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Financial Statements

AMSA, 15th Annual Report, 2004 - 2005

Independent Audit Report

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Australian Maritime Safety Authority Statement By Directors

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Statement of Financial Performance

Australian Maritime Safety Authority
for the year ended 30 June 2005

	Notes	2005 $'000	2004 $'000
REVENUE
Revenues from ordinary activities
Revenues from government	5A	66,466	64,575
Sale of Goods and services	5B	2,275	2,625
Interest revenue	5C	1,444	928
Revenue from sales of assets	5D	28	18
Other revenues	5E	389	262
Revenue from ordinary activities		70,602	68,408
EXPENSE
Expenses from ordinary activities (excluding borrowing costs expense)
Employee expenses	6A	25,007	24,210
Supplier expenses	6B	32,981	27,249
Depreciation and amortisation	6C	5,398	11,474
Write-down of assets	6D	1,134	4
Value of assets sold	5D	1,614	1,374
Total expenses from ordinary articles (excluding borrowing costs expense)		66,134	64,311
Operating surplus from ordinary activities		4,468	4,097
Net profit		4,468	4,097
Net credit /(debit) to asset revaluation reserve		(2,550)	15,832
Total revenues, expenses and valuation adjustments recognised directly in equity		(2,550)	15,832
Total changes in equity other than those resulting from transactions with the Austrlaian Government as owner		1,918	19,929

The above statement should be read in conjunction with the accompanying notes.

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Statement of Financial Position

Australian Maritime Safety Authority
as at 30 June 2005

	Notes	2005 $'000	2004 $'000
ASSETS
Financial assets
Cash	12B, 19	4,330	4,316
Receivables	7A, 19	1,891	3,184
Investments	7B, 19	28,011	15,681
Total financial assets		34,232	23,181
Non-financial assets
Land and buildings	8A, C	7,107	6,437
Infrastructure, plant and equipment	8B, C	62,827	65,341
Inventories	8E	952	2,246
Intangibles	8D	6,498	7,878
Other non-financial assets	8F	705	424
Total non-financial assets		78,089	82,326
Total assets		112,321	105,507
LIABILITIES
Provisions
Employee provisions	9A	9,009	7,963
Total provisions		9,009	7,963
Payables
Supplier payables	10A, 19	5,721	2,978
Other payables	10B, 19	76	184
Total payables		5,797	3,162
Total liabilities		14,806	11,125
NET ASSETS		97,515	94,382
EQUITY
Contributed Equity	11A	26,525	25,310
Reserves	11A	32,585	35,135
Retained surpluses/ (Accumulated Deficits)	11A	38,405	33,937
Total equity		97,515	94,382
Current assets		35,889	22,605
Non-current assets		76,432	82,902
Current Liabilities		9,676	6,494
Non-current liabilities		5,130	4,631

The above statement should be read in conjunction with the accompanying notes.

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Statement of Cash Flows

Australian Maritime Safety Authority
for the year ended 30 June 2005

	Notes	2005 $'000	2004 $'000
OPERATING ACTIVITIES
Cash received
Goods and Services		2,771	2,160
Appropriations		67,509	63,375
Interest		1,328	853
GST received from ATO		3,823	3,624
Other		389	262
Total cash received		75,820	70,274
Cash used
Employees		23,966	23,980
Suppliers		34,414	31,919
Total cash used		58,380	55,899
Net cash from/(used by) operating activities	12A	17,440	14,275
INVESTING ACTIVITIES
Cash received
Proceeds from sales of property, plant and equipment		28	18
Total cash received		28	18
Cash used
Purchase of property, plant and equipment		4,901	8,958
Purchase of Financial Instruments		12,330	4,623
Purchase of intangibles		1,438	1,002
Total cash used		18,669	14,583
Net cash from/(used by) investing activities		(18,641)	(14,565)
FINANCING ACTIVITIES
Cash received
Appropriations - contributed equity		1,215	-
Total cash received		1,215	-
Cash used
Total cash used		-	-
Net cash from/(used by) financing activities		1,215	-
Net increase/ (decrease) in cash held		14	(190)
Cash at the beginning of the reporting period		4,316	4,562
Cash at the end of the reporting period	12B	4,330	4,316

The above statement should be read in conjunction with the accompanying notes.

