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Financial Statements - Notes to the Financial Statements

For the Year Ended 30 June 2008

On This Page:

1 Summary of Accounting Policies

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared on an accrual basis in accordance with the Financial Management Act 1994, applicable Australian Accounting Standards (AAS), which includes the Australian accounting standards issued by the Australian Accounting Standards Board (AASB), AAS29 Financial Reporting by Government Departments, Interpretations and other mandatory professional requirements. The financial report also complies with relevant Financial Reporting Directions (FRDs) issued by the Department of Treasury and Finance, and relevant Standing Directions (SD) authorised by the Minister for Finance.

(b) Basis of preparation

The financial report has been prepared on an historical cost basis, except for the revaluation of certain non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. In the application of AAS's, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2008 and the comparative information presented in these financial statements for the year ended 30 June 2007.

(c) Reporting Entity

The financial report covers the Country Fire Authority which is a statutory authority and operates under the Country Fire Authority Act 1958. Its principal address is:
8 Lakeside Drive, Tally-Ho Technology Park Burwood East Vic 3151.
The financial statements include all the controlled activities of the Authority.

(d) Events after reporting date

Assets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between the authority and other parties, the transactions are only recognised when the agreement is irrevocable at or before balance date. Adjustments are made to amounts recognised in the financial statements for events which occur after the reporting date and before the date the statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note disclosure is made about events between the balance date and the date the statements are authorised for issue where the events relate to conditions which arose after the reporting date and which may have a material impact on the results of subsequent years.

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(e) Goods and Services Tax (GST)

Income, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.

(f) Income recognition

Income is recognised for each of the Authority's major activities as follows:

  1. Contributions
    Statutory contributions are determined under Section 77 of the Country Fire Authority Act 1958 and comprise 77.5% from insurance companies insuring against fire for property situated within the Country Area of Victoria, and 22.5% from the Consolidated Fund. Contributions Income is recognised in the financial year to which the determination under Section 77 applies.
  2. Sales of Goods and Services
    Sales of Goods and Services comprises revenue earned (net of returns, discounts and allowances) from the provision of goods and services to external entities. This income is recognised when the goods and services are provided.
  3. Other Income
    Interest revenue
    Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.
  4. Fixed asset sales
    The gross proceeds of non-current fixed asset sales are included as revenue at the date control of the asset passes to the buyer, usually when an unconditional contract of sale is signed.
    The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the net proceeds on disposal.

    CFA and Brigades Donations Fund
    The Authority has responsibility for transactions and balances relating to the CFA and Brigades Donations Fund, the purpose of which is to receive and distribute donations received by or on behalf of CFA Brigades.

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(g) Expenses

Employee Benefits
Employee benefits expenses include all costs related to employment including wages and salaries, leave entitlements, redundancy payments and superannuation contributions. These are recognised when incurred, except for contributions in respect of defined benefit plans.

Superannuation

Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.

Defined benefit plans
The amount charged to the operating statement in respect of defined benefit plan superannuation represents the contributions made by the Authority to the superannuation plan in respect to the current services of current Authority staff. Superannuation contributions are made to the funds based on the relevant rules of each fund.
The Authority does not recognise any defined benefit liability in respect of the superannuation plan because the Authority has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance administers and discloses the State's defined benefit liabilities or surplus in its financial report.

Depreciation
Depreciation is provided on property, plant and equipment, including buildings but excluding freehold land Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to the Authority to its estimated residual value. Depreciation methods and rates and estimated useful lives are reviewed at the start of each annual reporting period.
Property, plant and equipment is depreciated from the date of acquisition in a ready to use condition or, in respect of internally constructed assets, from the time an asset is completed and held ready for use.

The following expected useful lives are used in the calculation of depreciation:-

Buildings at Cost 67 years
Buildings at Valuation 52 years
Plant and Equipment 3 - 20 years

Leasehold Improvements
The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or the estimated useful life of the improvement to the Authority, whichever is the shorter. Leasehold improvements held at the reporting date are being amortised over periods ranging from 4 to 50 years.

Impairment of assets
All assets are assessed annually for indications of impairment, except for inventories, financial instrument assets and non-current assets held for sale. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset's carrying value exceeds its recoverable amount, the difference is written off by a charge to the operating statement except to the extent that the write-down can be debited to an asset revaluation reserve amount applicable to that class of asset.
The recoverable amount for most assets is measured at the higher of depreciated replacement cost and fair value less costs to sell. It is deemed that, in the event of the loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made.

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Supplies and services
Supplies and services generally represent cost of goods sold and the day-to-day running costs, including maintenance costs, incurred in the normal operations of the Authority. These items are recognised as an expense in the reporting period in which they are incurred. The carrying amount of any inventories held for distribution is expensed when distributed.

(h) Assets

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash at bank, deposits at call and highly liquid investments with short periods to maturity, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value.

