2015-10-14 Audit & Risk Committee Meeting - Draft Annual Financial Statements

NOOSA SHIRE COUNCIL

Notes to the Financial Statements
For the year ended 30 June 2015

  1. 16 (b)        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 are 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 earned to date, and the result is discounted to present
              value. The interest rates attaching to Commonwealth Government guaranteed securities at the
              reporting date are used to discount the estimated future cash outflows to their present value.



              Where employees have met the prerequisite length of service and council does not have an
              unconditional right to defer this liability beyond 12 months long service leave is classified as a
              current liability. Otherwise it is classified as non-current.
              This liability is reported in note 17 as a provision.

  1. 16 (c)        Annual leave
              A liability for annual leave is recognised. As Council does not have an unconditional right to defer
              settlement of the annual leave beyond the 12 months after the reporting date, annual leave is
              classified as current, and calculated based on projected future wage and salary levels and related
              employee on-costs, and discounted to present values.
              This liability represents an accrued expense and is reported in note 16 as a payable.

  1. 17       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.


              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. 18       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:




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