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									                                                      Contents
WaterSecure   Financial Management Practices Manual




      Queensland Manufactured Water Authority
                    trading as


               WaterSecure
                  Incorporating
     Western Corridor Recycled Water Pty Ltd
                       and
      South East Queensland (Gold Coast)
         Desalination Company Pty Ltd




   Financial Management Practices
               Manual

                     31 October 2009
                      Prepared by the WaterSecure
                     Business Services Finance Team
                            31 October 2009

                                   i
                                                                                                   Contents
WaterSecure                     Financial Management Practices Manual



Contents
Contents ------------------------------------------------------------------------------------------------------------ ii
Amendment History -------------------------------------------------------------------------------------------- 1
1.     Introduction ----------------------------------------------------------------------------------------------- 3
       1.1          Accountable Officer ------------------------------------------------------------------3
       1.2          How to use this Manual -------------------------------------------------------------4
       1.3          Authorities for this Manual---------------------------------------------------------7
       1.4          Controlled and Administered --------------------------------------------------- 13
2      Income ---------------------------------------------------------------------------------------------------- 14
       2.1          General Policy------------------------------------------------------------------------ 14
       2.2          Service Level Agreements or Contract -------------------------------------- 18
3      Expenses ------------------------------------------------------------------------------------------------- 19
       3.1          General Policy------------------------------------------------------------------------ 19
       3.2          Permitted Expenses ---------------------------------------------------------------- 25
                    3.2.1 Personal/Private Expenses -------------------------------------- 27
       3.3          Procurement and Contracts Management ---------------------------------- 29
       Policy       29
       3.4          Credit Facilities ---------------------------------------------------------------------- 31
                    3.4.1 Credit Cards --------------------------------------------------------- 33
       3.5          Expenditure Authorisation ------------------------------------------------------- 35
       3.6          Ex Gratia Payments ---------------------------------------------------------------- 37
                    3.6.1 Payment Preparation---------------------------------------------- 39
       3.7          Depreciation -------------------------------------------------------------------------- 40
                    3.7.1 Application and Methodology ----------------------------------- 41
       3.7A         Attachment – Depreciation Schedule----------------------------------------- 44
       3.8          Interest on Borrowings------------------------------------------------------------ 45
                    3.8.1 Calculation, Payment and Recording ------------------------- 46
                    Policy Statements ------------------------------------------------------------ 46
       3.9          Employee Expenses---------------------------------------------------------------- 47
                    3.9.1 Advances------------------------------------------------------------- 50
                    3.9.2 Reimbursements --------------------------------------------------- 51
                    3.9.3 Payroll ---------------------------------------------------------------- 53
                    Policy Statements ------------------------------------------------------------ 53
                    3.9.4 Employee Benefits------------------------------------------------- 54
       3.10         Recovery of Expenses------------------------------------------------------------- 55
                    3.10.1 Policy Application -------------------------------------------------- 57
       3.11         Amortisation -------------------------------------------------------------------------- 59
                    3.11.1 Methodology--------------------------------------------------------- 60
4      Assets-------------------------------------------------------------------------------------------------------61
       4.1          General Policy------------------------------------------------------------------------ 61
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    4.2       Cash ------------------------------------------------------------------------------------- 67
              4.2.1 Bank Accounts------------------------------------------------------ 70
              4.2.2 Authorisation to Receive Monies ------------------------------- 76
              4.2.3 Forms of Payments Received----------------------------------- 78
              4.2.4 Receiving Methods ------------------------------------------------ 80
              4.2.5 Receipting------------------------------------------------------------ 81
              4.2.6 Balancing------------------------------------------------------------- 83
              4.2.7 Banking --------------------------------------------------------------- 85
              4.2.8 Dishonoured Transactions --------------------------------------- 87
              4.2.9 Refunds--------------------------------------------------------------- 89
              4.2.10 System Update for Cash Received ---------------------------- 91
              4.2.11 Security and Control for Cash (excluding cheques) ------- 92
              4.2.12 EFT Payments ------------------------------------------------------ 95
              4.2.13 Manual Cheques --------------------------------------------------- 96
              4.2.14 Opening and Encashment of Cheques ----------------------- 97
              4.2.15 Cancelled Cheques------------------------------------------------ 98
              4.2.16 Replacement Cheques ------------------------------------------- 99
              4.2.17 Security and Control for Cheques---------------------------- 101
    4.3       Petty Cash and Advances ------------------------------------------------------ 102
              4.3.1 Petty Cash --------------------------------------------------------- 104
    4.4       Employee Expense Advances ------------------------------------------------ 108
              4.4.1 Administration, Recording and Reporting ------------------ 110
    4.5       Accounts Receivable ------------------------------------------------------------ 112
              4.5.1 Service Level Agreements ------------------------------------- 114
              4.5.2 Customer Invoices ----------------------------------------------- 115
              4.5.3 Customer Credit Notes ----------------------------------------- 117
              4.5.4 Overdue Accounts ----------------------------------------------- 118
              4.5.5 Doubtful and Bad Debts ---------------------------------------- 120
    4.6       Prepaid Expenses----------------------------------------------------------------- 122
              4.6.1 Payment and Reporting ---------------------------------------- 124
    4.7       Non-Recurrent Physical Assets ---------------------------------------------- 126
              4.7.1 Recognition -------------------------------------------------------- 130
              4.7.2 Acquisition --------------------------------------------------------- 132
              4.7.3 Valuation and Impairment-------------------------------------- 135
              4.7.4 Recording ---------------------------------------------------------- 139
              4.7.5 Safeguarding ------------------------------------------------------ 140
              4.7.6 Use ------------------------------------------------------------------ 141
              4.7.7 Revaluation -------------------------------------------------------- 143
              4.7.8 Capital vs Repairs and Maintenance------------------------ 147
              4.7.9 Transfer------------------------------------------------------------- 149
              4.7.10 Disposal ------------------------------------------------------------ 150
              4.7.11 Loans --------------------------------------------------------------- 154
              4.7.12 Stocktakes --------------------------------------------------------- 155
              4.7.13 Review and Reconciliation------------------------------------- 158
    4.8       Portable and Attractive---------------------------------------------------------- 159
              4.8.1 Movements and Recording ------------------------------------ 161
              4.8.2 Stocktakes --------------------------------------------------------- 162


    4.9       Inventories -------------------------------------------------------------------------- 163
              4.9.1 Recording, Issue and Stocktake------------------------------ 165
              4.9.2 Valuation ----------------------------------------------------------- 166
              4.9.3 Disclosure---------------------------------------------------------- 167
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    4.10        Intangible Assets------------------------------------------------------------------ 168
                4.10.1 Recognition and Recording------------------------------------ 170
    4.11        Investments ------------------------------------------------------------------------- 171
                4.11.1 Administration and Recording--------------------------------- 173
    4.12        Contingent Assets ---------------------------------------------------------------- 174
5   Liabilities ------------------------------------------------------------------------------------------------ 175
    5.1         General Policy---------------------------------------------------------------------- 175
    5.2         Accounts Payable----------------------------------------------------------------- 180
                5.2.1 Periodic Payments----------------------------------------------- 183
                5.2.2 Major Accounts --------------------------------------------------- 185
                5.2.3 Foreign Currency Payments----------------------------------- 187
                5.2.4 Hire and Leases -------------------------------------------------- 189
                5.2.5 Duplicate Invoices ----------------------------------------------- 192
                5.2.6 Payment Terms--------------------------------------------------- 193
                5.2.7 System Update --------------------------------------------------- 194
    5.3         Accrued Expenses---------------------------------------------------------------- 195
    5.4         Employee Benefits---------------------------------------------------------------- 197
                5.4.1 Calculation and Reporting ------------------------------------- 199
    5.5         Borrowings-------------------------------------------------------------------------- 201
                5.5.1 Arrangements ----------------------------------------------------- 202
    5.6         Unearned Revenue --------------------------------------------------------------- 203
    5.7         Credit Balances in Debtor Accounts---------------------------------------- 204
    5.8         Contingent Liabilities ------------------------------------------------------------ 205
6   Equity----------------------------------------------------------------------------------------------------- 206
    6.1         General Policy---------------------------------------------------------------------- 206
    6.2         Reserves ----------------------------------------------------------------------------- 209
7   Taxation ------------------------------------------------------------------------------------------------- 210
    7.1         General Policy---------------------------------------------------------------------- 210
    7.2         Fringe Benefits Tax (FBT) ------------------------------------------------------ 213
    7.3         Payroll Tax -------------------------------------------------------------------------- 216
    7.4         PAYG Tax (Employees) --------------------------------------------------------- 218
    7.5         PAYG Tax (Other) ----------------------------------------------------------------- 220
    7.6         National Tax Equivalents Regime ------------------------------------------- 222
    7.7         Goods and Services Tax (GST)----------------------------------------------- 223
                7.7.1 Identification, Deduction and Remittance ------------------ 225
8   Reporting------------------------------------------------------------------------------------------------ 226
    8.1         General Policy---------------------------------------------------------------------- 226
    8.2         Period End--------------------------------------------------------------------------- 229
                8.2.1 End of Month ------------------------------------------------------ 231
    8.3         Internal Reporting----------------------------------------------------------------- 234
                8.3.1 Management Reports ------------------------------------------- 236
    8.4         System Appraisals---------------------------------------------------------------- 238
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                    8.4.1     Methodology------------------------------------------------------- 240
       8.5          Financial Reporting--------------------------------------------------------------- 242
                    8.5.1 Income Statement ----------------------------------------------- 245
                    8.5.2 Balance Sheet ---------------------------------------------------- 247
                    8.5.3 Statement of Changes in Equity------------------------------ 252
                    8.5.4 Statement of Cash Flows -------------------------------------- 254
                    8.5.5 Compilation of Financial Statements ------------------------ 255
9      Further Applications--------------------------------------------------------------------------------- 256
       9.1          Cash Management ---------------------------------------------------------------- 256
                    9.1.1 Cash Inflows and Outflows ------------------------------------ 258
       9.2          Journal Entries--------------------------------------------------------------------- 260
                    9.2.1 Preparation and Processing ----------------------------------- 261
       9.3          Losses and Write Offs ----------------------------------------------------------- 263
                    9.3.1 Identification and Recording----------------------------------- 265
       9.4          User Charging---------------------------------------------------------------------- 268
                    9.4.1 Arrangements ----------------------------------------------------- 269
       9.5          Risk Management ----------------------------------------------------------------- 272
                    9.5.1 Policy Application ------------------------------------------------ 274
       9.6          Internal Audit and Audit Committees--------------------------------------- 276
       9.7          Financial Systems Management --------------------------------------------- 277
                    9.7.1 Development, Implementation and Use -------------------- 279
       9.8          Contributions----------------------------------------------------------------------- 282
                    9.8.1 Contributions Received at Below Fair Value -------------- 284
                    9.8.2 Contributions Provided at Below Value--------------------- 285
                    9.8.3 Gifts ----------------------------------------------------------------- 286
       9.9          Conflicts of Interest -------------------------------------------------------------- 288
                    9.9.1 Disclosure---------------------------------------------------------- 290
       9.10         Controls ------------------------------------------------------------------------------ 291
                    9.10.1 Internal Control --------------------------------------------------- 293
                    9.10.2 Accounting Records --------------------------------------------- 297
                    9.10.3 Confidentiality ----------------------------------------------------- 298
       9.11         Legal Documents ----------------------------------------------------------------- 299
                    9.11.1 Served on WaterSecure ---------------------------------------- 300
                    9.11.2 Legal Agreements ----------------------------------------------- 301
       9.12         Financial Records----------------------------------------------------------------- 302
                    9.12.1 Reproduction and Electronic Storage ----------------------- 304
                    9.12.2 Retention and Destruction ------------------------------------- 305
       9.13         Materiality---------------------------------------------------------------------------- 308
       9.14         Restructures ------------------------------------------------------------------------ 309
Glossary -------------------------------------------------------------------------------------------------------- - 1 -




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                                                             Amendment History
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Amendment History
Changes to the Financial Accountability Act 2009, the Financial Performance and
Management Standard 2009, Australian Accounting Standards, Taxation Legislation and the
policies and practices of WaterSecure may result in amendments to this Financial
Management Practices Manual. By recording any such amendments in table 1, which
follows, an amendment history can be maintained.

The most up-to-date version of the Financial Management Practices Manual will be available on
the Intranet site. Officers should ensure that they refer to this version of the document.




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Table 1: Financial Management Practices Manual Amendment History


AMENDMENT
INSTRUCTION
              DATE             UPDATED BY                 DETAILS OF POLICY CHANGE
NO.
              ISSUED
01            20/10/2009       Financial Controller       Draft FMPM for WaterSecure

02            31/10/2009       Chief         Financial    Review draft FMPM for WaterSecure
                               Officer
03            23/11/2009       Chief         Financial    Update for minor changes to FMPM
                               Officer
04            26/11/09         Chief         Financial    Approved and Signed Off
                               Officer
05

06

07

08

09

10

11

12

13

14

15

16

17

18




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1.     Introduction
1.1    Accountable Officer

As part of good management practice, and as the Accountable Officer of Queensland
Manufactured Water Authority trading as WaterSecure, I hereby authorise the issue
of this Financial Management Practices Manual for WaterSecure and it’s subsidiary
Entities (WaterSecure).



This volume is essentially a policies and practices manual setting forth the accounting
policies and broad practices required for responsible financial administration.



Substantial changes have taken place with the introduction of the Financial
Performance and Management Standard 2009 and new developments in State
Government accounting. These have resulted in the introduction of new policy
initiatives. Included in the manual are areas to accommodate accrual accounting as set
down in Australian Accounting Standard (AAS) 29 ‘Financial Reporting by Government
Departments’.



Whenever major financial policy or practice changes occur across the State
Government or within WaterSecure, appropriate updates for the manual will be issued
via WaterSecure. This will ensure the manual remains a useful and used document.



I have approved the manual for issue and use by WaterSecure, and I endorse the
policies and practices it contains. The document has enabled me, as the Accountable
Officer, to provide you with a sound reference document that will be an invaluable tool
to guide you in the performance of your financial responsibilities.




Sam Romano
Chief Financial Officer
Queensland Manufactured Water Authority

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1.2 How to use this Manual

The Financial Accountability Act 2009, the Financial Performance and Management
Standard 2009 and the Financial Administration Legislation Amendment Act 1999
provide the principles and policies for financial administration and audit of all
Queensland Government departments and statutory bodies.



This Financial Management Practices Manual provides detailed policy and practice
guidelines to enable officers of WaterSecure to carry out day-to-day accounting and
financial functions.



Purpose
The purpose of this manual is to:
         ♦ outline general State Government policies and practices relevant to the
             financial management of WaterSecure
         ♦ detail specific policies and practices developed by WaterSecure to give
             effect to that general policy
         ♦ provide all officers of WaterSecure with an understanding of the financial
           affairs and administration of WaterSecure.



Structure
Format of the manual

This volume of the Financial Management Practices Manual consists of a single book,
with pages numbered consecutively.          A general table of contents appears at the
beginning of the manual.       An amendment history follows the general table of
contents. A comprehensive glossary is located at the end of the manual.

Each of the chapters follows a broadly similar pattern. There is a general policy section
followed by a series of sections covering more specific aspects. Each section provides
a key policy, followed by an overview and reference list. As necessary, the topic
covered by the section is further divided into sub-sections providing policy statements
and practice statements.

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Amendments and Modifications
There are likely to be amendments to the Acts and other legislation governing financial
accounting in the State Government, and changes in the application of policies and
practices in WaterSecure.       The manual therefore contains an amendment history
schedule which records updates and amendments. The schedule is located
immediately following the general table of contents, at the beginning of the manual.



The date of issue is shown at the base of each page.



When situations alter, it is important that the manual be kept current and updated. Any
suggestions for changes or advice of outdated information are to be forwarded to the
Chief Financial Officer, WaterSecure, who is responsible for monitoring policy and
practice changes, identifying necessary additions and deletions, and updating and
distributing the manual.



Terminology

“WaterSecure” represents “Queensland Manufactured Water Authority, Western
Corridor Recycled Water Pty Ltd and South East QLD (Gold Coast) Desalination
Company Pty Ltd trading as SureSmart Water” throughout the manual.




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Links
Queensland Treasury
Several documents are accessible from Treasury’s site. For convenience, some
specific documents and links have been listed below.
http://www.treasury.qld.gov.au/office/knowledge/financial/all.shtml


Financial Accountability Act 2009
http://www.legislation.qld.gov.au/Acts_SLs/Acts_SL_F.htm


Financial Performance and Management Standard 2009
http://www.legislation.qld.gov.au/Acts_SLs/Acts_SL_F.htm


Australian Accounting Standards Board - Standards
http://www.aasb.com.au/pronouncements/standards_index.htm


Australian Accounting Standards Board – Concepts & Policies
http://www.aasb.com.au/pronouncements/policies_index.htm


State Procurement Policy
http://www.qgm.qld.gov.au/policy2007/index.html



Officer Responsibility
Every officer of WaterSecure is required to comply with the policies and practices set
forth in this manual. In circumstances where compliance is not possible, due to local
circumstances or prohibitive costs, written approval for non-compliance is to be
sought from the Chief Financial Officer, WaterSecure.




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1.3 Authorities for this Manual
Financial Accountability Act 2009
The Financial Accountability Act 2009 is the law governing public sector financial
administration in Queensland and is supported by the Financial and Performance
Management Standard 2009 and the Financial Accountability Regulation 2009.


Objectives


The objectives of the Act is to provide for accountability in the administration of the
State’s finances, to provide for financial administration of departments and statutory
bodies, to repeal the Financial Administration and Audit Act 1977, to amend the
Government Owned Corporations Act 1993 for particular purposes and to make
consequential or minor amendments to other Acts.


Principles

The Act has been prepared on a principles-based approach with key themes throughout
the Act and its subordinate legislation emphasising the importance of accountability,
governance and internal controls. The Act sets out strategic legal obligations with which
agencies must comply.



Structure
The Act is divided into sections:
Part 1     Introduction
Part 2     Provisions applying to Ministers
Part 3     Consolidated fund and Treasurers’ responsibilities
Part 4     Provisions applying to departments and statutory bodies
Part 5     Provisions applying only to departments
Part 6     Other provisions
Part 7     Repeal and transitional provisions
Part 8     Amendment of Government Owned Corporations Act 1993
Part 9     Amendment of other Acts
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Financial Performance and Management Standard 2009
Background

The Financial and Performance Management Standard 2009 was repealed with the
introduction of the Financial and Performance Management Standard 2009.



The purpose of the Financial and Performance Management Standard 2009 is to
provide a framework for an accountable officer of a department, or a statutory body, to
develop and implement systems, practices and controls for the efficient, effective and
economic financial and performance management of the department or statutory body.



Objectives
   The Financial Performance and Management Standard 2009 provides the following:

       ♦ policies and principles to be observed in financial management including
           planning, performance management internal control and corporate
           management
       ♦ content of financial statements and annual reports
       ♦ matters to be included in policy and procedural manuals.



Statements of Accounting Concepts
Through uniform compliance and in conjunction with the Australian Accounting
Standards, the Statements of Accounting Concepts (SACs) provide a mechanism for
ensuring consistency across Australian accounting.



SACs have been developed as a conceptual framework for financial reporting to:

     ♦ ensure that accounting standards are consistent and logically formulated
     ♦ provide guidance in the absence of specific accounting standards
     ♦ enable users of accounting standards to understand and evaluate both
         those standards and proposals for new standards.




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While SACs do not contain actual operating requirements, the concepts that are
identified within the statements are given effect in the Australian Accounting
Standards.



The prescribed accounting standards for the Queensland public sector under section
97 of the FMS include the Framework as well as the remaining SACs 1 and 2.

More detailed information on the Framework is available from the AASB website.



SAC 1 "DEFINITION OF THE REPORTING ENTITY"

SAC 2 “OBJECTIVE OF GENERAL PURPOSE FINANCIAL REPORTING”



SAC 3 & SAC 4 overlaps with the Framework for the Preparation and Presentation of
the Financial Statements (issued by the IASB) and has been replaced with “the
Framework”.



Australian Accounting Standards
Through uniform compliance and in conjunction with the Statements of Accounting
Concepts, the Australian Accounting Standards (AASs) provide a mechanism for
ensuring consistency across Australian accounting.           AASs deal with operational
accounting issues.



In addition to the authority given to AASs with respect to members of the accounting
profession by virtue of Professional Statement Accounting Policy Statement (APS) 1
‘Conformity with Statements of Accounting Standards’, the standards are also given
legislative backing in respect of certain reporting entities in both the public and
private sectors. This is through requirements specified in Acts of Parliament or in
Regulations pursuant to such Acts.



To the extent possible, AASs are intended to apply to all reporting entities in the
private and public sectors. Any limitations on applicability are stated in the relevant


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standards. AASs are not intended to apply to immaterial items and cannot override
the requirements of legislation.



Australian Equivalents to International Financial Reporting Standards (AEIFRS)

The Australian Accounting Standards Board (AASB) has implemented the Financial
Reporting Council’s policy of adopting the Standards of the International Accounting
Standards Board (IASB) for application to reporting periods beginning on or after 1
January 2005. The AASB continues to issue sector-neutral Standards, that is,
Standards applicable to both for-profit and not-for-profit entities, including public
sector entities.



A list of all AEIFRS released to date is provided below.




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Current AASB Accounting Standards as at June 2009


              Framework for the Preparation and Presentation of Financial Statements
AASB 1        First-time Adoption of Australian Equivalents to International Financial
              Reporting Standards
AASB 2        Share-based Payment
AASB 3        Business Combinations
AASB 4        Insurance Contracts
AASB 5        Non-current Assets Held for Sale and Discontinued Operations
AASB 6        Exploration for and Evaluation of Mineral Resources
AASB 7        Financial Instruments: Disclosures
AASB 8        Operating Segments
AASB 101      Presentation of Financial Statements
AASB 102      Inventories
AASB 107      Cash Flow Statements
AASB 108      Accounting Policies, Changes in Accounting Estimates and Errors
AASB 110      Events after the Balance Sheet Date
AASB 111      Construction Contracts
AASB 112      Income Taxes
AASB 114      Segment Reporting (superseded by AASB 8)
AASB 116      Property, Plant and Equipment
AASB 117      Leases
AASB 118      Revenue
AASB 119      Employee Benefits
AASB 120      Accounting    for   Government      Grants       and   Disclosure   of   Government
Assistance
AASB 121      The Effects of Changes in Foreign Exchange Rates
AASB 123      Borrowing Costs
AASB 124      Related Party Disclosures
AASB 127      Consolidated and Separate Financial Statements
AASB 128      Investments in Associates
AASB 129      Financial Reporting in Hyperinflationary Economies
AASB 131      Interests in Joint Ventures
AASB 132      Financial Instruments: Presentation
AASB 133      Earnings per Share
AASB 134      Interim Financial Reporting
AASB 136      Impairment of Assets

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AASB 137      Provisions, Contingent Liabilities and Contingent Assets
AASB 138      Intangible Assets
AASB 139      Financial Instruments: Recognition and Measurement
AASB 140      Investment Property
AASB 141      Agriculture
AASB 1004     Contributions
AASB 1023     General Insurance Contracts
AASB 1031     Materiality
AASB 1038     Life Insurance Contracts
AASB 1039     Concise Financial Reports
AASB 1048     Interpretation and Application of Standards
AASB 1049     Whole of Government and General Government Sector Financial Reporting
AASB 1050     Administered Items
AASB 1051     Land Under Roads
AASB 1052     Disaggregated Disclosures




AAS Accounting Standards still Operative


AAS 22        Related Party Disclosures
AAS 25        Financial Reporting by Superannuation Plans
AAS 27        Financial Reporting by Local Governments
AAS 27A       Amendments to the Transitional Provisions in AAS 27
AAS 29        Financial Reporting by Government Departments
AAS 29A       Amendments to the Transitional Provisions in AAS 29
AAS 31        Financial Reporting by Governments
AAS 31A       Amendments to the Transitional Provisions in AAS 31
AAS 1045      Land Under Roads: Amendments to AAS 27A, AAS 29A and AAS 31A




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1.4 Controlled and Administered

The operations of WaterSecure consists of:


          ♦ Activities that are controlled by WaterSecure, in that they relate directly
              to the operational objectives of WaterSecure and arise at the discretion
              and direction of WaterSecure.              Financial information relating to
              controlled activities focuses on resources for the operational needs of
              WaterSecure so that it fulfils its stated objectives.


All transactions and balances of WaterSecure (i.e. assets, liabilities, revenue and
expenses) are to be categorised as ‘controlled’ activities or ‘whole-of-government’
activities.



In many cases, the distinction between controlled activities and whole-of-government
activities will be clear, based on the degree of delegation or authority available to
dispose of, or otherwise transact with, the related assets and liabilities. In cases
where any significant doubt exists, the activities should be disclosed as controlled.



For the purposes of this manual, all references to revenue, expenses, assets,
liabilities and equity refer to both those controlled and administered by WaterSecure.




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2        Income
2.1      General Policy
Purpose

To describe the financial management policies and procedures relating to the income
functions of WaterSecure.



Scope

These policies and procedures apply to all officers with financial responsibilities
relating to the income received by WaterSecure.



Definition

AASB 118 Revenue defines revenues as the gross inflow of economic benefits
during the period arising in the course of the ordinary activities of an entity when
those inflows result in increases in equity, other than increases relating to
contributions from equity participants.



In the Framework for Preparation and Presentation of Financial Statements, the
definition of income encompasses both revenue and gains. Revenue arises in the
course of the ordinary activities of an agency, and, gains are determined on a net
basis (proceeds less the carrying amount and/or costs of achieving the proceeds)
and may, or may not, arise in the course of the ordinary activities of an agency.



For a transaction or another event to give rise to income that WaterSecure may use
for its own benefit, WaterSecure must control the future economic benefits arising
from the transaction or other event and there must be no equivalent increase in its
liabilities.




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Classification
In the financial statements, income will be classified in the following categories:
      ♦       Revenue.
          ♦ sales – water grid
          ♦ sales – construction
          ♦ sales – corporate support
          ♦ user charges
          ♦ grants and other contributions
          ♦ other revenue.
      ♦       Gains.
          ♦ Gains on sale of Property Plant and Equipment



Recognition
Income will be recognised in the financial statements when:

       ♦ it is clear or probable that the inflow, other enhancement or saving in
          outflows or economic benefits or service potential has occurred
       ♦ the inflow, other enhancement or saving in outflows of economic benefits
          or service potential can be measured reliably.

Income will therefore be recognised when it is earned, i.e. when WaterSecure
becomes entitled to receive the benefit that is classified as income.

In terms of the different types of income received by WaterSecure, recognition will be
as follows:
      ♦       Revenue.
          - Sale of Goods. Recognised at the time the charge is levied. The gross
          sales (before interest or discounts) will be shown in the financial
          statements.
          - Grants. Usually recognised when monies are received, although an
          individual assessment of each grant will be required to establish the timing
          of revenue recognition.
          - Miscellaneous. Recognised when the revenue is earned.


       ♦ Gains
          - Profit on sale of assets. Recognised at the time of sale.



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Objective
It is the objective of the income policy to ensure that:

       ♦ income is promptly recognised and recorded to satisfy reporting and
          accountability requirements
       ♦ income is promptly levied and its collection is properly managed
       ♦ accounting policies for the recognition of income in the accounts or as
          disclosures in the notes to the financial statements are defined and
          consistently applied
       ♦ income is safeguarded from loss.



Systems and Control

WaterSecure will establish and maintain financial systems and internal controls to
ensure the protection and security of all income, and that:
       ♦ income earned is promptly identified, calculated, levied and recorded
       ♦ income receivable is promptly collected on or before the due date
       ♦ income received is protected, recorded and banked in accordance with
          sections 4.1 Assets: General Policy, and 4.2 Assets: Cash of this manual
       ♦ income unrecoverable is identified and written off in a timely manner.


For further information, see section 9.9 Further Applications: Controls.


Responsibilities
The Chief Financial Officer, WaterSecure, is responsible for developing,
promulgating and annually reviewing these policies and procedures. Managers of
WaterSecure are responsible for implementing policies and procedures, and
ensuring that officers within their organisational units comply with those authorised
policies and procedures. All officers engaged in the financial operations of
WaterSecure are responsible for complying with these policies and procedures.



References

Financial Performance and Management Standard 2009
Part 2 Division 4 Section 17 ‘Revenue Management’
Part 2 Division 4 Section 18 ‘User Charging’
Part 2 Division 3              ‘Performance Management’
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Part 2 Division 4 Section 28 ‘Risk Management’

Australian Accounting Standards (AASs, AASBs,)
The Framework for the Preparation and Presentation of Financial Statements.
AAS 29          ‘Financial Reporting by Government Departments’
AASB 116        Property Plant and Equipment
AASB 118        ‘Revenue’

Queensland Treasury Accounting Policy Guidelines (APGs)
APG 2           ‘Definition and Recognition of Income’
APG 3           ‘Contributions, grants, and Government Assistance Received’.

This manual
Section 4.2          Assets: Cash
Section 4.5          Assets: Accounts Receivable
Section 4.7          Assets: Non-Current Physical Assets
Section 4.9          Assets: Inventories
Chapter 8            Reporting
Section 9.9          Further Applications: Controls




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2.2 Service Level Agreements or Contract
Policy
♦      WaterSecure, is to enter into a written service level agreement or
       contract with each organisation for which the entity provides services.
       The agreement is to document services provided, performance criteria
       and a schedule of fees and charges.

♦      Service level agreements or Contacts are to be executed by the Chief
       Executive Officer, WaterSecure, and the appropriate officer from the
       client organisation.

♦      Invoices relating to service level agreements or contracts are to be
       issued monthly.


♦      Each SLA or Contract should include a clause for variations in Statutory
       changes and obligations, e.g. GST.



Overview
A service level agreement or contract is used to formalise the arrangements for
WaterSecure providing services to other entities.


References

Financial Management Practices Manual
Section 2.1        Revenue: General Policy
Section 4.5        Assets: Accounts Receivable




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3       Expenses
3.1     General Policy
Purpose
To describe the financial management policies and procedures relating to the
expense functions of WaterSecure.



Scope
These policies and procedures apply to all officers of WaterSecure with financial
responsibilities.



Definition
The Framework for the Preparation and Presentation of Financial Statements defines
expenses as ‘decreases in economic benefits during the accounting period in the
form of outflows or depletions of assets or incurrence’s of liabilities that result in
decreases in equity, other than those relating to distributions to equity participants.


Expenses are outflows, consumptions, and/or liabilities incurred as a result of the
purchase of goods and services, production of goods, provision of services or
carrying out other activities that constitute operations of WaterSecure.



Classification
Salaries, wages and associated expenses. Includes all salaries, wages, leave,
leave loading, terminations, cash equivalents and other payroll expenses paid or
payable to employees of WaterSecure. See also section 5.4 Liabilities: Employee
Benefits.


Transfer, travel, training and other like expenses. Includes all employee benefits
prescribed in the awards and conditions of employment for officers of WaterSecure,
and other human resource costs such as training.



Taxation. Includes all taxes payable, including:

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         ♦ Fringe Benefits Tax (FBT)
         ♦ Pay As You Go (PAYG) tax
         ♦ Payroll tax
         ♦ Goods & Services Tax (GST)
         ♦ Income Tax


For further information, see chapter 7 Taxation.


Purchase of goods and services. Includes the purchase of goods and services to
effect the day-to-day operation of WaterSecure.              All purchases are to be in
accordance with the requirements of the State Procurement                   Policy and
                                                                                          Deleted: .
WaterSecure’s Procurement Policy.



Hire of goods and services. Where WaterSecure elects to hire goods or services
in lieu of purchasing, the ownership of the hired property does not transfer to
WaterSecure. See section 5.2 Liabilities: Accounts Payable.



Leasing of goods and assets. Leasing is an alternative financing method used for
the acquisition of goods. Finance leases are contracts between a lessor and lessee
that, in effect, substantially transfer all the risks and benefits of ownership of the
leased property to the lessee. Under operating lease contracts, all the risks and
benefits of ownership of the leased property are retained by the lessor. See section
5.2 Liabilities: Accounts Payable.



Interest. Includes payments made for the use of borrowed funds. See also section
5.5 Liabilities: Borrowings.



Consumption of assets. Includes depreciation, amortisation, doubtful debts and
losses. See also section 9.3 Further Applications: Losses and Write-Offs.



Software. Whether purchased externally or developed in-house, all software below
the threshold stated in Asset Accounting Guidelines is to be expensed.

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Cabling costs, upgrades, memory and sundry minor computer hardware.
These costs are to be treated as an expense, except where upgrades and memory
are purchased for network servers (such costs are capitalised – see chapter 4
Assets).



Liabilities incurred.    Includes all accrued expenses (see section 5.3 Liabilities:
Accrued Expenses) and outstanding payments to creditors (see section 5.2
Liabilities: Accounts Payable).



Other. Other types of expenditure incurred by WaterSecure in the normal course of
operations includes gifts (see also section 9.7 Further Applications: Contributions), ex
gratia payments, sponsorship, and research and development.




Recognition
The Framework and AAS 29 state an expense shall be recognised in the financial
statements when:
           ♦ it is probable that the consumption or loss of future economic benefits
              resulting in a reduction in assets and/or an increase in liabilities has
              occurred
           ♦ the consumption or loss of future economic benefits has a cost or value
              that can be measured reliably.


Where the future economic benefits acquired by WaterSecure are consumed
simultaneously with acquisition, expenses will be recognised in the reporting period
in which the acquisition occurs (e.g. salaries, wages, electricity, telecommunication
expenses).

Where an expense results directly and jointly from the same transaction as does
revenue, the expense will be recognised on the basis of its direct association with the
revenue (e.g. cost of goods sold or services provided during the reporting period).




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Where future economic benefits are expected to be consumed over several reporting
periods, expenses would generally be allocated systematically to the reporting
periods (e.g. prepaid expenses or expenses for depreciation and amortisation).



Objective
It is the objective of the expenses policy to enable:

         ♦ prompt recognition and recording of expenses in a way that allows
              reporting objectives and accountability requirements to be satisfied
         ♦ adequate systems of approval and control to be established, ensuring
              expenses are incurred only for authorised, official and permitted
              purposes
         ♦ definition and consistent application of accounting policies for the
              recognition of expenses in the accounts or as disclosures in the notes to
              the financial statements
         ♦ taxation expenses to be properly calculated and discharged
         ♦ timely payment of expenses



Systems and Control

In accordance with the Financial Performance and Management Standard 2009,
WaterSecure will establish adequate systems and internal controls to ensure that:

         ♦ expenses incurred are properly identified, calculated and recorded
         ♦ expenses arising from consumption, actual loss or as a provision for
              probable loss are recorded appropriately
         ♦ payments are made in accordance with the approved procedures.


For further information, see section 9.10 Further Applications: Controls.


Responsibilities

The   Chief    Financial     Officer, WaterSecure,         is   responsible   for   developing,
promulgating and annually reviewing these policies and procedures.




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Management are responsible for implementing policies and procedures, and
ensuring that officers within their organisational units comply with those authorised
policies and procedures.



All officers engaged in the financial operations of WaterSecure are responsible for
complying with these policies and procedures.



References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 19 ‘Expense Management’
Part 2 Division 4 Section 20 ‘Record of Special Payments’
Part 2 Division 3              ‘Performance Management’
Part 2 Division 6              ‘Contract Performance Guarantees’


Australian Accounting Standards (AASs, AASBs)
The Framework for the Preparation and Presentation of Financial Statements
AAS 29 ‘Financial Reporting by Government Departments’
AASB 116 ‘Property, Plant and Equipment’
AASB 138 ‘Intangible Assets’
Queensland Treasury Non-Current Asset Policies for the Qld Public Service


Queensland Treasury Accounting Policy Guidelines (APGs)
APG4            ‘Definition and Recognition of Expenses’


This manual
Section 4.2         Assets: Cash
Section 4.7         Assets: Non-Current Physical Assets
Section 4.10        Assets: Intangible Assets
Section 5.1         Liabilities: General Policy
Section 5.2         Liabilities: Accounts Payable
Section 5.3         Liabilities: Accrued Expenses
Section 5.4         Liabilities: Employee Benefits
Section 5.5         Liabilities: Borrowings
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Chapter 7         Taxation
Chapter 8         Reporting
Section 9.2       Further Applications: Journal Entries
Section 9.3       Further Applications: Losses and Write-Offs
Section 9.7       Further applications: Financial Systems Management
Section 9.10      Further Applications: Controls
Section 9.12      Further Applications: Financial Records


Other documents
WaterSecure Delegations and Authorisations Manual
WaterSecure Procurement Policy
Code of Conduct




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3.2 Permitted Expenses
Policy
All expenditure is to be incurred for official purposes only, and officers must
be able to identify the benefit for WaterSecure and the State, if required to do
so.

Prior to committing to the expenditure of monies, an appropriately delegated
officer must ensure that the expense:
       –       is an appropriate use of public funds
       –       is subject to available funding
       –       complies   with   all   applicable        legislation   and   WaterSecure’s
       procurement policy
       –       is able to withstand public scrutiny
       –       is the most economical and effective for the purpose
       –       is necessary for the effective operation of WaterSecure .

Expenses must be capable of being supported on the basis of reasonableness
and publicly defensible under scrutiny. Expenses are to be properly declared
and documented.

Unless otherwise approved, WaterSecure should not incur expenditure of a
private or personal nature on behalf of an employee or any other party.



Overview

Permitted expenses are those types of expenses that WaterSecure is allowed to
incur in accordance with legislative guidelines, State Government policy and ethical
constraints.



Generally, all reasonable expenses incurred in the course of official business that are
for the benefit of WaterSecure and necessary to ensure effective operation, are
considered to be permitted expenses.




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All officers with delegated financial authority to authorise payments on behalf of
WaterSecure are responsible for ensuring that only permitted expenses are approved
for payment.



References

This manual
Section 3.1          Expenses: General Policy
Section 3.10         Expenses: Recovery of Expenses
Section 4.5          Assets: Accounts Receivable


Other documents
WaterSecure Delegations and Authorisations Manual
WaterSecure Procurement Policy
Guidelines for the Financial Management of the Office of the Minister (Department of
Premier and Cabinet).




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3.2.1       Personal/Private Expenses
Policy Statements
          ♦ Unless otherwise specified in an officer’s employment contract, private
              expenses should not be incurred by WaterSecure on behalf of an officer.

Procedures

Non-official expenses. Except where it is specified in the contract of employment,
expenditure should not be authorised where there is a component that is private/
non-official by nature. Examples of expenses that are generally regarded as non-
official include:

          ♦ non-official entertainment and travel costs (e.g. personal video hire fees
              and mini-bars)
          ♦ tips or gratuities (except where the officer is travelling on official
              business in a country where this is the custom)
          ♦ dinners/functions at an officer’s private residence (unless specifically
              authorised by an appropriately delegated officer before the event takes
              place)
          ♦ personal grooming expenses
          ♦ parking for non-business related trips
          ♦ parking and traffic offences
          ♦ child-minding fees
          ♦ club membership fees (except approved airline travel club memberships)


Nature of expenses unclear. In circumstances where the nature of expenses is
unclear, the officer will meet the expenses in the first instance and subsequently
submit a claim to their delegated authority, WaterSecure for determination.



Reimbursement to WaterSecure. In exceptional circumstances, where an account
that includes non-official expenses is paid in full by WaterSecure in the first instance,
the relevant officer is required to reimburse the non-official component within a period
of seven days from when the charge was incurred.




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Regulated traffic offences. Officers incurring fines for breaches of parking or traffic
regulations are responsible for notifying the relevant manager of the offence and
paying the resulting fine.



Private use of official telephones. The costs of all personal mobile, STD and ISD
calls made from official telephones should be reimbursed to WaterSecure. Officers
are required to keep private local calls to a minimum.




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3.3 Procurement and Contracts Management


Policy
The procurement of goods and services by WaterSecure must be in
accordance with the requirements and processes prescribed by the
State    Procurement      Policy   and      WaterSecure’s     Procurement       and     Deleted:

Contracts Management Framework.

Overview
WaterSecure have established a Procurement and Contracts Management
Framework to ensure WaterSecure’s business needs are met whilst demonstrating
compliance with the State Procurement Policy and the relevant provisions of the
Shareholder Agreement between WaterSecure and the State.
WaterSecure’s Procurement and Contracts Management Framework consists of:
     Procurement Policy             Provides clear objectives when acquiring goods
                                    &/or services for WaterSecure, and includes
                                    principles that are consistent with the policy
                                    objectives of the State Procurement Policy.
     Corporate Procurement Plan     Upon approval of the annual budget the
                                    procurement and contracts team work with each
                                    of the business units within WaterSecure to
                                    develop a Corporate Procurement Plan. The
                                    Corporate Procurement Plan forms the basis for
                                    the   majority    of   procurement    activities
                                    undertaken throughout each financial year to
                                    ensure a strategic and planned approach.
     Procurement Procedures         Assists all staff by outlining detailed processes
                                    and procedures with regard to procurement and
                                    contracts management.            This document
                                    includes detail for the complete procurement life
                                    cycle, from identification of a need through to
                                    close-out of the contract or purchase order.
The State Procurement Policy applies to the procurement of goods and services by
all State Government organisations. Compliance with the policy is required by the


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Financial and Performance Management Standard 2009 and the Financial
Accountability Act 2009.
Prior to making commitments on behalf of WaterSecure all procurement and
contracts related transactions require approval in accordance with WaterSecure’s
Delegations and Authorisations Manual.

References

This manual
Section 3.1        Expenses: General Policy
Section 3.4        Expenses: Credit Facilities
Chapter 4          Assets



Other documents
WaterSecure Procurement Policy
WaterSecure Corporate Procurement Plan 2009/2010
WaterSecure Procurement Procedure
State Procurement Policy 2008
WaterSecure Delegations and Authorisations Manual




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3.4 Credit Facilities

Policy

The establishment of any credit facility requires the recommendation of the
relevant Executive Manager and the approval of the Chief Financial Officer,
WaterSecure.


All credit facilities must be subject to agreed terms and conditions between the
credit provider and WaterSecure.


Users of credit facilities must comply with agreed terms and conditions, and
properly discharge responsibilities regarding the use and reconciliation of
credit accounts.


At the discretion of the Chief Financial Officer, WaterSecure, the misuse of
credit facilities will result in the user’s access to the facility being revoked and
appropriate disciplinary action being taken.

Overview

A credit facility is any system of credit established to allow purchases of goods or
services without the use of an official purchase order or the exchange of cash
between the purchaser and supplier at the time of the transaction.


The credit facilities currently used by WaterSecure are:

         ♦ corporate credit cards
         ♦ cabcharge vouchers and cards
         ♦ motorway toll responders.


The Chief Financial Officer, WaterSecure is responsible for the approval of credit
facilities to be used by WaterSecure.



Business Services Commercial, WaterSecure is responsible for establishing,
implementing, managing and controlling credit facilities used by WaterSecure.
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Users of credit facilities are responsible for the proper and appropriate use of those
facilities and are accountable for all transactions associated with their use. Users are
also responsible for the security of the card or vouchers and, where applicable, the
Personal Identification Number (PIN) used with the facility.



References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 19 ‘Expense Management’

Queensland Government State Procurement Policy

This manual
Section 3.1          Expenses: General Policy
Section 3.2          Expenses: Permitted Expenses
Section 3.3          Expenses: Procurement and Contracts Management
Section 4.6          Assets: Prepaid Expenses
Section 5.2          Liabilities: Accounts Payable

Other documents
Corporate Purchasing Card – Administration Manual
Corporate Purchasing Card – User Manual and Guidelines




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3.4.1 Credit Cards
Policy Statements
        ♦ Corporate credit cards may be issued to officers of WaterSecure who
            have purchasing training and a financial delegation, on the basis of the
            card providing a necessary and convenient facility for meeting
            commitments incurred in the course of official business and procuring
            goods or services for official purposes.


        ♦ Corporate credit cards must not be used for transactions of a personal
            nature.


        ♦ Cardholders are to obtain documentary evidence, including a valid tax
            invoice, of all transactions for which the credit card is used and reconcile
            these to transactions appearing on the periodic statement from the credit
            provider.


        ♦ The reconciliation of cardholder statements is to be checked and
            approved by the officers delegated authority who must confirm that the
            goods or services purchased were required for official purposes and that
            a tax invoice has been obtained for each purchase.


Procedures

Prohibited uses. Corporate credit cards are not to be used for the following types of
transactions:
         ♦ personal or unofficial purchases
        ♦ entertainment expenses, excluding meal entertainment (unless prior
            written approval has been obtained from an officer with appropriate
            delegation)
        ♦ computer hardware or software with a value above the asset recognition
            threshold (unless appropriate prior written approval has been obtained)
        ♦ payments for goods/services not delivered or immediately available at
            the time of purchase (excluding authorised prepayments – see section
            4.6 Assets: Prepaid Expenses)
        ♦ payment in full for part supply or delivery
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         ♦ cash withdrawals from automatic teller machines (ATMs) or other outlets
         ♦ point of sale (EFTPOS) transactions
         ♦ Expenses of the Minister



Transaction limits. When a corporate card is issued, the cardholder will be advised
of the transaction limits imposed by the credit provider (bank) and WaterSecure on
the use of that particular card.



