a liability at the lower of the fair value of the asset and
the present value of the minimum lease payments, including any guaranteed residual value.
Lease payments are allocated between the reduction of the lease liability and the interest
expense. Leased assets are depreciated on a straight line basis over their estimated useful
lives to the Council where it is likely that the Council will obtain ownership of the asset or over
the term of the lease, whichever is the shorter. Leased assets are currently being amortised
over a <> to<> year period.
Operating leases
101
108(a)
Lease payments for operating leases are required by the accounting standard to be
recognised on a straight line basis, rather than expensed in the years in which they are
incurred.
Leasehold improvements
116
101
108(a)
Leasehold improvements are recognised at cost and are amortised over the unexpired period
of the lease or the estimated useful life of the improvement, whichever is the shorter. At
balance date, leasehold improvements are amortised over a <> to <> year period.
(p)
101
46
108(b)
Allocation between current and non-current
In the determination of whether an asset or liability is current or non-current, consideration is
given to the time when each asset or liability is expected to be settled. The asset or liability
is classified as current if it is expected to be settled within the next twelve months, being the
Council’s operational cycle, or if the Council does not have an unconditional right to defer
settlement of a liability for at least 12 months after the reporting date.
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
(q)
101
108(a)
The Council does not recognise assets and liabilities arising from agreements that are equally
proportionately unperformed in the balance sheet. Such agreements are recognised on an
‘as incurred’ basis.
(r)
AAI 132
Agreements equally proportionately unperformed
Web site costs
Costs in relation to websites are charged as an expense in the period in which they are incurred.
(s)
Goods and Services Tax (GST)
AAI 1031
6, 8
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances
the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the
expense. Receivables and payables in the balance sheet are shown inclusive of GST.
AAI 1031
10
Cash flows are presented in the cash flow statement on a gross basis, except for the GST
component of investing and financing activities, which are disclosed as operating cash flows.
(t)
136
101
108(b)
At each reporting date, the Council reviews the carrying value of its assets to determine
whether there is any indication that these assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less
costs to sell and value in use, is compared to the assets carrying value. Any excess of the
assets carrying value over its recoverable amount is expensed to the comprehensive income
statement, unless the asset is carried at the revalued amount in which case, the impairment
loss is recognised directly against the revaluation surplus in respect of the same class of asset
to the extent that the impairment loss does not exceed the amount in the revaluation surplus
for that same class of asset.
(u)
101
46(e)
101
108(a)
101
140
108(a)
75(a)-(c)
Non-current assets held for sale
A non-current asset held for sale (including disposal groups) is measured at the lower of
its carrying amount and fair value less costs to sell, and are not subject to depreciation.
Non current assets, disposal groups and related liabilities assets are treated as current and
classified as held for sale if their carrying amount will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as met only when the sale is
highly probable and the asset’s sale (or disposal group sale) is expected to be completed
within 12 months from the date of classification.
(w)
140
Rounding
Unless otherwise stated, amounts in the financial report have been rounded to the nearest
thousand dollars. Figures in the financial statement may not equate due to rounding.
(v)
5
Impairment of assets
Investment property
Investment property, comprising freehold office complexes, is held to generate long-term
rental yields. Investment property is measured initially at cost, including transaction costs.
Costs incurred subsequent to initial acquisition are capitalised when it is probable that future
economic benefit in excess of the originally assessed performance of the asset will flow to
the Council. Subsequent to initial recognition at cost, investment property is carried at fair
value, determined annually by independent valuers. Changes to fair value are recorded in
the comprehensive income statement in the period that they arise. Rental income from the
leasing of investment properties is recognised in the comprehensive income statement on a
straight line basis over the lease term.
47
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
(x)
137
101
108(a)
Financial guarantees
Financial guarantee contracts are recognised as a liability at the time the guarantee is issued.
The liability is initially measured at fair value, and if there is material increase in the likelihood
that the guarantee may have to be exercised, at the higher of the amount determined in
accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and
the amount initially recognised less cumulative amortisation, where appropriate. In the
determination of fair value, consideration is given to factors including the probability of default
by the guaranteed party and the likely loss to Council in the event of default.
(y)
Pending Accounting Standards
The following Australian Accounting Standards have been issued or amended and are
applicable to the Council but are not yet effective. They have not been adopted in preparation
of the financial statements at reporting date.
48
Standard / Interpretation
Summary
Applicable for annual Impact on Local
reporting periods
Government
beginning or
financial statements
ending on
AASB 9: Financial Instruments
and AASB 2010–11:
Amendments to Australian
Accounting Standards arising
from AASB 9 [AASB 1, 3,
4, 5, 7, 101, 102, 108, 112,
118, 121, 127, 128, 131, 132,
136, 139, 1023 & 1038 and
Interpretations 10 & 12]
These standards are applicable retrospectively
and amend the classification and
measurement of financial assets. Council has
not yet determined the potential impact on
the financial statements. Specific changes
include:
Applicable for annual
reporting periods
commencing on or
after 1 January 2013.
These changes are
expected to provide
some simplification
in the accounting
for and disclosure of
financial instruments
* simplifying the classifications of financial
assets into those carried at amortised cost
and those carried at fair value;
* removing the tainting rules associated with
held-to-maturity assets;
* simplifying the requirements for embedded
derivatives;
* removing the requirements to separate and
fair value embedded derivatives for financial
assets carried at amortised cost;
* allowing an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are
not held for trading in other comprehensive
income. Dividends in respect of these
investments that are a return on investment
can be recognised in profit or loss and there
is no impairment or recycling on disposal of
the instrument; and
* reclassifying financial assets where there is a
change in an entity’s business model as they
are initially classified based on:
a. the objective of the entity’s business model
for managing the financial assets; and
b. the characteristics of the contractual
cash flows.
AASB 2011-3 Amendments to
Australian Accounting Standards
– Orderly Adoption of Changes
to the ABS GFS Manual and
Related Amendments.
These standards are aimed at limiting certain
recognition and measurement options to align
with GFS, and supplemented by additional
disclosures.
Applicable for annual
reporting periods
commencing on or
after 1 JJuly 2012.
These amendments
are not expected
to impact Council
directly.
Key Characteristics of the
Public Sector with Potential
Implications for Financial
Reporting
These standards detail numerous nonurgent but necessary changes to accounting
standards arising from the IASB’s annual
improvements project.
Applicable for annual
reporting periods
commencing from
1 January 2011.
These amendments
are not expected to
impact Council
Amendments to Australian
Accounting Standards
- Financial Instruments:
Disclosures, Recognition and
Measurement [AASB 7, 139]
These standards detail the proposed changes
to be made to the recognition, disclosure
and measurement of impairment.of financial
instruments
Applicable for annual
reporting periods
commencing on or
after 1 July 2011 but
before 1 July 2012.
These amendments
are not expected to
impact Council
49
Standard / Interpretation
Summary
Applicable for annual Impact on Local
reporting periods
Government
beginning or
financial statements
ending on
AASB 2010–9: Amendments to
Australian Accounting Standards
— Additional Exemptions for
First-time Adopters [AASB 1]
These amendments specify requirements for
entities using the full cost method in place
of the retrospective application of Australian
Accounting Standards for oil and gas assets,
and exempt entities with existing leasing
contracts from reassessing the classification
of those contracts in accordance with
Interpretation 4 when the application of their
previous accounting policies would have given
the same outcome.
Applicable for annual
reporting periods
commencing on or
after 1 January 2011.
These amendments
are not expected to
impact Council
AASB 2010–10: Amendments
to Australian Accounting
Standards — Classification of
Rights Issues [AASB 132]
These amendments clarify that rights, options
or warrants to acquire a fixed number of an
entity’s own equity instruments for a fixed
amount in any currency are equity instruments
if the entity offers the rights, options or
warrants pro-rata to all existing owners of the
same class of its own non-derivative equity
instruments.
Applicable for annual
reporting periods
commencing on
or after 1 February
2011.
These amendments
are not expected to
impact Council
Reference
AASB
Para
Note 1 Significant accounting policies Cont.
(z)
Contingent assets and contingent liabilities and commitments
Contingent assets and contingent liabilities are not recognised in the Balance Sheet, but are
disclosed by way of a note and, if quantifiable, are measured at nominal value. Contingent
assets and liabilities are presented inclusive of GST receivable or payable respectively.
Commitments are not recognised in the Balance Sheet. Commitments are disclosed at their
nominal value by way of a note and are presented inclusive of the GST payable.
50
Reference
AASB
Para
Commentary – Summary of accounting policies
Change to Accounting policy – Land under Roads – LGV Circular 15/11
AASB 108
In December 2007, the Australian Accounting Standards Board issued AASB 1051: Land Under
Roads (LUR). The required each local government to:
• make a final election to recognise or not to recognise LUR acquired before 1 July 2008
as an asset; and
• recognise all LUR acquired after 30 June 2008 as an asset.
The Victorian Auditor-General noted in Local Government: Results of the 2008-09 Audits, November
2009 that councils had elected one of the following four recognition and valuation options:
• recognise all roads using the cost method
• recognise all roads using the fair value method
• only recognise roads acquired after 1 July 2008 using the cost method
• only recognise roads acquired after 1 July 2008 using the fair value method.
The Victorian Auditor-General further noted that the differing elections selected by councils for the
recognition and valuation of LUR, whilst permitted under the Standard limited the comparability of
financial information reported by the sector. The Auditor-General recommended that the Department
of Planning and Community Development (DPCD) provide guidance to the local government sector to
improve the consistency and comparability of the financial information in the sector.
• Accordingly, DPCD has developed the following guidance for councils for the
recognition and valuation of LUR.
• Recognition of LUR pre 1 July 2008.
These should be accounted for at fair value.
• Recognition of LUR post 1 July 2008.
These should be accounted for at fair value.
The move to recognition of all LUR and accounting at fair value will bring local governments’ reporting
into alignment with State departments and agencies. This will assist to achieve better integration of
asset information, improve accountability and reliability in decision making.
DPCD understands that for some councils the new approach will require a change in a council’s
accounting policy. AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors
facilitates councils’ capacity to change accounting policies where improved financial information is
provided. The new approach will also require adjustments to some councils’ financial statements to
take account of the change in recognition of assets and/or valuation method.
DPCD acknowledges that recognition of LUR pre 1 July 2008 and accounting for these assets at fair
value at the time of acquisition will require some additional work for some councils in determining a
reported value. Accordingly, a transition period of up to three years is proposed. For the 2014/15
financial statements all councils should be compliant. Councils are recommended to apply the
attached guidance to the recognition of LUR as soon as practicable, but no later than the 2014/15
financial statements.
Content
AASB 101
103
The notes to the financial statements of an entity shall:
(a) present information about the basis of preparation of the financial report and the specific
accounting policies used in accordance with paragraphs 108-115 of AASB 101 Presentation of
Financial Statements;
51
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
(b) disclose the information required by Australian Accounting Standards that is not presented
on the face of the balance sheet, comprehensive income statement, statement of changes in
equity or cash flow statement; and
(c) provide additional information that is not presented on the face of the balance sheet,
comprehensive income statement, statement of changes in equity or cash flow statement, but
is relevant to an understanding of any of them.
Systematic structure
AASB 101
104
Notes shall, as far as practicable, be presented in a systematic manner. Each item on the face of
the balance sheet, comprehensive income statement, statement of changes in equity and cash flow
statement shall be cross referenced to any related information in the notes.
AASB 101
105
Notes are normally presented in the following order, which assists users in understanding the financial
report and comparing them with financial reports of other entities:
(a) a statement of compliance with IFRSs (refer to paragraph 14 of AASB 101);
(b)a summary of significant accounting policies applied (refer to paragraph 108 of AASB 101);
(c) supporting information for items presented on the face of the balance sheet, comprehensive
income statement, statement of changes in equity and cash flow statement, in the order in
which each statement and each line item is presented; and
(d) other disclosures, including:
(i) contingent liabilities and assets (refer to AASB 137) and unrecognised contractual
commitments; and
(ii) non-financial disclosures; for example, the entity’s financial risk management objectives
and policies (refer to AASB 7).
AASB 101
106
In some circumstances, it may be necessary or desirable to vary the ordering of specific items
within the notes. For example, information on changes in fair value recognised in profit or loss may
be combined with information on maturities of financial instruments, although the former disclosures
relate to the operating statement and the latter relate to the balance sheet. Nevertheless, a
systematic structure for the notes is retained as far as practicable.
AASB 101
13
A financial report shall present fairly the financial position, financial performance and cash flows
of an entity.
Fair presentation requires the faithful representation of the effects of transactions, other events and
conditions in accordance with the definitions and recognition criteria for assets, liabilities, income
and expenses set out in the Framework. The application of Australian Accounting Standards, with
additional disclosure when necessary, is presumed to result in a financial report that achieves a fair
presentation.
AASB 110
17
An entity shall disclose the date when the financial report was authorised for issue and who gave that
authorisation. If the entity’s owners or others have the power to amend the financial report after issue,
the entity shall disclose that fact.
Note: The illustrations quoted in the policy note are examples only, and do not necessarily represent
the only treatment which may be appropriate for the item concerned and do not cover all items that
shall be considered for inclusion in the summary of accounting policies. Professional judgement
should be applied.
