Will your accounting policies change?
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).
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.
Part 1A has been updated and contains valuable material for the new accounting standards including:
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:
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.
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: