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TC 20-08 ‘Mandates of options and major policy decisions under Australian Accounting Standards’

NSW Treasury released TC 20-08 ‘Mandates of options and major policy decisions under Australian Accounting Standards’ (the Circular), to update Treasury’s mandates under Australian Accounting Standards for financial years ending on or after 30 June 2021.

The main changes to the mandates are to:

• add mandates for the adoption of AASB 1059 ‘Service Concession Arrangements: Grantors’
• remove certain mandates required on the adoption of AASB 15 ‘Revenue from Contracts with Customers’, AASB 16 ‘Leases’ and AASB 1058 ‘Income of Not-for-Profit Entities’
• update the list of Standards issued but not yet effective and confirm that Accounting Standards cannot be early adopted.

The Circular:

• applies to GSF agencies required to prepare general purpose financial statements under section 7.6 of the Government Sector Finance Act 2018. It does not apply to universities and their controlled entities
• supersedes and withdraws Treasury Circular TC20-01 ‘Mandates of Options and Major Policy Decisions under Australian Accounting Standards’.

The Circular must be read in conjunction with Treasury’s other Circulars and Policy Papers regarding Australian Accounting Standards. Only major policy decisions are listed in this Circular and, where applicable, the Circular refers to the particular Treasury Circular or Policy Paper.

TPP 20-09 ‘Financial Reporting Code for NSW General Government Sector Entities’

Treasury NSW has released TPP20-09 ‘Accounting Policy: Financial Reporting Code for NSW General Government Sector Entities’ (the Code), which has been updated for changes in Australian Accounting Standards and Treasury policy requirements.

The main changes to the Code include:

• addition of transitional disclosures upon the adoption of AASB 1059 ‘Service Concession Arrangements: Grantors’
• addition of the new disclosure requirements subsequent to the adoption of AASB 1059
• added commentary on compliance with Part 7 of the Government Sector Finance Act 2018 (GSF Act)
• revised commentary on deemed appropriations
• removal of revenue and lease disclosures relevant to the 2018–19 financial year
• expanded examples of revenue disclosures.

NSW Treasury based this version of the Code on the presumption that the GSF Act financial reporting provisions will commence on 1 July 2021 and apply for the 2020-21 financial year. If the GSF Act financial reporting provisions do not commence on that date, the same disclosures will apply under the provisions in the Public Finance and Audit Act 1983.

The Code:

• applies for financial years ending on or after 30 June 2021
• supersedes the previous version, issued as NSW Treasury Policy and Guidelines Paper TPP 20-01.

Guidance on disclosures for the repeal of TPP 06-8 for financial statements for years ending 30 June 2021

NSW Treasury released ‘Guidance on disclosures for the repeal of TPP 06-8 in FY 20-21 Financial Statements’ (the Guidance) to assist agencies with disclosing the impact of the withdrawal of TPP 06-8 ‘Accounting for Privately Financed Projects’ (TPP 06-8) for arrangements that are outside the scope of AASB 1059 in their 2020–21 financial statements.

Treasury Circular TC 20-07 ‘Accounting Policy – Withdrawal of TPP 06-08 Accounting for Privately Financed Projects’ withdrew TPP 06-8 effective from 1 July 2020. The withdrawal of TPP 06-8 was due to the introduction of AASB 1059 ‘Service Concession Arrangements: Grantors’ (AASB 1059), which applies to annual reporting periods beginning on or after 1 January 2020.

For arrangements that were previously accounted for under TPP 06-8, but are outside the scope of AASB 1059, agencies must determine the appropriate accounting to be applied following the hierarchy in AASB 108 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ (AASB 108).

For these arrangements, the withdrawal of TPP 06-8 must be disclosed as a change in accounting policy in accordance with AASB 108.

Appendix A of the Guidance provides pro forma disclosures that demonstrate a possible scenario where an arrangement was previously within the scope of TPP 06-8 that falls outside the scope of AASB 1059. Agencies can tailor this example to suit their specific circumstances.

TD19-02 ‘Mandatory early close as at 31 March each year’

NSW Treasury has reissued the Treasurer’s Direction TD19-02 ‘Mandatory early close as at 31 March each year’ (TD19-02).

