Queensland Art Gallery Annual Report 2002-03

NOTES TO THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2003 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting General These financial statements are a general purpose financial report and have been prepared in accordance with the Financial Administration and AuditAct 1977, Financial Management Standard 1997, applicable Australian Accounting Standards, Urgent Issues Group Abstracts and Statements of Accounting Concepts. This financial report has been prepared on accrual and going concern basis. The financial report has also been prepared under the historical cost convention except where specifically stated. Accounting Policies Unless otherwise stated, all accounting policies applied are consistent with those for the prior year. Where appropriate, comparative figures have been amended to accord with current presentation and disclosure made of material changes to comparatives. Classification between current and non-current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be realised or paid. The asset or liability is classified as current if it is expected to be turned over within the next twelve months, being the Gallery's operational cycle. Rounding Unless otherwise stated, amounts in the financial report have been rounded to the nearest thousand dollars. (b) Revenue recognition Revenue is recognised when goods or services are delivered Services acquired for no cast The value of services received free of charge are recognised as revenue when received. Government Contributions Government grants and contributions are recognised as operating revenue on receipt or when an entitlement is established, whichever is the sooner, and disclosed in the Statement of Financial Performance as Government Contributions. Sale of Assets The profit or loss on the sale of an asset is determined when control has passed to the buyer. In accounting for the sale of non-current assets, gross proceeds from the sales are included as other revenue, and the written down value of the assets sold is disclosed as an operating expense. (cl Borrowing Costs Borrowing costs are recognised as an expense in the period in which they are incurred. (d) Recognition and Measurement of Property, Plant and Equipment Acquisition The purchase method of accounting is used for all acquisitions of assets, being the fair value of the assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition. Actual cost is used for the initial recording of all acquisitions of assets controlled and administered by the Gallery. Assets acquired at no cost, or for nominal considerations, are recognised at their fair value at date of acquisition. 58 Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use. All items of plant and equipment with a cost or value in excess of $2000 and a useful life of more than one year are recognised as an asset. All other items of plant and equipment are expensed on acquisition. Revaluation Cultural assets, Art Works and Research Library Materials, are measured at fair value in accordance with AASB 1041. All other assets are measured at cost. This is in accordance with the Queensland Treasury's 'Non-Current AssetAccounting Guidelines for the Queensland Public Sector'. Details of the revaluation are also disclosed in Note 10. The Gallery's Art Works, including gifts, are revalued on an annual basis for insurance purposes by the Gallery's experienced specialist curatorial staff who are considered experts in their field. The valuation of the Gallery's Research Library Materials represents the cost of replacing the core collection of monographs, serials and slides of the Gallery's Art Works in the event of the loss of the Library's collection. These items are determined by the Gallery's library staff as being essential for replacement to support the Gallery's research and exhibition development objectives, taking into account its role, the Gallery's collection development policy and its clientele. The Research Library Materials are revalued each year using an average cost. The average cost is determined from the cost of additions each year that are provided by various suppliers divided by the number of materials purchased. The bases of valuation for Art Works and Research Library Materials are current market values and current replacement cost respectively. All Art Works are reviewed annually by curators considered experts in their fields. Art Works that have had a material movement in valuation are revalued during the year using recent auction results. On this basis, the Art Works are comprehensively revalued each year. Repairs and Maintenance Routine maintenance, repair costs and minor renewal costs are expenses as incurred. Where the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the cost is capitalised and depreciated. Operating Leases Lease payments for operating leases are recognised as an expense in the years in which they are incurred as this reflects the pattern of benefits derived by the Gallery. The Art Gallery Board of Trustees has a signed lease agreement with the Queensland Cultural Centre Trust for the main Art Gallery building located within the Queensland Cultural Centre Complex for which no rent is charged. The provision of the building and items of fit-out, including plant and equipment, form part of this agreement. The Gallery pays for services including building maintenance and repairs, electricity, security, cleaning, air-conditioning and telephone rental. (Note r) (e) Recognition of Donated Assets from the Queensland Art Gallery Foundation The Queensland Art Gallery Foundation purchases Art Works and then donates them to the Gallery. These particular Art Works are included in the total value of the Art Works in the Gallery's Statement of Financial Position. In past financial years these Art Works have been brought to account in the Gallery's Statement of Financial Position at nil value. When the Gallery's Art Works, including these donated Art Works, are revalued annually the Asset Revaluation Reserve is increased by their market value accordingly.