fesa annual report 2005-6 audited 25 09 am

FESA ANNUAL REPORT 2005-2006 169

Financial statements CONTENTS STATEMENT OF CERTIFICATION 170

INCOME STATEMENT 171

BALANCE SHEET 172

STATEMENT OF CHANGES IN EQUITY 173

CASH FLOW STATEMENT 174

NOTES TO FINANCIAL STATEMENTS 175


FINANCIAL STATEMENTS STATEMENT OF CERTIFICATION The accompanying financial statements of the Fire and Emergency Services Authority of Western

Australia have been prepared in compliance with the provisions of the Financial Administration and

Audit Act 1985 from proper accounts and records to present fairly the financial transactions for the

twelve months ending 30 June 2006 and the financial position as at 30 June 2006.

At the date of signing we are not aware of any circumstances, which would render the particulars

included in the financial statements misleading or inaccurate.

M Barnett AM FESA BOARD CHAIR

J Harrison-Ward FESA CHIEF EXECUTIVE OFFICER

Frank Pasquale ACTING FESA PRINCIPAL ACCOUNTING OFFICER 20 September 2006

FIRE AND EMERGENCY SERVICES AUTHORITY OF WESTERN AUSTRALIA Income Statement For the Year Ended 30 June 2006


2006 2005 NOTE $000 $000 COST OF SERVICES

Expenses Employee benefits expense 3 91,983 82,353 Supplies and services 4 43,076 39,151 Depreciation and amortisation expense 5 8,322 8,116 Finance costs 6 2,508 2,712 Accommodation expenses 7 4,771 4,589 Grants and subsidies 8 28,042 29,765 Capital user charge 9 3,038 3,048 Loss on disposal of non-current assets 10 259 591 Other expenses 11 330 1,285

Total Cost of Services 182,329 171,610

INCOME

Revenue Regulatory fees and fines 12 139,040 126,237

User charges and fees 13 4,344 3,965 Commonwealth grants and contributions 14 3,013 15,249 Other grants and contributions 15 1,769 2,190 Interest Revenue 16 3,861 2,132 Other revenue 17 3,101 2,946

Total Revenue 155,128 152,719

Gains Gain on disposal of non-current assets 10 1,978 289

Total Gains 1,978 289

Total Income other than income from State Government 157,106 153,008

NET COST OF SERVICES 25,223 18,602

INCOME FROM STATE GOVERNMENT

Service appropriation 18 (i) 44,301 38,320 Resources received free of charge 18 (ii) 888 1,153

Total Income from State Government 45,189 39,473

SURPLUS FOR THE PERIOD 19,966 20,871

REPLACEMENT RESERVES Net Transfer to Reserves 32(b) 15,500 10,013

Total Transfer to Reserves 15,500 10,013

TOTAL CHANGE IN EQUITY 4,466 10,858

The Income Statement should be read in conjunction with the accompanying notes.

FIRE AND EMERGENCY SERVICES AUTHORITY OF WESTERN AUSTRALIA Balance Sheet As at 30 June 2006


2006 2005 NOTE $000 $000 ASSETS CURRENT ASSETS

Restricted cash and cash equivalents 19 72,165 51,433 Inventories 20 5,646 4,239 Receivables (a) 21 2,894 1,364 Amounts receivable for services (a) 22 1,675 3,894 Other current assets 23 1,051 431

Total Current Assets 83,431 61,361

NON-CURRENT ASSETS

Restricted cash and cash equivalents 24 500 - Property, plant and equipment 25 134,185 131,502 Intangible assets 26 183 237

Total Non-Current Assets 134,868 131,739

TOTAL ASSETS 218,299 193,100

LIABILITIES CURRENT LIABILITIES

Payables (a) 28 3,212 2,757 Borrowings (a) 29 2,050 2,030 Provisions 30 6,825 5,244 Other current liabilities 31 7,268 1,704

Total Current Liabilities 19,355 11,735

NON-CURRENT LIABILITIES

Borrowings (a) 29 32,865 40,687 Provisions 30 8,147 8,139

Total Non-Current Liabilities 41,012 48,826

TOTAL LIABILITIES 60,367 60,561

NET ASSETS 157,932 $132,539

EQUITY

Contributed equity 32(a) 58,113 51,882 Reserves 32(b) 85,092 69,592 Accumulated surplus/(deficit) 32(c) 14,727 11,065

TOTAL EQUITY 157,932 132,539

(a) In accordance with AASB 1.36A and Treasurer’s Instruction 1106 the recognition, measurement and disclosure of line items accounted for under AASB 139 will remain on the existing AGAAP basis as at the date of transition on 1 July 2004 and for the comparative period ending 30 June 2005. The date of transition date for these items will be 1 July 2005. Items such as derivative financial instruments that may be recognised for the first time under AASB 139 will have a value of ‘nil’ until their recognition on 1 July 2005.

The Balance Sheet should be read in conjunction with the accompanying notes.

FIRE AND EMERGENCY SERVICES AUTHORITY OF WESTERN AUSTRALIA Statement of Changes in Equity For the Year Ended 30 June 2006


2006 2005 NOTE $000 $000 Balance of equity at start of period 45 (iii) 132,539 110,971 CONTRIBUTED EQUITY 32(a)

Balance at start of period 51,882 75,268 Contributions received 6,447 1,382 Contributions repaid (1,020) (685) Contributions reclassed to replacement reserve - (23,929) Contributions reclassed to retained earnings 804 (154)

Balance at end of period 58,113 51,882

RESERVES 32(b)

Replacement Reserves

Balance at start of period 54,581 20,639 Replacement reserve reclassed from equity - 23,929 Net Increment / (Decrement) 15,500 10,013


Asset Revaluation Reserve

Balance at start of period 15,011 15,011 Gains/(losses) from asset revaluation - -


Total Reserves 85,092 69,592

ACCUMULATED SURPLUS (RETAINED EARNINGS) 32(c)

Balance at start of period 11,065 53 Net adjustment on transition to AIFRS - - Equity contributions reclassed to retained earnings (804) 154 Surplus/(deficit) for the period 4,466 10,858 Gains/(losses) recognised directly in equity - -


Balance of equity at end of period $157,932 $132,539

Total income and expense for the period (a) 19,966 20,871

(a) The aggregate net amount attributable to each category of equity is: surplus $19,966,000 (2005: surplus $20,871,000).

The Statement of Changes in Equity should be read in conjunction with the accompanying notes.

FIRE AND EMERGENCY SERVICES AUTHORITY OF WESTERN AUSTRALIA Cash Flow Statement For the Year Ended 30 June 2006


2006 2005 NOTE $000 $000 CASH FLOWS FROM STATE GOVERNMENT

Service appropriation 43,596 36,025 Capital contributions 5,426 1,382 Holding account draw downs 2,924 4,360

Net Cash provided by State Government 51,946 41,767

Utilised as follows:

CASH FLOWS FROM OPERATING ACTIVITIES

Payments Employee benefits (90,394) (83,665) Supplies and services (37,669) (42,965) Finance costs (2,508) (2,723) Accommodation (4,771) (4,589) Grants and subsidies (28,042) (29,765) Capital user charge (3,038) (3,048) GST payments on purchases (7,400) (8,487) Receipts Regulatory fees and fines 138,013 125,560 User charges and fees 3,944 5,655 Grants and subsidies 4,810 16,500 Interest received 3,493 2,015 GST receipts on sales 1,591 1,297 GST receipts from taxation authority 5,809 6,888 Other receipts 2,481 9,642

Net Cash provided by/(used in) operating activities 33(b) (13,681) (7,685)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of non-current physical assets 4,330 399 Purchase of non-current physical assets (13,561) (22,216)

Net Cash provided by/(used in) investing activities (9,231) (21,817)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 3,000 9,630 Repayment of borrowings (10,802) (9,038) Distribution of equity to insurance companies - (685)

Net Cash provided by/(used in) financing activities (7,802) (93)

Net increase/(decrease) in cash and cash equivalents 21,232 12,172

Cash and cash equivalents at the beginning of the period 51,433 39,261

Cash & cash equivalents at the end of the period 33(a) $72,665 $51,433

The Statement of Cash Flows should be read in conjunction with the accompanying notes.