The main changes to TD19-02 include:

• updated the effective date from 13 December 2019 to 3 March 2021
• updated to specify that Appendix A may be amended from time to time
• in section 3 ‘Audit Planning’, changed the deadline for the reporting on early close in point E from 31 May each year to the date per TPP21-01 ‘Agency Direction for the 2020-21 Mandatory Early Close’
• updated section 4 ‘Emerging Issues Report’ to require the accountable authority to communicate emerging issues to their respective Audit and Risk Committee
• added the following agencies to Appendix A:
  • Department of Transport
  • Office of Independent Review Officer
  • Regional NSW
  • Resilience NSW
• removed Roads and Maritime Services from Appendix A.

TPP21-01 ‘Agency Direction for the 2020-21 Mandatory Early Close’

NSW Treasury has issued TPP21-01 ‘Agency Direction for the 2020-21 Mandatory Early Close’.

TPP21-01 should be read in conjunction with the above TD19-02, as amended from time to time. TD19-02 and TPP21-01 define the minimum requirements for the Early Close procedures that agencies must complete at 31 March each year. Agencies may wish to perform additional procedures as part of a strategy to improve the quality and timeliness of financial reporting.

The Early Close Procedures apply to all entities listed in Appendix A of TD19-02.

The table below outlines the returns agencies are required to submit to Treasury.

TPP 21-01 requires agencies to develop a detailed plan with key stakeholders, including the Audit Office, to achieve these deadlines. Plans should allow sufficient time for management review and involvement of Audit and Risk Committees as applicable.

Appendix F of TPP 21-01 contains the year-end preliminary reporting timetable. Treasury will issue another pronouncement detailing the Final timetable and the year-end reporting requirements closer to year-end.

TPP21-01 supersedes the previous version, TPP19-08.

TPP21-02 ‘Use and Management of NSW Government Purchasing Cards’ and TC21-01 ‘NSW Payment Digital Reform – Digital Payment Adoption’

NSW Treasury has issued TPP21-02 ‘Use and Management of NSW Government Purchasing Cards’ (the Policy) to assist GSF agencies:

• to comply with their obligations under the Government Sector Finance Act 2018 (GSF Act), Treasurer’s Direction TD 19-01 ‘Financial Services’ and Treasury Circular TC 20-01 ‘Banking and Payments Digital Report – Card Adoption and Cash and Cheque Reduction’
• manage the use and administration of purchasing cards
• implement appropriate internal controls across the PCard program.

The Policy takes effect from February 2021 and replaces the previous TPP17-09.

The key drivers for updating the Policy include:

• the requirements of the GSF Act for entering financial arrangements and the introduction of new terminology
• Treasurer’s Direction TD 19-01 ‘Financial Services’ regarding the use of banking services
• a whole-of-government Banking, Financial and Related Services Agreement (Master Agreement) to provide PCard products and services by a single service provider for use by GSF agencies
• enhanced purchasing service facilities and capabilities, such as vCards, supporting business to business transactions.

In conjunction with the Policy, NSW Treasury has also issued TC21-01 ‘NSW Payments Digital Reform – Digital Payment Adoption’ (TC21-01). TC21-01 outlines the NSW Government’s commitment to supporting the use of PCards for low value, high volume procurement of goods and services. TC21-01 seeks to drive the adoption of digital and contactless payment options across the NSW public sector and reduce/eliminate cash and cheque handling.

The NSW Government has mandated the use of PCard payments for all transactions up to $10,000, where viable, and the adoption of digital and contactless payment methods more broadly to displace cheque payments across the sector.

On 22 December 2020, the Australian Securities and Investments Commission (ASIC) released its Audit inspection report 1 July 2019 to 30 June 2020. The report sets out the findings from the ASIC reviews of audit files, focusing on listed and other public interest entities with larger numbers of users of their reports, conducted as part of ASIC’s ongoing risk-based reviews of financial reports.

ASIC found auditors did not obtain reasonable assurance that the financial reports were free from material misstatement in 27 per cent of the 179 key audit areas that ASIC reviewed across 53 audit files. This compares to 26 per cent in the 12 months to 30 June 2019.

Adverse findings were made by ASIC in the following key audit areas:

• Impairment / asset valuation
• Revenue / receivables
• Investments and financial instruments
• Inventory / cost of sales
• Provisions
• Expenses / payables
• Acquisition accounting
• Taxation
• Loans / borrowing.

The review relates to the audits of financial reports for years ended 30 June 2018 to 31 December 2019 and therefore largely does not reflect the impact of COVID-19 conditions.

ASIC’s report also included:

• better practice recommendations from their reviews of conflicts of interest, firm governance and accountability for audit quality at the larger audit firms
• focus areas for audits under COVID-19 conditions
• information on the role of directors and management, including links to other ASIC publications to assist directors in their roles for financial reporting and audit quality.

