Preliminary Australian Water Accounting Standard and

Preliminary Australian Water Accounting Standard and Associated Model Report

Water AccountingStandards BoardAn independent advisory Board to the Bureau of Meteorology

The Preliminary Australian Water Accounting Standard and associated Model Report, is available online at: www.bom.gov.au/water/wasb

COPYRIGHT

© 2009 Commonwealth of Australia

First published by the Water Accounting Standards Board in 2009 in Canberra, Australia.

The Preliminary Australian Water Accounting Standard and associated Model Report was approved by the Water Accounting Standards Board on 16 June 2009. It was funded by the Raising National Water Standards project (RNWS), managed by the National Water Commission.

Water Accounting Standards Board Members:Mike RL Smith ChairW Peter DayJayne M GodfreyThomas L VanderbylDenis W Flett

Suggested ReferenceWater Accounting Standards Board, Preliminary Australian Water Accounting Standard and associated Model Report, Commonwealth of Australia, Canberra, 2009

ISBN 978-0-642-70605-8

Preliminary Australian Water Accounting Standard i

Preliminary Australian Water Accounting StandardThe Preliminary Australian Water Accounting Standard (PAWAS) is a preliminary version of the Australian Water Accounting Standard (AWAS) prepared specifically to guide the Methods Pilot for the National Water Account.

The PAWAS is published by the Water Accounting Standards Board (WASB) for comment only. This feedback will significantly inform the transition of the PAWAS to Australian Water Accounting Standards. Please provide any comments to [email protected]

Comments will be put on public record unless the respondent requests confidentiality. However, such requests will not normally be granted unless supported by good reason, such as commercial confidence.

Included as an appendix to PAWAS is a list of defined terms, some illustrative guidance and a basis for conclusions, which outlines the discussion and assumptions that informed the decisions WASB made while writing PAWAS. A Model Report of a fictitious water reporting entity is also included, which illustrates the content, layout and disclosure that comply with PAWAS. The Model Report is not a static document, and is regularly updated and changed.

For more information visit our website at: www.bom.gov.au/water/wasb

ii Preliminary Australian Water Accounting Standard

Revision History

Date Version Description Author04/05/09 1.0 First draft WASB16/06/09 1.1 Second draft – amended for comments from

personnel involved in the production of the Methods Pilot for the National Water Account.

WASB

Release History

Date Version Status Audience Approval12/05/09 1.0 First draft Personnel involved in the production

of the Methods Pilot for the National Water Account.

Bureau of Meteorology

16/06/09 1.1 Final Personnel involved in the production of the Methods Pilot for the National Water Account.

Bureau of Meteorology

Preliminary Australian Water Accounting Standard: Contents 1

Preliminary Australian Water Accounting StandardContents

Paragraph

Introduction ........................................................................................ IN1–IN6

Reasons for issuing the PAWAS ....................................................... IN1–IN4

Main features of the PAWAS ........................................................... IN5–IN6

Objective ..........................................................................................................1

Scope .............................................................................................................2–3

General Purpose Water Accounting Reports ...............................................4–37

Objective of General Purpose Water Accounting Reports .............................4

Components of General Purpose Water Accounting Reports ........................5

General Features of General Purpose Water Accounting Reports ............6–37

Fair presentation ...............................................................................6–10

Accrual basis of water accounting ....................................................11–12

Materiality ......................................................................................13–17

Offsetting ........................................................................................18–19

Frequency of reporting ..........................................................................20

Comparative information ................................................................21–26

Consistency of presentation .............................................................27–29

Elements and quantification ............................................................30–37

Structure and Content of General Purpose Water Accounting Reports ....... 38–130

Contextual Statement ..........................................................................39–40

Accountability Statement .....................................................................41–47

Statement of Water Assets and Water Liabilities ...................................48–79

Information to be presented ............................................................49–54

Recognition criteria .........................................................................55–79

Statement of Changes in Water Assets and Water Liabilities .................80–86

Information to be presented ............................................................82–85

Recognition criteria ...............................................................................86

Statement of Physical Water Flows .......................................................87–93

Information to be presented .............................................................89–93

2 Preliminary Australian Water Accounting Standard: Contents

Group water accounting reports ...........................................................94–98

Procedures for preparing group water accounting reports ................95–98

Note disclosures .................................................................................99–127

Content and presentation ..............................................................99–101

Significant water accounting policies ...........................................102–104

Restatement of comparative information .....................................105–106

Quantification approaches ...........................................................107–109

Statement of Physical Water Flows: Reconciliations and other information .........................................................................110

Water assets available to settle water liabilities and future commitments within 12 months of the reporting date ................111–115

Contingent water assets and contingent water liabilities ..............116–118

Water rights, water allocations and water restrictions ...................119–120

Water market activity ..................................................................121–122

Water use ....................................................................................123–126

Group water accounting reports ..........................................................127

Assurance Statement ........................................................................128–130

Appendix – Defined terms

WASB Approval

Implementation guidanceA. Illustrative water accounting statements

B. Illustrative note disclosure of water assets available to settle water liabilities and future commitments within 12 months of the reporting date

Basis for conclusions

Preliminary Australian Water Accounting Standard: Contents 3

The Preliminary Australian Water Accounting Standard (PAWAS) is set out in paragraphs 1-130 and the Appendix. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in the Appendix appear in italics throughout the PAWAS. The PAWAS should be read in the context of its objective and the Basis for conclusions.

4 Preliminary Australian Water Accounting Standard: Introduction

Preliminary Australian Water Accounting Standard

IntroductionReasons for issuing the PAWAS

One of the objectives of the National Water Initiative (NWI) is to standardise the IN1. practice of water accounting in Australia so that consistent and comparable information is available to decision-makers at:

the national level for policy development;a)

the jurisdictional level for water resource planning and monitoring;b)

the water organisation level for water resource management; andc)

the site level for on-site water management.d)

IN2. The SKM Report: Stocktake and Analysis of Australia’s Water Accounting Practice (2006), commissioned by the parties to the NWI, recommended a disciplinary approach to developing water accounting standards based on that used for financial reporting. In late 2006, the parties to the NWI established the National Water Accounting Development project (NWADp) to create such a disciplinary approach.

IN3. The NWADp has primarily involved considering user requirements, developing a Water Accounting Conceptual Framework (WACF) and capacity building within the states and territories through practical pilot testing projects. The WACF will form the foundation for developing Australian Water Accounting Standards (AWASs). AWASs will prescribe the basis for the preparation and presentation of general purpose water accounting reports.

IN4. Under the Commonwealth Water Act (2007), the Director of Meteorology is required to publish annually a National Water Account. It is the intention of the Bureau of Meteorology (BoM) to prepare the National Water Account in accordance with AWASs, with the first National Water Account scheduled for public release by the end of 2010. The BoM also intends to produce a Pilot National Water Account by the end of 2009. As the final AWASs could not be developed and undergo a comprehensive due process in time to be applied in the preparation of the Pilot National Water Accounts, the Preliminary Australian Water Accounting Standard (PAWAS) has been developed as an interim step to underpin the preparation and presentation of the Pilot National Water Account.

Preliminary Australian Water Accounting Standard: Introduction 5

Main features of the PAWASThe PAWAS is intended as a preliminary version of the proposed AWASs It prescribes IN5. the basis for the preparation and presentation of a general purpose water accounting report, which comprises the following components:

a Contextual Statement;a)

an Accountability Statement;b)

a Statement of Water Assets and Water Liabilities;c)

a Statement of Changes in Water Assets and Water Liabilities;d)

a Statement of Physical Water Flows;e)

note disclosures; andf )

an Assurance Statement.g)

IN6. The PAWAS has been developed based on the WACF and sets out the following:

the definitions of the water accounting elements (water assets, water liabilities, a) changes in water assets, changes in water liabilities and net water assets);

the recognition criteria for those elements;b)

the quantification attribute and unit of account for those elements; andc)

disclosure requirementsd)

6 Preliminary Australian Water Accounting Standard: Standard

ObjectiveThis Standard prescribes the basis for the preparation and presentation of 1. general purpose water accounting reports. It sets out requirements for the recognition, quantification, presentation and disclosure of items in a general purpose water accounting report to ensure comparability with:

the a) general purpose water accounting reports of a water reporting entity in prior periods; and

the b) general purpose water accounting reports of other water reporting entities.

Scope2. This Standard shall be applied in the preparation and presentation of general

purpose water accounting reports for a water reporting entity.

3. The Water Accounting Conceptual Framework for the Preparation and Presentation of General Purpose Water Accounting Reports shall be applied in developing and applying water accounting policies in the absence of explicit guidance in this Standard.

General purpose water accounting reportsObjective of general purpose water accounting reports4. A general purpose water accounting report shall provide information to users of

that report that will be useful in:

making and evaluating decisions about the allocation of resources; anda)

understanding and evaluating the accountability of managers, management b) groups or governing bodies of the water reporting entity for the water resources of the water reporting entity.

Components of general purpose water accounting reports5. A general purpose water accounting report shall comprise:

a Contextual Statement (see paragraphs 39 – 40);a)

an Accountability Statement (see paragraphs 41 – 47);b)

a Statement of Water Assets and Water Liabilities as at the c) reporting date (see paragraphs 48 – 79);

a Statement of Changes in Water Assets and Water Liabilities for the d) reporting period (see paragraphs 80 – 86);

a Statement of Physical Water Flows for the e) reporting period (see paragraphs 87 – 93);

note disclosures, including a summary of significant f ) water accounting policies and other explanatory information (see paragraphs 99 – 127); and

an Assurance Statement (see paragraphs 128 – 130).g)

Preliminary Australian Water Accounting Standard: Standard 7

General features of general purpose water accounting reports

Fair presentation6. General purpose water accounting reports shall present fairly the water assets and

water liabilities, the changes in water assets and changes in water liabilities, and the physical water flows of a water reporting entity. Fair presentation requires the faithful representation of the effects of transactions, transformations and other events in accordance with the definitions and recognition criteria for water assets, water liabilities, changes in water assets and changes in water liabilities set out in this Standard. The application of this Standard results in a general purpose water accounting report that achieves a fair presentation.

7. Information provided in a general purpose water accounting report is considered to be a faithful representation of the effects of transactions, transformations and other events when it is complete, neutral and free from material error.

8. Information in general purpose water accounting reports is complete if it includes all information that is necessary for faithful representation of the transactions, transformations and other events that it purports to represent. Information that is omitted or is false and misleading is not useful for decision making.

9. Information in general purpose water accounting reports is neutral if it is free from bias. General purpose water accounting reports are not neutral if, by the selection, disclosure or presentation of information, they influence the making of a decision or judgement by the users of those reports in order to achieve a predetermined result or outcome.

10. Information is material if its omission from or misstatement in a general purpose water accounting report could influence the water-related decisions of users of that report (see paragraphs 13 – 17).

Accrual basis of water accounting11. With the exception of physical water flow information, general purpose water

accounting reports shall be prepared using the accrual basis of water accounting.

12. Applying the accrual basis of water accounting means that the effects of transactions, transformations and events are recognised when the decisions or commitments which give rise to them occur. This may not be the time at which water is physically transacted, transformed or subject to some other event. Accrual water accounting ensures that transactions, transformations and events are recorded in the Statement of Water Assets and Water Liabilities and the Statement of Changes in Water Assets and Water Liabilities in the periods to which they relate. For example, a present legal obligation to provide water from a particular catchment area would be recognised at the reporting date as a water liability of the water reporting entity, even though water has not been physically transferred by the end of the period. General purpose water accounting reports prepared on an accrual basis inform users not only of past transactions, transformations or events involving the physical transfer or transformation of water, but also of present obligations to transfer or transform water in the future and of rights that represent water to be transferred to or from the water reporting entity in the future. Therefore, they provide the type of information about past transactions, transformations and events that is most useful to users in making and evaluating decisions about the allocation of resources.


Materiality13. Materiality shall be applied in the preparation and presentation of general

purpose water accounting reports. Information is material if its omission from or misstatement in a general purpose water accounting report could influence the water-related decisions of users of that report.

14. Materiality influences whether an item or an aggregate of items is required to be recognised, quantified, presented or disclosed in accordance with the requirements of this Standard. When an item or an aggregate of items is not material, application of materiality does not mean that those items would not be recognised, quantified, presented or disclosed, but rather that they would not be required to be recognised, quantified, presented or disclosed in accordance with the requirements of this Standard.

15. It is not possible to specify a uniform quantitative threshold at which a particular type of water-related information becomes material. Nevertheless, materiality must be taken into account because material omissions from or misstatements in general purpose water accounting reports will render the information incomplete, biased or not free from error.

16. In some cases, the nature of information alone is sufficient to determine its materiality. For example, environmental water flows from a particular source may be relatively small in volume, but may be critical for maintaining ecosystem health, and therefore information about such water flows is relevant to decision makers. In other cases, both the nature and volume of an item are important to assessing materiality. For example, if the volume of minor catchment storages within a particular area is relatively small, reporting information about those storages may not be relevant. However, when minor catchment storages capture a significant portion of runoff, disclosure of information about those storages may be relevant. Materiality is therefore a matter of judgement influenced by the characteristics of the water reporting entity and the information needs of the users of the general purpose water accounting report.

17. In addition to guiding the application of the recognition, quantification, presentation and disclosure requirements, materiality guides the margin of error that is acceptable in the amount attributed to an item or an aggregate of items and the degree of precision required in estimating the amount of an item or an aggregate of items.

Offsetting18. A general purpose water accounting report shall present:

a) water assets separately from water liabilities;

b) changes in water assets separately from changes in water liabilities; and

c) physical water inflows separately from physical water outflows.

19. Offsetting detracts from the ability of users both to understand the transactions, transformations and events that have occurred and to assess the water reporting entity’s water flows. Therefore, this Standard does not permit offsetting of items within the water accounting statements.

Frequency of reporting20. General purpose water accounting reports shall be prepared for a water reporting

entity at least annually.


Comparative information21. Comparative information shall be provided in general purpose water accounting

reports to enable users to compare the nature and volumes of water resources of a water reporting entity, and changes in those water resources, over time.

22. Except when this Standard permits or requires otherwise, comparative information shall be provided in respect of the immediately preceding period for all volumes reported in the current period’s general purpose water accounting report. Comparative information for narrative and descriptive information shall be provided when it is relevant to an understanding of the current period’s general purpose water accounting report.

23. This Standard requires, as a minimum, comparative information for the immediately preceding period to be provided for all volumes reported in the current period’s general purpose water accounting report. Comparative information for earlier periods is also provided when it is relevant to an understanding of the current period’s general purpose water accounting report.

24. In some cases, narrative information provided in the general purpose water accounting report for a prior period continues to be relevant in the current period. For example, information about temporarily contaminated water at the end of the immediately preceding reporting period coupled with information about the treatments or other events altering the condition of that water during the current period may be relevant to an understanding of the current period’s general purpose water accounting report.

25. When, in accordance with paragraph 27, changes are made to the presentation or classification of an item in a general purpose water accounting report, the comparative information presented for each prior period shall be restated as if the revised presentation or classification had always applied, unless such restatement is impracticable.

26. Ensuring the inter-period comparability of information assists users in making and evaluating decisions about the allocation of resources. Therefore, when changes are made to the presentation or classification of an item, it is important that comparative information is restated as if the revised presentation or classification had always applied. However, in some circumstances it may be impracticable to restate some or all of the comparative information to achieve inter-period comparability. This may be the case, for example, when the collection of prior-period data was such that it prohibits recreation of the necessary information.

Consistency of presentation27. The presentation and classification of items within general purpose water accounting

reports shall be retained from one period to the next, unless a change results in the general purpose water accounting report providing more useful information to users of that report.

28. Consistency in the presentation and classification of items from one period to the next enhances the inter-period comparability of information. However, in certain circumstances a change to the presentation or classification of an item may be appropriate because it results in more useful information being provided to users of the general purpose water accounting report. For example, the evolution of new or improved quantification approaches may enable more detailed information to be available about certain items, transactions, transformations or other events than was previously the case.

29. When changes are made to the presentation or classification of an item in a general purpose water accounting report, comparative information is restated in accordance with paragraph 25.


Elements and quantification30. The elements of a general purpose water accounting report are:

a) water assets;

b) water liabilities;

c) net water assets;

d) changes in water assets; and

e) changes in water liabilities.

31. Except when this Standard permits or requires otherwise, an element recognised in a general purpose water accounting report shall be presented using:

volume as the quantification attribute; anda)

litres as the unit of account.b)

32. Elements of general purpose water accounting reports often possess more than one attribute that can be quantified. Quantifiable attributes of water assets, water liabilities, net water assets and changes in balances of water assets and water liabilities include, for example, volume, salinity or monetary value.

33. An attribute of an element may be quantified using different units of account. For example, the volume of water assets may be quantified in litres, cubic metres or gallons. A water quality attribute such as the salinity of water assets may be expressed in units of account such as milligrams of dissolved solid per litre or microSiemens per centimetre (µS/cm) at 25ºC.

34. This Standard requires an element recognised in a general purpose water accounting report to be presented using volume as the quantification attribute and litres as the unit of account. Information about other attributes of an element should also be disclosed when it is relevant to an understanding of the general purpose water accounting report.

35. The quantification of an attribute of an element recognised in a general purpose water accounting report shall involve applying the combination of attribute, unit of account and quantification approach that best enables the report to faithfully represent information that is useful for making and evaluating resource allocation decisions.

36. An attribute of an element is often able to be quantified using different quantification approaches. For example, water reservoir volume losses due to sedimentation can be quantified using bathymetric surveys or multifrequency acoustic profiling systems. Approaches to quantifying salinity include total dissolved salts (or solids) and electrical conductivity. Approaches to quantifying the monetary value of water include cost, market value and net present value.

37. All elements of a particular type (water assets, water liabilities, net water assets, changes in water assets or changes in water liabilities) reported in a particular water accounting statement are quantified using the same attribute if those elements are to be aggregated. For example, it is not meaningful to report aggregate water assets if some water assets have volumetric quantification and others in the same statement are quantified using a monetary value. It is also not meaningful to report aggregate quantities of water assets or water liabilities if the unit of account differs. For example, it is not meaningful to report aggregate water assets quantified in volume if some water assets are recognised in litres and others in cubic metres. However, the use of different quantification approaches for particular items or elements does not of itself prevent their aggregation. For example, if the water storages of a water reporting entity are recognised in litres, those water storages can be aggregated and presented as a single item even if different quantification approaches are used to determine the volumes of individual water storages.


Structure and Content of General Purpose Water Accounting Reports38. Paragraphs 39 to 130 prescribe the information to be provided in a general purpose

water accounting report.

Contextual Statement39. The Contextual Statement shall provide information that enables users to

understand the physical and administrative aspects of the water reporting entity. It shall therefore provide information about the water resources of the water reporting entity as well as any conditions that have an impact on the management of those water resources.

40. Information about the water resources of the water reporting entity may, for example, include details of the geographical location of the water resources and actual storage volumes in comparison to total possible storage volumes. Information about conditions that have an impact on the management of those water resources may, for example, include:

the climatic conditions experienced before and during the a) reporting period; and

any significant conditions included in, or changes to, institutional or administrative b) arrangements relevant to the water reporting entity. This would include significant conditions included in, or changes to, water resource management instruments such as water sharing plans.

Accountability Statement41. The Accountability Statement shall provide information that enables users to

assess compliance with:

externally-imposed requirements relevant to managing the water resources of a) the water reporting entity; and

best practice for managing water resources.b)

42. Externally-imposed requirements relevant to managing the water resources of the water reporting entity include those contained in water resource management instruments such as water sharing plans and those stemming from other statutory or regulatory requirements. Best practice for managing water resources may include, for example:

predictable dates for announcements of future changes to allocations or restrictions; a) or

making readily available information triggers for the announcement or cessation of b) water supply restrictions or critical water sharing arrangements

43. Depending on the nature of the water reporting entity, information may need to be disclosed in the Accountability Statement across multiple distinct areas such as:

water sharing and extraction limitations;a)

water utility service and operations;b)

trading of water rights and other claims to water;c)

environmental stewardship; andd)

water planning and strategic initiatives.e)

44. The Accountability Statement shall include an explicit statement of compliance with this Standard.


45. The Accountability Statement shall be signed by those appropriate persons with:

statutory reporting responsibilities for the a) water reporting entity; and

ultimate responsibilities for the management of the b) water reporting entity.

46. Those appropriate persons with statutory reporting responsibilities may not be the same as those appropriate persons with ultimate responsibilities for the management of the water reporting entity. In such cases, two or more parties would be required to sign the Accountability Statement.

