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MODEL FINANCIAL STATEMENTS

FOR SA GOVERNMENT

NOT-FOR-PROFIT ENTITIES

(TIER 1)

For the year ended 30 June 2017

Model Financial Statements 2017 2

Department of Treasury and Finance Level 6, State Administration Centre 200 Victoria Square ADELAIDE SOUTH AUSTRALIA 5000 AUSTRALIA Telephone: +618 8226 9529 Facsimile: +618 8226 3127 Website: www.treasury.sa.gov.au Published by the Department of Treasury and Finance Issue Date: May 2017 © State of South Australia

The Department for SA Service Delivery is a fictitious department and has been used only for the purpose of illustrating the preferred reporting format for Tier 1 -South Australian Government not-for-profit entities.

http://www.treasury.sa.gov.au/


TABLE OF CONTENTS

Foreword ...................................................................................................................................... 4

Financial reporting requirements .............................................................................................. 5

Summary of changes in reporting requirements ..................................................................... 8

Department for SA Service Delivery

(Model financial statements for SA Government not-for-profit entities)

Report of the Auditor-General .................................................................................................. 15

Certification of the financial statements ................................................................................. 16

Controlled items

Statement of Comprehensive Income ...................................................................... 17

Statement of Financial Position ............................................................................... 20

Statement of Changes in Equity ............................................................................. 24

Statement of Cash Flows ........................................................................................ 27

Disaggregated Disclosures - Expenses and Income ............................................................ 31

Disaggregated Disclosures - Assets and Liabilities .............................................................. 33

Notes to and forming part of the Financial Statements......................................................... 35

Administered items

Disclosure of administered items ............................................................................. 96

Administered financial statements ......................................................................... 101

Appendix – alternate note 3 presentation ............................................................................. 114

Appendix – alternate note 41 presentation ........................................................................... 114


FOREWORD

Consistent with Treasurer’s Instruction 19 Financial Reporting, the 2017 Model Financial Statements set out the preferred form and content of financial statements for not-for-profit public authorities.

The 2017 Model Financial Statements use a fictitious not-for-profit entity, the Department for SA Service Delivery, to illustrate the preferred financial statements format. The guidance provided is designed to accommodate the diversity of South Australian not-for-profit public sector entities.

The 2017 Model Financial Statements include financial reporting requirements that are applicable for the reporting period ending 30 June 2017. These include requirements of the Public Finance and Audit Act 1987, relevant Treasurer’s Instructions, Accounting Policy Statements and Australian Accounting Standards.

I encourage all South Australian not-for-profit public sector entities to adopt the format set out in the 2017 Model Financial Statements. In doing so, however, each not-for-profit entity needs to review the contents of their financial statements to ensure the Model Financial Statements are appropriately amended to reflect the specific circumstances of the entity.

I would like to acknowledge the Auditor-General’s Department for their input on the 2017 Model Financial Statements for South Australian Government not-for-profit entities.

Kevin Cantley EXECUTIVE DIRECTOR, PUBLIC FINANCE May 2017


FINANCIAL REPORTING REQUIREMENTS

Section 41(b) of the Public Finance and Audit Act 1987 states that the Treasurer may issue instructions setting out the form and content of financial statements that must be prepared by the Treasurer and public authorities.

Paragraph 19.6 of Treasurer’s Instruction 19 Financial Reporting identifies:

each Chief Executive as being responsible for the preparation of general purpose financial statements;

that the general purpose financial statements shall comply with Australian Accounting Standards and Accounting Policy Statements issued by the Treasurer; and

that the preferred form and content of the general purpose financial statements for the public sector is incorporated in the model financial statements issued by the Department of Treasury and Finance.

The Model Financial Statements have been prepared in accordance with the requirements contained in Australian Accounting Standards, Accounting Policy Frameworks and Treasurer’s Instructions that are current at the time of publication.

References

The Australian Accounting Standards Board (AASB) has a number of versions of accounting standards available on their website. References included within the Model Financial Statements refer to the following versions of the accounting standards:

Standard Principal/ Compiled Date

Operative Date

CF Framework for the Preparation and Presentation of

Financial Statements

June 2014 (c) 1 Jul 2014

AASB 5 Jan 2015 (c) 1 Jan 2016

AASB 7 Jan 2015 (c) 1 Jan 2016

AASB 10 Dec 2015 (c) 1 Jul 2016

AASB 11 July 2015 (p) 1 Jan 2016

AASB 12 Aug 2015 (p) 1 Jan 2016

AASB 13 July 2015 (c) 1 July 2016

AASB 101 Jan 2015 (c) 1 Jan 2016

AASB 102 Dec 2013 (c) 1 Jan 2014

AASB 107 Aug 2015 (p) 1 Jan 2016

AASB 108 Jan 2015 (c) 1 Jul 2015

AASB 110 Jan 2015 (c) 1 Jan 2016

AASB 116 Dec 2014 (c) 1 Jan 2016

AASB 117 Aug 2015 (p) 1 Jan 2016

AASB 118 Dec 2013 (c) 1 Jan 2014

AASB 119 Aug 2015 (p) 1 Jan 2016


Standard Principal/ Compiled Date

Operative Date

AASB 123 Jan 2015 (c) 1 Jan 2016

AASB 124 July 2015 (p) 1 Jul 2016

AASB 128 Dec 2015 (c) 1 Jan 2016

AASB 132 Dec 2013 (c) 1 Jan 2014

AASB 136 Dec 2014 (c) 1 Jan 2016

AASB 137 Jan 2015 (c) 1 Jan 2016

AASB 138 August 2014 (c) 1 Jan 2016

AASB 139 June 2014 (c) 1 Jul 2014

AASB 140 Jan 2015 (c) 1 Jan 2016

AASB 1004 Jan 2015 (c) 1 Jul 2015

AASB 1048 Aug 2015 (p) 31 Aug 2015

AASB 1050 Dec 2013 (c) 1 Jan 2014

AASB 1051 Dec 2013 (c) 1 Jan 2014

AASB 1052

AASB 1053

June 2014

Jan 2015

(c)

(c)

1 Jul 2014

1 Jul 2015

AASB 1054 Jan 2015 (c) 1 Jul 2015

AASB 1055 Dec 2013 (c) 1 Jul 2014

AASB 1057 Nov 2015 (c) 1 Jan 2016 Paragraph 19.9 of Treasurer’s Instruction 19 requires that the general purpose financial statements in a public authority’s annual report must have the same form and content as the general purpose financial statements certified by the Chief Executive, and must include a copy of the opinion of the Auditor-General on those financial statements.

Please note:

The ‘Department for SA Service Delivery’ model financial statements are illustrative. It is intended to be representative rather than exhaustive.

Where a not-for-profit entity’s circumstances do not include items illustrated in the model financial statements these items should not be included in the not-for-profit entity’s financial statements, for example if a not-for-profit entity does not have any finance or operating leases, then the not-for-profit entity would not include the illustrated note disclosure for finance and operating leases.

The name of the not-for-profit entity and the reporting period covered by the financial statements should appear on each page of the financial statements.

Information included in the notes to and forming part of the financial statements should contain sufficient headings, cross-references and other detail to enable the subject matter to be identified promptly.

The font size used in presenting financial statements, schedules and accompanying notes should be at least 10pt.

Materiality is to be applied to the presentation of information in each not-for-profit entity’s financial statements. A specific disclosure requirement in an Australian Accounting Standard need not be satisfied if the information is not material. However, materiality does not apply to specific disclosure requirements contained


within Accounting Policy Statements.

APF II General Purpose Financial Statements Framework clause APS 2.5 requires not-for-profit entities that control other entities, subject to materiality, to prepare consolidated financial statements, showing a separate column for the parent entity in addition to the consolidated accounts, where material differences exist and the parent entity is a reporting entity or there is a reporting mandate.

AASB 112 Income Taxes is not applicable to SA Government not-for-profit entities that are required by Treasurer’s Instruction 22 Tax Equivalent Payments to calculate income tax equivalent payments using the accounting profit model.

In accordance with APF II General Purpose Financial Statements Framework clause APS 2.7 a not-for-profit entity must seek the Department of Treasury and Finance’s approval prior to adopting a new or amended accounting standard ahead of the specified commencement date due to the effect on the whole-of-government financial statements.

Reporting period

The Model Financial Statements apply to the reporting period commencing 1 July 2016 to 30 June 2017.

Controlled and administered items

The financial statements must distinguish between those transactions and balances that are ‘controlled’ by the entity and those that are ‘administered’ by the entity on behalf of the Government.

Controlled transactions and balances must be recognised in the financial statements.

Administered transactions and balances that are significant in relation to the not-for-profit entity’s overall financial performance or financial position must have separate ‘administered’ financial statements and notes prepared. Administered items that are insignificant to the entity’s overall financial performance and position must be disclosed in the notes to the accounts.

APF II General Purpose Financial Statements Framework clause APS 3.11 to 3.15 provides additional guidance in relation to the reporting of certain entities/items as administered.

Administrative restructures/machinery of government changes

Pursuant to legislation or other authority, the identity and/or structure of a government reporting entity may be dismantled or restructured by the Government. The restructuring process may result in the transfer of certain employees, activities, assets and/or the assumption of liabilities to other government reporting entities.

Part 5 of APF II General Purpose Financial Statements Framework specifies the financial reporting requirements for administrative restructures. In addition, the Financial Management Toolkit contains guidance and checklists which may be of assistance.

Rounding

Amounts shown in the financial statements must be rounded to the nearest $1,000 and expressed in Australian currency.


SUMMARY OF CHANGES IN REPORTING REQUIREMENTS

Treasurer’s Instructions

Amendments have been made to Treasurer’s Instructions since 30 June 2016, but these will not have an impact on the production of general purpose financial statements.

Accounting policy frameworks

The main amendments to the Accounting Policy Frameworks are for:

AASB 1053 Application of Tiers of Australian Accounting Standards – The guidance clause at 2.6.2 within APF II General Purpose Financial Statements Frameworks has been amended to include additional reporting entities that may apply, if they wish, Tier 2 reporting requirements.

Prospective Accounting policy framework changes

It is anticipated that Department of Treasury and Finance will, in June, amend certain rates and thresholds for employee benefits within APF IV Financial Asset and Liability Framework.

Public Finance and Audit Act 1987

There have been no amendments to the Public Finance and Audit Act 1987 that will have an impact on the production of general purpose financial statements.

New and revised Australian accounting standards

When complying with Australian accounting standards, preparers need to comply with all applicable new and amending standards and interpretations.

The AASB has released the following major new/revised accounting standards that will apply in future reporting periods:

AASB 9 Financial Instruments is operative from 1 January 2018. This standard applies to not-for-profit entities. AASB 9 addresses the classification, measurement, recognition and de-recognition of financial assets and liabilities.

AASB 15 Revenue from Contracts with Customers and AASB 1058 are operative from 1 January 2019. This standard applies to not-for-profit entities. When operative, the standard supersedes AASB 111 Construction Contracts, AASB 118 Revenue and the majority of revenue recognition requirements in AASB 1004 Contributions and various Interpretations.

AASB 16 Leases is operative from 1 January 2019. This standard applies to not-for-profit entities. Earlier application is permitted for entities that early adopt AASB 15 Revenue from Contracts with Customers. When operative, the standard supersedes AASB 117 Leases.


As at March 2017, the following new and/or revised accounting standards are applicable for the year ending 30 June 2017:

AASB 1 First-time adoption of Australian Accounting Standards (amendments arose from AASB 2014-1, AASB 2014-3, AASB 2014-9, AASB 2015-1)

AASB 2 Shared-based payments (amendments arose from AASB 2015-1)

AASB 3 Business Combinations (amendments arose from AASB 2015-1)

AASB 5 Non-current assets held for sale and discontinued operations (amendments arose from AASB 2015-1)

AASB 7 Financial Instruments: Disclosures (amendments arose from AASB 2015-1 and AASB 2015-2)

AASB 8 Operating Segments (amendments arose from AASB 2015-9)

AASB10 Consolidated financial statements (amendments arose from AASB 2015-10, AASB 2015-5 and AASB 2015-6)

AASB 11 Joint Arrangements (Principal Standard - amendments arose from AASB 2014-3 and AASB 2015-1 )

AASB 12 Disclosure of interests in other entities (Principal standard - amendments arose from AASB 2015-5)

AASB 13 Fair Value Measurement (amendments arose from AASB 2015-7)

AASB 14 Regulatory Deferral Accounts

AASB 101 Presentation of Financial Statements (amendments arose from AASB 2014-6 and AASB 2015-2 )

AASB 110 Events after the Reporting Period (amendments arose from AASB 2015-1 )

AASB 116 Property, Plant and Equipment (amendments arose from AASB 2014-4 and AASB 2014-6 )

AASB 117 Leases (amendments arose from AASB 2014-6, )

AASB 119 Employee Benefits (amendments arose from AASB 2015-1)

AASB 121 The effects of changes in foreign exchange rates (amendments arose from AASB 2015-1)

AASB 123 Borrowing Costs (amendments arose from AASB 2014-6)

AASB 124 Related Parties (Principal Standard – amendments arose from AASB 2015-6 )

AASB 127 Separate Financial Statements (amendments arose from AASB 2014-9)

AASB 128 Investments in Associates and Joint Ventures (amendments arose from AASB 2014-9, AASB 2015-5 and AASB 2015-10)

AASB 133 Earnings per Share (amendments arose from AASB 2015-1 and AASB 2015-9)

AASB 134 Interim Financial Reporting (amendments arose from AASB 2015-1 and AASB 2015-2)

AASB 136 Impairment of Assets (amendments arose from AASB 2014-6)

AASB 137 Provision, Contingent Liabilities and Contingent Assets (amendments arose from AASB 2015-1)


AASB 138 Intangible Assets (amendments arose from AASB 2014-4)

AASB 140 Investment Properties (amendments arose from AASB 2014-6 and AASB 2015-1)

AASB 141 Agriculture (amendments arose from AASB 2014-6)

AASB 1049 Whole of Government and General Government Sector Financial Reporting (amendments arose from AASB 2015-6 and AASB 2015-2)

AASB 1056 Superannuation Entities

AASB 1057 Application of Australian Accounting Standards (amendments arose from AASB 2015-9).

AASB 14 Regulatory Deferred Accounts

This new standard applies on or after 1 January 2016. It establishes the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation. It applies to first Australian Accounting Standard financial statements if the entity conducts rate regulated activities and it recognises amounts that qualify as regulatory deferral account balances in its financial statements in accordance with previous GAAP.

Impact

This standard will not have an impact on Department of SA Service Delivery. The department adopted Australian Accounting Standards in 2005.

AASB 1056 Superannuation Entities

This new standard applies on or after 1 July 2016. It establishes the requirements for general purpose financial statements of superannuation entities and accordingly is limited in application to general purpose financial statements of each superannuation entity.

Impact

This standard will not have an impact on Department of SA Service Delivery. The department is not a superannuation entity.

AASB 1057 Application of Australian Accounting Standards

This new standard applies on or after 1 January 2016. It outlines the types of entities and financial statements to which Australian Accounting Standards (including Interpretations) apply. The AASB noted that the IFRSs do not contain application paragraphs and to minimise Australia specific wording within the AASB, the application paragraphs within each standard were moved to this new standard.

Impact

This standard does not change the current application of Australian Accounting Standards to the Department of SA Service Delivery and accordingly will not have an impact on the Dept.


AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 and 11]

The amending standard provides guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business (as defined in AASB 3). The amendments require the acquirer of an interest in a joint operation in which the activity constitutes a business, to apply all of the principles on business combinations accounting in AASB 3 and other standards that do not conflict with the guidance in AASB 11. In addition, there are disclosure requirements (in relation to business combinations) for the acquirer.

Impact

The amendments will not have an impact on the Department for SA Service Delivery, the department does not have any investments in subsidiaries, joint ventures or associations. Consequently the Model Financial Statements for not-for-profit entities has not been amended.

AASB 2014-4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation [AASB 116 and 138]

The amending standard clarifies that the use of revenue based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. In addition, it also clarifies that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset.

Impact

The amendments will not have an impact on the Department for SA Service Delivery, the Department has not used revenue based methods to calculate depreciation of an asset or an intangible asset. Consequently the Model Financial Statements for not-for-profit entities has not been amended.

AASB 2014-6 Amendments to Australian Accounting Standards – Agriculture: Bearer Plants [AASB 101, 116, 117, 123, 136, 140 and 141]

The amending standard defines a bearer plant and requires bearer plants to be accounted for as property, plant and equipment.

Impact

The amendments will not have an impact on the Department for SA Service Delivery, the Department is not involved in the production or supply of agriculture produce. Consequently the Model Financial Statements for not-for-profit entities has not been amended.

AASB 2014- 9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements [AASB 1, 127, 128]

The amending standard allows entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements.


Impact

The amendments will not have an impact on the Department for SA Service Delivery, the Department does not have any investments in subsidiaries, joint ventures or associates. Consequently the Model Financial Statements for not-for-profit entities has not been amended.

AASB 2015 – 1 Amendments to Australian Accounting Standards – Annual improvements to Australian Accounting Standards 2012-2014 Cycle [AASB 1,2,3,5,7,11,110,119,121,133,134,137 &140]

The amending standard is a part of the AASB’s non-urgent but necessary amendment regime. The amendments are consistent with the IASB’s annual improvement process.

Impact

The amendments will not have an impact on the Department for SA Service Delivery. The Department:

is not a first time adopter (AASB 1);

does not undertake share based payment transactions (AASB 2) and does not have business combinations accounted for using the purchase method (AASB 3);

does not have an interest in a joint venture (AASB 11) and does not prepare interim financial reports (AASB 7 and 134).

is an administrative unit, any distribution to owners (ie via administrative restructure) are outside the scope of AASB 5.

is a not-for-profit public sector entity, and accordingly will continue to discount employee benefit obligations using market yields on govt bonds.

Consequently the Model Financial Statements for not-for-profit entities has not been amended.

AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative Amendments to AASB 101 [AASB 7,101,134 and 1049]

This amending standard provides clarification regarding the disclosure requirements within AASB 101 ensuring that preparers can apply judgement when determining what information is to be disclosed. In addition, the standard makes consequential amendments to AASB 7, 134 and 1049.

Impact

The amendments will reduce the current note disclosure accompanying the Department of Service Delivery’s financial statements. This will ensure that material information is not obscured with immaterial information.

AASB 2015 – 5 Amendments to Australian Accounting Standards – Investment Entities: Applying the Consolidation Exception [AASB 10,12,128]

This amending standard amends AASB 10, AASB 12 and AASB 128:

a. To confirm that the exemption from preparing consolidated financial statements set out in AASB 10 is available to a parent entity that is a subsidiary of an investment entity;


b. To clarify the applicability of AASB 12 to the financial statements of an investment entity;

c. To introduce relief in AASB 128 to permit a non-investment entity investor in an associate or joint venture that is an investment entity to retain the fair value through profit or loss measurement applied by the associate or joint venture to its subsidiaries.

Impact

The amendments will not have an impact on the Department for SA Service Delivery, the Department does not have any investments in subsidiaries, joint ventures or associates. Consequently the Model Financial Statements for not-for-profit entities has not been amended.

AASB 2015-6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities [AASB 10, 124,1049]

The amending standard extends the scope of AASB 124 to not-for-profit public sector entities. It also makes related minor amendments to AASB 10 and 1049.

Impact

The Department is a not-for-profit public sector entity and accordingly this amending standard has had a significant impact on the Department, largely in relation to the processes, procedures, internal controls and mechanisms to capture and report the required information associated with remuneration of Key Management Personnel and related party transactions. Consequently detailed disclosures have been included in the Model Financial Statements for not-for-profit entities.

AASB 2015-7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-for-Profit Public Sector Entities [AASB 13]

This amending standard relieves not-for-profit public sector entities from certain disclosures specified in AASB 13 for assets within the scope of AASB 116 that are held primarily for their current service potential rather than to generate future net cash inflows.

Impact

The Department early adopted this amending standard, accordingly the reduced disclosure is already reflected in the Model Financial Statements for not-for-profit entities.

AASB 2015-9 Amendments to Australian Accounting Standards – Scope and Application Paragraphs [AASB 8, 133,1057]

This amending standard places scope details into AASB 8 and 133 which were inadvertently deleted.

Impact

The amendments will not have an impact on the Department for SA Service Delivery. There is no change to the requirements or the applicability of AASB 8 and AASB 133 (noting that neither standard applies to the Department). Consequently, the Model Financial Statements for not-for-profit entities has not been amended.


AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128

The amending standard extends the operative date / effective date of AASB 2014-10 to 1 January 2018.

Impact

The amendments will not have an impact on the Department for SA Service Delivery. Consequently, the Model Financial Statements for not-for-profit entities has not been amended.



REPORT OF THE AUDITOR-GENERAL

Independent Auditor’s Report To the Chief Executive

(Insert Auditor’s Opinion)

A Richardson

AUDITOR-GENERAL

August 2017

Section 23(1) of the Public Finance and Audit Act 1987 requires each public authority, within 42 days after the end of the financial year of the public authority, to deliver to the Auditor-General financial statements relating to that financial year that comply with the Treasurer’s Instructions.



Certification of the Financial Statements

We certify that the attached general purpose financial statements for the Department for SA Service Delivery:

comply with relevant Treasurer’s Instructions issued under section 41 of the Public Finance and Audit Act 1987, and relevant Australian Accounting Standards;

are in accordance with the accounts and records of the Department; and

present a true and fair view of the financial position of the Department for SA Service Delivery as at 30 June 2017 and the results of its operation and cash flows for the financial year.

We certify that the internal controls employed by the Department for SA Service Delivery for the financial year over its financial reporting and its preparation of the general purpose financial statements have been effective throughout the reporting period.

Alex Smith Sam Jones CPA/CA/MIPA Chief Executive Director Corporate Services

August 2017 August 2017

Where the not-for-profit entity has a Board of management or a Board of Directors, the presiding member of the Board must also sign this certification. Section 23(2) and (2a) of the Public Finance and Audit Act 1987 requires the Chief Executive and the officer responsible for the financial administration to attach a certification that contains specific information, which is captured in the wording above.



