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A message from CPA Australia
It gives me great pleasure to present the Local Government Model Financial Report (Model Report) for use by 79
Victorian Councils.
This Model Report 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 Report 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 2012 and Local Government Directions.
The Model Report 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 and FinPro.
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
Page 2
Local Government Model Financial Report
A message from Local Government Victoria
Welcome to the 2013-14 version of the Local Government Model Financial Report (Model Report).
This Model Report is developed to assist councils in the preparation of their financial and standard statements to be
included in their annual report.
Each Council retains the responsibility for the preparation of their financial and standard statements, including the
format of the statements and the disclosures made. This Model Report represents the preferred presentation of Local
Government Victoria and as such all councils are requested to adopt the disclosures in this Model Report as far as
practical.
For the 2013-14 financial year there are a number of changes to the accounting framework as a result of changes to
accounting standards and new accounting standards becoming applicable for the first time. These include changes to
definitions and disclosures in relation to fair value measurement and classification of employee benefits. The more
significant of these changes are detailed below.
As in the previous year there has been a continued focus on achieving consistency between the Victorian City Council
Model Budget prepared by the Institute of Chartered Accountants in Australia and the Model Report.
Local Government Victoria is implementing a new Local Government Performance Reporting Framework which will be
enabled through amendments to the Local Government Act 1989 and the Local Government (Planning and Reporting)
Regulations 2014. These changes take effect in the 2014-15 financial year. Under the proposed changes, the financial
statements in the strategic resource plan, budget and annual report will be required to be in the form prescribed in the
Model Report from the 2014-15 year onwards. For the purposes of preparing the Statement of Capital Works in the
strategic resource plan and budget for the 2014-15 year, the prescribed form has been included with the financial
statements in this Model Report.
I trust that you find this Model Report a very practical tool to assist in the preparation of your financial and standard
statements for the 2013-14 financial year.
Nick Foa
Executive Director
Local Government Victoria
Page 3
Local Government Model Financial Report
Summary of changes incorporated in to the 2014 Model and
Guidelines
New and amended Accounting Standards


Impacts of AASB 13 Fair Value Measurement:
o Inclusion of additional Note 1 disclosures detailing the nature and impact of the new standard;
o Expansion of note 22 (Property, infrastructure plant and equipment) to add additional disclosures
including details of valuation hierarchy for assets at fair value, sensitivity analysis and reconciliation
tables; and
o Updates of terminology and definitions throughout model and guidance consistent with the new
standard.
Impacts of AASB 119 Employee Benefits:
o Inclusion of additional Note 1 disclosure detailing the nature and impact of the change;
o Revision of Note 27 (Provisions) to meet the amended disclosure requirements;
o Update of guidance to highlight changes to the measurement requirements resulting from the updated
standard; and
o Additional disclosure at Note 36 (Superannuation) to meet the specific requirements of a multi
employer defined benefit fund.
Local Government (Planning and Reporting) Regulations 2014

Inclusion of a Statement of Capital Works within the general purpose financial report. Although not to be
included in 2013-14 financial reports the Statement of Capital Works is a required reference for users when
preparing their 2014-15 Budgets and Strategic Resource Plans.
Notes to the Accounts




Note 1 – Significant accounting policies - Land under roads guidance has been updated to reinforce the
Department’s requirements in relation to valuing all land under roads at fair value designed to ensure
consistency across the sector;
Note 1 – Significant accounting policies - Pending accounting standards have been updated to reflect changes
however Councils are reminded to ensure that the generic information provided fits their circumstances;
Note 20 – Assets held for sale – Inclusion of a table presenting Councils fair value measurement hierarchy for
assets held for sale; and
Note 43 – Related party transactions - Amended Senior Officer remuneration threshold from $130,000 to
$133,000 in line with Ministerial adjustment.
Terminology and references



Terminology has been subject to continued review and amendment to improve consistency across the Model
Report as well as that used in the Model Budget;
External references have been reviewed and amended to keep pace with changes in accounting standards;
and
Various minor amendments have been made to simplify and streamline the reporting disclosures while
continuing to comply with reporting requirements.
Page 4
Local Government Model Financial Report
Model Council Annual Financial Report 2014
NOTE: The AASB 13 Fair Value Measurement accounting treatment and disclosures included in this model financial
report have been updated to reflect the preferred position of the State as presented in the 2013-14 Model Report for
Victorian Government Departments.
MODEL COUNCIL
LOCAL GOVERNMENT MODEL
ANNUAL FINANCIAL REPORT
For the Year Ended 30 June 2014
Page 5
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Example Council
Financial Report
Table of Contents
Reference
AAS/AASB
Act
FINANCIAL REPORT
LGR 5
LGR 12
101
101
101
101
101, 108
118
118
118
118
118
118
118
101
101
101
101
101
101
101
101
LGR 13
LGR 14
Page
Standard Statements
Standard Income Statement
Standard Balance Sheet
Standard Cash Flow Statement
Standard Statement of Capital Works
Basis of Preparation of the Standard Statements
Certification of the Standard Statements
General Purpose Financial Statements
Comprehensive Income Statement
Balance sheet
Statement of Changes in Equity
Statement of Cash Flows
Statement of Capital Works
Notes to Financial Statements
Introduction
Note 1
Significant accounting policies
Note 2
Rates and charges
Note 3
Statutory fees and fines
Note 4
User fees
Note 5
Grants
Note 6
Contributions
Note 7
Reimbursements
Note 8
Other revenue
Note 9
Employee costs
Note 10
Materials and services
Note 11
Bad and doubtful debts
Note 12
Depreciation and amortisation
Note 13
Finance costs
Note 14
Other expenses
Note 15
Investments in associates
Note 16
Cash and cash equivalents
Page 6
Local Government Model Financial Report
Model Council Annual Financial Report 2014
101
101
101
101
101
101
101
101
101
101
101
101
101
101
107
107
132
107
101
119
101, 116
117
137
7, 132
101
110
131
101
LGR 14
LGR14
LG LSL
Reg
LGD 5
LGR 14
LGR 15
BP
LGR16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Note 25
Note 26
Note 27
Note 28
Note 29
Note 30
Note 31
Note 32
Note 33
Note 34
Trade and other receivables
Financial assets
Inventories
Assets held for Sale
Other assets
Property, infrastructure, plant and equipment
Investment property
Intangible assets
Trade and other payables
Trust funds and deposits
Provisions
Interest bearing loans and borrowings
Reserves
Adjustments directly to equity
Reconciliation of cash flows from operating activities to surplus
(deficit)
Reconciliation of cash and cash equivalents
Financing arrangements
Non-cash financing and investing activities
Note 35
Restricted assets
Note 36
Note 37
Note 38
Note 39
Note 40
Note 41
Note 42
Note 43
Note 44
Note 45
Note 46
Note 47
Note 48
Superannuation
Commitments
Operating leases
Contingent liabilities and contingent assets
Financial instruments
Auditor’s remuneration
Events occurring after balance date
Related party transactions
Joint venture information
Income, expenses and assets by functions/activities
Financial ratios (Performance indicators)
Capital expenditure
Special committees and other activities
Certification of the Financial Statements
Audit Opinion
Commentary – Contents page
A contents page for notes is not mandatory; however it may assist readers to understand the
financial report
Page 7
Local Government Model Financial Report
Model Council Annual Financial Report 2014
STANDARD INCOME STATEMENT
For the year ending 30 June 2014
Income
Rates and charges
Statutory fees and fines
User fees
Contributions – cash
Contributions – non-monetary assets
Grants – Operating (recurrent)
Grants – Operating (non-recurrent)
Grants – Capital (recurrent)
Grants – Capital (non-recurrent)
Net gain on disposal of property, infrastructure,
plant and equipment
Other income
Total income
Expenses
Employee costs
Materials and services
Bad and doubtful debts
Depreciation and amortisation
Finance costs
Other expenses
Total expenses
Surplus (deficit) for the year
Other comprehensive income
Asset revaluation (1)
Impairment loss (1)
Other
Total comprehensive result
Actual
Budget
Variance
$'000
$'000
$'000
41,195
2,445
7,198
661
0
13,573
950
810
2,093
43,457
2,690
7,680
51
0
12,617
1,000
830
5,447
(2,262)
(245)
(482)
610
0
956
(50)
(20)
(3,354)
(5.2%)
(9.1%)
(6.3%)
1196.1%
0%
7.6%
(5%)
(2.4%)
(61.6%)
1
2
823
2,823
72,571
539
3,263
77,574
284
(440)
(5,003)
52.7%
(13.5%)
(6.4%)
6
7
31,541
22,937
314
14,034
380
5,287
74,493
(1,922)
34,091
22,107
340
14,500
312
5,179
76,529
1,045
(2,550)
(7.5%)
830
3.8%
(26)
(7.6%)
(466)
(3.2%)
68
21.8%
108
2.1%
(2,036)
(2.7%)
(2,967) (283.9%)
8
2,300
(300)
0
78
0
0
0
1,045
2,300
(300)
0
(967)
%
100%
(100%)
0%
(92.5%)
Ref
3
4
5
9
10
11
(1) It is not likely that a Council would budget for asset revaluations or impairments.
Page 8
Local Government Model Financial Report
Model Council Annual Financial Report 2014
STANDARD INCOME STATEMENT
For the year ending 30 June 2014
Variance Explanation Report
Ref.
Item
Commentary
1
Rates and charges
During the year Council decided to defer a special charge
scheme that was planned to raise $2m for additional tourism
development activities. In addition to this a decrease in
development activities has meant that the level of
supplementary valuations was lower than that budgeted.
2
Statutory fees and fines
The reduction in statutory fees and fines has resulted from
ongoing industrial action over the collection of parking fees
and the issuing of infringement notices.
3
Contributions - cash
The significant increase in contributions relates to an
agreement entered into between Council and the
developers of the new Town Centre complex. As part of this
development the developer was required to contribute
$600,000 that will be allocated to meet future expanding
parking needs.
4
Grants operating (recurrent)
Late in the year Council received grant funds relating to the
next financial year that are required to be recognised as
income in the current year. These amounts were not
expected to be received until the 2013-14 year and as such
were not included in the budget.
5
Grants capital (non recurrent)
Commonwealth funding for the new, interactive visitor
information centre has been deferred.
6
Net gain on disposal of property,
infrastructure, plant and equipment
Council received higher returns on the disposal of vehicles
than anticipated in the budget
7
Other income
The closure of our aquatic centre, damaged in the recent
bushfires, resulted in a reduction of other revenue.
8
Employee costs
The deferral of the development of the new visitor
information centre, and tourism development activities has
resulted in lower than expected levels of new staff hires.
9
Finance costs
The increase in finance costs compared to budget was a
combination of the earlier taking up of borrows and higher
than anticipated interest rates.
10 Asset revaluation
During the year a revaluation of infrastructure assets was
undertaken resulting in a $2m increase in the reported value
of these assets. The nature of the revaluation process
means that it is not possible to accurately estimate the
outcome of the revaluation as part of the budget process
and as such it is not included in the budget.
Page 9
Local Government Model Financial Report
Model Council Annual Financial Report 2014
11 Impairment loss
During the year a number of building assets were impacted
by bushfire. These events were unforseen and not included
in the budget process.
COMMENTARY on the Standard Income Statement for the Annual Report:
The Standard Income Statement for the Annual Report shows what has happened during the year in terms of income, expenses
and other adjustments from all activities. The Standard Income Statement must be presented in the same format as that which was
presented in Council’s budget.
The Standard Income Statement requires income items 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 Income Statement for the Annual Report also shows the movement in equity, so that a separate Statement of
Changes in Equity is not necessary.
Page 10
Local Government Model Financial Report
Model Council Annual Financial Report 2014
D-2 COMPARISON REPORT
STANDARD BALANCE SHEET
As at 30 June 2014
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Other assets
Total current assets
Actual
Budget
$'000
$'000
Variance
$'000
%
Ref
23,476
5,272
6
1,440
30,194
12,207
5,367
6
200
17,780
11,269
(95)
0
1240
12,414
92.3%
(1.8%)
0%
620.0%
69.8%
1
Non-current assets
Trade and other receivables
Property, infrastructure, plant & equipment
Total non-current assets
206
501,795
502,001
12
514,527
514,539
194
(12,732)
(12,538)
1616.7%
(2.4%)
(2.4%)
3
4
Total assets
532,195
532,319
(124)
(0.0%)
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Provisions
Total current liabilities
5,880
1,161
5,510
12,551
5,880
1,161
5,714
12,755
0
0
(204)
(204)
0%
0%
(3.6%)
(1.6%)
Non-current liabilities
Interest-bearing loans and borrowings
Provisions
Total non-current liabilities
Total liabilities
4,887
972
5,859
18,410
3,726
1,008
4,734
17,489
1,161
(36)
1,125
921
31.2%
(3.6%)
23.8%
5.3%
Net assets
513,785
514,830
(1045)
(0.2%)
Equity
Accumulated surplus
Asset revaluation reserve
Other reserves
Total equity
398,518
102,118
13,149
513,785
407,910
102,118
4,802
514,830
(9,392)
0
8,347
(1,045)
(2.3%)
0%
173.8%
(0.2%)
2
5
6
7
Page 11
Local Government Model Financial Report
Model Council Annual Financial Report 2014
STANDARD BALANCE SHEET
As at 30 June 2014
Variance Explanation Report
Ref.
Item
Commentary
1
Cash and cash equivalents
The recent bushfires has meant that Council has been
unable to deliver a significant portion of its capital works
program. As such Council have retained the cash that was
to be spent on these works in cash or short term deposits.
2
Other assets
Council entered into an agreement with a major supplier to
prepay a significant portion of next years fees. In return
Council received a significant discount that would not have
otherwise been available.
3
Trade and other receivables
Three community groups which use Council facilities have
entered into long term agreements to repay amounts owing
to Council.
4
Property, infrastructure, plant &
equipment
As detailed in point 1, Council’s capital works program was
significantly impacted by the recent bushfires.
5
Interest-bearing loans and borrowings
During the year Council brought forward the borrowings
related to the operations of Council’s second aquatic centre.
This was to assist in meeting the significant increased
demand resulting from the closure of our other facility.
6
Accumulated surplus
As part of the budget it was anticipated that $9m would be
transferred from the capital works reserve to accumulated
surpluses. As the capital works were not completed this
was not done.
7
Other reserves
As detailed in point 6.
COMMENTARY on the Standard Balance Sheet for the Annual Report:
The Standard Balance Sheet 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 Balance Sheet must be presented in the same format as that which was presented in Council’s
budget
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.
