1.1 Objectives of the Entity
The CDPP is an Australian Government controlled entity. It is a not-for-profit entity. The objective of the CDPP is to contribute to a fair, safe and just society by delivering an effective, independent prosecution service in accordance with the Prosecution Policy of the Commonwealth.
1.2 The Basis of Preparation
The financial statements are general purpose financial statements and are required by Section 42 of the Public Governance, Performance and Accountability Act 2013.
The financial statements have been prepared in accordance with:
- Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
- Australian Accounting Standards - Reduced Disclosure Requirements, and Interpretations 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 and values are rounded to the nearest thousand dollars unless otherwise specified.
1.3 Significant Accounting Judgments and Estimates
In the process of applying the accounting policies listed in the notes, the CDPP has made judgements in relation to:
- the fair value of property, plant and equipment and the related make good; and
- employee provisions;
that have a significant impact on the amounts recorded in the financial statements.
COVID-19 and potential, related uncertainties have been considered in relation to the above judgements. No accounting assumptions or estimates have been identified that have a significant risk of causing a material adjustment to carrying amounts of assets and liabilities within the next reporting period.
1.4 New Australian Accounting Standards
All new/revised/amending 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 the CDPP’s financial statements.
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
for Not‐for‐Profit Entities
and AASB 1058 Income of
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.
Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not-For-Profit Entities
The CDPP 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 the CDPP 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), the CDPP applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, the CDPP shall consider whether AASB 1058 applies.
In relation to AASB 15, the CDPP elected to apply the new standard to all new and uncompleted contracts from the date of initial application. The CDPP is required to aggregate the effect of all of the contract modifications that occur before the date of initial application.
Impact on transition
CDPP has recognised no adjustment to retained earnings as a result of the transition to the new accounting standards AASB 15 and AASB 1058.
The recognition of revenue for the year ended 30 June 2020 in accordance with AASB 15 and AASB 1058 has resulted in no changes when compared to previously applicable accounting standards.
Application of AASB 16 Leases
The CDPP 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.
AASB 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The CDPP applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under AASB 136 Impairment of assets as at the date of initial application; and
Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date of initial application.
As a lessee, the CDPP 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, the CDPP recognises right-of-use assets and lease liabilities for most leases. However, the CDPP 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, the CDPP recognised right-of-use assets and lease liabilities in relation to leases of office space 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 CDPP’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.
Impact on transition
On transition to AASB 16, the CDPP recognised additional right-of-use assets and additional lease liabilities. Lease incentive and straight-line payables recognised as at 30 June 2019 were cleared to retained earnings.
1 July 2019
Right-of-use assets recognised - property, plant and equipment
Prepaid lease expenses at 30 June 2019
Lease liabilities recognised
Lease Incentive payable cleared
Lease Straight-line payable cleared
Balance to Retained Earnings
The following table reconciles the minimum lease commitments disclosed in the CDPP's 30 June 2019 annual financial statements to the amount of lease liabilities recognised on 1 July 2019:
1 July 2019
Minimum operating lease commitment at 30 June 2019
Less: restatement of opening balance1
Less: commitments for leases commencing after 30 June 2019
Less: short-term 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
1. The Minimum operating lease commitment at 30 June 2019 has been restated to correct the amount previously reported.
The CDPP is exempt from all forms of taxation except Fringe Benefits Tax (FBT) and the Goods and Services Tax (GST).