Significant
Accounting
Policy
Draft Policy Document February 2014
GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
OBJECTIVE: .............................................................................................................................................................. 3
BACKGROUND ............................................................................................................................................................. 3
THE LOCAL GOVERNMENT REPORTING ENTITY .................................................................................................................. 4
THE TRUST FUND ........................................................................................................................................................ 4
FINANCIAL STATEMENTS BASIS OF PREPARATION. .............................................................................................................. 4
BASIS OF ACCOUNTING ................................................................................................................................................. 4
Historical Cost Convention ................................................................................................................................. 4
Critical Accounting Estimates ............................................................................................................................. 5
Code of Accounting Practice; Requirements and Prescriptions. ........................................................................ 5
VALUATION OF ASSETS ................................................................................................................................................. 7
LAND UNDER ROADS..................................................................................................................................................... 7
DEPRECIATION OF NON-CURRENT ASSETS ........................................................................................................................ 7
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GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
Responsible Officer:
Chief Finance & Information Officer
Applies to:
Councillors and staff
Legislation:
NSW Local Government Act 1993
NSW Local Government (General) Regulation 2005
Australian equivalents to International Financial Reporting
Standards (AIFRS);
Australian Accounting Standards and Professional
Pronouncements;
Australian Accounting Standards Board Urgent Issues Group
Interpretations;
Local Government Code of Accounting Practice and Financial
Reporting
Associated:
Attachment:
Motor Vehicle Allowance Agreement
History:
New Policy Document
File Number
OBJECTIVE:
This Policy is required to establish the accounting principles under which the Annual
Financial Statements will be prepared.
BACKGROUND
Each year the Council is required to prepare Financial Statements to show the Financial
Position at 30 June, the Operating Statement for the twelve months to 30 June, Changes in
Equity since the previous Financial Statements, a Statement of Cash Flows during the
reporting period and such notes as necessary or prescribed In order to do this task a number
of assumptions, practices and procedures are used. So that readers of the document may
understand them, the Significant Accounting Policies are set out in Note 1 to the
Statements. The policies may change from one year to another due to changes in
Accounting Standards and the Department of Local Government Code of Accounting
Practice. However, whenever this occurs the effect of the change must be disclosed in the
Financial Statements.
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GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
THE LOCAL GOVERNMENT REPORTING ENTITY
The Financial Statements include the consolidated fund and other entities through which
the Council controls resources to carry on its functions. In the process of reporting on the
Council as a single unit, all transactions and balances between activity areas and entities will
be eliminated.
THE TRUST FUND
In accordance with the provisions of Section 411 of the Local Government Act 1993, a
separate and distinct Trust Fund will be maintained to account for all monies and property
received by the Council in trust which must be applied only for the purposes of or in
accordance with the trusts relating to these monies
FINANCIAL STATEMENTS BASIS OF PREPARATION.
Council will prepare its Annual Financial Statements and Special Purpose Reports in
accordance with;
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The Local Government Act 1993 (as amended) and the Regulations made there
under;
The Australian equivalents to International Financial Reporting Standards (AIFRS);
The Australian Accounting Standards and Professional pronouncements;
The Australian Accounting Standards Board Urgent Issues Group Interpretations;
The Local Government Code of Accounting Practice and Financial Reporting (as
amended) and current at the time of production of Financial Statements and its
requirements;
BASIS OF ACCOUNTING
HISTORICAL COST CONVENTION
The general purpose financial statements are prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Interpretations, the Local Government Act (1993) and
Regulations and the Local Government Code of Accounting Practice and Financial Reporting.
All Accounting Standards adopted for the reporting period which differ with those of the
previous reporting period will be reported.
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GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with AIFRS requires the use of certain
critical accounting estimates, and requires management to exercise its judgement in
applying Council’s accounting policies.
The valuation of collateralised debt obligations (CDOs) is subject to the difficulties set out in
Appendix B to the Review of NSW Local Government Investments (Cole Inquiry Report).
Valuations were provided by the promoters or distributors of the product, and largely
represent an estimate of the market price. The valuation adopted for the purposes of
financial statements is consistent with the information contained within the Cole Inquiry
Report and other information subsequently obtained by Council.