Receivables
All debtors are recognised at the amounts receivable less an allowance for doubtful debts. Trade debtors are due for settlement at no more than 30 days from the date of recognition or other negotiated business terms. Contribution debtors are due within 14 days. A legislated rate of interest is charged on outstanding contribution debtors.
The collectability of debtors is assessed at balance date. Debts which are known to be uncollectible are written off. An allowance has been made for estimated irrecoverable amounts, determined by reference to past default experience. The movement in the allowance was recognised in the operating result for the current financial year. (See note 3)

Inventories
Inventories include goods and other property held either for sale or for distribution at no or nominal cost in the ordinary course of business operations. It excludes depreciable assets.
All inventories and consumable stores were physically counted and valued as at 30th June 2008, or counted during the year on a rotating basis using the perpetual inventory method, at the lower of cost and net realisable value.
Cost is determined principally by the weighted average method.

Property, Plant and Equipment
Land and buildings are measured initially at cost, then subsequently at fair value.
Plant, equipment and vehicles are measured at cost less accumulated depreciation and impairment.

Acquisition of Assets
All assets acquired are initially recorded at their cost of acquisition. Cost is measured as the fair value of the assets given up or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition

Costs incurred on fixed assets subsequent to initial acquisition are capitalised when it is probable that future economic benefits, in excess of the originally assessed performance, will flow to the Authority in future years. Where these costs represent separate components they are accounted for as separate fixed assets and are separately depreciated over their useful lives to the Authority.

The cost of capital work in progress is carried at cost of materials, external services, direct labour and appropriate proportion of fixed and variable overheads recognised to date based on the value of work completed.

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Revaluations of Non-current Assets
Prior to the current year, land and buildings revaluations were based on independent assessments obtained from the Valuer General on a three year rotation policy by dividing the State of Victoria on a geographical basis.

Non-current physical assets measured at fair value are now to be revalued in accordance with FRD 103C. This revaluation process normally occurs every five years, based upon the asset's Government Purpose Classification. Revaluation increments or decrements arise from differences between carrying value and fair value.

Revaluation increments are credited directly to the asset revaluation reserve, except that, to the extent that an increment reverses a revaluation decrement in respect of that class of asset previously recognised as an expense in the net result, the increment is recognised immediately as revenue in the net result.

Revaluation decrements are recognised immediately as expenses in the net result, except that, to the extent that a credit balance exists in the asset revaluation reserve in respect of the same class of assets, they are debited directly to the asset revaluation reserve.

Revaluation increases and decreases relating to individual assets within a class of assets are offset against one another within that class but are not offset in respect of assets in different classes.

Revaluation reserves are not normally transferred to accumulated surplus on de-recognition of the relevant asset.

Other Non Current Assets
All other non-current assets appear at original cost less accumulated depreciation.

Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and is expected to be completed within one year from the date of classification.

Operating Leases
The Authority leases property under non-cancellable operating leases expiring over the period of one to in excess of thirty years. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

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(i) Liabilities

Payables
Payables consist predominantly of creditors and other sundry liabilities.
These amounts represent liabilities for goods and services provided to the Authority prior to the end of the financial year that are unpaid, and arise when the Authority becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

Provisions
Provisions are recognised when the Authority has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

Employee benefits

  1. Wages and salaries and annual leave
    Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date are recognised in the provision for employee benefits in respect of employee services up to the reporting date, classified as current liabilities and measured at their nominal values.
    Those liabilities that are expected to be settled within 12 months are recognised in the provision for employee benefits as current liabilities, measured at present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.
  2. Long service leave
    Liability for long service leave (LSL) is recognised in the provision for employee benefits as follows:-
  3. Current liability - unconditional LSL (representing 10 or more years of continuous service) is disclosed as a current liability even where the Authority does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months.

    The components of this current LSL liability are measured at:
    present value - component that the Authority does not expect to settle within 12 months; and
    nominal value - component that the Authority expects to settle within 12 months.

    Non-current liability - conditional LSL (representing less than 10 years of continuous service) is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value.

  4. Employee benefits on-costs
    Employee benefits on-costs (payroll tax, workers compensation, superannuation) are recognised separately from the provision for employee benefits.
  5. Volunteer Compensation The Provision for Volunteer Compensation is the accrued liability after allowing for anticipated recovery from insurance in respect of all outstanding registered Volunteer Compensation claims at 30 June 2008.
    Outstanding claims are assessed on an actuarial basis. Future payments are projected using the Payment Per Claim Incurred (PPCI) method and the Payment Per Active Claim (PPAC) for older non-large weekly benefit claims and they allow for the potential additional liability arising from claims Incurred But Not Reported (IBNR), Incurred But Not Enough Reported (IBNER) and reopened claims. The portion of the liability which is expected to be paid later than 12 months after balance date has been classified as Non-Current.

