Model Annual Report for Net Cost of Services

Illustrative Model Annual Report

Statutory Authority (Net Cost of Services)

For the year ended 30 June 2017 Foreword

This Model Annual Report has been prepared as a guide and includes the minimum annual reporting requirements of the Financial Management Act 2006 and Treasurer’s instructions. Agencies should be aware that the Models are for general use and are not intended to cover every potential circumstance. Other methods of presenting financial statements are suitable and agencies are encouraged to streamline their financial statements. Streamlining reduces the costs and burdens of preparing the annual report whilst improving the relevance and meaning for users. Further reporting requirements are specified in the Public Sector Commission’s Annual Reporting Framework available at http://www.publicsector.wa.gov.au/

30.06.2017 Page 2 of 95 Illustrative Model Annual Report Statutory Authority (Net Cost of Services) – 30 June 2017

Table of Contents

Statement of Compliance

FMA sec 63 For year ended 30 June 2017 TI 902 HON MICHAEL JACKSON MINISTER FOR INFORMATION TECHNOLOGY In accordance with section 63 of the Financial Management Act 2006, we hereby submit for your information and presentation to Parliament, the Annual Report of the Model Statutory Authority for the reporting period ended 30 June 2017. The Annual Report has been prepared in accordance with the provisions of the Financial Management Act 2006 and [any other relevant written law].

(Signature) (Signature) B. Gate H. Norman Chairman of Accountable Authority Member of Accountable Authority 1 August 2017 1 August 2017

Contacts AASB 101.138(a) Postal Address Electronic PO Box 9999 1 William Street Internet: www.authority.wa.gov.au Perth WA 6000 Perth WA 6000 Email: [email protected] Telephone: 61 8 6551 0000 Facsimile: 61 8 6551 1111

Commentary: AASB 101 requires the following disclosures: the domicile and legal form of the entity; and its country of incorporation and the address of its registered office (or principal place of business, if different from the registered office).

TI 903 Overview

Executive Summary

Performance Highlights  The Authority received a commendation from the State Government for its services in providing assistance to public sector agencies to complement the corporate services reforms.  Customer surveys indicated that 95 per cent of agencies rated the services provided for the implementation of corporate services reforms as exceptional.  The Authority’s research and development project on software development for public sector accounting is on schedule and is expected to be completed in 2018.

TI 903(5) Commentary: Include a statement from the accountable authority that includes performance highlights and/or other significant events impacting on the agency. Operational Structure

The Model Statutory Authority delivers services through the following divisions:  Information Technology;  Customer Relations; and  Corporate Services.

TI 903(6) Commentary: Under this section, agencies are required to disclose a summary of activities and responsibilities of each division or its equivalent. Enabling Legislation

AASB 101.138(a) The Model Statutory Authority was established under section 5 of the Enabling Act 1990, TI 903(6)(ii)) listed as a statutory authority on Schedule 1 of the Financial Management Act 2006 and is subject to the provisions of the Public Sector Management Act 1994.

TI 903(6) Responsible Minister The Hon. Michael Jackson, BCom MLA, Minister for Information Technology.

Organisational Structure

AASB 101.138(b) Mission To provide leadership, support and services necessary to ensure that Western Australians have easy and affordable access to a diverse range of information technology.

TI 903(6) Organisational Chart

Board of the Authority Board members are appointed for a three year period by the Minister for Information Technology. Members are appointed according to their expertise and experience in areas relevant to the Model Statutory Authority’s activities.

Board Profiles

Mr Bill Gate (Chairman) Mr Gate was reappointed Chairman of the Model Statutory Authority for a second threeyear term in April 2016. Mr Gate is currently a Director of Microsoft Corporation and a member of the Word for Windows Commission. He has had a long involvement with the computer manufacturing sector and is a past Chairman of the State Government’s Information Technology Advisory Committee. He is also a member or patron of a number of community organisations.

Mr Harvey Norman Mr Norman was reappointed to the Board for a second three-year term in April 2015. Mr Norman, formerly managing director of IBM, is also a Board member of the April May Trust. In 2003 Mr Norman was awarded the Order of Australia for services to the Western Australian community. Mrs Jessica Rabbit Mrs Rabbit was reappointed to the Board for a second three-year term in April 2015. Mrs Rabbit has a Bachelor of Commerce from the University of Western Australia and is a Member of the Institute of Public Accountants (IPA). She has worked within the information technology industry for many years and has a high level of expertise at both operational and managerial levels.

Senior Officers Dr Bill King PhD (Chief Executive Officer) Mr King has extensive experience in corporate management and public sector information technology. Elliot James BCom CA (Director Information Technology) Mr James has 7 years’ public sector management experience and 15 years corporate advisory experience in the private sector. Chris Fleming BCom FCPA (Director Corporate Services, Chief Finance Officer) Mr Fleming has 17 years’ experience in public sector finance, in addition to experience in the private sector. Kevin Smith BA (Hons) (Director Customer Relations) Mr Smith has 10 years’ experience in public sector customer relations.

Administered Legislation The Authority assists the Minister for Information Technology in administration the following Acts: Information Technology Act 1951-1983; and Information Protection Act 1959.

TI 903(6)(v)-(vii) Commentary: Include the name of and authority for establishment of each subsidiary, related and affiliated body and information about the legislation administered pertaining to each subsidiary and related body. Other Key Legislation Impacting on the Model Statutory Authority’s Activities

In the performance of its functions, the Model Statutory Authority complies with the following relevant written laws: Auditor General Act 2006;

Contaminated Sites Act 2003; Disability Services Act 1993; Equal Opportunity Act 1984; Financial Management Act 2006; Freedom of Information Act 1992; Industrial Relations Act 1979; Minimum Conditions of Employment Act 1993; Occupational Safety and Health Act 1984; Public Sector Management Act 1994; Salaries and Allowances Act 1975; State Records Act 2000; and State Supply Commission Act 1991.

Commentary: In addition to the abovementioned legislations, where applicable agencies may consider disclosing specialised legislation that impacts upon their area of operations. Although the above information is not mandatory, listing the key legislation impacting on the agency’s activities provides useful information to users. TI 904(2), 903(7) Performance Management Framework

AASB 101.138(b) Outcome Based Management Framework

Commentary: Include a description of the links between the relevant government goals, agency level government desired outcomes and services. Changes to Outcome Based Management Framework

The Model Statutory Authority’s Outcome Based Management Framework did not change

30.06.2017 Page 6 of 95 Illustrative Model Annual Report Statutory Authority (Net Cost of Services) – 30 June 2017 during 2016-17.

Commentary: Include a discussion of any changes to agency level government desired outcomes, services and key performance indicators from the previous year. This segment should be included even if there is a nil return. Shared Responsibilities with Other Agencies

The Model Statutory Authority did not share any responsibilities with other agencies in 2016-17.

Commentary: Include a statement of which services are being delivered jointly with other agencies and how the agency is contributing to other agencies’ government desired outcomes. This segment should be included even if there is a nil return.

Agency Performance

Report on Operations

FMA sec 61(1)(c) Commentary: TI 903(8) The Report on Operations must be prepared in accordance with section 61(1)(c) of the FMA and TI 903. Include a brief discussion of agency performance, including references to key achievements and other key highlights about agency performance during the year. A brief discussion of the reason(s) for any material variations between actual performance and the targets specified in the agency’s resource agreement, budget statements, statement of corporate intent or any equivalent document should also feature in this section, as well as the impact of any external factors. Include any narrative necessary to explain the results and describe the agency’s performance, including any material variations and the impact of any external factors.

TI 808(4) Statutory authorities submitting resource agreements as part of the annual budget process are required to apply TI 808 Resource Agreements and encouraged to use a format similar to that shown in the Guidelines. Agencies may modify the content in the tables below according to the agency’s structure and reporting needs. Actual Results versus Budget Targets

Financial Targets 2016-17 2016-17 Variation(2) Target(1) Actual $000 $000 $000 Total cost of services (expense limit) (sourced from Statement of Comprehensive Income) 804,482 799,899 (4,583)(a) Net cost of services (sourced from Statement of Comprehensive Income) 773,708 766,798 (6,910)(b)

Total equity (sourced from Statement of Financial Position) 1,358,941 1,459,592 100,651(c)

Net increase / (decrease) in cash held (sourced from Statement of Cash Flows) (3,127) (2,950) 177

Approved salary expense level 639,000 636,757 (2,243)(d)

Agreed borrowing limit (where applicable) 5,720 5,675 (45)

(1) As specified in the Budget Statements. (2) Further explanations are contained in Note 45 ‘Explanatory statement’ to the financial statements. (a) The variation is mainly due to implementing tighter cost controls ($14,593,000), which was partially offset by additional costs ($11,220,000) in hiring consultants to deliver services. (b) In addition to the explanation above regarding expenses, the variation was mainly due to an increase in user charges and fees, and sales revenue ($2,050,000) as a result of better than expected demand. (c) The variation is mainly due to a greater than expected asset revaluation increments for land and buildings ($60,000,000) and infrastructure ($40,000,000). (d) The variation arose due to a number of vacancies occurring through secondment and attrition remaining unfilled through the second half of the reporting period ($2,243,000).

Commentary: The agreed borrowing limit is the total borrowings authorised by the Treasurer during, or subsequent to the budget process, due to the impact on the State’s Net Debt. Accountable authorities should refer to TI 822 to determine their borrowing limit.

Financial Targets 2016-17 2016-17 Variation(3) Agreed Target(1)/ Limit Actual(2) $000 $000 $000

Agreed Working Cash Limit (at Budget) 39,934 39,934 N/A

Agreed Working Cash Limit (at Actuals) 38,188 1,265(e) (36,923)(f) (e) The Actual Working Cash held totals $1,465,000, which includes an amount of $200,000 for Asset Investment Program milestone payments due early in the first month of the successive reporting period. Cash held for milestone payments is excluded from this target. (f) The variation is mainly due to [insert narrative]. Commentary: The Target Working Cash Limit at Budget is calculated by multiplying 5% by budgeted recurrent payments (total operating and financing). The Agreed Working Cash Limit was subsequently revised at MidYear Review when predicted reductions in salary expenses resulted in a contraction of the agreed limit. Further information on the Working Cash Target may be found in the Cash Management Policy (2007) at: http://www.treasury.wa.gov.au/uploadedFiles/_Treasury/Publications/Cash_Management _Policy.pdf More detailed information on agency performance, including long term trends and supporting footnotes, may be disclosed either in this section or in the section ‘Disclosures and Legal Compliance’. If further information is disclosed elsewhere, a cross reference to the page number would be required.

Summary of Key Performance Indicators 2016-17 2016-17 Variation(2) Target(1) Actual

Outcome 1: Sustainability of the provision of information technology Key Effectiveness Indicator(s): The proportion (%) of government agencies using sustainable information technology plans 85% 86% 1%

Service 1: Information Technology Key Efficiency Indicator(s): Cost per sustainable IT plan $22,700 $21,950 $750

Outcome 2: The improvement to the level of information technology for the public sector Key Effectiveness Indicator(s): The proportion (%) of government agencies upgrading their information technology 75% 76% 1% Service 2: Training and Assistance Key Efficiency Indicator(s): Clients assisted per staff member 0.36 0.39 0.03 Cost per hour of service delivered $5,000 $5,311 ($311) Outcome 3: Improvement to the competitiveness of the Western Australian technology industry Key Effectiveness Indicator(s): Gross value of goods and services produced $200m $206m $6m Uptake of new technology (%) 66% 68% 2% Service 3: Competition Policy Key Efficiency Indicator(s): Cost per advisory program $19,300 $18,900 $400 Cost per hour of service delivered $5,000 $5,155 ($155)

(1) As specified in the Budget Statements. (2) Explanations for the variations between target and actual results are presented in Note 45 ‘Explanatory statement’ to the financial statements. Commentary: More detailed information, including long term trends and supporting footnotes, may be disclosed either in this section or in the section ‘Disclosures and Legal Compliance’. The report on operations shall include any narrative necessary to explain the results and describe the agency’s performance, including any material variations and the impact of any external factors. If further information is disclosed elsewhere, a cross reference to the page number would be required. Where there is no resource agreement, the key performance indicators approved under TI 904 are to be used in this reporting process by reporting, at a minimum, a summary assessment of actual performance relative to target performance as set in the budget statements, statement of corporate intent or any equivalent document in accordance with TI 903(8).

Significant Issues Impacting the Agency

Current and emerging issues and trends The rapid pace of technological advancement is leading to a reduction in agency costs and creates opportunities to deliver enhanced services. Economic and social trends There is an expectation in society that services delivered by the Model Statutory Authority will be enhanced to take advantage of technological advances. Changes in written law There were no changes in any written law that affected the Authority during the financial year. Likely developments and forecast results of operations It is likely that Authority operations will undergo a period of consolidation during 2017 as a result of the full impact of changes made during the 2016-17 reporting period. The most significant areas for change will be in: continuation of the research and development project on software development for public sector accounting. This project is expected to deliver significant cost savings to the public sector; and measures taken in the current period with respect to information technology services should begin to deliver significant cost savings and greater sales growth.

TI 903(9) Commentary: Include a brief description of current and emerging issues and trends impacting on the agency’s operations, as well as the operations of any subsidiary and/or related bodies, and how the agency and bodies intend to address them. This may include economic and social trends and changes in any written law and significant judicial decisions affecting the agency or bodies. Any likely developments in the operations of the agency or bodies and the forecast results of those developments should also be disclosed, unless the disclosure is likely to be prejudicial to the agency.

Disclosures and Legal Compliance

Financial Statements

FMA sec 62(2) Certification of Financial Statements TI 947 For the year ended 30 June 2017 The accompanying financial statements of the Model Statutory Authority have been prepared in compliance with the provisions of the Financial Management Act 2006 from proper accounts and records to present fairly the financial transactions for the reporting period ended 30 June 2017 and the financial position as at 30 June 2017.

AASB 110.17 At the date of signing we are not aware of any circumstances which would render the particulars included in the financial statements misleading or inaccurate.

(Signature) (Signature) C. Fleming H. Norman Chief Finance Officer Member of Accountable Authority 1 August 2017 1 August 2017

(Signature) B. Gate Chairman of Accountable Authority 1 August 2017

Commentary: FMA sec 62(1) Financial statements are to be prepared in accordance with the accounting standards and other requirements issued by the AASB.

FMA sec 62(2) Financial statements include any financial statements and information prescribed by the Treasurer’s instructions and any other financial information required by a written direction given by the Minister.

AASB 110.17 Disclose the date when the financial statements were authorised for issue and who gave that authorisation. If the entity’s owners or others have the power to amend the financial statements after issue, the entity shall disclose that fact.

FMA sec 61(1)(a), 62(1), TI 1102, Statement of Comprehensive Income AASB 101.10(b), 81105 For the year ended 30 June 2017 AASB Framework, 2017 2016 Note $000 $000 COST OF SERVICES AASB 101.85, 88, 89, 99, 102, 104 Expenses AASB 101.102 Employee benefits expense 7 669,757 599,002 Supplies and services 9 61,980 56,345 Depreciation and amortisation expense 10 33,330 33,820 AASB 101.82(b) Finance costs 11 263 347 AASB 101.85 Accommodation expenses 12 6,963 6,330 AASB 101.85 Grants and subsidies 13 9,801 8,910 Cost of sales 17 5,560 3,700 AASB 101.98(c) Loss on disposal of non-current assets 20 - - AASB 101.102 Other expenses 14 12,245 13,074 Total cost of services 799,899 721,528

AASB 101.88, 89 Income AASB 101.82(a), AASB 118.35 Revenue AASB 118.35(b)(i)- (ii) User charges and fees 16 16,497 14,997 AASB 118.35(b)(i) Sales 17 14,267 12,970 AASB 1004.18 Commonwealth grants and contributions 18 1,100 1,000 AASB 118.35(b)(iii) Interest revenue 19 990 900 Other revenue - - Total Revenue 32,854 29,867

Gains AASB 101.98(c) Gain on disposal of non-current assets 20 170 4,700 Other gains 21 77 70 Total Gains 247 4,770 Total income other than income from State Government 33,101 34,637 NET COST OF SERVICES 766,798 686,891

Income from State Government 22 Service appropriation 796,234 702,101 TI 1102(11)(i) Liabilities assumed - - TI 1102(11)(ii), AASB 1004.18 Assets transferred - - TI 1102(11)(ii), AASB 1004.62 Services received free of charge 4,400 4,000 Royalties for Regions Fund - - AASB 101.85 Total income from State Government 800,634 706,101 AASB 101.81A(a) SURPLUS/(DEFICIT) FOR THE PERIOD 33,836 19,210

AASB 101.81A(b) OTHER COMPREHENSIVE INCOME Items not reclassified subsequently to profit or loss AASB 101.85, 96 Remeasurements of defined benefit liability - - Changes in asset revaluation surplus 39 100,000 25,500 Total other comprehensive income 100,000 25,500 AASB 101.81A(c) TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 133,836 44,710 See also Note 52 ‘Schedule of Income and Expenses by Service’. The Statement of Comprehensive Income should be read in conjunction with the accompanying notes. Commentary: Supplies and services – include administrative expenses. Finance costs – include borrowing costs. AASB 123.5 defines borrowing costs as interest and other costs incurred by an entity in connection with the borrowing of funds. Other

finance costs would include discounting expense incurred under AASB 5.17 and AASB 137. The discounting of employee benefits should be recognised under employee benefits expense rather than separately as a finance cost. Cost of sales – Australian Accounting Standards do not allow the disclosure of a net trading result in the Statement of Comprehensive Income. However, where immaterial, sales and the cost of goods sold would be included under other revenue and other expense respectively. Losses or gains on disposal of non-current assets or other assets – subject to materiality, gains or losses may be displayed separately such as losses or gains on disposal of noncurrent and other assets. Groups of similar transactions would normally be reported on a net basis. Immaterial losses or gains can be included in other expenses or other gains. Assets transferred – This is for transfers made at the transferor agency’s discretion and represents an expense to the transferor and revenue to the transferee. Other comprehensive income – AASB 101.82A requires separate line item for each class of other comprehensive income which are grouped on the basis of whether or not they will be reclassified subsequently to profit or loss. AASB 101.7 – Other comprehensive income may also include gains and losses arising from translating the financial statements of a foreign operation, gains and losses on remeasuring available for sale financial assets and the effective portion of gains and losses on hedging instruments in a cash flow hedge. Surplus/(deficit) for the period – any reduction in service appropriation under Treasury’s Cash Management Policy resulting in a deficit for the period should be explained in the Agency Performance section of the Annual Report.

AASB 101.85, 96 Remeasurements of defined benefit liability – Example disclosures of transactions for defined benefit plans are not addressed in this model. Further guidance may be found in the Note 35 ‘Provisions’ of the Model Annual Report for Statutory Authorities (Commercial).

FMA sec 61(1)(a), 62(1), Statement of Financial Position AASB 101.10(a), 6080 As at 30 June 2017 Note 2017 2016 $000 $000 ASSETS AASB 101.60, 66 Current Assets AASB 101.54(i) Cash and cash equivalents 40 1,465 4,625 TI 1103(7) Restricted cash and cash equivalents 23, 40 50 50 AASB 101.54(g) Inventories 24 18,310 16,375 AASB 101.54(h) Receivables 25 8,555 2,150 TI 1103(7), Amounts receivable for services 26 14,239 18,137 AASB 101.55 AASB 101.55 Other current assets 27 540 550 AASB 5.38, Non-current assets classified as held for sale 28 2,900 2,628 AASB 101.54(j) Total Current Assets 46,059 44,515

AASB 101.60 Non-Current Assets AASB 101.54(g) Inventories 24 - - AASB 101.54(h) Receivables 25 - - TI 1103(7), Amounts receivable for services 26 71,903 47,925 AASB 101.55 AASB 101.54(a) Property, plant and equipment 29 738,493 647,326 AASB 101.54(a) Infrastructure 30 632,490 601,077 AASB 101.54(c) Intangible assets 32 455 1,008 AASB 101.55 Other non-current assets 27 60 - Total Non-Current Assets 1,443,401 1,297,336 TOTAL ASSETS 1,489,460 1,341,851

LIABILITIES AASB 101.60, 69 Current Liabilities AASB 101.54(k) Payables 34 2,787 2,040 AASB 101.54(m) Borrowings 35 1,070 1,330 AASB 101.54(m) Amounts due to the Treasurer 36 2,400 7,970 AASB 101.54(l) Provisions 37 15,950 13,247 AASB 101.55 Other current liabilities 38 - - AASB 5.38, Liabilities directly associated with non-current assets AASB 101.54(p) classified as held for sale - - Total Current Liabilities 22.207 24,587

AASB 101.60, 69 Non-Current Liabilities AASB 101.54(k) Payables 34 - - AASB 101.54(m) Borrowings 35 2,205 2,220 AASB 101.54(l) Provisions 37 5,456 1,288 AASB 101.55 Other non-current liabilities 38 - - Total Non-Current Liabilities 7,661 3,508 TOTAL LIABILITIES 29,868 28,095 NET ASSETS 1,459,592 1,313,756

EQUITY 39 AASB 101.54(r) Contributed equity 118,000 106,000 AASB 101.54(r) Reserves 305,500 205,500 AASB 101.54(r) Accumulated surplus/(deficit) 1,036,092 1,002,256 TOTAL EQUITY 1,459,592 1,313,756 The Statement of Financial Position should be read in conjunction with the accompanying notes.

