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Notes to the financial statements

for the period ended 30 June 2019

1. Financial performance

This section analyses the financial performance of ACIAR for the year ended 2019

1.1 Expenses

1.1A: Employee benefits

2019

2018

$’000

$’000

Wages and salaries

5,381

4,563

Superannuation:

Defined contribution plans

455

410

Defined benefit plans

585

339

Leave and other entitlements

879

405

Separation and redundancies

29

154

Total employee benefits

7,329

5,871

Accounting policy

Accounting policies for employee related expenses are contained in the People and Relationships section.

1.1B: Suppliers

2019

2018

$'000

$'000

Goods and services supplied or rendered

Contractors, consultants and service providers

1,311

1,247

Travel

624

559

IT Services

832

685

Property services (excluding rent)

350

296

Workforce capability

329

262

Publications and promotion

48

106

Other

258

264

Total goods and services supplied or rendered

3752

3419

Goods supplied

542

501

Services rendered

3,210

2,918

Total goods and services supplied or rendered

3,752

3,419

Other suppliers

Operating lease rentals

699

652

Workers compensation expenses

40

47

Total other suppliers

739

699

Total suppliers

4,491

4,118

Leasing commitments

ACIAR, in its capacity as lessee, has in place a number of non-cancellable operating lease agreements for office accommodation in Canberra and overseas. The terms and conditions of these leases vary based on local market conditions.

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

Within 1 year

900

834

Between 1 to 5 years

3,641

3,411

More than 5 years

918

1,642

Total operating lease commitments1

5,459

5,887

Accounting policy

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

1 Commitments are GST inclusive where relevant.

1.2 Own-source revenue and gains

Own-source revenue

1.2A: Sale of goods and rendering of services

2019

2018

$’000

$’000

Sale of goods

20

13

Rendering of services

2,616

1,182

Total sale of goods and rendering of services

2,636

1,195

Accounting policy

Revenue from the sale of goods is recognised when:

a) the risks and rewards of ownership have been transferred to the buyer; and

b) ACIAR retains no managerial involvement or effective control over the goods.

Revenue from rendering of services is recognised by reference to the stage of completion of contracts at the reporting date. The revenue is determined by reference to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

1.2B: Other revenue

2019

2018

$'000

$'000

Resources received free of charge

Remuneration of auditors

32

30

Total other revenue

32

30

Accounting policy

Resources received free of charge

Resources received free of charge are recognised as revenue when, and only when, a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Resources received free of charge are recorded as either revenue or gains depending on their nature.

1.2C: Revenue from Government

2019

2018

$'000

$'000

Appropriations

Departmental appropriation

9,302

9,364

Total revenue from Government

9,302

9,364

Accounting policy

Revenue from Government

Amounts appropriated for Departmental appropriations for the year (adjusted for any formal additions and reductions) are recognised as Revenue from Government when the entity gains control of the appropriation, except for certain amounts that relate to activities that are reciprocal in nature, in which case revenue is recognised only when it has been earned. Appropriations receivable are recognised at their nominal amounts.

2. Income and expenses administered on behalf of Government

This section analyses the activities that ACIAR does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for Departmental reporting.


2.1 Administered - expenses

2.1A: International Development Assistance

2019

2018

$'000

$'000

Research program

77,168

78,954

Multilateral program

22,907

23,914

Education and training

10,277

8,299

Communicating research results

2,865

1,324

Total international development assistance

113,217

112,491

International Development Assistance is made up of:

Employee benefits

2,282

2,940

Supplier expenses

110,935

109,551

Total

113,217

112,491

Accounting policy

International development assistance

ACIAR administers international development assistance programs and projects on behalf of the Government.

International development assistance liabilities are recognised to the extent that:

(i) the services required to be performed by the recipient have been performed; or

(ii) the contract eligibility criteria have been satisfied, but payments due have not been made.

2.2 Administered - income

2.2A: External Funds

2019

2018

$'000

$'000

Revenue

Non–Taxation Revenue

External funds

11,951

13,687

Total external funds

11,951

13,687

Accounting policy

All Administered revenues are revenues relating to ordinary activities performed by the entity on behalf of the Australian Government. As such, Administered appropriations are not revenues of the individual entity that oversees distribution or expenditure of the funds as directed.

3. Financial position

This section analyses the ACIAR's assets used to conduct its operations and the operating liabilities incurred as a result. Employee-related information is disclosed in the People and Relationships section.

3.1 Financial assets

3.1A: Cash and cash equivalents

2019

2018

$’000

$’000

Cash on hand or on deposit

12

11

Total cash and cash equivalents

12

11

Accounting policy

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

a) cash on hand;

b) demand deposits in bank accounts with an original maturity of 3 months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value; and

c) cash in special accounts.

3.1B: Trade and other receivables

2019

2018

$'000

$'000

Appropriations receivable

Appropriation receivable

3,231

3,682

Total appropriations receivable

3,231

3,682

Other receivables

GST receivable from the Australian Taxation Office

49

49

Total other receivables

49

49

Total trade and other receivables (net)

3,280

3,731

Credit terms for goods and services were within 30 days (2018: 30 days)

Accounting policy

Financial assets

Trade receivables and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

3.2 Non-financial assets

3.2A: Reconciliation of the opening and closing balances of leasehold improvements, plant and equipment and intangibles

Leasehold improvements

Plant and equipment

Intangibles computer software1

Total

$’000

$’000

$’000

$’000

As at 1 July 2018

Gross book value

1,054

258

2,514

3,826

Accumulated depreciation, amortisation and impairment

(146)

(78)

(641)

(865)

Work in progress

28

-

81

109

Total as at 1 July 2018

936

180

1,954

3,070

Additions

Purchase

75

547

4

626

Depreciation and amortisation

(151)

(125)

(206)

(482)

Disposals

Asset cost

(14)

(27)

(80)

(121)

Accumulated depreciation

13

21

80

114

Total as at 30 June 2019

859

596

1,752

3,207

Total as at 30 June 2019 represented by

Gross book value

1,143

778

2,519

4,440

Accumulated depreciation, amortisation and impairment

(284)

(182)

(767)

(1,233)

Total as at 30 June 2019

859

596

1,752

3,207

1The carrying amount of computer software included $1.752 million of internally generated software.

No indicators of impairments were found for leasehold improvements, plant and equipment or computer software.

No leasehold improvements, plant and equipment or computer software are expected to be sold or disposed of within the next 12 months.

Revaluations of non-financial assets

All revaluations were conducted in accordance with the revaluation policy stated at Note 7.4. On 30 June 2019, an independent valuer from Jones Lang LaSalle conducted the revaluations. This did not result in a change to the fair value of leasehold improvements or property, plant and equipment.

ACIAR has a number of contractual commitments for the acquisition of plant and equipment and intangible assets

2019

2018

$’000

$’000

Within 1 year

8

41

Between 1 to 5 years

-

-

Total commitments1

8

41

1Commitments are GST inclusive where relevant.

Accounting policy

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Asset recognition threshold

Purchases of leasehold improvements, plant and equipment and intangibles are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

The initial cost of an asset includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located.

Revaluations

Following initial recognition at cost, leasehold improvements, plant and equipment assets are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets' fair values as at the reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets.

Revaluation adjustments are made on a class basis. Any revaluation increment is credited to equity under the heading of asset revaluation reserve except to the extent that it reverses a previous revaluation decrement of the same asset class that was previously recognised in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reverse a previous revaluation increment for that class.

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

Depreciation

Depreciable leasehold improvements, property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to ACIAR using, in all cases, the straight-line method of depreciation.

Depreciation rates (useful lives), residual values and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.

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

2019

2018

Leasehold improvements

Lower of useful life or lease term

Lower of useful life or lease term

Plant and equipment

3 to 10 years

3 to 10 years

Impairment

All assets are assessed for impairment annually. Where indications of impairment exist, the asset’s recoverable amount is estimated and an impairment adjustment made if the asset’s recoverable amount is less than its carrying amount.The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. Value in use is the present value of the future cash flows expected to be derived from the asset. Where the future economic benefit of an asset is not primarily dependent on the asset’s ability to generate future cash flows, and the asset would be replaced if ACIAR were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

Derecognition

An item of leasehold improvements or plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Intangibles

ACIAR's intangibles comprise software for internal use. These assets are carried at cost less accumulated amortisation and accumulated impairment losses.Software is amortised on a straight-line basis over its anticipated useful life. The useful lives of the ACIAR's software are 3 to 10 years (2018: 3 to 10 years).