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(j) Commitments

Commitments include those operating, capital and other outsourcing commitments arising from non-cancellable contractual or statutory sources and are disclosed at their nominal value.

(k) Contingent assets and contingent liabilities.

Contingent assets and contingent liabilities are not recognised in the balance sheet , but are disclosed by way of a note and, if quantifiable, are measured at nominal value.

(l) Equity

Contributions by owners
Contributed capital is additions to net assets which have been designated as contributed asset transfers by owners in accordance with the requirements of paragraph 7c of Urgent Issues Group Interpretation 1038, Contributions by Owners to Wholly-Owned Public Sector Entities.
Other transfers that are in the nature of contributions or distributions have also been designated as contributions by owners.

(m) Rounding of amounts

Amounts in the financial report have been rounded to the nearest thousand dollars, unless otherwise stated.

(n) Functional and presentation currency

The functional currency of the Authority is the Australian dollar, which is also the presentation currency.

(o) Volunteer Brigade Policies

Volunteer Brigade cash and cash equivalents
Volunteer Brigade cash and cash equivalents as defined above have continued to be brought to account at 30 June 2008, as part of the ongoing consolidation of brigade activities with the Authority's financial activities. In accordance with Australian Accounting Standard AASB118, the movement has been disclosed as Income in the Operating Statement (note 2(c) ) and as an increase in current assets in the Balance Sheet (notes 11& 17).
The basis of calculation for Brigade cash and cash equivalents was the balance as at 31 March 2008 adjusted for known income and expenditure to 30 June 2008.

Volunteer Brigade Land and Buildings
The Authority acknowledges the significant contributions made by Volunteer Brigades to the capital value of their fire stations. It has over 1,200 Volunteer Brigades and many of these have made substantial improvements to their fire stations and property over a number of decades. The value of these improvements is taken into account when the five yearly Valuer General's valuation occurs and the aggregate amount is then included in future financial statements. Where practical the value of major community funded projects is taken up at fair value when the improvement is carried out.

Brigade Owned Assets
The Authority fully recognises the major community contribution by bringing to account, at cost less accumulated depreciation, fire fighting vehicles acquired by volunteer brigades (Brigade Owned Vehicles) and Plant and. Equipment valued at over $5000.
Brigade Owned Vehicles are defined as any fire fighting or support vehicles, including transport vehicles owned by a registered brigade or group which comes under the control of the Authority for operational purposes.

(p) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2008 reporting period. The Department of Treasury and Finance assesses the impact of these new standards and advises departments and other entities of their applicability and early adoption where applicable.
As at 30 June 2008 the following standards and interpretations had been issued but were not mandatory for the financial year ending 30 June 2008. The Authority has not , and does not intend to, adopt these standards early.

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Standard / Interpretation Summary Applicable for annual reporting periods beginning or ending on Impact on the financial statements
 
Revised AASB 1004
Contributions
AASB decided to relocate requirements on contributions from AAS 27, 29 and 31, substantively unamended, into AASB 1004 as part of its short-term review of AAS 27, AAS 29, and AAS 31. Beginning
1 Jul 2008
Impact expected to be insignificant
Revised interpretation 1038 Contributions by Owners made to Wholly-Owned Public Sector Entities. Editorial amendments to Interpretation 1038 due to changes to AASB 1004. Beginning
1 Jul 2008
Impact expected to be insignificant
AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 [AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB127, AASB 134, AASB 136, AASB1023 and AASB 1038]. An accompanying amending standard also introduced consequential amendments into other Standards. Beginning
1 Jan 2009
Impact expected to be insignificant
AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116, & AASB 138 and interpretations 1 & 12] Option to expense borrowing cost related to a qualifying asset had been removed. Entities are now required to capitalise borrowing costs relevant to qualifying assets. Beginning
1 Jan 2009
All Australian government jurisdictions are currently still actively pursuing an exemption for government from capitalising borrowing costs.
AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101 Editorial amendments to Australian Accounting Standards to align with IFRS terminology. Beginning
1 Jan 2009
Impact expected to be insignificant

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(q) Prospective accounting changes

GAAP-GFS Convergence
The AASB has recently approved AASB 1049 Whole of Government and General Government Financial Reporting, which will apply to future financial reports of the Victorian general government sector. In October 2007, the AASB extended AASB 1049 to also apply to financial reports of the Whole of Government economic entity. The standard, which will be applicable for annual reporting periods beginning on or after 1 July 2008, converges Australian Generally Accepted Accounting Principles (GAAP) and Government Finance Statistics (GFS) reporting. It also includes additional disclosure requirements. The effect of any changes to recognition or measurement requirements as a result of this new standard is being evaluated.