47. An appropriate person with ultimate responsibilities for the management of the water reporting entity may, for example, be a member of the management group or governing body of the water reporting entity.

Statement of Water Assets and Water Liabilities48. The Statement of Water Assets and Water Liabilities shall provide information

that enables users to understand the nature and volumes of water resources of a water reporting entity and the nature and volumes of present obligations against those water resources.

Information to be presented49. The Statement of Water Assets and Water Liabilities shall include line items that

present the following volumes:

a) surface water assets;

b) groundwater assets;

c) other water assets;

d) allocation carryover;

e) other water liabilities; and

f ) net water assets.

50. Additional sub-classifications of the line items set out in paragraph 49 shall be presented in the Statement of Water Assets and Water Liabilities when the volume, nature or function of a sub-item is such that its separate presentation is relevant to an understanding of the water reporting entity’s water assets or water liabilities.

51. This Standard does not prescribe the order or format in which items are presented in the Statement of Water Assets and Water Liabilities. However, the items included in paragraph 49 are sufficiently different in nature or function to warrant their separate presentation. Additional sub-classification of these line items is also presented when the volumes, nature or function of a sub-item is such that its separate presentation is relevant to an understanding of the water reporting entity’s water assets or water liabilities. The requirements and guidance in paragraphs 13-17 on materiality are considered in making this assessment.

52. For example, when a water reporting entity covers more than one groundwater management area, it may be appropriate to present disaggregated groundwater storage information for each of those management areas if the volumes in each area are such that their separate presentation is relevant to an understanding of the water reporting entity’s water assets.

53. Different quantification approaches may be used for different types of water assets comprising one of the line items in paragraph 49. This does not, of itself, provide a basis for presenting additional sub-classification of the line item in the Statement of Water Assets and Water Liabilities. However, when those quantification approaches give rise to different levels of quantification accuracy for the water assets comprising the line item, information should be disclosed in the notes in accordance with paragraphs 107-109.


54. For example, the approaches used to quantify evaporation may differ depending on where the evaporation occurs. In an area where there is instrumentation, evaporation volumes may be derived from measured data. In remote areas, evaporation volumes may be estimated using modelling techniques. To the extent that these quantification approaches give rise to different levels of quantification accuracy, information about these different quantification approaches is disclosed in the notes.

Recognition criteria

Water assets

55. An item that meets the definition of a water asset shall be recognised in the Statement of Water Assets and Water Liabilities when:

it is probable that future benefits associated with the item will be derived by a) the individual or organisation that is a water reporting entity, or by a group of stakeholders of a physical water reporting entity; and

the item’s volume can be quantified with representational faithfulness (see b) paragraphs 7-10).

56. Items that meet the definition of a water asset and are expected to satisfy the recognition criteria in paragraph 55 include water in storages behind dams and water within lakes and other natural surface features. They also include dead storage water, conveyance water and the extractable portion of groundwater.

57. Dead storage water provides future benefits to the water reporting entity for the following reasons:

it provides access to the a) surface water above it;

if storage level falls below the elevation of the lowest constructed outlet, the b) dead storage water could be accessed and, with some effort and investment, taken or delivered; and

if the c) dead storage water was not there it would need to be replaced. Consequently there is a benefit in not having to replace it with other water assets. Therefore, provided its volume can be quantified with representational faithfulness, dead storage water is recognised as a water asset in the Statement of Water Assets and Water Liabilities.

58. Conveyance water provides future benefits for the following reasons:

it enables the delivery of water in regulated rivers and utility supply networks by a) covering the loss of water in the delivery process;

if necessary, it could be accessed and taken or delivered; andb)

if c) conveyance water was not part of a delivery system it would need to be replaced. Consequently there is a benefit in not having to replace it with other water assets.

Therefore, provided its volume can be quantified with representational faithfulness, conveyance water is recognised as a water asset in the Statement of Water Assets and Water Liabilities.

59. The total volume of groundwater is often not regarded as a water asset because a significant portion of the groundwater is non-extractable due to physical and regulatory limitations. However, the portion of the groundwater that is extractable provides future benefits because it can be accessed and taken or delivered. Provided the extractable volume can be quantified with representational faithfulness, it is recognised as a water asset in the Statement of Water Assets and Water Liabilities.


Contingent water assets

60. A contingent water asset shall not be recognised in the Statement of Water Assets and Water Liabilities.

61. A contingent water asset is a possible water asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water reporting entity.

62. The total volume of groundwater is often not regarded as a water asset because a significant portion of the groundwater is non-extractable due to physical and regulatory limitations. The non-extractable portion of the groundwater is a contingent water asset, because it is possible that a change in circumstances (such as legislative or regulatory changes that alter the extractive limits) would result in further portions of the groundwater storage becoming available for extraction.

63. A water resource management instrument may specify a minimum flow of water from one water reporting entity to another to the extent that there is sufficient water to meet that minimum flow. These arrangements are often referred to as ongoing water commitments. A right to receive water in the future under an ongoing water commitment is a contingent water asset because it is possible that water will be received in the future to the extent it is available to be delivered.

64. Contingent water assets are not recognised in the Statement of Water Assets and Water Liabilities because they satisfy neither the definition of a water asset nor the recognition criteria in paragraph 55. However, information about contingent water assets is disclosed in accordance with paragraphs 116-117.

Water liabilities

65. An item that meets the definition of a water liability shall be recognised in the Statement of Water Assets and Water Liabilities when:

it is probable that the present obligation will result in a decrease in the a) water reporting entity’s assets or an increase in another water liability when the obligation is discharged; and

the item’s volume can be quantified with representational faithfulness (see b) paragraphs 7-10).

66. An essential characteristic of a water liability is that there exists a present obligation. An obligation is a duty or responsibility to act or perform in a certain way. An obligation can be a legal obligation or a constructive obligation.

67. A past event that leads to a present obligation is called an obligating event. For an event to be an obligating event, it is necessary that the water reporting entity has no realistic alternative but to settle the obligation created by the event. This will be the case only when:

the settlement of the obligation can be enforced by law, meaning that the a) water reporting entity has a legal obligation; or

the b) water reporting entity has a constructive obligation because the event, which may be an action of the water reporting entity, has created a valid expectation by other parties that the obligation will be discharged.

68. An example of a present obligation is allocation carryover. The allocation determination and announcement, which is made in accordance with the water resource management instrument, represents the obligating event and gives rise to a legal obligation for the water to be taken or delivered. Provided its volume can be quantified with representational


faithfulness, allocation carryover as at the reporting date is recognised as a water liability in the Statement of Water Assets and Water Liabilities.

69. A water resource management instrument may specify a monthly minimum flow of water from one water reporting entity to another to the extent that there is available water. These arrangements are often referred to as ongoing water commitments. Typically, an inability to deliver water in a particular month due to insufficient water does not result in a carryover of the undelivered amount. When this is the case, the water reporting entity does not have a present obligation at the reporting date for the undelivered volumes. However, a present obligation would exist at the reporting date for any undelivered volumes relating to past months for which sufficient water was available to meet the minimum flow requirements. In such circumstances, the obligating event is the availability of water to meet the minimum flow requirements for a particular month. Provided the undelivered volume can be quantified with representational faithfulness, it is recognised as a water liability in the Statement of Water Assets and Water Liabilities. Importantly, it is only the undelivered volumes relating to past months for which there was sufficient water available to meet the minimum flow requirements that give rise to a present obligation at the reporting date. The requirement to deliver water in future periods under an ongoing water commitment is not a present obligation but rather a future commitment.

70. A constructive obligation may arise, for example, when the management of the water reporting entity has indicated to other parties that a certain volume of water will be returned to the environment each period and in doing so has created a valid expectation on the part of those parties that the water will be returned if sufficient water is available. A present obligation exists at the reporting date for any water that is yet to be returned to the environment in accordance with management’s decision. Provided the volume yet to be delivered for the current period can be quantified with representational faithfulness, it is recognised as a water liability in the Statement of Water Assets and Water Liabilities. Importantly, it is only the water that is expected to be delivered in accordance with the decision that relates to the current or prior periods that gives rise to a present obligation at the reporting date. A decision to return water in future periods is not a present obligation but rather a future commitment.

Future commitments

71. A future commitment shall not be recognised in the Statement of Water Assets and Water Liabilities.

72. Future commitments are expected future demands on water influenced by the availability and management of the water resources of the water reporting entity. They may arise as a result of externally-imposed requirements or best practice for managing water resources. Future commitments are not, at the reporting date, present obligations of the water reporting entity and are therefore not recognised as water liabilities in the Statement of Water Assets and Water Liabilities.

73. Expected future allocations are not, at the reporting date, present obligations of the water reporting entity. Rather, they represent expected future demands on water influenced by the availability and the management of the water resources of the water reporting entity. They are therefore not recognised as water liabilities at the reporting date. However, information about future commitments expected to be settled within 12 months of the reporting date is disclosed in the notes in accordance with paragraphs 111-115.

74. Similarly, the expected future delivery of water to a wetland is not, at the reporting date, a present obligation of the water reporting entity, unless it represents, at the reporting date, an outstanding delivery of water under a water resource management instrument for which all the criteria for delivery, including the due date for delivery and the availability of water, have passed or been met.


Contingent water liabilities

75. A contingent water liability shall not be recognised in the Statement of Water Assets and Water Liabilities.

76. A contingent water liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water reporting entity.

77. A water resource management instrument may specify a monthly minimum flow of water from one water reporting entity to another to the extent that there is available water. These arrangements are often referred to as ongoing water commitments. An inability to deliver water in a particular month due to insufficient water does not generally result in a carryover of the undelivered amount. The requirement to deliver water in future periods under an ongoing water commitment is a contingent water liability because the delivery of water is dependent on sufficient water being available in a given future month.

78. Contingent water liabilities are not recognised in the Statement of Water Assets and Water Liabilities because they satisfy neither the definition of a water liability nor the recognition criteria in paragraph 65. However, information about contingent water liabilities is disclosed in accordance with paragraphs 116-118.

79. A contingent water liability may also represent a future commitment. To the extent that a contingent water liability is also a future commitment expected to be settled within 12 months of the reporting date, information about that future commitment is disclosed in accordance with paragraph 111-115.

Statement of Changes in Water Assets and Water Liabilities80. The Statement of Changes in Water Assets and Water Liabilities shall provide

information that enables users to understand changes in the volumes and nature of the water reporting entity’s net water assets during the reporting period.

81. The Statement of Changes in Water Assets and Water Liabilities provides information on transactions, transformations and events that give rise to changes in water assets or changes in water liabilities, irrespective of whether those transactions, transformations or events represent physical water flows. For example, allocation carryover represents volumes of water that a water reporting entity is obliged to make available to be taken or delivered at the reporting date as a consequence of an allocation determination and announcement before the end of the reporting period under a water sharing plan. The allocation carryover is recognised as a water liability at the reporting date. The balance of the allocation carryover liability changes from one reporting period to the next as a result of the following events:

it is increased as a result of allocation determination and announcements made a) during a reporting period; and

it is decreased as a result of the physical outflow of water to settle allocations.b)

The balance may also change as a result of other events such as evaporation adjustments applied to allocation carryover in accordance with a water sharing plan. The Statement of Changes in Water Assets and Water Liabilities reflects the impact of each of these events, notwithstanding that the announced allocation does not itself represent a physical water flow.


Information to be presented82. The Statement of Changes in Water Assets and Water Liabilities shall include line

items that present the following volumes for the period:

a) surface water increases;

b) groundwater increases;

c) other water asset increases;

d) surface water decreases;

e) groundwater decreases;

f ) other water asset decreases; and

g) change in net water assets.

83. Additional sub-classifications of the line items set out in paragraph 82 shall be presented in the Statement of Changes in Water Assets and Water Liabilities when the volume, nature or function of a sub-item is such that its separate presentation is relevant to understanding the changes in the water reporting entity’s net water assets during the reporting period.

84. This Standard does not prescribe the order or format in which items are presented in the Statement of Changes in Water Assets and Water Liabilities. However, the items included in paragraph 82 are sufficiently different in nature or function to warrant their separate presentation. Additional sub-classifications of these line items are also presented when the volume, nature or function of a sub-item is such that its separate presentation is relevant to understanding the changes in the water reporting entity’s net water assets during the reporting period. The requirements and guidance in paragraphs 13-17 on materiality are considered in making this assessment.

85. For example, when a water reporting entity experiences significant volumes of evaporation relative to other forms of surface water decreases, it may be appropriate to disaggregate surface water decreases to present separately the volumes attributable to evaporation.

Recognition criteria86. An item that meets the definition of a change in a water asset or a change in a

water liability shall be recognised in the Statement of Changes in Water Assets and Water Liabilities when:

it is probable that there has been a a) change in a water asset or a change in a water liability;

the b) water asset or water liability that has increased or decreased is recognised in the Statement of Water Assets and Water Liabilities; and

the volume of change in the c) water asset or water liability can be quantified with representational faithfulness (see paragraphs 7-10).

Statement of Physical Water Flows87. The Statement of Physical Water Flows shall provide information that enables

users to understand the nature and volumes of physical water flows experienced by the water reporting entity during the reporting period.

88. The Statement of Physical Water Flows provides information on transactions, transformations and events that give rise to physical water flows during the reporting period. For example, in the case of water liabilities arising from allocation carryover, the Statement of Physical Water Flows will:


include the effect of decreases in the a) water liability resulting from the physical outflow of water to settle announced allocation; and

exclude the effect of allocation determination and announcements made during the b) reporting period that remain undelivered at the reporting date. This is because they have not given rise to a physical water flow during the period.

Information to be presented89. The Statement of Physical Water Flows shall include line items that present the

following volumes for the period:

a) surface water inflows;

b) surface water outflows;

c) groundwater inflows;

d) groundwater outflows;

e) change in net water storage;

f ) opening water storage; and

g) closing water storage.

90. Additional sub-classifications of the line items set out in paragraph 89 shall be presented in the Statement of Physical Water Flows when the volume, nature or function of a sub-item is such that its separate presentation is relevant to understanding the physical water flows of the water reporting entity during the reporting period.

91. This Standard does not prescribe the order or format in which items are presented in the Statement of Physical Water Flows. However, the items included in paragraph 89 are sufficiently different in nature or function to warrant their separate presentation. Additional sub-classifications of these line items are also presented when the volume, nature or function of a sub-item is such that its separate presentation is relevant to understanding the physical water flows of the water reporting entity during the reporting period. The requirements and guidance in paragraphs 13-17 on materiality are considered in making this assessment.

92. For example, when a water reporting entity has significant volumes of evaporation relative to other forms of surface water outflows, it may be appropriate to disaggregate surface water outflows to present separately the volumes attributable to evaporation.

93. Because the Statement of Physical Water Flows provides information about the physical water flows of a water reporting entity, the water storages referred to in that Statement relate only to physical water assets either held or managed by the water reporting entity. They do not include water assets in the nature of water rights for which the water has not yet been taken or delivered.

Group water accounting reports94. A group water accounting report shall be prepared for a group water reporting

entity by applying the requirements and guidance in this Standard.

Procedures for preparing group water accounting reports95. A group water accounting report is the water accounting report of a group water reporting

entity presented as a single water entity. In preparing a group water accounting report, the preparer:


combines the a) water accounting reports of the water entities comprising the group by aggregating, line by line, like items of water assets, water liabilities, net water assets, changes in water assets, changes in water liabilities, water inflows and water outflows; and

eliminates transactions between the b) water entities comprising the group to ensure there is no overstatement or double-counting of water assets, water liabilities, changes in water assets, changes in water liabilities, water inflows or water outflows.

96. For example, when the water outflows from one water entity represent the water inflows of another water entity within the group, aggregating the water accounting statements of these water entities would result in an overstatement of water inflows and water outflows. When preparing the group water accounting report for the group, adjustments are made to avoid this overstatement.

97. The water accounting reports of the water entities used to prepare the group water accounting report shall be prepared as of the same date. If the reporting date for the group is different from that of a water entity within the group, additional water accounting statements shall be prepared for that water entity as of the same date and for the same reporting period as the group water accounting report to enable the group report to be prepared

98. A group water accounting report shall be prepared using uniform water accounting policies for like transactions and other events.

Note disclosures

Content and presentation99. The following information shall be disclosed in the notes:

a statement that, except for physical water flow information, the a) general purpose water accounting report has been prepared on the accrual basis of water accounting;

a summary of the significant b) water accounting policies used in the preparation of the general purpose water accounting report (see paragraphs 102-104);

information required to be disclosed by this Standard that is not presented c) elsewhere in the general purpose water accounting report; and

any additional information not explicitly required by this Standard that is d) nonetheless relevant to an understanding of:

i) the water resources of the water reporting entity; and

ii) the management of those water resources.

100. The note disclosures shall be presented in a systematic manner. Cross-references shall be provided for each item in the water accounting statements to any related information in the notes.

101. To assist users’ understanding of the information included in general purpose water accounting reports and to facilitate comparisons, the note disclosures are normally presented in the following order:

summary of significant a) water accounting policies (see paragraphs 102-104);

supporting information for items presented in the b) water accounting statements in the order in which each statement and each item is presented, including:

i) information about the restatement of comparative information (see paragraphs 105-106);


ii) information about quantification approaches (see paragraphs 107-109); and

iii) reconciliations and other information related to the Statement of Physical Water Flows (see paragraph 110); and

other note disclosures, including information about:c)

i) water assets available to settle water liabilities and future commitments within 12 months of the reporting date (see paragraphs 111-115);

ii) contingent water assets and contingent water liabilities (see paragraphs 116-118);

iii) water rights, water allocations and water restrictions (see paragraphs 119-120);

iv) water market activity (see paragraphs 121-122);

v) water use (see paragraphs 123-126);

vi) group water accounting reports (see paragraph 127).

Significant water accounting policies102. The following information shall be disclosed in the summary of significant water

accounting policies:

the quantification attribute and the unit of account used in the a) water accounting statements; and

details of other b) water accounting policies used in the preparation and presentation of the general purpose water accounting report that are relevant to an understanding of the water accounting statements.

103. In deciding whether a particular water accounting policy should be disclosed, it is necessary to consider whether disclosure would assist users in understanding how transactions, transformations and other events are reflected in the water accounting statements.

104. A water accounting policy may be significant because of the nature of the operations of the water reporting entity even if volumes for current and prior periods are not material.

Restatement of comparative information105. When comparative information is restated in accordance with paragraph 25, the

following information shall be disclosed in the notes:

the nature of the restatement;a)

the items presented in the b) general purpose water accounting report that have been affected by the restatement and the volume of the restatement of each such item; and

an explanation of why the presentation or classification changes that have c) caused the restatement result in more useful information being provided to users of the general purpose water accounting report.

106. When, in accordance with paragraph 25, it is impracticable to restate comparative information, the following shall be disclosed in the notes:

an explanation of why restatement is impracticable; anda)

an explanation of why the presentation or classification changes made in b) accordance with paragraph 27 result in more useful information being provided to users of the general purpose water accounting report.


Quantification approaches107. Information shall be disclosed in the notes about the approaches used to quantify

items presented in the water accounting statements.

108. Different quantification approaches may be used for the various items presented in the water accounting statements. Those quantification approaches may give rise to materially different levels of quantification accuracy. Therefore, information is provided to assist users in understanding how an item’s volume has been determined.

109. To give effect to the principle in paragraph 107, the following information is disclosed:

the quantification approaches used for the items;a)

a statement as to whether the quantification approaches are in accordance with b) relevant quantification standards or established practices and the identification of those standards and practices;

details of any quality assurance processes underpinning the quantification c) approaches;

the levels of accuracy or precision achieved by the quantification approaches; andd)

the sensitivities of the quantifications to key assumptions used in the quantification e) approaches.

Statement of Physical Water Flows: Reconciliations and other information110. The following information shall be disclosed in the notes:

a reconciliation of the a) change in net water storage presented in the Statement of Physical Water Flows to the change in net water assets presented in the Statement of Changes in Water Assets and Water Liabilities;

the components of both b) opening water storage and closing water storage presented in the Statement of Physical Water Flows; and

a reconciliation of c) closing water storage presented in the Statement of Physical Water Flows to total water assets presented in the Statement of Water Assets and Water Liabilities.


Water assets available to settle water liabilities and future commitments within 12 months of the reporting date

111. The following information shall be disclosed in the notes:

total water assets;a)

water not available to be accessed and taken or delivered;b)

the difference between a) and b), which is the portion of c) water assets recognised in the Statement of Water Assets and Water Liabilities that will be available to be accessed and taken or delivered within 12 months of the reporting date;

the volumes of:d)

i) water liabilities recognised in the Statement of Water Assets and Water Liabilities that are expected to be settled within 12 months of the reporting date; and

ii) future commitments expected to be settled within 12 months of the reporting date; and

the difference between c) and d), which is the surplus / (deficit) of available e) water assets over both water liabilities and future commitments expected to be settled within 12 months of the reporting date.

