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Financial position

This section analyses Australian Pesticides and Veterinary Medicines Authority'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.

2.1: Financial Assets

2.1: Financial Assets

2019

$'000

2018

$'000

2.1A: Cash and Cash Equivalents

Cash at bank

8 918

2 269

Total cash and cash equivalents

8 918

2 269

Accounting Policy

Cash is recognised at its nominal amount.

2.1B: Trade and Other Receivables

Contribution receivable

Department of Agriculture

11 128

6 860

Total contribution receivable

11 128

6 860

Other receivable

GST receivable from the Australian Taxation Office

396

192

Undrawn appropriations from Department of Finance

-

500

Suspense holding account ‐ leave transfers

214

529

Total other receivables

610

1 221

Total trade and other receivables (gross)

11 738

8 081

Less impairment allowance account:

Goods and services

-

-

Total impairment allowance account

-

-

Total trade and other receivables (net)

11 738

8 081

Credit terms for goods and services were within 30 days.

Accounting Policy

Trade and Other Receivables

Trade and other receivables that have fixed or determinable payments, and are not quoted in an active market, are classified as 'receivables'. Receivables are measured at amortised cost using the effective interest method less impairment.

Impairment

Trade and Other Receivables are assessed for impairment at the end of each reporting period.

2.2: Non-Financial Assets

2.2: Non-Financial Assets

2.2A: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

Reconciliation of the opening and closing balances for 2019

Leasehold Improvements

$'000

Other P P & E

$'000

Computer Software1

$'000

Total

$'000

As at 1 July 2018

Gross book value

1 759

1 441

9 645

12 845

Accumulated depreciation and impairment

( 1 259)

( 623)

( 3 665)

( 5 547)

Total as at 1 July 2018

500

818

5 980

7 298

Additions:

Purchase

2 707

937

-

3 644

Internally developed

114

114

Impairments recognised in the operating result

-

( 43)

( 6)

( 49)

Impairments recognised in other comprehensive income

-

( 48)

-

( 48)

Depreciation and amortisation expenseRevaluations

( 349)

( 366)

( 1 302)

( 2 017)

Disposals:

Disposal

-

( 13)

-

( 13)

Accumulated depreciation of disposed assets

-

12

-

12

Total as at 30 June 2019

2 858

1 297

4 786

8 941

Total as of 30 June 2019 represented by:

Gross book value

4 465

1 839

9 441

15 745

Accumulated depreciation and impairment

( 1 607)

( 542)

( 4 655)

( 6 804)

Total as of 30 June 2019 represented by:

2 858

1 297

4 786

8 941

1. The carrying amount of computer software includes $0.456 million purchased software and $4.330 million internally generated software.

Management is currently reviewing its property needs for the Canberra office, and may result in leasehold improvements, property, and plant and equipment being sold or disposed of within the next 12 months.

Revaluations of non‐financial assets

On 30 June 2016, an independent valuer conducted the revaluations, which remains current for three years. However, as the Armidale offices are newly occupied, and management has yet to decide on the future of the existing Canberra offices, the revaluation exercise has been deferred until the 2019‐20 financial year reporting period.

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 an exchange and any liabilities undertaken. Financial assets are initially measured at their fair value plus transaction costs where appropriate.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and income at their fair value at the date of acquisition, unless acquired as a consequence of a restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor’s accounts immediately prior to the restructuring.

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the statement of financial position, except for purchases costing less than $5 000, 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. This is particularly relevant to ‘make good’ provisions in property leases taken up by the APVMA where there exists an obligation to restore the property to its original condition. These costs are included in the value of the APVMA’s leasehold improvements with a corresponding provision for ‘make good’.

Non-financial Asset Revaluations

All non‐financial assets are initially recognised at cost. Property, plant and equipment are then carried at fair value once they have been revalued in accordance with policy. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values at reporting date. The regularity of independent valuations depends upon the volatility of movements in market values for the relevant assets. Assets are presently revalued on a three year cycle.

All assets (except for intangibles) were revalued as at 30 June 2016 by an independent valuer. This year, a revaluation exercise was not conducted as the majority of assets acquired were commissioned in June 2019. Management has deferred the revaluation exercise until the 2019‐20 financial year reporting period.

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 through the operating result. Revaluation decrements for a class of assets are recognised directly through the operating result 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 property plant and equipment assets are written‐off to their estimated residual values over their estimated useful lives to the APVMA 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

Shorter of lease term of useful life

Shorter of lease term of useful life

Property, Plant and Equipment

3 to 15 years

3 to 15 years

Impairment

Where indications for 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 the APVMA were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

APVMA commenced work from its Armidale office on 3 June 2019 whilst continuing to occupy its Canberra office. Most assets were relocated to Armidale however those that did not have either remained in the Canberra office or have been disposed of due to obsolescence or disrepair.

All assets were assessed for impairment at 30 June 2019.

Derecognition

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

Dependent on the outcome of management's assessment of Canberra office space, some items of property, plant and equipment may be sold or disposed of within the next 12 months, but are not material in value.

Intangibles

The APVMA’s intangibles comprise internally developed and externally acquired 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 APVMA’s software are 3 to 10 years (2018: 3 to 10 years).

All software assets were assessed for indications of impairment as at 30 June 2019.

2.2B: Other Non‐Financial Assets

2019

$'000

2018

$'000

Prepayments

408

271

Total other non‐financial assets

408

271

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

2.3: Payables

2.3: Payables

2.3A: Suppliers

2019

$'000

2018

$'000

Trade creditors and accruals

2 633

3 023

Total supplier payables

2 633

3 023

Settlement is usually made within 30 days.

Accounting Policy

Suppliers

Supplier payables are measured at their nominal amounts.

2.3B: Other Payables

Salaries and wages

4 775

291

Superannuation

34

34

Lease incentive

11

50

Lease liability

1 654

1 821

Total other payables

6 474

2 196

Accounting Policy

Other Payables

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

2.4: Other provisions

2.4: Other Provisions

2.4: Other provisions

2019

$'000

2018

$'000

Provision for restoration obligations

645

604

Total other provisions

645

604

Carrying amount 1 July 2018

604

534

Unwinding of discount or change in discount rate

41

70

Closing balance 30 June 2019

645

604

The APVMA currently has an agreement for the leasing of the Canberra Office which has provision requiring the APVMA to restore the premises to their original condition at the conclusion of the lease. The APVMA has made a provision to reflect the present value of this obligation.

The agreement for the leasing of the newly‐occupied premises in Armidale has no such provision. Therefore no provision for make‐good is required.

Accounting Policy

Other provisions

The provision for make‐good of the Canberra Office was assessed and re‐estimated by the independant valuer as part of the assets revaluation on 30 June 2016. The additional estimated provision for make‐good is amortised over the balance of the lease to ensure that the target provision will be available when required.