National Library of Australia
Annual Report 2001-2002
 Notes to & Forming Part of the Financial Statements - Index
Note 2: Economic Dependency
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Director General's Review
Corporate Overview
Report on Operations
Financial Statements
Appendices
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Financial Statements

Note 1: Summary of Significant Accounting Policies

1.1 Basis of Accounting

The financial statements are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997 and are a general purpose financial report.

The statements have been prepared in accordance with:

  • Finance Minister's Orders (being the Commonwealth Authorities and Companies (Financial Statements 2001-2002) Orders);
  • Australian Accounting Standards and Accounting Interpretations issued by the Australian Accounting Standards Board;
  • other authoritative pronouncements of the Board; and
  • Consensus Views of the Urgent Issues Group.

The statements have been prepared having regard to:

  • the Explanatory Notes to Schedule 1 issued by the Department of Finance and Administration; and
  • Finance Briefs issued by the Department of Finance and Administration.

The Statements of Financial Performance and Financial Position have been prepared on an accrual basis, except for trust accounts where cash accounting is employed, and are in accordance with historical cost convention, except for certain assets, which as noted, are at valuation.  Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

Assets and liabilities are recognised when and only when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured.  Assets and liabilities arising under agreements equally proportionately unperformed are, however not recognised unless required by an Accounting Standard.  Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies.

Revenues and expenses are recognised in the Statement of Financial Performance when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

1.2 Changes in Accounting Policy

The accounting policies used in the preparation of these financial statements are consistent with those used in 2000-01.

1.3 Reporting by Outcomes

A comparison of Budget and Actual Figures by Outcome specified in the Appropriation Acts relevant to the Library is presented in Note 20.  Any material intra-government costs included in the figure 'net cost to Budget outcomes' are eliminated in calculating the actual budget outcome for the Government overall.

1.4 Revenue

The revenues described in this Note are revenues relating to the core operating activities of the Library.  Details of revenue are given in Note 3.

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

Revenue from the rendering of a service is recognised by reference to the stage of completion of contracts.  The stage of completion is determined according to the proportion that costs incurred to date bear to the estimated total costs of the transaction.

Revenues from Government - Output Appropriations

The full amount of the appropriation for Library outputs is recognised as revenue.

Resources Received Free of Charge

Services received free of charge are recognised as revenue when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated.  Use of those resources is recognised as an expense.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value when the asset qualifies for recognition.

1.5 Transactions by the Government as Owner

Amounts appropriated by Parliament as equity injections have been fully drawn down in both 2000-01 and 2001-02 and recognised as 'contributed equity' in accordance with the Finance Minister's Orders.

1.6 Employee entitlements

Leave

The liability for employee entitlements includes provisions for annual leave and long service leave.  No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in the future by employees of the Library is estimated to be less than the annual entitlement for sick leave.

The liability for annual leave reflects the value of total annual leave entitlements of all employees as at 30 June 2002 and is recognised at its nominal amount.

The non-current portion of the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2002.  In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account.

Separation and redundancy

Provision is also made for separation and redundancy payments in circumstances where the Library has formally identified positions as excess to requirements and a reliable estimate of the amount payable can be determined.

Superannuation

Employees contribute to the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme.  Employer contributions amounting to $3,102,203 (2000-01: $2,849,780) for the Library in relation to employee superannuation had been expensed in these financial statements.

No liability is shown for superannuation benefits recognised as at 30 June as the employer contributions fully extinguish the accruing liability, which is assumed by the Commonwealth.

Employer Superannuation Productivity Benefit contributions totalled $606,664 (2000-01: $540,408).

1.7 Leases

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value of minimum lease payments at the inception of the lease and a liability for the lease payments recognised at the same amount.  Leased assets are amortised over the period of the lease.  Lease payments are allocated between the principal component and the interest expense.

Operating lease payments are expensed on a basis which is representative of the pattern of benefits derived from the leased assets.  The net present value of future net outlays in respect of surplus space under non-cancellable lease agreements is expensed in the period in which the space becomes surplus.

Lease incentives taking the form of 'free' leasehold improvements and rent holidays are recognised as liabilities.  These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability.

1.8 Borrowing Costs

All borrowing costs are expensed as incurred except to the extent that they are directly attributable to qualifying assets, in which case they are capitalised.  The amount capitalised in a reporting period does not exceed the amounts of costs incurred in that period.

The Library has no qualifying assets for which funds were borrowed specifically.

1.9 Grants

The Library recognises grant liabilities as follows.

Most grant agreements require the grantee to undertake specific tasks or utilise the funding in a specific way.  In these cases, liabilities are recognised only to the extent that the grantee has complied with the grant agreement, and where grant moneys are paid in advance, a prepayment is recognised.