112. Illustrative examples of the disclosure requirements in paragraph 111 are provided in the Implementation guidance.

113. Dead storage water is water that is below the elevation of the lowest constructed outlet. It meets the definition of a water asset, however it is typically not available to be accessed and taken or delivered to settle water liabilities or future commitments. Therefore, it typically forms part of the disclosure required by paragraph 111(b).

114. Similarly, conveyance water is water required to operate regulated rivers and utility supply networks to enable the delivery of water. It meets the definition of a water asset, however it is typically not available to be accessed and taken or delivered to settle water liabilities or future commitments. Therefore, it typically forms part of the disclosure required by paragraph 111(b).

115. In some circumstances it may be appropriate to also disclose information that enables users to evaluate the extent to which water assets available to be accessed and taken or delivered within 12 months of the reporting date are sufficient to meet future commitments expected to be settled beyond 12 months of the reporting date. For example, this would be the case when the management of the water reporting entity is required to ensure the availability of water through multi-year droughts.

Contingent water assets and contingent water liabilities116. Information shall be disclosed in the notes that enables users to understand the

nature and volume of contingent water assets and contingent water liabilities at the reporting date.

117. To give effect to the principle in paragraph 116, a brief description of the nature of each contingent water asset and contingent water liability is included in the notes. When possible, information about volumes is also disclosed, such as expected volumes or minimum and maximum expected volumes.

118. A contingent water liability may also represent a future commitment. To the extent that a contingent water liability is also a future commitment expected to be settled within 12 months of the reporting date, information about that future commitment is disclosed in accordance with paragraphs 111-115.


Water rights, water allocations and water restrictions119. Information shall be disclosed in the notes that enables users to understand the

nature and volumes of water rights, water allocations and water restrictions for the reporting period that relate to water resources of the water reporting entity.

120. To give effect to the principle in paragraph 119, the following information is disclosed in the notes:

for each type of water right that existed during the a) reporting period:

i) a brief description of the nature of the water right;

ii) details of the attributes of the water right, including share or volume, reliability classification, water quality classification and tradability;

iii) details of any new issue, cancellation or conversion of the water right;

details of any changes to administrative arrangements during the b) reporting period that affect water rights, water allocations or water restrictions; and

details of any water allocation determinations and announcements or any water c) restrictions either imposed or amended during the reporting period.

Water market activity121. Information shall be disclosed in the notes that enables users to understand the

nature and volumes of water market activity during the reporting period that relate to water resources of the water reporting entity.

122. To give effect to the principle in paragraph 121, the following information is disclosed in the notes:

details of the number, volumes, origins and destinations of trades of each type of water a) right and water allocation that have been recognised during the reporting period; and

other information relevant to an understanding of water market activity. This b) would include, for example, details of externally-imposed limitations on the trading of water rights and water allocations, compliance with those limitations and any changes to the limitations during the reporting period.

Water use123. Information shall be disclosed in the notes that enables users to understand how

water resources of the water reporting entity have been used during the reporting period in the pursuit of:

environmental benefit;a)

social and cultural benefit; andb)

economic benefit.c)

Water related to environmental benefit

124. To give effect to the principle in paragraph 123(a), the following information is disclosed in the notes:

details of the non-discretionary or rules-based provisions in relevant administrative a) arrangements, such as water resource management instruments, aimed primarily at environmental benefit. This includes information about the objective, nature and volumes of such provisions;

details of any changes in the non-discretionary or rules-based provisions in relevant b) administrative arrangements, such as water resource management instruments, aimed primarily at environmental benefit;


details of the holdings of water rights, such as water entitlements or water allocations, c) or of the discretionary provisions in relevant administrative arrangements, such as water resource management instruments, aimed primarily at environmental benefit. This includes:

i) details of who holds or controls such holdings and discretionary provisions;

ii) a description of the attributes of the holdings and discretionary provisions including the related environmental objectives;

iii) any changes to the holdings, including details of any water entitlement or water allocation trading, and any changes to the discretionary provisions during the reporting period; and

iv) the volumes, origins and destinations of water accessed, taken or delivered during the reporting period;

information that allows users to understand compliance by the d) water reporting entity with the rules and changes to the rules disclosed in accordance with sub-paragraphs a) and b) above.

Water related to social and cultural benefit

125. To give effect to the principle in paragraph 123(b), the following information is disclosed in the notes:

details of any rights or customs relating to social and cultural benefit associated with a) the water resources of the water reporting entity, whether arising from externally-imposed requirements or good practice. This includes:

i) a brief description of the social and cultural rights, customs and associated objectives; and

ii) details of the nature of water associated with the rights or customs, the levels or flows maintained and the volumes, origins and destinations of water taken or delivered, or not taken or not delivered, during the reporting period.

Water related to economic benefit

126. To give effect to the principle in paragraph 123(c), information is disclosed in the notes about the purpose, nature and volume of water accessed and taken or delivered during the period to achieve economic benefits.

Group water accounting reports127. A list of all water entities comprising the group water reporting entity shall be

disclosed in notes to a group water accounting report.

Assurance Statement128. An explicit statement of whether the general purpose water accounting report is

presented fairly in accordance with this Standard shall be provided in the Assurance Statement.

129. Assurance refers to the attestation of whether the general purpose water accounting report is presented fairly in accordance with the requirements of this Standard. The assurance function, undertaken by an appropriately qualified and independent assurance provider, is important to enhancing users’ confidence in the veracity of the information being presented to inform decision-making.

130. The Assurance Statement shall be provided by an appropriately qualified and independent assurance provider.

Preliminary Australian Water Accounting Standard: Appendix – Defined Terms 25

Appendix – Defined termsThis appendix is an integral part of the Preliminary Australian Water Accounting Standard.

allocation carryover Water allocated in a reporting period in accordance with a water resource management instrument that is yet to be accessed and taken or delivered at the reporting date and is carried over to the next reporting period.

change in net water assets The change in net water assets for the water reporting entity from one reporting date to the next.

change in net water storage The change in net water storage for a water reporting entity from one reporting date to the next.

change in water assets Increases or decreases in the water reporting entity’s water assets from one reporting date to the next.

change in water liabilities Increases or decreases in the water reporting entity’s water liabilities from one reporting date to the next.

closing water storage The total water storage in groundwater assets and surface water assets for a water reporting entity at the reporting date.

constructive obligation An obligation that derives from a water reporting entity’s actions whereby:

a) an established pattern of past practice, published policies or sufficiently specific current statement means that the water reporting entity has indicated to other parties that it will accept certain responsibilities; and

b) as a result, the water reporting entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.

contingent water asset A possible water asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water reporting entity.

contingent water liability A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water reporting entity.

26 Preliminary Australian Water Accounting Standard: Appendix – Defined Terms

conveyance water Water required primarily to operate regulated rivers and utility supply networks to enable the delivery of water.

dead storage water Water in a storage that is below the elevation of the lowest constructed outlet.

future commitment An expected future demand on water influenced by the availability and management of the water resources of the water reporting entity. It may arise as a result of an externally-imposed requirement or best practice for managing water resources.

general purpose water accounting report A water accounting report intended to meet the information needs common to users who are unable to command the preparation of water accounting reports tailored to satisfy their information needs. A general purpose water accounting report is prepared in accordance with Australian Water Accounting Standards and comprises a Contextual Statement, an Accountability Statement, water accounting statements, an Assurance Statement and accompanying note disclosures.

groundwater Subsurface water in soils and geological formations that are fully saturated.

groundwater assets Water assets that relate to groundwater but excluding soil moisture and water held in works underground.

groundwater decreases Decreases in the groundwater assets or increases in related water liabilities of a water reporting entity.

groundwater increases Increases in the groundwater assets or decreases in related water liabilities of a water reporting entity.

group water accounting report The water accounting report of a group water reporting entity presented as a single water entity.

group water reporting entity A water reporting entity comprising individual water entities and for which a group water accounting report is required to be prepared under a regulation, statute or directive.

legal obligation An obligation that derives from:

a) a contract;

b) legislation; or

c) other operation of law.

net water assets The excess of the water assets of the water reporting entity after deducting all of its water liabilities.

Preliminary Australian Water Accounting Standard: Appendix – Defined Terms 27

obligating event An event that creates a legal or constructive obligation that results in a water reporting entity having no realistic alternative to settling that obligation.

opening water storage The total water storage in groundwater assets and surface water assets for a water reporting entity at the beginning of the reporting period.

other water assets Water assets that are rights or other claims to water.

other water asset decreases Decreases in other water assets or increases in related water liabilities of a water reporting entity.

other water asset increases Increases in other water assets or decreases in related water liabilities of a water reporting entity.

other water liabilities All water liabilities that are not allocation carryover.

reporting date The end of the last day of the reporting period.

reporting period The period for which a water accounting report is prepared.

special purpose water accounting report A water accounting report tailored to the information needs of a user able to command this information.

surface water Water that flows over or is stored on the surface of the earth.

surface water assets Water assets that relate to surface water, including water storage – stored or in transit – in catchments, regulated rivers and utility supply networks and soil moisture. Water storage in utility supply networks includes all water in works such as pipes regardless of whether those works are above or below the surface of the earth.

surface water decreases Decreases in the surface water assets or increases in related water liabilities of a water reporting entity.

surface water increases Increases in the surface water assets or decreases in related water liabilities of a water reporting entity.

water accounting policies The specific principles, bases, conventions, rules and practices applied in the preparation and presentation of water accounting reports.

water accounting report May be either a general purpose water accounting report or a special purpose water accounting report.

28 Preliminary Australian Water Accounting Standard: Appendix – Defined Terms

water accounting statements Comprise the Statement of Water Assets and Water Liabilities, the Statement of Changes in Water Assets and Water Liabilities, and the Statement of Physical Water Flows.

water assets Water, or the rights or other claims to water, which the water reporting entity either holds, or for which the water reporting entity has management responsibilities, and from which an individual or organisation that is a water reporting entity, or a group of stakeholders of a physical water reporting entity, derives future benefits.

water entity A physical entity, an organisation or individual, that:

a) holds or transfers water; or

b) holds or transfers rights or other direct or indirect claims to water; or

c) has inflows and/or outflows of water; or

d) has responsibilities relating to the management of water.

water liability A present obligation of the water reporting entity, the discharge of which is expected to result in a decrease in the water reporting entity’s water assets or an increase in another water liability.

water reporting entity A water entity in respect of which it is reasonable to expect the existence of users who depend on general purpose water accounting reports for information about water, or rights or other claims to water, which will be useful to them for making and evaluating decisions about the allocation of resources.

Preliminary Australian Water Accounting Standard: WASB Approval 29

Approval by the Water Accounting Standards Board of the Preliminary Australian Water Accounting StandardThe Preliminary Water Accounting Standard Version 1.1 was approved by the 5 members of the Water Accounting Standards Board on 16 June 2009.

Michael RL Smith Chairman

W Peter Day

Denis W Flett

Jayne M Godfrey

Thomas L Vanderbyl

30 Preliminary Australian Water Accounting Standard: Implementation Guidance

Implementation guidanceA. Illustrative water accounting statementsThe Preliminary Australian Water Accounting Standard (PAWAS) sets out the components of general purpose water accounting reports and minimum requirements for presentation in the water accounting statements. It also prescribes further items to be presented in the water accounting statements or disclosed in the notes. This guidance provides examples of ways in which the requirements of the PAWAS related to the presentation of water accounting statements might be met.

The examples are not intended to illustrate all aspects of the PAWAS, nor do they constitute a complete general purpose water accounting report, which would also include a Contextual Statement, an Accountability Statement, an Assurance Statement, a summary of significant water accounting policies and other explanatory information.

Statement of Water Assets and Water Liabilities for Testcorpas at 30 June 20X9

Statement of W ater Assets and W ater L iabilities for T estcor p as at 30 J une 20X 9

Note 20X 9 20X 8M L ML

W A T E R A SSE T SSur face water assetsCatchment and unregulated storage 455 000 325 000R egulated river storage 1 650 000 1 550 000Utility network storage 70 000 50 000T otal sur face water assets 2 175 000 1 925 000

G r oundwater assetsGroundwater storage 255 000 250 000T otal gr oundwater assets 255 000 250 000

Other water assetsClaims to water: intervalley 30 000 30 000T OT A L W A T E R A SSE T S 2 2 460 000 2 205 000

W A T E R L I A B I L I T I E SAllocation carryover 150 000 100 000Other water liabilities 30 000 30 000T OT A L W A T E R L I A B I L I T I E S 180 000 130 000NE T W A T E R A SSE T S 2 280 000 2 075 000

Net water assets at beginning of reporting period 2 075 000 2 600 000Change in net water assets 1 205 000 (525 000)NE T W A T E R A SSE T S 2 280 000 2 075 000

Statement of W ater A ssets and W ater L iabilities for T estcor p as at 30 J une 20X 9


W A T E R A SSE T SSur face water assetsCatchment and unregulated storage 455 000 325 000R egulated river storage 1 650 000 1 550 000Utility network storage 70 000 50 000T otal sur face water assets 2 175 000 1 925 000

G r oundwater assetsGroundwater storage 255 000 250 000T otal gr oundwater assets 255 000 250 000

Other water assetsClaims to water: intervalley 30 000 30 000T OT A L W A T E R A SSE T S 2 2 460 000 2 205 000

W A T E R L I A B I L I T I E SAllocation carryover 150 000 100 000Other water liabilities 30 000 30 000T OT A L W A T E R L I A B I L I T I E S 180 000 130 000NE T W A T E R A SSE T S 2 280 000 2 075 000

Net water assets at beginning of reporting period 2 075 000 2 600 000Change in net water assets 1 205 000 (525 000)NE T W A T E R A SSE T S 2 280 000 2 075 000

Preliminary Australian Water Accounting Standard: Implementation Guidance 31

Statement of Changes in Water Assets and Water Liabilities for Testcorpfor the year ended 30 June 20X9

Statement of C hanges in W ater Assets and W ater L iabilities for T estcor p for the year ended 30 J une 20X 9


I ncr easesSurface water increases 1 500 000 740 000Groundwater increases 55 000 20 000Other water asset increases - 30 000T otal incr eases 1 555 000 790 000

Decr easesSurface water decreases 1 300 000 1 250 000Groundwater decreases 50 000 65 000T otal decr eases 1 350 000 1 315 000C hange in net water assets 1 205 000 (525 000)

Statement of Physical Water Flows for Testcorpfor the year ended 30 June 20X9

Statement of Physical W ater F lows for T estcor p for the year ended 30 J une 20X 9


Sur face water flowsSurface water inflows 1 500 000 800 000Surface water outflows (1 250 000) (1 150 000)Net sur face water flows 250 000 (350 000)

G r oundwater flowsGroundwater inflows 55 000 20 000Groundwater outflows (50 000) (65 000)Net gr oundwater flows 5 000 (45 000)Net change in water stor age 1 255 000 (395 000)Opening water stor age 2 175 000 2 570 000C losing water stor age 2 2 430 000 2 175 000


Note 1 Reconciliation of Net Change in Water Storage to Change in Net Water Assets

Note 1 R econciliation of Net C hange in W ater Stor age to C hange in Net W ater Assets

20X 9 20X 8M L M L

C hange in net water assets 205 000 (525 000)Adjustments for:(Decrease)/increase in accruals Allocation carryover 50 000 100 000 Claims to water: intervalley - 30 000

50 000 130 000

Net change in water stor age 255 000 (395 000)

Note 2 Reconciliation of Closing Water Storage to Total Water AssetsNote 2 R econciliation of C losing W ater Stor age to T otal W ater A ssets

20X 9 20X 8M L ML

C losing water stor age 2 430 000 2 175 000comprises:Surface water assets 2 175 000 1 925 000Groundwater assets 255 000 250 000

2 430 000 2 175 000

Other water assets 30 000 30 000T otal water assets 2 460 000 2 205 000

Preliminary Australian Water Accounting Standard: Implementation Guidance 33

B. Illustrative note disclosure of water assets available to settle water liabilities and future commitments within 12 months of the reporting dateThis guidance illustrates the application of the disclosure requirements and guidance in paragraphs 111-115 of the PAWAS.

Illustrative example 1: Surplus of available water assets over water liabilities and future commitments expected to be settled within 12 months of the reporting date

ML ML

Total water assets as at 30 June 20X9 1 223 500

Less: Water assets not available to be accessed and taken or delivered within 12 months of the reporting date

Dead storage water (15 000) Conveyance water (3 500) (18 500)

Water assets available to be accessed and taken or delivered within 12 months of the reporting date 1 205 000

Less: water liabilities and future commitments expected to be settled within 12 months of the reporting date

Water liabilities expected to be settled within 12 months of the reporting date Allocation carryover (24 000) (24 000)

Future commitments expected to be settled within 12 months of the reporting date Critical human needs (300 000) Water to be delivered to Wetland A (20 000) (320 000)

Surplus of available water assets over water liabilities and future commitments expected to be settled within 12 months of the reporting date 861 000

Management assumes minimal water inflows for the 3-year period after the reporting date. Accordingly, management expects that water liabilities and future commitments expected to be settled during the next 3 years will need to be serviced primarily from existing water storages. The following table provides management’s estimate of future commitments expected to be settled within 3 years but beyond 12 months of the reporting date:

Surplus of available water assets over water liabilities and future commitments expected to be settled within 12 months of the reporting date 861 000

Future commitments expected to be settled within 3 years but beyond 12 months of the reporting date Critical human needs (700 000) Water to be delivered to Wetland A (40 000) (740 000)

Surplus of available water assets over water liabilities and future commitments expected to be settled within 3 years of the reporting date 121 000


Illustrative example 2: Deficiency of available water assets over water liabilities and future commitments expected to be settled within 12 months of the reporting date

ML ML

Total water assets as at 30 June 20X9 123 500

Less: Water assets not available to be accessed and taken or delivered within 12 months of the reporting date

Dead storage water (15 000) Conveyance water (3 500) (18 500)

Water assets available to be accessed and taken or delivered within 12 months of the reporting date 105 000

Less: water liabilities and future commitments expected to be settled within 12 months of the reporting date

Water liabilities expected to be settled within 12 months of the reporting date Allocation carryover (24 000) (24 000)

Future commitments expected to be settled within 12 months of the reporting date Critical human needs (20 000) Potential allocation (140 000) Water to be delivered to Wetland A (20 000) (180 000)

Deficiency of available water assets over water liabilities and future commitments expected to be settled within 12 months of the reporting date (99 000)

The deficiency of available water assets over water liabilities and future commitments expected to be settled within 12 months of the reporting date is expected to be met by water inflows during the next 12-month period, based on average annual water inflows for the past 10 years of 140,000 ML. Management has also developed plans to buy water allocations from other water entities in the event that water inflows are less than those forecast by management.

Preliminary Australian Water Accounting Standard: Basis of Conclusions 35

Basis for conclusionsContents

Paragraph

Introduction ............................................................................................. B1–B2

Background information ........................................................................ B3–B16

Water accounting and the National Water Initiative ............................. B3–B8

Terrestrial water resource management .............................................. B9–B16

Objective of General Purpose Water Accounting Reports ..................... B17–B18

General Features of General Purpose Water Accounting Reports ...........B19-B28

Accrual basis of water accounting ..................................................... B19–B23

Comparative information ................................................................ B24–B25

Elements and quantification............................................................. B26–B28

Contextual Statement ........................................................................... B29–B30

Accountability Statement ...................................................................... B31–B34

Statement of Water Assets and Water Liabilities .................................... B35–B92

Information to be presented ............................................................. B35–B37

Recognition criteria: water assets ...................................................... B38–B58

Contingent water assets.................................................................... B59–B62

Recognition criteria: water liabilities ................................................ B63–B82

Future commitments ....................................................................... B83–B87

Contingent water liabilities .............................................................. B88–B92

Statement of Changes in Water Assets and Water Liabilities and Statement of Physical Water Flows ..................................................B93-B94

Information to be presented ............................................................. B93–B94

Group water accounting reports ......................................................... B95–B112

Note disclosures .................................................................................B113-B119

Water assets available to settle water liabilities and future commitments within 12 months of the reporting date ................. B114–B116

Water use ......................................................................................B117-B119

Assurance Statement ..........................................................................B120-B122

36 Preliminary Australian Water Accounting Standard: Basis of Conclusions

IntroductionThe Water Accounting Standards Board (WASB) is responsible to the Director of B1. Meteorology for developing Australian Water Accounting Standards.

