Accounting Standards Update For-profit entities Tasmanian Audit Office Client Information Session April 2009

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2. 2 Effective for 30 June 2009 These will be covered briefly in the next few slidesThese will be covered briefly in the next few slides

3. 3 AASB 2008-10 Reclassification of Financial Assets Essentially this amendment arose due to the current economic environment More specifically, IFRS requirements are different to US GAAP and given crisis in US this was likely to result in significant differences. Research why reclassifying may be considered a good option???Essentially this amendment arose due to the current economic environment More specifically, IFRS requirements are different to US GAAP and given crisis in US this was likely to result in significant differences. Research why reclassifying may be considered a good option???

4. 4 AASB 2008-12 Reclassification of Financial Assets � Effective Date and Transition

5. 5 AI 12 Service Concession Arrangements Scope is for arrangements between public and private sector entities for the provision of public services. On basis that this does not address the accounting for public sector entities, will not cover in any great detail today. Operator does not recognise infrastructure as its P,P&E if it is existing infrastructure of the grantor or is infrastructure constructed or purchased by the operator as part of the service concession arrangement. An intangible asset or financial asset is recognised by the operator for any compensation it receives for construction services it provides. If grantor provides other items to operator that operator may retain or sell at its option, then the operator recognises those items as its assets together with corresponding liability for unfulfilled obligations. Operator recognises revenue for providing construction services in accordance with AASB 111 Construction Contracts and revenue for other services in accordance with AASB 118 Revenue. Revenue recognised at fair value of the consideration received or receivable. Operator recognises consideration receivable from grantor for construction services as a financial asset (under AASB 139) or an intangible asset (under AASB 138). A financial asset if operator has an unconditional right to receive cash irrespective of usage of the infrastructure. An intangible asset to the extent that operator has a right to charge for usage of the infrastructure. Operator recognises and measures obligations to maintain or restore infrastructure in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets as long as maintenance obligation arises as a result of use during the operating phase. Borrowing costs expensed unless qualifying asset under AASB 123. Check with TAO whether relevant to any entities? Scope is for arrangements between public and private sector entities for the provision of public services. On basis that this does not address the accounting for public sector entities, will not cover in any great detail today. Operator does not recognise infrastructure as its P,P&E if it is existing infrastructure of the grantor or is infrastructure constructed or purchased by the operator as part of the service concession arrangement. An intangible asset or financial asset is recognised by the operator for any compensation it receives for construction services it provides. If grantor provides other items to operator that operator may retain or sell at its option, then the operator recognises those items as its assets together with corresponding liability for unfulfilled obligations. Operator recognises revenue for providing construction services in accordance with AASB 111 Construction Contracts and revenue for other services in accordance with AASB 118 Revenue. Revenue recognised at fair value of the consideration received or receivable. Operator recognises consideration receivable from grantor for construction services as a financial asset (under AASB 139) or an intangible asset (under AASB 138). A financial asset if operator has an unconditional right to receive cash irrespective of usage of the infrastructure. An intangible asset to the extent that operator has a right to charge for usage of the infrastructure. Operator recognises and measures obligations to maintain or restore infrastructure in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets as long as maintenance obligation arises as a result of use during the operating phase. Borrowing costs expensed unless qualifying asset under AASB 123. Check with TAO whether relevant to any entities?

6. 6 AI 13 Customer Loyalty Programmes

7. 7 AI 13 Customer Loyalty Programmes

8. 8 AI 14 IAS 19 � The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

9. 9 Future impacts � 30 June 2010 The AASB in issuing recent standards and amendments have made most applicable for reporting periods beginning on or after 1 January 2009. This means they will be applicable fro 30 June 2010. This will represent the next wave of change, whilst acknowledging that they can be early adopted. Accordingly it is prudent to be keeping an eye on these developments to identify key impacts on your organisations financial statements or on the processes in place to capture the required information. The AASB in issuing recent standards and amendments have made most applicable for reporting periods beginning on or after 1 January 2009. This means they will be applicable fro 30 June 2010. This will represent the next wave of change, whilst acknowledging that they can be early adopted. Accordingly it is prudent to be keeping an eye on these developments to identify key impacts on your organisations financial statements or on the processes in place to capture the required information.

10. 10 Future impacts � 30 June 2010

11. 11 Future impacts � 30 June 2010 Revised AASB 8 Operating Segments Scope change Segments determined by internal reporting regularly reviewed by the �Chief Operating Decision Maker� More or less segments? Impact on goodwill allocation to CGU�s � cant be allocated to a CGU or group of CGUs larger than a segment Comparatives required on first time adoption unless information not available or too costly to develop it Scope change - Applies to entities whose debt or equity instruments are traded in a public market (eg listed ) or where is filing for issuing its securities in a public market. Scope change - Applies to entities whose debt or equity instruments are traded in a public market (eg listed ) or where is filing for issuing its securities in a public market.

12. 12 Future impacts � 30 June 2010 Revised AASB 123 Borrowing Costs Option of immediately expensing all borrowings costs is removed Capitalise if relates to qualifying asset Revised AASB 101 Presentation of Financial Statements Statement of Comprehensive Income required One or two statement approach Third balance sheet required in certain circumstances Qualifying asset = takes a substantial period of time to get ready for its intended use or sale. Comprehensive Income = changes in equity other than those changes resulting from transactions with owners in their capacity as owners eg fx translation differences for foreign operations, revaluations of assets, fv change in derivatives Third balance sheet required if applying accounting policy retrospectively or retrospective restatement of items or reclassification of items. Qualifying asset = takes a substantial period of time to get ready for its intended use or sale. Comprehensive Income = changes in equity other than those changes resulting from transactions with owners in their capacity as owners eg fx translation differences for foreign operations, revaluations of assets, fv change in derivatives Third balance sheet required if applying accounting policy retrospectively or retrospective restatement of items or reclassification of items.

13. 13 Future impacts � 30 June 2010 Revised AASB 127 Consolidated and Separate Financial Statements Changes in non-controlling interests now equity transactions If lose control, any interest measured at FV with any gain/loss recognised in P&L Dividends received now income Dividend receipt may be impairment indicator

14. 14 Future impacts � 30 June 2010 Revised AASB 3 Business Combinations and Amended AASB 127 Consolidated and Separate Financial Statements Transaction costs expensed MI measured at either FV or % of net identifiable assets & liabilities

15. 15 Future impacts � 30 June 2010 AI 18 Transfers of assets from customers Replaces AI 1017 with wider scope Price regulated industries, where all customers pay the same price for continued access, will not be impacted by move to AI 18 Non-price regulated industries should defer revenue where services have not been delivered

16. 16 Future impacts � 30 June 2010 Agreements for the construction of Real estate Guidance on revenue recognition Hedges of a net investment in a foreign operation Clarifies these hedges only applied when net assets of the foreign operation are recognised in consolidated financial statements Eligible Hedged Items Clarifies effect of using options as hedging instruments and circumstances where inflation risk can be hedged Distributions of non-cash assets to owners Measure liability at FV not at carrying amount with difference taken to P&L

17. 17 Q & A Ask participants if they have any questions.Ask participants if they have any questions.

18. 18 Presenter Details Hobart: David HowieKPMG Partner62304000dhowie@kpmg.com.au Launceston: Andy GrayKPMG Partner62373737andrewgray@kpmg.com.au Ask participants if they have any questions.Ask participants if they have any questions.