NOTE 02
CHANGES IN ACCOUNTING POLICIES
As explained in note 1(e) above, the group has
adopted a number of new or revised accounting
standards this year that have resulted in changes in
accounting policies and adjustments to the amounts
recognised in the financial statements.
(a) Employee benefits
The adoption of the revised AASB 119 Employee
Benefits resulted in one material change to the Group’s
accounting policy which affected items recognised in
the financial statements:
The amount of net defined benefit expense that is
recognised in the income statement under the revised
standard is higher than the amount that would have
been recognised under the old rules, with an equal
and opposite change to the amount that is recognised
as remeasurement in other comprehensive income.
This is the result of the replacement of the expected
return on plan assets and separate interest expense
with a net interest amount. A further change was
distinguishing between taxes payable by the plan on
contributions relating to service before the reporting
date or on benefits resulting from that service and
all other taxes payable by the plan. The result of this
change is that netting of forecast tax payable and
receivable is no longer possible requiring actuarial
assumptions to be updated, adversely increasing the
defined benefit obligation.
The revised standard does not mandate where to
present remeasurements in equity. The Group has
chosen to retain their previous policy of recognising
remeasurements directly in retained earnings.
The revised standard must be adopted
retrospectively, adjustments to the retirement
benefit obligations have been recognised at the
beginning of the earliest period presented (1 July
2012) and the income statement, statement of
comprehensive income and balance sheet were
restated for the comparative period. The impact on
these adjustments on the individual line items in the
financial statements are shown in note 2(c)(i) .
The revised standard has also changed the
accounting for the group’s annual leave
obligations. As the entity does not expect all
annual leave to be taken within 12 months of
the respective service being provided, annual
leave obligations are now classified as long term
employee benefits in their entirety. This did
change the measurement of these obligations, as
the non current obligation is now measured on
a discounted basis. However, the impact of this
change was immaterial since the majority of the
leave is still expected to be taken within 12 months
after the end of the reporting period.
(b) Fair value measurement
AASB 13 Fair Value Measurement aims to improve
consistency and reduce complexity by providing
a precise definition of fair value and a single
source of fair value measurement and disclosure
requirements for use across Australian Accounting
Standards. The standard does not extend the use
of fair value accounting but provides guidance
on how it should be applied where its use is
already required or permitted by other Australian
Accounting Standards.
Previously the fair value of financial liabilities
(including derivatives) was measured on the basis
that the financial liability would be settled or
extinguished with the counterparty. The adoption
of AASB 13 has clarified that fair value is an exit
price notion, and as such, the fair value of financial
liabilities should be determined based on a transfer
value to a third party market participant. As a
result of this change, the fair value of derivative
liabilities changed on transition to AASB 13, due
to incorporating counterparty and the Groups own
credit risk into the valuation.
As required under AASB 13, the change to fair value
measurements on adoption of the standard is applied
prospectively, in the same way as a change in an
accounting estimate. As a consequence, the impact of
incorporating accounting changes results in the fair
value of derivative liabilities decreasing from $3,094k
to $3,087k as at 30 June 2014. The difference has
been recorded as a fair value movement through the
other comprehensive income statement. Comparative
amounts have not been restated.
53