FMA sec 61(1)(a), 62 Statement of Changes in Equity AASB 101.10(c), 106110 For the year ended 30 June 2017 Accumulate Contribute d surplus/ Total d equity Reserves (deficit) equity Note $000 $000 $000 $000 Balance at 1 July 2015 39 41,000 180,000 983,046 1,204,046 AASB 108.19(b), 42(b), Changes in accounting policy or AASB 101.106(b) correction of prior period errors - - - - Restated balance at 1 July 2015 41,000 180,000 983,046 1,204,046 AASB 101.106(d)(i) Surplus/(deficit) - - 19,210 19,210 AASB 101.106(d)(ii) Other comprehensive income - 25,500 - 25,500 Total comprehensive income for the AASB 101.106(a) period - 25,500 19,210 44,710 Transactions with owners in their AASB 101.106(d)(iii) capacity as owners: Capital appropriations 65,000 - - 65,000 Other contributions by owners - - - - Distributions to owners - - - - Total 65,000 - - 65,000 Balance at 30 June 2016 106,000 205,500 1,002,256 1,313,756

Balance at 1 July 2016 106,000 205,500 1,002,256 1,313,756 AASB 101.106(d)(i) Surplus/(deficit) - - 33,836 33,836 AASB 101.106(d)(ii) Other comprehensive income - 100,000 - 100,000 Total comprehensive income for the AASB 101.106(a) period - 100,000 33,836 133,836 Transactions with owners in their AASB 101.106(d)(iii) capacity as owners: Capital appropriations 12,000 - - 12,000 Other contributions by owners - - - - Distributions to owners - - - - Total 12,000 - - 12,000 Balance at 30 June 2017 118,000 305,500 1,036,092 1,459,592 The Statement of Changes in Equity should be read in conjunction with the accompanying notes. Commentary: Changes in accounting policy or correction of prior period errors An example of a voluntary change in accounting policy is an increase in the asset capitalisation threshold. Refer to Guidelines in TI 1101. Under AASB 108, voluntary changes in accounting policy and correction of prior period errors are adjusted against the opening balances of each affected component of equity in the comparatives. Note that changes in accounting policy under AASB 116 and AASB 138 in respect to the revaluation of assets are not accounted for under AASB 108. Changes to the revaluation model under these Standards are not applied retrospectively. Balance at 1 July 2016 In accordance with AASB 108.24, under limited circumstances the current period may be the beginning of the earliest period for which retrospective application is practicable for a change in accounting policy. Refer also to AASB 108.19(b) and AASB 101.106(b).

Statement of Cash Flows FMA sec 61(1)(a), 62 For the year ended 30 June 2017 AASB 101.10(d), AASB 107 2017 2016 TI 1101(7)(i) Note $000 $000 CASH FLOWS FROM STATE GOVERNMENT Service appropriation 757,879 661,652 Capital appropriation 12,000 65,000 Holding account drawdown 18,137 7,688 Royalties for Regions Fund - - Net cash provided by State Government 788,016 734,340

AASB 107.18 CASH FLOWS FROM OPERATING ACTIVITIES Payments AASB 107.14(d) Employee benefits (663,640) (593,442) AASB 107.14(c) Supplies and services (65,567) (55,556) AASB 107.31 Finance costs (175) (270) Accommodation (6,292) (5,720) Grants and subsidies (9,801) (8,910) GST payments on purchases (7,336) (6,829) GST payments to taxation authority - - Other payments (12,645) (10,838)

Receipts Sale of goods and services 9,989 9,081 User charges and fees 16,497 14,997 Commonwealth grants and contributions 1,100 1,000 AASB 107.31 Interest received 990 900 GST receipts on sales 2,345 1,730 GST receipts from taxation authority 5,056 5,034 Other receipts 77 70 AASB 107.Aus 20.2 Net cash provided by/(used in) operating activities 40 (729,402) (648,753)

AASB 107.21 CASH FLOWS FROM INVESTING ACTIVITIES Payments AASB 107.16(a) Purchase of non-current assets (58,727) (96,992) Receipts AASB 107.16(b) Proceeds from sale of non-current assets 2,798 11,190 Net cash provided by/(used in) investing activities (55,929) (85,802)

AASB 107.21 CASH FLOWS FROM FINANCING ACTIVITIES Payments AASB 107.17(d) Repayment of borrowings (8,035) (1,090) Other repayments - - Receipts AASB 107.17(c) Proceeds from borrowings 2,400 1,160 Other proceeds - - Net cash provided by/(used in) financing activities (5,635) 70

AASB 107.7 Net increase/(decrease) in cash and cash equivalents (2,950) (145) Cash and cash equivalents at the beginning of the period 3,995 4,140 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 40 1,045 3,995 The Statement of Cash Flows should be read in conjunction with the accompanying notes. Commentary: Finance costs – are equivalent to borrowing costs. Any unwinding of discounts is included in the Statement of Comprehensive Income as they are not cash flows. Purchase of non-current assets – due to the change in capitalisation threshold where assets below $5,000 are to be expensed, the cash flows under investing activities represent the extent to which expenditure has been made for resources that are

30.06.2017 Page 17 of 95 Illustrative Model Annual Report Statutory Authority (Net Cost of Services) – 30 June 2017 initially recognised as an asset in the Statement of Financial Position. Therefore, expenditure on items below $5,000 is to be classified as an operating activity. Cash and cash equivalent assets transferred to/from an agency as part of a distribution to/contribution by owners should be reported under ‘Cash flows from State Government’.

Index of Notes to the Financial Statements For the year ended 30 June 2017 Subject Policy Disclosure Title of the Policy Note Note Note General 1 Australian Accounting Standards General 1 Early adoption of standards General 1 General General 2 Summary of significant accounting policies General 2(a) General statement General 2(b) Basis of preparation General 2(c) 49,50 Reporting entity General 2(d) 22, 39 Contributed equity Income 2(e) Income Income 2(e) Revenue Income 2(e) Sale of goods Income 2(e) Provision of services Income 2(e) 19 Interest Income 2(e) 22 Service appropriations Income 2(e) Grants, donations, gifts and other non- reciprocal contributions Income 2(e) Gains Expense/Asset 2(f) 11, 35 Borrowing costs Assets 2(g) 29, 30 Property, plant and equipment and infrastructure Assets 2(h) 32 Intangible assets Assets 2(i) 33 Impairment of assets Assets 2(j) 20, 28 Non-current assets (or disposal groups) classified as held for sale Assets/Liability 2(k) 10, 11, 12, Leases 29, 35, 42 Assets/Liability 2(l) 46 Financial instruments Assets 2(m) 40 Cash and cash equivalents Assets 2(m) 23, 40 Restricted Cash and cash equivalents Assets/Liability 2(n) 23, 34 Accrued salaries Assets 2(o) 26 Amounts receivable for services (Holding Account) Assets 2(p) 17, 24 Inventories Assets 2(q) 25 Receivables Liability 2(r) 34 Payables Liability 2(s) 35 Borrowings Liability 2(t) 36 Amounts due to the Treasurer Liability 2(u) 37 Provisions Liability 2(u) 7, 37 Provisions – employee benefits Expense 2(u) 37 Provisions – other Expense 2(v) 7 Superannuation expense Revenue/Asset 2(w) 22 Assets and services received free of charge or for nominal cost General 2(x) 47 Jointly controlled operations General 2(y) Comparative figures General 3 Other accounting policies that are not included in this model General 4 Judgements made by management in applying accounting policies General 5 Key sources of estimation uncertainty

This index does not form part of the financial statements.

Index of Notes to the Financial Statements For the year ended 30 June 2017 Subject Policy Disclosure Title of the Disclosure Note Note Note General 6 Disclosure of changes in accounting policy and estimates General 6 Initial application of an Australian Accounting Standard General 6 Voluntary changes in accounting policy General 6 Future impact of Australian Accounting Standards not yet operative General 6 Changes in accounting estimates Expense 2(u) 7, 14, 37 Employee benefits expense Expense 2(u), 2(v) 8 Compensation of Key Management Personnel Expense 9 Supplies and services Expense 10 Depreciation and amortisation expense Expense 2(f) 11 Finance costs Expense 12 Accommodation expenses Expense 13 Grants and subsidies Expense 14 Other expenses Income/Expense 15 Related Party Transactions Income 16 User charges and fees Income/Expense 17, 24 Trading profit Income 2(e) 18 Commonwealth grants and contributions Income 2(e) 19 Interest revenue Income 2(e) 21 Other gains Income/Expense 2(e), 2(j) 20 Net gain/(loss) on disposal of non-current assets Income 2(e) 22 Income from State Government Asset 2(m) 23, 40 Restricted cash and cash equivalents Asset 2(p) 24, 17 Inventories Asset 2(q) 25 Receivables Asset 2(o) 26, 22 Amounts receivable for services (Holding Account) Asset 27 Other assets Asset 2(j) 28 Non-current assets classified as held for sale Asset 2(g) 29 Property, plant and equipment Asset 2(g) 30 Infrastructure Asset 2(b), (g), 31 Fair value measurements (j) (k), (l) Asset 2(h) 32 Intangible assets Asset 2(i) 33 Impairment of assets Liability 2(r) 34 Payables Liability 2(s) 35 Borrowings Liability 2(t) 36 Amounts due to the Treasurer Liability 2(u) 37 Provisions Liability 38 Other liabilities Equity 2(d) 39 Equity Cash Flow 40 Notes to the statement of cash flows Expense 41 Services provided free of charge General 42 Commitments General 43 Contingent liabilities and contingent assets General 44 Events occurring after the end of the reporting period General 45 Explanatory statement General 2(l) 46 Financial instruments General 2(l) 46(c) Financial instrument disclosures

Index of Notes to the Financial Statements For the year ended 30 June 2017 Subject Policy Disclosure Title of the Policy Note Note Note General 2(l) 46(a) Financial risk management objectives and policies General 2(l) 46(b) Categories of financial instruments General 2(x) 47 Joint operations General 48, 14 Remuneration of auditor General 2(c) 49 Related bodies External 2(c) 50 Affiliated bodies External 51 Special purpose accounts General 52 Supplementary financial Information 52(a) Write offs 52(b) Losses through theft, defaults and other causes 52(c) Gifts of public property External 2(e) 52 Schedule of income and expenses by service

Notes to the Financial Statements For the year ended 30 June 2017

Note 1. Australian Accounting Standards General The Authority’s financial statements for the year ended 30 June 2017 have been prepared in accordance with Australian Accounting Standards. The term ‘Australian Accounting Standards’ includes Standards and Interpretations issued by the Australian Accounting Standards Board (AASB). The Authority has adopted any applicable new and revised Australian Accounting Standards from their operative dates.

TI 1101(6) Early adoption of standards The Authority cannot early adopt an Australian Accounting Standard unless specifically permitted by TI 1101 Application of Australian Accounting Standards and Other Pronouncements. There has been no early adoption of any other Australian Accounting Standards that have been issued or amended (but not operative) by the Authority for the annual reporting period ended 30 June 2017.

Commentary: The Australian Accounting Interpretations are adopted through AASB 1048 Interpretation of Standards and are classified into those corresponding to International Financial Reporting Interpretations Committee (IFRIC) Interpretations and those only applicable in Australia. This includes interpretations of both the AASB and the former Urgent Issues Group (UIG). The AASB last amended the Framework for the Preparation and Presentation of Financial Statements (Framework) in July 2014. These amendments also withdraw the Statement of Accounting Concept SAC 2. The AASB continues to revise and maintain accounting standards and those interpretations that are of particular relevance to the Australian environment, especially those that deal more specifically with not-for-profit entity issues and/or do not have an equivalent IASB Standard or IFRIC Interpretation.

AASB 101.114(b) TI 1101 Note 2. Summary of significant accounting policies AASB 1054.7-9 (a) General statement The Authority is a not-for-profit reporting entity that prepares general purpose financial statements in accordance with Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the AASB as applied by the Treasurer's instructions. Several of these are modified by the Treasurer's instructions to vary application, disclosure, format and wording. The Financial Management Act 2006 and the Treasurer's instructions impose legislative provisions that govern the preparation of financial statements and take precedence over Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the AASB. Where modification is required and has had a material or significant financial effect upon the reported results, details of that modification and the resulting financial effect are disclosed in the notes to the financial statements.

FMA sec 61(1)(a), 62(1), 78 Commentary: TIs mandate options and modify application of accounting standards to provide certainty, consistency and appropriate reporting across the public sector. For example, AASB 116 requires land and buildings to be measured at either cost or fair value, while TI 954 mandates the fair value option.

AASB 101.112(a) (b) Basis of preparation

AASB 101.117(a) The financial statements have been prepared on the AASB 101.27 accrual basis of accounting using the historical cost

TI 954 convention, except for land, buildings and infrastructure which have been measured at fair AASB 108.13 value. The accounting policies adopted in the preparation of the financial statements have been consistently applied throughout all periods presented unless otherwise stated.

AASB 121.9, 38 The financial statements are presented in Australian AASB 101.51(e) dollars and all values are rounded to the nearest TI 948 thousand dollars ($'000).

AASB 101.122 Note 4 ‘Judgements made by management in applying accounting policies’ discloses judgements that have been made in the process of applying the Authority’s accounting policies resulting in the most significant effect on amounts recognised in the financial statements.

AASB 101.125 Note 5 ‘Key sources of estimation uncertainty’ discloses key assumptions made concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period.

AASB 101.25 Commentary: Going concern AASB 101 requires management to assess the Authority’s ability to continue as a going concern when preparing financial statements. The Model does not illustrate an entity encountering either a going concern issue or a deficiency of net assets. Where this occurs the following wording may be appropriate: “The financial statements have been prepared on a going concern basis which assumes that the Authority will be able to generate sufficient positive cash flows to meet its financial obligations and realise its assets and extinguish its liabilities in the normal course of business [narrate appropriate causal factors as applicable].” OR “ Notwithstanding the Authority’s deficiency of net assets, the financial statements have been prepared on the going concern basis. This basis has been adopted as the Authority is a State Government agency funded by Parliamentary appropriation from the Consolidated Account.”

TI 951, 1105 (c) Reporting entity AASB 127 The reporting entity comprises the Authority and bodies included at Note 49 ‘Related bodies’.

Int 1038 (d) Contributed equity TI 955 AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities requires transfers in the nature of equity

contributions, other than as a result of a restructure of administrative arrangements, to be designated by the Government (the owner) as contributions by owners (at the time of, or prior to transfer) before such transfers can be recognised as equity contributions. Capital appropriations have been designated as contributions by owners by TI 955 Contributions by Owners made to Wholly Owned Public Sector Entities and have been credited directly to Contributed Equity.

The transfers of net assets to/from other agencies, other than as a result of a restructure of administrative arrangements, are designated as contributions by owners where the transfers are non- discretionary and non-reciprocal.

Commentary: Repayable capital appropriations are recognised as liabilities. Refer to Note 22 ‘Income from State Government’ for further commentary on the AASB 1004.5456 application of TI 955. Transfers of net assets to/from other agencies as a result of a restructure of administrative arrangements are to be accounted for as distributions to owners and contributions by owners respectively. See also Note 39 ‘Equity”.

Framework 74-77 (e) Income Revenue recognition Revenue is recognised and measured at the fair value of consideration received or receivable. Revenue is recognised for the major business activities as follows:

AASB 118.14, 35(a) Sale of goods Revenue is recognised from the sale of goods and disposal of other assets when the significant risks and rewards of ownership transfer to the purchaser and can be measured reliably.

AASB 118.20, 35(a) Provision of services Revenue is recognised by reference to the stage of completion of the transaction.

AASB 118.30(a) Interest Revenue is recognised as the interest accrues.

Commentary: Interest shall be recognised using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset, where applicable.

AASB 118.35(a) Service appropriations

Service appropriations are recognised as revenues at fair value in the period in which the Authority gains control of the appropriated funds. The Authority gains control of appropriated funds at the time those funds are deposited to the bank account or credited to the ‘Amounts receivable for services’ (holding account) held at Treasury.

FMA sec 26(2) Commentary: See also Note 22 ‘Income from State Government’ for further information.

Grants, donations, gifts and other non-reciprocal contributions AASB 1004.12 Revenue is recognised at fair value when the Authority obtains control over the assets comprising the contributions, usually when cash is received.

AASB 1004.12, 44 Other non-reciprocal contributions that are not contributions by owners are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated. Royalties for Regions funds are recognised as revenue at fair value in the period in which the Authority obtains control over the funds. The Authority obtains control of the funds at the time the funds are deposited into the Authority’s bank account.

Commentary: AASB 1004.60(a) Where contributions recognised as revenues during TI 1102(8) the reporting period were obtained subject to conditions that they will be expended in a specified manner, and those expenditures had yet to be made at the end of the reporting period, the amounts and nature of the contributions, and the conditions attaching to them are to be disclosed in the notes.

AASB 1004.60(b), (d) Where contributions recognised as revenues during the reporting period were obtained specifically for the provision of goods or services over a future period, the amounts and nature of the contributions, and the periods to which they relate are to be disclosed.

AASB 1004.60(e) Where contributions recognised as revenues in a previous reporting period were obtained in respect of the current reporting period, the amounts and nature of the contributions are to be disclosed.

Framework 75-76 Gains Realised and unrealised gains are usually recognised on a net basis. These include gains arising on the disposal of non-current assets and some revaluations of non-current assets.

(f) Borrowing costs

AASB 123. 8, Aus 26.1 Borrowing costs for qualifying assets are capitalised net of any investment income earned on the

AASB 123. 26(b) unexpended portion of the borrowings. Other borrowing costs are expensed when incurred. The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average interest rate applicable to the Authority’s outstanding borrowings during the year, in this case 3.5% (2016: 4%).

AASB 123.7, 8 Commentary: A qualifying asset is an asset that takes a substantial period of time to get ready for its intended use or sale. AASB 123 Borrowing Costs still allows not-for-profit public sector entities to continue to choose whether to expense or capitalise borrowing costs relating to qualifying assets.

AASB 116 (g) Property, plant and equipment and infrastructure Capitalisation/expensing of assets TI 1101(14) Items of property, plant and equipment and infrastructure costing $5,000 or more are recognised as assets and the cost of utilising assets is expensed (depreciated) over their useful lives. Items of property, plant and equipment and infrastructure costing less than $5,000 are immediately expensed direct to the Statement of Comprehensive Income (other than where they form part of a group of similar items which are significant in total).

AASB 116.15 Initial recognition and measurement Property, plant and equipment and infrastructure are initially recognised at cost. AASB 116.Aus15.1 TI 1102(11)(ii) For items of property, plant and equipment and infrastructure acquired at no cost or for nominal cost, the cost is the fair value at the date of acquisition.

Subsequent measurement AASB 116.31 Subsequent to initial recognition of an asset, the revaluation model is used for the measurement of land, buildings and infrastructure, and historical cost for all other property, plant and equipment. Land, buildings and infrastructure are carried at fair value less accumulated depreciation (buildings and infrastructure only) and accumulated impairment losses. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses.

AASB 116.35 Where market-based evidence is available, the fair value of land and buildings is determined on the basis of current market values determined by reference to recent market transactions [or other basis, describe]. When buildings are revalued by reference to recent market transactions, the

accumulated depreciation is eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount.

AASB 116.35 In the absence of market-based evidence, fair value of land and buildings is determined on the basis of existing use. This normally applies where buildings are specialised or where land use is restricted. Fair value for existing use buildings is determined by reference to the cost of replacing the remaining future economic benefits embodied in the asset, i.e. the depreciated replacement cost. Where the fair value of buildings is determined on the depreciated replacement cost basis, the gross carrying amount and the accumulated depreciation are restated proportionately with the change in the gross carrying amount of the asset. Fair value for restricted use land is determined by comparison with market evidence for land with similar approximate utility (high restricted use land) or market value of comparable unrestricted land (low restricted use land).