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Schedule of Commitments

Australian Maritime Safety Authority
as at 30 June 2005

	Notes	2005 $'000	2004 $'000
BY TYPE
Capital commitments
Infrastructure, plant and equipment		623	3,575
Total capital commitments		623	3,575
Other commitments
Operating leases		12,560	10,250
Goods and Services Contracts		54,493	16,151
Total other commitments		67,053	26,401
Commitments receivable		(6,150)	(2,725)
Net commitments by Type		61,526	27,251
BY MATURITY
Capital commitments
One year or less		623	3,575
Total capital commitments		623	3,575
Operating lease commitments
One year or less		3,679	3,314
From one to five years		7,016	5,566
Over five years		1,865	1,370
Total operating lease commitments		12,560	10,250
Other commitments
One year or less		20,220	11,477
From one to five years		24,618	4,404
Over five years		9,655	270
Total other commitments		54,493	16,151
Commitments receivable
One year or less		(2,230)	(1,670)
From one to five years		(2,876)	(905)
Over five years		(1,044)	(150)
Total commitments receivable		(6,150)	(2,725)
Net commitments		61,526	27,251

The above schedule should be read in conjunction with the accompanying notes.

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Schedule of Contingencies

Australian Maritime Safety Authority
as at 30 June 2005

	Notes	guarantees		Claims for damages/cost		Indemnities		Total
		2005	2004	2005	2004	2005	2004	2005	2004
CONTINGENT LIABILITIES	13
Balance from previous period		-	-	-	-	-	-	-	-
Claims for damages/costs		-	-	251	1285	-	-	251	1285
Re-measurement		-	-	-	-	-	-	-	-
Liabilities crystallised		-	-	-	-	-	-	-	-
Obligations expired		-	-	-	-	-	-	-	-
Total contingent liabilities		-	-	251	1285	-	-	251	1285
CONTINGENT ASSETS	13
Balance from previous period		-	-	-	-	-	-	-	-
Legal claims		-	-	201	985	-	-	201	985
Re-measurement		-	-	-	-	-	-	-	-
Assets crystallised		-	-	-	-	-	-	-	-
Expired		-	-	-	-	-	-	-	-
Total contingent gains		-	-	201	985	-	-	201	985
Net contingencies		-	-	50	300	-	-	50	300

Details of each class of contingent liabilities and assets, including those not disclosed above because they cannot be quantified or are considered remote, are disclosed in Note 13: Contingent Liabilities and Assets.

The above schedule should be read in conjunction with the accompanying notes.

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Schedule of Administered Items

Australian Maritime Safety Authority
as at 30 June 2005

	Notes	2004 $'000	2004 $'000
Revenues administered on behalf of the Government for the year ended 30 June 2005
Non-taxation (Revenues from Government)	20A
Goods and Services		4,999	5,305
Interest		10	6
Total non-taxation revenue		5,009	5,311
Total revenues administered on behalf of the Government		5,009	5,311
Expenses administered on behalf of the Government for the year ended 30 June 2005	20B
Expenses
Suppliers		4,999	4,799
Total expenses administered on behalf of the Government		4,999	4,799
Assets administered on behalf of the Government as at 30 June 2005
Financial assets	20C
cash		127	(178)
Receivables		38	159
Total financial assets		165	(19)
Liabilities administered on behalf of the Government as at 30 June 2005
Payables	20D
Suppliers		230	234
Total Payables		230	234
Total liabilities administered on behalf of the Government		230	234
Net Assets administered on behalf of the Government		(65)	(253)
Current Assets		165	(19)
Current Liabilities		230	234
Administered cash flow for the year ended 30 June 2005
Operating activities
cash received	20E
appropriations		5,222	5,068
Interest		10	6
Other - GST received from ATO		503	-
Total cash received		5,735	5,074
Cash used
Suppliers		5,430	5,401
Total cas used		5,430	5,401
Net cash from/(used in) operating activites		305	(327)
Net increase/(decrease) in cash held		305	(327)
Cash at the beginning of the reporting period		(178)	149
Cash at the end of the reporting period		127	(178)

The above schedule should be read in conjunction with the accompanying notes.

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Notes To and Forming Part of the Financial Statements

Australian Maritime Safety Authority
for the year ended 30 June 2005

Note	Description
1	Summary of Significant Accounting Policies
2	Adoption of AASB Equivalents to International Reporting Standards from 2005-2006
3	Economic Dependency
4	Events Occuring after Reporting Date
5	Operating Revenues
6	Operating Expenses
7	Financial Assets
8	Non-Financial Assets
9	Provisions
10	Payables
11	Equity
12	Cash Flow Reconciliation
13	Contingent Liabilites and Assets
14	Directors Remuneration
15	Related Party Disclosures
16	Remuneration of Officers
17	Remuneration of Auditors
18	Average Staffing Levels
19	Financial Instruments
20	Administered Items
21	Appropriations
22	Reporting of Outcomes

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Note 1 Summary of Significant Accounting Policies

1.1 Objectives of Australian Maritime Safety Authority

The Australian Maritime Safety Authority (AMSA) has the following main ojbectives pursuant to the Australian Maritime Safty Authority Act
1990:

1. Promote maritime safety.

AMSA primarily meets this objective through delivery of its outputs for ship safety standards regulation and ship safety standards compliance monitoring and for providing the national network of aids to marine navigation.

