2007 Annual report (PDF 8.1 Mb) - University of Melbourne

NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2007
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i) Recreation Leave
Liabilities for recreation leave have been determined in accordance with AASB 119 Employee Benefits. The liability is broken down
into the amount expected to be settled within twelve months of the reporting date and that which is expected to be settled after
twelve months of the reporting date.
(ii)
(iii)
(iv)
Long Service Leave
Liabilities for long service leave are measured using the projected unit credit method which measures the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date. The current portion of the liability
is the amount expected to be settled within twelve months of the reporting date plus the amount over which the University does not
have a right of deferral.
Superannuation
Employee contributory superannuation funds managed outside of the University exist to provide benefits for the Group’s employees
and their dependents on retirement, disability or death of the employee. The contributions made to these funds are recorded in the
Income Statement. Further details are provided in Note 36.
Unfunded Superannuation Liabilities
In accordance with the 1998 instructions issued by the Department of Education, Training and Youth Affairs (DETYA), now known as
the Department of Education, Employment and Workplace Relations (DEEWR), the effects of the unfunded superannuation liabilities
of the University were recorded in the Income Statement and the Balance Sheet for the first time in 1998. Prior to this date, the
practice had been to disclose the liabilities by way of a note to the financial statements.
The unfunded liabilities recorded in the Balance Sheet under Provisions have been determined by the actuary of the Victorian
Government Superannuation Office and relate to employees who transferred to the University from the former Melbourne College of
Advanced Education (merged with the University 1 January 1989) Hawthorn Institute of Education Ltd (merged with the University
1 January 1997), the Victorian College of Agriculture and Horticulture Ltd (merged with the University 1 July 1997) and the Victorian
College of the Arts (merged with the University 1 January 2007) who are members of the State Superannuation Scheme.
An arrangement exists between the Australian Government and the State Government to meet the unfunded liability for the
University’s beneficiaries of the State Superannuation Schemes on an emerging cost basis. This arrangement is evidenced by the
State Grants (General Revenue) Amendment Act 1987, Higher Education Funding Act 1988 and subsequent amending legislation.
Accordingly the unfunded liabilities have been recognised in the Balance Sheet under Provisions with a corresponding asset
recognised under Receivables. The recognition of both the asset and the liability consequently does not affect the year end net
asset position of the University and its subsidiaries.
1.20 Provisions
The University is a Self Insurer for Workers’ Compensation and WorkCover. A provision is recognised representing an estimate of the
total outstanding liability for workers’ compensation claims. The value of the provision is based on an actuarial assessment carried out at
balance date.
1.21 Goods and Services Tax (GST)
Income, 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 taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of
the asset or as part 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
Australian Taxation Office (ATO) is included as a current asset or liability in the Balance Sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the ATO are presented as operating cash flows.
1.22 Leases
(i) Operating Leases as Lessee
The Group leases certain land and buildings. Leases where the lessor retains substantially all the risks and benefits of ownership
of the asset are classified as operating leases. Payments made under operating leases are charged to the Income Statement on a
straight-line basis over the period of the lease.
(ii)
(iii)
Operating Leases as Lessor
Lease income from operating leases is recognised in the Income Statement on a straight-line basis over the lease term.
Finance Leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as
finance leases. The assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the
present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses.
Interest charged on finance leases is charged to the Income Statement on a straight-line basis over the lease term.
1.23 Comparatives
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year. Such changes are disclosed in accordance with AASB 101 Presentation of Financial Statements. The following changes to
comparatives were made to the 2006 amounts:
> Grants from not-for-profit organisations amounting to $6.8 million were reclassified from Donations and Bequests to Non-
Government Grants in Note 8.