Financial Audit Update Thursday 3 March 2011 and Thursday 10 March 2011_part3 doc

Queensland’s Accounting & Reporting Framework- Departments & Statutory Bodies Financial Reporting Requirements FRRs Non-Current Asset Policies for the Queensland Public Sector NCAPs Fina

Queensland’s Accounting & Reporting Framework

- Departments & Statutory Bodies

Financial Reporting Requirements (FRRs)

Non-Current Asset Policies for the Queensland Public Sector (NCAPs)

Financial Management Framework For departments and statutory bodies

Financial Accountability Act 2009

(FA Act)

Financial and Performance Management Standard 2009

(FPMS)

Other policy documents

Australian Accounting Standards

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Queensland’s Accounting & Reporting Framework

Financial Management Framework for Government Owned Corporations

Corporations Act 2001 Government Owned

Corporations Act 1993

Government Owned Corporations Regulation 2004

Subsidiary Policy Documents (eg Code of Practice for GOC Financial

Arrangements)

Australian

Accounting

Standards

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Queensland’s Accounting & Reporting Framework

Legislation administered by Department of Local Government and

Planning (DLGP)

Financial Management Framework

Local Governments

Guidance – Tropical Council Financial Statements

Local Government Act 2009 (Effective July 2010)

Local Government (Beneficial Enterprises and Business Activities) Regulation 2010

Local Government (Finance, Plans and Reporting) Regulation 2010

Local Government (Operations) Regulation 2010

Australian

Accounting

Standards

A guide to asset accounting in Local Government s

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Defining “Grants”

• Definition of ‘grants’:

– “generic term applied to funding or other incentives provided to individuals or

bodies (including community groups, statutory bodies or commercial enterprises) that exhibit some of the following characteristics:

• a transfer to a recipient which may be in return for compliance with certain

terms and conditions

• a transfer which may not directly give approximately equal value in return to

the Government

• a recipient may have been selected on merit against a set of program-specific

criteria ”

– Source: Queensland Treasury’s Financial Accountability Handbook

• Examples

– Recurrent/Operating grants - Capital grants (eg to purchase/construct building) – Assets acq at below market values - Donation (eg donation of assets)

– Loans issued at below market rates - Loan forgiveness

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Grant Data - State

• Queensland’s Whole-of-Government Sector total grant revenue (excludes Local Government sector)

Total Grant

% of Total

(Source: Report on State Finances 2007 to 2010)

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Accounting for Grants

(Grantee/Recipient)

•Applicable Accounting Standards:

– AASB 118 Revenue

• Applicable to all entities

• Reciprocal grants

– AASB 1004 Contributions

• Applicable to not-for-profits (i.e Departments, most Statutory Bodies

and Local Governments)

• Non-reciprocal grants

– AASB 120 Accounting for Government Grants and Disclosure

of Government Assistance

• Applicable to for-profits (i.e Government Owned Corporations and

some Statutory Bodies)

Note:- IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers)

is not relevant in Australia

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Reciprocal Vs Non-Reciprocal

• Reciprocal transfer

– a transfer in which the entity transacts with a party and gives

approximately equal value in exchange

• eg research grant where grantor has first right to research results

• Non-reciprocal transfer (AASB 1004.Appendix A)

– a transfer in which the entity transacts with a party without giving

approximately equal value in exchange

• eg grant paid to sporting club to deliver sport program to community

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AASB 1004 Contributions

(Accounting for Grants)

• Applicable to not-for-profits entities preparing general

purpose financial statements

• Provides guidance on the recognition of ‘contributions’

(including ‘contributions’ of services)

entity receives assets or services, or has liabilities extinguished,

without directly giving approx equal value in exchange to the other party”

1 involuntary (rates, taxes, fines)

2 voluntary (non-reciprocal grants, donations)

3 parliamentary appropriations

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AASB 1004 Contributions (cont’d)

(Accounting for Grants)

• Recognition requirements (AASB 1004.20):

– Recognised as income in the period in which the funding is

received or receivable

– subject to meeting recognition criteria (control, probable,

measurable) and

– irrespective of whether restrictions or conditions are imposed on

the use of the contribution

• Measurement requirements (AASB 1004.11):

– must be measured at the fair value of the contributions received or

receivable

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AASB 1004 Contributions (cont’d)

(Accounting for Grants)

• ‘Control’ is achieved when (AASB 1004.27):

– the grantee can “benefit from funds transferred to it and deny or

regulate the access of others to those benefits”

• for grants received before services provided

– control achieved when entity meets eligibility criteria (i.e generally achieved when cash is received and available for use)

• for grants received after services provided

– control achieved when services or facilities under grant agreement have been provided

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