2. Protect the marine environment from pollution from ships and other environmental damage caused by shipping.

AMSA primarily meets this objective through its outputs for ship environmental standards regulations and ship environmental standards monitoring and for managing the National Plan to Combat Pollution of the Sea by Oil and Other Hazardous and Noxious Substances.

3. Provide a national search and rescue service.

AMSA primarily meets this objective by its output for search and rescue services in the operation of the Australian Rescue Coordination Centre and maintaining maritime distress and safety communications services.

4. Promote the efficient provision of services by the Authority.

AMSA primarily meets this objective by substantially consolidating its asset base and adopting a range of management strategies since its inception that have made considerable efficiency gains in service delivery and provided regular opportunities to reduce AMSA's levy rates on an ongoing basis which fund AMSA's safety regulation, aids to navigation, and pollution response functions.

1.2 Basis of Accounting

The financial statements are required by clause 1(b) of Schedule 1 to the Commonwealth Authorities and Companies Act 1997 and are a general purpose financial report.

The statements have been prepared in accordance with:

• Finance Minister's Orders (being the Commonwealth Authorities and Companies Orders (Financial Statements for reporting periods ending on or after 30 June 2004));
• Australian Accounting Standards and Accounting Interpretations issued by the Australian Accounting Standards Boards;
• other authoritative pronouncements of the Board; and
• Consensus Views of the Urgent Issues Group.

The Authority's Statement of Financial Performance and Financial Position have been prepared on an accrual basis and are in accordance with historical cost convention, except for certain assets which, as noted, are at valuation. Except where stated, no allowance is made for the effect of changing prices on the results or the financial position.

Assets and liabilities are recognised in the Statements of Financial Position when it is probable that future economic benefits will flow and the amounts of the assets or liabilities can be reliably measured. Assets and liabilities arising under agreements equally proportionately unperformed are however not recognised unless required by an accounting standard. Liabilities and assets that are unrecognised are reported in the Schedule of Commitments and the Schedule of Contingencies (other than unquantifiable or remote contingencies, which are reported at Note 13).

Revenues and expenses are recognised in the Statements of Financial Performance when the flow or consumption or loss of economic benefits has occurred and can be reliably measured.

Administered revenues, expenses, assets, liabilities and cash flows reported in the Schedule of Administered Items and related notes are accounted for on the same basis and using the same policies as for Authority items, except where stated in Note 1.23.

1.3 Changes in Accounting Policy

The accounting policies used in the preparation of these financial statements are consistent with those used in 2003-2004, except in respect of:

• the initial revaluation of property plant and equipment on a fair value basis (refer note 1.15).

1.4 Reporting by Outcomes

A comparison of actual and prior year figures by outcome specified in the Appropriation Acts relevant to the Authority is presented in Note 22. Any intra-government costs included in the figure `net cost of outcomes' are eliminated in calculating the actual budget outcome for the Government overall.

1.5 Revenue

The revenues described in this Note are revenues relating to the core operating activities of the Authority.

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the relevant asset.

Dividend revenue is recognised when the right to receive a dividend has been established.

Revenue from disposal of non-current assets is recognised when control of the asset has passed to the buyer.

Revenue from the rendering of a service is recognised upon completion of the service.

Receivables for goods and services are recognised at the nominal amounts due less any provision for bad or doubtful debts. Collectability of debts is reviewed periodically and at balance date. Provisions are made when collectability of the debt is judged to be less rather than more likely.

Revenues from Government - Output Appropriations

The major appropriation revenue for the Authority relates to maritime infrastructure charges and includes levies received by the Commonwealth under the Marine Navigation Levy Act 1989, the Protection of the Sea (Shipping Levy) Act 1981 and the Marine Navigation (Regulatory Functions) Levy Act 1991 appropriated to AMSA via the Australian Maritime Safety Authority Act 1990 and through agreements with the Commonwealth for the provision of search and rescue and maritime communications services.

The full amount of the appropriation for departmental outputs for the year is recognised as revenue.

Resources Received Free of Charge

Services received free of charge are recognised as revenue when a fair value can be reliably determined and the services would have been purchased if they had not been donated. Use of those resources is recognised as an expense.

Contributions of assets at no cost of acquisition or for nominal consideration are recognised at their fair value when the asset qualifies for recognition.

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1.6 Transactions by the Government as Owner

Equity Injections

Amounts appropriated by the Parliament as equity injections are recognised as "contributed equity" in accordance with the Finance Ministers' Orders.

1.7 Employee Benefits

Benefits

Liabilities for services rendered by employees are recognised at the reporting date to the extent that they have not been settled.