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

STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 20171

Reference Note No.2

2017 $’0003

2016 $’0003

AASB 101 para 85, 99

APF II para APS 3.2(a), APS 3.3 Expenses

AASB 101 para 85,97 Employee benefits expenses 5

AASB 101 para 85,97 Supplies and services 6

AASB 101 para 85,97 Depreciation and amortisation expense 7

AASB 101 para 98(c), APF II APS

3.2(c)

Net loss from disposal of non-current assets 15

AASB 101 para 85,97 Grants and subsidies 8

AASB 101 para 82(b),APF II para

APS 3.6

Borrowing costs 9

AASB 102 para Aus 34.1, AASB 101

para 98(a)

Write-down of inventories for loss of service potential 21

Other expenses 10

Total expenses

AASB 101 para 85, APF II para APS

3.2(a), APS 3.3 Income

AASB 101 para 82(a); AASB 118

para 35(b)(i) & (ii)

Revenues from fees and charges 11

AASB 1004 para 18(a) Commonwealth revenues 12

AASB 118 para 35(b)(iii) Interest revenues 13

AASB 1004 para 18(a) 62 Resources received free of charge 14

Other revenues 16

AASB 101 para 98(c), APF II APS

3.2(c)

Net gain from disposal of non-current assets 15

AASB 101 para 98(d) Net gain from disposal of other assets 15

Other income 16

Total income

APF II para APS 3.3 Net cost of providing services

Revenues from / payments to SA Government

AASB 1004 para 18(a), 63(a) Revenues from SA Government 17

AASB 101 para 85, 97,99 Payments to SA Government 17

AASB 101 para 8, 81A, 85 Net result

Other Comprehensive Income

AASB 101 para 82A, AASB 116 Aus

39.1

Items that will not be reclassified to net result

Changes in property, plant and equipment asset revaluation surplus

Items that will be reclassified subsequently to net result when specific conditions are met

Gains or losses recognised directly in equity

AASB 101 para 81A(b) Total other comprehensive income

AASB 101 para 81A(c) Total comprehensive result

AASB 101 para 81B(b) The net result and total comprehensive result are attributable to the SA Government as owner

Note that if a not-for-profit entity has no amounts applicable to any individual item, these items should not be included in the statement.

1. The name of the entity and reporting date must be identified, required by AASB 101, paragraph 51(a) and (c).

2. AASB 101, paragraph 113 requires notes to be presented systematically and each item to be cross-referenced to any related information in the notes.

3. The rounding used in the financial report must be identified, required by AASB 101, paragraph 51(e).



STATEMENT OF COMPREHENSIVE INCOME (cont)


AASB 101 para 81A and APF II

para APS 3.2 Accounting Policy Statements require all items of income and expense to be recognised in a single Statement of Comprehensive Income. When income and expense items are material, their nature and amount are to be disclosed separately.

AASB 101 para 32 The standard provides that income and expense items are not to be offset unless permitted by a specific accounting standard. Offsetting may be permitted where it reflects the substance of the transaction or other event. Examples of income and expenses that are permitted to be offset are gains and losses on the disposal of non-current assets, and expenses related to a provision that is recognised in accordance with AASB 137 and reimbursed under a contractual arrangement with a third party.

AASB 101 para 5

AASB 101:

- uses terminology that is suitable for for-profit oriented entities. The descriptions used in the model financial statements’ Statement of Comprehensive Income have been amended from those suggested by AASB 101, e.g. profit or loss has been amended to net result;

AASB 101 para 85 - provides for additional line items, headings and subtotals when such presentation is relevant to an understanding of the entity’s financial performance. The model financial statements’ Statement of Comprehensive Income has been prepared on the net cost of services format, as required by APF II; and

AASB 101 para 87 - prohibits an entity presenting any item of income and expense as extraordinary in the Statement of Comprehensive Income or in the notes.

APF II para APS 3.2 Accounting Policy Statements contained within Accounting Policy Framework II General Purpose Financial Statements Framework require income and expense items

to be disclosed in aggregate and according to their nature (rather than function within the entity) and the net gain/loss on disposal of assets to be disclosed in the Statement of Comprehensive Income.

AASB Interprétation 1031 para 6

AASB 118 para 8

Income and expenses must be recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred by a purchaser is not recoverable from the Australian Taxation Office.

Similar to GST, the Commonwealth Government’s Paid Parental Leave Scheme involves amounts collected on behalf of third parties. These amounts are not recognised as income and expense in the Statement of Comprehensive Income.


Materiality

Line items are included in the Statement of Comprehensive Income when the amount and nature of an item or aggregation of similar items is such that separate presentation is relevant. Notes are to be prepared for each material item in the Statement of Comprehensive Income and further details provided depending on the size, nature and function of the amounts involved.

Applying the concept of materiality means that a specific disclosure requirement in an accounting standard need not be satisfied if the information is not material (nature and amount). However, this does not apply to specific disclosure requirements contained in Accounting Policy Statements.

AASB 118 para 35(b)

Income

Income is comprised of revenue and gains.

AASB 118 Revenue requires that each significant category of revenue be disclosed including the following revenue items:

- Sale of goods; - Rendering of services; - Interest; - Royalties; and - Dividends.

AASB 1004 Contributions requires asset contributions, forgiveness of liabilities,

appropriations, liabilities assumed, goods and services received free of charge to be disclosed.

Note: the line item ‘other revenue’ should not exceed 10% of the total value of



STATEMENT OF COMPREHENSIVE INCOME (cont)


revenues.

Gains are displayed separately to revenue in the Statement of Comprehensive Income. Generally, gains are reported net of related expenses e.g. gain on sale of property, plant and equipment; gain on contributed assets; gain on investment. The line item ‘other income’ will be used where a specific standard prohibits the item being classified as revenue (e.g. AASB 138, paragraph 113 de-recognition of an intangible asset), the amount is immaterial and does not warrant an additional descriptive line item in the Statement of Comprehensive Income.

AASB 101 para 100

Expenses

AASB 101 encourages entities to disclose expenses aggregated in the Statement of Comprehensive Income with further detail in the notes. Accounting standards require borrowing costs to be disclosed separately.

It is considered best practice that income and expenses disclosed in the Statement of Comprehensive Income are reconciled to the detailed categorisations of income and expenses contained in the notes unless these disclosures are presented in the Statement of Comprehensive Income.

‘Payments to government’ may include the return of surplus cash pursuant to the cash alignment policy, income tax equivalent payments, or other payments made directly to the Consolidated Account. Note: the line item ‘other expenses’ should not exceed 10% of the total value of expenses.

Other information

The reference column in the Statement of Comprehensive Income is for information only and should not be replicated in not-for-profit entities’ financial statements.

Paragraph 19.7 of Treasurer’s Instruction 19 Financial Reporting provides that in the

event of any inconsistency between an Accounting Policy Statement issued by the Treasurer pursuant to that instruction and an Australian Accounting Standard, the requirements of the Accounting Policy Statement will prevail.



STATEMENT OF FINANCIAL POSITION

As at 30 June 20171

Reference

Note No.2

2017 $’0003

2016 $’0003

1 July 2015

$’0003

AASB 101 para 10(f), 60

APF II para APS 3.1 Current assets

AASB 101 para 54(i) Cash and cash equivalents 18

AASB 101 para 54(h) Receivables 19

AASB 101 para 54(d) Other financial assets 20

Other assets

AASB 101 para 54(g) Inventories 21

AASB 101 para 54(j)

AASB 5 para 38,40

Non-current assets classified as held for sale 22

Total current assets

AASB 101 para 60 Non-current assets

AASB 101 para 54(d) Other financial assets

AASB 101 para 54(a) Property, plant and equipment 23

AASB 101 para 54(c) Intangible assets 24

AASB 101 para 54(b) Investment properties 25

Other assets

Total non-current assets

Total assets

AASB 101 para 60 Current liabilities

AASB 101 para 54(k) Payables 27

AASB 101 para 54(m) Financial liabilities/Borrowings 28

AASB 101 para 55 Employee benefits 29

AASB 101 para 54(l) Provisions 30

Other liabilities 31

AASB 5 para 38 Liabilities directly associated with non-current assets held for sale

22

Total current liabilities




STATEMENT OF FINANCIAL POSITION (cont.)

As at 30 June 20171

Reference

Note No.2

2017 $’0003

2016 $’0003

1 July 2015

$’0003

AASB 101 para 60 Non-current liabilities

AASB 101 para 54(m) Financial liabilities/Borrowings 28

AASB 101 para 55 Employee benefits 29

AASB 101 para 54(l) Provisions 30

Other liabilities 31

Total non-current liabilities

Total liabilities

Net Assets

AASB 101 para 60 Equity

AASB 101 para 54(r) Contributed capital 32

Retained earnings

AASB 101 para 54(r) Asset Revaluation Surplus 32

Total Equity

AASB 101 para 54(r) The total equity is attributable to the SA Government as owner

AASB 101 para

114(c)(IV)(2)

Unrecognised contractual commitments 33

AASB 101 para

114(c)(iv)(2) AASB 137

para 86

Contingent assets and liabilities 34








As at 30 June 20171

AASB 101 para 60 AASB 101 Presentation of Financial Statements requires all assets and liabilities to be separately classified either as current or non-current unless a presentation based on liquidity is more relevant. A twelve-month period or a clearly identifiable operating cycle can be used as the basis for differentiating between current and non-current.

AASB 101 para 68,70 The term ‘non-current’ usually includes items of a long-term nature. Current assets/liabilities include assets/liabilities that are part of the normal operating cycle even when they are not expected to be realised / settled within twelve months after the reporting date, e.g. inventories, receivables, payables and operating accruals.

When asset and liability items are material, their nature and amount are to be disclosed. The notes accompanying the financial statements will disclose the amounts expected to be recovered or settled up to and including 12 months and more than 12 months after the reporting date for each asset and liability line item.

UIG Interpretation 1031

para 6 -9

Items must be recognised net of the amount of GST, except as follows:

- the amount of GST incurred by a purchaser that is not recoverable from the Australian Taxation Office must be recognised as part of the cost of acquisition of the asset; and

- receivables and payables must be stated with the amount of GST included.

GST recoverable from, or payable to, the Australian Taxation Office must be included as part of receivables or payables in the Statement of Financial Position.

Note: Prepayments are GST exclusive (as the agency already holds the tax invoice and has or will claim the ITC). Accrued expenses are GST inclusive (i.e. it is the amount that will be paid).

AASB 101 para 32 Assets and liabilities are not to be offset unless permitted by a specific accounting standard. Offsetting may be permitted where it reflects the substance of the transaction or other event. AASB 132 para 46 permits a financial asset and a financial liability to be offset and the net amount presented in the Statement of Financial position when an entity has a legally enforceable right to set off the recognised amounts and intends to settle on this basis.

AASB 101 para 57,

58,77,78

Materiality

Line items are included in the Statement of Financial Position when the size, nature or function of an item or aggregation of similar items is such that separate presentation is relevant.

Notes are to be prepared for each material item in the Statement of Financial Position and further details provided depending on the size, nature and function of the amounts involved.

Applying the concept of materiality means that a specific disclosure requirement in an accounting standard need not be satisfied if the information is not material (nature and amount). However, this does not apply to specific disclosure requirements contained in Accounting Policy Statements.

AASB 101 para 54 Assets and Liabilities

AASB 101 requires the following items to be disclosed in the Statement of Financial Position:

- Cash and cash equivalents; - Inventories; - Trade and other receivables; - Assets classified as held for sale and associated liabilities; - Biological assets; - Property, plant and equipment; - Investment property; - Intangible assets; - Financial assets; - Investments accounted for using the equity method; - Trade and other payables; - Provisions; - Financial liabilities; - Current tax assets and liabilities; - Deferred tax assets and liabilities; - Issued capital and reserves attributable to owners of the parent; and - Non-controlling interest, presented within equity.




As at 30 June 20171

When a line item for ‘other’ assets/liabilities is used, this line item should not exceed 10% of the value of total assets/liabilities.

AASB 7 para 8 Categories of financial assets and financial liabilities

AASB 7 requires that an entity disclose the carrying amounts of each category of financial instruments either in the Statement of Financial Position or in the accompanying notes. For the purposes of illustrating the preferred reporting format for South Australian Government not-for-profit entities, the carrying amounts for each category of financial instruments are disclosed in note 41.

AASB 101 para 61-62 Employee benefits

As per AASB 101, a provision is classified as a current liability if the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

This means, for example, where employees are entitled to take their annual leave after the reporting period, the provision for annual leave must be recorded as a current liability even if the employees are not expected to take leave within the twelve month period. Annual leave is a short- term benefit and will be measured at a nominal basis.

Vested long service leave will be classified as a current liability where the entity does not have an unconditional right to defer settlement of the leave liability. Unvested long service leave will be classified as non-current liability as the entity has an unconditional right to defer settlement of the leave liability.

All long service leave whether current or non-current, is a long-term benefit and is required to be accounted for under the projected unit credit method in accordance with AASB 119.

Equity

The creation of reserves other than the asset revaluation surplus will be rare and specific to each not -for-profit entity. For each reserve, entities are required to provide a description of the nature and purpose of the reserve in the notes and movement disclosure in the Statement of Changes in Equity.

AASB 101 para 10(f) Comparative

AASB 101 Presentation of Financial Statements requires an agency present, as a minimum, three statements of financial position, two of each other statement and related notes, where an entity applies an accounting policy retrospectively or makes a retrospective restatement of items or when it reclassifies items in its financial statements.

Note: The requirements specified in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors apply where information resulting from their application is material.

Other information

The reference column in the Statement of Financial Position is for information only and should not be replicated in entities’ financial statements.

Paragraph 19.7 of Treasurer’s Instruction 19 Financial Reporting provides that in the event of any inconsistency between an accounting policy statement issued by the Treasurer pursuant to that instruction and an Australian accounting standard, the requirements of the accounting policy statement will prevail.



STATEMENT OF CHANGES IN EQUITY


Reference

Note No.2

Contributed capital

$’0003

Asset revaluation

surplus $’0003

Retained earnings $’0003

Total Equity $’0003

Balance at 30 June 2015

AASB 101 para

106(b)

Changes in accounting policy 23

AASB 101 para

106(b)

Error correction

Restated balance at 30 June 2015

AASB 101

para106(d)(i)

Net result for 2015-16

AASB 101 para

106(d)(ii), AASB 116

para 77(f)

Gain on revaluation of land during 2015-16

23

AASB 101 para

106(d)(ii), AASB 116

para 77(f)

Loss on revaluation of plant and equipment during 2015-16

23

Net income or expense relating to non-current assets classified as held for sale

Gains or losses taken to equity

AASB 101 para

106(a)

Total comprehensive result for 2015-16

APF III APS 3.19

AASB 101 para

106(d)(iii), APF II para

APS 3.8

Transfer between equity components

Transactions with SA Government as owner

AASB 1004 para 48 Equity contribution received

AASB 1004 para 49 Net assets received from an administrative restructure

35

Equity contribution repaid

AASB 101 para 107

APF II para APS 3.8

Dividends paid

Net assets transferred as a result of an administrative restructure

35

Balance at 30 June 2016 32



All changes in equity are attributable to the SA Government as owner.

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

STATEMENT OF CHANGES IN EQUITY


Reference

Note No.2

Contributed capital

$’0003

Asset revaluation

surplus $’0003

Retained earnings $’0003

Total Equity $’0003

AASB 101 para

106(d)(i)


AASB 101 para

106(d)(ii) AASB 116

para 77(f)


23

AASB 101 para

106(d)(ii) AASB 116

para 77(f)


23

Net income or expense relating to non-current assets classified as held for sale

AASB 101 para

106(d)(ii)

Gains or losses taken to equity

AASB 101 para 106(a) Total comprehensive result for 2016-17

APF III APS 3.19

AASB 101 para

106(d)(iii) APF II para

APS 3.8

Transfer between equity components


AASB 1004 para 48 Equity contribution received

AASB 1004 para 49 Net assets received from an administrative restructure

35

Equity contribution repaid

AASB 101 para 107

APF II para APS 3.8

Dividends paid

Net assets transferred as a result of an administrative restructure

35

Balance at 30 June 2017 32


1 The name of the entity and reporting date must be identified, required by AASB 101, paragraph 51(a) and (c).

2 AASB 101, paragraph 113 requires notes to be presented systematically and each item to be cross-referenced to any related information in the notes.

3 The rounding used in the financial report must be identified, required by AASB 101, paragraph 51(e).



STATEMENT OF CHANGES IN EQUITY (cont.)


AASB 101 para 106-110

In accordance with AASB 101 Presentation of Financial Statements an entity is required to disclose in the Statement of Changes in Equity:

- Total comprehensive result for the period, showing separately total amounts attributable to owners and non-controlling interests;

- For each component of equity, the effects of retrospective application or retrospective restatements recognised;

- The amounts of transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners; and

- For each component of equity, reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing each change.

The APF II APS 3.8 requires analysis of other comprehensive income by item and transactions with the State Government as owner, including dividends to be presented in the Statement of Changes in Equity rather than the notes.

In accordance with the revised AASB 1004 Contributions restructure of administrative arrangements are in the nature of transactions with owners in their capacity as owners and accordingly are presented in the Statement of Changes in Equity rather than recognised as a net revenue or expense through profit and loss.

The reference column in the Statement of Changes in Equity is for information only and should not be replicated in not-for-profit entities’ financial statements.

Separate line items shown in the Statement of Changes in Equity need not be included unless they are material and relevant to the circumstances of the entity.

Paragraph 19.7 of Treasurer’s Instruction 19 Financial Reporting provides that in the

event of any inconsistency between an Accounting Policy Statement issued by the Treasurer pursuant to that instruction and an Australian Accounting Standard, the requirements of the Accounting Policy Statement will prevail.



STATEMENT OF CASH FLOWS


Reference

Note No.2

2017 $’0003

2016 $’0003

AASB 107 para 10 Cash flows from operating activities

AASB 107 para 18, APF II para APS 3.10(a)

Cash outflows

Employee benefits payments

Payments for supplies and services

Payments of grants and subsidies

APF II para APS 3.10(c)

Interest paid

Payments for paid parental leave scheme

Other payments

Cash used in operations

AASB 107 para 18 Cash inflows

Fees and charges

Receipts from Commonwealth


Interest received


Dividend received

APF II para APS 3.10(d)

GST recovered from the ATO4

Receipts for paid parental leave scheme

Other receipts

Cash generated from operations

AASB 107 para 18, Aus20.2

Cash flows from SA Government

Receipts from SA Government

Payments to SA Government

Cash generated from SA Government

APF II para APS 3.9 Net cash provided by/(used in) operating activities

AASB 107 para 10, 18 Cash flows from investing activities

Cash outflows

AASB 107 para 16(a) Purchase of property, plant and equipment Purchase of intangibles

AASB 107 para 16(c) Purchase of investments

Cash used in investing activities




STATEMENT OF CASH FLOWS (cont.)


Reference

Note No.2

2017 $’0003

2016 $’0003

Cash inflows

AASB 107 para 16(b) Proceeds from the sale of property, plant and equipment

AASB 107 para 16(d) Proceeds from sales/maturities of investments

Cash generated from investing activities

Net cash provided by/(used in) investing activities

AASB 107 para 10 Cash flows from financing activities

AASB 107 para 18 Cash outflows


Cash transferred as a result of restructuring activities

Dividends paid to government

AASB 107 para 17(e) Repayment of finance leases

AASB 107 para 17(d) Repayment of borrowings

Cash used in financing activities

AASB 107 para 18 Cash inflows

Capital contributions from government

AASB 107 para 17(c) Proceeds from borrowings

Cash received from restructuring activities

Cash generated from financing activities

Net cash provided by/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period 19

AASB 107 para 43 Non-cash transactions 19


1 The name of the entity and reporting date must be identified, required by AASB 101, paragraph 51(a) and (c).

2 AASB 101, paragraph 113 requires notes to be presented systematically and each item to be cross-referenced to any related information in the notes.

3 The rounding used in the financial report must be identified, required by AASB 101, paragraph 51(e).

4 One net GST amount for the year is to be reported. Where the agency is in a: 1. GST recovery position, this will be GST recovered from the ATO 2. GST payable position, this will be GST paid to the ATO.



STATEMENT OF CASH FLOWS (cont.) For the year ended 30 June 20171

AASB 107 Statement of Cash Flows requires a Statement of Cash Flows to report cash flows during the period. Cash flows will be classified as operating, investing or financing activities.

AASB 107 allows cash flows arising from operating activities to be reported in the statement using either the direct or indirect method. APF II mandates the use of the direct method, whereby major classes of gross cash receipts and cash payments are disclosed.

The Statement of Cash Flows has been prepared on the net cost of services format consistent with the requirement outlined in APF II and as permitted by AASB 107, ‘Aus’ paragraph 20.2.

The following cash flows must be separately disclosed and classified in a consistent manner from period to period as either operating, investing or financing activities:

- interest received, dividends received and interest paid (classified as operating flows); and - dividends paid (classified as financing flows).

It is unlikely that not-for-profit entities will pay a dividend to the Treasurer. Dividends are payments from profit and not-for-profit entities generally do not make a profit but rather receive appropriation or earn income to cover the cost of providing services.

Cash flows are to be included in the Statement of Cash Flows on a gross basis, subject to AASB Interpretation 1031, paragraphs 6 to 11 and AASB 107.

When accounting for the GST cash flows, disclosure of ‘one annual net GST amount’ for the year’ is preferred, i.e. a separate line for GST recovered or paid to the Australian Taxation Office. The GST arising from investing and financing activities which is recoverable from, or payable to, the Australian Taxation Office must be classified as operating cash flows. See guidance below.

At the UIG meeting in September 2000, UIG members noted that although GST amounts are not required to be disclosed in cash flow statements, an entity could choose to make specific GST disclosures in the statement itself or in notes to the statement.

When accounting for the Commonwealth Government’s Paid Parental Leave Scheme, agencies are acting as a conduit through which the payment to eligible employees are made on behalf of the Family Assistance Office – consistent with the treatment of GST, the 2 line method is preferred.

The line item for ‘other’ receipts/payments should not exceed 10% of the total value of receipts/payments.

Materiality

Each material class of similar items shall be presented separately in the statement. If a line item is not individually material, it is aggregated with other items in the statement or in the notes. An item that is not sufficiently material to warrant separate presentation in the Statement of Cash Flows may be sufficiently material for it to be presented separately in the notes.

