Example Superannuation Fund 30 June 2008 Annual Financial Report audit
May 2008 Disclaimer: Under the Corporations Act 2001, the directors of a Company have sole responsibility for the preparation and true and fair presentation of the financial report and for ensuring that they meet all the requirements of the Corporations Act 2001, Accounting Standards and any other relevant requirements such as the ASX Listing Rules, if applicable. In preparing the financial report, entities may choose to use Example Superannuation Series 30 June 2008 Annual Financial Reports to assist them, however their use cannot and does not purport to guarantee that the financial reports will comply with all aspects of the relevant legislation and guidance. Should entities choose to rely on Example Superannuation Series 30 June 2008 Annual Financial Reports when preparing their financial reports they do so at their own risk. KPMG will accept no responsibility or liability to entities in respect of Example Superannuation Series 30 June 2008 Annual Financial Reports or any use to which it may be put. While we have taken all reasonable care in its preparation, it is possible that this version of the Example Superannuation Series 30 June 2008 Annual Financial Reports may contain errors or omissions. Commonwealth of Australia, 2008 All legislation herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation. In particular, s182a of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing from the Commonwealth, available from the Australian Accounting Standards Board. Requests in the first instance should be addressed to the Administration Director, Australian Accounting Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria, 8007. 2008 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
To preparers of superannuation plan financial reports The financial reporting standards applicable for the year ending 30 June 2008 are relatively stable. However, set against very dynamic global economic conditions, there will be challenges in the preparation of this year s financial reports. These more challenging conditions will provide a measure of AGAAP as a robust reporting framework. Specifically, the more extensive financial instrument disclosure requirements this year will provide greater transparency and understanding of an entity's exposure and sensitivity to risk in the face of global economic conditions. We have designed this publication to assist you with the detailed and complex disclosure and presentation requirements of not only the new AASBs, but also the ongoing requirements of AAS 25 Financial Reporting by Superannuation Plans, which are required to be applied in the preparation of financial statements for superannuation entities. While we present illustrative formats for financial statements of superannuation plans, other presentations may be equally appropriate. Accordingly, we have also included general guidance on applying presentation and disclosure requirements. We trust you will find this publication useful when preparing your year-end financial report. We also welcome your feedback on Example Superannuation Fund 30 June 2008 illustrative financial report. Please provide any feedback you may have by contacting your KPMG partner or local office. Sean Hill Partner, Superannuation Audit & Risk Advisory Services May 2008
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Example Superannuation Series Annual financial reports 30 June 2008
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Example Superannuation Fund 30 June 2008 Annual Financial Report 1 May 2008 Contents Page 1. Purpose and basis of this publication 3 2. Financial reporting developments 5 3. What s changed from June 2007 6 Appendices Appendix One Example Defined Contribution Superannuation Fund 7 Appendix Two Example Defined Benefit Superannuation Fund 81 Appendix Three Example Defined Contribution Superannuation Fund and its controlled entities 151
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Example Superannuation Fund 30 June 2008 Annual Financial Report 3 May 2008 1. Purpose and basis of this publication Purpose The purpose of this publication is to assist you in preparing annual financial reports for superannuation entities in accordance with AAS 25 Financial Reporting by Superannuation Plans (AAS 25) and Australian Accounting Standards (AASBs) (Example Superannuation Series). This publication illustrates one possible format for full financial statements of a defined contribution superannuation fund and a defined benefit superannuation fund based on fictitious superannuation funds. This publication also provides an illustrative example of selected disclosures required for financial statements of consolidated superannuation fund financial statements. The funds presented in this publication are not first-time adopters of AASBs. A number of exposure drafts have been released recently by the International Accounting Standards Board (IASB) and the Australian Accounting Standards Board (AASB). Future editions of this publication will reflect the requirements of these future standards where applicable. While these illustrative financial reports provide a valuable demonstration of AAS 25 and other AASBs, they should not be used as a substitute for referring to the standards and interpretations themselves, particularly where a specific requirement is not addressed in this publication or where there is uncertainty regarding the correct interpretation of AAS 25 and/or other AASBs. Scope This publication is based on the International Financial Reporting Standards (IFRS) developed by the IASB as modified by the AASB. This publication reflects AAS 25 requirements and other AASBs on issue as at 28 February 2008 that must be applied by a superannuation entity with an annual period beginning on 1 July 2007 ( currently effective requirements). AASBs that are effective for annual periods beginning after 1 July 2007 ( forthcoming requirements) have not been early adopted in preparing these illustrative financial statements except for: AASB 8 Operating Segments AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8. Details of the main financial reporting developments impacting the 30 June 2008 financial reporting period are included in Section 2 of this publication. Any subsequent changes and additional requirements will need to be considered when preparing financial reports in accordance with AASBs. Refer to the latest KPMG Flash Report Current AASB/IASB projects and timetable for further information on newly applicable standards and interpretations, as well as the status of forthcoming requirements. Dual AASB and IFRS compliance In late 2006, the AASB decided to make the Australian requirements the same as IFRS in respect of for-profit entities. AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments, issued in April 2007, reinstated treatments contained in IFRSs that had not been allowed under AASBs and is expected to make dual compliance more easily achieved. See Section 2 of this publication for more about AASB 2007-4. Each scheme will need to perform its own assessment of whether it should and/or can claim compliance with IFRS. Further information To assist you in preparing financial statements for superannuation entities, the following KPMG publications are also recommended: Insights into IFRS, 4th edition, 2007/8 Australian equivalents to IFRS: Disclosure checklist, dated May 2008 Example Public Company Limited 31 December 2008 interim financial report dated November 2007 Example Public Company Limited 30 June 2008 annual financial report dated April 2008 Example Managed Investment Scheme 31 December 2007 interim financial report dated November 2007 IFRS 7 for Corporates and IFRS 7 for investment funds for guidance on the requirements of AASB7 Financial Instruments: Disclosures Other publications in the Example Series.