AASB 116.77(b) Land and buildings are independently valued annually by the Western Australian Land Information Authority (Valuation Services) and recognised annually to ensure that the carrying amount does not differ materially from the asset’s fair value at the end of the reporting period. Fair value of infrastructure has been determined by reference to the depreciated replacement cost (existing use basis) as the assets are specialised and no market-based evidence of value is available. Land under infrastructure is included in land reported under Note 29 ‘Property, plant and equipment’ [specify how land under infrastructure is valued]. Independent valuations are obtained every 3 to 5 years for infrastructure.

AASB 116.35 When infrastructure is revalued, the accumulated depreciation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount.

AASB 13.B30 The most significant assumptions and judgements in TI 1101 estimating fair value are made in assessing whether to apply the existing use basis to assets and in determining estimated economic life. Professional judgement by the valuer is required where the evidence does not provide a clear distinction between market type assets and existing use assets.

Commentary: AASB 116.31 In this model, the agency has recognised revaluations annually. However, AASB 116 only requires revaluations to be made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined AASB 116.35

TI 954 Guidelines using fair value at the end of the reporting period. On revaluation, agencies may elect to either restate proportionately the gross carrying amount and the accumulated depreciation (gross method), or eliminate accumulated depreciation against the gross carrying amount of the asset and restate the net carrying amount to the revalued amount (net method). TI 954 prefers the gross method for asset values determined on the basis of depreciated replacement cost. This model is prepared on the gross basis and the disclosure above reflects this election. See also Note 29 ‘Property, plant and equipment’ and Note 30 ‘Infrastructure’ for further information on revaluations.

AASB 116.41 Derecognition TI 954 Guidelines Upon disposal or derecognition of an item of property, plant and equipment and infrastructure, any revaluation surplus relating to that asset is retained in the asset revaluation surplus.

AASB 101.79(b) Asset revaluation surplus The asset revaluation surplus is used to record increments and decrements on the revaluation of non-current assets on a class of assets basis.

AASB 116.50 Depreciation All non-current assets having a limited useful life are systematically depreciated over their estimated useful lives in a manner that reflects the consumption of their future economic benefits. Depreciation is calculated using the straight line method [or other method, describe], using rates which are reviewed annually. Estimated useful lives for each class of depreciable asset are: Buildings 20 to 40 years Plant and equipment 10 to 15 years Office equipment 5 years Software(a) 3 to 5 years Motor vehicles 3 to 7 years Infrastructure 55 to 80 years (a) Software that is integral to the operation of related hardware.

Works of art controlled by the Authority are classified as property, plant and equipment. These are anticipated to have indefinite useful lives. Their service potential has not, in any material sense, been consumed during the reporting period and consequently no depreciation has been recognised. Land is not depreciated.

AASB 138 (h) Intangible assets Capitalisation/expensing of assets

TI 1101(14) Acquisitions of intangible assets costing $5,000 or more and internally generated intangible assets costing $50,000 or more are capitalised. The cost of utilising the assets is expensed (amortised) over their useful lives. Costs incurred below these thresholds are immediately expensed directly to the Statement of Comprehensive Income.

AASB 138.24, Aus24.1 Intangible assets are initially recognised at cost. For assets acquired at no cost or for nominal cost, the AASB 138.74 cost is their fair value at the date of acquisition. The cost model is applied for subsequent measurement requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.

AASB 138.97, 100 Amortisation for intangible assets with finite useful lives is calculated for the period of the expected benefit (estimated useful life which is reviewed annually) on the straight line basis. All intangible assets controlled by the Authority have a finite useful life and zero residual value. The expected useful lives for each class of intangible asset are: Licences up to 10 years Development Costs 3 to 5 years Software(a) 3 to 5 years Website costs 3 to 5 years (a) Software that is not integral to the operation of any related hardware. Commentary: TI 1101 Agencies should assess their own circumstances in determining capitalisation thresholds for intangible AASB 138.75 assets (TI 1101 requires a minimum threshold of $5,000). AASB 138.107-108 Intangible assets can only be revalued to fair value AASB 138.97 where an active market exists. APG 2 Intangible assets that have an indefinite useful life are not subject to amortisation but must be tested annually for impairment. Amortisation commences when the intangible asset is available for use and ceases when the asset is classified as held-for-sale or where the asset has been fully amortised.

AASB 138.118 Licences Licences have a finite useful life and are carried at cost less accumulated amortisation and accumulated impairment losses.

AASB 138.118 Development costs APG 2 Research costs are expensed as incurred. Development costs incurred for an individual project are carried forward when the future economic benefits can reasonably be regarded as assured and

the total project costs are likely to exceed $50,000. Other development costs are expensed as incurred.

AASB 138.57 Commentary: Int 132 Specific recognition criteria apply to the capitalisation of development costs (e.g. software developed inhouse and web site costs.

Computer software Software that is an integral part of the related hardware is recognised as property, plant and equipment. Software that is not an integral part of the related hardware is recognised as an intangible asset. Software costing less than $5,000 is expensed in the year of acquisition.

Int 132.7-10 Website costs Website costs are charged as expenses when they are incurred unless they relate to the acquisition or development of an asset when they may be capitalised and amortised. Generally, costs in relation to feasibility studies during the planning phase of a website, and ongoing costs of maintenance during the operating phase are expensed. Costs incurred in building or enhancing a website that can be reliably measured, are capitalised to the extent that they represent probable future economic benefits.

Int 132.8 Commentary: Website costs may be capitalised by public sector agencies. The future economic benefits are not necessarily related to specific cash flows and the website is capable of capitalisation where it is linked to the delivery of services of the agency. (i) Impairment of assets

AASB 136.Aus6.1, Aus6.2, 9 Property, plant and equipment, infrastructure and TI 1101(7)(vii) intangible assets are tested for any indication of impairment at the end of each reporting period. Where there is an indication of impairment, the recoverable amount is estimated. Where the recoverable amount is less than the carrying amount, the asset is considered impaired and is written down to the recoverable amount and an impairment loss is recognised. Where an asset measured at cost is written down to recoverable amount, an impairment loss is recognised in profit or loss. Where a previously revalued asset is written down to recoverable amount, the loss is recognised as a revaluation decrement in other comprehensive income. As the Authority is a not-for-profit entity, unless a specialised asset has been identified as a surplus asset, the recoverable amount is the higher of an asset’s fair value less costs to sell and depreciated replacement cost.

The risk of impairment is generally limited to circumstances where an asset’s depreciation is

materially understated, where the replacement cost is falling or where there is a significant change in useful life. Each relevant class of assets is reviewed annually to verify that the accumulated depreciation/amortisation reflects the level of consumption or expiration of the asset’s future economic benefits and to evaluate any impairment risk from falling replacement costs.

AASB 136.10 Intangible assets with an indefinite useful life and intangible assets not yet available for use are tested for impairment at the end of each reporting period irrespective of whether there is any indication of impairment.

AASB 136.6 The recoverable amount of assets identified as surplus assets is the higher of fair value less costs to sell and the present value of future cash flows expected to be derived from the asset. Surplus assets carried at fair value have no risk of material impairment where fair value is determined by reference to market-based evidence. Where fair value is determined by reference to depreciated replacement cost, surplus assets are at risk of impairment and the recoverable amount is measured. Surplus assets at cost are tested for indications of impairment at the end of each reporting period.

AASB 139.59 Commentary: See Note 33 ‘Impairment of assets’ for the outcome of impairment reviews and testing. Refer also to Note 2(q) ‘Receivables’ and Note 25 ‘Receivables’ for impairment of receivables.

AASB 5.6, 15 (j) Non-current assets (or disposal groups) classified as held for sale Non-current assets (or disposal groups) held for sale are recognised at the lower of carrying amount and fair value less costs to sell, and are disclosed separately from other assets in the Statement of Financial Position. Assets classified as held for sale are not depreciated or amortised.

AASB 5.Aus2.1, 2.3 Commentary: Discontinued operations are rare in the public sector and therefore are not addressed in this model. (k) Leases

AASB 117.7, 8, 20, 25, 27 Finance lease rights and obligations are initially AASB 7.21 recognised, at the commencement of the lease term, as assets and liabilities equal in amount to the fair value of the leased item or, if lower, the present value of the minimum lease payments, determined at the inception of the lease. The assets are disclosed as plant, equipment and vehicles under lease, and are depreciated over the period during which the Authority is expected to benefit from their use. Minimum lease payments are apportioned between

the finance charge and the reduction of the outstanding lease liability, according to the interest rate implicit in the lease.

AASB 117.33 Operating leases are expensed on a straight line basis over the lease term as this represents the pattern of benefits derived from the leased properties.

Commentary: Int 4 Specific criteria apply in determining whether an arrangement is, or contains, a lease for the purposes of applying AASB 117 Leases. For example, take-or- pay and similar contracts. Agencies should assess their own circumstances in determining whether an ‘in-substance’ lease has been entered into.

AASB 117.15A Where leases include both land and buildings elements, separate classification of each element as a finance or an operating lease is required. (l) Financial instruments

AASB 139.9 In addition to cash and bank overdraft, the Authority AASB 7.8 has two categories of financial instrument: Loans and receivables; and Financial liabilities measured at amortised cost.

AASB 7.6, B1 Financial instruments have been disaggregated into the following classes: Financial Assets Cash and cash equivalents Restricted cash and cash equivalents Receivables Amounts receivable for services

Financial Liabilities Payables Bank overdraft WATC/Bank borrowings Finance lease liabilities Amounts due to the Treasurer

AASB 139.14, 43, 46(a), 47 Initial recognition and measurement of financial AASB 7.21 instruments is at fair value which normally equates to the transaction cost or the face value. Subsequent measurement is at amortised cost using the effective interest method.

AASB 7.29(a) The fair value of short-term receivables and payables is the transaction cost or the face value because there is no interest rate applicable and subsequent measurement is not required as the effect of discounting is not material.

AASB 107.45, 46 (m) Cash and cash equivalents For the purpose of the Statement of Cash Flows, cash and cash equivalent (and restricted cash and cash equivalent) assets comprise cash on hand and short-term deposits with original maturities of three months or less that are readily convertible to a known amount of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are included in Note 35 ‘Borrowings’.

(n) Accrued salaries Accrued salaries (see Note 34 ‘Payables’) represent the amount due to staff but unpaid at the end of the reporting period. Accrued salaries are settled within a fortnight of the reporting period end. The Authority considers the carrying amount of accrued salaries to be equivalent to its fair value.

AASB 107.48 Commentary: TI 1103 Accrued salaries are recognised at year end where the pay date for the last pay period for that reporting period does not coincide with the end of the reporting period. Statutory authorities required to pay amounts into a suspense account in relation to the 27th pay period that occurs every 11 years should follow the example disclosure in the Model Annual Report for Departments.

AASB 107.48 (o) Amounts receivable for services (holding TI 1103 account) The Authority receives income from the State Government partly in cash and partly as an asset (holding account receivable). The accrued amount appropriated is accessible on the emergence of the cash funding requirement to cover leave entitlements and asset replacement.

Commentary: See also Note 22 ‘Income from State Government’ and Note 26 ’Amounts receivable for services’.

AASB 102.36(a) (p) Inventories Inventories are measured at the lower of cost and net realisable value. Costs are assigned by the method most appropriate for each particular class of inventory, with the majority being measured on a first in first out basis [specify other cost methods used]. Inventories not held for resale are measured at cost unless they are no longer required, in which case they are measured at net realisable value.

AASB 102.Aus6.1, Aus9.1, Aus36.1 Commentary: Inventories ‘held for distribution’ by not-for-profit entities must be disclosed separately in the notes and measured at cost, adjusted when applicable for any

loss of service potential. See also Note 24 ‘Inventories’.

AASB 7.21, B5(d) (q) Receivables AASB 139.43, 46(a) AASB 139.59 TI 807 Receivables are recognised at original invoice amount less an allowance for any uncollectible amounts (i.e. impairment). The collectability of receivables is reviewed on an ongoing basis and any receivables identified as uncollectible are written-off against the allowance account. The allowance for uncollectible amounts (doubtful debts) is raised when there is objective evidence that the Authority will not be able to collect the debts. The carrying amount is equivalent to fair value as it is due for settlement within 30 days.

Commentary: An allowance for impairment of receivables can only be raised if there is objective evidence of impairment. See also Note 2(l) ‘Financial Instruments’ and Note 25 ‘Receivables’.

AASB 7.21 (r) Payables AASB 139.43, 47 TI 323 Payables are recognised at the amounts payable when the Authority becomes obliged to make future payments as a result of a purchase of assets or services. The carrying amount is equivalent to fair value, as settlement is generally within 30 days.

Commentary: See also Note 2(l) ‘Financial Instruments’ and Note 34 ‘Payables’.

AASB 7.21, 27 (s) Borrowings AASB 139.43, 47 All loans payable are initially recognised at the fair value, being the net proceeds received. Subsequent measurement is at amortised cost using the effective interest method.

Commentary: See also Note 2(l) ‘Financial Instruments’ and Note 35 ‘Borrowings’.

AASB 7.21 (t) Amounts due to the Treasurer AASB 139.47 The amount due to the Treasurer is in respect of a Treasurer’s Advance. Initial recognition and measurement, and subsequent measurement, is at the amount repayable. Although there is no interest charged, the amount repayable is equivalent to fair value as the period of the borrowing is for less than 12 months with the effect of discounting not being material.

Commentary: See also Note 36 ‘Amounts due to the Treasurer’. (u) Provisions

Provisions are liabilities of uncertain timing or amount and are recognised where there is a present legal or constructive obligation as a result of a past event and when the outflow of resources embodying economic benefits is probable and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at the end of each reporting period.

Commentary: See also Note 37 ‘Provisions’.

AASB 119.10, 128 Provisions - employee benefits All annual leave and long service leave provisions are in respect of employees’ services up to the end of the reporting period. Annual leave Annual leave is not expected to be settled wholly within 12 months after the end of the reporting period and is therefore considered to be ‘other long term employee benefits’. The annual leave liability is recognised and measured at the present value of amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

AASB 119.Aus78.1 When assessing expected future payments consideration is given to expected future wage and salary levels including non-salary components such as employer superannuation contributions, as well as the experience of employee departures and periods of service. The expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

AASB 101.69(d) The provision for annual leave is classified as a current liability as the Authority does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

Commentary: Agencies are required to review leave patterns of employees for the purpose of measuring the employee benefit liability. Where annual leave for the entire employee population is not wholly settled within the twelve months after balance date, all annual leave falls within the scope of ‘other longterm employee benefits’ and is measured at the present value of amounts expected to be paid when the liabilities are settled in accordance with AASB 119.155.

AASB 119.11 In contrast, where annual leave is settled wholly within the twelve months after balance date, the first paragraph under the subheading ‘Annual Leave’ should be substituted with:

AASB 119.76-79 “Annual leave is expected to be settled wholly within 12 months after the end of the reporting period and is therefore considered to be a ‘shortterm employee benefit’. The annual leave liability is recognised and measured at the undiscounted amounts expected to be paid when the liability is settled.”

Long service leave Long service leave is not expected to be settled wholly within 12 months after the end of the reporting period and is therefore recognised and measured at the present value of amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

AASB 119.76-79 When assessing expected future payments consideration is given to expected future wage and salary levels including non-salary components such as employer superannuation contributions, as well as the experience of employee departures and periods of service. The expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

AASB 101.69(d) Unconditional long service leave provisions are TI 520 Guidelines classified as current liabilities as the Authority does not have an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period. Pre-conditional and conditional long service leave provisions are classified as non-current liabilities because the Authority has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.

Commentary: Long service leave AASB 119.51, 128 Agencies using the short-hand method to recognise the long service leave liabilities should adopt the following paragraphs under the heading ‘Long service leave’ instead of the above paragraphs. The following paragraphs should be tailored in accordance with the Authority’s circumstances: “ A liability for long service leave is recognised after an employee has completed x years of service based on remuneration rates current as at the end of the reporting period. An actuarial assessment of long service leave undertaken by XXX Actuaries at 30 June 2017 AASB 101.69(d) TI 520 Guidelines determined that the liability measured using the short-hand measurement technique above was not materially different from the liability determined using the present value of expected future payments. This calculation is consistent with the Authority’s experience of employee retention and leave taken. Unconditional long service leave provisions are

classified as current liabilities as the Authority does not have an unconditional right to defer the settlement of the liability for at least 12 months after the end of the reporting period. Pre-conditional and conditional long service leave provisions are classified as non-current liabilities because the Authority has an unconditional right to defer the settlement of the liability until the employee has completed the requisite years of service.”

TI 1101 Guidelines Use the following notes where applicable: Sick leave Liabilities for sick leave are recognised when it is probable that sick leave paid in the future will be greater than the entitlement that will accrue in the future. Past history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liability for unused sick leave entitlements is recognised. As sick leave is non-vesting, an expense is recognised in the Statement of Comprehensive Income for this leave as it is taken. Deferred leave The provision for deferred leave relates to Public Service employees who have entered into an agreement to self-fund an additional 12 months leave in the fifth year of the agreement. The provision recognises the value of salary set aside for employees to be used in the fifth year. This liability is measured on the same basis as annual leave. Deferred leave is reported as a current provision as employees can leave the scheme at their discretion at any time. Purchased leave The provision for purchased leave relates to Public Service employees who have entered into an agreement to self-fund up to an additional 10 weeks leave per calendar year. The provision recognises the value of salary set aside for employees and is measured at the undiscounted amounts expected to be paid when the liabilities are settled.

AASB 119.139(a) Superannuation The Government Employees Superannuation Board (GESB) and other fund providers administer public sector superannuation arrangements in Western Australia in accordance with legislative requirements. Eligibility criteria for membership in particular schemes for public sector employees vary according to commencement and implementation dates. Eligible employees contribute to the Pension Scheme, a defined benefit pension scheme closed to new members since 1987, or the Gold State

Superannuation Scheme (GSS), a defined benefit lump sum scheme closed to new members since 1995. Employees commencing employment prior to 16 April 2007 who were not members of either the Pension Scheme or the GSS became non- contributory members of the West State Superannuation Scheme (WSS). Employees commencing employment on or after 16 April 2007 became members of the GESB Super Scheme (GESBS). From 30 March 2012, existing members of the WSS or GESBS and new employees have been able to choose their preferred superannuation fund provider. The Authority makes contributions to GESB or other fund providers on behalf of employees in compliance with the Commonwealth Government’s Superannuation Guarantee (Administration) Act 1992. Contributions to these accumulation schemes extinguish the Authority’s liability for superannuation charges in respect of employees who are not members of the Pension Scheme or GSS.

The GSS is a defined benefit scheme for the purposes of employees and wholeofgovernment reporting. However, it is a defined contribution plan for agency purposes because the concurrent contributions (defined contributions) made by the Authority to GESB extinguishes the agency’s obligations to the related superannuation liability. The Authority has no liabilities under the Pension Scheme or the GSS. The liabilities for the unfunded Pension Scheme and the unfunded GSS transfer benefits attributable to members who transferred from the Pension Scheme, are assumed by the Treasurer. All other GSS obligations are funded by concurrent contributions made by the Authority to the GESB. The GESB makes all benefit payments in respect of the Pension Scheme and GSS, and is recouped from the Treasurer for the employer’s share.

Commentary: Statutory authorities utilising this Model Annual Report and identified in Division 2 of Schedule 1 of the State Superannuation Regulations 2001, should refer to the Model Annual Report for Commercial agencies for assistance on reporting liabilities arising from the Pension Scheme and the pre-transfer component of the GSS. See also Note 2(v) ‘Superannuation expense’.

AASB 137 Provisions – other Employment on-costs Employment on-costs, including workers’ compensation insurance, are not employee benefits and are recognised separately as liabilities and

expenses when the employment to which they relate has occurred. Employment on-costs are included as part of ‘Other expenses’ and are not included as part of the Authority’s ‘Employee benefits expense’. The related liability is included in ‘Employment on-costs provision’.

Commentary: See also Note 14 ‘Other expenses’ and Note 37 ‘Provisions’.

Warranties Provision is made for the estimated liability on all products still under warranty at the end of the reporting period. The amount of the provision is the present value of the expected future cash outflows expected to settle the warranty obligations, having regard to the warranty experience over the last five years and the risks of the warranty obligations.

Int 1 Remediation costs AASB 116 AASB 137 A provision is recognised where the Authority has a APG 1 legal or constructive obligation to undertake remediation work. Estimates are based on the present value of expected future cash outflows.

AASB 119.53. 135 (v) Superannuation expense AASB 119.51(b) 70 Superannuation expense is recognised in the profit or loss of the Statement of Comprehensive Income and comprises employer contributions paid to the GSS (concurrent contributions), WSS, the GESBS, and other superannuation funds.

Commentary: Example disclosures of defined benefit plans are not addressed in this model. Further guidance may be found in the Note 35 ‘Provisions’ of the Model Annual Report for Statutory Authorities (Commercial).

TI 1102(11)(ii) (w) Assets and services received free of charge or for nominal cost Assets or services received free of charge or for nominal cost that the Authority would otherwise purchase if not donated, are recognised as income at the fair value of the assets or services where they can be reliably measured. A corresponding expense is recognised for services received. Receipts of assets are recognised in the Statement of Financial Position. Assets or services received from other State Government agencies are separately disclosed under Income from State Government in the Statement of Comprehensive Income.

AASB 11.20 (x) Joint operations The Authority has interests in joint arrangements that

are joint operations. A joint arrangement is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A joint operation involves the use of assets and other resources of the venturers rather than the establishment of a separate entity. The Authority recognises its interests in the joint operations by recognising the assets it controls and the liabilities that it incurs in respect of the joint arrangements. The Authority also recognises the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the joint operations.

Commentary: Details of the joint operations are disclosed in Note 47 ‘Jointly controlled operations’.

AASB 101.38, 41 (y) Comparative figures TI 949 Comparative figures are, where appropriate, reclassified to be comparable with the figures presented in the current reporting period.

AASB 101.10(f) Commentary: AASB 101.40A Change in Accounting Policy, Retrospective TI 1103 Restatement or Reclassification If the Authority applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items in its financial statements, and the financial effect of the amended items on the statement of financial position at the beginning of the preceding period is material, a statement of financial position as at the beginning of the preceding period is required.

AASB 108.44 Error Where the Authority corrects an error which has a material financial effect but the periodspecific effect of the error is indeterminate, the Authority may be compelled to restate the opening balances of assets, liabilities and equity for the earliest period for which retrospective restatement is practicable. Authorities discovering a material error in their financial statements should review paragraphs 41 to 47 of AASB 108 to determine the reporting requirements that apply to their situation.

Note 3. Other accounting policies not included in this model AASB 101.119 Commentary: The Authority should consider its own circumstances and incorporate any other accounting policies where relevant. Further guidance for accounting policy disclosures not included in this model may be obtained from Australian Accounting Standards and other illustrative statement examples available in the public domain. The Model Annual Report for Commercial agencies

provides limited examples for accounting policy notes in respect of investment property, rental income, foreign currency translation, derivatives and hedge accounting.

Note 4. Judgements made by management in applying accounting policies The preparation of financial statements requires management to make judgements about the application of accounting policies that have a significant effect on the amounts recognised in the financial statements. The Authority evaluates these judgements regularly.

Operating lease commitments The Authority has entered into a number of leases for buildings for branch office accommodation. Some of these leases relate to buildings of a temporary nature and it has been determined that the lessor retains substantially all the risks and rewards incidental to ownership. Accordingly, these leases have been classified as operating leases.

AASB 101.122 Commentary: This note is only required where judgements made in applying accounting policies have a significant effect on the amounts recognised in the financial statements. An example disclosure is presented above. Other examples of the types of judgements that would need to be disclosed where they have a significant effect are as follows:  Whether a joint arrangement is a joint operation or a joint venture;  Capitalisation of development expenditure (for example, whether enhancements should be capitalised or whether internally developed computer software should be capitalised, refer to Accounting Policy Guideline (APG) 2 and AASB 138 Intangible Assets for further guidance);  Adoption of revaluation versus cost basis for plant and equipment; and  Recognition and valuation of heritage and cultural assets. Note that the above is not an exhaustive list.

Note 5. Key sources of estimation uncertainty Key estimates and assumptions concerning the future are based on historical experience and various other factors that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next reporting period.

Long Service Leave Several estimations and assumptions used in calculating the Authority’s long service leave provision include expected future salary rates, discount rates, employee retention rates and expected future payments. Changes in these estimations and assumptions may impact on the carrying amount of the long service leave provision.

AASB 101.125 Commentary: This note is only required where the key estimates and assumptions made concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period. The following are other sources of estimation uncertainty that may be disclosed where they have a significant risk of material impact:  impairment of intangible assets Agencies are required to assess impairment of intangible assets at the end of each reporting period. Where there is an indication of impairment (such as falling replacement costs), the recoverable amount (depreciated replacement cost) of the intangible asset is estimated. Calculations performed in assessing recoverable amounts incorporate a number of key estimates; refer to AASB 138 Intangible Assets;  discount rates used in estimating provisions;  estimating useful life and residual values of key assets;  estimating depreciated replacement cost; and  contaminated sites (for example, in estimating the liability when remediation required, refer to APG 1 Accounting for Contaminated Sites).

Note 6. Disclosure of changes in accounting policy and estimates AASB 108.28 Initial application of an Australian Accounting Standard The Authority has applied the following Australian Accounting Standards effective, or adopted, for annual reporting periods beginning on or after 1 July 2016 that impacted on the Authority.

AASB 1057 Application of Australian Accounting Standards This Standard lists the application paragraphs for each other Standard (and Interpretation), grouped where they are the same. There is no financial impact.

AASB 20143 Amendments to Australian Accounting Standards Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & 11] The Authority establishes Joint Operations in pursuit of its objectives and does not routinely acquire interests in Joint Operations. Therefore, there is no financial impact on application of the Standard.

AASB 20144 Amendments to Australian Accounting Standards Clarification of Acceptable Methods of Depreciation and Amortisation [AASB 116 & 138] The adoption of this Standard has no financial impact for the Authority as depreciation and amortisation is not determined by reference to revenue generation, but by reference to consumption of future economic benefits.

AASB 20149 Amendments to Australian Accounting Standards Equity Method in Separate Financial Statements [AASB 1, 127 & 128] This Standard amends AASB 127, and consequentially amends AASB 1 and AASB 128, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements. As the Authority has no joint ventures and associates, the application of the

Standard has no financial impact.

AASB 20151 Amendments to Australian Accounting Standards Annual Improvements to Australian Accounting Standards 20122014 Cycle [AASB 1, 2, 3, 5, 7, 11, 110, 119, 121, 133, 134, 137 & 140] These amendments arise from the issuance of International Financial Reporting Standard Annual Improvements to IFRSs 20122014 Cycle in September 2014, and editorial corrections. The Authority has determined that the application of the Standard has no financial impact.

AASB 20152 Amendments to Australian Accounting Standards Disclosure Initiative: Amendments to AASB 101 [AASB 7, 101, 134 & 1049] This Standard amends AASB 101 to provide clarification regarding the disclosure requirements in AASB 101. Specifically, the Standard proposes narrow-focus amendments to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying a Standard in determining what information to disclose in their financial statements. There is no financial impact.

AASB 20156 Amendments to Australian Accounting Standards Extending Related Party Disclosures to Not- for-Profit Public Sector Entities [AASB 10, 124 & 1049] The amendments extend the scope of AASB 124 to include application by not-for-profit public sector entities. Implementation guidance is included to assist application of the Standard by not- for-profit public sector entities. There is no financial impact.

AASB 201510 Amendments to Australian Accounting Standards Effective Date of Amendments to AASB 10

& 128 This Standard defers the mandatory effective date (application date) of amendments to AASB 10 & AASB 128 that were originally made in AASB 201410 so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016. There is no financial impact.

Commentary: This Authority adopted AASB 20157 in a prior reporting period, as partial exemption from TI 1101 Application of Australian Accounting Standards and Other Pronouncements permitting early adoption of AASB 20157 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not for Profit Public Sector Entities was exercised. Authorities who have not previously utilised the partial exemption should include AASB 20157 in this list of standards and include the following commentary:

“AASB 20157 Amendments to Australian Accounting Standards Fair Value Disclosures of NotforProfit Public Sector Entities [AASB 13] This Standard relieves not-for-profit public sector entities from the reporting burden associated with various disclosures required by AASB 13 for assets within the scope of AASB 116 that are held primarily for their current service potential rather than to generate future net cash inflows. It has no financial impact.”

Commentary: This disclosure is required when the initial application of an Australian Accounting Standard or Interpretation has an effect on the current period or any prior period, or would have such an effect, except that it is impracticable to determine the amount of the adjustment, or might have an effect on future periods. Treasury considers the following Australian Accounting Standards as not usually applicable to the public sector as they have no impact or do not apply to not-for-profit entities. However, it is the agency’s responsibility to confirm whether the Standards apply to their own individual circumstances. If the agency determines that any of these Standards are clearly not applicable to the agency, they should not be included in the above note disclosure. AASB 14 Regulatory Deferral Accounts AASB 1056 Superannuation Entities AASB 20141 Amendments to Australian Accounting Standards [Part D] AASB 20146 Amendments to Australian Accounting Standards Agriculture: Bearer Plants [AASB 101, 116, 117, 123, 136, 140 & 141] AASB 20155 Amendments to Australian Accounting Standards Investment Entities: Applying the Consolidation Exception [AASB 10, 12 & 128] AASB 20159 Amendments to Australian Accounting Standards Scope and Application Paragraphs [AASB 8, 133 & 1057]

Voluntary changes in accounting policy AASB 108.29 Commentary: When a voluntary change in accounting policy has an effect on the current period or any prior period, would have an effect on that period except that it is impracticable to determine the amount of the adjustment, or might have an effect on future periods, an entity shall disclose: (a) the nature of the change in accounting policy; (b) the reasons why applying the new accounting policy provides reliable and more relevant information; (c) for the current period and each prior period presented, to the extent practicable, the amount of the adjustment for each financial statement line item affected; (d) the amount of the adjustment relating to periods before those presented, to the extent practicable; and (e) if retrospective application is impracticable for a particular prior period, or for periods before those presented, the circumstances that led to the existence of that condition and a description of how and from when the change in accounting policy has been applied.

AASB 108.30, 31 Future impact of Australian Accounting Standards not yet operative The Authority cannot early adopt an Australian Accounting Standard unless specifically permitted by TI 1101 Application of Australian Accounting Standards and Other Pronouncements or by an exemption from TI 1101. By virtue of a limited exemption, the Authority has early adopted AASB 20157 Amendments to Australian Accounting Standards – Fair Value Disclosures of NotforProfit Public Sector Entities. Where applicable, the Authority plans to apply the following Australian Accounting Standards from their application date.

Operative for reporting periods beginning

on/after

AASB 9 Financial Instruments 1 Jan 2018 This Standard supersedes AASB 139 Financial Instruments: Recognition and Measurement, introducing a number of changes to accounting treatments. The mandatory application date of this Standard is currently 1 January 2018 after being amended by AASB 20126, AASB 2013-9, and AASB 20141 Amendments to Australian Accounting Standards. The Authority has not yet determined the application or the potential impact of the Standard.

AASB 15 Revenue from Contracts with Customers 1 Jan 2019 This Standard establishes the principles that the Authority shall apply to report useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with a customer. The Authority's income is principally derived from appropriations which will be measured under AASB 1058 Income of NotforProfit Entities and will be unaffected by this change. However, the Authority has not yet determined the potential impact of the Standard on ‘User charges and fees’ and ‘Sales’ revenues. In broad terms, it is anticipated that the terms and conditions attached to these revenues will defer revenue recognition until the Authority has discharged its performance obligations.

Operative for reporting periods beginning on/after

AASB 16 Leases 1 Jan 2019 This Standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Whilst the impact of AASB 16 has not yet been quantified, the entity currently has operating lease commitments for $27,526,000. The worth of noncancellable operating leases which the Authority anticipates most of this amount will be brought onto the statement of financial position, excepting amounts pertinent to shortterm or lowvalue leases. Interest and amortisation expense will increase and rental expense will decrease.

AASB 1058 Income of Not-for-Profit Entities 1 Jan 2019 This Standard clarifies and simplifies the income

recognition requirements that apply to notforprofit (NFP) entities, more closely reflecting the economic reality of NFP entity transactions that are not contracts with customers. Timing of income recognition is dependent on whether such a transaction gives rise to a liability, or a performance obligation (a promise to transfer a good or service), or, an obligation to acquire an asset. The Authority has not yet determined the application or the potential impact of the Standard.

AASB 2010-7 Amendments to Australian Accounting Standards 1 Jan 2018 arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Int 2, 5, 10, 12, 19 & 127] This Standard makes consequential amendments to other Australian Accounting Standards and Interpretations as a result of issuing AASB 9 in December 2010. The mandatory application date of this Standard has been amended by AASB 20126 and AASB 20141 to 1 January 2018. The Authority has not yet determined the application or the potential impact of the Standard.

AASB 2014-1 Amendments to Australian Accounting Standards 1 Jan 2018 Part E of this Standard makes amendments to AASB 9 and consequential amendments to other Standards. It has not yet been assessed by the Authority to determine the application or potential impact of the Standard.

AASB 2014-5 Amendments to Australian Accounting Standards 1 Jan 2018 arising from AASB 15 This Standard gives effect to the consequential amendments to Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 15. The Authority has not yet determined the application or the potential impact of the Standard.

AASB 2014-7 Amendments to Australian Accounting Standards 1 Jan 2018 arising from AASB 9 (December 2014) This Standard gives effect to the consequential amendments to Australian Accounting Standards (including Interpretations) arising from the issuance of AASB 9 (December 2014). The Authority has not yet determined the application or the potential impact of the Standard.

AASB 2014-10 Amendments to Australian Accounting Standards – 1 Jan 2018 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture [AASB 10 & 128] This Standard amends AASB 10 and AASB 128 to address an inconsistency between the requirements in AASB 10 and those in AASB 128 (August 2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The mandatory effective date (application date) for the Standard has been deferred to 1 January 2018 by AASB 201510. The Authority has determined that the Standard has no financial impact.

AASB 2015-8 Amendments to Australian Accounting Standards – 1 Jan 2019 Effective Date of AASB 15 This Standard amends the mandatory effective date (application date) of AASB 15 Revenue from Contracts with Customers so that AASB 15 is required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2017. For NotForProfit entities, the mandatory effective date has subsequently been amended to 1 January 2019 by AASB 20167. The Authority has not yet determined the application or the potential impact of AASB 15.

AASB 2016-2 Amendments to Australian Accounting Standards – 1 Jan 2017 Disclosure Initiative: Amendments to AASB 107 This Standard amends AASB 107 Statement of Cash Flows (August 2015) to require disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. There is no financial impact.

AASB 2016-3 Amendments to Australian Accounting Standards – 1 Jan 2018 Clarifications to AASB 15 This Standard clarifies identifying performance obligations, principal versus agent considerations, timing of recognising revenue from granting a licence, and, provides further transitional provisions to AASB 15. The Authority has not yet determined the application or the potential impact.

AASB 2016-4 Amendments to Australian Accounting Standards – 1 Jan 2017 Recoverable Amount of Non-Cash-Generating Specialised Assets of Not-for-Profit Entities This Standard clarifies that the recoverable amount of primarily non-cash-generating assets of not-forprofit entities, which are typically specialised in

nature and held for continuing use of their service capacity, is expected to be materially the same as fair value determined under AASB 13 Fair Value Measurement. The Authority has not yet determined the application or the potential impact.

AASB 2016-7 Amendments to Australian Accounting 1 Jan 2017 Standards Deferral of AASB 15 for NotforProfit Entities This Standard amends the mandatory effective date (application date) of AASB 15 and defers the consequential amendments that were originally set out in AASB 20145 Amendments to Australian Accounting Standards arising from AASB 15 for notforprofit entities to annual reporting periods beginning on or after 1 January 2019, instead of 1 January 2018. There is no financial impact.

AASB 2016-8 Amendments to Australian Accounting 1 Jan 2019 Standards Australian Implementation Guidance for NotforProfit Entities This Standard inserts Australian requirements and authoritative implementation guidance for notforprofit entities into AASB 9 and AASB 15. This guidance assists not-for-profit entities in applying those Standards to particular transactions and other events. There is no financial impact.

AASB 2017-2 Amendments to Australian Accounting 1 Jan 2017 Standards Further Annual Improvements 20142016 Cycle This Standard clarifies the scope of AASB 12 by specifying that the disclosure requirements apply to an entity’s interests in other entities that are classified as held for sale, held for distribution to owners in their capacity as owners or discontinued operations in accordance with AASB 5. There is no financial impact.

Commentary: AASB 108.30 This disclosure is required for new or revised Australian Accounting Standards that have been issued but are not yet effective and have not been early adopted. AASB 110.18 The above information is current as per Australian Accounting Standards issued up to the AASB 101.7, 86 publication date of this Model – agencies will need to consider standards issued from the date of Model publication until the date of authorisation for their financial statements, subject to materiality. Treasury considers the following Australian Accounting Standards as not usually applicable to the public sector as they have no impact or do not apply to not-for-profit entities. However, it is the agency’s responsibility to confirm whether the Standards apply to their own individual circumstances. If the agency determines that any of these Standards are clearly not applicable to the agency, they should not be included in the

above note disclosure. Operative for reporting periods beginning on/after AASB 2016-1 Amendments to Australian Accounting Standards – 1 Jan 2017 Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112] AASB 20165 Amendments to Australian Accounting 1 Jan 2018 Standards Classification and Measurement of Share based Payment Transactions AASB 20166 Amendments to Australian Accounting 1 Jan 2018 Standards Applying AASB 9 Financial Instruments with AASB 4 Insurance Contracts AASB 20171 Amendments to Australian Accounting 1 Jan 2019 Standards Transfers of Investment Property, Annual Improvements 20142016 Cycle and Other Amendments Changes in accounting estimates AASB 108.39 Commentary: Disclosure of the nature and amount of a change in an accounting estimate that has an effect in the current period or is expected to have an effect in future periods is required, except when it is impracticable to estimate that effect on future periods.

AASB 119.131 Note 7. Employee benefits expense 2017 2016 $000 $000 Wages and salaries(a) 636,757 569,002 AASB 119.46 Superannuation – defined contribution plans(b) 33,000 30,000 669,757 599,002 (a) Includes the value of the fringe benefit to the employee plus the fringe benefits tax component, leave entitlements including superannuation contribution component. (b) Defined contribution plans include West State, Gold State, GESBS and other eligible funds. Employment on-costs expenses, such as workers’ compensation insurance, are included at Note 14 ‘Other expenses’. Employment on-costs liability is included at Note 37 ‘Provisions’.

Note 8. Compensation of Key Management Personnel AASB 124.17, 17A The Authority has determined that key management personnel include Ministers, TI 952(3) members, and, senior officers of the Authority. However, the Authority is not obligated to compensate Ministers and therefore disclosures in relation to Ministers’ compensation may be found in the Annual Report on State Finances. Total compensation for key management personnel, comprising members and senior officers, of the Authority for the reporting period are presented within the following bands:

TI 952(3)(c) Compensation of members of the accountable authority Compensation Band ($) 2017 2016 160,001 – 170,000 1 - 150,001 – 160,000 1 1 140,001 – 150,000 1 1 130,001 – 140,000 - 1

TI 952(3)(c) Compensation of senior officers Compensation Band ($) 2017 2016 160,001 – 170,000 1 - 150,001 – 160,000 - 1 140,001 – 150,000 2 1 130,001 – 140,000 - 1

AASB 124.17 $000 $000 AASB 119.5 Short term employee benefits 825 750 Post employment benefits 83 75 Other long term benefits 37 55 Termination benefits - - Total compensation of key management personnel 945 880

TI 952(3)(i)(d) Commentary: APG 4 Disclose the number of members of the accountable authority and senior officers who are members of the Pension Scheme. AASB 119 ‘Employee Benefits’ imposes the relevant requirements for measuring the components of compensation. Employee benefits are all forms of consideration given by an agency in exchange for service rendered, including total fees, salaries, superannuation, leave entitlements, redundancy payments, non-monetary benefits (including motor vehicle benefits, housing and parking) and other benefits. The calculations are to be made on an accrual accounting basis. Therefore, total compensation disclosed does not necessarily represent the cash paid in a single

reporting period. AASB 119 distinguishes employee benefits on the basis of when benefits are expected to be settled and the employment status at the time of that settlement.

Note 9. Supplies and services 2017 2016 $000 $000 Communications 16,302 14,820 Consultants and contractors 15,318 13,925 Consumables 8,910 8,100 Materials 19,591 17,810 Travel 1,089 990 Other 770 700 61,980 56,345

Note 10. Depreciation and amortisation expense 2017 2016 $000 $000 Depreciation Plant, equipment and vehicles 2,827 4,147 Buildings 17,939 17,422 Infrastructure 8,587 8,800 Leased plant, equipment and vehicles 3,424 3,057 Total depreciation 32,777 33,426

Amortisation Licenses 20 10 Computer software 533 384 AASB 138.126 Total amortisation 553 394 Total depreciation and amortisation 33,330 33,820

AASB 101.82(b) Note 11. Finance costs 2017 2016 $000 $000 AASB 137.60 Unwinding of discounts applied to provisions 88 77 AASB 117.25 Finance lease charges 105 150 AASB 7.20(b) Interest expense 70 120

AASB 123.26(a) Borrowing costs capitalised [show amounts as applicable] - - Finance costs expensed 263 347

Commentary: Finance costs include borrowing costs. AASB 123.5 defines borrowing costs as interest and other costs incurred by an entity in connection with the borrowing of funds, including finance charges associated with AASB 117 finance leases (AASB 123.6(d)). Other finance costs would include discounting expense incurred under AASB 5.17 and AASB 137.60. The discounting of employee benefits should be recognised under employee benefits expense rather than separately as a finance cost. See also AASB 7, AASB 102, AASB 141, related information in Note 14 ‘Other expenses’ and Note 37 ‘Provisions’.