Notes are to be prepared for each material item in the Statement of Cash Flows. Applying the concept of materiality means that a specific disclosure requirement in an accounting standard need not be satisfied if the information is not material. However, this does not apply to specific disclosure requirements contained in accounting policy statements.

The reference column in the Statement of Cash Flows is for information only and should not be replicated in not-for-profit entities’ financial statements. Separate line items shown in the statement need not be included unless they are material and relevant to the circumstances of the entity.

Non-cash transactions

AASB 107 paragraph 43 requires investing and financing activities that do not require the use of cash to be disclosed in a way that provides all the relevant information about these activities.

Other disclosures

AASB 107 paragraphs 48 and 50 require an entity to disclose, together with commentary by management, the amounts of cash and cash equivalent balances held by the entity that are not available for use by the entity. This disclosure is applicable to the Department for SA Service Delivery and has been illustrated at Note 18 Cash and cash equivalents.



STATEMENT OF CASH FLOWS (cont.) For the year ended 30 June 20171

Guidance re Cash Flows relating to GST

Main points: cash flows are GST inclusive; and one net amount to be disclosed for GST paid or received from ATO.

Operating cash flows are required to be recognised on a gross basis, that is, inclusive of the amount of GST (refer APF II, AASB 107 and UIG 1031). The direct method is to be used and information about major classes of gross receipts and gross payments are disclosed i.e. the GST recovered/paid to the ATO is a major class of gross cash receipt (refer to APF II and AASB 107).

Treasury’s preferred position is for ‘one net GST amount for the year’ to be reported in the Statement of Cash Flows as illustrated above.

Example: During the year Agency A:

paid $200,000 to employees. $170,000 was recorded as employee benefits expense (and disclosed in the Statement of Comprehensive Income) and the Employee benefits liability was reduced by $30,000 (relating to additional payments made to employees). Payments for employees’ salaries and wages and payments for seconded employees do not include GST.

paid $330,000 to various suppliers for taxable supplies and services. $300,000 was recorded as goods and services expenses (and disclosed in the Statement of Comprehensive Income) and $30,000 was recorded in the GST control account (and the input tax credits were recovered from the ATO via the BAS)

paid $105,000 to grant recipients. $100,000 was recorded as a grant expense (and disclosed in the Statement of Comprehensive Income) and $5,000 was recorded in the GST control account (and the input tax credits were recovered from the ATO via the BAS). Note: in this example all grants, except one, did not include GST. A single taxable grant of $55,000 GST inclusive was paid.

received $20,000 from regulated fees and charges. $20,000 was recorded as revenues from fees and charges (and disclosed in the Statement of Comprehensive Income). Income from regulated fees and charges met division 81 requirements, and did not include GST.

received $44,000 from other activities. $40,000 was recorded as other revenues (and disclosed in the Statement of Comprehensive Income) and $4,000 was recorded in the GST control account (and the GST was paid to the ATO via the BAS).

Note: During the year, Agency A was in a net refund position for 11 of the 12 monthly BASs (35,000), and a net payment position for only 1 BAS (4,000).

Extract - Statement of Cash Flows

Cash outflows from operating activities

Employee benefits expense $200,000

Payment for supplies and services $330,000

Payment of grants and subsidies $105,000

Cash used in operations $635,000

Cash inflows from operating activities

Fees and charges $20,000

Other receipts $44,000

GST recovered from the ATO $31,000

Cash generated from operations $95,000



DISAGGREGATED DISCLOSURES – EXPENSES AND INCOME


Activity A Activity B Activity C New activity/old activity not continued

General/not attributable Total

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

Expenses

Employee benefits expenses

Supplies and services

Depreciation and amortisation expense

Net loss from disposal of non-current assets

Grants and subsidies

Borrowing costs

Write-down of inventories for loss of service potential

Other expenses

Total expenses

Income

Revenues from fees and charges

Commonwealth revenues

Interest revenues

Resources received free of charge

Other revenues




DISAGGREGATED DISCLOSURES – EXPENSES AND INCOME (cont.)




2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

Net gain from disposal of non-current assets

Net gain from disposal of other assets

Other income

Total income

Net cost of providing services

Revenue from / payments to SA Government

Revenues from SA Government


Net result

AASB 1052 Disaggregated Disclosures para 15 and 16 requires expenses, income, assets and liabilities to be disclosed via each of the entity’s activities, where this can be done reliably.

AASB 1052’s requirements are applicable to departments. APF II clause APS 4.11 extends this to all not-for-profit agencies except for those entities required to comply with a specific accounting standard or universities.

Where activity expense, income, asset and liability allocation has changed and, as a result, a direct comparison cannot be made with the previous year’s activities, the previous year’s Schedule will be recast and reported in the current year’s financial reports. If a direct comparison can be made with the prior year, this information does not need to be included.

General / not attributable includes amounts that cannot be easily and reliably allocated to an activity.



DISAGGREGATED DISCLOSURES – ASSETS AND LIABILITIES




2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

Assets

Cash and cash equivalents

Receivables

Other financial assets

Inventories

Non-current assets classified as held for sale

Property, plant and equipment

Intangibles

Investment properties

Other assets

Total assets

Liabilities

Payables

Financial liabilities / Borrowings

Employee benefits



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

DISAGGREGATED DISCLOSURES – ASSETS AND LIABILITIES (cont.)




2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

Provisions

Other liabilities

Liabilities directly associated with non- current assets held for sale

Total liabilities

AASB 1052 Disaggregated Disclosures paras 15 and 16 requires expenses, income, assets and liabilities to be disclosed via each of the entity’s activities, where this can be done reliably. AASB

1052’s requirements are applicable to departments. APF II clause APS 4.11 extends this to all not-for-profit agencies except for those entities required to comply with a specific accounting standard or universities.

Where activity expense, income, asset and liability allocation has changed and, as a result, a direct comparison cannot be made with the previous year’s activities, the previous year’s Schedule will be recast and reported in the current year’s financial reports. If a direct comparison can be made with the prior year, this information does not need to be included.

General / not attributable includes amounts that cannot be easily and reliably allocated to an activity.



NOTES TO &

FORMING PART OF

THE FINANCIAL

STATEMENTS



Commentary - Contents

Reference Contents page

A contents page/note index will assist users of the financial report.

Presentation of notes

ASB 101 para 113 & 114

Notes to and forming part of the financial statements must be presented in a systematic manner. This requires consideration of the effect on the understandability and comparability of the financial statements. Each item in the financial statements is to be cross-referenced to any directly related information in the notes.

Notes are normally presented following the order of the line items in the statements of comprehensive income and statement of financial position:

statement of compliance with Australian accounting standards;

summary of significant accounting policies applied;

supporting information for items presented in the statements in the order of which each statement and each line item is presented; and

other disclosures including contingent assets and liabilities and unrecognised contractual commitments and non-financial disclosures.

AASB 101 also permits ordering or grouping notes by:

giving prominence to the areas of its activities that the entity considers to be most relevant to an understanding of its financial performance and financial position, such as grouping together information about particular operating activities; or

grouping together information about items measured similarly such as assets measured at fair value.

Content of notes

AASB 101 para 112

The notes will:

present information about the basis of preparation of the financial statements and specific accounting policies used.

disclose information required by Australian accounting standards, where material, that is not presented elsewhere in the statements.

provide information that is not presented elsewhere in the financial statements but is relevant to an understanding of them.

Basis of preparation /Statement of compliance

AASB 1054 para 7,8,9

The notes will outline:

a statement of compliance with Australian accounting standards and other relevant statutory requirements;

statutory basis or other reporting framework; and

whether the entity is a not-for-profit entity or a for-profit entity and whether that entity’s financial statements are general purpose financial statements or if applicable special purpose financial statements.

Significant accounting policies

AASB 101 para 117, 122 and 125

Significant accounting policies that have been applied in the preparation and presentation of the financial statements (for example, policy adopted where alternatives are allowed in standards) and the measurement bases used in preparing the financial statements (for example, historical cost, fair value or net realisable value) will be disclosed. Disclosure may be within the significant accounting policies note or alternatively within the respective note.



An entity will also disclose:

judgements (apart from estimations) management has made in applying an entity’s accounting policies (for example, whether the substance of a relationship is controlled or administered) and that have the most significant effect on the amounts recognised in the financial statements.

assumptions made about the future and estimations that have a significant risk of resulting in material adjustments to the carrying amounts of assets and liabilities within the next reporting period (for example, estimating recoverable amount, effect of technological obsolescence on plant and equipment and discount rates).

Where there is no accounting standard or policy covering a particular item, the disclosure should focus on explaining why the policy applied ensures that relevant and reliable information is presented.


Where there is a change in accounting policy arising from the initial application of an Australian accounting standard or a voluntary change in accounting policy, the following information must be disclosed:

the title of the standard (if applicable);

the nature of the change and the reasons for the change;

details of transitional provisions (if applicable); and

the financial effect (for each financial statement line item affected).


When an entity has not applied an accounting standard that has been issued but is not yet effective, the entity shall disclose this fact; and known or reasonably estimable information relevant to assessing the possible impact and application the standard will have on the entity’s financial statements in the period of initial application. An entity must consider disclosing:

the title of the standard;

the nature of the impending change or changes in accounting policy;

the date by which application of the standard is required; and

the date as at which it plans to apply the standard and either a discussion of the impact that initial application of the standard is expected to have on the entity’s financial statement or if that impact is not known or reasonably estimable, a statement to that effect.

Note: Accounting Policy Framework II General Purpose Financial Statements para APS 2.7 requires entities to seek the Department of Treasury and Finance’s approval prior to adopting a new or amended accounting standard ahead of the specified commencement date. Not all accounting standards are available for early adoption.

Consistent accounting treatment must be employed in the preparation and presentation of consolidated financial statements.

General purpose financial statements

AASB 101 para 10, 38, 45

APF II para APS 2.2, 2.6

Accounting Policy Framework II General Purpose Financial Statements paragraph:

APS 2.6 requires all government entities, other than those specifically exempted by the Under Treasurer or his delegate (via APS 2.6.1), to apply Tier 1 Australian Accounting Standards reporting requirements when preparing general purpose financial statements; and

APS 2.2 requires general purpose financial statements to include a Statement of Comprehensive Income, Statement of Financial Position, a Statement of Changes in Equity, a Statement of Cash Flows, explanatory notes; and financial schedules and explanatory notes for administered items.



Classification and presentation of items in the financial statement is to be retained from one period to the next unless an accounting policy framework or Australian accounting standard requires a change or it is apparent, following a significant change in the nature of the entity, that another classification or presentation is more appropriate.

Except where a specific accounting standard permits, comparative information should be disclosed for previous periods.

The economic substance of transactions should be reflected in the financial statements.

Administered items

AASB 1050 para 7 APF II para APS 3.11

The financial statements must distinguish between those transactions and balances controlled and those administered by the entity on behalf of the Government. An entity with administered items that are significant in relation to the entity’s overall performance or financial position will prepare a Statement of Administered Comprehensive Income; Statement of Administered Financial Position, Statement of Administered Changes in Equity, Statement of Administered Cash Flows and activity schedules. An entity with administered items that are insignificant will disclose these transactions in the notes accompanying the administered statements.

Disclosures

AASB 101 para 114d,137,138

Specific note disclosure requirements are contained in Accounting Policy Statements contained within:

Part 4 and 5 of APF II General Purpose Financial Statements Framework;

Part 14 of APF III Asset Accounting Framework;

Part 4 of APF IV Financial Asset and Liability Framework; and

Parts 4 of APF V Income Framework.

AASB 1054, para 10

The following items will also be disclosed in the general purpose financial statements:

Capital and expenditure commitments contracted for as at reporting date;

Contingent assets and liabilities (as required by AASB 137);

The amount of dividends proposed or declared (if declared after the reporting period but before financial statements are authorised for issue, the dividends are disclosed as a note to the accounts);

Description of the nature and principal activities of the entity; and

Amounts paid or payable to the auditor for the audit/review of the financial report and non-audit services.

Where a not-for-profit entity manufactures goods (this would be rare in the SA public service), the entity will need to ensure the disclosure requirements relating to cost of goods sold are met.

The model provides an alternative presentation in relation to the changes in accounting policy – one which provides disclosure about the adoption of standards and interpretations that have recently been issued or amended but are not effective, where an agency can provide sufficient audit evidence to substantiate that there are no impacts and an alternative (see page 109) which provides the specific disclosures about the adoption of these standards and interpretations. The Auditor-General’s Department has advised that where an agency can provide sufficient audit evidence to substantiate there are no impacts, the disclosure illustrated in Note 3 would be assessed as appropriate.



NOTE INDEX

Objectives of the Department for SA Service Delivery Note 1

Significant accounting policies Note 2

New and revised accounting standards and policies Note 3

Activities of the department Note 4

Expense notes

Employee benefits expenses Note 5

Remuneration of employees and TVSP disclosure Note 5

Supplies and services Note 6

Depreciation and amortisation expense Note 7

Grants and subsidies Note 8

Borrowing costs Note 9

Other expenses (including Auditor’s remuneration) Note 10

Payments to SA Government Note 17

Income notes

Revenues from fees and charges Note 11

Commonwealth revenues Note 12

Interest revenues Note 13

Resources received free of charge Note 14

Net gain/loss from the disposal of non-current and other assets Note 15

Other revenues/income Note 16

Revenues from SA Government Note 17

Asset notes

Cash and cash equivalents (including non-cash transactions) Note 18

Receivables Note 19

Other financial assets Note 20

Inventories Note 21

Non-current assets classified as held for sale Note 22

Property, plant and equipment Note 23

Intangible assets Note 24

Investment properties Note 25

Fair value measurement Note 26

Liability notes

Payables Note 27

Financial Liabilities/Borrowings Note 28

Employee benefits Note 29

Provisions Note 30

Other liabilities Note 31

Equity notes

Equity Note 32

Other notes

Unrecognised contractual commitments Note 33

Contingent assets and contingent liabilities Note 34

Transferred functions Note 35

Remuneration of board and committee members Note 36

Related Party Transactions Note 37

Cash flow reconciliation Note 38

Transactions with SA Government Note 39

Budgetary reporting and explanations of major variances Note 40

Financial instruments/financial risk management Note 41

Events after the reporting period Note 42



Reference Note 1 Objectives of the Department for SA Service Delivery

AASB 101 para 138(b) AASB 1052 para 15(a),(b)

The Department for SA Service Delivery serves the Government and the people of South Australia by achieving excellence in the provision of financial management services to the State Government.

The department aims to increase awareness, development and application of accounting standards and good financial management practices in the South Australian public sector by providing research, guidance and support to government agency personnel.

The department is structured to contribute to three outcomes for which the portfolio is responsible:

1. To ensure South Australia is contributing to the development of public sector accounting standards and practices by having decision makers informed of developments in standards and their implication

2. To facilitate improvement in financial management practices across the government

3. To ensure integration of policies and practices with developments in systems, legislation and financial reporting.

AASB101 para 10(e) and 122

Note 2 Significant accounting policies

a) Statement of compliance

AASB 1054 para 7,8 & 9 AASB 101 Aus 16.2 &,Aus 16.3 AASB 101 para 114(a)

These financial statements have been prepared in compliance with section 23 of the Public Finance and Audit Act 1987.

The financial statements are general purpose financial statements. The accounts have been prepared in accordance with relevant Australian Accounting Standards and comply with Treasurer’s Instructions and Accounting Policy Statements promulgated under the provisions of the Public Finance and Audit Act 1987.

The department has applied Australian Accounting Standards that are applicable to not-for-profit entities, as the department is a not-for-profit entity.

AASB 101 para 112, 114(b) & 117

AASB 101 para 122

b) Basis of preparation

The preparation of the financial statements requires:

• the use of certain accounting estimates and requires management to exercise its judgement in the process of applying the department’s accounting policies. The areas involving a higher degree of judgement or where assumptions and estimates are significant to the financial statements, are outlined in the applicable notes.

• accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events are reported.

AASB 101 para 17(c)

compliance with Accounting Policy Statements issued pursuant to section 41 of the Public Finance and Audit Act 1987. In the interest of public accountability and transparency the accounting policy statements require the following note disclosures, which have been included in this financial report:

a) revenues, expenses, financial assets and liabilities where the counterparty/transaction is with an entity within the SA Government as at reporting date, classified according to their nature. A threshold of $100 000 for separate identification of these items applies



b) expenses incurred as a result of engaging consultants;

c) employee targeted voluntary separation package information

d) employees whose normal remuneration is equal to or greater than the base executive remuneration level (within $10 000 bandwidths) and the aggregate of the remuneration paid or payable or otherwise made available, directly or indirectly by the entity to those employees;

e) board/committee member and remuneration information, where a board/committee member is entitled to receive income from membership other than a direct out-of-pocket reimbursement.

ASB 101 para 51(c) (d)

The financial statements have been prepared based on a 12 month period and presented in Australian currency.

AASB 101 para 51(b)

AASB 101 para 138(a) & (c)

c) Reporting entity

The department is a government department of the State of South Australia, established pursuant to the Public Sector Act 2009. The department is an administrative unit acting on behalf of the Crown.

AASB 1050 para 7 AASB 10

The financial statements and accompanying notes include all the controlled activities of the Department of SA Service Delivery (refer to the disaggregated schedule for details of the department’s controlled activities).

The department does not control any other entity and has no interests in unconsolidated structured entities. Transactions and balances relating to administered resources are not recognised as departmental income, expenses, assets and liabilities. As administered items are significant (insignificant) in relation to the department’s overall financial performance and position, they are disclosed in the administered financial statements (schedule of administered items) at the back of the controlled general purpose financial statements. Except as otherwise disclosed, administered items are accounted for on the same basis and using the same accounting policies as for departmental items.

AASB 12 para 7 The model financial statements do not illustrate the consolidation of controlled entities – where this occurs the following wording may be appropriate:

The consolidated financial statements have been prepared by combining the financial statements of all entities that comprise the consolidated entity being the Department of SA Service Delivery and [government controlled Funds/Commissions/Councils/Schools etc] , in accordance with AASB 10 Consolidated Financial Statements. A list of controlled entities is at Note [ ].

Consistent accounting policies have been applied and all inter-entity balances and transactions arising within the consolidated entity have been eliminated in full.

APF II para APS 5.7 AASB 1004 para 57

d) Transferred functions

The Public Sector (Reorganisation of Public Sector Operations) Notice 2016 (dated 1 December 2016) declared that:

the Legislative Framework and Project Division was transferred from the Fiscal Policy Department to the Department for SA Service Delivery, effective from 1 January 2017 (refer note 35)

the Banking Services Division of the Department for SA Service Delivery was dissolved and amalgamated into the Finance Authority, effective from 1 January 2017 (refer note 35).



e) Comparative information

The presentation and classification of items in the financial statements are consistent with prior periods except where specific accounting standards and/or accounting policy statements have required a change.

Where the department has applied an accounting policy retrospectively; retrospectively restated items in the financial statements; reclassified items in the financial statements, it has provided three Statements of Financial Position and related notes.

The restated comparative amounts do not replace the original financial statements for the preceding period.

AASB 101 para 51(e)

f) Rounding

All amounts in the financial statements and accompanying notes have been rounded to the nearest thousand dollars ($’000).

AASB 1048 Interpretation 1031 para 7 - 10

g) Taxation

The department is not subject to income tax. The department is liable for payroll tax, fringe benefits tax, goods and services tax (GST), emergency services levy, land tax equivalents and local government rate equivalents.

Income, expenses and assets are recognised net of the amount of GST except:

when the GST incurred on a purchase of goods or services is not recoverable from the Australian Taxation Office (ATO), in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item applicable

receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the ATO is classified as part of operating cash flows

AASB 101 para 112, AASB 110 para 8 & 10

h) Events after the reporting period

Adjustments are made to amounts recognised in the financial statements, where an event occurs after 30 June and before the date the financial statements are authorised for issue, where those events provide information about conditions that existed at 30 June.

Note disclosure is made about events between 30 June and the date the financial statements are authorised for issue where the events relate to a condition which arose after 30 June and which may have a material impact on the results of subsequent years.

AASB 101 para 60, 62, 119

i) Current and non-current classification

Assets and liabilities that are to be sold, consumed or realised as part of the normal operating cycle even when they are not expected to be realised within twelve months after the reporting date have been classified as current assets or current liabilities. All other assets and liabilities are classified as non-current.

Where asset and liability line items combine amounts expected to be realised within 12 months and more than 12 months, the department has separately disclosed the amounts expected to be recovered or settled after more than 12 months.



AASB 116 para 73(a), APF II & III

j) Non-current Assets

Acquisition and recognition

Non-current assets are initially recorded at cost or at the value of any liabilities assumed, plus any incidental cost involved with the acquisition. Non-current assets are subsequently measured at fair value after allowing for accumulated depreciation.

APF III para APS 2.12, APS 3.1 AASB 116 para Aus 15.1

Where assets are acquired at no value, or minimal value, they are recorded at fair value in the Statement of Financial Position.

However, if the assets are acquired at no or nominal value as part of a restructure of administrative arrangements then the assets are recognised at book value ie the amount recorded by the transferor public authority immediately prior to the restructure.

AASB 101 para 122, APF III para APS 2.15 & APS 7.2

All non-current tangible assets with a value equal to or in excess of $5 000 are capitalised.

Note: APF III paragraph APS 2.15 states that non-current assets with a fair value at the time of acquisition of less than $10 000 need not be recognised, however, para APS 2.16 allows agencies to elect to adopt a lower capitalisation threshold. Due to materiality, the Department of SA Service Delivery has a capitalisation threshold of $5 000.

Componentisation of complex assets is only performed when the complex asset’s fair value at the time of acquisition is equal to or in excess of $5 million for infrastructure assets and $1 million for other assets.

AASB 101 para 122

Depreciation and amortisation

All non-current assets, having a limited useful life, are systematically depreciated/amortised over their useful lives in a manner that reflects the consumption of their service potential.

AASB 116 para 51

Assets’ residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate, on an annual basis.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the time period or method, as appropriate, which is a change in accounting estimate.

AASB 5 para 25 Land and non-current assets held for sale are not depreciated.