4 Keep in contact and stay up to date Changes to disclosure requirements will occur as the Corporations Act 2001, Regulations 2001 are amended and further AASBs and Interpretations are issued. Developments will be discussed in detail in KPMG s Flash Reports as they occur. KPMG s Flash Reports are available to clients of the firm, either via e-mail, in hard copy or at http://www.kpmg.com.au. Please speak to your KPMG contact partner to arrange to receive KPMG s Flash Reports. For analysis and interpretation of the requirements of AASBs and other financial reporting requirements, please speak to your usual KPMG contact. Acknowledgements The following members of KPMG were the principal authors of this publication: Kris Peach Sean Hill Steve Hubbard Sophie Wilcox Ian Tracey
Example Superannuation Fund 30 June 2008 Annual Financial Report 5 May 2008 2. Financial reporting developments Details of accounting pronouncements and other developments impacting on financial reporting requirements are outlined in this section. This information is current as at 29 February 2008. This section includes a discussion of new requirements effective for 30 June 2008 financial reports and other significant developments likely to affect future reporting periods. This section is structured as follows: financial reporting changes applicable for 30 June 2008 annual financial reports, including Australian Accounting Standards and Australian Interpretations; and new requirements effective after 30 June 2008, which may be early adopted. Snap shot of new requirements effective for 30 June 2008 The following symbols are used in the tables below to indicate the timing of application of AASBs and Interpretations for the 30 June 2008 reporting date: Action required Mandatory adoption in this period, unless early adopted in a previous reporting period Action may be required Available for early adoption in this period, unless early adopted in a previous reporting period Snap shot of new requirements mandatory for 30 June 2008 The following AASBs and Interpretations are mandatory for annual reporting periods beginning on 1 July 2007, where they have not been early adopted by an entity in previous reporting periods. Example Super Series has assumed all of the following are adopted in the current reporting period, but that adoption did not result in a change in accounting policy. AASBs and Interpretations Operative date Year end application June 2008 Transitional provisions Flash Report AASB 7 Financial Instruments: Disclosures (August 2005) AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) [Applicable when AASB 7 is applied] AASB 101 Presentation of Financial Statements (Revised, October 2006) AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments (April 2007) Example Superannuation Fund has early adopted AASB 2007-4 in the previous year and therefore this example does not show disclosures required in the first year adoption AASB 2007-7 Amendments to Australian Accounting Standards (June 2007) 1 January 2007 1 January 2007 1 July 2007 Disclosure requirements also apply to comparatives (unless AASB 7 was adopted in first-time adoption financial report). Does not impact interim financial reporting disclosures under AASB 134. Changes to disclosure requirements also apply to comparatives. General requirements of AASB 108 apply including full retrospective application, as no specific transition requirements are included in the amendments. 05FR-048 07FR-003 06FR-054 06FR-061 07FR-016 1 July 2007 Refer to Example Public Company Limited 30 June 2008 Appendix 2 for an illustration of a cash flow statement prepared under the indirect method. 07FR-023 reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
6 New requirements effective for financial reporting periods beginning after 1 July 2007, which may be early adopted Refer Example Public Company Limited 30 June 2008 for details of all standards, interpretations and amendments that are available for early adoption. The following standard and amendments are available for early adoption at 30 June 2008 and have been applied by Example Superannuation Series. Australian Accounting Standards Operating Segments AASB 8 Operating Segments, issued in February 2007 is applicable for annual reporting periods beginning on or after 1 January 2009 with early adoption permitted. Upon adoption, AASB 8 supersedes AASB 114 Segment Reporting and requires segment information disclosure based on segments monitored by the chief operating decision maker (CODM) in allocating resources and in assessing their performance rather than on a business/geographical basis. This will require more qualitative disclosure than AASB 114 even for single segment entities. AASB 8 applies to individual and consolidated financial statements of entities whose debt or equity instruments are traded in a public market or are in the process of issuing any class of instruments in a public market. Australian for-profit reporting entities that are not listed, or are not about to list, need no longer make segment disclosures, when AASB 8 is adopted. Refer to KPMG Flash Report 06FR-064 and 07FR-006 for further details. AASB 2007-3 Amendments to Australian Accounting Standards (February 2007) makes the amendments to other standards that arise from the release of AASB 8. Based on current interpretations of the scope of application of AASB 8, Australian not for profit and for profit reporting entities that are not listed, need no longer make segment disclosures if they early adopt AASB 8. AASB 8 has been early adopted in the Example Superannuation Series. 