NET COST OF SERVICES

Expenses

Employee benefits

Suppliers

Grants

Depreciation and amortisation

Finance costs

Total expenses

Own-Source Income

Own-source revenue

Contributions from jurisdictions

Interest

Other revenue

Total own-source revenue

Gains/(Losses)

Other Gains/(Losses)

Total Gains/(Losses)

Total own-source income

Net cost of services

Revenue from Government

Surplus/(Deficit) attributable to the Australian Government

OTHER COMPREHENSIVE INCOME

Changes in asset revaluation surplus

Total comprehensive income

Total comprehensive income attributable to the Australian Government

Budget Variances Commentary

Budget variance explanations are outlined in Note 5. The original budget balances have been adjusted so as to be consistent with the financial statements classification.

ASSETS

Financial assets

Cash and cash equivalents

Trade and other receivables

Total financial assets

Non-financial assets¹

Buildings

Property, plant and equipment

Intangibles

Prepayments

Total non-financial assets

Total assets

LIABILITIES

Payables

Suppliers

Other payables

Total payables

Interest bearing liabilities

Leases liabilities

Total interest bearing liabilities

Provisions

Employee provisions

Other provisions

Total provisions

Total liabilities

Net assets

EQUITY

Contributed equity

Reserves

Retained surplus

Total equity

Budget Variances Commentary

Budget variance explanations are outlined in Note 5. The original budget balances have been adjusted so as to be consistent with the financial statements classification.

CONTRIBUTED EQUITY/CAPITAL

Opening balance

Balance carried forward from previous year¹

Equity injection²

Closing balance

RETAINED EARNINGS³

Opening balance

Balance carried forward from previous year

Adjustment for changes in accounting policies

Adjusted opening balance

Comprehensive income

Surplus/(Deficit) for the year

Other comprehensive income

Total comprehensive income

Closing balance

ASSET REVALUATION RESERVE

Balance carried forward from previous year

Comprehensive income

Other comprehensive income

Total comprehensive income

Closing balance

TOTAL EQUITY

Opening balance

Balance carried forward from previous year

Adjustment for changes in accounting policies

Adjusted opening balance

Comprehensive income

Surplus/(Deficit) for the year

Other comprehensive income

Total comprehensive income

Contributions by owners

Equity injection

Total transactions with owners

Closing balance

Accounting Policy

Equity Injections

Amounts appropriated which are designated as ‘equity injections’ for a year (less any formal reductions) and Departmental Capital Budgets (DCBs) are recognised directly in contributed equity in that year.

Budget Variances Commentary

Budget variance explanations are outlined in Note 5. The original budget balances have been adjusted so as to be consistent with the financial statements classification.

OPERATING ACTIVITIES

Cash received

Receipts from Government

Contributions from jurisdictions

Interest

Net GST received

Other

Total cash received

Cash used

Employees

Suppliers

Grants

Interest payments on lease liabilities

Other

Total cash used

Net cash (used by)/from operating activities

INVESTING ACTIVITIES

Cash received

Proceeds from sales

Total cash received

Cash used

Purchase of property, plant and equipment

Purchase of intangible assets

Total cash used

Net cash (used by) investing activities

FINANCING ACTIVITIES

Cash received

Contributed equity

Total cash received

Cash used

Principal payments of lease liabilities

Total cash used

Net cash from financing activities

Net Increase/(decrease) in cash held

Cash and cash equivalents at the beginning of the reporting period

Cash and cash equivalents at the end of the reporting period

Budget Variances Commentary

Budget variance explanations are outlined in Note 5. The original budget balances have been adjusted so as to be consistent with the financial statements classification.

Standard/ Interpretation

Nature of change in accounting policy, transitional provisions¹, 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 Contribution 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.

Right-of-use assets - property, plant and equipment

Lease liabilities

Retained earnings

Minimum operating lease commitment at 30 June 2019

Less: short-term leases not recognised under AASB 16

Less: low value leases not recognised under AASB 16

Plus: effect of extension options reasonably certain to be exercised

Undiscounted lease payments

Less: effect of discounting using the incremental borrowing rate as at the date of initial application

Lease liabilities recognised at 1 July 2019

Note 1.1A: Employee Benefits

Wages and salaries

Superannuation:

Defined contribution plans

Defined benefit plans

Leave and other entitlements

Separation and redundancies

Total employee benefits

Accounting policy

Accounting policies for employee related expenses are outlined in Note 3.1.

Note 1.1B: Suppliers

Goods and services supplied or rendered

Expenditure by State Constructing Authorities

Water licence fee

Consultants and contractors

Communication & IT services

Other employment expenses

Committee expenses

Travel

Other provision of goods & services

Goods and services supplied or rendered

Goods and services are made up of:

Provision of goods

Rendering of services

Total goods and services supplied or rendered

Other suppliers

Operating lease rentals¹

Short-term leases

Workers compensation expenses - government entity

Total other suppliers

Total suppliers

¹ The Authority has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

The Authority has no short-term lease commitments as at 30 June 2020.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1E, 2.2 and 2.4.

Accounting policy

Short-term leases and leases of low-value asset

The Entity has elected not to recognise right-of-use assets and lease liabilities for short-term leases of assets that have a lease term of 12 months or less and leases of low-value assets (less than $10,000). The entity recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Note 1.1C: Grants

Grants

Total grants

Note 1.1D: Finance Costs

Unwinding of discount on make good provision

Interest on lease liabilities

Unwinding of interest on finance leases¹

Total finance costs

¹ The Authority has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

The above lease disclosures should be read in conjunction with the accompanying notes 1.1B, 2.2 and 2.4.

Own-Source Revenue

Note 1.2A: Contributions from Jurisdictions

Australian Government

New South Wales

Victoria

South Australia

Queensland

Australian Capital Territory

Total contributions from jurisdictions

Accounting policy

The Authority receives contributions from jurisdictions based on an agreed contributions model (the model). The model is based on a number of different requirements including specific provisions under the Murray-Darling Basin Agreement. These Contributions are recognised as revenue when received.

Note 1.2B: Other Revenue

Hydropower generation

Funding from other MOUs¹

Contributions by States - Salinity program

Revenue from use of Land and cottage

Other²

Total other revenue

¹ Amounts relate to revenue received in relation to Memorandums of Understanding (MOUs) signed with the Department of Agriculture, Water and the Environment (DAWE) for the Ecosystem Functions, Independent Assessment of Social and Economic Conditions and Hydrometric Networks & Remote Sensing Projects, MDB Water and Environment Research Program, and First Pass Business Case River Modelling and ICT transformation.

² Other revenue includes an amount of $78,000 for audit services provided free of charge by the Australian National Audit Office.

Accounting policy

Hydropower generation

Hydroelectricity revenue is generated when the release of water from Hume and Dartmouth dams is routed through electricity generating plants. Revenue is recognised over time based on recovery of a set percentage of the hydroelectricity revenue earned during the period.

Funding from other MOUs

Revenue is recognised over time based on milestones achieved.

Contributions by States - Salinity program

Revenue is recognised over time on a cost recovery basis.

Revenue from use of Land and cottage

Revenue is recognised at a point in time as it is earned.

Other revenue

Other revenue comprises of miscellanous revenue that is recognised both at a point in time and over time depending on the nature of the transaction.

Gains/(Losses)

Note 1.2C: Other Gains/(Losses)

Gain/(loss) on movement in provisions

(Loss) on disposal/write-off of assets

Total other gains/(losses)

Revenue from Government

Note 1.2D: Revenue from Government

Corporate Commonwealth entity payment item:

Department of Agriculture

Department of Agriculture, Water and Environment

Total revenue from Government

Accounting Policy

Funding received or receivable from non-corporate Commonwealth entities (appropriated to the Department of Agriculture, Water and Environment as a corporate Commonwealth entity payment item for payment to the Authority) is recognised as Revenue from Government by the Authority unless the funding is in the nature of an equity injection or a loan.

Note 2.1A: Cash and Cash Equivalents

Cash on hand

Total cash and cash equivalents

Accounting policy

Cash is recognised at its nominal amount. Cash and cash equivalents include cash on hand and any deposits in bank accounts with an original maturity of 3 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

Goods and services recievable

Trade Receivables

Net GST receivable from the Australian Taxation Office

Other Receivables

Total goods and services receivable (gross)

Total trade and other receivables (net)

Credit terms for goods and services were within 30 days (2019: 30 days).

Accounting policy

Trade receivables 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 2.2: Reconciliation of the Opening and Closing Balances of Property, Plant and Equipment and Intangibles

Reconciliation of the opening and closing balances for 2020

As at 1 July 2019

Gross book value

Accumulated depreciation, amortisation and impairment

Total as at 1 July 2019

Transfer of finance lease asset to right of use assets:

Gross book value

Accumulated depreciation

Recognition of right of use assets on initial application of AASB 16

Adjusted total as at 1 July 2019

Additions

Depreciation and amortisation

Depreciation on right-of-use assets

Other movements

Total as at 30 June 2020

Total as at 30 June 2020 represented by

Gross book value

Accumulated depreciation, amortisation and impairment

Total as at 30 June 2020

Total intangible assets

Carrying amount of right-of-use assets included in the above total

¹ This asset class has been renamed from 'Leasehold improvements' to 'Buildings' in order to incorporate Lease Right of Use Buildings recognised upon initial application of AASB 16 Leases.

² The carrying amount of computer software in-use includes purchased and internally developed software.

There is no commitment or expectation to dispose or sell any leasehold improvement, other property, plant & equipment or intangible assets within the next 12 months.

There is a capital commitment value of $226,000 expected within the next 12 months (2019: $12,000).

Accounting policy

Acquisition of Assets

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 $2,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).

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.

The initial cost of an ROU asset also includes an estimate of the cost of dismantling and removing the item and restoring the site on which it is located. This is particularly relevant to ‘make good’ provisions in property leases taken up by the Authority where there exists an obligation to restore the property to its original condition. These costs are included in the value of the Authority's ROU assets and leasehold improvements (recognised prior to the adoption of AASB 16) with a corresponding provision for the ‘make good’ recognised.

On initial adoption of AASB 16 the Authority 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 the Authority's financial statements.

Revaluation

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

All leasehold improvements and property, plant and equipment assets were reviewed and assessed for fair value in March 2018 by Deloitte Touche and Tohmatsu.

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 reverse 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 using 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 and/or amortisation rates applying to each class of asset are based on the following useful lives:

Asset Class

Computers and IT equipment

3-7 years

Office equipment

6-9 years

Leasehold improvements

Lease term

Data sets

3-20 years

Software applications

2-4 years

Software licences

Length of licence

The depreciation rates for ROU assets are based on the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term.

Impairment

All assets were assessed for indications of 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 Authority 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 Authority’s intangibles comprise internally developed software; acquired data-sets for internal use and software licences. 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. All software assets were assessed for indications of impairment as at 30 June 2020.

Note 2.3A: Suppliers

Trade creditors and accruals

Total suppliers

Note 2.3B: Other Payables

Wages and salaries

Superannuation

Lease incentive

¹

Finance lease liability

¹

Prepayments received/unearned income

Other

Total other payables

¹ The Authority has applied AASB 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under AASB 117.

Accounting policy

The Authority's financial liabilities consist of trade creditors and accruals. These liabilities are recognised at their nominal amounts, being the amounts at which the Authority expects the liabilities will be settled. Liabilities are recognised to the extent that the goods or services have been received (and irrespective of having been invoiced).

Unearned income represents assets received from another party in advance of the Authority fulfilling its contracted obligations. The Authority releases unearned income to revenue when the services required to be performed have been performed.

Policies in relation to AASB 117:

Lease incentives received under operating leases are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis over the lease term.

2020

2019

$’000

$’000

Lease Liabilities

16,693

-

Total leases

16,693

-

Total cash outflow for leases for the year ended 30 June 2020 was $2,407,776.

Accounting Policy

Refer Overview section for accounting policy on leases.

Note 2.5: Other Provisions

Provision for make good

Total other provisions

Carrying amount 1 July 2019

Unwinding of discount or change in discount rate

Amount used on settlement

Reversal of prior year provision

Additional provisions made

The Authority currently has 2 (2019: 2) agreements for the leasing of premises which have provisions requiring the Authority to restore the premises at the conclusion of the lease. The Authority has made a provision to reflect the present value of this obligation.

Note 3.1: Employee Provisions

Leave

Total employee provisions

Accounting policy

Liabilities for ‘short-term employee benefits’ (as defined in AASB 119 Employee Benefits) and termination benefits due within twelve months of the end of reporting period are measured at their nominal amounts.

The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability.

Other long-term employee benefits are measured at the present value of the defined benefit obligation at the end of the reporting period.

Leave

The liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Authority is estimated to be less than the annual entitlement for sick 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 Authority’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 liability for long service leave has been determined using the Shorthand method as per the Public Governance, Performance and Accountability (Financial Reporting) Rule (FRR) and Commonwealth Entity Financial Statements Guide. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation.

Superannuation

The Authority's staff are members of the Commonwealth Superannuation Scheme (CSS), the Public Sector Superannuation Scheme (PSS), the PSS accumulation plan (PSSap) or other employee nominated superannuation funds.

The CSS and PSS are defined benefit schemes for the Australian Government. The remaining 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 Authority makes employer contributions to the employees' superannuation schemes at rates determined by an actuary to be sufficient to meet the current cost to the Government. The Authority accounts for the contributions as if they were contributions to defined contribution plans.

The Authority also contributes to a number of complying funds to discharge the Authority’s liability in regard to individual employees and the Superannuation Guarantee (Administration) Act 1992 as well as to facilitate the salary sacrifice options of employees.

The liability for superannuation recognised as at 30 June represents outstanding contributions of reporting period. This is disclosed in Note 2.3B.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The entity has determined the key management personnel to include the Minister for Agriculture, Water, and the Environment, Authority members, the Chief Executive and Divisional heads within the Authority and any staff member who has acted in one of the divisional head roles for longer than 3 months. Key management personnel remuneration is reported in the table below:

Total key management personnel remuneration expenses¹

The total number of key management personnel included in the above table is 11 (2019: 12).

¹ The above key management personnel remuneration excludes the remuneration and other benefits of the Portfolio Minister. The Portfolio Minister's remuneration and other benefits are set by the Remuneration Tribunal and are not paid by the entity.

Related party relationships:

The Authority is an Australian Government controlled entity. Related parties to this entity are Key Management Personnel (as detailed in Note 3.2), Members of the Ministerial Council, the Living Murray Initiatives & River Management Operations joint ventures and other Australian Government entities.

Transactions with related parties:

Given the breadth of 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 Authority does not pay any member of the Ministerial Council for the services they provide to the MDBA under the Murray-Darling Basin Agreement.

The following transactions with related parties occurred during the 2020 financial year:

- There were no transactions with related parties in the current year.

There were no transactions with related parties during the 2019 financial year.

There are no contingent assets or liabilities in current year or prior year.

Quantifiable Contingencies

There were no estimated contingent liabilities as at 30 June 2020.

Unquantifiable Contingencies

There is one unquantifiable contingency that relates to a claim asserting negligence in relation to the Authority's performance of function under the Water Act 2007 (Cth) and Murray-Darling Basin Agreement. Damages are unquantifiable. The Authority's insurer Comcover has been formally notified of, and has accepted, this claim.

Under Section 239F of the Water Act 2007, the liabilities of the Murray-Darling Basin Commission (the Commission) became liabilities of the Authority. These pertain to the former Commission.

This includes any liability, duty or obligation, whether contingent or prospective; but does not include a liability, duty or obligation imposed by:

  an Act; or

  regulations or other subordinate legislation made under an Act; or

  the Murray-Darling Basin Act 1992 of New South Wales; or

  the Murray-Darling Basin Act 1993 of Victoria; or

  the Murray-Darling Basin Act 1996 of Queensland; or

  the Murray-Darling Basin Act 1993 of South Australia; or

  the former Murray-Darling Basin Agreement.

There were no such contingencies during the financial year (2019: nil).

Accounting policy

Contingent liabilities and contingent assets are not recognised in the statement of financial position but are reported in the notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain and contingent liabilities are disclosed when settlement is greater than remote.

Note 4.2: Categories of Financial Instruments

Financial assets measured at amortised cost

Cash and cash equivalents

Trade and other receivables

Total financial assets at amortised cost

Total financial assets

Financial Liabilities

Financial liabilities measured at amortised cost

Trade creditors and accruals

Total financial liabilities measured at amortised cost

Total financial liabilities

Accounting policy

Financial Assets

The entity classifies its financial assets in the following categories:

a) financial assets at fair value through profit or loss;

b) financial assets at fair value through other comprehensive income; and

c) 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.

Financial liabilities

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

The Authority only holds financial instruments carried at amortised cost.

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 and other 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

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

Accounting policy

The Authority's assets are held for operational purposes and not held for the purposes of deriving a profit. The current use of all non-financial assets is considered their highest and best use.

The Authority's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There have been no transfers between level 1 and level 2 of the hierarchy during the year.

Note 4.3: Fair Value Measurements

ASSETS

Assets measured at fair value

Buildings

Other property, plant and equipment

Total assets measured at fair value

Assets measured at other than fair value, but approximate fair value¹

Cash and cash equivalents

Trade and other receivables

Total assets measured at other than fair value, but approximate fair value

Assets measured at cost

Intangibles

Other non-financial assets

Total assets measured at cost

Total assets stated in the Statement of Financial Position

LIABILITIES

Liabilities measured at fair value

Provision for restoration

Total liabilities measured at fair value

Liabilities measured at other than fair value, but approximate fair value²

Suppliers

Other payables

Total liabilities measured at other than fair value, but approximate fair value

Liabilities measured at cost

Leases liabilities

Employee provisions

Total liabilities measured at cost

Total liabilities stated in the Statement of Financial Position

¹ The Authority did not measure any non-financial assets at fair value on a non-recurring basis as at 30 June 2020 (2019:Nil).

² These items' carrying amounts equate to their fair values.

Note 4.4: Aggregate Assets and Liabilities

Assets expected to be recovered in:

No more than 12 months

More than 12 months

Total Assets

Liabilities expected to settled in:

No more than 12 months

More than 12 months

Total Liabilities

Variances are considered to be ‘major’ if they are core to the Authority's activities and based on the following criteria:

  the variance between budget and actual is greater than +/- 10% of the original budget for a line item; and

  the variance between budget and actual is greater than $1,000,000; or

  an item is below this threshold but is considered important for the reader’s understanding or is relevant to an assessment of the discharge of accountability and to an analysis of the Authority's performance.

The budget is not audited.

Budget Variance Explanation

Affected statements and line items

The Authority experiences significant fluctuations in its spending against budget due to the complex nature of the joint programs. This complexity reflects a high level of inherent risk associated with capital construction and environmental projects.

During 2019-20, there was a minor underspend of supplier spending against budget. This mainly resulted from:

- disruption of COVID-19 to the manufacture and delivery of a crane from Germany, for the Maratala vessel, resulting in delay. This has also resulted in the delay of maintenance works on the South Australian Water infrastructure that requires the new crane to undertake the works; and

- lower water allocations resulted in less usage for The Living Murray program with an associated reduction in water usage fees.

The supplier underspend was partially offset by an increase in investigation and construction works including:

- completion of the access staircase at Yarrawonga Weir;

- construction of river bank stabilisation works along the Hume to Yarrawonga river reach;

- Hume Dam geotechnical investigations to inform the embankment stability analysis and comprehensive risk assessment; and

- continued investigations of the Hume Dam irrigation outlets to determine the scope of refurbishment works required.

In preparation of the budget, estimates were made between the allocation of expenses between suppliers and grants. Actual expenditure between these two categories were slightly different to the budget.

Revenue from contributions from jurisdictions is lower than budgeted amount due to some jurisdictions utilising prior year underspends.

Statement of Comprehensive Income:

- Suppliers

- Grants

- Contribution from Jurisdictions

Statement of Financial Position:

- Cash and cash equivalents

- Suppliers

- Other payables

Cash Flow Statements:

- Net GST received

- Suppliers

- Grants

On adoption of AASB 16, the Authority recognised right-of-use assets and lease liabilities in relation to leases of office space, IT equipment and motor vehicles, which had previously been classified as operating leases. The Authority adopted a retrospective approach, under which the cumulative effect of initial recognition is recognised in retained earnings as at 1 July 2019. Right of use assets, lease liabilities and deprecation were not included in the original budget. The effects of lease incentive and lease straightlining were recognised as an adjustment to the opening balance of retained earnings.

For 2019-20 the Authority was allocated decentralisation capital funding for ICT and Data management. The primary focus initially was to develop strategic plans for the new ICT and data requirements. Following the acceptance of the ICT strategy in mid-2019 the Authority commenced a number of design and procurement projects. The Authority is still working on its data strategy which will be complete by late 2020. The commencement of some of the implementation activities were delayed due to market approaches and evaluations resulting in actual expenditure being lower than budgeted for capital spending.

Statement of Comprehensive Income:

- Depreciation and amortisation

Statement of Financial Position:

- Cash and cash equivalents

- Buildings

- Intangibles

- Other payables

Cash Flow Statements:

- Purchase of property, plant and equipment

- Principal payments for lease liabilities

The Authority received funding from a number of MOUs with DAWE during the year which were not in the 2019-20 budget. These include:

- Hydrometric Networks and Remote sensing Funding Program

- Ecosystem functions

- Independent Assessment of Social and Economic Conditions

The Hydrometric Networks and Remote sensing Funding Program was established to fund projects that will contribute to the better measurement of water diversions and in-streams flows. A substantial amount of funding under this program was received towards the end of the year which is not yet spent.

The joint program underspend over the past few years, the lower than planned capital asset additions and the receipt of MOU funding above has led to an increase in the overall cash balance above that initially budgeted.

Despite the increase in bank balances at year end, interest revenue decreased during the year as a result of lower interest rates.

Statement of Comprehensive Income:

- Other revenue

- Interest

Statement of Financial Position:

- Cash and cash equivalents

Cash Flow Statements:

- Other cash received