Queensland Treasury Financial Reporting Requirements (FRRs) for 2018–19 are available on Queensland Treasury’s website. www.treasury.qld.gov.au/resource/financial-reporting-requirements-queensland-government-agencies/
Not all entities have to comply with the FRRs, such as local governments and universities; however, the FRRs are a good resource that may provide useful guidance to other public sector entities.
While not linked to the new accounting standards, you will need to update the wording of your Management Certificate for the financial statements.
Previously the wording has contained a positive statement on the effectiveness of internal controls and risk management systems.
The Management Certificate now simply requires acknowledgement by the Accountable Officer, or the Statutory Body, of their responsibilities for internal controls and risk management, per sections 8 and 15 of the Financial and Performance Management Standard 2009. The amended wording is consistent with what QAO includes in our audit report on responsibilities for internal controls. An illustration of the revised wording is contained within the Illustrative Sunshine Financial Statements (FRR 6A) and Future Bay Foundation—Tier 2 Statements (FRR 6B).
New accounting standards this financial year
Part 4E has been updated and includes guidance on implementing AASB 9 Financial instruments, including applicable designations and transition policies. This section includes a worked example of the ‘provisions matrix’ approach for impairment of trade receivables.
New accounting standards next year and future years
Part 1A has been updated and contains valuable material for the new accounting standards including:
- getting ready for AASB 15 Revenue, AASB 1058 Income for Not‑for-Profit Entities, AASB 16 Leases and AASB 1059 Service Concession Arrangements
- transitional requirements for the new standards that Treasury intend to mandate. While the proposed transitional requirements have been included in the FRRs for the last two financial years, if agencies still have any issues or problems with these, please provide feedback to Treasury early, so it can be considered in preparing the FRRs for 2019-20.
Part 6A (Sunshine Note D6) has illustrative disclosures on the effect of the new accounting standards that you can consider for inclusion in your financial statements. However, you will need to tailor these to reflect the specific circumstances of your entity.
QAO expects that the proposed transition policies that will be the most helpful in easing implementation costs for you are:
- not retrospectively restating 2017–18 results on commencement of AASB 9
- not retrospectively restating 2018–19 results on commencement of AASB 15, AASB 1058 and AASB 16
- permitting entities to measure, on a lease-by-lease basis, the right-of-use lease asset carrying value on transition as being either based on the lease liability, or a recalculation from lease commencement
- using cost and not revaluing the right-to-use lease asset for existing operating leases.
The proposed policy that may require additional effort is the removal of the practical expedients on completed contracts (under AASB 15 or AASB 1058 definitions).
Under this proposed approach, you will need to determine the contract liability (unearned revenue) on transition at 1 July 2019 for contracts where the full revenue amount has already been recognised by 30 June 2019 under the old standards. An example is sufficiently specific grants received in advance that have outstanding performance obligations at 30 June 2019. Revenue for these grants is recognised on receipt under the old standards. And under the transition policy proposed by Treasury that will need to be re-recognised from 1 July 2019 as performance obligations are satisfied.
Considerations for other entities
As we mentioned above, if you do not have to follow the FRRs (that is you are a local government or university) they are still a good resource that may provide useful guidance.
When considering the FRRs, you should pay particular attention to:
- transition policies—you will need to select your own transition policies. The list in Part 1A is a good starting point to identify the policies you need to make, even if you make a different choice.
- using cost and not revaluing the right-to-use lease asset for existing finance leases already on balance sheet (for example, leases of land).