FIRE AND EMERGENCY SERVICES AUTHORITY OF WESTERN AUSTRALIA Notes to the Financial Statements For the Year Ended 30 June 2006


1. FIRST TIME ADOPTION OF AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS General

This is the Authority’s first published financial statements prepared under Australian equivalents to International Financial Reporting Standards (AIFRS).

Accounting Standard AASB 1 ‘First-time Adoption of Australian Equivalents to International Financial Reporting Standards’ has been applied in preparing these financial statements. Until 30 June 2005, the financial statements of the Authority had been prepared under the previous Australian Generally Accepted Accounting Principles (AGAAP).

The Australian Accounting Standards Board (AASB) adopted the Standards of the International Accounting Standards Board (IASB) for application to reporting periods beginning on or after 1 January 2005 by issuing AIFRS which comprise a Framework for the Preparation and Presentation of Financial Statements, Australian Accounting Standards and the Urgent Issue Group (UIG) Interpretations. In accordance with the option provided by AASB 1 paragraph 36A and exercised by Treasurer’s Instruction 1101 ‘Application of Australian Accounting Standards and Other Pronouncements’, financial instrument information prepared under AASB 132 and AASB 139 will apply from 1 July 2005 and consequently comparative information for financial instruments is presented on the previous AGAAP basis. All other comparative information is prepared under the AIFRS basis.

Early adoption of standards

The Authority cannot early adopt an Australian Accounting Standard or UIG Interpretation unless specifically permitted by TI 1101 ‘Application of Australian Accounting Standards and Other Pronouncements’. This TI requires the early adoption of revised AASB 119 ‘Employee Benefits’ as issued in December 2004, AASB 2004-3 ‘Amendments to Australian Accounting Standards; AASB 2005-3 ‘Amendments to Australian Accounting Standards [AASB 119]’, AASB 2005-4 ‘Amendments to Australian Accounting Standard [AASB 139’, AASB 132, AASB 1, AASB 1023 & AASB 1038]’ and AASB 2005-6 ‘Amendments to Australian Accounting Standards [AASB 3]’ to the annual reporting period beginning 1 July 2005. AASB 2005-4 amends AASB 139 ‘Financial Instruments: Recognition and Measurement’ so that the ability to designate financial assets and financial liabilities at fair value is restricted. AASB 2005-6 excludes business combinations involving common control from the scope of AASB 3 ‘Business Combinations’.

Reconciliations explaining the transition to AIFRS as at 1 July 2004 and 30 June 2005 are provided at note 44 ‘Reconciliations Explaining the Transition to AIFRS’.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 General Statement

The financial statements constitute a general purpose financial report which has been prepared in accordance with the Australian Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board as applied by the Treasurer’s Instructions. Several of these are modified by the Treasurer’s Instructions to vary application, disclosure, format and wording.

The Financial Administration and Audit Act and the Treasurer’s Instructions are legislative provisions governing the preparation of financial statements and take precedence over Accounting Standards, the Framework, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board.

Where modification is required and has a material or significant financial effect upon the reported results, details of that modification and the resulting financial effect, are disclosed in individual notes to these financial statements.

2.2 Basis of Preparation

The financial statements have been prepared on the accrual basis of accounting using the historical cost convention, modified by the revaluation of land and buildings which have been measured at fair value.

The accounting policies adopted in the preparation of the financial statements have been consistently applied throughout all periods presented unless otherwise stated.

The financial statements are presented in Australian dollars rounded to the nearest thousand dollars ($’000).



2.3 Income

Revenue

Revenue is measured at the fair value of consideration received or receivable. Revenue is recognised for the major business activities as follows:

(i) Regulatory Fees and Fines

Revenues from regulatory fees and fines is recognised upon the rendering of services and encompass the following:

Fire service levy contributions from insurance companies raised in accordance with Section 37 of the Fire Brigades Act 1942;

Emergency services levy assessments raised in accordance with Part 6A of the Fire and Emergency Services Authority of Western Australia Act 1998;

Private brigade registration fees raised in accordance with Regulation 215 of the Fire Brigades Regulations 1943;

Incorrect and incomplete insurance return penalties raised in accordance with Section 39(6) of the Fire Brigades Act 1942;

Failure to pay prescribed payments in accordance with Section 43 of the Fire Brigades Act 1942;

Interest accrued on unpaid Emergency services levy assessments in accordance with Section 36X of the Fire and Emergency Services Authority of Western Australia Act 1998; and

Other related fees, penalties and fines enshrined within the emergency services Acts.

(ii) User Charges, Fees and Disposal of Non-Current Assets

Revenue is recognised from the sale of goods and disposal of other assets and the delivery of services to the client when the significant risks and rewards of ownership control transfer to the purchaser.

(iii) Service Appropriations

Service appropriations are recognised as revenues at nominal value in the period in which the Authority gains control of the appropriated funds. The Authority gains control of appropriated funds at the time those funds are deposited into the Authority’s bank account or credited to the holding account held at the Department of Treasury and Finance. (See note 18 ‘Income from State Government’).

(iv) Interest

Revenue is recognised as the interest accrues.

(v) Grants, Donations, Gifts and Other Non-Reciprocal Contributions

Revenue is recognised when the Authority obtains control over the assets comprising the contribution. Control is normally obtained upon their receipt.

Contributions are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated.

Where contributions recognised as revenues during the reporting period were obtained on the condition that they be expended in a particular manner or used over a particular period, and those conditions were undischarged as at the reporting date, the nature of, and amounts pertaining to, those undischarged conditions are disclosed in the notes.

Gains

Gains may be realised or unrealised and are usually recognised on a net basis. These include gains arising on the disposal of non-current assets and some revaluations of non-current assets.

Borrowing Costs

Borrowing costs for qualifying assets are capitalised net of any investment income earned on the unexpended portion of the borrowings. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Other borrowing costs are expensed when incurred.



2.4 Property, Plant and Equipment

Capitalisation/Expensing of assets

Items of artwork, property, plant and equipment costing over $1,000 are recognised as assets and the cost of utilising assets is expensed (depreciated) over their useful lives. Items of property, plant and equipment costing less than $1,000 are immediately expensed direct to the Income Statement (other than where they form part of a group of similar items which are significant in total).

Initial recognition and measurement

All items of property, plant and equipment are initially recognised at cost.

For items of property, plant and equipment acquired at no cost or for nominal cost, the cost is their fair value at the date of acquisition.

Subsequent measurement

After recognition as an asset, the revaluation model is used for the measurement of land and buildings and the cost model for all other property, plant and equipment. Land and buildings are carried at fair value less accumulated depreciation on buildings and accumulated impairment losses. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses.

The Authority has a policy of valuing land and buildings at fair value every three years. The revaluation of land and buildings is provided independently by the Department of Land Information (Valuation Services). The last valuation was undertaken as at 1 July 2003.

Depreciation

All non-current assets having a limited useful life are systematically depreciated over their estimated useful lives in a manner which reflects the consumption of their future economic benefits.

Land and Artwork are not depreciated. Depreciation on other assets is calculated using the straight-line method, using rates which are reviewed annually. Estimated useful lives for each class of depreciable asset are:

Buildings 20 - 40 years Fire and Emergency Appliances 4 - 20 years Non-Emergency Vehicles 2 - 20 years Plant and Equipment 5 - 10 years

2.5 Intangible Assets

Capitalisation/Expensing of assets

Acquisitions of intangible assets over $1,000 are capitalised. The cost of utilising assets is expensed (amortised) over their useful lives. Costs incurred below these thresholds are immediately expensed direct to the Income Statement.

Initial recognition and measurement

All intangible assets are initially recognised at cost. For assets acquired at no cost or for nominal cost, the cost is their fair value at the date of acquisition.

Subsequent measurement

The cost model is applied for subsequent measurement requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.

The carrying value of intangible assets is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.

Amortisation

Amortisation for intangible assets with finite useful lives is calculated for the period of the expected benefit (estimated useful life) on the straight-line basis using rates which are reviewed annually. The expected useful lives for each class of intangible asset are:

Software 3 years



2.6 Impairment of Assets Property, plant and equipment, and intangible assets are tested for any indication of impairment at each reporting date. Where there is an indication of impairment, the recoverable amount is estimated. Where the recoverable amount is less than the carrying amount, the asset is considered impaired and is written down to the recoverable amount and an impairment loss is recognised. As the Authority is a not-for-profit entity, unless an asset has been identified as a surplus asset, the recoverable amount is the higher of an asset’s fair value less costs to sell and depreciated replacement cost.