Topics discussed included:

AASB Meeting Highlights – 24-25 February 2021

• agenda consultation
• not-for-profit (NFP) private sector financial reporting framework
• transition between tier 2 frameworks for NFP entities
• fair value measurement for NFP entities
• insurance activities in the public sector
• audit engagement-related disclosures
• classification of debt with covenants
• disclosure of accounting policies and definition of accounting estimates
• business combinations under common control
• other submissions
• research update

Latest news, accounting standards and work-in-progress documents from the AASB included:

Topics discussed included:

IASB Meeting Highlights – 23-24 March 2021

• board work plan update
• management commentary
• maintenance and consistent application
• equity method
• goodwill and impairment
• second comprehensive review of the IFRS for SMEs Standard
• primary financial statements

IASB Meeting Highlights – Supplementary IASB update – 10 March 2021

• COVID-19-related rent concessions

IASB Meeting Highlights – 16-17 February 2021

• financial instruments with characteristics of equity
• management commentary
• third agenda consultation
• disclosure initiative – subsidiaries that are Small and Medium Sized Entities (SMEs)
• second comprehensive review of the IFRS for SMEs Standard
• extractive activities

IASB Meeting Highlights – 26 January 2021

• board work plan update
• maintenance and consistent application
• disclosure initiative – subsidiaries that are SMEs
• primary financial statements

Latest news from the IASB included:

Topics discussed included:

IPSASB Meeting Highlights – 16-19 & 23 March 2021

• IAS 26, accounting and reporting by retirement benefit plans
• IFRS 8, operating segments
• revenue
• natural resources
• mid-period work program consultation
• conceptual framework – limited scope update
• review of decisions and instructions
• program and technical director’s report on work program
• approach to meeting and board business

IPSASB Meeting Highlights – 25 February 2021

• ED 79, IPSAS 17 update, heritage and infrastructure
• current operational value (ED 76 and ED 77, conceptual framework – limited scope update and measurement)
• amendments to other IPSAS (ED 77, measurement)

Recent news from the IPSASB included:

IPSASB has recently issued:

Topics discussed included:

AUASB Meeting Highlights – 10 & 12 March 2021

• FRC and audit quality update
• AUASB foreword to pronouncements – review and approval
• quality management standards – review and approval
• international matters
• turnaround of approval documents (quality management standards, AUASB foreword)
• AUASB technical work program 2020-21 update
• IESBA exposure draft: proposed revisions to the definitions of Listed Entity and Public Interest Entity in the Code
• matters arising from AASB/AUASB joint strategy day
• other business

AUASB Meeting Highlights – 19 February 2021

• quality management suite standards – Australian modifications
• AUASB strategy discussion
• other business

Latest news from the AUASB included:

Topics discussed included:

IAASB Meeting Highlights – 15-19 March 2021

• audit evidence
• extended external reporting assurance
• audits of less complex entities
• ISA 600, group audits

IAASB Meeting Highlights – 26 January 2021

• disruptive technologies
• conforming amendments to quality management standards

Latest news from the IAASB included:

Topics discussed included:

APESB Meeting Highlights – 4 March 2021

• proposed revisions to APES GN 30 ‘Outsourced Services’
• project update on quality management standards
• proposed amending standard to APES 110 on the role and mindset expected of professional accountants
• international and other activities
• status of APES 230 ‘Financial Planning Services’
• proposed revisions to APES 110 for the objectivity of the engagement quality reviewer
• proposed revisions to APES 110 for non-assurance services
• proposed revisions to APES 110 for fee-related provisions
• project update APES 330 ‘Insolvency Services’

Latest media releases from the APESB included:

Topics discussed included:

IESBA Meeting Highlights – 15-17, 23 & 31 March 2021 - Virtual

• non audit services & fees rollout
• benchmarking
• technology
• engagement team – group audits
• emerging issues and outreach committee
• long association post-implementation review
• IAASB-IESBA coordination
• tax planning & related services

Latest publications from the IESBA included:

Treasury’s recent releases included:  

DPC released the following memos and circulars:

DCS released the following circulars:

NSW Procurement Board’s recent Directions and Procurement alerts included:

Inquiries and Reports tabled in NSW Parliament included:

Inquiries and Reports tabled in NSW Parliament included:

 Recent media releases included:

 Recent IPART papers and reports included: