Go to top of page

Overview

The basis of preparation

The financial statements are general purpose financial statements and are required by section 42 of the Public Governance, Performance and Accountability Act 2013 (PGPA Act). The financial statements have been prepared in accordance with:

  • Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR)
  • Australian Accounting Standards and Interpretations - Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period

The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars and values are rounded to the nearest thousand dollars unless otherwise specified.

New accounting standards

All new, revised and amending standards or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period that have a material effect on AMSA's financial statements are detailed in the table below.

Standard / Interpretation

Nature of change in accounting policy, transitional provisions, and adjustment to financial statements

AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-for-Profit Entities

AASB 15, AASB 2016-8 and AASB 1058 became effective on 1 July 2019.

AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised and replaces existing revenue recognition guidance in AASB 118 Revenue. The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

AASB 16 Leases

AASB 16 became effective on 1 July 2019.

This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases - Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained.

The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements.

Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-for-Profit Entities

AMSA adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings as at 1 July 2019. Accordingly, the comparative information has not be restated and continues to be reported under AASB 118 and ASB 1004.

Under the new income recognition model AMSA shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), AMSA applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, AMSA shall consider whether AASB 1058 applies.

In relation to AASB 15, AMSA elected to apply the new standard to all new and uncompleted contracts from the date of initial application. AMSA is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.

Impact on transition

The impact of transition is summarised below:

Impact on transition

1 July 2019

$'000

Liabilities

Contract liabilities

374

Total adjustment recognised in retained earnings

(374)

Set out below are the amounts by which each financial statement line item is affected as at, and for the year ended, 30 June 2020 as a result of the adoption of AASB 15 and AASB 1058. The first column shows amounts prepared under AASB 15 and AASB 1058 and the second column shows what the amounts would have been had AASB 15 and AASB 1058 not been adopted:

AASB 15 /

AASB 1058

Previous

AAS

Increase / (Decrease)

$'000

$'000

$'000

Revenue

Revenue from contracts with customers

6,312

6,647

(335)

Liabilities

Contract liabilities

957

248

709

Retained earnings

53,803

54,512

(709)

The differences above are due to the change in the recognition of revenue by reference to the stage of completion under the previous standards from the recognition of revenue when goods and services are transferred to the customer under AASB 15.

Application of AASB 16 Leases

AMSA adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations.

AMSA elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019.

AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. AMSA did not apply these practical expedients when applying the standard.

As a lessee, AMSA previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, AMSA recognises right-of-use assets and lease liabilities for most leases. However, AMSA has elected not to recognise right-of-use assets and lease liabilities for some leases of low-value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less.

On adoption of AASB 16, AMSA recognised right-of-use assets and lease liabilities in relation to leases of office space, warehouse space, aids to navigation sites, search and rescue aircraft and equipment, emergency towage vessel and equipment and motor vehicles, which had previously been classified as operating leases.

The lease liabilities were measured at the present value of the remaining lease payments, discounted using AMSA's incremental borrowing rate as at 1 July 2019. AMSA's incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted-average rate applied was 1.2 per cent.

The right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

Impact on transition

On transition to AASB 16, AMSA recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:

1 July 2019

$'000

Assets

Right-of-use assets

144,143

Liabilities

Lease liabilities

144,375

Supplier payables (Operating lease rentals)

(6,958)

Total adjustment recognised in retained earnings

6,726

The following table reconciles the minimum lease commitments disclosed in AMSA's 2019 financial statements to the amount of lease liabilities recognised on 1 July 2019:

1 July 2019

$'000

Minimum operating lease commitments at 30 June 2019

161,764

Less: GST

(14,706)

Less: non-lease components not recognised under AASB 16

(661)

Less: other

(1,934)

Plus: effect of extension options reasonably certain to be exercised

6,532

Undiscounted lease payments

150,995

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

(6,620)

Lease liabilities recognised at 1 July 2019

144,375

Taxation

AMSA is exempt from all forms of taxation except Fringe Benefits Tax (FBT), Goods and Services Tax (GST) and Customs Duties.

Impact of COVID-19

AMSA has considered the impact of COVID-19 on its 2019-20 financial statements, and its future financial performance and financial position, and concluded there is no significant impact as at the reporting date.