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Attachment 4.5 Accounting Policies Usually Addressed in Transition Contents of this Attachment: I. II. III. IV. V. VI. VII. VIII. IX. General Accounting Policies Assets Liabilities Revenue Expenses Equity/Net Worth Other Accounting Policies Other Disclosures and Presentations Reporting on Operational Performance I. GENERAL ACCOUNTING POLICIES Statement of Entities to Which the Policies Apply Definition of Reporting Entity – Consolidation of Controlled Entities – Combination of Associates – Joint Ventures Entity Reporting Period Accrual Basis Used by Entity Going Concern Assumption Measurement Basis Used by Entity Application of “Materiality“1 Explanation of Changes in Entity’s Accounting Policies II. ASSETS Definition and Recognition Criteria Used for Assets Classifications Used within the Financial Statements Cash and Cash Equivalents Accounts Receivable and Accrued Revenues (by type) Bad Debts and Doubtful Accounts Inventories (by type) Prepayments Investments (by type) Investment Property Property, Plant and Equipment (by type) Leased Assets/Sale and Leaseback Transactions Information Technology Assets (Hardware and Software) Intangible Assets Biological Assets Heritage Assets ”Information is material if its omission or misstatement could influence the decisions or assessments of users made on the basis of the financial statements. Materiality depends on the nature or size of the item or error judged in the particular circumstances of omission or misstatement.” – Glossary of Defined Terms: IPSAS 1 to IPSAS 20, IFAC Public Sector Committee. 1 Adapted primarily from Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities, Study 14, IFAC Public Sector Committee, April 2002. 1 Attachment 4.5 Accounting Policies Usually Addressed in Transition III. LIABILITIES Definition and Recognition Criteria Used for Liabilities Classifications to be used within the financial statements Accounts Payable and Accrued Expenses (by type including transfers/grants payable) Finance Lease Liabilities Provisions for Employee Entitlements Other Provisions Pension Liability Borrowings Bonds/Stock Unearned Revenue Currency Issued Social Policy Obligations (by type) IV. REVENUE Definition and Recognition Criteria used for Revenues Classifications to be used within the financial statements Application of classification system to all revenues Recognition of Investment Revenue (by type, for example interest and dividend/distribution revenue) Recognition of Revenue from the Provision of Goods and Services (by type, examples listed) Output revenue (under a purchaser/provider model) User charges (exchange only) Trading revenue Certain government grants Property rental Recognition of Types of Non-Exchange Revenue (by type, examples listed) - Taxes - Levies - Fines - Certain government grants - Donations Other Revenue Surplus or Loss on Construction Contracts Lease Revenue (operating and finance types) V. EXPENSES Definition and Recognition Criteria used for Expenses Classifications to be used within the financial statements Application of classification system to all expenses Employee Expenses (inc luding contributions to superannuation schemes) Supplies and Consumables Depreciation Amortization of Intangible Assets Transfer Payments/Grants and Donations (by type) Interest and Financing Income Tax/Income Tax Equivalents (where appropriate) VI. EQUITY/NET WORTH/NET ASSETS Definition of Equity/Net Worth Composition of Equity/Net Worth Contributed Capital Accumulated Surplus and Deficit Asset Revaluation Reserve Foreign Currency Reserve VII. OTHER ACCOUNTING POLICIES General Presentation and Disclosure Policies Treatment of Extraordinary Items Treatment of Fundamental Errors Recognition of Gains and Losses on Disposal of Non-Current Assets Treatment of Transfers of Assets and Liabilities Disclosure of Commitments Contingent Liabilities Definition and Recognition Criteria Contingent Assets Treatment of Events After the Reporting Date Related Party Disclosures Treatment of Foreign Currency Denominated Items Applicability (and Treatment) of Accounting for Hyperinflation VIII. OTHER DISCLOSURES AND PRESENTATIONS Adapted primarily from Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities, Study 14, IFAC Public Sector Committee, April 2002. 2 Attachment 4.5 Accounting Policies Usually Addressed in Transition Cost Accounting Policies Comparative Data Presentation Presentation of Budget Reporting Non-Financial Reporting (Performance ratios, operational and demographic statistics, etc.) IX. REPORTING ON OPERATIONAL PERFORMANCE Measures of efforts (Inputs) Measures of accomplishments • Outputs measures • Outcomes measures Measures that relate efforts to accomplishments • Efficiency measures • Cost−outcome measures Adapted primarily from Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities, Study 14, IFAC Public Sector Committee, April 2002. 3