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2 Net result from operations

Notes 2008
$'000
2007
$'000
Income
(a) Contributions
State Government 57,510 75,696
Insurance companies 201,466 175,870
Owners and insurance intermediaries etc. 9,150 8,179
Commonwealth Government 511 491
  268,637 260,236
 
(b) Sales of goods and services
Revenue from sale of goods 4,878 3,623
Revenue from the rendering of services 8,401 6,224
  13,279 9,847
 
(c) Other income
Property rental 641 751
Commonwealth Government Grant 4,375 4,375
Gain/(loss) on disposal of property, plant and equipment (1,353) (2,381)
 
Interest Revenue
Interest on bank deposits 1,987 1,980
Interest on term deposits 992 1,009
Total interest revenue from financial assets not at fair value through Operating statement 2,979 2,989
Total interest revenue from financial assets at fair value through Operating statement 0 0
Total interest revenue 2,979 2,989
 
Volunteer Brigade
Brigade donations received 4,351 3,984
Brigade owned vehicles and PME recognised 4,581 4,562
Brigade cash and cash equivalents recognised 570 35,695
Total Volunteer Brigade 9,502 44,241
 
Other (Aggregate of Immaterial items) 5,840 3,421
 
Total Other income 21,984 53,396
 
Total Income 303,900 323,479
 
Expenses
 
(d) Employee Benefits
Salaries 112,872 110,461
Superannuation (see note 16) 10,604 10,000
Other on-costs (payroll tax, fringe benefits tax, workcover premium) 8,093 7,730
Employee Support 5,116 4,847
Total Employee Benefits 136,685 133,038
 
(e) Depreciation and amortisation
Depreciation of non-current assets
Buildings 5,301 4,688
Vehicles 12,799 12,091
Other plant and equipment 3,777 4,443
  21,877 21,222
Amortisation of non-current assets
Leasehold Improvements 971 896
  971 896
Total depreciation and amortisation 22,848 22,118
 
(f) Other expenses
Buildings Operating and Maintenance 7,387 5,803
Motor Vehicle 9,494 10,122
Cost of Goods Sold / Services Provided 5,408 3,471
CFA Contributions to OESC Running Costs 2,142 1,972
Operating and other Lease payments 4,224 3,739
Other Operating and Maintenance 5,190 6,042
Computer equipment and systems 3,581 2,852
Communications and Alarms 7,024 8,299
Contract payments to external services 33,723 37,145
Volunteer Compensation and Insurance 2,125 3,540
External Training and Skills Maintenance 2,035 1,788
Uniforms and Equipment 4,311 5,866
Other Volunteer and Brigade Support 3,557 3,140
Audit Fees (note 14) 378 348
Bad Debts 27 (4)
Consultants Fees 122 11
Aircraft Hire 4,795 10,732
Hire Fees - Other 1,963 3,989
Legal Fees 880 1,334
Grants to Volunteer Associations and Local Government 1,041 1,110
Printing and Stationery 2,361 2,320
Publicity/Advertising 2,488 1,909
Brigade Donations Distributed 4,351 3,984
General Expenses 13,639 14,271
Total other expenses 122,246 133,783
 
 

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3 Receivables

  2008
$'000
2007
$'000
Current:
Trade Receivables 7,032 3,562
GST Recoverable 2,069 2,202
  9,101 5,764
 
Other Receivables 462 2,106
Allowance for Doubtful Debts (See also Note 10(a) below) (26) (14)
Total Receivables 9,537 7,856
 
(a) Movement in the Allowance for Doubtful Debts
 
Balance at beginning of the year (14) (30)
Amounts written off during the year 0 10
Amounts recovered during the year 0 30
(Increase)/decrease in allowance recognised in profit or loss (12) (24)
Balance at end of the year (26) (14)
 
(b) Ageing analysis of Receivables
Please refer to table Note 11(c) for the ageing analysis of receivables.
 
(c) Nature and extent of risk arising from receivables

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4 Inventories

2008
$'000
2007
$'000
 
Supplies and consumables:
At lower of cost and net realisable value (Note 1(g)) 7,086 7,507
 
Publications held for sale:
At cost 0 87
 
Total Inventories 7,086 7,594

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5 Other assets

2008
$'000
2007
$'000
 
Prepayments 1,867 2,021
  1,867 2,021

Non-current assets classified as held for sale

2008
$'000
2007
$'000
 
Freehold land and buildings held for sale 5,290 666

The Authority intends to dispose of freehold land and buildings that are surplus to its programs and which are no longer utilised within the next 12 months. The properties were previously used as fire stations, as well as land acquired for building programs now no longer required. No impairment loss was recognised on reclassification of the properties as held for sale.

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Property, plant and equipment

2008
$'000
2007
$'000
 
(a) Value and Depreciation - Carrying amounts
 
Freehold Land
At cost 10,562 6,432
At independent valuation 2005 16,531 16,782
At independent valuation 2006 15,015 15,695
At independent valuation 2007 40,413 42,009
  82,521 80,918
 
Buildings
At cost 38,643 23,965
Less: Accumulated Depreciation (843) (486)
 
At independent valuation 2005 86,522 87,336
Less: Accumulated Depreciation (4,994) (3,305)
 
At independent valuation 2006 83,602 84,316
Less: Accumulated Depreciation (3,214) (1,646)
 
At independent valuation 2007 83,469 84,856
Less: Accumulated Depreciation (1,594) 0
  281,591 275,036
 
Leasehold Improvements - at cost 11,636 11,529
Less: Accumulated amortisation (8,313) (7,341)
  3,323 4,188
 
Vehicles - at cost 260,899 236,989
Less: Accumulated Depreciation (118,526) (110,814)
  142,373 126,175
 
Brigade Owned - at cost 32,653 29,979
Less: Accumulated Depreciation (9,467) (7,849)
  23,186 22,130
  165,559 148,305
 
Plant and equipment - at cost 62,853 62,782
Less: Accumulated Depreciation (48,279) (45,349)
  14,574 17,433
 
Brigade Owned - at cost 72 0
Less: Accumulated Depreciation (3) 0
  69 0
  14,643 17,433
 
Property, plant and equipment in the course of construction - at cost
  16,334 14,737
 
Total Property, plant and equipment
  563,971 540,617

7(b) Movements in carrying amounts
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below.

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  Freehold Land at fair value Buildings at fair value Leasehold Improve'ts at cost Vehicles at chost Plant, Mach. & Equipement at cost In the course of construction cost Total
Carrying amount $'000 $'000 $'000 $'000 $'000 $'000 $'000
               
Balance at 1 July 2006 62,623 239,025 4,349 139,229 18,675 10,314 474,215
Additions 0 0 0 0 0 46,163 46,163
Disposals (667) (328) 0 (5,748) (4) 0 (6,747)
Classified as held for sale (521) (145) 0 0 0 0 (666)
Net Revaluation Increments/(Decrements) (Note 10(b)) 15,857 29,351 0 0 0 0 45,208
Transfers to Fixed Assets 3,626 11,821 735 22,353 3,205 (41,740) 0
Brigade Owned Vehicles Recognised (Note 2(c)) 0 0 0 4,562 0 0 4,562
Depreciation/amortisation expense (Note 2(e)) 0 (4,688) (896) (12,091) (4,443) 0 (22,118)
               
Balance at 1 July 2007 80,918 275,036 4,188 148,305 17,433 14,737 540,617
Additions 0 0 0 0 0 52,192 52,192
Disposals (20) (253) 0 (5,007) 0 0 (5,280)
Classified as held for sale (2,602) (2,688) 0 0 0 0 (5,290)
Net Revaluation Increments/(Decrements) (Note 10(b)) 0 0 0 0 0 0 0
Transfers to Fixed Assets 4,225 14,797 106 30,552 915 (50,596) 0
Brigade Owned Vehicles Recognised (Note 2(c)) 0 0 0 4,508 72 0 4,580
Depreciation/amortisation expense (Note 2(e)) 0 (5,301) (971) (12,799) (3,777) 0 (22,848)
               
Balance at 30 June 2008 82,521 281,591 3,323 165,559 14,643 16,334 563,971

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8 Payables

2008
$'000
2007
$'000
 
Trade payables 4,779 5,457
Sundry payables 8,767 9,058
Other payables and Accruals 2,646 1,437
  16,192 15,952
 
Nature and extent of risk arising from payables
Please refer to Note 11(d) for the nature and extent of risks arising from payables.

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9 Provisions

2008
$'000
2007
$'000
Current
Employee Benefits (i) (See Note 9 (a))
Unconditional and expected to be settled within 12 months(ii) 13,217 12,611
Unconditional and expected to be settled after 12 months(iii) 16,866 16,530
  30,083 29,141
 
Provisions related to employee benefit on-costs 2,876 2,752
Unconditional and expected to be settled within 12 months(ii) 3,066 3,022
Unconditional and expected to be settled after 12 months(iii) 5,942 5,774
 
Volunteer Compensation (See note 1(h)) 1,343 1,744
Total current provisions 37,368 36,659
 
Non-Current
Employee Benefits (i) (See Note 9 (a)) 5,116 4,241
Provisions related to employee benefit on-costs 918 765
Volunteer Compensation (See note 1(h)) 5,131 5,029
Total non-current provisions 11,165 10,035
 
Total provisions
Employee Benefits (See Note 9 (a)) 42,059 39,921
Volunteer Compensation (See note 1(h)) 6,474 6,773
  48,533 46,694
 
(a) Employee Benefits and related on-costs
 
Current employee benefits
Annual leave entitlements 13,482 12,848
Unconditional long service leave entitlem 16,601 16,293
Non-current employee benefits
Conditional long service leave entitlements 5,116 4,241
Total employee benefits 35,199 33,382
 
Current on-costs 5,942 5,774
Non-current on-costs 918 765
Total on-costs 6,860 6,539
Total employee benefits and related on-costs 42,059 39,921
 
