FRR section 26 – Restructures of administrative arrangements
This section of the FRR sets out reporting and disclosure requirements for when a restructure of administrative arrangements has occurred.
Restructures of administrative arrangements are defined in AASB 1004 as:
“The reallocation or reorganisation of assets, liabilities, activities and responsibilities amongst the entities that the government controls that occurs as a consequence of a rearrangement in the way in which activities and responsibilities as prescribed under legislation or other authority are allocated between the government’s controlled entities.
The scope of the requirements relating to restructures of administrative arrangements is limited to the transfer of a business (as defined in AASB 3 Business Combinations). The requirements do not apply to, for example, a transfer of an individual asset or a group of assets that is not a business.”
Accounting entries do not need to be processed by the date of the transfer for an entity to make the disclosures required.
Section 75 of the PGPA Act provides for adjustments to annual appropriations related to the transfer of functions between non-corporate Commonwealth entities (NCEs). For further information, see RMG-116 Accounting for annual appropriations and RMG-118 Accounting for machinery of government changes.
Disclosures and notes for financial statements
In preparing financial statements to reflect a restructure of administrative arrangements:
Transfer of assets and/or liabilities
Transfers of assets and/or liabilities for no consideration to a wholly-owned Commonwealth entity, must be recognised by the transferee as a contribution by owners when, and only when, it satisfies the definition of contributions by owners in AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities. For more information, see RMG-123 Designating transfers of assets and liabilities as 'contributions by owners' (equity).
For not-for-profit entities, where an asset is acquired at no cost or nominal cost, the cost is its fair value as at the date of acquisition.
Special reporting requirements following machinery of government changes
Division 4 of Part 2-3 of the PGPA Rule provides special reporting requirements for Commonwealth entities that have ceased to exist or whose functions have been transferred following machinery of government changes. Under subsection 26(1A) of the FRR, where these circumstances occur, the relevant reporting entity must prepare financial statements accordingly.
For guidance on the special reporting requirements under the Division 4 of Part 2-3 of the PGPA Rule, see RMG-119 Reporting requirements following machinery of government changes.