LEGAL SERVICES COMMISSIONER ANNUAL REPORT 2012

Standard/InterpretationAASB 13 Fair ValueMeasurementAASB 119 EmployeeBenefitsAASB 127 SeparateFinancial StatementsAASB 128 Investmentsin Associates and JointVenturesSummaryThis Standard outlines therequirements for measuringthe fair value of assets andliabilities and replaces theexisting fair value definitionand guidance in other AASs.AASB 13 includes a ‘fairvalue hierarchy’ which ranksthe valuation techniqueinputs into three levels usingunadjusted quoted prices inactive markets for identicalassets or liabilities; otherobservable inputs; andunobservable inputs.In this revised Standardfor defined benefitsuperannuation plans,there is a change tothe methodology inthe calculation ofsuperannuation expenses,in particular there is now achange in the split betweensuperannuation interestexpense (classified astransactions) and actuarialgains and losses (classifiedas ‘Other economic flows– other movements inequity’) reported on thecomprehensive operatingstatement.This revised Standardprescribes the accountingand disclosure requirementsfor investments insubsidiaries, joint venturesand associates when anentity prepares separatefinancial statements.This revised Standard setsout the requirements forthe application of the equitymethod when accounting forinvestments in associatesand joint ventures.Applicable for annualreporting periodsbeginning onImpact on publicsector entity financialstatements1 Jan 2013 Disclosure for fair valuemeasurements usingunobservable inputsare relatively onerouscompared to disclosure forfair value measurementsusing observable inputs.Consequently, the Standardmay increase the disclosuresfor public sector entities thathave assets measured usingdepreciated replacementcost.1 Jan 2013 Not-for-profit entities arenot permitted to applythis Standard prior to themandatory applicationdate. While the totalsuperannuation expenseis unchanged, the revisedmethodology is expectedto have a negative impacton the net result fromtransactions of the generalgovernment sector and forthose few Victorian publicsector entities that reportsuperannuation definedbenefit plans.1 Jan 2013 Not-for-profit entities arenot permitted to applythis Standard prior to themandatory application date.The AASB is assessing theapplicability of principles inAASB 127 in a not-for-profitcontext. As such, impactwill be assessed after theAASB’s deliberation.1 Jan 2013 Not-for-profit entities arenot permitted to applythis Standard prior to themandatory application date.The AASB is assessing theapplicability of principles inAASB 128 in a not-for-profitcontext. As such, impactwill be assessed after theAASB’s deliberation.58 Legal Services COMMISSIONER Annual Report 2012