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:
a) Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR); and
b) 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
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 TSRA’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 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.
Application of AASB 15 Revenue from Contracts with Customers / AASB 1058 Income of Not‐For‐Profit Entities
The TSRA 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 TSRA 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 TSRA applies the general AASB 15 principles to determine the appropriate revenue recognition. If these criteria are not met, the TSRA shall consider whether AASB 1058 applies.
In relation to AASB 15, the TSRA elected to apply the new standard to all new and uncompleted contracts from the date of initial application. The TSRA 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, the TSRA 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. There was no impact from adopting AASB 15 and AASB 1058 as at 1 July 2019.
Application of AASB 16 Leases
The TSRA 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.
The TSRA 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. The Entity applied the following practical expedients when applying AASB 16 to leases previously classified as operating leases under AASB 117:
- Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
- Exclude initial direct costs from the measurement of right‐of‐use assets at the date of initial application for leases
where the right-of-use asset was determined as if AASB 16 had been applied since the commencement date;
- 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 TSRA 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 TSRA recognises right-of- use assets and lease liabilities for most leases. However, the TSRA 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 TSRA recognised right-of-use assets and lease liabilities in relation to leases of land and buildings, 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 TSRA's incremental borrowing rate as at 1 July 2019. The TSRA's incremental borrowing rate is the rate at which a similar borrowing could be obtained from an independent creditor under comparable terms and conditions. The weighted- average rate applied for land was 1.99% and for buildings was 0.34%.
The right-of-use assets were measured as follows:
- Office space: measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.
- Land: 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 TSRA recognised additional right-of-use assets and additional lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:
1 July 2019
Right-of-use assets - property, plant and equipment
The following table reconciles the Departmental minimum lease commitments disclosed in the entity'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
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