AASB 116 para 73(b)

Depreciation/Amortisation is calculated on a straight-line basis over the estimated useful life of the following classes of assets as follows:

AASB 116 para 50, 73(c)

Class of asset Useful life (years)

Buildings 70-80

Leasehold improvements Life of lease

Plant and equipment 5-10

Furniture and fittings 3-10

Intangibles 5

Community and heritage 50

AASB 1051 para 8,11, 15 APF III para APS 9.6

Land under roads

Land under roads which were acquired before 1 July 2008 is not recognised in



the Statement of Financial Position. Land under roads acquired on or after 1 July 2008 is recognised when the asset recognition criteria are met. Land under roads includes land under roadways, road reserves, footpaths, nature strips and median strips.

AASB 101 para 119

APF III para APS 3.1, APS 3.13

Revaluation of non-current assets

All non-current tangible assets are valued at fair value and revaluation of non-current assets or group of assets is only performed when its fair value at the time of acquisition is greater than $1 million and estimated useful life is greater than three years.

AASB 13 para 93(g)

AASB 101 para 122

Every three years, the Department for SA Service Delivery revalues its land, buildings, investment properties, leasehold improvements, heritage assets and plant and equipment via (an independent/non-independent) Certified Practising Valuer or internal estimates based on indices or recent transactions. A valuation appraisal by a Certified Practising Valuer is performed at least every six years.

If at any time management considers that the carrying amount of an asset materially differs from its fair value, then the asset will be revalued regardless of when the last valuation took place.

Non-current tangible assets that are acquired between revaluations are held at cost until the next valuation, where they are revalued to fair value.

AASB 116 para 35(b), 41, APF III para APS 3.19, APS 3.20

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amounts of the assets and the net amounts are restated to the revalued amounts of the asset.

Upon disposal or derecognition, any revaluation surplus relating to that asset is transferred to retained earnings

AASB 136 para 6, 9 & 59, AASB 2016-4, APF III para 5.1,5.9,5.10

Impairment

The department holds its property, plant and equipment and intangible assets for their service potential (value in use).

All non-current tangible assets are valued at fair value. Specialised assets would rarely be sold and typically any costs of disposal would be negligible, accordingly the recoverable amount will be close to or greater than fair value.

The department also expects for all other non-current tangible assets that any costs of disposal will be negligible, and the recoverable amount to be close to or greater than fair value.

AASB 101 para 119

APF III para APS 12.6, AASB 136 para 10

Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance. Intangible assets are measured at cost and are tested for indications of impairment at each reporting date. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

The useful lives of intangible assets are assessed to be either finite or indefinite. The department only has intangible assets with finite lives. The amortisation period and the amortisation method for intangible assets is reviewed on an annual basis.

APF III para APS 12.7

The acquisition of or internal development of software is capitalised only when the expenditure meets the definition criteria (identifiability, control and the existence of future economic benefits) and recognition criteria (probability of future economic benefits and cost can be reliably measured) and when the amount of expenditure is greater than or equal to $10 000.



All research and development costs that do not meet the capitalisation criteria outlined in AASB 138 are expensed.

Subsequent expenditure on intangible assets has not been capitalised. This is because the department has been unable to attribute this expenditure to the intangible asset rather than to the department as a whole.

ASB 13 para 27, 70, 72

AASB 13 para 93(g)

AASB 13 para 93(d),(g),(i). APF III clause APS 3.3 - 3.7

Fair value measurement

AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, in the principal or most advantageous market, at the measurement date.

The department classifies fair value measurement using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements, based on the data and assumptions used in the most recent revaluation:

Level 1 – traded in active markets and is based on unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at measurement date.

Level 2 – not traded in an active market and are derived from inputs (inputs other than quoted prices included within level 1) that are observable for the asset, either directly or indirectly.

Level 3 – not traded in an active market and are derived from unobservable inputs.

The valuation processes and fair value changes are reviewed by the Chief Finance Officer and Audit Committee at each reporting date.

In determining fair value, the department has taken into account the characteristic of the asset (eg condition and location of the asset and any restrictions on the sale or use of the asset) and the asset’s highest and best use (that is physically possible, legally permissible, financially feasible).

The department’s current use is the highest and best use of the asset unless other factors suggest an alternative use is feasible within the next five years. As the department did not identify any factors to suggest an alternative use, fair value measurement was based on current use.

The carrying amount of non-financial assets with a fair value at the time of acquisition that was less than $1 million or an estimated useful life that was less than three years are deemed to approximate fair value.

Refer notes 23, 25, and 26 for disclosure regarding fair value measurement techniques and inputs used to develop fair value measurements for non-financial assets.

AASB 101 para 32, 119 & 120

k) Liabilities

AASB 101 para 119 Leases

AASB1048 Interpretation 4 para 6

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement.

The Department for SA Service Delivery has entered into finance leases and operating leases.



AASB 117 para 8, 20 Finance leases

Finance leases, which transfer to the department substantially all the risks and benefits/rewards incidental to ownership of the leased assets, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments.

AASB 117 para 25 & 27

Minimum lease payments are allocated between interest expense/borrowing costs and reduction of the lease liability, to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Where there is no reasonable assurance that the department will obtain ownership of the capitalised asset at the end of the lease term, the asset is amortised over the shorter of the lease term and its useful life.

AASB 117 para 33 Operating leases

Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. The straight-line basis is representative of the pattern of benefits derived from the leased assets.

AASB 1048 Interpretation 115 para 3

Lease incentives

All incentives for the agreement of a new or renewed operating lease are recognised as an integral part of the net consideration agreed for the use of the leased asset. Incentives received to enter into operating leases are recognised as a liability.

The aggregate benefits of lease incentives received by the department in respect of operating leases have been recorded as a reduction of rental expense over the lease term, on a straight-line basis.

Lease incentives in the form of leasehold improvements are capitalised as an asset and depreciated over the remaining term of the lease or estimated useful life of the improvement, whichever is shorter.

AASB 139 para 47(c)

Financial guarantees

At the time a financial guarantee contract is issued, it is recognised as a liability initially measured at fair value. If there is a material increase in the likelihood that the guarantee may have to be exercised, the financial guarantee is measured at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less accumulative amortisation, where appropriate.

In the determination of fair value, consideration is given to the following factors:

the overall capital management / prudential supervision framework in operation

the protection provided by the State Government by way of funding should the probability of default increase the probability of default by the guaranteed party

the likely loss to the department in the event of default.

The department has reviewed its financial guarantees and determined that there is [no material liability to be recognised for financial guarantee contracts as at 30 June 2017 (there was no material liability recognised for financial guarantee contracts in 2016).]

Whilst no liability has been recognised for financial guarantee contracts, further note disclosures relating to financial guarantees are contained at note 28 and 34.



AASB 101 para 119

Employee benefits

AASB 119 para 10, 11,154

These benefits accrue for employees as a result of services provided up to the reporting date that remain unpaid. Long-term employee benefits are measured at present value and short-term employee benefits are measured at nominal amounts.

AASB 101 para 122

Salaries and wages, annual leave, SERL and sick leave

The liability for salary and wages is measured as the amount unpaid at the reporting date at remuneration rates current at reporting date.

The annual leave liability and the SERL liability is expected to be payable within 12 months and is measured at the undiscounted amount expected to be paid.

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 is estimated to be less than the annual entitlement for sick leave.

Where agencies have substantial excess leave balances (to be paid later than 12 months after balance date), the annual leave liability or skills and experience retention leave liability will be measured at present value rather than nominal value. Refer to APF IV Financial Assets and Liabilities Framework for guidance including the liability calculation.

The following note disclosure is provided:

Where the annual leave liability and the skills and experience retention leave liability are expected to be payable within twelve months, the liability has been measured at the undiscounted amount expected to be paid. Where annual leave liability and skills and experience retention leave liability are expected to be payable later than 12 months, the liability is measured at present value.

AASB 119 para 154

AASB 101 para 122, 125 APF IV para APS 5.10

Long service leave

The liability for long service leave is measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method.

The estimated liability for long service leave is based on actuarial assumptions over expected future salary and wage levels, experience of employee departures and periods of service. These assumptions are based on employee data over [SA Government entities/the education sector across government/ the police and emergency services sector across government].

Expected future payments are discounted using market yields at the end of the reporting period on government bonds with durations that match, as closely as possible, the estimated future cash outflows.

The unconditional portion of the long service leave provision is classified as current as the department does not have an unconditional right to defer settlement of the liability for at least 12 months after reporting date. The unconditional portion of long service leave relates to an unconditional legal entitlement to payment arising after 10 years of service.

AASB 101 para 114(c)(iv)(2), APFIV para APS 3.11

l) Unrecognised contractual commitments and contingent assets and liabilities

Commitments include operating, capital and outsourcing arrangements arising from contractual or statutory sources and are disclosed at their nominal value.

Contingent assets and contingent liabilities are not recognised in the Statement of Financial Position, but are disclosed by way of a note and, if quantifiable, are measured at nominal value.

Unrecognised contractual commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the Australian Taxation Office. If GST is not payable to, or recoverable from, the Australian Taxation



Office, the commitments and contingencies are disclosed on a gross basis.

Note 3 New and revised accounting standards and policies


The department did not voluntarily change any of its accounting policies during 2016-17.

Accounting Standards


Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, have not been adopted by the department for the period ending 30 June 2017. The department has assessed the impact of the new and amended standards and interpretations and considers there will be no impact on the accounting policies or the financial statements of the department, except as outlined in the table below*.

Ref Title and

date of std application

Summary Impact on financial statements

Application date for agency

AASB 16

Leases

1 Jan 2019

This new standard introduces a single accounting model for lessees. The standard requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset, and a lease liability representing its obligations to make lease payments. In effect, the majority of leases currently classified as operating leases will be reported on the Statement of Financial Position. AASB 16 substantially carries forward the lessor accounting requirements in AASB 117

This new standard is a significant change from the past 30 years of accounting for leases.

It will require the Dept of SA Service Delivery to record almost all operating lease arrangements in all financial statements.

There will be significant work for the dept to report these assets and liabilities due to the large scale of it’s leasing activities.

The dept has not yet quantified the impact of applying AASB 16 to its current operating lease arrangements on the financial statements.

1 July 2019

*The Auditor-General’s Department has advised that where an agency can provide sufficient audit evidence to substantiate that there are no impacts, Audit would consider the disclosure illustrated above as appropriate. Otherwise, a more detailed note is appropriate and is illustrated in the appendix to this document.

AASB 101 para 138(b) AASB 1052 para 15(a), 15(b)

Note 4 Activities of the department

In achieving its objective, the department provides a range of services classified into the following activities:

Activity A: Accounting Policy - ensuring that South Australia is contributing to the development of public sector accounting standards and practices by having decision makers informed of developments in standards and their implications.

Activity B: Taxation Policy - facilitate improvements in taxation management practices across the SA Government.

Activity C: Financial Management Advice - facilitate improvements in financial management practices across the SA Government.



AASB 1052 para 19

General/Not attributable: Certain items of the department are not allocated to activities.

The disaggregated disclosures schedules present expenses, income, assets and liabilities information attributable to each of the activities for the years ended 30 June 2017 and 30 June 2016.


Note 5 Employee benefits expenses

2017

$’000 2016

$’000

Salaries and wages

TVSPs (refer below)

LSL

Annual leave

SERL

Employment on-costs - superannuation*

Employment on-costs - other

Board and committee fees

Workers compensation

Other employee related expenses

Total employee benefits expenses

*The superannuation employment on-cost charge represents the department’s contributions to superannuation plans in respect of current services of current employees.



TVSPs 2017

$’000 2016

$’000

AASB 119 para 159, 171 APF II para APS 4.7

Amount paid during the reporting period to separated employees:

TVSPs

Annual leave, LSL and SERL paid to those employees

Recovery from the Department of Treasury and Finance^

Net cost to the department

The number of employees who received a TVSP during the reporting period was X (Y).

APF II para APS 4.8 Remuneration of employees

2017 No

2016 No

The number of employees whose remuneration received or receivable falls within the following bands:

$145 000 to $147 000* na

$147 001 to $157 000 $157 001 to $167 000 $167 001 to $177 000 $177 001 to $187 000 $187 001 to $197 000 $197 001 to $207 000 $207 001 to $217 000 $217 001 to $227 000 $227 001 to $237 000 $237 001 to $247 000 $247 001 to $257 000 $257 001 to $267 000 $267 001 to $277 000

Total

* This band has been included for the purposes of reporting comparative figures based on the executive base level remuneration rate for 2015-16.

The table includes all employees who received remuneration equal to or greater than the base executive remuneration level during the year.

Remuneration of employees reflects all costs of employment including salaries and wages, payments in lieu of leave, superannuation contributions, salary sacrifice benefits and fringe benefits and any fringe benefits tax paid or payable in respect of those benefits. The total remuneration received by these employees for the year was $x million ($y million).

^APF II, clause APS 4.7 requires disclosure of employee targeted voluntary separation package information. TVSPs are not defined in APF VI. Packages to be disclosed are any separation package that is both targeted (whether broadly at a category of employees, or at a particular individual) and voluntary.

In addition, TVSP recoveries from DTF are to be recognised when the not-for-profit entity obtains control over the funds associated with the TVSP recovery or the right to receive the TVSP recovery from DTF. This will generally be upon receipt of the funds or obtaining written confirmation/substantiation from DTF that provides a right to receive the funds associated with the TVSP recovery.




Note 6 Supplies and services

2017

$’000 2016

$’000

Accommodation and telecommunication

Information technology expenses

Minor works, maintenance and equipment AASB 140 para 75(f) Direct operating expenses of investment properties

Legal costs

Consultants

Contractors

Valuation fees

AASB 117 para 35(c)

Lease payments and other lease expenses

Operating lease minimum payments

Contingent rentals

General administration and consumables

Other

Total supplies and services

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, as it is representative of the pattern of benefits derived from the leased assets. The total supplies and services amount disclosed includes GST amounts not recoverable from the ATO due to the department not holding a tax invoice or payments relating to third party arrangements.

APF II para APS 4.5 DPC Circular 13

The number and dollar amount of consultancies paid/payable (included in supplies and services expense) that fell within the following bands: No

2017 $’000 No

2016 $’000

Below $10 000

Above $10 000

Total paid /payable to the consultants engaged

An Accounting Policy Statement requires expenses incurred as a result of engaging consultants to be separately disclosed. Premier and Cabinet’s Circular 13 Annual Reporting Requirements requires disclosure of consultants within the above bandwidths. The model illustrates and encourages note disclosure consistent with both of these reporting requirements. Disclosure of the number and dollar amount of other contractors or other categories of service provider is encouraged where the information is significant or relevant or may increase the users’ understanding of the business of the entity.

AASB 101 para 29, 97 AASB 116 para 48 AASB 138 para 118(d)

Note 7 Depreciation and amortisation expense

2017

$’000 2016

$’000


Buildings



Plant and equipment

Community and heritage assets

Leasehold improvements

Intangible assets

Total depreciation and amortisation

Change in depreciation due to a revaluation

AASB 116 para 51, 60 & 61 AASB 108 para 39

The Department for SA Service Delivery revalued its buildings downward during 2017. As a result of the devaluation, depreciation on these assets has decreased in the current reporting period. Depreciation expense decreased by $x as a result of the devaluation.

Revision of accounting estimates

AASB 116 para 51,76 AASB 108 para 34, 39

During the year, the department reassessed the useful lives of community and heritage assets, resulting in a reduction in the estimated useful life.

This has resulted in an increase of $x in the amount of depreciation calculated on these assets in the 2016-17 financial year relative to the amount that would have been expensed based on the previous estimate of the useful life.

The higher depreciation expense will also be reflected in future years.


Note 8 Grants and subsidies


2017 $’000

2016 $’000

Recurrent grant

Capital grant

CSO payments

Total grants and subsidies

Note 9 Borrowing costs

2017

$’000 2016

$’000

Interest paid/payable on short-term and long-term borrowings

Finance lease costs

Total borrowing costs

APF II para APS 3.6 AASB 101 para 119 AASB 123 para Aus 8.16

The department does not capitalise borrowing costs. The total borrowing costs from financial liabilities not at fair value through profit and loss was $X.

AASB 7 Para 20(b) Note: Where relevant, not-for-profit entities, disclose total interest expense from financial liabilities “not at fair value through profit or loss.”

AASB 101 para 97 Note 10 Other expenses

Other expenses 2017 $’000

2016 $’000

South Australian Superannuation Board reserve

Furniture and fittings derecognised

AASB 138 para 54 & 126

Research and development costs immediately expensed



Allowances for doubtful debts (refer note 20)

Impairment losses (refer note 24)

AASB 101 para 97 Property, plant and equipment write-offs^

AASB 102 para Aus34.1

Inventories used for distribution at no or nominal amount

Inventories used for other than distribution at no or nominal amount

Losses of public money and/or property

Use of services received free of charge

Ex gratia payments

Other*

Total other expenses

^A fire at a store in March 2016 damaged the facility and destroyed equipment. The fire was due to an electrical fault. An insurance recovery relating to the fire has been recognised in the Statement of Comprehensive Income.

AASB 101 para 122, APF III para APS 2.12 AASB 1054 para 10, 11

*Resources provided free of charge were $x ($y), and were expensed at fair value. In addition, audit fees paid / payable to the Auditor-General’s Department relating to work performed under the PFAA were $x ($y). No other services were provided by the Auditor-General’s Department.

AASB 1054 does not define the term auditor. For the purposes of agencies financial statements, this note relates to fees paid to auditors of the financial statements. This may include private sector auditors where there is no mandate for the Auditor-General to perform the audit of the financial statements.


Note 11 Revenues from fees and charges

Fees and charges

2017 $’000

2016 $’000

AASB 118 para 35(b)(i), 35(b)(ii) Financial services

Regulatory fees

Other fees and charges

Total fees and charges



AASB 1004 para 12, 60 APF V

Note 12 Commonwealth revenues

2017

$’000 2016

$’000

Grants

National Partnership payment - training funding

National Partnership payment - services 101 funding

Total Commonwealth revenue

APF V para APS 4.1

Contributions are recognised as an asset and income when the department obtains control of the contributions or obtains the right to receive the contributions and the income recognition criteria are met.

Generally, the department has obtained control or the right to receive:

Contributions with unconditional stipulations - this will be when the agreement becomes enforceable i.e. the earlier of when the receiving entity has formally been advised that the contribution (e.g. grant application) has been approved; agreement/contract is executed; and/or the contribution is received.

Contributions with conditional stipulations - this will be when the enforceable stipulations specified in the agreement occur or are satisfied; that is income would be recognised for contributions received or receivable under the agreement.

All contributions received by the department have been contributions with unconditional stipulations attached and have been recognised as income upon receipt. OR

AASB 1004 para 60(a), 60(d)

Contributions which have conditions of expenditure still to be met as at reporting date were $x ($y). These contributions relate to (agency specific details listed here).

Conditions attached to these contributions include (agency specific examples of conditions listed here)

AASB 1004 para 60(b), 60(d)

Included in revenue is Commonwealth funding for the Services 101 project. The terms of this grant are that it must be used to provide services to the community over the next four years. As the grant is a non-recourse grant it has been recognised upon receipt.

AASB 1004 para 60(e)

The department recognised $x of contributed income in 2016-17 which related to projects which were designated to commence in 2016-17.

AASB 108 para 49(a)(b)(i) & para 42(a)

Correction of errors

In December 2014, the department entered into a grant agreement with the Commonwealth Government to deliver financial management training for a two year period. Grant funds are paid progressively after each training session held. The department recognised income at the point of contract execution instead of deferring the income recognition until training sessions were held. As a consequence, income was overstated. In May 2017, the department reviewed its grant agreements and discovered the error. The error has been corrected by adjusting each of the affected financial statement line items as follows:



30 June 2016

$’000 1 July 2015

$’000

Impact on equity

Receivables

Total assets

Total impact on equity

Impact on net result

Grant income

Total income

Total impact on net result

The error did not have an impact for the period on cash flows.

Note 13 Interest revenues

2017

$’000 2016

$’000

AASB 118 para 29, 35(b)(iii) Interest

Other

Total interest revenues

Total interest income from financial assets not at fair value through profit and loss was $X.

AASB 7 para 20(b) Notes: Where relevant, not-for-profit entities, disclose in the note above, total interest

income from financial assets not at fair value through profit or loss.

AASB 1004 para 44, 62

Note 14 Resources received free of charge

2017

$’000 2016

$’000

Goods received free of charge

Services received free of charge - legal services

Total resources received free of charge

APF II APS 5.6, APF III para APS 2.12 AASB 1004 para 12,44, 47 AASB 116 para Aus 15.1

Legal services were received free of charge from the Crown Solicitor’s Office and were recognised at their fair value. If the legal services had not been donated

they would have been purchased. A corresponding expense was recognised in accordance with AASB 1004, paragraph 47.

Resources received free of charge relate to goods and/or services being provided free of

charge including from other agencies within the SA Govt. Contributions of services are recognised only when a fair value can be determined reliably and the services would be purchased if they had not been donated. In the example, legal

services were provided free of charge by the Crown Solicitor’s Officer as the department is a non-billable client.



AASB 101 para 29, 98(c)

Note 15 Net gain/loss from the disposal of non-current and other assets

2017

$’000 2016

$’000

Land and buildings:

Proceeds from disposal

Less net book value of assets disposed

Net gain/loss from disposal of land and building

Plant and equipment:

Proceeds from disposal

Less net book value of assets disposed

Net gain/loss from disposal of plant and equipment

Total assets:

Total proceeds from disposal

Less total value of assets disposed

Total net gain/loss from disposal of assets

AASB 116 para 68,71 APF III para APS 3.19

Gains/Losses on disposal of are recognised at the date control of the asset is passed to the buyer and are determined after deducting the cost of the asset from the proceeds at that time. When revalued assets are sold, the revaluation surplus is transferred to retained earnings.


Note 16 Other revenues/income

2017

$’000 2016

$’000

AASB 1004 para 12, 60 Donations*

AASB 140 para 75(f)(i) Rental from investment properties**

Other

Total other revenues

AASB 101 para 97 Insurance recovery

AASB 138 para 113 Derecognition of an intangible asset

Amortisation of financial guarantees

AASB 1004 para 63(b)18(b) Forgiveness of liabilities

Total other income

AASB 1004 para 18(a) 60(a) 60(d)

*Donations of artwork and cash were received from the Jones Family. The cash donation must be spent on securing and maintained the donated artwork over the next three years.