Note 12. Accommodation expenses 2017 2016 $000 $000

Lease rentals 5,214 4,740 AASB 117.35(c) Repairs and maintenance 1,452 1,320 Cleaning 297 270 6,963 6,330

Note 13. Grants and subsidies 2017 2016 $000 $000 Recurrent Function A 6,259 5,690 Subsidy Scheme A 77 70 Royalties for Region Funds – Regional Infrastructure and Headworks Account - - Royalties for Region Funds – Regional Community Services Account - -

Capital Function B 935 850 Industry Group 2,530 2,300 Royalties for Regions Fund – Regional Infrastructure and Headworks Account - - Royalties for Regions Fund – Regional Community Services Account - - 9,801 8,910

Commentary: Framework Broad categories of recipients must be disclosed in the notes to the Financial Statements AusOB2.1, under ‘Grants and Subsidies’, where material. Presentation of grants and subsidies AusOB3.1, expenditures should be tailored to the needs of users reliant on general purpose financial QC6QC11 statements and reflect discharge of accountability requirements. To achieve this, a mixture of classifications may be required. These classifications can be based on sector, function, project, destination/recipient, or, a combination of these classifications as appropriate. Classification by sector may entail distinguishing public sector, private sector, private sector NFP recipients. Alternatively, the profile of the sector might be significant for transparency purposes (e.g. schools, households or sporting clubs). Functional classification may incorporate differentiation between grants for research, targeted subsidy schemes, donations and sponsorships. Grants for research can be further disaggregated by area of research, distinguishing differences in the funding of aquaculture research, environmental research, or, digital system research.

FMA sec 60 Grant funding of satellite agencies should be characterised by the recipient agency. TI 951 Similarly, disclosure of funding of affiliated and related bodies is dictated by TI 951, which places the emphasis on disclosure by recipient agency or class of recipient agencies. The accountable authority, on advice from the chief financial officer, should evaluate the Authority’s operations and use that evaluation to apply an appropriate sub-classification methodology to ensure useful information is provided to users of the Authority’s general purpose financial statements.

AASB 101.97 AASB 116 Note 14. Other expenses AASB 136, 138,139, 2017 2016 141 $000 $000 Int 1 Restoration costs - - Building and infrastructure maintenance 1,035 940 Equipment repairs and maintenance 3,933 3,575 AASB 7.20(e) Doubtful debts expense 110 100

Australian Accounting Standards software modification costs 550 500 Warranties expense 42 38 Employment on-costs 6,040 5,491 Loss from earthquake(a) - 1,250 AASB 5.15 (b) AASB 138.126 Write-down of non-current assets classified as held for sale 470 1,100 Research and development costs expensed - 20 Other [list type of other expenses] 65 60 12,245 13,074 (a) Plant and Equipment (2016:$370,000), Other (2016:$880,000). (b) Non-current assets held for sale measured at lower of carrying amount and fair value less selling costs. Commentary: AASB 101.97 Material income or expenses should be disclosed separately. For example, include notes on impairment losses and revaluation decrements, where they are material enough to warrant disclosure. Employment on-costs Includes workers’ compensation insurance and other employment on-costs. The oncosts liabilities associated with the recognition of annual and long service leave liabilities are included at Note 37 ‘Provisions’. Superannuation contributions accrued as part of the provision for leave are employee benefits and are not included in employment on-costs. Other expenses Include audit fees which are usually for the final audit fee for the previous year’s audit and any interim audit fee (if any) for the current year’s audit. See also Note 48 ‘Remuneration of auditors’.

Note 15. Related Party Transactions The Authority is a wholly owned and controlled entity of the State of Western Australia. In conducting its activities, the Authority is required to pay various taxes and levies based on the standard terms and conditions that apply to all tax and levy payers to the State and entities related to the State. Related parties of the department include:  all Ministers and their close family members, and their controlled or jointly controlled entities;  all senior officers and their close family members, and their controlled or jointly controlled entities;  other departments and public sector entities, including related bodies included in the whole of government consolidated financial statements;  associates and joint ventures, that are included in the whole of government consolidated financial statements; and  the Government Employees Superannuation Board (GESB).

Commentary: AASB 10, 124 Local governments and universities are not controlled by the State Government, and are therefore not related parties of a public sector entity (i.e. an entity included in the whole of government consolidated financial statements). APG 4 Refer to Note 8 ‘Composition of Sectors’ in Appendix 1 ‘Detailed Financial Projections’ of the Budget Paper No. 3 ‘Economic and Fiscal Outlook’ for a list of entities included in the consolidated financial statements.

Significant transactions with government related entities Significant transactions include:  service appropriations (Note 22);

 capital appropriations (Note 39);  services received free of charge from the Information Technology Commission (Note 22);  income from Royalties for Regions Fund (Note 22);  superannuation payments to GESB (Note 7);  lease rentals payments for accommodation and fleet leasing to the Department of Finance (Note 12);  commitments for future lease payments to the Department of Finance (Note 42);  amounts due to the Treasurer (Note 36);  insurance payments to the Insurance Commission and Riskcover fund (Note 9);  grants provided to TAFE colleges (Note 13);  equity injections from Royalties for Regions Funds (Note 39); and  remuneration for services provided by the Auditor General (Note 48).

Commentary: AASB 124.26(b) Disclosures shall be in sufficient detail to enable users to understand the effect of related party transactions on the agency’s financial statements. Therefore, agencies may consider revising other disclosure notes to ensure that they are compliant with AASB 124. For example, grants and subsidies in Note 13 would need to be disclosed by recipients (or categories of recipients) to identify which are related parties and the relationship. The level of detail to be disclosed is a matter of judgement in the context of the agency’s AASB 124.27 financial statements, taking into account the size and nature of the transactions involved. Significant transactions are generally outside normal day-to-day business operations and are significant in size or nature, and therefore not expected to be frequent. Material transactions with related parties

AASB 124.26(b) During the year, Beta Software Solutions Pty Ltd, a company controlled by a related party of the Hon. Michael Jackson, was awarded a contract under the selective tender process on terms and conditions equivalent for those that prevail in arm’s length transactions under the State’s procurement process. The contract was awarded after the Honourable Minister referred approval to the Expenditure Review Committee (ERC). The transaction involved the provision of IT support services to support the migration of the authority’s financial management system and various databases to cloud based platforms with a total value of $4 million spread evenly over four years. $1 million has been included in expenses in the current reporting period, with $200,000 payable at the reporting date. $3 million will be provided to the Authority in the following reporting periods. No guarantee has been given on the contract. All other transactions (including general citizen type transactions) between the Authority and Ministers/senior officers or their close family members or their controlled (or jointly controlled) entities are not material for disclosure.

Commentary: AASB 124 Where no material related party transactions have occurred, the following statement may be appropriate: “The Authority had no material related party transactions with Ministers/senior officers or their close family members or their controlled (or jointly controlled) entities for disclosure.”

APG 4 It is noted that general citizen type transactions are unlikely to be material for disclosure. These transactions are where Ministers/senior officers or their close family members interact with a public sector entity under the same terms and conditions as a public citizen, such as paying taxes, levies or other statutory fees/charges and using public services such as hospitals, schools or public transport. AASB 124 AASB 124 requires the disclosure of material related party transactions, outstanding

balances, and, commitments. Materiality is subject to professional judgement and goes beyond the dollar value of the transaction or balance. Agencies should consider the objective of the Standard in determining whether quantitative or qualitative materiality justifies the disclosures of transactions in the financial statements.

AASB 124.24 Transactions of a similar nature may be disclosed in aggregate except when separate disclosure is necessary for an understanding of the effects of related party transactions on the financial statements of the Authority (i.e. individual transactions that are unusual in nature or material by amount). It is noted that the objective of the disclosures is not for the purposes of assessing governance or probity.

TI 924 It is important to note that all KMP need to declare all their own related parties (both people and entities) and certain related party transactions as described in the mandated declaration form. This information is necessary to enable the agency to prepare the financial statements and auditors to conduct the audit work in accordance with the Australian Auditing Standard ASA 550 ‘Related Parties’. The data collection process provides evidence (subject to audit) that all relevant information has been made available for assessment. A transaction that may appear immaterial on its own may in combination with other like transactions have a material effect on the agency's financial statements, and therefore warrants disclosures.

Note 16. User charges and fees 2017 2016 $000 $000 User charges 9,677 8,797 Fees 6,820 6,200 16,497 14,997

TI 810 Commentary: Fees and charges in subsidiary legislation are generally set at a level that is authorised by statute under which the subsidiary legislation is made. Agencies should ensure that their fees and charges are a reasonable reflection of costs, though factors such as competitive neutrality and Government policy objectives may alter this situation.

AASB 101.82(a), 103 Note 17. Trading profit 2017 2016 $000 $000 AASB 118.35(b) Sales 14,267 12,970 Cost of Sales: AASB 102.36 Opening inventory (14,900) (11,300) AASB 102.38 Purchases (8,030) (7,300) (22,930) (18,600) AASB 102.36 Closing inventory 17,370 14,900 AASB 102.36(d) Cost of Goods Sold (5,560) (3,700) Trading Profit 8,707 9,270

Commentary: See also Note 2(p) ‘Inventories’ and Note 24 ‘Inventories’.

Note 18. Commonwealth grants and contributions 2017 2016 $000 $000 AASB 1004.18 Capital grants 1,100 1,000 1,100 1,000

TI 1102(8) Capital grants for 2017 include a non-reciprocal grant of $500,000 from the Commonwealth Department of Information Technology. The terms of the grant specify that it must be used to fund the research and development project on software development for public sector accounting. The grant has been recognised in its entirety upon receipt as the only condition applying to its use is how it can be expended and it is not subject to performance measures in terms of service delivery. At 30 June 2017, $450,000 of the grant had been spent.

Commentary: AASB 1004.60(b), Where contributions have been recognised as income during the reporting period that (d) were provided specifically for the provisions of goods and services over a future reporting period, the nature, amounts and the periods to which they relate must be disclosed.

AASB 1004.60(e) Where contributions have been recognised as income in a previous reporting period that were obtained in respect of the current reporting period, the nature and amounts must be disclosed.

Note 19. Interest revenue 2017 2016 $000 $000 AASB 118.35(b)(iii) Interest revenue [disclose sources] 990 900 AASB 7.20(b) 990 900

Note 20. Net gain/(loss) on disposal of non-current assets AASB 5.30 2017 2016 AASB 101.98(c) $000 $000 AASB 116,68 Net proceeds from disposal of non-current assets AASB 138.113 Land 990 - Plant, equipment and vehicles 1,808 11,190

Carrying amount of non-current assets disposed Land (690) - Plant, equipment and vehicles (1,938) (6,490) Net gain/(loss) 170 4,700

Commentary: Net disposal proceeds are gross proceeds less costs to sell. Costs to sell (e.g. sales commissions netted from agency receipts) are ordinarily immaterial. Where the amounts are material, additional disclosure is warranted. See also Note 2(j) ‘Non-current assets (or disposal groups) classified as held for sale’, Note 28 ‘Non-current assets held for sale’ and Note 29 ‘Property, plant and equipment’. Insured non-current assets written-off as a result of an insurable event should be treated as other expenses (write-off of assets destroyed by fire/storm/earthquake etc). The subsequent insurance recovery is to be treated as other revenue when it is received or receivable.

Note 21. Other gains 2017 2016 $000 $000 [List types of other gain] 77 70 77 70

AASB 116.Aus39.1 Commentary: AASB 136.119

Other gains could include material reversals of impairments and revaluation increments (offsetting decrements).

TI 1102(7)(iv) Note 22. Income from State Government 2017 2016 $000 $000 Appropriation received during the period: Service appropriation(a) 796,234 702,101 796,234 702,101 AASB 1004.18 Liabilities assumed by other State government agencies during the period:(b) [Detail] - - Total liabilities assumed - -

AASB 1004.18 Assets transferred from/(to) other State government agencies during the period:(b) Inventories - - Total assets transferred - -

Services received free of charge from other State government agencies during the period: Information Technology Commission 4,400 4,000 4,400 4,000 Royalties for Regions Fund: Regional Infrastructure and Headwork Account(c) - - Regional Community Services Account(c) - - - - 800,634 706,101

(a) Service appropriations fund the net cost of services delivered. Appropriation revenue comprises a cash component and a receivable (asset). The receivable (holding account) comprises the budgeted depreciation expense for the year and any agreed increase in leave liabilities during the year. AASB 1004.54-59 (b) Discretionary transfers of assets (including grants) and liabilities between State Government agencies are reported TI 955 under Income from State Government. Transfers of assets and liabilities in relation to a restructure of administrative arrangements are recognised as distribution to owners by the transferor and contribution by owners by the transferee under AASB 1004 in respect of net assets transferred. Other nondiscretionary non-reciprocal transfers of assets and liabilities designated as contributions by owners under TI 955 are also recognised directly to equity. (c) This is a sub-fund within the over-arching ‘Royalties for Regions Fund’. The recurrent funds are committed to projects and programs in WA regional areas.

TI 1102(11) Commentary: Where another state government agency has assumed a liability, the agency recognises revenue equivalent to the amount of the liability assumed and an expense relating to the nature of the event or events that initially gave rise to the liability in order to disclose the true cost of services. Where assets or services have been received free of charge or for nominal cost, the agency recognises revenue (and assets or expenses) equivalent to the fair value of the assets and/or the fair value of those services that can be reliably determined and which would have been purchased if not donated.

AASB 107.45, 48 TI 1103 Note 23. Restricted cash and cash equivalents 2017 2016 $000 $000 Current Royalties for Regions Fund(a) - - Capital grant from the Commonwealth Department of Information Technology(b) 50 50 50 50

(a) Unspent funds are committed to projects and programs in WA regional areas. (b) Funds held for the research and development project on software development for public sector accounting.

AASB 101.66(d) Commentary: Disclose cash and cash equivalents as current assets unless restricted in its use beyond twelve months. Accordingly, the accrued salaries suspense account will be non-current for 10 out of 11 years. Statutory authorities required to contribute to a suspense account in relation to the 27th pay period that occurs every 11 years may refer to the note disclosure in the Model Annual Report for Departments. Where there is a balance of cash received as capital appropriations remaining at year- end, this cash should not be disclosed as restricted cash and cash equivalents.

AASB 101.78(c) AASB 102.36, 38 Note 24. Inventories 2017 2016 $000 $000 Current Inventories held for resale: Raw materials & stores (at cost) 9,100 6,365 Work in progress (at cost) 1,570 2,020 Finished goods At cost 4,570 4,545 At net realisable value 2,130 1,970 17,370 14,900 Other 940 1,475 AASB 102.36(b) Total current 18,310 16,375

Non-current [List classes of inventories] - - Total non-current - -

Commentary: See also Note 2(p) ‘Inventories’ and Note 17 ‘Trading profit’.

AASB 7 AASB 139 Note 25. Receivables 2017 2016 $000 $000 Current Receivables 8,794 2,286 AASB 7.16 Allowance for impairment of receivables (660) (550) Accrued revenue - - GST receivable 421 414 8,555 2,150 Loans and advances: Other debtors - - - - Total current 8,555 2,150

Non-current Loans and advances: Other debtors - - - - Bills of exchange: Bills accepted or endorsed by banks - - Other bills - -

- - Total non-current - -

Reconciliation of changes in the allowance for impairment AASB 7.16 of receivables: Balance at start of period 550 520 AASB 7.20(e) Doubtful debts expense 110 100 AASB 139.63 Amounts written off during the period - (48) AASB 139.65 Impairment losses reversed during the period - (22) Balance at end of period 660 550

AASB 7.38 The Authority does not hold any collateral or other credit enhancements as security for receivables.

Commentary: See also Note 2(q) ‘Receivables’ and Note 46 ‘Financial instruments’.

AASB 107.48 TI 1103 Note 26. Amounts receivable for services (Holding Account) 2017 2016 $000 $000 Current 14,239 18,137 Non-current 71,903 47,925 86,142 66,062

Represents the non-cash component of service appropriations. It is restricted in that it can only be used for asset replacement or payment of leave liability.

Commentary: See also Note 2(o) ‘Amounts receivable for services (holding account)’.

Note 27. Other assets 2017 2016 $000 $000 Current Prepayments - - Other [describe] 540 550 Total current 540 550

Non-current Other [describe] 60 - Total non-current 60 -

AASB 101.78(b) Commentary: Prepayments may be disclosed separately in the Statement of Financial Position, as a disaggregated component of receivables, or in notes as ‘Other Assets’ based on the size, nature and function of the amounts involved. Refer to Note 25 ‘Receivables’. Note that prepayments are not financial assets and should be excluded from receivables in the financial instruments note.

AASB 5.38-41 Note 28. Non-current assets classified as held for sale 2017 2016 $000 $000 Opening balance Land 1,090 - Plant, equipment and vehicles 2,038 2,170

Less write-down from cost to fair value less selling costs (500) - 2,628 2,170 Assets reclassified as held for sale Land - 1,090 Plant, equipment and vehicles 3,370 6,958 Less write-down from cost to fair value less selling costs(a) (470) (1,100) 2,900 6,948 Total assets classified as held for sale Land 1,090 1,090 Plant, equipment and vehicles 5,408 9,128 Less write-down from cost to fair value less selling costs (970) (1,100) 5,528 9,118 Less assets sold Land 1,090 - Plant, equipment and vehicles 2,038 7,090 Less write-down from cost to fair value less selling costs (500) (600) 2,628 6,490 Closing balance AASB 5.20 Land - 1,090 Plant, equipment and vehicles 3,370 2,038 Write-down from cost to fair value less selling costs (470) (500) 2,900 2,628 (a) Disclosed as Other expenses.

Information on fair value measurements is provided in Note 31.

Commentary: Disclose any write-downs that occurred during the reporting period. The above table is a long-hand disclosure and is included as guidance. The following remarks are provided for clarity:

AASB 5.23 (i) The contra amount under opening balance is equivalent to write-downs from prior reporting periods. AASB 5.20 (ii) The contra amount under assets reclassified as held for sale is equivalent to the writedown in the current reporting period. (iii) The contra amount under total assets classified as held for sale is equal to the contra amount for (i) and (ii). (iv) The contra amount under assets sold is the full amount of write-downs attributable to the assets sold. In this example, all assets in the opening balance were sold within the reporting period.

AASB 5.41 Describe the non-current asset, the facts and circumstances of the disposal, and the expected manner and timing of that disposal.

AASB 5.26-29, 42 Where an agency decides to change its plan to sell an asset held for sale or the criteria for the classification of an asset held for sale is no longer met, the agency must reclassify it and adjust in accordance with AASB 5. Disclose a description of the facts and circumstances leading to the decision and its effect on the results of the operations for the period and any prior periods presented. Less assets sold – See also Note 2(j) ‘Non-current assets (or disposal groups) classified as held for sale’, Note 20 ‘Net gain/(loss) on disposal of non-current assets’, Note 14 ‘Other expenses’ and Note 31 ‘Fair value measurements’.

AASB 116 AASB 101.54(a) Note 29. Property, plant and equipment 2017 2016 $000 $000 Land AASB 116 At fair value(a) 112,910 97,910 AASB 136 Accumulated impairment losses - - 112,910 97,910 Buildings At fair value(a) 511,670 457,270 Accumulated depreciation (24,939) (20,000) Accumulated impairment losses - - 486,731 437,270 Buildings under construction Construction costs 116,090 96,090 116,090 96,090 Plant, equipment and vehicles At cost 24,748 13,171 Accumulated depreciation (7,870) (6,583) Accumulated impairment losses - - 16,878 6,588 Office equipment At cost 800 800 Accumulated depreciation (254) (94) Accumulated impairment losses - - 546 706 Leased plant, equipment and vehicles AASB 117.31(a) At capitalised cost 10,580 10,580 AASB 117.20 Accumulated depreciation (7,522) (4,819) Accumulated impairment losses - - 3,058 5,761 Leased office equipment AASB 117.31(a) At capitalised cost 3,605 3,605 AASB 117.20 Accumulated depreciation (1,475) (754) Accumulated impairment losses - - 2,130 2,851 Works of art At cost 150 150 Accumulated impairment losses - - 150 150 738,493 647,326

AASB 116.77 (a) Land and buildings were revalued as at 1 July 2016 by the Western Australian Land Information Authority (Valuation Services). The valuations were performed during the year ended 30 June 2017 and recognised at 30 June 2017. In undertaking the revaluation, fair value was determined by reference to market values for land: $108,000,000 (2016: $93,640,000) and buildings: $347,381,000 (2016: $319,529,000). For the remaining balance, fair value of buildings was determined on the basis of depreciated replacement cost and fair value of land was determined on the basis of comparison with market evidence for land with low level utility (high restricted use land). Commentary:

AASB 117.20 Leased assets are recognised at the lower of fair value and present value of minimum lease payments. AASB 116.35 On revaluation, agencies may elect to either restate proportionately the gross carrying TI 954 Guidelines amount and the accumulated depreciation (gross method), or eliminate accumulated depreciation against the gross carrying amount of the asset and restate the net carrying amount to the revalued amount (net method). The treatment adopted should be disclosed in the accounting policy note. See also Note 2(g) ‘Property, plant and equipment and infrastructure’ and Note 31 ‘Fair

value measurements’.

