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FINANCIAL STATEMENTS |
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AUDITED FINANCIAL STATEMENTS
Independent Audit ReportCertificate
NATIONAL LIBRARY OF AUSTRALIA NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSNote 1: Summary of significant accounting policies1.1 Basis of accountingThe financial statements are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997 and are a general purpose financial report. The statements have been prepared in accordance with:
The Statements of financial performance and financial position have been prepared on an accrual basis, except for trust accounts where cash accounting is employed, and are in accordance with historical cost convention, except for certain assets, which as noted, are at valuation. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position. Assets and liabilities are recognised when and only when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured. Assets and liabilities arising under agreements equally proportionately unperformed are, however not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies (other than unquantifiable or remote contingences, which are reported at Note 12). Revenues and expenses are recognised in the statement of financial performance when and only when the flow or consumption or loss of economic benefits has occurred and can be reliably measured. 1.2 Changes in accounting policyThe accounting policies used in the preparation of these financial statements are consistent with those used in 2001–02, except in respect of:
1.3 RevenueThe revenues described in this note are revenues relating to the core operating activities of the Library. Details of revenue are given in Note 3. Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer. Revenue from the rendering of a service is recognised by reference to the stage of completion of contracts. The stage of completion is determined according to the proportion that costs incurred to date relate to the estimated total costs of the transaction. Revenues from government—Output appropriationsThe full amount of the appropriation for Library outputs is recognised as revenue. Resources received free of chargeServices received free of charge are recognised as revenue when and only when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense. Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value when the asset qualifies for recognition. 1.4 Transactions by the government as ownerEquity InjectionsAmounts appropriated by Parliament as equity injections are recognised as ‘contributed equity’ in accordance with the Finance Ministers Orders. Capital Use ChargeA Capital Use Charge is imposed by the government on the net assets of the Library. The charge is accounted for as a dividend to government. 1.5 Employee entitlementsBenefitsLiabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled. Liabilities for wages and salaries (including non-monetary benefits) and annual leave are measured at their nominal amounts. Other employee benefits expected to be settled within 12 months of their reporting date are also measured at their nominal amounts. The nominal amount is calculated with regard to the rates expected to be paid on settlement of the liability. This is a change in accounting policy required by the initial application of a new accounting standard AASB 1028 from 1 July 2002. The financial effect of this change in accounting policy is an increase in leave expenses of $515,000 and an increase of the same amount to provisions for employee entitlements. All other employee benefit liabilities are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. LeaveThe liability for employee benefits includes provision for annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in the future by employees of the Library is estimated to be less than the annual entitlement for sick leave. The leave liabilities are calculated on the basis of employees’ remuneration, including an on-cost for accruing leave entitlements and Library’s employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination. These on-costs are recognised because while the employee is taking leave, superannuation and leave entitlements continue to accrue. The liability for long service leave has been determined by reference to the work of an actuary undertaken in April 2003. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotion and inflation. Separation and redundancyProvision is also made for separation and redundancy payments in circumstances where the Library has formally identified positions as excess to requirements and a reliable estimate of the amount payable can be determined. SuperannuationEmployees contribute to the Commonwealth Superannuation Scheme and the Public Sector Superannuation Scheme. The liability for their superannuation benefits is recognised in the financial statements of the Commonwealth and is settled by the Commonwealth in due course. The Library makes employer contributions to the Commonwealth at rates determined by the actuary to be sufficient to meet the cost to the Commonwealth of the superannuation entitlements of the Library’s employees. The liability for superannuation recognised represents outstanding contributions as at 30 June. 1.6 LeasesA distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits. Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value of minimum lease payments at the inception of the lease and a liability for the lease payments recognised at the same amount. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense. Operating lease payments are expensed on a basis which is representative of the pattern of benefits derived from the leased assets. The net present value of future net outlays in respect of surplus space under non-cancellable lease agreements is expensed in the period in which the space becomes surplus. Lease incentives taking the form of ‘free’ leasehold improvements and rent holidays are recognised as liabilities. These liabilities are reduced by allocating lease payments between rental expense and reduction of the liability. 1.7 GrantsThe Library recognises grant liabilities as follows: Where grant agreements require the grantee to perform services or provide facilities, or to meet eligibility criteria, liabilities are recognised only to the extent that the services required have been performed or the eligibility criteria have been satisfied by the grantee. In cases where grant agreements are made without conditions to be monitored, liabilities are recognised on signing of the agreement. 1.8 CashCash includes notes and coin held and any deposits held at call with a bank or financial institution. 1.9 Financial instrumentsAccounting policies for financial instruments are stated at Note 19. 1.10 Acquisition of assetsAssets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken. Assets acquired at no cost or for nominal consideration are initially recognised as assets and revenues at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognised in the transferor entity’s accounts prior to restructuring. 1.11 Property (land, buildings and infrastructure), plant and equipmentAsset recognition thresholdPurchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $1,500, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). The threshold for the recognition of software assets is $2,000. The purchase of library material regardless of the amount, other than serials, are capitalised as part of the National Collection. RevaluationsLand, buildings, infrastructure, plant and equipment and collection assets are carried at valuation. Revaluations undertaken up to 30 June 2002 were done on a deprival basis; revaluations since that date are at fair value. This change in accounting policy is required by Australian Accounting Standard AASB 1041 Revaluation of Non-Current Assets. Fair and deprival values for each class of assets are determined as shown below.