The risk of impairment is generally limited to circumstances where an asset’s depreciation is materially understated or where the replacement cost is falling. Each relevant class of assets is reviewed annually to verify that the accumulated depreciation/amortisation reflects the level of consumption or expiration of asset’s future economic benefits and to evaluate any impairment risk from falling replacement costs.

Intangible assets with an indefinite life and intangible assets not yet available for use are tested for impairment at each reporting date irrespective of whether there is any indication of impairment.

The recoverable amount of assets identified as surplus assets is the higher of fair value less costs to sell and the present value of future cash flows expected to be derived from the asset. Surplus assets carried at fair value have no risk of material impairment where fair value is determined by reference to market evidence. Where fair value is determined by reference to depreciated replacement cost, surplus assets are at risk of impairment and the recoverable amount is measured. Surplus assets at cost are tested for indications of impairment at each reporting date.

Refer to note 27 ‘Impairment of assets’ for the outcome of impairment reviews and testing.

Refer to note 2.14 ‘Receivables’ and note 21 ‘Receivables’ for impairment of receivables.

2.7 Leases The Authority has entered into a number of operating lease agreements for buildings, office equipment and motor vehicles where the lessors effectively retains all the risks and benefits incidental to ownership of the items held under the operating leases.

Lease payments are expensed on a straight line basis over the lease term, as this is representative of the pattern of benefits to be derived from the leased property.

2.8 Resources Received Free of Charge or for Nominal Cost

Resources received free of charge or for nominal cost that can be reliably measured are recognised as revenues and as assets or expenses as appropriate, at fair value.

2.9 Reserves Section 35A of the Fire and Emergency Services Authority of Western Australia Act 1998 allows the Authority to retain funds for specific purchases. The Motor Vehicle Replacement Reserve, Land and Building Replacement Reserve, Plant and Equipment Replacement Reserve and General Reserve have been established.

2.10 Financial Instruments The Authority has two categories of financial instrument:

Loans and receivables (cash and cash equivalents, receivables); and Non-trading financial liabilities (payables).

Initial recognition and measurement of financial instruments is at fair value which normally equates to the transaction cost or the face value. Subsequent measurement is at amortised cost using the effective interest method.

The fair value of short-term receivables and payables is the transaction cost or the face value because there is no interest rate applicable and subsequent measurement is not required as the effect of discounting is not material.

2.11 Cash and Cash Equivalents For the purpose of the Cash Flow Statement, cash and cash equivalent (and restricted cash and cash equivalent) assets comprise cash on hand and short-term deposits with maturities of six months or less that are readily convertible to a known amount of cash and which are subject to insignificant risk of changes in value.

2.12 Accrued Salaries Accrued salaries represent the amount due to staff but unpaid at the end of the financial year, as the end of the last pay period for that financial year does not coincide with the end of the financial year. Accrued salaries are settled within a week of the financial year end. The Authority considers the carrying amount of accrued salaries to be equivalent to its net fair value.



2.13 Investments Investments are brought to account at the lower of cost and recoverable amount. Term investments held represent investments in approved commercial bills. Interest revenues from investments are recognised as they are accrued.

2.14 Receivables Receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. The collect ability of receivables is reviewed on an ongoing basis and any receivables identified as uncollectible written-off. The allowance for uncollectible amounts (doubtful debts) is raised when there is objective evidence that the Authority will not be able to collect the debts. The carrying amount is equivalent to fair value as it is due for settlement within 30 days. See note 2.10 ‘Financial Instruments’ and note 21 ‘Receivables’.

2.15 Amounts Receivable for Services (Holding Account) The receivable (holding account) covers items such as leave entitlements and asset replacement programs. It represents the non-cash component of service appropriations and is funded by the State Government.

2.16 Inventories Inventories are measured at the lower of cost and net realisable value. Costs are assigned by the method most appropriate to each particular class of inventory, with the majority being valued using the average cost method.

Inventories not held for resale are valued at cost unless they are no longer required, in which case they are valued at net realisable value.

2.17 Payables Payables are recognised at the amounts payable when the Authority becomes obliged to make future payments as a result of a purchase of assets or services. The carrying amount is equivalent to fair value, as they are generally settled within 30 days. See note 2.10 ‘Financial Instruments’ and note 28 ‘Payables’.

2.18 Borrowings Loans are recorded at an amount equal to the net proceeds received. Interest expense is recognised on an accrual basis. See note 2.10 ‘Financial Instruments’ and note 29 ‘Borrowings’.

2.19 Provisions Provisions are liabilities of uncertain timing and amount and are recognised where there is a present legal, equitable or constructive obligation as a result of a past event and when the outflow of economic benefits is probable and can be measured reliably. Provisions are reviewed at each balance date. See note 30 ‘Provisions’.

(i) Employee Benefits - Annual Leave and Long Service Leave The liability for annual and long service leave expected to be settled within 12 months after the end of the reporting date is recognised and measured at the undiscounted amounts expected to be paid when the liabilities are settled. Annual and long service leave expected to be settled more than 12 months after the end of the reporting date is measured at the present value of amounts expected to be paid when the liabilities are settled. Leave liabilities are in respect of services provided by employees up to the reporting date.

When assessing expected future payments consideration is given to expected future wage and salary levels including non-salary components such as employer superannuation contributions. In addition, the long service leave liability also considers the experience of employee departures and periods of service.

The expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

All annual leave and unconditional long service leave provisions are classified as current liabilities as the Authority does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

(ii) Superannuation Contributions are made to the Fire and Emergency Services Superannuation Board and to the Government Employees Superannuation Board to provide benefits for employees and their dependants on retirement, disability or death.

The liability for superannuation charges under the Fire and Emergency Services Superannuation Act 1985 is extinguished by weekly payments of employer contributions to the Fire and Emergency Services Superannuation Board.



2.19 Provisions (continued) The liability for superannuation charges under the Government Employees Superannuation Act is extinguished by fortnightly payments of employer contributions to the Government Employees Superannuation Board.

The liability for superannuation charges incurred under the Superannuation and Family Benefits Act 1938 pension scheme, together with the pre-transfer service liability for employees who transferred to the Gold State Superannuation scheme, and have been provided for in the financial statements

(iii) Employment On-Costs

Employment on-costs, including workers’ compensation insurance, are not employee benefits and are recognised separately as liabilities and expenses when the employment to which they relate has occurred. Employment on-costs are included as part of ‘Other Expenses’ and are not included as part of the Authority’s ‘Employee benefits expense’. The related liability is included in ‘Employment on-costs provision’. See note 11 ‘Other expenses’ and note 30 ‘Provisions’

2.20 Contributed Equity

UIG 1038 “Contributions by Owners Made to Wholly-Owned Public Sector Entities” requires transfers in the nature of equity contributions to be designated by the Government (owners) as contributions by owners (at the time of, or prior to transfer) before such transfers can be recognised as equity contributions. Capital contributions (appropriations) have been designated as contributions by owners by TI 955 ‘Contributions by Owners made to Wholly Owned Public Sector Entities’ and have been credited directly to Contributed Equity.

2.21 Comparative Figures

Comparative figures have been restated on the AIFRS basis except for financial instruments, which have been prepared under the previous AGAAP Australian Accounting Standard AAS 33 ‘Presentation and Disclosure of Financial Instruments’. The transition date to AIFRS for financial instruments is 1 July 2005 in accordance with the exemption allowed under AASB1, paragraph 36A and TI 1101.

2.22 Future Impact of Australian Accounting Standards Not Yet Operative

The Authority cannot early adopt an Australian Accounting Standard or UIG Interpretation unless specifically permitted by TI 1101 ‘Application of Australian Accounting Standards and Other Pronouncements’. As referred to in Note 1, TI 1101 has only mandated the early adoption of revised AASB 119, AASB 2004-3, AASB 2005-3, AASB 2005-4 and AASB 2005-6. Consequently, the Authority has not applied the following Australian Accounting Standards and UIG Interpretations that have been issued but are not yet effective. These will be applied from their application date:

1. AASB 7 ‘Financial Instruments: Disclosures’ (including consequential amendments in AASB 2005-10 ‘Amendments to Australian Accounting Standards [AASB 132, AASB 101, AASB 114, AASB 117, AASB 133, AASB 139, AASB 1, AASB 4, AASB 1023 & AASB 1038]’). This Standard requires new disclosures in relation to financial instruments. The Standard is required to be applied to annual reporting periods beginning on or after 1 January 2007. The Standard is considered to result in increased disclosures of an entity’s risks, enhanced disclosure about components of an financial position and performance, and changes to the way of presenting financial statements, but otherwise there is no financial impact.

2. AASB 2005-9 ‘Amendments to Australian Accounting Standards [AASB 4, AASB 1023, AASB 139 & AASB 132]’ (Financial guarantee contracts). The amendment deals with the treatment of financial guarantee contracts, credit insurance contracts, letters of credit or credit derivative default contracts as either an “insurance contract” under AASB 4 ‘Insurance Contracts’ or as a “financial guarantee contract” under AASB 139 ‘Financial Instruments: Recognition and Measurement’. The Authority does not undertake these types of transactions resulting in no financial impact when the Standard is first applied. The Standard is required to be applied to annual reporting periods beginning on or after 1 January 2006.

3. UIG Interpretation 4 ‘Determining whether an Arrangement Contains a Lease’. This Interpretation deals with arrangements that comprise a transaction or a series of linked transactions that may not involve a legal form of a lease but by their nature are deemed to be leases for the purposes of applying AASB 117 ‘Leases’. At reporting date, the Authority has not entered into any arrangements as specified in the Interpretation resulting in no impact when the Interpretation is first applied. The Interpretation is required to be applied to annual reporting periods beginning on or after 1 January 2006.



2.22 Future Impact of Australian Accounting Standards Not Yet Operative (continued)

The following amendments are not applicable to the Authority as they will have no impact:

AASB Amendment

Affected Standards

2005-1 AASB 139 (Cash flow hedge accounting of forecast intragroup transactions). 2005-5 ‘Amendments to Australian Accounting Standards [AASB 1 & AASB 139]’. 2006-1 AASB 121 (Net investment in foreign operations). UIG 5 ‘Rights to Interests arising from Decommissioning, Restoration and Environmental

Rehabilitation Funds’. UIG 6 ‘Liabilities arising from Participating in a Specific Market – Waste Electrical and

Electronic Equipment’. UIG 7 ‘Applying the Restatement Approach under AASB 129 Financial Reporting in

Hyperinflationary Economies’. UIG 8 ‘Scope of AASB 2’. UIG 9 ‘Reassessment of Embedded Derivatives’.

2006 2005 $000 $000 3. EMPLOYEE BENEFITS EXPENSE

Wages and salaries (a) 69,676 61,046 Superannuation contribution to FESB 7,886 7,441 Superannuation contribution to GESB 733 667 Long service leave (b) 2,818 3,050 Annual leave (b) 10,261 9,584 Other related expenses 609 565

$91,983 $82,353 (a) Includes the value of the fringe benefit to the employee plus the fringe benefits tax component, (b) Includes a superannuation contribution component.

4. SUPPLIES AND SERVICES

Administration 2,964 2,815 Advertising and promotion expense 997 467 Communication expense 1,936 1,827 Electricity and water expense 1,116 1,069 Hire charges 9,009 8,394 Insurance premiums and claims 2,139 2,215 Lease motor vehicle expense 1,368 1,290 Lease other expense 78 65 Maintenance of inventory (22) 71 Maintenance of motor vehicles 4,027 3,401 Maintenance of Plant and equipment 6,376 5,496 Protective clothing and uniforms 2,210 1,864 Services and contracts expense 8,179 7,837 Travel expense 2,699 2,340

$43,076 $39,151

5. DEPRECIATION AND AMORTISATION EXPENSE

(a) Depreciation

Buildings 2,453 2,144 Motor vehicles 3,816 3,874 Plant and equipment 1,929 2,080

8,198 8,098

(b) Amortisation

Software 124 18

124 18

$8,322 $8,116



2006 2005 $000 $000 6. FINANCE COSTS

Borrowing costs 2,508 2,712

$2,508 $2,712 7. ACCOMMODATION EXPENSES

Lease rentals 999 983 Repairs and maintenance 3,772 3,606

$4,771 $4,589

8. GRANTS AND SUBSIDIES

Grant and subsidy payments are made in accordance with policy and guidelines approved by the Authority to enable such entities to meet service delivery requirements of the community.

Classified as:

Emergency Service Levy grants paid in accordance with the provisions of the Fire and Emergency Services Authority of Western Australia Act 1998 and the Local Government Manual for Capital and Operating Grants:

- Local Governments 15,562 17,149 - Private Fire Brigades 102 99

Natural Disaster grants paid in accordance with agreements and determinations administered on behalf of the Commonwealth Department for Transport and Regional Services in relation to:

- Natural Disaster Relief Arrangements 9,959 9,531 - Natural Disaster Risk Management Studies Program - 103

Grants and subsidies paid to volunteer establishments and external bodies in line with approved schemes, agreements and statues encompassing:

- Volunteer Fire and Rescue Service delivery 853 594 - Volunteer Bush Fire Service delivery 250 274 - Volunteer State Emergency Service delivery 30 45 - Volunteer Marine Rescue Service delivery 1,110 1,651 - Volunteer FESA Units 175 70 - Other grants and subsidies 1 249

$28,042 $29,765

9. CAPITAL USER CHARGE

The Government applies a levy for the use of its capital for the delivery of services. It is applied at 8% per annum on 30% of the net assets of the Authority, excluding exempt assets, and is paid to the Department of Treasury and Finance quarterly.

Capital user charge 3,038 3,048

$3,038 $3,048



2006 2005 $000 $000

10. NET GAIN/ (LOSS) ON DISPOSAL OF NON-CURRENT ASSETS

Cost of Disposal of Non-Current Assets Buildings 883 - Land 1,466 492 Motor vehicles 256 152 Plant and equipment 7 49 Intangible assets - 8

Proceeds from Disposal of Non-Current Assets Buildings 967 - Land 3,078 40 Motor vehicles 284 358 Plant and equipment 2 1

$1,719 ($302)

11. OTHER EXPENSES

Doubtful debts 284 1,241 Bad debts - 9 Employment On-costs 46 35

$330 $1,285

12. REGULATORY FEES AND FINES

Contributions to Fire and Emergency Services

(i) ESL assessments for ratepayers

Ratepayers contribute to the ESL through Council rates levied annually. The ESL is assessed, raised, collected and remitted to the Authority in line with the Manual of Operating Procedures as approved by the Minister for Police and Emergency Services in accordance with the Fire and Emergency Services Authority of Western Australia Act 1998. 127,022 115,561

127,022 $115,561

(ii) ESL assessments for Local Governments, the State Government general sector and State Government Instrumentalities

ESL assessments are raised directly by the Authority for properties owned by Local Governments, the State Government general sector (met by the Treasurer) and State Government Instrumentalities.

Local Government assessments 1,132 861 State Government public sector assessments 8,866 7,662 State Government Instrumentalities 2,020 2,153

12,018 10,676

$139,040 $126,237

13. USER CHARGES AND FEES

Direct brigade alarms 1,518 1,511 Operational activities 1,009 825

Training and education charges 1,817 1,629

$4,344 $3,965



2006 2005 $000 $000 14. COMMONWEALTH GRANTS AND CONTRIBUTIONS

Fire Service Contributions 383 586 State Support Package Funding 710 756

Natural Disaster Relief Arrangements - 11,377 Natural Disaster Mitigation Studies Program 686 2,092

Emergency Mitigation and Research Grants 914 397 Indian Ocean Territories Funding 320 41

$3,013 $15,249

15. OTHER GRANTS AND CONTRIBUTIONS

(i) Non-Reciprocal Contributed Assets

Assets received under the Emergency Services Levy Capital Grants Scheme that are either refurbished and recommissioned or disposed off. 1,355 742

Assets received under memorandums of understanding for the formation of emergency service units and brigades are capitalised as assets. 255 939

1,610 1,681

(ii) Other grants, sponsorships and subsidies

Received for various programs promoted by the Authority and the recovery of the diesel fuel rebate under the Energy Grants Credit Scheme. 159 509

159 509

$1,769 $2,190

16. INTEREST REVENUE

Interest from investments 3,676 1,932 Interest from Emergency Services Levy 185 200

$3,861 $2,132

17. OTHER REVENUE

Employee and volunteer cost recovery 1,431 1,137 Insurance sources - 306 Sponsorship and donations 501 18 General 1,169 1,485

$3,101 $2,946



2006 2005 $000 $000 18. INCOME FROM STATE GOVERNMENT

(i) Appropriation received during the year:

Service Appropriation (a) 44,301 38,320

44,301 38,320

(ii) Resources received free of charge (b)

Resources received free of charge are determined on the basis of estimates provided by agencies.

