LEGAL SERVICES COMMISSIONER ANNUAL REPORT 2012

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1 Summary of significant accounting policies CONTINUEDDepreciation andamortisation expenseAll plant and equipment and othernon-financial physical assets that havefinite useful lives are depreciated.Depreciation is generally calculatedon a straight-line basis, at rates thatallocate the asset’s value, less anyestimated residual value, over itsestimated useful life.The estimated useful lives, residualvalues and depreciation method arereviewed at the end of each annualreporting period, and adjustmentsmade where appropriate.The following are typical estimateduseful lives for the different assetclasses for current and prior years:The LSC recharges staff salaries andon costs to the LSB for those staffundertaking LSB functions.(g) Other economic flows includedin the net resultOther economic flows measure thechange in volume or value of assetsor liabilities that do not result fromtransactions.2012 2011Motor vehicles 3 years 3 yearsOffice equipment 5 to 10 years 5 to 10 yearsOffice furniture 5 to 10 years 5 to 10 yearsComputer equipment 3 to 5 years 3 to 5 yearsIntangible assets 5 years 5 yearsIntangible produced assets withfinite useful lives are depreciated asan expense from transactions on asystematic (typically straight-line)basis over the asset’s useful life.Depreciation begins when the asset isavailable for use, that is, when it is inthe location and condition necessaryfor it to be capable of operating in themanner intended by management.Supplies and servicesSupplies and services are recognisedas an expense in the reporting periodin which they are incurred.Other operating expensesOther operating expenses generallyrepresent the day-to-day running costsincurred in normal operations.Bad and doubtful debtsRefer to Note 1(i) Impairment offinancial assets.Recharge of servicesThe LSB to the LSCExpenses directly incurred by the LSBfor occupancy, depreciation and otherrelevant operating costs have beenproportioned before being expensedand are charged directly to the LSBand the LSC. The LSC are charged itsportion of overhead costs.The LSC to the LSBUnder section 6.4.1 of the LegalProfession Act 2004, staff supportingthe activities of the LSB are classifiedas employees of the LSC, who employsall staff under Part 3 of the PublicAdministration Act 2004.Net gain/(loss) on non-financial assetsNet gain/(loss) on non-financialassets and liabilities includes realisedand unrealised gains and losses asfollows:Disposal of non-financial assetsAny gain or loss on the disposal ofnon-financial assets is recognised atthe date of disposal and is determinedafter deducting from the proceeds thecarrying value of the asset at that time.Impairment of non-financial assetsIntangible assets with indefinite usefullives (and intangible assets not yetavailable for use) are tested annuallyfor impairment (as described below)and whenever there is an indicationthat the asset may be impaired.All other assets are assessed annuallyfor indications of impairment.If there is an indication of impairment,the assets concerned are tested as towhether their carrying value exceedstheir recoverable amount. Where anasset’s carrying value exceeds itsrecoverable amount, the difference iswritten off as an other economic flow,except to the extent that the writedowncan be debited to an assetrevaluation surplus amount applicableto that class of asset.If there is an indication that there hasbeen a change in the estimate of anasset’s recoverable amount since thelast impairment loss was recognised,the carrying amount shall be increasedto its recoverable amount. Thisreversal of the impairment loss occursonly to the extent that the asset’scarrying amount does not exceed thecarrying amount that would have beendetermined, net of depreciation oramortisation, if no impairment loss hadbeen recognised in prior years.52 Legal Services COMMISSIONER Annual Report 2012
It is deemed that, in the event of theloss or destruction of an asset, thefuture economic benefits arisingfrom the use of the asset will bereplaced unless a specific decisionto the contrary has been made. Therecoverable amount for most assets ismeasured at the higher of depreciatedreplacement cost and fair value lesscosts to sell. Recoverable amount forassets held primarily to generate netcash inflows is measured at the higherof the present value of future cashflows expected to be obtained from theasset and fair value less costs to sell.Refer to Note 1(j) in relation to therecognition and measurement of nonfinancialassets.Net gain/(loss) on financialinstrumentsNet gain/(loss) on financial instrumentsincludes:• realised and unrealised gains andlosses from revaluations of financialinstruments at fair value;• impairment and reversal ofimpairment for financial instrumentsat amortised cost; and• disposals of financial assets.Revaluations of financial instrumentsat fair valueRefer to Note 1(h) Financialinstruments.Other gains/(losses) from othereconomic flowsOther gains/(losses) from othereconomic flows include the gains orlosses from the revaluation of thepresent value of the long service leaveliability due to changes in the bondinterest rates and transfer of amountsfrom the reserves and/or accumulatedsurplus to net result due to disposalor derecognition or reclassification.