Reference. For further information regarding the procedures for issuing and using
corporate credit card facilities, refer to the following documents:
         ♦ Corporate Purchasing Card – User Manual and Guidelines




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3.5 Expenditure Authorisation
Policy

All expenditure outlays of WaterSecure, whether of a capital or expense nature,
require the authorisation of a financial delegate.


An authorised delegate’s signature is required at the point at which the
purchase requisition is raised as confirmation of:
       – funds availability
       – compliance with legislative requirements
       – compliance with WaterSecure policy.

Overview

A financial delegate is an officer specifically authorised to perform one or more of the
following duties, in accordance with the limits of the delegation:

         ♦ approve the incurrence of expenditure for the supply of goods or
             services
         ♦ exercise payment authority across a number of appropriations
         ♦ write-off a loss in accordance with the relevant legislation
         ♦ make an ex gratia payment in accordance with the relevant legislation
         ♦ establish or close bank accounts and approve banking arrangements
         ♦ approve the establishment and use of credit facilities
         ♦ authorise the purchase and giving of gifts.



The Accountable Officer has overall responsibility for the financial operations of
WaterSecure.



The Accountable Officer can delegate financial authority to specific positions within
WaterSecure in order to enable efficient and effective operations. A financial
delegation cannot be approved by any officer other than the Accountable Officer.




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Financial delegations are to a specified dollar limit (excluding GST) and constrained
by limitations imposed by the terms of the delegations. Authority is granted to a
position – not an individual officer.



Financial delegates are responsible for:

         ♦ adhering to the limitations of the delegation being exercised
         ♦ performing their duties in accordance with the terms of the delegation
         ♦ complying with the responsibilities for financial delegates as prescribed
              in the schedule of financial delegations.



Managers are responsible for ensuring that all officers of WaterSecure have access
to the current schedule of financial delegations.



References

Financial Accountability Act 2009
Part 2 Division 1 Section 8     ‘Internal Control Structure’


This manual
Section 3.1           Expenses: General policy


Other documents
WaterSecure Delegations and Authorisations Manual


This manual
Section 3.3           Expenses: Procurement and Contracts Management
Section 3.5           Expenses: Expenditure Authorisation
Section 5.2           Liabilities: Accounts Payable
Section 8.5           Reporting: Financial Reporting

Other documents
WaterSecure Delegations and Authorisations Manual
WaterSecure Procurement Policy
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3.6 Ex Gratia Payments


Policy

Ex gratia payments are to be subject to specific WaterSecure policies,
approved by an appropriate financial delegate, recorded in a central register
and disclosed in the annual financial statements.



Overview

Ex gratia payments are unexpected items of expenditure that have not been
budgeted for and are made in extraordinary circumstances.



Ex gratia payments are categorised as follows:


         ♦ Extra-contractual and ex gratia payments to contractors. Payments
            that are outside the terms and conditions of a contract but result from
            circumstances that are such that a court may hold that a legal obligation
            exists (e.g. when a contractor incurs extra expenses as a result of
            WaterSecure action or inaction).


         ♦ Compensation payments. Payments made with respect to insurable
            risks for which the State Government or statutory authority acts as its
            own insurer (e.g. personal injuries, damage to property).


         ♦ Extra-statutory and extra-regulatory payments. Payments that are
            considered to be within the broad intention of an Act or Regulation but
            go beyond a strict legal interpretation of its terms.


         ♦ Ex gratia payments other than to contractors. Payments that do not
            fall within normal administrative rules (e.g. payments to meet hardship
            caused to persons by official failure or delay).



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         ♦ Other special payments. Include payments for items such as rewards
              and payments to non-employee committee members.



For ex gratia payments of more than $5,000, a record is to be retained including the
following details:
         ♦ Date of the payment;
         ♦ Recipient of the payment;
         ♦ Reason for the payment;
         ♦ Approval given for the payment.

The financial delegate is responsible for identifying possible ex gratia payments and
approving only those payments within the limits of their delegation.



The Chief Financial Officer, WaterSecure, is responsible for ratifying the classification
of payments as ex gratia and maintaining a central register of ex gratia payments
made.



References

This manual
Section 3.1          Expenses: General Policy
Section 3.5          Expenses: Expenditure Authorisation
Section 5.2          Liabilities: Accounts Payable
Section 8.5          Reporting: Financial Reporting


Other documents
WaterSecure Delegations and Authorisations Manual




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3.6.1 Payment Preparation
Policy Statements
        ♦ For reporting purposes, the classification of payments as ex gratia must
            be ratified by the Chief Financial Officer, WaterSecure.


        ♦ All ex gratia payments must be approved by an officer with appropriate
            financial delegation.


        ♦ Details of all ex gratia payments must be recorded in a register
            maintained by the Business Services Finance, WaterSecure.



Procedures

Classification.   When a potential ex gratia payment is identified, the financial
delegate must consult with the Chief Financial Officer, WaterSecure who is to ratify
the classification as an ex gratia payment.



Supporting documentation. Ex gratia payments must be supported by appropriate
documentation, particularly in terms of justification for the payment and evidence
supporting the amount to be paid.



Register.   The central register of ex gratia payments is to contain the following
details about each payment made:
        ♦ date of payment
        ♦ name and address of payee
        ♦ amount of payment
        ♦ reason for payment
        ♦ approving officer.




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3.7 Depreciation
Policy

All non-current physical assets of WaterSecure are to be depreciated in
accordance with AASB 116 ‘Property, Plant and Equipment’ and the
WaterSecure Asset Accounting Guidelines.



Overview
Depreciation is a non-cash expense that is systematically recognised for the purpose
of allocating the decline in the service potential of a non-current physical asset over
the period(s) during which it gives benefit to the organisation. Such recognition is
necessary to ensure that the value of assets is not overstated and an accurate
representation of the cost of operations is obtained.


Business Services Finance, WaterSecure is responsible for assessing the
appropriateness of depreciation rates and methods used for non-current physical
assets, and reporting depreciation as an expense.


References

Australian Accounting Standards (AASs)
AASB 116        ‘Property, Plant and Equipment’
AAS 29          ‘Financial Reporting by Government Departments’

Queensland Treasury Accounting Policy Guideline (APG)
APG 4           ‘Definition and Recognition of Expenses’.

This manual
Section 3.1         Expenses: General Policy
Section 4.7         Assets: Non-Current Physical Assets
Section 8.5         Reporting: Financial Reporting
Section 9.2         Further Applications: Journal Entries

Other documents
Queensland Treasury’s ‘Non-Current Asset Policies for the Queensland Public
Sector’
WaterSecure Asset Accounting Guidelines
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3.7.1 Application and Methodology
Policy Statements
         ♦ All depreciable non-current physical assets are to be depreciated on a
            straight line basis, with this method consistently applied across reporting
            periods.


         ♦ Depreciation is to be recorded in the financial statements as an expense
            of WaterSecure.



Procedures

Purpose. Depreciation reduces the value of an asset to reflect the consumption or
loss of the asset’s value due to wear and tear through physical use or technical/
commercial obsolescence.



Depreciation charge. The depreciation charge in respect of any asset is dependent
on the following:


         ♦ Depreciation method. An asset is depreciated using the appropriate
            method in accordance with AASB 116 ‘Property, Plant and Equipment’,
            and based on the asset’s useful life and associated depreciation rate.



          WaterSecure uses the straight line depreciation method for all its
          depreciable assets. This method allocates the cost of acquisition (or other
          valuation) in equal instalments over the term of the asset’s estimated
          useful life.


         ♦ Useful life. For depreciation purposes, WaterSecure will use standard
            useful economic lives (see Attachment 3.10A).


         ♦ Residual value. WaterSecure will use a nil residual value for all assets
            unless otherwise specified at the time of acquisition.

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Buildings.      Subject to the requirements of AASB 116 ‘Property, Plant and
Equipment’ in relation to investment properties, buildings will be depreciated over the
term of their useful life.



Enhancements to existing assets. Any enhancement to an existing depreciable
asset, where that enhancement has become an integral part of the asset and the
value of which is in excess of the asset capitalisation threshold, will be depreciated
over the remaining useful life of the asset, amended as appropriate.



An enhancement that retains a separate identity to the existing asset (it is capable of
being used after the original asset is disposed of) will be depreciated independently
of the existing asset on the basis of the class and sub-class of asset into which the
enhancement falls.



See also sub-section 4.7.8 Assets: Non-Current Physical Assets – Capital vs.
Repairs and Maintenance.



Major cyclical maintenance. In accordance with AASB 137 Provisions, Contingent
Liabilities and Contingent Assets, a provision for future maintenance must no longer
be recognised either as a liability or as a reduction in the carrying amount of the
asset.



Assets under construction.            Depreciation is only to be charged on completed
assets. Assets under construction are deemed to be completed when they become
available to perform the functions for which they have been constructed.



Depreciation dates.            In relation to asset acquisition, transfer and disposal,
depreciation charges will:
         ♦ be made from the first day of the month following asset acquisition or
              transfer
         ♦ cease from the last day of the month in which the asset was disposed.
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Revaluation. Where an asset has been revalued (see sub-section 4.7.7 Assets:
Non-Current Physical Assets – Revaluation), depreciation charges subsequent to
revaluation are to be based on the revalued amount.



Depreciation schedule.     See Attachment 3.10A for WaterSecure’s depreciation
schedule.




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3.7A     Attachment – Depreciation Schedule
Table 2: Depreciation Schedule


       ASSET CLASS             LIFE                        RATE (%)

       Buildings               To be assessed on a         N/A
                               case by case basis


       Infrastructure Assets   To be assessed by an        1.00-15.00%
                               independent expert
       Plant and Equipment     3.33-10 years               10.00-33.00%




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3.8 Interest on Borrowings
Policy

Interest on borrowings will be expensed to the extent that it relates to
operational activities, and will be capitalised to the extent that it relates to
Infrastructure Assets which have not yet been completed.

The frequency and amount of interest charged on borrowings should be in
accordance with the documented loan agreement and repayment schedule
agreed to between WaterSecure and lender.



Overview

Interest is an amount of money paid by WaterSecure to compensate a lender for the
use of borrowed funds.



After obtaining approval by the authorised delegate of WaterSecure to borrow funds,
the Chief Financial Officer, WaterSecure will be responsible for the negotiation and
agreement of the terms and conditions for borrowings (see section 5.5 Liabilities:
Borrowings).



References

This manual
Section 3.1         Expenses: General Policy
Section 5.1         Liabilities: General Policy
Section 5.2         Liabilities: Accounts Payable
Section 5.5         Liabilities: Borrowings
Section 8.5         Reporting: Financial Reporting




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3.8.1 Calculation, Payment and Recording
Policy Statements
        ♦ The Chief Financial Officer, WaterSecure is responsible for the accurate
            calculation and timely remittance of interest due to lenders for
            borrowings made by WaterSecure.


        ♦ Interest incurred but not paid at the end of the reporting period (accrued
            interest) is to be recognised as a liability (see section 5.1 Liabilities:
            General Policy).



Procedures

Payment of interest. Interest payments are to be calculated in accordance with the
loan agreement or repayment schedule, and checked by the Chief Financial Officer,
WaterSecure. The payment of interest is to be made by the agreed due date (see
section 5.2 Liabilities: Accounts Payable). Loan schedules should be maintained by
WaterSecure to record payments of interest made.



Withholding tax. When WaterSecure remits interest to non-residents of Australia, a
withholding tax is payable to the Australian Taxation Office (ATO). This tax is a
prescribed percentage of the gross interest amount. The tax is deducted from the
gross interest amount, and the net amount of interest is paid to the lender. The
deducted interest is remitted to the ATO.



Accrued interest. At the close of each reporting period, the amount of interest
accrued but not yet paid is to be calculated.                The Chief Financial Officer,
WaterSecure, is to ensure that it is recognised as an expense in the accounts.




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3.9 Employee Expenses
Policy
Approved expenses incurred by an employee while performing official duties
are to be promptly claimed by the officer, approved by an authorised financial
delegate and processed.


All payments for allowances or expenses due will be in accordance with the
relevant award, determination and/or conditions of employment for the officer.


Prospective employee expenses must be approved by the appropriate
supervising officer before being incurred. The payment of expenses must be
approved by the supervising officer and financial delegate when being claimed.


Officers may not authorise the incurrence or approve the payment of employee
expenses to themselves.


Advances of allowances will be made where the entitlement exists, and must
be acquitted within a reasonable period.



Overview

Employee expenses include all payments to officers of WaterSecure for expenses
incurred in performing official duties. The entitlement to expenses, and the rates and
allowances payable, are prescribed by the award and conditions under which an
officer is employed.



Examples of employee expenses include:
         ♦ travel expenses (domestic and overseas)
         ♦ private motor vehicle allowance
         ♦ appointment or transfer expenses
         ♦ private telephone allowances
         ♦ meal allowances




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         ♦ reimbursement of reasonable expenses incurred by employees in the
            completion of their duties, and as approved by an appropriately
            delegated officer.


In terms of advance payments of employee expenses, this section deals with their
payment and acquittal only. For further information regarding the administration,
recording and reporting of employee expense advances, see section 4.4 Assets:
Employee Expense Advances.



Managers/financial delegates are responsible for ensuring expenses claimed are for
legitimate purposes and events that actually occurred, and are in accordance with
the conditions of employment and policies of WaterSecure.



Business Services, WaterSecure, is responsible for providing procedures and
systems that ensure prompt processing of employee expense claims.



In addition, the employment of personnel by WaterSecure has various financial
implications in terms of payroll and associated liabilities (e.g. salaries, wages,
recreation leave, long-service leave and superannuation). For budgeting and
financial management purposes, it is the responsibility of the Chief Financial Officer,
WaterSecure, to ensure that these costs are recorded in the general ledger.



References

Australian Accounting Standard (AAS)
AASB 119            ‘Employee Benefits


Queensland Treasury Accounting Policy Guideline (APG)
APG 10              ‘Accounting for Employee Benefits’




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This manual
Section 3.1          Expenses: General Policy
Section 3.5          Expenses: Expenditure Authorisation
Section 4.4          Assets: Employee Expense Advances
Section 5.1          Liabilities: General Policy
Section 5.2          Liabilities: Accounts Payable
Section 5.4          Liabilities: Employee Benefits
Section 8.5          Reporting: Financial Reporting


Other documents
WaterSecure Delegations and Authorisations Manual
Directives (Dept of Industrial Relations)
Various awards and conditions of employment




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3.9.1 Advances
Policy Statements
         ♦ Claims for advances are to be submitted in reasonable time for
             processing. The urgent processing of travel advances can be approved
             by the officer’s delegated authority.


         ♦ Recipients are responsible for the safe custody of advanced monies and
             ensuring that the advance is used only for the purposes for which it was
             intended (i.e. expenses relating to official duties).


         ♦ An advance payment is to be acquitted within a reasonable period
             following the completion of the period for which it was granted.       An
             acquittal must be submitted whether or not a balance is payable by or
             due to the claimant, and when the balance is nil.


         ♦ Advances for cancelled travel arrangements are to be acquitted
             immediately.



Procedures

Payment of advances. To claim an advance of anticipated expenses, the claimant
requests the required amount on the appropriate form. An advance claim requires
the certifications of the claimant and their delegated authority.



WaterSecure will verify the claim and process in the computerised financial system.



Acquittal of advances.       To acquit an advance of expenses, a claim must be
submitted in writing by the recipient. The acquittal requires the certifications of the
claimant and their delegated authority. Appropriate supporting documentation (e.g.
receipts) is to be attached to the acquittal.


Administration, recording and reporting. For further information, see section 4.4
Assets: Employee Expense Advances.

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3.9.2 Reimbursements
Policy Statements
         ♦ Claims for employee expenses may be granted only where the
            entitlement is prescribed by the award and/or conditions of employment
            under which an officer is employed. Rates and allowances paid must be
            in accordance with these conditions.


         ♦ Approval for incurring the expenses and claiming reimbursement must
            be obtained from the relevant delegated authority.


     ♦      In cases where WaterSecure is not being billed directly for expenses
          such as accommodation and meals, employees are responsible for the
          payment of expenses in the first instance.


         ♦ It is the responsibility of the claimant to promptly submit claims for
            expenses due. Claims must be submitted within a reasonable period of
            time after the incurrence of expenditure. The limit is 2 months from the
            completion of the duties during which the expenses being claimed were
            incurred.


         ♦ All claims for employee expenses must be in relation to events that
            actually occurred.


         ♦ When claiming actual expenses, the expenses must be of a reasonable
            amount. All claims for actual expenses are to be supported by receipts
            or other documentation substantiating expenditure, and the claim must
            be in accordance with the amounts shown on the receipts. Tax invoices
            for all expenditure must be obtained where possible.




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Procedures

Claim. To claim expenses, an officer is to submit the details using the WaterSecure
Employee Reimbursement form. A claim requires the certifications of the claimant
and delegated authority, and must have the applicable receipts or other approval
documentation attached. After verification, the claim is processed.



References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 19 ‘Expense Management’
WaterSecure Employee Reimbursement Form




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3.9.3 Payroll
Policy Statements
        ♦ At the end of each pay cycle, the details of all salaries and wages are to
            be uploaded from the payroll system to the general ledger.


        ♦ At the end of each reporting period, a liability for all employee benefits is
            to be calculated and reported in the financial statements (see section 8.5
            Reporting: Financial Reporting).



Procedure

Reconciliation.   Business Services Finance, WaterSecure is responsible for the
reconciliation of the general ledger and payroll system after each upload of salaries
and wages data.




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3.9.4 Employee Benefits
Policy Statements
        ♦ WaterSecure shall recognise expenses in the accounts relating to
            employee benefits for:
          ♦ salaries and wages (including fringe benefits and non-monetary
              benefits)
          ♦ annual leave
          ♦ long-service leave
          ♦ superannuation and other post-employment benefits.


        ♦ Business Service Finance, WaterSecure is responsible for ensuring that
            the employee benefit expenses and accrued employee benefits reported
            in the general ledger are correct.



Procedures
Description. Employee benefits arise as a result of past services of employees and
accordingly impose a present and future obligation on WaterSecure.


For financial reporting purposes, employee benefits include:
         ♦ salaries and wages (including fringe benefits and non-monetary benefits)
         ♦ leave (including Annual Leave, leave loading, and Long Service Leave)
         ♦ superannuation and other post-employment benefits.


Calculation. Benefits are calculated on WaterSecure’s payroll system in accordance
with the relevant awards and conditions of employment.


Liability. See section 5.4 Liabilities: Employee Benefits.




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3.10 Recovery of Expenses
Policy
In circumstances where recovery is required, all public monies are to be
recovered. The recovery of other monies is subject to the circumstances of
individual cases.


Recovered and recoverable expenditure is to be properly recorded in
WaterSecure’s accounts.



Overview

The principles of recovering monies will depend on whether the monies are ‘public
monies’ or ‘other monies’. Public monies are subject to parliamentary appropriation;
other monies are not.



Examples of situations where expenses may need to be recovered include:
         ♦ overpayment of salary or wages
         ♦ duplicate payment or overpayment to claimants
         ♦ overpayment of benefits
         ♦ return of damaged or unwanted goods to a supplier following payment
         ♦ private use of official telephones (subject to the conditions prescribed in
            sub-section 3.2.1 Expenses: Permitted Expenses – Personal/Private
            Expenses, and the Code of Conduct).



The delegated authority is responsible for ensuring expenses of WaterSecure are
legitimately claimed and paid in the first instance. However, when expenses need to
be recovered, the relevant manager is responsible for identifying the circumstances
and advising WaterSecure to instigate follow-up action to secure recovery.




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References

This manual
Section 2.1   Revenue: General Policy
Section 3.1   Expenses: General Policy
Section 4.2   Assets: Cash
Section 9.3   Further Applications: Losses and Write-Offs




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3.10.1     Policy Application
Policy Statements
         ♦ When circumstances requiring the recovery of expenses are identified,
            the legitimacy of the claim is to be confirmed.           Business Service
            Finance, WaterSecure, is to be advised and action initiated immediately
            against the recipient of the overpayment.


         ♦ Those recoveries of payments which were made in the current financial
            year will be treated as expenditure recovered; those recoveries of
            payments which were made in previous financial years will be treated as
            revenue.



Procedures

Public monies. In taking action to recover public monies, the officer responsible for
recovery should consider the following:
         ♦ the amount involved compared with the estimated cost of recovery
         ♦ legal advice and, where appropriate, the services of the Attorney-
            General
         ♦ a plea by the recipient that:
            ♦ the monies were received in good faith
            ♦ they believed there was an entitlement to the monies
            ♦ the monies received have been spent
            ♦ genuine hardship (not inconvenience) would be caused to the
               recipient should repayment be required.



Other monies. In deciding whether to recover other monies, the responsible officer
must determine whether the circumstances surrounding the overpayment were:
         ♦ a mistake of fact (where the error leading to the overpayment would not
            have occurred if the person had known the true and complete facts); or
         ♦ a mistake of law (where an erroneous conclusion as to the legal effect of
            a payment was reached even though the person had a full knowledge of
            the facts, e.g. misconception of an Act or regulation).


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Legal advice may be required to determine the nature of an overpayment of other
monies.    However, a mistake of fact will generally result in recovery of erroneous
expenses; a mistake of law is generally not recoverable.


Recovery action. Recovery action is to be appropriate to the amount and nature of
the debt, and the circumstances surrounding the occurrence of the debt.



Credit notes. A credit note may be accepted as a means of recovering expenses
only when:
          ♦ the payee is a frequent supplier for WaterSecure and future business is
             assured; and
          ♦ the transaction resulting in recovery of expenses occurred in the current
             financial year.



Financial system update – prior year. Funds recovered from previous financial
years are to be credited to the appropriate revenue code for such recoveries.



Financial system update – current year. Funds recovered in the same financial
year as the expense was incurred are to be credited to the expenditure code from
which the expense was originally incurred.



Losses. Public monies that are not recovered are to be written off as losses and
reported in the financial statements (see sections 9.3 Further Applications: Losses
and Write-offs and 8.5 Reporting: Financial Reporting).



GST. A system should be maintained to ensure all taxation adjustments are effected
where expenditure is recovered or where credit notes are received.




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3.11 Amortisation
Policy
Intangible assets and assets acquired through finance leases are to be
amortised over their useful lives.



Overview
Amortisation is the allocation of the cost of intangible assets and assets acquired by
means of finance leases to the periods that WaterSecure will benefit from their use.
An intangible asset is a non-current asset that is not physical in nature but which
provides future economic benefits to WaterSecure. An intangible asset derives its
value from the special rights that possession and use confer to WaterSecure as the
owner. Examples include patents, trademarks, copyrights and brand names.
A finance lease is an alternative way of financing the acquisition of non-current
physical assets, where substantially all the risks and benefits of ownership pass to
the lessee.
Business Service Finance, WaterSecure is responsible for the calculation and
recording of amortisation at the end of each reporting period.



References

Australian Accounting Standard (AAS)
AASB 117            ‘Leases’
AASB 138            ‘Intangible Assets’

Queensland Treasury Accounting Policy Guideline
APG 4               ‘Definition and Recognition of Expenses’

This manual
Section 3.1         Expenses: General Policy
Section 4.10        Assets: Intangible Assets
Section 9.2         Further Applications: Journal Entries

Other documents
Qld Treasury’s Non-Current Asset Policies for the Qld Public Service.
WaterSecure Asset Accounting Guidelines

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3.11.1        Methodology
Policy Statements
         ♦ Amortisation against intangible assets and assets acquired through
             finance leases is to be calculated using the straight line method.


         ♦ At the end of each reporting period, the amortisation is to be charged
             against the relevant assets and recognised in WaterSecure’s financial
             statements.


         ♦ The accumulated value of amortisation is to be separately disclosed as a
             deduction from the relevant asset class in the financial statements of
             WaterSecure.



Procedures

Recording. The amortisation rate, annual charge and accumulated amortisation for
an intangible asset or an asset acquired through a finance lease are to be recorded
in the asset register.



Calculation. At the end of each reporting period, amortisation is to be calculated
using the straight line method, as follows:
         ♦ Intangible assets are to be amortised over the useful life of the asset.
           Assets acquired through finance leases are to be amortised over their
           useful life only when there is reasonable assurance that WaterSecure will
           eventually own the item. Otherwise, the amortisation expense is to be
           calculated over the lease term.




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4       Assets
4.1 General Policy

Purpose

To describe the accounting policy and procedural framework for the recording,
protection and management of assets of WaterSecure.


Scope

These policies and procedures apply to all officers of WaterSecure whose
responsibilities include the authorisation, management, recording and reporting of the
assets of WaterSecure.


Definition
In accordance with “The Framework” and the Statement of Accounting Concepts, an
asset is defined as ‘a resource controlled by the entity as a result of past events and
from which future economic benefits are expected to flow to the entity.



An agency controls an asset if it has the power to obtain the future economic benefits
flowing from the resource and to restrict the access of others to those benefits. In
determining the existence of an asset, the right of ownership is not essential. An
agency must simply have the ability to control the benefits which are expected to flow
from the asset.



Classification
In the financial statements, assets are classified as either current or non-current.




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Current Assets

Current assets include cash and other assets that are expected to be converted to
cash, sold or consumed in the normal course of business within 12 months. The
following list shows items that are classified as current assets.



Cash. Money and any medium of exchange that a bank accepts at face value. Cash
includes notes, coins, cheques, money orders and credit card vouchers whether they
are kept on hand, in a safe or in a bank.



Receivables. Includes any money owing to WaterSecure from the sale of property,
goods or services on credit, and from employees for items such as overpayment of
salaries, wages and allowances and rental money owed.



Advances.     Includes all Cash advances, where monies are expended from the
advance and then recouped to replenish the advance to the approved amount, and
all accountable advances of employee expenses (for travel, transfer and appointment
expenses). See also section 3.12 Expenses: Employee Expenses.



Prepaid expenses (prepayments). Includes all expenses that have been paid for
before receiving the related goods or services.



Inventories. Includes all goods, property and services held for resale or the production
of goods and provision of services, and bulk consumable stores. (Inventories may also
be classified as non-current assets where the inventory items will not be used within the
12-month reporting period).




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Non-Current Assets

Non-current assets include those assets that are not expected to be converted to cash,
sold or consumed in the normal course of business within 12 months. The following list
shows items that are classified as non-current assets.



Physical assets. Includes all property, plant and equipment.



Intangibles. Assets that are not physical in nature but which provide future benefits to
WaterSecure. Intangibles include such items as patents, trademarks, copyrights,
certificates, business system software and the like.



Investments. Includes any assets, other than operating assets, that are held by
WaterSecure for the generation of revenue such as interest, dividends and rentals.


Recognition

Assets are to be recognised in the financial statements when they satisfy the criteria
specified in the Framework and SAC 4 ‘Definition and Recognition of the Elements of
Financial Statements’. These criteria are:
       ♦ WaterSecure has control over the future economic benefits to the extent
          that it is able to enjoy the benefits and deny or regulate the access of
          others to these benefits
       ♦ the transaction or event enabling WaterSecure to control the future
          economic benefits has occurred
       ♦ it is probable that the future economic benefits embodied in the asset will
          eventuate
       ♦ the value of the asset can be measured reliably.

An asset is to be recognised irrespective of whether it was:
       ♦ a gift, donation or bequest
       ♦ purchased or otherwise acquired by WaterSecure
       ♦ developed by WaterSecure
       ♦ provided by the State Government
       ♦ obtained by other means.

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Objective

The objective of the policies and procedures for assets is to comply with the
requirements prescribed by the Financial and Performance Management Standard
2009, and ensure that:
       ♦ assets are acquired, used and disposed of in the most efficient and
          effective manner
       ♦ assets are promptly identified and recorded in the accounting records
       ♦ accounting transactions are supported by readily accessible records that
          are systematically filed and securely stored
       ♦ the existence of the assets is verified at least annually and an appropriate
          reconciliation with the accounting records is carried out
       ♦ the methods of accounting for assets are consistently applied
       ♦ where possible, there is adequate segregation of duties in approving and
          accounting for assets
       ♦ assets are protected from misuse and loss.


Systems and Control

Adequate financial systems and internal controls are to be established and maintained
to ensure the protection and security of all assets. Such systems and controls include:
       ♦ the prompt identification and recording of all assets in the accounting
          records
       ♦ stocktakes and periodic assessments
       ♦ banking all cash received to an authorised bank account on the first
          available banking day
       ♦ providing reasonable security to restrict access to authorised persons or to
          those officers responsible for the safe custody of collections, cash
          advances, inventories and other similar assets
       ♦ prohibiting the private use of assets unless appropriately approved
       ♦ installing adequate security systems to protect assets from unauthorised
          use, abuse, damage or theft
       ♦ using permanent labels, engraving tools or other suitable marking
          equipment to clearly identify that the assets are owned by WaterSecure
       ♦ regularly reviewing the internal control systems and acting immediately to
          rectify any discrepancy or weakness that is discovered.
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For further information, see sections 4.2 Assets: Cash, and 9.9 Further Applications:
Controls.


Responsibilities

The Chief Financial Officer, WaterSecure, is responsible for developing, promulgating
and annually reviewing these policies and procedures.



Managers within WaterSecure are responsible for the implementation of policies, and
ensuring officers within their organisational units comply with the authorised policies and
procedures.

All officers engaged in the financial operations of WaterSecure are responsible for
complying with these policies and procedures.



References


Financial and Performance Management Standard 2009
Part 2 Division 2              ‘Planning’
Part 2 Division 4 Section 23   ‘Asset Management’
Part 2 Division 4 Section 24   ‘Cash Management’
Part 2 Division 3              ‘Performance Management’
Part 2 Division 4 Section 28   ‘Risk Management’


Australian Accounting Standards (AASs)
The Framework for Preparation and Presentation of Financial Statements
AAS 29 Financial Reporting by Government Departments
AASB 102 Inventories
AASB 116 Property, Plant and Equipment
AASB 136 Impairment of Assets
AASB 137 Provisions, Contingent Liabilities and Contingent Assets
AASB 138 Intangible Assets


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This manual
Section 2.1           Revenue: General Policy
Chapter 3             Expenses
Section 5.2           Liabilities: Accounts Payable
Section 5.3           Liabilities: Accrued Expenses
Chapter 8             Reporting
Section 9.2           Further applications: Journal Entries
Section 9.3           Further applications: Losses and Write-Offs
Section 9.4           Further Applications: User Charging
Section 9.7           Further Applications: Financial Systems Management
Section 9.10          Further Applications: Controls
Section 9.12          Further Applications: Financial Records


Other documents
WaterSecure Delegations and Authorisations Manual
WaterSecure Procurement Policy
State Procurement Policy
Better Purchasing Guide “Ethics, Probity and Accountability in Procurement”
Queensland Treasury: Non-Current Asset Policies for the Queensland Public Sector
Queensland Treasury: Financial Reporting Requirements (incorporating Accounting
Policy Guidelines).




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4.2        Cash
Policy

All public monies will be held in an official bank account operated in the name
of Queensland Manufactured Water Authority, Western Corridor Recycled
Water Pty Ltd or South East Queensland (Gold Coast) Desalination Company
Pty Ltd.


An officer is not to receive monies on behalf of WaterSecure without the proper
authority to do so.


All payments received by WaterSecure must be in a form acceptable to and
allowed by WaterSecure.


Each payment received by WaterSecure must be recorded on an official
receipt.


Receipted payments are to be balanced and banked to an official bank account
in the name of WaterSecure or Queensland Manufactured Water Authority.


All cash received by WaterSecure is to be recorded in the relevant accounting
ledgers.


All payments that are not acceptable petty cash expenses and are not made
using an approved credit facility (e.g. corporate credit card) must be effected
by the drawing of a WaterSecure cheque or by an electronic funds transfer
from the appropriate bank account.


Before issue, all cheques must be correctly and fully completed, and
authorised by an approved cheque signatory.


Adequate systems and controls are to be established, maintained and
complied with to safeguard cash from accidental loss or intentional
misappropriation.




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Overview

The term ‘cash’ includes notes, coins, cheques, money orders and credit card
vouchers.

As cash is more susceptible to theft and mishandling than any other asset, adequate
systems of approval are essential to safeguard this asset.



The Chief Financial Officer, WaterSecure, is responsible for the establishment of
appropriate cash management procedures within WaterSecure.



An electronic funds transfer (EFT) is a payment made by direct transfer of funds from
WaterSecure’s bank account to the credit of another party’s bank account. EFT
payments are used instead of drawing cheques for the payment of:
   •   salaries or wages to employees
   •   monies owing to creditors (invoice payments).



A cheque is a negotiable instrument directing a bank to pay a specified sum of
money to the nominated payee, drawing the funds from WaterSecure’s bank
account.



Cheques that are opened for encashment can be presented for cash rather than for
the credit of funds to the payee’s account.



Authorised cheque signatories are responsible for ensuring the validity of cheques
drawn, and that cheques are drawn in such a way as to prevent fraudulent acts.



Business Service Finance, WaterSecure, is responsible for ensuring cheques have
been correctly printed and signed prior to dispatch.



References

Financial and Performance Management Standard 2009

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Part 2 Division 4 Section 24 ‘Cash Management’




This manual
Section 2.1         Revenue: General Policy
Section 4.1         Assets: General Policy
Section 5.2         Liabilities: Accounts Payable
Section 9.1         Further Applications: Cash Management
Section 9.7         Further Applications: Financial Systems Management
Section 9.12        Further Applications: Financial Records




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4.2.1      Bank Accounts
Policy Statements
        ♦ All WaterSecure bank accounts are to be held with an authorised banking
          facilities provider unless otherwise approved by the Treasurer.     These
          bank accounts are to be operated in the name of Queensland
          Manufactured Water Authority.


        ♦ A separate bank account will be maintained for administered transactions.


        ♦ A register of bank accounts is to be maintained, recording the account
          details, banking arrangements and associated authorities for each bank
          account of WaterSecure.


        ♦ Official bank accounts operated by WaterSecure are to be used for the
          purposes of depositing monies received and drawing funds for payments
          made in relation to operations of WaterSecure .


        ♦ The accountable officer has the authority to establish or close an official
          bank account operated by WaterSecure and to approve an authorising
          officer. No account may be established or closed without the approval of
          the accountable officer.


        ♦ Verifying officers are to be nominated and approved by the authorising
          officer. These officers are responsible for authorising cheque signatories
          for specified bank accounts.


        ♦ Only authorised cheque signatories may sign cheques drawn on
          WaterSecure bank accounts and authorise electronic funds transfers
          (EFT). Details of cheque signatories and authorisors are to be recorded at
          the bank and in a register maintained by WaterSecure. When granted
          authority, cheque signatories and authorisors are to be advised of their
          responsibilities.


        ♦ WaterSecure will perform monthly bank reconciliations for all bank
          accounts. The bank account balance as shown in the bank statement
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          must reconcile with the balance as shown in the general ledger. All
          outstanding items are to be actioned in a systematic and regular manner.


       ♦ All monies unclaimed for twelve months after becoming payable to the
          person entitled thereto shall be paid into the Treasurer’s Unclaimed
          Monies Fund in accordance with the prescribed requirements.


Procedures

Establishment. When new bank accounts are to be established, written applications
are to be made to the accountable officer or delegated officer, through the Chief
Financial Officer, WaterSecure.     An application is to state the reasons the new
account is required.



The Chief Financial Officer, WaterSecure is to evaluate and approve the request.



When the establishment of a new bank account has been approved by the
accountable officer or delegated officer, Business Services Finance, WaterSecure, is
to forward correspondence to the bank requesting the opening of the account and
provision of the required documentation (e.g. deposit book). The opening of the
account is to be confirmed by the bank through written correspondence.



The requestor is to be advised of the account details and date of operation, and
furnished with the necessary documentation.



Closure. When existing bank accounts are to be closed, written applications are to
be made to the accountable officer or delegated officer, through the Chief Financial
Officer, WaterSecure An application is to state the reasons for closure.



The Chief Financial Officer, WaterSecure, is to evaluate requests, and forward those
that are recommended to the accountable officer or delegated officer for approval.



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When the closure of an existing bank account has been approved by the accountable
officer or delegated officer, Business Services Finance, WaterSecure, is to forward
correspondence to the bank requesting the closure. The bank is to be advised of the
following:


       ♦ details of the account that is to be closed
       ♦ date on which closure is required (one month from the date of the last
             cheque drawn)
       ♦ instructions for the transfer of any funds remaining in the account and
             redirection of any outstanding cheques or deposits.



Depositing to and/or withdrawing from the account is to cease and a reconciliation of
the account is to be performed.



Use of bank accounts


       ♦ Collections. All public monies collected or received by authorised officers
             other than client organisation monies are to be credited to a WaterSecure
             bank account.


   Any monies deposited to a WaterSecure bank account on behalf of a client
   organisation are to be cleared by electronic funds transfer to that organisation’s
   bank account within an agreed period.


       ♦ Expenses. Monies expended in relation to WaterSecure operations must
             be paid from an official bank account, and only:
             ♦ in accordance with the prescribed requirements and any directions
               given by the Treasurer
             ♦ for the authorised purpose for which that expenditure was appropriated
             ♦ in the case of any Trust or Special Fund, for the purposes for which that
               fund was established
             ♦ in accordance with the terms and conditions of purchase.



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Authorising Officer and Cheque Signatories

Authorising officers and Verifying officers are responsible for the authorisation of
cheque signatories and electronic authorisors for all bank accounts. Each authorised
officer’s identity is established using the 100-point system (Financial Transactions
Reports Act 1988). Signatories’ and authorisors identities are also established using
the 100-point system and lodged with the bank for verification purposes.


           ♦ Additions. An officer requiring authority to sign cheques drawn on a
               WaterSecure bank account is to submit an application in writing to the
               Chief Financial Officer for approval.



When approved, notification of the new cheque signatory is to be forwarded to the bank,
confirming the identity of the signatory and the validity of the signature provided.



Newly authorised cheque signatories are to be advised of their responsibilities
immediately upon the commencement of the authority period.


        ♦ Deletions. When an authorised cheque signatory resigns or retires from
           WaterSecure, transfers to another State Government entity, or otherwise
           relinquishes the position held when the authority was granted, the authority
           is to be cancelled.



When an officer is transferred within WaterSecure, the cheque signatory authority is
to be reviewed to ascertain whether it is still required in the new position.



When an authority is no longer required, the cheque signatory and supervising officer
are responsible for advising the Chief Financial Officer, WaterSecure. This officer is
to ensure that the authority is cancelled with the bank and that the agency’s records
are updated.




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Registers. The register of bank accounts is to record the following details of each
bank account operated by WaterSecure:

       ♦ name of the account
       ♦ bank and branch through which the account is operated
       ♦ overdraft limit that applies (if any)
       ♦ cheque signatories to the account
       ♦ other authorities given for the account (e.g. encashment authorities).



In addition to the register of bank accounts, a register of specimen signatures is to be
maintained by the Business Services Finance, WaterSecure.



Bank reconciliations. Business Services Finance, WaterSecure, is to ensure that
monthly reconciliations are performed for all bank, trust, operating and investment
accounts operated by WaterSecure.



Reconciling items must be identified and recorded in the statement reconciling the
agency’s records with the bank’s records.



Items identified on the bank statement that are not recorded in the records of
WaterSecure must be recorded using a journal transaction (see section 9.2 Further
Applications: Journal Entries). Such items may include (but are not limited to) the
following:

       ♦ direct deposits/electronic funds transfers
       ♦ bank fees
       ♦ interest revenue
       ♦ computational errors.



The bank reconciliation statement records all items identified during the reconciliation
process. Upon completion, the statement is to be certified by both the preparing
officer and the checking officer.



The reconciling items must be actioned within the following month, before the next
bank reconciliation statement is prepared.
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Unclaimed monies/unpresented cheques. When a cheque drawn by WaterSecure
has not been presented within three months from its date of issue, attempts are to be
made to contact the payee and secure presentation of the cheque.



References



Financial and Performance Management Standard 2009
Part 2 Division 4 Section 24 ‘Cash Management’




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4.2.2       Authorisation to Receive Monies


Policy Statements
        ♦ An officer shall not receipt monies on behalf of WaterSecure unless
           authorised in their position to do so.


        ♦ The authority to receipt monies is designated to the position; not the officer
           appointed to that position.


        ♦ Position descriptions for positions authorised to receive monies will include
           reference to such authorisation.


        ♦ All receipting officers must be issued with an official receipt book (if a
           manual system is in place) or access to the receipting function within the
           relevant computerised system.


Procedures

Application. When a position requires an officer to receive monies on behalf of
WaterSecure, an application is to be forwarded to the Chief Financial Officer,
WaterSecure, for approval.



The application for approval to receive monies must contain:
        ♦ the reasons why there is a need to accept monies (e.g. an estimate of the
           number of receipts to be issued and the amount of monies to be collected
           each day)
        ♦ advice as to the availability of safe custody facilities and where the monies
           are to be stored
        ♦ details of the banking facilities that are required.



Responsibilities. After granting approval to receive monies, the Chief Financial
Officer, WaterSecure, must ensure that the incumbent of the newly authorised
position is advised of their responsibilities.

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Such responsibilities include the following:
       ♦ Money cannot be accepted without being recorded on an official receipt
          form or other authorised accounting record being used to record all
          collections.
       ♦ Public money cannot be kept with private money.
       ♦ Money must always be kept in a place of secure storage.
       ♦ Money must be accepted and banked in the name of WaterSecure or
          Queensland Manufactured Water Authority.
       ♦ Implications and responsibilities for missing money are to be complied with
          (see sub-section 4.2.6 Balancing).



Advice of the method of receipting monies includes the type of receipts to be used and
the details required on each receipt. If not already established, the arrangements for
banking collected monies, including the need to segregate the duties of receipting and
banking where practical, must be advised at the time of authorisation.




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4.2.3      Forms of Payments Received
Policy Statements
        ♦ Monies paid to and receipted on behalf of WaterSecure must be in an
          approved and acceptable form.


        ♦ Monies that are not in an acceptable form will not be accepted or
          acknowledged as payment of monies owing to WaterSecure.


        ♦ The authorised receiving officer is responsible for ensuring all payments
          received on behalf of WaterSecure are in an acceptable form.



Procedures

Acceptable forms for payments received


        ♦ Cash.     Notes and coins are an acceptable form for payments to
          WaterSecure, provided they are in Australian currency.


        ♦ Cheques. Personal, business and bank cheques are acceptable forms for
          payments to WaterSecure, provided they are signed, correctly completed,
          and are not stale or post-dated.       All cheques are accepted subject to
          clearance. Change can not be given on any personal, business or bank
          cheque.


        ♦ Money orders. A money order is similar to a bank cheque in that it is a
          non-negotiable instrument made out to the order of WaterSecure.
          Therefore, a money order is subject to the same conditions of receipt as a
          cheque. However, where sufficient funds are available, change may be
          given on a money order.


        ♦ Direct deposits/electronic funds transfer (EFT).       Direct deposits and
          EFT’s are those payments which are made directly to a WaterSecure bank
          account. These payments are to be identified when they appear on the bank
          statements, and receipted and recorded in WaterSecure’s ledgers.

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         In relation to direct deposit or EFT arrangements, Business Services
         Finance, WaterSecure, must ensure:
         − correct procedures are in place to bring all deposits to account
         − postings are made to the correct account codes.


Unacceptable forms for payments received


      ♦ Stamps. Stamps of any type are not acceptable as payment of monies
         owing to WaterSecure.


      ♦ Foreign currency. Currency of any type other than Australian is an
         unacceptable form for payments to WaterSecure in all cases other than
         donations.


      ♦ Irregular cheques. A cheque is not an acceptable form for payments to
         WaterSecure when it is:
         − unsigned or otherwise incomplete
         − incorrectly completed (e.g. the amount in words does not agree with the
              amount in figures)
         − stale (i.e. dated more than 12 months prior to the date of receipt).


  If an irregular cheque has been inadvertently accepted as payment of a debt
  owing to WaterSecure, it must be exchanged for the original receipt from the
  payer. At no time should a payer be in possession of both the receipt and the
  returned original cheque.


      ♦ Traveller’s cheques. Traveller’s cheques are not an acceptable form for
         payments to WaterSecure.


      ♦ Credit Cards.       Credit cards are not accepted as a form of payment to
         WaterSecure.




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4.2.4      Receiving Methods
Policy Statement
        ♦ The acceptable receiving methods for WaterSecure are:

          ♦ customer contact transactions (across-the-counter)
          ♦ payments received through the post
          ♦ direct deposits/electronic funds transfers.



Procedures

Customer contact transactions.          Monies may be received through customer
contact transactions at the reception counter of WaterSecure. Such payments would
usually be made by cash or cheque.



Upon receiving monies through a customer contact transaction, the accounts officer
is to ensure that the payment is in an acceptable form (see sub-section 4.2.3 Forms
of Payments Received), and the correct amount has been offered as payment.



The accounts officer is to issue a receipt for the payment (see sub-section 4.2.5
Receipting).



Cash by post.         Unless otherwise approved by the Chief Financial Officer,
WaterSecure, all negotiable instruments received by mail that are in an acceptable
form (see sub-section 4.2.3 Forms of Payments Received) and payable to
WaterSecure must be immediately recorded in the cash by post book and the entries
signed by the officer responsible for the mail opening process and an bank account
authorised officer.



Direct deposits/electronic funds transfers/EFT’s). When arranging for the direct
deposit or electronic transfer of payments, Business Services, WaterSecure, is
required to negotiate an agreement between WaterSecure and the payer. The payer
will require the details of the bank account to which the payments are to be credited.


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4.2.5      Receipting
Policy Statements
        ♦ An official receipt is to be issued promptly for all monies received.
           Receipts are to be sent to clients at their request or when dictated by the
           nature of the payment.


        ♦ In terms of controls, and to meet legislative requirements, receipts are to
           be:

              ♦ issued chronologically and in sequential order
              ♦ prepared in duplicate or recorded in a computerised financial system
              ♦ printed in permanent ink
              ♦ in a form compliant with the ATO requirements for tax invoices.


        ♦ Where possible (e.g. customer contact transactions), and at any time when
           requested by the customer, the original receipt is to be issued to the payer;
           duplicate receipts are to be retained for WaterSecure ’s records.


        ♦ The details of all receipts are to be recorded in WaterSecure’s general
           ledger as soon as possible after their issue.


Procedures

Components. An official receipt is to contain the following information and be in a
form compliant with ATO requirements for tax invoices:
        ♦ a title identifying the document as a WaterSecure receipt
        ♦ a unique identification number
        ♦ the name of the payer
        ♦ transaction details (date, amount, form of payment, reason for payment)
        ♦ ABN of WaterSecure.



In addition, manual receipts must also contain the signature of the officer issuing the
receipt.




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Cancellation. When required, a hard copy receipt can be cancelled by writing the word
‘cancelled’ across its face. All copies of the receipt are to be affixed in the receipt book
(or other record if applicable) and retained by the receipting centre. Where necessary,
the cancellation of the receipt should also be recorded in the computerised receipting
system.



Replacement. Under no circumstances is a replacement receipt to be issued to a
customer reporting the loss of an original receipt.            Instead, after confirming the
payment details, the customer may be issued with either:
       ♦ a certified and noted copy of WaterSecure ’s copy of the receipt; or
       ♦ official correspondence confirming the transaction details and quoting the
            original receipt number.



Recording. All receipts issued on any one day must be recorded in the ledgers of
WaterSecure within the approved time frame.



Security deposits. Tender and other security deposits are to be receipted, listed on
a schedule and recorded in WaterSecure ’s ledgers. A successful tender who is
required to lodge a security deposit will usually do so in the form of a guarantee.
Such guarantees are to be treated as legal documents (see section 9.11 Further
Applications: Legal Documents) and held in secure storage for the duration of the
contract.


Donations. Donations received by WaterSecure are to be receipted and recorded
promptly in WaterSecure ’s ledgers.



Interest. Operational Interest received for WaterSecure funds is to be recognised as
revenue and recorded promptly in WaterSecure ’s ledgers. An official receipt need
not be issued.




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4.2.6       Balancing
Policy Statements
        ♦ Balancing cash and other negotiable instruments received must occur:

              ♦ at the end of each receipting period
              ♦ before the preparation of the banking
              ♦ whenever there is a changeover of authorised receipting officers.


        ♦ The balancing sheet is to be certified by both the preparing (receipting)
           officer and the checking (supervising) officer.


        ♦ Unbalanced amounts (shortages or surplus monies) are to be immediately
           investigated and promptly resolved.



Procedures
Balancing process. The total of monies received is reconciled with the total of the
receipts issued during the receipting period. The reconciliation is to be certified by
the preparing (receipting) officer.


An independent check of the reconciliation is to be performed by the responsible
supervising officer, who is to certify the balancing sheet.


Computerised receipting systems must include controls for balancing monies
received.


Shortages


        ♦ Responsibility. Except in specific cases such as breaking and entering,
          hold-up or other suspected theft, the officer responsible for the cash is to
          be held responsible for any shortage of cash identified in the balancing
          process. If factors outside the direct control of the responsible officer exist,
          that officer may apply to the Chief Financial Officer, WaterSecure, for relief
          from liability.


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       ♦ Action.     When a shortage of monies is detected, an immediate
         investigation by the relevant manager is to be undertaken to determine the
         cause of the shortage.


  When the investigation determines the shortage may have resulted from an
  offence committed under the Criminal Code or any other Act or law, the manager
  is to provide a written report and immediately notify:
          ♦ the Chief Executive Officer, WaterSecure
          ♦ Internal Audit Unit, WaterSecure
          ♦ Queensland Police.


The Chief Financial Officer, WaterSecure, is responsible for advising the Auditor-
General and Crime and Misconduct Commission in the event where a report states that
official misconduct by an officer of WaterSecure may have occurred.


       ♦ Irrecoverable monies. Irrecoverable amounts are to be written off with
         the proper authority in accordance with the policies and practices
         prescribed in section 9.3 Further Applications: Losses and Write-Offs.


       ♦ Recovered monies. Monies that have been formally written-off and are
         subsequently recovered are to be immediately receipted to the appropriate
         receipt code.


Surplus monies. Surplus monies are to be receipted immediately to a sundry
debtors account and promptly investigated to determine their origins.


When the origin of surplus monies is identified, a journal transaction is to be used to
transfer the monies from the sundry debtors account to the appropriate receipt code
(see section 9.2 Further Applications: Journal Entries).




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4.2.7      Banking
Policy Statements
        ♦ All monies received are to be banked to an authorised WaterSecure bank
          account as soon as practicable by the end of the next working day, or as
          otherwise directed by the Chief Financial Officer, WaterSecure. All
          collections will be banked in the same form in which they were received (e.g.
          as cash or cheques).


        ♦ Prior to banking, all monies received on behalf of WaterSecure are to be
          held separately from other monies in a place of secure storage.


        ♦ Where sufficient staff resources exist, the duties of receipting, recording,
          banking, and reconciliation are to be segregated.


          Specifically, in relation to the banking process, the duties of preparing the
          banking, checking the banking and depositing monies in the bank account
          are to be segregated.



Procedures

Exceptions to daily banking. Banking monies by the end of the next working day
may be altered when:
        ♦ there are adequate secure storage facilities for the holding of monies, and:
        ♦ the cash component does not exceed $500; and
        ♦ cheques do not exceed $1,000.



In such cases banking may be performed twice weekly.



Documentation. A bank deposit slip is to be prepared in duplicate each time monies
are to be banked.



The banking documentation is to be checked against the monies on hand and
certified by both the preparing officer and supervisor. The deposit slip and negotiable
instruments are to be held in secure storage until deposit.
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Deposits. Collections for any one day may be banked by making a single deposit or,
where substantial amounts of cash are being received, by making interim and final
deposits.



Where sufficient staff resources exist, an officer independent of the receipting
process is required to deliver the monies and corresponding deposit slip to the bank.
The duplicate deposit slip is to be validated by the bank officer and returned to the
checking officer.



The supervisor is required to check the returned banking documentation to verify all
cash collected has been banked. For audit purposes, the duplicate deposit slip is to
be retained in date order.




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4.2.8      Dishonoured Transactions
Policy Statements
        ♦ Advice of a dishonoured transaction (e.g. a dishonoured cheque) received
          from the bank is to be the subject of immediate remedial action to recover
          the monies owing to WaterSecure.


        ♦ Any fees imposed by the bank and incurred by WaterSecure as a result of
          dishonoured transactions are to be recovered from the payer, unless
          otherwise approved by the delegated authority.



Procedures
Reasons. A cheque may be dishonoured for the following reasons:
        ♦ a discrepancy or irregularity on the face of the cheque
        ♦ insufficient funds or the account is closed
        ♦ payment stopped.


A credit card transaction may be dishonoured if the credit card has expired or been
cancelled, or if the customer has exceeded their credit limit.



Action. On receipt of a dishonour advice from the bank, the processing officer must
contact the payer immediately to rectify the anomaly.            If a cheque has been
dishonoured, the cheque should then be re-presented using a separate deposit slip
to the normal banking.



If a cheque dishonour advice indicates there are insufficient funds, the account is
closed, or payment has been stopped, the processing officer is to immediately
contact the payer for full payment, in certified funds, within 24 hours or as soon as
otherwise practical.



If the payer does not provide the required payment, the processing officer is to notify
the Chief Financial Officer, WaterSecure, who may consider notifying WaterSecure’s
legal advisers to commence legal action for recovery.
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Fee recovery.      Where fees are incurred by WaterSecure as a result of a
dishonoured transaction, the payer is to be invoiced for the amount of the fees where
it is economically feasible to do so (see section 4.5 Assets: Accounts Receivable).




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4.2.9          Refunds
Policy Statements
        ♦ Refunds of monies received are subject to prescribed conditions of sale
               and must be approved by an appropriately authorised officer.


        ♦ A refund of monies received may be made provided the following
               conditions are met:

               ♦ The customer provides a receipt or other acceptable proof of payment.
               ♦ The refund is specifically allowed within the terms and conditions
                 defined when payment was made.
               ♦ Where a cheque was offered as payment, it has been deposited and
                 cleared by the bank.
               ♦ Where goods were purchased, they have been returned in their original
                 sale condition.


        ♦ Refunds of monies that have previously been balanced and deposited in
               the bank account are payable by cheque.           Refunds of monies not yet
               banked are to be made in the same form as the original payment.



Procedures

Responsibility. The officer authorised to approve refunds is responsible for ensuring
that all refunds are made in accordance with the policies stated above, and that the
appropriate documentation supporting the original payment of monies to WaterSecure
is in order.



Same day refunds. If a refund is to be made on the same day as the corresponding
payment was received, and occurs before balancing and banking procedures have
taken place, it is to be in the same mode as the original payment (e.g. the cheque or
cash paid is returned; for credit card payments, credit vouchers are processed).




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The receipt issued for the original payment is to be recovered from the customer and
cancelled in accordance with the procedures prescribed in sub-section 4.2.5
Receipting.



Other refunds. When monies that have been received by WaterSecure have been
banked and posted to the ledger, refunds are to be made by raising a cheque or EFT
payment transaction.   To do this, a payment approval form is to be completed,
authorised and processed in the computerised financial system.



GST adjustments. Action must be taken to have adjustments for GST amounts paid
relating to the refund reflected in the Business Activity Statement forwarded to the
ATO.




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4.2.10       System Update for Cash Received
Policy Statements
          ♦ All revenue received by WaterSecure is to be recorded in the financial
            system.


          ♦ When unidentified monies are received, the origin and/or destination of
            which is unknown, they are to be receipted to a sundry debtors account,
            promptly investigated and cleared as quickly as possible. Entries in the
            sundry debtors account are to be reviewed monthly.


          ♦ The Chief Financial Officer, WaterSecure is responsible for ensuring that
            revenue financial systems, whether computerised or manual, are
            implemented, modified, supported and secured in accordance with the
            operational needs and internal controls of WaterSecure (see section 9.6
            Further Applications: Financial Systems Management).



Procedures

Data entry. On a daily basis, all monies received are to be entered into the general
ledger.



Unidentified monies.       When the destination of unidentified monies previously
receipted to the sundry debtors account is determined, a journal transaction is to be
processed, crediting the receipt account and debiting the sundry debtors account (see
section 9.2 Further Applications: Journal Entries).



When monies are due to be refunded from the sundry debtors account, a payment
approval form is to be prepared and a cheque drawn for the refund amount (see section
5.2 Liabilities: Accounts Payable).



An aged monthly report of all monies that are held in the sundry debtors account is to
be prepared by the officer responsible for the account. The report is to be reviewed by
the Chief Financial Officer, WaterSecure, or their delegate.
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4.2.11   Security and Control for Cash (excluding cheques)
Policy Statements
      ♦ All cash must be held securely and the access of unauthorised persons
         restricted.


      ♦ Private and public monies are not to be stored together.


      ♦ Where possible, the individual duties comprising the cash processes are to
         be segregated.


      ♦ Only those officers who hold positions authorised to receive monies on
         behalf of WaterSecure may do so.


      ♦ Receipt of monies is to be evidenced by an official receipt and an
         accounting record.


      ♦ Amounts received must be banked intact to an official WaterSecure bank
         account on the day of receipt, as soon as practicable on the following
         working day, or on a basis otherwise approved by the Chief Financial
         Officer, WaterSecure.


      ♦ The bank account is to be reconciled on a daily basis, and a finalised bank
         reconciliation prepared on a monthly basis.


      ♦ As far as practical, monies collected and payable into the public accounts
         are to be remitted to the Treasurer in the financial year of collection.


      ♦ Random internal checks are to be performed to ensure all cash processes
         and records are being adequately and accurately maintained.




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Procedures

Storage. Where a strong room, safe or strongbox within which cash is stored is
fitted with a combination lock, the combination must be changed:
       ♦ whenever an officer who is responsible for the item resigns, transfers or
          leaves for any reason; and
       ♦ if it is suspected unauthorised persons may have knowledge of the
          combination; and
       ♦ at least annually.



Where the cash is held in a lockable safe, strongbox or cabinet, the officer
responsible and accountable for the cash must hold a full set of keys to the storage
items. Keys to storage items must not be duplicated unless written authorisation is
obtained from an authorised officer.



Private monies.      Unless approved in writing by the Chief Financial Officer,
WaterSecure, private monies must not be:
       ♦ kept with public monies
       ♦ stored in an official safe or storage item
       ♦ banked into WaterSecure bank accounts.



Under no circumstances shall WaterSecure monies or monies received on behalf of
a client organisation be banked to the credit of a private bank account.



Segregation of duties. Where practical, the following duties in the cash process are
to be segregated:
       ♦ banking preparation and banking
       ♦ cash collection (including opening the mail), cash recording and cash
          banking
       ♦ raising invoices/levying monies and cash recording
       ♦ receiving monies and entering the same monies into the accounting record
       ♦ receiving monies and checking the receipt of those monies
       ♦ posting entries and checking those entries
       ♦ drawing cheques, preparing vouchers, and authorising vouchers.

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Banking arrangements.          The following internal controls are to be in place for
WaterSecure’s bank accounts:
       ♦ All banking arrangements must be in the name of WaterSecure or
            Queensland Manufactured Water Authority.
       ♦ Unless otherwise approved by the Treasurer, all WaterSecure bank
            accounts are to be kept with a current authorised banking facilities
            provider.
       ♦ A register that records the details and authorities of all bank accounts
            opened in the name of WaterSecure is to be maintained.
       ♦ Banking arrangements may be varied only with the approval of an
            authorised bank account verifying officer of WaterSecure.



Cash advances. The following internal controls are to be in place in regard to cash
advances:
       ♦ Adequate control records must be established to manage the level and use
            of cash advances, prepayments, deposits and the like.
       ♦ The balances of cash accounts and other accountable advances must be
            verified at least monthly.
       ♦ Temporary cash advances are to be made only for specific, work-related
            purposes, and must be acquitted within the prescribed time frame (14 days
            after the end of the period).



Verification of Controls.       Random internal checks must be performed by the
relevant manager to ensure all cash transaction records and balances, cash books,
deposit records and other monetary records are being adequately and accurately
maintained, and that:
       ♦ cash received each day is properly banked
       ♦ all cash-related transactions are brought to account in the ledger.



Evidence of internal checks is to be indicated in the form of the relevant manager’s
signature and date checked noted on the records examined.



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4.2.12   EFT Payments
Policy Statements
      ♦ All payments made by WaterSecure by electronic funds transfer are to be
         supported by fully completed and properly certified payment vouchers.


      ♦ All EFT payments are to be made using the approved software of the
         authority’s financial institution.


      ♦ An audit trail of all EFT transactions must be maintained.


Procedures
      Preparation.     All payments that are to be remitted by EFT are to be
      supported by the appropriate documentation for the type of claim being made.
      The documentation is to be authorised by an officer of WaterSecure with
      appropriate financial delegation.


      Payment report. For all EFT payment runs, a payment report is to be printed
      from the EFT system software. Business Services Finance or equivalent is to
      verify the data and certify the report prior to the EFT file being uploaded into
      the EFT software.


      Payment. Using the authorised service provider EFT software, the data is
      encoded and transmitted to the bank. The system is to be checked to ensure
      that the transactions have occurred. Corrective action is to be taken if any
      data is not received.


      Audit trail. The certified payment report is to be retained on file.




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4.2.13     Manual Cheques
Policy Statements
       ♦ Manual cheques will be issued only where an assessment of the
          circumstances deems an EFT payment during the next payment cycle is
          unsatisfactory or EFT details cannot be obtained, and the approval of two
          authorised cheque signatories is obtained.


       ♦ Manual payment information is to be promptly recorded in the financial
          system.



Procedures

Completion of cheques. Manual cheques drawn for authorised payments are to be
correctly and fully completed in accordance with the security policies for the issue of
cheques (see sub-section 4.2.18 Security and Control for Cheques).



Payment approval form.        Manual payment information is to be input to the
computerised financial system before the cheque is released to the payee. The
manual cheque details are to be recorded on the corresponding payment
documentation, and the form filed securely.




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4.2.14     Opening and Encashment of Cheques
Policy Statements
       ♦ All cheques will be made payable to a specific payee (not ‘Cash’).
          Encashment will be indicated by way of the endorsement ‘Please Pay
          Cash’ on the face of the cheque.


       ♦ Nominated officers are to be authorised to open cheques for encashment.
          A maximum amount of $1,000 will limit the value of cheques that may be
          opened for encashment.


       ♦ Two authorised cheque signatories must authorise the endorsement on a
          cheque for payment of cash.


       ♦ Under no circumstances are cheques that have been endorsed with
          ‘Please Pay Cash’ to be placed in the internal or external mailing systems.



Procedures

Cheque encashment officers. A request for an officer to be authorised to open
cheques for encashment is to be completed by the relevant manager, and forwarded
to the Chief Financial Officer, WaterSecure, for approval. The request is to include:
       ♦ name, position and location of the officer requiring authority
       ♦ bank branch at which cheques are to be presented for encashment
       ♦ maximum value of individual cheques that may be opened for encashment
       ♦ three specimen signatures of the nominated officer, verified by the relevant
          manager.



When approved and verified by WaterSecure’s verifying officer for banking
arrangements, the details of the encashment authority are lodged with the
Queensland Government Banking Centre, which will forward the authorisation and
specimen signatures to the nominated bank branch.




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4.2.15    Cancelled Cheques
Policy Statements
       ♦ Cheques will be cancelled where they have been drawn in error, for
          example:

              ♦ incorrectly drawn for a supplier or claimant (e.g. duplicate payment)
              ♦ amount of the cheque or other cheque information is incorrect
              ♦ the cheque is no longer required for a particular reason.



Procedures

Stop payment. A stop payment is to be placed on a cheque that has been issued to
a payee and subsequently is to be cancelled.



Cancellation. The original cheque is to be cancelled by crossing the face of the
cheque with the word ‘Cancelled’. The signature of the officer authorised to cancel
the cheque, the date, and the reason for cancellation are to be recorded on the
cheque.



Financial system update


       ♦ System cheques.          System cheques are to be cancelled in the
          computerised financial system, reversing the original cheque entry.


       ♦ Manual cheques.        When a manual cheque was not processed in the
          computerised financial system, no adjustment is required. However, if the
          manual cheque was processed in the computerised financial system, the
          entry must be reversed.



Register. All cancelled cheques are to be recorded in a register maintained by the
Business Services Finance, WaterSecure. The actual cheques are to be filed
numerically with this register.


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4.2.16       Replacement Cheques
Policy Statements
          ♦ WaterSecure will replace cheques that have been lost, stolen, destroyed or
            not received by the payee and have not been negotiated.


          ♦ Before replacement cheques are issued, payees are required to indemnify
            WaterSecure from further claim in respect of the replacement cheque and
            undertake to return the original cheque should it come into their
            possession.


          ♦ All replacement cheques must be drawn from the same bank account from
            which the corresponding original cheque was issued.


Procedures

Stop payment. A stop payment is to be placed on a cheque that has been issued to
a payee and subsequently is to be replaced.



Indemnity. The cheque payee is to complete an indemnity form, sign and date the
declaration in the presence of an independent witness, and submit it to WaterSecure
officer responsible for processing the request for a replacement cheque.



Checking. Before issuing a replacement cheque, the processing officer must fully
investigate the current status of the cheque by examining:
          ♦ computerised financial system records
          ♦ cheque presentation lists
          ♦ bank statements.



Replacement.       The original cheque is to be cancelled in accordance with the
procedures prescribed in sub-section 4.2.16 Cancelled Cheques, and a new cheque
issued.




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Financial system update.    When a replacement cheque is issued, the original
cheque is to be cancelled provided it was issued and recorded in the computerised
financial system.



Register. Details of all cheque cancellations and the corresponding replacement
cheques are to be recorded in a register maintained by the Business Services
Finance, WaterSecure.




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4.2.17     Security and Control for Cheques
Policy Statements
       ♦ The receipt, issue and use of cheques drawn on WaterSecure bank
          accounts are to be documented at all times.


       ♦ Cheques drawn for accounts that have been certified and passed for
          payment will be immediately recognised in WaterSecure’s accounting
          records.



Procedures


Cheque Book Security. Cheque books will be securely stored at all times by
Business Services Finance in a lockable cabinet.


Stock. The Chief Financial Officer, WaterSecure or approved delegate, must ensure
that bulk stocks of cheque forms are held securely and protected from unauthorised
access and use.



Monitoring use. The Chief Financial Officer, WaterSecure or approved delegate,
must ensure that all cheques are accounted for at all times.




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4.3        Petty Cash and Advances
Policy

Petty cash accounts and cash advance accounts may be established for the
purposes of maintaining cash floats and change floats.


The establishment, increase, decrease, expenditure, reconciliation and
replenishment of cash advances must be properly authorised by a relevant
financial delegate with appropriate authority.               The administration of cash
advances is to be supervised by the nominated responsible officer and that
officer’s manager.


All cash and negotiable instruments on hand are to be held in secure storage.




Overview

Cash advance accounts are those advances of monies that are expended for the
purposes of business expenditure of a cash nature. Petty cash accounts are
established to accommodate minor items of expenditure that can be paid for in cash
rather than drawing a WaterSecure cheque, effecting an EFT payment or using an
approved credit facility.


The officer nominated as being responsible for the cash advance is accountable for
the administration, expenditure and reconciliation of the advance, and the security of
cash or other negotiable items on hand.



Business Services Finance is responsible for checking the reconciliation of the petty
cash and cash advance accounts.



The Chief Financial Officer, WaterSecure or approved delegate, is responsible for
ensuring that petty cash and cash advance accounts are maintained, and for
reporting details of the cash advances in the annual financial statements of
WaterSecure (see section 8.5 Reporting: Financial Reporting).
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References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 19 ‘Expense Management’


This manual
Section 3.1       Expenses: General Policy
Section 3.2       Expenses: Permitted Expenses
Section 3.3       Expenses: Purchasing
Section 3.6       Expenses: Expenditure Authorisation
Section 4.1       Assets: General Policy
Section 4.2       Assets: Cash
Section 5.2       Liabilities: Accounts Payable
Section 8.5       Reporting: Financial Reporting


Other documents
WaterSecure Delegations and Authorisations Manual




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4.3.1      Petty Cash
Policy Statements
        ♦ The establishment of a petty cash account, and any subsequent increases
           or decreases to the amount of the advance, are to be approved by
           delegated authority.


        ♦ A petty cash account is to be operated by an authorised officer within
           WaterSecure.       This officer is charged with responsibility for the
           administration of the advance and safe-keeping of the cash on hand (see
           sub-section 4.2.11 Assets: Cash – Security and Control for Cash).


        ♦ Individual items of expenditure from petty cash are not to exceed $50 in
           total. Splitting expenditure to remain within this limit is not permissible.


        ♦ All expenditure from a petty cash account is to be of an approved type,
           supported by a supplier’s invoice (this must be a tax invoice when dealing
           with a registered entity) or receipt.         Petty cash expenditure is to be
           documented on a Petty Cash Reconciliation Form.


        ♦ Petty cash and cash advances are to be reconciled at least monthly and at
           any time the responsibility for the advance is transferred between officers.


        ♦ Petty cash must be replenished at least monthly or at any time that local
           circumstances dictate otherwise.



Procedures

Application. An application for the establishment of a petty cash advance is to
contain the following:
        ♦ justification for the request
        ♦ the amount required
        ♦ description of the facilities available for the safekeeping of monies
        ♦ nomination of a responsible officer.



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An application for an increase in the amount of an existing petty cash advance is to
contain full justification for the request and, where the increase is significant, details
of improved safekeeping facilities for the monies on hand.



An application for a decrease in the amount of an existing petty cash advance, when
it is determined that the current level is too high to meet operational requirements, is
to contain reasons for the decrease.



Payment for establishment or increase. After obtaining the approval of the Chief
Financial Officer, WaterSecure for the establishment or increase of a petty cash
advance, a claim for payment, supported by the relevant approval, is to be processed
(see section 5.2 Liabilities: Accounts Payable) and a cheque forwarded to the
nominated responsible officer for encashment (see sub-section 4.2.15 Assets: Cash
– Opening and Encashment of Cheques).



Decreases. To effect a decrease in the amount of a petty cash advance, the next
replenishment is to be made up to the decreased advance amount only – not the
higher original advance amount.         The reconciliation statement is to quote the
approval for the decrease.



Permitted petty cash expenditure. All petty cash expenditure must be made in
accordance with the general policy for the expenditure of WaterSecure monies (see
sections 3.1 Expenses: General Policy, and 3.2 Expenses: Permitted Expenses) and
within the limit prescribed by this policy ($50 per expenditure item).



Examples of the types of expenses that may be incurred through petty cash, subject
to the $50 limit and permitted expenses policy, are:

       ♦ small miscellaneous requisites (stationery, incidental postage, first aid
          supplies etc.) required in emergent circumstances
       ♦ official morning or afternoon tea requisites
       ♦ moderate working meals



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         ♦ incidental parking costs incurred while performing official duties (not
           including parking fines)
         ♦ ‘up front’ banking charges (stamp duty, interstate cheque fees) incurred
           when depositing official monies
         ♦ emergent purchases of fuel or oil for official vehicles, where access to the
           contracted supplier was unavailable, justification is provided with the claim
           and vehicle details are provided for fringe benefits tax purposes.
         ♦ COD delivery charges
         ♦ bus or emergent taxi fares for official travel in the local area (not when the
           officer will be submitting a related travel claim and/or a taxi voucher or card
           is not available)
         ♦ official entertainment expenses, subject to fringe benefits tax requirements
           (justification and event details must be provided with claim).



Petty cash advances. Advances of petty cash may be granted provided:

         ♦ the purpose of the advance, amount and signature of the payee are
           recorded
         ♦ the advance is acquitted, where practical, on the same day it was
           obtained.



Petty cash expenditure claims. Claims for expenditure are to be submitted on a
petty cash voucher (with purchases itemised or otherwise adequately described),
supported by the supplier’s invoice/receipt, certified by the claimant. A tax invoice
must be obtained when dealing with a registered entity.



Reconciliation. Petty cash accounts are to be reconciled when:

         ♦ replenishment is required (at least monthly)
         ♦ custody of the cash is being transferred from one responsible officer to
           another
         ♦ shortages or surpluses are suspected.



Documented expenditure and cash on hand are to be reconciled to the petty cash
value.
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Where the petty cash incorporates an incidental postage imprest, stamps on hand
are to be added to the calculation.



Reconciliations are to be supported by the individual claims and the entries in the
Petty Cash Book.

Reconciliations require the certification of the responsible officer preparing the
reconciliation and the relevant senior officer as the checking officer.



Cash shortages or surpluses identified by the reconciliation process are to be treated
in accordance with the policies prescribed in sub-section 4.2.6 Assets: Cash –
Balancing.



Reimbursement and replenishment. After reconciliation, an approved claim for
reimbursement of the expended petty cash amount is to be processed (see section
5.2 Liabilities: Accounts Payable).



The cheque drawn for reimbursement will be forwarded to the officer responsible for
encashment (see sub-section 4.2.15 Assets: Cash – Opening and Encashment of
Cheques).




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4.4         Employee Expense Advances
Policy

Advances of allowances will be made where the entitlement exists and must be
acquitted in accordance with policy guidelines.


All advances and subsequent acquittals are to be recorded in a register and
subjected to appropriate review and follow-up action.


Outstanding advances are to be reported in the period end accounts and
annual financial statements.



Overview

Employee expenses include all payments to officers of WaterSecure for expenses
incurred in performing official duties. The entitlement to expenses and the rates and
allowances payable are prescribed by the award and conditions under which an
officer is employed.



An advance of employee expenses is the payment of anticipated allowances and/or
expenses before the employee actually incurs those expenses.



Employee expenses for which an advance may be granted include:

         ♦ travel expenses (domestic and overseas)
         ♦ appointment or transfer expenses.



The Chief Financial Officer, WaterSecure or approved delegate, is responsible for
identifying, recording and instigating action for advance payments and subsequent
acquittals. The reporting of outstanding advances in the period end accounts (see
section 8.2 Reporting: Period End) and annual financial statements (see section 8.5
Reporting: Financial Reporting) is also the responsibility of this officer.




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This section deals only with the administration, recording and reporting of employee
expense advances.      For information regarding the payment and acquittal of
advances, see section 3.12 Expenses: Employee Expenses.



References

This manual
Section 3.12        Expenses: Employee Expenses
Section 4.1         Assets: General Policy
Section 8.2         Reporting: Period End
Section 8.5         Reporting: Financial Reporting


Other documents
WaterSecure Delegations and Authorisations Manual




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4.4.1      Administration, Recording and Reporting
Policy Statements
        ♦ Claims for advances of employee expenses may be granted only where
          the entitlement is prescribed by the Award or conditions of employment
          under which an officer is employed or is approved by the Board or
          delegated authority and:

          ♦ the travel is to extend to at least overnight and up to 3 weeks (where
              required, progressional claims may be made for each subsequent
              period)
          ♦ the officer is required to incur the costs of accommodation and/or meals
              during the period of travel
          ♦ the claimant is an employee of WaterSecure.


          Individual claims for travel advances that require further consideration,
          including those of non-officers, are to be referred to the appropriate EMT
          member, for determination.


        ♦ An advance of appointment or transfer expenses will be granted only
          where WaterSecure is to incur some or all of the relocation expenses and
          the officer is or is to become an employee.


        ♦ Advance       claims   may     not     exceed       100%   of   the   anticipated
          allowances/expenses due.


        ♦ The payment and acquittal of all advances are to be recorded in a register
          maintained by WaterSecure.           The register of travel advances is to be
          reconciled with the general ledger on a monthly basis.


        ♦ Outstanding and overdue advances are to be reviewed and subjected to
          appropriate follow-up action.


        ♦ Unless otherwise approved by the Chief Financial Officer, WaterSecure,
          further advances will not be issued to a claimant with an overdue acquittal
          for a previous advance.

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Procedures

Payment and acquittal of advances.            For further information, see sub-section
3.12.1 Expenses: Employee Expenses – Advances.



Reconciliation of advances and acquittals.             At the close of each month, the
WaterSecure officer responsible for management of advances is to reconcile
advances with acquittals.    The reconciliation must identify unmatched credits for
corrective action and unmatched debits for follow-up of outstanding advances.



Review of overdue advances. An advance is deemed to be overdue when an
acquittal has not been submitted by the due date, i.e. 30 days after the completion of
the period for which the advance was granted.            An acquittal must be submitted
whether or not a balance is due to or payable by the claimant, and when the balance
is nil.



When an overdue advance is identified, correspondence requesting acquittal within
seven days is to be forwarded to the officer. In addition, the relevant manager is to
be advised of the overdue advance.



Further recovery action is to be conducted by the relevant manager. The Chief
Financial Officer, WaterSecure, is to be kept informed of the progress.



Reporting. Monthly reports of overdue travel advances for organisational units are
to be provided to the relevant managers.

Period end accounts showing aged outstanding advances are to be provided to the
Chief Financial Officer, WaterSecure or approved delegate.

All outstanding advances are to be disclosed in the annual financial statements (see
section 8.5 Reporting: Financial Reporting).




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4.5         Accounts Receivable
Policy

All debts owed to WaterSecure must be accurately assessed and recorded in
the accounts receivable system.


Any overdue amounts are to be either promptly recovered, reported and/or
provisioned if identified as non-recoverable.


Bad debts that prove unable to be recovered are to be written off as losses.



Overview

Accounts receivable are debts owing to WaterSecure by persons, State Government
organisations or businesses, and are classified as either trade debtors or sundry
debtors.

Trade debtors are those with debts arising from the regular sale of goods and
services on credit.       These are accounts that are raised and are payable to
WaterSecure.     Trade debts relate mainly to invoices issued to client organisations
based on service level agreements.

Sundry debtors are those with debts that arise as a result of sundry transactions and
are not considered to be related to the mainstream business. Examples of these
transactions are:

         ♦ employee debts arising from:

              ♦ overpayments of salaries, wages and allowances
              ♦ travel,      appointment        or       transfer   advances   exceeding
                 allowances/expenses due
              ♦ payments of public monies for personal/private expenses that are to
                 be recovered
         ♦ overpayments of suppliers’ accounts or invoices
         ♦ credit card payments made through direct debit facility to be matched to
           credit card reconciliations to be completed by employees
         ♦ unmatched debtor receipts


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       The Chief Financial Officer, WaterSecure, is responsible for the overall
       administration of the accounts receivable process, ensuring that all monies
       due to WaterSecure are recovered promptly.


References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 17 ‘Revenue Management’
Part 2 Division 4 Section 21 ‘Loss from Offence or Misconduct’
Part 2 Division 4 Section 22 ‘Other Losses’
Part 2 Division 4 Section 24 ‘Cash Management’


This manual
Chapter 2            Revenue
Section 3.2          Expenses: Permitted Expenses
Section 3.13         Expenses: Recovery of Expenses
Section 4.1          Assets: General Policy
Section 4.2          Assets: Cash
Section 8.3          Reporting: Internal Reporting
Section 8.5          Reporting: Financial Reporting




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4.5.1       Service Level Agreements
Policy Statements
        ♦ The majority of WaterSecure’s accounts receivable revenue, other than
            sundry accounts receivable, will be derived from fees earned for the
            provision of goods and services by WaterSecure to clients.


        ♦ When entering into arrangements for WaterSecure to provide goods and
            services to another organisation, the goods to be provided, fees for
            services and billing arrangements are to be formally detailed in a service
            level agreement or a contract.


        ♦ Service level agreements and contracts are to be documented and signed
            on behalf of WaterSecure in accordance with delegations and authority
            manual.



Procedures

Service level agreements or Contracts.             The procedures for formalising client
service arrangements or contracts and the matters to be considered are contained in
section 2.2 Revenue: Service Level Agreements or Contracts.



When negotiating the terms for the provision of client services, billing arrangements
and the frequency by which expenses incurred by WaterSecure on behalf of a client
organisation will be reimbursed must be established so as to ensure that the cash
flow and cash management position of WaterSecure is not adversely affected.



Each SLA should include a clause for variations in statutory changes and obligations,
e.g. GST.




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4.5.2      Customer Invoices
Policy Statements
        ♦ In accordance with the billing arrangements specified in the commercial
          contract or service level agreements with client organisations, or
          immediately upon identifying a sundry debt, a tax invoice for the amount
          owing is to be raised and forwarded to the debtor.


        ♦ All accounts receivable are to be recorded in the computerised financial
          system.


Procedures

Raising a Tax invoice


        ♦ Tax Invoice request. A Customer Tax Invoice request is to be provided
          and approved by the relevant WaterSecure officer, and forwarded to
          Business Services Finance, WaterSecure. After entering the details into
          the computerised financial system, a tax invoice will be produced in
          duplicate. The original invoice is to be forwarded to the customer; the copy
          is forwarded to the requestor as confirmation.




Incorrect tax invoices. When tax invoices raised in error or printed with incorrect
details are detected before being issued to debtors, they are to be cancelled.



If errors are identified after the issue of a tax invoice, a credit note is to be raised to
reverse the invoiced debt (see sub-section 4.5.3 Credit Notes) and, if applicable, an
amended invoice raised.



End of month.       At the end of each month, a reconciliation of the balance of
receivables as per the general ledger to the balance of receivables as per the
computerised financial system is to be conducted by Business Services Finance,
WaterSecure. Monthly statements will be produced and issued to all debtors.

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An aged debtors report, by customer, is to be prepared from the financial system so
as to:
         ♦ identify receivables that have not been paid within the agreed credit terms
           and require follow-up action
         ♦ assist in identifying receivable balances that may require the raising of a
           provision for doubtful debts.



The debtors report is to be aged as follows:
         ♦ up to 30 days
         ♦ 31 to 60 days
         ♦ 61 to 90 days
         ♦ exceeding 90 days.


Business Services Finance, WaterSecure, is responsible for ensuring that the
reconciliation is performed and the aged trial balance is prepared and actioned within
ten working days from the end of the month.


Payments received. The payment of any invoice is to be received and receipted by
Business Services Finance, WaterSecure. The monies received are to be deposited
in a WaterSecure bank account.




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4.5.3      Customer Credit Notes
Policy Statements
        ♦ A credit note is to be raised to cancel an invoice raised in error, or raised
          with incorrect details, or for any other reason as approved by the Chief
          Financial Officer, WaterSecure, or other delegated officer.

Procedures
Request. When a credit note is required, a Request for Credit Note form is to be
prepared and approved by the relevant officer. The request must contain sufficient
detail to justify the raising of a credit note and satisfy third party review.


Authorised requests are to be forwarded to the Business Services Finance,
WaterSecure.


Raising a credit note. Credit notes are to be raised in duplicate by Business
Services Finance, WaterSecure. The original credit note is to be forwarded to the
customer; the copy is forwarded to the requestor as confirmation of filling the
Request for Credit Note.


Before issuing a credit note, the credit note details are to be verified with the source
documentation by an officer independent of the credit note raising process. The
credit note is to be certified by an officer authorised to raise credit notes on behalf of
WaterSecure.


Incorrect credit notes. When credit notes raised in error or printed with incorrect
details are detected before being issued to debtors, they are to be cancelled.


If errors are identified after the issue of the credit note, an invoice is to be raised to
reverse the credit (see sub-section 4.5.2 Customer Invoices) and, if applicable, an
amended credit note raised.


GST adjustment. Any adjustment to previous GST returns caused by the raising of
a credit note must be reflected in future GST returns in accordance with ATO and
legislative requirements.
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4.5.4         Overdue Accounts
Policy Statements
        ♦ An invoice is outstanding from the time it is issued until payment is
           received.   That invoice becomes overdue if payment has not been
           received within 30 days of the invoice date (for sundry debts) or other
           agreed and documented due date (for trade debtor invoices issued in
           accordance with service level agreements or contracts).


        ♦ Regular follow-up action will be taken for an overdue account receivable by
           the officer responsible for debt management in the Business Services
           Finance, WaterSecure.


        ♦ Unless otherwise approved by the Chief Financial Officer, WaterSecure, or
           other delegated officer, further credit will not be extended to a trade debtor
           with an account receivable that remains outstanding in excess of 30 days
           from the invoice date or other agreed credit period, whichever is the lesser.


Procedures

Aged debtors listing.      At the end of each month, Business Services Finance,
WaterSecure, is to review the debtors listing showing all debts outstanding and aged
as follows:

        ♦ up to 30 days
        ♦ 31 to 60 days
        ♦ 61 to 90 days
        ♦ exceeding 90 days.


The purpose of the aged debtors listing is to:

        ♦ identify the items requiring follow-up action
        ♦ provide the information necessary for WaterSecure’s management reports
           (see section 8.3 Reporting: Internal Reporting) and annual financial
           statements (see section 8.5 Reporting: Financial Reporting).




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Follow-up action.   Unless otherwise determined by the Chief Financial Officer,
WaterSecure, the following action will be adopted with respect to the management
and recovery of overdue accounts receivable.


       ♦ Monthly.    A statement may be produced for each debtor showing all
          outstanding amounts.


       ♦ 30-45 days from invoice date.                  The officer responsible for debt
         management in Business Services Finance, WaterSecure, is to make
         verbal contact with the debtor, reiterating the trade terms to which the
         customer agreed and determining a date for settlement of the overdue
         account. All contact with the debtor is to be documented.


       ♦ 45 days overdue. For accounts overdue for more than 45 days, a formal
         letter will be forwarded to the debtor stating that debt recovery action will
         be commenced if no response is received within 5 working days.


       ♦ 60 days overdue.        The administration of recovery action for accounts
         receivable overdue 60 days or more will be the responsibility of Business
         Services Finance, WaterSecure. Further credit may not be issued to the
         customer. Further recovery action will include:
         ♦ a letter of demand;
         ♦ instigation of legal proceedings; and/or
         ♦ write-off as a bad debt.




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4.5.5        Doubtful and Bad Debts
Policy Statements
        ♦ A specific doubtful debt should be provided for once WaterSecure
             ascertains the recovery of the debt is unlikely and/or uneconomical. Should
             a doubtful debt prove subsequently to be a bad debt (i.e. it is unable to be
             recovered), the debt is to be formally written off as a loss. The formal
             write-off process for bad debts is to be performed biannually.


        ♦ The Chief Financial Officer, WaterSecure is responsible for all entries
             relating to provisions for doubtful debts, actual bad debts, and the
             subsequent recovery of bad debts previously written off.



Procedures

Doubtful debts.        At the end of each month, the officer responsible for debt
management in WaterSecure is to prepare a listing of all doubtful debts for which
specific provisions should be made. The list is to be forwarded to the Chief Financial
Officer, WaterSecure or approved delegate, who is responsible for establishing the
provision.



If the Chief Financial Officer, WaterSecure or approved delegate, identifies further
recovery action appropriate to the amount and nature of the debt, that officer may
instigate such action before establishing the provision.



Bad debts


        ♦ Recovery action. Write-off of a bad debt will not occur until all efforts to
             recover the debt have been exhausted (see sub-section 4.5.4 Overdue
             Accounts) and the debt is deemed unable to be recovered.


        ♦ Request for write-off. A request to write-off a bad debt is to be prepared
             by the Chief Financial Officer, WaterSecure or approved delegate and
             delivered to the relevant WaterSecure officer for approval.
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        A write-off request is to include:

         ♦ the details of attempts that have been made to recover the outstanding
              amount
         ♦ the amount of the overdue account
         ♦ whether a dispute exists in relation to the account and, if so, the details
              of that dispute.



      ♦ Write-off. Biannually, those debts that prove unable to be recovered are
         to be written off in accordance with the policies and procedures prescribed
         in section 9.3 Further Applications: Losses and Write-Offs.


      ♦ Subsequent recovery. When a bad debt that has been written off is
         subsequently recovered, the cash transaction is to be recorded in the bank
         account and the appropriate revenue account. The payment received from
         the debtor is to be receipted and recorded in accordance with the
         procedures prescribed in section 4.2 Assets: Cash.


      ♦ GST adjustment. Any adjustment to previous GST returns caused by the
         write-off of a bad debt must be reflected in future GST returns in
         accordance with ATO and legislative requirements. Should the write-off
         amount be subsequently recovered, a further adjustment to a future GST
         return will be required.




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4.6         Prepaid Expenses
Policy

Prepayment for the provision of goods or services will be made only when the
supplier will not provide those goods or services without prior payment.


Wherever possible, prepayments will be avoided because of the inability to
ensure the quality of goods or services before the payment of monies, and the
difficulty in securing refunds after payment has been made.


A prepayment is to be accounted for only when the value per invoice is $1,000
(excluding GST) or more as at the end of the accounting period in which the
payment was made. These prepayments are to be disclosed in the annual
financial statements.



Overview

A prepayment is the part or full payment to a supplier for the provision of goods or
services before WaterSecure receives those goods or services. Under the accrual
basis of accounting, prepaid expenses must be allocated to the accounting periods to
which they relate.



Examples of instances where prepayments are most commonly sought include:
         ♦ salaries and superannuation
         ♦ workers’ compensation
         ♦ rent in advance
         ♦ vehicle registrations
         ♦ vehicle lease costs
         ♦ insurance
         ♦ conference and course attendance fees
         ♦ purchases of publications and Acts
         ♦ mail-order purchases
         ♦ foreign currency purchases
         ♦ computer maintenance fees.


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       The financial delegate is responsible for ensuring that prepayments are
       necessary, and that the purchase terms and conditions are satisfactory to
       WaterSecure. This officer is also responsible for confirming the goods or
       services are received.



The Chief Financial Officer, WaterSecure or approved delegate, is responsible for
ensuring that prepaid expenses are correctly disclosed in the financial statements
(see section 8.5 Reporting: Financial Reporting).


References

This manual
Section 3.3         Expenses: Purchasing
Section 3.6         Expenses: Expenditure Authorisation
Section 4.1         Assets: General Policy
Section 5.2         Liabilities: Accounts Payable
Section 8.5         Reporting: Financial Reporting
Section 9.2         Further applications: Journal Entries


Other documents
WaterSecure Delegations and Authorisations Manual
State Procurement Policy
WaterSecure Procurement Policy




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4.6.1       Payment and Reporting
Policy Statements
        ♦ Before approving prepayments, the financial delegate must investigate
            the purchase terms and conditions to ensure the interests of WaterSecure
            are addressed.


