Classification according to function or activity by local governments (AASB1052_12-07_COMPmar20_07-21)

Paragraphs 11 to 14 only apply to local governments.

The complete set of financial statements of a local government shall disclose in respect of each broad function or activity:

(a) by way of note:

(i) the nature and objectives of that function/activity; and

(ii) the carrying amount of assets that are reliably attributable to that function/activity; and

(b) by way of note or otherwise:

(i) income for the reporting period that is reliably attributable to that function/activity, with component revenues from related grants disclosed separately as a component thereof; and

(ii) expenses for the reporting period that are reliably attributable to that function/activity.

The information provided by way of note in accordance with paragraph 11 shall be aggregated and reconciled to agree with the related information in the financial statements of the local government.

This Standard requires disclosure of information about the assets, income and expenses of the local government according to the broad functions or activities of the local government, whether they be related to service delivery or undertaken for commercial objectives. Disclosure of this information assists users in identifying the resources committed to particular functions/activities of the local government, the costs of service delivery that are reliably attributable to those functions/activities, and the extent to which the local government has recovered those costs from income that is reliably attributable to those functions/activities. Function/activity classification of financial information will also assist users in assessing the significance of any financial or non-financial performance indicators reported by the local government.

AASB 8 Operating Segments is not applicable to local governments. The bases considered appropriate for identifying broad functions or activities of local governments would not necessarily accord with the criteria for identification of segments contained in that Standard. However, preparers of the complete set of financial statements may find that the guidance contained in that Standard is useful in identifying the income, expenses and assets that are reliably attributable to the broad functions or activities of the local government.