This Basis for conclusions summarises the considerations of the WASB in reaching B2. the significant conclusions in the Preliminary Australian Water Accounting Standard (PAWAS).

Background information

Water accounting and the National Water InitiativeOne of the objectives of the National Water Initiative (NWI) is to standardise the B3. practice of water accounting in Australia so that consistent and comparable information is available to decision-makers at:

the national level for policy development;B4.

the jurisdictional level for water resource planning and monitoring;a)

the water organisation level for water resource management; andb)

the site level for on-site water management.c)

B4. The SKM Stocktake Report on Water Accounting (2006), commissioned by the parties to the NWI, recommended a disciplinary approach to developing water accounting standards based on that used for financial reporting. In late 2006, the parties to the NWI established the National Water Accounting Development project (NWADp) to create such a disciplinary approach.

B5. The NWADp has primarily involved considering user requirements, developing a Water Accounting Conceptual Framework (WACF) and capacity building within the states and territories through practical pilot testing projects. The WACF will form the foundation for developing Australian Water Accounting Standards (AWASs). AWASs will prescribe the basis for the preparation and presentation of general purpose water accounting reports.

B6. Under the Commonwealth Water Act (2007), the Director of Meteorology (BoM) is required to publish annually a National Water Account. It is the intention of the Bureau of Meteorology to prepare the National Water Account in accordance with AWASs, with the First National Water Account scheduled for public release by the end of 2010. The BoM also intends to produce a Pilot National Water Account by the end of 2009. As the final AWASs could not be developed and undergo a comprehensive due process in time to be applied in the preparation and presentation of the Pilot National Water Accounts, the PAWAS has been developed as an interim step to underpin the preparation and presentation of the Pilot National Water Account.

B7. The PAWAS is intended as a preliminary version of the proposed AWASs. It prescribes the basis for the preparation and presentation of a general purpose water accounting report, which comprises the following components:

a Contextual Statement;a)

an Accountability Statement;b)

a Statement of Water Assets and Water Liabilities;c)

a Statement of Changes in Water Assets and Water Liabilities;d)

a Statement of Physical Water Flows;e)

note disclosures; andf )

an Assurance Statement.g)


The PAWAS has been developed based on the WACF and sets out the following:B8.

the definitions of the water accounting elements (water assets, water liabilities, a) changes in water assets, changes in water liabilities and net water assets);

the recognition criteria for those elements;b)

the quantification attribute and unit of account for those elements; andc)

disclosure requirementsd)

Terrestrial water resource managementB9. Water accounting is being developed to track and report on stocks and flows of water

during the terrestrial phase of the water cycle. Water accounting is not endeavouring to account for water in the marine or aerial phases of the water cycle. The focus of water accounting is on water that is fit for purpose, whether that is environmental, social, cultural or economical.

B10. The concept of terrestrial water resource management can be separated into physical and administrative aspects.

B11. Physical aspects comprise all natural sources of water in the terrestrial water phase including catchment runoff and water in aquifers, streams, wetlands and estuaries. All of the human activities that affect the stocks and flows of water are also encompassed. This includes activities such as the regulation of rivers through the storage and controlled release of water storages behind dams, the extraction of groundwater, the diversion of surface water from unregulated streams, the interception of surface runoff in minor catchment storages, the diversion of surface water from regulated rivers and its distribution to customers via rural or urban supply networks, the collection of irrigation drainage or urban wastewater and its recycling or return to rivers and the desalination of seawater and its connection into urban water storages or supply networks.

B12. Water in the terrestrial water phase is neither created nor destroyed but can be transformed between solid, liquid and gaseous form, for example as it leaves the terrestrial phase via evaporation. Water accounting uses litres as the unit of volumetric quantification and covers all water transactions that can be included in comprehensive water balance presentations. There will, however, be practical limitations on what water transactions can be included in general purpose water accounting reports, based on considerations related to materiality and representational faithfulness. The movement of water into and out of the terrestrial water phase is within the scope of water accounting and will appear as inflows to, or outflows from, water reporting entities.

B13. Administrative aspects of terrestrial water resource management are embedded in public policy, legislation, administrative regulation and water resource management instruments such as water sharing plans. Water sharing plans are typically legal instruments that are the basis of sharing water between environmental, economic and social needs. A water sharing plan will typically be based on environmental flow and extractive entitlement reliability objectives. It will also establish management tools such as operational rules, allocation or restriction methods and trading rules when tradability is an attribute of entitlements. Water sharing plans are progressively being developed across Australia, with priority being given to areas assessed as having the highest need for active management of water resources.


B14. The water resource management instruments that administer the taking and use of water take various forms and have varying degrees of sophistication. They are created from a variety of processes, are titled differently and reflect the priority and water management resources available at the time of their development and creation. They also vary in substance depending largely on the state of underpinning technical knowledge of water source or resource characteristics at the time of their development and creation. These instruments generally apply to a specific source or sources of water, often have common features related to the type of water source but also often have unique provisions. They have traditionally separated the management of surface water and groundwater, although a shift to more integrated water planning and management is underway.

B15. The particular concepts and instruments administering the taking and use of water are wide ranging. Sophisticated entitlement regimes can include multiple entitlement types with different reliability and tradability attributes. They can also involve regular allocation determinations and announcements, trading of entitlements and both trading and carryover of annual allocations. They alternatively may involve continuous sharing of available water allocations and losses and can include controls such as annual caps. Licensing regimes with restriction methods are relatively common for groundwater and unregulated stream sources. Private rights to access water for specified purposes such as domestic and stock watering and even event-based sporadic permits are also part of the range of instruments.

B16. There are also many ways in which management functions and hence roles and responsibilities are assigned among organisations and individuals both between and within Australia’s jurisdictions. An appreciation of both the physical and administrative aspects of water resource management applicable to a water reporting entity is necessary to facilitate the usefulness of general purpose water accounting reports.

Objective of general purpose water accounting reports (paragraph 4)B17. Consistent with the WACF, the PAWAS specifies that the objective of general purpose

water accounting reports is to provide information to users that will be useful in:

making and evaluating decisions about the allocation of resources; anda)

understanding and evaluating the accountability of managers, management groups b) or governing bodies of the water reporting entity for the water resources of the water reporting entity.

B18. Also consistent with the WACF, the PAWAS adopts a water reporting entity concept that is tied to the information needs of users. Accordingly, general purpose water accounting reports are required to be prepared for a water entity when it is reasonable to expect the existence of users who are:

dependent on water accounting reports for information about water, or rights or a) other claims to water, which will be useful to them for making and evaluating decisions about the allocation of resources; and

unable to command the preparation of special purpose water accounting reports to b) satisfy their information needs.

General features of general purpose water accounting reports

Accrual basis of water accounting (paragraphs 11-12)B19. With the exception of physical water flow information, the PAWAS requires general

purpose water accounting reports to be prepared using the accrual basis of water accounting.


B20. Applying the accrual basis of water accounting means that the effects of transactions, transformations and other events are recognised when the decisions or commitments that give rise to them occur. This may not necessarily be the time at which water is physically transacted, transformed or subject to some other event. Accrual water accounting ensures that transactions, transformations and events are recorded in the Statement of Water Assets and Water Liabilities and the Statement of Changes in Water Assets and Water Liabilities in the periods to which they relate. General purpose water accounting reports prepared on an accrual basis therefore inform users not only of past transactions, transformations or other events involving the physical transfer or transformation of water, but also of present obligations to transfer or transform water in the future and of rights that represent water to be transferred to the water reporting entity in the future.

B21. It was concluded that preparing general purpose water accounting reports using an accrual basis of water accounting would provide information about past transactions, transformations and other events that would be most useful to the report users in making and evaluating decisions about the allocation of resources.

The distinction between the Statement of Changes in Water Assets and Water Liabilities and the Statement of Physical Water Flows

B22. There is an important distinction between the Statement of Changes in Water Assets and Water Liabilities and the Statement of Physical Water Flows. The former is prepared on an accruals basis and provides information on all transactions, transformations and other events that give rise to changes in water assets and water liabilities during the reporting period, irrespective of whether those transactions, transformations or other events represent physical water flows. The latter provides information on transactions, transformations and other events only when they give rise to physical water flows during the reporting period. For example, allocation carryover represents volumes of water that a water reporting entity is obliged to deliver at the reporting date as a consequence of an allocation determination and announcement before the end of the reporting period under a water sharing plan. An allocation carryover is recognised as a water liability at the reporting date. The balance of the allocation carryover liability changes from one reporting period to the next as a result of the following events:

it is increased as a result of allocation determinations and announcements made a) during the reporting period; and

it is decreased as a result of the physical water outflows to settle allocations.b)

The Statement of Changes in Water Assets and Water Liabilities reflects the impact of each of these events. In contrast, the Statement of Physical Water Flows reflects only the physical water outflows.

B23. For example, assume that a water entity has an allocation carryover at the beginning of the reporting period of 40,000ML. That allocation carryover is recognised as a water liability in the Statement of Water Assets and Water Liabilities. Further assume that:

an allocation determination and announcement is made during the reporting a) period of 150,000ML; and

135,000ML of water is physically transferred during the reporting period to settle b) both the carryover obligation and part of the current period allocation.


Accordingly, the balance of the allocation carryover liability at the end of the reporting period is 55,000ML, calculated as follows:

Carryover obligation at beginning of the reporting period 40 000ML add allocation determination and announcement made during the period 150 000ML

less allocation settled during the period (135 000ML)

Carryover obligation at the end of the reporting period 55 000ML

The recognition of these events in the Statement of Changes in Water Assets and Water Liabilities and the Statement of Physical Water Flows is as follows:

Statement of Changes Statement of in Water Assets and Physical Water Liabilities Water FlowsSurface water decreases/outflows Allocation diversion 135 000ML 135 000ML Allocation carryover 15 000MLTotal surface water decreases/ outflows 150 000ML 135 000ML

The following points are noteworthy:

i) The PAWAS prescribes ‘surface water decreases’ and ‘surface water outflows’ as the minimum line items in the Statement of Changes in Water Assets and Water Liabilities and the Statement of Physical Water Flows respectively. However for the purpose of illustration, the additional line items of ‘allocation diversion’ and ‘allocation carryover’ have been included in the above table.

ii) Allocation diversion represents the take or delivery or the physical water outflows to settle announced allocations (135 000ML).

iii) Allocation carryover represents the difference between the announced allocation volume for the reporting period and the volume of water actually taken or delivered (150 000ML – 135 000ML = 15 000ML).

iv) The Statement of Changes in Water Assets and Water Liabilities is prepared using the accrual basis of water accounting and reflects the impact of both events (the allocation determination and announcement and the physical water outflows), whereas the Statement of Physical Water Flows reflects only the physical water outflows.

v) At the end of the reporting period, the Statement of Water Assets and Water Liabilities, also prepared using the accrual basis of water accounting, would include as a water liability an allocation carryover of 55 000ML.

Comparative information (paragraphs 21-24)B24. It was concluded that the provision of comparative information within a general

purpose water accounting report enables users to compare the nature and volumes of water resources of a water reporting entity, and changes in those water resources, over time.

B25. It was decided that:

the comparative information requirements for all volumes should be limited in the a) PAWAS to the immediately preceding reporting period; and

additional guidance should be included to clarify that comparative information for b) earlier periods should be presented when it is relevant to an understanding of the current period’s general purpose water accounting report.


It was acknowledged that for some items, comparative information would be more useful if it covers trends over a period. It was agreed that the comparative information requirements should be revisited as part of developing the AWASs and after reviewing the nature and extent of expanded comparative information prepared by water reporting entities in applying the PAWAS.

Elements and quantification (paragraphs 30-37)B26. As part of deliberations, it was noted that the elements of general purpose water

accounting reports often possess more than one attribute that can be quantified. Quantifiable attributes of water assets, water liabilities, net water assets and changes in balances of water assets and water liabilities include volume, salinity or monetary value.

B27. It was also noted that an attribute of an element may be quantified using different units of account. For example, the volume of water assets may be quantified in litres or cubic metres. A water quality attribute such as the salinity of water assets may be expressed in units of account such as milligrams of dissolved solid per litre or microSiemens per centimetre (µS/cm) at 25ºC.

B28. Consistent with the objectives of the NWI related to water resource planning, monitoring, management and policy development (see paragraph BC3), it was concluded that the most appropriate quantification attribute to include in the PAWAS would be volume. It was also concluded it would be appropriate to require information about other attributes of an element to be disclosed when that information is relevant to an understanding of the current period’s general purpose water accounting report.

Contextual Statement (paragraphs 39-40)B29. Deliberations included a consideration of whether the PAWAS should be prescriptive

about the information to be provided in the Contextual Statement or merely identify the themes or concepts that the statement should cover. It was concluded that the latter ‘principle-based’ approach would be the preferred approach for the PAWAS. Therefore, the PAWAS requires the Contextual Statement to provide information that enables users to understand the physical and administrative aspects of the water reporting entity. Specifically, it should provide information about the water resources of the water reporting entity as well as any conditions that have an impact on the management of those water resources.

B30. It was also decided that it would be helpful to preparers of general purpose water accounting reports to include additional guidance in the PAWAS to illustrate the types of information that could be provided in the Contextual Statement. For example, information about the water resources of the water reporting entity may include details of the geographical location of the water resources and actual storage volumes in comparison to total possible storage volumes. Information about conditions that have an impact on the management of those water resources may include the climatic conditions experienced before and during the reporting period and any significant conditions included in, or changes to, institutional or administrative arrangements relevant to the water reporting entity.

Accountability Statement (paragraphs 41-47)B31. One of the objectives of general purpose water accounting reports is to provide

information to users that will be useful in understanding and evaluating the accountability of managers, management groups or governing bodies of the water reporting entity for the water resources entrusted to them. Consistent with this objective, it was agreed that the PAWAS should include a requirement for an Accountability Statement that provides information to enable users to assess compliance with:


externally-imposed requirements relevant to managing the water resources of the a) water reporting entity; and

best practice for managing water resources.b)

B32. It was also decided that it would be helpful to preparers of general purpose water accounting reports to include additional guidance in the PAWAS to illustrate the aspects for which compliance information could be provided in the Accountability Statement. In particular, the PAWAS identifies a water resource management instrument, such as a water sharing plan, as an example of an externally-imposed requirement relevant to managing the water resources of the water reporting entity.

B33. It was similarly concluded that it would be helpful to preparers to identify within the PAWAS distinct areas for which compliance disclosures may be relevant for the water reporting entity. These include:

water sharing and extraction limitations;a)

water utility service and operations;b)

trading of water rights and other claims to water;c)

environmental stewardship; andd)

water planning and strategic initiatives.e)

B34. It was also concluded that the Accountability Statement would be most useful for assessing accountability if it is signed by those appropriate persons with:

statutory reporting responsibilities for the water reporting entity; anda)

ultimate responsibilities for the management of the water reporting entity.b)

Statement of Water Assets and Water Liabilities (paragraphs 48-79)

Information to be presented (paragraphs 49-54)B35. An enhancing quality of the information provided in general purpose water accounting

reports is comparability. Information about a water reporting entity is more useful if it can be compared with similar information about other water reporting entities or with similar information about the same entity for some other reporting period or some other point in time. Users must be able to compare the general purpose water accounting reports of a water reporting entity through time in order to identify trends. Users must also be able to compare the general purpose water accounting reports of different water reporting entities in order to evaluate their relative positions and trends in relation to water resources. To facilitate comparability, it was concluded that the PAWAS should prescribe minimum line items to be included in the water accounting statements.

B36. To determine the minimum line items to be presented in the water accounting statements, a preliminary Chart of Accounts (CoA) was produced. A CoA is a list of all of the items to be used to record the volumes of water assets and water liabilities of a water reporting entity, as well as the transactions, transformations and events that give rise to changes in water assets and changes in water liabilities. In producing the preliminary CoA, reference was made to the following:

The a) SKM Report: Stocktake and Analysis of Australia’s Water Accounting Practice (2006). Appendix B of the report offered an initial review of the possible list of items to be used to record the volumes of water assets and water liabilities of a water reporting entity, as well as the transactions, transformations and events that give rise to changes in water assets and changes in water liabilities;


The b) Complex Water Balance (BoM: Water Analysis and Reporting), which is a framework being developed for the Water Balance work being conducted by BoM. Referring to this document was considered particularly relevant on the basis that BoM intends the Water Balance and National Water Account to be as compatible as practical; and

The National Water Accounting Development project (NWADp) Pilot Project c) Demonstration Accounts. The information items chosen by each of the jurisdictions to represent the transactions in their respective water reporting entities were reviewed to ensure the practicality and utility of the CoA for the report preparers. This included reference to the demonstration accounts for Pioneer Valley (QLD), Regulated Murrumbidgee River (NSW), Goulburn-Broken Catchment (VIC), Carnarvon Groundwater Management Area (WA), the Regulated River Murray (MDBA) and the Lower River Murray (SA).

B37. Those items included in the preliminary CoA that were regarded as the minimum line items to be presented in the Statement of Water Assets and Water Liabilities were then identified. It was also concluded that whilst preparers of general purpose water accounting reports should have the option of presenting additional line items, they should nonetheless be required to present additional sub-classifications when such additional information is relevant to an understanding of the Statement of Water Assets and Water Liabilities.

Recognition criteria: water assets (paragraphs 55-59)B38. The PAWAS requires an item that meets the definition of a water asset to be recognised

in the Statement of Water Assets and Water Liabilities when:

it is probable that future benefits associated with the item will be derived by a) the individual or organisation that is a water reporting entity, or by a group of stakeholders of a physical water reporting entity; and

the item’s volume can be quantified with representational faithfulness.b)

B39. In applying the definition and recognition criteria for water assets, it was considered that for some items this would be relatively straight-forward. For example, items that meet the definition of a water asset and are expected to satisfy the recognition criteria include water in storages behind dams and water within lakes and other natural water surface features. However for other items, it was believed that the application of the definition and recognition criteria may prove challenging and that in the absence of additional guidance within the PAWAS, divergent treatments amongst water reporting entities could emerge. In particular, it was believed that additional guidance within the PAWAS would be useful in relation to groundwater, dead storage water and conveyance water. In this regard, the main focus of deliberations was on part (a) of the recognition criteria (probable future benefits).

Groundwater

B40. For some groundwater resources, volumetric information is available of the total water in the aquifer. However, typically only a small portion of this water is available to be accessed and taken or delivered due to extractive limits included in the water resource management instrument. This is because extractions above a certain level may be detrimental to the surrounding ecosystem or may result in contamination of the aquifer.


B41. The question considered was whether it would be appropriate to recognise as a water asset the total water in the system or only the volume representing the extractable portion. Put another way, it was considered whether, given the restrictions on the ability to extract water from the aquifer, it could be concluded that it would be probable that future benefits would be derived from the total volume of water in the system. This in turn raised the question of what should be considered to be future benefits.

B42. Paragraph 21 of Statement of Water Accounting Concepts 4 Definition of Elements of General Purpose Water Accounting Reports (SWAC4) states the following:

“The future benefits embodied in an asset may flow to the water reporting entity or to stakeholders of a physical water reporting entity in a number of ways. For example, an asset may be:

used singly or in combination with other assets or water assets;a)

exchanged for other assets or water assets;b)

used to settle a liability or water liability; orc)

distributed to the owners of the water reporting entity or other stakeholders of the d) water reporting entity.”

B43. SWAC 4 then provides an analysis of future benefits related to a water reporting entity and those related to a physical water reporting entity. For example, paragraph 22 states the following:

“In the case of an individual or organisation that is a water reporting entity, future benefits derived by the water reporting entity are contributions to achieving the economic, environmental, social or other objectives of the water reporting entity.”

B44. Paragraph 25 of SWAC 4 states the following:

“Future benefits that achieve environmental objectives of a water reporting entity may produce environmental benefits, or prevent or reduce environmental degradation. For example, water stored in the dams of a park with environmental protection objectives may be released to mitigate the nature and extent of deterioration of rivers and environmental sites during drought conditions.”

B45. Consistent with the notion of deriving environmental benefits, some argue that the entire groundwater system could be regarded as providing future benefits in the form of preserving ecosystems. In other words, notwithstanding that only a restricted or limited volume of groundwater is available to be extracted, future benefits are derived in the form of achieving the environmental objectives of the water reporting entity. Therefore, provided it can be quantified with representational faithfulness, the entire volume of groundwater should be recognised as a water asset in the Statement of Water Assets and Water Liabilities.

