Annual Report 2017-18 | Monash Health

Notes to the Financial Statements
Monash Health Annual Report 2017/2018
Note 1: Summary of Significant Accounting Policies (continued)
(c) Basis of Accounting Preparation and Measurement (continued)
Consistent with the requirements of AASB 1004 Contributions contributed capital and its
repayment are treated as equity transactions and, therefore, do not form part of the income and
expenses of Monash Health.
Additions to net assets which have been designated as contributions by owners are recognised as
contributed capital. Other transfers that are in the nature of contributions to or distributions by
owners have also been designated as contributions by owners.
Monash Health operates on a fund accounting basis and maintains three funds: Operating, Specific
Purpose and Capital Funds. Monash Health's Capital and Specific Purpose Funds include unspent
donations and receipts from fund-raising activities conducted solely in respect of these funds.
The financial statements, except for the cash flow statement, have been prepared using the accrual
basis of accounting. Under the accrual basis, items are recognised as assets, liabilities, equity,
income or expenses when they satisfy the definitions and recognition criteria for those items, that
is, they are recognised in the reporting period to which they relate, regardless of when cash is
received or paid.
The financial statements are prepared in accordance with the historical cost convention, except for:
● Non-current physical assets which, subsequent to acquisition, are measured at a revalued
amount being their fair value at the date of the revaluation less any subsequent accumulated
depreciation and subsequent impairment losses. Revaluations are made and are reassessed when
the indices are published by the Valuer-General Victoria to ensure that the carrying amounts do not
materially differ from their fair values;
● The fair value of assets other than land is generally based on their depreciated replacement
value.
Judgements, estimates and assumptions are required to be made about the carrying values of
assets and liabilities that are not readily apparent from other sources. The estimates and
underlying assumptions are reviewed on an ongoing basis. The estimates and associated
assumptions are based on professional judgements derived from historical experience and various
other factors that are believed to be reasonable under the circumstances. Actual results may differ
from these estimates.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and
also in future periods that are affected by the revision. Judgements and assumptions made by
management in the application of AAS that have significant effects on the financial statements and
estimates relate to:
● The fair value of land, buildings and plant and equipment (refer to Note 4.2 Property, Plant and
Equipment);
● Superannuation expense (refer to Note 3.6 Superannuation);
● Employee benefit provisions are based on likely tenure of existing staff, patterns of leave claims,
future salary movements and future discount rates (refer to Note 3.5 Employee Benefits in the
Balance Sheet).
Goods and Services Tax (GST)
Income, expenses and assets are recognised net of the amount of associated GST, unless the GST
incurred is not recoverable from the Australian Taxation Office (ATO). In this case the GST payable
is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net
amount of GST recoverable from, or payable to, the ATO is included with other receivables or
payables in the Balance Sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the ATO, are presented
as operating cash flow.
Commitments and contingent assets and liabilities are presented on a gross basis.
76 Monash Health Annual Report 2017-18