Liabilities for wages and salaries (including non-monetary benefits) are measured at their nominal amounts. Annual leave, other leave and other employee benefits expected to be settled within 12 months of their reporting date are measured at their expected future salary amounts.

The expected future amount is calculated with regard to the rates expected to be paid on settlement of the liability.

All other employee benefit liabilities are measured as the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date.

Leave

The liability for employee benefits includes provision for annual leave, professional leave, surveyors leave and long service leave. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave taken in future years by employees of the Authority is estimated to be less than the annual entitlement for sick leave.

The leave liabilities are calculated on the basis of employee's remuneration, including the Authority's employer superannuation contribution rates to the extent that the leave is likely to be taken during service rather than paid out on termination.

The non-current portion of the liability for long service leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees at 30 June 2005. The estimate of the present value of the liability takes into account attrition rates and pay increases through promotionn and inflation.

Separation and redundancy

Provision is also made for separation and redundancy benefit payments in circumstances where the Authority has formally identified positions as excess to requirements and a reliable estimate of the amount of the payments can be determined.

Superannuation

Employees of AMSA are members of the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme and the Public Sector Superannuation Accumulation Scheme. The liability for their superannuation benefits is recognised in the financial statements of the Commonwealth and is settled by the Commonwealth in due course.

AMSA makes employer contributions to the Commonwealth at rates determined by the actuary to be sufficient to meet the cost to the Commonwealth of the superannuation entitlements of the Authority's employees.

The liability for superannuation recognised as at 30 June represents outstanding contributions for the final day of the year, including the Authority's employer superannuation contribution rates.

1.8 Leases

A distinction is made between finance leases and operating leases. Finance leases effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased non-current assets. In operating leases, the lessor effectively retains substantially all such risks and benefits.

Where a non-current asset is acquired by means of a finance lease, the asset is capitalised at the present value of the minimum lease payments at the beginning of the lease term and a liability recognised at the same time and for the same amount. The discount rate used is the interest rate implicit in the lease. Leased assets are amortised over the period of the lease. Lease payments are allocated between the principal component and the interest expense.

Operating lease payments are expensed on a basis which is representative of the pattern of benefits derived from leased assets. The net present value of future net outlays in respect of surplus space under non-cancellable lease agreements is expensed in the period in which the space becomes surplus.

Lease incentives taking the form of 'free' fit out and rent holidays are recognised as liabilities. Allocating lease payments between rental expenses and reduction of the liability reduces these liabilities.

1.9 Appropriations Receivable

These receivables are recognised at the nominal amounts due.

1.10 Cash

Cash means notes and coins held and any deposits held at call with a bank or financial institution. Cash is recognised at its nominal amount. Interest is credited to revenue as it accrues.

1.11 Other Financial Assets

Term deposits are recognised at cost.

1.12 Other Financial Liabilities

Trade creeditors and accruals are recognised at their nominal amounts, being the amounts at which the liabilities will be settled. Liabilities are recognised to the extent that goods and services have been received, irrespective of having been invoiced.

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1.13 Financial Instruments

Accounting policies for financial instruments are stated at Note 19.

1.14 Acquisition of Assets

Assets are recorded at cost on acquisition except as stated below. The cost of acquisition includes the fair value of assets transferred in exchange and liabilities undertaken.

Assets acquired at no cost, or for nominal consideration, are initially recognised as assets and revenues at their fair value at the date of acquisition, unless acquired as a consequence of restructuring of administrative arrangements. In the latter case, assets are initially recognised as contributions by owners at the amounts at which they were recognsed in the transferor entity's accounts immediately prior to restructuring.

1.15 Property (Land, Buildings and Infrastructure), plant and equipment

Asset recognition threshold

Purchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $3,000, which are expensed in the year of acquisition.

Revaluations

Basis

Land, buildings, infrastructure, plant and equipment are carried at valuation, being revlaued with sufficient frequency to ensure that the carrying value is not materially difference from its fair value.

Fair values for each class of assets are determined as shown below.

Asset Class	Fair Value Measured at:
Land	market selling price
Building	market selling price
Leasehold improvements	depreciated replacement cost
Plant & Equipment	market selling price

Assets that are surplus to requirements are measured at their net realisable value. At 30 June 2005 AMSA held no surplus assets (30 June 2004: $0).

Land, buildings, infrastructure, plant and equipment purchased between formal valuations are deemed to be at fair valuation.

Revaluations undertaken to 30 June 2002 were done on a deprival basis; revaluations since that date are as fair value. Australian Accounting Standard AASB 1041 Revaluation of Non-Current Assets requires this change in accounting policy.

