AUSTRALIAN ANIMAL HEALTH COUNCIL LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Special programs revenue - Special program funding is agreed on a project by project basis, on condition that specified project services are delivered and specific conditions met. This funding is considered to be a reciprocal transaction. Income is recognised as services are performed and conditions met. To the extent services are not met, cash received is recognised as a liability – ‘unearned revenue’. Interest income - is recognised as accrued using the effective interest method. Other revenue - includes minor and/or ad hoc and one-off revenue sources. (e) Operating leases The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified. Payments made under operating leases are recognised in the statement of comprehensive income on a straight line basis over the term of the lease. (f) Income tax Under the provisions of Section 50-1 and 50-40 of the Income Tax Assessment Act 1997, as amended, the company is eligible for exemption from income tax and currently no tax provision has been provided for in the financial statements. Such eligibility is reviewable by the Australian Taxation Office (ATO). (g) Other taxes Revenues, expenses and assets are recognised net of the goods and services tax (GST), except where the GST incurred is not recoverable from the ATO. The net GST recoverable from, or payable to the ATO is included as a current asset/liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of the cash flows, arising from investing and financing activities, which are recoverable from, or payable to, the ATO are classified as operating cash flows. Commitments and contingencies are stated with the amount of GST included. (h) Foreign currency Foreign currency transactions are translated to Australian currency at the rate of exchange at the dates of the transactions. (i) Treasury policy AHA’s treasury policy is to invest funds with a minimum of two financial institutions which have a credit rating of at least AA equivalent, in guaranteed products. (j) Inventories held for distribution AHA holds inventories of antigens in guaranteed quantities in specialist banks in the event of a disease outbreak of anthrax or foot and mouth disease. The inventories are valued at cost due to the guaranteed delivery over the multi-year provisioning contracts. (k) Trade and other receivables AHA’s terms are typically settlement within 30 days, though vary for members according to circumstances. Receivables are carried at amount due. The collectability of debts is assessed at balance date and provision made for any doubtful accounts. - 11 - ANNUAL REPORT 2016-17 91
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