anrep0607 - Health Systems Trust

c) Standards and Interpretations to existing standards that
are not yet effective and not relevant for the Trust’s
operations.
The following interpretations to existing standards
have been published that are mandatory for the Trust’s
accounting periods beginning on or after 1 July 2007 or
later periods but that are not relevant for the Trust’s
operations:
▪ IFRS 8, Operating Segments (Effective for periods
beginning on or after 1 January 2009)
▪ IFRIC 8, Scope of IFRS 2 (Effective for annual periods
beginning on or after 1 May 2006).
▪ IFRIC 10, Interim Financial Reporting and Impairment
(Effective for annual periods beginning on or after 1
November 2006).
▪ IFRIC 12, Service Concession Arrangements (Effective
for annual periods beginning on or after 1 January
2008).
▪ AC 503, Accounting For Black Economic Empowerment
(BEE) Transactions (Effective for periods beginning on
or after 1 May 2006).
1.3. Property, plant and equipment
All property, plant and equipment is stated at historical
cost less accumulated depreciation and impairment
losses. Historical cost includes expenditure that is directly
attributable to bringing the assets to working condition for
their intended use.
Subsequent costs are included in the assets carrying amount
or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with
the item will flow to the trust and the cost can be measured
reliably. All other repairs and maintenance are charged to
the income statement during the financial period in which
they are incurred.
Depreciation is calculated using the straight-line method to
allocate their cost to their residual values over their estimated
lives as follows:
▪
▪
▪
▪
Motor vehicles
Computer equipment
Computer software
Furniture and fittings
4 years
4 years
2 years
6 years
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (refer note 1.5).
Gains and losses on disposals are determined by comparing
proceeds with carrying amount and are recognised within
‘other income’/administrative and other expenses’ in the
income statement.
1.4. Impairment of non-financial assets
Property, plant and equipment and other non-current assets
that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are
separately identifiable cash flows.
1.5. Receivables and prepayments
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. A provision for
impairment of trade receivables is established when there is
objective evidence that the Trust will not be able to collect all
amounts due according to the original terms of receivables.
Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation,
and default or delinquency in payments are considered
indicators that the trade receivable is impaired. The amount
of the provision is the difference between the asset’s carrying
amount and the present value of estimated future cash flows,
discounted at the effective interest rate. The amount of the
provision is recognised in the income statement.
1.6. Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet
at cost. Cash and cash equivalents includes cash on hand,
deposits held at call with banks and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities
on the balance sheet.
1.7. Trade and other payables
Trade payables are carried at the fair value of the consideration
to be paid in future for goods or services that have been
received or supplied and invoiced or formally agreed with the
supplier.
Employee entitlements to annual leave and long service leave
are recognised when they accrue to employees. An accrual is
made for the estimated liability for annual leave and longservice
leave as a result of services rendered by employees up
to the balance sheet date.
1.8. Funded projects
Funds granted to approved projects are expensed as and
when payments are made, even if projects are of an ongoing
nature.
1.9. Revenue recognition
Income from donations and grants, including capital grants,
shall be recognised as income over the periods necessary to
match them with the related costs which they are intended to
compensate, on a systematic basis.
Income from donations and grants, including capital grants, is
not recognised until there is reasonable assurance that the
trust will comply with the conditions attaching to it, and that
the grant will be received.
Donations and grants, including capital grants, that are
awarded for the purpose of giving immediate financial support
rather than as an incentive to undertake specific expenditures
are recognised as income in the period in which the trust
qualifies to receive it.
Donations and grants, including capital grants, that are
receivable as compensation for expenses or losses already
incurred shall be recognised as income of the period in which
it becomes receivable.
Income from sale of publications is included in other income.
Other revenue earned by the trust is recognised on the
following basis:
▪ Interest income - as it accrues
1.10. Leased assets
Leases of assets under which all the risks and benefits of
ownership are effectively retained by the lessor are classified
as operating leases. Payments made under operating
leases are charged to the income statement on a straightline
basis over the period of the lease. When an operating
lease is terminated before the lease period has expired,
any payment required to be made to the lessor by way of
penalty is recognised as an expense in the period in which the
termination takes place.
1.11. Financial risk management
Financial risk factors:
HEALTH SYSTEMS TRUST 47 ANNUAL REPORT 2006/07