Accounting Code Supplement for
New Councils
Purpose of this webinar
Opportunity for:
• OLG to outline the proposed Accounting Code #25
Supplement reporting requirements for new
councils;
• all parties to obtain a common understanding; and
• new councils to seek clarification on any aspects of
their unique reporting obligations for the first
reporting period
Tele Web Seminar
• This webinar is slightly different to webinars held previously
• Participants will log on the web to view the presentation and will
also dial in via the teleconference to listen and participate in live
Q&A.
• As part of and throughout the webinar presentation:- you will be able to enter written questions at any time and
we will attempt to answer them during the session;
- if we are unable to answer your questions at the time of this
webinar a full list of questions and answers will be published
on the OLG website along with the webinar and live Q&A
recording
• At the end of the presentation there will also be live Q&A time
- if you wish to ask a question you need to press the * and 1
on your phone keypad and you will be placed in a queue
• Your participation in this Tele Web Seminar is important and we
encourage you to ask questions to seek clarification.
Questions can be entered here at any
time
Declaration
• Statement by Administrator/Councillors and
Management made pursuant to Section 413 (2c) of
the Local Government Act 1993 (NSW) (as amended)
• Consider which is the appropriate sign-off
• Be consistent throughout the report
Accounting Code Supplement
• To be read in conjunction with the general Code
• Supplement includes:
– additional guidance;
– areas of the Code which will be different for new
councils; and
• additional notes to explain the transaction
Special purpose financial
report and special schedules
• To be completed in accordance with your reporting
period, i.e. from formation to 30 June 2017
Overall accounting guidance
•
•
•
Relevant Accounting Standard is
AASB 3 Business Combinations
General requirements plus specific guidance in paragraphs
Aus 63.1 – 63.9
Provisional accounting permitted for 12 months after date of
transaction – all numbers to be finalised for amalgamations
occurring in May 2016 – no adjustments required after
30 June 2017
Information not required…
The following information is not required for
30 June 2017 reporting:
• budget information;
• comparatives;
• Note 16 – material budget variations; and
• Note 28 – related party disclosures
(with the exception of Bayside Council)
Relevant period of the
financial report
• Financial reporting period is:
– date of formation through to 30 June 2017
• Need to refer to period rather than year:
– ensure all references in the report have been
changed
– remember they will need to be changed back next
year
Income Statement
• Gain arising on amalgamation is fair value of net
assets acquired
• Does not form part of operating result
• Revaluation reserves from previous councils are
not transferred
Statement of cash flows
Cash received as
part of the
amalgamation to be
shown separately
Accounting policy
Value of the assets transferred
Definition of fair value
AASB 13
Fair value in AASB 13 is:
‘the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction in
the principal (or most advantageous) market at the
measurement date under current market conditions’
Issues to consider for asset
value
•
•
•
Assets in local councils should be held at fair value
How has the new council assessed the value of the
assets transferred to them?
An independent valuation is not required, however
there should be evidence of a process to determine
whether the current carrying amount is materially
different from fair value
Issues to consider in
assessing fair value
•
•
•
•
•
Asset recognition threshold
Methodology for calculating liabilities
Completeness of assets / liabilities
Date of last external valuation – valuation
methodology since that date
Valuation methodology – Valuer General v
depreciated replacement cost
Fair value of liabilities
Provisions for:
• Self-insurance
• Rehabilitation
• Onerous contracts
Consider as part of the fair value assessment
• Employee benefits accounted for under AASB 119
• Recognition and measurement of contingent
liabilities
Note 29 (extract)
Former Council 1
$’000
Former
Council 2
$’000
Former
Council 3
$’000
1Gain
on local
government
amalgamation
$’000
Current assets
Cash and cash equivalents
Investments
Receivables
Inventories
Other
Non-current assets classified as
held for sale
Total current assets
Non-current assets
Investments
Receivables
• Note includes all assets and liabilities – this is an extract only
• Accounting policy adjustment column removed
Explanation of adjustments
to fair value
Rates income
Rates and Non Reciprocal Grants income
• The rates and non-reciprocal grants revenue for the
period from [commencement date] to 30 June 2016
were recorded in the financial statements of the
former councils in accordance with AASB 1004
Contributions. The assets transferred to NSW
Council includes a portion of rates and nonreciprocal grants that were received but related to
the period after the former councils ceased to exist.
• Bayside Council will need a different note
AASB 124 Related Party
Disclosures
• Not required for 30 June 2017
• Required from 1 July 2017
• Think about current KMP and capturing the relevant
information prior to elections
Special schedule 8
• Councils are still
required to
complete the SS8
working papers
• SS8 will be audited
as will domestic
waste
Live Q&A
Questions?
Additional guidance required by
Councils from OLG?
Press *1
on your phone keypad
OLG Contact
If you wish to discuss any issues, please do not hesitate
to contact OLG staff:Laura Love, Senior Policy Officer - 02 4428 4178
Email any feedback/questions to
[email protected]
Next steps
•
•
•
•
•
Contact will be made with each new council in the coming
week
Councils discussions with their auditors regarding their
2016/17 financial reporting
Release of final Code #25 and Supplement by end of
May 2017
Audited finance reports due to be submitted to OLG by
31 October 2017
Requests for extensions must be in writing and received by
17 October 2017
Thankyou for your
participation
Disclaimer
The material presented in the Code or in the webinar session, should be regarded as general advice for information
purposes only. Discussions held in the webinar cannot replace specific advice that Councils should seek from their
accountants and auditors.