The financial report of the Australian Strategic Policy Institute (ASPI) Limited for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the directors.

ASPI is a Commonwealth Government wholly owned not for profit company established in 2001. It is one of Australia's leading independent research bodies in the area of strategic and defence policy.

The Basis of Preparation

The financial report is general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards, and interpretations issued by the Australian Accounting Standards Board and Urgent Issues Group that apply for the reporting period.

The financial report has been prepared on an accrual basis and are in accordance with the historical cost convention. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. Cost is based on the fair values of the consideration given in exchange for assets.

The financial report is presented in Australian dollars and values are rounded to the nearest dollar.

New Accounting Standards

Adoption of new Australian Accounting Standard requirements

AASB 15 - Revenue from Contracts with Customers

ASPI assessed revenue using the five-step model under AASB 15. AASB 15 allows Not-For-Profit Entities to defer income recognition, where there is a transfer of benefit to a third party, until the associated performance obligation has been satisfied. Revenues meeting the criteria of AASB 15 have been classified as Revenue from Contracts in the financial report. Where these revenues have been received in advance, the revenue is recognised as Unearned Revenue (contract liability). There has been no change to the recognition of Revenue from Contracts.

AASB 1058 - Income of Not-For-Profit Entities

AASB 1058 is applied to Not-For-Profit Entities recognising income that either does not arise from an enforceable contract with customers or which does not have sufficiently specific performance obligations to meet the requirements of AASB 15. ASPI sponsorship revenues have been assessed as AASB 1058 revenue and therefore recognised as income on receipt.

AASB 15 and AASB 1058 are effective from 1 July 2019. ASPI has adopted the modified retrospective option and therefore no adjustment to retained earnings at 1 July 2019 was made and comparatives have not been restated.

The impact of the adoption of AASB 15 and AASB 1058 has resulted in a material one-off adjustment of $1.06m to Sponsorship Revenue (income) and Unearned Revenue (liability) due to the recognition of sponsorship receipts received in advance as income for the financial year ended 30 June 2020. This has resulted in ASPI reporting a surplus of $.58m.

AASB 16 – Leases

ASPI has adopted AASB 16 effective from 1 July 2019 in this financial report. ASPI has recognised the ASPI office premises lease as a Right-of-Use Asset and a corresponding lease liability for the term of the lease (to 11 November 2025).

The impact of the adoption of AASB 16 has resulted in a material one-off adjustment of $.72m to Retained Earnings being the reversal of prior year lease incentives and straight lining lease payables. Refer to note 2.3C.

Taxation

ASPI is exempt from all forms of taxation except fringe benefits tax (FBT), the goods and services tax (GST) and payroll tax.

Events after the reporting period

There are no known events after the reporting period that have occurred and need to be brought to account in the financial statements at 30 June 2020 (2019: nil).

Impact of COVID-19

The impact of the COVID-19 pandemic on the financial performance and position of ASPI was largely a result of the need to cancel and/or defer the National Conference and other ASPI face to face events. ASPI migrated a number of these events to an on-line forum where practical. A significant number of ASPI staff transitioned to working remotely during the pandemic with negligible or no loss in productivity. It is anticipated the impact on COVID-19 will continue in the 2020-21 financial year.