All computer software assets are assessed for indications of impairment annually.

3.2B: Other non-financial assets

2019

2018

$’000

$’000

Prepayments

261

96

Total other non-financial assets

261

96

No indicators of impairment were found for other non-financial assets.

3.3 Payables

3.3A: Suppliers

2019

2018

$’000

$’000

Trade creditors and accruals

327

335

Total suppliers

327

335

All supplier payables are expected to be settled within 12 months.

Settlement was usually made within 30 days.

3.3B: Other payables

2019

2018

$'000

$'000

Salaries and wages

159

116

Superannuation

6

8

Rent payable

33

7

Lease incentive

237

277

Other

232

254

Total other payables

667

662

4. Assets and liabilities administered on behalf of government

This section analyses assets used to conduct operations and the operating liabilities incurred as a result which ACIAR does not control but administers on behalf of the Government. Unless otherwise noted, the accounting policies adopted are consistent with those applied for Departmental reporting.

4.1 Administered - financial assets

4.1A: Cash and cash equivalents

2019

2018

$’000

$’000

Cash in special accounts

8,851

13,171

Cash on hand or on deposit

10

10

Total cash and cash equivalents

8,861

13,181

4.1B: Taxation Receivables

2019

2018

$’000

$’000

GST receivable from Australian Taxation Office

825

1,468

Total taxation receivables (net)

825

1,468

4.1C: Trade and Other Receivables

2019

2018

$'000

$'000

Goods and services receivables

1,626

3

Other receivables

-

644

Total trade and other receivables (net)

1,626

647

No indicators of impairment were found for trade and other receivables.

Trade and other receivables credit terms were within 30 days (2018 : 30 days).

4.2 Administered - non-financial assets

4.2: Other Non-Financial Assets

2019

2018

$’000

$’000

Prepayments

54

34

Total other non-financial assets

54

34

4.3 Administered - payables

4.3A: Suppliers

2019

2018

$’000

$’000

Trade creditors and accruals

2,645

2,396

Total suppliers

2,645

2,396

Settlement was usually made within 30 days.

4.3B: Other payables

2019

2018

$’000

$’000

GST payable to OPA

856

1,403

Salaries and wages

42

55

Superannuation

2

4

Total other payables

900

1,462

5. Funding

This section identifies ACIAR's funding structure.

5.1 Appropriations

5.1A: Annual appropriations (recoverable GST exclusive)

Annual appropriations for 2019

Annual appropriation1

Section 74 adjustments to appropriation

Total appropriation

Appropriation applied in 2019 (current and prior years)

Variance2

$'000

$'000

$'000

$'000

$'000

DEPARTMENTAL

Ordinary annual services

9,302

2,650

11,952

12,266

(314)

Capital budget3

245

-

245

252

(7)

Total departmental

9,547

2,650

12,197

12,518

(321)

ADMINISTERED

Ordinary annual services

Administered items

97,965

-

97,965

97,612

353

Total administered

97,965

-

97,965

97,612

353

Notes:

1In 2018-19, there was an unspent 2015-16 equity injection ($131k) which expired on 1 July 2018.

2In 2018-19, the variances reflect:

  • Ordinary annual services- ACIAR use of available appropriation for the upgrade of aged IT hardware.
  • Capital Budget - The overspend is offset by a corresponding underspend in 2017-18 Financial years.

3Departmental and Administered Capital Budgets are appropriated through Appropriation Acts (No.1,3). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.

Annual appropriations for 2018

Annual appropriation1

Section 74 adjustments to appropriation

Total appropriation

Appropriation applied in 2018 (current and prior years)

Variance2

$'000

$'000

$'000

$'000

$'000

DEPARTMENTAL

Ordinary annual services

9,364

1,195

10,559

10,642

(83)

Capital Budget3

245

-

245

238

7

Total departmental

9,609

1,195

10,804

10,880

(76)

ADMINISTERED

Ordinary annual services

Administered items

96,882

-

96,882

95,084

1,798

Total administered

96,882

-

96,882

95,084

1,798

Notes:

1In 2017-18, there were no appropriations which have been quarantined.