With assets progressively revalued over the triennium, the remainder of the assets valued under the previous policy have been recognised at fair value at 30 June 2005. The financial effect for 2004-05 of the change is given by the difference between the carrying amount at 30 June 2005 of these assets and their fair values as at 30 June 2005. The financial effect by class is as follows:

Asset Class	Adjustment ($)	Contra Account
Building	131,134	Asset Revaluation Reserve
Plant and Equipment	16,459	Asset Revaluation Reserve

Total financial effect was to a net credit to the asset revaluation reserve of $147,593.

A correction was put through the 2004-05 Financial Statements to take account of asset value adjustments from the 2003-04 closing balances. These corrections included an adjustment to the Asset Revaluation Reservce of: $243,000 for Buildings, $2,159,169 for Navigational Aids.

Frequency

Land and buildings, aids to navigation and vesses and amphibian assets were formally revalued in the 2003-2004 financial year. Plant and equipment, office and computer equipment, furntiture and fittings and vehicles were formally revalued in the 2002-2003 financial year. Between formal valuations assets are revalued using an appropriate index reflecting movements in the value of similar assets.

Conduct

All formal valuations are conducted by an independent qualified valuer.

Valuation of Heritage Assets

Heritage assets are not brought to account, as the economic benefit of these items that would otherwise be acquired if the Authority were to be deprived of these items, is not material.

Depreciation and Amortisation

Depreciable property, plant and equipment assets are written-off to their estimated residual values over their estimated useful lives to the Authority using, in all cases, the straight line method of depreciation. Leasehold improvements are amortised on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease.

Depreciation/amortisation rates (useful lives) and methods are reviewed at each reporting date and necessary adjustments are recognised in the current, or current and future reporting periods, as appropriate. Residual values are re-estimated for a change in prices only when assets are revalued.

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Depreciation and amortisation rates applying to each class of depreciable asset are based on the following useful lives:

	2005	2004
Buildings	20 to 40 years	20 to 40 years
Furniture and fittings (includes leasehold improvements)	4 to 10 years	4 to 10 years
Plant and equipment	3 to 30 years	3 to 30 years
Office and computer equipment	3 to 16 years	3 to 16 years
Aids to navigation	3 to 40 years	3 to 40 years
Vessels and amphibians	10 to 20 years	10 to 20 years
Vehicles	5 to 8 years	5 to 8 years

The aggregate amount of depreciation allocated for each class of asset during the reporting period is disclosed in Note 8.

1.16 Impairment of Non-Current Assets

AMSA had not identified any non-current assets that were not used in generating income, and were waiting disposal at 30 June 2005.

1.17 Capital Works Under Construction

Capital works under construction are carried at cost and capitalised when completed and ready for use.

1.18 Inventories

Inventories include bulk purchases of managed stores, which are expected to be used within twelve months, less a provision for obsolete and slow moving stock. Inventories held for sale are valuaed at the lower of cost or net realisable value and inventory not held for sale at their net realisable vlaue.

All inventories are current assets.

1.19 Intangibles

The Authority's intangibles comprise software and rights.

During the financial year ended 30 June 1998, the Authority paid $220,000 to Telstra to gain access to a tower on Warraber Island. This right is to be amortised over 15 years, being the number of years the period of access exists.

During the financial years ended 30 June 2001 and 30 June 2002, the Authority paid $9,650,000 to TVNZ Australia Ltd upon signing a contract for the provision of shore based facilities for terrestrial radio services and Inmarsat services in accordance with the requirements of the Global Maritime Distress and Safety (GMDSS).

These assets are carried at cost. The carrying amount of each non-current intangible asset is reviewed to determine whether it is in excess of the asset's recoverable amount. If an excess exists as at the reporting date, the asset is written down to its recoverable amount immediately. In assessing recoverable amounts, the relevant cash flows, including the expected cash inflows from future appropriations by the Parliament, have been discounted to their present value.

No write-down to recoverable amount has been made in 2004-05.

1.20 Taxation

AMSA is exempt from all forms of taxation except fringe benefits tax and the goods and services tax (GST).

Revenues, expenses and assets and liabilities are recognised net of GST:

• except where the amount of GST incurred is not recoverable from the Australian Taxation Office; and
• except for receivables and payables.

1.21 Foreign Currency

Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Foreign currency receivables and payables are translated at the exchange rates current as at balance date. Associated currency gains and losses are not material.

1.22 Insurance

The Authority has insured for risks through the Government's insurable risk managed fund, called 'Comcover'. Workers compensation is insured through Comcare Australia.

1.23 Reporting of Administered Activities

Administered revenues, expenses, assets, liabilities and cash flows are disclosed in the Schedule of Administered Items and related notes.

Except where otherwise stated betlow, administered items are accounted for on the same basis and using the same policies as for Authority items, including the application to the greatest extent possible for Accounting Standards, Accounting Interpretations and UIG Consensus Views.

Revenue

All administered revenues are revenues relating to the core operating activities performed by the Authority on behalf of the Commonwealth. Recoveries of costs incurred for search and rescue operations conducted by the Authority are recognised as revenue when the economic activity takes place that gives rise to the Commonweath's obligation to reimburse the Authority.

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Note 2. Adoption of AASB Equivalents to International Financial Reporting Standards from 2005-2006

The Australian Accounting Standards Board has issued replacement Australian Accounting Standards to apply from 2005-2006. The new standards are the Australian Equivalents to International Financial Reporting Standards (AEIFRSs). The International Financial Reporting Standards are issued by the International Accounting Standards Board. The new standards cannot be adopted early. The standards being replaced are to be withdrawn with effect from 2005-06, but continue to apply in the meantime, including reporting periods ending on 30 June 2005.

The purpose of issuing AEIFRS is to enable Australian entities reporting under the Corporations Act 2001 to be able to more readily access overseas capital markets by preparing their financial reports according to accounting standards more widely used overseas.

For-profit entitles complying with AEIFRS will be able to make an explicit and unreserved statement of compliance with International Financial Reporting Standards (IFRS) as well as a statement that the financial report has been prepared in accordance with Australian Accounting Standards.

AEIFRS contain certain additonal provisions that will apply to not-for-profit entities, including Australian Government agencies. Some of these provisions are in conflict with the IFRS, and therefore Australian Maritime Safety Authority will only be able to assert compliance that the financial report has been prepared in accordance with Australian Accounting Standards.

AAS29 Financial Reporting by Government Departments will continue to apply under AEIFRS.

Accounting Standard AASB 1047 Disclosing the Impact of Adopting Australian Equivalents to International Financial Reporting Standards requires that the financial statements for 2004-05 disclose:

• an explanation of how the transition to the AEIFRS is being managed;
• narrative explanations of the key policy differences arising from the adoption of AEIFRS;
• any known or reliably estimable information about the impacts on the financial report had it been prepared using the Australian equivalents to IFRS; and
• if the impacts of the above are not known or reliably estimable, a statement to that effect.

When an entity is not able to make a reliable estimate, or where quantitative information is not known, the entity should update the narrative disclosures of the key differences in accounting policies that are expected to arise from the adoption of AEIFRS.

The purpose of this Note is to make these disclosures.

Management of the transition to AEIFRS

Australian Maritime Safety Authority has taken the following steps for the preparation towards the implementation of AEIFRS:

• The Agency's Audit Committee is tasked with oversight of the transition to and implementation of AEIFRS. The Chief Financial Officer is formally responsible for the project and reports regularly to the Audit Committee on progress against the formal plan approved by the Committee.
• The plan requires the following key steps to be undertaken and sets deadlines for their achievement.
• All major accounting policy differences between current AASB standards and AEIFRS were identified by 30 June 2004.
• System changes necessary to be able to report under the AEIFRS, including those necessary to capture data under both sets of rules for 2004-05 were identified.
• An AEIFRS compliant balance sheet as at 30 June 2005 was also prepared during the preparation of the 2004-05 statutory financial reports.
• The 2004-05 Balance Sheet under AEIFRS will be reported to the Department of Finance and Administration in line with their reporting deadlines.
• The plan also addresses the risks to successful achievement of the above objectives and includes strategies to keep implementation on track to meet deadlines.

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Major changes in accounting policy

Australian Maritime Safety Authority Agency believes that the first financial report prepared under AEIFRS ie at 30 June 2006, will be prepared on the basis that Australian Maritime Safety Authority Agency will be a first time adopter under AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards. Changes in accounting policies under AEIFRS are applied retrospectively ie as if the new policy had always applied except in relation to the exemptions available and prohibitions under AASB 1. This means that an AEIFRS compliant balance sheet has to be prepared as at 1 July 2004. This will enable the 2005-06 financial statements to report comparatives under AEIFRS.

A first time adopter of AEIFRS may elect to use exemptions under paragraphs 13 to 25E. When developing the accounting policies applicable to the preparation of the 1 July opening balance sheet, no exemptions were applied by Australian Maritime Safety Authority Agency.

Changes to major accounting policies are discussed in the following paragraphs.

Management's review of the quantitative impacts of AEIFRS represents the best estimates of the impacts of the changes as at reporting date. The actual effects of the impacts of AEIFRS may differ from these estimates due to:

• continuing review of the impacts of AEIFRS on Australian Maritime Safety Authority Agency operations;
• potential amendments to the AEIFRS and AEIFRS Interpretations; and
• emerging interpretation as to the accepted practice in the application of AEIFRS and the AEIFRS Interpretations.