Note:
(i) Employee benefits consist of amounts for annual leave and long service leave accrued not including on-costs
(ii) The amounts disclosed are nominal amounts
(iii) The amounts disclosed are discounted to present values

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(b) Movement in provisions

  Employee Benefits 2008 On-costs 2008 Volunteer Compensation 2008 Total 2008
Opening balance 33,382 6,539 6,773 46,694
         
Additional provisions required 1,821 317 (299) 1,839
         
Closing Balance 35,203 6,856 6,474 48,533
         
Current 30,087 5,938 1,343 37,368
Non-current 5,116 918 5,131 11,165
  35,203 6,856 6,474 48,533

10 Equity and movements in equity

2008
$'000
2007
$'000
 
(a) Contributions by owners
Balance 1 July 2007 196,605 193,076
Capital Contribution from other Government entities 3,265 3,529
Balance 30 June 2008 199,870 196,605
 
(b) Reserves
Asset Revaluation Reserve - Land 59,783 59,783
Asset Revaluation Reserve - Buildings 161,233 161,233
  221,016 221,016
 
Movements
Asset revaluation reserve
Balance 1 July 2007 221,016 175,808
 
Revaluation increment (decrement) of freehold land 0 15,857
Revaluation increment (decrement) of buildings 0 29,351
Movement for the year 0 45,208
 
Balance 30 June 2008 221,016 221,016
 
Nature and purpose of reserve
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 1(g).
 
(c) Accumulated Surplus
Balance at beginning of financial year 128,795 94,255
Net Result 22,121 34,540
Balance at end of the financial year 150,916 128,795
 
(d) Change in Equity
Total equity at the beginning of the financial year 546,416 463,139
Total changes in equity recognised in the statement of Changes in Equity 22,121 79,748
Contributions of equity (note 10(a)) 3,265 3,529
Total equity at the end of the financial year 571,802 546,416

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11 Financial Instruments

(a) Significant accounting policies
The Authority's activities expose it to a variety of financial risks; credit risk, liquidity risk and market risk. The Authority regularly reviews all risks in relation to financial assets and financial liabilities. Its overall risk management policies focus on mitigating risks associated with operating in a commercial environment and the unpredictability of financial markets and to seek to minimise potential adverse effects on its financial performance.

The Authority has policies and procedures for its financial assets and financial liabilities which are reviewed at least annually Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset and financial liability are disclosed in Note 1 to the financial statements.

(b) Categorisation of financial instruments

Financial assets Note Category Carrying
amount
2008
Carrying
amount
2007
         
Cash and cash equivalents 17 N/A 48,776 50,308
Trade and other receivables (i) 3 Loans and receivables (at amortised cost). 7,141 5,668
         
Financial liabilities Note Category Carrying amount 2008 Carrying amount 2007
         
Trade creditors and other payables 8 Financial liabilities measured at amortised cost. 16,192 5,952

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Notes:
(i) The amount of receivables disclosed here exclude statutory receivables .(e.g. Amounts owing from Victorian Government and GST input tax credit recoverable).

(c) Credit risk
The Authority's maximum exposures to credit risk at balance date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the Balance Sheet.

The Authority minimises concentrations of credit risk in relation to trade accounts receivable by undertaking transactions with a large number of customers. Other than trade debtors, the major amounts owing at any point in time are from Government (no credit risk considered), and the pool of Insurance Industry contributors. There is not considered to be any major risk with this latter class as, in the event of one contributor failing, the amount so lost can be collected from the rest of the pool in a subsequent period.

Credit risk in trade receivables is managed in the following ways:

CFA has in place a Board approved Treasury Management Policy that has been formally noted by the Department of Treasury and Finance and is in compliance with the Borrowing and Investment Powers Act (1988). Investments are only made subject to the appropriate institution having a Standard & Poor's credit rating for short term investments of A3 or better, and long term investments of BBB or better, at the time of investing the funds.

Financial assets that are either past due or impaired

Currently the Authority does not hold any collateral as security nor credit enhancements relating to any of its financial assets As at reporting date, there is no event to indicate that any of the financial assets are impaired. There are no financial assets that have had their terms renegotiated so as to prevent them from being past due or impaired, and they are stated at the carrying amounts as indicated. The following table discloses the ageing only of financial assets that are past due but not impaired:

Interest rate risk exposure and ageing analysis of financial assets

($ thousand)
        Interest rate exposure   Maturity dates (i)
    Weighted
average
effective
interest rate
Carrying
Amount
Fixed
Interest
Rate
Variable
interest
Rate
Non-interest
bearing
Normal
amount
Less than
1 month
1-3
months
3 months-1 year 1-5 years
  2008 %                  
Payables:                      
Amounts payable to other government agencies   - 3,542 0 0 3,542 3,542 3,542 0 0 0
Trade and other payables   - 12,650 0 0 12,650 12,650 12,650 0 0 0
      16,192 0 0 16,192 16,192 16,192 0 0 0
  2007                    
Payables:                      
Amounts payable to other government agencies   - 3,871 0 0 3,871 3,871 3,871 0 0 0
Trade and other payables   - 12,081 0 0 12,081 12,081 12,081 0 0 0
      15,952 0 0 15,952 15,952 15,952 0 0 0

Notes:
(i) The amounts disclosed are the contractual undiscounted cash flows of each class of financial liabilities

(e) Market risk
The Authority's exposures to market risk which would primarily be through day to day interest rates is minimal as the Authority currently has no interest bearing financial liabilities and only insignificant exposure to foreign currency and other price risks.