**Rental income from the leasing of investment properties is recognised on a straight-line basis over the lease term.



Note 17 Revenues from / payments to SA Government

2017

$’000 2016

$’000

AASB 1004 para 63 Revenues from SA Government

Appropriations from Consolidated Account pursuant to the Appropriation Act

Appropriations under other Acts

Commonwealth grants received via Treasury (ie National Specific Purpose Payments)

Total revenues from SA Government


Return of surplus cash pursuant to cash alignment policy

AASB 107 para 35 Income tax equivalent payment

Other payments to the Consolidated Account*

Total payments to SA Government

*This amount does not include a dividend/distribution to the SA Government as owner.

TI 3 Appropriations are recognised as revenues when the department obtains control over the funding. Control over appropriations is normally obtained upon receipt.

Where money has been appropriated in the form of a loan, the department has recorded a loan receivable. Refer to note x.

Where money has been appropriated in the form of an equity contribution, the Treasurer has acquired a financial interest in the net assets of the department and the appropriation is recorded as contributed equity. Refer to note x.

AASB 1004 para 64

Total revenues from Government consist of $x ($a) for operational funding and $y ($b) for capital projects. For details on the expenditure associated with the operational funding and capital funding received refer notes 5 to 10 and 35. There was no material variations between the amount appropriated and the expenditure associated with this appropriation.

The original amount appropriated to the department under the annual Appropriation Act was not varied however an additional advance of $x was received from the Treasurer via the Governor’s Appropriation Fund. Refer note 34 for details on additional funding transferred to the department as a result of the administrative restructure.

AASB 107 para 45 Note 18 Cash and cash equivalents

2017 $’000

2016 $’000

Deposits with the Treasurer

Imprest account/ cash on hand

Short-term deposits with SAFA

Total cash and cash equivalents



AASB 107 para 48 Cash is measured at nominal amounts

Deposits with the Treasurer

The Department has two deposit accounts with the Treasurer, a general operating account and an Accrual Appropriation Excess Funds Account. Although the department controls the money in the Accrual Approp Account its use must be approved by the Treasurer. The Department does not earn interest on it’s deposits with the Treasurer.

Short-term deposits

Short-term deposits are made for varying periods of between one day and three months. The deposits are lodged with SAFA and earn interest at the respective short-term deposit rates.

Non-cash financing and investing activities

AASB 107 para 43, AASB 1004 para 63(b)

Assumption of liabilities

During the reporting period the Department for SA Service Delivery assumed the liabilities of [Department XYZ] amounting to $x ($y). The assumption of liabilities is not reflected in the Statement of Cash Flows.

If cash was not received on an administrative restructure, then the following note may be appropriate:

Restructuring of administrative arrangements

Effective 1 January the Legislative Framework and Project Division was transferred from the Fiscal Policy Department to the Department for SA Service Delivery.

This restructure resulted in the department assuming net assets of $xxx ($yyy). Details with respect to the restructuring of administrative arrangements are set out in Note 35. This restructure is not reflected in the Statement of Cash Flows.

AASB 101 para 78(b)

Note 19 Receivables

2017

$’000 2016

$’000

Current

Receivables AASB 139 para 63 & AASB 7 para 16 Less allowance for doubtful debts

Workers compensation recoveries

Prepayments

Accrued revenues

Operating lease receivables

UIG 1031 para 9 GST input tax recoverable

AASB 101 para 61(b)

Expected to be recovered more than 12 months after reporting date

Receivables AASB 139 para 63 AASB 7 para 16 Less allowance for doubtful debts

Total current receivables

The total receivables figure does not include ‘non-current receivables’ as the Department

for SA Service Delivery does not have any receivables that meet the definition of non-current. Any ‘non-current receivables’ would be disclosed in this note.



AASB 7 para 16 & 21

Movement in the allowance for doubtful debts

The allowance for doubtful debts (allowance for impairment loss) is recognised when there is objective evidence (i.e. calculated on past experience and current and expected changes in client credit rating) that a receivable is impaired.

An allowance for impairment loss has been recognised in other expenses for specific debtors and debtors assessed on a collective basis for which such evidence exists.

AASB 7 para 16 Movements in the allowance for doubtful debts (impairment loss)

2017 $’000

2016 $’000

Carrying amount at the beginning of the period

Increase in the allowance

Amounts written off

Amounts recovered during the year

Increase/(Decrease) in allowance recognised in profit or loss

Carrying amount at the end of the period

Interest rate and credit risk

AASB 7 para 7, 21 33

AASB 139 para43,46,63

Receivables arise in the normal course of selling goods and services to other government agencies and to the public. Receivables are normally settled within 30 days after the issue of an invoice or the goods/services have been provided under a contractual arrangement. Receivables, prepayments and accrued revenues are non-interest bearing.

Collectability of receivables is reviewed on an ongoing basis. An allowance for doubtful debts is raised when there is objective evidence that the department will not be able to collect the debt. Other than as recognised in the allowance for doubtful debts, it is not anticipated that counterparties will fail to discharge their obligations. The carrying amount of receivables approximates net fair value due to being receivable on demand. There is no concentration of credit risk.

Refer to Note 31 for further information on risk management.

AASB 101 para 77 Note 20 Other financial assets

2017

$’000 2016

$’000

Non-current

Held-to-maturity investments with SAFA

Total non-current investments

Total investments

AASB 7 para 31 Represented by:

Bonds

Debentures

Total other financial assets

APF IV para APS 2.1

The debentures are carried at cost. They are to be held to their maturity and carry an average fixed interest rate of X%.

AASB 7 para 31 The bonds are carried at cost and were acquired on X/X/X. They have a face value of X and are redeemable in five years. The effective yield is Y. The fair value of the debentures and bonds is Y and W respectively. This was



determined with reference to the relevant active market for identical assets.

For further information on risk management refer to Note 41.

APF IV para APS 2.1 & APS 6.3, APS 6.6

Notes: Where not-for-profit entities are exempt from the requirements of APF IV Financial Asset and Liability Framework, paragraph APS 6.1, the following note disclosure is provided.

The fair value of assets or liabilities traded in active markets is based on quoted market prices for identical assets or liabilities at balance date. The fair value of other financial assets or liabilities is determined using valuation techniques. These techniques maximises the use of observable market data where it is available. The Department uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.

Refer note 26 and 41 for disclosure regarding fair value measurement techniques and inputs used to develop fair value measurement for financial assets.

Where not-for-profit entities have interest free loans, the following note disclosure is provided.

The department measures financial assets and debt at historical cost, except for derivatives (measured at market value) and interest free loans (measured at the present value of expected repayments). All interest free loans are recorded at the present value of expected repayment, being expected future cash payments discounted using the prevailing market rate of interest for similar instrument. At 30 June there was not a prevailing interest rate; accordingly the market yield on long-term Commonwealth bonds was used at the time of the loan plus a risk margin of 2.5%.

AASB 101 para 61, 77, 78(c)

Note 21 Inventories

2017

$’000 2016

$’000

Current – held for distribution at no or nominal amount

AASB 102 para 36(b) & (c) Materials at cost

Work in progress at cost and expected to be recovered not more than 12 months after reporting date

AASB 102 para Aus9.1 Less write-down from loss of service potential


Total current inventories held for distribution at no or nominal amount

Current – other than those held for distribution at no or nominal amount

Materials at net realisable value

Work in progress at net realisable value


Total current other inventories – other than those held for distribution at no or nominal amount

Total inventories

AASB 102 para Aus 9.1

AASB 102 para 9,Aus 9.1, Aus 10.1 & 36(a)

Inventories include goods and other property held either for sale or distribution at no or nominal cost in the ordinary course of business. It includes land held for sale and excludes depreciable assets.

Inventories held for distribution at no or nominal consideration are measured at



cost and adjusted when applicable for any loss of service potential. Inventories held for sale are measured at the lower of cost or their net realisable value.

AASB 102 para 9, Aus 9.2 & Aus 10.1 & 36(a)

Bases used in assessing loss of service potential for inventory held for distribution at no or minimal cost include current replacement cost and technological or functional obsolescence.

Cost is assigned to land held for sale and to other high value, low volume inventory items on a specific identification of cost basis.

AASB 101 para 122

Cost for all other inventory is measured on the basis of the first-in, first-out method. Net realisable value is determined using the estimated sales proceeds less costs incurred in marketing, selling and distribution to customers.

Inventory write-down

AASB 102 para 36(d), (e), (f)

An inventory write-down to net realisable value of $xxx due to functional obsolescence has been recognised as an expense.

Cost of inventories

AASB 102 para 39 The cost recognised as an expense for raw materials and consumables is $xxx. The net change in inventories held for distribution and other inventory for the period is Y and Z respectively.

Note 22 Non-current assets classified as held for sale

2017

$’000 2016

$’000

AASB 5 para 38 Land

Building

Total non-current assets classified as held for sale

AASB 5 para 6,15 & 38,

Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset’s sale is expected to be completed one year from the date of classification.

AASB 5 para 41 AASB 13 para 93(a)

As a result of the Banking Services Division being dissolved in early 2016, the department was relocated from Adelaide to West Lakes. A public tender to sell the surplus land and building located in Adelaide during 2016-17 failed to be realised and as at 30 June 2017 the property remains on the market for sale. It is anticipated that the land and building will be sold via public auction in late September/early October 2017 The liability directly associated with these non-current assets classified as held for sale is $x.

An independent site valuation was provided by a Certified Practising Valuer for the property upon its classification as held for sale. The valuation was based on recent market transactions for similar unrestricted land and building in the area and includes adjustment for factors specific to the land and building such as size and location. This valuation was in accordance with the valuation principles as outlined in note 2 and valuation technique as outlined in notes 23 to 26 (i.e. there was no change to valuation technique).



AASB 101 para 77,78(a)

Note 23 Property, plant and equipment

2017

$’000 2016

$’000

AASB 116 para 73(a), (d) Land and buildings

Land at fair value

Buildings at fair value

AASB 116 para 75(b)

Accumulated depreciation at the end of the period

Total land and buildings

AASB 116 para 73(a), (d)

Leasehold improvements

Leasehold improvements at fair value

AASB 116 para 75(b)


Total leasehold improvements

AASB 116 para 73(a), (d) Plant and equipment

Plant and equipment at cost (deemed fair value)

AASB 116 para 75(b)


Plant and equipment at fair value

AASB 116 para 75(b)


Total plant and equipment

APF III para APS 8.4 Heritage assets

Heritage assets at fair value

AASB 116 para 75(b)


Total heritage assets

Total property, plant and equipment

Valuation of land and buildings

AASB 116 para 77(b) AASB 13 para 93(d),(g)

An independent valuation of land and buildings was performed in April 2017 by a Certified Practising Valuer from XXX, as at 30 June 2017.

The valuer arrived at the fair value of unrestricted land using the market approach. The valuation was based on recent market transactions for similar land in the area and includes adjustment for factors specific to the land such as size and location. Fair value of land classified as restricted in use was determined using an adjusted market price of surrounding unrestricted land.

The valuer used depreciated replacement cost for buildings, due to there not being an active market. The depreciated replacement cost considered the need for ongoing provision of government services; specialised nature and restricted use of the assets, their size, condition and location.

The valuation used estimates about construction materials that would be required to replace the buildings, information about current construction costs were derived from [Building costs guides / internal records such as recent tender documents, construction invoices etc] and the estimated useful life due to age and condition of the building.



Carrying amount of plant and equipment

AASB 13 para 93(d)(g)

AASB 116 para 79(a), (b) & (c)

AASB 13 para 93(d),(g)

All items of plant and equipment had a fair value at the time of acquisition that was less than $1 million or had an estimated useful life that was less than three years, and have not been revalued in accordance with APF III. The carrying value of these items are deemed to approximate fair value. These assets are classified in level 3 as there has been no subsequent adjustments to their value, except for management assumptions about the asset condition and remaining useful life.

Plant and equipment includes $x of temporarily idle plant and equipment; $y of fully depreciated plant and equipment still in use; and $z of plant and equipment retired from active use but not classified as held for sale.

Heritage assets

An independent valuation of heritage assets was performed in April 2017 by a Certified Practising Valuer from XXX as at 30 June 2017. The valuer specialises in the valuation of heritage assets - as there is no active market for these, the valuer used the cost approach (ie depreciated reproduction cost) taking into account the assets characteristics and restrictions. The valuation was based on a combination of internal records, specialised knowledge and market information about reproduction materials.

AASB 107 para 43 AASB 1004 para 18 Resources received free of charge

On XX the Jones Family donated rare Australian abstract paintings to the department refer note 14.

Impairment

AASB 136 para 130

An impairment loss of $x for land has been recognised. This is due to EPA advising the department that a vacant unrestricted land parcel, that was transferred to the department in December last year, is contaminated.

As a result the land is impaired and has been written down to its fair value less costs of disposal. The valuation was provided by an independent Certified Practising Valuer from [abc entity]. In determining fair value the Valuer did not use a present value technique but rather considered the observable market data being the value of adjoining parcels of land that were also contaminated. The land is classified as a level 2 asset for the purposes of the fair value hierarchy.

Note 24 Intangible assets

2017 $’000

2016 $’000

Computer software

Internally developed computer software

AASB 138 para 118(c) Accumulated amortisation

Other computer software

AASB 138 para 118(c) Accumulated amortisation

Total computer software

AASB 138 para 122(b)

The internally developed computer software relates to the department’s CMS database and ICFR consolidated reporting package with a remaining useful life of y and x and carrying amount of a and b respectively.

AASB 138 para 122(e)

The department has no contractual commitments for the acquisition of intangible assets



Impairment

There were no indications of impairment of intangible assets at 30 June 2017

Note 25 Investment properties

2017

$’000 2016

$’000

Land

Building

Property under construction

Total investment property

AASB 101 para 41 & 10(f)

A property under construction/development previously held as property, plant and equipment has been reclassified as investment property [agency specific details of the property here]

AASB 140 para 75(a)(e)

AASB 13 para 93(d),(e),(g)

Valuation basis

Subsequent to initial recognition at cost, investment properties are revalued to fair value with changes in the fair value recognised as income or expense in the period that they arise. The properties are not depreciated and are not tested for impairment.

As at 30 June 2017, an independent valuation was performed on all investment properties, by Certified Practising Valuers with recent experience in the local market and equivalent properties, Investment properties are measured at fair value.

Where there is recent market transactions for similar properties, the valuations are based on the amounts for which the properties could be exchanged between willing parties in an arm’s length transaction, based on current prices in the active market for similar properties, these investment properties have been categorised as level 2.

Where there is no active market, the valuations are based on recent selling prices in less active markets adjusted for factors specific to the property being valued such as its nature, characteristics and location. The valuer’s assessment / adjustment for [direct cost per square metre adjustment restrictions in property use, difference in property specifics, useful life of building etc] are considered significant unobservable inputs in nature, accordingly the properties have been classified as level 3 fair value measurements.

AASB 140 para 53, 53A

AASB 140 para 75(h)

The department has determined that the fair value of an investment property under construction/development is not reliably determinable but expects the fair value of the property to be reliably determinable when construction/development is complete.

The department has a contractual obligation to construct and/or develop an investment property at [Felixstow] with [ABC developer] and has no contractual obligation for repairs, maintenance and enhancements.



2017

$’000 2016

$’000

AASB 140 para 76 At fair value

Opening balance at the beginning of the period

AASB 140 para 76(a) Acquisitions

AASB 140 para 76(a) Capitalised subsequent expenditure

AASB 140 para 76(c) Classified as held for sale and/or disposals

AASB 140 para 76(d) Net gain (loss) from fair value adjustment

AASB 140 para 76(f)

Transfer (to) from inventories and owner occupied property

Closing balance at the end of the period

AASB 140 para 75 Amounts recognised in profit and loss for investment property

AASB 140 para 75(f)(i) Rental income

AASB 140 para 75(f)(ii)

Direct operating expenses from property that generated rental income

AASB 140 para 75(f)(iii)

Direct operating expenses from property that did not generate rental income

Total amount recognised in profit and loss



RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

The following table shows the movement of property, plant and equipment and intangible assets during 2016-17

Land $’000

Buildings $’000

Leasehold improveme

nts $’000

Plant and equipment

$’000

Heritage assets

$’000

Tangible assets

total $’000


$’000


$’000

Intangible assets

total $’000

AASB 116 para 73(e) AASB 138 para 118(e)


AASB 116 para 73(e)(i) AASB 138 para 118(e)(i)

Acquisitions

AASB 116 para 73(e)(ii) AASB 138 para 118(e)(ii)

Assets reclassified to assets held for sale


Disposals eg sales, write off

AASB 116 para 73(e)(iv) AASB 138 para 118(e)(iii)

Revaluation increment/(Decrement)

AASB 116 para 73(e)(iv) and (v) AASB 138 para 118(e)(v) and (iv)

Impairment losses

AASB 116 para 73(e)(vii) & 75(a) AASB 138 para 118(e)(vi)


AASB 116 para 73(e)(ix) AASB 138 para 118(e)(viii)

Acquisition/(Disposal) through administrative restructuring

Transfers between asset classes

Other changes eg donated assets





RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

The following table shows the movement of property, plant and equipment and intangible assets during 2015-16

Land $’000

Buildings $’000

Leasehold improveme

nts $’000

Plant and equipment

$’000

Heritage assets

$’000

Tangible assets

total $’000


$’000


$’000

Intangible assets

total $’000



AASB 116 para 73(e)(i) AASB 138 para 118(e)(i)

Acquisitions


Assets reclassified to assets held for sale


Disposals eg sales, write off

AASB 116 para 73(e)(iv) AASB 138 para 118(e)(iii)

Revaluation increment/(Decrement)

AASB 116 para 73(e)(iv) and (v) AASB 138 para 118(e)(v) and (iv)

Impairment losses

AASB 116 para 73(e)(vii) & 75(a) AASB 138 para 118(e)(vi)


AASB 116 para 73(e)(ix) AASB 138 para 118(e)(viii)

Acquisition/(Disposal) through administrative restructuring


Other changes eg donated asset





Note 26 Fair Value Measurement

AASB 13 para 91, 93

Fair Value Hierarchy The fair value of non-financial assets must be estimated for recognition and measurement or for disclosure purposes. The department categorises non-financial assets measured at fair value into hierarchy based on the level of inputs used in measurement as follows:

Fair value measurements at 30 June 2017

AASB 13 para 93(a),(b)

Recurring fair value measurements Level 2

$’000 Level 3

$’000 Total $’000

Land (note 23)

Buildings (note 23)

Leasehold improvements (note 23)

Plant and Equipment (note 23)

Heritage Assets (note 23)

Investment Properties (note 25)

Total recurring fair value measurements

AASB 13 para 93(a),(b) Non-recurring fair value measurements

Land held for sale (note 22)

Buildings held for sale (note 22)

Total non-recurring fair value measurements1

Total

Fair value measurements at 30 June 2016

AASB 13 para 91, 93(a),(b) Recurring fair value measurements

Level 2 $’000

Level 3 $’000

Total $’000

Land (note 23)

Buildings (note 23)

Leasehold improvements (note 23)

Plant and Equipment (note 23)

Heritage Assets (note 23)

Investment Properties (note 25)

Total recurring fair value measurements

Non-recurring fair value measurements

Land held for sale (note 22)

Buildings held for sale (note 22)

Total non-recurring fair value measurements1

Total

AASB 13 para 93(a)

1 The department has measured land and buildings held for sale at fair value less costs to sell in accordance with AASB 5 because the assets’ fair value less costs to sell is lower than its carrying amount. Refer to Note 22



AASB 13 para 93(a)(b)(c)(g)

The department’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period. Valuation techniques and inputs used to derive level 2 and 3 fair values are at note 23 and 25. During 2017 and 2016, the department had no valuations categorised into level 1; there were no transfers of assets between level 1 and 2 fair value hierarchy levels and there were no changes in valuation technique..

Refer to APF III Asset Accounting Framework for guidance in determining the applicable fair

value hierarchy disclosure level.

The following table is a reconciliation of fair value measurements using significant unobservable inputs (level 3). Reconciliation of Level 3 recurring fair value measurements as at 30 June 2017

Land $’000

Building $’000

Leasehold improvement $’000

Plant and equipment $’000

Heritage assets $’000

Investment Properties $’000

AASB 13 para 91, 93(e),(f)


Acquisitions

Capitalised subsequent expenditure

Acquisitions through administrative restructures


Level 3 measurements no longer undertaken on a recurring basis

Transfer into level 3 * Transfer out of level 3 *

Disposals

Disposal through administrative restructure

Resources provided free of charge


Prior period adjustments

Gains/(Losses) for the period recognised in net result:

- Revaluation increment/decrement

- Impairment losses/reversals

- Depreciation

Total gains/(losses) recognised in net result

Gains/(Losses) for the period



recognised in other comprehensive income (OCI)

- Revaluation increments/(decrements)


Total gains/(losses) recognised in OCI


Reconciliation of Level 3 recurring fair value measurements as at 30 June 2016

Land $’000

Leasehold improvement $’000

Building $’000

Plant and equipment $’000

Heritage assets $’000

Investment Properties $’000

AASB 13 para 93(e),(f)


Acquisitions

Capitalised subsequent expenditure

Acquisitions through administrative restructures


Level 3 measurements no longer undertaken on a recurring basis

Transfer into level 3 *

Transfer out of level 3 *

Disposals

Disposal through administrative restructure

Resources provided free of charge


Prior period adjustments

Gains/(Losses) for the period recognised in net result:

- Revaluation increment/decrement


- Depreciation

Total gains/(losses) recognised in net result

Gains/(Losses) for the period recognised in other



comprehensive income (OCI)

- Revaluation increments/(decrements)

- -Impairment losses/reversals

Total gains/(losses) recognised in OCI


AASB 13 para 93 (d)(e)(iv)

* The department’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period. In 2016, certain land was transferred from level 3 (existing use basis) to level 2 (market value basis) due to the restrictions on the use of the land being removed by the SA Government.

Note: Where assets are classified as level 3 and are either investment properties, assets held for sale or AASB 116 assets held primarily for cash-generating purposes (i.e. not AASB 116 assets held primarily for their service potential) the following disclosures may be required.