Disclosures to be made at the commencement of Note 1. Summary of accounting policies
The following disclosures must be made in the notes:
AASB 101.
Aus13.4
AASB 101
13.2
52
(a) a statement that the financial report is a general purpose financial report or special purpose
financial report;
(b) a statement of compliance with Australian Accounting Standards; and
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
AASB 101
14
(c) where applicable, a statement of compliance with IFRSs.
This latter statement is unlikely to be applicable because Local Governments would have applied
additional Australian paragraphs applicable to not-for-profit entities.
AASB 101
14
AASB 101
Aus14.1
An entity whose financial statements and notes comply with IFRSs shall make an explicit and
unreserved statement of such compliance in the notes.
Where an entity can make the explicit and unreserved statement of compliance in respect of only:
• the parent financial statements and notes; or
• the consolidated financial statements and notes
the entity shall make the explicit and unreserved statement of compliance in accordance with AASB
101.14 and clearly identify to which financial statements and notes it relates.
Revised
Where compliance with AAS does not lead to compliance with IFRSs
AASB 101
Aus14.2
In some circumstances compliance with Australian Accounting Standards (AAS) by for-profit entities
will not lead to compliance with IFRSs. These circumstances include, for example, when the entity is a
for-profit public sector entity to which AAS 29 applies and the entity has applied a requirement in that
standard that overrides the requirements in an IFRS-compliant
AASB 101
Aus14.3
Some AASs contain requirements specific to not-for-profit entities that are inconsistent with IFRS
requirements. A not-for-profit entity is only able to make a statement of explicit and unreserved
compliance with IFRSs if the entity:
• has not applied any of these not-for-profit requirements that are inconsistent with IFRSs;
• has voluntarily applied those IFRS-compliant AASs that are not required to be applied
by not-for-profit entities; and
• is not a parent that falls within the exceptions in AASB 101.Aus14.2.
Summary of accounting policies
Contents
AASB 101
108-112
The summary of accounting policies shall include a description of each specific accounting policy that
is necessary for an understanding of the financial report. In making judgments about the details to be
disclosed about an entity’s accounting policies, consideration shall be given to the information needs
of the likely users of the financial report, the nature of the entity’s operations and the policies that a
user would expect to find disclosed for that type of entity.
Measurement basis
AASB 101
108
An entity shall disclose in the summary of significant accounting policies:
AASB 101
108(a)
• the measurement basis (or bases) used in preparing the financial report; and
AASB 101
108(b)
• the other accounting policies used that are relevant to an understanding of the financial report.
Basis of Consolidation
AASB 127
Dec-36
If the entity is a consolidating entity, it needs to disclose its basis of consolidation.
Going concern basis
AASB 101
23
When preparing financial reports, management shall make an assessment of an entity’s ability to
continue as a going concern. When management is aware, in making its assessment, of material
uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to
continue as a going concern, those uncertainties shall be disclosed. When the financial report is not
prepared on a going concern basis, that fact shall be disclosed, together with the basis on which the
financial report is prepared and the reason why the entity is not regarded as a going concern.
53
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
Critical accounting estimates and judgements
AASB 101
113
An entity shall disclose, in the summary of significant accounting policies or other notes, the
judgements, apart from those involving estimations, that management has made in the process of
applying the entity’s accounting policies and that have the most significant effect on the amounts
recognised in the financial report.
AASB 101
114
In the process of applying the entity’s accounting policies, management makes various judgements,
apart from those involving estimations, that can significantly affect the amounts recognised in the
financial report. For example, management makes judgements in determining:
(a) whether financial assets are held-to-maturity investments;
(b) when substantially all the significant risks and rewards of ownership of financial assets and
lease assets are transferred to other entities;
(c) whether, in substance, particular sales of goods are financing arrangements and therefore do
not give rise to revenue; and
(d) whether the substance of the relationship between the entity and a special purpose entity
indicates that the special purpose entity is controlled by the entity.
Key Sources of estimation uncertainty
AASB 101
116
An entity shall disclose in the notes information about the key assumptions concerning the future, and
other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next annual reporting
period. In respect of those assets and liabilities, the notes shall include details of:
(a) their nature; and
(b) their carrying amount as at the reporting date.
AASB 101
117
Determining the carrying amounts of some assets and liabilities requires estimation of the effects of
uncertain future events on those assets and liabilities at the reporting date.
AASB 101
119
The disclosures in paragraph 116 are not required for assets and liabilities with a significant risk
that their carrying amounts might change materially within the next annual reporting period if, at the
reporting date, they are measured at fair value based on recently observed market prices.
AASB 101
110
In deciding whether a particular accounting policy should be disclosed, management considers
whether disclosure would assist users in understanding how transactions, other events and conditions
are reflected in the reported financial performance and financial position. Disclosure of particular
accounting policies is especially useful to users when those policies are selected from alternatives
allowed in Australian Accounting Standards. Some Australian Accounting Standards specifically
require disclosure of particular accounting policies, including choices made by management between
different policies allowed by a standard.
AASB 1031
9
Materiality
In accordance with Accounting Standard AASB 1031 Materiality, accounting polices need only be
identified in the summary of accounting policies where they are considered ‘material’. Accounting
policies will be considered material if their omission, misstatement or non-disclosure has the potential,
individually or collectively, to:
(a) influence the economic decisions of users taken on the basis of the financial report; and
(b) affect the discharge of accountability by the management or governing body of the entity.
Changes in accounting policies
Initial application of Australian Accounting Standard
AASB 108
54
28
When initial application of an Australian Accounting Standard has an effect on the current period or
any prior period, would have such an effect except that it is impracticable to determine the amount of
the adjustment, or might have an effect on future periods, an entity shall disclose:
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
(a) the title of the Australian Accounting Standard;
(b) when applicable, that the change in accounting policy is made in accordance with its
transitional provisions;
(c) the nature of the change in accounting policy;
(d) when applicable, a description of the transitional provisions;
(e) when applicable, the transitional provisions that might have an effect on future periods;
(f) for the current period and each prior period presented, to the extent practicable, the amount of
the adjustment:
(i) for each financial statement line item affected; and
(g) the amount of the adjustment relating to periods before those presented, to the extent
practicable; and
(h) if retrospective application required by paragraph 19(a) or (b) of AASB 108 Accounting Policies,
Changes in Accounting Estimates and Errors is impracticable for a particular prior period, or for
periods before those presented, the circumstances that led to the existence of that condition
and a description of how and from when the change in accounting policy has been applied.
Voluntary changes in accounting policies
AASB 108
14
An entity shall change an accounting policy only if the change:
• is required by an Australian Accounting Standard; or
• results in the financial report providing reliable and more relevant information about the
effects of transactions, other events or conditions on the entity’s financial position, financial
performance or cash flows.
AASB 108
29
When a voluntary change in accounting policy has an effect on the current period or any prior period,
would have an effect on that period except that it is impracticable to determine the amount of the
adjustment, or might have an effect on future periods, an entity shall disclose:
(a) the nature of the change in accounting policy;
(b) the reasons why applying the new accounting policy provides reliable and more relevant
information;
(c) for the current period and each prior period presented, to the extent practicable, the amount of
the adjustment:
(i)for each financial statement line item affected; and
(d) the amount of the adjustment relating to periods before those presented, to the extent
practicable; and
(e) if retrospective application of the accounting policy is impracticable for a particular prior period,
or for periods before those presented, the circumstances that led to the existence of that
condition and a description of how and from when the change in accounting policy has been
applied. Financial reports of subsequent periods need not repeat these disclosures.
Financial reports of subsequent periods need not repeat these disclosures.
Where compliance with an Australian Accounting Standard is misleading
AASB 101
21
In the extremely rare circumstances in which management concludes that compliance with a
requirement in an Australian Accounting Standard would be so misleading that it would conflict with
the objective of financial reports set out in the Framework, the entity shall, to the maximum extent
possible, reduce the perceived misleading aspects of compliance by maximum extent possible,
reduce the perceived misleading aspects of compliance by disclosing:
55
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
• the title of the Australian Accounting Standard in question, the nature of the requirement,
and the reason why management has concluded that complying with that requirement is so
misleading in the circumstances that it conflicts with the objective of financial reports set out in
the framework; and
• for each period presented, the adjustments to each item in the financial reports that
management has concluded would be necessary to achieve a fair presentation.
Inappropriate accounting policies not rectified by disclosure
AASB 101
16
Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used
or by notes or explanatory material.
Comparative amounts
AASB 101
38 and 39
When the presentation or classification of items in the financial report is amended, comparative
amounts shall be reclassified unless the reclassification is impracticable. When comparative amounts
are reclassified, an entity shall disclose:
(a) the nature of the reclassification;
(b) the amount of each item or class of items that is reclassified; and
(c) the reason for the reclassification.
When it is impracticable to reclassify comparative amounts, an entity shall disclose:
(a) the reason for not reclassifying the amounts; and
(b) the nature of the adjustments that would have been made if the amounts had been reclassified.
Contributions
AASB 1004
The following commentaries on contributions relate to not-for-profit entities only.
AASB 1004
13
A contribution occurs when an entity receives an asset, including the right to receive cash or other
forms of asset without directly giving approximately equal value to the other party or parties to the
transfer; that is, when there is a non-reciprocal transfer. Contributions would, for example, include
donated assets. Contributions that are income exclude contributions by owners.
AASB 1004
15
In some cases it may be difficult to determine whether the entity is giving approximately equal value to
the other parties to a transfer. This is particularly the case where, for example, fees are charged by a
not-for-profit entity for the potential use of a general pool of facilities.
In circumstances where clubs and professional associations charge fees in return for contributors
being able to enjoy the use of facilities, receive publications or practice in a particular vocation for
a defined period, an exchange transaction can be presumed and the fees would not be treated as
contributions. The recipient of the fees would have a contractual or constructive obligation to refund
some or all fees if it were unable to provide the facilities or services. In circumstances where the
benefits to contributors are only nominal, such as acknowledgment letters, general information about
the entity’s activities and satisfaction of contributors’ altruistic goals, the fees are in the nature of
contributions.
AASB 116
Aus15.1
&2
Not-for-profit entities may acquire an asset at no cost or for nominal cost. In such circumstances,
the cost is its fair value as at the date of the acquisition. For example, land may be contributed to
a local government by a developer at no or nominal consideration to enable the local government to
develop parks, roads and paths in the development. An asset may also be acquired for no or nominal
consideration through the exercise of powers of sequestration. Under these circumstances the cost
of the item is its fair value as at the date it is acquired.
AASB 116
Aus15.3
In respect of not-for-profit entities, the initial recognition at fair value of an item of property, plant
and equipment, acquired at no or nominal cost, does not constitute a revaluation. Accordingly, the
revaluation requirements only apply where an entity elects to revalue an item of property, plant and
equipment in subsequent reporting periods.
56
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
Commonwealth and State grants
Example policy note disclosure for a for-profit entity:
AASB 120
12
AASB 120
24, 26
Government grants relating to [describe income item to which the grant relates] are recognised as
income over the periods necessary to match them with the related costs.
Government grants relating to [describe the asset item to which the grant relates] are treated
as deferred income and released to profit and loss over the expected useful lives of the assets
concerned.
Borrowing costs
AASB 123
7,8,9
AASB 123
9
AASB 123 allows either a ‘Benchmark’ or ‘Allowed Alternative’ treatment of borrowing costs.
‘Benchmark’ treatment requires borrowing costs to be recognised as an expense in the period in
which they are incurred regardless of how the borrowings are applied.
Where the policy is to expense all borrowing costs as they are incurred, the accounting policy must be
disclosed in accordance with paragraph 9 of AASB 123. If the decision is made to adopt the allowed
alternative of capitalising borrowing costs associated with qualifying assets the detailed disclosure and
accounting treatments required by AASB 123 must be complied with.
Depreciation
The useful lives illustrated in the Model are for illustrative purposes only. Local Government Agencies
should determine the useful lives of assets by consideration of the nature and characteristics of
specific assets.
AASB 116
60
AASB 116
51, 61
The depreciation method used shall reflect the pattern in which the asset’s future economic benefits
are expected to be consumed by the entity.
Depreciation rates and methods shall be reviewed at least annually and, where changed, shall
be accounted for as a change in accounting estimate. Where depreciation rates or methods are
changed, the net written down value of the asset is depreciated from the date of the change in
accordance with the new depreciation rate or method. Depreciation recognised in prior financial years
shall not be changed, that is, the change in depreciation rate or method shall be accounted for on a
‘prospective’ basis.
How to estimate useful life
The long-lived and complex nature of infrastructure assets makes the reliable estimation
of useful life difficult.
One relevant source of data is historic records of the current age of existing assets and the achieved
ages of assets that have been replaced. However, this data may not be available either because of
past poor record keeping practices or because certain assets have not completed a full life-cycle and
have not needed to be renewed.
Asset condition data is therefore required in many cases, to either complement historic data,
or as a surrogate.
Condition data can be used to determine remaining useful life (i.e. when an asset or component is
likely to be replaced). It can also be used to confirm current estimates of total expected useful life,
based on the expected rate of deterioration of an asset or component.