Department of Land Administration 888 1,153

$45,189 $39,473

(a) Service appropriations are accrual amounts reflecting the net cost of services delivered. The appropriation revenue comprises a cash component and a receivable (asset). The receivable (holding account) comprises the depreciation expense for the year and any agreed increase in leave liability during the year. (b) Where assets or services have been received free of charge or for nominal cost, the Authority recognises revenues (except where the contributions of assets or services are in the nature of contributions by owners in which case the Authority shall make a direct adjustment to equity) equivalent to the fair value of the assets and/or the fair value of those services that can be reliably determined and which would have been purchased if not donated, and those fair values shall be recognised as assets or expenses, as applicable.

19. RESTRICTED CASH AND CASH EQUIVALENTS

Cash at bank 1,317 6,684 Cash deposits 31 25 Cash investments 70,744 44,683 Cash on hand and advances 73 41

$72,165 $51,433

Cash held by the Authority is to be used only for the purpose of providing services in accordance with the Fire and Emergency Services Authority of Western Australia Act 1998.

20. INVENTORIES

Inventories held for consumption 1,200 1,085 Inventories held for distribution 4,446 3,154

$5,646 $4,239 See also note 2.16 ‘Inventories’.

21. RECEIVABLES

Current receivables 5,047 3,620 Allowance for impairment of receivables (3,286) (3,002) Interest receivable 432 64 Goods and services tax receivable 701 682

$2,894 $1,364 See also note 2.14 ‘Receivables’ and note 2.10 ‘Financial Instruments’.

22. AMOUNTS RECEIVABLE FOR SERVICES

Current 1,675 3,894

$1,675 $3,894

23. OTHER CURRENT ASSETS

Prepaid expenditure 1,051 431

$1,051 $431



2006 2005 $000 $000 24. RESTRICTED CASH AND CASH EQUIVALENTS

Cash investments 500 -

$500 -

25. PROPERTY, PLANT AND EQUIPMENT

Land

At fair value 32,430 33,714

32,430 33,714

Buildings

At fair value 66,917 63,019 Accumulated depreciation (13,580) (11,449)

53,337 51,570

Motor Vehicles

At cost 51,335 46,433 Accumulated depreciation (22,463) (19,576)

28,872 26,857

Plant and Equipment

At cost 16,426 17,287 Accumulated depreciation (8,727) (9,565)

7,699 7,722

Artwork

At cost 160 160

160 160 Capital Works In Progress

Appliances (Owned) 6,259 6,398 Land & Buildings 3,950 3,635 Plant and equipment 1,478 1,446

11,687 11,479

$134,185 $131,502



25. PROPERTY, PLANT AND EQUIPMENT (continued)

Reconciliation of the carrying amounts of property, plant, equipment and vehicles at the beginning and end of the reporting period are set out below.

Net Book Values as at 30 June 2006

Non-Current Asset By Class

Balance as at

30/06/2005 $’000

Revaluations and

Additions $’000

Disposals and

Capitalised $’000

Balance as at

30/06/2006 $’000

Land - at fair value

33,714

183

(1,467)

32,430

Written Down Value 33,714 183 (1,467) 32,430 Buildings - at fair value

63,019

5,102

(1,204)

66,917

Accumulated Depreciation (11,449) (2,453) 322 (13,580) Written Down Value 51,570 2,649 (882) 53,337 Motor Vehicles - at cost Accumulated Depreciation

46,433

(19,576)

6,087

(3,816)

(1,185)

929

51,335

(22,463) Written Down Value 26,857 2,271 (256) 28,872 Plant and Equipment - at cost Accumulated Depreciation

17,287 (9,565)

1,919

(1,929)

(2,780)

2,767

16,426 (8,727)

Written Down Value 7,722 (10) (13) 7,699 Artwork - at cost

160

-

-

160

Written Down Value 160 - - 160 Capital Works in Progress - at cost - Appliances (Owned) - Land & Buildings - Plant & Equipment

6,398 3,635 1,446

5,756 4,541

163

(5,895) (4,226)

(131)

6,259 3,950 1,478

Written Down Value 11,479 10,460 (10,252) 11,687 Total Written Down Value 131,502 15,553 (12,870) 134,185

Net Book Values as at 30 June 2005

Non-Current Asset By Class

Balance as at

30/06/2004 $’000

Revaluations and

Additions $’000

Disposals and

Capitalised $’000

Balance as at

30/06/2005 $’000

Land - at fair value

30,258

3,496

(40)

33,714

Written Down Value 30,258 3,496 (40) 33,714 Buildings - at fair value Accumulated Depreciation

56,653 (9,436)

6,990

(2,144)

(624)

131

63,019

(11,449) Written Down Value 47,217 4,846 (493) 51,570 Motor Vehicles - at cost Accumulated Depreciation

40,674

(16,295)

6,662

(3,874)

(903)

593

46,433

(19,576) Written Down Value 24,379 2,788 (310) 26,857 Plant and Equipment - at cost Accumulated Depreciation

15,387 (7,750)

2,029

(2,080)

(129)

265

17,287 (9,565)

Written Down Value 7,637 (51) 136 7,722 Artwork - at cost

160

-

-

160

Written Down Value 160 - - 160 Capital Works in Progress - at cost - Appliances (Owned) - Buildings - Plant & Equipment

5,959 511 317

6,121 9,218 1,364

(5,682) (6,094)

(235)

6,398 3,635 1,446

Written Down Value 6,787 16,703 (12,011) 11,479 Total Written Down Value 116,438 27,782 (12,718) 131,502



2006 2005 $000 $000 26. INTANGIBLE ASSETS

Computer Software

At cost 1,589 1,520 Accumulated amortisation (1,428) (1,304) Accumulated impairment losses - -

161 216

Trademarks

At cost 22 21 Accumulated amortisation - - Accumulated impairment losses - -

22 21

$183 $237

Reconciliation:

Computer Software

Carrying amount at start of year 216 249 Additions 69 - Disposals - (15) Amortisation expense (124) (18)

Carrying amount at the end of year 161 216

Trademarks

Carrying amount at start of year 21 21 Additions 1 - Disposals - - Amortisation expense - -

Carrying amount at the end of year 22 21

27. IMPAIRMENT OF ASSETS

There were no indications of impairment to property, plant and equipment and intangible assets at 30 June 2006.

28. PAYABLES

Trade payables 2,521 2,076 Interest payable 535 625 Goods and services tax payable 156 56

$3,212 $2,757 See also note 2.17 ‘Payables’ and note 41 ‘Financial Instruments’.

29. BORROWINGS At the reporting date, the Authority has the following obligations under loans from Western Australia Treasury Corporation:

Classified as:

Current liabilities 2,050 2,030 Non-current liabilities 32,865 40,687

$34,915 $42,717



2006 2005 $000 $000 30. PROVISIONS

The settlement of annual and long service leave entitlements give rise to the payment of on-costs including superannuation. The liability for such on-costs is included here.

(a) Current employee benefits

Annual leave 2,796 2,205 Long service leave (a) 3,129 2,394 Employment on-costs (b) 900 645

$6,825 $5,244

(b) Non-Current employee benefits

Long service leave (a) 7,140 7,137 Employment on-costs (b) 1,007 1,002

$8,147 $8,139

(a) Long service leave liabilities have been classified as current where there is no unconditional right to defer settlement for at least 12 months after reporting date. Assessments indicate that actual settlement of the liabilities will occur as follows: Within 12 months of reporting date 3,501 2,7340 More than 12 months after reporting date 6,768 6,797

$10,269 $9,531

(b) The settlement of annual and long service leave liabilities gives rise to the payment of employment on-costs including workers’ compensation insurance. The provision is the present value of expected future payments. The associated expenses are included in note 3 ‘Employee benefits expense’ and note 11 ‘Other expenses’.

Movement in Other Provisions

Movements in each class of provisions during the financial year, other than employee benefits, are set out below.