1. Where valuations are susceptible to major movement on the basis of changes to unobservable inputs, it may be necessary to include a sensitivity analysis regarding changes to unobservable inputs for recurring fair value measurements. For further information refer to AASB 13 para 93(h)9i)

2. Quantitative information about significant unobservable inputs, for further information refer to AASB 13 para 93(d). Refer to Note 25 for investment properties

3. For recurring fair value measurement, the amount of the total gains or losses for the period recognised in net result that is attributable to the change in unrealised gains or losses relating to those assets and liabilities hold at the end of the reporting period, for further information refer to AASB 13 para 93(f).



AASB 101 para 77 Note 27 Payables

2017

$’000 2016

$’000

Current

Creditors

Contributions Payable*

Accrued expenses

GST payable APF IV para APS 5.23 Employment on-costs^

Paid Parental Leave Scheme payable

AASB 101 para 61(b)

Expected to be settled more than 12 months after reporting date

Creditors

Employment on-costs

Total current payables

* Contributions are recognised as a liability and expense when the entity has a present obligation to pay the contribution and the expense recognition criteria are met.

^Employment on-costs include payroll tax, WorkCover levies and superannuation contributions. - The department makes contributions to several State Government and externally managed superannuation schemes. These contributions are treated as an expense when they occur. There is no liability for payments to beneficiaries as they have been assumed by the respective superannuation schemes. The only liability outstanding at reporting date relates to any contributions due but not yet paid to the South Australian Superannuation Board.


APF IV para 5.22, 5.26

As a result of an actuarial assessment performed by the Department of Treasury and Finance, the proportion of long service leave taken as leave remains unchanged from the 2016/2017 rate (40%) and the average factor for the calculation of employer superannuation on-cost has changed from the 2016/2017 rate (10. 2%) to 10.1%. These rates are used in the employment on-cost calculation. The net financial effect of the changes in the current financial year is an [increase/decrease] in the employment on-cost of $x and employee benefits expense of $y. The estimated impact on 2018 and 2019 is $x and $ y respectively.

Paid Parental Leave Scheme payable - represents amounts which the department has received from the Commonwealth Government to forward onto eligible employees via the department’s standard payroll processes. That is, the department is acting as a conduit through which the payment to eligible employees is made on behalf of the Family Assistance Office.

The total payables figure does not include ‘non-current payables’ as the Department for SA Service Delivery does not have any payables that meet the definition of non-current. Any ‘non-current payables’ would be disclosed in this note.

AASB 7 para 7 and 31

Interest rate and credit risk

Payables are measured at nominal amounts. Creditors and accruals are raised for all amounts owing but unpaid. Sundry creditors are normally settled within 30 days from the date the invoice is first received. Employment on-costs are



settled when the respective employee benefits that they relate to is discharged. All payables are non-interest bearing. The carrying amount of payables represents fair value due to the amounts being payable on demand.

The advance to establish the imprest account of $x was repaid to the Treasurer during 2016-17.For further information on risk management refer to Note 41.

AASB 101 para 77 Note 28 Borrowings

2017 $’000

2016 $’000

Current:

Borrowings from SA Government(1)

AASB 117, para 20 Obligations under finance leases and hire-purchase contracts (refer note 33)(2)

Total current borrowings

Non-current:

Borrowings from SA Government(1)

Financial guarantee

AASB 117, para 20 Obligations under finance leases and hire-purchase contracts (refer note 33)(2)

Total non-current borrowings

Total borrowings

APF IV para APS 6.1 & APS 6.3

The Department measures financial liabilities including borrowings/debt at historical cost, except for interest free loans (measured at the present value of expected repayments) and financial guarantees (measured at fair value).

Notes: Where not-for-profit entities are exempt from the requirements of APF IV Financial Asset and Liability Framework, paragraph APS 6.1, the following note disclosure is provided.

Borrowings /Financial liabilities are recorded initially at fair value, net of transaction costs

Subsequent to initial recognition, borrowings/financial liabilities are measured at amortised cost with any difference between the initial recognised amount and the redemption value being recognised in profit and loss over the period of the financial liability using the effective interest rate method.

.

AASB 7 para 14 (1) These are unsecured loans which [do not/do] bear interest. The terms of the loan are agreed by the Minister/Governing Body at the time the loan was provided.

AASB 116 para 74(a)

(2) Secured by the asset leased.

AASB 7 para 31 & 33 APF IV para APS 6.1

Borrowings are recognised at cost and have no maturity date. The interest rate is determined by the Treasurer. The rate was X% in 2017 (Y% in 2016).

Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

2017 $’000

2016 $’000

AASB 7 para 14 (a) Assets pledged as security

AASB 116 para 74(a)

The carrying amount of non-current assets pledged as security are:

Leased plant and equipment

Leased vehicles

Total assets pledged as security

AASB 7 para 31 Financial guarantees



The department provided financial guarantees to [Entity XYZ] which commits the department to make payments upon their failure to perform under the terms of the relevant contract.

AASB 7 para 18 The significant accounting estimates or assumptions used in determining fair value of these guarantees are [agency specific examples]. There were no defaults or breaches on any of the above liabilities throughout the year

For further information on risk management refer to Note 41.

AASB 101 para 77 Note 29 Employee benefits

2017

$’000 2016

$’000

Current

Accrued salaries and wages

Annual leave

Short-term long service leave

Skills and experience retention leave

AASB 101 para 61(b)

Expected to be settled more than 12 months after reporting date

Long-term long service leave

Total current employee benefits

Non-current

Long service leave

Total non-current employee benefits

Total employee benefits

APF IV para 5.9

AASB 119 contains the calculation methodology for long service leave liability. The actuarial assessment performed by the Department of Treasury and Finance has provided a basis for the measurement of long service leave. AASB 119 requires the use of the yield on long-term Commonwealth Government bonds as the discount rate in the measurement of the long service leave liability. The yield on long-term Commonwealth Government bonds has increased from 2016 (2%) to 2017 (2.5%).

AASB 108 para 39 APF IV para 5.5

This [decrease/increase] in the bond yield, which is used as the rate to discount future long service leave cash flows, results in a [increase/decrease] in the reported long service leave liability.

The net financial effect of the changes to actuarial assumptions in the current financial year is an increase in the long service leave liability of $x and employee benefits expense of $y. The impact on future periods is impracticable to estimate as the long service leave liability is calculated using a number of demographical and financial assumptions – including the long-term discount rate.

The actuarial assessment performed by the Department of Treasury and Finance left the salary inflation rate at 4% for long service leave liability and 3% for annual leave and skills, experience and retention leave liability. As a result, there is no net financial effect resulting from changes in the salary inflation rate.



AASB 101 para 77 Note 30 Provisions

Current

2017 $’000

2016 $’000

Provision for workers compensation

Total current provisions

Non-current

Provision for workers compensation

Total non-current provisions

Total provisions

AASB 137 para 84(a)


AASB 137 para 84(b) Additional provisions recognised

AASB 137 para 84(c)

Reductions arising from payments/other sacrifice of future economic benefits

AASB 137 para 84(d)

Reductions resulting from re-measurement or settlement without cost

AASB 137 para 84(e)

Unwinding of discount and effect of change in the discount rate

Other

AASB 137 para 84(a) Carrying amount at the end of the period

AASB 101 para 118&119, AASB 137 para 85

A liability has been reported to reflect unsettled workers compensation claims. The workers compensation provision is based on an actuarial assessment of the outstanding liability as at 30 June 2017 provided by a consulting actuary engaged through the Office for the Public Sector (a division of the Department of the Premier and Cabinet). The provision is for the estimated cost of ongoing payments to employees as required under current legislation

The Department is responsible for the payment of workers compensation claims.

AASB 101 para 77 Note 31 Other liabilities

Current

2017 $’000

2016 $’000

Lease incentive

Unearned revenue

Total current other liabilities

Non-current

Lease incentive

Total non-current other liabilities

Total other liabilities

Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

AASB 101 para 77, 78(e)

Note 32 Equity

2017

$’000 2016

$’000

Contributed capital

Accumulated surplus

Asset revaluation surplus

Total equity



AASB 101 para 79(b), APF III, para APS 3.18 & APS 3.19

The asset revaluation surplus is used to record increments and decrements in the fair value of land, buildings and plant and equipment to the extent that they offset one another. Relevant amounts are transferred to retained earnings when an asset is derecognised.

Note 33 Unrecognised contractual commitments

Capital commitments

2017 $’000

2016 $’000

APF IV para APS 3.11, AASB 101 para 114(d), AASB 116 para74(c)

Capital expenditure contracted for at the reporting date but are not recognised as liabilities in the financial report, are payable as follows:

Within one year

Later than one year but not longer than five years

Later than five years

Total capital commitments

The department’s capital commitments are for [agency specific details].

APF IV para APS 3.11; AASB 101 para 114(d) Expenditure commitments

2017 $’000

2016 $’000

Within one year



Total other commitments

The department’s expenditure commitments are for agreements for [agency specific examples – this may include commitments under grant and subsidy arrangements via TI 15, outsourcing services contracts/agreements with Shared Services SA].

There are no purchase options available to the department. [Depending on the terms and conditions of the department’s agreement with Fleet SA, it may be either an operating lease commitment or another commitment].

APF IV para APS 3.11, AASB 101 para 114(d), Operating lease commitments

2017 $’000

2016 $’000

Commitments in relation to operating leases contracted for at the reporting date but not recognised as liabilities are payable as follows:

Within one year



Total operating lease commitments

Representing:

Cancellable operating leases

Non-cancellable operating leases

Total operating lease commitments

AASB 117 para 35(d)

The department’s operating leases are for office accommodation and equipment. Office accommodation is leased from [XYZ entity]. The leases are non-cancellable with terms ranging up to three years with some leases having the right of renewal. Rent is payable in arrears.

[Depending on the terms and conditions of the department’s agreement with REM may be either an operating lease commitment or another commitment]

AASB 7 para 31 The weighted average interest rate implicit in the non-cancellable operating leases is X%. The department also leases office equipment from [ABC entity].



These leases are cancellable on six months notice.

AASB 117 para 35(a)

Commitments for minimum lease payments in relation to non-cancellable operating leases, are payable as follows:

AASB 117 para 35(a) (i) Within one year

AASB 117 para 35(a) (ii) Later than one year but not longer than five years

AASB 117 para 35(a) (iii) Later than five years

Total non-cancellable operating lease commitments

Finance lease commitments

Future minimum lease payments under finance leases and hire purchase contracts together with the present value of net minimum lease payments are as follows:

2017

2016

Min lease payments

Present value of

lease payments

Min lease payments

Present value of

lease payments

AASB 117 para 31(b)(i) Within one year

AASB 117 para 31(b)(ii)


AASB 117 para 31(b) Total minimum lease payments

Less amounts representing finance charges

AASB 117 para 31(b)

Present value of minimum lease payments

Included in the financial statements as: 2017 2016

Current borrowings (note 28)

Non-current borrowings (note 28)

Total included in borrowings

AASB 117 para 31 The department has finance leases and hire purchase contracts for various items of plant and equipment with a carrying amount of $xxx. These contracts will expire within one to four years. The leases have terms of renewal but no purchase options. Renewals are at the option of the department. The weighted average interest rate implicit in the leases is X%.

AASB 137 para 86, 89, 91, 92

Note 34 Contingent assets and liabilities

The department is not aware of any contingent assets.

A claim for unspecified damages was lodged against the department in April for contractual non-performance. The department is negotiating with the claimant, on advice from the Crown Solicitor’s Office. It is not possible to estimate the dollar effect of this claim or whether the claim will be successful.

AASB 137 para 86(a), (b)

The Australian Government has issued draft legislation amending the XYZ Act. The department is currently assessing the possible impact, if any, that these changes will have on the department’s financial position. No liability has been recognised in respect of this.

AASB 137 para 86(a), (b) AASB 7 Under an agreement with XYZ Association, the Minister has guaranteed the



para 14 repayment of a loan, which the XYZ Association has with an external banking institution with a total exposure of $200 000. The Department’s exposure is capped at $200 000. The terms and conditions of the guarantee include [agency specific details].

AASB 101 98(b) APF II para APS 5.5, APS 5.7 ; AASB 1004

Note 35 Transferred functions

para 54-58

Transferred in

Under the Public Sector (Reorganisation of Public Sector Operations) Notice 2016, from 1 January 2016 the Legislative Framework and Project Division was transferred from the Fiscal Policy Department to the Department for SA Service Delivery. This included eight employees and budget funding of $x. Legislative Framework and Project Division provides legal advice on matters of interest to the State.

The effective date of the transfer is 1 January 2017. Total income and expenses attributable to the Legislative Framework and Project Division for 2016-17 were:

Fiscal

Policy Dept

July 2016 to Dec 2016

Dept for SA Service Delivery

Jan 2017 to June 2017 TOTAL

$’000 $’000 $’000

Appropriation

Revenue from services

Other income

Total income




Grants

Other expenses

Total expenses

Net result

On transfer of the Legislative Framework and Project Division, the Department for SA Service Delivery recognised the following assets and liabilities:

$’000

Cash

Receivables


Other assets

Total assets

Payables

Provisions

Employee benefits expense

Other liabilities

Total liabilities

Total net assets transferred

Net assets assumed by the department as a result of the administrative



restructure are the carrying amount of those assets in the transferor’s Statement of Financial Position immediately prior to transfer. The net assets transferred were treated as a contribution by the Government as owner.

Transferred out

Under the Public Sector (Reorganisation of Public Sector Operations) Notice 2016, from 1 January 2017 the Banking Services Division of the Department for SA Service Delivery was dissolved and amalgamated into the Finance Authority. Banking Services provides advice on the State’s banking contract and banking arrangements.

The effective date of the transfer is 1 January 2017.

The following assets and liabilities were transferred to the Finance Authority:

$’000

Cash

Receivables


Other assets

Total assets

Payables

Employee benefits expense

Provisions

Other liabilities

Total liabilities

Total net assets transferred

Net assets transferred by the department as a result of the administrative restructure were at the carrying amount. The net assets transferred were treated as a distribution to the Government as owner.



APF II para APS 4.12- 4.16

Note 36 Remuneration of board and committee members

Members during the 2017 financial year were:

DSD Governing Board Tax and Audit Committee

Mr Chas Michaels Mr Bruce Kubrick

Mr Andrew Stoneholden Mr John Maclean (retired 1 Aug 2016)

Ms Rachel Leroy Mr Ricardo DaSilva (appt 8 Sept 2016)

Mr Richie Gilbert

Mr Bob Dobak*

Ms Christine Marshall*

ICFR Technical Group Operations Assessment Panel

Mr Paul Kotzen Mr George Giorgiou

Ms Laura Musgrave Mr Stefan Matzwalder

Joint Solutions Commission Industry Partners Forum

Mr Joe Satriani (appointed 15 May 2017)Mr Hans Liebert (appointed 27 April 2017)

The number of members whose remuneration received or receivable falls within the following bands:

2017 2016

$0 - $9 999

$10 000 - $19 999

$20 000 - $29 999

Total number of members

Remuneration of members reflects all costs of performing board/committee member duties including sitting fees, superannuation contributions, salary sacrifice benefits and fringe benefits and any fringe benefits tax paid or payable in respect of those benefits. The total remuneration received or receivable by members was $xxx ($yyy).

*In accordance with the Premier and Cabinet Circular No. 016, government employees did not receive any remuneration for board/committee duties during the financial year.

Unless otherwise disclosed, transactions between members are on conditions no more favourable than those that it is reasonable to expect the entity would have adopted if dealing with the related party at arm's length in the same circumstances.

The Model Financial Statements demonstrate a consolidated table for the remuneration of all members of boards and committees. Agencies may, if they wish, prepare separate member remuneration tables for each board/committee rather than a consolidated table.

Consistent with the guidance in APF II, where a board or committee member has, during the year, been appointed, resigned, retired or term ceased this has been disclosed, as illustrated above.

The APS does not require direct out of pocket reimbursement of expenses incurred in carrying out the duties of the board/committee member to be included in the remuneration for the purpose of this note disclosure.

In some cases, board/committee members may receive a travel allowance or reimbursement. Whether or not this payment is a reimbursement for direct out-of-pocket expenses incurred in carrying out the duties of the board/committee member will be a matter of judgement.

The public authority may choose to include these amounts in the remuneration for the purpose of the note disclosure. If these amounts are deemed to be reimbursement of out-of-pocket expenses, and the agency does not include these amounts in the remuneration amounts in the disclosure table, then the public authority should include a note to the effect that:

"For the purpose of this table, the travel allowance paid to members has not been included as remuneration as it is considered to be a reimbursement of direct out-of-pocket expenses incurred by the relevant members."



Note 37 Related Party Transactions

AASB 124 para 9,13, 26(a),14

The department is a government administrative unit and is wholly owned and controlled by the Crown.

Related parties of the department include all key management personnel and their close family members^; all Cabinet Ministers and their close family members; and all public authorities that are controlled and consolidated into the whole of government financial statements and other interests of the Government*.

^The term ‘close family members’ is defined in AASB 124 as children, spouse, partner, children of the spouse or partner; and dependents of the key management personnel or the spouse of partner.

Children include adopted, step, dependent and non-dependent children (including adult children).

Dependents includes all family members who are financial supported by the key management personnel or the spouse or partner and may include siblings, parents, extended family etc.

*The term ‘other interests of the Government’ includes all other entities such as joint ventures or associates that may or may not be consolidated into the whole of government financial statements.

AASB 124 para 26(b)(i) and (ii),

AASB 124 para 17A, 18A, IG8

Significant transactions with government related entities

The department had the following significant transactions with government related entities:

[Discuss here arrangements that are significant enough to warrant separate disclosure. For each significant transaction include details about the nature of the arrangement and the context of the transaction]

Factors to consider in assessing whether a transaction is significant enough to warrant separate disclosure are:

transaction not adequately disclosed elsewhere in the financial statements (eg not appropriation drawdowns, not payments made to DPTI for property leases etc as these are generally disclosed adequately elsewhere in the financial report) and/or

transaction is significant in terms of size (eg large dividend or large repayment of debt) and/or

outside normal day-to-day business operations (eg moving business units from the GGS sector to PNFC/PFC sector) and/or

the authority had some discretion over the transaction eg not directed by legislation or the Appropriation process (eg contributed non-current assets or entering into procurement arrangements) and/or

transaction is carried out on non-market terms (eg land and buildings ‘sold’ to another agency below market price) and/or



transactions disclosed to regulatory bodies or approval sought from Cabinet/Governor.

Collectively, but not individually significant transactions with government related entities.

Quantitative information about transactions and balances between Department for SA Service Delivery and other SA Government entities are disclosed at Note 39.

Key Management Personnel Key management personnel of the department include the Minister, the Chief Executive Officer and the four members of the Executive Team who have responsibility for the strategic direction and management of the department. The compensation detailed below excludes salaries and other benefits the Minister [of Service] receives, the Minister’s remuneration and allowances are set by the Parliamentary Remuneration Act 1990 and the Remuneration Tribunal of SA respectively and are payable from the Consolidated Account (via the Department of Treasury and Finance) under section 6 the Parliamentary Remuneration Act 1990.

AASB 124 para 17 Compensation

2017 $’000

2016 $’000

Salaries and other short term employee benefits na

Post-employment benefits na

Other long-term employment benefits na

Termination Benefits na

Total na


Transactions with Key Management Personnel and other related parties

The Chief Finance Officer’s husband is a controlling Director of The Building Site. The Building Site is a construction company and has been appointed to a whole of government panel via standard government procurement processes. During the year, the department engaged The Building Site for works associated with its Manhattan Project on normal commercial terms and conditions totalling $5.1m. The $5,1m reflects the total amount recognised. As at year end, there are no amounts outstanding. The Chief Finance Officer did not take part in any decisions or implementation of any decisions relating to the department’s relationship with The Building Site.

Note: Where a related party transaction needs to be disclosed, the nature of the arrangement is to be disclosed, including the amount of transaction and outstanding balances and commitments at year end. If there are no material transactions or balances to disclose with related parties then no disclosure is required.

Related Party Disclosures (including KMP compensation) are only required for controlled activities ie not administered items.



AASB 107 para Aus 20.2

Note 38 Cash flow reconciliation

Reconciliation of cash and cash equivalents at the end of the reporting period:

2017 $’000

2016 $’000

Cash and cash equivalents disclosed in the Statement of Financial Position

[Agency specific difference recorded here]

Balance as per the Statement of Cash Flows

Reconciliation of net cash provided by operating activities to net cost of providing services:

Net cash provided by (used in) operating activities

Less revenues from SA Government

Add payments to SA Government

Add/less non-cash items

Depreciation and amortisation expense of non-current assets

Impairment of non-current assets

Gain/loss on sale or disposal of non-current assets

Gain/loss on sale or disposal of other assets

Increments/decrements on revaluation of non-current assets

Assets de-recognised/written off

Assets acquired at no cost or nominal consideration

Movement in assets and liabilities

Increase/(decrease) in receivables

Increase/(decrease) in inventories

Increase/(decrease) in other assets

(Increase)/decrease in payables

(Increase)/decrease in employee benefits

(Increase)/decrease in provisions

(Increase)/decrease in other liabilities




Note 39 Transactions with SA Government

The following table discloses revenues, expenses, financial assets and liabilities where the counterparty/transaction is with an entity within the SA Government as at the reporting date, classified according to their nature. Transactions with SA Government entities below the threshold of $100 000 have been included with the non-government transactions, classified according to their nature.