3. What s changed from June 2007 Major changes from the June 2007 edition of Example Superannuation Series are highlighted by a double line border running down the left margin of the text within this document. Impact of the adoption of new and amended standards The disclosures required by AASB 7 have been adopted in this edition. This has resulted in several new disclosures, as well as a relocation of disclosures previously required by AASB 132. The following are new or more comprehensive disclosures in order to meet the requirements of AASB 7 and AASB 101 Presentation of Financial Statements (Revised October 2006): Parent entity disclosures: - financial instruments disclosures in respect of the parent entity are given in Appendix 3 (previously a disclosure exemption was available to the parent under AASB 132). Financial instruments: - detailed narrative disclosures on aspects of credit, liquidity and market risk, including trade and other receivables, currency risk, interest rate risk and capital management - credit risk, including detailed tables and explanatory paragraphs in respect of exposure to credit risk - liquidity risk, illustrated by the contractual maturities of financial liabilities - currency risk, including detailed tables illustrating exposure to currency risk and sensitivity analysis - interest rate risk, including a risk profile and sensitivity analysis - other price risk, including a sensitivity analysis. Disclosures that are new or significantly amended are marked as changes reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
ABCD 7 Appendix One Example Defined Contribution Superannuation Fund Annual financial report 30 June 2008
ABCD 8 May 2008 Disclaimer: Under the Corporations Act 2001, the directors of a Company have sole responsibility for the preparation and true and fair presentation of the financial report and for ensuring that they meet all the requirements of the Corporations Act 2001, Accounting Standards and any other relevant requirements such as the ASX Listing Rules, if applicable. In preparing the financial report, entities may choose to use Example Defined Contribution Superannuation Fund 30 June 2008 Annual Financial Report to assist them, however its use cannot and does not purport to guarantee that the financial report will comply with all aspects of the relevant legislation and guidance. Should entities choose to rely on Example Defined Contribution Superannuation Fund 30 June 2008 Annual Financial Report when preparing their financial reports they do so at their own risk. KPMG will accept no responsibility or liability to entities in respect of Example Defined Contribution Superannuation Fund 30 June 2008 Annual Financial Report or any use to which it may be put. While we have taken all reasonable care in its preparation, it is possible that this version of the Example Defined Contribution Superannuation Fund 30 June 2008 Annual Financial Report may contain errors or omissions. Commonwealth of Australia, 2008 All legislation herein is reproduced by permission but does not purport to be the official or authorised version. It is subject to Commonwealth of Australia copyright. The Copyright Act 1968 permits certain reproduction and publication of Commonwealth legislation. In particular, s182a of the Act enables a complete copy to be made by or on behalf of a particular person. For reproduction or publication beyond that permitted by the Act, permission should be sought in writing from the Commonwealth, available from the Australian Accounting Standards Board. Requests in the first instance should be addressed to the Administration Director, Australian Accounting Standards Board, PO Box 204, Collins Street West, Melbourne, Victoria, 8007. 2008 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
Example Defined Contribution Superannuation Fund 9 June 2008 Contents Statement of financial position 11 Operating statement 13 Statement of cash flows 15 Notes to the financial statements 19 1 Reporting Entity 19 2 Basis of preparation 19 3 Significant accounting policies 21 4 Payables 33 5 General administration expenses 33 6 Investments 35 7 Movements in net market values 35 8 Auditors remuneration 37 9 Finance income and expense 37 10 Income tax expense 39 11 Tax assets and liabilities 39 12 Deferred tax assets and liabilities 41 13 Liability for accrued benefits and funding arrangements 43 14 Vested benefits 43 15 Guaranteed benefits 43 16 Notes to the statement of cash flows 45 17 Operating leases 49 18 Related parties 55 19 Additional financial instruments disclosure 57 20 Events subsequent to reporting date 77 21 Contingent liabilities 77 22 Segment reporting 77 Trustee s declaration to the members 79 Page
