Annual Report 2018-19

                                                                                                   Financial Statements 2019



Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2019

Note 1. Summary of Significant Accounting Policies (continued)

   AASB 1058 clarifies and simplifies the income                    - Revenue decrease due to deferral of grant funding,
   recognition requirements that apply to not-to-profit             pre-paid rates, and other sales related revenue (based
   (NFP) entities, in conjunction with AASB 15, and                 on the facts available to Council at the date of
   AASB 2016-8. These Standards supersede the                       assessment).
   majority of income recognition requirements relating
   to public sector NFP entities, previously in AASB 1004           - There would be an equal reduction in the reported
   Contributions.                                                   equity as the reduced revenue will require an increase
                                                                    in recognition of contract liabilities, and statutory
   Identifiable impacts at the date of this report are:             receivables.

   Some grants received by the Council will be                      - Net result would be lower on initial application as a
   recognised as a liability, and subsequently recognised           result of decreased revenue. A range of new
   progressively as revenue as the Council satisfies its            disclosures will also be required by the new standards
   performance obligations under the grant. At present,             in respect of the council's revenue.
   such grants are recognised as revenue upfront.
                                                                    Transition method
   Grants that are not enforceable and/or not sufficiently
   specific will not qualify for deferral, and continue to be       The Council intends to apply AASB 15, AASB 1058 and
   recognised as revenue as soon as they are controlled.            AASB 2016-8 initially on 1 July 2019, using the
   Council receives several grants from the Federal                 modified retrospective approach. The recognition and
   Government and State Government for which there                  measurement principles of the standards will be
   are no sufficiently specific performance obligations             retrospectively applied for the current year and prior
   these are expected to continue being recognised as               year comparatives as though the standards had always
   revenue upfront assuming no change to the current                applied, consistent with AASB 108 Accounting Policies,
   grant arrangements.                                              Changes in Accounting Estimates and Errors.

   Depending on the respective contractual terms, the               The Council intends to apply the practical expedients
   new requirements of AASB 15 may potentially result               available for the full retrospective method. Where
   in a change to the timing of revenue from sales of the           revenue has been recognised in full under AASB 1004,
   Council's goods and services such that some revenue              prior to 1 July 2019, but where AASB 1058 would have
   may need to be deferred to a later reporting period to           required income to be recognised beyond that date, no
   the extent that the Council has received payment but             adjustment is required. Further, Council is not required
   has not met its associated performance obligations               to restate income for completed contracts that start and
   (such amounts would be reported as a liability in the            complete within a financial year. This means where
   meantime).                                                       income under AASB 1004 was recognised in the
                                                                    comparative financial year (i.e. 2018/19), these also do
   Prepaid rates will not be recognised as revenue until            not require restatement.
   the relevant rating period starts. Until that time these
   receipts will be recognised as a liability (unearned
   revenue).                                                       AASB 16 Leases – Council has assessed the impacts
                                                                    of the new standard that initial application of AASB 16
   Revenue from Special rates and charges are currently             will have on its consolidated financial statements,
   recognised as revenue upon receipt. As these funds               however, the actual impacts may differ as the new
   relate to the completion of specific implementation              accounting policies are subject to change until the
   plans and are refundable under the Local Government              Council presents its first financial statements that
   Regulations 2012 they will now initially be recorded as          include the date of initial application.
   unearned revenue and recognised only as revenue
   when the performance obligations are satisfied.                  AASB 16 introduces a single, on-balance sheet lease
                                                                    accounting model for lessees. A lessee recognises a
   Membership revenue will be recognised in line with               right-of-use asset representing its right to use the
   the membership period to which the fees were paid                underlying asset and a lease liability representing its
   which is a change to the current recognition of                  obligation to make lease payments. There are
   revenue upon receipt.                                            recognition exemptions for short-term leases and
                                                                    leases of low-value items. Lessor accounting remains
   There will be no impact upon the recognition of other            similar to the current standard – i.e. lessors continue to
   fees and charges.                                                classify leases as finance or operating leases.

   Based on Councils assessment, if Council had
   adopted the new standards in the current financial
   year it would have had the following impacts:

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