Annual Report 2018-2019 Essential Services Commission of South Australia
Tabled paper 1481
Tabled Papers for 13th Assembly 2016 - 2020; Tabled Papers; ParliamentNT
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Department of the Legislative Assembly
Essential Services Commission Notes to and forming part of the financial statements for the year ended 30 June 2019 23 9.3. Impacts of standards and statements not yet effective The Commission has assessed the impact of new and changed Australian Accounting Standards Board Standards and Interpretations (not yet effective). Treasurers Instructions (Accounting Policy Statements) 2019 issued by the Treasurer on 22 March 2019 are effective for 2018-19 reporting period and are addressed below in relation to Standards that are not yet effective and in note 8.1. There are no Accounting Policy Statements that are not yet effective. The material impacts on the Commission are outlined below. AASB 16 Leases The Commission will adopt AASB 16 Leases from 1 July 2019. Objective AASB 16 sets out a comprehensive model for lease accounting that addresses recognition, measurement, presentation and disclosure of leases. The outcome will be that lease information disclosed will give users of financial statements a basis to assess the effect that leases have on the financial position, financial performance and cash flows of an entity. AASB 16 Leases replaces AASB 117 Leases and Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases Incentives and Interpretation, and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. Impact on 2019-20 financial statements The Commission has assessed the estimated impact on the Statement of Financial Position of adopting AASB 16 with the transition requirements mandated by the Treasurers Instructions (Accounting Policy Statements). AASB 16 requires lessees to recognise assets and liabilities for all leases not subject to a recognition exemption or scoped out of the application of AASB 16. Applying AASB 16 will result in leases previously classified as operating leases having right-of-use assets and related lease liabilities being recognised in the Statement of Financial Position for the first time. Lease incentive liabilities previously recognised will be written off against the right-of-use assets or retained earnings depending on the nature of the incentive. AASB 16 is expected to have a material impact on the Statement of Financial Position. The Commission has estimated the impact of this change and the results as at 1 July 2019. The estimated impact is based on applying AASB 16s transition approach to those leases identified as leases by the Commission prior to 1 July 2019. The incremental borrowing rates applied to estimate the lease liability are the Department of Treasury and Finance's incremental borrowing rates at 1 July 2019. The estimated impact is set out below. as at 1 July 2019 $000 Assets Right-of-use assets 3 926 Liabilities Lease liabilities (3 926) Net impact on equity - AASB 16 will also impact on the Statement of Comprehensive Income. The operating lease expense previously included in supplies and services will mostly be replaced with: A depreciation expense that represents the use of the right-of-use asset; and Borrowing costs that represent the cost associated with financing the right-of-use asset.