B46. Alternatively, others consider the argument that the entire groundwater system contributes to the achievement of environmental objectives of the water reporting entity to be tenuous. They instead argue that an assessment of the future benefits to be derived from the groundwater system should be limited to the amounts capable of being accessed and taken or delivered. The fact that the non-extractable portions contribute to the attainment of environmental benefits such as the preservation of ecosystems and the avoidance of salt contamination is secondary to the benefits to be derived from the use of the extractable portions. Therefore, provided it can be quantified with representational faithfulness, only the extractable volume of groundwater should be recognised as a water asset in the Statement of Water Assets and Water Liabilities.


B47. In considering this issue, the financial reporting analogy of a ‘contingent asset’ included in Australian Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets was explored. A contingent asset is defined in AASB 137 as follows:

“a contingent asset is a possible asset that arises from past events and whose existence will be confirmed only be the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity”

B48. It was noted that those who argue that only the extractable volume of groundwater should be recognised as a water asset would analogise that the non-extractable portion of the aquifer is in the nature of a contingent asset. In other words, the non-extractable volume represents only a possible asset because the ability to extract volumes in excess of the specified extractable volumes would be contingent on changes to the relevant legislative or regulatory requirements or the triggering of waiver provisions, all of which are uncertain events not wholly within the control of the management of the water reporting entity.

B49. The question of whether recognition of the entire volume of groundwater would be consistent with the objective of providing relevant information to users of general purpose water accounting reports was also considered. SWAC 3 Qualitative Characteristics of General Purpose Water Accounting Reports outlines the qualitative characteristics of general purpose water accounting reports. Paragraph 18 states the following:

“An essential quality of the information provided in general purpose water accounting reports is that it is relevant to the decision-making needs of users. Information is considered to be relevant when it influences, or has the capacity to influence, users’ decisions about the allocation of resources. Information is capable of influencing users’ decisions when it has predictive value, confirmatory value or both. Information is useful if it assists users by helping them to understand and evaluate past, present or future water events, transactions or transformations.”

B50. As noted in SWAC 3, information is considered to be relevant when it influences, or has the capacity to influence, users’ decisions about the allocation of resources. It was noted during deliberations that concerns had been raised when preparing demonstration accounts as part of the NWADp Pilot Program that presenting a total volume would increase the risk of over-consumption of the water resource.

B51. After considering each of the arguments, it was concluded that groundwater should be viewed, in the first instance, as a contingent water asset on the basis that it does not, in the first instance, meet the definition of a water asset. However, it was further concluded that the extractable portion of the groundwater meets the definition of a water asset and also satisfies the recognition criterion relating to probable future benefits. Therefore, provided it can be quantified with representational faithfulness, the extractable volume of groundwater should be recognised as a water asset in the Statement of Water Assets and Water Liabilities.

B52. Because, in forming this conclusion, reference had been made to the accounting concept of a contingent asset, it was decided that it would be useful to include a similar concept in the PAWAS (see paragraphs BC59-BC62).


Dead storage water

B53. Some argue that dead storage water provides future benefits to the water reporting entity for the following reasons:

it provides access to the surface water above it;a)

if storage level falls below the elevation of the lowest constructed outlet, the dead b) storage water could be accessed and, with some effort and investment, taken or delivered; and

if the dead storage water was not there it would need to be replaced. Consequently c) there is a benefit in not having to replace it with other water assets.

B54. Others disregard these arguments on the basis that an assessment of future benefits should be limited to amounts that are capable of being accessed and used. They further argue that consistent with the treatment of the non-extractable portion of groundwater, dead storage water could be considered to be in the nature of a contingent water asset.

B55. However it was noted that a key characteristic of a contingent water asset is that it is a possible water asset whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Accessing dead storage water is generally within the control of the management of a water reporting entity via the use of alternative extraction methods. In contrast, the non-extractable portion of groundwater is in the nature of a contingent asset because the ability to access is not within the control of the management of the water reporting entity.

B56. It was concluded that dead storage water meets the definition of a water asset as well as the recognition criterion relating to probable future benefits. Therefore, provided its volume can be quantified with representational faithfulness, dead storage water is recognised as a water asset in the Statement of Water Assets and Water Liabilities.

Conveyance water

B57. It was noted that conveyance water provides future benefits for the following reasons:

it enables the delivery of water in regulated rivers and utility supply networks by a) covering the loss of water in the delivery process;

if necessary, it could be accessed and taken or delivered; andb)

if conveyance water was not part of a delivery system it would need to be replaced. c) Consequently there is a benefit in not having to replace it with other water assets.

B58. It was concluded that conveyance water meets the definition of a water asset as well as the recognition criterion relating to probable future benefits. Therefore, provided its volume can be quantified with representational faithfulness, conveyance water is recognised as a water asset in the Statement of Water Assets and Water Liabilities.

Contingent water assets (paragraphs 60-64)B59. As noted in paragraph BC52, reference was made to the accounting concept of a

contingent asset in reaching conclusions about the treatment of groundwater. It was decided it would be useful to include a similar concept in the PAWAS.

B60. It was agreed that a contingent water asset should be defined as a possible water asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water reporting entity.


B61. Because it is only a possible water asset, a contingent water asset does not meet either the definition or the recognition criteria for water assets. It is therefore not recognised in the Statement of Water Assets and Water Liabilities.

B62. It was decided it would be helpful to preparers of general purpose water accounting reports to include additional guidance in the PAWAS to illustrate the concept of a contingent water asset. The PAWAS therefore includes the example of groundwater discussed in paragraphs BC40-BC52, clarifying that the non-extractable portion of groundwater is a contingent water asset because it is possible that a change in circumstances not wholly within the control of the management of the water reporting entity (such as legislative changes that alter the extractive limits) would result in further portions of the groundwater storage becoming available for extraction.

Recognition criteria: water liabilities (paragraphs 65-70)B63. The PAWAS requires an item that meets the definition of a water liability to be

recognised in the Statement of Water Assets and Water Liabilities when:

it is probable that the present obligation will result in a decrease in the water a) reporting entity’s assets or an increase in another water liability when the obligation is discharged; and

the item’s volume can be quantified with representational faithfulness.b)

B64. In considering the definition and recognition criteria for water liabilities, it was concluded that providing additional guidance in the PAWAS on the notion of a present obligation would be useful for preparers of general purpose water accounting reports.

Present obligation (paragraphs 66-70)

B65. To meet the definition of a water liability it is necessary that the item constitutes a present obligation of the water reporting entity. Paragraph 34 of SWAC 4 states the following:

“An essential characteristic of a water liability that is reported by a water reporting entity is that the water reporting entity has a present obligation. An obligation is a duty or responsibility to act or perform in a certain way. Obligations may be legally enforceable as a consequence of a binding contract or statutory requirement. This is normally the case, for example, with volumes of water deliverable under contract or as a consequence of an allocation announcement under a water sharing plan. …”

B66. It was noted that SWAC 4.34 identified volumes of water deliverable as a consequence of an allocation determination and announcement under a water sharing plan as being an obligation. It was agreed that an allocation determination and announcement could be expected to give rise to a present obligation and that such a determination was relatively straight-forward. However for other items, it was believed that determining whether a present obligation exists may prove challenging and that in the absence of additional guidance within the PAWAS, divergent treatments could emerge. For example, it was believed that additional guidance within the PAWAS would be useful in relation to ongoing water commitments, which arise when a water reporting entity is subject to a water sharing plan that requires it to deliver a monthly minimum flow of water to another water reporting entity to the extent that there is available water. The question considered was whether the ongoing water commitment represented a present obligation of the water reporting entity.


Ongoing water commitments (paragraph 69)

B67. It was noted that the definition of a water liability in SWAC 4 draws on the definition of a liability in Australian Accounting Standards. The definition of a liability in Australian Accounting Standards also makes use of the term ‘present obligation’. Therefore, the financial reporting concept of a ‘present obligation’ was considered.

B68. Australian Accounting Standard AASB 137 Provisions, Contingent Liabilities and Contingent Assets prescribes the accounting for provisions, contingent liabilities and contingent assets. AASB 137 contains the following definitions:

“A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits.

A provision is a liability of uncertain timing or amount.

A contingent liability is:

a possible obligation that arises from past events and whose existence will be a) confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or

a present obligation that arises from past events but is not recognised because:b)

i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii) the amount of the obligation cannot be measured with sufficient reliability.”

It was noted that a contingent liability in a financial reporting context can be either a possible obligation (part (a) of the definition of a contingent liability) or an unrecognised present obligation (part (b) of the definition of a contingent liability). In this regard, the main focus of deliberations was on contingent liabilities that represent possible obligations and not unrecognised present obligations.

B69. AASB 137 distinguishes between a provision and a contingent liability. This is significant because a provision is recognised as a liability in the financial statements when recognition criteria are met, whereas contingent liabilities are not permitted to be recognised in the financial statements. A provision is “a present obligation … that arises from past events, the settlement of which is expected to result in an outflow …” whereas a contingent liability is “a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.” A contingent liability is a possible obligation because it is yet to be confirmed whether the entity has a present obligation that could lead to an outflow of resources. Both the definition of a provision and a contingent liability refer to obligations (be they present or possible) that arise from past events.

B70. AASB 137 specifies that a past event that leads to a present obligation is an obligating event, and contains the following definition:

“An obligating event is an event that creates a legal or constructive obligation that results in an entity having no realistic alternative to settling that obligation.”

B71. Therefore, it is necessary to determine whether a past event constitutes an obligating event, and therefore gives rise to a present obligation rather than a possible obligation.


B72. AASB 137 provides examples of what constitutes an obligating event. One example involves a manufacturer granting a warranty to purchasers of its product at the time of sale. The sale of the product represents an obligating event because it creates a present legal obligation on the manufacturer to make good any defective products. Another example involves an entity operating an oil rig whereby the terms of its licence require it to remove the rig at the end of production and restore the seabed. The construction of the rig represents an obligating event because it creates a present legal obligation on the entity to remove the rig and restore the seabed at the end of production.

B73. AASB 137 also provides examples of events that do not give rise to a present obligation. One example is a court case in which the facts and circumstances suggest that the defendant will not be found liable. On that basis, the event that led to the litigation is not considered to be an obligating event. Instead, it is a past event that gives rise to a possible obligation whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity (the decision of the court). In other words, the obligation to pay damages is contingent upon the outcome of the litigation.

B74. Another example of a contingent liability is when an entity acquires an asset and is obligated under the sale and purchase agreement to pay the vendor a percentage of the sales generated from the asset. The signing of the sale and purchase agreement does not constitute an obligating event. Instead, it is a past event that gives rise to a possible obligation whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity (sales generated from the asset). In other words, the obligation to make payments to the vendor is contingent upon sales being generated by the asset. The fact that the entity expects to generate sales from the asset does not constitute an obligating event. It is only when the sales are made that a present obligation is triggered.

B75. Some argue the enactment of the water resource management instrument that imposes an ongoing water commitment is the obligating event that gives rise to a present obligation to deliver water. However, this raises a further question regarding the quantification of the ongoing water commitment. For example, because it is an ongoing commitment, should the obligation be measured (i) into perpetuity; (ii) to the extent that the water reporting entity has existing water that is available to satisfy the ongoing commitment; or (iii) for a specified, albeit arbitrary, time period (for example, volumes to be delivered within the next 12 months)?

B76. Others note that supply of water under an ongoing water commitment is ultimately subject to the water being available. Further, an inability to deliver water in a particular month typically does not result in a carryover of the undelivered amount. Therefore, the obligation to deliver water is contingent on sufficient water being available in a given month, meaning that the obligating event is not the enactment of the water resource management instrument but rather the availability of water over time. In other words, the obligation to deliver water arises over time, dependent on water availability. Those who support this approach argue that there is a present obligation only for the undelivered volumes relating to past months for which there was sufficient water available to meet the minimum flow requirements. The requirement to deliver water in future periods under an ongoing water commitment is not a present obligation of the water reporting entity at the reporting date but rather a possible obligation (because the obligation to deliver is contingent on the availability of water in the future).


B77. After considering each of the arguments, it was concluded that the obligating event relating to an ongoing water commitment is not the enactment of the water resource management instrument but rather the availability of water to meet the minimum flow requirements for a particular month. Accordingly, a present obligation would exist at the reporting date for any undelivered volumes relating to past months for which sufficient water was available to meet the minimum flow requirements. The requirement to deliver water in future periods under an ongoing water commitment is not a present obligation but rather a possible obligation.

Constructive obligations (paragraph 70)

B78. As noted in paragraph BC66, it was believed that determining whether a present obligation exists may prove challenging and that, in the absence of additional guidance within the PAWAS, divergent treatments amongst water reporting entities could emerge. In addition to considering present obligations in the context of ongoing water commitments, it was agreed that present obligations in the form of constructive obligations should also be considered.

B79. It was noted that paragraph 34 of SWAC 4 states the following:

“… Obligations also arise, however, from normal business practice, custom and a desire to maintain good business relations or act in an equitable manner. If, for example, management of an entity decides as a matter of policy to return water to the environment, even when there exists no enforceable obligation to do so, the obligation creates a water liability.”

In a financial reporting context, obligations that arise in this manner are referred to as constructive obligations and are distinguished from legal obligations. AASB 137 contains the following definitions of constructive and legal obligations:

“A constructive obligation is an obligation that derives from an entity’s actions where:

by an established pattern of past practice, published policies or a sufficiently specific a) current statement, the entity has indicated to other parties that it will accept certain responsibilities; and

as a result, the entity has created a valid expectation on the part of those other b) parties that it will discharge those responsibilities.

A legal obligation is an obligation that derives from:

a contract (through its explicit or implicit terms);a)

legislation; orb)

other operation of law.”c)

B80. Volumes of water deliverable as a consequence of an allocation announcement or an ongoing water commitment under a water sharing plan represent legal obligations.

B81. It was noted that a constructive obligation may arise, for example, when the management of the water reporting entity has indicated to other parties that a certain volume of water will be returned to the environment each period and in doing so has created a valid expectation on the part of those parties that the water will be returned if sufficient water is available. Similar to the conclusion reached for ongoing water commitments, it was determined that a present obligation exists at the reporting date for any water that is yet to be returned to the environment in accordance with management’s decision. Importantly, it is only the water that is expected to be delivered in accordance with the decision that relates to the current or prior periods that gives rise to a present obligation at the reporting date. A decision to return water in future periods is not a present obligation but rather a possible obligation.


B82. Because, in forming this conclusion, reference was made to the accounting concepts of obligating events, legal obligations, constructive obligations and contingent liabilities, it was decided to include similar concepts in the PAWAS (see paragraphs BC88-BC92 for a discussion of contingent water liabilities).

Future commitments (paragraphs 71-74)B83. Consistent with the objective of general purpose water accounting reports, it was

considered useful to require information to be disclosed in those reports about the extent to which water assets at the reporting date would be available to settle water liabilities and other commitments within 12 months of the reporting date.

B84. One approach considered for providing this information was to require information to be presented in the Statement of Water Assets and Water Liabilities based on a temporal classification of water assets and water liabilities. It was noted that temporal classification is applied in financial reporting. For example, the assets and liabilities recognised in an entity’s balance sheet are classified as current or non-current in accordance with specified criteria (an asset that is expected to be realised within 12 months of the reporting date or a liability that is due to be settled within 12 months of the reporting date would be classified as current for financial reporting purposes). However, it was noted that adopting a temporal classification approach for the Statement of Water Assets and Water Liabilities would not provide sufficiently fulsome information. This is because future commitments expected to be settled within 12 months but not representing present obligations at the reporting date would not be recognised as water liabilities in the Statement of Water Assets and Water Liabilities. Consequently, to provide information about the extent to which water assets at the reporting date would be available to settle water liabilities and other commitments within 12 months of the reporting date, further note disclosures would be required.

B85. To give effect to its decision to provide this information, it was agreed that guidance on what constitutes a future commitment should be included in the PAWAS. It was agreed that future commitments are not, at the reporting date, present obligations of the water reporting entity and are therefore not recognised as water liabilities in the Statement of Water Assets and Water Liabilities. It was further agreed that future commitments should be defined as expected future demands on water influenced by the availability and management of the water resources of the water reporting entity. They may arise as a result of externally-imposed requirements or best practice for managing water resources.

B86. It was also decided that the PAWAS should include an example to demonstrate a future commitment. It therefore provides the example of expected future allocation announcements, clarifying that they are not, at the reporting date, present obligations of the water reporting entity. Rather, they represent expected future demands on water influenced by the availability and the management of the water resources of the water reporting entity.

B87. See paragraphs BC114-BC116 for a discussion of the disclosure requirements related to water assets available to settle water liabilities and future commitments expected to be settled within 12 months of the reporting date.

Contingent water liabilities (paragraphs 75-79)B88. As noted in paragraph BC82, reference was made to the accounting concept of a

contingent liability in reaching conclusions about the concept of a present obligation. It was decided it would be useful to include a similar concept in the PAWAS.

B89. It was agreed to draw on the financial reporting definition of a contingent liability and to therefore define a contingent water liability as an obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the water reporting entity.


B90. Because it is a possible obligation, a contingent water liability does not meet either the definition or the recognition criteria for water liabilities. It is therefore not recognised in the Statement of Water Assets and Water Liabilities.

B91. It was decided that it would be helpful to preparers of general purpose water accounting reports to include additional guidance in the PAWAS to illustrate the concept of a contingent water liability. In particular, the PAWAS includes the example of an ongoing water commitment, clarifying that the requirement to deliver water in future periods under an ongoing water commitment is a contingent water liability because the delivery of water is dependent on sufficient water being available in a given future month.

B92. It was also noted that a contingent water liability may also represent a future commitment. To the extent that a contingent water liability is also a future commitment expected to be settled within 12 months of the reporting date, information about that future commitment is disclosed in accordance with the PAWAS (see paragraph BC114-BC116).

Statement of Changes in Water Assets and Water Liabilities and Statement of Physical Water Flows

Information to be presented (paragraphs 82-85 and 89-93)B93. As noted in paragraph BC35, to facilitate comparability, it was concluded that the

PAWAS should prescribe minimum line items to be included in the water accounting statements. As noted in paragraph BC36, to determine the minimum line items to be presented in the water accounting statements a Chart of Accounts (CoA) was produced, which was then used to determine the minimum line items to be presented in the Statement of Changes in Water Assets and Water Liabilities and the Statement of Physical Water Flows.

B94. It was also concluded that whilst preparers of general purpose water accounting reports should have the option of presenting additional line items, they should nonetheless be required to present additional sub-classifications when such additional information is relevant to an understanding of the Statement of Changes in Water Assets and Water Liabilities and the Statement of Physical Water Flows.

Group water accounting reports (paragraphs 94-98)B95. The National Water Account will ultimately be a special purpose water accounting

report intended to provide water information for the nation as a single water entity. It will involve the aggregation of the water assets and water liabilities, net water assets, changes in water assets and changes in water liabilities and the physical water flows of other lower-level (but as yet unspecified) water entities.

B96. However, transactions occur regularly between these lower-level water entities. For example, one water entity’s outflows to another water entity represent inflows of the latter. Such transactions will be recorded in the water accounting reports of the respective water entities. For the National Water Account to present water information for the nation as a single water entity, transactions between lower-level water reporting entities will need to be examined and adjustments made as appropriate to ensure there is no overstatement or double-counting of water assets, water liabilities, changes in water assets, changes in water liabilities, water inflows or water outflows. For example, when the outflows from one water entity represent the inflows of another, simply aggregating the water accounting statements of these water entities would result in an overstatement of both inflows and outflows.


B97. Therefore, to aid and inform the preparation of the National Water Account, it was decided to include in the PAWAS requirements and guidance related to the preparation of group water accounting reports. A group water accounting report is the water accounting report of a group water reporting entity presented as a single water entity.

B98. Specifically, the following issues were considered:

whether the requirements for preparing group water accounting reports should a) relate solely to the preparation of the National Water Account or to the preparation of group water accounting reports generally;

whether a basis should be included in the PAWAS for determining when a group b) water accounting report should be prepared;

what definitions relating to the preparation of a group water accounting report c) should be included in the PAWAS;

what procedural guidance should be included in the PAWAS for preparing group d) water accounting reports; and

what group-related disclosure requirements should be included in the PAWAS.e)

Requirements for preparing the National Water Account versus group water accounting reports generally

B99. As noted in paragraph BC95, the National Water Account is intended to provide aggregate water information for the nation as a single water entity, and will involve the aggregation of the water accounting reports of other lower-level water entities. It was therefore considered appropriate to include in the PAWAS requirements and guidance to aid and inform the preparation of the National Water Account. However, this raised the question as to whether the requirements and guidance should be described solely in the context of preparing the National Water Account or whether they should be described in terms of preparing group water accounting reports generally.