2In 2017-18, the variances are not considered material.

3Departmental and Administered Capital Budgets are appropriated through Appropriation Acts (No.1,3,5). They form part of ordinary annual services, and are not separately identified in the Appropriation Acts.

5.1B: Unspent annual appropriations (recoverable GST exclusive)

Authority

2019

2018

$'000

$'000

DEPARTMENTAL

Appropriation Act (No 4) 2015-16 Non Operating - Equity Injection

-

131

Appropriation Act (No 1) 2017-18 Capital Budget (DCB) Non Operating

-

7

Appropriation Act (No 1) 2017-18

-

3,544

Appropriation Act (No 1) 2018-19 Capital Budget (DCB) Non Operating

-

-

Appropriation Act (No 1) 2018-19

3,231

-

Cash on hand or on deposit

12

11

Total

3,243

3,693

ADMINISTERED

Appropriation Act (No 1) 2017-18

416

2,423

Appropriation Act (No 1) 2018-19

2,360

-

Cash on hand or on deposit

10

10

Total

2,786

2,433

5.2 Special accounts

5.2: Special accounts (recoverable GST exclusive)

ACIAR Special Account1

2019

2018

$’000

$’000

Balance brought forward from previous period

13,171

15,402

Increases

Other receipts

13,257

14,825

Total increases

13,257

14,825

Available for payments

26,428

30,227

Decreases

Administered

Payments made to suppliers

(17,577)

(17,056)

Total administered

(17,577)

(17,056)

Total decreases

(17,577)

(17,056)

Total balance carried to the next period

8,851

13,171

Balance represented by:

Cash held in the Official Public Account

8,851

13,171

Total balance carried to the next period

8,851

13,171

1Appropriation: Public Governance, Performance and Accountability Act 2013 section 80
Establishing Instrument: Australian Centre for International Agricultural Research Act 1982 section 33 Purpose: For crediting amounts received from time to time to cover the discharge of costs.

5.3 Net cash appropriation arrangements

Net cash appropriation arrangements

2019

2018

$’000

$’000

Total comprehensive income excluding depreciation / amortisation expenses previously funded through revenue appropriations

109

570

Plus: depreciation/amortisation expenses previously funded through revenue appropriation

(482)

(366)

Total comprehensive income/(loss) - as per the Statement of Comprehensive Income

(373)

204

6. People and relationships

This section describes a range of employment and post employment benefits provided to our people and our relationships with other key people.

6.1 Employee provisions

6.1A: Employee Provisions

2019

2018

$’000

$’000

Leave

1,561

1,599

Other

498

395

Total employee provisions

2,059

1,994

6.1B: Administered - Employee Provisions

2019

208

$'000

$'000

Leave

153

150

Total employee provisions

153

150

Accounting policy

Liabilities for short-term employee benefits and termination benefits expected within twelve months of the end of reporting period are measured at their nominal amounts.

Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period, minus the fair value at the end of the reporting period of plan assets (if any), out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave.

The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including ACIAR’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The liability for long-service leave has been determined by reference to the shorthand method. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Separation and redundancy

Provision is made for separation and redundancy benefit payments. ACIAR recognises a provision for termination when it has developed a detailed formal plan for the terminations and has informed those employees affected that it will carry out the terminations.

Superannuation

ACIAR's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

The CSS and PSS are defined benefit schemes for the Australian Government. The PSSap and other superannuation funds held outside the Australian Government are defined contribution schemes.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s Administered schedules and notes.

ACIAR makes employer contributions to the employees' defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Government. ACIAR accounts for the contributions as if they were contributions to defined contribution plans.

The liability for superannuation recognised as at 30 June represents outstanding contributions.

For other superannuation funds held outside the Australian Government, as employer, ACIAR, contributes a minimum of 9.5% of superannuable salaries.

6.2 Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of ACIAR, directly or indirectly, including any director (whether executive or otherwise) of ACIAR. ACIAR has determined the key management personnel to be the Portfolio Minister (the Minister for the Department of Foreign Affairs and Trade), Cabinet Ministers, Chief Executive Officer, Chief Finance Officer and other Senior Management Team members. Key management personnel remuneration is reported in the table below. The total number of key management personnel included in the table is 6 (2018: 7).