Employment on-cost provision

Carrying amount at start of year 1,002 - Additional provisions recognised 1,007 1,002 Payments/other sacrifices of economic benefits (1,002) -

Carrying amount at the end of year 1,007 1,002

31. OTHER LIABILITIES

Accrued salaries 937 - Accrued expenditure 5,795 1,689 Unearned revenue 535 - Unclaimed monies 1 15

$7,268 $1,704



2006 2005 $000 $000

32. EQUITY

Equity represents the residual interest in the net assets of the Authority. The Government holds the equity interest in the Authority on behalf of the community. The asset revaluation reserve represents that portion of equity resulting from the revaluation of non-current assets.

(a) Contributed Equity

Opening Balance 51,882 75,268 Equity contributions received 6,447 1,382 Distribution to owners (a) (1,020) (685) Equity contributions reclassed to replacement reserve - (23,929) Equity contributions reclassed to retained earnings 804 (154)

Closing Balance $58,113 $51,882 (a) Distribution to owners relates to transfer of Crown Land to DPI.

(b) Reserves

(i) Replacement Reserves The replacement reserve is used to record increments and decrements for specific purchase programmes, as described in accounting policy note 2.9

Opening balance 54,581 20,639

Replacement reserve reclassed from equity - 23,929 Net Transfer from Surplus 15,500 10,013

Closing Balance 70,081 54,581

(ii) Asset Revaluation Reserve

The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets, as described in accounting policy note 2.4

Opening balance 15,011 15,011

Net revaluation increments - - Motor vehicle - - Land - - Building - -

Closing Balance 15,011 15,011 Total Reserves $85,092 $69,592

(c) Accumulated Surplus/(Deficit)

Opening Balance 11,065 53

Equity contributions reclassed from retained earnings (804) 154 Income and expense recognised directly to equity 4,466 10,858

Closing Balance $14,727 $11,065

33. NOTES TO THE CASH FLOW STATEMENT

(a) Reconciliation of Cash

Cash at the end of the financial year as shown in the Cash Flow Statement is reconciled to the related items in the Balance Sheet as follows:

Cash at bank 1,317 6,684 Cash deposits 31 25 Cash investments 71,244 44,683 Cash on hand and advances 73 41

$72,665 $51,433



2006 2005 $000 $000

33. NOTES TO THE CASH FLOW STATEMENT (continued)

(b) Reconciliation of net cost of services to net cash flows provided by/ (used in) operating activities

Net Cost of Service (25,223) (18,602)

Plus/(minus) non-cash items:

Depreciation and amortisation expense 8,322 8,116 Doubtful debts expense 284 1,241 Gain/loss from sale of non-current assets (1,719) 302 Resources received free of charge 888 1,153

7,775 10,812 (Increase)/Decrease in assets:

Receivables and other assets (1,814) 742 Inventories (1,407) 122 Non-current assets (620) (1,484) Increase/(Decrease) in liabilities:

Payables and other liabilities 6,019 912 Provisions 1,589 (187)

3,767 105

Net cash used in Operating Activities ($13,681) ($7,685)

34. COMMITMENTS FOR EXPENDITURE

(a) Lease Commitments

At the reporting date, the Authority had the following obligations, not recognised as liabilities, under non-cancellable operating leases:

Motor vehicles 1,442 1,228 Property 976 1,298 Plant and equipment 4 57

$2,422 $2,583

Commitments in relation to leases contracted for at the reporting date but not recognised as liabilities, are payable as follows:

Within one year 1,530 1,500 Later than one year and no later than five years 879 1,064 Later than five years 13 19

$2,422 $2,583

(b) Capital Expenditure Commitments

Capital expenditure commitments, being contracted capital expenditure additional to the amounts reported in the financial statements are due and payable.

Buildings 563 - Motor vehicles 2,001 2,090 Plant and equipment 13,856 678 $16,420 $2,768

Commitments in relation to capital expenditure at the reporting date but not recognised as liabilities, are payable as follows:

Within one year 2,271 2,197 Later than one year and no later than five years 14,149 571

$16,420 $2,768



2006 2005 $000 $000

35. REMUNERATION OF MEMBERS OF THE ACCOUNTABLE AUTHORITY AND SENIOR OFFICERS

(a) Remuneration of Members of the Accountable Authority

The number of members of the Accountable Authority, whose total of fees, salaries, superannuation, non-monetary benefits and other benefits for the financial year, fall within the following bands are:

$ $ 30/06/06 30/06/05 1 - 10,000 13 7 10,001 - 20,000 2 3 30,001 - 40,000 1 1 180,000 - 190,000 - - 200,001 - 300,000 1 - 300,001 - 310,000 - 1 17 12

Total fees, salaries, superannuation and other benefits received or due and receivable for the period by members of the Accountable Authority. 354 409

Total Remuneration for members of the Accountable Authority $354 $409

The total remuneration includes the superannuation expense incurred by the Authority in respect of members of the Accountable Authority. No members of the Authority are members of the Pension Scheme.

(b) Remuneration of Senior Officers

The number of Senior Officers other than members of the Accountable Authority whose total of fees, salaries, superannuation and other benefits received or due and receivable for the period falls within the following bands:

$ $ 30/06/06 30/06/05

0 - 10,000 4 - 10,001 - 20,000 1 - 20,001 - 30,000 2 - 30,001 - 40,000 2 - 40,001 - 50,000 1 - 50,001 - 60,000 - - 60,001 - 70,000 - - 70,001 - 80,000 1 - 80,001 - 90,000 1 - 90,001 - 100,000 3 3 100,001 - 110,000 5 5 110,001 - 120,000 2 4 120,001 - 130,000 4 8 130,001 - 140,000 - 1 140,001 - 150,000 1 1 150,001 - 160,000 1 - 190,001 - 200,000 - 1 320,001 - 330,000 - 1

28 24

Total fees, salaries, superannuation and other benefits received or due and receivable for the period by Senior Officers other than members of the Accountable Authority. 2,205 3,083

Total Remuneration of Senior Officers $2,205 $3,083

The total remuneration includes the superannuation expense incurred by the Authority in respect of senior officers of the Accountable Authority. No senior officers are members of the Pension Scheme.

36. REMUNERATION OF AUDITOR

Remuneration payable to the Office of the Auditor General for the financial year is as follows:

Audit of accounts, financial statements and performance indicators 80 53

$80 $53



2006 2005 $000 $000 37. SUPPLEMENTARY FINANCIAL INFORMATION

Write-Offs

Bad Debts - 9 Non-current assets - 54 Inventory - 44

- $107

38. RELATED AND AFFILIATED BODIES

a) Non-Government Affiliated Bodies

The following are classified as non-government affiliated bodies and receive indirect and/or direct financial assistance.

Direct financial assistance is given in the form of a grant. Indirect financial assistance is also given in the form of administrative support including the use of a motor vehicle and running costs, office accommodation and minor administrative support.

Association of Volunteer Bush Fire Brigades WA Inc 28 28 Emergency Services Volunteer Association Inc - 15 SES Volunteer Association of WA Inc 25 28 Volunteer Marine Rescue WA 65 30 Western Australian Volunteer Fire & Rescue Services Association 257 248

$375 $349

b) Related Bodies

The Authority has no related bodies at the reporting date.

39. EVENTS OCCURRING AFTER BALANCE DATE

The Authority is not aware of any event or events occurring after the reporting date, which would materially, effect the operating results as disclosed in the financial statements during the current or future reporting periods.

40. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

In addition to the liabilities included in the financial statements the Authority is aware of 1 potential claim with an estimated value of $2,000,000.00. This claim relates to the overpayment of Fire Levy Contributions. There are also 2 potential claims that are too early to estimate.

41. FINANCIAL INSTRUMENTS

(a) Financial Risk Management Objectives and Policies

Financial instruments held by the Authority are cash and cash equivalents, loans, finance leases, receivables and payables. The Authority has limited exposure to financial risks. The Authority’s overall risk management program focuses on managing the risks identified below. Credit risk

The Authority trades only with recognised, creditworthy third parties. The Authority has policies in place to ensure that sales and services are made to customers with an appropriate credit history. In addition, receivable balances are monitored on an ongoing basis with the result that the Authority’s exposure to bad debts is minimal. There are no significant concentrations of credit risk. Liquidity risk

The Authority has appropriate procedures to manage cash flows including draw downs of appropriations by monitoring forecast cash flows to ensure that sufficient funds are available to meet its commitments. Cash flow interest rate risk

The Authority’s exposure to market risk for changes in interest rates relate primarily to the long-term debt obligations. The authority’s borrowings are all obtained through the Western Australian Treasury Corporation (WATC) and are at fixed rates with varying maturities. The risk is managed by WATC through portfolio diversification and variation in maturity dates.



41. FINANCIAL INSTRUMENTS (continued)

(b) Financial Instrument disclosures

Financial instrument information for the year ended 2005 has been prepared under the previous AGAAP Australian Accounting Standard AAS 33 ‘Presentation and Disclosure of Financial Instruments’. Financial instrument information from 1 July 2005 has been prepared under AASB 132 ‘Financial Instruments: Presentation’ and AASB 139 ‘Financial Instruments: Recognition and Measurement’. See also note 2.21 ‘Comparative figures’.

Interest Rate Risk Exposure

The following tables detail the Authority’s exposure to interest rate risk at the reporting date:

Fixed interest rate maturity INTEREST RATE RISK As at 30 June 2006

Weighted average effective interest

rate %

Variable interest

rate

$’000

Less than

1 year

$’000

1 to 5 years

$’000

More than

5 years

$’000

Non interest bearing

$’000

Total

$’000

FINANCIAL ASSETS Cash at bank 5.17 1,317 - - - - 1,317 Cash on hand - - - - - 73 73 Cash deposits - - - - - 31 31 Term Investments 5.67 - 70,744 - 500 - 71,244 Receivables - - - - - 4,569 4,569 Total financial assets 5.42 1,317 70,744 - 500 4,673 77,234

FINANCIAL LIABILITIES

Payables - - - - - 3,212 3,212 Interest-bearing Liabilities

6.11

-

2,050

8,360

24,505

-

34,915

Total financial liabilities 6.11 - 2,050 8,360 24,505 3,212 38,127

Fixed interest rate maturity INTEREST RATE RISK As at 30 June 2005

Weighted average effective interest

rate %

Variable interest

rate

$’000

Less than

1 year

$’000

1 to 5 years

$’000

More than

5 years

$’000

Non interest bearing

$’000

Total

$’000

FINANCIAL ASSETS Cash at bank 4.99 6,684 - - - - 6,684

Cash on hand - - - - - 41 41 Cash deposits - - - - - 25 25

Term Investments 5.49 - 44,683 - - - 44,683

Receivables - - - - - 5,258 5,258

Total financial assets 5.24 6,684 44,683 - - 5,324 56,691

FINANCIAL LIABILITIES

Payables - - - - - 2,757 2,757 Interest-bearing Liabilities

5.82

-

2,030

8,784

31,903

-

42,717

Total financial liabilities 5.82 - 2,030 8,784 31,903 2,757 45,474

Fair Values

The carrying amount of financial assets and financial liabilities recorded in the financial statements are not materially different from their net fair values.



42. EXPLANATORY STATEMENT

(a) Significant variances between actual results for 2005 and 2006

Details and reasons for significant variations between the total actual results with the corresponding results of the preceding year are detailed below. Significant variations are considered to be those greater than 10% and $2,000,000.

ACTUAL COMPARISON

2006 Actual $’000

2005 Actual $’000

Variance

$’000

Variance

%

Expenses Supplies and services 43,076 39,151 3,925 10.03

Income Regulatory fees and fines 139,040 126,237 12,803 10.14 Commonwealth grants and contributions 3,013 15,249 (12,236) (80.24)

Income from State Government Service appropriations 44,301 38,320 5,981 15.61

Expenses

The increase in supplies and services is due to operational control expenditure recouped via supplementary funding.

Income

The increase in revenue from regulatory fees and fines is due to normal service cost escalation, funded from the Emergency Services Levy. The decrease in commonwealth grants and contributions is due to no major claim for natural disaster administration for the financial year.

Income from State Government

The increase in service appropriations is due to supplementary funding for operational control expenditure.

(b) Significant variances between estimated and actual result for the 2006

Details and reasons for significant variations between the total actual results with the annual estimates are detailed below. Significant variations are considered to be those greater than 10% and $2,000,000.

ACTUAL V ESTIMATES

2006 Actual $’000

2006 Estimates

$’000

Variance $’000

Variance %

Expenses Supplies and services 43,076 52,004 (8,928) (17.17) Accommodation expense 4,771 2,182 2,589 118.65 Grants and subsidies 28,042 20,486 7,556 36.88 Income from State Government Service appropriations 44,301 33,237 11,064 33.29

Expenses

The supplies and services variance is due to reclassification of accounts under IFRS. Estimates need to move to employee benefits expense and accommodation expenses.

The accommodation expenses variance is due to the reclassification of accounts under IFRS which was budgeted for in supplies and services.

Grants and subsidies have increased due to grant payments made under the Natural Disaster Relief Arrangements and Natural Disaster Mitigation Programme and grants disbursed under the Emergency Services Levy to Local Governments that were not expended in the previous financial year.


The increase in service appropriations is due to supplementary funding for operational control expenditure.



43. INDIAN OCEAN TERRITORIES

The funds provided by the Department of Transport and Regional Services have been spent on provision of services to the Indian Ocean Territories as specified in the Service Delivery Arrangements entered into between the State and Commonwealth.

Opening Balance 106,054 253,922 Total Receipts 339,926 56,627 Total Expenditure (386,229) (204,495) Closing Balance $59,751 $106,054

44. SCHEDULE OF INCOME AND EXPENSES BY SERVICE

As at 30 June 2006 As at 30 June 2005 COST OF SERVICES Prevention

Services $’000

Emergency Services

$’000

Total $’000

Prevention Services

$’000

Emergency Services

$’000

Total $’000

Expenses

Employee benefits expense 14,981 77,002 91,983 13,413 68,940 82,353 Supplies and services 2,524 40,552 43,076 2,294 36,857 39,151 Depreciation and amortisation expense 227 8,095 8,322 221 7,895 8,116 Finance costs 43 2,465 2,508 46 2,666 2,712 Accommodation expense 326 4,445 4,771 314 4,275 4,589 Grants and subsidies 99 27,943 28,042 105 29,660 29,765 Capital user charge 302 2,736 3,038 303 2,745 3,048 Loss on disposal of non-current assets 8 251 259 18 573 591 Other expense 14 316 330 54 1,231 1,285 Total Cost of Services

18,524

163,805

182,329

16,768

154,842

171,610

Income

Regulatory fees and fines 13,796 125,244 139,040 12,526 113,711 126,237 User charges and fees 431 3,913 4,344 393 3,572 3,965 Commonwealth grants & contributions 299 2,714 3,013 1,513 13,736 15,249 Other grants and contributions 175 1,594 1,769 217 1,973 2,190 Interest revenue 384 3,477 3,861 212 1,920 2,132 Gain on disposal of non-current assets 198 1,780 1,978 29 260 289 Other revenue 307 2,794 3,101 292 2,654 2,946 Total Income other than income from State Government

15,590

141,516

157,106

15,182

137,826

153,008 NET COST OF SERVICES

2,934

22,289

25,223

1,586

17,016

18,602


Services Appropriation & Contributions 4,395 39,906 44,301 3,802 34,518 38,320 Resources received free of charge 88 800 888 114 1,039 1,153 Total Income from State Government

4,483

40,706

45,189

3,916

35,557

39,473

Surplus for the period

$1,549

$18,417

$19,966

$2,330

$18,541

$20,871



45. RECONCILIATION EXPLAINING THE TRANSITION TO AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (AIFRS)

(i) Reconciliation of Equity at the Date of Transition to AIFRS 1 July 2004

GAAP AIFRS 2004 Reclassification 2004 $’000 $’000 $’000

ASSETS CURRENT ASSETS

Restricted cash and cash equivalents 39,235 - 39,235 AASB 102 Note 6 Inventories 1,207 3,304 4,511 AASB 101 Note 5 Receivables 3,802 (2,528) 1,274 Amounts receivable for services 5,959 - 5,959 Other current assets - 2,528 2,528

Total Current Assets 50,203 3,304 53,507

NON-CURRENT ASSETS

AASB 102 Note 6, 7 Property, plant and equipment 120,012 (3,574) 116,438 AASB 138 Note 7 Intangible assets - 270 270

Total Non-Current Assets 120,012 (3,304) 116,708

TOTAL ASSETS 170,215 - 170,215


AASB 101 Note 8 Payables 3,548 (1,474) 2,074 Borrowings 2,112 - 2,112 Provisions 5,129 - 5,129 AASB 101 Note 8 Other current liabilities - 1,474 1,474

Total Current Liabilities 10,789 - 10,789


Borrowings 40,013 - 40,013 Provisions 8,442 - 8,442

Total Non-Current Liabilities 48,455 - 48,455

TOTAL LIABILITIES 59,244 - 59,244

NET ASSETS $110,971 - $110,971

EQUITY

AASB 101 Note 9 Contributed equity 75,268 (23,928) 51,340 AASB 101 Note 9 Reserves 35,650 23,928 59,578 Accumulated surplus/(deficit) 53 - 53

TOTAL EQUITY $110,971 - $110,971



45. RECONCILIATION EXPLAINING THE TRANSITION TO AUSTRALIAN EQUIVALENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (AIFRS) (Continued)

(ii) Reconciliation of Income Statement (Profit or Loss) for the Year Ended 30 June 2005


COST OF SERVICES

Expenses

AASB 101 Note 1 Employee benefits expense 84,927 (2,574) 82,353 AASB 101 Note 1, 2 Supplies and services 41,215 (2,064) 39,151 Depreciation and amortisation expense 8,116 - 8,116 Finance costs 2,712 - 2,712 AASB 101 Note 2 Accommodation expense - 4,589 4,589 Grants and subsidies 29,765 - 29,765 Capital user charge 3,048 - 3,048 AASB 116 Note 3 Loss on disposal of non-current assets 701 (110) 591 AASB 119 Note 4 Other expense 1,236 49 1,285

Total Cost of Services 171,720 (110) 171,610

Income

AASB 101 Note 4 Regulatory fees and fines 126,789 (552) 126,237

AASB 101 Note 4 User charges and fees 5,102 (1,137) 3,965 Commonwealth grants and contributions 15,249 - 15,249 Other grants and contributions 2,190 - 2,190 AASB 101 Note 4 Interest Revenue 1,933 199 2,132 AASB 116 Note 3 Gain on disposal of non-current assets 399 (110) 289 AASB 101 Note 4 Other revenue 1,456 1,490 2,946

Total Income 153,118 (110) 153,008 NET COST OF SERVICES 18,602 - 18,602

INCOME FROM STATE GOVERNMENT

Service appropriations 38,320 - 38,320 Resources received free of charge 1,153 - 1,153

Total Income from State Government 39,473 - 39,473

SURPLUS FOR THE PERIOD 20,871 - 20,871

REPLACEMENT RESERVES Net Transfer to Reserves

Net transfer to reserves 10,013 - 10,013

Total Transfer to Reserves 10,013 - 10,013

TOTAL CHANGE IN EQUITY 10,858 - 10,858




(iii) Reconciliation of Equity at the end of the Last Reporting Period Under Previous AGAAP: 30 June 2005


ASSETS CURRENT ASSETS

AASB 101 Note 5 Restricted cash and cash equivalents 51,407 26 51,433 AASB 102 Note 6 Inventories 1,085 3,154 4,239 AASB 101 Note 5 Receivables 1,389 (25) 1,364 Amounts receivable for services 3,894 - 3,894 Other current assets 431 - 431

Total Current Assets 58,206 3,155 61,361

NON-CURRENT ASSETS

AASB 102 Note 6, 7 Property, plant and equipment 134,894 (3,392) 131,502 AASB 138 Note 7 Intangible assets - 237 237

Total Non-Current Assets 134,894 (3,155) 131,739

TOTAL ASSETS 193,100 - 193,100


AASB 101 Note 8 Payables 2,233 524 2,757 Borrowings 2,030 - 2,030 Provisions 5,244 - 5,244 AASB 101 Note 8 Other current liabilities 2,228 (524) 1,704

Total Current Liabilities 11,735 - 11,735


Borrowings 40,687 - 40,687 Provisions 8,139 - 8,139

Total Non-Current Liabilities 48,826 - 48,826

TOTAL LIABILITIES 60,561 - 60,561

NET ASSETS $132,539 - $132,539

EQUITY

Contributed equity 51,882 - 51,882 Reserves 69,592 - 69,592 Accumulated surplus/(deficit) 11,065 - 11,065

TOTAL EQUITY $132,539 - $132,539




(iv) Reconciliation of Cash Flow Statement for the Year Ended 30 June 2005


CASH FLOWS FROM STATE GOVERNMENT

Service appropriations 36,025 - 36,025 Capital contributions 1,382 - 1,382 Holding account drawdown 4,360 - 4,360

Net Cash provided by State Government 41,767 - 41,767

Utilised as follows:

CASH FLOWS FROM OPERATING ACTIVITIES

Payments Employee benefits (83,665) - (83,665) AASB 101 Note 2 Supplies and services (47,814) 4,849 (42,965) AASB 101 Note 4 Finance costs (2,765) 42 (2,723) AASB 101 Note 2 Accommodation - (4,589) (4,589) Grants and subsidies (29,765) - (29,765) Capital user charge (3,048) - (3,048) AASB 101 Note 4 GST payments on purchases - (8,487) (8,487) Receipts Regulatory fees and fines 125,560 - 125,560 User charges and fees 5,655 - 5,655 Grants and subsidies 16,500 - 16,500 Interest received 2,015 - 2,015 AASB 101 Note 4 GST receipts on sales - 1,297 1,297 AASB 101 Note 4 GST receipts from taxation authority - 6,888 6,888 Other receipts 9,642 - 9,642

Net Cash provided by/(used in) Operating Activities (7,685) - (7,685)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of non-current physical assets 399 - 399 Purchase of non-current physical assets (22,216) - (22,216)

Net Cash provided by/(used in) Investing Activities (21,817) - (21,817)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from borrowings 9,630 - 9,630 Repayments of borrowings (9,038) - (9,038) Distribution of equity to insurance companies (685) - (685)

Net Cash provided by/(used in) Financing Activities (93) - (93)

Net increase/(decrease) in cash and cash equivalents 12,172 - 12,172

AASB 101 Note 5 Cash and cash equivalents at the beginning of the period 39,235 26 39,261

Cash and cash equivalents at the end of the period $51,407 26 $51,433




(v) Notes to the reconciliations

1. Travel expenses have been reclassified from employee expenses to supplies and services. 2. Accommodation expenses have been reclassified from supplies and services to the new AIFRS

categories accommodation expenses. 3. Disposals are treated on the net basis under AIFRS. 4. Reclassification of income and expenses to more appropriate groups. 5. Property rental bonds have been reclassified from receivables to restricted cash and cash

equivalents including a rounding adjustment. 6. AASB 102 requires inventories held for consumption to be recognised at net realisable value.

Inventories comprising vehicle spare parts, consumables and supplies are valued using the average cost method and are brought to account at the lower of cost and net realisable value. Recognition is as per disclosure under GAAP.

AASB 102 requires inventories held for distribution at no or nominal consideration to be measured at the lower of cost and current replacement costs. ESL Fire Fighting and Emergency vehicles previously categorised under Capital Works In progress have been recategorised as inventories held for distribution for IFRS purposes. Vehicles being constructed under this program are currently valued at cost and are distributed to Local Governments free of charge under "non-reciprocal contribution" arrangements. Recognition of this category for IFRS purposes is at cost as there is no difference between the cost and current replacement cost.

ESL emergency vehicles have been reclassified from property, plant and equipment to inventories held for distribution

7. There has been a change in terms of grouping of individual classes of assets previously disclosed

under one heading from AGAAP to IFRS. There has been a reduction in Works under Construction with the reclassification of "ESL Fire Fighting and Emergency Vehicles" from Non-Current Assets as it does not fit within AASB 116 and has been reclassed to Current Assets for the purposes of AASB 102(Aus 9.1) as these items are constructed and held for distribution to Local Governments under the provisions of the Emergency Services Levy Capital Grant Scheme.

Intellectual property has been reclassed to intangible assets in the following note and excluded from property, plant and equipment as per AASB 138.

Software and trademarks have been reclassified from property, plant and equipment to intangible assets

8. Interest payable has been reclassified from other liabilities to payables

9. Reclassification of equity to reserves

fesa annual report 2005-6 audited 25 09 am

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