ABCD 10 Note Reference Explanatory note 1. AAS 25.13 There is no mandatory format for the presentation of the statement of financial position prescribed by AAS 25. This example is consistent with the requirements of the example provided by Appendix 1 of AAS 25, and to the extent that there is no inconsistency with the AAS 25 requirements, is also presented in accordance with AASB 101. AASB 101.71 The order or format in which items are to be presented on the face of the balance sheet are not prescribed by AASB 101. As a minimum the line items required by AASB 101.68 shall be presented on the face. AASB 101.29 Each material class of similar items shall be presented separately. Items of a dissimilar nature or function shall be presented separately unless they are immaterial. AASB 101.32 An entity may continue to present its balance sheet in the same order as it has done under its previous GAAP as long as the line items required by AASB 101.68 are presented as a minimum and the format is relevant to users. Assets and liabilities are offset only when required or permitted by a standard or an interpretation. AASB 101.51 AAS 25 does not require current/non-current classifications of assets and liabilities. An entity may present its assets and liabilities broadly in order of liquidity if such presentation provides reliable and more relevant information. Whichever method of presentation is adopted, for each asset and liability line item that combines amounts expected to be recovered or settled within (1) no more than 12 months after the balance sheet date and (2) more than 12 months after the balance sheet date, an entity should disclose the amount expected to be recovered or settled after more than 12 months. AASB 101.27, 28,108.10 In the absence of a change in AASBs, the presentation and classification of items in the financial statements shall be retained from one period to the next unless it is apparent, following a significant change in the nature of the entity s operations or a review of its financial statements, that another presentation or classification would be more appropriate. The revised presentation should be reliable and more relevant to users and should be expected to be appropriate for some time so that continuity of information is not compromised. AASB 101.69, 72 Additional line items, headings and sub-totals should be presented on the face of the balance sheet when such presentation is relevant to an understanding of the entity s financial position. The judgement used should be based on an assessment of the nature and liquidity of the assets, the function of assets within the entity as well as the amounts, nature and timing of liabilities. AI 1031.7 The amount of GST incurred by a purchaser that is not recoverable from the ATO shall be recognised as part of the cost of acquisition of an asset or as part of an item of expense. AI 1031.8,9 Receivables and payables shall be stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO shall be included as part of receivables or payables in the statement of financial position. 2. AASB 101.70 When an entity presents current and non-current assets, and current and non-current liabilities, as separate classifications on the face of its statement of financial position, it shall not classify deferred tax assets (liabilities) as current assets (liabilities). AASB 101.68(m),(n) Current tax assets and liabilities should be presented separately on the face of the balance sheet. Deferred tax assets and liabilities should be presented separately on the face of the balance sheet. 3. AAS 25.37 AAS 25.37 requires the assets of a defined contribution plan to be measured at net market values as at the reporting date. Net market value is defined in AAS 25.10 as the amount which could be expected to be received from the disposal of an asset in an orderly market after deducting costs expected to be incurred in realising proceeds of such a disposal. For further guidance refer to AAS 25.38-41.
Example Defined Contribution Superannuation Fund 11 June 2008 Reference Example Defined Contribution Superannuation Fund Statement of financial position 1 As at 30 June 2008 AAS 25.21,23,57 SIS 112(1)(a) In thousands of AUD Note 2008 2007 AAS 25.57(a) Assets 3(a) AASB 101.68(i) Cash and cash equivalents 1,056 1,568 AASB 101.68(h) Receivables Contributions receivable 320 386 Investment income receivable 646 593 Interest receivable 246 220 AASB 101.68 AAS 25.57(a) Investments Financial assets Fixed interest securities 1,464 1,040 Shares in listed corporations 3,251 3,000 Units in unlisted unit trusts 1,045 504 Units in pooled superannuation trusts 2,391 1,507 Life office endowment policies 860 816 Non-financial assets AASB 101.68(b) Investment properties 6(a) 960 1,160 AASB 101.69 Total assets 12,239 10,794 AASB 101.69 AAS 25.57(b) Liabilities AASB 101.68(j) Other payables 4 217 306 AASB 101.68(m) Current tax liabilities 2 11 192 168 AASB 101.68(n) AASB 112.81(g),(i) Deferred tax liabilities 2 12 1,366 1,313 AASB 101.69 Total liabilities (excluding net assets available to pay benefits) 1,775 1,787 Net assets available to pay benefits 3 10,464 9,007 Represented by: AAS 25.57(b) Liability for accrued benefits 13(a) AAS 25.57(c) Allocated to members accounts 10,046 8,872 AAS 25.57(c) Not yet allocated 418 135 10,464 9,007 The statement of financial position is to be read in conjunction with the notes to the financial statements set out on pages 19 to 77.
