Stralian Hearing Annual Report 2003–04 - Australian Hearing

SEPARATION AND REDUNDANCY
Provision is made for separation and redundancy benefit payments in circumstances where
Australian Hearing has developed a detailed formal plan for the redundancies and has informed
those employees affected.
SUPERANNUATION
Permanent employees of Australian Hearing are members of the Commonwealth
Superannuation Scheme and the Public Sector Superannuation Scheme. The liability for
employee superannuation benefits is recognised in the financial statements of the Australian
Government and is settled by the Australian Government in due course.
Australian Hearing makes employer contributions to the Australian Government at rates
determined by the actuary to be sufficient to meet the cost to the Australian Government of
the superannuation entitlements of Australian Hearing’s employees. Refer Note 18 for details
of superannuation contributions made.
(f) Inventories
Australian Hearing classifies hearing aids, batteries, accessories, and repair parts as inventory
and values them at the lower of cost or net realisable value. Costs are assigned to inventory
using the average cost method.
(g) Financial instruments
Accounting policies for financial instruments are stated at Note 21.
(h) Leases
A distinction is made between finance leases, which effectively transfer from the lessor to the
lessee substantially all the risks and benefits incidental to ownership of leased non-current
assets, and operating leases, under which the lessor effectively retains substantially all such
risks and benefits.
All properties, apart from one used by Australian Hearing are leased. These leases are classified
as operating leases as the lessors retain substantially all the risks and benefits of ownership.
Operating lease payments are charged to the Statement of Financial Performance on a basis
which is representative of the pattern of the benefits derived from the leased assets. The net
present value of future net outlays in respect of surplus space under non-cancellable lease
arrangements is expensed in the period in which the excess space is identified.
Motor vehicles for senior executives and pooled vehicles for use in the Hearing Centre
operations of Australian Hearing are leased. These leases are classified as operating leases as
the lessor retains substantially all the risks and benefits of ownership. No contingent rentals
exist and there are no renewal options available to Australian Hearing for these leases.
Lease incentives taking the form of ‘free’ leasehold improvements and rent free periods are
recognised as liabilities. These liabilities are reduced by allocating lease payments between
rental expense and the reduction of the liability.
All commitments are GST inclusive where relevant.
Australian Hearing has no finance leases.
(i) Taxation (income tax equivalent)
Australian Hearing is exempt from all forms of taxation except fringe benefits tax and the
goods and services tax. Under Competitive Neutrality (CN) principles however, Government
trading enterprises pay a tax equivalence of State and Commonwealth taxes in full to the
Commonwealth. Australian Hearing became liable for income tax equivalent CN payments
in the year 1999/00.
Tax effect accounting procedures are followed whereby the income tax expense in the
Statement of Financial Performance is matched with the accounting profit after allowing for
permanent differences. The future tax benefit relating to tax losses is not carried forward as
an asset unless the benefit is virtually certain of realisation. Income tax on cumulative timing
differences is set aside to the deferred income tax of the future income tax benefit accounts
at the rates which are expected to apply when those timing differences reverse.
Revenues, expenses and assets are recognised net of GST:
• except where the amount of GST incurred is not recoverable from the Australian Taxation
Office; and
• except for receivables and payables.
( j) Revenue
Revenues are recognised at the fair value of the consideration received net of the amount of
goods and services tax (GST). Exchanges of goods or services of the same nature and value
without any cash consideration are not recognised as revenues.
Australian Hearing receives the majority of its government revenues from two sources: firstly
federal budget funding via the Department of Health and Ageing (Office of Hearing Services
(OHS) Branch) for its community service and research work; and secondly from revenue received
through a competitive voucher scheme administered by the OHS. Funding from the OHS is
recognised when received except for special purpose funding, which is recognised when the
service or goods are provided. Revenue for services provided under the competitive voucher
scheme is recognised when the services are provided. Maintenance fees are paid in advance
and revenue is recognised proportionately over the 12 months that services are provided.
Australian Hearing is a party in the Co-operative Research Centre (CRC) for Cochlear Implant
and Hearing Aid Innovation which is an unincorporated non-partnership venture. Australian
Hearing provides staff and facilities to the venture to conduct research into hearing technology
and receives funds to reimburse expenditures.
Australian Hearing receives grants from organisations to conduct studies into hearing and
noise. Most grant agreements require the grantee to perform services or provide facilities, or to
meet eligibility criteria. In these cases revenue is only recognised to the extent that the services
required have been performed or Australian Hearing has satisfied the eligibility criteria. Where
grant monies are received in advance, a liability is recognised.
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial asset.
Revenues from the rendering of consulting services are recognised by reference to the stage
of completion of contracts. The stage of completion is determined to the proportion that time
spent to date bears to the estimated total time of completing the transaction.
Client contributions for the provision of hearing aids are brought to revenue as the goods
are provided.
(k) Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax
(GST), except where the amount of GST incurred is not recoverable from the Australian Tax
Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition
of the asset or as part of an item of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset
or liability in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components
of cash flows arising from investing and financing activities which are recoverable from, or
payable to, the ATO are classified as operating cash flows.
(l) Rounding
Amounts are rounded to the nearest $1,000 apart from the remuneration of directors, officers,
and auditors.
(m) Comparative figures
Where necessary, comparative figures have been adjusted to conform to changes in
presentation in the financial statements.
The above statement should be read in conjunction with the accompanying notes
52 AUSTRALIAN HEARING ANNUAL REPORT 2003–04
The above statement should be read in conjunction with the accompanying notes
FINANCIAL STATEMENTS 53