B100. It was noted that water accounting reports are likely to be required in the future for specified regions or areas below the National level, such as at the State level or at a regional level such as the Murray-Darling Basin. Consistent with the National Water Account, the water accounting reports for these regions or areas will need to present aggregate water information for the region or area as a single water entity, and will thus involve the aggregation of lower-level water entities within that region or area. Therefore, any requirements and guidance developed for the PAWAS on the preparation of group water accounting reports will be equally applicable in the preparation of these sub-group water accounting reports.

B101. Whilst the PAWAS has been developed as an interim step to underpin the preparation of the Pilot and First National Water Accounts, it may be also viewed as providing a basis for preparing other general purpose water accounting reports, either now or in the future pending the development and completion of final Australian Water Accounting Standards. Moreover, it is possible that group water accounting reports will need to be prepared for specified regions or areas below the National level to facilitate the preparation of the Pilot and First National Water Accounts. It was therefore decided that it would be appropriate to articulate the requirements and guidance in the PAWAS in terms of preparing group water accounting reports generally.

Basis for preparing group water accounting reports

B102. A key issue for consideration was whether the PAWAS should specify a basis for determining the circumstances in which a group water accounting report would be required to be prepared.


B103. By way of a financial reporting analogy, Australian Accounting Standard AASB 127 Consolidated and Separate Financial Statements prescribes ‘control’ as the basis for preparing consolidated financial statements. That is, an entity (parent) is required to prepare consolidated financial statements in which it consolidates all of the entities that it controls (subsidiaries).

B104. It was decided that a basis was not required in a water accounting context since the requirement to consolidate a number of water entities into a single water entity would ultimately come via a regulation, statute or directive from an authority such as the Bureau of Meteorology. Accordingly, a basis for preparing group water accounting reports is not included in the PAWAS. Instead, the PAWAS defines a group water reporting entity as a water reporting entity comprising individual water entities and for which a group water accounting report is required to be prepared under a regulation, statute or directive. It also prescribes the procedures to be applied in preparing group water accounting reports.

Defined terms to be included in the PAWAS

B105. Because the requirements and guidance for preparing group water accounting reports are described in the PAWAS in terms of preparing group water accounting reports generally, it was decided important to include in the PAWAS a definition of a group water accounting report.

B106. By way of a financial reporting analogy, AASB 127 defines consolidated financial statements as “the financial statements of a group presented as those of a single economic entity”. It goes on to define a group as “a parent and all its subsidiaries”, with the parent-subsidiary relationship underpinned by the concept of control.

B107. It was decided that similar definitions could be used in a water accounting context. In particular:

a group water accounting report is the water accounting report of a group water a) reporting entity presented as a single water entity; and

a group water reporting entity is a water reporting entity comprising individual b) water entities and for which a group water accounting report is required to be prepared under some regulation, statute or directive.

B108. The definition for a group water reporting entity refers to water entities as opposed to water reporting entities. This is because a group water reporting entity may comprise water entities that are not themselves water reporting entities.

B109. It was considered that these definitions would be appropriate for the preparation of the National Water Account as well as the preparation of other (sub-national) group water accounting reports. For the National Water Account, the group water reporting entity will comprise water entities within the nation, and the group water accounting report will therefore be the water accounting report of the nation presented as a single water entity.

Procedures for preparing group water accounting reports

B110. In considering the procedural guidance to be included in the PAWAS for preparing group water accounting reports, reference was made to AASB 127, which prescribes a number of consolidation procedures to be applied in the preparation of consolidated financial statements. In particular, it was decided to include requirements and guidance dealing with:

the need for transactions between water entities within a group to be eliminated a) as appropriate to avoid overstating or ‘double-counting’ the elements of water accounting statements;


the need for the water accounting statements for all water entities within the group b) to be prepared as of the same date and for the same reporting period to provide meaningful information as at a point in time and for a particular period; and

the need for the water accounting statements of all water entities within the group c) to be prepared using uniform water accounting policies for like transactions and other events to ensure a meaningful aggregation of consistent information.

B111. In terms of the requirement to make adjustments to avoid overstating or ‘double-counting’ the elements of water accounting statements, consider the following example:

A group water reporting entity comprises Water Entity A and Water Entity B:

Water Entity A’s only surface water increase during the reporting period is an inflow a) of 250 000ML;

Water Entity A’s only surface water decrease is the delivery of water (outflow) to b) Water Entity B;

Water Entity B’s only surface water increase for the reporting period is an inflow of c) 240 000ML from Water Entity A; and

Water Entity B’s only surface water decrease during the reporting period is an d) outflow of 225 000ML.

The following table illustrates the determination of the Statement of Changes in Water Assets and Water Liabilities for the group water reporting entity:

Water Entity A

Water Entity B Aggregation Adjustments Group Water

Reporting Entity

Surface water increases 250 000ML 240 000ML 490 000ML (240 000ML) 250 000ML

Surface water decreases (240 000ML) (225 000ML) (465 000ML) 240 000ML 225 000ML

Change in net water assets 10 000ML 15 000ML 25 000ML 25 000ML

The ‘Aggregation’ column represents the summation of Water Entity A and B. However, the ‘Group Water Reporting Entity’ column is the aggregation of Water Entity A and B adjusted for the water flows that occurred between these two entities during the reporting period in order to present the group as a single water reporting entity. Therefore, from a group perspective, the surface water increases are inflows of 250 000ML, not 490 000ML. Similarly, the group’s surface water decreases are outflows of 225 000ML, not 465 000ML. Whilst the change in net water assets in both the Aggregation and Group columns is the same (25 000ML), failure to make the adjustment for water flows between the two water entities results in an overstatement of the surface water increases and surface water decreases from the group’s perspective.


Group-related disclosure requirements (paragraph 127)

B112. In developing the group-related disclosure requirements to be included in the PAWAS, reference was made to AASB 127, which prescribes a number of disclosures in the preparation of consolidated financial statements. However, it was concluded that many of the financial reporting disclosure requirements were not relevant in a water accounting context, such as those relating to the application of the control concept and the relationship between a parent ecided that the most relevant information would be the names of all the water entities comprising the group.

Note disclosures (paragraphs 99-126)B113. Consistent with the objective of general purpose water accounting reports, it was agreed

that the following note disclosure requirements should be included in the PAWAS:

a summary of the significant water accounting policies used in the preparation of a) the general purpose water accounting report;

supporting information for items presented in the water accounting statements, b) including:

i) information about the restatement of comparative information;

ii) information about quantification approaches; and

ii) reconciliations and other information related to the Statement of Physical Water Flows; and

other note disclosures, including information about:c)

i) water assets available to settle water liabilities and future commitments within 12 months of the reporting date (see paragraphs BC114-BC116);

ii) contingent water assets and contingent water liabilities;

ii) water rights, water allocations and water restrictions;

iv) water market activity;

v) water use (see paragraphs BC117-BC119); and

vi) group water accounting reports (see paragraph BC112).

Water assets available to settle water liabilities and future commitments within 12 months of the reporting date (paragraphs 111-115)

B114. As outlined in paragraphs BC83-BC87, it was agreed that it would be useful to require information to be disclosed in general purpose water accounting reports about the extent to which water assets at the reporting date will be available to settle water liabilities and future commitments within 12 months of the reporting date.

B115. It was decided that it would be helpful to preparers of general purpose water accounting reports to include additional guidance in the PAWAS to illustrate the concept of ‘available’ water assets. There was concern that divergent treatments might emerge amongst water reporting entities without such additional guidance. The PAWAS includes the examples of dead storage water and conveyance water, clarifying that whilst they meet the definition of a water asset, they are typically not able to be accessed and taken or delivered to settle water liabilities or future commitments. Accordingly, they do not typically form part of water assets available to be accessed.


B116. It was also concluded that in some circumstances it may be appropriate to disclose information that enables users to evaluate the extent to which water assets at the reporting date will be sufficient to meet future commitments expected to be settled beyond 12 months of the reporting date. For example, this would be the case when the management of the water reporting entity is required to ensure the availability of water through multi-year droughts and the water reporting entity is currently experiencing such drought conditions.

Water use (paragraphs 123-126)B117. The PAWAS requires information to be disclosed about how water resources of the

water reporting entity have been used during the reporting period in the pursuit of:

environmental benefit;a)

social and cultural benefit; andb)

economic benefit.c)

B118. The disclosure requirements relating to environmental benefit give effect to the provisions in the National Water Initiative that deal with environmental water accounting.

B119. The note disclosure requirements relating to social and cultural benefit give effect to the provisions in the National Water Initiative that deal with indigenous access.

Assurance Statement (paragraphs 128-130)B120. The PAWAS requires an Assurance Statement to be provided in a general purpose

water accounting report. An Assurance Statement is an explicit statement of whether the general purpose water accounting report is presented fairly in accordance with Australian Water Accounting Standards, and is provided by an appropriately qualified assurance provider independent of the water reporting entity and its management and governing body.

B121. The assurance function, undertaken by an appropriately qualified and independent assurance provider, is important to enhancing users’ confidence in the veracity of the information being presented to inform decision-making. For this reason it was decided to embed the requirement for an Assurance Statement in the PAWAS. However, whilst the PAWAS requires an Assurance Statement to be provided, it does not prescribe:

the level of assurance to be provided; ora)

the criteria against which an assurance provider’s qualifications and independence b) should assessed.

B122. The WASB intends to develop an assurance framework to accompany Australian Water Accounting Standards. In lieu of this assurance framework being completed, the relevant authority will need to determine the level of assurance to be provided and the criteria against which an assurance provider’s qualifications and independence should assessed for the purpose of preparing general purpose water accounting reports in accordance with the PAWAS. At the time of developing the PAWAS, the regulatory and institutional arrangements regarding the assurance function for the preparation of the Pilot and First National Water Accounts had not been determined.

Model Water Accounting ReportSlattery Water Supply SystemWater Accounting Report

30 June 2X09

An illustration of an Australian general purpose water accounting report for a fictitious water reporting entity

Model water accounting report 3MODEL WATER ACCOUNTING REPORT 3 / 25 SLATTERY WATER SUPPLY SYSTEM

Table of contents

Introduction .............................................................................................................................. 4

Contextual Statement ............................................................................................................... 5 Physical information .................................................................................................................... 5 Administrative information........................................................................................................... 6 Overview of reporting period:...................................................................................................... 8

Accountability Statement .......................................................................................................... 9

Statement of Water Assets and Water Liabilities.................................................................... 10

Statement of Changes in Water Assets and Water Liabilities................................................. 11

Statement of Physical Water Flows......................................................................................... 12

Note Disclosures...................................................................................................................... 13 Note 1: Significant water accounting policies ............................................................................. 13 Note 2: Information supporting the items presented in the water accounting statements .......... 14 Note 3: Quantification approaches............................................................................................. 17 Note 4: Other disclosures .......................................................................................................... 19

Assurance Statement .............................................................................................................. 25

4 Model water accounting reportMODEL WATER ACCOUNTING REPORT 4 / 25 SLATTERY WATER SUPPLY SYSTEM

Introduction

This document contains a model water accounting report for a fictitious group water reporting entity, Slattery Water

Supply System. Testcorp, a government-owned water resource management body, is responsible for the

management of the Slattery Water Supply System.

The enclosed group water accounting report is an illustrative general purpose water accounting report (GPWAR)

prepared in accordance with the Preliminary Australian Water Accounting Standard (PAWAS). It is intended to

illustrate the presentation and disclosure requirements of the PAWAS.

The enclosed GPWAR is illustrative only and does not attempt to show all possible presentation and disclosure

requirements. It should not be regarded as a comprehensive checklist of PAWAS presentation and disclosure

requirements. For a comprehensive list of the presentation and disclosure requirements, reference should be made to

the PAWAS itself.

Each section of the GPWAR is referenced to the relevant paragraphs within the PAWAS.

The GPWAR illustrated in this document will require continual updating as new and amended Australian Water

Accounting Standards (AWASs) are issued by the Water Accounting Standards Board. It does not include changes

arising from new or amending AWASs issued after 16 June 2009.

Model water accounting report 5


PAWAS Ref Para 39-40 Contextual Statement

Physical information

Description of the Water Reporting Entity

The group water reporting entity for which this General Purpose Water Accounting Report is prepared is the Slattery Water Supply System, which is depicted in the map below and comprises: • The regulated Slattery River (including the Pierre Jour Reservoir, and the Cherant and Nirvana Weir pools);

• The Longford irrigation supply network (including Lake Humphrey); • The unregulated Slattery River and Smith Creek (including associated minor on and off stream catchment storages); and • The groundwater within the Vanderbelt Groundwater Management Area. The water reporting entity excludes the Helgaville urban supply system, the Helgaville wastewater system, the Longford

drainage collection network, Stanley Creek and the Menace and Baxter Rivers, although interactions occur with these other water entities. The water entities excluded from this group water accounting report are denoted by dotted lines in the map.

Para 40 Map of the Slattery Water Supply System

Para 127 The Slattery Water Supply System water reporting entity comprises the following four discrete water entities being managed

by Testcorp: 1. unregulated Slattery River and Smith Creek 2. regulated Slattery River

3. Vanderbelt groundwater management area 4. Longford irrigation supply network

6 Model water accounting report


PAWAS Ref There are four principal connections with neighbouring water entities.

1. Menace River Catchment - There is a small diversion from the Menace River in the north-west corner of the catchment. 2. Regulated Baxter River - The Slattery River is one of the tributaries to the regulated Baxter River. 3. Helgaville urban supply system - The Helgaville supply network takes its supply from the regulated Slattery River and

some treated wastewater is returned to the Slattery River.

4. Longford drainage collection network - The Longford drainage collection network collects irrigation drainage flows and returns flows to the Slattery River.

These connections require Slattery River inter-valley accounts to be kept with both the Baxter and Menace River water entities.

Water resources The Slattery River Catchment experiences a semi-arid climate. The Slattery River proper provides approximately 91% of

natural stream flow in the catchment and the Smith Creek contributes approximately 9%. There is a small diversion into the catchment from the Menace River. The Vanderbelt groundwater management area includes the Cave Aquifer - an unconfined aquifer at a depth that permits reasonably accurate modelling of its volume; and the Puits Aquifer - a second unconfined aquifer, which cannot be reliably

modelled. Both are in the Slattery River Catchment from which significant extraction occurs. Historically, the assessed extractable limit of groundwater represents approximately 4% of the total available groundwater resources, although a recent analysis indicated this could be increased to approximately 6% and still be within environmental

management guidelines for sustainable extraction limits. Substantial surface water is diverted from the regulated Slattery River to the Longford irrigation supply network that delivers water to the region’s substantive agricultural sector. Baxter River is the major river in the area, of which Slattery River is a

tributary. Water Infrastructure

The principal reservoir is Pierre Jour Reservoir, which is located on the regulated Slattery River below the confluence with Smith Creek. The reservoir behind Pierre Jour dam has a capacity of 1 200 000ML. There are two weirs and associated pools in the catchment. Cherant Weir (capacity 300 000ML) is the major source of water for Lake Humphrey and the Longford irrigation supply network. End of system flows are measured below Nirvana Weir

(capacity 100 000ML) at Gauging Station 30032010 before the Slattery River enters Baxter River. Lake Humphrey (capacity 1 000 000ML) is the other major water storage, and is effectively part of the Longford irrigation supply network.

Para 40(b)

Administrative information

Water Resource Management Instruments

The Slattery Water Resources Management Plan 2X05 (WRMP) is the principal instrument for water sharing. This plan was developed by the Department of Water in accordance with provisions of the Minton Water Act and was approved by the Minton State Government. The WRMP is informed by the Water Resource Assessment Report (WRAP), which assesses the water resources in the water entity and identifies the key risks and uses associated with them. Based on this assessment, the

WRMP sets out environmental, social and cultural river flow objectives; the parameters for the extraction of groundwater and for the diversion and storage of unregulated surface water; and the supply reliability objectives for the diversion of regulated surface water. The Slattery Resource Operations Plan 2X07 (ROP) is the instrument that creates tradable entitlements (and recognises

entitlements which are not tradable) and which sets out methods for annual water allocation or restriction as well as rules for the trading for both entitlements and allocations. The ROP was approved by the Department of Water after a rigorous process, which ensured that its provisions were consistent with the provisions of the WRMP. All water entitlement and licence details are kept in a state-wide register by the Department of Water, with virtual extracts made available to particular operational

bodies that are responsible for management of the virtual registers in accordance with provisions of the relevant ROP. There are licences to take water from the unregulated rivers though these are not tradable. Minor catchment storages on private property are not licensed, but are considered collectively significant and are included in the management regime via a

system of registration. There are non-tradable licences to extract groundwater from the Vanderbelt groundwater management area with no provision for allocation carryover. These licenses are either for irrigation or stock and domestic purposes. There is an entitlement regime for the regulated Slattery River with entitlements having either high, medium or low reliability classifications. Annual allocation determinations and announcements must be carried out in accordance with a schedule and

process specified in the ROP. Both entitlement and annual allocation trade is allowed in accordance with the specified trading rules. Allocation carryover is only allowed ‘high’ reliability classification, and within specified limits. Entitlement holders are notified by mail or email of their allocation after each determination and the allocation schedules are published within three days in local newspapers and are available online on the day of the determination. In order to maintain optimum flexibility in



PAWAS Ref

days in local newspapers and are available online on the day of the determination. In order to maintain optimum flexibility in managing storage capacity, the Minton government imposed a limit on the volume of water allocation than can be carried over to the following reporting period. This limit is currently set at 15% of a licence-holder’s total entitlement volume. A reduction of 8% is applied at the end of the financial year to the volume of allocation carried over to the following period, to

account for water lost in evaporation while it is being stored. In addition to the limits on trade embedded in the trading rules, the Commonwealth government has imposed a 5% annual limit on trading out of certain areas in order to stabilise the volume of water trading over a ten-year period (of which this is

the sixth). The ROP also provides for a reserve for future critical human needs and for conveyance water in the regulated Slattery River and in the Longford irrigation supply network.

Para 40(b)

The ROP also has provisions to guide the roles of a Water Resource Manager and an Environmental Water Manager. The role

of the Water Resource Manager is to make allocation and restriction determinations and announcements in relation to the water resources of the Slattery Water Supply System. These include decisions related to water for social, cultural and economic purposes.

The job of the Environmental Water Manager is to prepare and implement an Environmental Watering Plan including the management of environmental water entitlements and allocations, which allows discretion in the way they are held and applied. Rural and urban water utility functions are covered in the Minton Water Act. The Minton Environment Act is also relevant to

water resource management activities in the Slattery River Catchment. There were no adjustments made to either the Water Resource Management Plan or the Resource Operations Plan during the reporting period.

Water Management Bodies The main bodies with responsibility for the management of the water resources of the Slattery Water Supply System are the

Minton State Government, the Department of Water and Testcorp. The Minton State Government is responsible for approving and reviewing the WRMP. The Department of Water is responsible for approving and reviewing the ROP and monitors and assesses compliance with its provisions.

Testcorp is the body primarily responsible for managing the water resources in the Slattery River Catchment in line with the Slattery Resource Operations Plan (ROP) to ensure stakeholders gain the greatest environmental, social, cultural, and economic benefits from those resources.

Testcorp was established in 1984 and its functions have evolved to cover most water resource management functions within the Slattery River Catchment. It is responsible for management of the water infrastructure of the Slattery Water Supply System, operational management of water resources, including the administration associated with water trading, and maintenance of the virtual entitlement and licence register of the Slattery River Catchment under delegations and provisions in

the ROP. Testcorp is government owned and has a Board of Directors with non-executive directors appointed by the Minton Minister for Water. The Board comprises three senior executives of Testcorp and four independent directors. Antionette Dimmett is the

current Chairman of the Board. The Board is responsible for governance of Testcorp and for meeting its responsibilities under the ROP and the Water Act, including facilitation of the implementation of the Environmental Watering Plan (EWP). Senior management comprises: Sven Hannover (Chief Executive Officer), Samuel Crusoe (Chief Financial and Water Accounting Officer), and Terry O’Donnell (Chief Technical Services). The Head Office is located in Helgaville.

The Water Resource Manager is a nominated independent position within Testcorp with delegations under the ROP to independently make allocation and restriction determinations and announcements, but to work closely with other areas within Testcorp to ensure timely and efficient implementation of operational water resource administration.

The Environmental Water Manager is a nominated position within the Minton Department of Environment with delegations under the Minton Environment Act and the ROP.