Property plant and equipment

It is expected that the 2005-06 Finance Minister's Orders will continue to require property plant and equipment assets to be valued at fair value in 2005-06.

Intangible Assets

Australian Maritime Safety Authority currently recognises internally-developed software assets on the cost basis. Therefore there is no adjustment required to remove the effect of subsequent valuations as per the AEIFRS standard.

The AASB Equivalent on Intangibles has specific criterion to be met before intangible assets can be recognised. AMSA assessed the current intangibles against this criterion and has de-recognised assets to the value of $2,648,001 with an associated adjustment for the 04-05 year of $588,369 for amortisation. In addition an intangible to the value of $5,850,000 being reclassified as a prepayment, with and associated adjustment for the 2004-05 year of $1,950,000 moved from amoritisation to communication costs.

Impairment of Intangibles and Property, Plant and Equipments

Australian Maritime Safety Authority's policy on impairment of non-current assets is at Note 1.16.

Under AEIFRS these assets will be subject to assement for impairment and, if there are indications of impairment, an assessment of the degree of impairment. (Impairment measurement must also be done, irrespective of any indications of impairments, for intangible assets not yet available for use). The impairment test is that the carrying amount of an asset must not exceed the greater of (a) its fair value less costs to sell and (b) its value in use. 'Value in use' is the net present value of net cash inflows for cash generating units of the Agency (in particular, of the Education Services Business Operation) and depreciated replacement cost for other assets which would be replaced if Australian Maritime Safety Authority were deprived of them.

The most significant changes are that, for the Agency's cash generating units, the recoverable amount is only generally to be measured where there is an indication of impairment. Previoulsy all assets' recoverable amount was tested.

AMSA has recognised an impairment adjustment for a number of Navigational Aids which have been identified for handover to the State Government.

Decomissioning, Restoration and Make-good

When assessing accommodation leases for the preparation of the opening balance sheet, an obligation under the leases for make-good was identified and provided for in the decommissioning provision.

In relation to non-financial assets, Australian Maritime Safety Authority has assessed the obligation for decommissioning, restoration or make-good. A provision has been estimated in regard to navigational aid sites.

Inventory

Australian Maritime Safety Authority recognises inventory not held for sale at cost, except where no longer required, in which case net realisable value is applied.

The new Australian Equivalent standard will require inventory held for distribution for no consideration or at nominal amount to be carried at a lower cost or current replacement cost.

An assessment was made of the carrying value of inventory and an adjustment made to record a value of lower of cost or current replacement cost.

Employement Benefits

The provision for long service leave is measured at the present value of the estimated furture cash outflows using market yields as at the reporting date on national government bonds.

The 2003-04 Financial reports noted that the AEIFRS standards may require the market yield on corporate bonds to be used. The AASB has decided that a deep market in high quality corporate bonds does not exist and therefore national government bonds will be referenced.

AEIFRS require that annual leave that is not expected to be taken within 12 months of balance date is to be discounted. After assessing the staff leave profile, Australian Maritime Safety Authority does not expect that any material amounts of the annual leave balance will not be taken in the next 12 months. Consequently, there are no adjustments for non-current annual leave.

Administered Items

Assessment of the administered assets and liabilities of Australian Maritime Safety Authority indicate that there are no adjustments due to the transition to the AEIFRS.

Financial Instruments

AEIFRS include an option for entities not to restate comparative information in respect of financial instruments in the first AEIFRS report. It is expected that Finance Minister's Orders will require entities to use this option. Therefore, the amounts for financial instuments presented in the Australian Maritime Safety Authority Agency's 2004-05 primary financial statements are not expected to change as a result of the adoption of AEIFRS.

Australian Maritime Safety Authority Agency will be required by AEIFRS to review the carrying amounts of financial instruments at 1 July 2005 to ensure they align with the accounting policies required by AEIFRS. It is expected that the carrying amounts of financial instruments held by Australian Maritime Safety Authority Agency will not materially change as a result of the process.