Under both deprival and fair value, assets that are surplus to requirements are measured at their net realisable value. At 30 June 2003 the Library held no surplus assets. (30 June 2002: $0) The financial effect for 2002–03 of this change in policy relates to those assets to be recognised at fair value at 30 June 2003. The financial effect of the change is given by the difference between carrying amount at 30 June 2002 of these assets and their fair value as at 1 July 2002. The financial effect by class is as follows:
Total financial effect was to a net credit to the asset revaluation reserve of $55,303. Accounting Standard AAS 6 Accounting Policies requires, where practical, presentation of the information that would have been disclosed in the 2001–02 statements had the new accounting policy always applied. It is impractical to present this information. FrequencyLand, buildings, leasehold improvements and plant and equipment were revalued during 2002–03. These assets will be revalued on a regular basis to ensure that the valuations remain current. The Library collections were revalued as at 30 June 2001 and are planned to be revalued during 2003–04. Assets in each class acquired after the commencement of the progressive revaluation cycle are not captured and are reported at cost for the duration of the progressive revaluation then in progress. ConductAll valuations are conducted by an independent qualified valuer. Recoverable amount testFrom 1 July 2002, Schedule 1 no longer requires the application of the recoverable amount test in AAS 10 Recoverable Amount of Non-Current Assets to the assets of authorities when the primary purpose of the asset is not the generation of net cash inflows. No property, plant and equipment assets have been written to recoverable amount per AAS 10. Accordingly the change in policy has had no financial effect. Depreciation and amortisationDepreciable property, plant and equipment is written-off to their estimated residual values over their estimated useful lives to the Library, using in all cases the straight-line method of depreciation. Leasehold improvements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease. Depreciation/amortisation rates (useful lives) and methods are reviewed at each balance date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Residual values are re-estimated for a change in prices only when assets are revalued. Depreciation and amortisation rates applying to each class of depreciable assets are based on the following useful lives:
The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 4D. 1.12 InventoriesInventories held for resale are valued at the lower of cost and net realisable value. Inventories not held for resale are valued at cost, unless they are no longer required, in which case they are valued at net realisable value. Costs incurred in bringing each item of inventory to its present location and condition are assigned as follows:
1.13 IntangiblesThe Library’s intangibles comprise purchased software and internally developed software for internal use. From 1 July 2002, Schedule 1 no longer requires the application of the recoverable amount test in Australian Accounting Standard AAS 10 Recoverable Amount of Non-Current Assets to the Library’s assets when the primary purpose of the asset is not the generation of net cash inflows. However, Schedule 1 now requires such assets, if carried on the cost basis, to be assessed for indications of impairment. The carrying amount of impaired assets must be written down to the higher of its net market selling price or depreciated replacement cost. All software assets were assessed for impairment and none were found to be impaired as at 30 June 2003. Intangible assets are amortised on a straight-line basis over their anticipated useful lives. Useful lives are:
1.14 TaxationThe Library is exempt from all forms of taxation except Fringe Benefits Tax and the Goods and Services Tax. Revenues, expenses and assets are recognised net of GST:
1.15 Foreign currencyTransactions denominated in a foreign currency are converted at the rate of exchange at the date of the transaction. Foreign currency receivables and payables are translated at exchange rates as at the balance date. Associated currency gains or losses are not material. 1.16 InsuranceThe Library has insured for risks through the Commonwealth Government’s insurable risk managed fund, called Comcover. Workers compensation is insured through Comcare Australia.
Note 14: Related party disclosuresNational Library Council Members of the Council during the year were:
The aggregate remuneration of Council members is disclosed in Note 13.
Note 19: Financial instruments (cont.)Note 19C—Net fair value of financial assets and liabilitiesThe net fair value of each class of the Library’s financial assets and liabilities equal the carrying amount for both the current and preceding reporting periods. Financial assetsThe net fair values of cash, deposits on call and non-interest-bearing monetary financial assets approximate their carrying amounts. None of the classes of financial assets are readily traded on organised markets in standardised form. Financial liabilitiesThe net fair values for trade creditors and grant liabilities, which are short term in nature, are approximated by their carrying amounts. None of the classes of financial liabilities are readily traded on organised markets in standardised form. Note 19D—Credit risk exposuresThe Library’s maximum exposures to credit risk at reporting date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the Statements of Assets and Liabilities. The Library has no significant exposures to any concentrations of credit risk. The Library does not hold collateral or other security and therefore the figures for credit risk represent the maximum credit risk exposure.
National Library of Australia Council 2003 Standing (from left): Mr Brian Long, Dr Colin Rubenstein, Mr Fergus Ryan, Ms Helen Williams, Mr Martin Ferguson MP, Ms Winnie Pelz, Professor Iain McCalman. Seated (from left): Senator John Tierney, Sir James Gobbo (Chairman), Ms Jan Fullerton (Director-General), Professor Alan Robson (Deputy-Chairman), Professor Susan Bambrick
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