Remuneration - key management personnel

2019

2018

$'000

$'000

Short-term employee benefits

1,448

1,451

Post-employment benefits

249

286

Other long-term employee benefits

103

194

Total senior executive remuneration expenses1, 2

1,800

1,931

1The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister and Cabinet Ministers. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by ACIAR.

2Comparative numbers for short-term employee benefits and long-term employee benefits for 2017-18 were changed to correct the recognition of short-term employee benefits (annual leave) of $0.107 million which had been included in long-term employee benefits in 2017-18.

Further, during 2018-19 ACIAR identified an error in the calculation of the Chief Executive Officer's pay which resulted in back payment of non-salary allowances of $0.039 million which had not been included short-term employee benefits in 2017-18.

To correct both changes, the comparatives for 2017-18 for short-term employee benefits has been adjusted from $1.305 million to $1.451 million and long-term employee benefits has been adjusted from $0.301 million to $0.194 million.

6.3 Related party disclosures

Related party relationships:

ACIAR is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel including the Portfolio Minister (the Minister for the Department of Foreign Affairs and Trade), Cabinet Ministers, and Executive, and other Australian Government entities.

Transactions with related parties:

Given the breadth of Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

The following transactions with related parties occurred during the financial year:

● The entity transacts with other Australian Government controlled entities consistent with normal day-to-day business operations provided under normal terms and conditions, including the payment of workers compensation and insurance premiums. These are not considered individually significant to warrant separate disclosure as related party transactions.

● Refer to Note 6.1 Employee Provisions for details on superannuation arrangements with the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), and the PSS accumulation plan (PSSap).

7. Managing uncertainties

This section analyses how the ACIAR manages financial risks within its operating environment.

7.1A: Contingent assets and liabilities

Quantifiable contingencies
At 30 June 2019, ACIAR had no quantifiable contingencies (2018: $Nil).

Unquantifiable contingencies
At 30 June 2019, ACIAR had no unquantifiable contingencies (2018: $Nil).

7.1B: Administered - contingent assets and liabilities

Quantifiable contingencies
At 30 June 2019, ACIAR had no quantifiable contingencies (2018: $Nil).

Unquantifiable contingencies
At 30 June 2019, ACIAR had no unquantifiable contingencies (2018: $Nil).

Accounting policy
Contingent liabilities and contingent assets are not recognised in the Statement of Financial Position, but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

7.2 Financial instruments

7.2A: Categories of Financial Instruments

2019

2018

$'000

$'000

Financial Assets under AASB 139

Loans and receivables

Cash and cash equivalents

11

Financial Assets under AASB 9

Financial assets at amortised cost

Cash and cash equivalents

12

Total financial assets at amortised cost

12

11

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors

327

335

Other payables1

502

538

Total financial liabilities at amortised cost

829

873

1. During the 2019 financial year, the ACIAR determined that Other payables of $284K were understated in the financial instruments disclosure note in the 2018 financial statements by $254K, as these account balances incorrectly excluded other external liabilities, included within the Other payables category. The 2018 comparative disclosures have been restated with Other payables now reported as $538K (2018 financial statements: $284K).

Classification of financial assets on the date of initial application of AASB 9

Financial assets class

Note

AASB 139 original classification

AASB 9 new classification

AASB 139 carrying amount at 1 July 2018

AASB 9 carrying amount at 1 July 2018

$'000

$'000

Cash and cash equivalents

3.1A

Loans and receivables

Amortised cost

11

11

Total financial assets

11

11

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

Financial assets at amortised cost

AASB 139 carrying amount at 30 June 2018

Reclassification

Remeasurement

AASB 9 carrying amount at 1 July 2018

$'000

$'000

$'000

$'000

Loans and receivables

Cash and cash equivalents

11

-

-

11

Total amortised cost

11

-

-

11

Accounting policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2019, ACIAR classifies its financial assets as financial assets measured at amortised cost.

The classification depends on ACIAR's business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when ACIAR becomes a party to the contract and, as a consequence, has a legal right to receive or a legal obligation to pay cash and derecognised when the contractual rights to the cash flows from the financial asset expire or are transferred upon trade date.

Comparatives have not been restated on initial application.

