This section analyses the financial performance of the Torres Strait Regional Authority for the year ended 2020.

Expenses

Accounting Policy

Accounting policies for employee related expenses are contained in the People and Relationships section.

Accounting Policy

Short-term leases and leases of low-value assets

The TSRA 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 TSRA recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Accounting Policy

All borrowing costs are expensed as incurred.

Own-Source Revenue and Gains

Accounting Policy

Revenue from the sale of goods is recognised when control has transferred to the buyer.

As required by AASB15 Revenue from Contracts with Customers, the TSRA determines whether a contract is in scope of AASB 15 by the following criteria:

a) An enforceable contract must exist,

b) There must be sufficiently specific performance obligations in the contract to enable the TSRA to determine when they have been satisifed, and;

c) There must not be a significant donation component in the contract.

If these three criteria are met, the transaction price will be split between significantly specific performance obligations and recognised as revenue as those obligations are completed.

If any of these three criteria are not met, the TSRA refers to AASB 1058 Income of not-for-profit Entites to recognise the revenue as follows:

a) For transfers to enable the TSRA to acquire or construct a non financial asset, revenue is recognised as the non financial asset is acquired or constructed, otherwise;

b) the transfer is accounted for as revenue when it is received.

The principal activity from which the TSRA generates its revenue is the delivery of State and Commonwealth Government funded projects in the Torres Strait that benefit Torres Strait Islander and Aboriginal people living in the Torres Strait. All of these contracts for 2018-19 have been determined to have insufficiently specific performance obligations to attach the transaction price to, and therefore there are no adjustments as at 1 July 2019. One grant received in 2019-20 for $41K was assessed to be a transfer to acquire a non-financial asset and, as such, has been recognised as a future obligation under contract liabilities as at 30 June 2020.

The transaction price is the total amount of consideration to which the TSRA expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Receivables for goods and services, which have 30 day terms, are recognised at the nominal amounts due less any impairment allowance account. Collectability of debts is reviewed at end of the reporting period. Allowances are made when collectability of the debt is no longer probable.

Accounting Policy

Interest revenue is recognised using the effective interest method.

Accounting Policy

Revenue from Government

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.