AASB 116.73 Reconciliations of the carrying amounts of property, plant, and equipment at the beginning and end of the reporting period are set out in the table below. Lea sed plan t, equi pme nt Plant, and Buildings under equipment Office vehi Land construction and vehicles equipment cles $000 $000 $000 $000 $000 2017 5,76 Carrying amount at start of period 97,910 96,090 6,588 706 1 Additions - 20,000 16,327 - - Transfers - - - - - Other disposals - - - - - Classified as held for sale - - (3,370) - - Revaluation increments/(decrements) 15,000 - - - - Impairment losses(a) - - - - - Impairment losses reversed(a) - - - - - (2,7 Depreciation - - (2,667) (160) 03) 3,05 Carrying amount at end of period 112,910 116,090 16,878 546 8

2016 8,46 Carrying amount at start of period 93,500 70,000 15,858 756 4 Additions - 26,090 2,155 - - Transfers - - - - - Other disposals - - - - - Classified as held for sale (1,090) - (6,958) - - Revaluation increments/(decrements) 5,500 - - - - Impairment losses(a) - - - - - Impairment losses reversed(a) - - - - - (2,7 Depreciation - - (4,097) (50) 03) Write-off of assets destroyed by earthquake - - (370) - - 5,76 Carrying amount at end of period 97,910 96,090 6,588 706 1 (a) Recognised in the Statement of Comprehensive Income. Where an asset measured at cost is written-down to recoverable amount, an impairment loss is recognised in profit or loss. Where a previously revalued asset is written down to recoverable amount, the loss is recognised as a revaluation decrement in other comprehensive income. Information on fair value measurements is provided in Note 31.

Commentary: AASB 117.47, 56 Disclose the leasing arrangements for finance or operating leases of non-current assets to external parties (i.e. the agency is the lessor). Int 4 Arrangements containing ‘in-substance’ leases classified as finance leases under AASB 117 Leases are to be recognised as leased assets in the appropriate category.

AASB 116 Note 30. Infrastructure

2017 2016 $000 $000 At fair value 666,079 624,079 Accumulated depreciation (33,589) (23,002) Accumulated impairment losses - - 632,490 601,077

AASB 116.77 Infrastructure assets were independently revalued by [state name of valuer] as at [date of valuation]. The valuations were recognised at 30 June 2017. Fair value was determined on the basis of depreciated replacement cost.

2017 2016 $000 $000 AASB 116.73(e) Reconciliation Carrying amount at start of period 601,077 597,877 Additions - 10,000 Assets classified as held for sale - - Revaluation increments/(decrements) 40,000 2,000 AASB 136.60, 117 Impairment losses - - AASB 136.60, 119 Impairment losses reversed - - Depreciation expense (8,587) (8,800) Carrying amount at end of period 632,490 601,077

Information on fair value measurements is provided in Note 31.

AASB 116.35 Commentary: TI 954 Guidelines On revaluation, agencies may elect to either restate proportionately the gross carrying amount and the accumulated depreciation (gross method), or eliminate accumulated depreciation against the gross carrying amount of the asset and restate the net carrying amount to the revalued amount (net method). The treatment adopted should be disclosed in the accounting policy note. See also Note 2(g) ‘Property, plant and equipment and infrastructure’.

AASB 13 Note 31. Fair Value Measurements Fair Value AASB 13.93(a),(b) AASB 13.94 Assets measured at fair value: Level 1 Level 2 Level 3 At end of period 2017 $000 $000 $000 $000 Non-current assets classified as held - 2,900 - 2,900 for sale (Note 28) Land (Note 29) - 108,000 4,910 112,910 Buildings (Note 29) - 347,381 139,350 486,731 Infrastructure (Note 30) - - 632,490 632,490 - 458,281 776,750 1,235,031 Fair Value AASB 13.93(a),(b) AASB 13.94 Assets measured at fair value: Level 1 Level 2 Level 3 At end of period 2016 $000 $000 $000 $000 Non-current assets classified as held - 2,628 - 2,628 for sale (Note 28) Land (Note 29) - 93,640 4,270 97,910 Buildings (Note 29) - 319,529 117,741 437,270 Infrastructure (Note 30) - - 601,077 601,077 - 415,797 723,088 1,138,885

There were no transfers between Levels 1, 2 or 3 during the current and previous periods.

AASB 13.93(e)(iv) Commentary: AASB 13.95 Additional consequential narrative disclosures are required when assets transfer levels in

the fair value hierarchy. An asset deemed surplus and in the process of preparation for disposal may change levels in the fair value hierarchy. The narrative disclosure for changes in this circumstance will include a reference to the relevant assets being prepared for sale subsequent to being deemed surplus to requirement and the agency’s policy for determining when transfers between levels are deemed to have occurred.

AASB 13.93(d) Valuation techniques to derive Level 2 fair values

Level 2 fair values of Non-current assets held for sale, Land and Buildings (Office Accommodation) are derived using the market approach. Market evidence of sales prices of comparable land and buildings (office accommodation) in close proximity is used to determine price per square metre. Non-current assets held for sale have been written down to fair value less costs to sell. Fair value has been determined by reference to market evidence of sales prices of comparable assets.

AASB 13.93(e) Fair value measurements using significant unobservable inputs (Level 3) Land Buildings Infrastructure 2017 $000 $000 $000 Fair Value at start of period 4,270 117,741 601,077 Additions - 22,400 - Revaluation increments/(decrements) recognised in - - - Profit or Loss AASB 13.93(e)(ii) Revaluation increments/(decrements) recognised in 640 4,039 40,000 Other Comprehensive Income AASB 13.93(e)(iv) Transfers from/(to) Level 2 - - - Disposals - - - Depreciation Expense - (4,830) (8,587) Fair Value at end of period 4,910 139,350 632,490 AASB 13.93(e)(i) Total gains or losses for the period included in profit or - - - loss, under ‘Other Gains’ Land Buildings Infrastructure 2016 $000 $000 $000 Fair Value at start of period 5,060 60,410 597,877 Additions - 57,239 10,000 Revaluation increments/(decrements) recognised in - - - Profit or Loss AASB 13.93(e)(ii) Revaluation increments/(decrements) recognised in 300 2,866 2,000 Other Comprehensive Income AASB 13.93(e)(iv) Transfers from/(to) Level 2 - - - Transfers from/(to) noncurrent assets classified as held - - - for sale Disposals (1,090) - - Depreciation Expense - (2,774) (8,800) Fair Value at end of period 4,270 117,741 601,077 AASB 13.93(e)(i) Total gains or losses for the period included in profit or - - - loss, under ‘Other Gains’

TI 954 Guidelines Commentary: The reconciliation for the comparative period includes a parcel of land which moved from ‘existing use’ basis (Level 3) to market value basis (Level 2) as the restrictions on the use of the land were removed by the Government of Western Australia prior to marketing the asset to the public. At the end of the comparative reporting period, the transferred land parcel was classified as Non-current assets classified as held for sale.

AASB 13.93(g) Valuation processes

AASB 13.93(d) There were no changes in valuation techniques during the period.

AASB 13.95 TI 954(5) Transfers in and out of a fair value level are recognised on the date of the event or change in circumstances that caused the transfer. Transfers are generally limited to assets newly classified as non-current assets held for sale as Treasurer's instructions require valuations of land, buildings and infrastructure to be categorised within Level 3 where the valuations will utilise significant Level 3 inputs on a recurring basis.

Land (Level 3 fair values) AASB 13.93(d),(g), Fair value for restricted use land is based on comparison with market evidence for land (h) with low level utility (high restricted use land). The relevant comparators of land with low level utility is selected by the Western Australian Land Information Authority (Valuation Services) and represents the application of a significant Level 3 input in this valuation methodology. The fair value measurement is sensitive to values of comparator land, with higher values of comparator land correlating with higher estimated fair values of land.

Commentary: Level 3 estimated land values may be either: high restricted use, or low restricted use. The above illustration is for high restricted use land. Low Restricted Use Land Where the Authority controls low restricted use land, the following wording is appropriate: “Fair value for restricted use land is based on market value, using market evidence of sales of comparable land that is unrestricted less restoration costs to return the site to a vacant and marketable condition (low restricted use land). The estimate of restoration cost as provided by [state name of expert] as at [date of estimate] represents a significant Level 3 input, with higher restoration costs correlating with lower estimated fair values of land.”

APG 1 Restoration costs are estimated for the purpose of returning the site to a vacant and marketable condition and include costs for: building demolition, clearing, re-zoning and an allowance for time factors.

AASB 13.91, Authorities holding both Low Restricted Use Land and High Restricted Use Land AASB 13.93(g) If the Authority’s fair value estimates of land comprise both low restricted use and high restricted use land values, the relevant amounts and comparatives should be disclosed.

Buildings and Infrastructure (Level 3 fair values)

AASB 13.B9 Fair value for existing use specialised buildings and infrastructure assets is determined AASB 136.Aus6.2 by reference to the cost of replacing the remaining future economic benefits embodied in AASB 136.Aus32 the asset, i.e. the depreciated replacement cost. Depreciated replacement cost is the current replacement cost of an asset less accumulated depreciation calculated on the basis of such cost to reflect the already consumed or expired economic benefit, or obsolescence, and optimisation (where applicable) of the asset. Current replacement cost is generally determined by reference to the market observable replacement cost of a substitute asset of comparable utility and the gross project size specifications.

AASB 13.93(d),(g), Valuation using depreciated replacement cost utilises the significant Level 3 input, (h) consumed economic benefit/obsolescence of asset which is estimated by the Western Australian Land Information Authority (Valuation Services). The fair value measurement is sensitive to the estimate of consumption/obsolescence, with higher values of the estimate correlating with lower estimated fair values of buildings and infrastructure.

Commentary: Derivation of Depreciated Replacement Cost In applying the depreciated replacement cost for valuing specialised assets (buildings and infrastructure assets), both observable and unobservable inputs may be utilised in determining fair value. For example, Valuation Services may utilise replacement costs (per unit volume) that are observable in the market via the Cordell’s Publication or the

Rollinson’s Publication for constructing a similar asset. In contrast, the effective age and the consumed economic benefit of the asset is an asset specific value and is unobservable to the market.

AASB 13.93(e)(iv) Where applicable to an Authority’s specialised noncurrent assets, the following statement AASB 13.95 may be added to the above paragraph: “For some specialised buildings and infrastructure assets, the current replacement cost is determined by reference to the historical cost adjusted by relevant indices. ‘Historical cost per square metre floor area (m2)’ and ‘Historical cost per cubic metre (m3)’ represent significant Level 3 inputs used in the valuations of these respective buildings (2017: [Insert value]; 2016:[Insert value]) and infrastructure assets respectively (2017: [Insert value]; 2016:[Insert value]), with higher historical costs per m2 or m3 correlating with higher estimated fair values.” Depreciated replacement cost contains an implicit reference to asset optimisation, whereby the cost is determined by reference to obtaining the asset at the lowest cost at which the gross future economic benefits of that asset could currently be obtained in the normal course of business. Consequently, assets are replaced with a modern equivalent with optimisation for obsolescence and relevant surplus capacity. Additional Disclosures AASB 13.92, 94, 98 Agencies may need to disclose additional information for liabilities where liabilities are measured at fair value. Liabilities of the Model Statutory Authority are normally measured at amortised cost.

AASB 13.97 Where assets or liabilities are not measured at fair value, but fair value information is provided in the notes to the financial statements the AASB 13 disclosures are required. Income Approach Whilst TI 954 generally considers the income approach irrelevant for valuing specialised assets in the public sector, agencies applying AASB 140 are more likely to be required to disclose inputs in this section. Where this occurs, the following example disclosure may be appropriate: “ The discounted cash flow approach takes into account the ability of the property to generate income over a 12 year period based on certain assumptions. Provision is made for leasing up periods upon the expiry of the various leases throughout the 12 year time horizon. Each year’s net operating income during the period is discounted to arrive at the present value of expected future cash flows.”

AASB 13.93(g), (i) Basis of Valuation

TI 954 Guidelines In the absence of market-based evidence, due to the specialised nature of some nonfinancial assets, these assets are valued at Level 3 of the fair value hierarchy on an existing use basis. The existing use basis recognises that restrictions or limitations have been placed on their use and disposal when they are not determined to be surplus to requirements. These restrictions are imposed by virtue of the assets being held to deliver a specific community service.

Commentary: Agencies will need to disclose the nature of the legal, natural or socio-political restrictions on the potential use of assets valued on an existing use basis.

AASB 13.93(h) Information about significant unobservable inputs (Level 3) in fair value measurements [where applicable AASB 20157 Description Fair value Fair value Valuation Unobservable Ran Range of 2017 2016 technique(s) inputs ge unobservable inputs $000 $000 of (weighted average) uno bser vabl e

inpu ts (wei ghte d aver age) 201 7 [insert class [insert [insert value] Income Approach [insert description] [ins [insert comparative of asset or value] ert liability] data ] Reconciliations of the opening and closing balances are provided in Notes 28, 29 and 30.

Commentary: Agencies will need to be familiar with each valuation technique applicable to their asset base. Requirement for information about significant unobservable inputs and sensitivity of the fair value measurement to changes in unobservable inputs The following circumstances result in a continued requirement to disclose information about significant unobservable inputs:  forprofit public sector agencies;  fair valued assets within the scope of AASB 116 that are held for generating future net cash inflows for both forprofit and notforprofit public sector agencies; and,  fair valued assets and liabilities recognised under other Australian Accounting Standards for both forprofit and notforprofit public sector agencies. Where the information is required, the relationship between the unobservable inputs and the resultant fair value must be described. Unobservable Inputs in Fair Value Estimation Process Agencies will need to establish and disclose values of only the significant unobservable inputs utilised in the fair value estimation process for their asset base, other than property, plant and equipment held for their current service potential. Where the range of values is wide, a weighted average for those values is required. If the range of values is very wide, it may be necessary to disaggregate the asset class further (e.g. Metropolitan Area versus Regional Areas) to provide meaningful information.

AASB 138.118 Note 32. Intangible assets 2017 2016 $000 $000 Licences At cost 200 200 AASB 101.104 Accumulated amortisation (40) (20) Accumulated impairment losses - - 160 180 Computer software At cost 1,600 1,600 AASB 101.104 Accumulated amortisation (1,305) (772) Accumulated impairment losses - - 295 828

Other [describe] - - 455 1,008

Reconciliations Licenses Carrying amount at start of period 180 190 Additions - - Classified as held for sale - - Impairment losses - -

Impairment losses reversed - - Amortisation expense (20) (10) Carrying amount at end of period 160 180

Computer software Carrying amount at start of period 828 1,212 Additions - - Classified as held for sale - - Impairment losses - - Impairment losses reversed - - Amortisation expense (533) (384) Carrying amount at end of period 295 828

APG 2 Commentary: Research costs must be expensed. Development costs that meet the specified criteria in AASB 138.57 can be capitalised.

Note 33. Impairment of assets AASB 136.9 There were no indications of impairment to property, plant and equipment, infrastructure or intangible assets at 30 June 2017. AASB 136.10 The Authority held no goodwill or intangible assets with an indefinite useful life during the reporting period. At the end of the reporting period there were no intangible assets not yet available for use.

AASB 136.12 All surplus assets at 30 June 2017 have either been classified as assets held for sale or written-off.

Note 34. Payables 2017 2016 $000 $000 Current Trade payables 2,028 1,350 Other payables 528 480 Accrued expenses 201 160 Accrued salaries 30 50 Other [describe] - - Total current 2,787 2,040

Non-current Trade payables - - Other [describe] - - Total non-current - -

Commentary: See also Note 2(r) ‘Payables’ and Note 46 ‘Financial instruments’.

AASB 7.8(f) Note 35. Borrowings AASB 101.77 2017 2016 $000 $000 Current Bank Overdraft (Note 40 ‘Notes to the Statement of Cash Flows’) 470 680 AASB 117, AASB 7 Finance lease liabilities (secured)(a) 600 650 AASB 101.58-59 Other [describe] - - Total current 1,070 1,330

Non-current WATC/Bank borrowings 1,000 1,000 (a) AASB 117, AASB 7 Finance lease liabilities (secured) 1,205 1,220 AASB 101.58-59 Other [describe] - - Total non-current 2,205 2,220

AASB 7.14(b) (a) Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default. 2017 2016 $000 $000 Assets pledged as security AASB 7.14(a) The carrying amounts of non-current assets pledged as security are: Leased plant, equipment and vehicles 3,058 5,761 Leased office equipment 2,130 2,851 5,188 8,612

Commentary: Int 4 Agencies entering into arrangements containing ‘in-substance’ leases classified as finance leases under AASB 117 Leases are required to recognise these as finance lease liabilities. AASB 7.18, 19 Disclose any defaults or breaches of any terms of a loan agreement.

FMA sec 9 Note 36. Amounts due to the Treasurer 2017 2016 $000 $000 Current Amount due to the Treasurer 2,400 7,970 2,400 7,970

Commentary: An example of an amount due to the Treasurer is an outstanding Treasurer’s Advance. See also Note 46 ‘Financial instruments’.

AASB 137.84, 85 Note 37. Provisions 2017 2016 $000 $000 Current Employee benefits provision Annual leave(a) 10,352 9,411 Long service leave(b) 3,101 2,819 Deferred salary scheme(c) 1,252 22 14,705 12,252 Other provisions Employment on-costs(d) 1,225 975 Warranties(e) 20 20 Int 1 Remediation costs(f) - - 1,245 995 15,950 13,247 Non-current Employee benefits provision Long service leave(b) 4,214 550 4,214 550 Other provisions Employment on-costs(d) 650 188 Warranties(e) 42 25 Int 1

Remediation costs(f) 550 525 1,242 738 5,456 1,288

AASB 101.69(d) (a) Annual leave liabilities have been classified as current as there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Assessments indicate that actual settlement of the liabilities is expected to occur as follows: 2017 2016 $000 $000 AASB 101.61 Within 12 months of the end of the reporting period 9,990 9,130 More than 12 months after the end of the reporting period 362 281 10,352 9,411

AASB 101.69(d) (b) Long service leave liabilities have been classified as current where there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Assessments indicate that actual settlement of the liabilities is expected to occur as follows: 2017 2016 $000 $000 AASB 101.61 Within 12 months of the end of the reporting period 2,957 1,819 More than 12 months after the end of the reporting period 4,358 1,550 7,315 3,369

AASB 101.69(d) (c) Deferred salary scheme liabilities have been classified as current where there is no unconditional right to defer settlement for at least 12 months after the end of the reporting period. Actual settlement of the liabilities is expected to occur as follows: 2017 2016 $000 $000 AASB 101.61 Within 12 months of the end of the reporting period - - More than 12 months after the end of the reporting period 1,252 22 1,252 22

(d) The settlement of annual and long service leave liabilities gives rise to the payment of employment on-costs including workers’ compensation insurance. The provision is the present value of expected future payments. The associated expense, apart from the unwinding of the discount (finance cost), is disclosed in Note 14 ‘Other expenses’.

AASB 137.85 (e) Provision is made for the estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. These claims are expected to be settled within two reporting periods, but this may be extended if claims are made late in the warranty period and are subject to confirmation by suppliers that component parts are defective. The timing and amount of economic outflows is uncertain and estimates are based on past claims experience. The associated expense, apart from the unwinding of the discount (finance cost), is disclosed in Note 14 ‘Other expenses’.