Page 12
Local Government Model Financial Report
Model Council Annual Financial Report 2014
D-3 COMPARISON REPORT
STANDARD CASH FLOW STATEMENT
For the year ending 30 June 2014
Cash flows from operating activities
Receipts
Rates and charges
Statutory fees and fines
User fees
Contributions - Cash
Grants – operating
Grants – capital
Interest
Other receipts
Payments
Employee costs
Materials and consumables
External contracts
Utilities
Other payments
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of property, infrastructure, plant
and equipment
Payments for property, infrastructure, plant and
equipment
Repayment of loans and advances
Deposits
Net cash used in investing activities
Cash flows from financing activities
Finance costs
Proceeds from borrowings
Repayment of borrowings
Net cash provided by (used in) financing activities
Net increase (decrease) in cash & cash equivalents
Cash & cash equivalents at the beginning of the year
Cash & cash equivalents at the end of the year
Actual
Budget
$'000
$'000
Variance
$'000
%
41,410
2,195
7,849
661
43,357 (1,947) (4.5%)
2,690 (495) (18.4%)
7,680
169
2.2%
51
610 1196.1%
13,313
2,903
2,044
2,511
72,886
13,617 (304)
6,277 (3,374)
1,820
224
1,443 1,068
76,935 (4,049)
(2.2%)
(53.8%
12.3%
74.0%
(5.3%)
(31,185) (33,841) 2,656
7.8%
(4,797) (4,183) (614) (14.7%)
(15,506) (14,103) (1,403) (9.9%)
(3,740) (3,820)
80
2.1%
(5,786) (5,529) (257) (4.6%)
(61,014) (61,476)
462
0.7%
11,872 15,459 (3,587) (23.2%)
1,664
3,741 (2,077) (55.5%)
Ref
1
2
3
4
5
6
7
8
9
10
(21,007) (29,195)
8,188
28.0%
11
10
199
50
0
(19,283) (25,255)
(189) (95.0%)
50 100.0%
5,972 23.6%
12
13
(380)
0
(1,161)
(1,541)
(312)
0
(1,161)
(1,473)
(68)
0
0
(68)
21.8%
0.0%
0.0%
(4.6%)
(8,952) (11,269) 2,317
32,428 23,476 8,952
23,476 12,207 11,269
20.6%
38.1%
92.3%
14
Page 13
Local Government Model Financial Report
Model Council Annual Financial Report 2014
D-3 COMPARISON REPORT
STANDARD CASH FLOW STATEMENT
For the year ending 30 June 2014
Variance Explanation Report
Ref.
Item
Commentary
1
Rates and charges
During the year Council decided to defer a special charge
scheme that was planned to raise $2m for additional tourism
development activities. In addition to this a decrease in
development activities has meant that the level of
supplementary valuations was lower than that budgeted.
2
Statutory fees and fines
The reduction in statutory fees and fines has resulted from
ongoing industrial action over the collection of parking fees
and the issuing of infringement notices.
3
Contributions - Cash
The significant increase in contributions relates to an
agreement entered into between Council and the
developers of the new Town Centre complex. As part of this
development the developer was required to contribute
$600,000 that will be allocated to meet future expanding
parking needs.
4
Grants – capital
Commonwealth funding for the new, interactive visitor
information centre has been deferred.
5
Interest
The higher level of cash holdings, resulting from the deferral
of capital works has resulted in higher than budgeted
interest receipts.
6
Other receipts
Improved focus on amounts owed by community groups has
resulted in significant improvements in these receipts.
7
Employee costs
The deferral of the development of the new visitor
information centre, and tourism development activities has
resulted in lower than expected levels of new staff hires
8
Materials and consumables
Significant, unexpected material and consumables costs
were incurred as a result of the bushfires. Council intends
to lodge a claim for reimbursement of these costs with the
federal bushfire recoveries committee.
9
External contracts
A number of external contractors were engaged to assist
with bushfire clean up activities. Council intends to lodge a
claim for reimbursement of these costs with the federal
bushfire recoveries committee.
10 Proceeds from sale of property,
infrastructure, plant and equipment
A number of planned asset sales had not been completed
by balance date.
11 Payments for property, infrastructure,
The failure to meet capital works budget due to other
priorities arising has resulted in lower payments in this area
Page 14
Local Government Model Financial Report
Model Council Annual Financial Report 2014
plant and equipment
(bushfire recovery) than budgeted
12 Repayment of loans and advances
The net level of repayments is significantly lower than
anticipated as a result of the Council decision not to actively
seek repayment of these amounts in the current depressed
economic conditions
13 Deposits
Council received a significant deposit from a developer in
relation to the redevelopment of the Town Centre. This
development was not anticipated in the budget.
14 Finance costs
Council incurred higher interest costs due to bringing
forward the timing of borrowings as well as an increase in
the prevailing interest rate.
COMMENTARY on the Standard Cash Flow Statement for the Annual Report:
A Standard Cash Flow Statement 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 Cash Flow Statement must be presented in the same format
as that which was presented in Council’s budget.
The information in the Standard Cash Flow Statement 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.
Page 15
Local Government Model Financial Report
Model Council Annual Financial Report 2014
D-4 COMPARISON REPORT
STANDARD CAPITAL WORKS STATEMENT
For the year ending 30 June 2014
Actual
Budget
$'000
$'000
Variance
$'000
%
Roads
Drains
Open space
Buildings
Plant, equipment and other
Feasibility studies
Total capital works
6,122
1,303
2,947
7,887
4,358
0
22,617
6,173
1,885
3,383
13,395
5,791
90
30,717
(51)
(582)
(436)
(5,508)
(1,433)
(90)
(8,100)
(0.8%)
(30.9%)
(12.9%)
(41.1%)
(24.7%)
(100.0%)
(26.4%)
Represented by:
Asset renewal
New assets
Asset expansion/upgrade
Total capital works
12,225
6,850
3,542
22,617
17,454
9,176
4,087
30,717
(5,229)
(2,326)
(545)
(8,100)
(30.0%)
(25.3%)
(13.3%)
(26.4%)
Reconciliation of net movement in
property, infrastructure, plant and
equipment
Actual
Budget
$'000
$'000
Total capital works
Asset revaluation movement
Depreciation and amortisation
Written down value of assets sold
Granted assets
Recognition of previously unrecognised
assets
Net movement in property, plant and
equipment
22,617
0
(14,034)
(3,691)
0
0
30,717
0
(14,500)
(3,485)
0
0
(8,100)
0
466
(206)
0
0
(26.4%)
0.0%
(3.2%)
5.9%
0.0%
0.0%
4,892
12,732
7,840
(61.6%)
Ref
1
2
3
4
5
6
7
8
Variance
$'000
%
Ref
9
Page 16
Local Government Model Financial Report
Model Council Annual Financial Report 2014
D-4 COMPARISON REPORT
STANDARD CAPITAL WORKS STATEMENT
For the year ending 30 June 2014
Variance Explanation Report
Ref.
Item
Commentary
1
Drains
With the exception of roads, all capital works activities were
significantly impacted on by the recent bushfires. Council
resources that would have normally been dedicated to the
delivery of the capital works program have been redirected
to clean up repair and recovery activities. It is anticipated
that the capital works program will be recommenced in
2013-14, although it will take 2 – 3 years to catch up to
where the program would have been if the fires had not
occurred.
2
Open space
See point 1 above.
3
Buildings
See point 1 above.
4
Plant, equipment and other
See point 1 above.
5
Feasibility studies
See point 1 above.
6
Asset renewal
See point 1 above.
7
New assets
See point 1 above.
8
Asset expansion/upgrade
See point 1 above.
9
Total capital works
See point 1 above.
Page 17
Local Government Model Financial Report
Model Council Annual Financial Report 2014
COMMENTARY on the Standard Capital Works Statement for the Annual Report:
The Standard Capital Works Statement 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 of the increase in the council's asset base.

New capital expenditure does not 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 Capital Works
Statement figures relate to the Standard Balance Sheet movement in property, plant and equipment.
Page 18
Local Government Model Financial Report
Model Council Annual Financial Report 2014
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 Income 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 results reported in these statements are
consistent with those reported in the General Purpose Financial Statements.
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
$XXX. 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 14 February 2013.
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 asset 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 statements, budget and other Council documents.
If any deviation to the accounting basis that has been adopted in the general purpose financial statements (including format of the
statements) reference to such changes shall be included in the accounting policy note.
Variations, all variations from budget, either greater than +/- 10% or an absolute amount relevant to Council’s size require
explanation in the standard statements.
Page 19
Local Government Model Financial Report
Model Council Annual Financial Report 2014
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.
Page 20
Local Government Model Financial Report
Model Council Annual Financial Report 2014
MODEL COUNCIL
FINANCIAL STATEMENTS
Page 21
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB Para
LGR
Comprehensive Income Statement
For the Year Ended 30 June 2014
Note
101
118
118
118
1004
1004
LGR
LGR
LGR
LGR
116
97
35
35
35
12
12
14
14
14
14
68
118
140
35
75
101
101
101
97
97
97
101
101
97
82
101
101
81A
82A
136
60
116
101
40.1
82
101
81A
Income
Rates and charges
Statutory fees and fines
User fees
Contributions - cash
Contributions - non-monetary assets
Grants – Operating (recurrent)
Grants – Operating (non recurrent)
Grants – Capital (recurrent)
Grants – Capital (non-recurrent)
Net gain/(loss) on disposal of property,
infrastructure, plant and equipment
Other income
Fair value adjustments for investment property
Share of net profits/(losses) of associates and joint
ventures accounted for by the equity method
Total income
2014
$'000
2013
$'000
2
3
4
6 (a)
6 (b)
5
5
5
5
45,794
2,818
7,828
1,562
449
10,500
1,500
1,000
8,000
43,357
2,703
7,442
1,254
359
11,000
2,000
500
3,000
7
8
23
479
3,204
1,000
3,542
-
15
84,134
75,157
9
10
11
12
13
14
(35,367)
(17,939)
(2,167)
(15,187)
(247)
(8,309)
(79,216)
(34,421)
(19,843)
(2,940)
(14,809)
(320)
(6,485)
(78,818)
Surplus/(deficit) for the year
Other comprehensive income
Items that will not be reclassified to surplus or
deficit (see new guidance):
Impairment of fire impacted infrastructure. (see new
guidance)
4,918
(3,661)
-
-
Net asset revaluation increment(decrement)
Share of other comprehensive income of
associates and joint ventures accounted for by the
equity method
Total comprehensive result
6,637
-
11,555
(3,661)
Expenses
Employee Costs
Materials and services
Bad and doubtful debts
Depreciation and amortisation
Borrowing costs
Other expenses
Total expenses
The above comprehensive income statement should be read in conjunction with the
accompanying notes.
Page 22
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB 101.Aus1.1(b)
(c)
AASB 101.5
Commentary – Comprehensive Income statement
AASB 101 Presentation of Financial Statements applies to general
purpose financial statements of each reporting entity, and financial
statements that are, or are held out to be, general purpose financial
statements.
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.
All items of income and expense recognised in a period shall be
included in profit or loss unless an Australian Accounting Standard
requires otherwise.
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
Information to be Presented in the Other Comprehensive Income
Section
The other comprehensive income section shall present line items for
amounts of other comprehensive income in the period, classified by
nature (including share of the other comprehensive income of
associates and joint ventures accounted for using the equity method)
and grouped into those that, in accordance with other Australian
Accounting Standards:
(a) will not be reclassified subsequently to profit or loss; and
(b) will be reclassified subsequently to profit or loss when specific
conditions are met.
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.
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.
Page 23
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB 101.81A
Commentary – Comprehensive Income statement
Information to be presented on the face of the comprehensive
income statement
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.
Other Comprehensive Income
AASB 101.82A
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).
An impairment loss on a revalued asset is recognised in other
comprehensive income to the extent that the impairment loss does not
exceed the amount in the revaluation surplus for that same asset.
Such an impairment loss on a revalued asset reduces the revaluation
surplus for that asset.
In most cases where infrastructure has been impaired (fire/flood) it will
have been previously revalued and the treatment of the impairment as
an item of other comprehensive income will be appropriate. However,
to satisfy audit requirements, councils are required to be able to
demonstrate this to be the case.
Other comprehensive income must be classified as amounts that
either:
(a) will not be reclassified subsequently to profit or loss; and
(b) will be reclassified subsequently to profit or loss when specific
Page 24
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Comprehensive Income statement
conditions are met.
In most instances councils will not recognise items of other
comprehensive income that will (may) be subsequently reclassified to
profit and loss, and as such the model adopts a simplified disclosure.
However preparers need to be aware that any items of comprehensive
income that may be subsequently reclassified to profit and loss need to
be separately disclosed.
In the local government context items of other comprehensive income
that have the potential to be subsequently reclassified to profit and loss
are limited to unrealised gains or losses on available for sale financial
assets, hedging instruments.
AASB 101.97
Revenue
The revenues required to be disclosed by AASB 101 (the revenue line
item) include all revenues recognised in accordance with AASB 118
Revenue.
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 118.35 (c)
AASB 101.32 Income and expenses shall not be offset unless required
or permitted 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.
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 comprehensive income 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;
Page 25
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Comprehensive Income statement
(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.
AASB 101.99
Classification of expenses by nature or function
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 comprehensive
income statement.
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
Page 26
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Comprehensive Income statement
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.
Materiality and aggregation
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.
Page 27
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB Para
101
101
101
101
101
54
54
54
54
54
101
54
101
101
101
54
54
54
101
101
101
101
54
54
54
54
101
101
54
54
101
101
54
54
Balance Sheet
As at 30 June 2014
Note
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Inventories
Non-current assets classified as held for sale
Other assets
Total current assets
Non-current assets
Trade and other receivables
Investments in regional library corporation
Property, infrastructure, plant and equipment
Investment property
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Trust funds and deposits
Provisions
Interest-bearing loans and borrowings
Total current liabilities
Non-current liabilities
Provisions
Interest-bearing loans and borrowings
Total non-current liabilities
Total liabilities
2014
2013
$'000
$'000
16
17
18
19
20
21
18,254
4,319
200
216
6
584
23,579
18,033
3,827
196
173
6
766
23,001
17
15
-
22
23
24
510,681
8,000
518,681
542,260
338
499,432
10,000
509,770
532,771
25
26
27
28
6,876
588
5,872
1,161
14,497
6,273
574
5,825
2,704
15,376
27
28
1,090
2,565
3,655
18,152
1,138
3,344
4,482
19,858
Net Assets
524,468
Equity
Accumulated surplus
398,622
Reserves
29
125,846
Total Equity
524,468
The above balance sheet should be read in conjunction with the accompanying notes.
512,913
393,704
119,209
512,913
Page 28
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Balance sheet
Information to be presented
On the face of the balance sheet
AASB 101.–54-59
AASB 101 sets out the line items that shall, as a minimum, be
presented on the face of the balance sheet, which are the following:
Assets:
• cash and cash equivalents;
• trade and other receivables;
• inventories;
• assets held for sale;
• investment property;
• biological assets;
• 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.
AASB 101.55
Additional Disclosures
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
Assets and liabilities shall not be offset unless required or permitted
by an Australian Accounting Standard
AASB101.32
Offset of financial assets and financial liabilities
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.
Page 29
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Balance sheet
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
An entity shall disclose, either on the face of the balance sheet,
or in the notes, further sub-classifications 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.
AASB 7.8
Categories of financial assets and financial liabilities
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 41.
