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)
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
– Government Owned Corporations (GOCs)
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
– Local Governments
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

– Rebates - Tax relief
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Grant Data - State
• Queensland’s Whole-of-Government Sector total grant revenue
(excludes Local Government sector)
2010 2009 2008 2007
$M $M $M $M
Total Grant
Revenue 20,352 17,596 16,006 14,479
% of Total
Revenue 45% 40% 39% 35%
(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)
• Definition of contribution - “
a non-reciprocal transfer in which an
entity receives assets or services, or has liabilities extinguished,
without directly giving approx. equal value in exchange to the other
party
”.
• Form of contribution:
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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