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Reconciliation of Impacts - AGAAP to AEIFRS

	Previous AGAAP 30 june 2005	effect of transition to australian equivalents to ifrs	australian equivalents to ifrs 30 june 2005
	$'000	$'000	$'000
Profit and Loss Statements (formally statement of financial performance)
REVENUE
Revenue from ordinary activities
Revenues from Government	66,466	-	66,466
Sale of Goods and Services	2,275	-	2,275
Interest Revenue	1,444	-	1,444
Revenue from sale of assets	28	-	28
Other Revenues	389	-	389
Total Revenue from ordinary activities	70,602	-	70,602
EXPENSES
Expenses from ordinary activities
Employee Expenses	25,007	-	25,007
Supplier Expenses	32,981	965	33,946
Depreciation and Amortisation	5,398	834	33,946
Write Down of Assets	1,134	793	1,927
Value of assets sold	1,614	(796)	818
Borrowing costs	-	448	448
Total expenses from ordinary activities	66,134	2,244	68,378
Net Surplus	4,468	(2,244)	2,224
Net credit/(debit) to asset revaluation reserve	(2,550)	2,550	-
Total revenues, expenses and valuation adjustments recognised directly in equity	(2,550)	2,550	-
Total changes in equity other than those resulting from transactions with the Australian Government as owners	1,918	306	2,224
ASSETS
Financial Assets
Cash	4,330	-	4,330
Receivables	1,891	-	1,891
Investments	28,011	-	28,011
Total financial assets	32,232	-	34,232
Non-financial assets
Land and Buildings	7,107	82	7,189
Infrastructure, Plant and Equipment	62,827	9,488	72,315
Inventories	952	2,868	3,820
Intangibles	6,498	(5,960)	538
Other non-financial assets	705	3,900	4,605
Total non-financial assets	78,089	10,378	88,467
Total Assets	112,321	10,378	122,699
LIABILITIES
Provisions
Employee Provisions	9,009	-	9,009
Provision from removal and restoration	-	11,264	11,264
Total provisions	9,009	11,265	20,273
Payables
Supplier payables	5,721	-	5,721
Other payables	76	-	76
Total payables	5,797	-	5,797
Total Liabilities	14,806	11,264	26,070
Net Assets	97,515	(886)	96,629
EQUITY
Contributed equity	26,525	-	26,525
Reserves	32,585	-	32,585
Retained surpluses	38,405	(886)	37,519
Total equity	97,515	(886)	96,629

30 June 2005 total represents the accumulated impacts of AEIFRS from the date of transition.

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Note 3. Economic Dependency

The Australian Maritime Safety Authority was established by the Australian Maritime Safety Authority Act 1990 and is controlled by the Commonwealth of Australia.

The Authority is dependent on appropriations from the Parliament of the Commonwealth for its continued existence and ability to carry out its normal activities.

Note 4. Events Occuring After Reporting Date

AMSA is not aware of any subsequent event that has occurred since balance date that could materially effect these financial statements.

Note 5. Operating Revenues

	2005 $'000	2004 $'000
Note 5A - Revenues from Government Appropriations for outputs
Australian Maritime Safety Act 1990, s.48
Marine Navigation Levy	17,621	19,163
Regulatory Function Levy	23,660	24,830
Protection of the Sea Levy	4,632	4,313
Services provided on behalf of government	20,553	16,268
Total revenues from government	66,466	64,575
Note 5B. Sales of goods and services
Goods	62	28
Services	2,213	2,597
Total sales of goods and services	2,275	2,625
Provision of goods to:
Related entities	1	13
External entities	61	15
Total sales of goods	62	28
Rendering of services to:
Related entities	7	830
External entities	2,206	1,767
Total rendering of services	2,213	2,597
Note 5C. Interest Revenue
Interest on deposits	1,444	928
Total interest revenue	1,444	928
Note 5D. Net Gain from Sale of Assets
Proceeds from disposal	-	12
Net book value of assets disposed	-	(51)
Write-offs	-	(29)
Net gain/(loss) from disposal of land and buildings	-	(68)
Infrastructure, plant and equipment
Proceeds from disposal	28	6
Net book value of assets disposed	(17)	(39)
Write-offs	(1,597)	(1,255)
Net gain/(loss) from disposal of infrastructure, plant and equipment	(1,586)	(1,288)
Total proceeds from disposals	28	18
Total value of assets disposed	(1,614)	(1,374)
Total net gain/(loss) from disposal of assets	(1,586)	(1,356)
Note 5E. Other Revenues
Other taxes, fees and fines	389	262
Total other revenues	389	262

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Note 6. Operating Expenses

	2005 $'000	2004 $'000
Note 6A. Employee expenses
Wages and Salaries	17,480	17,609
Superannuation	3,471	2,766
Leave and other entitlements	2,192	2,208
Separation and redundancy	564	282
Other employee benefits	1,180	1,146
Total employee benefits expenses	24,887	24,011
Workers compensation premiums	120	199
Total employee expenses	25,007	24,210
Note 6B. Suppliers expenses
Goods from related entities	3,094	-
Goods from external entities	25,981	23,323
Services from external parties	35	28
Operating lease rentals *	2,532	2,764
Other supplier expenses	1,339	1,134
Total supplier expenses	32,981	27,249
* These comprise minimum lease payments only.
Note 6C. Depreciation and amortisation
Depreciation
Other infrastructure, plant and equipment	3,859