Todays Date: February 13, 2012
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Accounting Policy Frequently Asked Questions

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Are NSW public sector agencies required to adopt International Accounting Standards? What is Treasury doing to assist agencies with the adoption of new or changed Accounting Standards (including AEIFRS)?

In July 2002, the Financial Reporting Council announced its decision to support the adoption of International Accounting Standards (IAS) in Australia from 1 January 2005. This decision impacted on both private and public sector entities.

The Australian Accounting Standards Board (AASB) has subsequently re-confirmed its commitment to continue to issue one series of sector-neutral Standards, applicable to both for-profit and not-for-profit entities, including the public sector.

As a result, the AASB has used the IAS as the ‘foundation’ Standards to which the Board has added material detailing the scope and applicability of the Standards in the Australian environment. These are referred to as Australian equivalents to International Financial Reporting Standards (AEIFRS). This is necessary because the IAS were meant to apply to only profit seeking entities. Additions have been made by the AASB to broaden the content to cover the not-for-profit sector, including the public sector, and domestic and regulatory or other issues.

Treasury has developed a strategy to implement Australian Accounting Standards including AEIFRS, in tandem with agencies and has provided additional guidance to agencies, where necessary. This includes a 'Treasury Analysis' for relevant Standards of changes compared to previous Australian Accounting Standards.

Further information can be obtained from the following websites:

Do I need approval for individual transactions and / or for the financial statements?

Accounting policy does not provide formal advice on individual agency issues, except where an issue highlights generic or emerging accounting issues that have policy implications or where an issue may have a significant impact on the Budget or Total State Sector financial statements. The Accounting policy team is not a substitute for agencies’ own financial accounting resources and generally the onus is on individual agencies to internally resolve accounting issues.

By what date is an agency required to submit its financial statements?

Agencies have a maximum of six weeks after the end of each financial year to prepare and submit financial statements to the Minister and the Auditor-General.

However, each year Treasury issues a Treasury Circular outlining the financial reporting requirements for the consolidated financial reports of the State, specifying the deadlines for agency reports and Treasury returns.

This Circular specifies the submission dates for different groups of agencies. As a result, agencies may be required to submit financial statements earlier than 6 weeks after the end of the financial year. Refer to Treasury Circulars.

Can an agency obtain an extension of time to submit the financial statements?

How can an agency apply for an extension of time?

By what date does a request for an extension have to be made?

Under the Public Finance and Audit Act, the Treasurer has the power to approve an extension of time. However, to ensure the legislative deadlines are met for the preparation of the consolidated financial reports of the State, Treasury does not propose to allow any extensions of time for the preparation and submission of agencies’ financial statements.

The public can reasonably expect timely information from agencies. Dates for submission are specified in law. Agencies should therefore do all that is possible to meet the deadlines in the Public Finance and Audit Act 1983 and the annual Treasury Circular and avoid the need to apply for additional time.

Notwithstanding this, an extension of time may be considered in very limited instances (e.g. where there are extenuating circumstances and where an agency does not form part of the consolidated financial reports of the State).

To be considered, the agency must apply to the Treasurer for an extension of time within 6 weeks of the financial year end. The application must include detailed reasons and other relevant information in support of the application.

The Treasurer can only approve an extension of time after consultation with the appropriate Minister and the Auditor-General. To assist in this process, agencies are encouraged to obtain written support for the extension of time from their own Minister and the Auditor-General and forward this to Treasury.

Where an extension of time is granted, details of the extension must be disclosed in the annual report.

Can an exemption be obtained from the financial reporting requirements?

The Treasurer has the legal power to exempt agencies from certain requirements contained in the Public Finance and Audit Act and Regulation.

As the same requirements apply to all agencies, there would have to be very good "public interest" grounds for the granting of exemptions.

Limited exemptions have been allowed in respect of public sector agencies considered to be operating in competition with the private sector or other government bodies.

Australian Accounting Standards are issued by the Australian Accounting Standards Board. Neither the Treasurer nor the Treasury can exempt agencies from Australian Accounting Standards.

Where an exemption is granted from a requirement in the Regulation, details of the exemption must be disclosed in the notes to the financial statements, together with the reasons for granting the exemption.