Systematically capturing condition data over a number of years on a consistent basis will allow
also local governments to better understand the actual rate of degradation or deterioration of their
infrastructure assets. The actual rate of degradation should be compared to the expected rate to
determine whether current estimates of total and remaining useful life remain valid.
57
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
Useful life by component
Where an asset, such as a sealed road, consists of a number of major components, it is desirable to
initially establish useful lives for each component.
For example, road seals typically have significantly shorter lives than pavements. By contrast road
formations (earthworks) may have indefinite lives. A similar approach can be applied to drainage,
where pits and pipes may have different useful lives; and to buildings, where plant such as lifts and air
conditioning may be replaced during the building’s life.
Infrastructure assets
For infrastructure assets the concept of residual value can be problematic, especially where the
asset is renewed or replaced. The difficulty arises because the costs incurred in renewal (commonly
called the “brownfield” costs) are often significantly different from than the costs incurred during initial
construction (commonly called the “greenfield” costs).
The cost of renewal will include new and relatively higher costs that arise from factors that were not
present when the asset was originally constructed. These costs include relocation of services, removal
and restoration of ‘improvements’ erected over the assets, traffic control and increased workplace
safety requirements.
Such costs are excluded from the determination of replacement cost.
However, some of the “brownfield” costs incurred in renewal will also be relatively less than those
incurred in original construction. In the case of roads, the initial earthworks required to create the road
formation will not need to be re-done on renewal, achieving a significant saving when compared to a
greenfield site.
Closer consideration of the difference in these costs shows that a large part of the difference arises
because certain components are not replaced when an asset is renewed.
The difference between the initial greenfield costs on acquisition and the expected brownfield costs on
renewal is often used as a proxy for the residual value of the existing asset.
It is preferable, as with the estimates of useful lives, to also separately determine residual values for
each asset component.
In the case of roads it is likely that many if not most road formations (earthworks) will have an indefinite
life and hence will not be depreciated. Alternatively, if road formations are considered to have a finite
life, this could be expected to be very long, for example when compared to the life of the pavement. In
either case the issue of a residual value is either not relevant or likely to be immaterial.
Road seals generally would have no or little residual value at the end of their lives, their original cost
would be fully depreciated over their lives.
Road pavements or sub-grades may be considered to have a proxy “residual” value in terms of the
in-situ material from which they were constructed being able to be re-used in re-constructing or
rehabilitating the pavement.
In this case the “residual” value of the in-situ pavement materials would be costed into the new
pavement - the combined value of the residual value and the brownfield costs potentially being
equivalent, or close to, the greenfield replacement cost of that component.
58
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
Impairment of assets
Goodwill, intangible assets and all other assets must be tested annually for indications of impairment,
except for the following:
• inventories;
• assets arising from construction contracts;
• assets arising from employee benefits;
• deferred tax assets;
• financial instrument assets;
• investment property that is measured at fair value;
• certain biological assets related to agricultural activity;
• certain deferred acquisition costs and intangible assets arising from an insurer’s
contractual rights; and
• non-current assets held for sale.
Other financial liabilities - Financial guarantees
AASB 139
9
AASB 139
47 (c)
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when
due. Financial guarantee contracts may have various forms, and may arise under legislation. Local
Government Agencies should undertake a comprehensive review to identify whether any financial
guarantee contracts exist.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is
issued. The liability is initially measured at fair value and subsequently at the higher of the amount
determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets
and the amount initially recognised less cumulative amortisation, where appropriate. The fair value of
financial guarantees is determined as the present value of the difference in net cash flows between the
contractual payments under the debt instrument and the payments that would be required without the
guarantee.
Revaluations of non-current physical assets
Recoverable amount and revaluation of non-current assets
Accounting standards for the recoverable amount and revaluation of non-current physical assets are
set out in AASB 116 Property, Plant and Equipment.
AASB 116
2
AASB 116 shall be applied in accounting for property, plant and equipment except when another
Standard requires or permits a different accounting treatment.
AASB 116
3
AASB 116 does not apply to:
(a) property, plant and equipment classified as held for sale in accordance with AASB 5; or
(b) biological assets related to agricultural activity; or
(c) mineral rights and mineral reserves such as oil, natural gas and similar non-regenerative
resources.
Note: The policy disclosure provided in this Model for revaluation of non-current physical assets
is also applicable to for-profit entities, except for the policy on the transfer of revaluation reserves
to accumulated surplus. Unlike not-for-profit entities, for-profit entities may transfer the revaluation
reserves to accumulated surplus on derecognition of the relevant asset.
59
Reference
AASB
Para
Commentary – Summary of accounting policies Cont.
Reclassification of financial assets
AASB 7
12
If, as a result of a change in intention or ability or in the rare circumstance that a reliable measure of
fair value is no longer available, or because the ‘two preceding annual reporting periods’ have passed
in relation to a financial asset that could previously not be classified as held-to-maturity, where an
entity reclassifies a financial asset as one measured at cost or amortised cost rather than at fair value,
it shall disclose the reason for the reclassification.
Rounding of amounts
The rounding used in the presentation of amounts in the financial report must be prominently
displayed. It is recommended that the financial statements of the Local Government Agency must be
expressed by reference to the nearest dollar except where the total assets, or liabilities, or revenues,
or expenses, of the Local Government Agency are greater than:
• $10 000 000 the amounts shown in the financial statements may be expressed
by reference to the nearest $1 000; or
• $1 000 000 000 the amounts shown in the financial statements may be expressed
by reference to the nearest $100 000.
New Accounting Standards and interpretations
Australian Accounting Standard issued but not yet effective
AASB 108
30
When an entity has not applied a new Australian Accounting Standard that has been issued but is not
yet effective, the entity shall disclose:
(a) this fact; and
(b) known or reasonably estimable information relevant to assessing the possible impact that
application of the new Australian Accounting Standard will have on the entity’s financial report
in the period of initial application.
AASB 108
31
In complying with requirement above, an entity considers disclosing:
(a) the title of the new Australian Accounting Standard;
(b) the nature of the impending change or changes in accounting policy;
(c) the date by which application of the Standard is required;
(d) the date as at which it plans to apply the Standard initially; and
(e) either:
(i) a discussion of the impact that initial application of the Standard is expected to have on
the entity’s financial report, or
(ii) if that impact is not known or reasonably estimable, a statement to that effect.
The disclosures as described above must be made even if the impact on the entity is not expected
to be material. However, there is no need to mention a standard or interpretation if it is clearly not
applicable to the entity.
60
Notes to the Financial Report
For the Year Ended 30 June 2012
2012
$’000
2011
$’000
Residential
13,403
12,951
Commercial
Reference
AASB
Para
Note 2 Rates and charges
118
Council uses Capital Improved Value (CIV) as the basis of valuation of all
properties within the municipal district. The CIV is the value of the land and all its
improvements.
The valuation base used to calculate general rates for 2011/2012 was $23,764
million (2010-2011 $21,856 million). The 2011/2012 rate in the CIV dollar was
0.00174 (2010-2011, 0.00181).
118
35(c)
10,411
9,755
Industrial
9,255
8,672
Farm/Rural
4,627
4,336
Supplementary rates and rate adjustments
2,314
2,168
Municipal charge
1,157
1,084
Garbage charge
3,412
3,281
Special rates and charges
1,215
1,110
-
-
45,794
43,357
2,254
2,162
206
186
98
75
Land information certificates
125
115
Permits
135
165
2,818
2,703
Revenue in lieu of rates
The date of the latest general revaluation of land for rating purposes within the
municipal district was 1 January 2012 and the valuation will be first applied in the
rating year commencing 1 July 2012
The date of the previous general revaluation of land for rating purposes within the
municipal district was 1 January 2010, and the valuation first applied to the rating
period commencing 1 July 2010
Commentary - Note 2 Rates and Charges
AASB 118
35
AASB 132
AG 12
118
35(c)
AASB 118 requires that the amount of each significant category of revenue
recognised during the period including revenue arising from:
(i) the sale of goods;
(ii) the rendering of services;
(iii) interest;
(iv) royalties;
(v) dividends.
Note 3 Statutory fees and fines
Infringements and costs
PERIN court recoveries
Town planning fees
61
Reference
AASB
Para
2012
$’000
2011
$’000
3,914
3,721
-
-
Commentary - Note 3 Statutory fees and fines
AASB 132
AG 12
118
35(c)
Note 4 User fees
(a) Leisure centre fees
Resort and recreation fees*
Child care/children’s program fees
801
744
Fees - ticket machines
401
490
Aged services fees
731
809
Registration fees
328
431
Road occupancy charges
365
298
Building services fees
566
344
Valuation fees/supplementary charges
286
125
Fees - parking meters
301
265
Other fees and charges
135
215
7,828
7,442
8,500
7,100
12,325
9,075
175
325
21,000
16,500
500
2,000
Commonwealth Government - Family and children
1,000
1,500
Victoria Grants Commission - unallocated
4,000
3,750
Victoria Grants Commission - local roads
* Resort and recreation fees received during the year are transferred to other
reserves pursuant to section 18 of the Subdivision Act 1988 (Resort and
Recreation Reserve) (refer note 29).
(b) Ageing analysis of contractual receivables
Please refer to Table in Note 40 entitled Ageing of Trade and other
renewables for the ageing analysis of contractual receivables.
Note 5 Grants
118
35(c)
Grants were received in respect of the following :
Summary of grants
Federally funded grants
State funded grants
Others
Total
Recurrent
LGR
62
14(b)
Commonwealth Government - Roads to recovery
1,000
1,750
Community health
250
250
School crossing supervisors
241
97
Planning and development
343
113
Maternal and child health
234
96
Family and children
473
302
Food services
432
301
Home help/linkages
365
253
Senior citizen centres
906
712
Transport
386
801
2012
$’000
2011
$’000
Adult day care
412
284
Assessment/welfare support
106
71
Libraries
153
80
Recreation
110
59
Local government improvement incentives
199
61
Community safety
114
86
Drug strategy development
141
78
73
92
Reference
AASB
Para
Note 5 Grants Cont.
Homeless support
Other
LGR
14(b)
562
264
12,000
13,000
6,500
-
-
2,500
Community health
750
500
Family and children
750
500
Transport
500
-
Homeless support
250
-
Other
250
-
9,000
3,500
Community health
500
400
Transport
500
-
1,000
400
400
300
400
300
600
100
Total recurrent
Non-recurrent
Commonwealth Government - Drainage
Commonwealth Government - Bridges
LGR
14(b)
Total non-recurrent
Conditions on Grants
Grants recognised as revenue during the year that were obtained on condition
that they be expended in a specified manner that had not occurred at balance
date were:
Grants which were recognised as revenue in prior years and were expended
during the current year in the manner specified by the grantor were:
Community health
Net increase (decrease) in restricted assets resulting from grant revenues
for the year:
LGR
14(b)
Commentary - Note 5 Grants
In addition to any matters required by AAS, the financial statements must
disclose by way of note a summary of grants and subsidies by type, classified
separately as to recurrent and non recurrent revenue components.
Note 6 Contributions
(a)
Cash
118
35(c)
1004
Roads
539
432
172
138
230
185
Footpaths and cycleways
Drainage
63
Reference
AASB
Para
2012
$’000
2011
$’000
344
276
69
Note 6 Contributions Cont.
Recreational, leisure and community facilities
Waste management
86
Parks, open space and streetscapes
34
7
Community day care
50
40
Parking
67
54
Other
40
33
1,562
1,254
1004
62
(b) Non-monetary assets
Land under roads
54
37
Roads
212
176
Drainage
114
91
16
13
Parking
33
26
Other
20
16
Total Contributions
Commentary - Note 6 Contributions
Parks, open space and streetscapes
449
359
2,011
1,613
Conditions on contributions
AASB 1004
60(a)
Where a local government agency has recognised as revenue contributions for
which the contributor has specified the manner in which they are to be expended
and those conditions are undischarged at the reporting date, the Council must
disclose details of those contributions and the conditions attaching to them.
118
35(c)
Note 7 Net gain/(loss) on disposal of property, infrastructure, plant and equipment
Proceeds of sale
Written down value of assets disposed
Total
118
35(c)
118
35(b)(iii)
Interest
118
35(b)(iii)
Interest on rates
118
35(b)(v)
Dividends
140
75(f)(i)
Investment property rental
-
(3,082)
-
479
-
1,264
1,179
940
863
-
-
800
1,000
Note 8 Other income
Other rent
-
-
118
35(b)(iv)
Royalties
-
-
136
126(b)
Reversals of impairment losses
-
-
200
500
3,204
3,542
28,209
28,346
Other
Total other income
64
3,561
101
103(c)
Note 9 Employee benefits
Wages and salaries
Workcover
610
594
Casual staff
616
599
Annual leave and long service leave
795
774
Reference
AASB
Para
2012
$’000
2011
$’000
2,503
2,436
-
735
962
937
-
-
35,367
34,421
Note 9 Employee benefits Cont.
Superannuation
Superannuation – additional contribution
Fringe benefits tax and work cover
Redundancy
Total employee benefits
During the prior period (2011) Council was required to make an additional
contribution to Vision Super to meet our obligations to members of the defined
benefit plan
101
103(c)
Note 10 Materials and services
Contract payments
6,176
7,176
Building maintenance
4,484
4,984
Plant and equipment maintenance
3,588
3,988
Utilities
2,691
3,195
Consultants
1,000
500
Total materials and services
17,939
19,843
101
103(c)
Parking fine debtors
100
1,000
Rates debtors
-
-
Other debtors
2,067
1,940
Total bad and doubtful debts
2,167
2,940
101
103(c)
Property
Land
296
289
Buildings
Buildings
1,673
1,639
Building improvements
195
193
Leasehold improvements
-
-
Heritage buildings
141
137
Plant and Equipment
Plant, machinery and equipment
2,194
2,129
Fixtures, fittings and furniture
1,712
1,669
Computers and telecommunications
305
297
Leased plant and equipment
-
-
Heritage plant and equipment
11
11
Library books
-
-
Infrastructure
Roads
6,900
6,728
Bridges
250
244
Note 11 Bad and doubtful debts
Note 12 Depreciation and amortisation
Land improvements
65
Reference
AASB
Para
2012
$’000
2011
$’000
850
829
66)
644
-
-
15,187
14,809
-
-
247
320
-
-
247
320
-
-
247
320
<> %
<> %
Note 12 Depreciation and amortisation Cont.
66
Footpaths and cycleways
Drainage
Intangible assets
138
118(d)
101
103(c)
Note 13 Finance costs
Bank overdraft charges
Interest - Borrowings
Interest - Finance leases
123
29(b)
101
123
29(c)
101
Aus126.1
Auditors’ remuneration
94
88
Councillors’ allowances
250
240
117
35(c)
Operating lease rentals
4,000
4,000
136
126(a)
Impairment losses
-
-
Other
3,965
2,157
Total other expenses
8,309
6,485
101, 128
128
38
- <> regional library corporation
-
-
<> regional library corporation
Background
<brief explanation of entity and the Council’s share in its ownership>
128
37(b)
Council’s share of accumulated surplus(deficit) at start of year
-
-
Reported surplus(deficit) for year
-
-
Transfers (to) from reserves
-
-
Distributions for the year
-
-
Council’s share of accumulated surplus(deficit) at end of year
-
-
Council’s share of reserves
Council’s share of reserves at start of year
-
-
Transfers (to) from reserves
-
-
Council’s share of reserves at end of year
-
-
Movement in carrying value of specific investment
-
-
Intangible assets
Total depreciation and amortisation
Less capitalised borrowing costs on qualifying assets
Total finance costs
Rate used to capitalise finance costs
Note 14 Other expenses
Note 15 Investment in associates
Investments in associates accounted for by the equity method are:
Council’s share of accumulated surplus(deficit)
Carrying value of investment at start of year
Reference
AASB
Para
2012
$’000
2011
$’000
Note 15 Investment in associates Cont.
Share of surplus(deficit) for year
-
-
Share of asset revaluation
-
-
Distributions received
-
-
Carrying value of investment at end of year
-
-
Council’s share of expenditure commitments
Operating commitments
-
-
Capital commitments
-
-
-
-
128
40(a), (b)
-
-
101
74
Note 16 Cash and cash equivalents
Cash on hand
54
33
Cash at bank
4,200
5,000
Money market call account
Bank bills
Council’s share of contingent liabilities and contingent assets
<List relevant assets and liabilities eg site restoration costs>
4,000
4,000
10,000
9,000
18,254
18,033
Councils cash and cash equivalents are subject to a number of internal and
external restrictions that limit amounts available for discretionary or future use.
These include:
- Reserve funds allocated for specific future purposes (Note 35)
- Trust funds and deposits (Note 35)
Restricted Funds
Total unrestricted cash and cash equivalents
11,369
11,369
588
574
11,957
11,943
6,297
6,090
2,208
2,101
207
208
1,714
1,491
(1,010)
(910)
201
620
3,416
1,077
Commentary – Note16 Cash and cash equivalents
Long Service Leave obligations
At the time of drafting the model accounts and exposure draft had been issued
for revised Local Government (Long Service Leave) regulations. The revised
regulations do not require the establishment of a separate account to hold an
amount calculated in accordance with the regulations. This model anticipates
that the new regulations will be in place by 30 June 2012 (currently anticipated
to take effect on February 18 2012) accordingly the above disclosure does not
included a restricted amount for the long service leave account, calculated in
accordance with the former regulations.
101
74, 75
Note 17 Trade and other receivables
Current
Rates debtors
Special rate debtors
Parking infringement debtors
7
20(e)
Loans and advances to community organisations
Other debtors
Provision for doubtful debts - parking infringements
67
Reference
AASB
Para
2012
$’000
2011
$’000
(2,417)
(350)
-
-
4,319
3,827
Note 17 Trade and other receivables Cont.
7
20(e)
Provision for doubtful debts - other debtors
Non-current
<> Special rate assessment
-
11
Loans and advances to community organisations
-
327
-
338
Total
4,319
4,165
101
74
Note 18 Financial assets
Current
Managed funds (note 1(j))
-
-
Non-current
Managed funds (note 1(j))
200
196
Managed funds are held with <> and are represented by:
<include details of holdings where relevant>
<Show as part of cash assets where actively used as part of cash management
and show here as non-current where used for long-term investment>
Note 19 Inventories
216
173
-
-
216
173
Net GST receivable
101
74
102
Aus36.1(b)
Inventories held for sale
Total inventories
Inventories held for distribution
5
30
101
38
Note 20 Assets held for sale
Cost of acquisition
6
6
Capitalised development costs (eg roads, drainage)
-
-
Borrowing costs capitalised during development
-
-
Total
6
6
123
29(b)
Borrowing costs capitalised
-
-
123
29(c)
Capitalisation rate used in the allocation of borrowing costs
0
0
AASB5
41(a)-(d)
Commentary - Note 20 Assets held for sale
Assets held for sale
In the period in which a non-current asset is first classified for sale or sold,
disclosure must also be made of:
(a) 68
a description of the non-current asset (or disposal group);
2012
$’000
Reference
AASB
Para
Commentary - Note 20 Assets held for sale Cont.
2011
$’000
(b) a description of the facts and circumstances of the sale, or leading to the
expected disposal, and the expected manner and timing of that disposal;
(c) the gain or loss recognised in accordance with paragraphs 20-22 and,
if not separately presented on the face of the comprehensive income
statement, the caption in the comprehensive income statement that
includes that gain or loss;
Also, if there is a change in the plan to dispose of an asset previously held for
sale, additional disclosures are required.
101
74
Note 21 Other assets
Current
Prepayments
167
154
Accrued income
251
451
Other
64
78
482
683
Non-current
Prepayments
102
83
Accrued income
-
-
Other
-
-
102
83
at cost
72,058
75,793
Less accumulated depreciation
27,065
25,143
44,993
50,650
Note 22 Property, infrastructure, plant and equipment
Summary
at fair value as at 30 June 2011
643,503 612,727
Less accumulated depreciation
177,815 163,945
465,688 448,782
Total
510,681 499,432
Property
Land
at cost
at fair value as at 30 June 2011
-
3,000
164,359 157,810
164,359 160,810
at cost
at Council valuation at 30 June 2011
54
-
5,037
5,037
5,091
5,037
21,733
15,935
8,701
8,405
13,032
7,530
Land improvements
at cost
Less accumulated depreciation
Total Land
182,482 173,377
69
Reference
AASB
Para
2012
$’000
2011
$’000
-
8,800
Note 22 Property, infrastructure, plant and equipment Cont.
Buildings
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
at fair value as at 30 June <>
Less Accumulated depreciation
-
1,399
-
7,401
134,251
-
52,197
-
82,054
-
- 115,644
-
49,125
-
66,519
at cost
6,155
5,800
Less accumulated depreciation
1,036
841
5,119
4,959
at fair value as at 30 June <>
-
-
Less accumulated depreciation
-
-
-
-
at fair value as at 30 June <>
-
-
Less accumulated depreciation
-
-
-
-
at cost
-
-
Less accumulated amortisation
-
-
-
-
at cost
74
20
Less accumulated depreciation
14
3
60
17
1,000
1,000
622
492
378
508
87,611
79,404
Building improvements
Leasehold improvements
Heritage buildings
at fair value as at 30 June <>
Less accumulated depreciation
Total Buildings
Total Property
70
270,093 252,781
2012
$’000
2011
$’000
at cost
19,551
19,783
Less accumulated depreciation
10,907
9,108
8,644
10,675
at cost
8,083
9,542
Less accumulated depreciation
5,111
4,399
2,972
5,143
at cost
2,093
1,742
Less accumulated depreciation
1,031
739
1,062
1,003
at cost
73
20
Less accumulated depreciation
15
4
58
16
at cost
264
245
Less accumulated depreciation
157
144
107
101
12,843
16,938
5,693
-
58
-
5,635
-
Reference
AASB
Para
Note 22 Property, infrastructure, plant and equipment Cont.
Valuation of land (excluding land under roads) and buildings were undertaken
by a qualified independent valuer include name and valuer registration no.].
The valuation of buildings is at fair value based on current replacement cost
less accumulated depreciation at the date of valuation. The valuation of land
is at fair value, being market value based on highest and best use permitted
by relevant land planning provisions. All freehold land reserved for public open
space is valued at a discount of <<%>> percent to market value based on legal
precedents.
Land under roads is valued at deemed cost/fair value [delete as appropriate].
Deemed cost/fair value [delete as appropriate] is based on Council valuations at
30 June 20XX for land under roads in existence at that date [delete if appropriate]
and at the date acquired for subsequent acquisitions using site values adjusted
for englobo (undeveloped and/or unserviced) characteristics, access rights and
private interests of other parties and entitlements of infrastructure assets and
services.
Plant and Equipment
Plant, machinery and equipment
Fixtures, fittings and furniture
Computers and telecommunications
Heritage plant and equipment
Library books
Total Plant and Equipment
Infrastructure
Roads
at cost
Less accumulated depreciation
71
2012
$’000
Reference
AASB
Para
2011
$’000
Note 22 Property, infrastructure, plant and equipment Cont.
at fair value as at 30 June <>
Less accumulated depreciation
245,125 245,125
84,853
78,011
160,272 167,114
Bridges
at cost
1,110
-
27
-
1,083
-
at fair value as at 30 June <>
8,183
8,183
Less accumulated depreciation
3,447
3,224
4,736
4,959
198
-
8
-
190
-
12,753
12,753
4,800
3,958
7,953
8,795
at cost
-
1,895
Less accumulated depreciation
-
101
-
1,794
at fair value as at 30 June <>
72,832
-
Less accumulated depreciation
31,896
-
40,936
-
at Fair value as at 30 June <>
-
67,212
Less accumulated depreciation
-
29,135
-
38,077
Less accumulated depreciation
Footpaths and cycleways
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Drainage
Total Infrastructure
220,805 220,739
Valuation of infrastructure assets has been determined in accordance with an
<independent> valuation undertaken by <name and qualifications>.
The valuation is at fair value based on replacement cost less accumulated
depreciation as at the date of valuation.
Works in progress
Buildings at cost
4,165
5,385
Roads at cost
2,081
2,692
694
897
6,940
8,974
Bridges at cost
Total Works in progress
Total property, infrastructure, plant and equipment
72
510,681 499,432
Balance at end of
financial year
Transfers
Impairment losses
recognised in profit or
loss (a)
Written down value of
disposals
Depreciation and
amortisation (note12)
Revaluation increments
(decrements) (note29)
Acquisition of assets
2012
Balance at beginning
of financial year
Note 22 Property, plant and equipment, infrastructure (cont.)
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
160,810
-
3,549
-
-
-
-
164,359
Property
land
land under roads
5,037
54
-
-
-
-
-
5,091
land improvements
7,530
5,798
-
296
-
-
-
13,032
Total land
173,377
5,852
3,549
296
-
-
-
182,482
buildings
73,920
3,251
,006
1,63
-
-
4,550
82,054
4,959
355
-
15
-
-
-
5,119
building improvements
leasehold improvements
-
-
-
-
-
-
-
-
525
54
-
141
-
-
-
438
Total buildings
79,404
3,660
2,006
2,009
-
-
4,55
87,611
Total property
252,781
-
5,555
2,305
-
-
4,550
270,093
10,675
1,558
-
2,194
1,395
-
-
8,644
fixtures, fittings and furniture
5,143
1,228
-
1,712
1,687
-
-
2,972
computers and
telecommunications
1,003
364
-
305
-
-
-
1,062
-
-
-
-
-
-
-
16
53
-
11
-
-
-
58
101
6
-
-
-
-
-
107
16,938
(22,420)
-
4,222
3,082
-
-
12,843
167,114
3,419
-
6,900
-
-
2,274
165,907
bridges
4,959
352
-
250
-
-
758
5,819
footpaths and cycleways
8,795
198
-
850
-
-
-
8,143
39,871
643
1,082
660
-
-
-
40,936
recreational, leisure and
community facilities
-
-
-
-
-
-
-
-
waste management
-
-
-
-
-
-
-
-
parks, open space and
streetscapes
-
-
-
-
-
-
-
-
off street car parks
-
-
-
-
-
-
-
-
other <insert details>
-
-
-
-
-
-
-
-
220,739
4,612
1,082
8,660
-
-
3,032
220,805
heritage buildings
Plant and Equipment
plant, machinery and
equipment
leased plant and equipment
heritage plant and equipment
library books
Total plant and equipment
Infrastructure
roads
drainage
Total infrastructure
73
Balance at end of
financial year
Transfers
Impairment losses
recognised in profit or
loss (a)
Written down value of
disposals
Depreciation and
amortisation (note12)
Revaluation increments
(decrements) (note29)
Acquisition of assets
2012
Balance at beginning
of financial year
Note 22 Property, plant and equipment, infrastructure (cont.)
