Opinions
September 2008
Inside this Edition ...
ANAO Audit Reports
􀂉Recently tabled Audit Reports
ANAO Opinions is published to provide our
audit clients with information on developments
Upcoming ANAO Audit Reports
􀂉ANAO Audit Reports scheduled to be
in
tabled October to December 2008
financial
reporting
and
disclosure,
together with details of recently completed
Australian Accounting Standards Board
􀂉New and revised Accounting
performance audits and better practice guides.
Standards and interpretations
Exposure Drafts and invitations to
y and
becomment
information since the June 2008 edition and
International Accounting Developments
􀂉IASB Developments
􀂉IPSASB Developments
lists those audits scheduled for completion
in the October to December 2008 period.
Other Matters of Interest
􀂉Guidelines on Information and Advertising
􀂉
􀂉
This edition of Opinions provides updated
Finance Briefs
Finance Circulars
Adding Value to Public Sector Performance and
Accountability
Opinions 1
ANAO Audit Reports
Recently Tabled Audit Reports
The following section contains the objectives
and scope of ANAO audit reports tabled from
July to September 2008. A copy of all ANAO
reports can be obtained from the ANAO’s
website, www.anao.gov.au. For further details
contact the Publications Officer on (02) 6203
7505.
Audit Report No.1, 2007-08 Employment
and Management of Locally Engaged Staff
(LES)
The objective of the audit was to assess the
effectiveness of Department of Foreign Affairs
and Trade’s employment and management of
its LES at Australia’s overseas missions. In
particular, the audit examined arrangements
for: planning and risk management; guidance
and training; recruitment, engagement
and employment of LES; and performance
management.
Audit Report No.2, 2007-08 Tourism
Australia
The objective of this audit was to assess
the effectiveness of Tourism Australia’s
governance arrangements, the management of
its marketing contracts, and whether outcomes
are being achieved. The audit reviewed
Tourism Australia’s:
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procurement processes for selecting
service providers;
management of service provider
contracts; and
governance framework including
planning, performance management
and reporting.
Audit Report No.3, 2007-08 Establishment
and Management of the Communications
Fund
The objective of the audit was to assess
the effectiveness of the management and
administration of the Communications Fund,
including an assessment of:
•
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the development and implementation
of appropriate investment strategies;
and
the robustness of the governance
structures and controls relating to
investment activities.
Audit Report No.4, 2007-08 The Business
Partnership Agreement between the
Department of Education, Employment
and Workplace Relations (DEEWR) and
Centrelink
The audit objective was to form an opinion
on the administrative effectiveness of the
Opinions 2
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arrangements between DEEWR and Centrelink
for the delivery of working age employment
services under the Business Partnership
Agreement.
Audit Report No.5, 2007-08 The
Senate Order for Departmental and
Agency Contracts (Calendar Year 2007
Compliance)
•
ANAO Audit Reports scheduled to be
tabled October to December 2008
The audit objective was to assess whether all
agencies compiled Internet listings of contracts
as required by the Senate Order, and to examine
the appropriateness of the use, by selected
agencies, of confidentiality provisions.
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•
Audit Report No.6, 2007-08 Illegal,
Unreported and Unregulated (IUU) Fishing
in the Southern Ocean
•
The objective of the audit was to assess whether
Customs has implemented effective measures
to control IUU fishing in the Southern Ocean.
The audit examined Customs’ management
and coordination of enforcement operations in
the Southern Ocean, with particular emphasis
on:
• the approach to assessing and
reporting Southern Ocean Maritime
Patrol and Response program
performance, and whether outcomes
are being met;
• coordination with other stakeholder
agencies to meet program outcomes;
• the operational planning framework,
Opinions 3
management of human and physical
resources and contract management;
and
the management of the deployment
and operation of program maritime
assets.
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Centrelink Tip-off System
Administration of the Textile, Clothing
and Footwear Post-2005 Scheme
National Marine Unit – Follow-up
Australian Sport Commission – Active
After-School Communities
Australian Government Agencies
Management of their websites
Disability Employment Services
Initiation of Business Systems
Administration of Contracting
Arrangements in relation to
Government Advertising
Management of the Tendering
Process for the Construction of the
Joint Operation Headquarters
Quality and Integrity of DVA’s
Electronic Income Support Records
Administration of Job Network
Outcome Payments
Business Continuity Management in
the Tax Office
Audits of the Financial Statements of
Australian government Entities for the
period ended 30 June 2008
Australian Accounting Standards Board
New & Revised Accounting Standards &
Interpretations
•
AASB 1039 Concise Financial
Reports (Revised)
This Standard applies to concise financial
reports prepared in accordance with the
Corporations Act. It was revised and reissued in
August 2008, superseding the version issued in
April 2005. It includes changes to terminology,
descriptions of the financial statements and
disclosure requirements to achieve consistency
with those used in AASB 101 Presentation of
Financial Statements and AASB 8 Operating
Segments.
