Grants are recognised to the extent that services required to be performed by the grantee have been performed or the grant eligibility criteria has been satisfied. A commitment is recorded when ARENA has a binding agreement to make these grants but services have not been performed or criteria satisfied. Where grant monies are paid in advance of performance or eligibility, a prepayment is recognised. Grants payable are settled within twelve months of recognition.
Certain grants provided by ARENA include the potential for ARENA to recoup all, or part, of its grant expenditure. The amount of any future recoupment may in some instances even exceed that of the initial grant expense depending on the realisation of specified future events and/or other commercial indicators.
Recoverability will in certain instances be predicated on formulas that have been agreed as part of the terms and conditions of the relevant grant funding agreement.
ARENA has no quantifiable contingent assets at reporting date as the amount and likelihood cannot be measured reliably.
ARENA's Locked Box funding arrangements relate to grant funding agreements whereby ARENA deposits the total amount of the grant into a prescribed bank account, in the recipient’s name, after the execution of a legally binding funding agreement. ARENA retains sole control of the Locked Box until withdrawal conditions precedent (WCPs) have been satisfied.
Locked Box Arrangements
At the time of payment by ARENA into the prescribed bank account, the transaction is recorded as a Prepayment in the Statement of Financial Position. After all WCPs have been met, ARENA relinquishes sole control over the Locked Box and the recipient is able to withdraw money from the Locked Box in accordance with the funding agreement. At this point, the Prepayment is expensed as a Grant in the Statement of Comprehensive Income.
Withdrawals from Locked Boxes require joint signatures from the recipient and ARENA. ARENA can only refuse the release of funds if there is a breach of conditions in the funding agreement. ARENA continues to be responsible and accountable for ensuring that the funds are only released from the Locked Boxes when conditions specified in the grant funding agreement have been met. Accordingly, the value of Locked Boxes at balance date is deemed to be held by ARENA in trust and is disclosed under Note 5.2: Assets Held in Trust.