Foreign currency risk
The Authority is exposed to insignificant foreign currency risk through its payables relating to purchases of supplies and consumables from overseas. This is because of a limited amount of purchases denominated in foreign currencies and a short timeframe between commitment and settlement with the availability of facilities such as EFT.
The Authority has no current foreign currency exposure risk and any future risk is considered minimal.

Interest rate risk
Exposure to interest rate risk might arise primarily through interest bearing liabilities which are currently nil.

(f) Fair value
The fair values and net fair values of financial assets and financial liabilities are determined as follows:

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12 Responsible Persons

In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the following disclosures are made regarding responsible persons for the year ended 30 June 2008.

Names
The names of the people who were "Responsible Persons" at any time during the financial year are:

Responsible Minister
Minister for Police and Emergency Services:
The Honourable B Cameron MP

Authority Members
K A Murphy (Chairman)
C L Higgins (Deputy Chairman)
Z M Burgess (to 1 April 2008)
K A Erwin
D G Gibbs
L M Gunter
P B Harmsworth
P Jamvold
K W King
P G Marke
M G Tudball
F P Zeigler

Accountable Officer
N G Bibby (Chief Executive Officer)

Remuneration (other than the Responsible Minister)
The numbers of Responsible Persons are shown below in their relevant income bands:

  2008 2007
Income Band No. No.
$0 - $9,999 1 1
$10,000 - $19,999 9 10
$20,000 - $29,999 0 1
$30,000 - $39,999 1 0
$290,000 - $299,999 0 1
$300,000 - $309,999 1 0
Total Numbers 12 13
Total Amount $'000 425 447

It should be noted that C L Higgins is Chairman of Victoria State Emergency Services, and P G Marke and D G Gibbs are board members of the Bendigo Community Bank. CFA had transactions with both these entities which were arms-length from the Authority members and at normal commercial terms.
There were no other material transactions between the Country Fire Authority and the Authority members or Member related entities.

Amounts relating to the Responsible Minister are reported separately in the financial statements of the Department of Premier and Cabinet.

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13 Remuneration of Executives

The number of executive officers, other than Ministers and Accountable Officers, and their total remuneration commencing at $100,000 during the reporting period are shown in the first two columns in the table below in their relevant income bands. The base remuneration is shown in the third and fourth columns. Base remuneration is exclusive of bonus payments, long-service leave payments, redundancy payments and retirement benefits.
Several factors have affected total remuneration payable to executives over the year. A number of employment contracts were completed during the year and renegotiated and a number of executives received bonus payments during the year. These bonus payments depend on the terms of individual employment contracts. Some contracts provide for an annual bonus payment whereas other contracts only include the payment of bonuses on the successful completion of the full term of the contract. A number of these contract completion bonuses became payable during the year.

  TOTAL REMUNERATION BASE REMUNERATION
  2008
No.

2007
No.

2008

No.

2007
No.
Income Band        
$100,000 - $109,999 0 0 0 0
$110,000 - $119,999 0 3 0 2
$120,000 - $129,999 0 0 0 0
$130,000 - $139,999 1 3 6 4
$140,000 - $149,999 4 3 5 13
$150,000 - $159,999 6 6 6 6
$160,000 - $169,999 2 8 5 2
$170,000 - $179,999 9 2 3 2
$180,000 - $189,999 2 4 1 1
$190,000 - $199,999 1 1 1 0
$200,000 - $209,999 2 1 0 0
         
Total Numbers 27 31 27 30
Total Amount $'000 4,811 4,929 3,777 4,439

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14 Remuneration of auditors

2008
$'000
2007
$'000
Audit fees paid or payable to the Victorian Auditor-General's Office for
audit of the Authority's financial statements pursuant to the Audit Act 1994.
Paid as at 30 June 2008 70 58
Payable as at 30 June 2008 10 20
  80 78

15 Commitments for expenditure and Contingent Liabilities

(i) Commitments for expenditure
The following commitments have not been recognised as liabilities in the financial statements:

2008
$'000
2007
$'000
 
(a) Capital expenditure commitments
Plant and equipment
Payable:
Not longer than 1 year 37,442 27,568
Longer than one year and not longer than 5 years. 1,990 7,456
Longer than 5 years 0 0
Total capital expenditure commitments 39,432 35,024
 
(b) Lease commitments
 
Non-cancellable operating leases payable:
Not longer than 1 year 4,364 4,338
Longer than one year and not longer than 5 years. 4,859 6,962
Longer than 5 years 3,094 3,670
Total lease commitments 12,317 14,970

{c) Other expenditure commitments
Statewide Integrated Public Safety and Communications Strategy (SIPSaCS)

  1. Call Taking & Dispatch Services.
  2. There is an ongoing Service Agreement with the Emergency Services Telecommunications Authority (ESTA) for the provision of call taking and dispatch services for Outer Metropolitan and Regional Victoria, through facilities at East Burwood and Mt. Helen, Ballarat. The service fees for the year to 30 June 2008 were $11.495M.

  3. Emergency Alerting System
  4. CFA has an ongoing Service Level Agreement with the State, (through ESTA for 3rd party services) for the provision of an Emergency Alerting System. The contract services began in November 2005 with CFA incurring $23.991M for the year ending 30 June 2008 ($10.150M 2007).

  5. Short Message Service - SMS Gateway
  6. There is an ongoing contract with the Emergency Services Telecommunications Authority (ESTA), for the provision of SMS Gateway Services. Base level Service Fees for 2007/08 were $0.238M.

  7. Metropolitan Mobile Radio Services
  8. CFA have entered into a contract with the MFB as a third party to their contract with the service provider. Base level Service Fees for 2007/08 were $0.297M.

    All of the expenditure amounts shown in the above commitments note are nominal amounts inclusive of GST.

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(ii) Contingencies
In the context of CFA's business and recognising the Authority's existing insurance arrangements, there are some matters which may be subject to judicial process. None of those items are considered likely to have a material effect on the financial statements at 30 June 2008.

16 Superannuation

Employees of the Authority are entitled to receive superannuation benefits and the Authority contributes to both defined benefit and accumulation contribution plans managed by the Emergency Services & State Super superannuation fund (ESSS). The defined benefit plan provides benefits based on years of service and final average salary.
The Authority does not recognise any defined benefit liability in respect of the plans because the Authority has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance recognises and discloses the State's defined benefit liabilities in its financial report.
However, superannuation contributions for the reporting period are included as part of employee benefits in the Operating Statement of the Authority.
There were no superannuation contributions outstanding at 30 June 2008.

The name and details of each of the major employee superannuation funds and contributions made by CFA are as follows:

Fund 2008
$'000
2007
$'000
 
Defined Benefits Schemes
Emergency Services Superannuation Scheme (ESSS) 7,229 6,887
Other 38 35
Accumulation Schemes
Emergency Services Superannuation Plan (ESS Plan) 3,278 3,023
Others 59 55
Total (See note 2(d)) 10,604 10,000

Employer contribution rates were:
Defined Benefits Scheme.
The employer contribution rate for the financial year was 12.5% (2007: 13%) of salary for operational staff as well as for non-operational staff employed prior to 1 January 1994.
Accumulation Scheme
9% of salary for non-operational staff employed after 31 December 1993.

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17 Cash flow information

(a) Reconciliation of cash and cash equivalents

For the purposes of the Cash Flow Statement, cash and cash equivalents comprise 2008 2007 cash on hand and cash at bank, deposits at call and highly liquid investments with $'000 $'000 short periods to maturity that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. 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: 2008
$'000
2007
$'000
Cash at bank and on hand 46,776 40,308
Short Term Deposits 2,000 10,000
  48,776 50,308
 
(b) Reconciliation of net result for the period to net cash flows from operating activities
 
Net Result for the period 22,121 34,540
 
Non-cash movements:
Depreciation and Amortisation of non-current assets. 22,848 22,118
Brigade Owned Assets Recognised (4,581) (4,562)
Allowance for Doubtful Debts 12 (16)
(Gain) / Loss on sale of non-current assets 1,353 2,381
 
Movements in assets and liabilities:
(Increase) decrease in assets (1,612) 345
Receivables and Prepayments 508 (228)
Current Inventories
Increase (Decrease) in liabilities:
Current payables 296 (499)
Employee Entitlements 2,138 5,103
Volunteer Compensation (299) 574
 
Total Adjustments 20,663 25,216
 
Net cash inflow from operating activities 42,784 59,756

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18 Trust Account Balances

The following is a listing of Trust Account Balances relating to Trust Accounts Controlled or Administered by the Authority.

Cash and Investments as at 30 June 2008.

2008
$'000
2007
$'000
 
Controlled Trusts
Public Trust Account 1 1
 
Total Controlled Trusts 1 1
 
Administered Trusts
CFA and Brigades Donations Fund 927 641
 
Total Administered Trusts 927 641
 
There were no Trust Accounts opened and closed by CFA

19 Subsequent events

The Authority has no material or significant events.

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