CODE OF ACCOUNTING PRACTICE; REQUIREMENTS AND PRESCRIPTIONS.
Guyra Shire Council adheres to the requirements of The Local Government Code of
Accounting Practice and Financial Reporting for New South Wales Local Governments as
amended in its application to the Council’s accounting practices and procedures in the
following areas;
Principles of Consolidation
Revenue Recognition
Rates, Annual Charges, Grants and Contributions
User Charges and Fees
Interest and Rents
Joint Ventures
Joint Ventures and Associated Entities
County Councils
Leases
Receivables and Inventories
Receivables
Inventories
Land held for resale/capitalisation of borrowing costs
Non-current assets (or disposal groups) held for sale and discontinued operations
Cash Assets and other Financial Assets
Cash and cash equivalents
Classification
Financial assets – reclassification
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GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
Recognition and de-recognition
Subsequent measurement
Impairment
Policy
Fair Value Estimation.
Investment Property
Infrastructure, Property, Plant and Equipment (IPPE) (See section 5 of this Policy)
Recognition
Materiality
Valuation
Land Under Roads (See section 6 of this Policy)
Depreciation of Non-Current Assets (See section 7 of this Policy)
Acquisition of assets
Impairment of Intangible assets
Impairment of Assets
Payables Goods & Services
Payments Received in Advance & Deposits
Borrowings
Borrowing Costs
Provisions
Employee Benefits Salaries, Wages & Compensated Absences
Superannuation
Construction Contracts
Provision for close down and restoration and for environmental clean up costs – Tips and
Quarries
Intangible Assets
Crown Reserves
Rural Fire Service assets
Allocation between current and non-current assets and liabilities
Goods and Services Tax (GST)
Rounding
Budget Information
New Accounting Standards & UIG Interpretations
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GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
VALUATION OF ASSETS
Council’s assets have been progressively re-valued to fair value in accordance with a staged
implementation advised by the Department of Local Government. At balance date the
following classes of IPPE were stated at their fair value:
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Operational land (External Valuation).
Buildings – Specialised/Non Specialised (External Valuation).
Water/Sewerage Networks (Internal Valuation).
Plant and equipment (as approximated by depreciated historical cost).
Roads and footpaths (External and Internal Valuation)
Drainage (Internal Valuation)
Bulk Earthworks (Internal Valuation)
Community Land, land improvements, other structures and other assets –
(Internal Valuation).
LAND UNDER ROADS
Council has elected not to recognise land under roads acquired before 1 July 2008 in
accordance with AASB 1051. Any land under roads that was recognised before 1 July 2008
has been derecognised at 1 July 2008 against the opening balance of retained earnings.
Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 –
Property, Plant and Equipment.
DEPRECIATION OF NON-CURRENT ASSETS
Other than land, all assets recognised are systematically depreciated over their useful lives
in a manner which reflects the consumption of the service potential embodied in those
assets.
Depreciation is recognised on a straight-line basis. Depreciation periods for infrastructure
assets have been estimated based on the best information available to Council, but
appropriate records covering the entire life cycle of these assets are not available, and
extreme care should be used in interpreting financial information based on these estimates.
Land is not depreciated. Depreciation on other assets is calculated using the straight line
method to allocate their cost, net of their residual values, over their estimated useful lives,
as follows:
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GUYRA SHIRE COUNCIL POLICY
POLICY: Significant Accounting Policy
Motor Cars - Sedans
Trucks and Utilities
Dozers, Graders, Rollers, Tractors, Backhoes,
Loaders
Office Equipment
Furniture & Fittings
Library Books
Buildings - masonry
Buildings – other construction
Playground equipment
Benches, seats, etc
Dams & Reservoirs
Water Mains
Water Treatment Plant
Meters & Plant
Sewerage Treatment Plants
Sewer Mains & Pump Stations
Roads - Unsealed
- Sealed
- Concrete
Bridges - Timber
- Concrete
5 years
5-10 years
10 years
5-20 years
5-20 years
5 years
50 to 100 years
20 to 40 years
5 to 15 years
10 to 20 years
100 years
80 -100 years
70 -100 years
10 years
50 -100 years
50 -100 years
15 - 70 years
20 -120 years
20 - 60 years
20 - 40 years
20 - 120 years
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