Overview
Objectives of the Entity
Geoscience Australia is an Australian Government controlled not-for-profit entity. Geoscience Australia’s purpose is to be the trusted source of information on Australia’s geology and geography for government, industry and community decision making, and contribute to a safer, more prosperous and well-informed Australia.
Geoscience Australia is structured to meet a single outcome: informed government, industry and community decisions on the economic, social and environmental management of the nation’s natural resources through enabling access to geoscientific and spatial information.
The continued existence of Geoscience Australia in its present form and with its present programs is dependent on Government policy and on continued funding by Parliament for Geoscience Australia’s administration and programs.
Geoscience Australia's activities contributing toward its outcome are classified as either departmental or administered. Departmental activities involve the use of assets, liabilities, income and expenses controlled or incurred by the entity in its own right. Administered activities involve the management or oversight by the entity, on behalf of the Government, of items controlled or incurred by the Government.
Geoscience Australia administers a grant to the International Geological Correlation Program on behalf of the Government.
The Basis of Preparation
The financial statements are general purpose financial statements and are required by subsection 42(2) of the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
The financial statements have been prepared in accordance with:
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
- Australian Accounting Standards and Interpretations – Reduced Disclosure Requirements issued by the Australian Accounting Standards Board (AASB) that apply for the reporting period.
The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention, except for certain assets and liabilities at fair value. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. The financial statements are presented in Australian dollars.
New Accounting Standards
The following new standards, revised standards and/or interpretations were issued prior to the signing of the statement by the accountable authority and chief financial officer, are applicable to the current reporting period and had a material effect Geoscience Australia’s financial statements:
Standard/ Interpretation | Nature of change in accounting policy, transitional provisions, and adjustment to financial statements |
AASB 15 Revenue from Contracts with Customers / AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities and AASB 1058 Income of Not-For-Profit Entities | AASB 15, AASB 2016-8 and AASB 1058 became effective 1 July 2019. AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and Interpretation 13 Customer Loyalty Programmes . The core principle of AASB 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. AASB 1058 is relevant in circumstances where AASB 15 does not apply. AASB 1058 replaces most of the not-for-profit (NFP) provisions of AASB 1004 Contributions and applies to transactions where the consideration to acquire an asset is significantly less than fair value principally to enable the entity to further its objectives, and where volunteer services are received . The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. |
AASB 16 Leases | AASB 16 became effective on 1 July 2019. This new standard has replaced AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases—Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. AASB 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. AASB 16 substantially carries forward the lessor accounting in AASB 117, with the distinction between operating leases and finance leases being retained. The details of the changes in accounting policies, transitional provisions and adjustments are disclosed below and in the relevant notes to the financial statements. |
All other new standards, revised standards and/or interpretations that were issued prior to the sign-off date and are applicable to the current reporting period did not have a material effect on Geoscience Australia’s financial statements.
Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-For-Profit Entities
Geoscience Australia adopted AASB 15 and AASB 1058 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under the various applicable AASBs and related interpretations.
Under the new income recognition model Geoscience Australia shall first determine whether an enforceable agreement exists and whether the promises to transfer goods or services to the customer are ‘sufficiently specific’. If an enforceable agreement exists and the promises are ‘sufficiently specific’ (to a transaction or part of a transaction), Geoscience Australia applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, Geoscience Australia shall consider whether AASB 1058 applies.
In relation to AASB 15, Geoscience Australia elected to apply the new standard to all new and uncompleted contracts from the date of initial application. Geoscience Australia is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.
In terms of AASB 1058, Geoscience Australia is required to recognise volunteer services at fair value if those services would have been purchased if not provided voluntarily, and the fair value of those services can be measured reliably.