ABCD 12 Note Reference Explanatory note 1. AAS 25.13 There is no mandatory format for the presentation of the operating statement prescribed by AAS 25. This example is consistent with the requirements of the example provided by Appendix 1 of AAS 25, and to the extent that there is no inconsistency with the AAS 25 requirements, is also presented in accordance with AASB 101. AASB 101.85, 86 No items of income or expense may be presented as extraordinary. The nature and amounts of material items should be disclosed separately on the face of the income statement or in the notes. Individually material items are classified in accordance with their nature of function, consistent with the classification of items that are not individually material. In our view, it is preferable for separate presentation to be made on the face of the income statement only when necessary for an understanding of the entity s financial performance. This issue is discussed in our publication Insights into IFRS. AASB 101.32 Items of income and expense shall not be offset unless required or permitted by an Australian Accounting Standard. AASB 101.88 The analysis of expenses may be based on function or nature of expenses. Entities that classify expenses by function shall disclose additional information on the nature of expenses, including depreciation and amortisation expense and employee benefits expense. Individually material items are classified in accordance with their nature or function, consistent with the classification of items that are not individually material. This issue is discussed in our publication Insights into IFRS. AASB 101.83 Additional line items, headings and subtotals shall be presented on the face of the operating statement when such presentation is relevant to an understanding of the entity s financial performance. AASB 101.84 Because the effects of an entity s various activities, transactions and other events differ in frequency, potential for gain or loss and predictability, disclosing the components of financial performance assists in an understanding of the financial performance achieved and in making projections of future results. Additional line items are included on the face of the operating statement, and the descriptions used and the ordering of items are amended when this is necessary to explain the elements of financial performance. Factors to be considered include materiality and the nature and function of the components of income and expenses. 2. AI 1031.6,7 Revenues and expenses shall be recognised net of the amount of GST, unless not recoverable from the ATO in which case GST shall be recognised as part of the cost of acquisition of an asset or as part of an item of expense.
Example Defined Contribution Superannuation Fund 13 June 2008 Reference Example Defined Contribution Superannuation Fund Operating statement 1,2 For the year ended 30 June 2008 AAS 25.21,23,58 SIS 112(1)(b) In thousands of AUD Note 2008 2007 AAS 25.58(a)(i) Investment revenue AASB 118.35(b)(iii) Interest 220 176 AASB 118.35(b)(v) Dividends 304 203 AASB 101.83 Distributions from investments 440 265 AASB 140.75(f)(i) Property rentals 164 140 AAS 25.44 Movement in net market value of investments 7 516 404 1,744 1,288 AAS 25.58(b) Direct investment expense (360) (296) Net investment revenue 1,384 992 AASB 101.83 Contributions income AAS 25.58(a)(ii) Employers 1,116 920 AAS 25.58(a)(iii) Members 904 1,040 Transfers from other funds 72 32 2,092 1,992 AAS 25.58(a)(iv) Other income AAS 25.58(a)(iv) Proceeds from life office endowment policies 68 - Expenses Life office endowment premium expense (230) (150) AAS 25.58(b) General administration expenses 5 (161) (150) AI 1019.10(b) Superannuation Contributions (Surcharge) Tax (192) (168) Financial expenses 9 (3) (4) (586) (472) AAS 25.58(b) AASB 112.77 AAS 25.54 Benefits accrued as a result of operations before income tax 2,958 2,512 Income tax expense attributable to benefits accrued as a result of operations 10 (245) (1481) AAS 25.58(c) Benefits accrued as a result of operations 13(a) 2,713 1,031 The operating statement is to be read in conjunction with the notes to the financial statements set out on pages 19 to 77.
ABCD 14 Note Reference Explanatory note 1. AASB 107.18 In this statement of cash flows, cash flows from operating activities are presented using the direct method. Subsequent AASB deliberations will change ED 151, such that an entity using the direct method will need to provide a reconciliation from net profit to cash flows from operating activities. Exposure Draft 151 Australian Additions to, and Deletions from, IFRSs (ED 151) proposes to allow, as an alternative, cash flows from operating activities to be reported using the indirect method, whereby the net profit or loss for the period is adjusted for the effects of non-cash transactions, accruals, and items of income or expense associated with investing or financing cash flows. Appendix 2 of Example Public Company Limited 30 June 2008 Annual Financial Report illustrates a statement of cash flows prepared under the indirect method. AAS 25.59 The statement of cash flows of a defined contribution plan shall be prepared in accordance with AASB 107 Cash Flow Statements, and shall include separate disclosure of the amount of benefits paid to members during the reporting period. 2. AASB 107.50 Entities are encouraged, but not required, to disclose additional information relevant to understanding an entity s financial position and liquidity. AASB 107.10 The statement of cash flows shall report cash flows during the period classified by operating, investing and financing activities. SIS 67 Note that it will be rare for a superannuation entity to have financing activities due to the restrictions imposed on borrowings by the Superannuation Industry (Supervision) Act (1993). 3. AASB 107.43 An entity should disclose investing and financing transactions that are excluded from the cash flow statement because they do not require the use of cash or equivalents in a way that provides all relevant information about these activities. 4. AASB 107.31,33 Cash flows from interest and dividends received and paid shall each be disclosed separately. These items may be classified as operating, investing or financing activities, but must be consistent between periods. 5. AASB 107.35 Cash flows arising from taxes on income shall be separately disclosed and shall be classified as cash flows from operating activities unless they can be specifically identified with financing and investing activities. AI 1031.10,11 Cash flows shall be grossed up to include the amount of GST collected and paid. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the ATO shall be classified as operating cash flows. 6. AASB 107.45 An entity shall disclose the components of cash and cash equivalents and shall present a reconciliation of the amounts of cash and cash equivalents in the statement of cash flows with the equivalent items reported in the statement of financial position.
