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The amendments apply to local governments’ 2019-20 audited financial statements.

In summary, the impact for 2019-20 should generally be limited to the following:

• Local governments must update the notes to the accounts to reflect the amended requirements.
• Local governments who currently value Crown land that is a golf course, showground, racecourse or any other sporting or recreational facility of State or regional significance will need to adjust those values back to zero. The contra entry should be to the relevant revaluation reserve.
• If a local government had valued for right-of-use land because they were not anticipating being able to use the concession for right-of-use assets provided by AASB 2018-8, those values will need to be reversed.

The above comments are provided for guidance only. Local governments should liaise with their auditor to ensure any proposed changes to their draft financial statements meet the auditor’s requirements.

Enquiries can be made by emailing the department.

An explanatory comment on the amendments to Regulations applying to local governments’ 2019-20 audited financial statements

1. Land Under Roads
   1. The exemption for land under roads has been removed, but it will still be valued at zero.
   2. In accordance with AASB 16 Leases, land under roads is now considered a concessionary right-of-use asset that is to be valued using the cost model, i.e. zero.
2. Land and buildings classified as Property, Plant and Equipment
   1. Continues to be valued at fair value.
   2. Required to be revalued every 5 years, unless the fair value of the asset differs materially  from its carrying value.
3. Land and buildings classified as Inventory
   1. Continues to be valued in accordance with AASB 102 Inventories.
4. Investment properties
   1. Continues to be valued in accordance with AASB 140 Investment Property.
5. Infrastructure
   1. Accounting treatment remains unchanged.
   2. Improvements are valued at fair value and depreciated over their remaining useful life.
   3. Assets are required to be revalued every 5 years, unless the fair value of the asset differs materially from its carrying value.
6. Vested improvements on land that the local government controls at nil or nominal cost for and indefinite period
   1. Required to be valued at fair value.
   2. Classified as right-of-use assets and be disclosed in the notes to the financial statements by class of underlying asset (e.g. building, infrastructure).
7. Plant and Equipment
   1. The requirement to revalue has been removed. Local governments are now required to use the cost model for plant and equipment.
   2. If plant and equipment has already been revalued in 2019-20, there is no requirement to reverse the revaluation undertaken, now or in the future.
   3. In moving to the cost model, local governments do not need to make any adjustments to the current carrying cost or accumulated depreciation. They can continue to depreciate on the existing revalued amount.
   4. Commercial leases (e.g. offices, vehicles, machinery, ICT equipment) are right-of-use assets of plant and equipment and are measured at cost, together with a corresponding lease liability.
   5. New acquisitions above the threshold fair value of $5000 should be brought in at their fair value (or acquisition value) and depreciated over their useful life.
   6. Art is considered to form part of the plant and equipment assets, so there is no requirement to revalue. Art is considered to have an indefinite life, so should not be depreciated.
8. Crown Land that is vested or under a Management Order, or other land that is not owned by the local government but which is vested in the local government
   1. The requirement to value vested land that is a golf course, showground, racecourse or any other sporting or recreational facility of State or regional significance has been removed. Any values brought to account should be reversed against the relevant revaluation reserve.
   2. In accordance with AASB 16 Leases, Crown or other land vested in the local government is now considered a concessionary right-of-use asset that is to be valued using the cost model.
   3. Consequently Crown or other vested land will continue to be valued at zero.