Technical accounting policy and guidance

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Unless otherwise stated, the following guidance applies until they are either amended or withdrawn: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 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 (‘make good’)
  • RMG 115 - Accounting for concessional loans
  • RMG 118 - Accounting for machinery of government changes
  • RMG 122 - Disclosure of maturity information in financial statements 
  • RMG 123 - Deeming or designating transfers of assets and liabilities as 'contributions by owners' (equity)
  • RMG 125 - Commonwealth entities financial statements guide

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Unless otherwise stated, the following position papers apply until they are either amended or withdrawn:

Presentation notes

These notes are from presentations previously provided by Finance on financial reporting matters.

Resource Details

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 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 provide guidance on applying AASB 1023 General Insurance Contracts in the identification of general insurance contracts in relation to agreements entered into by Australian Government entities.

RMG 113 - Accounting for subsequent expenditure on property, plant and equipment

This guide provides guidance on the accounting (capitalise or expense) for expenditure on property, plant and equipment after initial recognition, generally referred to as subsequent expenditure.

RMG 114 - Accounting for decommissioning, restoration and similar provisions (‘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 118 - Accounting for machinery of government changes

This guide provides guidance as to when changes arising from machinery of government (MoG) changes, should be recorded in entities’ accounts and records. It is limited to financial management implications and excludes other procedural matters arising from changing or abolishing entities’ functions.

RMG 122 - Disclosure of maturity information in financial statements

This guidance provides advice to entities on the classification of assets and liabilities to assist them in complying with section 34B of the FRR when completing financial statements and completing the Supplementary Reporting Pack for Consolidated 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 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.

Position Paper - Implementation Options for AASB 16 Leases

This paper identifies the Department of Finance’s (Finance) position on the options available for implementation of AASB 16. This will ensure consistency among entities which is necessary for the preparation of the CFS. Where the accounting treatments are prescriptive they will be mandated by amendments to the PGPA Financial Reporting Rule from 2019-20 onward. Application of all requirements is subject to the principles of materiality.

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.


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