Notes to and forming part of the accounts

For the year ended 31 December 2004

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. The Australian Accounting Standards Board (AASB) is adopting International Financial Reporting Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005. The AASB will issue Australian equivalents to IFRS, and the Urgent Issues Group will issue abstracts corresponding to International Accounting Standards Board (IASB) interpretations originated by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee. The adoption of Australian equivalents to IFRS will be first reflected in the Association's financial statements for the year ending 31 December 2005. Information about how the transition to Australian equivalents to IFRS is being managed, and the key differences in accounting policies that are expected to arise, is set out in note 1n.

1. 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.
   
   
2. 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.
   
   
3. Revenue recognition The main source of revenue is membership income. Membership income is recognised for yearly subscriptions following the dispatch of an invoice over the period to which the subscriptions relate. Other main sources of income include income generated from conferences and advertising income. Prepaid membership subscriptions are amounts which are yet to be earned as at balance date.
   
   
4. Receivables All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days from the date of recognition. Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised when some doubt as to collection exists.
   
   
5. Recoverable amount of non-current assets Where the carrying amount of a non-current asset is greater than its recoverable amount, the asset is written down to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. The decrement in the carrying amount is recognised as an expense in net profit or loss in the reporting period in which the recoverable amount write-down occurs. The expected net cash flows included in determining recoverable amounts of non-current assets are not discounted.
   
   
6. Revaluations of non-current assets Subsequent to initial recognition as assets, land and buildings, including those classified as investment properties, are measured at fair value being the amounts for which the assets could be exchanged between willing parties in an arm's-length transaction. Revaluations are made with sufficient regularity to ensure that the carrying amount of each piece of land and each building does not differ materiality from its fair value at the reporting date. Annual assessments are made by the directors, supplemented by independent assessments at least every three years. In 2004, the directors revalued a component of the land, being the change lease purpose. This will be revalued during the next independent assessment. The last independent valuation was conducted by McAnn Property and Planning in December 2003. The independent valuation has been reflected in the financial statements for the year ended 31 December 2003.
   
   
7. Depreciation of plant, property and equipment Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over its expected useful life to the Association. The expected useful lives are as follows: Buildings: 30 years; Furniture and fittings: 3-11 years; Computer equipment: 1-3 years; Office partitions: 10 years; Air-conditioning rectification: 4-5 years; Leasehold improvements: 10 years. Additions are depreciated from the month in which they were acquired.
   
   
8. 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 30 days of recognition.
   
   
9. Interest-bearing liabilities Loans are carried at their principal amounts. Interest is accrued over the period it becomes due and is recorded as part of other creditors.
   
   
10. Maintenance and repairs Maintenance, repair costs and minor renewals are charged as expenses when incurred.
    
    
11. Employee entitlements i. Wages and salaries, annual leave and sick-leave: Liabilities for wages and salaries, including non-monetary benfits, annual leave and accumulated sick leave expected to be settled within 12 months of the reporting date, are recognised in other payables in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. ii. Long-service leave: The liability for long-service leave expected to be settled within 12 months of the reporting date is recognised in the provision for employee benefits and is measured in accordance with (i) above. The liability for long-service leave expected to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits and 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 market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
    
    
12. Borrowing costs Borrowing costs are recognised as expenses in the period in which they are incurred. Borrowing costs include finance lease charges.
    
    
13. Cash For the purpose of the statement of cashflows, cash includes deposits at call with financial institutions and other highly-liquid investments with short periods of maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value, net of outstanding overdrafts.
    
    
14. International Financial Reporting Standards (IFRS) Entities complying with Australian equivalents to IFRS for the first time will be required to restate their comparative financial statements to amounts reflecting the application of IFRS to that comparative period. Most adjustments required on transition to IFRS will be made, retrospectively, against opening retained earnings as at 1 January 2005. Minor changes identified to date that will be required to the Association's existing accounting policies include the following: i. Investment property: Investment properties carried at fair value will need to be measured at fair value on the date of transition. Any changes in value are recognised as income in the statement of financial performance. This is opposed to the current procedure of recording revaluations where revaluation increments are credited directly to the asset revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of the investment property previously recognised as an expense in net profit or loss, the increment is recognised immediately as revenue in net profit or loss. ii. Other non-current assets: Other plant and equipment carried at cost are to be depreciated and tested for impairment at least at the end of each reporting period. This is a more rigorous and regulatory testing of the recoverable amounts of assets as discounted cash flows must be used. The residual value is to be revised using the current prices at the date of revision. iii. Related party disclosures: Disclosures may be required for different related parties, such as key management personnel and close members of the family. The volume of transactions, as well as the amounts, will need to be disclosed.
    
    
15. 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.