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
buildings
5,385
3,330
-
-
-
-
(4,550)
4,165
roads
2,692
1,663
-
-
-
-
(2,274)
2,081
897
555
-
-
-
-
(758)
694
8,974
5,548
-
-
-
-
(7,582)
6,940
499,432
(12,260)
6,637
15,187
3,082
-
-
510,681
Works in progress
bridges
Total works in progress
Total property, plant and
equipment, infrastructure
(a) Impairment losses
Impairment losses are recognised in the comprehensive income statement under other expenses.
Reversals of impairment losses are recognised in the comprehensive income statement under other revenue.
Property
land
160,810
0
0
0
0
0
0
160,810
land under roads
5,000
37
0
0
0
0
0
5,037
land improvements
4,909
2,910
0
289
0
0
0
7,530
Total land
170,719
2,947
0
289
0
0
0
173,377
buildings
68,959
2,506
-
1,639
-
-
4,094
73,920
4,879
273
-
193
-
-
-
4,959
-
23
-
-
-
-
-
23
569
70
-
137
-
-
-
508
Total buildings
74,407
2,872
-
1,969
-
-
4,094
79,410
Total property
245,126
,819
-
2,258
-
-
4,094
252,787
11,448
2,291
-
2,129
935
-
-
10,675
6,138
1,807
-
1,669
1,133
-
-
5,143
756
544
-
297
-
-
-
1,003
-
-
-
-
-
-
-
-
building improvements
leasehold improvements
heritage buildings
Plant and Equipment
plant, machinery and
equipment
fixtures, fittings and furniture
computers and
telecommunications
leased plant and equipment
heritage plant and equipment
library books
Total plant and equipment
-
27
-
11
-
-
-
16
101
-
-
-
-
-
-
101
18,443
4,669
-
4,106
2,068
-
-
16,938
168,216
3,579
-
6,728
-
-
2,047
167,114
4,153
368
-
244
-
-
682
4,959
Infrastructure
roads
bridges
74
Balance at end of
financial year
Transfers
Impairment losses
recognised in profit or
loss (a)
Written down value of
disposals
Depreciation and
amortisation (note12)
Revaluation increments
(decrements) (note29)
Acquisition of assets
2012
Balance at beginning
of financial year
Note 22 Property, plant and equipment, infrastructure (cont.)
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
9,417
207
-
829
-
-
-
8,795
40,555
(160)
-
644
(120)
-
-
39,871
(30)
148
-
-
118
-
-
-
waste management
-
-
-
-
-
-
-
-
parks, open space and
streetscapes
-
-
-
-
-
-
-
-
off street car parks
-
-
-
-
-
-
-
-
other <insert details>
-
-
-
-
-
-
-
-
222,311
4,142
-
8,445
(2)
-
2,729
220,739
buildings
6,914
2,566
-
-
-
-
(4,095)
5,385
roads
2,998
1,740
-
-
-
-
(2,046)
2,692
998
581
-
-
-
-
(682)
897
10,910
4,887
-
-
-
-
(6,823)
8,974
496,790
19,517
-
14,809
2,066
-
-
499,438
footpaths and cycleways
drainage
recreational, leisure and
community facilities
Total infrastructure
Works in progress
bridges
Total works in progress
Total property, plant and
equipment, infrastructure
(a) Impairment losses
Impairment losses are recognised in the comprehensive income statement under other expenses.
Reversals of impairment losses are recognised in the comprehensive income statement under other revenue.
75
2012
$’000
Reference
AASB
Para
2011
$’000
Commentary - Note 22 Property, plant, equipment and infrastructure
AASB116
73(a)
Partial revaluations within a class of assets
When preparing accounts where individual assets within a class of assets are being revalued over
more than one year (meaning that the entire asset class is not fully revalued within one year) then
additional disclosure should be made of the basis of determining the carrying amount.
Acquisition of assets
A separate column could be included in the table in Note 22 which reconciles the movement in PP&E
to show non-monetary assets contributed. This would result in greater dissection of the assets
acquired.
Land Under Roads
Local Government Victoria has provided guidance recommending that Council account for land under
road in a consistent manner. The recommendation is that all land under roads is recognised in the
financial report at its fair value. These model accounts reflect that guidance. Further detail about this
guidance is outlined in the commentary to note 1.
140
140
76(a)-(g)
Balance at beginning of financial year
Acquisitions
Disposals
140
75(d), (e)
101, 138
76
Note 23 Investment property
10,000
10,000
2,000
-
(5,000)
-
Fair value adjustments
1,000
-
Balance at end of financial year
8,000
10,000
Valuation of investment property has been determined in accordance with an independent valuation
by <name and qualifications> who has recent experience in the location and category of the property
being valued.
Note 24 Intangible assets
138
118
Software developed in-house
-
-
Aged care bed licenses
-
-
Parking infringement system developed in-house
-
-
(insert details)
-
-
-
-
Reference
Para
Note 24 Intangible assets
138
118(c), (e)
Other
Total
Software
Parking
infringement
system
Aged care bed
licences
AASB
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2010
-
-
-
-
-
Additions from internal developments
-
-
-
-
-
Other
-
-
-
-
-
Balance at 1 July 2011
-
-
-
-
-
Additions from internal developments
-
-
-
-
-
Other
-
-
-
-
-
Balance at 30 June 2012
-
-
- -
-
Accumulated amortisation and impairment
Balance at 1 July 2010
-
-
-
-
-
Amortisation expense
-
-
-
-
-
Balance at 1 July 2011
-
-
-
-
-
Amortisation expense
-
-
-
-
-
Balance at 30 June 2012
-
-
-
-
-
Net book value at 30 June 2011
-
-
-
-
-
Net book value at 30 June 2012
-
-
-
-
-
Gross carrying amount
Reference
AASB
Para
Commentary - Note 24 Intangible assets
Intangible Assets
An intangible asset is an identifiable non-monetary asset without physical substance.
AASB 138
8
(In relation to the valuation of intangible assets) An active market is a market in which all the following
conditions exist:
(a)
the items traded in the market are homogeneous;
(b)
willing buyers and sellers can normally be found at any time; and
(c )
prices are available to the public.
Amortisation is the systematic allocation of the depreciable amount of an intangible asset
over its useful life.
Carrying amount is the amount at which an asset is recognised in the balance sheet after deducting
any accumulated amortisation and accumulated impairment losses thereon.
Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given
to acquire an asset at the time of its acquisition or construction, or, when applicable, the amount
attributed to that asset when initially recognised in accordance with the specific requirements of other
Australian Accounting Standards.
77
Reference
AASB
Para
Commentary - Note 24 Intangible assets Cont.
Depreciable amount is the cost of an asset, or other amount substituted for cost,
less its residual value.
Entity-specific value is the present value of the cash flows an entity expects to arise from the
continuing use of an asset and from its disposal at the end of its useful life or expects to incur when
settling a liability.
Fair value of an asset is the amount for which that asset could be exchanged between
knowledgeable, willing parties in an arm’s length transaction.
An impairment loss is the amount by which the carrying amount of an asset exceeds its
recoverable amount.
Monetary assets are money held and assets to be received in fixed or determinable amounts
of money.
The residual value of an intangible asset is the estimated amount that an entity would currently obtain
from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of
the age and in the condition expected at the end of its useful life.
Useful life is:
(a) the period over which an asset is expected to be available for use by an entity; or
(b) the number of production or similar units expected to be obtained from the asset by an entity.
12
An asset meets the identifiability criterion in the definition of an intangible asset when it:
(a) is separable, that is, is capable of being separated or divided from the entity and sold,
transferred, licensed, rented or exchanged, either individually or together with a related
contract, asset or liability; or
(b) arises from contractual or other legal rights, regardless of whether those rights are transferable
or separable from the entity or from other rights and obligations.
21
An intangible asset shall be recognised if, and only if:
(a)it is probable that the expected future economic benefits that are attributable to the asset will
flow to the entity; and
(b)the cost of the asset can be measured reliably.
22
78
An entity shall assess the probability of expected future economic benefits using reasonable and
supportable assumptions that represent management’s best estimate of the set of economic
conditions that will exist over the useful life of the asset.
Reference
2012
$’000
2011
$’000
5,818
5,240
AASB
Para
101
74, 75
101
Trade payables
Net GST payable
264
258
Accrued expenses
794
775
6,876
6,273
101
74, 75
LGR
14(a)
Refundable building deposits
163
149
Refundable contract deposits
225
240
Refundable tender deposits
40
36
Refundable civic facilities deposits
25
24
Retention amounts
105
97
Other refundable deposits
Note 25 Trade and other payables
Note 26 Trust funds and deposits
30
28
588
574
(include in commentary)
Reference
Note 27 Provisions
2012
137
84(a)
Balance at beginning of the financial year
137
84(b)
Additional provisions
137
84(c)
Amounts used
137
84(e)
Increase in the discounted amount arising
because of time and the effect of any change in
the discount rate
137
84(a)
Balance at the end of the financial year
2011
Balance at beginning of the financial year
Additional provisions
Amounts used
Increase in the discounted amount arising
because of time and the effect of any change in
the discount rate
Balance at the end of the financial year
$ ‘000
$ ‘000
$ ‘000
$ ‘000
$ ‘000
2,409
4,553
-
1
6,963
496
299
-
-
795
(303)
(492)
-
(1)
(796)
-
-
-
-
-
2,602
4,360
-
-
6,962
2,220
4,440
-
1
6,661
483
292
-
-
775
(294)
(179)
-
-
(473)
-
-
-
-
-
2,409
4,553
-
1
6,963
Total
Other
Landfill
restoration
Long service
leave
Para
Annual leave
AASB
79
Reference
AASB
Para
2012
$’000
2011
$’000
Note 27 Provisions Cont.
74, 75
Current
Annual leave
2,602
2,409
Long service leave
3,270
3,415
Retirement gratuity
-
-
Superannuation
-
-
Other
-
-
5,872
5,824
Non-current
Long service leave
1,090
1,138
Retirement gratuity
-
-
Superannuation
-
-
Other
-
-
1,090
1,138
Aggregate carrying amount of employee benefits:
Current
5,872
5,824
Non-current
1,090
1,138
6,962
6,962
137
85(b)
Weighted average increase in employee costs
4.50%
4.75%
Weighted average discount rates
5.23%
4.73%
Weighted average settlement period
12
12
137
85(a), (b)
137
80
(a) Employee benefits
101
85(a),(b)
(i)
(ii)
The following assumptions were adopted in measuring the present
value of employee benefits:
(i) Current
All annual leave and the long service leave entitlements representing
10 or more years of continuous service
- Short-term employee benefits, that fall due within 12 months
after the end of the period measured at nominal value
3,602
3,409
- Other long-term employee benefits that do not fall due within
12 months after the end of the period measured at present value
2,270
2,415
5,872
5,824
1,090
1,138
(ii) Non-current
Long service leave representing less than 10 years of continuous service
measured at present value
2012
$’000
Reference
AASB
Para
2011
$’000
Note 27 Provisions Cont.
(b) Land fill restoration
Under [legislation/agreement/Council undertaking] Council is obligated to restore [landfill] site to a
particular standard. Current [engineering] projections indicate that the [landfill] site will cease operation
in [201X] and restoration work is expected to commence shortly thereafter. The forecast life of the
[landfill] site is based on current estimates of remaining capacity and the forecast rate of infill. The
provision for landfill restoration has been calculated based on the present value of the expected
cost of works to be undertaken. The expected cost of works has been estimated based on current
understanding of work required to reinstate the site to a suitable standard and [budgeted costs for
that work/independent specialist advice]. Accordingly, the estimation of the provision required is
dependent on the accuracy of the forecast timing of the work, work required and related costs.
Council [does/does not] expect to receive reimbursement from a third party.
(c) Provisions
<Insert relevant items>
Current
-
1
Non-current
-
-
Total
-
1
101
74,75
Current
Bank overdraft
-
-
Borrowings - secured
1,161
2,704
1,161
2,704
Non-current
Borrowings - secured
2,565
3,344
Total
3,726
6,048
7
39(a)
Not later than one year
1,161
2,704
Later than one year and not later than five years
2,565
3,344
Later than five years
-
-
3,726
6,048
117
31(b)
Not later than one year
-
-
Later than one year and not later than five years
-
-
Later than five years
-
-
Minimum lease payments
-
-
Less: Future finance charges
-
-
117
31(a)
Note 28 Interest-bearing loans and borrowings
The maturity profile for Council’s borrowings is:
Finance leases
Council had the following obligations under finance leases for the lease of equipment (the sum of
which is recognised as a liability after deduction of future lease finance charges included in the
obligation):
Recognised in the balance sheet as:
81
Reference
AASB
Para
2012
$’000
2011
$’000
-
-
Note 28 Interest-bearing loans and borrowings
82
Current
Leases
Non-current
Leases
-
-
Total
-
-
Aggregate carrying amount of interest-bearing loans and borrowings:
Current
1,161
2,704
Non-current
2,565
3,344
3,726
6,048
101
74,75
Current
Bank overdraft
-
-
Borrowings - secured
1,161
2,704
1,161
2,704
Non-current
Borrowings - secured
2,565
3,344
Total
3,726
6,048
7
39(a)
Not later than one year
1,161
2,704
Later than one year and not later than five years
2,565
3,344
Later than five years
-
-
3,726
6,048
117
31(b)
Not later than one year
-
-
Later than one year and not later than five years
-
-
Later than five years
-
-
Minimum lease payments
-
-
Less: Future finance charges
-
-
117
31(a)
Current
Leases
-
-
Non-current
Leases
-
-
Total
-
-
Aggregate carrying amount of interest-bearing loans and borrowings:
Current
1,161
2,704
Non-current
2,565
3,344
3,726
6,048
Note 28 Interest-bearing loans and borrowings
The maturity profile for Council’s borrowings is:
Finance leases
Council had the following obligations under finance leases for the lease of
equipment (the sum of which is recognised as a liability after deduction of future
lease finance charges included in the obligation):
Recognised in the balance sheet as:
Reference
(a) Asset revaluation reserves
2012
Property
Land
Buildings
Infrastructure
Balance at end of
reporting period
Note 29 Reserves
Share of increment (decrement)
on revaluation of <name asset
class> by an associate
Increment
(decrement)
Para
Balance at beginning of
reporting period
AASB
$’000
$’000
$’000
$’000
38,418
3,549
-
41,967
Land under roads
-
-
-
-
Land improvements
-
-
-
-
18,158
2,006
-
20,164
148
-
-
148
56,724
5,555
-
62,279
Roads
35,211
-
-
35,211
Bridges
1,149
-
-
1,149
5,548
-
-
5,548
Drainage
9,238
1,082
-
10,320
-
-
-
-
52,228
Total Asset revaluation reserves
2011
Property
Land
Land under roads
Land improvements
Buildings
Infrastructure
Heritage buildings
Footpaths and cycleways
Other infrastructure<insert details>
51,146
1,082
-
107,870
6,637
- 114,507
38,418
-
-
38,418
-
-
-
-
-
-
-
-
18,276
(160)
-
18,116
-
148
-
148
56,694
(12)
-
56,682
Roads
35,211
-
-
35,211
Bridges
1,149
-
-
1,149
5,548
-
-
5,548
Drainage
9,238
-
-
9,238
-
-
-
-
51,146
-
-
51,146
107,840
-
- 107,840
Heritage buildings
Footpaths and cycleways
Other infrastructure<insert details>
Total Asset revaluation reserves
83
Reference
84
Balance at end of
reporting period
Note 29 Reserves Cont.
Share of increment (decrement)
on revaluation of <name asset
class> by an associate
Increment
(decrement)
Para
Balance at beginning of
reporting period
AASB
$’000
$’000
$’000
$’000
101
76(b)
(b) Other reserves
2012
Resort and recreation reserve
11,369
-
-
11,369
Total Other reserves
11,369
-
-
11,369
2011
Resort and recreation reserve
11,369
-
-
11,369
Total Other reserves
11,369
-
-
11,369
101
76(b)
<Provide a description of the nature and purpose of reserve>
<Provide a description of the nature and purpose of reserve>
2012
$’000
2011
$’000
Adjustment arising from recognising land under roads
-
-
Impairment losses on revalued assets
-
-
Reversal of impairment losses on revalued assets
-
-
Adjustment on change in accounting policy
-
-
Change arising from a change in restoration liability
-
-
Gains (losses) from remeasuring available-for-sale financial assets to fair value:
Recognised during the year
-
-
Removed and recognised in profit/loss
-
-
107
Aus20.1
Comprehensive Result
11,555
(3,661)
Depreciation/amortisation
17,939
19,843
(Profit)/loss on disposal of property, plant and equipment, infrastructure
(479)
78,818
Impairment losses
-
-
Fair value adjustments for investment property
(1,000)
-
Contributions - Non-monetary assets
(3,204)
(3,542)
Other
-
-
Change in assets and liabilities:
(Increase)/decrease in trade and other receivables
(375)
325
Decrease in prepayments
-
-
Increase/(decrease) in accrued income
Increase/(decrease) in trade and other payables
Reference
AASB
Para
101
96(b), (d)
Note 30 Adjustments directly to equity
Note 31 Reconciliation of cash flows from operating activities to surplus (deficit)
-
-
124
105
(Decrease)/increase in other liabilities
-
-
(Increase)/decrease in inventories
-
-
(Decrease) in provisions
(1)
(3)
(insert other relevant items)
Net cash provided by/(used in) operating activities
107
45
Note 32 Reconciliation of cash and cash equivalents
Cash and cash equivalents (see note 16)
Less bank overdraft
132
610
335
19,014
11,555
18,254
18,033
-
-
18,254
18,033
5,000
5,000
-
-
5,000
5,000
-
-
-
-
Note 33 Financing arrangements
Bank overdraft
Used facilities
107
50(a)
107
43
Note 34 Non-cash financing and investing activities
<Provide details>
Unused facilities
85
2012
$’000
Reference
AASB
Para
2011
$’000
Note 35 Restricted assets
LGLSL
18(2)
107
48
Council has cash and cash equivalents (note 18) that are subject to restrictions. As at the reporting
date, Council had legislative restrictions in relation to employee entitlements (Long Service Leave) and
reserve funds (Recreational Lands Reserves).
Trust funds and deposits
Reserve funds (note 29)
588
574
11,369
11,369
11,957
11,943
Commentary - Note 35 Restricted Assets
Long Service Leave obligations
At the time of drafting the model accounts and exposure draft had been issued for revised
Local Government (Long Service Leave) regulations. The revised regulations do not require the
establishment of a separate account to hold an amount calculated in accordance with the regulations.
This model anticipates that the new regulations will be in place by 30 June 2012 (currently anticipated
to take effect on February 18 2012) accordingly the above disclosure does not included a restricted
amount for the long service leave account, calculated in accordance with the former regulations.
Note 36
119
Superannuation
Council made Contributions to the following funds:
Fund
86
Defined benefits fund
119
120
Employer contributions to Local Authorities Superannuation Fund (Vision Super)
437
421
Employer contributions to (insert details)
110
103
Employer contributions payable to Local Authorities Superannuation Fund
(Vision Super) at reporting date
Employer contributions payable to (insert details)
119
46
Accumulation funds
Employer contributions to Local Authorities Superannuation Fund (Vision Super)
Employer contributions to (insert details)
547
524
2
-
-
-
2
-
1,403
1,376
553
536
1,956
1,912
Employer contributions payable to Local Authorities Superannuation Fund
(Vision Super) at reporting date
5
3
Employer contributions payable to (insert details)
-
-
5
3
Reference
The Council has entered into the following commitments
101
Aus126.6
Total
Note 37 Commitments
Later than 5 years
94
Later than 2 years
and not later than
5 years
27
Later than 1 year
and not later than
2 years
Para
Not later than 1
year
AASB
$’000
$’000
$’000
$’000
$’000
2012
Operating
Recycling
Street cleaning services
Garbage collection
Refurbishment and alteration
to council buildings
Open space management
169,932
143,075
99,970
26,676
439,653
-
-
-
-
-
237,960
216,980
129,970
17,280
602,190
-
-
-
-
-
147,336
65,519
65,029
-
277,884
Information systems & technology
-
-
-
-
-
Insurances
-
-
-
-
-
Home care services
141,438
-
-
-
141,438
Cleaning contracts for council buildings
106,836
106,836
160,254
-
373,926
Meals for delivery
27,533
-
-
-
27,533
Animal pound services
-
-
-
-
-
Total
831,035
532,410
455,223
1,060
-
-
-
1,060
-
-
-
-
-
116
74(c)
Capital
43,956 1,862,624
Buildings
Plant and equipment
Roads
2,063
-
-
-
2,063
Drainage
1,000
-
-
-
1,000
Total
4,123
-
-
-
4,123
2011
Operating
Recycling
160,728
160,728
179,865
46,137
547,458
Street cleaning services
-
-
-
-
-
Garbage collection
197,712
197,712
230,742
47,337
673,503
Refurbishment and alteration
to council buildings
-
-
-
-
-
Open space management
119,569
119,569
37,637
-
276,775
Information systems & technology
-
-
-
-
-
Insurances
-
-
-
-
-
Home care services
154,296
141,438
-
-
295,734
Cleaning contracts for council buildings
109,092
109,092
272,730
-
490,914
Meals for delivery
30,036
27,533
-
-
57,569
87
Reference
AASB
Para
Animal pound services
Total
Capital
Buildings
Plant and equipment
Roads
Drainage
Total
Total
Later than 5 years
Later than 2 years
and not later than
5 years
Later than 1 year
and not later than
2 years
Not later than 1
year
Note 37 Commitments Cond.
$’000
$’000
$’000
$’000
$’000
-
-
-
771,433
756,072
720,974
1,062
-
-
-
1,062
-
-
-
-
-
1,962
-
-
-
1,962
900
-
-
-
900
3,924
-
-
-
3,924
117
88
Para
-
93,474 2,341,953
2012
$’000
Reference
AASB
-
2011
$’000
Note 38 Operating leases
(a) Operating lease commitments
117
35(a)
Not later than one year
13,641
15,929
Later than one year and not later than five years
12,185
25,826
Later than five years
117
56(c)
The Council has entered into commercial property leases on its investment property, consisting of
surplus freehold office complexes. These properties held under operating leases have remaining
non-cancellable lease terms of between 1 and 10 years. All leases include a CPI based revision of the
rental charge annually.
117
56(a)
Future minimum rentals receivable under non-cancellable operating leases are as follows:
Not later than one year
At the reporting date, the Council had the following obligations under non-cancellable operating leases
for the lease of equipment and land and buildings for use within Council’s activities (these obligations
are not recognised as liabilities):
-
-
25,826
41,755
(b) Operating lease receivables
850
800
Later than one year and not later than five years
2,450
2,500
Later than five years
3,800
3,400
7,100
6,700
Reference
AASB
Para
137
86(a), (c)
Contingent liabilities
The Council is presently involved in several confidential legal matters, which are being conducted
through Council’s solicitors.
As these matters are yet to be finalised, and the financial outcomes are unable to be reliably
estimated, no allowance for these contingencies has been made in the financial report.
Council has obligations under a defined benefit superannuation scheme that may result in the need
to make additional contributions to the scheme to ensure that the liabilities of the fund are covered
by the assets of the fund. As a result of the increased volatility in financial markets the likelihood of
making such contributuions in future periods has increased. At this point in time it is not known if
additional contributions will be required, their timing or potential amount
Council operates a landfill at <place>. Council will have to carry out site rehabilitation works in the
future. At balance date Council is unable to accurately assess the financial implications of such works.
Guarantees for loans to other entities
<list other matters where appropriate>
Note 39 Contingent liabilities and contingent assets
137
89
Developer contributions to be received in respect of estates currently under development
total $<> (2010/11, $<>).
<list other matters where appropriate>
AASB 137
Contingent assets
Commentary - Note 39 Contingent liabilities and contingent assets
86
Guarantees for loans to other entities
The amount disclosed for financial guarantee in this note is the nominal amount
of the underlying loan that is guaranteed by the Council, not the fair value of the
financial guarantee.
89
Reference
AASB
Para
7
7, 21
Note 40 Financial Risk Management
(a) Accounting Policy, terms and conditions
Recognised
financial
instruments
Note
Accounting Policy
Terms and Conditions
16
Cash on hand and at bank and
money market call account are
valued at face value.
On call deposits returned a floating
interest rate of <>% (<>% in
2010/2011). The interest rate at
balance date was <>% ‘(<>% in
2010/2011).
Interest is recognised as it accrues.
Funds returned fixed interest rate of
between <>% (<>% in 2010/2011),
and <>% (<>% in 2010/2011) net
of fees.
Investments and bills are valued at
cost.
Managed fund provided return of
% (<>% in 2010/2011) excluding
unrealised gains/losses
Investments are held to maximise
interest returns of surplus cash.
Interest revenues are recognised as
they accrue.
Managed funds are measured at
market value.
Trade and other receivables
Other debtors
Financial assets
Cash and cash
equivalents
17
Receivables are carried at
amortised cost using the effective
interest method. A provision for
doubtful debts is recognised when
there is objective evidence that an
impairment loss has occurred.
Collectability of overdue accounts
is assessed on an ongoing basis.
General debtors are unsecured and
arrears attract an interest rate of
<>% (<>% in 2010/2011). Credit
terms are based on <> days.
Financial Liabilities
7
90
Trade and other
payables
25
Liabilities are recognised for
amounts to be paid in the future
for goods and services provided to
Council as at balance date whether
or not invoices have been received.
General Creditors are unsecured,
not subject to interest charges and
are normally settled within <> days
of invoice receipt.
14(a), (b)
Interest-bearing
loans and
borrowings
28
Loans are carried at their principal
amounts, which represent the
present value of future cash flows
associated with servicing the debt.
Interest is accrued over the period
it becomes due and recognised as
part of payables.
Borrowings are secured by way of
mortgages over the general rates
of the Council.
The weighted average interest
rate on borrowings is <>%
(<>% in 2010/2011).
Reference
AASB
Para
Note 40 Financial Risk Management Cont.
7
14(a), (b)
Bank overdraft
28
Finance leases are accounted for
at their principal amount with the
lease payments discounted to
present value using the interest
rates implicit in the leases.
As at balance date, the Council
had finance leases with an average
lease term of <> years.
The weighted average rate implicit
in the lease is <>% (<>% in
2010/2011).
Overdrafts are recognised at
the principal amount. Interest
is charged as an expense as it
accrues.
The overdraft is subject to annual
review.
It is secured by a mortgage over
Council’s general rates and is
repayable on demand.
Interest rates on utilised overdraft
were <>% (<>% in 2010/2011).
The interest rate as at balance date
was <>% (<>% in 2010/2011).
Commentary - Note 40 Financial Instruments
Financial Instruments: Definition & Disclosures
AASB 7
The definition of a financial instrument in accounting standards requires that there to be a contractual
right or obligation. Therefore liabilities or assets that are not contractual but are created as a result of
statutory requirements imposed by governments are not financial instruments.
Nature and extent of risks arising from financial instruments
31
An entity shall disclose information that enables users of its financial report to evaluate the nature and
extent of risks arising from financial instruments to which the entity is exposed at the reporting date.
32
The disclosures required focus on the risks that arise from financial instruments and how they have been
managed. These risks typically include, but are not limited to, credit risk, liquidity risk and market risk.
Qualitative disclosures
33
For each type of risk arising from financial instruments, an entity shall disclose:
(a)
the exposures to risk and how they arise;
(b) its objectives, policies and processes for managing the risk and the methods used to measure
the risk; and
(c)
any changes in (a) or (b) from the previous period.
91
Reference
Note 40 Financial instruments Cont.
34(a), 39(a)
The exposure to interest rate risk and the effective interest rates of financial assets and financial
liabilities, both recognised and unrecognised, at balance date are as follows:
Fixed interest maturing in:
Total
7
(b) Interest Rate Risk
Noninterest
bearing
More than
5 years
Over 1 to 5
years
1 year or
less
Para
Floating
interest
rate
AASB
$’000
$’000
$’000
$’000
$’000
$’000
2012
92
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Other assets
Total financial assets
Financial liabilities
8,200
10,000
-
-
54
18,254
-
-
206
-
-
206
952
-
-
-
1,192
2,144
-
-
-
-
-
-
9,152
10,000
206
-
1,246
20,604
6.69%
5.65%
Trade and other payables
-
-
-
-
5,292
5,292
Trust funds and deposits
-
-
-
-
588
588
Interest-bearing loans and borrowings
-
1,161
2,565
-
-
3,726
Total financial liabilities
-
1,161
2,565
-
5,880
9,606
6.41%
6.20%
6.42%
Net financial assets (liabilities)
9,152
8,839
(2,359)
-
(4,634)
10,998
2011
Financial assets
Cash and cash equivalents
9,000
9,000
-
-
33
18,033
Other financial assets
-
-
202
-
-
202
Trade and other receivables
999
-
-
-
1,042
2,041
Other assets
Total financial assets
Weighted average interest rate
Weighted average interest rate
Weighted average interest rate
-
-
-
-
-
-
9,999
9,000
202
-
1,075
20,276
6.89%
4.72%
Reference
AASB
Para
Note 40 Financial instruments Cont.
Floating
interest
rate
1 year or
less
Over 1 to 5
years
More than
5 years
Noninterest
bearing
Total
Fixed interest maturing in:
$’000
$’000
$’000
$’000
$’000
$’000
Financial liabilities
Trade and other payables
-
-
-
-
5,168
5,168
Trust funds and deposits
-
-
-
-
574
574
Interest-bearing loans and borrowings
-
2,704
3,344
-
-
6,048
Total financial liabilities
-
2,704
3,344
-
5,742
11,790
Weighted average interest rate
3.00%
6.36%
6.38%
6.05%
Net financial assets (liabilities)
9,999
6,296
(3,142)
-
(4,667)
8,486
7
27
(c) Net Fair Values
7
25
The aggregate net fair values of financial assets and financial liabilities, both recognised and
unrecognised, at balance date are as follows:
Financial Instruments
2012
2011
2012
2011
$’000
$’000
$’000
$’000
Financial assets
Cash and cash equivalents
18,254
18,033
18,254
18,033
Other financial assets
Trade and other receivables
Other assets
Total financial assets
Financial liabilities
Trade and other payables
Trust funds and deposits
7
36(a)
Total carrying
amount as per
Balance Sheet
Aggregate
net fair value
206
202
206
202
2,144
2,041
2,144
2,041
-
-
-
-
20,604
20,276
20,604
20,276
5,292
5,168
5,292
5,168
588
574
588
574
Interest-bearing loans and borrowings
3,726
6,048
3,814
6,121
Total financial liabilities
9,606
11,790
9,694
11,863
(d) Credit Risk
The maximum exposure to credit risk at balance date in relation to each class of recognised financial
asset is represented by the carrying amount of those assets as indicated in the Balance Sheet.
93
Reference
AASB
Para
Note 40 Financial instruments Cont.
(e) Risks and mitigation
The risks associated with our main financial instruments and our policies for minimising these risks are
detailed below.
7
34(a)
7
34(a)
Market risk
Market risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate
because of changes in market prices. The Council’s exposures to market risk are primarily through
interest rate risk with only insignificant exposure to other price risks and no exposure to foreign
currency risk. Components of market risk to which we are exposed are discussed below.
Interest rate risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated
with the instrument will fluctuate due to changes in market interest rates. Interest rate risk arises from
interest bearing financial assets and liabilities that we use. Non derivative interest bearing assets are
predominantly short term liquid assets. Our interest rate liability risk arises primarily from long term
loans and borrowings at fixed rates which exposes us to fair value interest rate risk.
Our loan borrowings are sourced from major Australian banks by a tender process. Finance leases
are sourced from major Australian financial institutions. Overdrafts are arranged with major Australian
banks. We manage interest rate risk on our net debt portfolio by:
• ensuring access to diverse sources of funding;
• reducing risks of refinancing by managing in accordance with target maturity profiles; and
• setting prudential limits on interest repayments as a percentage of rate revenue.
We manage the interest rate exposure on our debt portfolio by appropriate budgeting strategies and
obtaining approval for borrowings from the Department of Planning and Community Development
each year.
Investment of surplus funds is made with approved financial institutions under the Local Government
Act 1989. We manage interest rate risk by adopting an investment policy that ensures:
• conformity with State and Federal regulations and standards,
• capital protection,
• appropriate liquidity,
• diversification by credit rating, financial institution and investment product,
• monitoring of return on investment,
• benchmarking of returns and comparison with budget.
Maturity will be staggered to provide for interest rate variations and to minimise interest rate risk.
7
34(a)
Credit risk
Credit risk is the risk that a contracting entity will not complete its obligations under a financial
instrument and cause us to make a financial loss. We have exposure to credit risk on some financial
assets included in our balance sheet. To help manage this risk:
• we have a policy for establishing credit limits for the entities we deal with;
• we may require collateral where appropriate; and
• we only invest surplus funds with financial institutions which have a recognised credit rating
specified in our investment policy.
94
Reference
AASB
Para
7
Note 40 Financial instruments Cont.
36(b,c)
Trade and other receivables consist of a large number of customers, spread across the consumer,
business and government sectors. Credit risk associated with the Council’s financial assets is minimal
because the main debtor is the Victorian Government. Apart from the Victorian Government we do
not have any significant credit risk exposure to a single customer or groups of customers. Ongoing
credit evaluation is performed on the financial condition of our customers and, where appropriate, an
allowance for doubtful debts is raised.
We may also be subject to credit risk for transactions which are not included in the balance sheet,
such as when we provide a guarantee for another party. Details of our contingent liabilities are
disclosed in note 39.
Movement in Provisions for Doubtful Debts
2012
$’000
2011
$’000
Balance at the beginning of the year
1,260
383
New Provisions recognised during the year
4,334
2,716
Amounts already provided for and written off as uncollectible
(2,167)
1,839
Amounts provided for but recovered during the year
Balance at end of year
-
-
3,427
1,260
Ageing of Trade and Other Receivables
At balance date other debtors representing financial assets were past due but not impaired. These
amounts relate to a number of independent customers for whom there is no recent history of default.
The ageing of the Council’s Trade & Other Receivables was:
2012
$’000
2011
$’000
4,437
4,299
224
187
Past due between 31 and 180 days
1,125
687
Past due between 181 and 365 days
3,112
1,187
8
4
8,906
6,364
Current (not yet due)
Past due by up to 30 days
Past due by more than 1 year
Total Trade & Other Receivables
Ageing of individually impaired Trade and Other Receivables
At balance date, other debtors representing financial assets with a nominal value of $73,757 (2011:
$48,012) were impaired. The amount of the provision raised against these debtors was $73,757
(2011: $48,012). The individually impaired debtors relate to general and sundry debtor and have been
impaired as a result of their doubtful collection. Many of the long outstanding past due amounts have
been lodged with Council’s debt collectors or are on payment arrangements.
95
Reference
AASB
Para
Note 40 Financial instruments Cont.
The ageing of Trade and Other Receivables that have been individually
determined as impaired at reporting date was:
7
34(a)
2012
$’000
2011
$’000
Current (not yet due)
-
-
Past due by up to 30 days
-
-
Past due between 31 and 180 days
9
12
Past due between 181 and 365 days
3
6
Past due by more than 1 year
62
30
Total Trade & Other Receivables
74
48
Liquidity risk
Liquidity risk includes the risk that, as a result of our operational liquidity requirements:
• we will not have sufficient funds to settle a transaction on the date;
• we will be forced to sell financial assets at a value which is less than what they are worth; or
• we may be unable to settle or recover a financial assets at all.
To help reduce these risks we:
• have a liquidity policy which targets a minimum and average level of cash and cash
equivalents to be maintained;
• have readily accessible standby facilities and other funding arrangements in place;
• have a liquidity portfolio structure that requires surplus funds to be invested within
various bands of liquid instruments;
• monitor budget to actual performance on a regular basis; and
• set limits on borrowings relating to the percentage of loans to rate revenue and
percentage of loan principal repayments to rate revenue.
The Councils exposure to liquidity risk is deemed insignificant based on prior periods’ data and
current assessment of risk.
The table below lists the contractual maturities for Financial Liabilities.
These amounts represent undiscounted gross payments including both principal and interest amounts.
96
Reference
$’000
$’000
$’000
$’000
$’000
$’000
Amount
Carrying
Cash Flow
>5 years
2-5 years
Contracted
Note 40 Financial instruments Cont.
1-2 years
6-12
months
Para
6 mths
or less
AASB
$’000
2012
Trade and other payables
5,292
-
-
-
-
5,292
5,292
Trust funds and deposits
425
163
-
-
-
588
588
Interest-bearing loans
and borrowings
581
581
1,161
1,403
3,726
3,726
Total financial liabilities
6,298
744
1,161
1,403
-
9,606
9,606
2011
Trade and other payables
5,168
-
-
-
5,168
5,168
5,168
Trust funds and deposits
329
245
-
-
574
574
574
Interest-bearing loans
and borrowings
1,352
1,352
1,161
2,183
6,048
6048
6048
Total financial liabilities
6,849
1,597
1,161
2,183
11,790
11,790
11,790
7
40
(f) Sensitivity disclosure analysis
Taking into account past performance, future expectations, economic forecasts, and management’s
knowledge and experience of the financial markets, the Council believes the following movements
are ‘reasonably possible’ over the next 12 months (Base rates are sourced from Reserve Bank of
Australia):
• A parallel shift of + 1% and -2% in market interest rates (AUD) from year-end rates of 4.4%.
The table below discloses the impact on net operating result and equity for each category of financial
instruments held by the Council at year-end, if the above movements were to occur.
Interest rate risk
-200
basis
points
+100
basis
points
Profit
Equity
Profit
Equity
$’000
$’000
$’000
$’000
-2 %
$’000
+1
2012
Financial assets:
Cash and cash equivalents
18,254
(365)
(365)
182
182
Trade and other receivables
5,467
-
-
-
54
Financial liabilities: Interest-bearing loans and borrowings
3,726
75
75
(37)
(37)
(g) Fair Value Hierarchy
All financial assets carried at fair value are measured at quoted process in active markets for identical
assets or liabilities.
97
Reference
AASB
Para
Commentary - Note 40 Financial Instruments
Fair Value Hierarchy
AASB 7 requires the disclosure of a fair value hierarchy table to identify the basis of valuation for
financial assets. As it is very rare for a Council to hold financial assets that are measured at other
than level 1 (quoted market prices) the inclusion of a detailed table will only be required in the rare
occurrence where financial assets are valued at other than a market price basis.
Note 41 Auditors’ remuneration
101
Aus126.1
2012
$’000
2011
$’000
Audit fee to conduct external audit - Victorian Auditor-General
55
52
Internal audit fees – Crowe Horwath
39
36
Fees for other services provided by internal auditor
110
19, 21
LGD
5
-
-
94
88
Note 42 Events occurring after balance date
No matters have occurred since balance date that require disclosure in the financial report.
Note 43 Related party transactions
(i) Responsible Persons
Names of persons holding the position of a Responsible Person at the Council at any time during the
year are:
CouncillorsCouncillor <> (Mayor <> 18/11/11 to current)
Councillor <> (Mayor <> 01/07/11 to 17/11/11)
Councillor <>
Councillor <>
Councillor <>
Councillor <>
Councillor <>
Councillor <>
Chief Executive Officer
<name>
(ii) Remuneration of Responsible Persons
The numbers of Responsible Officers, whose total remuneration from Council and any related entities
fall within the following bands:
$1 - $9,999
2012
2011
No.
No.
-
-
$10,000 - $19,999
$20,000 - $29,999
7
$30,000 - $39,999
$40,000 - $49,999
2
1
$150,000 - $159,999
$160,000 - $169,999
Total Remuneration for the reporting year for Responsible Persons
included above amounted to:
98
7
1
1
1
1
9
12
<>
<>
Reference
AASB
Para
Note 43 Related party transactions Cont.
(iii) No retirement benefits have been made by the Council to a Responsible Person.
(2010/11, <>).
(iv) No loans have been made, guaranteed or secured by the Council to a Responsible
Person during the reporting year (2010/11, <>).
(v) Other Transactions
No transactions other than remuneration payments or the reimbursement of approved expenses were
entered into by Council with Responsible Persons, or Related Parties of such Responsible Persons
during the reporting year (2010/11, <>).
LGA
3 (1)
A Senior Officer other than a Responsible Person, is an officer of Council who has management
responsibilities and reports directly to the Chief Executive Officer or whose total annual remuneration
exceeds $127,000.
The number of Senior Officers other than the Responsible Persons,
are shown below in their relevant income bands:
Income Range:
<$127,000
(vi) Senior Officers Remuneration
2012
2011
No.
No.
2
2
$127,000 - $129,999
1
3
$130,000 - $139,999
2
1
$140,000 - $149,999
2
1
$150,000 - $159,999
-
1
$160,000 - $169,999
1
-
8
8
$1,053,276
1,020,544
Total Remuneration for the reporting year for Senior Officers included
above, amounted to
Commentary - Note 43 Senior Officer remuneration
Determination of Senior Officers to include in note 43
LGA 3 (1)
The actual number of staff holding senior officer positions are to be disclosed at this note. If two or
more staff occupy a senior officer role in a given year each member is to be disclosed separately.
Note 44 Joint venture information
LGR
14(c)
Disclose all assets and liabilities in relation to joint ventures
Council has an 25% interest in the Council Co-operative computing centre, whose principal activity is
the development of tailored software solutions to the local government sector
Council accounts for its interests in the joint venture by applying the proportionate consolidation
method and by combining Council’s share of each of the assets, liabilities, incomes and expenses of
the jointly controlled entity with similar items line by line in council’s financial statements.
99
Reference
AASB
Para
Note 43 Related party transactions Cont.
Council’s share of assets employed in the joint venture is
2012
Current assets
2011
Receivables
123
25
Inventories
812
253
Total current assets
935
278
Intangibles (Software)
3,298
2,547
Total non current assets
3,298
2,547
Share of total assets of joint venture
4,233
2,825
Net Interest in joint venture
3,859
2,441
Non current assets
The recoverability of the carrying amount of the intangible assets is dependent upon the successful
development and commercial exploitation, or alternative sale of the developed software.
LGR
Commentary - Note 44 Joint venture information
14
Notes to financial statements
In addition to any matters required by AASB 131, the financial statements must disclose by way of
note the following information for the financial year to which the financial statements relate(c) all assets and liabilities committed to joint venture activities.
Note 45 Income, expenses and assets by function/activities
City Development
Division
Finance and
Business
Development
Division
Community
Development
Division
Total
2012
2011
2012
2011
2012
2011
2012
2011
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Income
Grants
15,275
12,150
3,725
2,850
2,000
1,500
21,000
16,500
Other
25,445
23,905
22,265
20,917
15,903
14,941
63,613
59,762
Total
40,720
36,055
25,990
23,767
17,903
16,441
84,613
76,262
Expenses
(31,686)
(31,527)
(27,726)
(27,586)
(19,804)
(19,705)
(79,216)
(78,818)
Surplus (deficit)
for the year
9,034
4,528
(1,736)
(3,819)
(1,901)
(3,264)
5,397
(2,556)
Assets
attributed to
functions /
activities*
217,048 213,108 189,917 186,470 135,655 133,193 542,620 532,771
*Assets have been attributed to functions/activities based on the control and/or custodianship of
specific assets.
100
Reference
AASB
Para
Note 45 Income, expenses and assets by function/activities Cont.
City Development Division
The City Development Division is responsible for protecting, developing and enhancing the
Council’s social and physical environment. The broad objective will be achieved primarily through
planning, coordination and delivery of a diverse range of high quality, cost-efficient community and
environmental services which are responsive to the needs of residents and other service users.
The Division includes the following branches :
• City Infrastructure
• Urban planning
• Access
• Environmental Services
Finance and Business Development Division
The Finance and Business Development Division is responsible for providing a range of strategic and
operational financial services to business units and to the Council as a whole.
The Division includes the following Branches :
• Information Systems
• Governance
• Business Development
• Assets
• Financial Services
Community Development Division
The Community Development Division promotes and enhances community wellbeing through funding
programs, advocacy, service provision, community partnerships and regulatory activity.
The Division includes the following Branches :
• Organisational Development
• Aged Services
• Community Development
• Family Services
101
Reference
AASB
Para
LGR
15
Note 46 Financial ratios (Performance indicators)
2012
2012
2011
2011
2010
2010
$’000
(%)
$’000
(%)
$’000
(%)
(a) D
ebt servicing ratio
(to identify the capacity
of Council to service its
outstanding debt)
Debt servicing costs
Total revenue
247
87,134
= 0.29%
320
75,175
= 0.43%
297
71,234
=0.42%
Debt servicing costs refer to the payment of interest on loan borrowings, finance lease, and bank overdraft.
The ratio expresses the amount of interest paid as a percentage of Council’s total revenue.
(b) Debt commitment ratio
(to identify Council’s debt
redemption strategy)
Debt servicing & redemption costs
2,937
Rate revenue
45,794
= 6.41%
1,481
43,357
= 3.42%
1,746
41,923
= 4.16%
The strategy involves the payment of loan principal and interest, finance lease principal and interest.
The ratio expresses the percentage of rate revenue utilised to pay interest and redeem debt principal.
(c) Revenue ratio
(to identify Council’s dependence
on non-rate income)
Rate revenue
45,794
Total revenue
84,134
= 54.43%
43,357
75,157
= 57.69%
41,923
71,234
= 58.85%
The level of Council’s reliance on rate revenue is determined by assessing rate revenue as a proportion
of the total revenue of Council.
(d) Debt exposure ratio
(to identify Council’s exposure
to debt)
Total indebtedness
14,004
Total realisable assets
305,442
= 4.58%
15,356
295,620
= 5.19%
17,365
241,659
= 7.19%
For the purposes of the calculation of financial ratios, realisable assets are those assets which can be
sold and which are not subject to any restriction on realisation or use.
Any liability represented by a restricted asset (note 35) is excluded from total indebtedness.
The following assets are excluded from total assets when calculating Council’s realisable assets.
Land and buildings on Crown land; restricted assets; heritage assets; total infrastructure assets; and
Council’s investment in associate.
102
Reference
AASB
Para
LGR
15
Note 46 Financial ratios (Performance indicators) Cont.
2012
2012
2011
2011
2010
2010
$’000
(%)
$’000
(%)
$’000
(%)
This ratio enables assessment of Council’s solvency and exposure to debt. Total indebtedness refers
to the total liabilities of Council. Total liabilities are compared to total realisable assets which are all
Council assets not subject to any restriction and are able to be realised. The ratio expresses the
percentage of total liabilities for each dollar of realisable assets.
(e) Working capital ratio
(to assess Council’s ability to
meet current commitments)
Current assets
23,277
Current liabilities
14,497
= 160.56%
22,722
15,376
= 175.31%
23,003
10,968
= 209.73%
The ratio expresses the level of current assets the Council has available to meet its current liabilities.
(f) Adjusted working capital
ratio (to assess Council’s ability
to meet current commitments)
Current assets
23,277
Current liabilities
12,227
= 190.37%
22,722
12,961
= 175.31%
23,003
10,968
= 209.73%
The ratio expresses the level of current assets the Council has available to meet its current liabilities.
Current liabilities have been reduced to reflect the long service leave that is shown as a current liability
because Council does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting date, but is not likely to fall due within 12 months after the end of the
period.
Commentary - Note 40 Financial Ratios (Performance Indicators)
Other performance indicators may be included, but they must satisfy the concepts of relevance,
reliability, comparability and understandability. The following indicators may be useful in
demonstrating financial sustainability. Consideration can be given to making disclosures of these
indicators, either in the body of the financial report or elsewhere in the annual report.
Further a Council is able to include a longer trend period to better highlight progress over time
103
Note
Reference
AASB
Para
104
2012
2011
$’000
$’000
6,735
6,263
Note 47 Capital expenditure
Capital expenditure areas
Roads
Drainage
529
2,122
Parks, open space and streetscapes
5,836
2,934
Buildings
6,793
5,345
Plant and equipment
2,539
4,719
Other
-
-
Total capital works
22,432
21,383
Represented by:
Renewal of infrastructure
(a)
3,967
4,481
Upgrade of infrastructure
(b)
2,506
3,481
Expansion of infrastructure
(c)
1,462
2,481
New infrastructure
5,112
1,193
New buildings
6,846
5,028
New plant and equipment
2,539
4,719
Other
-
-
Total capital works
22,432
21,383
Property, plant and equipment, infrastructure movement
The movement between the previous year and the current year in property, plant and equipment,
infrastructure as shown in the Balance Sheet links to the net of the following items:
Total capital works
Contributions - non-monetary assets
Asset revaluation movement
(a) Renewal
Expenditure on an existing asset which returns the service potential or the life of the asset up to
that which it had originally. It is periodically required expenditure, relatively large (material) in value
compared with the value of the components or sub-components of the asset being renewed. As it
reinstates existing service potential, it has no impact on revenue, but may reduce future operating and
maintenance expenditure if completed at the optimum time.
(b) Upgrade
Expenditure which enhances an existing asset to provide a higher level of service or expenditure
that will increase the life of the asset beyond that which it had originally. Upgrade expenditure is
discretional and often does not result in additional revenue unless direct user charges apply. It will
increase operating and maintenance expenditure in the future because of the increase in the council’s
asset base.
22,432
21,383
6(b)
449
359
29(a)
6,637
-
Depreciation/amortisation
12
15,187
14,809
Written down value of assets sold
22
3,802
2,068
Net movement in property, plant and equipment, infrastructure
22
48,507
38,619
Reference
AASB
Para
Note 47 Capital expenditure Cont.
(c) Expansion
Expenditure which extends an existing asset, at the same standard as is currently enjoyed by
residents, to a new group of users. It is discretional expenditure which increases future operating and
maintenance costs, because it increases council’s asset base, but may be associated with additional
revenue from the new user group.
Note 48 Special committees and other activities
Council has control of the William Pettit Recreation Reserve which is
managed through a special committee. The financial transactions of
the Reserve are not material.
Certification of the Financial Report
LGR
16
In my opinion the accompanying financial statements have been prepared in accordance
with the Local Government Act 1989, the Local Government (Finance and Reporting)
Regulations 2004, Australian Accounting Standards and other mandatory professional
reporting requirements.
<Principal Accounting Officer Name & Qualifications>
Principal Accounting Officer
Date:<Date>
<Location>
LGR
16
In our opinion the accompanying financial statements present fairly the financial transactions of
<Name> for the year ended 30 June 2012 and the financial position of the Council as at that date.
As at the date of signing, we are not aware of any circumstances which would render any particulars
in the financial statements to be misleading or inaccurate.
LGA
131
We have been authorised by the Council on <date> to certify the financial statements in
their final form.
<Councillor 1 Name>
<Councillor 2 Name>
<Chief Executive Officer Name>
Councillor
Councillor
Chief Executive Officer
Date: Date: <Date>
Date: <Date>
<Date>
CPA231955_WL 02/2012
<Location><Location> <Location>
105