PAWAS Ref

Para 40(a)

Overview of reporting period:

Climatic conditions

Climatic conditions improved in 2X09 after drought conditions in 2X08, though water resources did not fully recover to long-term average inflow and storage levels, as shown in the table below. Temperatures during the irrigation season were again above average and continued the trend of increases above the long term mean. Rainfall was again below average and there was an absence of extreme events such as severe storms and frost. The demand for water was high in line with the long-term trend of increasing agricultural productivity from the region, driven mainly by the increasing importance of grapevines for

wine. The downstream catchment of the Baxter River remained in drought throughout the period.

2X09 2X08 Long term average

(1X09 - 2X09)

Amount in Storage at the end of the period (ML) 2 231 022 2 032 146 2 624 310

Inflows (ML) 1 177 291 1 068 285 1 713 131

Diversions and Extractions (ML) 622 962 514 692 687 562

Average Temperature (oC) 17 18 15

Total rainfall (mm) 464 288 558 Inflows and outflows

The major sources of inflows into the Slattery River Catchment came from the unregulated inflow of runoff to regulated and

unregulated Slattery River and Smith Creek (857 839ML, 76%). These were supplemented with diversions from the Menace River catchment (98 391ML, 9%) and return flow from urban and rural areas. Bulk rural irrigation allocation diversions (502 860ML, 52%) and flows to the Baxter River (197 200ML, 18%) were the major

outflows. The percentage of water diverted for urban purposes grew in line with an evident recent trend with some 2% in 2X09 going to Helgaville.

Allocations and restrictions The table in Note 4c shows the regulated Slattery River allocation determinations and announcements made by the Water Resource Manager during the reporting period.

The allocation for high reliability entitlements in 2X09 reached 100% in March while the allocation for medium reliability entitlements only reached 34% in April. There was no allocation for low reliability entitlements. Growers in the region further reduced their water use in 2X09 and increased their carried over allocation as a reserve for 2X10.

In 2X09 the volume of water allocations that exceeded the carryover limit and were therefore forfeited totalled 19 523ML. Some restrictions were imposed via irrigation bans on the unregulated Slattery River and Smith Creek during December to

February and August to January respectively. Trading Activity

The purchase of water rights (entitlements) from neighbouring water entities has become more common in recent years, reflecting the change in agricultural water use from rice, which is a low security annual speculative crop, to growing wine grapes, which is a long term investment needing high reliability water. Growers have preferred to purchase an ongoing entitlement to water rather than annual allocation so as to ensure security of water supply. Trading of water allocations was reduced in 2X08 – 2X09 as further detailed in Note 4f.

The historical trend of water entitlements being purchased from the regulated Slattery River and other upstream catchments by entitlement holders on the regulated Baxter River in times of drought was again evident in the period.



PAWAS Ref Para 41-47 Accountability Statement

In the opinion of the undersigned: Para 41(a), 42 1. The management and operations of Slattery Water Supply System have , with some exceptions outlined below, been

conducted throughout the reported period in compliance with all relevant externally-imposed requirements, including: o Minton Water Act 2X07 o Natural Resources Management Act 2X04 (NRM Act) o National Water Initiative 2X04 (NWI) o Irrigation Act 1X94

o Minton Environmental Act 2X02 o Slattery Resources Operations Plan o Slattery River Catchment Environmental Watering Plan

Some exceptions occurred, which prevented the compliance of the Slattery River Water Supply System with all the externally-

imposed requirements described above. These exceptions are outlined below and in note 4g: o Slattery River Water Supply System breached its obligations under the Slattery River Catchment

Environmental Watering Plan for minimum flow at Nirvana Weir in one instance in 2X09. o As shown in note 4g, there were 11 instances of restrictions in the Vanderbelt groundwater management

area due to over-extraction in the prior month by license-holders.

Para 41(b) 2. The management and operations of Slattery Water Supply System have been conducted throughout the reporting period in compliance with the following best practices for managing water:

o United Nations Guidelines on the quantification of groundwater models o Minton guidelines on water monitoring

Para 43 3. Additionally, the Slattery River Catchment Resource Operations Plan incorporates the following best practice information:

o Water sharing and extraction limitations o Water utility service and operations o Trading of water rights and other claims to water o Water planning and strategic initiatives o Environmental stewardship (through the Environmental Watering Plan)

Para 44 4. This general purpose water accounting report complies with the Preliminary Australian Water Accounting Standard issued

by the Water Accounting Standards Board.

Para 45(a) Joanne Humphrey

Director of ROPs, Minton Department of Water1

Para 45(b) Antoinette Dimmett

Chairman - Testcorp Sven Hannover Chief Executive Officer - Testcorp Darryl Fleetwood

Water Resource Manager Gregory Pearce Environmental Water Manager

1 Identify statutory reporting responsibility



PAWAS Ref

Para 48-79

Statement of Water Assets and Water Liabilities Note 2X09 2X08

ML ML

WATER ASSETS

Para 49(a) Surface Water Assets

SURFACE WATER STORAGE - UNREGULATED

Unregulated river channel storage 2a 9 860 9 860

Unregulated minor storages 98 600 98 600

108 460 108 460

SURFACE WATER STORAGE - REGULATED

Regulated major storages 1 747 784 1 577 600

Regulated river channel storage 2a 173 635 172 550

1 921 418 1 750 150

WATER TRANSPORT SYSTEM STORAGE

Distribution network carrier storage 2a 120 884 93 670

Within distribution network storage 2a 20 114 19 720

140 998 113 390

Total Surface Water Assets 2a, 4b 2 170 876 1 972 000

Para 49(b) Groundwater Assets

GROUNDWATER STORAGES

Unconfined aquifer 60 146 60 146

Total Groundwater Assets 2b, 4b 60 146 60 146

Para 49(c) Other Water Assets

Claims to water: intervalley 44 370 34 510

Total Other Water Assets 2c, 4b 44 370 34 510

TOTAL WATER ASSETS 4b, 4c 2 275 392 2 066 656

WATER LIABILITIES

Para 49(d) Allocation carryover 2d 110,629 98 600

Para 49(e) Environmental carryover 2e 4 930

TOTAL WATER LIABILITIES 4c 110 629 103 530

Para 49(f) NET WATER ASSETS 2 164 763 1 963 126

Net water assets at the beginning of the reporting period 1 963 126 1 805 750

Change in net water assets 201 637 157 376

NET WATER ASSETS AT THE END OF THE REPORTING PERIOD 2 164 763 1 963 126

Note:

Additional sub-classifications of the minimum line items have been presented in accordance with paragraph 50 of the PAWAS.

Items have been cross-referenced to the note disclosures in accordance with paragraph 100 of the PAWAS.



PAWAS Ref Para 80-86

Statement of Changes in Water Assets and Water Liabilities

Note 2X09 2X08

ML ML

INCREASES

Para 82(a) Surface water increases

Urban wastewater/effluent 9 860 9 860

Precipitation on surface water storage - regulated 11 043 1 578

Inflow from upstream water reporting entity 98 391 49 300

Tagged trade by stakeholders - inflows 4f 39 440 29 580

Unregulated inflow of runoff to surface water storage - unregulated 98 619 74 059

Unregulated inflow of runoff to surface water storage - regulated 759 220 739 500

Return flow from irrigation 71 978 59 160

Other bulk rural irrigation allocation adjustment (levy) 7 888 1 716

Bulk rural irrigation allocation forfeiture 19 523 13 074

Other surface water increases - balancing item 4 930 3 648

Discharge from groundwater to surface water storage - regulated 3 451 3 451

Total surface water increases 2f 1 124 343 984 926

Para 82(b) Groundwater increases

Recharge from landscape water storage to groundwater 36 975 36 975

Recharge from regulated surface water storage to groundwater 3 944 3 944

Total groundwater increases 2g 40 919 40 919

Increases in other water assets

Purchase of claims to water: intervalley 49 300 78 880

Total increases in other water assets 49 300 78 880

TOTAL INCREASES 1 214 562 1 104 725

DECREASES

Para 82(c) Surface water decreases

Outflow to downstream water reporting entity 197 200 166 634

Unregulated private irrigation flows 19 708 14 790

Basic stock and domestic 19 542 9 860

Environmental allocation 2e, 4g 39 440 14 790

Bulk rural irrigation allocation announcement 2d, 4g 542 300 522 580

Cultural flows 4g 4 930 4 930

Other surface water decreases - balancing item 2 958 1 282

Evaporation from surface water storage - unregulated 15 776 15 776

Evaporation from surface water storage - regulated 85 782 121 278

Evaporation from water transport system storage 986 986

Recharge from regulated surface water storage 3 944 3 944

Tagged trade by stakeholders - outflows 4f 39 440 29 580

Total surface water decreases 2h 972 006 906 430

Para 82(d) Groundwater decreases

Other basic stock and domestic groundwater decreases 2i 986 986

Direct extraction from groundwater for irrigation 21, 4g 30 566 30 566

Discharge to surface water storage - regulated 2i 3 451 3 451

Evapotranspiration from aquifer 2i 5 916 5 916

Total groundwater decreases 2i 40 919 40 919

TOTAL DECREASES 1 012 925 947 349

Para 82(e) CHANGE IN NET WATER ASSETS 4a 201 637 157 376

Note:






Statement of Physical Water Flows

Note 2X09 2X08

ML ML

SURFACE WATER FLOWS

Para 89(a) Surface Water Inflows

Urban wastewater/effluent 9 860 9 860

Precipitation on surface water storage - regulated 11 043 1 578

Inflow from upstream water reporting entity 98 391 49 300

Tagged trade by stakeholders - inflows 39 440 29 580

Unregulated inflow of runoff to surface water storage - unregulated 2j 98 619 74 059

Unregulated inflow of runoff to surface water storage - regulated 759 220 739 500

Return flow from irrigation 71 978 59 160

Realisation of claims to water: intervalley 39 440 54 230

Other surface water increases - balancing item 4 930 3 648

Discharge from groundwater to surface water storage - regulated 3 451 3 451

Total Surface Water Inflows 1 136 372 1 024 366

Para 89(b) Surface Water Outflows

Outflow to downstream water reporting entity 197 200 166 634

Uncontrolled/unsupplemented/unregulated flows 19 708 14 790

Basic stock and domestic 19 542 9 860

Environmental flows 2e 44 370 9 860

Bulk rural irrigation allocation diversion 2d 502 860 443 700

Cultural flows 4 930 4 930

Other surface water decreases - balancing item 2 958 1 282

Evaporation from surface water storage - unregulated 15 776 15 776

Evaporation from surface water storage - regulated 85 782 121 278

Evaporation from water transport system storage 986 986

Recharge to groundwater from surface water storage - regulated 3 944 3 944

Tagged trade by stakeholders - outflows 39 440 29 580

Total Surface Water Outflows 937 496 822 620

NET SURFACE WATER FLOWS 198 876 201 746

Para 89(c) GROUNDWATER FLOWS

Groundwater Inflows

Recharge from landscape water storage to groundwater 36 975 36 975

Recharge from regulated surface water storage to groundwater 3 944 3 944

Total Groundwater Inflows 2g 40 919 40 919

Para 89(d) Groundwater Outflows

Other basic stock and domestic groundwater decreases 2i 986 986

Direct extraction from groundwater for irrigation 2i, 4g 30 566 30 566

Discharge to surface water storage - regulated 2i 3 451 3 451

Evapotranspiration from aquifer 2i 5 916 5 916

Total Groundwater Outflows 2i 40 919 40 919

NET GROUNDWATER FLOWS 0 0

Para 89(e) Net Change in Water Storage 4a 198 876 201 746

Para 89(f) Opening Water Storage 4b 2 032 146 1 830 400

Para 89(g) Closing Water Storage 4b 2 231 022 2 032 146

Note:





PAWAS Ref Para 99-126 Note Disclosures

Para 102 Note 1: Significant water accounting policies

Para 99(a) Para 102(a)

With the exception of the physical water flow information, this general purpose water accounting report has been prepared using an accrual basis of accounting. The water attribute being quantified is volume and the unit of account is megalitres (ML).

Para 102(b)

Recognition of Water Assets Unregulated minor storage: Estimates of the volumes for unregulated minor storages have been included in the statements based on capacity rather than actual quantification because the actual volumes are unable to be quantified with representational faithfulness. However, differences between capacity and actual volumes are not regarded as material to the General Purpose

Water Accounting Report. Groundwater storages: Of the two groundwater aquifers in Slattery River catchment, the volume of the Cave Aquifer can be quantified with representational faithfulness based on the environmentally sustainable extraction limit recommended by the

WRAP. This is not possible for the significantly deeper Puits Aquifer (quantifying the resource with representational faithfulness), so it is not included in the Statement of Water Assets and Water Liabilities. Surface water storages: Where a water storage has been rendered inaccessible by blue-green algae, and there is no intervention planned to restore the utility of the storage, the asset is not recognised on the Statement of Water Assets and Water Liabilities.

This is the case for Swagman Pool, is a natural body located in the unregulated Slattery River that has been rendered unfit for consumption or other extraction since 2X06 due to high levels of blue-green algae. No other benefit is derived from this water storage.

Recognition of Changes in Water Assets Inflow to unregulated river storages in Unregulated Slattery River and Smith Creek are not measured, but are estimated by summing the known inflow into Regulated Slattery River, and the known diversions of water in the unregulated catchment area for private irrigation.

Inflow to the Puits Aquifer is assumed to be equal to extraction, because the water table has not fallen below historical levels at the current rate of extraction. Group water reporting entity The Slattery Water Supply System is a group water reporting entity, comprising the four discrete water entities described in the Contextual Statement. Water accounting statements for each of the individual water entities in the group are prepared for the same period using

consistent water accounting policies. In preparing this group water accounting report:

1. the water accounting statements of the individual water entities have been combined by aggregating, like items of

water assets, water liabilities, net water assets, changes in water assets, changes in water liabilities, water inflows and water outflows; and

2. transactions and balances between the water entities have been examined and adjustments made to ensure there is no overstatement or double-counting of water assets, water liabilities, changes in water assets, changes in water

liabilities, water inflows and water outflows.



PAWAS Ref Note 2: Information supporting the items presented in the water accounting statements

Note 2a: Surface water assets (2 170 876ML) Swagman Pool continues to be unfit for consumption or other extraction, and so has not been included in the Statement of Water Assets and Water Liabilities. This pool has been unfit for human bathing since 2X06 due to an outbreak of blue-green algae, brought on by insufficient water flow in the unregulated Slattery River and nutrient build-up from run-off from adjacent farming activity. Were the flushing flows sufficient to restore the connection of this water hole to the Slattery River, it would be

recognised at its estimated storage volume (approximately 20 000ML when full). As shown in the table and graph below, surface water assets are all well below their capacity in storage volume. However, the water reporting entity did, for the first time in 4 years, record an increase to its surface water assets for the water reporting

period of 198 876ML (10%).

Surface water asset dead

storage

water

conveyance water

available to be accessed

and taken

total % capacity

Unregulated river channel storage 9 860 9 860 66% 15 000

Unregulated minor storages 98 600 98 600 94% 105 000

Regulated major storages 430 000 1 317 784 1 747 784 67% 2 600 000

Regulated river channel storage 15 000 173 635 173 635 96% 180 000

Distribution network carrier storage 30 000 120 884 120 884 86% 140 000

Within distribution network storage 500 19 614 20 114 80% 25 000

Total surface water assets 430 500 45 000 1 740 376 2 170 876 71% 3 065 000

Surface water assets

0

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1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

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dead storage water conveyance water available to be accessed and taken capacity

Note 2b: Groundwater assets (60 146ML) According to the ROP, the total extractable groundwater recognised at 30 June 2X09 is 60 146ML, which represents 6.1% of the total water estimated to be in the Cave Aquifer (986 000ML). This is the sustainable extractable portion, which has been

quantified in accordance with the Water Resource Management Plan (WRMP). The remaining 925 854ML estimated to be in the aquifer is considered a contingent water asset as more of the resource may be available for consumption in the future if changes were to be made to the extraction limit. At this time, the ROP has limited licensed extraction to 40 426ML (4.1%) of this aquifer.

As the total volume of water in the Puits Aquifer cannot be reliably quantified, it is not recognised in the Statement of Water Assets and Water Liabilities.

Note 2c: Other water assets - Claims to water: intervalley (44 370ML) Claims to water: intervalley represents the amount of allocation that Testcorp has purchased from other water entities on behalf of its stakeholders, but which was not called upon during the reporting period



PAWAS Ref

Note 2d: Allocation carryover (110 629ML) Allocation carryover comprises allocations that have been declared by the Water Resource Manager, but not yet extracted or diverted at the reporting date. Under the Slattery ROP and PAWAS, these volumes are carried over to the following reporting period as a current liability. Importantly, starting in 2X09 Testcorp applies an 8% reduction for evaporation and

evapotranspiration on all water carried over on 30 June. As such, at 1 July 2X10, the volume of the liability will be reduced to 101 779ML.

Allocation Carryover Reconciliation 2X09 2X08

Allocation carryover at beginning of reporting period 90 712 32 794

Add: Allocation announcement 542 300 522 580

Less: Allocation diversion (502 860) (443 700)

Less: Forfeiture of allocation (19 523) (13 074)

Movement in allocation carryover 19 917 65 806

Allocation carryover at end of reporting period 110 629 98 600

Less: Evaporation on allocation carryover (8 850) (7 888)

Allocation carryover at start of following reporting period 101 779 90 712

Note 2e: Environmental carryover (0ML)

Other water liabilities are environmental flows allocated during the period that have yet to be released into wetlands at the reporting date. The environmental allocation for 2X08 was carried over and contributed to an increased environmental flow in 2X09. This entitlement is managed by the Environmental Water Manager (Gregory Pearce).

Environmental Carryover Reconciliation 2X09 2X08

Allocation carryover at beginning of reporting period 4 930 0

Add: Environmental allocation 39 440 14 790

Less: Environmental flow (44 370) (9 860)

Movement in allocation carryover (4 930) 4 930

Allocation carryover at end of reporting period 0 4 930

Note 2f: Surface water increases (1 124 343ML) In this reporting period, 9% of surface water inflows were from the Menace River upstream water entity, while the largest contributor to surface water inflows was unregulated inflow of runoff to regulated and unregulated surface water storages at 76%. The increase in “inflow from upstream reporting entity” was due to increased diversion related to above average precipitation in the upstream Menace River Catchment. This contributed to an increase in surface water increases in 2X09 of

14% compared to 2X08. Note 2g: Groundwater increases (40 919ML)

The majority of inflows to the groundwater storage are due to recharge from within the catchment. Inflows to the Puits Aquifer are recognised as equal to the metered outflows (9 860ML), and are disclosed in the Statement of Changes in Water Assets and Water Liabilities.

Note 2h: Surface water decreases (972 006ML) Principal outflows from surface water storages are due to allocation diversion to economic stakeholders (54%) and to fulfil the

statutory obligation to provide 180 000ML of outflow to the regulated Baxter River. This target was not met in 2X08; however the target was met and exceeded in 2X09 due largely to an increased inflow from the upstream Menace River Catchment. Note 2i: Groundwater decreases (40 919ML)

In this reporting period, 31 552ML out of 40 919ML in groundwater outflows from the Cave Aquifer relates to the extraction of groundwater for irrigation (30 556ML) and other basic stock and domestic purposes (986ML). The remaining amount relates to interactions between the surface and groundwater (3 451ML) and evapotranspiration (5 916ML), which are amounts that have remained fairly consistent over the past 15 years.

9 860ML relates to extraction of groundwater in the Puits Aquifer, all of which relates to metered extraction for allocation and stock and domestic purposes.

However, as shown in the table below, there has been a steady increase in the extraction of groundwater from the Cave aquifer over the last four reporting periods. It may be that this is being caused by lower levels of allocation for surface water, and those stakeholders with entitlements for both surface water and groundwater compensating these lower levels of allocation with greater extraction of groundwater. In response to this, the Board has requested the Minton State Government to conduct a new survey in 2X10 on the Vanderbelt aquifer to consider whether the extraction limit is appropriate for the area, or whether it could

potentially be increased.



PAWAS Ref

Groundwater 2X06 2X07 2X08 2X09

Assessed extractable limit 50 286 50 286 50 286 50 286

Direct extraction from groundwater for irrigation 25 636 26 622 30 566 30 566

Other basic stock and domestic groundwater decreases 493 740 986 986

As set out in the WRMP, there is no license extraction carryover associated with the Vanderbelt groundwater management area. Note 2j: Unregulated inflow of runoff to surface water storage – unregulated (98 619ML) Inflows to unregulated Slattery River and Smith Creek are not measured individually, but rather derived from the volume of outflows measured at the point where they join regulated Slattery River, and from the licensed extraction that occurs from unregulated storages. In this way, the inflow of 98 619 is the sum of the outflows to Regulated Slattery (69 369ML) plus licensed

extraction, including basic stock and domestic (19 708ML + 3 766ML) and modelled evaporation (15 776ML) from the unregulated Slattery River and Smith Creek.



