Portland District Health Annual Report 2005 - South West Alliance of ...

Portland District HealthNotes to and Forming Part of the Financial Statements for the Year Ended 30 June 2005Note 1: Statement of Accounting PoliciesThe general purpose financial report has been prepared on an accrual basis in accordance with the Financial Management Act 1994, AustralianAccounting Standards, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board,and Urgent Issues Group Consensus Views.It is prepared in accordance with the historical cost convention, except for certain assets and liabilities which, as noted are at valuation. Theaccounting policies adopted, and the classification and presentation of items, are consistent with those of the previous year, except where a change isrequired to comply with an Australian Accounting Standard or Urgent Issues Group Consensus View, or an alternative accounting policy permittedby an Australian Accounting Standard is adopted to improve the relevance and reliability of the financial report. Where practicable, comparativeamounts are presented and classified on a basis consistent with the current year.(a)Amalgamations and MergersAssets and Liabilities of the amalgamated entities were taken up at book value at date of amalgamation. Crown assets acquired remain theproperty of the Crown, however they are reported as assets of the entity, because effective control passes to the entity along with a substantialbenefit. Amalgamation between Portland & District Hospital and Portland and District Community Health Centre occurred on 1 July2003.(b)Adoption of International Financial Reporting Standards (IFRS)For reporting periods beginning on or after 1 January 2005, all Australian reporting entities are required to adopt the financial reportingrequirements of the Australian equivalents to International Financial Reporting Standards (IFRS).Portland District Health has established a project team to manage the transition to A-IFRS, including training of staff and system and internalcontrol changes necessary to gather all of the required financial information.The project team has analysed all of the A-IFRS and A-IFRS Financial Reporting Directions to identify the accounting policy changes thatwill be required.The known or reliably estimable impacts on the financial report for the year ended 30 June 2005 had it been prepared using A-IFRS are setout in Note 29.(c)ReceivablesTrade debtors are carried at nominal amounts due and are due for settlement within 30 days from the date of recognition. Collectability ofdebts is reviewed on an ongoing basis, and debts which are known to be uncollectible are written off. A provision for doubtful debts is raisedwhere doubt as to the collection exists.(d)InventoriesInventories are valued at the lower of cost and net realisable value. Cost is determined principally by the weighted average cost method.(e)Other Financial AssetsOther Financial Assets are valued at cost and classified between current and non-current assets based on the Hospital Board of Management’sintention at balance date with respect to the timing of disposal of each investment. Interest revenue from other financial assets is brought toaccount when it is earned.(f)Revaluation of Non-Current AssetsSubsequent to the initial recognition as assets, non-current physical assets, other than plant and equipment, are measured at fair value. Plantand Equipment and Furniture and Fittings are measured at cost. Revaluations are made with sufficient regularity to ensure that the carryingamount of each asset does not differ materially from its fair value at the reporting date. Revaluations are assessed annually and supplementedby independent assessments, at least every three years. Revaluations are conducted in accordance with the Victorian Government Policy PaperRevaluation of Non-Current Physical Assets.54