Managing uncertainties
This section analyses how the Department of the House of Representatives manages financial risks within its operating environment.
Note 13: Financial instruments
2019 |
2018 |
|
---|---|---|
$’000 |
$’000 |
|
Categories of financial instruments |
||
Financial assets under AASB 139 |
||
Held-to-maturity investments |
||
Term deposit |
2,546 |
|
Total held-to-maturity investments |
2,546 |
|
Loans and receivables |
||
Cash and cash equivalents |
410 |
|
Trade and other receivables |
157 |
|
Total loans and receivables |
567 |
|
Financial assets under AASB 9 |
||
Financial assets at amortised cost |
||
Term deposit |
2,546 |
|
Cash and cash equivalents |
617 |
|
Trade and other receivables |
242 |
|
Total financial assets at amortised cost |
3,405 |
|
Total financial assets |
3,405 |
3,113 |
Financial liabilities |
||
Financial liabilities measured at amortised cost |
||
Suppliers |
389 |
340 |
Other payables |
95 |
191 |
Total financial liabilities measured at amortised cost |
484 |
531 |
Total financial liabilities |
484 |
531 |
.
Classification of financial assets on the date of initial application of AASB 9 |
|||||
---|---|---|---|---|---|
AASB 139 original classification |
AASB 9 new classification |
AASB 139 carrying amount at 1 July 2018 |
AASB 9 carrying amount at |
||
Financial assets class |
Note |
$'000 |
$'000 |
||
Cash and cash equivalents |
3A |
Held-to-maturity |
Amortised cost |
410 |
410 |
Trade receivables |
3B |
Held-to-maturity |
Amortised cost |
157 |
157 |
Term deposit |
3C |
Held-to-maturity |
Amortised cost |
2,546 |
2,546 |
Total financial assets |
3,113 |
3,113 |
|||
Reconciliation of carrying amounts of financial assets on the date of initial application of AASB 9 |
|||||
AASB 139 carrying amount at 30 June 2018 |
Reclassification |
Remeasurement |
AASB 9 carrying amount at 1 July 2018 |
||
$'000 |
$'000 |
$'000 |
$'000 |
||
Financial assets at amortised cost |
|||||
Held to maturity |
|||||
Term deposit |
2,546 |
- |
- |
2,546 |
|
Loans and receivables |
|||||
Cash and cash equivalents |
410 |
- |
- |
410 |
|
Trade and other receivables |
157 |
- |
- |
157 |
|
Total amortised cost |
3,113 |
- |
- |
3,113 |
Accounting policy |
---|
Financial assets With the implementation of AASB 9 Financial Instruments, for the first time in 2019 the department classifies its financial assets in the following categories:
The classification depends on both the department’s business model for managing the financial assets and contractual cash flow characteristics at the time of initial recognition. Financial assets are recognised when the entity 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:
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 at amortised cost Supplier and other payables are recognised at amortised cost and consist of trade creditors, accruals and unearned income. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced). |
Note 14: Fair value measurement
Fair value measurements at |
||
---|---|---|
2019 |
2018 |
|
$'000 |
$'000 |
|
Non-financial assets1 |
||
Property, plant and equipment2 |
4,819 |
8,225 |
Heritage and cultural2 |
454 |
419 |
- The department's assets are held for operational purposes and not held for the purposes of deriving profit. The current use of all non-financial assets is considered their highest and best use.
- The department did not measure any non-financial assets at fair value on a non-recurring basis as at 30 June 2019.
Accounting policy |
---|
The department tests the procedures of the valuation model as an asset materiality review at least once every 12 months (with a formal revaluation undertaken once every three years). If a particular asset class experiences significant and volatile changes in fair value (i.e. where indicators suggest that the value of the class has changed materially since the previous reporting period), that class is subject to specific valuation in the reporting period, where practicable, regardless of the timing of the last specific valuation. For the period ended 30 June 2019, the department engaged JLL Public Sector Valuations Pty Ltd (JLL) to undertake a revaluation of all tangible assets at 30 June 2019 and relied on those outcomes to establish carrying amounts. JLL provided written assurance that the models developed are in compliance with AASB 13. |
Visit
https://www.transparency.gov.au/annual-reports/department-house-representatives/reporting-year/2018-2019-87