        ♦ Prepayments must be supported by appropriate procurement and
            financial approval and a supplier’s tax invoice.


        ♦ A prepaid expense exclusive of any GST amount is to be carried forward
            as an asset at period end date if it meets the following tests:

            ♦ it complies with the prepayment policy threshold of $1,000 (excluding
                  GST)
            ♦ the benefit of the payment is to be received in future accounting
                  periods.


Expenditure that does not meet these tests is to be treated as an expense of the

current period.


        ♦    Prepaid amounts for goods or services not received by 30 June are to be
             disclosed as prepayments in the financial statements.



Procedures

Purchase considerations. Purchase terms and conditions that must be considered
by the financial delegate before approving a prepayment include (as applicable):

        ♦ a guaranteed delivery or completion date
        ♦ refund conditions (e.g. full or part refund upon cancellation of conference
            attendance)
        ♦ a nil price variance so that further charges cannot be incurred between
            payment and delivery
        ♦ quality assurance guarantee (whether goods can be returned if they are
            not of a satisfactory standard)


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       ♦ supporting documentation for the prepayment amount (supplier’s tax
           invoice).

Payment. Prepayments are to be processed in accordance with the policies and
procedures prescribed in section 5.2 Liabilities: Accounts Payable. Prepayments will
be identified by a manual review of paid invoices carried out monthly by Business
Services Finance, WaterSecure. Full amount of GST will be paid at the time of the
expense.



Carrying forward. For prepayments to be carried forward as an asset at period end
date, the expenditure must comply with the prepayment policy. The Chief Financial
Officer, WaterSecure or approved delegate, is responsible for ensuring that
prepayments are correctly recognised in the financial statements. The amount to be
carried forward will be exclusive of any GST paid.




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4.7        Non-Recurrent Physical Assets
Policy

All non-current physical assets are to be recognised in accordance with the
requirements of the Financial Accountability Act 2009, other relevant
legislation, Queensland Treasury guidelines, Statements of Accounting
Concepts and Australian Accounting Standards.

Internal controls are to be in place to ensure all non-current physical assets
are correctly identified, accurately recorded and appropriately managed.

All non-current physical assets must be purchased and disposed of in
accordance      with   the   State   Procurement         Policy   and   any   legislative
requirements.

For reporting purposes, WaterSecure is to record and value their non-current
physical assets in accordance with the policies prescribed in Queensland
Treasury Instruction ‘Non-Current Asset Policies for the Queensland Public
Sector’.



Overview

When an item satisfies the criteria that define a non-current asset of WaterSecure
(see section 4.1 Assets: General Policy) and has physical substance, it can be
further identified as a non-current physical asset where it has an individual value
(exclusive of GST) of $5,000. Any personal computing device that does not meet the
asset recognition threshold must be captured on a portable and attractive item
register where the value of such an item exceeds $200 (exclusive of GST).



Software will be captured as an asset where it satisfies the criteria that define a non-
current asset of WaterSecure (see section 4.1 Assets: General Policy) and has an
individual value of $100,000 or more.       Software assets will be accounted for as
‘Intangible Assets’ using the guidelines set forth in Australian Accounting Standards
Board 138 – Intangible Assets.



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Examples of non-current physical assets include:

       ♦ Buildings
       ♦ Land
       ♦ Plant and equipment
          ♦ Office furniture
          ♦ Office equipment
          ♦ Computer equipment.

The purchasing officer is responsible for ensuring that assets purchased by
WaterSecure comply with the requirements of the State Procurement Policy, relevant
legislation or guidelines, the WaterSecure Procurement Policy and the policies
contained in this manual.



Managers are responsible for the safeguarding and proper use of non-current
physical assets in their custody, and the associated issues of stocktakes, disposal,
repairs, and maintenance and so on.



Chief Financial Officer, WaterSecure or approved delegate, is responsible for the
systems and processes that allow for:

       ♦ the management and ongoing maintenance of WaterSecure’s non-current
           physical assets register
       ♦ system integrity (security, updating)
       ♦ asset register and ledger reconciliations
       ♦ maintenance of the non-current physical asset general ledger control
           accounts
       ♦ depreciation charges
       ♦ revaluations
       ♦ stocktake coordination
       ♦ financial reporting in accordance with the requirements of:

           ♦ Financial Accountability Act 2009
           ♦ Financial Performance and Management Standard 2009
           ♦ Australian Accounting Standards (AASs)
           ♦ Statement of Accounting Concepts (SACs)
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       ♦ ad hoc reporting.

References

Legislation
Financial Accountability Act 2009
Financial and Performance Management Standard 2009
Workplace Health and Safety Act


Australian Accounting Standards (AASs and AASBs)
AAS 29        Financial Reporting by Government Departments
AASB          The Framework
AASB116       Property, Plant and Equipment
AASB136       Impairment of Assets
AASB138       Intangible Assets
AASB1031      Materiality

Queensland Treasury Accounting Policy Guideline (APG)
APG4                  Definition and Recognition of Expenses

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 23 ‘Asset Management’




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This manual
Section 3.10       Expenses: Depreciation
Section 4.1        Assets: General Policy
Section 4.2        Assets: Cash
Section 4.8        Assets: Portable and Attractive Items
Section 5.2        Liabilities: Accounts Payable
Section 8.3        Reporting: Internal Reporting
Section 8.4        Reporting: System Appraisals
Section 8.5        Reporting: Financial Reporting
Section 9.3        Further Applications: Losses and Write-Offs
Section 9.10       Further Applications: Controls


Other documents
WaterSecure Delegations and Authorisations Manual
Asset Accounting Guidelines
Tax Asset Guidelines
Code of Conduct
State Procurement Policy
WaterSecure Procurement Policy
Queensland Treasury Instruction ‘Non-Current Asset Policies for the Queensland
Public Sector’
Queensland Government ‘Property Tenure Government Land Policy’




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4.7.1      Recognition
Policy Statements
        ♦ Assets are to be recognised as non-current physical assets by
          WaterSecure when they satisfy the following criteria, as prescribed by “the
          Framework for the Preparation and Presentation of Financial Statements”
          and documented in the Assets Policy:

          • WaterSecure has control over the future economic benefits to the extent
              that it will be able to deny or regulate the access of other entities to the
              service potential or future economic benefits embodied in the asset.
          • The transaction or event has occurred enabling WaterSecure to control
              the service potential or future economic benefits.
          • The asset will generate service potential or future economic benefits for
              WaterSecure.
          • The asset will be used to achieve the objectives of WaterSecure.
          • It is probable that the service potential or future economic benefits
              embodied in the asset will eventuate for WaterSecure within a
              reasonable time.
          • The asset possesses a cost or value that can be reliably measured by
              WaterSecure.
          • It is probable that the service potential or future economic benefits
              embodied in the asset will be realised over a period longer than the 12-
              month reporting period.


        ♦ The date of acquisition for a non-current physical asset will be the date on
          which the risks and rights to future benefits of the asset, as would be
          conferred with ownership, pass to WaterSecure.


        ♦ The threshold for recording non-current physical assets is $5,000.
          Software purchase and development costs will be recorded as a non-
          current physical asset where it meets the recognition criteria and has a
          value of $100,000 or more.




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       ♦ The value of the asset is to be determined by the original gross cost
          (exclusive of GST) or, where that gross cost is unavailable, a gross
          valuation. In addition, the asset must have an economic life of more than 1
          year.


       ♦ Asset purchases costing less than the recording threshold will not be
          recorded as non-current physical assets; where appropriate, they are to be
          recorded as portable and attractive items (see section 4.8 Assets: Portable
          and Attractive Items). Any personal computing device that does not meet
          the asset recognition threshold must be captured on a portable and
          attractive item register where the value of such an item exceeds $200.


       ♦ For the purposes of applying the non-current physical assets threshold
          test, a unit of property, plant or equipment is a physical asset if it has an
          independent existence and is functionally complete.


       ♦ In recording land assets, compliance with ‘Property tenure government
          land policy’ is required.


Procedure

Decision chart. See Appendix A: Queensland Treasury Instruction – ‘Non-Current
Asset Policies for the Queensland Public Sector’ – for the decision chart to be used
with regard to asset recognition.

Appendix A “Asset Recognition”




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4.7.2      Acquisition
Policy statements
        ♦ Condition of acquisition. The acquisition of a non-current physical asset
          must give rise to service potential or future economic benefits additional to
          those already controlled by WaterSecure.


        ♦ Approval.    Approval to acquire an asset must be obtained from an
          appropriate financial delegate prior to the acquisition. Appropriate financial
          delegation is to be based on the total gross purchase price.              Asset
          acquisitions must not be dissected into smaller components to circumvent
          WaterSecure’s financial delegations system.


        ♦ Acquisition methods. Assets may be acquired by the following methods:
          ♦ the placement of orders with external suppliers
          ♦ construction or development (either in-house or by external contractors)
          ♦ a compulsory or agreed acquisition process
          ♦ donations or transfers of assets to WaterSecure.


        ♦ State Procurement Policy. The purchasing officer must ensure that any
          assets purchased by WaterSecure comply with the requirements of the
          State   Procurement     Policy     and       WaterSecure’s   policy,   including
          considerations of quality assurance and workplace health and safety.


        ♦ Disclosure. Chief Financial Officer, WaterSecure or approved delegate is
          responsible for ensuring that all acquisitions are correctly recorded in the
          financial system.


        ♦ Construction.       Costs incurred in the construction of an asset by
          WaterSecure for the purpose of its own operations are to be charged to the
          appropriate cost centres that identify capital works in progress.




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         ♦ Enhancements. Enhancements to existing non-current physical assets
           are to be capitalised where:

           ♦ the expenditure will be recovered from either additional future revenue
              generated by the asset’s continued use, or by cost savings resulting
              directly from the enhancement
           ♦ the asset’s operational capacity will be increased or the asset’s
              economic life will be extended beyond that which was originally
              estimated
           ♦ the cost of the enhancement is in excess of the capitalisation threshold
              for the type of asset.


         ♦ Acquired at below fair value. Provided that an asset would have been
           acquired if it was not received by WaterSecure at below fair value –
           through gifts, donations, bequests or the like – it is to be capitalised at fair
           value in accordance with the policies and procedures prescribed in section
           9.8 Further Applications: Contributions.



Procedures

Justification. When an asset is being requisitioned for use by WaterSecure, the
available options must be considered to ensure the most cost-effective option can be
taken.



Trade-ins and acquisitions. Where a trade-in is involved in the acquisition of an
asset, the disposal of the asset through trade-in is to be regarded as a separate
transaction to the acquisition of the new asset. Authorisation requirements for each
transaction are to be adhered to. Any GST implications are to be appropriately
accounted for.



Construction. Construction-in-progress costs are to be capitalised as follows:
         ♦ costs that relate directly to the construction of an asset (direct labour and
           material costs, depreciation of non-current physical assets used in
           construction, set-up costs)



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       ♦ costs that are attributable to the construction activity and are able to be
         allocated on a reasonable basis to specific assets (purchasing
         administration costs, insurance, design and technical costs, project and
         corporate overheads, financing costs).
       ♦ Any GST for tax paid should not be capitalised.


Enhancements. An enhancement is to be capitalised in either of the following ways:
       ♦ Where the enhancement becomes an integral part of the asset, the written-
         down value of the existing asset is to be increased by the value of the
         enhancement exclusive of GST.
       ♦ Where the enhancement retains a separate identity that can be used after
         the existing asset is disposed of, it is to be capitalised independently of the
         existing asset exclusive of any GST paid.




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4.7.3       Valuation and Impairment
Policy Statements

Valuation
        ♦ Valuation: method. In accordance with Asset Accounting Guidelines, all
            assets must be valued using either historical cost or fair value.


        ♦ Valuation: on acquisition. The valuation of a non-current physical asset
            at the time of acquisition will be as follows:

            ♦ Acquisition at cost.           Assets that come under the control of
               WaterSecure within the current financial year should generally be
               recognised at the cost of acquisition exclusive of GST (in accordance
               with AASB 116 ‘Property, Plant and Equipment’).

            ♦ Acquisition at other than fair value. When an asset is obtained by
               gift, donation, bequest, subsidised purchase or compulsory acquisition,
               and is acquired at less than fair value, it must be valued at its fair value
               (unless the item was transferred from another State Government
               department, in which case the net book value of the asset in the
               transferor’s asset register or other assigned fair value may be used).


        ♦ Valuation: Item/component groups. Where practical, assets must be
            recorded and valued in the smallest group of items or components that can
            independently and effectively perform the function for which they were
            acquired.


        ♦ Valuation: Additions and extensions. Any addition or extension to an
            existing asset is to be valued (exclusive of GST) as a separate asset,
            provided the addition or extension retains a separate identity, can be used
            after the existing asset is disposed of and is in excess of the capitalisation
            threshold.


        ♦ Valuation: Surplus assets.            Plant, equipment and buildings that are
            surplus, and would not be replaced if WaterSecure was deprived of them,
            are to be valued at their current market selling price.
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       ♦ Valuation: Assets not to be replaced. Assets held for continued use that
          would not be replaced if WaterSecure was deprived of the assets are to be
          valued at the greater of the net present value of future cash flows
          attributable to the asset and the current net market selling price.


       ♦ Valuation: No reliable value available.              Where a reliable value of a
          material asset is not available, WaterSecure is to disclose details of that
          asset in the notes to the financial statements, and the reasons why a
          reliable value is not available.


       ♦ Valuation: Valuers.       Where officers of WaterSecure do not have the
          expertise to value non-current physical assets, an expert is to be engaged.
          In such cases, it is to be ensured that a consistent methodology that
          complies with the requirements of Queensland Treasury is applied to the
          whole of WaterSecure.



Procedures

Valuation: Decision charts. The decision charts contained in Queensland Treasury
‘Non-Current Asset Policies for the Queensland Public Sector’ are to be referred to in
circumstances where the valuation to be placed on an asset requires clarification.


       Appendix B Initial Asset Valuation
       Appendix C Identification of Significant Components of a Complex Asset
       Appendix D Determination of Fair Value


Policy Statements

Impairment
All non-current assets must be assessed for impairment annually.
   ♦ Impairment is the decline in the future economic benefits or service potential
       of an asset, over and above the use reflected through depreciation.
   ♦ In general, an asset is impaired when its recoverable amount (i.e. the net
       amount expected to be recovered through cash flows arising from its use and
       disposal) is less than its carrying amount
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    ♦ If an asset is impaired, it must be written down and an impairment loss
         recorded.



Procedure

Impairment:     Assessment. Agencies must assess every year-at reporting date
whether there are any indicators that an asset may be impaired. This assessment
will be at the individual asset level or cash generating unit rather than at the class
level.



For physical assets and most intangible assets, agencies only have to test an asset
for impairment if there is an indication of impairment.



For intangible assets with an indefinite useful life or an intangible assets not yet
available for use, the agency must test for impairment annually, irrespective of
whether there is any indication of impairment, and whenever there is an indication
that the intangible asset may be impaired.



An indicator of impairment will not always lead to an impairment loss being recorded.


Impairment: Indicators

In assessing whether there is any indication of impairment the Agency must, as a
minimum, assess the following external factors:


    ♦ during the period the asset’s market value has declined significantly more
         than would have been expected as a result of the passage of time or normal
         use; and
    ♦ significant changes with an adverse effect on the Agency have taken place or
         will take place in the near future in the technological, market, economic or
         legal environment in which the Agency operates.


In assessing whether there is any indication of impairment the Agency must, as a
minimum, assess the following internal factors:

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   ♦ evidence is available of obsolescence or physical damage of an asset;
   ♦ significant changes with an adverse effect on the Agency have taken place
       during the year, or are expected to take place in the near future, in the extent
       to which, or manner in which an asset is used or expected to be used. This
       may include an asset becoming idle, plans to discontinue the operation to
       which an asset belongs, or plans to dispose of an asset before the previously
       expected date; and
   ♦ evidence from internal reporting indicates that the economic performance of
       an asset is, or will be, worse than expected.


The external and internal factors above would also be used, as a minimum, to
determine whether or not a previous impairment loss should be reversed.

Impairment: Recoverable Amount. The impairment loss is the amount by which
the asset’s carrying amount exceeds its recoverable amount. Recoverable amount is
determined as the higher of an asset’s fair value less costs to sell and its value-in-
use.

Impairment:      Recording.   An impairment loss is recognised immediately in the
Income Statement, unless the asset is carried at a revalued amount. When an asset
is measured at a revalued amount, the impairment loss is to be treated in the same
way as a revaluation decrement, i.e., offset against the asset revaluation reserve to
the extent available.

Accumulated Impairment Losses are to be shown separately from Accumulated
Depreciation.



Impairment: Reversing.        An impairment loss can be reversed for all assets other
than goodwill.

An impairment loss can only be reversed if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was
recognised.

Impairment: Disclosure. Agencies are to make the relevant disclosure in relation
to impairment.

Further, to ensure transparent reporting, an additional line of disclosure is to be
included in the notes to the financial statements.
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4.7.4      Recording
Policy Statements
        ♦ Non-current physical assets are to be recorded in the accounting records
          and non-current physical assets register at their gross cost of acquisition
          (exclusive of GST), gross valuation, or gross fair value where acquired at
          below fair value. The cost is to include all expenses incidental to the
          purchase and necessary to have the asset ready for use.


        ♦ The non-current physical assets register for WaterSecure is to be
          maintained and controlled by WaterSecure, to ensure that all additions,
          and disposals are properly accounted for, and all relevant information is
          available to identify each item.


        ♦ Each month, the non-current physical assets register is to be reconciled
          with the non-current physical assets general ledger accounts.



Procedures

Advice. Details of each non-current physical asset acquired are to be provided to
Business Services Finance, WaterSecure, for entry into the non-current physical
assets register. Details are to include location, organisational unit, full description of
the asset, value and date of acquisition. These details may be incorporated in the
original requisition or purchase order, or conveyed using an Asset Registration Form.



Descriptions.    Standard descriptions are to be used in the non-current physical
assets register for classes of similar items. The title of the principle item is to be
used as the first word (e.g. a laser printer would be described as ‘printer, laser’).



Responsibility. Business Services Finance, WaterSecure, is responsible for the
maintenance of WaterSecure’s non-current physical assets register.




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4.7.5        Safeguarding
Policy Statements
          ♦ Each organisational unit within WaterSecure is responsible for the physical
            security and custody of non-current physical assets registered under their
            custodianship.


          ♦ With the exception of real property and leasehold assets, all other non-
            current physical assets are to be:
            ♦ allocated a unique asset number
            ♦ identifiable as assets of WaterSecure by attachment of the unique asset
               number.


          ♦ Employees are to return all non-current physical assets in their care before
            retirement, dismissal, resignation or transfer.



Procedures

Receipt. Each organisational unit of WaterSecure taking delivery of a non-current
physical asset from a supplier is to ensure that the asset is accompanied by a
supplier’s invoice/delivery docket containing the details required for entering the
asset into the non-current physical assets system.



Data entry of the transaction into the computerised financial system automatically
updates the non-current physical assets register.              The relevant officer of the
Business Services Finance, WaterSecure, is responsible for entering and reviewing
asset acquisitions and following up the retrieval of any additional information that is
required.



Asset numbers. The sequential allocation of asset numbers is the responsibility of
the relevant officer of the Business Services Finance, WaterSecure. Asset numbers
are to be allocated sequentially and to be affixed to or engraved on the relevant
assets.



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4.7.6      Use
Policy Statements
        ♦ Private use.      Non-current physical assets may be used for private
          purposes only in the following circumstances:
          ♦ The relevant manager has approved that an asset be allocated to a
              specific employee for private purposes (e.g. motor vehicles, computer
              equipment).
          ♦ An asset to be used for approved official purposes is held on private
              property, either for such use at that location or as an intermediate step
              in performing the official duties elsewhere.
          ♦ The officer responsible for non-current physical assets has issued
              written authorisation indicating the specific need for private use and the
              period of usage.


        ♦ Unauthorised use. When an employee is found to have used non-current
          physical assets for private purposes without written authorisation to do so,
          the employee is potentially liable for the loss, damage or destruction of the
          assets and will also be subject to disciplinary measures as described in
          WaterSecure’s policies and procedures and Code of Conduct


        ♦ Community use. Public property or facilities may be used for community
          purposes only in accordance with the approval of an appropriately
          delegated officer.



Procedures

Private use. When private use of a non-current physical asset has been approved,
the details of the private use, authorisation and location of the asset during the
private use period are to be recorded in a log book. The officer responsible for non-
current physical assets must ensure the asset is returned at the date required by the
authorisation and in similar condition to when it was issued.




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Unauthorised use. When an employee is found to have used non-current physical
assets for private purposes without written authorisation to do so, the accountable
officer or other authorised delegate is responsible for deciding on the appropriate
course of action to be taken. Such action may include:
       ♦ repairs to or replacement of the asset, at the personal cost of the
          employee who was using the asset without prior approval
       ♦ disciplinary action or termination of employment as a result of the
          unauthorised use, in accordance with the relevant human resource policies
          and code of conduct (e.g. enterprise agreements).



Community use. When applying to the authorised officer for approval to use a non-
current physical asset for community purposes, full details of the proposed use,
associated costs to WaterSecure and any resulting benefits are to be provided for
consideration.




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4.7.7      Revaluation
Policy Statements
        ♦ Periodic revaluations of WaterSecure’s non-current physical assets are to
           be performed in accordance with the methodology prescribed in
           Queensland Treasury Instruction ‘Non-Current Asset Policies for the
           Queensland Public Sector’.


        ♦ Assets valued at cost in accordance with the Queensland Treasury
           Guidelines are not revalued.


        ♦ Assets measured at cost are subject to the “recoverable amount test” as
           described in Queensland Treasury Instruction “Non-current Asset Policies
           for the Queensland Public Sector”.


        ♦ Assets valued at fair value are required to be comprehensively revalued
           every 5 years. This may be a cyclical process, on a class basis.


        ♦ When the written down value of an asset is nil but it is still in use, the asset
           is not worthless and the carrying value of the asset should be reassessed,
           having regard to replacement costs, estimated future economic benefits
           and estimated useful life.


        ♦ Annual interim revaluations, based on industry price indices, are to be
           carried out for the eligible classes of assets in the years when the formal
           revaluation is not undertaken.


        ♦ Chief Financial Officer, WaterSecure or approved delegate, is responsible
           for the coordination of revaluations and for ensuring the revalued asset
           details are entered in WaterSecure’s non-current physical assets register.


        ♦ Non-current physical asset revaluations are to be approved by the
           accountable officer.




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Procedures

Reasons for revaluation. The principal reason for revaluing assets is to show:
       ♦ a more appropriate valuation of the assets that WaterSecure owns
       ♦ that the costs associated with the use of WaterSecure’s assets reflect the
          true cost of using all assets (through depreciation charges on all assets).



Periodic comprehensive revaluation. AASB1031 ‘Materiality’ is to be applied to
limit the comprehensive periodic revaluation process to material asset classes.



For revaluation purposes, the following policy documents apply to WaterSecure:

       ♦ AAS 29 ‘Financial Reporting by Government Departments’
       ♦ Queensland Treasury Instruction ‘Non-Current Asset Policies for the
          Queensland Public Sector’ Part 5 “Revaluation of Assets”.



Where a class of depreciable assets is revalued, WaterSecure is to restate
separately the gross amount and related accumulated depreciation of the class of
revalued asset.



Comprehensive revaluations of non-current physical assets are to be performed at 5-
yearly intervals unless the nature of the assets dictates, or an event occurs that
requires revaluation to be performed more frequently.



Valuer. Revaluations are to be performed by either an appropriately qualified officer
of WaterSecure with extensive experience in valuing the particular type of asset, or
an independent, qualified and experienced valuer (for buildings).



Instructions given to valuers must embody the policies prescribed in the Queensland
Treasury Instruction ‘Non-Current Asset Policies for the Queensland Public Sector’
(see Appendix G “Better Practice Guidelines for instructing Valuers”).




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Interim revaluations.     To maintain the value of assets in current terms, interim
revaluations are to be performed annually, between the comprehensive revaluations,
for all assets that exceed the revaluation threshold and that are valued at fair value.



These interim valuations should use relevant indices (e.g. Australian Bureau of
Statistics indices) or other reliable measures that can be used to estimate the current
values of major asset classes.



Revaluation transactions.        Revaluations will result in an increase in the written
down value of some non-current physical assets (a revaluation increment) and a
decrease in that of others (a revaluation decrement). Revaluation increments and
decrements are to be considered and actioned on an asset class basis.



Recording. The revaluation of assets is to be recorded in WaterSecure’s accounting
records and in the non-current physical assets register.



The following transactions will record revaluations in WaterSecure’s accounts:


       ♦ An increment is to be credited directly to the asset revaluation reserve –
          except that, to the extent that the increment reverses a revaluation
          decrement previously recognised as an expense in the operating
          statement in respect of that same class of assets, it is to be recognised as
          revenue in the operating statement for the reporting period.


       ♦ A decrement is to be recognised as an expense in the operating statement
          – except that, to the extent that the decrement reverses a revaluation
          increment previously credited to and still included in the balance of an
          asset revaluation reserve in respect of that same class of assets, it shall be
          debited directly to that revaluation reserve.




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Depreciation. The useful life of an asset is to be re-estimated each year for the
purpose of setting the new rate of depreciation to apply to the asset (see section 3.10
Expenses: Depreciation).



Financial reporting. The following disclosures (Non-current Asset Policies for the
Queensland Public Sector, Part 5.6 Disclosures) are to be made in the annual
financial statements in respect of each class of non-current physical assets that has
been revalued:


       ♦ the net amount of asset revaluation increments less decrements for each
           class of non-current assets;
       ♦ the date of the last comprehensive valuation;
       ♦ whether that valuation was made internally or by an independent external
           party;
       ♦ the method and significant assumptions underlying the valuation; and
       ♦ details of the basis on which interim revaluations are made.




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4.7.8      Capital vs Repairs and Maintenance
Policy Statements
        ♦ Asset expenditure that is regarded as capital is to be carried forward as an
          asset in WaterSecure’s accounts.


        ♦ Expenditure incurred to ensure that an asset continues to operate at its
          normal capacity until the conclusion of its useful life is to be regarded as
          repairs and maintenance and charged as recurrent expenditure.


        ♦ Prior to deciding whether to repair or replace a non-current physical asset
          the manager responsible for the asset is to perform a cost/benefit analysis
          to determine the best option for WaterSecure.



Procedures

Recording


        ♦ Enhancements. The value of enhancements (exclusive of GST) is to be
          added to the acquisition cost of the existing asset when the following
          criteria are met:
          ♦ the enhancement produces an effective increase of capacity or
              efficiency in the present or planned service capacity of the asset which
              will be utilised; or
          ♦ the enhancement increases the value of the asset; or
          ♦ the enhancement produces an effective increase in the quality of the
              asset’s service; or
          ♦ the enhancement effectively extends the useful life of the asset; and
          ♦ the cost of the enhancement exceeds the capitalisation threshold for the
              type of asset.




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          Examples of this include:
          ♦ expenditure for building additions
          ♦ extraordinary repairs
          ♦ major overhauls.


       The details in the non-current physical assets register are to be updated with
       the additional costs, the asset revalued where necessary (see sub-section
       4.7.7 Revaluation) and the asset depreciated at the revised rate (see section
       3.10 Expenses: Depreciation). The costs incurred in revaluing the asset are
       not to be added to the purchase costs.


       ♦ Repairs and maintenance. Repairs and maintenance of a regular and
          on-going nature are to be treated as an expense for both accounting and
                                                                                        Comment [A1]: Need to
          budgeting purposes. Examples of expenses of this nature are:                  consider tax here as repairs and
                                                                                        maintenance are sometimes treated
          ♦ scheduled overhauls                                                         as capex and vice versa.
          ♦ painting                                                                    Comment [PV2]: Refurbishme
                                                                                        nt is treated as capital not repairs
          ♦ regular servicing.


          Maintenance expenditure is incurred to ensure that the asset continues to
          provide its pre-determined service capacity and quality, and that it
          achieves its useful life.



          Treatment for tax purposes is to be in accordance with the Tax Asset
                                                                                        Comment [n3]: Included
          Guidelines.                                                                   reference to tax asset guidelines




Approval.     When approving repairs to non-current physical assets in lieu of
replacement, the manager responsible for the asset must be satisfied that the cost of
repairing the asset is the more economical option after considering:

       ♦ the cost of a replacement asset
       ♦ the age of the existing asset and comparison with the efficiency of a
          replacement
       ♦ the time and human resources involved in completing the repair.
       ♦ Complete a net present value calculation of the options


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4.7.9      Transfer
Policy statements
        ♦ All non-current physical assets are recorded at cost centre level in the non-
          current physical assets register. When assets are transferred between
          cost centres for periods exceeding six months, the ownership of the asset
          is to be transferred to the receiving cost centre.

        ♦ All non-current physical asset transfers are to be approved by an
          appropriately delegated officer.


Procedures

Asset transfers.      When an asset is to be transferred from one cost centre to
another, the delegated Assets officer is to be advised of the asset’s new location and
responsible cost centre. The Assets officer is responsible for updating the non-
current physical assets register with the transfer details.



Asset loans.     Non-current physical assets that are being temporarily transferred
outside of WaterSecure represent asset loans (see sub-section 4.7.11 ‘Loans’).



Asset disposals.        Non-current physical assets that are being permanently
transferred outside of WaterSecure represent asset disposals (see sub-section
4.7.10 ‘Disposal’).




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4.7.10      Disposal
Policy Statements
         ♦ When disposing of a non-current physical asset, the following principles
           apply:

           ♦ the need for open and effective competition
           ♦ the achievement of value for money
           ♦ the observance of fair dealing and ethical behaviour.
           ♦ Policies and procedures
           ♦ Government requirements


         ♦ Authorisation for the disposal of a non-current physical asset must be
           obtained from a delegated officer, based on the asset’s depreciated value
           less estimated disposal proceeds. Where more than one asset is being
           disposed of, the approval threshold applies to each asset – not the
           combined total value of them all.


         ♦ Where practical, the duties of authorising asset disposal, arranging for
           disposal and collecting payment resulting from disposal are to be
           segregated.


         ♦ Business Services Finance, WaterSecure, is responsible for ensuring that
           all disposals are correctly recorded in the computerised financial system.



Procedures

Request for approval. Before a non-current physical asset may be disposed of, the
written approval of the relevant manager is to be obtained using an Asset Disposal
Application form.



The approved Asset Disposal form is to be forwarded to Business Services
Commercial, WaterSecure, who is responsible for arranging the disposal of the
asset.



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Write-offs and losses. The categories for writing off non-current physical assets
are:
       ♦ asset at the end of its useful life is regarded as a write-off and not as a loss
       ♦ asset considered inefficient to use because of damage, excess wear or
             technically obsolete, but has not reached the end of its useful life (written
             down value greater than zero) is regarded as a write-off and not as a loss
       ♦ asset lost, stolen, destroyed or cannot otherwise be located but has not
             reached the end of its useful life (written down value greater than zero) is
             regarded as a loss (see section 9.3 Further Applications: Losses and
             Write-Offs).



Disposal worth less than $5,000. Acceptable methods of disposal include:
       ♦ gifts or donations to charities or educational groups
       ♦ scrapping and removal for recycling
       ♦ taking parts to repair another machine
       ♦ sale to an officer of WaterSecure through internal offer arrangements
       ♦ dumping (where not recyclable).



Disposal worth more than $5,000. Acceptable methods of disposal include:
       ♦ public auction
       ♦ inviting public offers
       ♦ negotiating terms and conditions of sale to another Queensland
             Government department, local authority, Commonwealth department or
             other State or Territory department
       ♦ trade-in1.



Sales to officers of WaterSecure.                      Sales to officers of WaterSecure may be
approved as a method of disposal only where it is considered that the asset’s value
would make an external sale unlikely or uneconomic.


       1
           A trade-in has a financial implication on the acquisition cost of the new item. The manager responsible for

       the maintenance of the non-current physical asset is to ensure that the Chief Financial Officer, is advised

       of the trade-in details, so that these transactions are accurately recorded in WaterSecure’s registers and

       ledgers.
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The internal circulation of the invitation for offers to purchase is to be determined by
the nature and value of the asset.



Identification. Where applicable, evidence of WaterSecure’s ownership of an asset
(including licensed software in personal computers) is to be removed from the item
prior to disposal.



Date of disposal. For recording purposes, the date of disposal will be the date on
which WaterSecure no longer had the responsibility for controlling the non-current
physical asset (date of sale, trade-in, etc.) or the date of write-off approval.



In the case of depreciable non-current physical assets that are not fully depreciated
at the date of disposal, the depreciation cessation date is the end of the month in
which the disposal occurs.



Proceeds of disposal. All proceeds from the disposal (sale) of an asset, including
any amount of GST collected, are to be promptly banked and the transaction
recorded in the accounts of WaterSecure.



Recording. Business Services Finance, WaterSecure, is responsible for updating
the non-current physical assets register with the details of asset disposals.



Gifts. When the disposal of an asset as a gift is approved, the item’s condition is to
be documented and certified by the recipient and the relevant manager. Business
Services Finance, WaterSecure, is responsible for updating the non-current physical
assets register and the register of gifts (see also section 9.8 Further Applications:
Contributions).      An assessment of GST implications must be made prior to the
disposal of an asset as a gift.




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Replacement under warranty. When an asset is to be replaced under warranty,
approval to replace the original asset is to be obtained from the relevant manager.
When the replacement asset is received, the non-current physical assets register is
to be updated with its serial number only (the other details need not be altered).



Reinstatement. Where an asset previously written-off because of loss or theft is
subsequently recovered, the officer responsible for the item is to forward written
advice to the Business Services Finance, WaterSecure who will have recorded the
asset details in the non-current physical assets register.



Write-off.   If a non-current physical asset is lost, stolen or cannot otherwise be
located, the written down value of that asset is the value that must be considered
when determining the officer with the delegated authority to approve the write-off of
the asset. Write-off is to be in accordance with section 9.3 Further Applications:
Losses and Write-Offs.




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4.7.11     Loans
Policy Statements
       ♦ Loans of non-current physical assets to or from organisations external to
          WaterSecure are to be approved by an officer with appropriate delegation.


Procedures

Loans to external organisations. After obtaining approval to lend an asset to an
external organisation, the item is to be delivered to the receiving officer.      The
recipient is required to provide a certified statement acknowledging receipt of the
asset and giving assurances that the asset will be:

       ♦ used only for the purposes for which it was loaned
       ♦ appropriately maintained
       ♦ adequately safeguarded.



The loan approval and recipient’s certified statement are to be forwarded to Business
Services Finance, WaterSecure.



Loans received from external organisations. After obtaining approval to borrow
an asset from an external organisation, the recipient is to forward the documentation
and asset details to Business Services Finance, WaterSecure.



The Chief Financial Officer, WaterSecure or approved delegate, is responsible for
periodically reviewing the asset loan entries and ensuring that loan agreements are
adhered to (e.g. in terms of return dates).



Return of loaned assets. When an asset that has been borrowed is returned to the
originating organisation, written notification is to be forwarded to Business Services
Finance, WaterSecure.




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4.7.12     Stocktakes
Policy Statements
                                                                                         Deleted: physical
       ♦ A complete physical stocktake of non-current plant & equipment assets is
          to be performed at least annually. Each asset is to be physically identified
          and verified with the non-current physical assets register. A consistent
          approach and procedures are to be applied for all stocktakes.


       ♦ The Chief Financial Officer, WaterSecure or approved delegate, is
          responsible for coordinating the annual stocktake including:

          ♦ preparing stocktaking instructions and a timetable for completion
          ♦ monitoring the stocktake
          ♦ analysing the stocktake results
          ♦ updating the non-current physical assets register as necessary
          ♦ reporting requirements.



Procedures

Timing. Annual stocktakes will be conducted at a time indicated in the instructions
and procedures for stocktakes issued by Business Services Finance, WaterSecure.



Objectives. The objectives of the stocktake are to ensure that:

       ♦ all assets are properly recorded in the registers of WaterSecure
       ♦ all assets are correctly valued
       ♦ all assets are being maintained in satisfactory working condition
       ♦ all levels of management can have reliable information regarding non-
          current physical assets.




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Conducting stocktakes.       Before commencing the stocktake, Business Services
Finance, WaterSecure, is responsible for distributing a list of all non-current physical
assets. The list is to provide the identification number, location and description for
each of the assets, and is to be made available to WaterSecure organisational units
that are to conduct stocktakes.



Where practical, the stocktake will be conducted by two officers, one of whom will not
have any responsibilities for maintaining the assets or the asset records; the second
officer is to be familiar with the items being counted. Every asset is to be physically
counted and verified with the stocktake list.



Amendments.       If the stocktake reveals asset details have been inaccurately
recorded in the non-current physical assets register (e.g. an incorrect serial number
has been entered), written advice of the amended details are to be forwarded to
Business Services Finance, WaterSecure to update the register.



Discrepancies. All discrepancies between the physical count and the asset records
are to be investigated and the results reported in writing to the Chief Financial
Officer, WaterSecure. Appropriate action (e.g. write-off of damaged items) is to be
taken, where practical, before 30 June.


       ♦ Additional assets. Where the stocktake reveals an asset held at the
          organisational unit has not been recorded in the non-current physical
          assets register, and subsequent investigation deems the asset should
          have been recorded, written advice of the asset details is to be forwarded
          to Business Services Finance, WaterSecure, who is responsible for
          updating the register and reflecting the additional asset in WaterSecure’s
          accounts.


       ♦ Duplicate register entries. Where the stocktake reveals duplicate entries
          in the non-current physical assets register for the one item, a written
          request for the removal of the duplicate entries from the assets register is


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         to   be   prepared     and   forwarded         to   Business   Services   Finance,
         WaterSecure, to update the register.


      ♦ Write-off. If the action to be taken is the write-off of a non-current
        physical asset, a written request for write-off approval is to be prepared.
        After obtaining the approval of the appropriately delegated manager,
        and retaining a copy of the memo on file at the organisational unit, the
        approved request is to be forwarded to Business Services Finance,
        WaterSecure, to update the register of non-current physical assets and
        the register of losses and write-offs.


      ♦ Records. Business Services Finance, WaterSecure is to update the
        non-current physical assets register with the data provided in relation to
        completed stocktakes.          The asset records are to be adjusted
        accordingly for:
        −     amendments to inaccurate item details in the non-current physical
              assets register
        −     additional items located through the stocktake process
        −     duplicate register entries
        −     items that cannot be located, are damaged or obsolete and have been
              written-off.




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4.7.13     Review and Reconciliation
Policy Statements
   ♦      All expenditure for non-current physical assets is to be accurately recorded
          in the accounts of WaterSecure.


           To ensure accuracy and completeness of records as at 30 June, Business
           Services Finance, WaterSecure, is responsible for coordinating the
           annual stocktake process, and preparing the final consolidated stocktake
           report for WaterSecure for review by the Chief Financial Officer,
           WaterSecure or delegated officer.             Responsibility for conducting the
           stocktakes lies with Business Services Finance, WaterSecure.


   ♦      Business Services Finance, WaterSecure is responsible for reconciling the
          non-current physical assets register with the non-current physical assets
          general ledger accounts, and for instigating appropriate action for any
          reconciling items.


Procedures
Expenditure review.      At the end of each month, Business Services Finance,
WaterSecure is to review the expenditure reports to ensure that all expenditure
amounts that should be classified as non-current physical assets have been posted
to the appropriate account code.


Any errors discovered in the review will be rectified by journal transactions raised by
Business Services Finance, WaterSecure, and the adjustments verified against the
following month’s reports.


Reconciliations. Business Services Finance, WaterSecure, is responsible for:

       ♦ coordinating stocktakes (including instructing in stocktake procedures and
          compiling the final consolidated stocktake report)

       ♦ the monthly reconciliation of the non-current physical asset account
          balance as per the general ledger and the non-current physical assets
          register balance.



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4.8        Portable and Attractive
Policy

Assets costing more than $200 and less than the asset recognition threshold
for accounting purposes established in this document that are susceptible to
theft or loss because of their size and appeal, must be recorded as portable
and attractive items and controlled.


Portable and attractive items are not to be held on private property or used for
personal or community purposes without written authorisation from an
appropriately delegated officer.



Overview

Certain types of assets that have values below the asset recording threshold are, due
to their size and appeal, highly susceptible to theft or loss. To reduce the risk of loss,
such assets, known as portable and attractive items, need to be identified and
recorded in the non-current physical assets register as part of the internal control
system.



An asset will be considered to be a portable and attractive item where it is valued at
more than $200 and less than the asset recognition threshold and is of the following
type:
   ♦      video cameras and recording equipment
   ♦      personal computing equipment
   ♦      photographic equipment and cameras

   ♦      mobile telephones
   ♦      audio visual equipment (including televisions and video recorders)
   ♦      artwork
   ♦      office equipment (facsimile machines, microwave ovens and so on).



Other assets may be included in the list if considered appropriate.

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An asset with a value that falls within the recording threshold may not necessarily be
recorded as portable and attractive due to its size or nature. Examples include:

   ♦ office furniture items such as filing cabinets, chairs and desks

   ♦ items integral to the operation of, fixed to or mounted on another asset,
       thereby becoming a sub-asset of that larger asset.



The relevant manager is responsible for the safeguarding and proper use of portable
and attractive items in their custody and the associated issues of stocktakes,
transfers, disposals and register maintenance.



References

This manual

Section 4.1         Assets: General Policy

Section 4.2         Assets: Cash

Section 4.7         Assets: Non-Current Physical Assets

Section 8.5         Reporting: Financial Reporting

Section 9.3         Further Applications: Losses and Write-Offs

Section 9.7         Further Applications: Financial Systems Management

Section 9.10        Further Applications: Controls




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4.8.1        Movements and Recording
Policy Statements
          ♦ Details of all portable and attractive items are to be registered in the non-
            current physical assets register. Business Services Finance, WaterSecure,
            is responsible for ensuring that all movements of portable and attractive
            items are properly recorded in the register.


          ♦ The information recorded in the non-current physical assets register in the
            category of portable and attractive items is to sufficiently identify, locate,
            properly account for, and effectively control the items.


          ♦ Each portable and attractive item is to have a portable and attractive asset
            label attached to it.



Procedures

Movements. The policies and procedures for acquiring, transferring, disposing of
and loaning portable and attractive items are similar to those for non-current physical
assets.     Refer to the following sub-sections of section 4.7 Assets: Non-Current
Physical Assets:

          ♦ 4.7.2 Acquisitions
          ♦ 4.7.9 Transfers
          ♦ 4.7.10 Disposals
          ♦ 4.7.11 Loans.

Register. The non-current physical assets register is to contain the following details
for each portable and attractive item:

          ♦ identification number
          ♦ description of the item
          ♦ serial number
          ♦ model/brand name
          ♦ location of item
          ♦ cost centre
          ♦ accountable employee
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4.8.2        Stocktakes
Policy Statements
          ♦ At least annually, a physical stocktake is to be carried out to verify the
            existence of each portable and attractive item.


          ♦ The manager of each organisational unit is responsible for performing the
            stocktake of portable and attractive items in its custody, and for instigating
            any further action that is necessary.


          ♦ Any discrepancies identified by the stocktake are to be investigated by the
            manager responsible for the portable and attractive items stocktake, and
            the outcomes of the investigation recorded with the stocktake results.


          ♦ If a loss is revealed (although this is not a financial loss), the procedures
            for reporting losses will be applied (see section 9.3 Further Applications:
            Losses and Write-Offs).



Procedures

Conducting stocktakes. The policies and procedures for stocktaking portable and
attractive items are similar to those for non-current physical assets. See sub-section
4.7.12.




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4.9         Inventories
Policy

Inventory recording and management systems are to be maintained and
operated efficiently and effectively by the Water Plant Contractor on behalf of
WaterSecure.



Overview

Inventories are goods, other than property and services, and include the following:

         ♦ goods held for resale
         ♦ land held for resale
         ♦ goods held to repair and maintain existing assets
         ♦ bulk consumable stores
         ♦ raw materials
         ♦ work-in-progress (but not construction work-in-progress)
         ♦ finished goods.



The valuation of inventories will be in accordance with the Australian Accounting
Standard AASB102 – ‘Inventories’ which prescribes that inventories are to be valued
at either cost or net realisable value, whichever is the lower.



Consideration is to be given to the level of inventories held in stores so as to ensure
that the stores are not overstocked with inventory that is surplus to actual
requirements.     In doing this, average monthly usage and lead times for the
procurement of replacement stock should be taken into account.


The Water Plant Contractor is responsible for the management of all inventories held
at the manufacture water plants.


The designated officer at each location where a store exists is, in conjunction with
Business Services Finance, WaterSecure, responsible for ensuring that inventories
are administered and correctly valued for.

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The Chief Financial Officer, WaterSecure or delegated officer, is responsible for
ensuring that the value of inventories is updated in the financial records at least
annually so that the disclosure in the financial statements is accurate.