APFII APS4.1, APS4.2

SA Government Non-SA Government Total

Note

2017 $’000

2016 $’000

2017 $’000

2016 $’000

2017 $’000

2016 $’000

EXPENSES

5 Employee benefits expenses

6 Supplies and services:

Accommodation and telecommunication

Information technology expenses

Minor works, maintenance and equipment

Direct operating expenses of investment properties

Legal costs

Consultants

Contractors

Valuation fees

Lease payments and other lease expenses

Operating lease minimum payments

Contingent rentals

General administration and consumables

Other

7 Depreciation and amortisation expense

8 Grants and subsidies:

Recurrent grants

Capital grants

CSO payments




Note

2017 $’000

2016 $’000

2017 $’000

2016 $’000

2017 $’000

2016 $’000

9 Borrowing costs

10 Other expenses:

South Australian Superannuation Board reserve

Furniture and fittings derecognised

Research and development costs immediately expense

Bad debts and allowances for doubtful debts

Property, plant and equipment write-offs

Inventories used for distribution at no or nominal amount

Inventories used for other than distribution at no or nominal amount

Losses of public money and/or property

Use of services received free of charge

Ex-gratia payments

Other expenses (excluding audit fees)

10 Auditors remuneration

17 Payments to SA Government

TOTAL EXPENSES

INCOME

11 Revenues from fees and charges:

Financial services

Regulatory fees

Banking administration fees

Other fees and charges

12 Commonwealth revenues




Note

2017 $’000

2016 $’000

2017 $’000

2016 $’000

2017 $’000

2016 $’000

13 Interest revenues

14 Resources received free of charge

16 Other revenues:

Donations

Rent from investment properties

Other

16 Other income:

Insurance recovery

Derecognition of an intangible asset

Amortisation of financial guarantees

Forgiveness of liabilities

17 Revenues from SA Government

TOTAL INCOME

FINANCIAL ASSETS

18 Cash and cash equivalents

19 Receivables:

Receivables

Workers compensation recoveries

Prepayments

Accrued revenues

Operating lease receivables

GST input tax recoverable

Other receivables

20 Other financial assets

TOTAL FINANCIAL ASSETS




Note

2017 $’000

2016 $’000

2017 $’000

2016 $’000

2017 $’000

2016 $’000

FINANCIAL LIABILITIES

27 Payables:

Creditors

Accrued expenses

GST payable

Employment on-costs

Paid Parental Leave Scheme payable

28 Borrowings:

Borrowings

Obligations under finance leases and hire-purchase contracts

Financial guarantee

31 Other financial liabilities

FINANCIAL LIABILITIES

In preparing the above table, please ensure all expense, all income, all financial asset and all financial liability line items are included. It is Treasury’s preference that totals are also included to facilitate reconciliation back to the Statement of Comprehensive Income and Statement of Financial Position.

In considering whether or not an expense, income, financial asset or liability should be classified as SA Govt, the following questions and/or table may assist.

1. Is there another agency in the SA public sector that is also reporting the same transaction? If yes, then classify the transaction as SA Govt

2. Has your agency paid, transferred or received anything from another agency? If yes, then classify the transaction as SA Govt

3. Does your agency or another agency hold the asset or liability? If yes, then classify the transaction as SA Govt.



There may be exceptions but generally the following items would be classified as

SA Government Non SA Government

Payroll tax. Return to Work SA premiums. Self-insurance claims. Agency reimbursements for separation payments made.

Borrowing costs paid to Treasurer. SAFA Guarantee fees. Loan (via Treasurer).

Finance charges on finance leases, where the lessor is a SA Government agency

Appropriation. Intra-government transfers. Funding received from another SA Govt agency (via Commonwealth).

Audit fees (via Auditor-General’s Department). Legal fees (via Crown Solicitor’s Office). Income tax equivalents. Regulated fees and charges (via another SA Government agency) e.g. stamp duty, ESL, motor vehicle registration

Leaseplan payments (via Fleet SA). Office accommodation (via DPTI). Communication expenses (via DPC). Insurance premiums (via SAICORP). Service bureau charges (via Shared Services)

Facility Management payments for services provided by DPTI (ie DPTI’s internal facilities management team not Spotless)

Deposit account balances with Commonwealth Bank (via cash held on deposit with the Treasurer). Return of deposit account balances. Interest received (via DTF/SAFA)

Investments (via SAFA).

Payments to employees such as salary and wages, annual leave, long service leave, retention leave, TVSP. Employer Superannuation Contributions.

Employee benefits expense other than payroll tax or premiums to Return to Work SA


Grant payments to non SA Government bodies

Commonwealth revenue other than funding forwarded onto a SA Government agency via another SA Government agency.

Payments for goods and services to non SA Government bodies

Payments to Spotless for facilities management via DPTI.

Net loss/gain on revaluation of investments (whether or not investments are held with SAFA)



Note 40 Budgetary reporting and explanations of major variances between budget and actual amounts

Budget information refers to the amounts presented to Parliament in the original budgeted financial statements in respect of the reporting period (2016-17 Budget Paper 4). Budget information has been included for the Statement of Comprehensive Income and for Investment Expenditure. Budget information has not been included for the Statement of Financial Position or Statement of Cash Flows as the information in these statements are not budgeted for on the same basis and/or determined in a different manner to financial statement information. These original budgeted amounts have been presented and classified on a basis that is consistent with line items in the financial statements. However, these amounts have not been adjusted to reflect revised budgets or administrative restructures/machinery of government changes.

The budget process is not subject to audit.

The following are brief explanations of variances between original budget and actual amounts. Explanations are provided for variances where the variance exceeds the greater of 10% of the original budgeted amount and 5% of original budgeted total expenses.

Statement of Comprehensive Income

Note

Original budget1

2017 $’000

Actual 2017

$’000

Variance $’000

Expenses




Net loss from disposal of non-current assets


Borrowing costs

Write down of inventories for loss of service potential

a b c

d

Other expenses e

Total expenses

Income

Revenues from fees and charges f

Commonwealth revenues

Interest revenues


Other revenues

Net gain from disposal of non-current assets

Net gain from disposal of other assets

g

Other income h

Total income


Revenues from/payments to SA Govt

Revenue from SA Government


Net result



Other comprehensive income

Items that will not be reclassified to net result


Items that will be reclassified subsequently to net result when specific conditions are met

Gains or losses recognised directly in equity

Total other comprehensive income

Total comprehensive result

[Agencies to provide brief explanations where the variance exceeds the greater of 10% of the budgeted amount and 5% of budgeted total expenses]

(a) Employee benefits expense was greater than original budget largely due to the LSL expense. The LSL

expense increased as a result of a .5 percent increase in the discount rate

(b) Supplies and Services were lower than original budget due to the project 501 being abolished, in

accordance with savings measures

(c) Depreciation and amortisation was lower than the original budget mostly due to leasehold

improvements assets being classified as work-in-progress and not depreciated in the current year.

(d) Grants and subsidies were lower than the original budget due to the grant program for restoring

heritage assets being abolished, in accordance with savings measures.

(e) Other expenses were higher than original budget due to furniture and fittings being derecognized.

(f) Revenue from fees and charges was higher than original budget primarily due to unbudgeted income

for the unprecedented sale of 501 licences.

(g) Commonwealth revenues were lower than original budget primarily due to the Commonwealth

abolishing the highways program.

(h) Other income was higher than original budget primarily due to significant salary and wage recoveries

as a result of the Shared Services SA’s focus project on ‘salary overpayment’ debt recovery.

Investing expenditure summary

Note

Original budget1

2017 $’000

Actual 2017 $’000

Variance $’000

Total new projects

Total existing projects

Total annual programs

i j

Total investing expenditure

1 The budget process is not subject to audit. Budget information refers to the amounts presented to Parliament in the original budgeted financial statements in respect of the reporting period (2016-17 Budget Paper 4). These amounts have not been adjusted to reflect revised budgets or administrative restructures/machinery of government changes.

[Agencies to provide brief explanations where the variance exceeds the greater of 10% of the budgeted amount and 5% of budgeted total expenses]

(i) Total new project investing expenditure was lower than original budget largely due to the new

website project being delayed until 2016.

(j) Total existing project investing expenditure was higher than original budget due to the project 501

requiring significant rework by engineers in phase 2.



Budgeted amounts

In relation to reporting the ‘actual amounts’ of each line item disclosed in the Statement of Comprehensive Income for the current financial year (not comparatives), not-for profit entities (that meet APF II APS 4.17)) must disclose the corresponding original budgeted amount for that line item for the current financial year.

The budgeted amounts disclosed, where appropriate, must be drawn from the original budgeted financial statements presented to Parliament (Budget Paper 4) in respect of the reporting period.

Note these amount are not be adjusted to reflect revised budgets, administrative restructures or machinery of government changes.

In relation to reporting major variances.

Variances under 10% of the original budgeted line item are generally not required to be explained. In addition, variances under 5% of the original budgeted total expenses are generally not required to be explained.

For example:

A. Employee benefits expense –actual amount $365,660, line item budgeted amount $356,235. Variance to original budgeted amount is $9,425 or 2.64%. The variance is not greater than 10% of the original budgeted amount and according an explanation is not required.

B. Employee benefits expense –actual amount $456,660, line item budgeted amount $356,235. Total budgeted expense is $2,046,896. Variance to original budgeted amount is $100,425 or 28.19%. The variance is greater than 10% of the original budgeted amount. Variance to original total budgeted expenses is $100,425 or 4.9%. The variance is not greater than 5% of the original total budgeted expense and according an explanation is not required.

C. Employee benefits expense –actual amount $501,660, line item budgeted amount $356,235. Total budgeted expense is $1,146,896. Variance to original budgeted amount is $145,425 or 40.8%. The variance is greater than 10% of the original budgeted amount. Variance to original total budgeted expenses is $145,425 or 12.67%. The variance is greater than 5% of the original total budgeted expenses and accordingly an explanation is required.

Please note, that at times, variances below the 10% line item AND/OR below the 5% of total expenses will be considered a major variance, and accordingly an explanation required, because of the nature of the line item or based on qualitative grounds.

Ref: AASB 101 para 10(f) 38,38A, 38C, 38D, 40A, 41, 45,46



Note 41 Financial risk management/ Financial instruments

AASB 7 para 7,31,33

AASB 7 para 31, 33, 34 & 39(c)

AASB 7 para 31,33 34, 36, 37 & 40

41.1 Financial risk management

Risk management is managed by the Department’s corporate services section and departmental risk management policies are in accordance with the Risk Management Policy Statement issued by the Premier and Treasurer and the principles established in the Australian Standard Risk Management Principles and Guidelines.

The Department’s exposure to financial risk (liquidity risk, credit risk and market risk) is low due to the nature of the financial instruments held.

Liquidity risk

The department is funded principally from appropriation by the SA Government. The department works with the Department of Treasury and Finance to determine the cash flows associated with its Government approved program of work and to ensure funding is provided through SA Government budgetary processes to meet the expected cash flows.

Refer to note 27 and 28 for further information

Credit and market risk

The department has policies and procedures in place to ensure that transactions occur with customers with appropriate credit history.

The department does not trade in foreign currency, enter into transactions for speculative purposes, nor for hedging. The department does not undertake any hedging in relation to interest or foreign currency risk and manages its risk as per the Government’s risk management strategy articulated in TI 23 Management of Foreign Currency Exposures.

No collateral is held as security and no credit enhancements relate to financial assets held by the department

Refer note 18, 19 and 20 for further information.

Exposure to interest rate risk may arise through its interest bearing liabilities, including borrowings. The Department for SA Service Delivery’s interest bearing liabilities are managed through SAFA and any movement in interest rates are monitored on a daily basis. There is no exposure to foreign currency or other price risks.

There have been no changes in risk exposure since the last reporting period.

Where not-for-profit entities have financial risk exposure and/or transactions involving financial instruments that are material - refer to the alternative illustrative note disclosure in the appendix at page x.

AASB 7 para 6,7,8,21,25, 29(a) AASB 139 para 46,47 APF IV para APS2.1 and APS6.1 AASB 13 para 93,97

41.2 Categorisation of financial instruments

Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised with respect to each class of financial asset, financial liability and equity instrument are disclosed in note 2 or the respective financial asset / financial liability note.

The carrying amounts of each of the following categories of financial assets and liabilities: Held-to-maturity investments; loan and



receivables; and financial liabilities measured at cost are detailed below:

Department of SA Service Delivery does not recognise any financial assets or financial liabilities at fair value, but does disclose fair value in the notes. All of the resulting fair value estimates are included in level 2 as all significant inputs required are observable.

The carrying value less impairment provisions of receivables and payables is a reasonable approximation of their fair values due to the short-term nature of these (refer notes 2, 19 and 27).

Borrowings are initially recognised at fair value, plus any transaction cost directly attributable to the borrowings, then subsequently held at amortised cost. The fair value of borrowings approximates the carrying amount, as the impact of discounting is not significant (refer notes 2 and 28).

Held-to-maturity investments are initially recognised at fair value, then subsequently held at amortised cost. This is the most representative of fair value in the circumstances (refer notes 2 and 20).

AASB 7, para 8, 25, 31, 34 & 39(c)

2017 Contractual maturities

Category of financial asset and financial

liability

Notes

2017

Carrying amount /

Fair value

($’000)

2016

Carrying amount / Fair value

($’000) Within 1 year ($’000)

1-5 years

($’000)

More than

5 years ($’000)

Financial assets

Cash and equivalent

- Cash and cash equivalent

Loans and receivables

- Receivables (1)(2)

Held- to-maturity investments

- Other financial assets

Total financial assets

Financial liabilities

Financial liabilities at cost

- Payables (1)

- Borrowings

- Finance lease liability

- Other financial liabilities

Total financial liabilities



AASB 132 para AG 12 (1) Receivable and payable amounts disclosed here exclude amounts relating

to statutory receivables and payables (eg Commonwealth, State and Local Govt taxes, fees and charges; Auditor-General’s Department audit fees ). In government, certain rights to receive or pay cash may not be contractual and therefore in these situations, the requirements will not apply. Where rights or obligations have their source in legislation such as levies , tax and equivalents etc they would be excluded from the disclosure. The standard defines contract as enforceable by law. All amounts recorded are carried at cost (not materially different from amortised cost).

(2) Receivables amount disclosed here excludes prepayments. Prepayments are presented in note 19 as trade and other receivables in accordance with paragraph 78(b) of AASB 101. However, prepayments are not financial assets as defined in AASB 132 as the future economic benefit of these assets is the receipt of goods and services rather than the right to receive cash or another financial asset.

Note 42 Events after the reporting period

AASB 110 para 19,21,22 On 2 August 2017, the Government announced its intention to transfer the TI

Advice and Training Division from the Department of Fiscal Policy to the Department for SA Service Delivery. The movement of the division was undertaken because it was considered that this function more closely aligned with the exiting functions of the department. The financial effect of this machinery of government change has not been reflected in the financial statement. This division comprises of X employees and includes estimated net assets $x.



ADMINISTERED

ITEMS



ADMINISTERED ITEMS

AASB 1050 Administered Items paragraph 7 requires disclosure of items relating to activities administered by a government department on behalf of its controlling government in the capacity of an agency. Administered items include ‘trust accounts’.

Accounting Policy Framework II General Purpose Financial Statements, paragraph APS 3.11 requires that:

For administered items that are not significant in relation to the department’s overall financial performance and position, financial information shall be disclosed in the notes as a schedule. This is illustrated on page 104 onwards.

For administered items that are significant in relation to the department’s overall financial performance or financial position, separate ‘administered’ financial statements and notes shall be prepared. This is illustrated on page 110.

The financial schedules and notes are to be prepared using the same accounting policies and principles for controlled transactions and balances. Please note that general note disclosure need not be repeated but reference can be made to departmental note disclosure, e.g. the significant accounting policies note.

Please note the following disclosures need to be made for administered items:

commitments, contingent assets and liabilities.

board/committee member disclosures.

budgetary reporting

For the purpose of reporting, it is considered all programs/activities should be disclosed individually unless they represent less than 10 percent of the total administered activities of the department.

The notes to the accounts for the administered financial statements have not been included in the model as the notes to the controlled financial statements can be used as a guide. Relevant note disclosures should be provided in relation to specific aspects of activities but general accounting policies should not be duplicated.



DISCLOSURE OF ADMINISTERED ITEMS As at 30 June 20171

Notes2 2017

$’000 3 2016

$’000 3

APF II para APS 3.11 Administered expenses

AASB 1050 para 7 Employee benefits expense

Supplies and Services

Payments to Consolidated Account


Other expenses

Total administered expenses

Administered income



Other revenues

Total administered income

Net Result

Administered current assets


Receivables


Other current assets


Administered non-current assets

Investments/financial assets


Other non-current assets


Total administered assets

Administered current liabilities

Payables

Employee benefits

Other current liabilities


Administered non-current liabilities

Payables

Employee benefits

Other non-current liabilities


Total administered liabilities

Net assets

Administered equity

Accumulated surplus


Total administered equity



DISCLOSURE OF ADMINISTERED ITEMS

As at 30 June 2017

Reference Notes 2017

$’000 2016

$’000

APF II para APS 3.11 Changes in equity

Balance at beginning of reporting period

Gain on revaluation of property

Loss on revaluation of plant and equipment

Net income/expense recognised directly in equity

Net result

Total recognised income and expense for the period

Balance at the end of the reporting period

Cash flows from operating activities

Cash inflows

Receipts from SA Government

Taxes, fees and charges

Other receipts

Total cash inflows

Cash outflows



Other payments

Total cash outflows

Net cash inflows / outflows from operating activities

Cash flows from investing activities

Cash inflows

Proceeds from sale of property, plant and equipment

Total cash inflows

Cash outflows

Payments for property, plant and equipment

Total cash outflows

Net cash inflows / outflows from investing activities

Cash flows from financing activities

Cash inflows

Restructuring activities

Total cash inflows

Cash outflows

Repayment of borrowings

Total cash outflows

Net cash inflows / outflows from financing activities

Net increase / decrease in cash held

Cash at the beginning of the reporting period

Cash at the end of the reporting period


Model Financial Statements March 2017 100

DISAGGREGATED DISCLOSURES – ADMINISTERED EXPENSES AND INCOME




2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

2017

$’000

2016

$’000

Administered Expenses





Other expenses


Administered Income



Other income


Net result



Transfer Payments period

AASB 1050 para 7(b), 22 APF II 3.11, APS 3.12

The department makes various transfer payments to eligible beneficiaries in the capacity of an agent responsible for the administration of the transfer process. Amounts relating to these transfer payments are not controlled by the department, since they are made at the discretion of the Government in accordance with government policy. The following table lists recipients by class and the amounts transferred

Grants provided to:

2017

$’000

2016

$’000

SA Government entities

Local governments

Non-profit recreational groups such as sporting clubs

Environment groups

Schools

Note A4 Budgetary Reporting and Explanations of major variances between budget and actual amounts

Refer note 40 for illustrative example



ADMINISTERED FINANCIAL

STATEMENTS

For the year ended

30 June 2017



STATEMENT OF ADMINISTERED COMPREHENSIVE INCOME

For the Year ended 30 June 20171

Reference Notes2 2017 $’000 3

2016 $’000 3


APF II APS 3.11




Payments to consolidated account


Other expenses


Administered Income



Interest revenues

Other revenues


Net result

Other Comprehensive Income


Net result and total comprehensive result








STATEMENT OF ADMINISTERED FINANCIAL POSITION

As at 30 June 20171

Reference Notes2 2017 $’000 3

2016 $’000 3

AASB 1050 para 7(c)(d), 24 APF II APS 3.11

Administered Current Assets


Receivables


Inventory


Administered Non-Currents Assets


Intangible assets

Other non-current assets


Total assets

Administered Current Liabilities

Payables

Employee benefits

Financial liabilities/borrowings

Other Liabilities


Administered Non-Current Liabilities

Employee benefits

Other liabilities


Total liabilities

Net assets

Administered Equity

Contributed capital

Accumulated surplus


Total equity

Unrecognised contractual commitments

Contingent assets and liabilities









STATEMENT OF ADMINISTERED CHANGES IN EQUITY

For the year 30 June 20171

Reference Note No. 2

Contributed capital

$’000 3

Asset revaluation

surplus

$’000 3

Retained earnings $’000 3

Total $’000 3

AASB 1050 para 24 Balance at 30 June 2015

APF II para APS 3.11 Changes in accounting policy

Error correction

Restated balance at 30 June 2015






Net assets transferred as a result of administrative restructure

Net assets received from an administrative restructure



Gain on revaluation of property during 2016-17




Net assets transferred as a result of administrative restructure

Net assets received from an administrative restructure








STATEMENT OF ADMINISTERED CASH FLOWS As at 30 June 20171

Notes2 2017 $’000 3

2016 $’000 3

APF II para APS 3.11 Cash flows from operating activities

AASB 1050 para 7 Cash outflows



Other payments

Cash used in operations

Cash inflows

Receipts from Government

Taxes, fees and charges

Other receipts

Cash generated from operations

Net cash provided by/used in operations

Cash flows from investing activities

Cash outflows

Payments for property, plant and equipment

Cash used in investing activities

Cash inflows

Proceeds from sale of property, plant and equipment

Cash generated from investing activities

Net cash provided by/used in investing activities

Cash flows from financing activities

Cash outflows

Repayment of borrowing

Cash used in financing activities

Cash inflows

Cash received from restructuring activities

Capital payments from Government

Cash generated from financing activities

Net cash provided by/used in financing activities

Net increase / decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

AASB 107 para 43 Non-cash transactions








SCHEDULE OF EXPENSES AND INCOME

ATTRIBUTABLE TO ADMINISTERED ACTIVITIES




2017

$’000 2

2016

$’000 2

2017

$’000 2

2016

$’000 2

2017

$’000 2

2016

$’000 2

2017

$’000 2

2016

$’000 2

2017

$’000 2

2016

$’000 2

2017

$’000 2

2016

$’000 2






Other expenses


Administered Income



Other revenues

Other income


Net result

Note that if a not-for-profit entity has no amounts applicable to any individual item, these items should not be included in the statement. 1. The name of the entity and reporting date must be identified, required by AASB 101, paragraph 51(a) and (c). 2. The rounding used in the financial report must be identified, required by AASB 101, paragraph 51(e).



NOTES

AASB 1050 para 24 APF II para 3.13

Note A1 Significant accounting policies

All Department for SA Service Delivery accounting policies are contained in Note 2 Significant Accounting Policies. The policies outlined in Note 2 apply to both the department’s and administered financial statements.

AASB 1052 para 15

APF II para APS 3.12

Note A2 Objectives/Activities of the Department’s Administered Items

The department’s administered items are structured to contribute to three main activities, these are:

Taxation Receipts

Banking Services

Legal Assistance

AASB 1050 para 7(b), 22 APF II para APS 3.12

Note A3 Transfer payments

The department makes various transfer payments to eligible beneficiaries in the capacity of an agent responsible for the administration of the transfer process. Amounts relating to these transfer payments are not controlled by the department, since they are made at the discretion of the Government in accordance with government policy. The following table lists recipients by class and the amounts transferred

Grants provided to:

2017

$’000

2016

$’000

SA Govt entities

Local governments

Non-profit recreational groups such as sporting clubs

Environment groups

Note A4 Budgetary Reporting and Explanations of major variances between budget and actual amounts

Refer note 40 for illustrative example.