Example Defined Contribution Superannuation Fund 15 June 2008 Reference Example Defined Contribution Superannuation Fund Statement of cash flows 1 For the year ended 30 June 2008 AAS 25.21,23,59 SIS 112(1)(c) AASB In thousands of AUD Note 2008 2007 107.10,14,18 Cash flows from operating activities 2,5 Contributions received Employers 1,052 1,080 Members 814 988 Transfer from other funds 72 32 AASB 107.31,33 Interest received 4 784 408 AASB 107.31,33 Dividends received 4 114 118 Distributions received 45 55 Property rentals received 264 240 Proceeds from group life policies 68 - AAS 25.59 Benefits paid 1 13(a) (1,256) (240) Life office endowment premium paid (240) (160) Superannuation Contributions (Surcharge) Tax (192) (168) General expenses paid (202) (288) AASB 107.35 Income tax paid 5 (260) (163) Net cash from operating activities 16(b) 1,063 1,902 AASB 107.10,16,21 Cash flows from investing activities 3 Proceeds from sale of shares in listed corporations 1,000 160 Proceeds from sale of investment properties 384 288 Money market securities purchased (880) - Government securities purchased (1,247) (374) Other fixed interest securities purchased (408) (640) Life office endowment policies purchased (64) (40) Direct investment expenses paid (360) (80) Net cash used in investing activities (1,575) (686) Net increase/(decrease) in cash and cash equivalents held (512) 1,216 Cash and cash equivalents at the beginning of the financial year 1,568 352 AASB 107.45 Cash and cash equivalents at the end of the financial year 6 16(a) 1,056 1,568 The statement of cash flows is to be read in conjunction with the notes to the financial statements set out on pages 19 to 77.
ABCD 16 Note Reference Explanatory note 1. AASB 101.11 The notes to the financial statements should include narrative descriptions or break-downs of amounts disclosed on the face of the financial statements. They also include information about items that do not qualify for recognition in the financial statements. 2. AAS 25.21 AASB 101.103 The notes to the financial statements should disclose: information about the basis of preparing the financial statements and the specific accounting policies selected and applied for significant transactions and events; information required by AASBs that is not presented elsewhere in the financial statements; and additional information that is necessary for a fair presentation that is not presented on the face of the financial statements. 3. AASB 101.105 Notes are normally presented in the following order, which assists users in understanding the financial report and comparing them with financial reports of other entities: (a) a statement of compliance with AGAAP and IFRSs (see paragraph 14); (b) a summary of significant accounting policies applied ; (c) supporting information for items presented on the face of the statement of financial performance, income statement, statement of changes in equity and cash flow statement, in the order in which each statement and each line item is presented; and (d) other disclosures, including: (i) contingent liabilities (see AASB 137) and unrecognised contractual commitments; and (ii) non-financial disclosures, for example the entity s financial risk management objectives and policies. 4. AASB 1048 Compliance with Australian Interpretations (previously known as UIG Interpretations) is required by AASB 1048 Interpretation and Application of Accounting Standards. A statement of compliance with Australian Accounting Standards (AASBs) therefore includes a statement of compliance with Australian Interpretations. Accordingly, a separate statement of compliance with Australian Interpretations is no longer required. 5. AASB 101 Aus13.3 An entity shall disclose in the notes a statement whether the financial report has been prepared in accordance with Australian Accounting Standards, typically included in the Basis of Preparation note of the financial report, as is illustrated in Example Defined Contribution Superannuation Fund. AASB 101.14 An entity whose financial statements and notes comply with IFRSs shall make an explicit and unreserved statement of such compliance in the notes. Example Defined Contribution Superannuation Fund as complying with AAS 25, cannot be compliant with IFRSs as AAS 25 requires all assets and liabilities be measured at net market value which is not consistent with the fair value measurement requirement of IFRSs. Technically, there is no requirement to state that an entity does not comply with IFRS, however it is considered best practice that non-compliance is also reported. 6. AASB 110.17 An entity shall disclose the date when the financial report was authorised for issue and who gave that authorisation. If the entity s owners or others have the power to amend the financial report after issue, the entity shall disclose that fact.
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ABCD 18 Note Reference 7. AASB 101.46(e), ASIC CO 98/100 Explanatory note Amounts in the Example Defined Contribution Superannuation Fund have been rounded to the nearest one thousand dollars for illustrative purposes only. While superannuation entities are not covered by the Corporations Act 2001 and Class Order 98/100, industry practice is to round amounts where the total assets exceed $10 million. The decision to adopt this practice should be made with regard to provisions of the Trust Deed/Constitution. Auditor remuneration and director related, related party disclosures should not be rounded as materiality applies to each dollar of the disclosures. 8. AASB 101.116 An entity shall disclose in the notes information about the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next annual reporting period. Should this not be relevant, an example disclosure is as follows: It was concluded that judgements made by management in the application of Australian Accounting Standards did not have a significant effect on the financial report. No estimates with a significant risk of material adjustment in the next year were noted. 9. AAS 25.69 On the initial application of AAS 25, comparative amounts need not be disclosed: where the financial report has been prepared on a different basis from the report for the preceding corresponding period; particular disclosures are required for the first time; or obtaining the information is impracticable. 10. AASB 101.23 When the financial report is not prepared on a going concern basis, that fact shall be disclosed, together with the basis on which the financial report is prepared and the reason why the entity is not regarded as a going concern.