Financial assets at amortised cost

Financial assets included in this category need to meet two criteria:

1. the financial asset is held in order to collect the contractual cash flows; and

2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

Amortised cost is determined using the effective interest method.

Effective interest method

Income is recognised on an effective interest rate basis for financial assets that are recognised at amortised cost.

Impairment of financial assets

Financial assets are assessed for impairment at the end of each reporting period based on Expected Credit Losses, using the general approach which measures the loss allowance based on an amount equal to lifetime expected credit losses where risk has significantly increased, or an amount equal to 12-month expected credit losses if risk has not increased.

The simplified approach for trade, contract and lease receivables is used. This approach always measures the loss allowance as the amount equal to the lifetime expected credit losses.

A write-off constitutes a derecognition event where the write-off directly reduces the gross carrying amount of the financial asset.

Financial liabilities

Financial liabilities are classified as other financial liabilities. Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial liabilities at amortised cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

7.3 Administered - financial instruments

7.3A: Categories of financial instruments

2019

2018

$’000

$’000

Financial assets under AASB 139

Loans and receivables

Cash on hand or on deposit

13,181

Trade and other receivables

647

Financial assets under AASB 9

Financial assets at amortised cost

Cash on hand or on deposit

8,861

Trade and other receivables

1,626

Total financial assets at amortised cost

10,487

13,828

Financial liabilities

Financial liabilities measured at amortised cost

2,645

2,396

Trade creditors

Total financial liabilities at amortised cost

2,645

2,396

Classification of financial assets on the date of initial application of AASB 9

Financial assets class

Note

AASB 139 original classification

AASB 9 new classification

AASB 139 carrying amount at
1 July 2018

AASB 9 carrying amount at
1 July 2018

$'000

$'000

Cash and cash equivalents

4.1A

Loans and receivables

Amortised cost

13,181

13,181

Trade receivables

4.1C

Loans and receivables

Amortised cost

647

647

Total financial assets

13,828

13,828

Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9

Financial assets at amortised cost

AASB 139 carrying amount at 30 June 2018

Reclassification

Remeasurement

AASB 9 carrying amount at 1 July 2018

$'000

$'000

$'000

$'000

Loans and receivables

Cash and cash equivalents

13,181

-

-

13,181

Trade receivables

647

-

-

647

Total amortised cost

13,828

-

-

13,828

7.4 Fair value measurements

Accounting policy

ACIAR engaged the service of the Jones Lang LaSalle (JLL) to conduct a desktop review of carrying amounts for all non-financial assets at 30 June 2019. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations are carried out at least once every three years with the previous valuation conducted at 30 June 2017. JLL has provided written assurance to the ACIAR that the models developed are in compliance with AASB 13.

The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows:

Physical Depreciation and Obsolescence - Assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence have been measured utilising the Depreciated Replacement Cost approach. Under the Depreciated Replacement Cost approach the estimated cost to replace the asset is calculated and then adjusted to take into physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all Leasehold Improvement assets, the consumed economic benefit / asset obsolescence deduction is determined based on the term of the associated lease.

ACIAR's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

Non-financial assets1

Valuation method

Fair value measurements at the end of the reporting period

2019

$'000

2018

$'000

Leasehold improvements

Depreciated replacement cost

859

936

Plant and equipment

Depreciated replacement cost

596

180

1No non-financial assets were measured at fair value on a non-recurring basis as at 30 June 2019 (2018: Nil).

ACIAR's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all non-financial asset's is considered their highest and best use.

8. Other information

8.1 Aggregate assets and liabilities

8.1A: Aggregate assets and liabilities

2019

2018

$’000

$’000

Assets expected to be recovered in:

No more than 12 months

3,553

3,838

More than 12 months

3,207

3,070

Total assets

6,760

6,908

Liabilities expected to be settled in:

No more than 12 months

1,943

1,989

More than 12 months

1,110

1,002

Total liabilities

3,053

2,991

8.1B: Administered - Aggregate assets and liabilities

2019

2018

$’000

$’000

Assets expected to be recovered in:

No more than 12 months

11,366

14,686

More than 12 months

-

-

Total assets

11,366

14,686

Liabilities expected to be settled in:

No more than 12 months

3,610

3,968

More than 12 months

88

40

Total liabilities

3,698

4,008