Financial Audit Update Thursday 3 March 2011 and Thursday 10 March 2011_part6 potx

Impact of natural disasters Paul Christensen Acting Director – Audit Policy and Quality This is trial version www.adultpdf.com Areas to be considered • Non-current physical assets • Grants and other forms of assistance • Operational impacts • Financial statements and audit visits • Potential impact on audit opinions • Communication of issues and impacts This is trial version www.adultpdf.com Non-current physical assets • Condition of assets significantly impacted • May take a number of years to fully repair all major infrastructure assets • Indicator of impairment under AASB 136.12(e) – Need to assess recoverable amount of assets – For not-for-profit entities value in use = depreciated replacement cost – For-profit entities need to estimate future cash flows based on the present condition of the asset This is trial version www.adultpdf.com Non-current physical assets • Impact on asset classes reported at “fair value” – Need to reflect actual condition of the assets – Is any damage to the assets likely to impact materially on their “fair value”? – Where asset within a class is revalued AASB 116 requires the whole class to be revalued – Condition assessments often key input into valuations of infrastructure assets This is trial version www.adultpdf.com Non-current physical assets • Useful lives and residual values – Annual assessment required under AASB 116 – Have remaining useful lives been impacted by damage caused to the assets? – Has the damage impacted on the amount expected to be received on disposal? – Is the present value of the asset below the previous assessment of residual value? This is trial version www.adultpdf.com Non-current physical assets • Write-offs and repairs – At what stage are assets so damaged that they no longer represent assets? – Decisions made to repair or replace assets – Capital v maintenance – Replacement of parts and significant components • AASB 116 requires insurance recoveries to be record through profit or loss i.e. revenue • Cannot use insured value as “fair value” This is trial version www.adultpdf.com Non-current physical assets • Asset management plans – Have these been updated to reflect condition assessments of assets – Update to reflect key decisions around repairing and replacing assets – Do assumptions used in assessing asset values reflective of decisions in asset management plans This is trial version www.adultpdf.com Non-current physical assets • Practical issues – Timing of impairment – Impairment v revaluation – Capacity to have valuations undertaken – Need for valuations in future financial years – Determining revalued/impaired amounts in manner that reflects condition of assets – Impact of new role for Queensland Reconstruction Authority This is trial version www.adultpdf.com Government assistance • Accounting for government grants received – AASB 1004 v AASB 120 – Grants received in advance v in arrears – Reciprocal v non-reciprocal grants – Grants for construction of assets (for-profit entities only) • Other forms of government assistance offered – Financial and non-financial assistance – Impact on financial statements e.g. assessment of receivables for impairment This is trial version www.adultpdf.com Collection of donations • Accounting for donations received – Limited capacity for control over collection resulting in increased risk of fraud – Transfer of money collected between agencies – Ultimate accountability for funds This is trial version www.adultpdf.com . Director – Audit Policy and Quality This is trial version www.adultpdf.com Areas to be considered • Non-current physical assets • Grants and other forms of assistance • Operational impacts • Financial. assistance • Operational impacts • Financial statements and audit visits • Potential impact on audit opinions • Communication of issues and impacts This is trial version www.adultpdf.com Non-current. (for-profit entities only) • Other forms of government assistance offered – Financial and non -financial assistance – Impact on financial statements e.g. assessment of receivables for impairment This