Home > Reports > FRC & AASB Annual Report 2000-2001 - Financial report

Financial report

Page

Auditor's Report 31

AASB Statement by Directors 33

AASB Statement of Financial Performance 34

AASB Statement of Financial Position 35

AASB Statement of Cash Flows 36

AASB Schedule of Commitments 37

AASB Schedule of Contingencies 37

AASB Notes to and forming part of the financial statements 38

[Page 1 of Auditor's Report]

[Page 2 of Auditor's Report]

Australian Accounting Standards Board statement by directors

In our opinion, the attached financial statements give a true and fair view of the matters required by Schedule 1 of the Commonwealth Authorities and Companies (Financial Statements 2000-2001) Orders for the 12 months ended 30 June 2001.

SIGNED Director 28 September 2001

SIGNED Director 28 September 2001

Australian Accounting Standards Board statement of financial performance for the year ended 30 June 2001

	Notes	2001 $	2000* $
Operating revenues
Revenues from government	4A	1,502,598	1,040,520
Sales of publications	4B	226,276	135,134
Interest	4C	22,396	3
Grants and contributions	4D	1,375,828	428,000
Other		2,082
Total operating revenues		3,129,180	1,603,657
Operating expenses
Employees	5A	1,948,950	944,107
Suppliers	5B	765,878	478,089
Depreciation and amortisation	5C	149,989	15,956
Total operating expenses		2,864,817	1,438,152
Operating surplus		264,363	165,505
Total changes in equity other than those resulting from transactions with owners.		264,363	165,505

The above statement should be read in conjunction with the accompanying notes.

* The financial statements presented for comparative purposes are for the six months ended 30 June 2000. Refer to Note 1.1.

Australian Accounting Standards Board statement of financial position as at 30 June 2001

	Notes	2001 $	2000* $
ASSETS
Financial assets
Cash	6A	312,008	33,539
Receivables		9,621	2
Term deposit	6A	306,716	-
Total financial assets		628,345	33,541
Non-financial assets
Leasehold improvements	7A	250,198	344,022
Plant and equipment	7B	134,395	20,247
Inventory		1,952	-
Prepaid expenses		10,946	-
Total non-financial assets		397,491	364,269
Total assets		1,025,836	397,810
LIABILITIES
Debt
Loans	8A	-	50,200
Total Debt		-	50,200
Provisions
Employees	9A	364,339	5,449
Total provisions		364,339	5,449
Payables
Suppliers	10A	153,224	176,658
Subscriptions in advance		78,405	-
Total payables		231,629	176,658
Total liabilities		595,968	232,305
EQUITY
Accumulated surplus	11	429,868	165,505
Total equity		429,868	165,505
Current liabilities		442,310	232,305
Non-current liabilities		153,658	-
Current assets		641,243	33,541
Non-current assets		384,593	364,269

The above statement should be read in conjunction with the accompanying notes.

Australian Accounting Standards Board statement of cash flows for the year ended 30 June 2001

	Notes	2001 $	2000* $
OPERATING ACTIVITIES
Cash received
Appropriations		1,500,000	-
Sales of goods and Services		327,751	-
Interest		22,396	3
GST recovered from taxation authority		52,320	-
Grants and contributions		1,397,410	-
Other		2,083	-
Total cash received		3,301,960	3
Cash used
Employees		1,837,508	16,610
Suppliers		696,496	54
GST paid to taxation authority		97,052	-
Total cash used		2,631,056	16,664
Net cash from operating activities	13	670,904	(16,661)
INVESTING ACTIVITIES
Cash received		-	-
Cash used
Purchase of plant and equipment		(35,519)	-
Net cash from investing activities		(35,519)	-
FINANCING ACTIVITIES
Cash received
Proceeds from debt		-	50,200
Cash used
Repayment of debt		(50,200)	-
Net cash from financing activities		(50,200)	50,200
Net increase in cash held		585,185	33,539
Cash at the beginning of the reporting period	6	33,539	-
Cash at the end of the reporting period	6	618,724	33,539

The above statement should be read in conjunction with the accompanying notes.

* The financial statements presented for comparative purposes are for the six months ended 30 June 2000. Refer to Note 1.1.

Australian Accounting Standards Board schedule of commitments as at 30 June 2001

	Notes	2001 $	2000* $
BY TYPE
Operating leases		306,111	293,195
Commitments receivable		(176,000)	*(242,000)
Net commitments		130,111	51,195
BY MATURITY
All net commitments
One year or less		38,246	31,794
From one to two years		91,865	19,401
Net commitments		130,111	51,195

All commitments are GST inclusive where relevant.

* Represents commitment of Australian Stock Exchange (the lessor of the AASB's premises) to make annual grants to the AASB to cover future premises lease rental commitments.