(h) Financial instrumentsFinancial instruments arise out ofcontractual agreements that give riseto a financial asset of one entity and afinancial liability or equity instrumentof another entity. Due to the nature ofthe LSC’s activities, certain financialassets and financial liabilities ariseunder statute rather than a contract.Such financial assets and financialliabilities do not meet the definitionof financial instruments in AASB 132Financial Instruments: Presentation.For example, statutory receivablesarising from taxes, fines and penaltiesdo not meet the definition of financialinstruments as they do not arise undercontract.Where relevant, for note disclosurepurposes, a distinction is madebetween those financial assets andfinancial liabilities that meet thedefinition of financial instruments inaccordance with AASB 132 and thosethat do not.The following refers to financialinstruments unless otherwise stated.Categories of non-derivative financialinstrumentsLoans and receivablesLoans and receivables are financialinstrument assets with fixed anddeterminable payments that are notquoted on an active market. Theseassets are initially recognised at fairvalue plus any directly attributabletransaction costs. Subsequent toinitial measurement, loans andreceivables are measured at amortisedcost using the effective interestmethod, less any impairment.Loans and receivables categoryincludes cash and deposits, tradereceivables and other receivables(refer to Note 1(i)).Financial liabilities at amortised costFinancial instrument liabilities areinitially recognised on the date theyare originated. They are initiallymeasured at fair value plus anydirectly attributable transaction costs.Subsequent to initial recognition,these financial instruments aremeasured at amortised cost withany difference between the initialrecognised amount and the redemptionvalue being recognised in profit andloss over the period of the interestbearingliability, using the effectiveinterest rate method.Financial instrument liabilitiesmeasured at amortised cost includeall payables, deposits held andinterest-bearing arrangements otherthan those designated at fair valuethrough profit or loss.(i) Financial assetsCash and depositsCash and deposits comprise of cashon hand and cash at bank.ReceivablesReceivables consist of:• contractual receivables whichinclude mainly debtors in relationto goods and services;• accrued income; and• GST input tax credits recoverable.Contractual receivables are classifiedas financial instruments andcategoried as loans and receivables(refer to Note 1(h) for recognition andmeasurement). Statutory receivables,are recognised and measured similarlyto contractual receivables (except forimpairment), but are not classified asfinancial instruments because they donot arise from a contract.Receivables are subject to impairmenttesting as described below. A provisionfor doubtful receivables is recognisedwhen there is objective evidence thatthe debts may not be collected, and baddebts are written off when identified.Legal Services COMMISSIONER Annual Report 2012 53
Page 3: contentsAbout the Legal Services Co
Page 7 and 8: Education and OutreachIn accordance
Page 9 and 10: chapter 01REPORT OF OPERATIONSThis
Page 11 and 12: Figure 4 Top six issues that featur
Page 13 and 14: Overcharging complaint resolved wit
Page 15 and 16: An explanation and apology resolved
Page 17 and 18: The Complaints and InvestigationsTe
Page 22 and 23: Alternative disciplinary actionsWhe
Page 24 and 25: Oldham v Law Institute of Victoria
Page 26 and 27: Complaints outstandingThere were 57
Page 28 and 29: Educating consumers of legal servic
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Page 37 and 38: chapter 03governanceFreedom of Info
Page 42 and 43: Waste generationThe LSC also monito
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Page 60 and 61: Standard/InterpretationAASB 13 Fair
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Page 64 and 65: Standard/InterpretationAASB 2011-10
Page 66 and 67: 2 Income from transactions2012 2011
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Legislation Requirement Page Refere
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LEGAL SERVICES COMMISSIONER ANNUAL REPORT 2012

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