Note 1.1: Expenses

Note 1.1A: Employee benefits

Accounting policy

Accounting policies for employee related expenses are contained at Note 3.1A.

Note 1.1B: Suppliers

Supplier expenses in relation to communication activities were reclassified in the comparative year, due to the implementation of a new communications budget activity as per the FRDC 2019–20 approved Annual Operational Plan. As a result, $70,130 has been transferred to Note 1.1F.

Accounting policy

Short-term leases

The FRDC has no right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less.

Note 1.1C: Projects

Accounting policy

The FRDC recognises project liabilities through project agreements that require research partners to perform services or provide facilities, or to meet eligibility criteria. In these cases, liabilities are recognised only to the extent that the services required have been performed, an invoice issued consistent with the contractual requirements, and the eligibility criteria have been satisfied by the research partner to the FRDC’s satisfaction and approved invoice payment by the relevant delegate.

Project commitments

Project commitments comprise the future funding of approved projects that are contingent on the achievement of agreed deliverables over the life of those projects (project agreements are exchanged prior to release of the first payment on a project). Projects, where amounts were payable but were unpaid at the end of the period, have been brought to account as project payables. The FRDC contracts to fund projects in future years in advance of receipt of the income needed to fund them. FRDC manages this risk by having the project agreement allow for termination at its sole discretion for any reason. If the FRDC were to terminate a project agreement, it would only be liable to compensate the research partner for any reasonable costs in respect of unavoidable loss incurred by the research provider and directly attributable to the termination of the agreement, provided that the costs are fully substantiated to the FRDC.

Note 1.1D: Finance costs

Note 1.1E: Write down and impairment of assets

Note 1.1F: Other expenses

Note 1.2: Own-source income and revenue from the Australian Government

Own-source revenue

Note 1.2A: Revenue from contracts with customers

The FRDC has applied AASB 15 and AASB 1058 and has not applied retrospectively for comparatives, and therefore it has not been restated.

Accounting policy

The FRDC receives revenue from the Australian Government under which it manages a suite of research activities. These activities are listed at Note 3.4b, page 162. FRDC has specific funding agreements with the Australian Government that include enforceable rights and performance obligations. The FRDC initially recognises the funding received as a credit liability entry to recognise the contracted liability (refer Note 2.3b). Once the performance obligations have been satisfied as per the funding agreement milestones over time, it is then recognised as revenue from contracts with customers, unwinding the liability.

Note 1.2b: Interest

Accounting policy

Interest revenue is recognised using the effective interest method.

Note 1.2C: Grants

The FRDC has applied AASB 15 and AASB 1058 and has not applied retrospectively for comparatives, and therefore it has not been restated.

Accounting policy

Australian Government grants income is revenue paid to FRDC for the purpose of funding specific research and development projects, and is recognised when:

1. the FRDC obtains control of the grant or the right to receive the grant,
2. it is probable that the economic benefits comprising the grant will flow to the FRDC, and
3. the amount of the grant can be reliably measured.

Note 1.2D: Contributions

Accounting policy

Contributions are recognised when:

1. the FRDC obtains control of the contribution or the right to receive the contribution,
2. it is probable that the economic benefits comprising the contribution will flow to the FRDC, and
3. the amount of the contribution can be reliably measured.

Note 1.2E: Other revenue

Accounting policy

Project funds received are recognised when they are entitled to be received by the FRDC.

Project refunds from research partners are brought to account when received.

Note 1.2F: Revenue from the Australian Government

Accounting policy

Revenue from the Australian Government

Revenues from the Australian Government are recognised when they are entitled to be received by the FRDC.

Funding received or receivable from non-corporate Commonwealth entities (appropriated to the non- corporate Commonwealth entity as a corporate Commonwealth entity payment item for payment to this entity) is recognised as revenue from Government by the corporate Commonwealth entity unless the funding is in the nature of an equity injection or a loan.

Note 2.1: Financial assests

Note 2.1A: Cash and cash equivalents

Accounting policy

Cash is recognised at its nominal amount. Cash and cash equivalents includes:

1. cash on hand, and
2. demand deposits in bank accounts with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value

Note 2.1B: trade and other receivables

Accounting policy

Financial assets

Trade receivables, loans and other receivables that are held for the purpose of collecting the contractual cash flows where the cash flows are solely payments of principal and interest, that are not provided at below-market interest rates, are subsequently measured at amortised cost using the effective interest method adjusted for any loss allowance.

Note 2.1C: Other investments

Australian Seafood Co-Products Pty Ltd (ASCo) company closed effective 30 June 2020. The FRDC’s share was written down to zero at 30 June 2020, as no funds will be paid out to shareholders (refer Note 1.1E: Write down and impairment of assets).

Note 2.2: Non-financial assets

Note 2.2A: Reconciliation of the opening and closing balances of property, plant and equipment and intangibles

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 exchange and 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 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 that are expensed in the year of acquisition (other than where they form part of a group of similar items where the value is greater than $5,000).

Lease right-of-use (ROU) assets

Leased ROU assets are capitalised at the commencement date of the lease and comprise of the initial lease liability amount, initial direct costs incurred when entering into the lease less any lease incentives received. These assets are accounted for by Commonwealth lessees as separate asset classes to corresponding assets owned outright, but included in the same column as where the corresponding underlying assets would be presented if they were owned.

On initial adoption of AASb 16 the FRDC has adjusted the ROU assets at the date of initial application by the amount of any provision for onerous leases recognised immediately before the date of initial application. Following initial application, an impairment review is undertaken for any right-of-use lease asset that shows indicators of impairment and an impairment loss is recognised against any right-of-use lease asset that is impaired. Lease ROU assets continue to be measured at cost after initial recognition in Commonwealth agency, GGS and Whole of Government financial statements.

Revaluations

Following initial recognition at cost, property, plant and equipment (excluding ROU assets) are carried at fair value less subsequent accumulated depreciation and accumulated impairment losses. Valuations are conducted with sufficient frequency to ensure that the carrying amounts of assets do not differ materially from the assets’ fair values as at the reporting date. The regularity of independent valuations depend on the volatility of movements in market values for the relevant assets.

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 in the surplus/deficit. Revaluation decrements for a class of assets are recognised directly in the surplus/deficit except to the extent that they reversed 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 FRDC 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:

Impairment

All assets were assessed for impairment at 30 June 2020. Where indications of 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 of disposal 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 entity were deprived of the asset, its value in use is taken to be its depreciated replacement cost.

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.

Intangibles

The FRDC’s intangibles comprise internally developed software and purchased 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 FRDC’s software is 10 years (2018–19: 10 years).

All software assets were assessed for indications of impairment as at 30 June 2020.

Note 2.2B: Other non-financial assets

Note 2.3: Payables

Note 2.3A: Suppliers and other payables

Settlement is usually made within 30 days.

Note 2.3B: Projects

The contract liability is associated with funding provided for Research & Development activities under Funding Agreements with the Department of Agriculture, Water and the Environment and Department of Primary Industries NSW as detailed below.

Department of Agriculture, Water and the Environment:

• Assist with data generation to support APVMA application — erythroymycin in finfish,
• Assist with data generation to support APVMA application — Praziquantel — Skin and gill flukes (Monogenea) — Non-seriola finfish,
• Development of on-farm biosecurity plan implementation support programs for aquaculture industry.

The FRDC recognised a contract liability in 2019–20 totalling: $291,548. Department of Primary Industries NSW:

• NSW seafood product development program

The FRDC recognised a contract liability in 2019–20 totalling: $526,000.

Accounting policy

Project payables are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. They relate to payments approved on achievement of agreed deliverables, but which were unpaid at the end of the reporting period. Settlement is usually made within 30 days.

As per AASB 15 Revenue from Contracts with Customers, contract liabilities are recognised at their nominal amounts, being the amounts at which the liabilities are not yet settled. They relate to payments received for funding provided for research and development activities, of which specific performance obligations were not met at the end of the reporting period.

Note 2.4: Interest bearing liabilities

Note 2.4A: Leases

Accounting policy

Refer Overview section for accounting policy on leases

Note 3.1: employee provisions

Note 3.1A: Employee provisions

Accounting policy

Liabilities for short-term employee benefits and termination benefits expected within 12 months of the end of reporting period are measured at their nominal amounts. Other long-term employee benefits are measured as net total of the present value of the defined benefit obligation at the end of the reporting period minus the fair value at the end of the reporting period of plan assets (if any) out of which the obligations are to be settled directly.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. The leave liabilities are calculated on the basis of employees’ remuneration at the estimated salary rates that will be applied at the time the leave is taken, including the entity’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

The FRDC’s staff are members of the Public Sector Superannuation Scheme (PSS), or the PSS accumulation plan (PSSap), or other superannuation funds held outside the Australian Government.

The PSS is a defined benefit scheme for the Australian Government. The PSSap and any other superannuation funds are defined contribution schemes.

The liability for defined benefits is recognised in the financial statements of the Australian Government and is settled by the Australian Government in due course. This liability is reported in the Department of Finance’s administered schedules and notes.

The FRDC makes employer contributions to the employee’s defined benefit superannuation scheme at rates determined by an actuary to be sufficient to meet the current cost to the Australian Government. The entity accounts for the contributions as if they were contributions to defined contribution plans.

Note 3.2: Key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the FRDC, directly or indirectly, including any director of the board (whether executive or otherwise) of the FRDC. The FRDC has determined the key management personnel to be the non-executive directors, the Managing Director and senior general managers. key management personnel remuneration is reported in the table below:

The total number of key management personnel that are included in the above table is 14 (2017–18: 16). They are made up of:

• seven non-executive directors
• one non-executive director (Chair)
• one Managing Director
• three senior general managers
• one acting senior general manager
• one non-executive director (Chair) (retired 1 January 2020).

Key management personnel remuneration figures have been restated for 2018–19. Accrued annual leave totalling $85,779 has been reclassified from other long-term benefits, to short-term benefits to better align to the 2019–20 Annual Report Executive Remuneration Note.

In 2018–19 an independent member of the Finance, Audit and Risk Management Committee was included in Note 3.3: Annual remuneration ranges, for the purposes of recognising the services that were paid during 2018–19. They were not included in Note 3.2: key management personnel remuneration, as they were paid under a consultancy agreement and not paid as key management personnel.

Note 3.3: Annual total remuneration ranges (including superannuation) paid to key management personnel

Note 3.4: Related party disclosures

Related party relationships

The FRDC is an Australian Government controlled entity. Related parties to this entity are non-executive directors, the Managing Director, and senior general managers and other Australian Government entities.

Note 3.4A: transactions with director-related entities

The FRDC’s practice is to disclose all transactions with an entity with whom a director has an association. This means that directors who have disclosed a material personal interest that all the transactions of that entity will be listed. Typically, the FRDC will not transact with all the entities for which a director has made such a declaration. The transactions that are not with related parties as defined by AASb 124 Related Party Disclosures, are identified below with an asterisk (*).

The FRDC’s ‘board governance policy’ provides guidance to directors on how the FRDC deals with material personal interests. Where a director has an association with an entity where a conflict has the potential to arise, in addition to the duty to disclose that association, the director absents him/herself from both the discussion and the decision-making process.

Given the breadth of Australian Government activities, related parties may transact with the government sector in the same capacity as ordinary citizens. Such transactions include the payment or refund of taxes, receipt of a Medicare rebate or higher education loans. These transactions have not been separately disclosed in this note.

The directors disclosed material personal interests during the directors’ related period.

The following transactions occurred during the directors’ related period with these entities.

All transactions were conducted under normal terms and conditions and include GST.

Note 3.4B: Other related party disclosures

Department of Agriculture, Water and the Environment

The FRDC has a Research & Development Funding Head Agreement with the Department of Agriculture, Water and the Environment under which it manages the suite of activities detailed below:

• AQUAPLAN Development Workshop Publication
• Aquatic Animal Health Training Scheme 2019–2022
• Data generation to support APVMA application
• Development of on-farm biosecurity plan implementation support programs for aquaculture industry
• National Carp Control Plan
• Rural R&D for Profit: Growing a profitable, innovative and collaborative Australian Yellowtail Kingfish aquaculture industry: bringing ‘white’ fish to the market
• The role of the recreational fisher in the stewardship of the Southern Bluefin Tuna fishery.

The FRDC has received funding from the Department of Agriculture, Water and the Environment in 2019–20 totalling: $877,515 (2018–19: $3,418,716).

Note 4.1: Financial instruments

Note 4.1A: Categories of financial instruments

Accounting policy

Financial assets

With the implementation of AASB 9 Financial Instruments for the first time in 2018–19, the entity classifies its financial assets in the following categories:

1. financial assets at fair value through profit or loss,
2. financial assets at fair value through other comprehensive income, and
3. financial assets measured at amortised cost.

The classification depends on both the entity’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:

1. the financial asset is held in order to collect the contractual cash flows, and
2. the cash flows are solely payments of principal and interest (SPPI) on the principal outstanding amount.

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

Financial liabilities are classified as either financial liabilities ‘at fair value through profit or loss’ or other financial liabilities.

Financial liabilities are recognised and derecognised upon ‘trade date’.

Financial liabilities at amortised cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. These liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective interest basis.

Supplier and other payables are recognised at amortised cost. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Note 4.1B: Net gain or loss from financial assets

There are no gains or losses on financial liabilities.

Note 4.2: Fair value measurement

Accounting policy

FRDC engaged jones Lang LaSalle Public Sector Valuations (JLL) to conduct an asset revaluation of all non-financial assets as at 30 June 2020. An annual assessment is undertaken to determine whether the carrying amount of the assets is materially different from the fair value. Comprehensive valuations are carried out at least once every three years. JLL has provided written assurance to the FRDC that the models developed are in compliance with AASB 13.

The methods utilised to determine and substantiate the unobservable inputs are derived and evaluated as follows.

Physical depreciation and obsolescence — assets that do not transact with enough frequency or transparency to develop objective opinions of value from observable market evidence that have been measured using the depreciated replacement cost approach. Under the depreciated replacement cost approach, the estimated cost to replace the asset is calculated and then adjusted to take into account physical depreciation and obsolescence. Physical depreciation and obsolescence has been determined based on professional judgement regarding physical, economic and external obsolescence factors relevant to the asset under consideration. For all leasehold improvement assets, the consumed economic benefit/asset obsolescence deduction is determined based on the term of the associated lease.

FRDC’s policy is to recognise transfers into, and transfers out of, fair value hierarchy levels as at the end of the reporting period.

Note 4.2A: Fair value measurement

The FRDC did not measure any non-financial assets at fair value on a non-recurring basis as at 30 june 2020.

As at 30 June 2020, jones Lang LaSalle Public Sector Valuations conducted a revaluation of plant and equipment. The table above summarises the results of the valuation at fair value. A revaluation increment was applied to the asset revaluation reserve by asset class and included in the equity section of the Statement of Financial Position. Refer Note 2.2A.

Note 5.1: Aggregate assets and liabilities

Note 5.1A: Aggregate assets and liabilities