In this blog, we summarise Queensland Treasury’s major changes in their financial reporting requirements (FRRs) for this year. Our advice is for those charged with governance of whole-of-government reporting entities and users of their financial statements.
Departments and statutory bodies, including hospital foundations, are required to comply with Queensland Treasury’s FRRs for Queensland Government Agencies. The 2022–23 FRRs are now available on Treasury’s website, which includes a summary of noteworthy changes.
The FRRs and illustrative statements are good resources even if your entity doesn’t need to follow them (for example, local governments, government owned corporations or universities). This is because they demonstrate how to apply the accounting standards in a public sector environment.
Climate reporting and climate related risks
FRR section 1.5 Climate Related Risks and Financial Reporting has been updated for the latest international and Australian developments around climate risk reporting, as well as Queensland Treasury’s reporting requirements.
At QAO’s client technical update event in February this year, Queensland Treasury explained that agencies are not to voluntarily adopt and report against the Taskforce on Climate related Financial Disclosures (TCFD) framework. Nor the draft pronouncements or exposure drafts (and now standards) issued by the International Sustainability Standards Board (ISSB).
Our March blog article: What we covered at our client technical update summarised Queensland Treasury’s position that climate related reporting is going to be whole-of-government led once the framework has been finalised. The Commonwealth Treasury has issued a consultation paper addressing climate related reporting, proposing a limited number of entities commence reporting in 2024.
We encourage all Queensland government entities to understand the proposed reporting changes and consider the potential impacts on their financial statements and operations.
FRR section 1.5 also includes updated details of key Queensland whole-of-government climate related publications, including the Climate Action Plan 2020–2030, Queensland Energy and Jobs Plan, and Queensland Sustainability Report.
Service concession arrangements
FRR section 5D Service Concession Arrangements and Other Public-Private Partnerships has updated guidance for:
- the concept ‘on behalf of the grantor’ and inter-agency arrangements. Queensland Treasury highlights that inter-agency arrangements are expected to be rare, and agencies need to carefully review the arrangements to determine if they are delivering services on behalf of the grantor, or to further their own objectives or mandate. This will influence what they report, and how they report the arrangement
- arrangements outside AASB 1059 that address lifecycle payments where there is no set replacement schedule. Queensland Treasury is conducting further research, but draw out that agencies may still be able to estimate the expected timing of replacements for major components, and attribute lifecycle payments to those components.
These changes should not be confused with the Australian Accounting Standards Board’s project to review the implementation of AASB 1059 Service Concession Arrangements: Grantors. That project, known as Invitation to comment ITC 49, is still ongoing and no proposed changes have been issued.
New accounting standards affecting future financial years
FRR section 1.4 includes new or updated sections for future financial years:
- AASB 2022-10 Amendments to Australian Accounting Standards – Fair Value Measurement of Non-Financial Assets of Not-for-Profit Public Sector Entities, which commences financial years beginning on or after 1 January 2024 (that is, 1 July 2024 for 30 June year ends).
- AASB 2022-9 Amendments to Australian Accounting Standards – Insurance Contracts in the Public Sector, which commences financial years beginning on or after 1 July 2026.
You should consider whether these changes are likely to affect your agency.
Financial reporting impacts of COVID-19
The mandated disclosures addressing COVID-19 have been removed from the FRRs and from the illustrative financial statements for Sunshine Department and Future Bay Regional Health Foundation.
You will still need to assess whether COVID-19 has had a material impact on your financial statements for the 2022–23 reporting year. No disclosures are required if there isn’t a material impact.
While there are amendments to existing standards for 2022–23 listed in FRR Section 1.3.1, they are not expected to be material to Queensland government agencies. The exception may be for onerous contracts, where the method of calculating the liability has been clarified. Onerous contracts are where the cost of adhering to the contract exceeds the benefits of the contract. Affected entities are encouraged to contact Queensland Treasury and discuss the matter with their QAO engagement leader.
We hope this blog provides a useful overview on the latest FRR changes.
- Our updated fact sheet on financial reporting considerations in uncertain times
- Queensland Treasury: Financial Reporting Requirements for Queensland Government Agencies 2022–23
- Summary of noteworthy changes to the Financial Reporting Requirements for Queensland Government Agencies.