References

Australian Accounting Standards (AASs)

The Framework for the Preparation and Presentation of Financial Statements

AASB 102       ‘Inventories’

AASB 1031      ‘Materiality’



This manual

Section 4.1          Assets: General Policy

Section 8.5          Reporting: Financial Reporting

Section 9.1          Further Applications: Cash Management

Section 9.3          Further Applications: Losses and Write-Offs

Section 9.10         Further Applications: Controls

Section 9.13         Further Applications: Materiality



Other Documents

Queensland Treasury – ‘Minimum Reporting Requirements’




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4.9.1      Recording, Issue and Stocktake
Policy Statements
        ♦ All movements of inventory are to be correctly recorded in the inventory
          recording system (such as an inventory book, manual card system or
          computerised files). Where practical, records are to be maintained by an
          officer independent of the officer responsible for maintaining the store.


        ♦ Inventory items are to be issued based on properly authorised inventory
          requisitions or orders. These orders will form the basis of the accounting
          entries.


        ♦ Stocktakes are to be carried out at least annually by two officers (one of
          whom is independent of inventory functions) in order to confirm the
          accuracy of the inventory records against the inventory held. Stocktake
          results are to be documented, certified by the stocktaking officers and
          reviewed by the relevant manager. Appropriate action is to be taken for
          exceptions highlighted by the stocktakes (e.g. missing inventory, damaged
          items).


        ♦ All inventories are to be securely stored and protected from theft, damage
          and decay. The secured area is to ensure that control can be exercised
          over the issue of items.


        ♦ All inventory records are to be retained in accordance with the record
          retention policy (see section 9.12 Further Applications: Financial Records).




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4.9.2      Valuation
Policy Statements
        ♦ Inventories are to be valued at the lower of cost and net realisable value.


        ♦ Where it is impossible to measure items of inventory separately because
           there are a large number of homogenous items each with an insignificant
           cost, the valuation is to be by groups of those items.


        ♦ Any write-down of inventories below the average cost is to be regarded as
           a loss, written-off accordingly and disclosed in the annual financial
           statements (see section 9.3 Further Applications: Losses and Write-Offs).



Procedures

Timing. Inventories are to be counted and valued at each stocktake. The water plant
contractor to provide a reported, in writing, to the Chief Financial Officer,
WaterSecure.



When valuing these inventory items at cost, the cost will be based on the last invoice
received for such items. The cost of purchase includes duties, taxes (exclusive of
GST), transport costs and other costs directly attributable to the cost of acquisition,
less any discounts, rebates and subsidies.



Net realisable value will be measured as the estimated proceeds of sale, less (as
applicable) the costs of sale (e.g. marketing, selling, distribution).




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4.9.3       Disclosure
Policy Statements
        ♦ The value of inventories held by WaterSecure are to be disclosed at the
            end of the reporting period in the financial statements (see section 8.5
            Reporting: Financial Reporting).


        ♦ For reporting purposes, inventories include all items:

            –     held for resale
            –     to be used in the production of public property or services for sale
            –     held as consumable stores for use by the agency in the delivery of
                  goods or services.


The value of inventories would generally comprise only the value of bulk stores.
Stationery and consumable stores held for normal operations would not be
considered as inventory.


        ♦ Inventories should be shown as current and non-current assets, as
            appropriate.



Procedures

Notes. The notes to the financial statements should disclose the amounts for each
of the following classes of inventory:

        ♦       raw materials and stores
        ♦       work-in-progress
        ♦       finished goods
        ♦       construction work-in-progress.




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4.10        Intangible Assets
Policy

All intangible assets above the capitalisation threshold of $100,000 are to be
identified, properly recorded in the accounting records and amortised over the
periods of their expected future economic benefits.



Overview



AASB 138 Intangible Assets (AASB 138) defines an intangible asset as an
identifiable non-monetary asset without physical substance.             Intangibles must be
identifiable in order to distinguish them from goodwill. An intangible asset is
identifiable when it:

         ♦ is separable (i.e. capable of being separated or divided from the entity
            and sold, transferred, licensed, rented or exchanged, either individually or
            together with a related contract, asset or liability); or

         ♦ arises from contractual or other legal rights, regardless of whether those
            rights are transferable or separable from the entity or from other rights
            and obligations.



Intangible assets, both at cost and fair value, are subject to amortisation and
impairment testing over their useful life. Intangible assets with an indefinite useful life
will not be amortised. See section 3.14 Expenses: Amortisation, for the policies and
procedures in relation to this function.



The Chief Financial Officer, WaterSecure, is responsible for identifying, recognising
and recording intangible assets in the accounts of WaterSecure.




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References

Australian Accounting Standard (AASs and AASBs)

AAS 29              ‘Financial Reporting by Government Departments’

AASB116             ‘Property, Plant and Equipment’

AASB136             ‘Impairment of Assets’

AASB138             ‘Intangible Assets’



Queensland Treasury

Non-Current Asset Policies for the Qld Public Sector



This manual

Section 3.14        Expenses: Amortisation

Section 4.1         Assets: General Policy

Section 4.7         Assets: Non-Current Physical Assets

Section 9.2         Further Applications: Journal Entries




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4.10.1    Recognition and Recording
Policy Statements
       ♦ Intangible assets are to be recognised where the following criteria are
          satisfied:
          ♦ the value of the asset is $100,000 or greater; and
          ♦ it is probable that the future economic benefits embodied in the asset
              will eventuate; and
          ♦ WaterSecure has control over the future economic benefits to the extent
              that it is able to deny or regulate the access of others to the benefits it
              enjoys; and
          ♦ the transaction or event enabling WaterSecure to control the future
              economic benefits has occurred; and
          ♦ the value of the asset is capable of being measured reliably.


       ♦ Intangible assets are to be recorded in the non-current physical assets
          register. Where there is an active and liquid market, intangible assets are
          to be carried at fair value, otherwise they must be carried at cost.



Procedures

Internally generated intangible assets. The assessment recognition of internally
generated intangible assets is defined in Queensland Treasury Non-Current Assets
Policies for the Queensland Public Service Part 11 and is to be referred to in
circumstances where intangible assets are internally generated.



Revaluation. Intangible assets are subject to the same rules that apply to Property
Plant and Equipment. Refer to FMPM 4.7.7 “Revaluation”.



Financial Reporting. Disclosure are to be made in the annual financial statements
for each class of intangible asset distinguishing between internally generated
intangible assets and other intangible assets as directed in AASB 138 ”Intangible
Assets” Paragraph 118.



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4.11       Investments
Policy

All investments are to be identified and correctly authorised in accordance
with the Financial Accountability Act 2009 and any other relevant legislation.


Procedures are to maximise returns generated by investment activities,
ensuring that associated risks do not outweigh expected benefits.


Investments are to be properly recorded in the accounts of WaterSecure.



Procedures

Investments are any assets purchased and held for the generation of revenue such
as interest, dividends, and rentals, but do not include operating assets.



The procedure is for Queensland Treasury to invest funds through its investments
section for WaterSecure.



WaterSecure may be appointed by an Act or any other relevant legislation as an
administrator of a trust fund subsidised by WaterSecure. These monies are outside
the public accounts.



The Chief Financial Officer, WaterSecure, is responsible for coordinating investment
approval requests to Queensland Treasury and the Business Services Finance is
responsible for maintaining a register of WaterSecure’s investments.




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References

Australian Accounting Standard (AASs and AASBs)

AASB116       ‘Property Plant and Equipment’



This manual

Section 4.1      Assets: General Policy

Section 4.2      Assets: Cash




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4.11.1     Administration and Recording
Policy Statements
       ♦ Every security, safe custody acknowledgement and other document that
          evidences title concerning an investment is to be adequately secured.


       ♦ Where WaterSecure is appointed by an Act or any other relevant
          legislation as an administrator for trust funds, controls must be in place to
          ensure investments are correctly managed and recorded. Formal approval
          for movement of these investments, given by the officer responsible for the
          relevant trust fund, must be signed before action is completed.


       ♦ Interest earned on investments must be promptly recorded in the general
          ledger (see section 4.2 Assets: Cash).


       ♦ All movements for investments are to be recorded in an investments
          register maintained by Business Services Finance, WaterSecure.


       ♦ All investments are to be valued at the lower of cost and net realisable
          value, in accordance with the requirements of AASB116 ‘Property, Plant
          and Equipment’.



Procedure

Register. For each investment, and as applicable, the following information is to be
recorded in the investments register:

       ♦ date of investment
       ♦ name of investment
       ♦ value
       ♦ term
       ♦ interest rate
       ♦ interest calculated
       ♦ interest received
       ♦ maturity date.



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4.12        Contingent Assets
Policy
♦        Contingent assets are to be disclosed as assets in the notes to the
       financial statements.



Overview

A contingent asset as defined in AASB 137 ‘Provisions, Contingent Liabilities and
Contingent Assets’ is a possible asset that arises from past events and whose
existence will be confirmed only by the occurrence of non-occurrence of one or more
uncertain future events not wholly within the control of the entity.



Contingent assets are recognised in the financial statements as an estimate of the
                                                                                       Comment [n4]: Updated to
maximum amount that may become receivable.                                             reflect what the notes to WCRW
                                                                                       Financials say



References

Australian Accounting Standards Board
AASB 137             ‘Provisions, Contingent Liabilities and Contingent Assets


This manual
Section 3.9          Expenses: Ex Gratia Payments
Section 5.1          Liabilities: General Policy
Section 8.5          Reporting: Financial Reporting




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5       Liabilities
5.1        General Policy
Purpose

To describe the financial management policies and procedures for the management
of the liabilities of WaterSecure.



Scope

These policies and procedures apply to all officers with financial responsibilities
relating to the liabilities of WaterSecure.



Definition

In accordance with the Framework for the Preparation and Presentation of Financial
Statements The Elements of Financial Statements – Financial Position, a liability is
defined as ‘a present obligation of the entity arising from past events, the settlement
of which is expected to result in an outflow from the entity of resources embodying
economic benefits’.


Liabilities therefore represent claims by employees, individuals or organisations for:
         ♦ goods or services provided to WaterSecure
         ♦ monies borrowed by WaterSecure
         ♦ monies owing due to successful legal action against WaterSecure
         ♦ any other situation where WaterSecure is required to pay monies or
             incur a transaction that reduces equity.


Classification

In the financial statements, liabilities are classified as current or non-current. A
liability may have both a current and non-current portion.


Current liabilities are those obligations that require payment to be made within 12
months of the reporting period. Non-current liabilities are those long-term obligations
that do not require payment within the next 12 months.
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Types of liabilities include:
         ♦ accounts payable
         ♦ borrowings, debt servicing and other financial arrangements
         ♦ unpaid employee benefits and claims incurred but not reported under
             insurance, employer contribution superannuation, grant or subsidy
             schemes
         ♦ accrued expenses
         ♦ other material amounts owed by WaterSecure, including current
             expenses.


Accounts payable. Exist when WaterSecure purchases goods or services on credit,
has received those goods or services but the account remains unpaid at the end of
the reporting period.



Accrued expenses.         Expenditure incurred (e.g. credit cards, telephones) on or
before the end of the accounting period but where the corresponding invoice has not
been received as at period-end.         The expenditure is to be recognised in the
accounting period in which it was incurred.



Employee benefits. Includes the benefits for salaries, wages, leave (annual and
long-service only) and superannuation.         See also sub-section 3.12.4 Expenses:
Employee Expenses – Employee Benefits.



Borrowings. A form of funds provided by an external party and generally used to
fund capital purchases. Interest is charged for borrowed funds throughout the term
of the loan. Interest on borrowings is a finance expense and is to be disclosed as
such in the financial statements (see section 3.11 Expenses: Interest on Borrowings).



Other material amounts owed by WaterSecure. Includes (but is not restricted to)
items such as:
         ♦ unearned revenue
         ♦ credit balances in debtors

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          ♦ contingent liabilities.


Recognition

In accordance with the Framework for the Preparation and Presentation of Financial
Statements, ‘Recognition of the Elements of Financial Statements – Recognition of
Liabilities’, a liability is recognised in the balance sheet when:
          ♦ it is probable that an outflow of resources embodying economic benefits
              will result from the settlement of a present obligation, and,
          ♦ the amount at which the settlement will take place can be measured
              reliably.


Liabilities will be recognised as either current or non-current (see ‘Classification’).


Objective

It is the objective of the liabilities policy to:

          ♦ ensure any debts for which WaterSecure is liable are identified,
              measured, authorised, managed and recorded in accordance with
              statutory requirements and standards
          ♦ ensure any commitments for capital expenditure are promptly identified,
              monitored, recorded and reported
          ♦ ensure that all liabilities can be satisfied as and when required
          ♦ establish and maintain readily accessible records and documentation
              that are systematically filed and securely stored.


Systems and Control
Financial systems and internal controls are to be established and maintained to
ensure that:
          ♦ liabilities are not incurred without proper authority
          ♦ liabilities are promptly identified, assessed and recorded
          ♦ potential liabilities, with regard to legal claims, are minimised
          ♦ where liabilities are settled by payment of monies, the requirements of
              the assets and expenses policies are applied (see sections 3.1
              Expenses: General Policy, and 4.1 Assets: General Policy).


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For further information, see section 9.10 Further Applications: Controls.



Responsibilities

The   Chief   Financial     Officer, WaterSecure,         is    responsible   for   developing,
promulgating and annually reviewing these policies and procedures.



Managers are responsible for implementing defined policies and procedures, and
ensuring that officers within their organisational units comply with those authorised
policies and procedures.



All officers engaged in the financial operations of WaterSecure are responsible for
complying with these policies and procedures.


References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 25 ‘Liability Management’
Part 2 Division 3                ‘Performance Management’


Australian Accounting Standard (AAS)
The Framework for the Preparation and Presentation of Financial Statements
AAS 29              ‘Financial Reporting by Government Departments’


Queensland Treasury Accounting Policy Guidelines (APGs)
APG 9               ‘Definition and Recognition of Liabilities, Contingent Liabilities and
                    Commitments’




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This manual
Chapter 3         Expenses
Section 4.1       Assets: General Policy
Section 4.2       Assets: Cash
Chapter 7         Taxation
Chapter 8         Reporting
Section 9.2       Further Applications: Journal Entries
Section 9.3       Further Applications: Losses and Write-Offs
Section 9.6       Further Applications: Financial Systems Management
Section 9.10      Further Applications: Controls
Section 9.12      Further Applications: Financial Records


Other documents
WaterSecure Delegations and Authorisations Manual
WaterSecure Procurement Policy




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5.2        Accounts Payable
Policy

♦      All accounts payable incurred by WaterSecure require the authorisation
       of an officer with appropriate financial delegation.


♦      Proper purchasing procedures are to be adhered to in the procurement
       of goods and services resulting in accounts payable.


♦      All payments for the purchase of goods and services are to be
       supported by a supplier’s tax invoice and an officer’s acknowledgment
       of the goods or services having been received.


♦      Personal claims for payment are to be supported by a claimant’s
       declaration of the expenses due and payable and, if applicable,
       supporting documentation including tax invoices if applicable.


♦      All invoices received but not yet entered into the financial system are to
       be recognised as a liability of WaterSecure, provided the goods and
       services have been received.


♦      Where goods or services have been received but the corresponding
       invoices have not been received, the value of these goods and services
       has to be quantified and recognised as a liability of WaterSecure.


♦      Unless otherwise authorised by the Business Services Commercial,
       officers will only enter into an agreement to purchase goods and/or
       services from entities that hold an ABN (Australian Business Number).



Overview

Accounts payable are those monies owed by WaterSecure to suppliers for the
provision of goods and services.




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Examples of accounts payable include:

           ♦ invoices resulting from purchase orders
           ♦ periodic payments
           ♦ major accounts
           ♦ foreign currency payments
           ♦ hire/lease payments.


Other instances where commitments need to be recognised as accounts payable
include:

           ♦ goods and/or services received but no invoice received
           ♦ invoices received but not yet entered into the financial system.


For further information regarding these commitments, see sub-section 8.2.1
Reporting: Period End – End of Month.



For the policy and procedure for prepayments, see section 4.6 Assets: Prepaid
Expenses.



Business Services Finance, WaterSecure, is responsible for coordinating the
identification, authorisation, preparation and payment of all accounts payable.



References

Australian Accounting Standard (AAS)
AASB 117           ‘Leases’

Queensland Treasury Accounting Policy Guideline (APG)
APG 9              ‘Definition and Recognition of Liabilities, Contingent Liabilities and
                   Commitments’

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 25 ‘Liability Management’




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This manual
Chapter 3          Expenses
Section 4.2        Assets: Cash
Section 4.5        Assets: Accounts Receivable
Section 4.6        Assets: Prepaid Expenses
Section 4.7        Assets: Non-Current Physical Assets
Section 5.1        Liabilities: General Policy
Section 5.4        Liabilities: Employee Benefits
Section 8.5        Reporting: Financial Reporting
Section 9.1        Further Applications: Cash Management
Section 9.2        Further Applications: Journal Entries
Section 9.3        Further Applications: Losses and Write-Offs
Section 9.7        Further applications: Financial systems management

Other documents
WaterSecure Delegations and Authorisations Manual
WaterSecure Procurement Policy
State Procurement Policy




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5.2.1          Periodic Payments
Policy Statements
           ♦ In respect of accounts payable, periodic payments are to be made only
               where the expense is of a recurrent and consistent nature and it is
               neither the accepted practice nor necessary to issue a purchase order
               for rendering the service.


           ♦ The financial delegate of WaterSecure is responsible for ensuring the
               validity and reasonableness of claims before approving periodic
               payments.


           ♦ Periodic payments must be supported by adequate third party
               documentation such as a supplier’s tax invoice or claim. An
               acknowledgment of goods/services having been received and/or other
               evidence of payment due (e.g. an underlying agreement) are also
               required.


Procedures

Description.      Periodic service payments are made for services of a repetitive,
periodic or standard nature for which the charge is relatively consistent over a period
of time.


Examples. Examples of periodic payments include:

           ♦ computer service charges
           ♦ insurance renewal premiums
           ♦ telephone and bulk postage charges
           ♦ subscriptions to magazines and journals
           ♦ electricity and gas charges
           ♦ water and cleaning charges
           ♦ rates
           ♦ rent
           ♦ loan debt service charges (interest and redemption, sinking fund
             contributions, debt management charges, loan raising and conversion
             charges)
           ♦ interdepartmental common service charges

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Account arrangements. Before entering into an agreement with a supplier for the
periodic provision of goods or services, consideration must be given to:

       ♦    the ongoing cost of the services
       ♦    the future availability of funds
       ♦    WaterSecures’ obligation to comply with terms and conditions of
           maintenance agreements.


For ease of administrative reference to the original approval, a standing purchase
order should be raised initially for the procurement of periodic services (see section
3.4 Expenses: Purchase Orders).



Documentation. A periodic payment is to be supported by a properly approved
supplier’s tax invoice which meets the ATO requirements of a valid tax invoice.


Approval. Before approving periodic expenditure, the financial delegate must
ensure that:
        ♦ the charges made in the claim are in accordance with any relevant
            agreement
        ♦ any variation to previously existing charges is properly substantiated and
            authorised
        ♦ the value of the claim is reasonable
        ♦ where applicable, prior approval to incur the periodic expenditure has
            been obtained.




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5.2.2      Major Accounts
Policy Statements
        ♦ Wherever possible, major account arrangements should be established
            with suppliers who provide significant amounts of goods or services to
            WaterSecure on an ongoing basis.


        ♦ Where both the supplier and WaterSecure are able to accommodate the
            request, computer interfaces or electronic transfer of information should
            be used in lieu of manual preparation of major account payments.


        ♦ Payment terms and conditions are to be negotiated between
            WaterSecure and supplier, documented and signed by representatives
            of both parties before accepting major account billing arrangements.


        ♦ Business      Services    Finance,       WaterSecure,   is    responsible   for
            administering major accounts. Financial delegates are responsible for
            ensuring the validity and reasonableness of individual charges
            comprising a major account.


        ♦ Business Services Finance, WaterSecure, is responsible for ensuring
            that a major account is reconciled, the payment amount is verified and
            all reconciling items are actioned.

Procedures

Description. Major accounts are invoices for the supply of goods or services to
WaterSecure on an ongoing basis, based on purchase-specific orders (where
applicable) or periodic/contractual service arrangements.          For such supplies,
WaterSecure is invoiced periodically (e.g. monthly).


Examples. Examples of major accounts include:

        ♦ consultants
        ♦ contractors
        ♦ fleet management
        ♦ office supplies

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        ♦ travel services
        ♦ telecommunication services


Payment terms and conditions. Negotiation of payment terms and conditions may
include consideration of WaterSecure remitting 100% of an account total within a
specified time. This should be supported by the written agreement of the supplier to
adjust, on WaterSecure’s advice, any account errors and credit all monies not due by
the following accounting period.


Documentation. Business Services Commercial, WaterSecure, is to ensure that the
documentation and signed payment terms and conditions for major account
arrangements are retained in a central location.


Verification. For each major account, the contracts officer must:

        ♦ ensure all relevant supporting documentation including tax invoices has
            been received
        ♦ ensure all charges appearing on the account relate to goods or services
            supplied
        ♦ identify costings for each charge.


Reconciliation. A major account must be reconciled to ensure that WaterSecure is
paying only for goods received or services that were provided. Before payment is
made, the reconciliation must be checked and certified by the Contracts Manager
and approved by an appropriately authorised financial delegate.



Follow-up action. As required, follow-up action must be taken by Business Services
Commercial to remove from the account any charges that are not payable by
WaterSecure or obtain credit for payments previously made in error.




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5.2.3      Foreign Currency Payments
(This section does not relate to foreign currency payments made by corporate
card.)



Policy Statements
        ♦ Payment to overseas suppliers for the provision of goods or services will
            be made in foreign currency.


        ♦ Foreign currency payments will be prepared for payment in the same
            way as other accounts.            The payments are subject to the same
            purchasing, authorisation and preparation requirements (see sections
            3.3    Expenses:        Purchasing       and        3.6   Expenses:   Expenditure
            Authorisation).


        ♦ Preferred method of payment will be EFT or telegraphic transfers which
            must be transacted on the same day on which the exchange rate is
            obtained. If paying by overseas bank draft, the draft must be purchased
            from the bank or agency on the same day on which the exchange rate is
            obtained.



Procedures

Documentation. All documentation submitted to WaterSecure in respect of foreign
currency transactions should be clearly marked with the currency type required, for
the purposes of obtaining exchange rate quotations on the payment date.



Exchange rate.       When a foreign currency transaction is due for payment,
WaterSecure will obtain exchange rate quotations for the currency type required.
When an exchange rate is obtained, documentation supporting the foreign currency
payment is to be clearly marked with the rate, the date of purchasing the bank draft,
and Australian dollar equivalent.




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Overseas draft
        ♦ Cheque payments. In lieu of a cheque being drawn payable to the
           supplier, a cheque is to be drawn for the bank from which an overseas
           draft is to be purchased. When the cheque payable to the bank or
           agency is drawn, the overseas draft for the supplier is to be obtained on
           the same day.    The draft, payable to the supplier, is to be promptly
           forwarded to the supplier’s payment address.


        ♦ EFT payments.         When facilities are available, foreign currency
           payments may be made by electronic funds transfer.


Coding. Agency or bank charges incurred for the purchase of an overseas draft are
to be entered into the financial system and coded to the same expenditure account
code as that to which the payment was coded.




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5.2.4     Hire and Leases
Policy Statements
        ♦ Where it is determined to be more economical, an item will be hired or
            leased rather than purchased. Any new hire or lease agreement must
            be authorised by an approved financial delegate.


        ♦ Business Services Commercial, WaterSecure, is responsible for
            ensuring that details of all WaterSecure hire and lease agreements is
            maintained.


        ♦ All payments for hire or lease of items must be supported by a supplier’s
            tax invoice, a copy of the hire or lease agreement, acknowledgment of
            goods or services having been received, and authorisation for payment.


        ♦ All hire or lease charges must be in accordance with the original
            agreement between the supplier and WaterSecure.



Procedures

Hiring. The hire of items refers to the short-term use of goods or services supplied
under a rental agreement between the supplier and WaterSecure. Ownership of the
item does not pass to WaterSecure.



Examples of items that may be hired include:

        ♦ motor vehicles (short-term hire)
        ♦ specialised items of equipment required for a short period of time.



Leasing. The leasing of items refers to the longer-term use of goods or services
under a lease agreement between the supplier and WaterSecure.



Examples of items that may be leased include:



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         ♦ office accommodation
         ♦ motor vehicles (e.g. long term leasing)
         ♦ items of equipment required over a long term for which maintenance and
             upgrade facilities are required.


Considerations.     When hiring or leasing an item rather than purchasing it, the
following points should be considered:

         ♦ economic benefit of purchase versus hire or lease (immediate
             expenditure of full cost versus instalments over period of hire/lease)
         ♦ the benefit to WaterSecure of owning the item outright (e.g. resale value)
         ♦ other uses or applications for the item within WaterSecure
         ♦ length of time over which the item is required
         ♦ alternatives (existing equipment, other modes of travel etc.)
         ♦ maintenance, support and upgrade facilities.



Agreements. Before entering into a new hire or lease agreement with a supplier, the
terms and conditions of the agreement must be investigated to determine that the
arrangements are not detrimental to WaterSecure and value for money is being
achieved.



New hire or lease agreements must not conflict with standing arrangements or
existing leases and must be authorised by a financial delegate with appropriate
authority.



Authorisation.     All hire and lease arrangements are to be authorised by an
appropriate financial delegate in consultation with Business Services Commercial.



The delegation of the signatory to any hire or lease agreement must be sufficient to
cover the total hire/lease commitment (i.e. the sum of the present value of minimum
hire/lease payments).




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Documentation. All hire and lease arrangements are to be documented, signed by
representatives of both parties and retained by WaterSecure.



Ownership. Substantial ownership of items hired or obtained by WaterSecure under
an operating lease will remain with the supplier. Hire and operating lease payments
are to be recognised as an expense.



Substantial ownership of items leased by WaterSecure under a finance lease will
pass to WaterSecure where a schedule of lease payments will be prepared.



At inception, the present value of minimum lease payments will be recognised as a
liability. Thereafter, lease payments will be allocated between principal and interest
components. The interest portion of the finance lease payments is to be recognised
as an expense.



Approval for payment. When approving the payment of hire or lease charges, the
financial delegate must ensure that the charges are in accordance with the hire or
lease agreement.



Payment processing.      After obtaining procurement and financial authority when
entering into the agreement, subsequent payments may be processed as periodic
payments (see sub-section 5.2.1).




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5.2.5        Duplicate Invoices
Policy Statement
           ♦ Duplicate invoices which will be accepted by the ATO as a valid tax
              invoice may be used for payment of supplier accounts, providing the
              accounting records have been thoroughly investigated and it is
              determined that payment has not previously been made.



Procedure

Processing. The processing officer is to check the computerised financial system to
confirm payment of the invoice has not previously been made.          The processing
officer must certify to performing this task, and record the outcome on the duplicate
invoice.




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5.2.6     Payment Terms
Policy Statements
        ♦ Suppliers will be paid within the agreed payment terms (e.g. 7 days, 14
           days, net 30 days). Where the supplier does not prescribe payment
           terms, the payment is to be made 30 days from receipt of the invoice.


         Where a payment due date has passed or payment terms have expired,
         payment is to be generated in the next available cheque or EFT run.


        ♦ All other claims (e.g. for personnel of WaterSecure or a client
           organisation) are to be remitted in the next available cheque or EFT run.


        ♦ Where a supplier offers a discount for early remittance, all efforts are to
           be made to ensure that WaterSecure receives the discount by remitting
           payment by the due date. Where a discount of a material amount is not
           obtained, the amount of the offered discount is to be written off as a loss
           (see section 9.3 Further Applications: Losses and Write-Offs).


        ♦ Sundry fees in relation to accounts held with suppliers (such as account-
           keeping fees and interest charged on overdue accounts) will not be paid
           by WaterSecure unless the charging of such fees was specifically
           included in the contract of supply to which WaterSecure agreed.



Procedures
Nil.




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5.2.7      System Update
Policy Statements
        ♦ All accounts that are payable are to be recorded in the computerised
            financial system.


        ♦ Financial systems, are to be implemented, modified, supported and
            secured in accordance with the operational needs and internal controls
            of WaterSecure (see section 9.6 Further Applications: Financial Systems
            Management).


WaterSecure must also maintain adequate systems, processes and procedures to
meet its operating needs.


        ♦ Business Services Finance, WaterSecure, is responsible for the timely
            and accurate processing of all accounts payable documentation.



Procedures

Batching. Invoices are to be checked before data entry to ensure the payment
documentation is correct.



Validation. Data entry is to be validated before processing to the general ledger and
producing cheques or EFT payments.




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5.3          Accrued Expenses
Policy

♦      Accrued expenses must be accounted for and recognised as liabilities
       at period end.


♦      WaterSecure has nominated no threshold; all known items are
       recognised as accrued expenses.



Overview

Accrued expenses are those that are incurred on or before the end of the accounting
period but where the corresponding invoice has not been received at the end of the
accounting period. Expenditure is to be recognised in the accounting period in which
it was incurred.



The following list provides some examples of expenditure that may need to be
accrued:

           ♦ fringe benefits tax
           ♦ computer processing charges
           ♦ computer maintenance costs
           ♦ contractors
           ♦ consultants
           ♦ audit fees
           ♦ telephone charges
           ♦ insurance
           ♦ utility expenses (e.g. electricity)
           ♦ rent (if paid in arrears)
           ♦ interest
           ♦ photocopying charges
           ♦ manual purchase order expenditure not entered into the system at
              period end
           ♦ credit card expenditure billed one month in arrears
           ♦ Salaries and wages.

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Accruals and expenditure that should be accrued periodically will be identified by
historical trends and future expectations, including budgets.

Business Services Finance, WaterSecure, is responsible for ensuring all accrued
expenses are recognised in the financial statements at the end of the reporting
period.


References

Australian Accounting Standard (AAS)
AASB 1031      ‘Materiality’


This manual
Section 5.1          Liabilities: General Policy
Section 5.2          Liabilities: Accounts Payable
Section 5.4          Liabilities: Employee Benefits
Section 8.2          Reporting: Period End
Section 9.2          Further Applications: Journal Entries
Section 9.13         Further Applications: Materiality




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5.4        Employee Benefits
Policy

♦      In the financial statements, WaterSecure is to recognise liabilities for
       accrued employee benefits for annual leave, long-service leave, accrued
       salaries and wages (including fringe benefits and non-monetary
       benefits), superannuation and other post-employment benefits.



Overview

Employee benefits arise as a result of past services of employees, and accordingly
impose a present and future obligation on WaterSecure.



For financial reporting purposes, accrued employee benefits include:

         ♦ annual leave (including leave loading)
         ♦ long service leave (see below)
         ♦ outstanding salaries and wages (including fringe benefits and non-
              monetary benefits)
         ♦ other post-employment benefits.


Accrued Long Service Leave.

The value of benefits expected to be paid in the next 12 months is a current liability.
The balance is a non-current liability. (See section 8.5 Reporting: Financial
Reporting.)


For further information regarding employee benefit expenses, see sub-section 3.12.4
Expenses: Employee Expenses – Employee Benefits.


References

Australian Accounting Standard (AAS)
AASB 119          ‘Employee Benefits’



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Queensland Treasury Accounting Policy Guideline (APG)
APG 10          ‘Accounting for Employee Benefits’


This manual
Section 3.12      Expenses: Employee Expenses
Section 5.1       Liabilities: General Policy
Section 8.5       Reporting: Financial Reporting


Other documents
Various awards and conditions of employment
Queensland Treasury: Long Service Leave Central Leave Guidelines




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5.4.1      Calculation and Reporting
Policy Statement


        ♦ In the financial statements, WaterSecure will recognise liabilities for
            annual leave and long-service leave (see below) for every employee
            during their period of employment, when prescribed by the conditions of
            employment.


        ♦ WaterSecure is responsible for ensuring the accurate, timely and
            complete disclosure of the employee benefit liabilities. All leave liabilities
            will be disclosed in accordance with relevant legislation and accounting
            standards, including AASB119 ‘Employee Benefits’.



Procedures

Annual leave. The accrued annual leave benefit is to be calculated at the end of
each financial reporting period. The calculation is to be based on the current pay
rates for all employees and is to include, where appropriate, additional allowances
and employee overhead oncosts (e.g. payroll tax, workers’ compensation insurance,
employer superannuation contribution).



Accrued Long Service Leave. The accrued long service leave benefit is to be
calculated at the end of each financial reporting period. The calculation is to be
based on the length of employment and current pay rates for all employees and is to
include, where appropriate, additional allowances and employee overhead oncosts
(e.g. payroll tax, workers’ compensation insurance, employer superannuation
contribution). The value of benefits expected to be paid in the next 12 months is a
current liability. The balance is a non-current liability. (See section 8.5 Reporting:
Financial Reporting.)

For further information regarding employee benefit expenses, see sub-section 3.12.4
Expenses: Employee Expenses – Employee Benefits.




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Special and other leave benefits. As there are no payments for accrued sick,
special and other leave benefits on termination of employment, a liability does not
accrue in respect of such benefits.         Consequently, there is no requirement to
establish a provision for these types of leave benefits.




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5.5        Borrowings
Policy

♦      WaterSecure may use short or long term borrowings for specific
       purposes.


♦      In the financial statements, the amount of borrowings outstanding at the
       end of the reporting period must be disclosed as a liability.



Overview

Borrowings are a form of funding that may be utilised for specific purposes.
Examples include:

         ♦ short-term
         ♦ bills of exchange
         ♦ long-term loans
         ♦ hire purchases.


Interest is an amount of money paid by WaterSecure to compensate lenders for the
use of borrowed funds.        See section 3.11 Expenses: Interest on Borrowings for
further information.



The Chief Financial Officer, WaterSecure, is responsible for the negotiation and
agreement of terms and conditions for borrowings.


References

This manual
Section 3.11           Expenses: Interest on Borrowings
Section 5.1            Liabilities: General Policy
Section 5.2            Liabilities: Accounts Payable
Section 8.5            Reporting: Financial Reporting




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5.5.1     Arrangements
Policy Statements
        ♦ The terms and conditions of all borrowings for WaterSecure are to be
            documented and stored securely by Business Services Finance,
            WaterSecure.


        ♦ All borrowings and loans for WaterSecure are to be recorded in a central
            register maintained by Business Services Finance, WaterSecure.


Procedures

Considerations. Before obtaining approval for borrowings, the following points are
to be considered:

        ♦ the costs of each form of borrowing
        ♦ the proposed interest rate (fixed or variable; risk margin)
        ♦ the terms of the arrangements
        ♦ the maturity schedule of the debt finance required
        ♦ ability of WaterSecure to meet loan redemption and interest at due date
        ♦ temporary fluctuations versus permanent needs of WaterSecure.




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5.6           Unearned Revenue
Policy
♦       All unearned revenue is to be carried forward as a liability at balance
        date.



Overview

Unearned revenue is revenue that is received in advance:
         ♦ before the goods or services are supplied by WaterSecure
         ♦ received in the form of a grant prior to grant conditions being met



Revenue should be carried forward as a liability to future accounting periods where it
satisfies the following criteria:
         ♦ It does not solely relate to goods and services provided during the
              reporting period.
         ♦ Where the receipt or recoverable amount has resulted in a liability, that
              amount must be repayable should goods and services not be provided in
              the future.



References

Australian Accounting Standard (AAS)
The Framework for the Preparation and Presentation of Financial Statements
AAS 29          ‘Financial Reporting by Government Departments’


Queensland Treasury Accounting Policy Guideline (APG)
APG 2           ‘Definition and Recognition of Income’


This manual
Section 5.1     Liabilities: General Policy
Section 8.5     Reporting: Financial Reporting




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5.7        Credit Balances in Debtor Accounts
Policy
♦        The gross amount of credit balances in debtor accounts is to be
       disclosed as a current liability in the financial statements.



Overview

Credit balances in debtor accounts are usually the result of debtor overpayments,
miscoding or unused credits for price or quantity adjustments. Once verified to be
correct, credit balances resulting from miscoding should be corrected.



Verified credit balances should be refunded to the debtor, except where the debtor
has frequent transactions with WaterSecure and the credit can be offset against
future debts raised (see sub-section 4.5.3 Assets: Accounts Receivable – Customer
Credit Notes). Where a credit balance is to be refunded, it should be in accordance
with the policies and procedures prescribed in sub-section 4.2.9 Assets: Cash -
Refunds.



Credit balances are not to be included in the aged trade debtors balance as this
balance must show the gross position.



The issue of credit notes for refunds may require adjustments to be included in GST
returns to the ATO.


References

This manual
Section 4.2           Assets: Cash
Section 4.5           Assets: Accounts Receivable
Section 5.1           Liabilities: General Policy
Section 8.5           Reporting: Financial Reporting
Section 9.2           Further Applications: Journal Entries

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5.8         Contingent Liabilities
Policy
♦        Contingent liabilities are to be disclosed as liabilities as a note to the
        financial statements.



Overview

A contingent liability is an estimate of an amount payable by WaterSecure, the exact
amount being dependant on the outcome of one or more future uncertain events.



Contingent liabilities are recognised in the notes to the financial statements when
certainty in the outcome/liability is not known. If known, the amount payable will not
be contingent and will be recognised in the financial statements as a liability.



References

Queensland Treasury Accounting Policy Guideline (APG)
APG 9                ‘Definition and Recognition of Liabilities, Contingent Liabilities
                     and Commitments’


This manual
Section 3.9          Expenses: Ex Gratia Payments
Section 5.1          Liabilities: General Policy
Section 8.5          Reporting: Financial Reporting




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6           Equity
6.1         General Policy


Definition

Equity is the residual interest in the assets of WaterSecure after deducting its
liabilities. Equity can be created through State Government contributions, excess of
revenue over expenses during a reporting period, and as a result of asset
revaluations.



Classification

State Government equity contributions. Refers to the recognition of interest in a
entity as a result of specific State Government direction.



Reserve appropriations. Are the result of an operating surplus or deficit for the
reporting period and are added to retained surpluses or accumulated deficits.



Asset revaluation reserves. In these terms, revaluation means the process of re-
establishing the value of non-current physical assets as at a particular date (see sub-
sections 4.7.7 Assets: Non-Current Physical Assets – Revaluation).



Recognition

As equity is the residual interest in the assets of WaterSecure, the amount assigned
to equity will always equal the excess of assets over liabilities. Recognition criteria for
equity are, therefore, the same as those for assets (see section 4.1 Assets: General
Policy) and liabilities (see section 5.1 Liabilities: General Policy).




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Objective

It is the objective of the equity policy to ensure that:
         ♦ entities that have contributed equity can be identified in terms of the
               relevant legislation or standards
         ♦ amounts appropriated from surpluses or reserves are separately
               recorded
         ♦ grants that qualify to be recorded as equity are supported by records
               giving the particulars of each grant
         ♦ authorised       reserves,    including        asset     revaluation,     are    properly
               established and maintained
         ♦ appropriations for distribution to equity interests are approved by a
               competent authority and properly recorded in the accounts.



Systems and Control

Adequate systems and internal controls are to be established and maintained to
ensure that:
         ♦ equity is promptly identified and recorded
         ♦ equity is managed and, where appropriate, disbursed in accordance with
               approved policies and procedures
         ♦ equity is reconciled at least annually with the related organisation.



For further information, see section 9.9 Further Applications: Controls.


Responsibilities

The   Chief     Financial   Officer, WaterSecure,          is     responsible      for   developing,
promulgating, implementing and annually reviewing these policies and procedures.


Managers are responsible for consistently applying these policies and procedures to
their organisation.


References

Australian Accounting Standards (AASs)

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AAS 29          ‘Financial Reporting by Government Departments’


Queensland Treasury Accounting Policy Guidelines (APGs)
APG 11          ‘Definition and Recognition of Equity’


Queensland Treasury: Non-Current Asset Policies for Qld Public Service


This manual
Chapter 4          Assets
Chapter 5          Liabilities
Chapter 8          Reporting
Section 9.2        Further Applications: Journal Entries
Section 9.5        Further Applications: Risk Management
Section 9.7        Further Applications: Financial Systems Management
Section 9.10       Further Applications: Controls
Section 9.12       Further Applications: Financial Records




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6.2        Reserves
Policy
Reserves are established to identify the State Government’s interest in
WaterSecure.

Overview
Reserves may be created as follows:
       ♦ by the transfer of a surplus or deficit from the appropriation account
       ♦ by transfers from existing reserves
       ♦ as a result of asset revaluations
       ♦ by direct capital contribution from the owner.


To create or decrease a reserve, a journal entry is to be used (see section 9.2
Further Applications: Journal Entries).


The Chief Financial Officer, WaterSecure, is responsible for the administration and
management of reserves.



References

Australian Accounting Standards (AASs)
AAS 29           ‘Financial Reporting by Government Departments’

Queensland Treasury Accounting Policy Guideline (APG)
APG 11           ‘Definition and Recognition of Equity’
Queensland Treasury: Non-Current Asset Policies for the Qld Public Service


This manual
Section 4.7 Assets: Non-Current Physical Assets
Section 6.1 Equity: General Policy
Section 8.5 Reporting: Financial Reporting
Section 9.2 Further Applications: Journal Entries




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7          Taxation
7.1        General Policy
Purpose

To describe the policies and procedures for the different types of taxation obligations
that WaterSecure will incur during the normal course of operations.



Classification

For the purposes of WaterSecure, the following types of taxation will apply:



Fringe Benefits Tax. Fringe Benefits Tax (FBT) is a Federal Government tax on
benefits (other than salaries, wages or similar payments) that are provided in respect
of employment by an employer to a past or present employee or associate of an
employee. For the purposes of FBT, the State Government is a single employer. FBT
instalments are remitted quarterly during the FBT year (1 April to 31 March).



Payroll tax.     Queensland employers paying wages in excess of a nominated
threshold (presently $1,000,000 annually) are obliged to remit payroll tax to the State
Government. The exemption threshold reduces progressively. It falls by $1 for every
$3 of wages over the threshold until $4 million is reached. The reduced threshold will
apply if wages are within the range. Above the upper limit, wages are taxed in full at
4.75%. Payroll tax is remitted monthly to the Queensland Government Office of
State Revenue.


Pay As You Go (PAYG). PAYG is a single, integrated system for reporting and
paying withholding amounts and tax on business and investment income.



PAYG (income) tax. Federal Pay As You Go (PAYG) tax is an amount withheld
from an employee’s salary or wage each time the salary or wage is paid. It is based
on the gross total of the salary or wage, less any threshold, and is remitted
fortnightly, at the prescribed rates, to the Australian Taxation Office (ATO).



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Goods and Services Tax (GST). GST is a broad-based tax of 10 per cent on the
supply of most goods, services and anything else consumed in Australia. GST is
effective from 1 July 2000.



Objective

It is the objective of the taxation policy to ensure that:
         ♦ taxation liabilities are calculated accurately and remitted on time to the
              appropriate authorities
         ♦ records are maintained in accordance with the relevant legislation and/or
              other requirements of the taxation authorities.


Systems and Control

Adequate systems and internal controls are to be established and maintained for all
taxation procedures to ensure that the taxation liabilities of WaterSecure are
supported by appropriate records and remitted when required in compliance with the
                                                                                                  Deleted: .
National Tax Equivalents Regime.



For further information, see section 9.9 Further Applications: Controls.


Responsibilities

The   Chief    Financial     Officer, WaterSecure,        is    responsible   for   developing,
promulgating and annually reviewing these policies and procedures.



Managers are responsible for implementing defined policies and procedures, and
ensuring that officers within their organisational units comply with those authorised
policies and procedures.



All officers engaged in the operations of WaterSecure are responsible for complying
with these policies and procedures.




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References

Legislation
Income Tax Assessment Act 1936
Payroll Tax Act 1971
Fringe Benefits Tax Assessment Act 1986
A New System (Goods and Services Tax) Act 1999
National Tax Equivalent Regime


This manual
Section 3.1            Expenses: General Policy
Section 5.2            Liabilities: Accounts Payable
Section 9.6            Further Applications: Financial Systems Management
Section 9.10           Further Applications: Controls
Section 9.12           Further Applications: Financial Records


Other documents
WaterSecure Authorities and Delegations Manual
WaterSecure Corporate Entertainment and Hospitality Policy
WaterSecure Gifts and Benefits Policy




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7.2        Fringe Benefits Tax (FBT)
Policy
All fringe benefits tax for which WaterSecure is liable is to be accurately
assessed and remitted to the Australian Taxation Office.


All required supporting documentation is to be obtained and held in files of
WaterSecure.



Overview

Fringe Benefits Tax (FBT) is a Federal Government tax on benefits (other than
salaries, wages or similar payments) that are provided in respect of employment by
an employer to an employee or associate of an employee. For the purposes of FBT,
the State Government is a single employer.



FBT may be incurred for the following expenses paid by an employer:
         ♦ cars
         ♦ car parking
         ♦ housing
         ♦ telephones
         ♦ overseas or domestic travel expenses
         ♦ relocation or transfer expenses
         ♦ education development payments
         ♦ entertainment
         ♦ living away from home allowance (employees only, not associates)
         ♦ board (meals)
         ♦ property benefits
         ♦ residual benefits.



FBT instalments are remitted quarterly during the FBT year (1 April to 31 March).



