01 - Department of Education and Communities - NSW Government

(c)Basis of AccountingThe Department’s financial statements comprise a general purpose financial report which has been preparedon an accrual basis in accordance with applicable Australian Accounting Standards and the Urgent IssuesGroup Consensus Views, the requirements of the Public Finance and Audit Act and Regulations, and theFinancial Reporting Directions published in the Financial Reporting Code for Budget Dependent Agenciesor issued by the Treasurer under Section 9(2)(n) of the Act. Where there are inconsistencies between theabove requirements, the legislative provisions have prevailed.Statements of Accounting Concepts are used as a guidance in the absence of applicable Accounting Standards,Urgent Issues Group Consensus Views and Legislative requirements.Except for certain property which is recorded at valuation, the financial statements are prepared in accordancewith the historical cost convention. All amounts are rounded to the nearest one thousand dollars and areexpressed in Australian currency. The accounting policies adopted are consistent with those of the previousyear.(d)Change in Accounting Policy – Transfer PaymentsThe Department makes payments on behalf of the Government to private schools, the Department of Technicaland Further Education, a statutory authority and other organisations. The Department has no discretionarycontrol over these payments which are provided for in the Recurrent and Capital Appropriations.Until 1995/96 these amounts were paid as grants with the Government Funding shown as part of theDepartment’s Recurrent and Capital Appropriations.From 1996/97 the transfer payments are not included in the Department’s Annual Statements, as they are notpart of the Department’s operations (Note 8). This change has resulted in the Grants and Subsidies payments(Note 2 (e)) being reduced by $342.091 million and Fee for Services in Other Operating Expenses (Note2(b)) being reduced by $0.51 million with a corresponding reduction in the Recurrent and CapitalAppropriations (Note 6). There is no effect on the Surplus / (Deficit) for the year.(e)(f)Parliamentary Appropriations and Contributions from other BodiesParliamentary Appropriations and Contributions from other Bodies (including grants and donations) arerecognised as revenues when the Department obtains control over the assets comprising the appropriations /contributions. Control over appropriations and contributions is normally obtained upon the receipt of cash orcontributions in kind.Employee Entitlements(i)Wages and Salaries, Annual Leave, Sick Leave and On-CostsLiabilities for wages and salaries and annual leave are recognised and measured as the amount unpaidat the reporting date at current pay rates in respect of employees’ services up to that date.Sick leave is non vesting and does not give rise to a liability as it is not considered probable that sickleave taken in future will be greater than the entitlements accrued in the future. The outstanding amountsof payroll tax, workers’ compensation insurance premiums and fringe benefits tax, which areconsequential to employment, are recognised as liability and expenses where the employee entitlementsto which they relate have been recognised.(ii)Long Service Leave and SuperannuationThe Department’s liabilities for long service leave and superannuation are assumed by the CrownTransactions Entity. The Department accounts for the liability as having been extinguished resulting inthe amount assumed being shown as part of the non-monetary revenue item described as “Acceptanceby the Crown Transactions Entity of Employee Entitlements and other Liabilities”.Long service leave is measured by the use of a model supported by the Government Actuary. Theformula allows for the increase in the existing long service leave provision to reflect the increase insalaries plus the value of long service leave accrued during the year less long service leave takenduring the year.114 DSE Annual Report 1997