5.1.1 Movement in the provision for doubtful debt 2017 $ 2016 $ Balance at beginning of the year (24,593) (28,109) Increase in provision recognised in the net result (31,091) (23,921) Reversal of provision of receivables written off during the year as uncollectable 24,593 27,437 Balance at end of the year (31,091) (24,593) Doubtful debts: receivables are assessed for bad and doubtful debts on a regular basis. A provision for doubtful debts is recognised when there is objective evidence that the debts may not be collected and bad debts are written off when identified. In assessing impartment of statutory (non-contractual) financial assets, which are not financial instruments, professional judgment is applied in assessing materiality using estimates, averages and other computational methods in accordance with AASB 136 Impairment of Assets. A provision is made for estimated irrecoverable amounts from the sales of goods when there is objective evidence that an individual receivable is impaired. The increase in the provision for the year is recognised in the net result. Bad debts considered as written off by mutual consent are classified as a transaction expense. Bad debts not written off, but included in the provision for doubtful debts, are classified as other economic flows in the net result. 5.1.2 Aging of contractual receivables Past due but not impaired Carrying amount $ Not past due and not impaired $ Less than 1 $ 1–3 months $ 3 months – 1 year $ 1–5 years $ 2017 Fee paying overseas students 1,007,619 965,768 – – – 41,851 receivables 1,075,978 1,073,433 – 1,625 920 – Total 2,083,597 2,039,201 – 1,625 920 41,851 2016 Fee paying overseas students 839,869 792,612 – – – 47,257 receivables 836,573 804,233 16,500 10,000 5,840 – Total 1,676,442 1,596,845 16,500 10,000 5,840 47,257 The average credit period for fee paying overseas students is 45 days and for receivables is 30 days. A provision has been made for estimated irrecoverable amounts from the fee paying students.
Fair value interest rate risk is the risk that the fair value of the financial instrument will fluctuate because of changes in market interest rates. The VCAA does not hold any financial instruments that are measured at fair value, therefore has no exposure to fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The VCAA actively manages this risk by monitoring movement in interest rates on a daily basis. Management has concluded for cash at bank, as a financial asset can be left at floating rate without necessarily exposing the VCAA to significant bad risk. The carrying amount of financial assets and financial liabilities that are exposed to interest rates are set out below. In addition, the VCAA’s sensitivity to interest rate risk is set out in the table that follows. Interest rate exposure of financial instruments Interest rate risk exposure Weighted average effective interest rate % Carrying amount $ Fixed interest rate $ Variable interest rate $ Non-interest bearing $ 2017 Financial assets Cash and deposits 1.08 11,161,896 – 11,161,896 – Receivables1 2,083,597 – – 2,083,597 Total financial assets 13,245,493 – 11,161,896 2,083,597 Financial liabilities Payables1 Supplies and services 6,788,884 – – 6,788,884 Borrowings Lease liabilities 150,952 150,952 – – Total financial liabilities 6,939,836 150,952 – 6,788,884 2016 Financial assets Cash and deposits 1.46 10,941,508 – 10,941,508 – Receivables1 1,676,442 – – 1,676,442 Total financial assets 12,617,950 – 10,941,508 1,676,442 Financial liabilities Payables1 Supplies and services 6,269,406 – – 6,269,406 Borrowings Lease liabilities 89,423 89,423 – – financial liabilities 6,358,829 89,423 – 6,269,406
classification and measurement of financial assets, a new hedging accounting model and a revised impairment loss model to recognise impairment losses earlier, as opposed to the current approach that recognises impairment only when incurred. result in earlier recognition of impairment losses and at more regular intervals. While there will be no significant impact arising from AASB 9, there will be a change to the way financial instruments are disclosed AASB 2010–7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) The requirements for classifying and measuring financial liabilities were added to AASB 9. The existing requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities the change in fair value is accounted for as follows: The change in fair value attributable to changes in credit risk is presented in other comprehensive income (OCI); and Other fair value changes are presented in profit and loss. If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. 1 January 2018 The assessment has identified that the financial impact of available for (AFS) assets will now be reported through other comprehensive income (OCI) and no longer recycled to the profit and loss. Changes in own credit risk in respect of liabilities designated at fair through profit and loss will now be presented within other comprehensive income (OCI). For entities with significant lending activities, an overhaul of related systems and processes may be needed. Hedge accounting will be more closely aligned with common risk management practices making it easier to have an effective hedge. For entities with significant lending activities, an overhaul of related systems and processes may be needed. AASB 2014–7 Amendments to Australian Accounting Standards arising from AASB 9 Amends various AASs to incorporate the consequential amendments arising from the issuance of AASB 9. 1 January 2018 The assessment has indicated that will be no significant impact for the public sector.
licence. The amendments require: A promise to transfer to a customer a good or service that is ‘distinct’ to be recognised as a separate performance obligation; For items purchased online, the entity is a principal if it obtains control of the good or service prior to transferring to the customer; and For licences identified as distinct from other goods or services in a contract, entities need to determine whether the licence transfers to the customer over time (right to use) or at a point in time (right to access). AASB 2016–7 Amendments to Australian Accounting Standards – Deferral of AASB 15 for Not-for- Profit Entities This Standard defers the mandatory effective date of AASB 15 for entities from 1 January 2018 to 1 January 2019. 1 January 2018 This amending standard will defer the application period of AASB 15 for entities to the 2019–20 reporting period. AASB 2016–8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for- Profit Entities This Standard amends AASB 9 and AASB 15 to include requirements to assist not- for-profit entities in applying the respective standards to particular transactions and events. The amendments: require receivables arising from statutory requirements (i.e. taxes, rates and fines) to be initially measured and recognised in accordance with AASB 9 as if those receivables are 1 January 2019 The assessment has indicated that there will be no significant impact for the public sector, other than the impacts identified for AASB 9 and AASB 15 above.
financial instruments; and clarifies circumstances when a contract with a customer is within the scope of AASB 15. AASB 16 Leases The key changes introduced by AASB 16 include the recognition of most operating leases (which are current not recognised) on balance sheet. 1 January 2019 The assessment has indicated that as most operating leases will come on balance sheet, recognition of the assets and lease liabilities will cause net debt to increase. Rather than expensing the payments, depreciation of assets and interest on lease liabilities will be recognised in the income statement with marginal impact on the operating surplus. No change for lessors. AASB 2016–4 Amendments to Australian Accounting Standards – Recoverable Amount of Non-Cash-Generating Specialised Assets of Entities The standard amends AASB 136 Impairment of Assets to remove references to using depreciated replacement cost (DRC) as a measure of value in use for entities. 1 January 2017 The assessment has indicated that there is minimal impact. Given the specialised nature and restrictions of public sector assets, the existing use is presumed to be the highest and best use (HBU), hence current replacement cost under AASB 13 Fair Value Measurement is the same as the depreciated replacement cost concept under AASB 136. AASB 1058 Income of Not-for-Profit Entities This standard replaces AASB 1004 Contributions and establishes revenue recognition principles for transactions where the consideration to acquire an asset is significantly less than fair value to enable to not-for-profit entity to further its objectives. 1 January 2019 The assessment has indicated that revenue from capital grants that are provided under an enforceable agreement that have sufficiently specific obligations, will now be deferred and recognised as performance obligations are satisfied. As a result, the timing recognition of revenue will change.