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Notes to and Forming Part of the Financial Statements
For the Year Ended 30 June 19981. Statement of Principal Accounting Policies
The Rural Industries Research and Development Corporation (RIRDC, the 'Corporation') is required by Part 3, Division 3, Section 20 of the Commonwealth Authorities and Companies Act 1997 to maintain proper accounts and records of the transactions and affairs of the Corporation in accordance with applicable accounting principles.
The purpose of this statement is to assist in the understanding of the financial statements through the disclosure of significant accounting policies adopted and other information relevant to the operations of the Corporation.
(a) Basis of Accounting
The financial statements are a general purpose financial report.
The financial statements have been prepared in accordance with:
Pursuant to clause 8 of the Guidelines, a delegate of the Minister for Finance and Administration has exempted the Directors of the Corporation from the requirement in the Guidelines to prepare an Operating Statement and a Statement of Assets and Liabilities on the basis that the Directors of the Corporation prepare a Statement of Revenues and Expenses and a Balance Sheet in accordance with the format specified in the Guidelines.
- Guidelines entitled Financial Statements of Commonwealth Authorities (the 'Guidelines') issued by the Minister for Finance and Administration in July 1997 which require that the financial statements are prepared
- in compliance with Australian Accounting Standards and Accounting Guidance Releases issued by the Australian Accounting Research Foundation, and
- having regard to Statements of Accounting Concepts, and the Consensus Views of the Urgent Issues Group.
The financial statements have been prepared on an accrual basis and are in accordance with historical cost convention. No allowance is made for the effect of changing prices on the results or the financial position.
The financial statements represent a consolidation of all activities controlled by or vested in the Corporation. Apart from the Corporation's core activities, it also provides program management and financial administration services to various statutory levy accounts, voluntary levy accounts and the Dried Fruits R & D Council as stipulated in the Primary Industries and Energy Research and Development Act 1989. The income attributable to the provision of these services amounted to $295,257 in 1997/98 (1996/97 : $222,589). These inter-entity revenues and associated expenditures have been eliminated from the Statement of Revenues and Expenses.
(b) Project Refunds
Refunds due from research organisations which are not quantifiable at the end of the financial year are taken to account on receipt of the research organisation's project financial statement.
(c) Funds Vested in the Corporation
The Corporation was established on 1 July 1990 by the enactment of the Primary Industries and Energy Research and Development Act 1989. Under Section 107(1) the Dried Fruits Research & Development Council (DFRDC) vests in and is administered by RIRDC (refer Note 21).
(d) Infrastructure, Plant and Equipment
All assets with a cost of less than $1,000 are expensed in the year of acquisition, except where they form a group of similar items which are significant in total.
Assets are reported at cost value.
The Guidelines require that infrastructure, plant and equipment be progressively revalued in accordance with the 'deprival' method of valuation (as set out in the Guidelines on Accounting Policy for Valuation of Assets of Government Trading Enterprises) by 1 July 1999 and thereafter be revalued progressively on that basis every three years. The Corporation will conduct a revaluation of each class of infrastructure, plant and equipment using the deprival method of valuation during 1998/99.
Assets purchased with research payments may revert to the Corporation at the end of the research project period and are accounted for at that date. During the reporting period, no reversions took place.
All depreciable non-current assets are written off to their estimated residual values over their estimated useful lives using the straight line method of depreciation.
Leasehold improvements are amortised on a straight line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.
Depreciation/amortisation rates applying to each class of depreciable assets are as follows:
Office Equipment 25%
Furniture & Fittings 25%
Computer Equipmentt 33%
Motor Vehicles 25%
Leasehold Improvements 33%
(e) Interest Income
Interest on Corporation funds invested in fixed interest securities is brought to account on a progressive daily basis over the life of the investment.
(f) Provision for Employee Entitlements
The provision for employee entitlements encompasses annual leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken by employees is less than the annual entitlement for sick leave.
The provision for annual leave reflects the value of total annual leave entitlements of all employees at 30 June 1998 and is recognised at its nominal value.
The liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 1998. In determining the present value of the liability, attrition rates and pay increases through promotion and inflation have been taken into account.
(g) Cash
For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments convertible to cash within two working days. Bank guaranteed bills of exchange are considered to form part of cash.
(h) Financial Reporting by Segments
Corporation activity involves the identification, co-ordination, funding and evaluation of research and development with Australia's smaller rural industries. The Corporation operates predominantly in the one industry, being the rural sector, and as such the financial statements have not been dissected into industry segments.
(i) Financial Instruments
Accounting policies in relation to financial instruments are disclosed in Note 22.
(j) Economic Dependency
The Corporation is dependent on appropriations from Parliament to carry out its normal activities.
(k) Comparative Figures
Where applicable, prior year comparative figures have been restated to reflect current year classifications of income and expenditure in the financial statements.
(l) Taxation
RIRDC is exempt from income tax under Section 46(1) of the Primary Industries and Energy Research and Development Act 1989, however the Corporation is subject to fringe benefits tax, sales tax and payroll tax.
2. Funding Arrangements
(a) Commonwealth Appropriation
Each year the Commonwealth appropriates funds to facilitate RIRDC's core program activities. RIRDC's 1996/97 Commonwealth appropriation was reduced by $5 million in the August 1996 Federal Budget. RIRDC's 1997/98 Commonwealth appropriation ($10,820,000) has been restored to the level of previous years including a factor for indexation.
(b) Industry Levies
Under Section 30(1)(a) and 108(1)(a) of the Primary Industries and Energy Research and Development Act 1989, each RIRDC sub account and R & D Council vested in the Corporation, to which a levy is attached, receives industry levies. These contributions are collected and distributed by the Commonwealth under the various Levy Collection Acts. In the case of the Corporation's Horse sub-program, a voluntary levy is facilitated by the Australian Jockey Club.
(c) Commonwealth Contributions
Under Section 30(1)(b) and 108(1)(b) of the Primary Industries and Energy Research and Development Act 1989, the Commonwealth matches dollar for dollar amounts expended by the leviable sub accounts and R & D Council.
Last updated: 20 October 1998 Copyright © RIRDC http://www.rirdc.gov.au/pub/anrep98/financials3.htm
