Part 5: Financial Reports
Australian Accounting Standards Board
Statement by Directors and Chief Executive
Statement of changes in equity
Note 1: Summary of significant accounting policies
Note 2: Events after the Balance Sheet date
Note 9: Cash flow reconciliation
Note 10: Directors’ remuneration
Note 11: Related party disclosures
Note 12: Executive remuneration
Note 13: Remuneration of part-time members of the AASB
Note 14: Remuneration of auditors
Note 15: Average staffing levels
Note 16: Financial instruments
Australian Accounting Standards Board Statement by Directors and Chief Executive
In our opinion, the attached financial statements for the year ended 30 June 2007 are based on properly maintained financial records and give a true and fair view of the matters required by the Finance Minister’s Orders made under the Commonwealth Authorities and Companies Act 1997.
In our opinion, at the date of this statement, there are reasonable grounds to believe that the Australian Accounting Standards Board will be able to pay its debts as and when they become due and payable.
This Statement is made in accordance with a resolution of the directors.
SIGNED |
SIGNED |
SIGNED |
Charles Macek |
Bruce Brook |
David Boymal |
Chairman — FRC |
Director |
Chairman — AASB |
5 September 2007 |
5 September 2007 |
5 September 2007 |
Australian Accounting Standards Board
Income statement
For the year ended 30 June 2007
The above statement should be read in conjunction with the accompanying notes.
Australian Accounting Standards Board
Balance sheet
As at 30 June 2007
The above statement should be read in conjunction with the accompanying notes.
Australian Accounting Standards Board
Statement of changes in equity
For the year ended 30 June 2007
The above statement should be read in conjunction with the accompanying notes.
Australian Accounting Standards Board
Cash flow statement
For the year ended 30 June 2007
The above statement should be read in conjunction with the accompanying notes.
Australian Accounting Standards Board
Schedule of commitments
As at 30 June 2007
The above schedule should be read in conjunction with the accompanying notes.
Australian Accounting Standards Board
Schedule of contingencies
As at 30 June 2007
There are no known contingencies as at 30 June 2007.
(Nil contingencies as at 30 June 2006.)
The above schedule should be read in conjunction with the accompanying notes.
Notes to and forming part of the financial statements
Note 1: Summary of significant accounting policies
1.1 Basis of preparation of the Financial Statements
The Financial Statements and notes are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997 and are a General Purpose Financial Report.
The AASB is dependent on funding from the Parliament of the Commonwealth and on contributions from the States and Territories, CPA Australia, The Institute of Chartered Accountants in Australia, the National Institute of Accountants and the Australian Stock Exchange to carry out its normal activities.
The Financial Statements and Notes have been prepared in accordance with:
- Finance Minister’s Orders (or FMOs, being the Commonwealth Authorities and Companies Orders (Financial Statements for reporting periods ending on or after 1 July 2006)); and
- Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
The Income Statement, Balance Sheet and Statement of Changes in Equity have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets which, as noted, are at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.
The Financial Report is presented in Australian dollars.
Unless alternative treatment is specifically required by an accounting standard, assets and liabilities are recognised in the Balance Sheet when and only when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured. However, assets and liabilities arising under agreements equally proportionately unperformed are not recognised unless required by an Accounting Standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies.
Unless alternative treatment is specifically required by an accounting standard, revenues and expenses are recognised in the Income Statement when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured.
1.2 Significant accounting judgements and estimates
No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next accounting period.
1.3 Statement of compliance
The financial report complies with Australian Accounting Standards, which include Australian Equivalents to International Financial Reporting Standards (AEIFRS).
The AASB has applied Australian Accounting Standards in preparing its financial report for the year ended 30 June 2007. Some of the requirements of these standards, as they apply to not-for-profit entities such as the AASB, are different from IFRSs. The nature and timing of the transactions in the year ended 30 June 2007 have been such that these differences have not had an impact on the AASB’s financial report. Accordingly, the application of Australian Accounting Standards in the year ended 30 June 2007 has given the same outcomes as would have been achieved had the AASB applied IFRSs. Whether the AASB also complies with IFRSs in future years depends on the nature and timing of the transactions in those years.
Australian Accounting Standards require the AASB to disclose Australian Accounting Standards that have not been applied, for standards that have been issued but are not yet effective.
The AASB website identifies standards and amendments that will become effective in the future. The AASB intends to adopt all of the standards upon their application date where they apply to the AASB.
The impact of the adoption of these standards on the financial report is not expected to be financially significant based on the AASB’s initial assessment at this date, but this assessment may change.
Users should consult the full version available on the AASB website to identify the full impact of the change.
1.4 Revenue
Revenues from government and contributions are recognised at nominal amounts when invoiced, in accordance with agreed schedules of payment (annually or quarterly).
Interest revenue is recognised using the effective interest method as set out in AASB 139 Financial Instruments: Recognition and Measurement.
Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value as revenue when the asset qualifies for recognition.
1.5 Employee benefits
Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.
Liabilities for ‘short term employee benefits’ (as defined in AASB 119) and termination benefits due within 12 months of balance date are measured at their nominal amounts.
The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.
All other employee benefit liabilities are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.
Leave
The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the AASB is estimated to be less than the annual entitlements for sick leave.
The leave liabilities are calculated on the basis of employees’ remuneration including the AASB employer superannuation contribution rates, to the extent that leave is likely to be taken during service rather than paid out on termination.
The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2007. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.
Superannuation
The AASB sponsors the AASB Superannuation Plan, which provides accumulation benefits to members.
For certain employees, the AASB has guaranteed minimum accumulated balances equivalent to benefits under a defined benefit plan. The Present Value of the Defined Benefit Obligation of these members as at 30 June 2007 amounted to $2,586,000 (2006: $2,563,000) compared to the fair value of attributable assets of $2,692,000 (2006: $2,461,000), giving a surplus of $106,000 (2006: deficiency $102,000). A provision for this surplus has been recognised at 30 June 2007 (refer Notes 4A and 8A).
Refer to Note 8A (i) for a reconciliation of the superannuation liability as at 30 June 2007.
1.6 Leases
A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and rewards incidental to ownership of leased non-current assets. An operating lease is a lease that is not a finance lease. In operating leases, the lessor effectively retains substantially all such risks and benefits.
The AASB has no finance leases.
Operating lease payments are expensed on a straight line basis which is representative of the pattern of benefits derived from the leased assets.
1.7 Cash
Cash means notes and coins held and any deposits held at call with a bank or financial institution. Cash is recognised at its nominal amount.
Temporarily surplus funds are placed on deposit at call with the AASB’s Business Investment Account. Interest is credited to revenue as it accrues.
1.8 Receivables
Receivables are recognised at nominal amounts due less any provision for bad and doubtful debts. Credit terms are 14 days (2005-06: 14 days).
1.9 Financial risk management
The AASB’s activities expose it to normal commercial financial risk. As a result of the nature of the AASB’s business, internal controls, and Australian Government policies dealing with the management of financial risk, the AASB’s exposure to market, credit, liquidity and cash flow and fair value interest rate risk is considered to be low.
1.10 Derecognition of financial assets and liabilities
Financial assets are derecognised when the contractual rights to the cash flow from the financial assets expire or the asset is transferred to another entity. In the case of a transfer to another entity, it is necessary that the risks and rewards of ownership are also transferred.
Financial liabilities are derecognised when the obligation under the contract is discharged or cancelled or expires.
1.11 Impairment of financial assets
Financial assets are assessed for impairment at each balance date.
Financial assets held at cost
If there is objective evidence that an impairment loss has been incurred on the funds held in the AASB business investment account with the National Australia Bank, the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets. Since the account is a current account and the interest is a commercial rate calculated daily, the asset has not been discounted.
If there is objective evidence that an impairment loss has been incurred for receivables, the amount of the impairment loss is the difference between the carrying amount of the asset and the present value of the estimated future cash flows discounted at the current market rate for similar assets.
Comparative year
For the comparative year, receivables were recognised and carried at original invoice amount less a provision for doubtful debts based on an estimate made when collection of the full amount was no longer probable. There were no bad debts.
1.12 Payables
Payables are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). Settlement is usually made net 30 days.
1.13 Contingent liabilities and contingent assets
Contingent liabilities and contingent assets are not recognised in the Balance Sheet but are discussed in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset, or represent an existing liability or asset in respect of which settlement is not probable or the amount cannot be reliably measured. Remote contingencies are part of this disclosure. Contingent assets are reported when settlement is probable, and contingent liabilities are recognised when settlement is greater than remote.