Officers charged with responsibility for items subject to FBT (e.g. vehicle custodians)
are responsible for enforcing policies relating to private use, and for maintaining the
records required for FBT purposes.
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Individual officers receiving payments subject to FBT are responsible for submitting
the declarations required to reduce taxable values. From 1 April 2007, any employer
who provides fringe benefits to an employee with a total taxable value of more than
$2,000 for a FBT year (1 April to 31 March) must record the grossed-up taxable value
of the benefits on the employee’s payment summaries for corresponding income year
(1 July to 30 June).



This must also include any fringe benefits provided to associates of the employee,
such as a spouse or child.



The amount reported on payment summaries will not be included in assessable (or
taxable) income or affect the amount of standard Medicare levy payable. The total
will, however, be used for determining a number of individual’s entitlements, e.g.
HELP, Child Support.



Financial delegates are responsible for identifying payments subject to FBT and
ensuring that the necessary information is provided with the payment documentation.



Business Services Finance, WaterSecure, is responsible for assessing the FBT
liability of WaterSecure, ensuring that all necessary records and documentation are
held, and submitting the annual FBT return to ATO.




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References

Legislation
Fringe Benefits Tax Act 1986
Fringe Benefits Tax Assessment Act 1986
Fringe Benefits Tax (Miscellaneous Provisions) Act 1986


This manual
Section 5.2         Liabilities: Accounts Payable
Section 7.1         Taxation: General Policy


Other documents
Australian Taxation Office explanatory booklets issued for FBT
WaterSecure Corporate Entertainment and Hospitality Policy
WaterSecure Gifts and Benefits Policy




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7.3        Payroll Tax
Policy
All payroll tax is to be accurately assessed and remitted to the Office of State
Revenue.



Overview

Pay-roll tax is payable on taxable wages. Taxable wages include:

         ♦ cash wages
         ♦ commissions
         ♦ directors' fees
         ♦ non-cash wages
         ♦ bonuses
         ♦ salaries
         ♦ fringe benefits
         ♦ allowances
         ♦ salary sacrifice
         ♦ employer superannuation contributions
         ♦ taxable eligible termination payments



In general, payments are liable to pay-roll tax if they are:
         ♦ a reward for services rendered by an employee,
         ♦ payments to which the employee has an enforceable right; or
         ♦ taxable eligible termination payments.

This includes cash salary which an employee elects to forego in return for other
benefits. A typical example is sacrificing cash for additional superannuation
contributions.

Taxable fringe benefits are those taxed by the Fringe Benefits Tax Act 1986 (Cwlth).
From 1 July 2002, pay-roll tax is payable on the FBT taxable amount, that is, the
grossed-up value of a fringe benefit.




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Car parking fringe benefits are excluded from pay-roll tax, unless provided in lieu of a
cash component of a salary package, e.g. sacrifice of $2,000 of total salary for the
car parking benefit.

Motor vehicle allowances (traveling allowances) are taxed on the portion over 50
cents per kilometre. Allowances for accommodation expenses (away from
headquarters overnight), are taxed on the portion over $90 per night.

From 1 July 2002, "wages" for pay-roll tax purposes include taxable eligible
termination payments. "Taxable ETP" is defined as an eligible termination payment
(ETP) that would be assessable under the Income Tax Assessment Act 1936 (Cwlth)
if paid to an employee, but does not include a death benefit ETP.

Payment for an employee's accrued wages and leave entitlements (such as holiday
pay and long service leave) on termination of employment are taxable. Payments in
lieu of notice, severance or redundancy payments are also taxable.

Business Services Finance, WaterSecure, is responsible for ensuring that the total
amount of payroll tax is posted to the general ledger and remitted within seven
calendar days of the end of each month to the Office of State Revenue.



References

Legislation
Payroll Tax Act 1971


This manual
Section 3.12           Expenses: Employee Expenses
Section 7.1            Taxation: General Policy




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7.4         PAYG Tax (Employees)
Policy
All income tax is to be accurately assessed, deducted from eligible payments
and remitted to the Australian Taxation Office.



Overview

For the purposes of this section, an employee is defined by the Income Tax
Assessment Act 1936.



Pay As You Go (PAYG) tax is a tax withheld from an employee’s salary or wage
each time the salary or wage is paid. Taxation is calculated differently for employees
who have:

         ♦ lodged an employment declaration claiming the general threshold
         ♦ lodged an employment declaration not claiming the general threshold
         ♦ not provided their tax file number.



Taxation calculations also take into account rebates claimed through the employment
declaration lodged with WaterSecure and other charges such as Higher Education
Loan Programme (HELP) debts.



The Chief Financial Officer, WaterSecure is responsible for ensuring the deduction
and fortnightly remittance of PAYG tax from salary and wage payments, and the
annual issue of payment summaries.



References

Legislation
Income Tax Assessment Act 1936




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This manual
Section 3.12   Expenses: Employee Expenses
Section 5.4    Liabilities: Employee Entitlements
Section 7.1    Taxation: General Policy




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7.5        PAYG Tax (Other)
Policy Statements
         ♦ All payments subject to PAYG tax are to be clearly identified when
             preparing claims for payment.


         ♦ PAYG tax is to be withheld in all instances where a supplier fails to
             provide an ABN at the top marginal rate of income tax including
             Medicare Levy, or approved varied rate where the appropriate
             documentation is provided.


         ♦ PAYG tax withheld is to be remitted within the prescribed time frame to
             the Australian Taxation Office (ATO).


         ♦ The Accounts Officer, WaterSecure, is to maintain records of service
             providers and their taxation details, in accordance with the requirements
             of the Australian Taxation Office.



Procedures

Identification. Generally, a payment will be a PAYG withholding instance where
goods and services are supplied by an entity that fails to provide a valid ABN.



Registration. WaterSecure will have a valid ABN registration at all times.


Deduction rate.     PAYG tax is withheld from payments to the entity at the top
marginal rate of income tax including Medicare Levy, except where:


       ♦ voluntary agreement
       ♦ a valid ABN is quoted



Remittance.     Business Services Finance, WaterSecure, is to remit PAYG tax
withheld and the appropriate documentation to the ATO within the required timeframe
established by the relevant tax legislation.
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End of financial year.     At the end of the financial year, but before 14 July,
WaterSecure, is to forward original Payment Summary forms to each supplier from
whom PAYG tax was withheld during the year.                 Duplicate summaries and a
reconciliation statement are to be forwarded to the ATO by 14 August.



Record-keeping.     In accordance with ATO requirements, all statements and
documentation relating to PAYG withholding instances are to be retained by
WaterSecure for at least five years from the end of the financial year to which they
relate.




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                                                                                         Comment [n5]: I have added
                                                                                         this section in as was not
7.6         National Tax Equivalents Regime                                              previously included.


Policy
♦ Income Tax is to be accurately assessed and reported through the National
   Tax Equivalents Regime.



Overview
The National Tax Equivalents Regime (NTER) is an administrative arrangement
between the Commonwealth and the states under which Commonwealth income tax
laws are applied to certain government bodies, namely Government Owned
Corporations (GOCs) and commercialised business units. The NTER regime is
administered by the ATO which charges the Queensland Government on a fee-for-
service basis.


The primary objective of the NTER is to promote competitive neutrality, through a
uniform application of income tax laws, between NTER entities and their privately
held counterparts.


WaterSecure will:

         ♦ lodge an annual NTER return in accordance with the lodgement due
            dates as published in the relevant financial years lodgement circular and
            the NTER Manual; and
         ♦ will comply with any other requirements as detailed in the NTER Manual.



Business Services Finance, WaterSecure is responsible for ensuring that the NTER
return is prepared and lodged with the NTER, and that any tax liability is paid to the
Commonwealth by the due date.



References

Legislation
Manual for the National Tax Equivalents Regime
Australian Tax Office website, Fact Sheets, Bulletins and Rulings


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7.7         Goods and Services Tax (GST)
Policy
♦ All GST is to be accurately assessed and reported to the Australian
   Taxation Office.




Overview

GST is a broad-based tax of 10 per cent on the supply of most goods, services and
anything else consumed in Australia.



Most goods, services and anything else consumed in Australia are subject to GST.
These are defined as taxable supplies.



There are other types of supplies that are not subject to GST. These are called GST-
free supplies and input taxed supplies.



If supplies are GST-free, WaterSecure would not charge or incur GST for them, but
WaterSecure is entitled to claim input tax credits for business inputs used in the
production of GST-free supplies.     GST-free supplies include most food, exports,
sewerage and water, eligible childcare, non-commercial activities of charitable
institutions and most education and health services.



If supplies are input taxed WaterSecure would not charge GST on the supply, but
neither are you entitled to claim input tax credits for anything acquired or imported to
make the supply.      Input taxed supplies include financial supplies, supplies of
residential rent and residential premises and some supplies of precious metals.

WaterSecure will:

         ♦ report the GST payable on taxable supplies we have made; and
         ♦ claim the GST included in the price we have paid for acquisitions and the
            GST paid on anything imported for use in our enterprise on a monthly

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           basis to the Australian Taxation Office (ATO) therefore resulting in either
           obtaining a refund or making payment to them.



Business Services Finance, WaterSecure is responsible for ensuring that the
reporting to the ATO is received by the ATO within 21 days of the end of each tax
period.



References


Legislation

A New System (Goods and Services Tax) Act 1999
Australian Tax Office website, Fact Sheets, Bulletins and Rulings


The Manual
Section 7.1 Taxation: General Policy




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7.7.1      Identification, Deduction and Remittance


Identification. The identification of GST will be identified by the financial delegate or
approving officer at the time of preparation of input documents.


Remittance/claims. Business Services Finance, WaterSecure, to remit/claim GST
tax and the appropriate documentation to ATO within the required time frame
established by the relevant tax legislation.



Record Keeping. Tax invoices must be retained for a period of 5 years after the
occurrence of the transaction to which they relate.



Deduction Rate. As at 1 July 2000 GST deduction rate is 10 per cent.




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8            Reporting
8.1          General Policy
Purpose
To describe the policies and procedures that relate to the reporting of WaterSecure’s
financial activities.



Scope
These policies and procedures apply to all officers with financial responsibilities that
relate to the preparation and use of financial reports.



Definition

Financial reports are documents that report financial information to both internal and
external users. The objective of these reports is to provide users with information
that is useful for making and evaluating decisions about the allocation of scarce
resources.



Classification

Period end. Sets of directions and statements designed to ensure that all financial
data is entered promptly into the accounting systems.



Internal reporting.     Regular reports that present financial data for analysis and
facilitate efficient and informed decision-making.            Internal reports are developed
according to the agency’s needs.



System appraisals.      Periodic assessments of the operation of material financial
systems, in terms of identification, recording, management and control functions.



Financial reporting. Includes preparing annual financial statements to indicate the
financial position of WaterSecure at the reporting date.

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Objective

It is the objective of the reporting policy to:

        ♦ enable relevant and reliable reporting of financial information
        ♦ enable timely information gathering and reporting in accordance with
            legislation, Australian Accounting Standards and internal requirements.



Systems and Control

All financial systems are to have the appropriate controls in place to ensure the
accuracy, relevance and reliability of the financial data that is required for reporting
purposes.



For further information, see sections 9.7 Further Applications: Financial Systems
Management, and 9.10 Further Applications: Controls.



Responsibilities

In respect of WaterSecure reporting, the Chief Financial Officer, WaterSecure, is
responsible for:
        ♦ ensuring that relevant information is collected and processed accurately,
            completely and on a timely basis, through the implementation and
            maintenance of an efficient and effective internal control framework
        ♦ producing financial reports that are comprehensive, relevant and effective
            in terms of the information delivered, for decision making purposes
        ♦ ensuring that reports are in a suitable format and encompass content
            tailored for client organisation users
        ♦ ensuring that financial information is appropriately distributed.




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References

Legislative

Financial and Performance Management Standard 2009
Part 2 Division 3               ‘Performance Management’
Part 3                          ‘Reporting’


Statements of Accounting Concepts (SACs)
SAC 1           ‘Definition of Reporting Entities’
SAC 2           ‘Objectives of General Purpose Financial Reporting’


Australian Accounting Standards (AASs and AASBs)
The Framework for the Preparation and Presentation of Financial Statements


AASB 108        ‘Accounting Policies, Changes in Accounting Estimates and Errors’
AASB 116        ‘Property, Plant and Equipment’
AASB 117        ‘Leases’
AASB 138        ‘Intangible Assets’
AASB 1031       ‘Materiality’
AAS 29          ‘Financial Reporting by Government Departments’


This manual
All policies and procedures




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8.2        Period End
Policy
At the end of each accounting period (month, quarter, year or other period), all
financial information is to be updated to the financial systems.



Overview

Period-end policies and procedures are sets of directions and statements designed
to ensure that all financial data is entered into the financial systems promptly. The
purpose of period-end practices is to ensure:

       ♦ financial information in the accounts is accurate and recognised promptly
       ♦ compliance with statutory, regulatory and internal reporting requirements
       ♦ monthly reports to management are reliable.



The financial information subject to period-end practices includes:

       ♦ receipts issued
       ♦ invoices raised
       ♦ commitments identified
       ♦ payments (including salaries and wage payments)
       ♦ write-offs and write-ons for inventory and non-current physical assets
       ♦ non-cash transactions for the period (including depreciation expenses)
       ♦ accruals and prepayments.



All officers are individually responsible for ensuring that period-end information is
available for processing within the required time frame.



The Chief Financial Officer, WaterSecure is responsible for ensuring that all
processing is accurately and fully completed and that the computerised financial
system is updated in a timely and reliable manner by:

         ♦ establishing period-end practices and ensuring relevant officers comply
            with them

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        ♦ establishing and maintaining an effective and efficient internal control
              framework.




References

This manual
Section 8.1          Reporting: General Policy
Section 8.3          Reporting: Internal Reporting
Section 9.2          Further Applications: Journal Entries




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8.2.1      End of Month
Policy Statements
        ♦ All month-end procedures and financial system updates are to be
          completed before monthly management reports are generated.


        ♦ All data entry to the financial system is verified before updating the general
          ledger at the close of the accounting period.


        ♦ Business Services Finance, WaterSecure, is responsible for ensuring that
          all suspense account clearances are completed and processed by month’s
          end.



Procedure

Timetable.    Business Services Finance, WaterSecure, is to establish a report
processing timetable.       To achieve near best practice, it is intended that all
management reports, including appropriate accrual adjustments, will be distributed to
relevant officers by the 8th working day of the end of the reporting period.



In order to achieve this, the ledger may incorporate estimates of amounts payable
and/or receivable that could not be accurately determined at or before the conclusion
of the 8th working day. Estimates will be incorporated where:

        ♦ the relevant payable or receivable cannot otherwise be accurately
          determined
        ♦ the amount involved is material to the user.



Care should be taken to avoid omitting an item as being insignificant to an
organisation when, in fact, the item is significant to the decision-making of a sub-unit
within that organisation.


The Chief Financial Officer, WaterSecure, is responsible for establishing appropriate
procedures, policies and protocols to achieve this reporting timetable.


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Data entry. Business Services Finance, WaterSecure, is to ensure that all data
processing of financial information to be recognised in the accounting period is
complete by the final processing day of the month.



This information includes details of the following items raised or received during the
month:

         ♦ invoices/claims received from suppliers and claimants
         ♦ manual cheques raised
         ♦ monies received
         ♦ invoices raised
         ♦ journal entries.



Journal entries. Business Services Finance, WaterSecure, is to ensure that all
journal entries (including standing journal entries) to be recognised in the monthly
accounting period are entered into the computerised financial system no later than
the 6th working day after the end of the reporting period.



Management reports. When satisfied that all financial information for the period has
been entered into the financial system, Business Services Finance, WaterSecure is
responsible for ensuring that the monthly EMT cost centre reports are generated and
distributed, that a budget versus actual anaylsis is prepared, and preparation of the
monthly Finance Report. See section 8.3 Reporting: Internal Reporting.



Verification.     The Chief Financial Officer, WaterSecure, is responsible for
establishing and verifying the accuracy of financial information. In this respect, the
Chief Financial Officer, WaterSecure or delegated officer, will establish and
implement a monthly verification schedule for assets, liabilities and equity. Minimum
verification requirements include:
         ♦ reconciliation     of   subsidiary    ledgers         (accounts   payable,   accounts
           receivable, property, plant and equipment) to the general ledger
         ♦ bank reconciliation
         ♦ major accounts payable reconciliation with creditor statements
         ♦ borrowings and leases reconciliation with the central register
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        ♦ employee entitlements.


In defining and establishing verification procedures, the Chief Financial Officer,
WaterSecure or delegated officer, will assess risk of misstatement of assets,
liabilities and equity. Verification of profit/loss items will be limited.




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8.3        Internal Reporting
Policy
Relevant, reliable and timely internal management reports, based on both the
needs of users and the cost effectiveness of producing the report, are to be
available to relevant personnel of WaterSecure at the required intervals.



Overview

Internal management reporting presents financial data for analysis and facilitates
efficient and informed decision-making.        Internal reports are based on the cost-
effective needs of WaterSecure and individual users, and may be distributed on
either a timed basis (e.g. monthly) or ad hoc basis (as required).



The objectives of the internal management reporting policy are to:
       ♦ report relevant and reliable financial information that can be used to assist
          in management decision-making
       ♦ gather and report information in a timely manner, in accordance with
          WaterSecure and user needs
       ♦ assess the financial performance and accountability of WaterSecure
       ♦ enable cost centre managers to be held accountable for the accuracy and
          integrity of data posted to their cost centres.



Managers (and other relevant personnel of WaterSecure) are responsible for
requesting the non-standard management reports they require, and for analysing the
data contained in the reports received.



The Chief Financial Officer, WaterSecure, is responsible for ensuring that policies
and procedures are in place to ensure the accuracy of the data upon which internal
management reports are based, coordinating requests for reports, and ensuring that
systems are in place for the prompt production and distribution of reports.




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References

This manual
Section 8.1   Reporting: General Policy
Section 8.2   Reporting: Period End
Section 9.7   Further Applications: Financial Systems Management




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8.3.1      Management Reports
Policy Statements
        ♦ Internal management reports are to be accessible to relevant personnel at
          monthly intervals, at minimum, and as required on a quarterly, six-monthly
          and yearly basis.


        ♦ Internal general ledger and similar management reports are to be based
          on computerised financial system data.


        ♦ All management reporting systems are to have the appropriate controls in
          place to ensure the accuracy, integrity, security, relevance, and reliability of
          the financial data (see sections 9.7 Further Applications: Financial Systems
          Management, and 9.10 Further Applications: Controls).


        ♦ Users are required to analyse the data contained in the internal reports,
          and initiate promptly any corrective action identified from the reports.


        ♦ Management reports at transaction level are to include sufficient
          information to enable cost centre managers to be held accountable for the
          accuracy and integrity of data posted to their cost centres.



Procedures
Examples. Examples of the types of management reports that may be developed
include:
        ♦ Cost centre reports
          ♦ monthly expenses incurred
          ♦ forecast expenditure vs. actual expenditure
          ♦ ad hoc expense reports
        ♦ revenue
          ♦ monies received
          ♦ forecast receipts vs. actual receipts
          ♦ ad hoc revenue reports




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      ♦ assets
         ♦ cash flows
         ♦ aged debtors
         ♦ stock usage
         ♦ non-current physical asset acquisitions and disposals
      ♦ liabilities
         ♦ trade and other creditors
         ♦ borrowings and loan commitments
         ♦ lease liability commitments
         ♦ provisions for employee entitlements for the period
         ♦ capital commitments
         ♦ contingent liability schedules.




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8.4        System Appraisals
Policy
Appraisals of all systems used in WaterSecure’s financial operations are to be
completed at least once every 3 years.



Overview

A system appraisal is an assessment of a financial system. It assesses that, in
relation to the system’s operation in terms of identification, recording, management
and control functions:

       ♦ controls have been implemented and maintained, and the system is
          consequently operating effectively and efficiently
       ♦ procedures are appropriate and cost-effective.



System appraisals are also a mechanism for:

       ♦ providing assurance that the accountable officer is managing WaterSecure
          efficiently, effectively and economically, as required by the Financial
          Accountability Act 2009
       ♦ ensuring that internal control, and all other procedures within WaterSecure,
          afford adequate safeguard with respect to monies and property
       ♦ evaluating the performance of WaterSecure.



System appraisals are to be carried out in all financial areas, specifically in relation
to:
       ♦ revenue
       ♦ expenses
       ♦ assets, including cash
       ♦ liabilities
       ♦ equity.




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The Chief Financial Officer, WaterSecure is responsible for:

       ♦ ensuring all financial systems within WaterSecure are appraised at least
            once every 3 years
       ♦ implementing corrective action identified as a result of the appraisals
       ♦ reporting the outcomes of those appraisals to the Audit, Risk and
            Remuneration Committee, WaterSecure.


References

Financial Accountability Act 2009
Part 5 ‘Corporate management’ Division 3         ‘Appraisal    and   risk   assessment   of
Agencies’ systems.’


This manual
Chapter 2            Income
Chapter 3            Expenses
Chapter 4            Assets
Chapter 5            Liabilities
Chapter 6            Equity
Section 8.1          Reporting: General Policy
Section 9.7          Further Applications: Financial Systems Management
Section 9.10         Further Applications: Controls




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8.4.1       Methodology
Policy Statements
        ♦ To ensure that all systems are reviewed and that WaterSecure’s
           obligations are discharged, Business Services, WaterSecure, must ensure
           that a list of WaterSecure’s systems is compiled. The list is to specify the
           positions that are responsible for conducting the appraisals and the time
           frame.


        ♦ Business Services, WaterSecure, is responsible for providing templates to
           organisational units for the purpose of conducting system appraisals.


        ♦ All financial systems within a line manager’s area of responsibility are to be
           appraised at least once every 3 years and when system anomalies are
           identified.


        ♦ Reports of system appraisals, including details of any corrective action
           taken, are to be submitted to the Chief Financial Officer, WaterSecure,
           within 14 days of completion.



Procedures

Frequency. Circumstances that may require system appraisals to be carried out
more frequently than defined include:

        ♦ changes in organisational structure
        ♦ staffing changes
        ♦ new initiatives
        ♦ system anomalies and modifications
        ♦ reorganisation of activities.



Objective. The objective of system appraisals is to determine whether systems are:

        ♦ documented
        ♦ functioning as documented
        ♦ appropriate for their objectives
        ♦ operating effectively and efficiently
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       ♦ the best practice alternative for WaterSecure’s operations.



In addition, system appraisals will:

       ♦ identify areas of potential risk
       ♦ ensure internal control mechanisms remain appropriate, necessary and
          represent best practice
       ♦ ensure the systems produce data and reports that are timely and
          appropriate to management and client needs
       ♦ provide a formal mechanism for the follow-up of findings.



Focus. System appraisals are to focus on key controls and critical issues. They are
to encompass only those procedures over which line management has control.



All system appraisals must ensure that the policies relating to the identification,
recording, management and control of the relevant financial function are
encompassed by the particular systems that have been implemented.



Steps. The following steps are to be included when carrying out a system appraisal:
       ♦ identify the system
       ♦ document the system
       ♦ state the internal control objectives
       ♦ apply internal control checks
       ♦ collate proposed actions in a report to management
       ♦ implement an action plan (including follow-up action at a future date).



Reports. Upon receiving the documented results of system appraisals, the Chief
Financial Officer, WaterSecure, is to review the outcomes and produce a summary
report for WaterSecure Audit, Risk and Remuneration Committee.




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8.5        Financial Reporting
Policy
In accordance with the Financial Accountability Act 2009, certified financial
statements are to be provided to the Auditor-General to allow for their
certification.


The format of the financial statements must be in accordance with the format
prescribed by the Financial Performance and Management Standard 2009,
Australian Accounting Standards and any other relevant legislation or
Queensland Treasury instructions.


Accrual accounting methods, whereby items are brought to account as earned
or incurred, rather than when monies are received or paid, are to be used when
maintaining accounting records and in financial reporting.



Overview

External financial reporting encompasses the preparation of periodic financial
statements and their disclosure in the Annual Report.         These reports, known as
General Purpose Financial Reports, prescribe the financial position of WaterSecure
at the reporting date.



The financial reports must be prepared in accordance with:

       ♦ Financial Performance and            Management Standard      2009 (Part 3
          ‘Reporting’)
       ♦ Australian Accounting Standards (AASs, AASBs, the Framework) and
          Statements of Accounting Concepts (SACs) as they relate to financial
          reporting, including, AAS 29 ‘Financial Reporting by Government
          Departments’
       ♦ Queensland Treasury instructions including the Minimum Reporting
          Requirements.




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The financial statements will comprise:

         ♦ Income Statement
         ♦ Balance Sheet
         ♦ Statement of Changes in Equity
         ♦ Statement of Cash Flows
         ♦ Notes to and forming part of the above mentioned statements.


The reports include the Whole Of Government (WOG) package under AAS 31.

The reports must express all amounts in Australian dollars. Amounts may be rounded
to the nearest thousand dollars where it assists presentation and understandability,
but does not materially detract from the information disclosed.



Comparative amounts for the corresponding previous period are to be shown in the
statements and accompanying notes.


The Chief Financial Officer, WaterSecure, is responsible for collating the financial
information required, and compiling the financial statements for WaterSecure. This
officer is also responsible for ensuring that appropriate systems are in place to
guarantee the timeliness, relevance, accuracy and reliability of the financial
information used.



References

Legislation
Financial Accountability Act 2009
Part 4 Section 62 ‘Annual Financial Statements’


Financial and Performance Management Standard 2009
Part 3                 ‘Reporting’




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Statements of Accounting Concepts (SACs)
SAC 1           ‘Definition of Reporting Entities’
SAC 2           ‘Objectives of Financial Reporting’


Australian Accounting Standards (AASs and AASBs)
The Framework for the Preparation and Presentation of Financial Statements


AASB 101        ‘Presentation of Financial Statements’
AASB 107        ‘Cash Flow Statements’
AASB 108        ‘Accounting Policies, Changes in Accounting Estimates and Errors’
AASB 116        ‘Property, Plant and Equipment’
AASB 136        Impairment of Assets’
AASB 117        ‘Leases’
AASB 138        ‘Intangible Assets’
AASB 1031       ‘Materiality’
AAS 29          ‘Financial Reporting by Government Departments’




This manual
All policies and procedures


Treasury Guidelines

Minimum Reporting Requirements for the Preparation of General Purpose Financial
Statements by Government Departments (included in Qld Treasury’s Financial
Reporting Requirements)

Queensland Treasury’s Non-Current Asset Policies for Qld Public Service.




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8.5.1        Income Statement
Policy Statements
        ♦ WaterSecure will prepare an Income Statement as part of the annual
             financial statements.



Procedures

Format. The Income Statement will be prepared in the format required by governing
regulations, Acts and accounting standards. These include, but are not limited to the
following:
        ♦ Financial Accountability Act 2009.
        ♦ Financial Performance and Management Standard 2009 – in particular
             Part 3 ‘Reporting’.
        ♦ Statements of Accounting Concepts, Australian Accounting Standards,
             Statements of Accounting Practice, and Urgent Issues Group.
        ♦ ‘Minimum Reporting Requirements for the Preparation of General Purpose
             Financial Statements’, issued by the Queensland Treasury.
        ♦ ‘Financial Statements for Sunshine Department’, issued by Queensland
             Treasury.
        ♦ Accounting Policy Guidelines, issued by Queensland Treasury.
        ♦ Queensland Treasury’s Non-Current Asset Policies for Qld Public Service.


Notes. In addition to the disclosure requirements of applicable Australian Accounting
Standards, the notes to the Income Statement are to disclose, where material, the
following:


        ♦ Revenue
             ♦ sale of goods and services
             ♦ dividends
             ♦ increments arising from valuation adjustments to a class of assets (if
                AASB116 ‘Property, Plant and Equipment’ requires the increments to
                be included as revenue)




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         ♦ interest
         ♦ profit on disposal of non-current assets
         ♦ write back of provisions
         ♦ grants and subsidies
         ♦ any other material classes of revenue.


      ♦ Expenses
         ♦ cost of sales
         ♦ auditor’s remuneration
         ♦ bad and doubtful debts
         ♦ decrements arising from any valuation adjustment to a class of assets
              (if AASB116 ‘Property, Plant and Equipment’ requires the decrements
              to be included as an expense)
         ♦ interest
         ♦ lease rental expenses for operating leases; finance charges for finance
              leases
         ♦ loss on disposal of non-current assets
         ♦ provisions required to recognise the depreciation, amortisation, future
              maintenance or diminishing value in respect of a class of assets shown
              in the Balance Sheet
         ♦ provisions for doubtful debts and employee entitlements
         ♦ other material expense classes.




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8.5.2         Balance Sheet
Policy Statement
         ♦ WaterSecure will prepare a Balance Sheet as part of the annual financial
             statements.



Procedures

Format. The Balance Sheet will be prepared in the format required by governing
regulation, Acts and accounting standards. These include, but are not limited to the
following:

         ♦ Financial Accountability Act 2009
         ♦ Financial Performance and Management Standard 2009 – in particular in
             particular Part 3 ‘Reporting’.
         ♦ Statements of Accounting Concepts, Australian Accounting Standards,
             Statements of Accounting Practice, and Urgent Issues Group.
         ♦ ‘Minimum Reporting Requirements for the Preparation of General Purpose
             Financial Statements’, issued by the Queensland Treasury.
         ♦ ‘Financial Statements for Sunshine Department’, issued by Queensland
             Treasury.
         ♦ Accounting Policy Guidelines, issued by Queensland Treasury.
         ♦ Queensland Treasury’s Non-Current Asset Policies for Qld Public Service.


Notes.       In addition to the disclosure requirements of the applicable Australian
Accounting Standards, the notes to the Balance Sheet are to disclose, where
material, the following:

         ♦ Current assets
             ♦ Cash
                • cash on hand
                • cash at bank.
             ♦ Receivables
                • debtors
                • loans and advances




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         ♦ Investments
              • Government and semi-Government stocks and bonds
              • debentures
              • description and market value of investments quoted on the stock
                exchange.
         ♦ Inventories
              • raw materials
              • work-in-progress
              • finished goods
              • consumable stores.
         ♦ Other current assets
              • prepaid expenses.


      ♦ Non-current assets
         ♦ Receivables, investments, inventories
              • as for current assets but showing amounts not expected to be
                realised within 12 months.
         ♦ Property, plant and equipment
              • buildings
              • infrastructure
              • plant and equipment
         ♦ Intangibles
              • permitted intangible assets.


      ♦ Current liabilities
         ♦ Creditors
              • creditors
              • leases
              • employee benefits.
         ♦ Borrowings
              • bank overdrafts
              • bank loans
              • debentures
              • other loans.



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             ♦ Provisions
                • dividends
                • taxation or taxation equivalents
                • guarantees for loans, interest payments and overdrafts.
             ♦ Other
                • unearned revenue.


       ♦ Non-current liabilities
             ♦ Creditors, borrowings, provisions, other
                • as for current liabilities but showing amounts not required to be
                  settled within 12 months.


       ♦ Equity
             ♦ Capital
                • movements in capital
                • dividends declared
                • dividends paid.
             ♦ Reserves
                • transfers to or from reserves
                • movements in reserves.



Other asset, liability and equity disclosures. Where material, other asset, liability
and equity disclosures shall be given, by way of note or otherwise, in regard to the
following:


       ♦ Provisions for assets. Any provision for the depreciation, impairment,
             amortisation or diminishing value of a class of assets is to be disclosed
             separately as a deduction from the amount of that class of assets.


       ♦ Property held for resale.            If property is held for resale, the cost of
             acquisition, capitalised development costs and other capitalised holding
             costs are to be separately disclosed.




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      ♦ Secured liabilities. Where any liability is secured by a charge, the nature
        of the security given and the amount secured is to be disclosed.


      ♦ Standby facilities. Where financing arrangements include credit facilities
        or loan rollover facilities, the name, nature and restrictions of the facilities
        and the amount not drawn down at the reporting date are to be disclosed.


      ♦ Borrowing restrictions.          Undertakings by lenders to restrict further
        borrowings or impose other restrictions are to be disclosed.


      ♦ Classification of amounts payable and receivable. Debts payable in
        respect of amounts received in response to public invitations to subscribe
        to debentures (or other securities) or debts payable in respect of
        guarantees for another respondent are to be disclosed so as to indicate
        liabilities due within the following times after the end of the financial period
        to which the financial report relates:

         ♦ not later than 1 year
         ♦ later than 1 year but not later than 2 years
         ♦ later than 2 years but not later than 5 years
         ♦ later than 5 years.


      ♦ Commitments for contracted capital expenditure. Where material
        commitments are not included in the Balance Sheet, the details are to be
        disclosed according to the date payable after the end of the financial
        period covered by the report:

         ♦ not later than 1 year
         ♦ later than 1 year but not later than 2 years
         ♦ later than 2 years but not later than 5 years
         ♦ later than 5 years.


      ♦ Contingencies.       The amounts (or estimated amounts) of material
        contingent assets and liabilities are to be disclosed, including whether the
        contingency is in respect of:


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         ♦
         ♦ the reporting or parent entity
         ♦ a controlled entity
         ♦ an associated body
         ♦ any other body or person
         ♦ superannuation schemes.


      ♦ Guarantees     and       undertakings.          Particulars   of    guarantees   and
        undertakings (e.g. for loans, interest payments and overdrafts) are to be
        disclosed.


      ♦ Monies held in trust. When monies are held in trust for external parties,
        the details are to be disclosed in the notes.


      ♦ Operating leases. The future expenditure relating to non-cancellable
        operating leases is classified in required time periods.




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8.5.3      Statement of Changes in Equity
Policy Statement
        ♦ WaterSecure will prepare a Statement of Changes in Equity, as part of the
          annual financial statements. Showing on the face of the statement:-

            -    operating surplus or deficit for the period;
            -    each item of income and expense for the period that, as required by
                 other Australian Accounting Standards, is recognised directly in
                 equity, and the total of these items;
            -    total income and expense for the period (calculated as the sum of the
                 two points above), showing separately the total amounts attributable
                 to equity holders of the parent and to minority interest; and
            -    for each component of equity, the effects of changes in accounting
                 policies and corrections of errors recognised in accordance with AASB
                 108 Accounting Policies, Changes in Accounting Estimates and
                 Errors.
            -    the amounts of transactions with equity holders acting in their capacity
                 as equity holders, showing separately distributions to equity holders;
            -    the balance of retained earnings (i.e. accumulated surplus or deficit) at
                 the beginning of the period and at the reporting date, and the changes
                 during the period; and
            -    a reconciliation between the carrying amount of each class of
                 contributed equity and each reserve at the beginning and the end of
                 the period, separately disclosing each change.



         ♦ For not-for-profit entities, the asset revaluation reserve must be
                dissected so as to show separately each class of asset revalued and the
                closing balance of the asset revaluation reserve by class.



         ♦ An agency must not create a general reserve without prior Treasury
                approval.




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         ♦ Note disclosure must be made of Reconciliation of Payments from
              Consolidated Fund to Equity Adjustment Recognised in Contributed
              Equity; and the reasons for any unforeseen expenditure.



         ♦ Transfers and unforeseen expenditure must be supported by appropriate
              Treasurer/Governor in Council approvals.




Procedure

Format. The Statement of Changes in Equity will be prepared in the format required
by governing regulation, Acts and accounting standards. These include, but are not
limited to the following:
       ♦ Financial Accountability Act 2009
       ♦ Financial Performance and Management Standard 2009 – in particular
           Part 3 ‘Reporting’.
       ♦ Statements of Accounting Concepts, Australian Accounting Standards,
           Statements of Accounting Practice, and Urgent Issues Group.
       ♦ ‘Minimum Reporting Requirements for the Preparation of General Purpose
           Financial Statements’, issued by the Queensland Treasury.
       ♦ ‘Financial Statements for Sunshine Department’, issued by Queensland
           Treasury.
       ♦ Accounting Policy Guidelines, issued by Queensland Treasury.
       ♦ Queensland Treasury’s Non-Current Asset Policies for Qld Public Service.




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8.5.4       Statement of Cash Flows

Policy Statement
        ♦ WaterSecure will prepare a Statement of Cash Flows, as part of the
           annual financial statements.



Procedure

Format. The Statement of Cash Flows will be prepared in the format required by
governing regulation, Acts and accounting standards. These include, but are not
limited to the following:

         ♦ Financial Accountability Act 2009
         ♦ Financial Performance and Management Standard 2009 – in particular
             Part 3 ‘Reporting’.
         ♦ Statements of Accounting Concepts, Australian Accounting Standards,
             Statements of Accounting Practice, and Urgent Issues Group.
         ♦ ‘Minimum Reporting Requirements for the Preparation of General
             Purpose Financial Statements’, issued by the Queensland Treasury.
         ♦ ‘Financial Statements for Sunshine Department’, issued by Queensland
             Treasury.
         ♦ Accounting Policy Guidelines, issued by Queensland Treasury.
         ♦ Qld Treasury’s Non-Current Asset Policies for Qld Public Service.


        Cash flows. Cash flows to and from Government are to be identified as
        separate classes.


        Notes.    The notes to the Statement of Cash Flows are to contain a
        reconciliation of the change in net assets resulting from operations with the
        net cash provided by (used in) operating activities.




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8.5.5      Compilation of Financial Statements

Policy Statement
WaterSecure will compile the annual financial statements and submit the information
to the Queensland Audit Office.

Procedures

Compilation. The financial statements will consist of the:
        ♦ Income Statement and accompanying notes
        ♦ Balance Sheet and accompanying notes
        ♦ Statement of Changes in Equity
        ♦ Statement of Cash Flows and accompanying notes
        ♦ other notes including:
          ♦ statement of significant accounting policies (as specified in AASB 108
              ‘Accounting Policies, Changes in Accounting Estimates and Errors.’)
          ♦ other information required to be disclosed under the Financial
              Accountability Act 2009 and Financial and Performance Management
              Standard 2009
          ♦ other information considered necessary to give a true and fair view.



Auditing. After preparing the financial statements and ensuring, as far as possible,
the accuracy of the financial data contained therein, the Chief Financial Officer,
WaterSecure, is to forward the statements to the Queensland Audit Office.



Any amendments to WaterSecure’s information resulting from the audit are to be
referred to the Chief Financial Officer, WaterSecure.




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9          Further Applications
9.1        Cash Management
Policy
Effective cash management principles with respect to all financial functions
are to be adhered to by WaterSecure.



Overview

Cash management refers to the process of utilising cash to its best advantage and,
more specifically, effectively managing cash flowing into WaterSecure bank accounts
(inflows) and out of the bank accounts (outflows).



Cash management encompasses numerous areas, including the collection, banking,
investing, payment and storage of cash. These activities are interdependent and
must be adequately controlled and managed if the benefits from the investment of
cash are to be maximised. See also section 9.9 Further Applications: Controls.



Queensland Treasury Corporation is responsible for operating cash management
functions for all State Government entities and departments in terms of investing
those monies.



WaterSecure is responsible for the effective internal application of cash management
practices to optimise the cash available for operational and investment purposes.



For its own operations, WaterSecure is to provide accurate data in relation to
forecast and actual receipts and expenditure.



The Chief Financial Officer, WaterSecure, is responsible for ensuring effective cash
management procedures are operating within WaterSecure.



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References

This manual
Section 4.2       Assets: Cash
Section 4.9       Assets: Inventories
Section 5.2       Liabilities: Accounts Payable
Section 8.5       Reporting: Financial Reporting
Section 9.10      Further Applications: Controls


Other documents
Nil




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9.1.1      Cash Inflows and Outflows
Policy Statements
        ♦ Inflows and outflows of cash are to be effectively managed to ensure
          optimal cash is available for investment.


        ♦ Cash inflow and outflow transaction forecasts for WaterSecure are to be
          reported by WaterSecure to Queensland Treasury in accordance with their
          requirements. At a minimum, this will be daily or at any other time when
          transactions are material and significant.

        ♦ Accurate recording of cash transactions and the ready availability of that
          information are required to ensure WaterSecure’s financial information,
          which is included in Queensland Treasury’s financial statements and
          Annual Report, is based on accurate and timely financial information (see
          section 8.5 Reporting: Financial Reporting).


        ♦ Adequate internal controls, including segregation of duties and assignment
          of responsibilities, are to be in place to ensure the effectiveness of
          WaterSecure’s cash management systems and its accountability for the
          use of resources (see also sub-section 9.10.1 Further Applications:
          Controls – Internal Controls).



Procedures
Inflows. Methods of controlling inflows of cash include:
        ♦ collecting and depositing receipts as soon as possible to increase the
          surplus cash available for investment
        ♦ accurately, completely and promptly recording all transactions involving the
          receipt of cash
        ♦ ensuring that invoices for accounts receivable are promptly raised and
          dispatched
        ♦ using cost-effective methods to encourage payment of accounts receivable
        ♦ initiating prompt and effective follow-up action for overdue accounts
          receivable.



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See section 4.2 Assets: Cash.


Outflows. Methods of controlling outflows of cash include:
       ♦ negotiating payment terms with suppliers and taking advantage of
          discounts offered (a change in an existing payment term agreement is to
          be amended in the computerised financial system by submitting supporting
          documentation to Business Services Commercial, WaterSecure, for
          alteration of the vendor policy)
       ♦ ensuring that accounts payable are not remitted before the agreed due
          date for payment
       ♦ accurately, completely and promptly recording all transactions with respect
          to the payment of cash.


See section 5.2 Expenses: Accounts Payable.


Inventories. Consideration is to be given to the level of inventories held in stores to
ensure that the stores are not overstocked with inventory that is surplus to actual
requirements.



For further information regarding the management of inventories, see section 4.9
Assets: Inventories.




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9.2          Journal Entries
Policy
Journal entries are to be used to ensure that financial information is properly
recorded in the financial system.


All journal entries recorded in the financial system require electronic
authorisation.



Overview
Journal entries are those entries that are made to the accounts in order to adjust
previous transactions or record non-cash transactions. Examples of transaction types
for which a journal entry would be required are:
         ♦   the amendment or adjustment of a prior transaction
         ♦   the transfer of expenses between account codes
         ♦   the recognition of direct debit fees and charges in the bank accounts
         ♦   the matching of expenditure to correct accounting periods (e.g.
             prepayments and accruals).


Officers within WaterSecure are responsible for identifying the need for a journal
entry and advise Business Services Finance of the journal to be processed. The
Business Services Finance officer certifying the journal is responsible for ensuring
that the transaction correctly adjusts the accounts.


The Chief Financial Officer, WaterSecure or delegated officer, is responsible for
ensuring that the journal entry has been correctly authorised and is accurately
processed in the accounts.



References
All policies and procedures.




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9.2.1      Preparation and Processing
Policy Statements
        ♦ All journals are to be properly completed by the preparing officer and
          reviewed and authorised by an appropriate delegated officer within
          WaterSecure.



Procedures

Preparation.    Journals are to be prepared by the appropriate officers within
WaterSecure.



Every journal must contain the following:

        ♦ valid and accurate account codes and cost centres
        ♦ sufficient   explanations     or    supporting       documentation   attached   to
          substantiate the transaction
        ♦ consistent manual journal referencing
        ♦ Electronic Journals should be supported by a reference of the
          appropriately delegated officer authorising the journal.



Checking. Processing officers in Business Services Finance, WaterSecure, must
check every journal before processing to ensure that:
        ♦ the transaction has not been previously processed
        ♦ the journal has been properly completed
        ♦ valid account codes have been supplied
        ♦ sufficient information or documentation is included to substantiate the
          journal.



Identification numbers. When processed, journals are to be allocated sequential
identification numbers.



Validation of data entry. Data entry of journals is to be checked by posting officer.
Errors are to be corrected before the transactions are posted to the general ledger.
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Corrections. If a journal transaction is entered into the system incorrectly and it is
not identified before general ledger posting, a second journal transaction is required
to reverse the original incorrect transaction. Where applicable, the correct journal
transaction may then be processed.




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9.3          Losses and Write Offs
Policy
All applications for write-off or loss are to be fully investigated before approval
by an appropriately delegated officer.


Details of all approved write-offs and losses are to be recorded in the register
of losses.


The number and value of all losses are to be reported in the annual financial
statements.



Overview

A write-off is the act of reducing to nil a debt that is owed to WaterSecure or the
value of an asset that is controlled by WaterSecure.



Where a write-off involves a forfeiture of the value of public or other monies, or public
or other property, a loss has occurred. Losses arise as a result of:
         ♦ the destruction, condemnation, obsolescence, deterioration, theft of or
           damage to property
         ♦ the theft of monies
         ♦ irrecoverable overpayments, debts written off and waivers of rights to claim
         ♦ expenditure made without lawful authority
         ♦ failure to assess and/or levy amounts receivable



The relevant manager is responsible for investigating reported losses and ensuring
all action has been taken to recover the monies or property.



Before approving a write-off or loss, the financial delegate is responsible for ensuring
every possible recovery action has been taken.




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Business Services Finance, WaterSecure, is responsible for ensuring a register of
losses is established and maintained by WaterSecure. The details contained in the
register are to be collated and included in the financial information for WaterSecure,
which is in turn included in the annual financial statements and statement of losses.