The Standard is applicable to annual reporting
periods beginning on or after 1 January 2009.
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AASB 2008-5 Amendments to
Australian Accounting Standards
arising from the Annual
Improvements Project
This Standard was issued in July 2008 as a
consequence of the IASB Annual Improvements
Project. It amends twenty-five standards.
The amending Standard results from proposals
that were included in Exposure Draft ED
159 Proposed Improvements to Australian
Accounting Standards issued in October 2007.
Many of the amendments are editorial changes
which are expected to have no or minimal
effect on accounting. The more significant
changes for the public sector include:
- entities renting out then selling
properties as part of their business
must transfer property to inventory on
final vacancy;
- investment property under
construction must be measured
at fair value if fair value is reliably
measurable; and
- for-profit entities receiving
concessional loans from government
must recognise the concessional
element of the loan as a grant.
The Standard is applicable to annual reporting
periods beginning on or after 1 January 2009.
•
AASB 2008-6 Further Amendments
to Australian Accounting
Standards arising from the Annual
Improvements Project
This Standard was issued in July 2008 as a
consequence of the Annual Improvements
Project. The amendments are additional to
those in AASB 2008-5 above. It amends two
Standards.
The main amendment is to AASB 5: Noncurrent Assets Held for Sale and Discontinued
Operations. An entity committed to a sale
Opinions 4
plan involving loss of control of a subsidiary
shall classify all the assets and liabilities of
that subsidiary as held for sale, regardless
of whether the entity will retain an interest
in its former subsidiary after the sale.
circumstances.
The Standard is applicable to reporting
periods beginning on or after 1 January 2009.
•
The Standard is applicable to annual reporting
periods beginning on or after 1 July 2009.
•
This
2008
AASB 2008-7 Amendments to
Australian Accounting Standards
– Cost of an Investment in a
Subsidiary, Jointly Controlled Entity
or Associate
Standard
was
and
amends
issued
in
July
five
Standards.
The amending Standard results from proposals
included in Exposure Draft ED 160 Proposed
Amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards
and IAS 27 Consolidated and Separate
Financial Statements – Cost of an Investment
in a Subsidiary, Jointly Controlled Entity or
Associate.
This Standard removes the requirement from
AASB 118: Revenue to deduct dividends
declared out of pre-acquisition profits from the
cost of an investment in a subsidiary, jointly
controlled entity or associate. All such dividends
are to be recognised as income. A related
change to AASB 136 Impairment of Assets
makes the recognition of such dividends a
potential trigger for impairment testing in certain
Opinions 5
AASB 2008-8 Amendments to
Australian Accounting Standards Eligible Hedged Items
This Standard was issued in August 2008 and
amends AASB 139 Financial Instruments:
Recognition and Measurement regarding
eligible hedged items. The amendments clarify
that the time value portion of a purchased
option cannot be a hedging instrument and that
inflation is not normally a risk to which hedge
accounting can be applied.
The Standard is applicable to reporting
periods beginning on or after 1 July 2009.
•
AASB 2008-9 Amendments to AASB
1049 for Consistency with AASB
101
This Standard was issued in September 2008
and amends AASB 1049 Whole of Government
and General Government Sector Financial
Reporting. The main changes reflect the
revised requirements in the September 2007
version of AASB 101, including presenting
whole-of-government and general government
statements of changes in equity, and using the
terminology of the revised AASB 101.
beginning on or after 1 October 2008.
This Standard is applicable to reporting
periods beginning on or after 1 January 2009.
Exposure Drafts and Invitations to
Comment
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Interpretation 15 Agreements for the
Construction of Real Estate
The Interpretation provides guidance on how to
assess whether an agreement for the construction
of real estate is within the scope of AASB 111
Construction Contracts or AASB 118 Revenue. It
also explains when revenue from the construction
of real estate should be recognised.
This
Interpretation,
issued
in
August
2008, is applicable to reporting periods
beginning on or after 1 January 2009.
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Interpretation 16 Hedges of a Net
Investment in a Foreign Operation
The Interpretation provides guidance on
accounting for the hedge of a net investment in
a foreign operation in an entity’s consolidated
financial statements. It applies to an entity
that hedges the foreign currency risk arising
from its net investments in foreign operations
and wishes to qualify for hedge accounting
in accordance with AASB 139 Financial
Instruments: Recognition and Measurement. It
does not apply to other types of hedge accounting.
