Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . .

Legislative Assembly for the ACT: 2003 Week 4 Hansard (3 April) . . Page.. 1425 ..

highlights the cost of litigation claims, and provides a breakdown of significant litigation claims on an Agency basis. This note is replicated in the attachment for your information.

(2) The presentation of damages in the Territory accounts are dependent on whether the damages fall under the category of contingent liability or actual liability. Where the damages are liquidated it will meet the criteria of a 'liability' (SAC 4 paragraph 48-69) the damages will then be presented in the Statement of Financial Position. If damages are 'unliquidated' the expenses are classified as a 'contingent liability' (AASB 1044), the damages are shown as a note to the annual financial statements.

(3) Treasury requires all Departments and Statutory Authorities to comply with the Australian Accounting Standards in the development of Annual Financial Statements. The treatment and presentation of litigation expenditure is dependant on the categorisation of the expenditure as a 'liability' or a 'contingent liability', as outlined in response (1).

(4) The annual financial statements are required to be prepared in accordance with Australian Accounting Standards (AASs). Disclosure in AASs is guided by either the principle of materiality, or specific disclosure required by an AAS. Litigation expenditure, or possible future expenditure, would be included in the annual financial statements as either an actual or contingent liability.

An actual liability would exist where the Territory has been determined through litigation to make certain future payments, or settlement against the Territory is considered probable. A contingent liability would exist where a legal claim had been lodged, but settlement against the Territory was considered less than probable, or was dependent on future uncertain events. In the annual financial statements, actual liabilities are reported in the 'Statement of Financial Position' and contingent liabilities are disclosed in the notes to the annual financial statements.

(5) The Australian Accounting Standard on contingent liabilities requires that possible future liabilities to arise from litigation be disclosed in the annual financial statements as a contingent liability where settlement of the litigation against the Territory is not considered probable, or is dependent on a future uncertain event. For all contingent liabilities the standard requires disclosure of the general nature of the liability, an indication of any uncertainties and an estimate of possible future payments, where it is possible to make an estimate.

(6) Annual financial statements of the Territory are required to be prepared in accordance with all Australian Accounting Standards, including the standard regarding contingent liabilities. The opinion issued by the auditors regarding the annual financial statements attests to their compliance, or non﷓compliance, with the Australian Accounting Standards.

(7) Annual financial statements are required to be prepared in accordance with the requirements of Australian Accounting Standards, including the standard regarding contingent liabilities. Costs of litigation would be specifically identified in the financial statements where the costs were material.

Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . .