annual report/2006 - University of Melbourne

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Notes to and forming part of the Financial Statements Note 1 Statement of Significant Accounting Policies The principal accounting policies adopted by The University of Melbourne in the preparation of the financial report for the year ended 31 December 2006 are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for the University as an individual entity and the consolidated entity consisting of the University and its subsidiaries. The University and its subsidiaries are referred to in this financial report as the Group or the consolidated entity. 1.1 Basis of Preparation This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial Reporting Standards (AIFRS), the Financial Management Act 1994, Urgent Issues Group Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board. The financial statements have also been prepared in accordance with the guidelines issued by the Department of Education, Science and Training (DEST) applicable to the 2006 year. Compliance with IFRS Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). The University and its subsidiaries are considered to be not-for-profit entities, as such the financial report has been prepared in accordance with the not-for-profit requirements of AIFRS. In some cases these requirements are inconsistent with International Financial Reporting Standards (IFRS). Reporting Basis and Conventions The financial statements have been prepared on an accruals basis and are based on the historical cost convention as modified by the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss and certain classes of property, plant and equipment. Critical Accounting Estimates The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. The resulting accounting estimates will, by definition, seldom equal the related actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a higher risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: (i) Key Estimates - Impairment The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the assets is determined. (ii) Key Estimates – Determination of Fair Values The determination of fair values for financial assets and liabilities for which there is no observable market price requires the use of valuation techniques as described in note 1.8. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. (iii) Key Judgements – Financial Asset and Liability Classification The group’s accounting policies provide scope for assets and liabilities to be designated on inception into different accounting categories in certain circumstances: a) In designating financial assets at fair value through profit and loss, the group has determined that it has met one of the criteria for this designation set out in accounting policy 1.8. b) In classifying financial assets as held-to-maturity, the Group has determined that it has both the positive intention and ability to hold the assets until their maturity date as required in accounting policy 1.8. 1.2 Principles of Consolidation The Financial Statements consist of a consolidated Income Statement, Balance Sheet, Statement of Changes in Equity and a Cash Flow Statement. The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the University as at 31 December 2006 and their results for the year then ended. Subsidiaries are all those entities over which the University has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the University controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the University. They are de-consolidated from the date that control ceases. 96 The University of Melbourne Annual Report 2006
financial statements/ Notes to and forming part of the Financial Statements Note 1 Statement of Significant Accounting Policies (continued) Intercompany transactions, balances and unrealised gains on transactions between consolidated entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the University. The Financial Statements show “University” in addition to “Consolidated” information. The term “University” in this context covers all aspects of total operations with the exclusion of the subsidiaries (see (5) below). In order to provide further information on the University, an additional Income Statement, Balance Sheet and Cash Flow Statement (see Notes 46, 47 and 48) have been prepared in columnar form. The activities and entities that make up the University and Consolidated information are as follows: University (1) University General Activities A summary of the University’s Teaching, Research and Administrative activities. (2) University Trust Activities A summary of University activities supported by funds derived from endowments and bequests and income earned thereon. A major part of trust monies is received for, and can only be applied to, restricted purposes. For this reason Trust Funds are separately identified. (3) University Auxiliary Operations A summary of the activities of the University’s Auxiliary Operations Group which encompasses the University’s semi-independent enterprises that operate on a commercial basis in support of core University activities. This group comprises the following organisations: Child Care Services Halls of Residence: - International House - Kendall Hall - Medley Hall Melbourne Theatre Company Melbourne University Bookshop Sport and Physical Recreation Centre The Ian Potter Museum of Art Veterinary Clinic and Hospital (4) University [being the aggregation of (1), (2) and (3)] Consolidated (University and its Subsidiaries) (5) Subsidiaries The subsidiaries of the University are: Australian International Health Institute Ltd ACN 084 268 655 Australian Music Examinations Board (Vic) Ltd ACN 050 464 634 Australian National Academy of Music Ltd ACN 067 405 190 and its subsidiary: - ANAM Foundation Ltd ACN 110 698 550 UMEE Ltd ACN 081 182 685 and its subsidiaries: - Melbourne Enterprises International Ltd ACN 073 950 062 * - MUP Services Pty Ltd ACN 082 978 578 * - MU Private (NZ) Ltd The University of Melbourne Annual Report 2006 97
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growing in the esteem of future gen
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Letter to the Minister The Hon Jaci
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annual report/2006 - University of Melbourne

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