Water Information Standards
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You may see the following abbreviations used in discussions about water accounting:
Release of ED AWAS 1 is an important milestone in the evolution of water accounting standards.
WASB are confident that AWAS 1 will be a practical and useable standard enabling preparation of GPWAR for all types of water entities. However, water accounting is a new discipline and water accounting report users may need time to prepare for using a standard.
Some of the concepts and principles in ED AWAS 1 will take time to absorb.
Issuing AWAS1 as an ED allows:
Water accounting is an emerging discipline. WASB intends to expose the ED AWAS 1 to the water accounting industry for up to two years. This will allow WASB to obtain extensive feedback and for information systems to be developed that will assist in the preparation of GPWAR.
A number of specific questions have been posed in the ED AWAS 1 accompanying document. WASB would like responses by the end of January 2011. Additional constructive feedback, particularly if it is based on practical application of ED AWAS1, is welcome until December 2011.
All comments will be considered in the light of their implications for ongoing application of AWAS 1. We will establish a process of communicating any proposed changes before an Australian Water Accounting Standard is issued. We do not intend to make changes to ED AWAS 1 during its exposure period.
We will work with the Auditing and Assurance Standards Board (AUASB) to develop an assurance Standard to be known as AWAS 2. This is likely to occur during the exposure period of the ED AWAS 1. AWAS 2 will also be exposed for comment and testing.
We encourage water report preparers to consider early adoption and application of ED AWAS 1.
We are confident from testing and development work over the past two years that ED AWAS 1 can be applied by report preparers for their GPWAR and will not need substantive changes in the short term.
Evolution of the standards, and development of systems and capacity within organisations to apply these standards, will benefit from early exposure to the ED AWAS 1.
If your organisation currently holds water or rights or other claims to water, or has management responsibilities for these, then the ED AWAS 1 will be of interest to your organisation. It will also be of interest if your organisation wishes to report to external stakeholders and their management to an agreed standard that ensures written reports that:
Preparing a report in accordance with AWAS 1, when issued, is not mandatory.
A number of organisations are, however, preparing or planning to prepare GPWAR on a voluntary basis.
Significant further testing of the ED AWAS 1 will occur over the next two years, including through the National Water Account.
The mandating of adoption of AWAS 1, when issued, is ultimately a matter for Australian governments to consider once the value of GPWARs prepared according to the AWAS 1 has been demonstrated.
GPWAR prepared in accordance with the AWAS 1 could replace a wide range of statutory reporting and is anticipated to provide confidence for water report users.
Hence, some of the key benefits of AWAS 1 are:
We will undertake a detailed analysis of existing statutory reporting requirements as part of a comprehensive cost benefit analysis while the AWAS 1 is in Exposure Draft form.
In consultation with water information practitioners and experts, the Bureau is developing water information standards. The Bureau is also adopting several defined standards and formalised operating practices and procedures developed by the International Organization for Standardization (ISO) and Standards Australia. This will ensure our water information is fit-for-purpose. Under the Water Act 2007 (section 130) the Director of Meteorology has the power to issue water information standards dealing with any of the following:
Water accounting is a systematic process of identifying, recognising, quantifying, reporting, and assuring:
Water accounting ensures that adequate measurement, monitoring and reporting systems are in place across Australia.
Effective water accounting should:
GPWAR are reports in a consistent format as defined in the AWAS 1.
GPWAR include the following components:
GPWAR are prepared on both a physical flow and accrual basis.
The physical flow report (Statement of Physical Water Flows) reports the flows that have actually occurred over the reporting period.
In contrast, the accrual reports (Statement of Water Assets and Water Liabilities, Statement of Changes in Water Assets and Water Liabilities) adjust for future outflows or inflows currently attributable to the entity.
For example, when an allocation announcement is made, the water-reporting entity recognises the volume of water allocation as an outflow at the announcement date.
