2015-01-12 General Committee Agenda Attachment 1 to Item 17 Noosa Council Report 2014

NOOSA SHIRE COUNCIL

Notes to the Financial Statements
For the six months ending 30 June 2014

          (c}       Sick leave
                    Sick leave taken in the future will be met by future entitlements and hence no recognition of accrued
                    sick leave entitlements have been made in these financial statements. No entitlement vests with the
                    employee on termination.
          {d)       Superannuation
                    The superannuation expense for the reporting period is the amount of the contribution the Council
                    makes to the superannuation plan which provides benefits to its employees.
                     Details of those arrangements are set out in note 29.
          (e)        Long service leave
                     A liability for long service leave is measured as the present value of the estimated future cash outflows
                     to be made in respect of services provided by employees up to the reporting date. The value of the
                     liability is calculated using current pay rates and projected future increases in those rates and includes
                     related employee on-costs. The estimates ar¢ adjusted for the probability of the employee remaining in
                     the Council's employment or other associated employment which would result in the Council being
                     required to meet the liability. Adjustments are then made to allow for the proportion of the benefit
                     eamed to date, and the result is discounted to present value. The interest rates atlaching to
                     Commonwealth Government guaranteed securities at the reporting date are used to discount the
                     estimated future cash outflows to their present value.
                     This liability is reported in note 22 as a provision.
   1, 24       Borrowings
                     Loans payable are measured at amortised cost using the effective interest rate method. The effective
                     interest rate is the rate that exactly discounts estimated future cash payments or receipts through the
                     expected life of the financial instrument. Borrowing costs, which includes interest calculated using the
                     effective interest method and administration fees, are expensed in the period in which they arise. Costs
                     that are not settled in the period in which they arise are added to the carrying amount of the borrowing.
                     In accordance with the Local Government Regulation 2012 Council adopts an annual debt policy that
                     sets out Council's planned borrowings for the next nine years. Council's current policy is to only
                     borrow for capital projects and for a term no longer than the expected life of the asset. Council also
                     aims to comply with the Queensland Treasury Corporation's borrowing guidelines and ensure that
                     sustainability indicators remain within acceptable levels at all times. Council has also established a
                     working capital loan facility to fund de-amalgamation expenditure incurred before 31 December 2013.
                     This facility will be fiully paid by 30 June 2015.
                     All borrowing costs are expensed in the period in which they are incurred. No borrowing costs are
                     capitalised on qualifying assets.
                     Borrowings are classified as current liabilities unless Council has an unconditional right to defer             .
                     settlement of the liability for at least 12 months after the balance date.

   1,25         Restoration provision
                     A provision is made for the cost of rehabiliation of assets and other future restoration costs where it is
                     probable the Council will be liable, or required, to incur such a cost on the cessation of use of the
                     facility. This liability is provided in respect of Quarries and Landfill sites.
                     The provision is measured at the expected cost of the work required discounted to current day values
                     using an appropriate rate, The current capital market yield bond rate is considered an appropriate rate
                     with a maturity date corresponding to the anticipated date of restoration.

                     Council has the following restoration provisions:
           (a)       Landfill sites
                     The provision represents the present value of the anticipated future costs associated with the closure of
                     the Eumundi Rd landfill site, decontamination and monitoring of historical residues and leaching on
                     the site.                                            :
                     The calculation of this provision requires assumptions such as application of environmental legislation,
                     site closure dates, available technologies and engineering cost estimates. These uncertainties may
                     tesuli in future actual expenditure differing from amounts currently provided. Because of the long-term
                     nature of the liability, the most significant uncertainty in estimating the provision is the costs that will
                     be incurred.
                     The provision recognised for the Eumundi Rd landiill site is reviewed at least annually and updated
                     based on the facts and circumstances available at the time. Management estimates that the site will
                     fully close in 2054 and that site restoration will occur progressively over the subsequent thirty years.
           (b)       Quarry sites
                     The provision represents the present value of the anticipated future costs associated with the closure of
                     the Ringtail Creek quarry site, reclamation and rehabilitation of the site.
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