The following accounting policy guidance are designed to support and be read in conjunction with the Commonwealth entities financial statements guide, Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 (FRR) and Australian Accounting Standards (AASs).
Guidance documents
Purpose of these guidance documents purpose are to:
- clarify and provide guidance on specific accounting and financial reporting policies
- provide explanations and examples relating to the interpretation and application of AASs and/or FRR.
Unless otherwise stated, the following guidance applies until they are either amended or withdrawn:
- RMG 109 - Accounting for internally developed software
- RMG 110 - Accounting for Leases
- RMG 111 - Accounting for non-current assets held for sale
- RMG 112 - Identification of general insurance contracts for accounting purposes
- RMG 113 - Accounting for subsequent expenditure on property, plant and equipment
- RMG 114 - Accounting for decommissioning, restoration and similar provisions to make good
- RMG 115 - Accounting for concessional loans
- RMG 116 - Accounting for annual appropriations
- RMG 117 - General principles for the recognition of expenditure in budget aggregates
- RMG 118 - Accounting for machinery of government changes
- RMG 119 - Reporting requirements following machinery of government changes
- RMG 122 - Disclosure of current and non-current assets and liabilities in financial statements
- RMG 123 - Deeming or designating transfers of assets and liabilities as 'contributions by owners' (equity)
- RMG 124 - Capital budgeting by Commonwealth entities in the general government sector
- RMG 125 - Commonwealth entities financial statements guide
- RMG 419 - Guide to classifying payments to other levels of government for specific purposes and Commonwealth own-purpose expense
Position papers
These position papers review the accounting, reporting and disclosure requirements under relevant accounting standards and provide the Department of Finance’s (Finance) position on the interpretations on accounting standards.
Unless otherwise stated, the following position papers apply until they are amended, superseded or withdrawn:
- Implementation options for AASB 9 Financial Instruments
- Implementation options for AASB 1058 Income of Not-for-Profit Entities in conjunction with AASB 15 Revenue from Contracts with Customers
- AASB 16 Measurement of ROU Assets
Presentation notes
These notes are from presentations previously provided by Finance on financial reporting matters.
- AASB 1058 & AASB 15 Revenue Tech Training - March 2019
- Accounting standards updates - CFO forum August 2018
- AASB 1058 CFO forum - March 2018
- AASB 9 Financial Instruments workshop - March 2018
- AASB 9 Financial Instruments - 13 December 2017
- AASB 124 Related Party Disclosures - March 2017
Resource Details
Finance guidance on provisions in government accounting
This guide provides additional guidance on theoretical aspects of recognising provisions and how to deal with the calculation or estimation uncertainty in the government sector. It is important that entities also review and apply the relevant legislation and Australian accounting standards.
Frequently asked questions – Concessional loans
This frequently asked questions provides general advice about concessional loans. Some concessional loan programs may be complex in practice or have specific requirements. It is important that entities also review and apply the relevant legislation, government policies and Australian accounting standards.
Frequently asked questions – Equity investments
This frequently asked questions provides general advice about equity investments. Some equity investment programs may be complex in practice or have specific requirements. It is important that entities also review and apply the relevant legislation, government policies and Australian accounting standards.
RMG 109 - Accounting for internally developed software
This guide provides guidance on what costs should be capitalised for internally developed software intended for internal use, not for the purpose of selling, nor software that is externally developed.
RMG 110 - Accounting for Leases
RMG 110 outlines the Department of Finance's major policy decisions regarding the application of AASB 16 Leases.
RMG 111 - Accounting for non-current assets held for sale
This guide provides guidance on the accounting for non-current assets that are held for sale under AASB 5 Non-current Assets Held for Sale and Discontinued Operations.
Please note AASB 5 excludes from its scope the restructuring of administrative arrangements and administered activities of a government department and the transfer of assets and liabilities between government departments.
RMG 112 - Identification of general insurance contracts for accounting purposes
This guide provides guidance on applying AASB 1023 General Insurance Contracts in the identification of general insurance contracts entered into by Australian Government entities.
RMG 113 - Accounting for subsequent expenditure on property, plant and equipment
This guide provides guidance on asset recognition criteria and accounting treatment for expenditure on property, plant and equipment after initial recognition, referred to as subsequent expenditure.
RMG 114 - Accounting for decommissioning, restoration and similar provisions to make good
This guide provides guidance on the accounting and disclosure requirements for the initial recognition of make good provisions and subsequent accounting, including the unwinding of the discount and changes made to the provision.
The guide also provides limited guidance is also provided on accounting for the related asset as support. In principle, the discounting guidance can also apply to other provisions under AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
RMG 115 - Accounting for concessional loans
This guide provides guidance on accounting for concessional loans, including discounting using the effective interest method and the unwinding of the discount. In principle, the ‘market based loan’ components of this guide can also apply to other financial instruments measured at amortised cost using the effective interest method.