This obligation is shown on the Statement of Changes in Water Assets and Water Liabilities, and therefore the Statement of Water Assets and Water Liabilities as well.
It is not shown in the Statement of Physical Flows until the allocated water has been taken or delivered.
Any water entity deemed to be a water report entity be able to have a GPWAR prepared for it. The preparer of the GPWAR will depend on the administrative arrangements governing the water report entity.
A water entity is a broad concept encompassing any entity that interacts with water (geographic or otherwise). For example, a catchment, a river or a particular reach of a river would each meet the definition of a water entity, such as an Environmental Water Holder, as would an organisation that holds transfers or has rights to water.
The level of interest in each entity (based on its financial, social and environmental significance) determines whether that entity is also a water report entity.
Water report entities have users that depend on GPWARs to help them make decisions.
Identification of water report entities will be an ongoing process. However, any preparer that wishes to report to a group of external stakeholders and its management to the ED AWAS 1 or AWAS 1 when issued, can deem its water entity as a water report entity and prepare a GPWAR.
Because water is so important in Australia, there are many diverse users of GPWAR, including:
GPWARs for water report entities prepared according to ED AWAS 1 will need to include volumetric information in the water accounting statements on both a physical flow basis (in the Statement of Physical Water Flows) and an accrual basis (in the Statement of Water Assets and Water Liabilities, and the Statement of Changes in Water Assets and Water Liabilities).
GPWAR preparers may need to disclose other information, such as flow rates, either in the note disclosures or the contextual statement.
We do not expect preparers to separately account for differing levels of water quality (though disclosures may be included). The water quality of reported water volumes must be of appropriate quality for their intended use, or 'fit for purpose'.
Financial information does not form part of the water accounting statements, however financial information—such as trading price—may be included in the note disclosures or the contextual statement.
Importantly, AWAS set out minimum reporting requirements. Preparers are encouraged to disclose additional information that they believe is relevant to users.
WASB expects more detailed disclosure and accounting requirements to emerge, to the extent that users require them.
The reporting and disclosure of items not addressed by the ED AWAS 1 should be conducted in accordance with the principles in the WACF.
GPWAR provide useful information for decision-making.
There is a wide diversity of users of GPWAR and their information needs are also diverse.
So that reports to meet these needs can be created, we have not restricted the definition of water report entities to a particular type of entity.
Therefore, while water authorities may well be water-reporting entities, other entities such as regions, organisations or individuals, and particularly physical entities such as regions and water systems, may also be water report entities if users require information on that entity for decision-making.
For example, while Sydney Water is a water-reporting entity of which it is reasonable to expect GPWAR will be required, the state of New South Wales may also be obliged to produce a GPWAR that includes the water managed by Sydney Water.
It is possible for water report entities, physical or organisational, to overlap.
Exactly which reports are prepared depends on users' needs.
In the example of the Murray-Darling Basin, each state might prepare a GPWAR for the part of the basin located within its borders. In addition, the Murray-Darling Basin Authority might prepare a consolidated GPWAR of the whole basin.
Each GPWAR must comply with the requirements of AWAS and the WACF.
A water report entity is a water entity (geographic region, water system, organisation or individual), which is required to prepare a GPWAR.
The report preparer is the organisation or person responsible for preparing the GPWAR.
For example, the water accounts of a particular geographic region might be prepared by the appropriate state or territory department.
In some cases, where regions of interest cross political borders, other entities might also be appropriate report preparers (such as the Murray-Darling Basin Authority).
As a guide, the entity which is primarily accountable for the management of the water report entity will usually be the most appropriate report preparer.
However, in the case of highly aggregated water reports, one organisation may oversee report preparation (such as the Bureau of Meteorology in the preparation of the NWA).
The term statements is often synonymous with accounts. Therefore, a report (i.e. a GPWAR) prepared for a water report entity will include information such as in a contextual statement and disclosure notes, that is supplementary to the information in the water accounting statements
The WACF is now available for download.