Australian Accounting Standards Board schedule of contingencies as at 30 June 2001

There are no known contingencies as at 30 June 2001.

Australian Accounting Standards Board

Notes to and forming part of the financial statements

Note 1: Summary of significant accounting policies

1.1 Period of financial statements

The Australian Accounting Standards Board (AASB) was reconstituted as a body corporate with effect from 1 January 2000 as part of the legislative reform package contained in the Corporate Law Economic Reform Program Act 1999. The financial statements which are presented for comparative purposes are for the six months ended 30 June 2000.

During the period to 30 June 2000, except for the Chairman who commenced employment on 8 May 2000, staff was provided to the Board by the Australian Accounting Research Foundation (AARF) on a cost reimburseable basis. Related administrative costs were also reimburseable to the AARF.

On 1 July 2000, the AARF technical and administrative staff transferred to the AASB, with the AARF funding the employee statutory entitlements at that date of $247,448. Also on 1 July 2000, the AASB acquired certain fixed assets of the AARF at a cost of $132,196.

1.2 Basis of accounting

The financial statements are a general purpose financial report.

They have been prepared:

• in accordance with Schedule 1 to the Commonwealth Authorities and Companies (Financial Statements 2000-01) Orders made under the Commonwealth Authorities and Companies Act 1997.
• in accordance with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Boards and the Consensus Views of the Urgent Issues Group; and
• having regard to Statements of Accounting Concepts.

The Statements of Financial Performance and Financial Position have been prepared on an accrual basis and are in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

Assets and liabilities are recognised in the Statement of Financial Position when and only when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured. Assets and liabilities arising under agreements equally proportionately unperformed are however not recognised unless required by an Accounting Standard. Liabilities and assets which are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies (other than remote contingencies).

Revenues and expenses are recognised in the Statement of Financial Performance when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

1.3 Changes in accounting policy

The accounting policies used in the preparation of these financial statements are consistent with those used in 2000.

1.4 Revenue

The revenues described in this Note are revenues relating to the core operating activities of the AASB.

Appropriations for outputs are recognised as revenue to the extent they have been received into the AASB's Bank account or are entitled to be received by the AASB at year end.

Revenue from the sale of publications is recognised upon the delivery of publications to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Services received free of charge are recognised when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value as revenue when the asset qualifies for recognition.

Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

1.5 Employee entitlements

(a) Leave

The liability for employee entitlements includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the AASB is estimated to be less than the annual entitlements for sick leave.

The liability for annual leave reflects the value of total annual leave entitlements of all employees at 30 June 2001 and is recognised at its nominal amount.

The non-current portion of the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2001. In determining the present value of the liability, the AASB has taken into account attrition rates and pay increases through promotion and inflation.

(b) Superannuation

The AASB sponsors the AASB Superannuation Plan, which provides accumulation benefits to members. The AASB has, for certain employees, guaranteed minimum accumulated balances equivalent to benefits under a defined benefit plan. Vested and accrued benefits of these members as at 30 June 2001 amounted to $1,382,200 compared to the net market value of attributable assets of $1,394,674, giving an excess asset position of $12,474.

Contributions during the year ended 30 June 2001 on behalf of employees with minimum guaranteed benefits amounted to $110,519 (2000: nil). Contribution expense represents the annual funding which is determined based on actuarial advice.

1.6 Leases

Operating lease payments are expensed on a basis which is representative of the pattern of benefits derived from the leased assets.

1.7 Cash

Cash includes deposits held at call with a bank or financial institution.

1.8 Financial instruments

Accounting policies for financial instruments are stated at note 18.

1.9 Acquisition of assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and revenues at their fair value at the date of acquisition.

1.10 Plant and equipment

Asset recognition threshold

Purchases of plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases less than $500, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

Revaluations

Schedule 1 requires that plant and equipment be revalued progressively in accordance with the 'deprival' method of valuation in successive 3-year cycles. No revaluations have yet been made pursuant to this requirement.

Recoverable amount test

Schedule 1 requires the application of the recoverable amount test to the AASB's non-current assets in accordance with AAS 10 Recoverable Amount of Non-Current Assets. The carrying amounts of these non-current assets have been reviewed to determine whether they are in excess of their recoverable amounts. In assessing recoverable amounts, the relevant cash flows have been discounted to their present value.

Depreciation and amortisation

Depreciable plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the AASB using, in all cases, the straight line method of depreciation. Leasehold improvements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation/amortisation rates (useful lives) and methods are reviewed at each balance date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Residual values are re-estimated for a change in prices only when assets are revalued.

Depreciation and amortisation rates applying to each class of depreciable asset are based on the following useful lives:

	2001	2000
Leasehold improvements	Lease term	Lease term
Plant and equipment	3 to 10 years	3 to 10 years

1.11 Taxation

The AASB is exempt from all forms of taxation except fringe benefits tax and the goods and services tax.

1.12 Inventories

Inventories held for resale are valued at the lower of cost and net realisable value.

1.13 Insurance

The AASB has taken insurance cover considered appropriate through the Government's insurable risk managed fund, called `Comcover'. Workers compensation is insured through Comcare Australia.

1.14 Comparative figures

Comparative figures have been adjusted to conform to changes in presentation in these financial statements where required.

Note 2: Reporting by segments

The AASB operates primarily in a single industry and geographic segment, being the making of Accounting Standards for use within Australia and participating in and contributing to the development of accounting standards for world-wide use.

Note 3: Economic dependency

The AASB is dependent on appropriations from the Parliament of the Commonwealth and on grants from the States and Territories and from CPA Australia, The Institute of Chartered Accountants in Australia, the National Institute of Accountants and the Australian Stock Exchange to carry out its normal activities.

Note 4: Operating Revenues

	2001	2000
	$	$
4A: Revenues from Government
Appropriations	1,500,000	648,000
Resources received free of charge	2,598	378,775
Other	-	13,745
	1,502,598	1,040,520
4B: Sales of publications
Publications	226,276	135,134
Cost of sales of publications	75,307	30,957
4C: Interest
Deposits	22,396	3
4D: Grants and contributions
Grants from States and Territories	500,000	83,000
Industry contributions - CPA Australia	325,000	162,500
- The Institute of Chartered Accountants in Australia	325,000	162,500
- National Institute of Accountants	50,000	-
- Australian Stock Exchange	175,828	20,000
	1,375,828	428,000

Note 5: Operating expenses

	2001	2000
	$	$
5A: Employee expenses
Remuneration (for services provided)	1,723,354	900,367
Other employee expenses	225,596	43,740
	1,948,950	944,107
Full-time equivalent number of employees	21	20.5
5B: Suppliers expenses
Supply of goods and services *	666,161	458,089
Operating lease rental	99,717	20,000
	765,878	478,089
* Includes $1,248 (2000 - Nil) attributable to the operations of the Financial Reporting Council.
5C: Depreciation and amortisation
Amortisation of leasehold improvements	93,824	15,637
Depreciation of plant and equipment	56,165	319
	149,989	15,956

Note 6: Financial assets

	2001	2000
	$	$
6A: Cash and Term Deposit
Cash at bank and on hand	312,008	33,539
Term deposit	306,716	-
	618,724	33,539
Balance of cash as at 30 June shown in the Statement of Cash Flows	618,724	33,539

Note 7: Non-financial assets

		2001	2000
		$	$
7A: Leasehold improvements
Leasehold improvements - received free of charge - at fair value		359,659	359,659
Accumulated amortisation		(109,461)	(15,637)
Total Leasehold Improvements		250,198	344,022
7B: Plant and equipment
Plant and equipment - received free of charge - at fair value		21,714	19,116
Accumulated depreciation		(2,469)	(319)
		19,245	18,797
Plant and equipment - at cost		169,165	1,450
Accumulated depreciation		(54,015)	(-)
		115,150	1,450
Total Plant and Equipment		134,395	20,247
7C: Analysis of Property, Plant and Equipment
Table A
Movement summary for all assets irrespective of valuation basis

	Leasehold Improvements $	Plant & Equipment $	Total $
Gross value as at 1 July 2000	359,659	20,566	380,225
Additions	-	170,313	170,313
Gross value as at 30 June 2001	359,659	190,879	550,538
Accumulated Depreciation/Amortisation as at 1 July 2000	15,637	319	15,956
Depreciation/amortisation charge for the year	93,824	56,165	149,989
Accumulated Depreciation/Amortisation as at 30 June 2001	109,461	56,484	165,945
Net book value as at 30 June 2001	250,198	134,395	384,593
Net book value as at 1 July 2000	344,022	20,247	364,269

Note 8: Debt

	2001	2000
	$	$
8A: Loans
Non-bank loans	-	50,200

Note 9: Provisions

	2001	2000
	$	$
9A: Employees
Salaries	15,699	-
Annual Leave	194,982	5,499
Long Service Leave	153,658	-
Aggregate employee entitlement liability	364,339	5,449

Note 10: Payables

	2001	2000
	$	$
10A: Suppliers
Trade creditors	153,224	176,656

Note 11: Equity

	Accumulated Surplus
	2001	2000
	$	$
Balance as at 1 July 2000	165,505	-
Operating result	264,363	165,505
Balance as at 30 June 2001	429,868	165,505

Note 12: Non-cash financing and investing activities

	2001	2000
	$	$
Non-current assets received free of charge	2,598	378,775
Settlement of suppliers	115,252	-
Acquisition of assets - at cost	132,196	-
Transfer of employee statutory entitlements	(247,448)	-
Total non-cash financing and investing activities	2,598	378,775

Note 13: Cash flow reconciliation

Reconciliation of net surplus to net cash

	2001	2000
	$	$
Operating surplus	264,363	165,505
Depreciation & amortisation of leasehold improvements, plant and equipment	149,989	15,956
Non-current assets received free of charge	(2,598)	(378,775)
Changes in assets and liabilities
Increase in liability to suppliers	91,820	175,206
Increase in subscriptions in advance	78,405	-
Increase in receivables	(9619)	(2)
Increase in inventory of publications	(1,952)	-
Increase in prepaid expenses	(10,946)	-
Increase in employee provisions	111,442	5,449
Net cash provided by operating activities	670,904	(16,661)

Note 14: Remuneration of directors

Members of the Financial Reporting Council are the directors of the AASB and act on a remuneration free basis.

Note 15: Related party disclosures

The Directors and Alternate Directors of the AASB during the period were:

• Paul Rizzo (Chairman) (Resigned 22 February 2001)
• Michael Ullmer (Deputy Chairman)
  • Tom Pockett (Alternate to Mr Ullmer; appointed 2 October 2000)
• Elizabeth Alexander, AM
• Don Challen
• Leigh Hall, AM
  • Mark Amour (Alternate to Mr Hall)
• David Jackson
• Jeffrey Lucy, AM
  • Stephen Harrison, AO (Alternate to Mr Lucy; appointed 2 October 2000)
• Charles Macek
• Jan McCahey (Resigned 31 March 2001)
• Graeme McGregor, AO
  • David Edwards, AM (Alternate to Mr McGregor; resigned 14 February 2001)
• Robert Nottle, CBE
• Gary Potts
• Veronique Ingram (Alternate to Mr Potts)
• Diana Wright
  • Anne Morant (Alternate to Dr. Wright; resigned 4 October 2000)

Note 16: Remuneration of officers

	2001	2000
	$	$
Remuneration of officers comprises:
Sitting fees for part-time members of the AASB	79,800	13,800
Remuneration of full time officers	416,141	35,916
	495,941	49,716

The number of Officers who received or were due to receive total remuneration of $100,000 or more:

	2001	2000
	Number	Number
$200,001 - $210,000	2	-

The officer remuneration includes officers concerned with or taking part in the management of the AASB.

Note 17: Remuneration of auditors

	2001	2000
	$	$
Remuneration to the Auditor-General for auditing the financial statements for the reporting period	7,800	3,300

No other services were provided by the Auditor-General during the reporting period.

Note 18: Financial instruments

(a) Terms, conditions and accounting policies

Financial Instrument	Notes	Accounting Policies and Methods (including recognition criteria and measurement basis)	Nature of underlying instruments (including significant terms and conditions affecting the amount, timing and certainty of cash flows)
Financial assets		Financial assets are recognised when control over future economic benefits is established and the amount of the benefit can be reliably measured.
Deposits at call	6A	Deposits are recognised at their nominal amounts. Interest is credited to revenue as it accrues.	Temporarily surplus funds are placed on deposit at call with the AASB's bank.
Financial Liabilities		Financial liabilities are recognised when a present obligation to another party is entered into and the amount of the liability can be reliably measured.
Non-bank loan	8A	The loan is carried at the balance to be repaid.	The loan is short-term but with no specified repayment date and is interest free. The loan is unsecured.
Trade creditors	10A	Creditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).	Settlement is usually made net 30 days.

(b) Interest rate risk

Financial Assets (recognised)	Notes	Floating Interest Rate		Non-Interest Bearing		Total		Weighted Average Effective Interest Rate
		00-01	99-00	00-01	99-00	00-01	99-00	00-01	99-00
		$	$	$	$	$	$	$	$
Cash at Bank	6A	311,132	33,539			311,132	33,539	4.38	3.1
Term Deposit	6A	306,716				306,716		4.67
Receivables		-	-	9,621	2	9,621	2	n/a	n/a
Total Financial Assets (recognised)		617,848	33,539	9,621	2	627,469	33,541
Total Assets						1,025,836	397,810
Financial Liabilities (recognised)
Non-Bank loans	8A	-	-	-	50,200	-	50,200	n/a	n/a
Trade creditors	10A	-	-	153,224	176,656	153,224	176,656	n/a	n/a
Total Financial Liabilities (recognised)		-	-	153,224	226,856	153,224	226,856
Total Liabilities		-	-			595,968	232,305

(c) The fair value of financial assets and liabilities approximate their carrying amounts.