PAWAS Ref Para 107-109 Note 3: Quantification approaches Para 109(a) Para 109(e)

Note 3a: Quantification approaches used

The table below sets out the quantification approaches used, as well as their indicative levels of accuracy and sensitivity for each item in the Statement of Water Assets and Water Liabilities and the Statement of Changes in Water Assets and Water Liabilities:

Category Element Approach Accuracy Sensitivity to key assumptions

Unregulated river channel storage 5 C

Unregulated private storages 2 A

Unregulated minor storages 4 A

Regulated major storages 1 A

Regulated river channel storage 1 A

Distribution network carrier storage 1 A

Surface Water Assets

Within distribution network storage 1 A

Groundwater Assets

Unconfined aquifer 4 C

Key in the methodology is estimating the depth to the water table and base of aquifer. Thickness constrained by the

depth estimates is likely to be 2 meters in a 20 metre aquifer (10% error). Estimates of bulk porosity are important components in estimating Unconfined Aquifer Volumes and can vary by 5% on sav a porosity of 30% (16% error).

Other Water Assets

Claims to water: intervalley 1 A

Allocation carryover 1 A Water Liabilities Environmental carryover 1 A

Urban wastewater/effluent 1 A

Precipitation on surface water storage - regulated 1 A

Inflow from upstream water reporting entity 1 A

Tagged trade by stakeholders - inflows 2 A

Unregulated inflow of runoff to surface water storage - unregulated

2 C

A key assumption that underpins storage inflow is storage evaporation based on BOM Class A pan Evaporation -

assumed to be homogenious across storage and estimated Pan Evaporation Factor. Varying this factor by 2%, can have an effect of 10% on the estimated quantification

Unregulated inflow of runoff to surface water storage - regulated

2 A

Return flow from irrigation 1 A

Other bulk rural irrigation allocation adjustment (levy)

2 A

Bulk rural irrigation allocation forfeiture 2 A

Other surface water increases - balancing item 1 A

Surface water increases

Discharge from groundwater to surface water storage - regulated

4 B

Recharge from landscape water storage to groundwater

4 B

Groundwater increases Recharge from regulated surface water storage to

groundwater 4 B

Unstressed systems are estimated from the aquifer parameters and often produce errors in excess of 400%. Stressed Systems have 2 possible approaches, as outlined

below, that contain errors in the same range as Metered pumping and rainfall recharge due to the pumping stress changing both temporally and spatially thus effecting the interchanger volumes

Increases in

other water assets

Purchase of claims to water: intervalley 1 A



PAWAS Ref

Category Element Approach Accuracy Sensitivity to key assumptions

Outflow to downstream water reporting entity 1 A

Unregulated private irrigation flows 1 A

Basic stock and domestic 1 A

Environmental allocation 1 A

Bulk rural irrigation allocation announcement 1 A

Other allocation announcement - allocation carryover

1 A

Cultural flows 1 A

Other surface water decreases - balancing item 1 A

Evaporation from surface water storage - unregulated

3 B

Evaporation from surface water storage - regulated 3 B

Evaporation from water transport system storage 3 B

A key assumption underpinning the quantification of

evaporation is mean daily temperatures. This is measured at the local weather station, which may vary for different sections of the regulated and unregulated surface water. Varying the estimate for daily mean temperature in the model 0.5°C can result in a change in the quantification of evaporation of 3-5%.

Recharge from regulated surface water storage 3 B

Surface water decreases

Tagged trade by stakeholders - outflows 2 A

Other basic stock and domestic groundwater

decreases 1 C

Direct extraction from groundwater for irrigation 1 A

Discharge to surface water storage - regulated 4 C

Groundwater

decreases

Evapotranspiration from aquifer 3 C

Para 109(b) Para 109(c)

# Approach to quantification Quality assurance statement

1 Measured data The measured data is collected using hydrologic structures, hydrographic measures, gauges and meters that are to agreed standards

2 Derived from measured data This data has been quantified using established practices in the State of Minton

3 Derived from measured data and refined/verified from model results

This data has been quantified using established practices in the State of Minton

4 Modelled outputs The models used underwent a peer-review in 2X06 by members of the Department of Water and the International Water Modelling Association

5 Estimates These amounts are estimated using Testcorp established practice. These established practices are

reviewed using models every five years. This was last completed in 2X07

Para 109(d)

Letter Accuracy indicator

A Very Good

B Good

C Fair

D Poor

E No Data



PAWAS Ref Note 4: Other disclosures

Para 110(a) Note 4a: Reconciliation of the net change in water storage to the change in net water assets

2X09 2X08

ML ML

CHANGE IN NET WATER ASSETS 201 637 157 376

Adjustments for:

(Decrease)/increase in accruals

Net change in allocation carryover 12 029 64 090

Net change in claims to water: intervalley (9 860) (24 650)

Net change in other liabilities (4 930) 4 930

(2 761) 44 370

NET CHANGE IN WATER STORAGE 198 876 201 746

Para 110(c)

Para 110(b)

Para 110(c)

Note 4b: Reconciliation of closing water storage to total water assets

2X09 2X08

ML ML

CLOSING WATER STORAGE: 2 231 022 2 032 146

comprises:

Surface water assets 2 170 876 1 972 000

Groundwater assets 60 146 60 146

2 231 022 2 032 146

Plus:

Other water assets 44 370 35 000

TOTAL WATER ASSETS 2 275 392 2 067 146

Para 111

Para 111(a)

Para 111(b) Para 111(b)

Para 111(c)

Para 111(d)(i)

Para 111(d)(ii)

Para 111(e)

Para 115

Note 4c: Water assets available to settle water liabilities and future commitments within 12 months of the reporting date The principal water commitments are set out in the ROP and relate to annual allocations for irrigation and urban purposes, basic stock and domestic, environmental allocations, conveyance water and reserve for critical human needs.

Note ML

2 275 392

2a 430 500

2a 45 000 475 500

1 799 892

Water liabilities expected to be settled within 12 months of the

reporting date

Allocation carryover 2d 110 629

Future commitments expected to be settled within 12 months of

the reporting date

Critical human needs 80 000

Ongoing water commitment 180 000

Indicative allocation* 800 000

Water to be delivered to Kelvin Wetland 40 000

Water to be delivered to Stanley Creek 5 000 1 105 000

1 215 629

584 263

*This represents 100% allocation against high and medium reliability, and 4% against low reliability

Water assets available to be accessed and taken or delivered within 12

months of the reporting date

Less: Water liabilities and future commitments expected to be settled

within 12 months of the reporting date

Surplus of available water assets over water liabilities and future

commitments expected to be settled within 12 months of the reporting

date

Total Water Assets as at 30 June 2X09:

Less: Water assets not available to be accessed and taken or delivered

within 12 months of the reporting date

Dead storage water

Conveyance water

Testcorp has elected to maintain a large volume of water resources in the Slattery River catchment in order to allow for little or no inflows in future periods. While this is unlikely, management believes it prudent to allow for such circumstances given the

increased temperature and decreased rainfall experienced in the region.




Note 4d: Contingent water assets and contingent water liabilities (i) Contingent Water assets (925 854ML)

Para 117 Non-extractable portion of groundwater: As noted in 2b (Groundwater assets), a large portion of the Vanderbelt groundwater

management area represents a contingent water asset. Based on the WRMP, which is currently under review, the maximum amount allowable for extraction from the Cave Aquifer is 4.1% of the resource. This is below the maximum environmentally sustainable extraction limit of 6.1%. If extractions greater than 6.1% were to occur, there is concern that this would risk both

the quality of the whole resource (through saline intrusion) and also be detrimental to the Steve Boston Pool which is an Australian icon and is required under the WRMP (and other international agreements) to be maintained.

(ii) Contingent Water Liabilities (1 105 000ML)

Para 117 a. Critical human needs: In accordance with the ROP, Testcorp is required to reserve a certain amount of water for future critical human needs. (see Note 4c for estimate of critical human needs for the 12 month period after the reporting date).

Para 117 b. Ongoing water commitments: In accordance with the ROP, Testcorp is required to deliver an annual minimum flow of

water of 180 000ML to the regulated Baxter River. The delivery of water in future periods is dependent on sufficient water being available (see Note 4c for an estimate of the expected delivery of water to the regulated Baxter River for the 12 month period after the reporting date).

Para 117 c. Future water allocations: In accordance with the ROP, the Water Resource Manager is required to determine and

announce water allocations. Future water allocations are dependent upon the availability of water (see Note 4c for indicative allocation for the 12 month period after the reporting date).

Para 117

d. Water to be diverted to Kelvin Wetland: In accordance with the ROP, the Water Resource Manager is required to determine and announce environmental allocations. These allocations are then managed by the Environmental Water Manager. Future allocations are dependent on the availability of water. (See Note 4c for estimate of water to be

delivered to the Kelvin Wetland for the 12 month period after the reporting date. See Note 4g for further environmental disclosures.)

Para 117 e. Water to be diverted to Stanley creek: In accordance with the ROP, the Water Resource Manager is required to

determine and announce cultural allocations. Future allocations are dependent on the availability of water (see Note 4c

for estimate of water to be delivered to Stanley Creek for the 12 month period after the reporting date (see Note 4g for further environmental disclosures).



PAWAS Ref

Para 119-120 Para 120(a)

Para 120(b)

Para 120(c)

Note 4e: Water rights, water allocations and water restrictions Water rights The Water Resource Manager administers 3 527 water entitlements for the Regulated Slattery River on behalf of the Minton

State Government, which - excluding those related to environmental and cultural purposes - equate to 1 459 474 ML of entitlement volume. This volume relates to three different reliability classifications of surface water: high reliability (423 700ML); medium reliability (348 824ML); low reliability (687 050ML). Additionally, there are licences to extract groundwater with the upper limit of

40 426ML. There were no new water rights issued for surface water during the reporting period.

Water allocations The following table and graph provide information on when allocation announcements for regulated surface water were made against each of the three entitlement reliability classifications.

Surface Water (%) Surface Water (ML)

Announcement Date HS MS LS HS MS LS

1/07/2X08 14 0 0 62 118

15/08/2X08 21 0 0 93 177

16/09/2X08 24 0 0 106 488

28/09/2X08 48 0 0 212 976

15/11/2X08 52 0 0 230 724

14/12/2X08 62 0 0 275 094

13/02/2X09 72 0 0 319 464

1/03/2X09 78 0 0 346 086

20/03/2X09 100 16 0 423 700 47 059

12/04/2X09 100 32 0 94 118

16/04/2X09 100 34 0 118 600

Total (by class) 423 700 118 600 0

Total Allocation 542 300

In this reporting period, 542 300ML represents the total allocated regulated surface water for the period, though only 502 860ML was diverted. The remaining 39 440ML is related entirely to high reliability water entitlements. The lower than allocated diversion was due to sizeable allocations being made on the medium reliability water entitlements towards the end of the water year. There is no carryover associated with medium reliability entitlements and the holders opted to use this allocation and carryover

the water relating to their high reliability allocation. No allocation announcements have been made against the low security classification since 2X01.

Surface Water Allocation Announcements as % of Entitlements

0

10

20

30

40

50

60

70

80

90

100

1/07/2X08

15/08/2X08

16/09/2X08

28/09/2X08

15/11/2X08

14/12/2X08

13/02/2X09

1/03/2X09

20/03/2X09

12/04/2X09

16/04/2X09

Announcement Date

% o

f E

nti

tle

me

nts

HS MS LS



PAWAS Ref

Para 120(c)

Para 120(c)

Water Restrictions As shown in the table below, the following restrictions were imposed on the unregulated Slattery River and Smith Creek during the current period.

Type of restriction Area Nature of Restriction

Slattery River Irrigation ban December 2X08 to February 2X09 Licensed diversion from unregulated streams Smith Creek Irrigation ban August 2X08 to January 2X09

As shown in Note 4g, there were 11 instances of restrictions in the Vanderbelt groundwater management area due to over-

extraction in the prior month.

Water licenses There are a number of licenses that exist in the Slattery Water Supply System. These include: groundwater extraction; groundwater private stock and domestic; unregulated private irrigation diversions; surface water private stock and domestic (minor catchment storages are registered, not licensed). They represent a fairly minor volume (70 802ML, 8%) of the total outflows from the Slattery Water Supply System. Two new licenses were issued for private stock and domestic from Smith Creek

and four new licenses were approved for extraction from groundwater during the reporting period.

Para 121-122

Para 122(b)

Para 122(b)

Note 4f: Market activity

Trading activity by Testcorp The Longford irrigation supply network has engaged in allocation trade on behalf of its stakeholders to reduce risk of low surface water allocations. This is further explained in Note 2c Claims to water: intervalley

Trading Activity by Stakeholders of the Slattery Water Supply System The stakeholders took part in net allocation trade out of 7 888ML. The existence of this market activity requires Slattery River, Menace River and Baxter River to maintain inter-valley accounts. This was represented by 47 328ML of tagged trade out, and

39 440ML of tagged trade into the Slattery River Catchment. The table below provides a summary of trading transactions by Testcorp and the stakeholders. Please note that the amount for tagged trade out (47 328) is not shown discretely in the Statement of Physical Flows as this amount is included in the allocation diversion amount in Note 2d.

For a more complete analysis of water trading in the Slattery Water Supply System and in the region, see the Australian Water Markets Report 2X08-2X09, produced by the National Water Commission.

Para 122(a)

Trading activity by Testcorp:

Origin/Destination Trading Zone Trade in to (ML) Trade out from

(ML) Net Change (ML)

Total Number of Trades

Water Allocation Trade

Longford Irrigation (from Menace River) 49 300 49 300 119

Total Volume Traded 49 300 0 49 300 119

Trading activity by stakeholders:

Origin/Destination Trading Zone Tagged trade in

from (ML) Tagged trade out to

(ML) Net Change (ML)

Total Number of Trades

Water Entitlement Trade

Menace River Catchment (upriver) 21 470 0 21 470 52

Baxter River Catchment (downriver) 0 (18 430) (18 430) 45

Total Volume Traded 21 470 (18 430) 3 040 97

0

Water Allocation Trade 1 0

Menace River Catchment (upriver) 13 799 (11 427) 2 372 61

Baxter River Catchment (downriver) 25 641 (35 901) (10 260) 149

Total Volume Traded 39 440 (47 328) (7 888) 210

Reconciliation of Entitlement volume

Trade out Opening Trade in Closing Surface water entitilements

ML

High reliability 5 529 414 200 15 029 423 700

Medium reliability 3 686 346 069 6 441 348 824

Low reliability 9 215 696 265 0 687 050

Total 18 430 1 456 534 21 470 1 459 574



PAWAS Ref

Para 123 Para 123(a) Para 124(c)

Para 124(c) (i) – (ii)

Para 124(c)

(iii)

Note 4g: Water Use Water for Environmental Purposes Environmental allocations and watering applications In line with the ROP, the Water Resource Manager allocates water to environmental entitlements. The Environmental Water Manager decides how to apply available allocations in accordance with the Environmental Watering Plan (EWP). The table below represents the environmental allocation and physical water flows that have occurred during the reporting period. The majority of

water under this allocation is delivered to Kelvin Wetland in order to stimulate the breeding cycles of the Crimson-billed goose and the uncommon trout.

Environmental flows 2X09 2X08

Environment allocation 39 440 14 790

Net change in other liabilities (4 930) 4 930

Physical environmental flows 44 370 9 860

Para 124(a)

Minimum flows at Nirvana Weir: As per the ROP, Nirvana Weir must experience minimum flows as set out in the table and graph below. In order to achieve these flows during certain periods, Testcorp released water over and above its normal operations (for allocation delivery etc.) during certain periods (July, December, and January).

In the peak demand season (February 2X09), minimum flow requirements were not met, and there was insufficient water available over and above the other obligations (for allocation) at that time for Slattery Water Supply System to release extra water.

Minimum Flows at Nirvana Weir Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Prescribed minimum flows (ML) 150 150 150 170 190 210 230 250 150 150 150 150

Actual flows (ML) 150 200 200 210 220 210 230 230 190 185 182 160

Additional flows required outside normal

operations to meet minimum flows (ML) 24 0 0 0 0 44 34 0 0 0 0 0

Minimum flows at Nirvana Weir

-50

0

50

100

150

200

250

300

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Period

Flo

w (

ML)

Prescribed minimum flows (ML) Actual flows (ML) Additional Flows required



PAWAS Ref

Para 124(a) Vanderbelt groundwater management area The groundwater resources of the Vanderbelt groundwater management area are managed on a sustainable basis for the economic, social, cultural and environmental benefit of the region. The Ecological Water Requirements (EWRs) are the water regimes needed to maintain ecological values of water dependent ecosystems at a low level of risk. EWRs are determined on the

basis of the best scientific information available and are the basis for the development of the groundwater sections of the Environmental Watering Plan. The major consideration in the EWP for groundwater is the Steve Boston pool. The Steve Boston pool is a dynamic component of the catchment. It was identified as a key groundwater dependent ecosystem

as it is directly supported by the water table. The pool is of high ecological value as it has unique ecologic characteristics, is vulnerable, and contains recognised biodiversity value. The pool was also identified as having high social value due to its recreational and aesthetic importance to tourism in the region. In order to ensure the sustainability of the Steve Boston pool, the following objectives in the table below are in place.

Objective 2X09 Commentary

Groundwater extraction from the Vanderbelt groundwater management area is restricted to 100 ML / month from any one license.

There were 11 occasions for which more than 100 ML/month were drawn from a license in the 2X09 year.

All new wells are to be constructed in the northern half of the groundwater management area.

4 new wells were constructed in the period, all in the northern half.

A 500m buffer zone with no extraction around the Steve Boston

Pool must be maintained.

The buffer zone was established in 2X05 as part of the Water Resource

Management Plan development, with extraction points progressively being removed from this area. At the end of the reporting period, this is 85% implemented, with the buffer zone expected to be complete in 2X11.

On each of the 11 occasions for which the extraction was above 100ML for the month, the license holder was fined and restrictions were imposed to ensure that they did not go over their total allocation for the 2X09 year. This represents a 50%

drop in the instances of over-extraction from the 2X08 year.

Para 125

Para 125 (a) (i) Para 125 (a) (ii)

Water for social and cultural purposes

Testcorp ensured a provision (as per Note 4c) for future critical human needs in the area was maintained. The Water Resource Assessment Report (WRAP) produced an estimate of the future critical human needs in the area, and identified the Namajira indigenous people as relying on the water resources to fulfil important cultural purposes.

Further, in accordance with the ROP, 4 930 ML was diverted from the Pierre Jour Reservoir through the Stanley Creek to Lake Andes during the last week of January. This is for the Namajira indigenous people, who are the traditional owners of the land in the Slattery River Catchment. The flow represents the natural flow that had occurred during the period before the construction

of the Pierre Jour Reservoir.

Para 126

Water for economic purposes

The WRAP also identified the principal economic purposes of water resources in the Slattery Water Supply System. Irrigation continues to be the largest user of water from the Slattery Water Supply System, with four discrete product groups – wine grapes, wheat, dairy and rice. While the split of water used for each of these industries is unable to be provided, the

construction of two new wineries in the region implies an increased proportion of water used for wine in the 20X9 year. For a full report on the economic uses of water in the Slattery Water Supply System, see the Water Account 2X08-2X09 produced by the Australian Bureau of Statistics.



PAWAS Ref

Para 128-30 Assurance Statement

Assurance Statement The PAWAS requires an Assurance Statement to be provided in a general purpose water accounting report. An

Assurance Statement is an explicit statement of whether the general purpose water accounting report is presented fairly in accordance with Australian Water Accounting Standards, and is provided by an appropriately qualified assurance provider independent of the water reporting entity and its management and governing body.

The assurance function, undertaken by an appropriately qualified and independent assurance provider, is important to enhancing users’ confidence in the veracity of the information being presented to inform decision-

making. Whilst the PAWAS requires an Assurance Statement to be provided, it does not prescribe:

a) the level of assurance to be provided; or

b) the criteria against which an assurance provider’s qualifications and independence should assessed.

An assurance framework to accompany Australian Water Accounting Standards is yet to be developed. In lieu of this assurance framework being completed, the relevant authority will need to determine the level of assurance to be provided and the criteria against which an assurance provider’s qualifications and independence should be assessed for the purpose of preparing general purpose water accounting reports in accordance with the PAWAS.

At the time of developing the PAWAS, the regulatory and institutional arrangements regarding the assurance function for the preparation of the Methods Pilot for the National Water Account and the First National Water Account had not been developed.

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Documents

Preliminary Australian Water Accounting Standard and