The first column shows amounts prepared under AASB 15 and AASB 1058 and the second column shows what the amounts would have been had AASB 15 and AASB 1058 not been adopted:
Impact on transition
The impact on transition is summarised below:
Departmental | 1/07/2019 $'000 | ||
Liabilities | |||
Decrease in Unearned income from contracts with customers | -157 | ||
Total liabilities | -157 | ||
Total adjustment recognised in retained earnings | 157 | ||
Set out below are the amounts by which each financial statement line item is affected as at and for the year ended 30 June 2020 as a result of the adoption of AASB 15 and AASB 1058. The first column shows amounts prepared under AASB 15 and AASB 1058 and the second column shows what the amounts would have been had AASB 15 and AASB 1058 not been adopted: | |||
Transitional disclosure | AASB 15 AASB 1058 | Previous AAS | Increase / (decrease) |
$’000 | $’000 | $’000 | |
Own-Source Income | |||
Revenue from contracts with customers | 30,950 | 0 | 30,950 |
Sale of goods and rendering of services | 0 | 31,631 | (31,631) |
Other revenue | 1,587 | 1,063 | 524 |
Total own-source revenue | 32,799 | 32,956 | -157 |
Net cost of services | -181,485 | -181,328 | -157 |
Total comprehensive income | 12,307 | 12,464 | -157 |
ASSETS | |||
Trade and other receivables | |||
Goods and services from contracts with customers | 826 | 0 | 826 |
Goods and services | 0 | 826 | -826 |
Total goods and services receivables | 826 | 826 | 0 |
Accrued revenue | |||
Accrued revenue | 150 | 1,905 | -1,755 |
Accrued revenue from contracts with customers | 1,755 | 0 | 1,755 |
Total accrued revenue | 1,905 | 1,905 | 0 |
LIABILITIES | |||
Other payables | |||
Unearned income from contracts with customers | 26,813 | 0 | 26,813 |
Prepayments received/unearned income | 0 | 26,813 | -26,813 |
Total other payables | 28,669 | 28,669 | 0 |
Retained earnings | 7,518 | 7,518 | 0 |
Timing of revenue recognition changed for agreements that were not sufficiently specific. Revenue recognition for the majority of Geoscience Australia's agreements are consistent to the recognition under the former standard. Geoscience Australia assets funded with own-source income were previously reported under Sale of goods and rendering of services instead of Other revenue. | |||
Application of AASB 16 Leases | |||
Geoscience Australia adopted AASB 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July 2019. Accordingly, the comparative information presented for 2019 is not restated, that is, it is presented as previously reported under AASB 117 and related interpretations. Geoscience Australia elected to apply the practical expedient to not reassess whether a contract is, or contains a lease at the date of initial application. Contracts entered into before the transition date that were not identified as leases under AASB 117 were not reassessed. The definition of a lease under AASB 16 was applied only to contracts entered into or changed on or after 1 July 2019. AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. Geoscience Australia applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
| |||
As a lessee, Geoscience Australia previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under AASB 16, Geoscience Australia recognises right-of-use assets and lease liabilities for most leases. However, Geoscience Australia has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12 months or less. On adoption of AASB 16, Geoscience Australia recognised right-of-use assets and lease liabilities in relation to leases of office space, observation sites and automobiles, which had previously been classified as operating leases. The lease liabilities were measured at the present value of the remaining lease payments, discounted using the Geoscience Australia’s incremental borrowing rate as at 1 July 2019. The incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments, subject to the practical expedients noted above. | |||
Impact on transition | |||
On transition to AASB 16, Geosience Australia recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below: | |||
Departmental | 1/07/2019 $'000 | ||
Increase in Right-of-use assets - property, plant and equipment | 351,916 | ||
Decrease in Prepayments | -2,085 | ||
Increase in Lease liabilities | 306,612 | ||
Increase in Retained earnings | 43,219 | ||
The following table reconciles the Departmental minimum lease commitments disclosed in Geoscience Austalia's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019: | |
1/07/2019 $'000 | |
Minimum operating lease commitment at 30 June 2019 | 417,243 |
Less: short-term leases under AASB 16 | -157 |
Less: GST reported in minimum operating lease commitments at 30 June 2019 | -37,931 |
Less: Non-lease components under AASB 16 | -5 |
Plus: effect of extension options reasonable certain to be exercised | 1,385 |
Undiscounted lease payments | 380,535 |
Less: effect of discounting using the incremental borrowing rate as at the date of initial application | -30,704 |
Lease liabilities recognised at 1 July 2019 | 349,831 |
Taxation | |
Geoscience Australia is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST). | |
Reporting of Administered activities | |
Administered revenues, expenses and cash flows are disclosed in the administered schedules and related notes. Geoscience Australia has no administered assets or liabilities. | |
Except where otherwise stated, administered items are accounted for on the same basis and using the same policies as for departmental items, including the application of Australian Accounting Standards. | |
COVID-19 impact | |
The spread of novel coronavirus (COVID-19) was declared a global pandemic by the World Health Organization in March 2020. COVID- 19 has resulted in an unprecedented global response by governments, regulators and industry. The restrictions imposed on travel in response to COVID-19 have impacted on Geoscience Australia’s field work activities and the ability of some of its contractors and suppliers to perform work within originally planned timeframes. Geoscience Australia has made adjustments to its work plans and identified alternative solutions where possible with impacted contractors and suppliers to ensure the continuity of mission critical capabilities and delivery of major programs. This has included renegotiating contractual arrangements, for example agreed delivery dates. The COVID-19 pandemic has not had a material impact on Geoscience Australia’s financial position, performance or cash flows in 2019- 20. The COVID-19 impact has not resulted in any major variances to budget (refer to the Departmental Budget Variance Commentary). | |
Events After the Reporting Period | |
Consistent with 2019-20, the COVID-19 pandemic is not expected to have a material impact on Geoscience Australia’s financial position, performance or cash flows in subsequent reporting periods. | |
There were no events occurring after 30 June 2020 that would have material impact on departmental or administered financial statements. | |
Visit
https://www.transparency.gov.au/annual-reports/geoscience-australia/reporting-year/2019-20-51