What are the financial reporting requirements for the current financial year-end?

The financial reporting requirements are outlined in the Public Finance and Audit Act, Regulation and Treasurer’s Directions.

Also Refer to Legislation and Relevant Treasury Circulars and Papers.

My agency has been restructured, how should the restructure be accounted for?

Restructures between NSW public sector agencies are generally treated as equity transfers, in accordance with Interpretation 1038.

The accounting treatment for restructures is outlined in TPP 06-7 “Contributions by Owners made to Wholly Owned Public Sector Entities”.

Do you have any guidance on Asset Valuations of physical non-current assets?

Yes. Refer to Treasury Policy Paper “Valuation of Physical Non-Current Assets at Fair Value” (TPP 07-01).

What financial reporting requirements is a statutory State Owned Corporation (SOCs) subject to?

According to the State Owned Corporations Act 1989 (s 24A(1)), statutory SOCs are subject to the statutory body financial reporting requirements in the Public Finance and Audit Act and Regulation.

Limited exemptions have been allowed in respect of statutory SOCs based on an assessment of whether they operate “in competition” with other bodies or “not in competition”.

Statutory SOCs are not subject to Treasurer’s Directions. However, as part of the Statement of Corporate Intent, statutory SOCs are required to comply with a number of Treasury Circulars listed in Attachment 1 of NSW Treasury’s “Guidelines for the Development of the Statement of Corporate Intent”. The Guidelines are sent to SOCs annually or SOCs may request a copy from Treasury. This is necessary to ensure that the State’s consolidated accounts are prepared on a consistent basis.

It is also recommended that the Corporation adopt all other Treasury Circulars and documents on accounting policy matters, however, this recommendation represents non-mandatory, best practice guidance.

What is Government Finance Statistics / Generally Accepted Accounting Principles (GFS/GAAP) convergence? How does GFS/GAAP convergence interact with AEIFRS adoption?

The AASB has issued AASB 1049 Financial Reporting of General Government Sectors by Governments to harmonise GFS/GAAP requirements (effective from 2008/09).

Budget reporting has traditionally used the standards of the Australian Bureau of Statistics Government Finance Statistics framework. The purpose of the GFS framework is to/for:

  • Facilitate macro-economic analysis;
  • Fiscal decision-taking and policy decision making;
  • Provide time series statistical data for comparative purposes.

Some jurisdictions (including New South Wales) have also produced Budget reports based on an Accounting Standard framework. In the past, the two frameworks (GFS and Accounting Standards) treated certain transactions differently and arrived at different “bottom lines”. This led to some confusion in the analysis of Budget results across Australian jurisdictions. This confusion, together with concerns regarding comparability and transparency resulted in the Financial Reporting Council’s direction to the AASB to pursue harmonisation of GFS and Accounting Standards, as follows:


“With regard to public sector reporting, the Board should pursue as an urgent priority the harmonisation of Government Finance Statistics (GFS) and Generally Accepted Accounting Principles (GAAP) reporting. The objective should be to achieve an Australian accounting standard for a single set of Government reports which are auditable, comparable between jurisdictions, and in which the outcome statements are directly comparable with the relevant budget statements.”

The GFS/GAAP convergence project and AEIFRS adoption project are interrelated, as the adoption of AEIFRS has in certain instances facilitated convergence. Also, where AEIFRS has provided an option, options have been selected that converge with GFS.

As part of the next phase/s, the GFS/GAAP project will impact on the whole of government, public non-financial corporation sector and public financial corporation sector; and individual general government sector entities.

For additional information refer:

AASB – GAAP/GFS Convergence Project website on the Useful Accounting Policy Links page

What Treasury Policies are in force? Which are out of force?

Current financial reporting / accounting policiess are available at http://www.treasury.nsw.gov.au/indexes/pubs_by_pol.htm

The full list of Treasury Circulars in force is available at http://www.treasury.nsw.gov.au/indexes/nswtcir.html

The list of repealed / withdrawn Circulars is available at http://www.treasury.nsw.gov.au/pubs/wdrn_tc/withdrawn_list.pdf

The full list of Treasury Policy Papers in force is available at http://www.treasury.nsw.gov.au/indexes/tppdex.html