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 25 10. Measurement and risk 10.1. Long service leave liability AASB 119 Employee Benefits describes the calculation methodology for long service leave liability. The actuarial assessment performed by the Department of Treasury and Finance has provided a basis for the measurement of long service leave and is based on actuarial assumptions on expected future salary and wage levels, experience of employee departures and periods of service. These assumptions are based on employee data across the South Australian Government. AASB 119 Employee Benefits requires the use of the yield on long-term Commonwealth Government bonds as the discount rate in the measurement of the long service leave liability. The yield on long-term Commonwealth Government bonds decreased from 2.5% to 1.25% in 2019. This decrease in the bond yield, which is used as the rate to discount future long service leave cash flows, results in an increase in the reported long service leave liability. The net financial effect of the changes to actuarial assumptions in the current financial year is an increase in the long service leave liability of $82 966 and employee benefits expense of $124 235. The impact on future periods is impracticable to estimate as the long service leave liability is calculated using a number of demographical and financial assumptions, including the long-term discount rate. The actuarial assessment performed by Department of Treasury and Finance left the salary inflation rate at 4% for long service leave liability. As a result there is no net financial effect resulting from changes in the salary inflation rate. Current long service leave reflects the portion of leave expected to be settled within the next 12 months, based on the average of long service leave taken over the past 3 years. 10.2. Fair value AASB 13 Fair Value Measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, in the principal or most advantageous market, at the measurement date. Initial recognition Non-current assets are initially recorded at cost or at the value of any liabilities assumed, plus any incidental cost involved with the acquisition. Non-current assets are subsequently measured at fair value after allowing for accumulated depreciation. Where assets are acquired at no value, or minimal value, they are recorded at their fair value in the Statement of Financial Position. All non-current tangible and intangible assets with a value equal to or in excess of $10 000 are capitalised. Revaluation All non-current assets are valued at fair value and revaluation of non-current assets or a group of assets is only performed when its fair value at the time of acquisition is greater than $1.5 million and estimated useful life is greater than three years. Plant and equipment All items of plant and equipment had a fair value at the time of acquisition less than $1.5 million. Plant and equipment has not been revalued in accordance with APS 116D. The carrying value of these items are deemed to approximate fair value.