KU Financial Report
Notes to the Financial Statements
Continued...
Government funding- capital Funds are received from government departments in accordance with contracts to undertake capital works programs on behalf of the department. In accordance with AASB 1004“ Contributions”, this income is recognised upfront once control of the funds or the commitment to receive funds has been satisfied. This accounting treatment is different for Not for Profit entities and does not have to be capitalised and amortised, recognising their unique funding arrangements.
Government Brokered Programs Funds are received from Government Brokered Programs by KU Children’ s Services for the allocation to recipients who provide a variety of early childhood education and care programs in the community. The entity acts as an agent for these programs. The funds received and allocated are not recognised in the Statement of Comprehensive Income in accordance with AASB118 Revenue. Cash flows are included in the Statement of Cash Flows on a gross basis.
Unit trust distributions and interest revenue Unit trust distributions from investments are recognised when the unit holder’ s right to receive payment has been established.
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset’ s net carrying amount.
h) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
i) Trade and other receivables Trade receivables, which comprise amounts due from services provided, are recognised and carried at original invoice amount less an allowance for uncollectible amounts. Normal terms of settlement are 7 days. The carrying amount of the receivable is deemed to reflect fair value.
An allowance for doubtful debts is made when there is objective evidence that the company will not be able to collect the debts. Bad debts are written off when identified.
j) Income tax The company is exempt from income tax under s50-5 of the Income Tax Assessment Act, as it is an income tax exempt charitable entity. As a consequence, there is no income tax attributable to the operating result.
k) General funds and reserves General Funds The general funds represent the funds of the Company that are not designated for particular purposes.
Fundraising Reserve The fundraising reserve arises from the accumulated efforts of parents and staff to allow services to purchase optional toys and equipment, to assist the service to expand and develop to meet local needs and to allow parents to share in the life of the service and to make a concrete contribution to their children’ s lives.
Available-for-sale Reserve The Available-for-Sale Reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold, that portion of the reserve which relates to that financial asset, and is effectively realised, is recognised in profit or loss. Where a revalued financial asset is impaired that portion of the reserve which relates to that financial asset is recognised in profit or loss.
28 KU Children’ s Services