APPENDIX - ALTERNATE NOTE 3 NEW OR REVISED ACCOUNTING STANDARDS AND POLICIES

Issued or Amended but not yet effective

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective, have not been adopted by the department for the reporting period ending 30 June 2017. The department has assessed the impact of the new and amended standards and interpretations, these are outlined in the table:

Reference Title Summary Application date of std

Impact on financial report

Application date for Dept

AASB 9 (new standard)

AASB 2010-7

AASB 2013-9

AASB 2014-7

AASB 2014-8

AASB 2016-8

Financial Instruments

Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120,121, 127, 128, 131, 132, 136, 137,139, 1023 & 1038 and Interpretations 2,5,10,12,19 & 127]

Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments’

Amendments to Australian Accounting Standards arising from AASB 9

Amendments to Australian Accounting Standards arising from AASB 9 – application of AASB 9

Amendments to Australian Accounting Standards – Australian Implementation

AASB 9 provides the principles for the classification, measurement, recognition, derecognition and disclosure associated with financial assets and liabilities.

It also includes new rules for hedge accounting.

In Dec 2014, the AASB made further amendments to AASB 9’s classification and measurement rules and also introduced a new impairment model.

AASB 9 has now been finalised.

The amending standards make various consequential amendments as a result of the issuance of AASB 9; and amend the mandatory effective date of AASB 9 to 1 Jan 18

This amending standard inserts guidance for not-for-profit entities into AASB 9 and AASB 15. The amendments to AASB 9 address the initial measurement and recognition of non-contractual receivables arising from statutory requirements. Such receivables

1 Jan 18 The department is not expecting any impacts from the new classification, measurement, recognition and derecognition rules on financial assets and liabilities.

The department does not ‘hedge account’.

The new impairment model is an expected credit loss model which may result in earlier recognition of credit losses.

It is envisaged that the Treasurer will continued to mandate historical cost for financial assets (except for derivatives) and liabilities.

Accordingly, the department is not expecting any impacts.

1 July 18



Guidance for NFP entities.

include taxes, rates and fines.

AASB 15

AASB 2014-5

AASB 2015-8

AASB 2016-3

AASB 2016-7

AASB 2016-8

Revenue from Contracts with Customers

Amendments to Australian Accounting Standards arising from AASB 15

Amendments to Australian Accounting Standards Effective Date of AASB 15

Amendments to Australian Accounting Standards – Clarifications to AASB 15

Amendments to Australian Accounting Standard – Deferral of AASB 15 for NFP entities.

Amendments to Australian Accounting Standards – Australian Implementation Guidance for NFP entities.

AASB 15 will replace AASB 118 and AASB 111.

The revenue recognition principle in the new standard is ’when control of a good or service transfers to a customer’, rather than ‘where the risk and rewards of ownership reside’.

This amending standard makes consequential amendments to a number of standards as a result of AASB 15 being issued.

The amending standard amends the mandatory effective date of AASB 15 to 1 Jan 18

This amending standard amends AASB 15 to clarify the requirements on identifying performance obligations, principal versus agent considerations and the timing of recognising revenue from granting a licence. In addition, it provides further practical expedients on transition to AASB 15.

This amending standard amends the mandatory effective date (application date) of AASB 15 for not-for-profit entities to annual reporting periods beginning on or after 1 January 2019 instead of 1 January 2018.

This amending standard inserts implementation guidance for not-for-profit entities into AASB 9 and AASB 15. The amendments to AASB 15 address the following aspects of accounting for contracts with customers: (a) identifying a contract with a customer;

(b) identifying performance obligations; and

(c) allocating the transaction price to performance obligations

1 Jan 19 This standard will have an impact on the dept of SA service Delivery – in relation to the potential timing of revenue recognition.

The dept is considering the finalised implementation guidance and its impact on the department’s grants, and service contractual arrangements such as MOU and MOAA’s.

The department has commenced its analysis of contractual arrangements, having regard to the definitions of a contract and customer and whether the contractual arrangements are in the entity’s ordinary activities.

The department’s financial report will include additional disclosures (qualitative and quantitative)

1 July 19

AASB 1058 Income of Not-for-Profit Entities

This new standard clarifies and simplifies the income recognition requirements that apply to NFP entities, in conjunction with AASB 15. AASB 1058 and AASB 15 will supersede the majority of income recognition requirements relating to public sector NFP entities,

1 Jan 19 The Department of SA Service Delivery has commenced analysing the new revenue recognition requirements under AASB 15 and AASB 1058 and is yet to form conclusions about

1 July 19



previously in AASB 1004. The timing of income recognition depends on whether a transaction gives rise to a liability or other performance obligation (a promise to transfer a good or service), or a contribution by owners, related to an asset (such as cash or another asset) received by an entity. AASB 1058 applies when a NFP entity receives volunteer services or enters into other transactions where the consideration to acquire an asset is significantly less than the fair value of the asset principally to enable the entity to further its objectives. If the transaction is a transfer of a financial asset to enable an entity to acquire or construct a recognisable non-financial asset to be controlled by the entity, the entity recognises a liability for the excess of the fair value of the transfer over any related amounts recognised. The entity recognises income as it satisfies its obligations under the transfer similarly to income recognition in relation to performance obligations under AASB 15. If the transaction does not enable an entity to acquire or construct a recognisable non-financial asset to be controlled by the entity, then any excess of the initial carrying amount of the recognised asset over the related amounts is recognised as income. When an entity receives volunteer services (and they would have been purchased if not provided voluntarily) and can reliably measure the fair value of those services, the entity may elect to recognise the services as an asset (provided the relevant asset recognition criteria are met) or an expense.

significant impacts.

AASB 16 Leases This new standard introduces a single lessee accounting model. It requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments. AASB 16 substantially carries forward the lessor accounting requirements in AASB 117

1 Jan 19 This new standard is a significant change from the past 30 years of accounting for leases. It will require the Dept of SA Service Delivery to record almost all lease arrangements on-balance sheet..

There will be significant work for the dept to bring all leases currently treated as operating onto balance sheet.

The dept will commence its analysis of current leasing arrangements based on AASB 16 shortly.

1 July 19

AASB 2014- Amendments to This amending standard amends 1 Jan 18 The standard will not 1 July 18



10

AASB 2015-10

Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture [AASB 10 and AASB 128]

Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128

AASB 10 and AASB 128 to address an inconsistency between the requirements, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require:

a. A full gain or loss to be recognised when a transaction involves a business; and

b. A partial gain or loss to be recognised when a transaction involves assets that do not constitute a business.

This amending standard amend s the effective date of application to 1 Jan 18

have an impact on Department of SA Service Delivery.

The department does not have any investments in subsidiaries, joint ventures or associations.

AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112]

This amending standard clarifies the requirements on recognition of deferred tax assets for unrealised losses on debt instruments measured at fair value.

Feb 2016 The standard will not have an impact on Department of SA Service Delivery.

1 July 17

AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107

This amending standard amends AASB 107 to require entities preparing financial statements in accordance with Tier 1 reporting requirements to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

Mar 16 Where required, the Department of SA Service Delivery will include these additional disclosures in its financial statements i.e. reconciliation of liabilities arising from financing activities.

1 July 17

AASB 2016-4 Amendments to Australian Accounting Standards – Recoverable Amount of Non-Cash-Generating Specialised Assets of NFP entities [AASB 136]

This amending standard amends AASB 136 to: (a) remove references to depreciated replacement cost as a measure of value in use for not-for-profit entities; and

(b) clarify that the recoverable amount of primarily non-cash-generating assets of not-for-profit entities, which are typically specialised in nature and held for continuing use of their service capacity, is expected to be materially the same as fair value And therefore AASB 136 does not apply to such assets that are regularly revalued to fair value under the revaluation model in AASB 116 and AASB 138

1 Jan 17 The department holds its property, plant and equipment for their service potential (value in use).

All non-current tangible assets are valued at fair value. Specialised assets would rarely be sold and typically any costs of disposal would be negligible, accordingly the recoverable amount will be close to or greater than fair value and therefore currently the Department does not test these assets for impairment.

In addition, it is noted that the AASB has concluded that DRC as a measure of value in use for specialised assets is unlike to be materially different from DRC (or CRC) as a measure of fair value

1 July 17



under AASB 13 of such assets. Accordingly the amending standard is not expected to have an impact on the Dept.

AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions [AASB 2]

This amending standard amends AASB 2 to address: (a) the accounting for the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments;

(b) the classification of share-based payment transactions with a net settlement feature for withholding tax obligations; and

(c) the accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.

1 Jan 2018 The standard will not have an impact on Department of SA Service Delivery. The dept is not involved with share based payments

1 July 2018

AASB 2016-6 Amendments to Australian Accounting Standards – Applying AASB 9 Financial Instruments with AASB 4 Insurance Contracts

This Standard amends AASB 4 to permit issuers of insurance contracts to: (a) choose to apply the ‘overlay approach’ that involves applying AASB 9 and AASB 139 to eligible financial assets to calculate a single line item adjustment to profit or loss so that the overall impact on profit or loss is the same as if AASB 139 had been applied; or

(b) choose to be temporarily exempt from AASB 9 when those issuers’ activities are predominantly connected with insurance, provided they make additional disclosures to enable users to make comparisons with issuers applying AASB 9.

1 Jan 18 The standard will not have an impact on Department of SA Service Delivery. The dept is not an issuer of insurance contracts.

1 July 2018

AASB 2017-1 Amendments to Australian Accounting Standards – Transfer of Investment Property, Annual Improvements 2014-2016 Cycle and other amendments [AASB 1, AASB 128 and AASB 140]

This amending standard amends: (a) AASB 1 to delete some short-term exemptions for first-time adopters that were available only for reporting periods that have passed and to add exemptions arising from AASB Interpretation 22;

(b) AASB 128 to clarify that: (i) a venture capital organisation, or a mutual fund, unit trust and similar entities may elect, at initial recognition, to measure investments in an associate or joint venture at fair value through profit or loss separately for each associate or joint venture; and (ii) an entity that is not an investment entity may elect to retain the fair value measurement applied by its associates and joint ventures that are investment entities when applying the equity method. This choice is available

1 Jan 2019 The standard will not have an impact on Department of SA Service Delivery. The dept will ensure its Asset Accounting Policy reflects the transfer to or from investment property only occurs when there is a change in use.

1 July 2019



separately for each investment entity associate or joint venture; and (c) AASB 140 to reflect the principle that an entity transfers a property to, or from, investment property when, and only when, there is a change in use of the property supported by evidence that a change in use has occurred.

AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle [AASB 12].

This amending standard clarifies the scope of AASB 12 by specifying that the disclosure requirements apply to an entity’s interests in other entities that are classified as held for sale, held for distribution to owners in their capacity as owners or discontinued operations in accordance with AASB 5.

1 Jan 2017 The standard will not have an impact on Department of SA Service Delivery

1 July 2017



APPENDIX – ALTERNATE NOTE 41 FINANCIAL RISK MANAGEMENT/ FINANCIAL INSTRUMENTS

AASB 7 para 7,31,33 41.1 Financial risk management

Risk management is managed by the Department’s corporate services section and departmental risk management policies are in accordance with the Risk Management Policy Statement issued by the Premier and Treasurer and the principles established in the Australian Standard Risk Management Principles and Guidelines.

The Department is exposed to financial risk – liquidity risk, credit risk and market risk. There have been no changes in risk exposure since the last reporting period.

AASB 7 para 6,7,8,21,25, 29(a) AASB 139 para 46,47 APF IV para APS2.1 and APS6.1 AASB 13 para 93,97

AASB 13 para 93 (a),(b),(c)

41.2 Categorisation of financial instruments

Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement, and the basis on which income and expenses are recognised with respect to each class of financial asset, financial liability and equity instrument are disclosed in note 2 or the respective note.

Refer note 41.3 for the carrying amounts of each of the following categories of financial assets and liabilities: Held-to-maturity investments; loan and receivables; and financial liabilities measured at cost.

Department of SA Service Delivery does not recognise any financial assets or financial liabilities at fair value, but does disclose fair value in the notes. All of the resulting fair value estimates are included in level 2 as all significant inputs required are observable.

The carrying value less impairment provisions of receivables and payables is a reasonable approximation of their fair values due to the short-term nature of these (refer notes 2, 20 and 28).

Borrowings are initially recognised at fair value, plus any transaction cost directly attributable to the borrowings, then subsequently held at amortised cost. The fair value of borrowings approximates the carrying amount, as the impact of discounting is not significant (refer notes 2 and 29).

Held-to-maturity investments are initially recognised at fair value, then subsequently held at amortised cost. This is the most representative of fair value in the circumstances (refer notes 2 and 21).

AASB 7 para 31, 33, 34 & 39(c)

In relation to note 41, particularly for smaller agencies with limited financial risk management and Financial instruments, tables may be deleted and replace with text where text is sufficient.

Where not-for-profit entities are exempt from the requirements of APF IV Financial Asset and Liability Framework para APS 6.1 consider adding a column in Table 41.3 to classify classes of

financial assets and liabilities by the fair value hierarchy or alternatively consider the following illustrative disclosure: The recognised fair values of financial assets and liabilities are classified according to the following fair Value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value of financial assets or liabilities traded in active markets is based on quoted market prices for identical assets or liabilities at balance sheet data (level 1).



The quoted market price used for assets held by the department is the most representative of fair value in the circumstances. The fair value of assets or liabilities that are not traded in an active market is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. All significant inputs required to fair value financial assets and liabilities are observable, and accordingly included in level 2. The department has no valuations for financial assets or liabilities categorised into level 3 (i.e. fair values derived from data not observable in a market).

Class of financial asset and liability

2017 Classification in fair value hierarchy

Level 1 Level 2 $’000 $’000

2017 Total $’000

2016 Classification in fair value hierarchy

Level 1 Level 2 $’000 $’000

2016 Total $’000

Financial asset

(list each class separately)

Financial liability

(list each class separately)

Total

There were no transfers of assets between level 1 and 2 fair value hierarchy levels in 2016 or 2015. The department’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period.

41.3 Liquidity risk

Liquidity risk arises from the possibility that the department is unable to meet its financial obligations as they fall due. The department is funded principally from appropriation by the SA Government. The department works with the Department of Treasury and Finance to determine the cash flows associated with its Government approved program of work and to ensure funding is provided through SA Government budgetary processes to meet the expected cash flows.

The Department for SA Service Delivery settles undisputed accounts within 30 days from the date of the invoice or date the invoice is first received. In the event of a dispute, payment is made 30 days from resolution.

The Department for SA Service Delivery’s exposure to liquidity risk is insignificant based on past experience and current assessment of risk.

Where a not-for-profit entity has material risk, consider the following illustrative note exposure:

Table 41.3(a): Maximum exposure to liquidity risk Maximum liquidity risk

Financial liabilities and other credit risk exposure 2017 $’000

2016 $’000

Other [agency specific details here]

Total

The carrying amount recorded in note 41.3 represent the department’s maximum exposure.

The following table discloses the carrying amount of each category of financial instrument held by the department including the contractual



maturity analysis for financial assets and liabilities (ie liquidity risk).

Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflects the earliest contractual settlement dates.

Table 41.3: Categorisation and maturity analysis of financial assets and liabilities

AASB 7, para 8, 25, 31, 34 & 39(c)



liability

Notes

2017


($’000)

Current Within 1 year ($’000)

1-5 years

($’000)

More than

5 years ($’000)

Financial assets

-

Cash and equivalent




Held- to-maturity investments





- Payables (1)

- Borrowings








liability

Notes

2016


($’000)

Current Within 1 year ($’000)

1-5 years

($’000)

More than

5 years ($’000)

Financial assets

Cash and equivalent




Held–to-maturity investments





- Payables (1)

- Borrowings




AASB 132 para AG 12

(3) Receivable and payable amounts disclosed here exclude amounts relating to statutory receivables and payables (eg Commonwealth, State and Local Govt taxes, fees and charges; Auditor-General’s Department audit fees). In government, certain rights to receive or pay cash may not be contractual and therefore in these situations, the requirements will not apply. Where rights or obligations have their source in legislation such as levies, tax and equivalents etc they would be excluded from the disclosure. The standard defines contract as enforceable by law. All amounts recorded are carried at cost (not materially different from amortised cost).

(4) Receivables amount disclosed here excludes prepayments. Prepayments are presented in note 20 as trade and other receivables in accordance with paragraph 78(b) of AASB 101. However, prepayments are not financial assets as defined in AASB 132 as the future economic benefit of these assets is the receipt of goods and services rather than the right to receive cash or another financial asset.



AASB 132. AG 12, AASB 7 para B11D, 39. AASB 7 para 39 IG IFRS 7 para 30 AASB 7 para B11

Categorisation of financial asset and liability

AASB 7 para 29 requires disclosure of fair value of categories of financial assets and liabilities only when carrying amount is not a reasonable approximation of fair value. Where the carrying amount is different to fair value (eg available for sale assets), consider adding a separate column for fair value or adding the fair value amount in brackets.

Maturity Analysis

Maturity analysis of receivables/payables must exclude statutory receivables/payables.

AASB 7 requires undiscounted amounts to be included in the maturity analysis. This means there may be cases where the amount included in the Statement of Financial Position for a financial asset or liability will be different to the amount included in the maturity analysis. An example of this would be finance leases.

Contractual maturities are likely to differ from carrying amounts when there is interest receivable or payable on the relevant financial instrument.

The model financial statements illustrates a maturity analysis for non-derivative financial liabilities. If an agency had derivative financial liabilities the additional disclosures in AASB 7 para 39(b) would be required.

*for issued guarantee contracts the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.

AASB 7 requires maturity analysis to be undertaken for all financial liabilities. AASB 7 only requires a maturity analysis be undertaken for financial assets that are held for the purposes of managing liquidity risk.

AASB 7 provides an example of the time bands to include in the maturity analysis required by the standard. These time bands are as follows:

• not later than one month;

• later than one month and not later than three months;

• later than three months and not later than one year; and

• later than one year and not later than five years.

It is considered that these are not the most appropriate time bands for SA Government as the public sector is not as focused on the short-term liquidity of its financial assets and liabilities. As such, the Model Financial Statements uses three time bands, which are as follows:

• one year or less;

• over one year to five years; and

• over five years.

AASB 7 para 31, 34, 36, 37

41.4 Credit risk

Credit risk arises when there is the possibility of the department’s debtors defaulting on their contractual obligations resulting in financial loss to the department. The department measures credit risk on a fair value basis and monitors risk on a regular basis.

The department has minimal concentration of credit risk. The department has policies and procedures in place to ensure that transactions occur with customers with appropriate credit history. The department does not engage in high risk hedging for its financial assets. No collateral is held as security and no credit enhancements relate to financial assets held by the department

Allowances for impairment of financial assets are calculated on past experience and current and expected changes in client credit rating. Other than receivables, there is no evidence to indicate that financial assets are impaired. Refer note 20 for information on the allowance for impairment in relation to receivables.

The carrying amount of financial assets as detailed in note 41.3



represents the department’s maximum exposure to credit risk.

AASB 7 para 34, 36 Where a not-for-profit entity has material risk, consider the following illustrative note disclosure:

Table 41.4(a): Maximum exposure to credit risk

Financial assets and other credit risk exposure

2017 $’000

2016 $’000

Other [agency specific details here]

Total

The carrying amount of financial assets recorded in Table 40.3 (net of any allowances for losses) represents the department’s maximum exposure to credit risk.

The following table discloses the ageing of financial assets that are past due but not impaired and impaired financial assets.

AASB 7 para 20(e), 37(a) & (b)

Table 41.4 Ageing analysis of financial assets

Carrying amount $’000

Not past due and

not impaired

$’000

Past due but not impaired

2017

Overdue for less than 30

days $’000

Overdue for 30 – 60 days

$’000

Overdue for more than 60

days $’000

Impaired financial assets $’000


Receivables (1)


2016


Receivables (1)


AASB 132 para AG12 (1) Receivable amounts disclosed here exclude amounts relating to statutory receivables (amounts owing to Govt). They are carried at cost.

AASB 7 para 33 & 40

41.5 Market risk

Market risk for the department is primarily through interest rate risk. Exposure to interest rate risk may arise through its interest bearing liabilities, including borrowings. The Department for SA Service Delivery’s interest bearing liabilities are managed through SAFA and any movement in interest rates are monitored on a daily basis. There is no exposure to foreign currency or other price risks.

The department does not trade in foreign currency, enter into transactions for speculative purposes, nor for hedging. The department does not undertake any hedging in relation to interest or foreign currency risk and manages its risk as per the Government’s risk management strategy articulated in TI 23 Management of Foreign Currency Exposures

Sensitivity disclosure analysis

A sensitivity analysis has not been undertaken for the interest rate risk of the



department as it has been determined that the possible impact on profit and loss or total equity from fluctuations in interest rates is immaterial.

Where material, consider the following illustrative note disclosure:

Taking into account future expectations, economic forecasts and management’s knowledge and experience of financial markets, the Department for SA Service Delivery believes the following movements are reasonably possible over the next 12 months - a parallel movement of +1% and –1% in market interest rates from year-end rates of 6.75%.

The impact on net operating result for each affected financial liability by the department, if the above movements were to occur, are disclosed in Table 41.5 below:

Table 41.5: Market risk exposure

Interest rate risk Price risk

-1% +1% -1% +1%

Carrying amount ($’000)

Profit

($’000)

Equity

($’000)

Profit

($’000)

Equity

($’000)

Profit

($’000)

Equity

($’000)

Profit

($’000)

Equity

($’000)

AASB 7 para 31,34 & 40(a)

2017

Financial assets:


Receivables


Financial liabilities:

Payables

Borrowings

Other financial liabilities

Total increase/ (decrease)

2016

Financial assets:


Receivables


Financial liabilities:

Payables

Borrowings

Other financial liabilities

Total increase/ (decrease)

model financial statements for sa … sa government not-for-profit entities ... (model financial...

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