This
2008,
Interpretation,
is applicable
issued
in
to reporting
August
periods
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ED 165 Improvements to Australian
Accounting Standards
ED 165 invited comments from Australian
constituents on the IASB’s proposed
amendments to IFRSs as part of its annual
improvements project for 2008.
The ED proposes to amend eight Australian
Accounting Standards. Key changes include a
clarification that only expenditure that results in
a recognised asset can be classified as a cash
flow from investing activities and guidance to
AASB 118 Revenue on when an entity is acting
as a principal or as an agent.
It is proposed that two of the amendments in
this Standard apply to annual reporting periods
beginning on or after 1 July 2009 and that
the remaining amendments apply to annual
reporting periods beginning on or after 1
January 2010.
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ED 166 Simplifying Earnings per
Share: Proposed Amendments to
AASB 133
ED 166 invites comments from Australian
constituents on proposed amendments to AASB
133 Earnings per Share. The ED proposes
to amend the principles for determining the
number of shares when calculating earnings
per share (EPS).
Opinions 6
The ED issued by the IASB is part of its
convergence project with the US Financial
Accounting Standards Board (FASB).
This ED sought comment to the AASB by 31
October 2008.
International Accounting Developments
International Accounting Standards
Board (IASB)
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Exposure Draft – Discontinued
Operations – Proposed
Amendments to IFRS 5
This exposure draft contains proposals by the
IASB to amend IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations
to revise the definition of discontinued
operations
and
require
additional
disclosure related to components of an
entity that have been (or will be) disposed.
This ED seeks comments to the IASB by 23
January 2009.
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Exposure Draft - Additional
Exemptions for First
Time Adopters (Proposed
Amendments to IFRS 1)
This exposure draft contains proposed
modifications to the rules for first-time
adopters of IFRS, focussing on challenges
likely to be faced by jurisdictions
adopting IFRS in the near future.
This ED seeks comments to the IASB by 23
January 2009.
Opinions 7
International Public Sector Accounting
Standards Board (IPSASB)
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ED 35 IPSAS 5 Borrowing Costs
(Revised 200X).
The purpose of the ED is to invite comments on
proposed amendments to IPSAS 5 Borrowing
Costs to reflect the view that the capitalisation
of borrowing costs as part of the cost of an
asset may not be appropriate for public sector
entities. The ED proposes that public sector
entities recognise borrowing-related expenses,
such as interest or loan origination fees, during
the period in which they are incurred, but with
the option to capitalise those costs where
entities borrow funds specifically to acquire,
construct or produce a qualifying asset.
This ED seeks comments to the IPSASB by 7
January 2009.
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Conceptual Framework for General
Purpose Reporting by Public
Sector Entities
The IPSASB has commenced a project to
develop a public sector conceptual framework
that makes explicit the concepts, definitions,
and principles that underpin the development
of IPSASB standards. As part of Phase 1 of that
project, the IPSASB has released a consultation
paper on: the objectives and scope of financial
reporting; the qualitative characteristics of
information included in general purpose
financial reports; and the reporting entity.
The consultation paper seeks comments to the
IPSASB by 31 March 2009.
Other Matters of Interest
•
Guidelines on Information and
Advertising
The purpose of these Guidelines is to set out the
principles applying to Australian Government
departments and agencies undertaking
information and advertising campaigns.
Australian Government Departments and all
agencies covered by the Financial Management
and Accountability Act 1997 must comply with
the Guidelines. A copy of the Guidelines is
available on the Department of Finance and
Deregulation website, www.finance.gov.au.
The ANAO has issued reports of five
advertising campaigns in accordance with
the requirements of the Guidelines. Copies
of these reports can be obtained from
the ANAO’s website, www.anao.gov.au.
Contact Us
For matters arising in this publication
Opinions is published by:
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GPO Box 707
Canberra ACT 2601
and is available on our website at:
www.anao.gov.au
Please contact:
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your first point of contact for technical accounting
matters. The Professional Services Branch in
the ANAO provides technical and policy advice
to financial and performance auditors.
Disclaimer
This publication has been prepared by the
Australian National Audit Office. Whilst
every effort has been made to ensure its
accuracy, neither the Australian National
Audit Office nor any of its employees shall
be liable on any ground whatsoever to any
party in respect of decisions or actions they
may take as a result of using this Bulletin.
The information in
of a general nature
intended to be relied
substitute for, specific
substitute for, specific
Opinions 8
this publication is
only and is not
upon as, or as a
professional advice.
professional advice.