References

Legislation



Financial and Performance Management Standard 2009
Part 2 Division 4 Section 21 Loss from Offence or Misconduct
Part 2 Division 4 Section 22 Other Losses


This manual
Section 3.13        Expenses: Recovery of Expenses
Section 4.2         Assets: Cash
Section 4.3         Assets: Cash Advances
Section 4.5         Assets: Accounts Receivable
Section 4.7         Assets: Non-Current Physical Assets
Section 4.8         Assets: Portable and Attractive Items
Section 4.9         Assets: Inventories
Section 5.2         Liabilities: Accounts Payable
Section 8.5         Reporting: Financial Reporting


Other documents
WaterSecure Authorities and Delegations Manual
Queensland Treasury Instruction: ‘Minimum Reporting Requirements for Financial
Statements of Government Departments’




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9.3.1      Identification and Recording
Policy Statements
        ♦ Before applying for write-off or loss approval, the relevant manager, or
          other delegated officer, is to take all reasonable action to determine the
          cause of or reason for the loss and, where possible, exhaust all recovery
          action.


        ♦ Write-off and loss approvals are to be in accordance with the financial
          delegations.


        ♦ All write-offs and losses are to be recorded in a register of losses for
          WaterSecure.


        ♦ A statement of losses for the financial year is to be prepared in accordance
          with      the   Queensland     Treasury        Instruction   ‘Minimum   Reporting
          Requirements for Financial Statements of Government Departments’, and
          disclosed in the annual financial statements (see section 8.5 Reporting:
          Financial Reporting).



Procedures
Discounts lost.      See sub-section 5.2.6 Liabilities: Accounts Payable – Payment
Terms.


Other losses


        ♦ Initial report and investigation. Any losses, deficiencies or shortages of
          monies or property are to be immediately reported in writing to the relevant
          manager. An investigation is to be carried out to determine whether, in
          fact, a loss has been suffered or whether a speedy resolution can be
          reached.


        ♦ Notification.     When it is determined that a loss has been suffered, a
          loss/write-off report is to be completed.



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      ♦ Losses not caused by an offence. When the investigation of a loss
           reveals it was not caused by an offence, the investigating officer is to
           report this to the relevant manager.


      ♦ Losses caused by an offence.                 The investigating officer or relevant
           manager is required to notify the Police and Manager, Internal Audit, via
           the Chief Executive Officer, WaterSecure, immediately upon identifying a
           loss resulting from an offence under the Criminal Code or any other Act or
           law.


           In cases where official misconduct is suspected, the Chief Executive
           Officer, WaterSecure, will advise the Crime and Misconduct Commission.



           In all cases, whether or not official misconduct is suspected, the Manager,
           Internal Audit is to notify the Auditor-General of a loss caused by an
           offence.


Approval


      ♦ Submission. A submission to a delegated officer for approval of a write-
           off or loss is to contain the following information:
           ♦ date on which the loss was noted
           ♦ particulars of the loss (e.g. irrecoverable overpayment)
           ♦ value of the loss
           ♦ cause of the loss
           ♦ a copy of the police report (if applicable)
           ♦ names of the persons responsible for or who contributed to the loss, if
              applicable
           ♦ investigative, recovery and/or prosecuting action taken, and the results
           ♦ amount or property recovered, if any
           ♦ if an asset, the asset number
           ♦ corrective action instigated where the loss was a result of a system or
              control deficiency
           ♦ file reference(s).


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       ♦ Valuation. The value of a loss will be determined as either:
          ♦ the actual value of monies lost
          ♦ the value of debts not recovered
          ♦ the depreciated value of assets, offset by any amount it is anticipated
              would be recovered through disposal
          ♦ other estimated value where the value of the loss cannot be otherwise
              determined.


Register. The financial delegate approving a loss is responsible for ensuring the
details of the loss are recorded in a register of losses. The details to be recorded
are:
       ♦ the nature, assessed value and cause of the loss
       ♦ action taken and, where applicable, any amount recovered
       ♦ the date, amount of and authority for write-off
       ♦ file reference(s)
       ♦ the financial year in which the loss is to be reported.



When an approved loss consists of several items (e.g. writing-off a group of bad
debts), each item is to be recorded separately in the register. Such losses are not
recorded as a single entry.




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9.4         User Charging
Policy
User charging may be utilised by WaterSecure in circumstances where it is
permitted by an Act, law, or State Government direction.


The Chief Financial Officer must endorse any decision to implement user
charges for goods or services supplied by WaterSecure to external users.



Overview

User charging is the charging by WaterSecure for the provision of goods or services
to internal or external users, and where the charge payable by the user directly
contributes to the cost of providing the goods or services.



The Chief Financial Officer, WaterSecure or delegated officer, is responsible for
considering and recommending user charging arrangements.



The Chief Financial Officer, WaterSecure or delegated officer is responsible for the
administration of approved user charging arrangements and providing relevant
information for inclusion in the annual financial statements.


References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 18 ‘User Charging’


This manual
Chapter 2            Income
Section 4.5          Assets: Accounts Receivable
Section 8.5          Reporting: Financial Reporting




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9.4.1      Arrangements
Policy Statements
        ♦ Nil charging. User charges are not to be levied in any of the following
          circumstances:
          ♦ a service is provided for the benefit of the general public or exclusively
              for the benefit of users who are assessed not to have the capacity to
              pay (also known as a public good)
          ♦ a service is provided both as a public good and as a benefit to specific
              users (the value of the component considered to be a public good is to
              be provided free of charge)
          ♦ charging is precluded by any Act or law, or the State Government has
              directed that no charge is to be levied
          ♦ the transaction is non-routine and immaterial in amount
          ♦ the ongoing administrative costs of user charging and revenue
              collection exceed the expected long-term efficiency gains.


        ♦ External user charging. Subject to the requirements of any Act, law or
          State Government direction, WaterSecure will charge for goods or services
          provided to external users in any one or more of the following
          circumstances:
          ♦ the user gains a benefit and has the capacity to pay
          ♦ the user has the choice to accept or not accept the goods and has
              considerable discretion as to the amount to accept
          ♦ a close substitute is available from a non-government supplier.


        ♦ Interdepartmental user charging. Subject to the requirements of any
          Act, law or State Government direction, WaterSecure will charge for goods
          or services provided to other State Government entities and organisations
          where the external user charging criteria are met or where:
          ♦ it will encourage rational economic choice in the allocation of resources
          ♦ it is required so that WaterSecure reflects the full cost of its programs or
              the proper allocation of costs to funds other than the Consolidated Fund
          ♦ by State Government decision, market access has been denied to user
              departments (e.g. CITEC)


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         ♦ costs arising from interdepartmental charging are included in the
              organisation’s pricing structure
         ♦ an agency agreement exists between organisations
         ♦ an organisation requests to be levied for a service for the purpose of
              claiming the cost from an external source.


      ♦ Intradepartmental user charging. Units within WaterSecure will charge
         for goods or services provided to other units where:
         ♦ a system of charging will encourage rational economic choice in the
              allocation of resources
         ♦ WaterSecure charges for goods or services provided to external users
              or other departments, and where costs arising for intradepartmental
              charges are included in the pricing structure
         ♦ for accounting purposes, the full cost of goods or services provided by
              WaterSecure is required.


      ♦ Rates. Charges levied for the provision of goods or services will reflect the
         full cost of providing such goods and services. The charges levied will be
         at a rate that encourages rational economic choice and efficiency in
         providing goods or services.


      ♦ Water Grid Charges. Charges agreed within a Grid Contract Document
         with the Water Grid Manager (WGM) for the provision of goods or services.
         The charge levied will be agreed annually by Ministerial approval.


      ♦ Approval. Based on the conditions described for the various types of user
         charging, requests for approval to charge and the rate of charging are to
         be submitted to the Chief Financial Officer, WaterSecure or delegated
         officer, for consideration.


      ♦ GST.       GST will need to be charged in all cases except where supplies
         made are input taxed or GST-free.



Procedures


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Level of charges. In determining an appropriate level of user charges, the following
issues are to be considered:
       ♦ the full cost of providing the goods or services
       ♦ market rates for comparable goods or services
       ♦ the implication of charges for encouraging rational economic choice by
          users
       ♦ whether the level of charges has any impact on achieving social objectives
          implicit in service delivery.


Full cost recovery. Full cost recovery in a user charge rate may not be appropriate
where:
       ♦ an active market exists for the provision of the goods or services offered;
          the higher of full cost price or market value will apply
       ♦ the organisation operates as a business or quasi-business undertaking
          and is seeking to utilise spare capacity; normal commercial pricing
          considerations will prevail
       ♦ the State Government has directed that a particular price or charge rate
          must apply
       ♦ differential pricing has been approved by the State Government because
          cross-subsidisation is evident.


Where full cost recovery will not apply, a submission must be forwarded to the Chief
Financial Officer, WaterSecure or delegated officer, who will review the submission.



Varied rates.     If charge rates are to be varied from those that were originally
approved, the officer in charge of the unit is to submit the details to the Chief
Financial Officer, WaterSecure or delegated officer, for consideration and re-
submission.



GST. Where invoices are prepared by WaterSecure in charging for products or
services, WaterSecure will charge GST in all cases.




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9.5          Risk Management
Policy
WaterSecure is committed to managing risks through identifying, analysing,
assessing and controlling the exposures that are likely to impact on its
operational performance and/or continuing effectiveness.



Overview

Risk management is the use of proactive management techniques to protect an
agency from unnecessary costs and losses.



As such, the risk management process is concerned with the identification,
measurement and control of those risks that threaten the assets and essential
services provided by WaterSecure.



The principles of risk management can be applied to almost every type of business
activity, including policy making, purchasing methods, contracts administration, fraud
control, contingency planning and so on. However, the main emphasis of this policy
is on insurable risk, as outlined in the Financial Performance and Management
Standard 2009.



Insurance is a paid policy providing protection against large and unexpected losses.
However, real financial benefits come more from the reduction or control of risks
themselves, rather than through the payment of large insurance policies.



All WaterSecure employees are responsible for identifying areas where risk
management practices could be adopted, and for advising their managers
accordingly.



Managers are responsible for taking appropriate action to protect WaterSecure from
unnecessary costs and losses through the implementation of risk management
practices.
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Business Services Commercial, WaterSecure, is responsible for the development
and implementation of risk management practices as part of the overall corporate
governance framework of the entity.



References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 28 ‘Risk Management’


Other Documents
WaterSecure Business Continuity Management Policy
WaterSecure Risk Management Framework
WaterSecure Risk Policy
WaterSecure Risk Register
Queensland Treasury Website (Queensland Government Insurance Fund).




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9.5.1      Policy Application
Policy Statements
        ♦ Business Services Commercial, WaterSecure is to develop, implement,
           document and review the required risk management processes.



Procedures

Process. The risk management process consists of four steps:

        1. Identify the nature and extent of exposure to risk.
        2. Formulate ways to reduce or prevent losses and claims.
        3. Decide whether or not to take some form of insurance.
        4. Establish ongoing procedures and managerial accountability.
                4.1 Establish WaterSecure Audit, Risk and Remuneration Committee
                4.2 Monthly Review of Risk Register by WaterSecure Audit, Risk and
                    Remuneration Committee



Responsibilities.    In coordinating the development and implementation of risk
management practices, Business Services Commercial, WaterSecure, is to:

        ♦ identify the extent of risk exposure
        ♦ initiate, coordinate and monitor actions to reduce or eliminate risks
        ♦ ensure the storing of ideas and information throughout WaterSecure.
        ♦ plan and implement risk management training programs
        ♦ establish appropriate information systems
        ♦ annually report to the accountable officer on the progress of implemented
           risk management practices.
        ♦ Twice-annually report to the Department of Environment and Resource
           Management on the risks identified in the WaterSecure Risk Register.



Insurance. Where a risk assessment has been undertaken and insurance is
identified as the most appropriate treatment, WaterSecure will seek appropriate
cover from the market.




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Business Services Commercial, WaterSecure, is responsible for assessing the
insurance options of the entity and making recommendations to the Audit, Risk and
Remuneration Committee and the Chief Financial Officer, WaterSecure, regarding
the most prudent option.




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9.6        Internal Audit and Audit Committees
Policy
The internal audit function and audit committees are to be developed and
implemented to ensure the audit function of WaterSecure operates efficiently,
effectively and economically.


Overview
The purpose of the internal audit function is to provide a level of assurance to the
Audit, Risk and Remuneration Committee on adherence to areas identified in the
internal audit plan.


The Chief Financial Officer, WaterSecure, is responsible for ensuring that the internal
audit function is established and implemented.



References

Financial and Performance Management Standard 2009
Part 2 Division 5     ‘Internal Audit and Audit Committees’




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9.7         Financial Systems Management
Policy
All financial systems are to be implemented, modified, supported and secured
in accordance with the operational needs and internal controls of WaterSecure.



Overview

Financial systems are those computer software packages used to manage and report
the financial accounting information and activities of WaterSecure and client
organisations.



Systems currently in use that provide financial information are:

         ♦ Finance One (Finance System)
         ♦ iPROsoft (Finance System)
         ♦ Aurion (Payroll System)



The Chief Financial Officer, WaterSecure or delegated officer, is responsible for
ensuring that the systems produce the financial information required to meet the
needs of WaterSecure.



System administrators are responsible for the operation and application of the
financial systems they manage, including ensuring that computer facilities are
properly used for approved purposes, and procedures exist to ensure that the
computerised systems are secured from unauthorised access.




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References

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 27 ‘Financial Information Management’


This manual
All policies and procedures




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9.7.1      Development, Implementation and Use
Policy Statements
        ♦ During the specification and development phases that precede the
          implementation of new financial systems, the advice of internal audit,
          external audit and other interested and relevant parties is to be sought.


        ♦ All financial systems are to be supported by systems documentation for
          operational procedures and individual applications of the systems.


        ♦ Appropriate integrated procedures are to be established to maintain the
          integrity of data and to ensure all statutory and regulatory requirements are
          met.


        ♦ Regular local and external backups of the data entered into financial
          systems are to be conducted.


        ♦ Business Services IT, WaterSecure, is responsible for developing and
          implementing disaster recovery plans for the financial systems managed
          by WaterSecure.


Procedures

Development.      Consultation with internal and external audit sections and other
interested parties in the development and specification phases will ensure all
statutory and regulatory requirements are met.            The process will also assist in
selecting and implementing a product that best fulfils the needs of WaterSecure and
client organisations, and contributes to achieving their collective goals.



A business case should be completed in order to ensure that the proposed system
will provide adequate facilities and represents the best value for money.



Implementation. The implementation of new financial systems is to be approved by
the Chief Financial Officer, WaterSecure. Implementation is to be a coordinated
exercise and all users are to be fully trained in the use of any new system.
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Modifications. Any modifications to existing financial systems are to be authorised
by the relevant system manager, approved by the Chief Financial Officer,
WaterSecure or delegated officer and thoroughly tested before implementation.



Use and security. Unauthorised, improper and personal use of computer facilities
and the data contained in financial systems is strictly prohibited. Procedures are to
be in place to prevent or detect, as far as is possible:
       ♦ accidental errors
       ♦ fraudulent use or manipulation of data
       ♦ misuse of classified material.



As a minimum, the following controls are to be in place to prevent the misuse of
financial systems:
       ♦ the issue, frequent rotation and secrecy of user passwords
       ♦ restricted access to master files or registers of user passwords
       ♦ storing of passwords in encrypted form
       ♦ limiting physical access to financial systems to authorised officers (with
          authorisation based on the needs of WaterSecure and client organisations,
          and the duties that officers are required to perform)
       ♦ monthly reviews of control breaches
       ♦ the utilisation of system-generated exception reports to detect attempted
          access by illegal users.



Integrated procedures. Integrated procedures are to be established to ensure that:
       ♦ appropriate storage media are used for each application
       ♦ all statutory, regulatory, organisational and record retention requirements
          are met
       ♦ surplus information is disposed of in accordance with internal control
          requirements
       ♦ financial information is consistent with the recording and reporting
          requirements of WaterSecure and client organisations, and the Financial
          and Performance Management Standard 2009
       ♦ system security and integrity of information are maintained
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       ♦ control procedures allow the monitoring of the effectiveness and efficiency
          of financial systems.


Balancing. It is the responsibility of the Chief Financial Officer, WaterSecure or
delegated officer, to ensure that the financial systems are balanced as necessary to
ensure the accuracy of data entered into the system.



Documentation. The procedures for performing the applications within all financial
systems are to be documented by the system administrator.



Chart of accounts.     Specifically, in terms of the chart of accounts used in the
operation of Finance One, controls are to apply to the addition, amendment and
deletion of account and cost centre codes. In particular, such amendments to the
chart of accounts require appropriate approval.



Systems Administration. It is the responsibility of the IT system administrator,
Corporate Administration Agency (CAA), to ensure that the financial systems are
available for user access for data processing and reporting.




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9.8        Contributions


Policy
Contributions received at below fair value by WaterSecure are to be recognised
as revenue when:
       – a fair value for those contributions can be readily determined
       – the contributions would have been purchased had they not been
       donated.


Contributions provided at below fair value by WaterSecure are to be
recognised at their fair value provided that value can be readily determined.



Overview

WaterSecure may receive contributions in the form of goods and/or services at below
fair value, including free of charge, by way of gift or donation. Provided that the
goods or services would have been purchased had they not been donated, a
contribution received at below fair value is to be recognised as revenue at its fair
value. This is required in order to reflect the total cost of service delivery.



WaterSecure may provide contributions in the form of goods and/or services at below
fair value, including free of charge, by way of gift or donation. Contributions provided
at below fair value are to be recognised at their fair value in order to reflect the total
cost of service delivery.



In relation to contributions received and provided at below fair value, the Chief
Financial Officer, WaterSecure or delegated officer, is responsible for ensuring that
the transactions are recorded in the general ledger and disclosed in the financial
statements of WaterSecure.



A reportable gift is any item of money, property, travel, or any other benefit, including
abnormal entertainment and hospitality, that is given or received on behalf of

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WaterSecure.       Where a gift or a series of gifts received from the same source
exceeds $100 in fair value, it is to be recorded in the financial statements at period
end.


        In relation to gifts, the Chief Financial Officer, WaterSecure or delegated
        officer, is responsible for ensuring that:
        ♦ all reportable gifts received that exceed $100 in fair value are recorded in
            the accounts
        ♦ all reportable gifts given are properly recorded in the accounts at period
            end.



References

Legislation

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 17 ‘Revenue Management’
Part 2 Division 4 Section 23 ‘Asset Management’
Part 3 Division 3               ‘Annual Reports and Final Reports’

Australian Accounting Standards (AASs)
The Framework for the Preparation and Presentation of Financial Statements
AASB 1031 ‘Materiality’
AAS 29             ‘Financial Reporting by Government Departments’

Queensland Treasury Accounting Policy Guideline (APG)
APG 3              ‘Contributions, Grants and Government Assistance Received’

This manual
Chapter 2              Income
Section 4.2            Assets: Cash
Section 4.7            Assets: Non-Current Physical Assets
Section 4.8            Assets: Portable and Attractive Items
Section 8.5            Reporting: Financial Reporting
Section 9.9            Further Applications: Conflicts of Interest

Other documents
WaterSecure Gifts and Benefits Policy

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9.8.1      Contributions Received at Below Fair Value
Policy Statements
        ♦ Contributions received at below fair value are to be recognised in the
          general ledger only if the contributed goods or services would have been
          purchased had they not been donated, and that a fair value can be readily
          determined.


        ♦ The Chief Financial Officer, WaterSecure or delegated officer, is
          responsible for ensuring that resources received at below fair value are
          recorded, if applicable, in the general ledger (updated quarterly) and other
          relevant registers, and disclosed in the financial statements.



Procedures
Valuation. Contributions in the form of goods or services that are received by
WaterSecure at below fair value are to be recognised at their fair value.


Recording. A contribution received at below fair value is to be recorded as a
separate revenue item, thus identifying the contribution at its fair value in the financial
statements, only when it would have been purchased, had it not been donated, and
the fair value is greater than $100.


Assets received. A contribution that is an asset and has been received by
WaterSecure at below fair value, and that has a fair value equal to or greater than
asset capitalisation threshold is to be recorded in the non-current physical assets
register and depreciated accordingly.


Gifts received. When a contribution received is deemed to be a reportable gift, the
details are to be recorded in the register of gifts (see sub-section 9.7.3 Gifts).


Disclosure. All contributions received at below fair value that satisfy the recording
criteria are to be reported in the Income Statement and Balance Sheet. If the
contributions are considered to be material, details of their nature and value are to be
disclosed in the notes to the financial statements. (See section 8.5 Reporting:
Financial Reporting.)

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9.8.2        Contributions Provided at Below Value
Policy Statements
        ♦ Contributions provided at below fair value are to be recognised in the
           general ledger at their fair value only where such value can be readily
           determined.


        ♦ The Chief Financial Officer, WaterSecure or delegated officer, is
           responsible for ensuring that resources provided at below fair value are
           recorded, if applicable, in the general ledger (updated quarterly) and other
           relevant registers.



Procedures

Valuation.    Contributions in the form of goods or services that are provided by
WaterSecure at below fair value are to be recognised at their fair value.



Recording.     A contribution provided at below fair value is to be recorded as a
separate expense item, thus identifying the contribution at its fair value in the
financial statements, only when the fair value is greater than $100. The contribution
is to be recorded when WaterSecure relinquishes control over the resource.



Gifts provided. When a contribution provided is deemed to be a reportable gift, the
details are to be recorded in the register of gifts (see sub-section 9.8.3 Gifts).




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9.8.3      Gifts
Policy Statements
        ♦ Gifts are not to be given without the prior approval of an appropriately
           delegated officer.


        ♦ A gift may be accepted only if it complies with the principles embodied in
           the WaterSecure Gifts and Benefits Policy, where none of the criteria
           preventing conflicts of interest apply (see section 9.9 Further Applications:
           Conflicts of Interest).


        ♦ The details of all gifts given or accepted in the course of official duties must
           be recorded in the gifts register.


        ♦ As gifts represent resources provided/received at below fair value, the
           Chief Financial Officer, WaterSecure or delegated officer, is required to
           initiate accounting entries for all gifts given and for those gifts received
           where the fair value exceeds $100 (see sub-sections 9.8.1 and 9.8.2).


           This includes gifts where the cumulative value is $100. For example, if a
           gift valued at less than $100 is received by an officer and, within one year,
           another gift or gifts are received from the same source resulting in a
           cumulative value of $100 or more, then all of the gifts are to be accounted
           for as reportable gifts.


        ♦ Reportable gifts are to be disclosed in the annual financial statements (see
           section 8.5 Reporting: Financial Reporting).



Procedure

Gifts given. Gifts given are those items that are:

        ♦ on permanent loan or lent for the expected useful life of the item
        ♦ transferred at no cost or below market value by WaterSecure (but not
           transferred to another unit within WaterSecure).



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Reportable gifts are to be approved in accordance with the financial delegations. If
these delegations are exceeded, the approval of the Board is required.



Gifts received. A gift received is any item of money, property, travel or any other
benefit, including abnormal entertainment and hospitality, that is received by an
employee while performing official duties on behalf of WaterSecure.          Such gifts
become the property of WaterSecure and not the individual.

The receipt of a gift is to be treated in the same way as any other asset acquisition
(see sub-section 4.7.2 Assets: Non-Current Physical Assets – Acquisition).

Gifts made by a personal friend or family member in a purely personal capacity are
excluded.



Register of gifts. A central register of all gifts given and received by WaterSecure is
to be maintained by Business Services, WaterSecure. It will be updated using the
information provided by the relevant managers.



In the case of gifts given and received, the register will record:

       ♦ the date given or received
       ♦ description of the gift or benefit
       ♦ value
       ♦ name of donor
       ♦ name of recipient
       ♦ For gifts offered, was the gift (declined, retained by employee, or by
            agency)

Accounting entries. The Chief Financial Officer, WaterSecure or delegated officer,
is responsible for ensuring that all accounting entries required for gifts given and
received are recorded in the ledger.



Reporting. Statements of gifts given and received are to be included in the annual
financial statements (see section 8.5 Reporting: Financial Reporting).




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9.9         Conflicts of Interest
Policy
Conflicts of interest are to be avoided by officers of WaterSecure.


An officer of WaterSecure will not:

        –    solicit a personal benefit at any time, other than from WaterSecure,
             in connection with official duties
        –    accept a personal benefit of any kind, other than from WaterSecure
             that creates or could be seen to create a conflict of interest
        –    accept any gift of money or benefit by way of loans and the like in
             connection with official duties.


Where a conflict does occur, it is to be immediately reported to the officer’s
supervisor or manager.



Overview

A conflict of interest may arise, or be seen to arise, where benefits accruing to an
employee of WaterSecure (or family, friends or associates of an employee) prevent,
or may be seen to prevent, that employee from acting impartially when performing
official duties.



A conflict of interest may arise from:

         ♦ the giving or receiving of a gift (see sub-section 9.8.3 Contributions: Gifts)
         ♦ the use of expertise gained while employed by WaterSecure for personal
            gain (e.g. an employee establishing a business in direct competition with
            WaterSecure)
         ♦ conducting business of WaterSecure or client organisation with persons or
            companies who offer undisclosed commissions to employees in return for
            favouritism or preference in decision-making
         ♦ an employee establishing a business to provide WaterSecure or client
            organisations with goods or services.


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Individual employees are responsible for declaring reportable gifts given or received,
and for reporting any actual or implied conflicts of interest arising in the course of
performing official duties.



Managers are responsible for ensuring that all notifications of conflicts of interest are
promptly investigated and, when necessary, reported to the Director-General.



When further action is required, the officer nominated by the Director-General is to
ensure that such action as is necessary to resolve the conflict is carried out.



References
Australian Accounting Standard (AAS)
AAS 29            ‘Financial Reporting by Government Departments’

This manual
Section 3.3          Expenses: Purchasing
Section 4.7          Assets: Non-Current Physical Assets
Section 8.5          Reporting: Financial Reporting
Section 9.8          Further Applications: Contributions

Other documents

Public Sector Ethics Act 1994
Public Service Act 1996 (Part 5 Section 84.)
State Procurement Policy
WaterSecure Procurement Policy
WaterSecure Code of Conduct


Crime and Misconduct Commission: Misconduct Prevention Materials ‘Managing
Conflict of Interest in the Public Sector’.




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9.9.1      Disclosure
Policy Statements

        ♦ If an employee becomes aware that a real or apparent conflict of interest
          has arisen (or is likely to arise), the employee is immediately required to
          disclose the details, in writing, to their relevant manager.


        ♦ The Manager is to determine the extent of the conflict of interest and direct
          the action to be taken to resolve the conflict.


        ♦ Relevant employees are to carry out the resolution. Failure to comply with
          the directions may make an employee liable to disciplinary action under
          WaterSecure’s Code of Conduct for employees.



Procedures

Disclosure.    Disclosure of a real or apparent conflict of interest is automatically
required whenever an officer engaged in regulatory, inspectorial, personnel,
consultant, tender/supply or other discretionary functions in dealing with relatives,
close friends or business acquaintances.


Any time an officer is unsure of whether or not a conflict of interest has arisen, or is
likely to arise, their manager should be approached for determination.




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9.10          Controls
Policy
Satisfactory internal and security controls will be in place to ensure the
accountability and integrity of WaterSecure’s financial and operational
activities.


All accounting records relating to the financial activities and assets of
WaterSecure are to be controlled and secured at all times.


Duties of officers of WaterSecure will be adequately segregated to the extent
that any opportunities for misconduct are minimised.


At all times, officers of WaterSecure will maintain the confidentiality of:
         – the business of WaterSecure and client organisations
         – the financial activities of WaterSecure and client organisations
         – the activities of persons associated with WaterSecure and client
              organisations.



Overview

Security controls and the system of internal controls are a series of methods and
procedures adopted by WaterSecure to assist in ensuring:

         ♦ that business of WaterSecure is conducted in an orderly and efficient
              manner
         ♦ the safeguarding of assets
         ♦ the prevention and detection of fraud and error
         ♦ the accuracy and completeness of accounting records
         ♦ the timely preparation of reliable financial information.



Internal controls extend to both accounting controls (financial impact) and
administrative controls (operational issues). Their operation ensures the reliability
and integrity of financial data.



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The Chief Financial Officer is responsible for the financial administration of
WaterSecure. All other officers are responsible for adhering to the security policies
and internal controls established for WaterSecure.



References

Legislation
Financial Accountability Act 2009

Financial and Performance Management Standard 2009
Part 2 Division 4 Section 28 ‘Risk Management’


This manual
Section 8.4   System Appraisals
All policies and procedures


Other documents
WaterSecure Code of Conduct




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9.10.1     Internal Control
Policy Statement
       ♦ Internal controls that satisfy the accountability needs of WaterSecure,
          client organisations and the public are to be established, implemented and
          reviewed by the designated officers of WaterSecure.



Procedures
Internal control structure. The internal control structure consists of:


       ♦ Control environment.         The overall approach of WaterSecure to its
          operations and the emphasis and importance placed on the systems and
          internal controls, as reflected in the policies, procedures and related
          actions of management.


       ♦ Information systems. Those methods, mechanisms and records that are
          established to identify, assemble, analyse, classify, record and report
          transactions and other events affecting WaterSecure.


       ♦ Internal controls.     Those mechanisms, policies and procedures (both
          financial and non-financial) that are implemented by management to
          ensure the records and assets of WaterSecure are safeguarded.


Development of internal controls. In the development of internal control systems,
regard is to be had for the following principles and types of control:
       ♦ assigning responsibility to appropriate officers
       ♦ segregating duties (the record-keeping and custodianship functions, the
          responsibility for separate but related transactions, and so on)
       ♦ implementing and enforcing physical controls over access to and use of
          records and assets
       ♦ performing internal checks and independent verifications of data
       ♦ administrative mechanisms (control accounts, reconciliations, and so on)
       ♦ proper authorisation of transactions and activities
       ♦ preparing adequate documents and records on a timely basis
       ♦ developing and maintaining a well organised chart of accounts

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       ♦ preparing and maintaining comprehensive and current procedural manuals
       ♦ existence of computer or manual verification processes for financial
          records
       ♦ assurance of cost-effectiveness of systems
       ♦ regular verification of the physical existence of assets with corresponding
          records.


Assets. The following internal controls for assets are mandatory:

       ♦ Inventories
          ♦ The following functions should be segregated:
              • maintaining control records in relation to inventory
              • custody of the inventory
              • conducting stocktakes
              • approving inventory transactions.
          ♦ Inventory issues must be the result of properly completed and
              authorised inventory requisitions or orders.

       ♦ Non-current assets
       ♦ Information and details must be recorded so as to identify and locate the
          assets, and accurately calculate the depreciation amounts.
       ♦ Assets must be held in the name of WaterSecure and legal title obtained
          where possible.

       ♦ Cash (see also sub-section 4.2.11 Assets: Cash – Security and Control for
          Cash)
          ♦ The following functions should be segregated:
              • collection of monies
              • banking cash collections
          ♦ Monies must be stored at a bank.
          ♦ Private monies and property must not be stored with official monies or
              property.
          ♦ Adequate security must be maintained over the supply, use and issue
              of cheque forms (see sub-section 4.2.18 Assets: Cash – Security and
              Control for Cheques).
          ♦ Acquittances must be obtained for the receipt of cash when payments
              are made in cash.


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       ♦ Accounts receivable
          ♦ The following functions should be segregated:
              • assessment and levying of revenue
              • maintaining debtor records
              • following up outstanding amounts
              • writing-off outstanding amounts.
          ♦ The amounts outstanding must be regularly followed up and action
              taken as required.

       ♦ Loans and recoverable advances
          ♦ The following functions in relation to loans and advances must be
              segregated:
              • maintaining debtor records
              • approving loans and advances
              • approving write-offs of outstanding amounts.
          ♦ Adequate security over the loan amount must be obtained and held by
              WaterSecure.
          ♦ All particulars and details of loans and advances are to be accurately
              recorded and documented.
          ♦ Amounts outstanding must not be written off without proper authority.

       ♦ Other
       ♦ Assets held in trust must be separately operated and managed.


Liabilities. The following internal controls for liabilities are mandatory:
       ♦ The following functions are to be segregated:
          ♦ approving the incurrence of liabilities
          ♦ maintaining liabilities.
       ♦ Reconciliations must be performed between records of the lender and
          WaterSecure’s accounting records.
       ♦ Reconciliations must be performed for opening and closing balances.
       ♦ Adequate details must be recorded for each payment, including:
          ♦ name and address of payee
          ♦ particulars of payment, including reference to receipt, transaction
              number or account being paid
          ♦ certification of accuracy
          ♦ ledger codes.

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       ♦ Unless otherwise agreed or prescribed, payments are due 30 days after
          the end of the month in which a correctly rendered invoice is dated.


Expenses. Adequate systems and controls must be in place to ensure expenses are
promptly identified, calculated and recorded as they are incurred.


Revenue. Adequate systems and controls must be in place to ensure revenue is
promptly identified, recognised and classified in the accounts of WaterSecure.


Exception. Where segregation of duties is not practical, alternative controls are to
be developed, approved by the Chief Financial Officer, WaterSecure, and
implemented.



                                                                                       Formatted: Bullets and
                                                                                       Numbering




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9.10.2     Accounting Records
Policy Statements
       ♦ All accounting records, whether computerised or otherwise, are to be kept
          secure and protected from unauthorised access and alteration.


       ♦ All accounting records that are to be maintained in hard-copy form must be
          printed, typed or written in permanent ink.


       ♦ WaterSecure must have procedures in place to ensure the recovery of
          records and the ability to continue normal operations when accounting
          records are lost through circumstances outside their control.



Procedures
Security. Security of records will be ensured by:

       ♦ restricting access to authorised persons
       ♦ the security of the location where records are held (locked room etc.)
       ♦ registering the authorised removal of documents from the storage area for
          official purposes.


If accounting records are maintained electronically, the computerised system must be
adequately secured to ensure the safeguarding of the records (see section 9.7
Further Applications: Financial Systems Management).



Ink. As the use of green ink is reserved for the Auditor-General, the use of this
coloured ink by others on official records is prohibited.



Corrections. When an alteration is to be made to a hard copy accounting record,
the incorrect entry is to be ruled through, initialled and dated. Correction fluid is not
acceptable.




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9.10.3     Confidentiality
Policy Statements
       ♦ Confidentiality regarding the financial management and activities of
          WaterSecure and client organisations will be maintained by all officers.


       ♦ Official information of a confidential or privileged nature is to not be
          disclosed to persons or organisations without the authorisation of the Chief
          Executive Officer.



Procedures

Disclosing work-related information.              Persons performing any duty for
WaterSecure will not disclose any work-related information to any other person
(employee or not) who does not have a direct and legitimate need to know.



Disclosing personal information. Unless the information is required for the normal
operating functions of WaterSecure or client organisations, an officer will not disclose
personal details of any employee to any other person or organisation without first
obtaining the permission of the employee concerned.




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9.11        Legal Documents
Policy
All legal documents served on WaterSecure are to be promptly actioned and,
when required, referred to the Crown Solicitor.



Overview

There are two types of legal documents WaterSecure may receive:

         ♦ those served on WaterSecure, such as subpoenas, summonses and writs
         ♦ other legal documents such as contracts, deeds, certificates of title and
           lease agreements.



The Chief Corporate Officer, WaterSecure, is responsible for establishing and
maintaining a register of all legal documents received by WaterSecure.



References

This manual
Section 5.2.4 Liabilities: Accounts Payable (Hire and Leases)




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9.11.1     Served on WaterSecure
Policy Statements
       ♦ Legal documents served on WaterSecure or the State of Queensland are
          to be accepted by the Chief Corporate Officer, WaterSecure.


       ♦ The Chief Corporate Officer, WaterSecure is to register the receipt of all
          legal documents served on WaterSecure.


       ♦ Legal documents served on WaterSecure are to be dealt with immediately
          upon receipt.


       ♦ All time limits and deadlines set by the Crown Solicitor in legal matters are
          to be met.



Procedure

Action. Prompt dealing with legal documents served on WaterSecure is essential,
particularly when the Crown Solicitor’s legal representation is required. Failure to act
promptly may lead to unfavourable legal and financial consequences for
WaterSecure and/or State Government.




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9.11.2     Legal Agreements
Policy Statement
       ♦ Upon receipt of a legal agreement between WaterSecure and an external
          party, the details are to be recorded in the central register of legal
          documents      maintained    by     the       Business   Services   Commercial,
          WaterSecure.



Procedure

Action. Legal documents formalising agreements between WaterSecure and other
parties are to be acknowledged, referenced, registered and securely filed in
chronological order.




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9.12        Financial Records
Policy
All financial records are to be retained in their original form for one year
following the completion of the external audit of the financial year to which the
records relate.


Retained records are to be held in safe custody for the required minimum
retention period based on their type and future use requirements.


Financial records are not to be destroyed until the minimum retention period —
as specified in the Financial Accountability Act 2009 has lapsed and
authorisation has been obtained.



Overview
A financial record is any record that is written, typed, printed, computerised or
produced in any other way, and pertains to the financial business of WaterSecure or
to the processing of financial transactions on behalf of client organisation. All such
records may be required for some time in connection with general inquiries, special
reports, accounting adjustments, litigation, audit and the like.



Section 27 (Financial Information Management) of the Financial and Performance
Management Standard 2009 requires the implementation of internal controls in
relation to accounting records and their retention.



The Chief Financial Officer, WaterSecure or delegated officer, is responsible for
ensuring that:
         ♦ access to financial records is restricted
         ♦ financial records are retained in safe storage for the required period



See sub-section 9.10.3 Further Applications: Controls – Accounting Records, for
specific information regarding the production and use of, and access to, financial
records.
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References

Legislation
Financial Accountability Act 2009
Evidence Act 1977


Financial and Performance Management Standard 2009
Part 2 Division 4 Section 27 ‘Financial Information Management’


This manual
Section 9.7          Further Applications: Financial Systems Management
Section 9.10         Further Applications: Controls




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9.12.1     Reproduction and Electronic Storage
Policy Statements
       ♦ Financial records may be reproduced and stored in a form other than their
          original hard-copy form after one year has lapsed from the audit of the
          financial year to which the records relate.


       ♦ The microfilm or other electronic storage medium used must be of archival
          quality and adequate for reproducing precise detail (refer to Queensland
          State Archives’ Guideline for the Digitisation of Paper Records)


       ♦ Reproduced and electronically stored records must be retained in good
          condition for the same retention period as would have been prescribed for
          the original record.



Procedures
Legislative requirements. When storing records other than in their original form, by
way of microfilm or electronic storage media, the relevant provisions of the Evidence
Act 1977 or any other Act or law of the State or Commonwealth are to be complied
with, especially in terms of:
       ♦ admissibility as evidence in a readable form in any legal proceedings, to
          the extent the original record would have been admissible
       ♦ the acceptability of the financial record in a court of law.


Microfilm and electronic storage. Where records are stored by these methods:
       ♦ an adequate referencing and indexing system is to be established and
          maintained to identify and locate records
       ♦ effective safeguards are to be implemented for the safe custody and
          secure storage of records
       ♦ access to reproduced records is to be restricted to authorised personnel
       ♦ procedures for the retrieval of reproduced records are to be implemented
          and will incorporate an audit trail
       ♦ internal check systems are to be in place for record reproduction and
         electronic storage methods.



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9.12.2       Retention and Destruction
Policy Statements
        ♦ All financial records are to be retained in their original form, or in a form
           admissible in evidence in any legal proceedings, for at least 12 months
           from the date of external audit of the financial year to which they pertain,
           and until:
           ♦ they are no longer likely to be required for legal proceedings or audit
           ♦ the expiration of the prescribed retention period for the type of record
           ♦ they are no longer of historical significance.


        ♦ The approval of the accountable officer or delegated officer must be
           obtained for the destruction of financial records when the retention period
           prescribed by the General Retention and Disposal Schedule for
           Administrative Records has elapsed.


Procedures

Retention.      Retention periods for financial records are embodied in the General
Retention and Disposal Schedule for Administrative Records and are set out in table
3, following.


TABLE 3: FINANCIAL RECORD RETENTION
 RECORD TYPE                     EXAMPLE(S)
                                                                               RETENTION
                                                                               PERIOD
                                 ♦   General ledger
 Accounting                                                                    7 years
                                 ♦   Journals
                                 ♦   Subsidiary ledgers
                                 ♦   Transaction summaries
                                 ♦   Bank records
                                 ♦   Cash records
                                 ♦   Cheque records
                                 ♦   Payment records
                                 ♦   Petty cash records
                                 ♦   Sales and purchase invoices
                                 ♦   Receipt and revenue records
                                 ♦   Other prime entry records



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RECORD TYPE                  EXAMPLE(S)
                                                                           RETENTION
                                                                           PERIOD
                             ♦   Purchase orders
Accountable Forms                                                          3 years
                             ♦   Cabcharge vouchers
                             ♦   Requests
                             ♦   Issue receipts
                             ♦   Approvals
                             ♦   Interim audit reports
Audit reports                                                              7 years
                             ♦   Final audit reports
                             ♦   Recommendations
                             ♦   Audit plans and strategies
                             ♦   Implementation plans
                             ♦   Quotations
Acquisition                                                                7 years
                             ♦   Requisitions
                             ♦   Purchase Orders
                             ♦   Approvals
Asset Registration                                                         7 years
                             ♦   Authorisations
                             ♦   Asset identification
                             ♦   Depreciation
                             ♦   Revaluations
                             ♦   Losses and write off
                             ♦   Delegations of power
Authorisation                                                              7 years
                             ♦   Register of delegations
                             ♦   Budget Approvals
Budgeting                                                                  5 years
                             ♦   Budget development
                             ♦   Contracts awarded
Contracting                                                                7 years
                             ♦   Terms and conditions
                             ♦   Performance reports
                             ♦   Variations
                             ♦   Applications
Grant Funding                                                              7 years
                             ♦   Approvals
                             ♦   Agreements
                             ♦   Notifications
                             ♦   Progress reports

Time and Wages Records                                                     7 Years
                             ♦ Accountable forms used for value
Payments                                                                   7 years
                             ♦ Vouchers to support payments made
                               (including pay sheets, acquittances for
                               cash payments and returned cheques)
                             ♦ Vouchers (Tax invoices)
                             ♦ Approvals
                             ♦ Electronic Funds Transaction (EFT) report
                             ♦ Remittance advice



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When stored, the nature of the record and the proposed date of destruction are to be
recorded on the storage item to facilitate the disposal process. Advice on storage
and disposal should be sought from the Knowledge and Information Branch of
Corporate Services before any action is undertaken.           A Register of Records
Destroyed is required to be kept by the Knowledge and Information Branch and a
prescribed minimum amount metadata relating to such records must be retained in
an official recordkeeping system.



Destruction. When the retention period has elapsed and WaterSecure so desires,
financial records may be destroyed in accordance with the General Retention and
Disposal Schedule for Administrative Records and with the approval of the Chief
Executive Officer or appropriately delegated officer. Approval will not be granted
unless:

          ♦ the minimum retention period for those records included in the previous
            table has elapsed
          ♦ full particulars on the original of any computer-generated form are also
            retained on a computerised system, in a readable form for future
            reference.



Unused, obsolete or damaged cheque forms. Cheque or money forms that are
unused, obsolete, damaged or otherwise spoiled may be returned for refund or may
be otherwise destroyed.



Destruction must be approved by the Chief Financial Officer, WaterSecure, and
performed or witnessed by two officers who are required to sign a statement to that
effect.




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9.13        Materiality
Policy
The concept of materiality will be applied in the recognition and recording of
financial information in the accounting records, and in the preparation and
presentation of the financial statements.



Overview
Materiality is a concept used to determine the relative size or importance of an item
or event. Information will be considered material if its omission, non-disclosure or
misstatement would cause the accounting records or financial statements to mislead
users when making evaluations or decisions.


Examples of questions that may have to be settled by reference to materiality are:
         ♦ Should an item be disclosed separately?
         ♦ Should the accounting basis adopted be disclosed?
         ♦ Should the fact and financial effect of a departure from an accounting
           standard be disclosed?
         ♦ Should the fact and financial effect of a change in accounting basis be
           disclosed?
         ♦ Should the financial statements be amended if an error is detected in the
           accounting records before completion of the statements?


Officers unsure as to the materiality of issues should seek clarification from the Chief
Financial Officer, WaterSecure or delegated officer.



References

Australian Accounting Standard (AAS)
AASB 1031       ‘Materiality’


This manual
All policies and procedures.



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9.14           Restructures
Policy
All revenue, expenses, assets and liabilities incurred as a result of a
restructure of administrative arrangements are to be accounted for in
accordance with Queensland Treasury guidelines.


All revenue, expenses, assets and liabilities incurred as a result of a
restructure other than of administrative arrangements are to be accounted for
in accordance with the instructions of the Chief Financial Officer, WaterSecure.



Overview

The Chief Financial Officer, WaterSecure, is responsible for ensuring that all
revenue, expenses, assets and liabilities incurred as a result of a restructure of
administrative arrangements are correctly reported in the financial statements, in
accordance with Queensland Treasury guidelines.



Should an organisational unit be the subject of a restructure other than of
administrative arrangements, the manager of the organisational unit is to notify the
Chief Financial Officer, WaterSecure, within 5 working days to determine how best to
record staff transfers and the movement of the organisational unit’s assets and
liabilities.



