Melbourne
Water accounting policies

a. Introduction

The information presented in the Melbourne region water accounting report is based on agreements between the Victorian Department of Sustainability and Environment, Southern Rural Water, Melbourne Water, City West Water, South East Water, Yarra Valley Water, Western Water and the Bureau of Meteorology.

This report has been prepared using an accrual basis of water accounting, with the exception of the physical water flow information. The water attribute being quantified is volume and the unit of account is megalitres (ML).

b. Recognition of water assets and water liabilities

Only water that is held or managed by the state licensing authority, the region's irrigation scheme or the urban water system, and from which future benefit can be derived by stakeholders of the region; is defined as a water asset. Water liabilities are constituted by present commitments to supply water, the discharge of which is expected to result in a decrease of the region's water assets or an increase in another water commitment to supply water.
State licensing authorities and retail water authorities in the Melbourne region are:

  • Victorian Department of Sustainability and Environment
  • Southern Rural Water
  • Melbourne Water
  • City West Water
  • South East Water
  • Yarra Valley Water
  • Western Water.

A water asset is recognised in the Statement of Water Assets and Water Liabilities providing:

  • its volume can be quantified in a way that is complete, neutral and free from material error, and
  • the derived benefit is probable.

A water liability is recognised in the Statement of Water Assets and Water Liabilities providing:

  • its volume can be quantified in a way that is complete, neutral and free from material error, and
  • the decrease of the region's water assets or increase in another water commitment to supply water is probable.

Water held in off-channel storages were not considered part of the region, regardless of size or connection to the system. This is because the attendant water right had already been exercised and the water abstracted from the source system.

c. Recognition of changes in water assets and water liabilities

The increases and decreases to the reported water assets and water liabilities consist of changes that can be quantified in a way that is complete, neutral and free from material error. These volumes are presented in the Statement of changes in water assets and water liabilities or the Statement of physical water flows.

Precipitation and evaporation are recognised only in relation to the surfaces of open storage volumes (line items 9.1 Precipitation on surface water and 17.1 Evaporation from surface water). They do not represent all precipitation, evaporation and evapotranspiration within the region (notably, these processes occurring from the landscape are not captured).

The portion of runoff that flowed into the surface water store (storages and river channels) was recognised in the water accounting statements. Runoff calculations included precipitation captured in the catchment less evaporation and infiltration (9.4 Runoff to surface water).

Allocation announcements on regulated entitlements have been recognised as an increase in water liabilities. Note that the definition of regulated or unregulated entitlements for the purpose of the National Water Account (refer to Glossary) may be different to the meaning applied by the jurisdiction. Please refer to the Water rights, entitlements, allocations and restrictions note for more information on the allocations.

d. Water assets and water liabilities that fail the recognition criteria

The volumes of some water assets and water liabilities in the Melbourne region were not recognised in the water accounting statements but replaced by dashes (–) because they failed the recognition criteria specified in the Exposure Draft of Australian Water Accounting Standards 1, as:

  • they could not be quantified in a way that is complete, neutral and free from material error, or
  • in the case of water assets, they were unlikely to provide a future benefit to the region or the region's stakeholders
  • in the case of water liabilities, they were unlikely to result in a decrease in the region's water assets or an increase in another water liability when the obligation is discharged.

A description of water assets and water liabilities that failed the recognition criteria is given in the following line item notes:

e. Changes to water assets and water liabilities that fail the recognition criteria

The volumes of several changes to water assets and water liabilities identified in the Melbourne region were not recognised in the water accounting statements but replaced by dashes (–) because they could not be quantified in a way that is complete, neutral and free from material error.

A description of changes to water assets and water liabilities that failed the recognition criteria is given in the following line item notes:

f. Restatement of comparative information

Several comparative year volumes in the water accounting statements were restated from the 2010 Account in order to provide more useful information to the users. Restatements may be due to:

  • error committed in the 2010 Account, referred to as prior period error
  • change in the presentation of the water accounting statements, where line items were generally simplified since the 2010 Account
  • change in scope, for instance to include more of the region's area in the definition of a line item in order to present more complete information
  • improvement in quantification methodology
  • increase in the data available to quantify a line item.

In accordance with the Exposure Draft of Australian Water Accounting Standard 1 (the Standard), comparative year volumes must be restated in the statements if there is a prior period error, a change in line item presentation or change in scope.

According to the Standard, comparative year volumes are not required to be restated if there is a change in methodology or subsequent data availability for the quantification of a line item. However, for this account, these volumes were restated if the change was considered material. In particular, any change affecting the volume of allocation remaining was restated.

The notes attached to the line items of the water accounting statements give the details of all the restatements made.

Change in presentation of the water accounting statements

In the 2010 Account, internal transactions between various water assets and water liabilities of the region were reported in the water accounting statements. In the 2011 Account, these internal transactions are not reported in the water accounting statements for the following reasons:

  • they did not affect the region's total water assets and water liabilities
  • feedback was received that presenting these internal transactions in the water accounting statements was confusing, as the same water appeared in the water accounting statements as both a claim to water and an obligation to deliver water and as both inflows and outflows in relation to the various water assets and water liabilities. 

In the 2011 Account, these internal transactions are reported instead in the Resources and systems suite of notes: Surface water, Groundwater and Urban system.

Line items that had comparative year volumes restated in the water accounting statements are shown below. The notes attached to the line items of the water accounting statements give the detail on all the restatements made.  They are: