FRRs and the new accounting standards

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Queensland Treasury Financial Reporting Requirements (FRRs) for 2017–18 are available online.

Not all entities have to comply with the FRRs, such as local councils and universities; however, the FRRs are a good resource that may provide useful guidance to other public sector entities. 

Part 1A contains valuable material for the new accounting standards including:

  • guidance on implementing AASB 9 Financial instruments, including any applicable designations—this section includes a worked example of the ‘provisions matrix’ approach for impairment of trade receivables
  • changes to hedge accounting
  • getting ready for the other new accounting standards—being 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—entities should review these proposed mandatory transition policies and give feedback to Treasury of any issues or problems.

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.

In relation to the transition policies, the proposed policies that the Queensland Audit Office (QAO) expects 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 the lease liability, or a recalculation from lease commencement
  • using cost and not revaluing the right-to-use lease asset for existing operating leases (for example, office accommodation).

The proposed policies that we suggest you consider whether they will have an onerous impact on you are:

  • removing the practical expedients on completed contracts (under AASB 15 or AASB 1058 definitions), and therefore you will need to determine the contract liability (unearned revenue) for those contracts on transition. An example is sufficiently specific grants.
  • using cost and not revaluing the right-to-use lease asset for existing finance leases already on balance sheet (for example, leases of land).

If you do not have to follow the FRRs, 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.