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Finances
Notes to and forming part of the accounts
For the year ended 31 December 2001
1. Summary of significant accounting policies
The general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001. It is prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at valuation. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.
- Basis of accounting
The accounts have been prepared on the basis of historical cost and except where stated, do not take into account current valuations of non-current assets. Non-current assets are revalued from time to time as considered appropriate by the directors. The directors have not adopted a policy of revaluing non-current assets on a regular basis.
- Income tax
The Australian Library and Information Association is a non-profit organisation established for community service purposes and is exempt from income tax under division 50(10) of the Income Tax Assessment Act 1997.
- Depreciation
Depreciation is calculated on a diminishing value basis to write off the net cost of each non-current asset (excluding land) during its expected useful life to the Association, with the exception of the building which is calculated on a straight line
basis. The expected useful lives are as follows: Computer equipment: 1-3 years; furniture and fittings: 3-11 years; TASS database: 5 years; Office partitions: 10 years; Air-conditioning rectification: 4-5 years; Building: 30 years. Additions are
depreciated from the month in which they were acquired.
- Stock valuation
Stock consisting of publications are stated at the lower of cost and net realisable value. Cost for Association publications includes direct material and labour and is assigned to individual items of stock on the basis of average costs. Purchased publications are valued at actual cost.
- Employee entitlements
i. Wages and salaries, annual leave and sick leave: Liabilities for wages and salaries, annual leave and sick leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employees' services up to that date. ii. Long-service leave: A liability for long-service leave is recognised, and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. iii. Employee numbers: The number of employees at the end of the financial year was 19 (2000: 15).
- Valuation of non-current assets
Leasehold land and buildings are carried at cost. Where the carrying amount of an individual non-current asset is greater than the net amount expected to be recovered through the nominal net cash inflows arising from their continued use and subsequent disposal ('recoverable amount'), the asset is revalued to its recoverable amount. The decrement is recognised as an expense in the statement of income and expenditure.
- Receivables and revenue recognition
i. Trade debtors: Trade debtors are recognised for advertising income. The revenue is recognised when the customer requests advertisement in a periodic publication. All trade debtors are recognised at the amounts receivable as they are due for settlement no more than thirty days from the date of recognition. Collectibility of trade debts is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised where some doubt as to collection exists.
- Foreign currency
Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables at balance date are translated at exchange rates at balance date.
- Conferences
Expenditure incurred before the financial year end relating to any future conference is included in the balance sheet as a prepayment or deferred revenue to be expensed or earned in the accounts of the year in which the respective conference is held.
- Leased non-current assets
A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets (finance leases), and operating leases under which the lessor effectively retains all such risks and benefits. Where a non-current asset is acquired by means of a finance lease, the minimum lease payments are discounted at the interest rate implicit in the lease. The discounted amount is established as a non-current asset at the beginning of the lease term and amortised on a 'straight-line' basis over its expected economic life. A corresponding liability is also established and each lease payment is allocated between the principal component and the interest expense.
- Redeemable vouchers
The Association is responsible for controlling funds raised by way of the issue of vouchers which are redeemable to the holder on presentation to the Association. Funds received from the issue of redeemable vouchers are placed in interest bearing deposit accounts or other interest bearing marketable securities.
- Cash
For the purpose of the statement of cashflows, cash includes deposit at call which are readily convertible to cash on hand and which are used in the cash management function on a day-to-day basis, net of outstanding overdrafts. Because of the nature of cash held on deposit to redeem vouchers, cash included in the voucher-fund investment does not meet the definition of cash.
- Comparative figures
Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.
- Trade and other creditors
These amounts represent liabilities for goods and services provided to the Association prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within thirty days of recognition.
- Borrowings
Loans are carried at their principal amounts. Interest is accrued over the period it becomes due and is recorded as part of other creditors.
- Maintenance and repairs
Maintenance, repair costs and minor renewals are charged as expenses when incurred.
- Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include interest on long-term borrowings and finance lease charges.
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