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Welcome & Overview
• Aims of the workshop
• Department/Legislative changes
• Tropical Financial Statements 2013-14
• Accounting Standards Update
• Queensland Audit Office
• State Valuation Service
• Evaluation and Close 3:30pm
Aims of the Workshop • Share knowledge and experience
• Develop understanding of changes in AASBs, legislation & Tropical
• Explore solutions, processes and answers to issues raised.
• Learn about emerging issues from the Queensland Audit Office
Samantha Cieslar
What’s new in the Department
Legislative changes….
Tropical Financial Statements 2013-14
Australian Accounting Standard update
What’s New in the Department
Department of Local Government, Community Recovery and Resilience
Director-General Craig Evans
What is Tropical? • Example
• For Queensland councils
• Produced by Department
• Reviewed by QAO
• Not mandatory
• Does not cover every scenario
How should Tropical be used? • Reference guide or input model?
• Remember,
they are
your financial
statements
AASB Requirements
• Note 1G disclosures updated
- Effect of AASB 13
- Accounting Standards
issued but not yet adopted
• New Note 19 Fair Value
Enhanced disclosure
• Controlled but not consolidated
• Changed formats
• Minor fixes
• Order for annual report
Summary of changes
• Highlighted in Orange
• Note 1
• Note 19
• Controlled but not consolidated
• Minor fixes
Why Comply?
• Local Government Regulation 2012
• Council’s annual general purpose financial statement must comply with:
– Australian Accounting Standards
– Statements of Accounting Concepts
– Interpretations
– Framework for the Preparation and Presentation of Financial Statements
What are Australian Accounting Standards?
• Issued by the Australian Accounting Standards Board (AASB)
• Continually updated by issuing amendments or revised and new standards
• Changes have specified application date
Why So Many Changes? • Harmonisation with International Accounting
Standards Board (IASB) + International Financial Reporting Standards Interpretations Committee (IFRSIC)
• Convergence between IASB/IFRSIC & US Financial Accounting Standards Board (US FASB)
• Pressure from G20 post Global Financial Crisis
• Harmonisation between Australia (AASB) & New Zealand (NZ ASB)
2013-14 - Major Changes Standard Change In Tropical
13/14?
AASB 13 Fair Value Measurement
Lots!
AASB 1053 Application of Tiers of Australian Accounting Standards
Introduces tiers with reduced disclosure requirements applicable to tier 2. Local Governments are tier 1 (full IFRS still required)
Revised AASB 119 Employee Benefits
Short-term/long-term benefits, defined benefit plans, termination payments
Disclosure
Level
Fair
Value
AASB 13 Fair Value Measurement effective from reporting periods beginning on or after
1 January 2013
• New definition
• Measurement guidance
• New disclosures
Fair value - price received to
sell asset, or paid to transfer
liability, in orderly transaction
between market participants
at measurement date (“exit
price”)
Valuation Methods
• Market approaches • Income approaches • Cost approaches
MUST maximise use of observable inputs,
minimise use of unobservable inputs
Assume transaction to sell asset/transfer liability occurs in the principal market for asset/liability
where no principal market, use the most advantageous market
Non-Financial Assets
Assume highest & best use
by market participant that
is physically possible,
legally permissible
& financially feasible
May differ from current entity use
Liabilities
• Assume remains outstanding
after transfer & market
participant would fulfil
obligation
• Fair value of liability to reflect
non-performance risk
Fair Value Hierarchy
Classify inputs
Unadjusted quoted market prices for identical assets/liabilities in active markets
Other inputs directly or indirectly observable in market
Inputs not observable in market
Level 1
Level 2
Level 3
Fair Value Hierarchy
Categorise valuation
Based on lowest level input significant to entire fair value measurement
• Eg. Estimate of useful life = level 3 input
Valuation Level 2 input
Level 3
input
Category Level 3
Disclosure
Depends upon
• Measured @ FV vs Disclosed @ FV
• Recurring vs non-recurring
• Categorisation in FV hierarchy
• Must disclose policy for
transfer between levels
Future changes - remember to …
• Identify & disclose material expected impacts for YOUR Council (AASB 108.30)
• Watch out for new/amended standards/interpretations issued between March 2014 & issue of financial statements
AASB 10 Consolidated Financial Statements
Investor controls investee when investor exposed, or has rights, to variable returns from involvement with investee & has ability to affect those returns through power over investee
AASB 11 Joint Arrangements • “Joint operation” (direct interest in assets/liabilities)
– account for share of assets/liabilities/revenue /expenses in own books according to relevant standards etc
• “Joint venture” (interest in net assets) – equity accounting as per revised AASB 128
• Accounting for both associates & “joint ventures” in revised AASB 128 -only equity accounting
AASB 12 Disclosure of Interests in Other Entities
Contains disclosure requirements:
• Subsidiaries
• Joint arrangements
• Associates
• Unconsolidated structured entities
AASB ED 214 Extending Related Party Disclosures to the Not-for-Profit
Public Sector • Councils no longer be exempt from AASB 124 Related Party
Disclosures disclosures concerning:
– key management personnel remuneration – including Councillors, CEOs, Senior Management??
– transactions with other related parties (inc. family members)
• Amendment expected by March 2014 to apply for 2014/15?
Income from transactions of NFP entities
• ED expected by
June 2014
• Will this replace
AASB 1004????
AASB ED 222 Revenue from Contracts with Customers
• Replaces AASB 111 Construction Contracts, AASB 118 Revenue, Interpretation 13 Customer Loyalty Programmes, Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers & Interpretation 131 Revenue – Barter Transactions Involving Advertising Services
Where to find accounting standards
• www.aasb.com.au
• Current year version:
• http://www.aasb.gov.au/Pronouncements/Search-by-reporting-period.aspx
Keeping up to date
• councils responsible for keeping up to date
• time savers
– review accounting firm websites
for quick summaries
– if topic looks relevant, read
“main features” section of
standard first
Useful websites • Australian accounting standards www.aasb.com.au • Departmental bulletins www.dlgcrr.qld.gov.au/resources-
lg/local-government-bulletins.html • PriceWaterhouse Coopers
www.pwc.com.au/assurance/index.htm • Deloitte
http://www.deloitte.com/view/en_AU/au/services/assurance/accountingtechnical/index.htm
• Queensland Treasury (applicable to State Government, not local government) http://www.treasury.qld.gov.au/office/knowledge/docs/fin-reporting-req/index.shtml
Department of Local Government, Community Recovery and Resilience
Po Box 15009
City East QLD 4002
Samantha Cieslar
Phone: 3452 6721
Email: samantha.cieslar@dlgcrr.qld.gov.au
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