Presentation issues
AASB 101.60
Current/Non-current Distinction
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:
(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
(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.
Page 30
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB 5.40
Commentary – Balance sheet
Consistency
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.
Materiality and aggregation
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
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 sheet for prior periods to reflect the
classification in the balance sheet for the latest period presented.
Refinancing liabilities
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.
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 noncurrent, 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
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.
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.
Page 31
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Balance sheet
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.
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.
AASB Interpretation
1031.9
Page 32
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Statement of Changes in Equity
For the Year Ended 30 June 2014
Reference
AASB Para
101
106
Total
2014
$'000
2014
Accumulated
Surplus
2014
$'000
Revaluation
Other
Reserve
Reserves
2014
2014
$'000
$'000
Note
1051
9
136
126
136
126
Balance at beginning of the financial year
Adjustment on change in accounting policy
- Land under roads
Comprehensive result
Impairment losses on revalued assets
Reversal of impairment losses on revalued
assets
Balance at end of the financial year
30
29
30
30
2013
Balance at beginning of the financial year
Adjustment on change in accounting policy
Comprehensive result
Net asset revaluation increment(decrement)
Impairment losses on revalued assets
Reversal of impairment losses on revalued
assets
Balance at end of the financial year
30
29(a)
30
30
512,913
11,555
-
393,704
4,918
-
107,840
6,637
-
11,369
-
524,468
398,622
114,477
11,369
Total
2013
$'000
Accumulated
Surplus
2013
$'000
Revaluation
Reserve
2013
$'000
Other
Reserves
2013
$'000
516,574
(3,661)
-
397,365
(3,661)
-
107,840
-
11,369
-
512,913
393,704
107,840
11,369
The above statement of changes in equity should be read in conjunction with the accompanying notes
Page 33
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB 101.106
Commentary – Statement of Changes in Equity
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 statements of each
reporting entity, and financial statements that are, or are held out to
be, general purpose financial statements.
Information to be disclosed
On the face of the statement
AASB 101.106
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 101.106A
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.
Page 34
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Statement of Changes in Equity
Other
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).
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.
Page 35
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB Para
Statement of Cash Flows
For the Year Ended 30 June 2014
2014
Inflows/
(Outflows)
$'000
2013
Inflows/
(Outflows)
$'000
46,123
651
7,826
1,562
12,000
9,000
1,264
2,099
(17,834)
(35,368)
(8,309)
42,983
2,703
7,442
1,254
13,000
3,500
1,179
2,363
816
(34,421)
(23,328)
(5,940)
31
19,014
11,551
48
(22,424)
6,561
(160)
148
(21,381)
3,361
(120)
118
(15,875)
(18,022)
Cash flows from financing activities
Finance costs
Proceeds from borrowings
Repayment of borrowings
(228)
(2,690)
(320)
(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
221
18,033
(7,952)
25,985
Cash and cash equivalents at the end of the financial year
34
Financing arrangements
35
Non-cash financing and investing activities
36
Restrictions on cash assets
37
The above statement of cash flows should be read with the accompanying notes.
18,254
18,033
Note
107
107
10
18
1031
11
107
1031
31
11
Cash flows from operating activities
Rates and charges
Statutory fees and fines
User fees
Contributions
Grants – operating
Grants - capital
Interest
Other receipts
Net GST refund/payment
Employee costs
Material and consumables
External contracts
Utilities
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
Trust funds and deposits
Loans and advances made
Repayment of loans and advances
107
7
107
107
10
31
43
48
Net cash provided by (used in) investing activities
Page 36
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB 107
Aus1.1(b) and (c)
Commentary – Statement of Cash Flows
Accounting standards for statement of cash flows are set out in AASB
107 Statement of Cash Flows. The standard applies to general purpose
financial statements of each reporting entity, and financial statements
that are, or are held out to be, general purpose financial statements.
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 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.
Page 37
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Statement of Cash Flows
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.
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 self-constructed
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.
Page 38
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
Commentary – Statement of Cash Flows
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
AASB 107.21
(e) cash payments by a lessee for the reduction of the outstanding
liability relating to a finance lease.
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).
Reporting cash flows on a net basis
AASB 107.22
AASB 107.24
AASB Interpretation
1031.10
AASB Interpretation
1031.11
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.
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)
Cash flows shall be included in the statement of cash flows on a gross
basis, subject to the paragraph below and AASB 107.
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
Page 39
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB 107.31
AASB 107.37
AASB 107.38
AASB 107.43
Commentary – Statement of Cash Flows
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
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 statement of cash flows to the
cash flows between itself and the investee, for example, to dividends
and advances.
An entity reports its interest in a jointly controlled entity using the
equity method and includes in its statement of cash flows 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
Investing and financing transactions that do not require the use of
cash or cash equivalents shall be excluded from a statement of cash
flows. 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.
Page 40
Local Government Model Financial Report
Model Council Annual Financial Report 2014
[NOTE: The Statement of Capital Works is provided as an illustration of the requirements of the proposed Local
Government (Planning and Reporting) Regulations 2014. COUNCILS ARE NOT TO INCLUDE THIS STATEMENT IN
THEIR 2013-14 FINANCIAL STATEMENTS]
Statement of Capital Works
For the Year Ended 30 June 2014
Property
Land
Land improvements
TOTAL LAND
Buildings
Building Improvements
Leasehold Improvements
Heritage Buildings
TOTAL BUILDINGS
TOTAL PROPERTY
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
Bridges
Footpaths and cycleways
Drainage
Recreational, leisure and community facilities
Waste management
Parks, open space and streetscapes
Aerodromes
Off street car parks
Other infrastructure
TOTAL INFRASTRUCTURE
TOTAL CAPITAL WORKS EXPENDITURE
Represented by:
New asset expenditure
Asset renewal expenditure
Asset expansion expenditure
Asset upgrade expenditure
TOTAL CAPITAL WORKS EXPENDITURE
2014
2013
$'000
$'000
0
0
0
7,712
150
25
0
7,887
7,887
0
0
0
13,095
250
50
0
13,395
13,395
2,875
592
812
0
79
4,358
4,141
650
900
0
100
5,791
5,000
1,000
122
1,303
948
0
1,999
0
0
0
10,372
22,617
5,143
880
150
1,885
1,183
0
2,290
0
0
0
11,531
30,717
6,850
12,225
500
3,042
22,617
9,176
17,454
650
3,437
30,717
Page 41
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Reference
AASB
Para
Notes to the Financial Statements
Introduction
101
138
(a)
(b)
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.
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 – Internal Audit Partner
Solicitors – Lawyers & Co.
Bankers - Nabwest
Website address – www.modeltown.vic.gov.au
These financial statements are general purpose financial statements that
consist of a Comprehensive Income Statement, Balance Sheet, Statement
of Changes in Equity, Statement of Cash Flows, and notes accompanying
these financial statements. The general purpose financial statements
comply 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)
101
117
108
13, 27
Basis of accounting
These financial statements have 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).
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.
Page 42
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
All entities controlled by Council that have material assets or liabilities, such
as Special Committees of Management, have been included in these
financial statements. 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.
108
28, 29
(b)
Change in accounting policies
AASB 13 Fair Value Measurement
Council has applied AASB 13 for the first time in the current year. AASB 13
establishes a single source of guidance for fair value measurements. The
fair value measurement requirements of AASB 13 apply to both financial
instrument items and non-financial instrument items for which other A-IFRS
require or permit fair value measurements and disclosures about fair value
measurements, except for share-based payment transactions that are within
the scope of AASB 2 Share-based Payment, leasing transactions that are
within the scope of AASB 17 Leases, and measurements that have some
similarities to fair value but not fair value (e.g. net realisable value for the
purposes of measuring inventories or value in use for impairment
assessment purposes).
AASB 13 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction in the principal (or
most advantageous) market at the measurement date under current market
conditions. Fair value under AASB 13 is an exit price regardless of whether
that price is directly observable or estimated using another valuation
technique. Also, AASB 13 includes extensive disclosure requirements.
AASB 13 requires prospective application from 1 January 2013. In addition,
specific transitional provisions were given to entities such that they need not
apply the disclosure requirements set out in the Standard in comparative
information provided for periods before the initial application of the
Standard. In accordance with these transitional provisions, Council has not
made any new disclosures required by AASB 13 for the 2012 comparative
period (please see note XX, XX and XX disclosures).
Other than the additional disclosures, the application of AASB 13 has not
had any material impact on the amounts recognised in the financial
statements.
All assets and liabilities for which fair value is measured or disclosed in the
financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the
fair value measurement as a whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical
Page 43
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable;
and
Level 3 — Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
For the purpose of fair value disclosures, Council has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of
the asset or liability and the level of the fair value hierarchy as explained
above.
In addition, Council determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at
the end of each reporting period.
[NOTE: - If the initial application of AASB 13 resulted in a
measurement difference (unlikely), the impact of that measurement
difference would need to be disclosed here]
(b)
Change in accounting policies cont’d
AASB 119 Employee benefits
In the current year, Council has applied AASB 119 Employee Benefits (as
revised in 2011) and the related consequential amendments for the first
time. AASB 119 changes the definition of short-term employee benefits.
These were previously benefits that were due to be settled within twelve
months after the end of the reporting period in which the employees render
the related service, however, short-term employee benefits are now defined
as benefits expected to be settled wholly before twelve months after the end
of the reporting period in which the employees render the related service. As
a result, accrued annual leave balances which were previously classified by
Council as short-term benefits no longer meet this definition and are now
classified as long-term benefits. This has resulted in a change of
measurement for that portion of annual leave provision from an
undiscounted to discounted basis
This change in classification has not materially altered Councils
measurement of the annual leave provision
OR
Page 44
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
Comparative amounts for 2013 and the related amounts as at 1 January
2013 have been restated in accordance with the relevant transitional
provisions set out in AASB 119. The impact is as follows:
Impact on Comprehensive Result:
Year ended
30 June 2013
Decrease in employee expenses
$X, xxx
Impact on Liabilities and Equity:
As at 1 June 2012 as previously reported
AASB 119
adjustments
As at 1
2012
(restate
As at 30 June 2012 as previously reported
AASB 119
adjustments
As at 31
2012
(restate
Current Employee Benefit Provision
Retained Earnings
Current Employee Benefit Provision
Retained Earnings
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)
1004
12
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.
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
Page 45
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
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.
118
35(a)
Rental
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.
Other Income
Other income is measured at the fair value of the consideration received or
receivable and is recognised when Council gains control over the right to
receive the income.
Page 46
Local Government Model Financial Report
Model Council Annual Financial Report 2014
102
Aus 9
Note 1 Significant accounting policies (cont.)
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 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))
Straight line depreciation is charged based on the residual useful life as determined
each year.
116
76(c)
Major depreciation periods used are listed below and are consistent with the prior
year unless otherwise stated:
Period 2014
Property
Land
land improvements
Buildings
buildings
building improvements
leasehold building improvements
heritage buildings
Plant and Equipment
plant, machinery and equipment
fixtures, fittings and furniture
computers and telecommunications
heritage plant and equipment
25years
50 years
10 years
10 years
50 years
5-10 years
3-10 years
3-10 years
7 years
Page 47
Local Government Model Financial Report
Model Council Annual Financial Report 2014
138
118(a)
(116)
108
(76)
39
Note 1 Significant accounting policies (cont.)
library books
Infrastructure
Roads
road pavements and seals
road substructure
road formation and earthworks
road kerb, channel and minor culverts
road other <insert details>
Bridges
bridges deck
bridges substructure
bridges other <insert details>
footpaths and cycleways
drainage
recreational, leisure and community facilities
waste management
parks, open space and streetscapes
aerodromes
off street car parks
other infrastructure <insert details>
Intangible assets
intangible assets
(f)
116
12
123
26(b)
4 years
13 years
50 years
50 years
50 years
15 years
50-75 years
50-75 years
25 years
50 years
30 years
25 years
15 years
25 years
Xx years
25 years
25 years
25 years
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.
116
(h)
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 price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Page 48
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
.
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:
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
Bridges
bridges deck
10
bridges substructure
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
Intangible assets
intangible assets
1
Page 49
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
Revaluation
116
73(a)
13
9
101
95
Subsequent to the initial recognition of assets, non-current physical assets,
other than plant and equipment, are measured at their fair value, being the
price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. .
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.
Fair value valuations are determined in accordance with a valuation hierarchy.
Changes to the valuation hierarchy will only occur if an external change in the
restrictions or limitations of use on an asset result in changes to the
permissible or practical highest and best use of the asset. More details about
the valuation techniques and inputs used in determining the fair value of nonfinancial physical assets are discussed in Note XX Property Plant and
Equipment.
In addition, Council undertakes a formal revaluation of land, buildings, and
infrastructure assets on a regular basis ranging from 3 to 5 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
11
Council recognises land under roads it controls at fair value.
[NOTE: In 2011 the former Department of Planning and Community
Development (DPCD) issued guidance requiring Victorian councils to
recognise all land under roads (pre and post 1 July 2008) at fair value.
This requirement aimed to improve the consistency and comparability
of financial information in the sector.
DPCD acknowledged that recognition of land under roads pre 1 July 2008
and accounting for these assets at fair value at the time of acquisition
would require additional work for some councils in determining a reported
value. Accordingly, a transition period of up to three years was proposed.
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Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
For the 2014/15 financial statements all councils should be compliant. Text
not to be included in financial report]
(i) Cash and cash equivalents
107
46
For the purposes of the statement of cash flows, 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) Financial assets
Financial assets 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) Investments
Investments, other than investments in associates, are measured at cost.
128
101
(l) Accounting for investments in associates
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) Tender deposits
LGR
14(a)
119
10/11
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) Employee benefits
The calculation of employee benefits includes all relevant on-costs and are
calculated as follows at reporting date.
(i) Wages and salaries, and annual leave
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulated sick leave expected to be wholly settled within 12
months of the reporting date are recognised in the provision for employee
benefits in respect of employee services up to the reporting date, classified
as current liabilities and measured at their nominal values.
Liabilities that are not expected to be wholly settled within 12 months of the
reporting date are recognised in the provision for employee benefits as
current liabilities, measured at present value of the amounts expected to be
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Model Council Annual Financial Report 2014
Note 1 Significant accounting policies (cont.)
paid when the liabilities are settled using the remuneration rate expected to
apply at the time of settlement.
(ii) Long service leave
Liability for long service leave (LSL) is recognised in the provision for
employee benefits.
Current Liability - unconditional LSL representing 7 years is disclosed as a
current liability even when the council does not expect to settle the liability
within 12 months because it will not have the unconditional right to defer
settlement of the entitlement should an employee take leave within 12
months.
The components of this current liability are measured at :
- present value - component that is not expected to be settled within 12
months.
- nominal value - component that is expected to be settled within 12
months.
Non-current liability - conditional LSL representing less than 7 years is
disclosed as a non - current liability. There is an unconditional right to defer
settlement of the entitlement until the employee has completed the requisite
years of service.
This non-current LSL liability is measured at present value. Gain or loss
following revaluation of the present value of non-current LSL liability due to
changes in bond interest rates is recognised as an other economic flow
(iii) Termination benefits
Termination benefits are payable when employment is terminated before the
normal retirement date, or when an employee accepts voluntary redundancy
in exchange for these benefits. The council recognises termination benefits
when it is demonstrably committed to either terminating the employment of
current employees according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than 12 months
after balance sheet date are discounted to present value.
Employee benefits on-costs
Employee benefits on-costs (payroll tax, workers compensation,
superannuation, annual leave and long service leave accrued while on LSL
taken in service) are recognised separately from provision for employee
benefits.
117
(o) Leases
Finance leases
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
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Note 1 Significant accounting policies (cont.)
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
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.
116
Leasehold improvements
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 3 to 10 year period.
(p) Allocation between current and non-current
101
60)
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.
(q) Agreements equally proportionately unperformed
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.
AAI 132
(r) 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
AAI
1031
10
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.
Cash flows are presented in the statement of cash flows on a gross basis,
except for the GST component of investing and financing activities, which are
disclosed as operating cash flows.
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Note 1 Significant accounting policies (cont.)
136
9
(t) Impairment of assets
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) 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.
5
101
(v) Non-current assets held for sale
54)
140
101
140
137
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 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) Investment property
54
75(a)-(c)
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.
(x) Financial guarantees
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Note 1 Significant accounting policies (cont.)
101
54
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) 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.
(z) 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.
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Local Government Model Financial Report
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Pronouncement
AASB 9 Financial Instruments
Summary
AASB 9 standard is one of a series of amendments that are
expected to eventually completely replace AASB 139. During 201011, the standard will be expanded to include new rules on
measurement of financial liabilities and hedge accounting. Currently
the existing provisions of AASB 139 will continue to apply in these
areas.
AASB 9 simplifies the classifications of financial assets into those to
be carried at amortised cost and those to be carried at fair value –
the ‘available for sale’ and ‘held-to-maturity’ categories no longer
exists. AASB 9 also simplifies requirements for embedded
derivatives and removes the tainting rules associated with held-tomaturity assets.
The new categories of financial assets are:

Amortised cost – those assets with ‘basic’ loan features’.

Fair value through other comprehensive income - this
treatment is optional for equity instruments not held for trading
(this choice is made at initial recognition and is irrevocable).

Fair Value through profit and Loss - everything that does not
fall into the above two categories.
The following changes also apply:

Investments in unquoted equity instruments must be measured
at fair value. However, cost may be the appropriate measure of
fair value where there is insufficient more recent information
available to determine a fair value.

There is no longer any requirement to consider whether
‘significant or prolonged’ decline in the value of financial assets
has occurred. The only impairment testing will be on those
assets held at amortised cost, and all impairments will be
eligible for reversal.
Similarly, all movements in the fair value of a financial asset now go to the
income statement, or, for equity instruments not held for trading, other
comprehensive income. There is no longer any requirement to book
decrements through the income statement, and increments through
equity.
Application Date
1 Jul 2015
Impact on Council
The impact is not likely to be extensive in the local
government sector. Although it will vary considerably
between entities. While the rules are less complex than those
of AASB 139, the option to show equity instruments at cost
has been largely removed, which is likely to lead to greater
volatility within the income statement. However it may also
lead to an improved financial position for some entities.
This will also create a requirement to measure some
instruments annually that has not previously existed.
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Pronouncement
Summary
Application Date
Impact on Council
AASB 10 Consolidated Financial
Statements
This Standard forms the basis for determining which entities should be
consolidated into an entity’s financial statements. AASB 10 defines
‘control’ as requiring exposure or rights to variable returns and the ability
to affect those returns through power over an investee, which may
broaden the concept of control for public sector entities.
The AASB has issued an exposure draft ED 238 Consolidated Financial
Statements – Australian Implementation Guidance for Not-for-Profit
Entities that explains and illustrates how the principles in the Standard
apply from the perspective of not-for-profit entities in the private and
public sectors.
This Standard forms the basis for determining which entities should be
consolidated into an entity’s financial statements. AASB 10 defines
‘control’ as requiring exposure or rights to variable returns and the ability
to affect those returns through power over an investee, which may
broaden the concept of control for public sector entities.
The AASB has issued an exposure draft ED 238 Consolidated Financial
Statements – Australian Implementation Guidance for Not-for-Profit
Entities that explains and illustrates how the principles in the Standard
apply from the perspective of not-for-profit entities in the private and
public sectors.
1 Jul 2014
The AASB have finalised deliberations on ED 238 and any
modifications made to AASB 10 for not-for-profit entities,
Council will need to re-assess the nature of its relationships
with other entities, including those that are currently not
consolidated.
AASB 11 Joint Arrangements
This Standard deals with the concept of joint control, and sets out a new
principles-based approach for
determining the type of joint arrangement that exists and the
corresponding accounting treatment. The new categories of joint
arrangements under AASB 11 are more aligned to the actual rights and
obligations of the parties to the arrangement.
1 Jul 2014
The AASB have finalised deliberations and any modifications
made to AASB 11 for not-for-profit entities, Council will need
to assess the nature of arrangements with other entities in
determining whether a joint arrangement exists in light of
AASB 11.
AASB 12 Disclosure of Interests in Other
Entities
This Standard requires disclosure of information that enables users of
financial statements to evaluate the nature of, and risks associated with,
interests in other entities and the effects of those interests on the financial
statements. This Standard replaces the disclosure requirements in AASB
127 Separate Financial Statements and AASB 131 Interests in Joint
Ventures.
The exposure draft ED 238 proposes to add some implementation
guidance to AASB 12, explaining and illustrating the definition of a
‘structured entity’ from a not-for-profit perspective.
1 Jul 2014
Impacts on the level and nature of the disclosures will be
assessed based on the eventual implications arising from AASB
10, AASB 11 and AASB 128 Investments in Associates and Joint
Ventures.
AASB 127 Separate Financial
Statements
This revised Standard prescribes the accounting and disclosure
requirements for investments in subsidiaries, joint ventures and associates
when an entity prepares separate financial statements.
1 Jul 2014
The impact of this standard will need to be assessed in line
with the final deliberations by the AASB on the application of
this standard to not for profit entities.
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Pronouncement
Summary
Application Date
Impact on Council
AASB 128 Investments in Associates and
Joint Ventures
This revised Standard sets out the requirements for the application of the
equity method when accounting for investments in associates and joint
ventures.
1 Jul 2014
The impact of this standard will need to be assessed in line
with the final deliberations by the AASB on the application of
this standard to not for profit entities.
AASB 1053 Application of Tiers of
Australian Accounting Standards and
AASB 2010-2 Amendments to Australian
Accounts Standard arising from
Reduced Disclosure Requirements
These standards set out the tiers of financial reporting and the reduced
disclosure framework.
1 Jul 2014
Council has yet to determine the impact of this standard,
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Commentary – Summary of accounting policies
Content
AASB
101
112
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;
(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 statement of cash flows; 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 statement of cash
flows, but is relevant to an understanding of any of them.
Systematic structure
AASB
101
112
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 statement of cash flows shall be cross referenced to any related information in the notes.
Notes are normally presented in the following order, which assists users in understanding the
financial statements and comparing them with financial statements of other entities:
(a) a statement of compliance with IFRSs (refer to paragraph 16 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 statement of cash
flows, 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).
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 comprehensive income statement and the latter relate to the
balance sheet. Nevertheless, a systematic structure for the notes is retained as far as
practicable.
A set of financial statements 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
financial statements that achieve a fair presentation.
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AASB
110
17
Commentary – Summary of accounting policies
An entity shall disclose the date when the financial statements were authorised for issue and
who gave that authorisation. If the entity’s owners or others have the power to amend the
financial statements 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
AASB
101.
AASB
101
AASB
101
The following disclosures must be made in the notes:
(a) a statement that the financial statements are general purpose financial statements or
special purpose financial statements;
(b) a statement of compliance with Australian Accounting Standards; and
16
(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
16
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 101.16 and clearly identify to which financial statements and notes it relates.
AASB
101
122
Summary of accounting policies
Contents
The summary of accounting policies shall include a description of each specific accounting
policy that is necessary for an understanding of the financial statements. 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
statements, 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
AASB
101
AASB
101
AASB
127
117
An entity shall disclose in the summary of significant accounting policies:
117
• the measurement basis (or bases) used in preparing the financial statements; and
117
• the other accounting policies used that are relevant to an understanding of the financial
statements.
Basis of Consolidation
If the entity is a consolidating entity, it needs to disclose its basis of consolidation.
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Commentary – Summary of accounting policies
Going concern basis
AASB
101
25
When preparing financial statements, 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 statements are not prepared on a going concern basis, that
fact shall be disclosed, together with the basis on which the financial statements are
prepared and the reason why the entity is not regarded as a going concern.
Critical accounting estimates and judgements
AASB
101
122
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 statements.
AASB
101
123
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 statements. 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
125
AASB
101
126
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.
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
The disclosures in paragraph 126 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
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
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Commentary – Summary of accounting policies
standard.
Materiality
AASB
1031
9
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 nondisclosure has the potential, individually or collectively, to:
(a) influence the economic decisions of users taken on the basis of the financial statements;
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
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:
(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: for each financial statement line item affected
(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 statements 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;
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Commentary – Summary of accounting policies
(c) for the current period and each prior period presented, to the extent practicable, the
amount of the adjustment for each financial statement line item affected.
(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 statements of subsequent periods need not repeat these disclosures.
Financial statements of subsequent periods need not repeat these disclosures.
Where compliance with an Australian Accounting Standard is misleading
AASB
101
19
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 statements set out in the Framework, the entity shall, to
the maximum extent possible, reduce the perceived misleading aspects of compliance by
maximum extent possible, by disclosing:
• 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 statements set
out in the framework; and
• for each period presented, the adjustments to each item in the financial statements that
management has concluded would be necessary to achieve a fair presentation.
Inappropriate accounting policies not rectified by disclosure
AASB
101
18
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
When the presentation or classification of items in the financial statements 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
AASB
1004
The following commentaries on contributions relate to not-for-profit entities only.
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.
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Commentary – Summary of accounting policies
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, its fair value at the date of the acquisition will be the price that would be
received to sell the asset in an orderly transaction between market participants at the
measurement date, where there is no active market for such an item the assets current
replaced cost (adjusted to reflect the condition of the contributed asset) would be used as a
proxy for the market exit price. 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.
Finance 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
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Commentary – Summary of accounting policies
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
also allow 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.
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 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
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Commentary – Summary of accounting policies
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 reconstructing 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.
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
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.
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AASB
139
47 (c)
Commentary – Summary of accounting policies
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.
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 statements 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.
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AASB
108
30
AASB
108
31
Commentary – Summary of accounting policies
New Accounting Standards and interpretations
Australian Accounting Standard issued but not yet effective
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 statements in the period of initial application.
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 statements, 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.
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Reference
AASB
Para
118
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 2
Rates and charges
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 2013/2014 was $23,764 million
(2012/2013, $21,856 million). The 2013/2014 rate in the CIV dollar was 0.00174
(2012/2013, 0.00181).
118
35(c)
Residential
Commercial
Industrial
Farm/Rural
Supplementary rates and rate adjustments
Municipal charge
Garbage charge
Special rates and charges
Revenue in lieu of rates
2014
$’000
2013
$’000
13,403
10,411
9,255
4,627
2,314
1,157
3,412
1,215
45,794
12,951
9,755
8,672
4,336
2,168
1,084
3,281
1,110
43,357
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 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.
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Reference
AASB Para
118
35(c)
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 3
Statutory fees and fines
Infringements and costs
PERIN court recoveries
Town planning fees
Land information certificates
Permits
Note 4
118
35(c)
2014
$’000
2013
$’000
2,254
206
98
125
135
2,162
186
75
115
165
2,818
2,703
3,914
801
401
731
328
365
566
286
301
135
2,818
3,721
744
490
809
431
298
344
125
265
215
7,442
User fees
(a) Leisure centre fees
Resort and recreation fees*
Child care/children's program fees
Fees - ticket machines
Aged services fees
Registration fees
Road occupancy charges
Building services fees
Valuation fees/supplementary charges
Fees - parking meters
Other fees and charges
* 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.
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Reference
AASB
Para
118
35(c)
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 5
Grants
2014
$’000
2013
$’000
Summary of grants
Federally funded grants
State funded grants
Others
Total
8,500
12,325
175
21,000
7,100
9,075
325
16,500
500
1,000
3,500
1,000
250
241
343
234
473
432
365
906
386
412
106
153
110
199
114
141
73
562
11,500
2,000
1,500
3,750
1,750
250
97
113
96
302
301
253
712
801
284
71
80
59
61
86
78
92
264
13,000
6,500
1,000
1,000
500
250
250
9,500
2,500
500
500
3,500
Grants were received in respect of the following :
LGR
14(b)
LGR
14(b)
Recurrent
Commonwealth Government – Roads to recovery
Commonwealth Government – Family and children
Victoria Grants Commission – General purpose
Victoria Grants Commission – Local roads
Community health
School crossing supervisors
Planning and development
Maternal and child health
Family and children
Food services
Home help/linkages
Senior citizen centres
Transport
Adult day care
Assessment/welfare support
Libraries
Recreation
Local government improvement incentives
Community safety
Drug strategy development
Homeless support
Other
Total recurrent
14(b)
Non-recurrent
Commonwealth Government - Drainage
Commonwealth Government - Bridges
Community health
Family and children
Transport
Homeless support
Other
Total non-recurrent
LGR
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AASB
Para
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 5
Grants (cont.)
Conditions on Grants
2014
$’000
2013
$’000
500
500
1,000
400
400
400
400
300
300
600
100
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:
Community health
Transport
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:
Commentary - Note 5 Grants
LGR
14(b)
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 expenditure components.
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Reference
AASB Para
118
1004
35(c)
1004
62
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 6
Contributions
(a) Cash
Roads
Footpaths and cycleways
Drainage
Recreational, leisure and community facilities
Waste management
Parks, open space and streetscapes
Community day care
Parking
Other
(b) Non-monetary assets
Land under roads
Roads
Drainage
Parks, open space and streetscapes
Parking
Other
Total Contributions
AASB 1
004
60(a)
2014
$’000
2013
$’000
539
172
230
344
86
34
50
67
40
1,562
432
138
185
276
69
7
40
54
33
1,254
54
212
114
16
33
20
449
2,011
37
176
91
13
26
16
359
1,613
Commentary - Note 6 Contributions
Conditions on contributions
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.
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Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
118
35(c)
Note 7
Net gain/(loss) on disposal of property,
infrastructure, plant and equipment
2014
$’000
2013
$’000
3,561
(3,082)
479
-
1,264
940
800
200
3,204
1,179
863
1,000
500
3,542
Wages and salaries
Workcover
Casual staff
Annual leave and long service leave
Superannuation
Superannuation – additional contribution
29,209
710
716
995
2,653
-
28,346
594
599
774
2,436
Fringe benefits tax and work cover
Redundancy
Total employee costs
During the prior period (2013) Council was
required to make an additional contribution
to Vision Super to meet our obligations to
members of the defined benefit plan
1,084
35,367
937
34,421
Proceeds of sale
Written down value of assets disposed
Total
118
35(c)
118
118
118
140
35(b)(iii)
35(b)(iii)
35(b)(v)
75(f)(i)
118
136
35(b)(iv)
126(b)
Note 8
Other income
Interest
Interest on rates
Dividends
Investment property rental
Other rent
Royalties
Reversals of impairment losses
Other
Total other income
Note 9
Employee costs
735
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101
112(c))
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 10 Materials and services
Contract payments
Building maintenance
Plant and equipment maintenance
Utilities
Consultants
Total materials and services
101
112(c))
112(c))
Plant and Equipment
Plant, machinery and equipment
Fixtures, fittings and furniture
Computers and telecommunications
118(d)
6,176
4,484
3,588
2,691
1,000
17,939
7,176
4,984
3,988
3,195
500
19,843
100
2,067
2,167
1,000
1,940
2,940
296
289
1,673
195
141
1,639
193
137
2,194
1,712
305
11
2,129
1,669
297
11
6,900
250
850
660
6,728
244
829
644
15,187
14,809
Note 12 Depreciation and amortisation
Property
Land
Land improvements
Buildings
Buildings
Building improvements
Leasehold improvements
Heritage buildings
138
2013
$’000
Note 11 Bad and doubtful debts
Parking fine debtors
Rates debtors
Other debtors
Total bad and doubtful debts
101
2014
$’000
Heritage plant and equipment
Infrastructure
Roads
Bridges
Footpaths and cycleways
Drainage
Intangible assets
Intangible assets
Total depreciation and amortisation
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Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
101
112(c)))
2014
$’000
2013
$’000
247
247
-
320
320
-
247
320
na %
na %
Auditors' remuneration
Councillors' allowances
Operating lease rentals
Other
94
250
4,000
3,965
88
240
4,000
2,157
Total other expenses
8,309
6,485
Note 13 Finance costs
Interest - Borrowings
123
29(b)
101
82
123
29(c)
Less capitalised borrowing costs on qualifying
assets
Total finance costs
Rate used to capitalise finance costs
Note 14 Other expenses
117
35(c)
101,
54
128
38
Note 15 Investment in associates
Investments in associates accounted for by the equity method
are:
- <> 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)
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
-
-
-
-
-
-
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Notes to the Financial Statements
For the Year Ended 30 June 2014
2014
$’000
2013
$’000
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
Carrying value of investment at start of year
Share of surplus(deficit) for year
Share of asset revaluation
Distributions received
Carrying value of investment at end of year
-
-
-
-
-
-
Note 15 Investment in associates (cont.)
Council's share of expenditure commitments
Operating commitments
Capital commitments
128
40(a), (b)
Council's share of contingent liabilities and
contingent assets
<List relevant assets and liabilities eg site
restoration costs>
[Note: If a Council holds greater than 20% of the equity and concludes that it
does not have significant influence, or alternatively holds less than 20% equity
and concludes it does have significant influence, the basis for these
conclusions must be disclosed.]
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Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
101
54
Note 16
2014
$’000
2013
$’000
54
4,200
14,000
18,254
33
5,000
13,000
18,033
11,369
11,369
588
574
11,957
11,943
6,297
6,090
Cash and cash equivalents
Cash on hand
Cash at bank
Short term deposits
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
Commentary - Note 16 Cash and cash equivalents
AASB 107 (7)
Cash and cash equivalents should only include cash holdings and short
term investments with a maturity term of less than three months. Other
investments with a longer term to maturity should be classified as
financial assets.
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Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
101
54
7
20(e)
7
20(e)
2014
$’000
2013
$’000
2,208
207
1,714
(1,010)
201
3,416
(2,417)
4,319
2,101
208
1,491
(910)
210
1,077
(350)
3,827
-
11
327
338
4,319
4,165
Note 17 Trade and other receivables
Current
Rates debtors
Special rate debtors
Parking infringement debtors
Provision for doubtful debts - parking infringements
Loans and advances to community organisations
Other debtors
Provision for doubtful debts - other debtors
Non-current
Special rate scheme
Loans and advances to community organisations
Total
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Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
101
54
101
102
54
Aus36.1(b)
5
30
123
123
2014
$’000
2013
$’000
Note 18 Financial assets
Managed funds (note 1(j))
200
196
Note 19 Inventories
Inventories held for distribution
Inventories held for sale
Total inventories
216
216
173
173
Land Capitalised development costs (eg roads,
drainage)
Borrowing costs capitalised during development
Total
6
-
6
-
6
6
Borrowing costs capitalised
-
-
Capitalisation rate used in the allocation of
borrowing costs
0
0
Note 20 Assets held for sale
26
26.1
Assets held for sale are carried at fair value less cost of disposal. The following table provides
Councils fair value measurement hierarchy for assets held for sale:
Carrying value at
30 June
Land
(1)
Fair Value measurement at the end of the period using(1):
Level 1
Level 2
Level 3
6
6
– Classified in accordance with fair value hierarchy – see note 22
Page 80
Local Government Model Financial Report
Model Council Annual Financial Report 2014
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) a description of the non-current asset (or disposal group);
(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.
Page 81
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
101
54
Note 21
Other assets
Prepayments
Accrued income
Other
Note 22
269
251
64
237
451
78
584
766
Property, infrastructure, plant and equipment
Summary
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Total
Property
Land
at cost
at fair value as at 30 June <>
Land under roads
at fair value at 30 June <>
Land improvements
at fair value at 30 June <>
Less accumulated depreciation
Total Land
Buildings
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
2014
2013
$'000
$'000
72,058
27,065
44,993
75,793
25,143
50,650
643,503
177,815
465,688
510,681
612,727
163,945
448,782
499,432
164,359
164,359
3,000
157,810
160,810
5,091
5,091
5,037
5,037
21,733
8,701
13,032
182,482
15,935
8,405
7,530
173,377
134,251
52,197
82,054
8,800
1,399
7,401
Page 82
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 22
Property, infrastructure, plant and equipment
(cont.)
at fair value as at 30 June <>
Less Accumulated depreciation
Building improvements
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Leasehold improvements
at cost
Less accumulated amortisation
Heritage buildings
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Total Buildings
Total Property
2014
$’000
2013
$’000
-
115,644
49,125
66,519
6,155
1,036
5,119
5,800
841
4,959
-
-
-
-
74
14
60
20
3
17
1,000
622
378
87,611
270,093
1,000
492
508
79,404
252,781
Page 83
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 22
Property, infrastructure, plant and equipment (cont.)
[NOTE: If a change to an unobservable input occurs (such as a reassessment
of the level of discount to market value), then the financial impact of that will
need to be disclosed. For example:
During the year Council reassessed the impact of restrictions placed on the use
of land under roads. This resulted in an increase in the adjustment from a
discount of 90% to a discount of 95% to surrounding land values. The financial
impact of this adjustment was asset revaluation decrement (other
comprehensive income) of $xxx.
[NOTE: If no valuation in current year need to include:
Fair value assessments have been performed at 30 June 2014 for land and
buildings. This assessment demonstrated that fair value was materially similar
to carrying value, and therefore a full revaluation was not required this year.
The next scheduled full revaluation for this purpose will be conducted in 20XX20XX.]
Details of the Council’s land and buildings and information about the fair value hierarchy as
at 30 June 2014 are as follows:
Level 1
Level 2
Level 3
$ '000
$ '000
$ '000
Land – non specialised
Land - specialised
Land under roads
Land Improvements
21,874
Buildings – non specialised
61,986
142,485
5,091
13,032
Buildings - specialised
Total
20,437
-
83,860
181,065
No transfers between levels occurred during the year
Page 84
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Notes to the Financial Statements
For the Year Ended 30 June 2014
2014
$’000
2013
$’000
19,551
10,907
8,644
19,783
9,108
10,675
8,083
5,111
2,972
9,542
4,399
5,143
2,093
1,031
1,062
1,742
739
1,003
73
15
58
20
4
16
264
157
107
245
144
101
12,843
16,938
Plant and Equipment
Plant, machinery and equipment
at cost
Less accumulated depreciation
Fixtures, fittings and furniture
at cost
Less accumulated depreciation
Computers and telecommunications
at cost
Less accumulated depreciation
Heritage plant and equipment
at cost
Less accumulated depreciation
Library books
at cost
Less accumulated depreciation
Total Plant and Equipment
Page 85
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
2014
$’000
Note 22
2013
$’000
Property, infrastructure, plant and equipment (cont.)
Infrastructure
Roads
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Bridges
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Footpaths and cycleways
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
Drainage
at cost
Less accumulated depreciation
at fair value as at 30 June <>
Less accumulated depreciation
5,693
58
5,635
-
245,125
84,853
160,272
245,125
78,011
167,114
1,110
27
1,083
-
8,183
3,447
4,736
8,183
3,224
4,959
198
8
190
-
12,753
4,800
7,953
12,753
3,958
8,795
-
1,895
101
1,794
72,832
31,896
40,936
-
Page 86
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
2014
$’000
Note 22
Property, infrastructure, plant and equipment
(cont.)
at Fair value as at 30 June <>
Less accumulated depreciation
Total Infrastructure
13
2013
$’000
-
67,212
29,135
38,077
220,805
220,739
90
.
[If no valuation in current year need to include:
Fair value assessments have been performed at 30 June 2014 for Infrastructure.
This assessment demonstrated that fair value was materially similar to carrying
value, and therefore a full revaluation was not required this year. The next
scheduled full revaluation for this purpose will be conducted in 20XX-20XX.]
Details of the Council’s infrastructure and information about the fair value hierarchy as
at 30 June 2014 are as follows:
Level 1
Level 2
Level 3
$ '000
$ '000
$ '000
Roads
Bridges
Footpaths and cycleway
165,907
5,819
8,143
Drainage
Total
40,936
0
0
220,805
No transfers between levels occurred during the year
Works in progress
Buildings at cost
Roads at cost
Bridges at cost
Total Works in progress
Total property, infrastructure, plant and
equipment
4,165
2,081
694
6,940
5,385
2,692
897
8,974
510,681
499,432
Page 87
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 22
Property, infrastructure, plant and equipment
(cont.)
Valuation basis
Non-specialised land, non-specialised buildings
Non-specialised land and non-specialised buildings are valued using the market based direct
comparison method. Under this valuation method, the assets are compared to recent comparable
sales or sales of comparable assets which are considered to have nominal or no added improvement
value.
For non-specialised land and non-specialised buildings, an independent valuation was performed by
<<name of Valuer>> to determine the fair value using the market based direct comparison method.
Valuation of the assets was determined by analysing comparable sales and allowing for share, size,
topography, location and other relevant factors specific to the asset being valued. From the sales
analysed, an appropriate rate per square metre has been applied to the subject asset. The effective
date of the valuation is 30 June 2014. To the extent that non-specialised land and non-specialised
buildings do not contain significant, unobservable adjustments, these assets are classified as Level 2
under the market based direct comparison approach.
Specialised land and specialised buildings
The market based direct comparison method is also used for specialised land although is adjusted to
reflect the specialised nature of the assets being valued. For Council specialised buildings, the
depreciated replacement cost method is used, adjusting for the associated depreciations. Specialised
assets contain significant, unobservable adjustments, therefore these assets are classified as Level 3
fair value measurements.
An adjustment is made to reflect a restriction on the sale or use of an asset by Council. The
adjustment is an allowance made to reflect the difference in value between unrestricted assets and
those held by the Council which are impacted by external restraints on their use.
An independent valuation of Council’s specialised land and specialised buildings was performed by
<<name of Valuer>>. The valuation was performed using either the market based direct comparison
method or depreciated replacement cost, adjusted for restrictions in use. The effective date of the
valuation is 30 June 2014.
Land Under Roads
Land under roads is valued at fair value 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. This adjustment is an unobservable input in the valuation. The
adjustment has no impact on the comprehensive income statement.
Infrastructure
Infrastructure is valued using the depreciated replacement cost method. This cost represents the
replacement cost of the building/component after applying depreciation rates on a useful life basis.
Replacement costs relate to costs to replace the property to an “as new” standard. Economic
obsolescence has also been factored into the depreciated replacement cost calculation.
Page 88
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Where it has not been possible to examine hidden works such as structural frames and floors, the use
of reasonable materials and methods of construction have been assumed bearing in mind the age and
nature of the building. The estimated cost of reconstruction including structure services and finishes,
also factors in any heritage classifications as applicable. Infrastructure assets contain significant
unobservable adjustments, therefore these assets are classified as Level 3.
A valuation of Council’s, infrastructure assets was performed by <<details of Valuer>>. The valuation
was performed based on the depreciated replacement cost of the assets. The effective date of the
valuation is 30 June 2014.
There were no changes in valuation techniques throughout the period to 30 June 2014.
For all assets measured at fair value, the current use is considered the highest and best use.
Reconciliation of Level 3 fair value
2014
Opening Balance
Depreciation
Impairment Loss
Revaluation
Acquistions
(Disposals)
Transfers
Closing Balance
Specialised Land
and Land
Improvements
149,675
(296)
6,138-
Specialised Buildings
Land Under Roads
Infrastructure
20,480
(108)
65
-
5,037
54
220,739
(8,660)
155,517
20,437
5091
220,805
1,082
7,644
Description of significant unobservable inputs into level 3 valuations
Valuation
Technique
Specialised
Land and Land
Improvements
Specialised
Buildings
Market based direct
comparison
approach (refer
above)
Depreciated
Replacement Cost
Signficant
Unobservable
Inputs
Extent and impact
of restriction of use
Direct cost per
square metre
Useful life of
specialised
buildings
Land Under
Roads
Infrastructure
Market based direct
comparison
approach (refer
above)
Depreciated
Replacement Cost
Extent and impact
of restriction of use
Cost per unit
Useful life of
infrastructure
Range
Sensitivity
Increase or decrease in the
extent of restriction would
result in a significantly lower or
higher fair value.
Increase or decrease in the
direct cost per square metre
adjustment would result in a
significantly lower or higher fair
value.
Increase or decrease in the
estimated useful life of the
asset would result in a
significantly lower or higher fair
value.
Increase or decrease in the
extent of restriction would
result in a significantly lower or
higher fair value.
Increase or decrease in the
cost per unit would result in a
significantly lower or higher fair
value.
Increase or decrease in the
estimated useful life would
result in a significantly lower or
higher fair value.
Page 89
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Note 22 Property, plant and equipment, infrastructure (cont.)
2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Balance at
beginning of
financial year
$'000
Property
Specialised land
Non specialised land
land under roads
land improvements
Total land
Specialised buildings
Non specialised buildings
building improvements
leasehold improvements
heritage buildings
Total buildings
Total property
Plant and Equipment
plant, machinery and equipment
fixtures, fittings and furniture
computers and telecommunications
heritage plant and equipment
library books
Total plant and equipment
Acquisition
of assets
$'000
142,145
18,665
5,037
7,530
173,377
20,480
53,440
4,959
525
79,404
252,781
340
54
5,798
6,192
Revaluation
increments
(decrements)
Depreciation
and
amortisation
(note 30)
(note 12)
$'000
$'000
Written
down value
of
disposals
Impairment
losses
recognised
in profit or
loss
Transfers
Balance at
end of
financial
year
$'000
$'000
$'000
$'000
(a)
(296)
(296)
(108)
(1,565)
(195)
(141)
(2,009)
(2,305)
(340)
(340)
-
-
3,251
355
54
3,660
9,512
3,549
3,549
65
1941
2,006
5,555
-
-
4,550
4,550
4,550
142,485
21,874
5,091
13,032
182,482
20,437
61,617
5,119
438
87,611
270,093
10,675
5,143
1,003
16
101
1,558
1,228
364
53
6
-
(2,194)
(1,712)
(305)
(11)
-
(1,395)
(1,687)
-
-
-
8,644
2,972
1,062
58
107
16,938
3,209
-
(4,222)
(3,082)
-
-
12,843
Page 90
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 22 Property, plant and equipment, infrastructure (cont.)
Balance at
beginning of
financial year
2014
$'000
Infrastructure
roads
bridges
footpaths and cycleways
drainage
recreational, leisure and community facilities
waste management
parks, open space and streetscapes
Aerodromes
off street car parks
other <insert details>
Total infrastructure
Works in progress
buildings
roads
bridges
Total works in progress
Total property, plant and equipment, infrastructure
a) Impairment losses
Acquisition
of assets
$'000
Revaluation
increments
(decrements)
Depreciation
and
amortisation
(note 30)
(note 12)
$'000
$'000
Written
down value
of
disposals
$'000
Impairment
losses
recognised
in profit or
loss
(a)
$'000
Transfers
Balance at
end of
financial
year
$'000
$'000
167,114
4,959
8,795
39,871
-
3,419
352
198
643
-
1,082
-
(6,900)
(250)
(850)
(660)
-
-
-
2,274
758
-
165,907
5,819
8,143
40,936
-
220,739
4,612
1,082
(8,660)
-
-
3,032
220,805
5,385
2,692
897
8,974
3,330
1,663
555
5,548
-
-
-
-
(4,550)
(2,274)
(758)
(7,582)
4,165
2,081
694
6,940
499,432
22,881
6,637
(15,187)
(3,082)
-
-
510,681
(
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.
Model Council
Financial Report
Note 22 Property, plant and equipment, infrastructure (cont.)
For the Year Ended 30 June 2014
Impairment
Page 91
Local Government Model Financial Report
Model Council Annual Financial Report 2014
2013
Balance at
beginning of
financial year
Acquisition
of assets
$'000
Revaluation Depreciatio
increments
n and
(decrements) amortisation
(note 30)
$'000
(note 12)
$'000
$'000
Written
down value
of
disposals
$'000
losses
recognised
in profit or
loss
(a)
$'000
Transfers
Balance at
end of
financial
year
$'000
$'000
Property
land
160,810
-
-
-
-
-
-
160,810
land under roads
5,000
37
-
-
-
-
-
5,037
land improvements
4,909
2,910
-
(289)
-
-
-
7,530
Total land
170,719
2,947
(289)
-
-
-
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
5,819
-
(2,258)
-
-
4,094
252,787
building improvements
leasehold improvements
heritage buildings
-
Page 92
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Note 22 Property, plant and equipment, infrastructure (cont.)
2013
Notes to the Financial Statements
For the Year Ended 30 June 2014
Balance at
beginning of financial
year
Acquisition
of assets
$'000
$'000
Revaluation Depreciatio
increments
n and
(decrements) amortisation
(note 30)
(note 12)
$'000
$'000
Written
down value
of
disposals
$'000
Impairment
losses
recognised
in profit or
loss
(a)
$'000
Transfers
Balance at
end of
financial
year
$'000
$'000
Plant and Equipment
plant, machinery and equipment
11,448
2,291
-
(2,129)
(935)
-
-
10,675
6,138
1,807
-
(1,669)
(1,133)
-
-
5,143
756
544
-
(297)
-
-
-
1,003
-
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
bridges
4,153
368
-
244
-
-
682
4,959
footpaths and cycleways
9,417
207
-
829
-
-
-
8,795
40,555
(160)
-
644
(120)
-
-
39,871
(30)
148
-
-
118
-
-
-
222,311
4,142
-
8,445
(2)
-
2,729
220,739
fixtures, fittings and furniture
computers and telecommunications
heritage plant and equipment
library books
Total plant and equipment
Infrastructure
roads
drainage
recreational, leisure and community facilities
waste management
parks, open space and streetscapes
Aerodromes
off street car parks
other <insert details>
Total infrastructure
Page 93
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Note 22 Property, plant and equipment, infrastructure (cont.)
Notes to the Financial Statements
For the Year Ended 30 June 2014
Works in progress
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
bridges
Total works in progress
Total property, plant and equipment, infrastructure
Commentary - Note 22 Property, plant, equipment and infrastructure
COMMENT
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 fu
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 i
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 statements at its fair value. These model accounts reflect that guidance. Further detail about this guidance is
outlined in note 1.
Page 94
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB
Para
140
140
76(a)-(g)
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 23
Investment property
Balance at beginning of financial year
Disposals
Fair value adjustments
Balance at end of financial year
140
75(e)
AASB 13
91
10,000
(3,000)
1,000
8,000
10,000
10,000
Valuation of investment property has been determined in accordance with an
independent valuation by J T Kelley, a registered valuer who has recent
experience in the location and category of the property being valued. The
valuation is at fair value, based on the current market value for the property.
The valuation is a level two valuation, meaning it is based on quoted prices
for similar assets in an active market.
There have been no transfers between levels during the period. There were
no changes in valuation techniques throughout the period to 30 June 2014.
For investment properties measured at fair value, the current use of the asset
is considered the highest and best use.
Fair Value Hierarchy:
Carrying amount as
at 30 June 2014
$ '000
Investment
Property
101, 138
138
Note 24
118
8,000
Fair value measurement at
end of reporting period:
Level 1
Level 2
Level 3
$ '000
$ '000
$ '000
8,000
Intangible assets
Software developed in-house
-
-
Page 95
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 24
Intangible assets (cont.)
Software
138
118(c),
(e)
Aged care bed
licences
Parking
infringement
system
Other
Total
$'000
$'000
$'000
$'000
$'000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Accumulated amortisation
and impairment
Balance at 1 July 2012
Amortisation expense
Balance at 1 July 2013
Amortisation expense
Balance at 30 June 2014
-
-
-
-
-
Net book value at 30 June 2013
Net book value at 30 June 2014
-
-
-
-
-
Gross carrying amount
Balance at 1 July 2012
Additions from internal
developments
Other
Balance at 1 July 2013
Additions from internal
developments
Other
Balance at 30 June 2014
Page 96
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Commentary - Note 24 Intangible assets
INTANGIBLE ASSETS
An intangible asset is an identifiable non-monetary asset without physical substance.
(In relation to the valuation of intangible assets) An active market is a market in which transactions for the asset or liability take
place with sufficient frequency and volume to provide pricing information on an ongoing basis
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.
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 price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
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
Page 97
Local Government Model Financial Report
Model Council Annual Financial Report 2014
(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
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.
Page 98
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
101
54
Note 25
101
101
LGR
Note 26
2013
$’000
5,818
264
794
6,876
5,240
258
775
6,273
163
225
40
25
105
30
588
149
240
36
24
97
28
574
Trade and other payables
Trade payables
Net GST payable
Accrued expenses
54
14(a)
2014
$’000
Trust funds and deposits
Refundable building deposits
Refundable contract deposits
Refundable tender deposits
Refundable civic facilities deposits
Retention amounts
Other refundable deposits
Page 99
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 27
Provisions
Annual
leave
137
137
137
137
84(a)
84(b)
84(c)
84(e)
137
84(a)
2014
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
2013
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
Long service
leave
Landfill
restoration
Other
$ '000
2,409
496
(303)
$ '000
4,553
299
(492)
$ '000
-
$ '000
1
(1)
2,602
4,360
-
-
2,220
483
(294)
4,440
292
(179)
-
1
-
2,409
4,553
-
1
Page 100
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 27 Provisions (cont.)
119
119
25
25
Current provisions expected to be settled within 12 months
Annual leave
2,432
Long service leave
1,170
Retirement gratuity
Superannuation
Other
3,602
Current provisions expected to be settled after 12 months
Annual leave
170
Long service leave
2,100
Other
Total current provisions
Non-current
Long service leave
Retirement gratuity
Superannuation
Other
137
85(b)
2014
$’000
2013
$’000
2,206
1,247
1
3,454
203
2,168
2,270
5,872
2,371
5,825
1,090
1,090
1,138
1,138
The following assumptions were adopted in measuring the present value of employee
benefits:
Weighted average increase in employee costs
Weighted average discount rates
Weighted average settlement period
4.50%
5.23%
12
4.75%
4.73%
12
Page 101
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Commentary - Note 27 Provisions
Councils are required to separately disclose current provisions that are expected to be settled within 12 months
(measured at undiscounted amounts) and those expected to be settled after 12 months (discounted to NPV).
In 2013/14 this will require an adjustment to the measurement of annual leave that is not expected to be settled
within 12 months. The financial impact of this change should be treated as an adjustment to opening retained
earnings. The change in accounting policy must be disclosed in note 1, including the financial impact of the
change, if material. An example of the potential disclosure is at Note 1.
Page 102
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 27 Provisions (cont.)
(b) Land fill restoration
Council is obligated to restore its landfill site to a particular standard. Current
projections indicate that the site will cease operation in 2018 and restoration work is
expected to commence shortly thereafter. The forecast life of the 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. Accordingly, the estimation of the provision required is dependent
on the accuracy of the forecast timing of the work, work required and related costs.
101
54
Note 28 Interest-bearing loans and borrowings
Current
Bank overdraft
Borrowings - secured
7
39(a)
2014
$'000
2013
$'000
1,161
1,161
2,704
2,704
Non-current
Borrowings - secured
2,565
3,344
Total
3,726
6,048
1,161
2,704
2,565
3,726
3,344
6,048
1,161
2,565
3,726
2,704
3,344
6,048
The maturity profile for Council's
borrowings is:
Not later than one year
Later than one year and not later than
five years
Later than five years
Aggregate carrying amount of interestbearing loans and borrowings:
Current
Non-current
Page 103
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB Para
Note 29
Reserves
Balance at
beginning of
reporting period
(a) Asset revaluation reserves
Increment
(decrement)
Share of increment
(decrement) on
revaluation of <name
asset class> by an
associate
Balance at end of
reporting period
$'000
$'000
$'000
$'000
38,418
18,116
148
3,549
2,018
-
-
41,967
20,134
148
56,682
5,567
-
62,249
35,211
1,149
5,548
9,238
51,146
107,870
1,082
1,082
6,649
-
35,211
1,149
5,548
10,320
52,228
114,477
2014
Property
Land
Land under roads
Buildings
Heritage buildings
Infrastructure
Roads
Bridges
Footpaths and cycleways
Drainage
Total Asset revaluation reserves
Page 104
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 29 Reserves (cont.)
2013
Balance at
beginning of
reporting period
Property
Land
Land under roads
Buildings
Heritage buildings
Infrastructure
Roads
Bridges
Footpaths and cycleways
Drainage
Total Asset revaluation reserves
101
54)
Transfer from
accumulated
surplus
Transfer to
accumulated
surplus
Balance at end of
reporting period
$'000
38,418
18,276
56,694
$'000
(160)
148
(12)
$'000
-
$'000
38,418
18,116
148
56,682
35,211
1,149
5,548
9,238
51,146
107,840
-
-
35,211
1,149
5,548
9,238
51,146
107,840
The asset revaluation reserve is used to record the
increased (net) value of Councils assets over time.
Page 105
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 29 Reserves (cont.)
Balance at
beginning of
reporting period
(b) Other reserves
Transfer from
accumulated
surplus
Transfer to
accumulated
surplus
Balance at end of
reporting period
$'000
$'000
$'000
$'000
11,369
11,369
-
-
11,369
11,369
11,369
11,369
-
-
11,369
11,369
2014
Resort and recreation reserve
Total Other reserves
2013
Resort and recreation reserve
Total Other reserves
The resort and recreation reserve is maintained to
account for funds reserved for the specific purpose of
assisting Council achieve its objectives under the Tourism
development master plan. These funds have been raised
through a levy on businesses within Council.
Page 106
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB
Para
101
40A
Note 30
Aus20.2
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-forsale financial assets to fair value:
Recognised during the year
Note 31
2013
$'000
-
-
-
-
-
-
-
-
4,918
(3,661)
15,187
14,809
(479)
(1,000)
(3,204)
-
3,183
(3,542)
-
(492)
603
47
3,434
325
105
(3)
335
19,014
11,551
Adjustments directly to equity <if required>>
Removed and recognised in profit/loss
107
2014
$'000
Reconciliation of cash flows from operating
activities to surplus (deficit)
Surplus/(deficit) for the year
Depreciation/amortisation
(Profit)/loss on disposal of property, plant and
equipment, infrastructure
Impairment losses
Fair value adjustments for investment property
Contributions - Non-monetary assets
Other
Change in assets and liabilities:
(Increase)/decrease in trade and other
receivables
Decrease in prepayments
Increase/(decrease) in accrued income
Increase/(decrease) in trade and other payables
(Decrease)/increase in other liabilities
(Increase)/decrease in inventories
Increase/(Decrease) in provisions
(insert other relevant items)
Net cash provided by/(used in) operating activities
Page 107
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
107
45
Note 32
Note 33
107
50(a)
107
43
107
48
18,033
18,033
5,000
5,000
5,000
5,000
-
-
588
11,369
11,957
574
11,369
11,943
Non-cash financing and investing activities
<Provide details>
Note 35
18,254
18,254
Financing arrangements
Bank overdraft
Used facilities
Unused facilities
Note 34
2013
$’000
Reconciliation of cash and cash equivalents
Cash and cash equivalents (see note 16)
Less bank overdraft
132
2014
$’000
Restricted assets
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 reserve funds (Recreational Lands
Reserves).
Trust funds and deposits
Reserve funds (note 29)
Page 108
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB Para
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 36 Superannuation
119
Council made Contributions to the following funds:
119
33
Fund
Defined benefits fund
Employer contributions to Local Authorities Superannuation
Fund (Vision Super)
Employer contributions to (insert details)
2014
$'000
2013
$'000
437
110
547
421
103
524
Employer contributions payable to Local Authorities
Superannuation Fund (Vision Super) at reporting date
Employer contributions payable to (insert details)
2
2
XX Council staff are members of Visions Super, a multi employer defined benefit fund
with a total of XX,XXX members. Funding of the fund is primarily through employer
contributions (xx%) and returns on investment, however Council may be required to
provide additional funds should they be required. Any additional funds provided are
contributed in proportion to membership of the total fund.
The complexity and timing of actuarial calculations required to allocate assets and
liabilities to individual Council’s results in it being impractical to determine the
necessary information to account for the fund as a defined benefit fund within the
financial statements, as such Council accounts for the fund as a contribution plan.
Council expects to make the following contributions in 2014-15:
$xxx
The most recent actuarial assessment of the fund (date) indicated that the fund was
in $xxx Surplus/Deficit. [If in deficit need to disclose that additional contributions are
likely and quantify if possible]
119
46
Accumulation funds
Employer contributions to Local Authorities Superannuation
Fund (Vision Super)
Employer contributions to other funds
Employer contributions payable to Local Authorities
Superannuation Fund (Vision Super) at reporting date
Employer contributions payable to (insert details)
1,403
553
1,956
1,376
536
1,912
3
2
5
2
1
3
Page 109
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB
Para
Note 37 Commitments
The Council has entered into the following commitments
Not later than
1 year
Later than 1
year and not
later than 2
years
Later than 2
years and
not later than
5 years
Later than 5
years
Total
$'000
$'000
$'000
$'000
$'000
Recycling
Garbage collection
Open space management
Home care services
Cleaning contracts for council buildings
Meals for delivery
169,932
237,960
147,336
141,438
106,836
27,533
143,075
216,980
65,519
106,836
-
99,970
129,970
65,029
160,254
-
26,676
17,280
-
439,653
602,190
277,884
141,438
373,926
27,533
Total
831,035
532,410
455,223
43,956
1,862,624
1,060
2,063
1,000
4,123
-
-
-
1,060
2,063
1,000
4,123
2014
Operating
116
74(c)
Capital
Buildings
Roads
Drainage
Total
Page 110
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 37 Commitments (cont.)
2013
Operating
Recycling
Garbage collection
Open space management
Home care services
Cleaning contracts for council buildings
Meals for delivery
Total
Capital
Buildings
Roads
Drainage
Total
Not later than
1 year
Later than 1
year and not
later than 2
years
Later than 2
years and
not later than
5 years
Later than 5
years
Total
$'000
$'000
$'000
$'000
$'000
160,728
197,712
119,569
154,296
109,092
30,036
771,433
160,728
197,712
119,569
141,438
109,092
27,533
756,072
179,865
230,742
37,637
272,730
720,974
46,137
47,337
93,474
547,458
673,503
276,775
295,734
490,914
57,569
2,341,953
1,062
1,962
900
3,924
-
-
-
1,062
1,962
900
3,924
Page 111
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB Para
117
117
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 38
2013
$'000
13,641
6,160
6,025
25,826
15,929
14,690
9,136
41,755
850
2,450
1,320
2,480
7,100
800
2,500
2,900
500
6,700
Operating leases
(a) Operating lease commitments
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):
Not later than one year
Later than one year and not later than two years
Later than two year and not later than five years
Later than five years
35(a)
2014
$'000
(b) Operating lease receivables
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 noncancellable 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 noncancellable operating leases are as follows:
Not later than one year
Later than one year and not later than two years
Later than two year and not later than five years
Later than five years
137
86(a),
(c)
Note 39
Contingent liabilities and contingent assets
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 statements.
Page 112
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 39
Contingent liabilities and contingent assets (cont.)
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 volatility in financial
markets a likelihood of making such contributions in
future periods exists. At this point in time it is not known
if additional contributions will be required, their timing or
potential amount
Council operates a landfill. 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. <<Include if unable to
accurately measure and recognise as provision>>
Guarantees for loans to other entities
Council has guaranteed a loan taken out by the
Brackston Football and Netball Club. The original
loan (and extent of possible Council exposure) was
$520,000. At balance date the outstanding balance
is $345,000. The loan was to undertake significant
capital improvements to the Clubs facilities that are
located on Council Land. At Balance date we have
received assurances from the Club that they are
continuing to meet all repayments in accordance
with the requirements of the loan agreement.
137
89
Contingent assets
Developer contributions to be received in respect of
estates currently under development total
$2,300,000 (2012/13, $683,000).
Commentary - Note 39 Contingent liabilities and contingent assets
AASB 137
PARA
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.
Page 113
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB Para
7
7, 21
Note 40
Financial Instruments
Financial Risk Management
(a) Accounting Policy, terms and conditions
Recognised
financial
instruments
Financial assets
Cash and cash
equivalents
Note
16
Accounting Policy
Terms and Conditions
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 2012/2013). The interest rate at
balance date was <>% '(<>% in 2012/2013).
Interest is recognised as it accrues.
Funds returned fixed interest rate of between <>%
(<>% in 2012/2013), and <>% (<>% in
2012/2013) net of fees.
Investments and bills are valued at cost.
Managed fund provided return of % (<>% in
2012/2013) 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.
Page 114
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 40
Financial Risk Management (cont.)
Trade and other receivables
Other debtors
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 2012/2013).
Credit terms are based on <> days.
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.
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 2012/2013).
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 2012/2013).
Financial Liabilities
7
14(a),
(b)
7
14(a),
(b)
Page 115
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 40
Financial Risk Management (cont.)
Bank overdraft
28
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 2012/2013).
The interest rate as at balance date was <>%
(<>% in 2012/2013).
Page 116
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Commentary - Note 40 Financial Instruments
FINANCIAL INSTRUMENTS: DEFINITION & DISCLOSURES
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.
AASB 7
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
.
Page 117
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB Para
7
34(a),
39(a)
Note 40 Financial instruments (cont.)
(b) Interest Rate Risk
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:
Floating
interest
rate
$'000
1 year or
less
$'000
Over 1 to
5 years
$'000
More than
5 years
$'000
Non-interest
bearing
$'000
Total
$'000
Other financial assets
Trade and other receivables
Other assets
Total financial assets
8,200
952
9,152
10,000
10,000
206
206
-
54
1,192
1,246
18,254
206
2,144
20,604
Weighted average interest rate
6.69%
5.65%
-
1,161
2,565
-
5,292
588
-
5,292
588
3,726
-
1,161
2,565
-
5,880
9,606
6.41%
6.20%
6.42%
8,839
(2,359)
-
(4,634)
10,998
2014
Financial assets
Cash and cash equivalents
Financial liabilities
Trade and other payables
Trust funds and deposits
Interest-bearing loans and borrowings
Total financial liabilities
Weighted average interest rate
Net financial assets (liabilities)
9,152
Page 118
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 40 Financial instruments (cont.)
Fixed interest maturing in:
Floating
Interest
rate
$'000
1 year or
less
$'000
Over 1 to
5 years
$'000
More than
5 years
$'000
Non-interest
bearing
$'000
Total
$'000
9,000
999
9,000
-
202
-
-
33
1,042
18,033
202
2,041
Total financial assets
9,999
9,000
202
-
1,075
20,276
Weighted average interest rate
6.89%
4.72%
-
2,704
2,704
3,344
3,344
-
5,168
574
5,742
5,168
574
6,048
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
2013
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Other assets
Financial liabilities
Trade and other payables
Trust funds and deposits
Interest-bearing loans and borrowings
Total financial liabilities
Page 119
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB Para
7
25
7
25
Note 40 Financial Instruments (cont.)
(c) Net Fair Values
The aggregate net fair values of financial assets and financial liabilities, both recognised and unrecognised, at
balance date are as follows:
Total carrying amount as per
Aggregate net fair value
Balance Sheet
Financial Instruments
2014
$'000
Financial assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Other assets
Total financial assets
Financial liabilities
Trade and other payables
Trust funds and deposits
Interest-bearing loans and borrowings
Total financial liabilities
2013
$'000
2014
$'000
2013
$'000
18,254
206
2,144
20,604
18,033
202
2,041
20,276
18,254
206
2,144
20,604
18,033
202
2,041
20,276
5,292
588
3,726
9,606
5,168
574
6,048
11,790
5,292
588
3,814
9,694
5,168
574
6,121
11,863
Page 120
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 40 Financial Instruments (cont.)
7
36(a)
7
34(a)
7
34(a)
(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.
(e) Risks and mitigation
The risks associated with our main financial instruments and our policies for minimising
these risks are detailed below.
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 through appropriate
budgeting strategies.
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.
Page 121
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
7
34(a)
7
36(b,c)
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 40 Financial Instruments (cont.)
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.
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.
2014
Movement in Provisions for Doubtful Debts
$'000
Balance at the beginning of the year
New Provisions recognised during the year
Amounts already provided for and written off as
uncollectible
Amounts provided for but recovered during the year
Balance at end of year
2013
$'000
1,260
4,334
383
2,716
(2,167)
3,427
1,839
1,260
Page 122
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 40 Financial Instruments (cont.)
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:
2014
$'000
Current (not yet due)
4,437
Past due by up to 30 days
224
Past due between 31 and 180 days
1,125
Past due between 181 and 365 days
3,112
Past due by more than 1 year
8
Total Trade & Other Receivables
8,906
2013
$'000
4,299
187
687
1,187
4
6,364
Ageing of individually impaired Trade and Other Receivables
At balance date, other debtors representing financial assets with a
nominal value of $73,757 (2013: $48,012) were impaired. The
amount of the provision raised against these debtors was $73,757
(2013: $48,012). The individually impaired debtors relate to general
and sundry debtors 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.
The ageing of Trade and Other Receivables that have been
individually determined as impaired at reporting date was:
Current (not yet due)
Past due by up to 30 days
Past due between 31 and 180 days
Past due between 181 and 365 days
Past due by more than 1 year
Total Trade & Other Receivables
7
34(a)
2014
$'000
9
3
62
74
2013
$'000
12
6
30
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.
Page 123
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 40 Financial Instruments (cont.)
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.
2014
Trade and
other
payables
Trust funds
and deposits
Interestbearing loans
and
borrowings
Total financial
liabilities
2013
Trade and
other
payables
Trust funds
and deposits
Interestbearing loans
and
borrowings
Total financial
liabilities
6 mths
or less
$'000
5,292
-
1-2
years
$'000
-
2-5
years
$'000
-
425
163
-
-
581
581
1,161
1,403
6,298
744
1,161
1,403
6 mths
or less
$'000
6-12
mths
$'000
6-12
mths
$'000
1-2
years
$'000
2-5
years
$'000
>5
years
$'000
-
-
>5
years
$'000
Contracted Carrying
Cash Flow Amount
$'000
$'000
5,292
5,292
588
588
3,726
3,726
9,606
9,606
Contracted
Cash Flow
$'000
Carrying
Amount
$'000
5,168
-
-
-
5,168
5,168
5,168
329
245
-
-
574
574
574
1,352
1,352
1,161
2,183
6,048
6048
6048
6,849
1,597
1,161
2,183
11,790
11,790
11,790
Page 124
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 40 Financial Instruments (cont.)
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.
$'000
Interest rate risk
-2%
+1%
basis
basis
-200
points
+100
points
Profit
Equity
Profit Equity
$'000
$'000
$'000
$'000
2014
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 prices
in active markets for identical assets or liabilities.
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.
Page 125
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB
Para
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 41 Auditors' remuneration
Audit fee to conduct external audit - Victorian Auditor-General
Internal audit fees – Service providers name
Fees for other services provided by internal auditor
110
19, 21
2014
$'000
2013
$'000
55
39
94
52
36
88
Note 42 Events occurring after balance date
No matters have occurred since reporting date that require disclosure in the financial statements..
Page 126
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB
LGD
Notes to the Financial Statements
For the Year Ended 30 June 2014
Para
5
Note 43
(i)
Related party transactions
Responsible Persons
Names of persons holding the position of a Responsible Person at the Council
at any time during the year are:
Councillors
Chief Executive
Officer
(ii)
Councillor <> (Mayor <> 18/11/13 to current)
Councillor <> (Mayor <> 01/07/13 to 17/11/13)
Councillor <>
Councillor <>
Councillor <>
Councillor <>
Councillor <>
Councillor <>
<name>
Remuneration of Responsible Persons
The numbers of Responsible Officers, whose total remuneration from Council
and any related entities fall within the following bands:
$1
$10,000
$20,000
$30,000
$40,000
$150,000
$160,000
- $ 9,999
- $19,999
- $29,999
- $39,999
- $49,999
- $159,999
- $169,999
2014
No.
7
1
1
9
2013
No.
7
2
1
1
1
12
Total Remuneration for the reporting year for Responsible Persons included
above amounted to:
(iii)
(iv)
No retirement benefits have been made by the Council to a Responsible
Person. (2012/13, <>).
No loans have been made, guaranteed or secured by the Council to a
Responsible Person during the reporting year (2012/13, <>).
Page 127
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 43
(v)
LGA
3 (1)
(vi)
Related party transactions (cont.)
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
(2012/13, <>).
Senior Officers Remuneration
A Senior Officer other than a Responsible Person, is an officer of Council who:
(a) has management responsibilities and reports directly to the Chief
Executive Officer; or
(b) whose total annual remuneration exceeds $133,000.
The number of Senior Officers other than the Responsible Persons, are shown
below in their relevant income bands:
2014
No.
2013
No.
3
3
1
1
2
2
3
1
8
8
$1,053,276
1,020,544
Income Range:
$133,000 - $139,999
$140,000 - $149,999
$150,000 - $159,999
$160,000 - $169,999
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 44
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.
Page 128
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB
Para
LGR
14(c)
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note 44
Joint venture information
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.
Council's share of assets employed in the joint venture is
Current assets
2014
Receivables
123
Inventories
812
Total current assets
935
Non current assets
Intangibles (Software)
3,298
Total non current assets
3,298
2,547
2,547
Share of total assets of joint venture
4,233
2,825
Net Interest in joint venture
3,859
2,441
2013
25
253
278
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.
Commentary - Note 44 Joint venture information
PARA
LGR
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.
Page 129
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 45 Income, expenses and assets by function/activities
City Development
Division
Finance and Business
Development Division
Community Development
Division
Total
2014
$'000
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
2014
$'000
2013
$'000
15,275
25,445
40,720
12,150
23,905
36,055
3,725
22,265
25,990
2,850
20,917
23,767
2,000
15,903
17,903
1,500
14,941
16,441
21,000
63,613
84,613
16,500
59,762
76,262
(31,686)
(31,527)
(27,726)
(27,586)
(19,804)
(19,705)
(79,216)
(78,818)
9,034
4,528
(1,736)
(3,819)
(1,901)
(3,264)
5,397
(2,556)
217,048
213,108
189,917
186,470
135,655
133,193
542,620
532,771
INCOME
Grants
Other
TOTAL
EXPENSES
SURPLUS (DEFICIT)
FOR THE YEAR
ASSETS ATTRIBUTED
TO FUNCTIONS
/ACTIVITIES*
*Assets have been attributed to functions/activities based on the control and/or custodianship of specific assets.
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, costefficient 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
Page 130
Local Government Model Financial Report
Model Council Annual Financial Report 2014


Access
Environmental Services
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
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
Page 131
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Reference
AAS/AASB Para
LGR
15
Note 46
Financial ratios (Performance indicators)
(a)
2014
2014
2013
$'000
(%)
$'000
Debt servicing ratio (to identify the capacity of Council to service its outstanding debt)
Debt servicing costs
Total revenue
247
87,134
=
0.28%
320
75,175
=
2013
(%)
2012
$'000
2012
(%)
0.43%
297
71,234
=
0.42%
1,746
41,923
=
4.16%
41,923
71,234
=
58.85%
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
Rate revenue
2,937
45,794
=
6.41%
1,481
43,357
=
3.42%
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
Total revenue
45,794
84,134
=
54.43%
43,357
75,157
=
57.69%
Page 132
Local Government Model Financial Report
Model Council Annual Financial Report 2014
The level of Council's reliance on rate revenue is determined by assessing rate revenue as a proportion of the total revenue of Council.
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 46
Financial ratios (Performance indicators) (cont.)
2014
$'000
(d)
2014
(%)
2013
$'000
4.58%
15,356
295,620
2013
(%)
2012
$'000
2012
(%)
Debt exposure ratio (to identify
Council's exposure to debt)
Total indebtedness
Total realisable assets
14,004
=
305,442
=
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.
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
23,579
=
162.65%
23,001
=
149.59%
23,003
=
209.73%
Page 133
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Current liabilities
14,497
10,968
15,376
The ratio expresses the level of current assets the Council has available to meet its current liabilities.
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 46
Financial ratios (Performance indicators) (cont.)
(f)
Adjusted working capital ratio (to assess Council's ability to meet current commitments)
Current assets
Current liabilities
23,579
12,227
=
192.84%
23,001
12,961
=
177.46%
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 46 Financial Ratios (Performance Indicators)
COMMENT
The preceding ratios are required under section 15 of the Local Government (Finance and Reporting Regulations) 2004. Other
performance indicators may be included, but they must satisfy the concepts of relevance, reliability, comparability and understandability.
The proposed Local Government (Planning and Reporting) Regulations 2014 will significantly change the reporting requirements
for the 2014-15 financial statements .
Page 134
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Model Council
Financial Report
Reference
AAS/AASB Para
Notes to the Financial Statements
For the Year Ended 30 June 2014
Note
Note 47
Capital expenditure
Capital expenditure areas
Land
Buildings
Plant and equipment
Roads
Bridges
Footpaths and Cycleways
Drainage
Recreational, leisure and community
facilities
Waste management
Parks, open space and streetscapes
Aerodromes
Off street car parks
Other Infrastructure
Total capital works
Represented by:
Renewal of infrastructure
Upgrade of infrastructure
Expansion of infrastructure
New infrastructure
New buildings
New plant and equipment
Other
Total capital works
(a)
(b)
(c)
(d)
2014
$'000
2013
$'000
6,793
2,539
6,735
5,345
4,719
6,263
529
2,122
5,836
2,934
22,432
21,383
3,967
2,506
1,462
5,112
6,846
2,539
22,432
4,481
3,481
2,481
1,193
5,028
4,719
21,383
Page 135
Local Government Model Financial Report
Model Council Annual Financial Report 2014
Notes to the Financial Statements
For the Year Ended 30 June 2014
Model Council
Financial Report
Note 47
Capital expenditure (cont.)
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:
Note
2014
$’000
Total capital works
Contributions - non-monetary assets
Asset revaluation movement
Depreciation/amortisation
Written down value of assets sold
Net movement in property, plant and
equipment, infrastructure
2013
$’000
6(b)
29(a)
12
22
22,424
449
6,629
15,187
3,802
21,381
359
14,809
2,066
22
48,491
38,615
(a) Asset renewal expenditure
Expenditure on an existing asset or on replacing an existing asset, which
returns the service capability of the asset up to that which it originally had.
Asset 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.
(b) Asset upgrade expenditure
Expenditure which enhances an existing asset to provide a higher level of
service or that will increase the life of the asset beyond that which it originally
had. Asset 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.
(c) Asset expansion expenditure
Expenditure that extends the capacity of an existing asset to provide benefits,
at the same standard as is currently enjoyed by existing beneficiaries, to new
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.
(d) New asset expenditure
Expenditure which creates a new asset that provides a new service that did not
previously exist. New asset expenditure does not 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.
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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.
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Model Council
Financial Report
Reference
AAS/AASB
LGR
Para
16
Certification of the Financial Statements
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
LGR
16
LGA
131
Date : <Date>
<Location>
In our opinion the accompanying financial statements present fairly the financial transactions of
<Name> for the year ended 30 June 2014 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.
We have been authorised by the Council on <date> to certify the financial statements in their
final form.
<Councillor 1 Name>
Councillor
<Councillor 2 Name>
Councillor
<Chief Executive Officer Name>
Date : <Date>
<Location>
Date : <Date>
<Location>
Date : <Date>
Chief Executive Officer
<Location>
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Reference
Background to the Model Accounts
Background to the LG Model Financial Report Manual
The LG Model Financial Report Manual illustrates the minimum disclosure requirements for the
financial and standard 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 xx at the end 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
statements comply with all new and revised accounting pronouncements that may be issued
subsequent to the publication of the Model.
Presentation and contents of Financial Statements
Minimum general requirements relating to the format of the financial statements 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 statements shall be presented in the English language
- the financial statements shall be identified clearly and distinguished from other information in the
same published document;
- financial statements shall be presented at least annually
- if the entity’s reporting date changes and the annual financial statements are presented for a period
longer or shorter than one year, the entity shall disclose, in addition to the period covered by the
financial statements :
- 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, statement of cash flows and related notes are not entirely comparable.
- each component of the financial statements shall be clearly identified ;
- 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 and any change in that
information from the preceding reporting date ;
- whether the financial statements cover the individual entity or a group of entities
- the reporting date or the period covered by the financial statements, whichever is appropriate
to that component of the financial statements
- the presentation currency; and
- the level of rounding used in presenting amounts in the financial statements .
- the presentation and classification of items in the financial statements shall be retained from one
period to the next unless:
- it is apparent, following a significant change in the nature of the entity’s operations or a review of its
financial statements, that another presentation or classification would be more appropriate having regard to
the criteria for the selection and application of accounting policies in or
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- an Australian Accounting Standard requires a change in presentation.
Specific disclosures
Where the following is not disclosed elsewhere in information published with the financial
statements, the information shall be disclosed in the financial report :
- 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 statements.
Comparative information shall be included for narrative and descriptive information when it is
relevant to an understanding of the current period’s financial statements.)
Reclassification of financial information
When the presentation or classification of items in the financial statements is amended, comparative
amounts shall be reclassified unless the reclassification is impracticable. When comparative
amounts are reclassified, an entity shall disclose:
- 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:
- 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 statements
authorised for issue after their discovery by:
- 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 :
- 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);
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 .
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.
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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.
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.
Fair Presentation and compliance with Australian Accounting Standards
Financial statements 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 financial statements that achieve a
fair presentation.
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 statements set out in the Framework, the entity shall, to the maximum
extent possible, reduce the perceived misleading aspects of compliance by:
- 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 statements set out in the Framework; )
and
- for each period presented, the adjustments to each item in the financial statements that
management has concluded would be necessary to achieve a fair presentation.
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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 statements.
Specifically, this Model does not provide guidance on the disclosure requirements of the
following Accounting Standards and Australian Interpretations:
Reference
AASB/UIG
1
Title
Changes in Existing Decommissioning, Restoration and Similar Liabilities
2
Members’ Shares in Co-operative Entities and Similar Instruments
3
Emission Rights [withdrawn 9/05]
5 (FP)
Rights to Interests arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds [for for-profit entities]
5 (NFP)
Rights to Interests arising from Decommissioning, Restoration and Environmental
Rehabilitation Funds [for not-for-profit entities]
6
Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic
Equipment
7
Applying the Restatement Approach under AASB 129 Financial Reporting in Hyperinflationary
Economies
9 (FP)
Reassessment of Embedded Derivatives [for for-profit entities]
9 (NFP)
Reassessment of Embedded Derivatives [for not-for-profit entities]
10
Interim Financial Reporting and Impairment
12
Service Concession Arrangements
13
Customer Loyalty Programmes
14
AASB 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction
16 (FP)
Hedges of a Net Investment in a Foreign Operation [for for-profit entities]
16 (NFP)
Hedges of a Net Investment in a Foreign Operation [for not-for-profit entities]
17 (FP)
Distributions of Non-cash Assets to Owners [for for-profit entities]
17 (NFP)
Distributions of Non-cash Assets to Owners [for not-for-profit entities]
18
Transfers of Assets from Customers
19
Extinguishing Financial Liabilities with Equity Instruments
20
Stripping Costs in the Production Phase of a Surface Mine
21
Levies
107
Introduction of the Euro
110
Government Assistance – No Specific Relation to Operating Activities
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125
Income Taxes – Changes in the Tax Status of an Entity or its Shareholders
129
Service Concession Arrangements: Disclosures
131
Revenue – Barter Transactions Involving Advertising Services
1003
Australian Petroleum Resource Rent Tax
1019
The Superannuation Contributions Surcharge
1038
Contributions by Owners Made to Wholly-Owned Public Sector Entities
1042
Subscriber Acquisition Costs in the Telecommunications Industry
1047
Professional Indemnity Claims Liabilities in Medical Defence Organisations
1052
Tax Consolidation Accounting
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.
Reference
Framework
AASB 1
AASB 2
AASB 3
AASB 4
AASB 5
AASB 6
AASB 7
AASB 13
AASB 101
AASB 102
AASB 107
AASB 108
AASB 110
AASB 111
AASB 112
AASB 114
AASB 116
AASB 117
AASB 118
AASB 119
AASB 120
AASB 121
AASB 123
AASB 124
AASB 127
Title
Framework for the Preparation and Presentation of Financial Statements
First‑Time Adoption of Australian Accounting Standards
Share‑based Payment
Business Combinations
Insurance Contracts
Non‑Current Assets Held for Sale and Discontinued Operations
Exploration for and Evaluation of Mineral Resources
Financial Instruments: Disclosures
Fair Value Measurement
Presentation of Financial Statements
Inventories
Statement of Cash Flows
Accounting Policies, Changes in Accounting Estimates and Errors
Events After the Reporting Period
Construction Contracts
Income Taxes
Segment Reporting
Property, Plant and Equipment
Leases
Revenue
Employee Benefits
Accounting for Government Grants and Disclosure of Government Assistance
The Effects of Changes in Foreign Exchange Rates
Borrowing Costs
Related Party Disclosures
Consolidated and Separate Financial Statements
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AASB 128
AASB 129
AASB 131
AASB 132
AASB 133
AASB 134
AASB 136
AASB 137
AASB 138
AASB 139
AASB 140
AASB 141
AASB 1004
AASB 1023
AASB 1031
AASB 1038
AASB 1039
AASB 1048
AASB 1049
AASB 1050
AASB 1051
AASB 1052
AAS 25
Investments in Associates and Join Ventures
Financial Reporting in Hyperinflationary Economies
Interests in Joint Ventures
Financial Instruments: Presentation
Earnings per Share
Interim Financial Reporting
Impairment of Assets
Provisions, Contingent Liabilities and Contingent Assets
Intangible Assets
Financial Instruments: Recognition and Measurement
Investment Property
Agriculture
Contributions
General Insurance Contracts
Materiality
Life Insurance Contracts
Concise Financial Reports
Interpretation of Standards
Whole of Government and General Government Sector Financial Reporting
Administered Items
Land Under Roads
Disaggregated Disclosures
Financial Reporting by Superannuation Plans
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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
Interpretation 2
Interpretation 4
Interpretation 5
Interpretation 6
Interpretation 7
Interpretation 8
Interpretation 9
Interpretation 10
Interpretation 11
Interpretation 12
Interpretation 13
Interpretation 14
Changes in Existing Decommissioning, Restoration and Similar Liabilities
Members’ Shares in Co‑operative Entities and Similar Instruments
Determining whether an Arrangement Contains a Lease
Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment
Applying the Restatement Approach under AASB 129 ‘Financial Reporting in Hyperinflationary Economies’
Scope of AASB 2 (Share‑based Payment)
Reassessment of Embedded Derivatives
Interim Financial Reporting and Impairment
AASB 2 - Group and Treasury Share Transactions
Service Concession Arrangements
Customer Loyalty Programmes
AASB 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
Interpretation 16
Interpretation 17
Interpretation 18
Interpretation 19
Interpretation 107
Interpretation 110
Interpretation 112
Interpretation 113
Interpretation 115
Interpretation 121
Interpretation 125
Interpretation 127
Interpretation 129
Interpretation 131
Interpretation 132
Interpretation 1001
Interpretation 1002
Interpretation 1003
Interpretation 1013
Interpretation 1017
Interpretation 1019
Interpretation 1030
Interpretation 1031
Interpretation 1038
Interpretation 1039
Interpretation 1042
Interpretation 1047
Interpretation 1052
Interpretation 1055
Hedges of a Net Investment in a Foreign Operation
Distributions of Non-cash Assets to Owners
Transfers of Assets from Customers
Extinguishing Financial Liabilities with Equity Instruments
Introduction of the Euro
Government Assistance – No Specific Relation to Operating Activities
Consolidation – Special Purpose Entities
Jointly Controlled Entities – Non‑Monetary Contributions by Venturers
Operating Leases – Incentives
Income Taxes – Recovery of Revalued Non‑Depreciable Assets
Income Taxes – Changes in the Tax Status of an Entity or its Shareholders
Evaluating the Substance of Transactions involving the Legal Form of a Lease
Service Concession Arrangements: Disclosures
Revenue – Barter Transactions Involving Advertising Services
Intangible Assets – Web Site Costs
Consolidated Financial Reports in relation to Pre‑Date‑of‑Transition Duel Listed Company Arrangements
Post‑Date‑of‑Transition Stapling Arrangements
Australian Petroleum Resource Rent Tax
Consolidated Financial Reports in relation to Pre‑Date‑Of‑Transition Stapling Arrangements
Developer and Customer Contributions for Connection to a Price‑Regulated Network
The Superannuation Contributions Surcharge
Depreciation of Long‑Lived Physical Assets: Condition‑Based Depreciation and Related Methods
Accounting for the Goods and Services Tax (GST)
Contributions by Owners Made to Wholly‑Owned Public Sector Entities
Substantive Enactment of Major Tax Bills in Australia
Subscriber Acquisition Costs in the Telecommunications Industry
Professional Indemnity Claims Liabilities in Medical Defence Organisations
Tax Consolidation Accounting
Accounting for Road Earthworks
Other Mandatory Reporting Requirements
Reference
Title
Local Government (Finance and Reporting) Regulations 2004
Local Government (Long Service Leave) Regulations 2012
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Local Government Act 1989
Glossary of terms:
AAS:
AASB:
AAI:
Act:
LGA:
LGR:
LGLSL:
LGD:
ED:
BP:
Australian Accounting Standard
Accounting Standard issued by the Australian Accounting Standards Board
Australian Accounting Interpretation
Legislation or Direction
Local Government Act 1989
Local Government (Finance and Reporting) Regulations 2004
Local Government (Long Service Leave) Regulations 2012
Local Government Direction
Exposure Draft
Better Practice
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