Example Defined Contribution Superannuation Fund 19 June 2008 Notes to the financial statements 1,2,3,9,10 Reference For the year ended 30 June 2008 AAS 25.21 AASB 101.8(e) AASB 101.126(a)- (c) 1. Reporting entity Example Defined Contribution Superannuation Fund (the Fund ) is a superannuation fund domiciled in Australia. The address of the Fund s registered office is [address]. The Fund is constituted by a Trust Deed dated [date] to provide superannuation benefits for employees and its related companies. The Trustee of the Fund is Example Trustee Company Pty Ltd. AASB 101.103(a) 2. Basis of preparation (a) Statement of compliance 4,5 AAS 25.13, AASB 101 Aus13.2,13.3, 13.4,14,105 The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standard AAS 25 Financial Reporting by Superannuation Plans, as amended by AASB 2005-13 (December 2005), other applicable Accounting Standards, the provisions of the Trust Deed and the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations. International Financial Reporting Standards ( IFRS ) form the basis of Australian Accounting Standards adopted by AASB. The financial report of the Fund does not comply with IFRSs, due to the requirements of AAS 25. AASB 110.17 The financial statements were approved by the Board of Directors of the Trustee, Example Trustee Company Pty Ltd, on [date]. 6 (b) Functional and presentation currency AASB 101.46(d) AASB 101.46(e) The financial statements are presented in Australian dollars, which is the functional currency of the Fund. Amounts have been rounded to the nearest thousand dollars except where otherwise noted. 7 (c) Use of estimates and judgements 8 AASB 101.113,116 The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: Note 6 - valuation of investment property.
ABCD 20 Note Reference Explanatory note 1. Accounting policies in these illustrative financial statements reflect facts and circumstances of the fictitious entity that these financial statements are based on. They should not be relied upon for a complete understanding of AIFRS requirements and should not be used as a substitute for referring to the AIFRS standards and interpretations. Accounting policy disclosures appropriate for an entity depend on the facts and circumstances of that entity and may differ from the disclosures illustrated in this publication. 2. AASB 101.108(b) The accounting policies should describe each specific accounting policy that is necessary for a proper understanding of the financial statements. 3. Corporations Act S334(5) In accordance with subsection 334(5) of the Corporations Act, early adoption is only permitted if an election has been made by the Board of Directors. S334(5) states that a company, registered scheme or disclosing entity may elect to apply the accounting standard to an earlier period unless the standard says otherwise. The election must be made in writing by the directors. Although a superannuation fund is not governed by this requirement of the Corporations Act 2001, it is considered best practice. In this publication we have assumed that the entity did not early adopt any standards that are not mandatory for annual periods beginning on 1 July 2007 except AASB 8. If an entity does early adopt any such standards, then that fact should be disclosed. AASB 108.28 An entity choosing to early adopt a standard or interpretation will also need to include disclosures in accordance with AASB 108.28. Refer to Example Public Company Limited 30 June 2008 Appendix 3 for guidance on applying a change in accounting policy that results from adopting a new standard or interpretation. 4. AAS 25.37 Assets shall be measured at net market values as at the reporting date. 5. AAS 25.37 The amended AAS 25, issued December 2005, requires assets and liabilities of the fund to be measured at net market value. AAS 25.13 This requirement overrides the fair value measurement of AASB 139, however where AAS 25 is silent in relation to the disclosure requirements of financial instruments, the requirements of AASB 7 apply. 6. AASB 7.25-30 Where the costs expected to be incurred in realising the proceeds of a disposal of an asset are expected to be material, net market value may not be a reasonable approximation of fair value and therefore additional disclosures are required in accordance with AASB 7.25-30. 7. AAS 25.57(d)(iv) The method adopted in determining net market value for each class of assets shall be disclosed.
Example Defined Contribution Superannuation Fund 21 June 2008 Notes to the financial statements Reference For the year ended 30 June 2008 AASB 101.103(a) AASB 101.108 3. Significant accounting policies 1,2 The accounting policies set out below have been applied consistently to all periods presented in these financial statements. AASB 108.28 The entity has elected to early adopt the following accounting standards and amendments: 3 AASB 8 Operating Segments replaces the presentation requirements of segment reporting in AASB 114 Segment Reporting. AASB 8 is applicable for annual reporting periods beginning on or after 1 January 2009. AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 makes amendments to AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 102 Inventories, AASB 107 Cash Flow Statements, AASB 119 Employee Benefits, AASB 127 Consolidated and Separate Financial Statements, AASB 134 Interim Financial Reporting, AASB 136 Impairment of Assets, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 2007-3 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be adopted in conjunction with AASB 8 Operating Segments. AASB 101.38 Certain comparative amounts have been reclassified to conform with the current year s presentation. (a) Assets 4,5 AAS 25.37 AAS 25.44 AASB 101.116 Assets are included in the statement of financial position at net market value as at reporting date and movements in the net market value of assets are recognised in the operating statement in the periods in which they occur. The Fund recognises financial assets on the date it becomes a party to the contractual provisions of the asset. Financial assets are recognised using trade date accounting. From this date any gains and losses arising from changes in net market value are recorded. AAS 25.10 Estimated costs of disposal are deducted in the determination of net market value. As disposal costs are generally immaterial, unless otherwise stated net market value approximates fair value. 6 AAS 25.57(d)(iv) Net market values have been determined as follows: 7 (i) Market quoted investments The net market value of an investment for which there is a readily available market quotation is determined as the last quoted sale price as at the close of business on reporting date, less an appropriate allowance for costs expected to be incurred in realising the investments.
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Example Defined Contribution Superannuation Fund 23 June 2008 Notes to the financial statements Reference For the year ended 30 June 2008 3. Significant accounting policies (continued) (a) Assets (continued) (ii) Non-market quoted investments Investments for which market quotations are not readily available are valued at the net fair value determined by the Trustee as follows: AAS 25.57(d)(iv) Delisted securities valuations based on the last sale price prior to delisting, or where subject to liquidation, the amount the Trustee expects to be received on wind up, less estimated realisation costs. Securities subject to takeover offer the value of the consideration offered under the takeover offer, less estimated realisation costs. AAS 25.57(d)(iv) AASB 139.AG74- AG82 AAS 25.57(d)(iv) AAS 25.57(d)(iv) Unlisted securities recorded with reference to recent arm s length transactions, current market value of another instrument substantially the same, or discounted cash flows, less estimated realisation costs. Where discounted cash flow techniques are used, estimated future cash flows are based on management s best estimates and the discount rate used is a market rate at the balance sheet date applicable for an instrument with similar terms and conditions. Where other pricing models are used, inputs are based on market data at the balance sheet date. Fair values for unquoted equity investments are estimated, if possible, using applicable price / earnings ratios for similar listed companies adjusted to reflect the specific circumstances of the issuer. (iii) Units in pooled superannuation trusts and unlisted managed investment schemes Units in pooled superannuation trusts and unlisted managed investment schemes are valued at the redemption price at reporting date as advised by the investment managers and are based on the net market value of the underlying investments. Unit values denominated in foreign currency are then translated to Australian dollars at the current exchange rates. (iv) Life office endowment policies Life office endowment policies are valued by reference to an actuarial assessment, provided by XYZ Actuaries Pty Ltd, of the amount receivable from the insurer as at balance date. AAS 25.57(d)(iv) (v) Investment properties AASB 140.75,77, 78 Investment properties comprise investment interests in land and buildings (including integral plant and equipment). Investment properties are initially recorded at cost of acquisition, less any disposal costs, at the date of acquisition. AASB 140.75(a), (d), (e) The carrying amount of investment property is the net market value of the property as determined by a registered independent appraiser having an appropriate recognised professional qualification and recent experience in the location and category of the property being valued. Net market values were determined using the capitalisation of net passing income and the discounted cash flow methods and also having regard to recent market transactions for similar properties in the same location as the Fund s investment property. (vi) Interest receivable Interest receivable represents accrued interest revenue from cash and cash equivalents and fixed interest securities.
ABCD 24 Note Reference Explanatory note 1. AASB 107.46 In view of the variety of cash management practices and banking arrangements around the world and in order to comply with AASB 101, an entity discloses the policy which it adopts in determining the composition of cash and cash equivalents. 2. The statement of financial position of a defined contribution plan shall disclose by way of note the method adopted in determining net market value for financial liabilities. The operating statement of a defined contribution plan shall disclose, by way of note changes in net market values of financial liabilities that have been recognised in the profit or loss for the reporting period (AASB 2005-13.9 & 10). AAS 25.13 AASB 7 The amended AAS 25, issued 15 May 2006, requires the assets and liabilities of the fund to be measured at net market value. This requirement overrides the fair value measurement of AASB 139, however where AAS 25 is silent in relation to the disclosure requirements of financial instruments, the requirements of AASB 7 apply. While bank overdraft, benefits payable and derivative liabilities are financial liabilities as they meet the definition of a financial liability as per AASB 139.9, it should be noted that tax liabilities and liabilities for accrued benefits are not financial liabilities. 3. AASB 7.25-30 Where the costs expected to be incurred in settling a liability are expected to be material, net market value may not be a reasonable approximation of fair value and therefore additional disclosures are required in accordance with AASB 7.25-30.