RMG 116 - Accounting for annual appropriations
This guide provides mandatory accounting requirements for annual appropriations in accordance with the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015 and Australian Accounting Standards, with accompanying guidance and illustrative examples.
RMG 117 - General principles for the recognition of expenditure in budget aggregates
This guide defines key budget aggregates: underlying cash balance; headline cash balance; net operating balance; fiscal balance and net debt. It outlines the impact on these aggregates on the following types of expenditure: grants; purchases of non-financial assets; prepayments for grants or non-financial assets; loans (commercial and concessional) and equity investments.
RMG 118 - Accounting for machinery of government changes
This guide provides information on accounting requirements and financial management implications to assist Commonwealth entities in implementing machinery of government changes.
This guide excludes other procedural matters arising from changing or abolishing entities’ functions. For guidance on reporting requirements following machinery of government changes, please refer to RMG 119.
RMG 119 - Reporting requirements following machinery of government changes
This guide provides guidance on reporting requirements for an entity’s annual report, performance report and annual financial statements following a machinery of government change in accordance with Division 4 of the Public Governance, Performance and Accountability Rule 2014.
For guidance on accounting requirements for implementing machinery of government changes, please refer to RMG 118.
RMG 122 - Disclosure of current and non-current assets and liabilities in financial statements
This guide provides guidance for the disclosure of maturity information in financial statements, as required under section 34B of the FRR and AASB 101 Presentation of Financial Statements.
RMG 123 - Deeming or designating transfers of assets and liabilities as 'contributions by owners' (equity)
This guide provides guidance to direct entities as to when it is appropriate to have transfers of assets and liabilities deemed or designated ‘contributions by owners’ (equity) in accordance with Interpretation 1038 Contributions by owners made to wholly-owned public sector entities and/or AASB 1004 Contributions. Transfers within a formal MoG process are excluded from this guide. Accounting for MoG transfers is covered by Part 8 of the Commonwealth Entities Financial Statements guide.
Outside of Machinery of Government (MoG) transfers, where a Government decision requires the non-reciprocal transfer of assets/liabilities between wholly-owned government entities, this guide provides a basis for certain transfers to be accounted for as contributions by owners.
RMG 124 – Capital budgeting by Commonwealth entities in the general government sector
This guide assists officials in Commonwealth entities (excluding GBE’s) to responsibly plan, manage and report capital expenditure and non-current asset funding for their entity.
The guide provides advice on:
- how entities report capital expenditure in their financial statements,
- how to create the third forward estimate year for departmental and administered capital budgets,
- the impact of a shared service agreement on entities’ departmental capital budget funding,
- the movement and reallocation of capital expenditure process,
- the capital management plan, and the requirement for reporting this.
RMG 125 – Commonwealth entities financial statements guide
This guide provides information relevant to the preparation of annual financial statements such as definitions, rounding and materiality policies. It includes information relevant to the specific requirements of the FRR, including disclosure of individual remuneration for senior executives of reporting entities and other additional disclosures not covered by AAS. For consistency, explains accounting treatment mandated by the FRR where AAS allows a choice (e.g. use of the valuation method for material property, plant and equipment and administered disclosures).
The Department of Finance has also produced the Primary Reporting and Information Management Aid to assist entities to prepare financial statements.
RMG 419 -Guide to classifying payments to other levels of government for specific purposes and Commonwealth own-purpose expenses
This guide outlines the process to determine whether payments made to other levels of government are recognised as Commonwealth Own Purpose Expenditure (COPE) or Specific Purpose Payments (SPP).
Position Paper - AASB 16 Measurement of ROU Assets
This paper provides the Department of Finance’s (Finance’s) position on whether Right of Use (ROU) lease assets are required to be measured at fair value under AASB 16 Leases and related Australian Accounting Standards.
Position Paper - Implementation options for AASB 9 Financial Instruments
This paper reviews the transition options under AASB 9 and the ongoing application of the standard. Options have been selected based on their compliance with AASB 1049 Whole of Government and General Government Sector Financial Reporting (AASB 1049), the need for consistency across Commonwealth entities, and an assessment of the costs of implementing particular options for preparers against their benefits to financial statement users.
Position Paper - Implementation options for AASB 1058 Income of Not-for-Profit Entities in conjunction with AASB 15 Revenue from Contracts with Customers
This paper reviews the transition options under both AASB 1058 and AASB 15, and the ongoing application of these standards. In compliance with AASB 1049 Whole of Government and General Government Sector Financial Reporting, the selected options will ensure consistent adoption of the relevant accounting standards are selected across not-for-profit Commonwealth entities. Finance’s position is largely based on consideration of the costs for financial statement preparers to implement a particular option compared to its benefits to financial statement users.