In cases where grant agreements are made without conditions to be monitored, liabilities are recognised on signing of the agreement.

1.10 Cash

Cash includes notes and coin held and any deposits held at call with a bank or financial institution.

1.11 Financial instruments

Accounting policies for financial instruments are stated at Note 18.

1.12 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below.  The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken.

Assets acquired at no cost or for nominal consideration are initially recognised as assets and revenues at their fair value at the date of acquisition, except where they are required as part of a transfer of functions from another Government entity, in which case they are recognised as contributed equity at the carrying amount on the books of the transferor.

1.13 Property (Land, Buildings and Infrastructure), Plant and Equipment

Asset Recognition Threshold

Purchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $1,500, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).  The threshold for the recognition of software assets is $2,000.  The purchase of library material regardless of the amount, other than serials, are capitalised as part of the National Collection.

Revaluations

Land, buildings, infrastructure, plant and equipment are revalued progressively in accordance with the 'deprival' method of valuation in successive 3-year cycles, so that no asset has a valuation greater than three years old.

Library collections were revalued as at 30 June 2001; Land and building were revalued as at 30 June 2000; and plant and equipment were revalued as at 30 June 2002.

Assets in each class acquired after the commencement of the progressive revaluation cycle are not captured and are reported at cost for the duration of the progressive revaluation then in progress.

In accordance with deprival methodology land is measured at its current market buying value because disposal is restricted by legislation, zoning or Government policy.  Property, plant and equipment, other than land, is recognised at its depreciated replacement cost.  Where assets are held which would not be replaced or are surplus to requirements, measurement is at net realisable value.  At 30 June 2002, the Library had no assets in this situation.

All valuations are independent.

Recoverable Amount Test

Schedule 1 of the Orders requires the application of the recoverable amount test to the Library's non-current assets in accordance with AAS 10 Recoverable Amount of Non-Current Assets.  The carrying amounts of these non-current assets have been reviewed to determine whether they are in excess of their recoverable amounts.  In assessing recoverable amounts, the relevant cash flows have been discounted to their present value.

Depreciation and Amortisation

Depreciable property, plant and equipment is written-off to their estimated residual values over their estimated useful lives to the Library, using in all cases the straight-line method of depreciation.  Leasehold improvements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation/amortisation rates (useful lives) and methods are reviewed at each balance date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate.  Residual values are re-estimated for a change in prices only when assets are revalued.

Depreciation and amortisation rates applying to each class of depreciable assets are based on the following useful lives:

.

2002

2001

Building and building improvements

10 to 250 years

10 to 250 years

Plant and equipment

1 to 20 years

5 to 20 years

National collection - printed materials

50 years

50 years

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 4D.

1.14 Inventories

Inventories held for resale are valued at the lower of cost and net realisable value.

Inventories not held for resale are valued at cost, unless they are no longer required, in which case they are valued at net realisable value.

Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:

  • raw materials and stores - purchase cost on a first-in-first-out basis; and
  • finished goods and work-in-progress - cost of direct materials and labour plus attributable costs that are capable of being allocated on a reasonable basis.

1.15 Intangibles

The carrying amount of each non-current intangible asset is reviewed to determine whether it is in excess of the asset's recoverable amount.  If an excess exists at the reporting date, the asset is written down to its recoverable amount immediately.  In assessing recoverable amounts, the relevant cash flows, including the expected cash inflows from future appropriations by the Parliament, have been discounted to their present value.

No write-down to recoverable amount has been made in 2001-2002.

Intangible assets are amortised on a straight-line basis over their anticipated useful lives.  Useful lives are:

.

2002

2001

Computer software

2 to 10 years

2 to 10 years

1.16 Taxation

The Library is exempt from all forms of taxation except fringe benefits tax and the goods and service tax.

1.17 Capital Use Charge

A Capital Use Charge of 11% (2001: 12%) is imposed by the Commonwealth on the net assets of the Library.  The charge is adjusted to take account of asset gifts and revaluation increments during the financial year.

1.18 Foreign Currency

Transactions denominated in a foreign currency are converted at the rate of exchange at the date of the transaction.  Foreign currency receivables and payables are translated at exchange rates as at the balance date. Associated currency gains or losses are not material.

1.19 Insurance

The Library has insured for risks through the Government's insurable risk managed fund, called `Comcover'.  Workers compensation is insured through Comcare Australia.

1.20 Comparative Figures

Comparative figures have been adjusted to conform to changes in presentation in these financial statements where required.

1.21 Rounding

Amounts are rounded to the nearest $1,000 except in relation to:

  • remuneration of directors;
  • remuneration of officers (other than directors); and
  • remuneration of auditors.
 Notes to & Forming Part of the Financial Statements - Index
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Note 2: Economic Dependency


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