References
Australian Accounting Standard (AAS)
AAS 29           ‘Financial Reporting by Government Departments’


Queensland Treasury Accounting Policy Guideline (APG)
APG 13           ‘Accounting for Non-Reciprocal             Transfers   and   Machinery   of
                  Government Changes’




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Glossary
    A

ABN
Australian Business Number


Abnormal item
     An item that is within the ordinary operations of the entity but is considered
     abnormal because of its amount and/or effect on the overall accounts.


Account balance
     The net amount representing the sum credit and/or sum debit total of period-
     to-date transactions at a reporting level in the chart of accounts.

       Also refers to the debit or credit total of a bank account as shown on a bank
       statement.


Account code
     A series of numbers used to classify financial information in the entity’s
     general ledger.


Accountable advance
     An advance of monies, made before an expense is incurred. Examples
     include advances (petty cash and other advances that are periodically
     reimbursed), and employee expenses advances (e.g. travel advances).


Accountable form
     A document that relates to value and supports an accounting transaction.
     Accountable forms are consecutively numbered, pre-printed, and their issue
     and use controlled. Examples of accountable forms are manual cheques,
     receipts, invoices, credit notes, purchase orders and the like.


Accountable officer
     In respect of the financial administration of the entity, the accountable officer
     is the Chief Financial Officer.


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Accounting officer
     According to section 5 of the Financial Accountability Act 2009, any officer
     charged with duties that involve:
        ♦ keeping accounts;
        ♦ collecting, receiving, keeping custody, banking of or accounting for
            public or other monies;
        ♦ disbursing public monies; and/or,
        ♦ purchase, receipt, issue, sale, custody, control, management, disposal of
            or accounting for public or other property.

       An accounting officer authorised by the accountable officer to perform specific
       tasks in these areas is known as an Authorised accounting officer.


Accounting period
     Any period that is the subject of financial reporting, e.g. monthly, quarterly or
     annually. Also known as Reporting period.


Accounting record
     Any written, typed, printed or computerised record pertaining to the financial
     business of the entity.


Accounts
     Records of the entity that detail financial or accounting balances, expressed
     in monetary or other units of measurement, and that are compiled, recorded
     or otherwise stored in an appropriate form.

Accounts Officer
       An officer of the entity responsible for administering the accounts payable and
       receivable transactions of WaterSecure.


Accounts payable
     Claims from any person or organisation that are deemed by an authorised
     officer to be due and payable for the supply of goods or services to the entity.
     See also Creditor.


Accounts receivable
     Monies owed to the entity by any person or organisation for the supply of
     goods or services, with an obligation to pay the amount owing in a specified
     time. See also Debtor.
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Accrual accounting
      A basis of accounting whereby items are brought to account as they are
      earned or incurred (rather than as monies are received or paid) and are
      included in the financial statements for the accounting periods to which they
      relate.


Accrued expense
      A payment that is yet to be made, although the obligation to pay has been
      established (i.e. the cash outflow lags behind the incurrence of the expense).


Accrued income
      A financial benefit that is yet to be received, although the right to receive such
      benefit has been established (i.e. the cash inflow lags behind the incident that
      generated the right to receive the benefit).


Accrued transaction
      A transaction that has been brought to account in the current accounting
      period because it is relevant to that period, notwithstanding that the
      corresponding cash transaction did not occur in the same period.


Accumulated depreciation
     The aggregate, at a given point in time, of depreciation charges made in
     respect of a particular depreciable non-current physical asset or class of
     depreciable assets. See also Depreciable asset and Depreciation.


Acquisition
      The act of either gaining the ownership or obtaining the control of the use of
      goods, services or assets by means of purchase or lease, or by donation to
      the entity.


Acquisition cost
      The net invoice price of acquiring the ownership or use of goods, a service or
      an asset, including the cost of preparing the item for its intended use (e.g.
      installation costs).
Acquisition date
      The date on which the risks and rights to future benefits of goods, a service or
      an asset, as would be conferred with ownership, pass to the acquirer.

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Acquittance
      The release from an obligation or liability by the issuing of a receipt or the
      payment of a debt (e.g. acquitting an advance by providing documentary
      evidence of expenditure incurred and returning the unspent balance).


Administered assets
      Those assets that the entity administers on behalf of the State Government
      without discretion. That is, access to and use of an administered asset are
      not controlled by the entity (conditions for access to and use of the asset are
      prescribed by the controlling entity).


Administration expenses
      All those expenses that relate to the operations of the entity, such as:
        ♦ employment         expenses        (including       superannuation,    workers’
            compensation and training)
        ♦ accommodation expenses (including rent, furniture, fittings, depreciation
            and office requisites)
        ♦ communication expenses (including telephone, facsimile and stationery)
        ♦ taxes (including payroll tax, fringe benefits tax and local authority
            charges).


Advance
     A sum of money supplied before an event taking place, goods being supplied
     or services being provided.


Aged analysis
      The classification of amounts payable or receivable according to the date on
      which payment or receipt is due.


Amortisation
      A systematic charge against operations, made for the purpose of allocating
      the cost of an intangible asset or an asset acquired through a finance lease,
      against the revenue of the accounting periods that are expected to benefit
      from its use.




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Annual Report
      A written report prepared within four months of the end of the financial year to
      provide the Minister, Queensland Treasury and the public with the information
      necessary to enable an assessment of the efficiency, effectiveness and
      economy of operations during the year. The Annual Report includes an
      audited copy of the financial statements.


Appropriation
      The level of funding approved by Parliament to be issued from the public
      accounts to finance the operations of the entity.


Arm’s length transaction
       An independent transaction that does not create or cannot be seen to create
       a conflict of interest.


Asset
        Service potential or future economic benefits controlled or administered by
        the entity as a result of past transactions or other past events. Assets include:
         ♦ property owned, held, controlled or administered by the entity for use in
             producing or supplying goods or services
         ♦ property acquired or constructed with the intention of its being used on a
             continuing basis
         ♦ property not intended for sale in the ordinary course of business
         ♦ cash     (including   monetary advances,            investments   and   accounts
             receivable).


Asset capitalisation threshold
The dollar value threshold established by the entity that determines a non-current
physical asset’s recognition in the accounts.


Asset class
      A summary grouping of physical assets that reflects the similar nature or
      functions of those assets.


Asset replacement program
       The systematic method used to dispose of non-current physical assets and
       acquire replacements in a manner that takes account of funding needs and


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        efficient and effective use of resources, and realises maximum economic
        benefit for the entity.


Asset revaluation reserve
       A reserve established to recognise the increments and decrements in the
       value of non-current physical assets as a result of asset revaluations.


ATO
        Australian Taxation Office


Audit
        A formal and independent inspection, investigation, examination and review
        of the entity’s accounts, supporting documentation and systems conducted by
        officers or consultants employed or engaged for that purpose by the
        Accountable Officer (internal audit) or the Auditor-General (external audit).
        See also Internal audit and External audit.


Auditor
      An officer or organisation appointed by the Accountable Officer (internal
      auditor) or Auditor-General (external auditor) to perform an audit function.
      See also Audit, Internal auditor and External auditor.


Audit trail
       Information that allows accounting transactions to be traced, and entries in
       the accounts of the entity to be explained and justified.


Australian Accounting Standards (AASs)
      Australian Accounting Standards are issued by the Australian Accounting
      Research Foundation on behalf of the Institute of Chartered Accountants in
      Australia and the Australian Society of Certified Practising Accountants. The
      standards are applicable to State Government accounting.


Authorised purchasing position
      A position of the entity that is authorised by the Accountable Officer to
      purchase goods and services for the entity.




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Authority
      The delegation to a position of a legal right enabling the incumbent to make
      and approve decisions regarding specified issues.




       B

Bad debt
      An account receivable that all recovery action has proved would be
      uneconomical to collect. A bad debt requires approval to be written off as a
      loss.


Balancing
      The process of reconciling the records of monies on hand with the actual
      monies on hand; equality between the totals of the two sides of an account;
      unpaid difference represented by the excess of debits over credits.


Bank reconciliation
      The process of comparing the transactions and balance shown on a bank
      statement with the entity’s records of bank account transactions and balance.


Bank reconciliation statement
      A statement prepared to bring into agreement the bank account balance
      shown by the bank statement and the balance shown in the general ledger
      bank account, and to explain the reasons for any differences between the
      two.


Benefit
       A gift, gratuity, remuneration, allowance, fee, subsidy, consideration, free
       service or entertainment provided to an employee of the entity.


Bill of exchange
        A written authorisation to pay a specified sum of money to a specified person
        or bearer.




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Book value
      The value an asset is given in the accounting records at a particular date. If
      this is a depreciable asset, it is the net value of the asset after deduction of
      accumulated depreciation.


Borrowings
      A form of funding provided by an external body and generally used by the
      entity for special purposes (e.g. capital purchases). See also Long-term
      borrowings and Short-term borrowings.


Budget
     A financial plan showing how financial resources are expected to be acquired
     and used during a specified period of time. the entity’s budget for the
     financial year is submitted to Queensland Treasury for approval and
     incorporation into the Appropriation Bill.


Budget allocation
     Funds provided by appropriation to meet expenditure in relation to a specific
     program, subdivision or item.


Budget process
     Includes the development of a budget strategy, assessment and allocation of
     financial resources, forward estimate development, submissions to
     Queensland Treasury, and documentation and management of the budget
     plan.


Budget transfer
     A transfer of budget allocation from one cost centre or program to another.




       C

Capital cost
       The original value of a non-current physical asset.




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Capital expenditure
       Expenditure that will provide future economic benefits beyond the current
       accounting period. Expenditure may be in the form of lengthening an asset’s
       useful life or increasing its capacity, or the acquisition of a new asset.


Capitalise
       To record the capital cost of non-current physical assets as an expense over
       the accounting periods that will benefit from their use.


Carryover
      A saving in one financial year’s appropriation that may be carried forward for
      expenditure in a subsequent financial year.


Cash
       Money and any medium of exchange that a bank accepts at face value. Cash
       includes monetary notes and coins, cheques, money orders and credit card
       vouchers.


Cash advance account
      An account operated using an advance that is provided for emergent or other
      authorised expenditure and that is regularly recouped to the full value of the
      advance (e.g. petty cash advance).


Cash book
      The accounting record of all payments made and receipts issued. The cash
      book entries are presented in chronological order, and are reconcilable to the
      bank statement.


Cash equivalent of long-service leave (CELSL)
      The cash payments of unused long service leave entitlement upon the
      resignation or retirement of an officer.


Cashflow forecast
      The forward estimate of anticipated monthly cash receipts and outlays.


Cashflow statement
      A monthly statement comparing actual receipts and outlays with cashflow
      forecasts. Used as a basis for revision of budget estimates.

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Centre for Information Technology and Communication (CITEC)
      The State Government entity that provides a coordinated facility for policy,
      consultation and hardware support in relation to computer operation and
      communication.


Certification
        The formal process whereby accounting officers with delegated authority
        validate transactions (e.g. certification of accounts for payment).


Chart of Accounts
       A list of all accounts and their corresponding reference numbers or codes in
       the general ledger.


Cheque
     A document directing a bank to pay a specified sum of money to the
     nominated payee, drawing the funds from the nominated bank account.


Cheque signatory
     The incumbent of a specified position that has been delegated the authority to
     sign cheques drawn on bank accounts of the entity.


Claim
        An invoice or other request for payment rendered on the entity by a creditor,
        vendor, employee or other valid source under the terms and conditions of a
        purchase order, contract or other agreement.


Claimant
      A creditor, vendor, employee or other valid source with legitimate claim on the
      entity for monies owed arising from a purchase order, contract or other
      agreement.


Code of Conduct
      The set of standards developed by the entity for the guidance of staff in
      performing their official duties.


Collections
       Monies received by an authorised accounting officer on behalf of the entity.
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Computer hardware
     The physical components of a computer system (e.g. disk drives, monitors
     and keyboards) that are used to run the entity’s information systems.


Computer software
     As distinct from physical units or components (computer hardware), computer
     software is the programs that allow a computer to operate (operating
     software) and perform specific tasks (application software).


Conflict of interest
       A real or apparent incompatibility between an employee’s personal welfare, in
       terms of benefits accruing to the employee or family/friends/associates of the
       employee, and the requirements of the employee’s official duties. Conflicts of
       interest may prevent or be seen to prevent that employee from acting
       impartially.


Consolidated Fund
      The fund through which the public sector’s normal operating costs are
      transacted, and to which all general receipts are credited.


Consultant
      An organisation or individual contracted to perform specific tasks and/or
      provide advice as an independent party by exercising their own expert
      judgement. the entity does not exercise detailed control over the methods
      used for or outcomes of the work performed.


Contingent liability
      A potential obligation that may arise out of a contingency, such as the
      possible obligation to pay damages at a future date if the judgement in a
      pending lawsuit is awarded against the entity.


Contra items
      Monies received and shown as a reduction of payments in the accounting
      period (e.g. refundable deposits).


Contract performance guarantee


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       A security given by a contractor, or for a contractor, for the performance of
       one or more of the contractors obligations under a contract with an
       accountable officer of a department or a statutory body.
Contract services
      Those services, usually of a specialised nature, that are provided by an
      individual or organisation under the direct and detailed control of the entity.
      Also known as Professional services.


Contribution
Goods or services received or provided by the entity at below fair value (e.g. as a gift
or donation).


Control (of an asset)
      The capacity of the entity to benefit from assets and deny or regulate the
      access of others to that benefit. Factors to be considered in determining
      whether control exists are:
         ♦ Possession or ownership does not automatically give control.
         ♦ It is not necessary to have ownership of an asset to control access to the
            benefits received from that asset (e.g. where a lease has the effect of
            transferring control of an asset from the lessor to the lessee).
         ♦ Control may be evidenced by an agency’s ability to:
              ♦ use the asset to achieve its objectives
              ♦ obtain a benefit from the sale of the asset
              ♦ charge for the use of the asset
              ♦ deny use of the asset to others.


Control account
      A general ledger account representing the total transactions and balances
      recorded in a subsidiary ledger or system.


Cost centre
      The lowest level at which transactions are aggregated for a business activity,
      functional or organisational unit.


Credit card
       A card that enables the authorised cardholder to obtain goods or services
       through the use of a credit facility (i.e. without prior or immediate payment to
       the supplier).

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Credit facility
       A system of credit established to allow purchases of goods or services
       without the use of an official purchase order or the exchange of cash between
       the entity and the supplier at the time of the transaction. Examples of credit
       facilities used by the entity are:
         ♦ corporate credit cards
         ♦ fuel cards
         ♦ taxi vouchers.


Credit limit
       The maximum amount to which a customer may purchase goods or obtain
       services on credit.


Credit note
       An authority issued for the cancellation or reduction of a claim previously
       made by the supplier. A credit note is issued in lieu of a refund where it is
       likely the credit will be taken up in the near future. (If this is not likely, e.g.
       infrequent or one-off dealings with a supplier, a refund is to be issued.) Credit
       notes may be issued to the entity by external suppliers or by the entity to
       debtors.


Credit terms
       Conditions of agreement between a debtor and a creditor that describe the
       acceptable form of payment and the period of time in which payment must be
       received by the creditor.


Creditor
       A vendor or supplier who has provided goods or services in accordance with
       the terms of a contract to supply, and from whom an invoice or other claim for
       payment is forthcoming. See also Accounts payable.


Current assets
      All assets owned or leased by the entity that:
       ♦     represent cash or are held for conversion to cash
       ♦     have a service life of 12 months or less
         ♦ are held by the entity for the production of goods or provision of services
             within the ensuing financial year.
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Current liabilities
      Amounts that the entity is obliged to discharge in the current accounting
      period, or within the coming 12-month period.


Current market buying price
      The amount for which an asset with similar service potential to the asset
      being valued could be bought by a knowledgeable, willing buyer from a
      knowledgeable, willing seller in an arm’s length transaction at current prices
      plus the buyer’s transaction costs. This equates to current market price plus
      buyer’s transaction costs. See also Arm’s length transaction.


Current market selling price
      The amount for which an asset with similar service potential to the asset
      being valued could be sold by a knowledgeable, willing seller to a
      knowledgeable, willing buyer in an arm’s length transaction at current prices
      less the seller’s transaction costs. This equates to current market value less
      the seller’s transaction costs. See also Arm’s length transaction.


Current market value
      The estimated amount for which an asset should exchange, on the date of
      valuation, between a willing buyer and a willing seller in an arm’s length
      transaction after proper marketing, wherein the parties had each acted
      knowledgeably, prudently and without compulsion. This amount does not
      include transaction costs. See also Arm’s length transaction.


Current replacement cost
      The estimated cost to replace the asset being valued with the most
      appropriate replacement item available. It applies where the asset being
      valued cannot be replaced by an asset with the same service potential, but
      would be replaced by a different asset with similar service potential.


Current reproduction cost
      The cost of reproducing or replicating an asset’s future economic benefits. It
      applies where the asset being valued would be replaced at balance date by a
      similar asset in terms of both scale and technology. It is relevant where a
      similar asset is available and the existing asset still represents significantly
      unchanged technology. The cost is then written down for age and condition.


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         D

Data integrity
       The soundness and reliability of information ensured by security measures
       and controls employed within systems.


Debtor
         A person or organisation owing money to the entity for any reason. See also
         Accounts receivable.


Deficiency/Deficit
       Shortage detected in the check or audit of transactions (e.g. shortage of
       monies banked in relation to collections); or excess of disbursement over
       receipts (e.g. disbursing more from the collections account than the total
       account balance); or excess of liabilities over assets.


Delegate (noun)
      An officer to whom authority and responsibility to carry out a specific function
      or duty has been passed to.


Delegation
      The act of passing on authority to carry out a specific function or duty to an
      officer of the entity, while the accountable officer retains accountability for that
      function or duty.


Depreciable amount
      The historical cost (or other substituted revalued amount) of a depreciable
      asset less the amount expected to be recovered on disposal of the asset at
      the end of its useful life.


Depreciable asset
      A non-current physical asset that has a limited useful life.




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Depreciated replacement cost
      The value arrived at after the asset has been valued at current replacement
      cost and is subsequently written down to reflect the asset’s age and/or
      obsolescence. See also Current replacement cost.


Depreciation (expense)
      The systematic charge against operations that is made for the purpose of
      allocating the depreciable amount of a depreciable asset over its anticipated
      useful life.


Designated Officer
       Assigned employee of WaterSecure or Water Plant Contractor responsible for
       the management of inventories


Destruction of records
      The physical destruction of accounting records after the prescribed retention
      period has elapsed and appropriate authorisation has been obtained.


Direct deposit
       The deposit of funds directly into a bank account. Also known as Electronic
       funds transfer.


Disbursement
      The expenditure of monies by means of a cheque, direct debit or cash
      transaction, thereby reducing funds held in the relevant bank account.


Discount received
      A reduction in an account payable, offered as an incentive for the entity to pay
      promptly, that is taken up.


Discrepancy
      The difference between two accounting records that are required to be equal.


Dishonoured cheque
      A cheque deposited in a bank account that the bank will not honour because
      of insufficient funds in the drawer’s account, incorrect or incomplete
      information being written on the cheque, no account in existence or the
      direction of the payer to stop payment.

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Dishonoured credit card transaction
      A credit card transaction that cannot be honoured because of incorrect or
      invalid information shown on the transaction record, or cancellation of the
      card.


Disposal (of assets)
      Relinquishing ownership of and rights to an asset by means of sale,
      scrapping, loss, destruction or other approved method.


Donation
      An amount of money or item given to a receiving entity without benefit to the
      donor.


Doubtful debt
      An account receivable due to the entity in relation to which all recovery action
      to date has been unsuccessful, and for which provision is to be made against
      likely non-payment.




       E

Economic benefit
     A monetary item, or the equivalent monetary value of a physical item, that
     constitutes an increase in the assets of the entity.


Electronic funds transfer (EFT)
       The direct transfer of funds from one bank account to the credit another. See
       also Direct deposit.


Electronic storage
       The use of an electronic memory device to store accounting records and
       supporting information for subsequent retrieval and/or reporting.


Employee
     An officer or person in the employment of the entity who receives a salary or
     wage under the provisions of relevant legislation and/or an appropriate award.

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Employee entitlements
     Benefits accrued to an employee of the entity under the terms and conditions
     of their employment and because of their past services to the entity and/or
     other public sector organisations.


Employee expenses
     Payments to officers of the entity for permitted expenses incurred in the
     performance of official duties; includes allowances and reimbursements.


EMT
         Executive Management Team


Enhancements
     Major expenditure incurred in reconditioning and overhauling an existing
     asset that extends its useful life beyond that originally estimated and is in
     excess of the capitalisation threshold.


Equity
         The residual interest in the entity’s assets after deduction of its liabilities.


Ex gratia payment
       A non-compulsory payment made as an act of grace and as a matter of
       favour. A payment that is not required under any law, Act or contract. See
       also Special payment.


Expenditure authorisation
     The authorisation to expend monies of the entity granted by an officer with
     appropriate financial delegation. See also Financial delegation.


Expenses
     Consumption or losses of service potential or future economic benefits in the
     form of reductions in current assets or increases in liabilities.


External audit
      The independent appraisal of the entity’s financial activities that is required by
      the Financial Accountability Act 2009 and controlled by the Auditor-General.
      See also Audit.
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External auditor
      An officer of the Auditor-General, or consultant appointed by the Auditor-
      General, to conduct an external audit. See also Auditor.


Extra-contractual expenditure
       Expenditure not required under the terms of a contract but acknowledged by
       the entity as being due to the contractor (e.g. when a contractor incurs extra
       expenses as a result of the entity’s actions or inaction).


Extraordinary expenses
      Item of an expenditure type that is outside the ordinary operations of the
      entity and not forecast in the budget, and reported separately in the financial
      statements.




       F

Fair value of an asset
       The amount for which an asset could be exchanged between a
       knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s
       length transaction. See also Arm’s length transaction.


FBT year
      The 12 month period beginning April 1 and ending March 31 during which the
      entity’s annual FBT liability is assessed.


Finance lease
      A lease arrangement that effectively transfers substantially all the risks and
      benefits of owning the leased property from the lessor to the lessee.


Financial Accountability Act 2009
      In conjunction with the Financial and Performance Management Standard
      2009, this Act provides the principles of financial administration and audit for
      all State Government departments and statutory bodies.




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Financial delegation
      An authority given by the Accountable Officer to the incumbents of specified
      positions to approve expenditure, write-off a loss, or make a special payment
      on behalf of the entity not exceeding a specified value. See also Delegation.


Financial management
      Planning, organising and controlling financial and physical resources in
      accordance with a strategic or business plan, and reporting performance
      against targets.


Financial and Performance Management Standard 2009
       Replacing the Public Finance Standards, the Financial and Performance
       Management Standard 2009 contains statements of policy and principles to
       be applied by accountable officers in the financial administration of the
       entities they control.


Financial statements
      Annual statements reporting the financial operations and performance of the
      entity, and including financial information in accordance with the provisions of
      the Financial Accountability Act 2009 and Financial and Performance
      Management Standard 2009. The statements are prepared on an accrual
      accounting basis and comprise:
         ♦ a Statement of Financial Performance and accompanying notes
         ♦ a Statement of Financial Position and accompanying notes
         ♦ a Statement of Cash Flows and accompanying notes
         ♦ other notes.


Financial system update
      The entry of all financial transactions into the financial systems of the entity.


Financial systems
      Those systems and procedures, whether manual or computerised, that are
      used to record, manage and report the financial accounting information and
      activities of the entity.


Financial year
      The 12-month period commencing 1 July and ending the following 30 June,
      that is the subject of financial reporting to State Parliament.
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Foreign currency
      Notes, coins, travellers cheques and overseas bank drafts that are in a
      currency other than Australian.


Fringe Benefits
       Benefits other than award payments of salaries and wages, provided to
       employees or associates of employees by the entity, an associate of the
       entity or third party in respect of the employment of that employee. See also
       Benefit.


Fringe Benefits Tax (FBT)
       An annual federal tax payable to the Australian Taxation Office that is based
       on the total taxable value of non-cash fringe benefits and non-exempt
       allowances provided to officers or their associates by the entity, associates or
       third party in respect of the employment of that employee.


Fuel card
       A corporate credit card issued by a fuel supplier that is used for the purchase
       of fuel and approved sundry services for official vehicles.


Future economic benefits
       Benefits derived from the capacity of an asset to contribute to the ability of the
       entity to meet its service objectives. See also Service potential.




       G

General ledger
      The principal set of accounting records to which postings are made and from
      which statutory financial statements are drawn.


General Purpose Financial Statements
      The annual financial statements prepared in accordance with section 40 of
      the Financial Accountability Act 2009




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Gift
        See Reportable Gift.


Goodwill
     An intangible asset arising from benefits such as a superior management
     team loyal and efficient employees, established clientele, strategic location,
     etc.


Grant
        An amount that is paid, in one sum or in instalments, to external bodies, in
        consideration of outcomes relating to specific activities. Grants operate under
        terms set out in the contractual agreement between the entity and the
        recipient of the grant. Grants do not include those payments made in relation
        to employees or contractors undertaking the entity’s own activities.

GST (Goods and Services Tax)
      The GST is a broad based tax of 10 per cent on the supply of most goods,
      services and anything else consumed in Australia. GST took effect on 1 July
      2000.




        H

Hire
        The short-term use of an item in accordance with a rental agreement between
        the entity and supplier, or between the hirer and the entity. Ownership of the
        item does not pass to the hirer.


Historical cost
       The original cost of an item.




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       I

Immaterial transaction
      A transaction that is of such a value that its non-disclosure in the financial
      statements will not affect judgments made about the financial performance of
      the entity.


Impressed signature
      Reproduction of an authorised officer’s signature on cheques                   or
      correspondence by means of an automatic or manual stamp impression.


Inflows
       The deposit of monies into an authorised bank account.


Infrastructure assets
        Assets that provide essential services and enhance the productive capacity of
        the State Government.


Insurance
      A paid policy that provides protection against large and unexpected losses.
      See also Risk management.


Intangible asset
       An asset that has no physical form but which, because of its special rights,
       provides future benefits to the entity.


Internal audit
       An independent appraisal of the entity’s activities that is to be established and
       maintained by the governing body under the requirements of the Financial
       Accountability Act 2009. The internal audit function evaluates the adequacy
       and effectiveness of the entity’s operations and the underlying systems of
       internal control, in accordance with the internal audit charter approved by the
       Accountable Officer. See also Audit.


Internal auditor
       Party appointed by the Accountable Officer to conduct an internal audit. See
       also Auditor.

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Internal check
       A system of in-built crosschecking mechanisms within recording and reporting
       processes, where the work of one person is independently verified by others.
       Such mechanisms should ensure that transactions to be recorded and
       reported:
        ♦ have been properly authorised
        ♦ are correctly detailed
        ♦ are accurately processed promptly, in accordance with established
            criteria.


Internal check officer
       An accounting officer charged with the duty of performing the internal check
       function.


Internal control
       The methods and procedures adopted within the entity to safeguard its
       assets, ensure the accuracy, reliability and integrity of its financial records,
       and ensure compliance with the relevant legislation and associated policies,
       practices and procedures.


Inventory
       Goods or other property held:
       ♦ for sale in the ordinary course of operations
       ♦ for use in the production of goods for sale
       ♦ for consumption in the production of goods or provision of services
          (including consumable stores and supplies).

Investments
      Assets held by the entity for the generation of revenue such as interest,
      royalties, dividends and rentals (not including operating assets).


Invoice
       A claim for payment issued on or by the entity under the terms of a purchase
       order, contract or other agreement.


Irregular cheque
       A cheque that has been incorrectly prepared and will not be honoured by the
       bank.

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        J

Journal entry
      A double-sided accounting transaction with a net value of nil, used for posting
      entries to general ledger accounts.


        L

Lease
        An agreement conveying from a lessor the right to use property for a stated
        period of time in return for a series of payments from the lessee. See also
        Finance lease, Lessee, Lessor and Operating lease.


Ledger
      A set of accounting records to which postings are made and that can be used
      to report the whole of a particular activity or function. A ledger may be
      subsidiary to the general ledger and represented in the general ledger by a
      single summary control account. See also Control account, General ledger
      and Subsidiary ledger.


Lessee
      The individual or organisation to whom the rights granted by a lease are
      conveyed.


Lessor
      The individual or organisation from whom the rights granted by a lease are
      conveyed.


Liabilities
        Sacrifices of future service potential or economic benefits that the entity is
        presently obliged to make to other entities as a result of past transactions or
        other past events.


Loan redemption

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       The repayment, usually in instalments, to a lender of the principal value of
       monies lent.


Long-term borrowings
      Funding provided to the entity by an external body over a period extending
      beyond 12 months. See also Borrowings.


Loss
       A deficiency in public or other monies, or public or other property through:
         ♦ damage to or destruction, condemnation, obsolescence or theft of
            property
         ♦ theft of monies
         ♦ overpayment, debts written off or waivers of claims to monies due
         ♦ expenditure made without lawful authority
         ♦ failure to assess or levy revenue or other amounts receivable


Losses register
      A record showing full particulars of all losses sustained by the entity.




       M

Maintenance (of assets)
      Expenditure incurred to keep assets in effective and efficient operating
      condition, maximising the economic benefit generated for the entity through
      their use.


Major account
       An account for the regular and ongoing supply of goods or services to the
       entity without the issue of purchase orders, and normally invoiced on a
       periodic basis. Also known as a Bulk account or Contractual account.

Material amount
       A transaction or event that is of such value that its non-disclosure in the
       financial statements would affect a judgment made about the financial
       performance of the entity.


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Minimum lease payment
      The rental payments over the term of a lease, including bargain purchase
      options, premium and guaranteed residual value, and excluding
      reimbursement of executory costs and contingent rental.


Monies
      Includes negotiable instruments and securities of any kind for the payment of
      debts owed to or by the entity.


       N

National Tax Equivalents Regime (NTER)
      An administrative arrangement between the Commonwealth and the states
      under which Commonwealth income tax laws are applied to certain
      government bodies, namely GOCs and commercialised business units


Negotiable instrument
      Any instrument ordering or authorising the payment of monies and able to be
      lodged with a bank for credit of those monies to a bank account. Includes
      bills of exchange, promissory notes, payment or money orders, postal orders
      and cheques.


Net present value
       A method used to discount future net cash flows into present value terms.


Net realisable value
       The amount expected to be recovered by disposing of an asset after the
       deduction of any costs associated with its disposal.


New initiative
      A proposed new service, or a significant improvement to the quality or range
      of existing services, put forward in the annual budget submission to
      Queensland Treasury.


Non-current liabilities
      Financial obligations against the entity in respect of claims which need not be
      discharged until a future accounting period beyond the next 12 months.

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Non-current physical assets
      All owned or leased tangible assets that:
         ♦ have a service life expectancy of more than 12 months
         ♦ are held by the entity for use in the production or supply of goods or
            services
         ♦ are acquired or constructed with the intention of being used on a
            continuing basis
         ♦ are not intended for resale in the ordinary course of business
         ♦ have a value of $5,000 or more.




       O

Obligation (to pay)
      An agreement binding the entity to make payment to a vendor, supplier or
      other claimant for the provision of goods or services to the entity.


Official purposes
        Functions or activities performed by officers in direct connection with their
        duties while employed by the entity.


Operating lease
      A lease where the lessor effectively retains substantially all the risks and
      benefits relating to ownership of the lease property. See also Lease.


Operating Statement
      A statement that identifies revenue and expenses of the entity within the
      reporting period.


Organisational unit
      An identifiable unit of activity within the entity’s organisational structure that
      has an operational plan, a budget and responsibility for the revenue,
      expenses, liabilities and assets of that unit.




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Other monies
      Monies, negotiable instruments or securities of any kind, other than public
      monies or property, that are held by an authorised officer in the course of
      official duties (e.g. refundable deposits).


Other property
       Property, other than public property or monies, that is held by an authorised
       officer in the course of official duties.


Outflows
      The payment of monies from an approved bank account of the entity.


Overdue account
      An invoice that remains unpaid after 30 days from the date of issue.


Overseas draft
      The instrument used to effect a foreign currency payment. Overseas drafts
      are drawn by the bank after payment of the equivalent Australian dollar
      amount plus fees.




         P
Patent
         An intangible asset that is the exclusive right to produce and sell a particular
         product or to use a specific process for a specified period. See also
         Intangible asset.


Pay As You Go (PAYG) tax
      PAYG is a single, integrated system for reporting and paying withholding
      amounts of tax on business and investment income. PAYG replaces PAYE
      (pay as you earn) and commenced on 1 July 2000. Group Tax (or personal
      income tax) deducted from employees wages is termed as withholding tax
      under PAYG and remitted to the ATO.




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Payment
     The discharge of an obligation on the entity to pay by the issue of a cheque or
     the use of a credit card, petty cash or other instrument of payment.


Payment Approval Form
       Form used for the approval of a payment.




Payment terms
     Condition(s) of an agreement between the entity and a vendor or supplier that
     describe the form and period of payment for goods or services supplied to the
     entity/client organisation.


Payroll tax
       A State Government tax levied on the entity as an employer and calculated as
       a percentage of total taxable salaries, wages and allowances paid to
       employees as well as the employer superannuation contribution. Payroll tax is
       remitted monthly to the Office of State Revenue.


Performance measure
      A quantifiable measure used to set performance targets and monitor actual
      performance against those targets.


Period end
       The end of a designated accounting period, e.g. day, month, quarter, year.


Periodic payment
       A payment to a supplier for the provision of a periodic service.


Periodic service
       A service of a repetitive or standard nature for which it is not necessary to
       issue a requisition or official purchase order, and for which the charge
       remains relatively consistent over a period of time (e.g. supply of electricity).


Permitted expense
      An expense that is an allowable type of expenditure to be incurred on behalf
      of the entity.


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Plant and equipment
       Depreciable non-current assets, such as computers and motor vehicles, that
       will not be substantially consumed within a 12-month period.


Portable and attractive item
      An asset costing more than $200 and less than $5,000 that, because of its
      size and portability, is highly susceptible to theft or loss, or could easily be
      converted to cash.


Post-dated cheque
      A cheque payable on a future date, thus rendering the funds unavailable to
      the bank (and, therefore, the entity) until that date. See also Irregular cheque.


Posting
      The recording of an accounting transaction in a ledger of the entity.


Prepaid expenses
      A payment made in advance of receiving the relevant goods or services for
      the purpose of taking advantage of an economic benefit (e.g. discount
      offered) or where it is a condition of providing goods or services. Also known
      as Prepayments.


Private monies
       Legal tender owned by individuals or other non-government entities, as
       opposed to monies owned by the entity and/or other State Government
       entities.


Procurement
      Obtaining or acquiring goods and services through the application of specific
      procedures.


Promissory note
      A written promise to pay a specified sum of money to a person, company or
      other organisation at a designated time or upon demand.


Promulgate
     To make known by open declaration; to proclaim formally; to put into
     operation.

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Provision
       An amount set aside by the entity to provide for a current or future expense.


Provision for doubtful debts
       An amount set aside by the entity to provide for an account receivable for
       which all recovery action to date has been unsuccessful and which is unlikely
       to be paid.


Public accounts
       The Consolidated Fund, Trust Funds and Special Funds maintained by
       Queensland Treasury on behalf of all State Government agencies.


Public monies
       Monies, negotiable instruments or securities of any kind collected, received or
       held by an authorised officer in the course of official duties and forming part of
       the public accounts (e.g. normal fees and charges).


Public property
       Property, other than public monies, that is held by an authorised officer in the
       course of official duties and is to be reported as an asset of the entity or other
       State Government entity.


Purchase order
      A written advice issued by an authorised officer committing the entity to the
      incurrence of expenditure in accordance with the terms of the advice and
      subject to satisfactory performance by the supplier.




       Q

Queensland Treasury
     The State Government department charged with the purpose of administering
     State Government funds and performing its functions under the direction of
     the Treasurer.




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       R

Receipt
      An accountable form issued by the entity to acknowledge monies or property
      given into the care, custody and control of the entity.


Receipting officer
      The incumbent officer of an authorised position who completes and issues a
      receipt for monies or property received on behalf of the entity.


Reconciliation
     The validation of a record (or series of records), a transaction (or series of
     transactions) by comparison with a predetermined result.


Recoverable advance
     Public monies issued by the entity to an officer, person or organisation for and
     in advance of expenditure for authorised purposes. Expenditure from a
     recoverable advance is to be acquitted and any unexpended balance repaid.

Recoverable amount
     The higher of an asset’s fair value less costs to sell and its value in use. See
     also fair value of an asset and value in use.


Recovery of expenses
     Expenses that have been paid out but that have later been recouped or
     returned.


Refund
      The authorised return of a payment made by a customer.


Remittance
      Payment of monies owing by forwarding a negotiable instrument to the payee.


Replacement cheque
      A cheque drawn in lieu because the original cheque has been lost, destroyed,
      or was not received by the payee, and where the original cheque has not
      been presented to the bank for payment. Also known as a Cheque in lieu.

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Replacement cost (of an asset)
      The cost at which an identical asset could be purchased or manufactured as
      at the reporting date, having regard for normal purchase or production
      conditions.


Reportable gift
      Any item of money, property, travel or any other benefit, including abnormal
      entertainment and hospitality, that is given or received on behalf of the entity.
      A gift received that exceeds $100 in fair value, and all gifts given are to be
      disclosed in the financial statements.


Requisition
      A form used to request that an official purchase order be raised for the supply
      of goods or services for the use of the entity.


Reserve
      An item of owner’s equity, other than contributed capital.


Resource allocation
      Assigning financial, human and physical resources to programs within the
      entity through the strategic plan.


Resource management
      A system that focuses on the outputs and outcomes achieved by programs
      within the entity’s strategic plan and which, by identifying clearly measurable
      objectives, ensures efficient and effective use of resources.


Resources
      Inputs to the entity’s strategic objectives (including money, human and
      physical elements) for use in the delivery of its services and production of its
      outputs.


Revaluation
      The act of recognising a reassessment of the value of a non-current physical
      asset at a particular date.




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Revaluation decrement
      The amount by which the revalued carrying amount of a class of non-current
      physical assets is less than the previous carrying amount, as at the
      revaluation date.


Revaluation increment
      The amount by which the revalued carrying amount of a class of non-current
      physical assets exceeds the previous carrying amount, as at the revaluation
      date.


Revenue
     All forms of income, levied or paid, that can be recognised in the accounting
     period.


Revenue initiative
     A policy proposal in the budget process aimed at generating additional
     revenue for the entity to fund new initiatives.


Risk management
      A policy of weighing the cost of controls, checks and insurance against the
      benefits to be gained by implementing them, and arriving at a sensible
      balance of such costs complemented by an acceptable level of risk. Risk
      management practices are designed to minimise the exposure of the entity to
      unnecessary costs and losses through preventative measures, rather than
      corrective measures.


Royalties
       A compensation or portion of proceeds paid to an owner for the use of
       property, or an agreed portion of proceeds resulting from a person’s work.




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         S

Salary
         Remuneration paid to public servants in accordance with their employment
         award.


Salvage value
      An estimate of the net amount recoverable on disposal of an asset at the end
      of its useful life. Also known as Residual value.


Secure storage
      A lockable area for the safe custody of cash, assets and other items of value
      to the entity.


Security and control
       A series of policies, practices and procedures adopted by the entity to
       safeguard assets and ensure the reliability of financial information.


Segregation (of duties)
      The separation of duties that provides a means of internal control whereby
      more than one officer takes part in the various steps of a financial transaction
      or process.


Service potential
      The capacity to provide services to the entities that use assets; applies to all
      assets, irrespective of their physical or other form. See also Future economic
      benefits.


Services
      Assistance, advice or other aid given in return for the payment of monies.


Settlement
       Discharge of an obligation by the issue of cash, a cheque or credit card to a
       creditor.



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Short-term borrowings
       Funding provided to the entity by an external body over a period of less than
       12 months. See also Borrowings.


Shortage
      A deficit or deficiency detected in the check of a transaction, e.g. balancing
      monies collected with receipts issued; reconciling petty cash on hand with
      monies issued.


Special payment
      An ex gratia payment, extra-contractual expenditure, ex-gratia compensation,
      extra statutory payment, or extra-regulatory payment. See also Ex gratia
      payment.


Statement of Cash Flows
      A statement forming part of the annual financial statements that reports the
      sources and uses of cash for the reporting period.


Statement of Financial Position
      A report forming part of the annual financial statements that lists the assets,
      liabilities and equity of the entity at a specified date, and where the net assets
      (total assets less total liabilities) equate to net equity.


Statements of Accounting Concepts (SACs)
      The statements issued by the Australian Accounting Research Foundation on
      behalf of the Institute of Chartered Accountants in Australia and the Australian
      Society of Certified Practising Accountants. The statements are applicable to
      State Government accounting.


Stocktake
      Counting, measuring, listing and, where applicable, valuing those items that
      comprise the entity’s non-current physical assets, portable and attractive
      items and inventories, and comparing the results of the check against the
      relevant register.


Straight line depreciation
       A depreciation method that allocates an equal amount of an asset’s cost to
       each accounting period in its useful life.


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Strategic plan
       A plan setting forth the entity’s desired position over the following five years,
       based on all relevant environmental factors. The plan provides a focus for
       annual budgetary and resource management strategies.


Subprograms
      Major areas of endeavour for the entity that contribute to the desired
      outcomes or goals of the relevant programs.


Subsidiary accounts
      Records of financial or accounting transactions that do not directly form a part
      of the general ledger, but support those records by being ‘rolled-up’ to a
      general ledger control account.


Sundry debtors
      Persons who do not have an authorised credit limit, currently owe monies to
      the entity, and are required to pay the amount at some time in the future.
      Sundry debtors may result from overpayments by the entity or unmatched
      deposits received. See also Unidentified monies.


Surplus
      The excess detected in checking a transaction, e.g. balancing monies
      collected with receipts issued; reconciling petty cash on hand with monies
      issued.


System appraisal
      A formal assessment performed at least every third financial year to
      determine the proper functioning of controls and the appropriateness of
      procedures associated with identifying, recording, managing and controlling
      revenue, expenditure, asset and liability systems.




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       T

Tax Invoice
       A document that includes the required information as determined by the
       Australian Taxation Office for GST purposes.


Tender
      A written offer to the entity quoting a fixed or variable price to perform
      specified works and/or supply specified commodities.


Threshold
      A financial limit imposed for the meeting of certain requirements, e.g.
      threshold for recognising and recording non-current physical assets in the
      fixed assets system.


Transaction
      An entry in the entity’s accounting records.




       U

Unclaimed cheque
      A cheque that has been returned because it was sent to an incorrect address
      or made out to an unknown payee.


Unclaimed monies
      Those funds paid by the entity that are not claimed by the payee within three
      months of the issue of the cheque.


Unearned revenue
      Revenue received from customers in advance of supplying goods or services
      or grant revenue received where grant conditions have not been met. Also
      known as Prepaid revenue.




                               Prepared by the WaterSecure
                                 Business Services Team
                                    31 October 2009

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Unidentified monies
      Those receipts whose origins and/or destination are unknown, and which are
      posted to a Sundry Debtors account pending determination. See also Sundry
      Debtors.


Unpresented cheque
      A cheque that the payee has not presented for payment.


Useful economic life
       The estimated period of service of a depreciable asset expressed as:
        ♦ period of time over which the asset is expected to be used
        ♦ period of time for which the benefits represented by that asset are
            expected to be derived
        ♦ total number of units which the asset is expected to have produced by
            the end of its useful life with the entity.


User charging
      A policy whereby the entity is permitted to charge users for goods or services
      so as to encourage rational economic choice.


       V

Validation
       The reconciliation of a record or transaction by comparison with a
       predetermined result or other like records or transactions.


Valuation
       The act of assessing the worth of an asset at a particular date.

Value in use
       The present value of estimated future cash flows expected to arise from the
       continuing use of an asset and from its disposal at the end of its useful life.


Vendor
      The supplier of goods or services to the entity.




                                 Prepared by the WaterSecure
                                   Business Services Team
                                       31 October 2009

                                         G- 40 -
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WaterSecure            Financial Management Practices Manual


Verifying officer (for bank accounts)
       An officer of the entity authorised by the Accountable Officer or other
       delegated officer to approve banking arrangements, including the
       authorisation of cheque signatories.




        W

Wages
        Remuneration made to employees in return for work performed for the entity.


Waiver
      Relinquishment of a right to claim a payment, service or other benefit.


Water Plant Contractor
        The contractor under an awarded contract to operate and maintain the
        manufactured water plants and pipeline network.


Weighted average cost
      An average cost per unit, calculated by dividing the total cost of the units
      available for sale by the total number of units available for sale.


Write-down
       The act of reducing to a lesser value a debt that is owed to the entity or the
       worth of an asset held by the entity.


Write-off
       The act of reducing to nil a debt that is owed to the entity or the worth of an
       asset held by the entity.


Written down value
       The value of an asset calculated by subtracting the accumulated depreciation
       from the purchase price. The written down value is intended to be an
       estimate of the true worth of an asset.




                                Prepared by the WaterSecure
                                  Business Services Team
                                     31 October 2009

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