AASB 137.85 (f) Under [detail circumstances] the Authority has a legal or constructive obligation to dismantle [detail the property] Int 1 and restore the site. [Also detail expected timing of payments any significant uncertainties regarding the timing and amounts of payments required to settle the obligations] The associated expense, apart from the unwinding of the discount (finance cost), is disclosed in Note 14 ‘Other expenses’. Commentary: TI 1101 Deferred salary schemes represent agreements between the Authority and individual employees, whereby the employee sacrifices salary in order to purchase additional leave. The liability for leave is measured on a discounted basis by calculating the present value of estimated future cash outflows. Disclose any 48/52 leave arrangements in place as a separate line item similar to the Deferred salary scheme. Recognised sick leave provisions should be disclosed as a separate line item.

AASB 137.5(d), 84 Movements in other provisions 2017 2016 $000 $000 Movements in each class of provisions during the period, other than employee benefits, are set out below: Employment on-cost provision

Carrying amount at start of period 1,163 520 Additional/(reversals of) provisions recognised 6,040 5,491 Payments/other sacrifices of economic benefits (5,388) (4,898) Unwinding of the discount 60 50 Carrying amount at end of period 1,875 1,163

Warranty provisions Carrying amount at start of period 45 30 Additional/(reversals of) provisions recognised 42 38 Payments/other sacrifices of economic benefits (28) (25) Unwinding of discount 3 2 Carrying amount at end of period 62 45

Remediation costs provisions Carrying amount at start of period 525 500 Additional/(reversals of) provisions recognised - - Payments/other sacrifices of economic benefits - - Unwinding of the discount 25 25 Carrying amount at end of period 550 525

Note 38. Other liabilities 2017 2016 $000 $000 Current Other [describe] - - Total current - -

Non-current Other [describe] - - Total non-current - -

Note 39. Equity Framework The Western Australian Government holds the equity interest in the Authority on behalf of the community. Equity represents the residual interest in the net assets of the Authority. The asset revaluation surplus represents that portion of equity resulting from the revaluation of non-current assets.

AASB 101.25 Commentary: TI 1103 Guidelines The following disclosure is applicable when liabilities exceed assets: ”Liabilities exceed assets for the Authority and therefore there is no residual interest in the assets of the Authority. This equity deficit arose through [provide details of the circumstances e.g. expenses such as depreciation and accrual of employee entitlements for leave not involving the payment of cash in the current period being recognised in the Statement of Financial Position].“

AASB 101.106 Contributed equity

2017 2016 $000 $000 Balance at start of period 106,000 41,000

Contributions by owners Capital appropriation 12,000 65,000

Other contributions by owners Royalties for Regions Fund – Regional Infrastructure and Headworks Account - - Royalties for Regions Fund – Regional Community Services Account - -

Transfer of net assets from other agencies [Provide details] - - Total contributions by owners 12,000 65,000

Distributions to owners Transfer of net assets to other agencies: [Detail] - - Net assets transferred to Government: [Detail] - - Total distributions to owners - - Balance at end of period 118,000 106,000

Commentary: TI 955(3)(i) Capital appropriations Int 1038 TI 955 Contributions by Owners Made to Wholly Owned Public Sector Entities designates capital appropriations as contributions by owners in accordance with AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities.

AASB 1004.54-59 Transfer of net assets from other agencies AASB 1004 Contributions requires transfers of net assets as a result of a restructure of administrative arrangements to be accounted for as contributions by owners and distributions to owners. Where activities are transferred from one agency to another agency as a result of a restructure of administrative arrangements, AASB 1004 (paragraph 57) requires the transferee agency to disclose the expenses and income attributable to the transferred activities for the reporting period, showing separately those expenses and income recognised by the transferor agency during the reporting period. Furthermore, AASB 1004 (paragraph 58) requires disclosures by class for each material transfer of assets and liabilities in relation to a restructure of administrative arrangements, together with the name of the counterparty transferor/transferee agency. In respect of transfers that are individually immaterial, the assets and liabilities are to be disclosed on an aggregate basis. TI 955 designates non-discretionary and non-reciprocal transfers of net assets between state government agencies as contributions by owners in accordance with AASB Interpretation 1038. Where the transferee agency accounts for a non-discretionary and non-reciprocal transfer of net assets as a contribution by owners, the transferor agency accounts for the transfer as a distribution to owners.

TI 955(5) Distribution to owners Int 1038 TI 955 requires non-reciprocal transfers of net assets to Government to be accounted for as distribution to owners in accordance with AASB Interpretation 1038.

AASB 101.106 Reserves

2017 2016 $000 $000 Asset revaluation surplus Balance at start of period 205,500 180,000 Net revaluation increments/(decrements)

Land 15,000 5,500 Buildings 45,000 18,000 Plant and equipment - - Infrastructure 40,000 2,000 Non-current assets classified as held for sale - - Others [describe] - - Balance at end of period 305,500 205,500

AASB 101.106 Accumulated surplus/(deficit)

2017 2016 $000 $000 Balance at start of period 1,002,256 983,046 Result for the period 33,836 19,210 Income and expense recognised directly in equity - - Balance at end of period 1,036,092 1,002,256 Total equity at end of period 1,459,592 1,313,756

Note 40. Notes to the Statement of Cash Flows AASB 107.45 Reconciliation of cash Cash at the end of the reporting period as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

2017 2016 $000 $000 Cash and cash equivalents 1,465 4,625 Restricted cash and cash equivalents (Note 23 ‘Restricted cash and cash equivalents’) 50 50 Bank Overdraft (Note 35 ‘Borrowings’) (470) (680) 1,045 3,995

AASB 107.Aus20.2 Reconciliation of net cost of services to net cash flows provided by/(used in) operating activities

2017 2016 $000 $000 Net cost of services (766,798) (686,891)

Non-cash items Depreciation and amortisation expense (Note 10 ‘Depreciation and amortisation expense’) 33,330 33,820 Doubtful debts expense (Note 14 ‘Other expenses’) 110 100 Superannuation expense - - Services received free of charge (Note 22 ‘Income from State Government’) 4,400 4,000 Finance costs – unwinding of discounts (Note 11 ‘Finance cost’) 88 77 Adjustment for other non-cash items (50) (82) Net (gain)/loss on disposal of property, plant and equipment (Note 20‘Net gain/(loss) on sale of non-current assets’) (170) (4,700) Write-down of non-current assets classified as held for sale (Note 14 ‘Other expenses’) 470 1,100 Loss from earthquake (Note 14 ‘Other expenses’) - 1,250 (Profit)/loss on sale of investment - -

(Increase)/decrease in assets Current receivables(a) (6,508) (266)

Current inventories (1,935) (3,625) Other current assets (10) 250 Non-current receivables - - Non-current inventories - - Other non-current assets 60 -

Increase/(decrease) in liabilities Current payables(a) 726 780 Current provisions 1,473 6,183 Other current liabilities 21 20 Non-current provisions 5,398 (960) Other non-current liabilities - - Net GST receipts/(payments)(b) 65 (65) Change in GST in receivables/payables(c) (72) 256 Net cash provided by/(used in) operating activities (729,402) (648,753) (a) Note that the Australian Taxation Office (ATO) receivable/payable in respect of GST and the receivable/payable in respect of the sale/purchase of non-current assets are not included in these items as they do not form part of the reconciling items. (b) This is the net GST paid/received, i.e. cash transactions. (c) This reverses out the GST in receivables and payables.

AASB 107.50(a) At the end of the reporting period, the Authority had fully drawn on all financing facilities, details of which are disclosed in the financial statements.

AASB 107.43, 44, Commentary: 50 Non-cash financing and investing activities Information about transactions and other events which do not result in any cash flows during the reporting period, but affect assets and liabilities that are recognised, must be disclosed in the general purpose financial statements where they: (a) involve external parties; and (b) relate to the financing, investing and other non-operating activities of the entity. The following are examples of non-cash financing and investing transactions and other events: (a) acquisition of assets by entering into finance leases; and (b) exchange of non-cash assets or liabilities for other non-cash assets or liabilities.

TI 1102(10) Note 41. Services provided free of charge 2017 2016 $000 $000 During the period the following services were provided to other agencies free of charge for functions outside the normal operations of the Authority: ABC Agency – Use of photocopier 110 100 110 100

AASB 101.114(d)(i) Note 42. Commitments Finance lease commitments

2017 2016 $000 $000 Minimum lease payment commitments in relation to finance AASB 117.31(b) leases are payable as follows: Within 1 year 650 800 Later than 1 year and not later than 5 years 1,280 1,100 Later than 5 years 15 120 Minimum finance lease payments 1,945 2,020

Less future finance charges (140) (150) Present value of finance lease liabilities 1,805 1,870

The present value of finance leases payable is as follows: Within 1 year 640 700 Later than 1 year and not later than 5 years 1,160 1,050 Later than 5 years 5 120 Present value of finance lease liabilities 1,805 1,870

Included in the financial statements as: Current (Note 35 ‘Borrowings’) 600 650 Non-current (Note 35 ‘Borrowings’) 1,205 1,220 1,805 1,870

AASB 117.31(e) The Authority has the option to purchase leased assets at their agreed fair value on expiry of the lease. These leasing arrangements do not have escalation clauses, other than in the event of payment default. There are no restrictions imposed by these leasing arrangements on other financing transactions. Certain finance leases have a contingent rental obligation; however these are not material when compared to the total lease payments made.

Commentary: The present value of finance leases payable within 1 year is generally greater than the outstanding liability recognised as current liabilities (Note 35 ‘Borrowings’) in the financial statements. This is due to minimum lease payments affecting only small reduction of the outstanding liability and satisfying large finance charge early in the lease term. As the entity approaches the contractual end date, the finance charge becomes smaller and the outstanding liability is settled rapidly.

AASB 117.35(a) Non-cancellable operating lease commitments

2017 2016 $000 $000 Commitments for minimum lease payments are payable as follows: Within 1 year 5,400 5,000 Later than 1 year and not later than 5 years 22,126 20,000 Later than 5 years - - 27,526 25,000

AASB 117.35(d) The Authority has entered into a property lease which is a non-cancellable lease with a five year term, with rent payable monthly in advance. Contingent rent provisions within the lease agreement require that the minimum lease payments shall be increased by the lower of CPI or 3% per annum. An option exists to renew the lease at the end of the five year term for an additional term of five years.

AASB 117.31(c), Commentary: 35(c) Where material, contingent rents shall be charged as expenses in the periods in which they are incurred and must be disclosed separately.

The commitments below are inclusive of GST.

AASB 101.114(d)(i) Capital expenditure commitments

2017 2016 $000 $000 Capital expenditure commitments, being contracted capital expenditure additional to the amounts reported in the financial statements, are payable as follows: TI 1103 Guidelines

Within 1 year 27,000 55,000 Later than 1 year and not later than 5 years 61,000 75,000 Later than 5 years - - 88,000 130,000

AASB 101.114(d)(i) Other expenditure commitments

2017 2016 $000 $000 Other expenditure commitments [describe] contracted for at the end of the reporting period but not recognised as liabilities, are payable as follows: TI 1103 Guidelines Within 1 year - - Later than 1 year and not later than 5 years - - Later than 5 years - - - -

AASB 101.114(d) AASB 137.86-92 Note 43. Contingent liabilities and contingent assets Contingent liabilities The following contingent liabilities are additional to the liabilities included in the financial statements: Litigation in progress A plaintiff has made a claim for $50,000 in relation to an alleged breach of copyright. Liability has been denied and any legal claim will be defended. Native title claims The Authority’s land is subject to a number of native title claims that have yet to be assessed by the National Native Title Tribunal. The financial effect should these claims be successful cannot be estimated at this time. Contaminated sites Under the Contaminated Sites Act 2003, the Authority is required to report known and suspected contaminated sites to the Department of Environment and Conservation (DEC). In accordance with the Act, DEC classifies these sites on the basis of the risk to human health, the environment and environmental values. Where sites are classified as contaminated – remediation required or possibly contaminated – investigation required, the Authority may have a liability in respect of investigation or remediation expenses. During the year the Authority reported three suspected contaminated sites to DEC. These have yet to be classified. The Authority is unable to assess the likely outcome of the classification process, and accordingly, it is not practicable to estimate the potential financial effect or to identify the uncertainties relating to the amount or timing of any outflows. Whilst there is no possibility of reimbursement of any future expenses that may be incurred in the remediation of these sites, the Authority may apply for funding from the Contaminated Sites Management Account to undertake further investigative work or to meet remediation costs that may be required. Other [describe]

AASB 139.47(c) Commentary: AASB 7.3(d) Agencies that have entered into contracts or arrangements as the issuer of ‘financial guarantee contracts’ shall recognise and measure the contracts in accordance with AASB 139. Disclosures for these contracts are required under AASB 7.B9, B10(c), B10A(b) and B11C(c).

AASB 137.89 Contingent assets The following contingent assets are additional to the assets included in the financial statements: Litigation in progress A negligence claim has been filed against a supplier for faulty materials. The potential financial impact of a successful outcome cannot be reliably measured at this time. Other [describe]

AASB 137.34 Commentary: A contingent asset is disclosed only where an inflow of economic benefits is probable.

Note 44. Events occurring after the end of the reporting period AASB 110.3 Commentary: AASB 110.3 notes that events after the end of the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types of events can be identified: those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the end of the reporting period); and those that are indicative of conditions that arose after the end of the reporting period (non-adjusting events after the end of the reporting period).

AASB 110.19 Updating Disclosure about Conditions at the End of the Reporting Period If an entity receives information after the end of the reporting period about conditions that existed at the end of the reporting period, it shall update disclosures that relate to these conditions, in light of the new information.

AASB 110.21 Non-adjusting Events after the end of the Reporting Period If non-adjusting events after the end of the reporting period are material, non-disclosure could influence the economic decisions of users taken on the basis of the financial report. Accordingly, an entity shall disclose the following for each material category of nonadjusting event after the end of the reporting period: the nature of the event; and an estimate of its financial effect, or a statement that such an estimate cannot be made.

Note 45. Explanatory statement TI 945P(3) Significant variances between estimates and actual results for 2017 and between the actual results for 2017 and 2016 are shown below. Significant variances are considered to be those greater than 10% or $10 million.

Commentary: Agencies within the scope of TI 945P This illustrative model is based on TI 945P, which is applicable to agencies not within the General Government Sector excepting the Public Transport Authority. Agencies reporting pursuant to TI 945P, including universities, may set their own thresholds, which may or may not coincide with the example below. Agencies within the scope of TI 945 Example disclosures of Explanatory Statements for agencies within the scope of TI 945 are not addressed in this model. Further guidance may be found in the Note 45 ‘Explanatory statement’ of the Model Annual Report for Departments (for June 2017), although some general government statutory authorities (e.g. those required to publish section 40 estimates or table a Statement of Corporate Intent) may only have to disclose information comparable with the line items in the published budgeted financial

30.06.2017 Page 79 of 95 Illustrative Model Annual Report Statutory Authority (Net Cost of Services) – 30 June 2017 statements. Agencies complying with TI 945 requirements do not have capacity to determine their own thresholds for ‘material variances’.

Significant variances between estimated and actual result for 2017

2017 2017 Estimate Actual Variance $000 $000 $000 Expenses Supplies and services 56,680 61,980 5,300

Income User charges and fees 13,500 16,497 2,997 Sales 12,537 14,267 1,730

Supplies and services Additional materials were required to provide training courses. User charges and fees Additional revenues were received as extra training courses were conducted to meet an unexpected surge in demand. Sales Sale of books, guides and training materials increased due to the extra demand for training courses.

Significant variances between actual results for 2017 and 2016

2017 2016 Variance $000 $000 $000 Expenses Employee benefits expense 669,757 512,584 157,173 Supplies and services 61,980 56,345 5,635 Cost of sales 5,560 3,700 1,860

Income User charges and fees 16,497 14,997 1,500 Sales 14,267 12,970 1,297 Employee benefits expense The variance is due to the hiring of more employees during the reporting period. Supplies and services The variance is due to higher use of contractors and consultants in providing services to agencies and higher communication expenses incurred during the reporting period. Cost of sales The variance is due to additional sales on the various books, guides and training materials to agencies. User charges and fees The variance is due to additional revenues received from services provided in respect of the corporate services reforms, which involved changes to agencies’ financial management systems and increased training courses during the reporting period. Sales The variance is due to additional sales on the various books, guides and training materials to agencies.

Note 46. Financial instruments Commentary: AASB 7.7, 31 Disclose information that enables users of its financial statements to evaluate the significance of financial instruments for its financial position and performance. This shall include information that enables users to evaluate the nature and extent of risks arising from financial instruments to which the agency is exposed at the end of the reporting period. AASB 7 requires disclosure of information used by key management personnel to measure and manage risk. The agency shall decide, in light of the circumstances, how much detail it provides to satisfy the requirements of this Standard, how much emphasis it places on different aspects of the requirements and how it aggregates information to display the overall picture without combining information with different characteristics. The minimum disclosures set out in this note of the model annual report are provided by way of example only. They do not necessarily represent the only disclosures which may be appropriate for particular financial instruments and do not cover all financial instruments that may be used in practice, or importantly, reflect the manner in which the agency reports internally to its key management personnel.

AASB 7.21, B5, 33, AASB 7 requires comprehensive disclosure requirements for financial instruments 34, 42B including, but not limited to, the following:  the measurement basis (bases) and the criteria used to determine classification for different types of financial instruments;  the qualitative and quantitative disclosures for each type of risk (e.g. credit risk, liquidity risk, and market risk) that the agency is exposed to;  qualitative disclosures concerning the exposures to risk and how they arise; the objectives, policies and processes for managing the risk and methods used to measure the risk; and any changes in these from the previous period; and  disclosures enabling financial statement users to: understand the relationship between transferred financial assets not derecognised in their entirety and associated liabilities, and, evaluate the nature and risks associated with continuing involvement in derecognised financial assets.

AASB 7.31, 33 (a) Financial risk management objectives and policies Financial instruments held by the Authority are cash and cash equivalents, restricted cash and cash equivalents, loans and receivables, payables, bank overdraft, WATC/Bank borrowings, finance leases, and Treasurer’s advances. The Authority has limited exposure to financial risks. The Authority’s overall risk management program focuses on managing the risks identified below.

AASB 7.33, 34(c), Credit risk 36(c) Credit risk arises when there is the possibility of the Authority’s receivables defaulting on their contractual obligations resulting in financial loss to the Authority. The maximum exposure to credit risk at the end of the reporting period in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any allowance for impairment as shown in the table at Note 46(c) ‘Financial instruments disclosures’ and Note 25 ‘Receivables’. Credit risk associated with the Authority’s financial assets is minimal because the main receivable is the amounts receivable for services (holding account). For receivables other than government, the Authority trades only with recognised, creditworthy third parties. The Authority has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. In addition, receivable balances are monitored on an ongoing basis with the result that the Authority’s exposure to bad debts is minimal. At the end of the reporting period there were no significant concentrations of credit risk.

Commentary: Disclose policies for managing any past due receivables. Allowance for impairment of financial assets is calculated based on objective evidence such as observable data in client credit ratings. For financial assets that are either past due or impaired, refer to Note 46(c) ‘Financial instrument disclosures’.

AASB 7.33, 39(c) Liquidity risk Liquidity risk arises when the Authority is unable to meet its financial obligations as they fall due. The Authority is exposed to liquidity risk through its trading in the normal course of business. The Authority has appropriate procedures to manage cash flows including drawdown of appropriations by monitoring forecast cash flows to ensure that sufficient funds are available to meet its commitments.

AASB 7.33 Market risk Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the Authority’s income or the value of its holdings of financial instruments. The Authority does not trade in foreign currency and is not materially exposed to other price risks [for example, equity securities or commodity prices changes]. The Authority’s exposure to market risk for changes in interest rates relates primarily to the long-term debt obligations.

All borrowings are due to the Western Australian Treasury Corporation (WATC) and are repayable at fixed rates with varying maturities. Other than as detailed in the interest rate sensitivity analysis table at Note 46(c), the Authority is not exposed to interest rate risk because the majority of cash and cash equivalents and restricted cash are non-interest bearing and it has no borrowings other than the Treasurer’s advance (non-interest bearing), WATC borrowings and finance leases (fixed interest rate).

AASB 7.33 Commentary: Disclose any changes from the previous period in respect of the exposures for each type of risk, such as how they arise, how they are managed and the methods used to measure such risks.

AASB 7.8 (b) Categories of financial instruments The carrying amounts of each of the following categories of financial assets and financial liabilities at the end of the reporting period are: 2017 2016 $000 $000 Financial Assets Cash and cash equivalents 1,465 4,625 Restricted cash and cash equivalents 50 50 (a) AASB 7.8(c) Loans and receivables 94,276 67,798 Financial Liabilities Bank overdraft 470 680 AASB 7.8(f) Financial liabilities measured at amortised cost 7,992 12,880 AASB 132.AG12 (a) The amount of loans and receivables excludes GST recoverable from the ATO (statutory receivable).

(c) Financial instrument disclosures Credit risk AASB 7.6, 7, 34, The following table discloses the Authority’s maximum exposure to credit risk and the ageing analysis of financial assets. The Authority’s

36(a), 37(a)(b) maximum exposure to credit risk at the end of the reporting period is the carrying amount of financial assets as shown below. The table discloses the ageing of financial assets that are past due but not impaired and impaired financial assets. The table is based on information provided to senior management of the Authority.

AASB 7.36(b), 38 The Authority does not hold any collateral as security or other credit enhancement relating to the financial assets it holds.

Ageing analysis of financial assets

Not past due Carrying and not 3 months to Amount impaired 1-3 months 1 year $000 $000 $000 $000 2017 Cash and cash equivalents 1,465 1,465 - - Restricted cash and cash equivalents 50 50 - - Receivables(a) 8,134 7,686 88 22 Loans and advances - - - - Amounts receivable for services 86,142 86,142 - - 95,791 95,343 88 22 2016 Cash and cash equivalents 4,625 4,625 - - Restricted cash and cash equivalents 50 50 - - Receivables(a) 1,736 1,618 17 6 Loans and advances - - - - Amounts receivable for services 66,062 66,062 - - 72,473 72,355 17 6 (a) The amount of receivables excludes the GST recoverable from the ATO (statutory receivable). (b) A particular debtor has filed for bankruptcy and it is expected that only $8,000 (2016: $3,000) of the amount owing will be recovered. The carrying amount of the receivable before deducting the impairment loss was $28,000 (2016: $12,000).

AASB 7.6, 7, 34, 39, Liquidity risk and interest rate exposure B11E The following table details the Authority’s interest rate exposure and the contractual maturity analysis of financial assets and financial liabilities. The maturity analysis section includes interest and principal cash flows. The interest rate exposure section analyses only the carrying amounts of each item.

Interest rate exposure and maturity analysis of financial assets and financial liabilities Interest rate exposure Maturity dates Up to 1 m Fixed ont interest Nominal h Carrying Amount rate V Non-interest bearing Amount $00 1-3 months $000 $000 $a $000 $000 0 2017 0 Financial Assets Cash and cash equivalents 1,465 - - 1,465 1,465 1,46 5 Restricted cash and cash 50 - 5 - 50 50 equivalents 0 Receivables(a) 8,134 - - 8,134 8,134 8,13 4 Loans and advances ------Amounts receivable for services 86,142 - - 86,142 86,142 1,42 9 95,791 - 5 95,741 95,791 11,0 0 78

Financial Liabilities Payables 2,787 - - 2,787 2,787 2,78 7 Bank overdraft 470 - 4 - 470 470 WATC/Bank borrowings 1,000 1,000 -7 - 1,221 - Finance lease liabilities 1,805 1,805 - - 1,945 - Amounts due to the Treasurer 2,400 - - 2,400 2,400 2,40 0 8,462 2,805 4 5,187 8,823 5,65 7 7 (a) The amount of receivables excludes the GST recoverable from the ATO (statutory receivable).

Interest rate exposure and maturity analysis of financial assets and financial liabilities Interest rate exposure Maturity dates Up to 1 m Fixed ont interest Nominal h Carrying Amount rate V Non-interest bearing Amount $00 1-3 months $000 $000 $a $000 $000 0 2016 0 Financial Assets Cash and cash equivalents 4,625 - - 4,625 4,625 4,62 5 Restricted cash and cash 50 - 5 - 50 50 equivalents 0 Receivables(a) 1,736 - - 1,736 1,736 1,73 6 Loans and advances ------Amounts receivable for services 66,062 - - 66,062 66,062 1,81 7 72,473 - 5 72,423 72,473 8,22 0 8

Financial Liabilities Payables 2,040 - - 2,040 2,040 2,04 0 Bank overdraft 680 - 6 - 680 680 WATC/Bank borrowings 1,000 1,000 -8 - 1,284 - Finance lease liabilities 1,870 1,870 - - 2,020 - Amounts due to the Treasurer 7,970 - - 7,970 7,970 7,97 0 13,560 2,870 6 10,010 13,994 10,6 8 90 (a) The amount of receivables excludes the GST recoverable from the ATO (statutory receivable).

AASB 7.39(b) Commentary: Disclose a maturity analysis for derivative financial liabilities where applicable. The maturity analysis shall include the remaining contractual maturities for those derivative financial liabilities for which contractual maturities are essential for an understanding of the timing of the cash flows.

AASB 7.40, B17-21 Interest rate sensitivity analysis The following table represents a summary of the interest rate sensitivity of the Authority’s financial assets and liabilities at the end of the reporting period on the surplus for the period and equity for a 1% change in interest rates. It is assumed that the change in interest rates is held constant throughout the reporting period. -100 basis points +100 basis points Carrying amount Surplus Equity Surplus Equity 2017 $000 $000 $000 $000 $000 Financial Assets Restricted cash and cash equivalents 50 (0.5) (0.5) 0.5 0.5 Financial Liabilities Bank overdraft 470 5 5 (5) (5) [List details] - - - - -

Total Increase/(Decrease) 4.5 4.5 (4.5) (4.5)

-100 basis points +100 basis points Carrying amount Surplus Equity Surplus Equity 2016 $000 $000 $000 $000 $000 Financial Assets Restricted cash and cash equivalents 50 (0.5) (0.5) 0.5 0.5 Financial Liabilities Bank overdraft 680 7 7 (7) (7) [List details] - - - - - Total Increase/(Decrease) 6.5 6.5 (6.5) (6.5) Commentary: Take into account of past performance, future explanations, economic forecasts, and management’s knowledge and experience of the financial markets to determine possible movements that are reasonably likely over the next 12 months.

AASB 7.40(c) Disclose any changes in the methods and assumptions used in the previous period. If applicable, a sensitivity analysis for currency risk and other price risks should be disclosed.

AASB 7.25, 27, 29 Fair values All financial assets and liabilities recognised in the Statement of Financial Position, whether they are carried at cost or fair value, are recognised at amounts that represent a reasonable approximation of fair value unless otherwise stated in the applicable notes.

Commentary: AASB 7.25, 30 Where a material difference between the carrying amount and fair value exists in respect of financial assets or liabilities, then the aggregate fair value of the class of financial assets or liabilities should be disclosed.

AASB 13.91-99 AASB 13 requires disclosures for financial instruments recognised or disclosed at fair value to assist users to assess the valuation techniques used, and the inputs used to develop those measurements. Moreover, the effect of the measurements on profit or loss or other comprehensive income for the period is required for recurring fair value measurements utilising significant unobservable inputs (Level 3).

AASB 12.21 Note 47. Joint operations Name of Operation Principal Place of Principal Activity Ownership Business Interest (%) JO 1 Western Australia Training Centre Construction 50 JO 2 Western Australia College Construction 50

Commentary: Additional minimum disclosure requirements apply to joint arrangements classified as joint ventures. Requirements for joint ventures, subject to applicability and materiality, include the following: AASB 12.21(b) (a) whether investments in joint ventures are measured using the equity method or at fair value; (b) additional summarised financial information about the joint venture; (c) the fair value of an investment in the joint venture if the joint venture is accounted for using the equity method where there is a quoted market price for the investment; AASB 12.22 (d) the nature and extent of any significant restrictions on the ability of joint ventures to transfer funds to the agency in the form of cash dividends, or to repay loans or advances made by the agency;

AASB 12.23(a) (e) information about capital commitments relevant to joint ventures; and AASB 12.23(b) (f) information about contingent liabilities relevant to joint ventures.

AASB 1054.10 Note 48. Remuneration of auditor Remuneration paid or payable to the Auditor General in respect of the audit for the current reporting period is as follows:

2017 2016 $000 $000 Auditing the accounts, financial statements, controls, and, key performance indicators 55 50

AASB 1054.10, 11 Commentary: AASB 1054 requires agencies to disclose the amounts paid or payable to: (a) the auditor of the entity for an audit or a review of the financial statements of the entity; and (b) the auditor of the entity for non-audit services in relation to the entity, disclosing separately the nature and amount of each of the non-audit services provided by the auditor. The amounts disclosed above differ from the amounts recognised in Note 14 ‘Other expenses’ and represents the totals of interim and final audit fees for the current year financial statement.

TI 951(3), (4) Note 49. Related bodies The Authority had two related bodies during the reporting period meeting all operating expenses of:

2017 2016 $000 $000 TNT Agency 6,290 6,540 ABN Agency 75 70

The transactions and results of the related bodies have been included in the financial statements.

Commentary: A related body is a body that receives more than half of its funding and resources from an agency and is subject to operational control by that agency.

TI 951(5), (6) Note 50. Affiliated bodies Excellent Board is a government affiliated body that received administrative support and a grant of $2,300,000 (2016: $1,200,000) from the Authority. The Excellent Board is not subject to operational control by the Authority.

Commentary: An affiliated body is a body that receives more than half its funding and resources from an agency but is not subject to operational control by that agency.

FMA sec 17 TI 1103 Note 51. Special purpose accounts The Prize Fund(a) The purpose of the account is to hold funds from donations and bequests in trust for the purpose of awarding prizes to schools and colleges in the information technology field.

2017 2016 $000 $000 Balance at start of period - 560 Receipts 390 135 Payments (305) (695) Balance at end of period 85 -

The Industry Fund(b) The purpose of the account is to hold funds appropriated by Parliament for the development of initiatives improving the competitiveness of the Western Australian technology industry. 2017 2016 $000 $000 Balance at start of period - - Receipts 100 - Payments (50) - Balance at end of period 50 - (a) Established under section 16(1)(c) of FMA. (b) Established under section 16(1)(d) of FMA.

TI 1103(15)(ii) Commentary: Statutory authorities are required to provide cash-based reporting for any special purpose accounts established under section 16(1)(c) or (d) of the Act. The relevant disclosure requirements are: a statement as to the purpose of the special purpose account; the balance of the account at the beginning of the reporting period; total receipts; total payments; and the balance of the account at the end of the reporting period. The above information can be presented in a table format.

Note 52. Supplementary financial information FMA sec 48 TI 952(6)(i) (a) Write-offs FMR reg 7 2017 2016 $000 $000 TI 807 Public property written-off by the Executive Council during the period - 370 - 370

Commentary: Disclose details of any other write-offs during the reporting period, such as bad debts and, revenue and debts due to the State, public and other property written off during the reporting period. FMA sec 49 TI 952(6)(ii) (b) Losses through theft, defaults and other causes TI 803 2017 2016 $000 $000 Losses of public money and public and other property through theft or default - 20 Amounts recovered - - - 20

TI 952(6)(iii) (c) Gifts of public property 2017 2016 $000 $000 Gifts of public property provided by the Authority - 50 - 50

AASB 1052.15 TI 1101(9) Note 53. Schedule of income and expenses by service Information Technology Training and Assistance 2017 2016 2016 2017 $000 $000 $000 $000 COST OF SERVICES Expenses Employee benefits expense 294,693 263,585 191,753 160,742 Supplies and services 28,328 22,845 17,500 15,550 Depreciation and amortisation expense 12,595 12,780 12,237 8,675 Finance costs 263 347 - - Accommodation expenses 3,095 2,814 2,250 1,393 Grants and subsidies 4,028 3,662 3,460 1,967 Cost of sales 3,600 2,400 1,100 310 Other expenses 10,100 11,670 907 1,052 Total cost of services 356,702 320,103 229,207 189,689

Income User charges and fees 8,980 8,157 4,540 2,522 Sales 7,117 6,470 3,800 2,970 Commonwealth grants and contributions 1,100 1,000 - - Interest revenue 440 400 300 220 Other revenue 27 7 58 8 Gain on disposal of non-current assets 170 4,700 - - Total income other than income from State Government 17,834 20,734 8,698 5,720 NET COST OF SERVICES 338,868 299,369 220,509 183,969

INCOME FROM STATE GOVERNMENT Service appropriation 357,441 315,183 264,671 138,637 Liabilities assumed - - - - Assets transferred - - - - Services received free of charge 1,365 1,150 2,040 1,015 Royalties for Regions Fund - - - - Total income from State Government 358,806 316,333 266,711 139,652 SURPLUS/(DEFICIT) FOR THE PERIOD 19,938 16,964 46,202 (44,317)

30.06.2017 Page 90 of 95 TI 903(11) Audited Key Performance Indicator Information

FMA sec 64(1)(b) Commentary: TI 903(8) requires agencies to include a discussion of actual results against budget targets for both financial and non-financial indicators in the Agency Performance section of the annual report. See Note 45 ‘Explanatory Statement’. In addition to the summary information contained in the Agency Performance section, agencies may wish to disclose further details including long term trends, graphs and supporting explanatory notes, as part of this section. As the key performance indicators are audited, the Auditor General’s opinion is usually inserted into this section.

Certification of Key Performance Indicators TI 905 We hereby certify that the key performance indicators are based on proper records, are relevant and appropriate for assisting users to assess the Model Statutory Authority’s performance, and fairly represent the performance of the Model Statutory Authority for the reporting period ended 30 June 2017.

(Signature) (Signature) B. Gate H. Norman Chairman of Accountable Authority Member of Accountable Authority 1 August 2017 1 August 2017

30.06.2017 Page 91 of 95 Detailed Information in Support of Key Performance Indicators

Agency Level Government Desired Outcome: Sustainability of the provision of information technology. 2013-14 2014-15 2015-16 2016-17 % % % % Key Effectiveness Indicator The proportion (%) of government agencies using sustainable information technology plans 82 83 85 86

Service 1: Information Technology 2013-14 2014-15 2015-16 2016-17 $ $ $ $ Key Efficiency Indicators Cost per sustainable IT plan 24,000 23,500 22,700 21,950 Cost per hour of service delivered 6,032 6,000 6,000 5,957

Commentary: An example of longer term trend data is shown above. This is also an appropriate place to provide graphs and charts. Insert a brief description of the services provided and a statement of how each service contributes to the identified agency level government desired outcome. Key Performance Indicators are to be disclosed in the annual report in accordance with TI 904. In addition to the information disclosed on outcomes and services in the report on operations, all accountable authorities are required to disclose: the relationship between government goals, agency level government desired outcomes and services; key performance indicators of effectiveness; and key performance indicators of efficiency and cost effectiveness (if applicable). Key effectiveness indicators provide information on the extent to which agency level government desired outcomes have been achieved through the funding and production of agreed services. For Statutory Authorities that are the subject of a separate division of the Consolidated Account Expenditure Estimates, the agency level government desired outcomes are those specified in the Budget Statements. For off-budget agencies, the government agency level Government desired outcomes will need to be either identified within the relevant enabling legislation or specified/endorsed by the Minister. Agencies are encouraged to supplement their reporting of effectiveness with narrative. This narrative may include comment on the projected timing of outcomes to be achieved in the long term. It is also appropriate for agencies to identify and discuss influences on achievement of outcomes other than their own services. These influences may include services provided by other agencies, or factors such as social or demographic trends. Key efficiency indicators generally relate services to the level of resource inputs required to deliver them. In some cases ‘per unit cost’ information provided in the budget process may fulfil the key performance indicator reporting requirement. In other cases cost per unit information may need to be aggregated, or productivity indicators used. Key cost effectiveness indicators are a type of key effectiveness indicator. They relate outcomes directly to inputs. In addition to providing key cost effectiveness indicators where there are no suitable key efficiency indicators, agencies are encouraged to also report cost effectiveness indicators where doing so adds value to reporting information. Further information on, and discussion of, agency level government desired outcomes, services and key performance indicators are available in the Treasury publication

30.06.2017 Page 92 of 95 Outcome Based Management: Guidelines for Use in the Western Australian Public Sector. TI 903(12) Ministerial Directions

No Ministerial directives were received during the reporting period.

Commentary: Disclose any Ministerial directives relevant to the setting of desired outcomes or operational objectives, the achievement of desired outcomes or operational objectives, investment activities, and financing activities. TI 903(13) Other Financial Disclosures

TI 810 Pricing policies of services provided The Authority charges for goods and services rendered on a full or partial cost recovery basis. These fees and charges were determined in accordance with Costing and Pricing Government Services: Guidelines for Use by Agencies in the Western Australian Public Sector published by Treasury. The current fees and charges were published in the Gazette on 31 December 2016 and introduced/payable from 7 January 2017. Details are available on the Authority’s website at www.authority.wa.gov.au.

Capital Works Capital project incomplete The construction of a new building to accommodate the Statutory Authority’s increasing demand for additional seminars and training sessions will be completed by January 2017. The building will also be used as a display centre for new computer equipment, which will be open to the public for viewing. The estimated total cost of the project is $20,000,000 and the estimated remaining cost to complete the project at 30 June 2017 is $13,000,000. Capital projects completed No capital projects were completed during 2016-17.

Employment and Industrial Relations Staff Profile 2017 2016 Full-time permanent 260 255 Full-time contract 150 140 Part-time measured on a FTE basis 10 8 On secondment 3 2 423 405

Staff Development The Statutory Authority has a commitment to the development of its employees. Our strategies are to build a highly skilled, professional and fair workforce with the ability to adapt to changing business technology and the environment. During the reporting period, our employees received training in excess of 3,000 hours of inhouse and external training. As the result of our commitment to staff training and development, we are recognised as the industry leader in the information technology area in the public sector.

30.06.2017 Page 93 of 95 Workers Compensation Five compensation claims of a minor nature were recorded during the reporting period. This compares with seven compensation claims of a minor nature recorded in 2016-17.

Commentary: The above disclosure is an example and agencies should consider their own circumstances in addressing the requirement. TI 903(14) Governance Disclosures

Contracts with Senior Officers At the date of reporting, no senior officers, or firms of which senior officers are members, or entities in which senior officers have substantial interests, had any interests in existing or proposed contracts with the Model Statutory Authority other than normal contracts of employment of service.

Commentary: The above disclosure is an example therefore agencies should consider their own circumstances in addressing the requirements of TI 903(14).

TI 903(13)(iv) Unauthorised Use of Credit Cards Officers of the Model Statutory Authority hold corporate credit cards where their functions warrant usage of this facility. Despite each cardholder being reminded of their obligations annually under the Model Statutory Authority’s credit card policy, one employee inadvertently utilised the corporate credit card for parking at an event that they were not attending in an official capacity. The matter was not referred for disciplinary action as the Chief Finance Officer noted prompt advice and settlement of the personal use amount, and, that the nature of the expenditure was immaterial and characteristic of an honest mistake. 2017 $ Personal use expenditure for the reporting period 27 Personal use expenditure settled by the due date (within 27 5 working days) Personal use expenditure settled after the period (after - 5 working days) Personal use expenditure outstanding at balance date -

Commentary: The above disclosure is an example therefore agencies should consider their own circumstances in addressing the requirements of TI 903(13)(iv). TI 903(15) Other Legal Requirements

Annual Estimates FMA sec 40 Commentary: TI 953 Section 40 of the FMA provides for the accountable authority of a statutory authority to submit annual estimates of the annual operations of the statutory authority to the Minister for approval. The estimates are to be prepared and submitted to the Minister at such times as determined by the Treasurer, or no later than three months before the commencement of the next reporting period. Statutory authorities not funded as a separate Division of the Consolidated Account Expenditure Estimates should include the approved annual estimates for the current

30.06.2017 Page 94 of 95 reporting period in the annual report of the preceding reporting period submitted to the responsible Minister under the provisions of section 63 of the Act. A comprehensive list of Other Legal Requirements is available from the Public Sector Commission’s Annual Reporting Framework: http://www.publicsector.wa.gov.au/Pages/A-ZPublications.aspx TI 903(16) Government Policy Requirements

Government Building Contracts The Model Statutory Authority has a commitment to the Government Building Training Policy, having included appropriate clauses in tender documentation and monitored compliance of in scope building, construction or maintenance contractors for projects with a duration of greater than 3 months and a value of greater than $2 million. At the balance date, no contracts subject to the Government Building Training Policy had been awarded. Measure Building and Maintenance Construction 2017 2017 Awarded - - Reported on  Commenced reporting - -  Continued reporting from previous reporting period - - Target training rate  Met or exceeded - -  Did not meet - -  Granted a variation - -

Commentary: Public sector agencies must incorporate the above disclosures in their Annual Report as required by Premier’s Circular 2015/02 Government Building Training Policy. Where a variation to the target training rate has been approved by the Chief Executive of the government contracting agency, the following information must also be provided: Target Training Rate Variations The Chief Executive of the government contracting agency may approve a variation to the target training rate in exceptional circumstances. Approved variations to the target training rate in the reporting period: Contract name/ Amended target Reason for the variation Contract number training rate % ------

For further information please refer to the Government Building Training Policy or contact the Department of Training and Workforce Development on 6551 5607 or email [email protected].

30.06.2017 Page 95 of 95