1.14 Acquisition of assets
Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.
Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and revenues at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor authority’s accounts immediately prior to the restructuring.
1.15 Plant and equipment (P&E)
Asset recognition threshold
Purchases of leasehold improvements, plant and equipment are recognised initially at cost in the Balance Sheet, except for purchases costing less than $500, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).
Revaluations
Leasehold improvements, plant and equipment are carried at fair value, being revalued with sufficient frequency such that the carrying amount of each asset is not materially different, at reporting date, from its fair value. Valuations undertaken in each year are as at 30 June.
Fair values for each class of asset are determined as follows:
Following initial recognition at cost, valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not materially differ from the assets’ fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.
Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised through profit and loss. Revaluation decrements for a class of assets are recognised directly through profit and loss except to the extent that they reverse a previous revaluation increment for that class.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the asset restated to the revalued amount.
Depreciation
Depreciable leasehold improvements, plant and equipment assets are written off to their estimated residual values over their estimated useful lives to the AASB using, in all cases, the straight line method of depreciation. Leasehold improvements are depreciated on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.
Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.
Depreciation rates applying to each class of depreciable asset are based on the following useful lives:
The aggregate amount of depreciation/amortisation allocated for each class of asset during the reporting period is disclosed in Note 4D.
1.16 Impairment
All assets were assessed for impairment at 30 June 2007. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if the AASB were deprived of the asset, its value in use is taken to be its depreciated replacement cost.
1.17 Intangibles
The AASB’s intangible assets comprise purchased software and licences for internal use. These assets are carried at cost.
Software and licences are amortised on a straight line basis over their anticipated useful life. The useful life of AASB’s software and licences is 3‑5 years (2005-06: 3‑5 years).
1.18 Inventories
Inventories held for resale are valued at the lower of cost and net realisable value.
1.19 Taxation
The AASB is exempt from all forms of taxation except fringe benefits tax and goods and services tax (GST).
Revenues, expenses and assets are recognised net of GST:
- except where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
- except for receivables and payables.
1.20 Insurance
The AASB has taken insurance cover considered appropriate through the Government’s insurable risk managed fund, called ‘Comcover’. Workers compensation is insured through Comcare Australia.
1.21 Foreign currency
Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency transactions relate primarily to currency obtained for overseas travel. The amounts and any associated gains or losses are not material.
1.22 Comparative figures
Comparative figures have been adjusted to conform to changes in presentation in these financial statements where required.
Note 2: Events after the Balance Sheet date
At the date of this report, the AASB has no reportable events after the Balance Sheet date.
Note 3: Income
Note 4: Expenses
Note 5: Financial assets
Note 6: Non-financial assets
Restoration of Leasehold Improvements and accumulated amortisation are non-current assets. All other assets are current.
Note 7: Payables
Note 8: Provisions
The AASB currently has one agreement for the leasing of premises which have provisions requiring the AASB to restore the premises to their original condition at the conclusion of the lease. The AASB has made a provision to reflect the present value.
Note 9: Cash flow reconciliation
Note 10: Directors’ remuneration
* Director’s remuneration relates to the remuneration of the FRC Chairman and the sitting fees paid to members of the FRC. The members of the FRC are the Directors of both the AASB and AUASB, however, their remuneration, and all the FRC related expenses are met by the Department of Treasury.
# Nine (9) of the members in the nil — $14,999 range received no remuneration.
Note 11: Related party disclosures
Note 12: Executive remuneration
The senior executives’ remuneration includes executives concerned with or taking part in the management of the AASB during 2006-07, except the FRC Chairman. Details in relation to the remuneration of the FRC Chairman and FRC members have been incorporated into Note 10: Directors remuneration.
Note 13: Remuneration of part-time members of the AASB
Note 14: Remuneration of auditors
Note 15: Average staffing levels
Note 16: Financial instruments
Note 16A: Interest rate risk
Note 16B
The fair value of financial assets and liabilities approximate their carrying amounts.
Note 16C
The economic entity’s maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Balance Sheet.
The economic entity has no significant exposures to any concentrations of credit risk.