The PAWAS was released in July 2009 for use by preparers of GPWARs and for the Methods Pilot for the NWA, and is also available for download.
Public comments on both these documents, were considered before releasing the ED AWAS 1 in October 2010. It is expected that AWAS 1 will be exposed for up to 2 years before finalisation and issuing.
The exposure draft of the AWAS will apply to preparing the NWA in 2010.
Significant further testing of the exposure draft AWAS will occur before the WASB considers making the standards mandatory.
You have the opportunity to comment on future water accounting standards.
The standards released to date have been developed through a consultative process, involving many pilot projects across Australia. This process will continue.
The WASB will distribute future draft standards for comment before finalising them.
Targeted stakeholders will evaluate future draft standards before we invite wider public comment.
The terms water accounting and water reporting are sometimes used interchangeably.
Technically, however, water accounting refers to the preparation and reporting of water accounting reports. The preparation and presentation of a GPWAR is a form of water accounting.
A report prepared for a water report entity, prepared in accordance with the WACF and AWAS, might also include supplementary information to the accounts in order to further inform users regarding the operations of the entity.
Supplementary information might include projections, estimates or other disclosures that management considers useful, but which fall outside the scope of GPWAR.
Water reporting may also refer to the preparation of water reports other than GPWAR.
The WACF establishes:
Standards developers are the main users of the WACF. However, the framework may also help report preparers to resolve issues on which the standards are silent.
The WACF underpins the PAWAS and ED AWAS 1.
The WACF sets the context required for defining standards, but does not define the standards themselves.
The AWAS include detailed requirements for preparing and presenting GPWARs.
If you prepare reports, the AWAS should be your primary source of guidance. However, sometimes the accounting treatment or disclosure you need to report is not prescribed by AWAS. If that happens, you can refer to the principles set out in the WACF.
Many government departments, agencies and other organisations have developed their own approaches to quantifying and reporting information on water. These might be considered 'water accounting standards' within specific jurisdictions or organisations.
In contrast, the ED AWAS 1 set out the nationally applicable requirements for the preparation and presentation of GPWARs.
Black-letter (bold) paragraphs contain the main principles of the ED AWAS 1 and WACF. It is essential to follow these paragraphs.
Australian water accounting is seeking to leverage the experience of the financial accounting community. There are similarities between the proposed water accounting model and existing financial accounting requirements, including:
However, given the nature of water accounting, there are also important differences. In particular, in water accounting:
Both water report entities and (financial) reporting entities are entities about which users rely on general-purpose reports for decision-making. the legal organisation or person who prepares a GPWAR may be different to the water report entity for which users need information for decision making.
The definition of water report entities is set out in the WACF.
The definition of (financial) reporting entities is set out in International Accounting Standards Committee (IASC) Framework for the Preparation and Presentation of Financial Statements (paragraph 8). The Corporations Act (2001) prescribes specific financial reporting obligations for Australian companies.
In general terms, an asset is anything that provides a future benefit, while a water asset is specifically water or a claim on water that provides a future benefit.
For example, where a dam full of water exists, the dam itself might be considered an asset and the stored water behind the dam a water asset.
Economic assets must be disclosed in financial accounts, and water assets must be disclosed in water accounts.
No. While there has been international development in standards for water statistics (see "How does this work compare to that being produced by the ABS"), Australia is the only country developing standardised water accounting on this basis. That is, it is the only country at the moment planning to produce General Purpose Water Accounting Reports in accordance with Water Accounting Standards, underpinned by a Water Accounting Conceptual Framework, and prepared on an accrual basis using double entry accounting.
WASB has been in touch with representatives of the International Accounting Standards Board during the development of the WACF and the PAWAS. Furthermore, we are aware that independent of WASB activities, discussions are occurring internationally regarding potential adoption of the standardised water accounting being produced by WASB.
As noted in "Is there an international standard setting regime for water accounting along the lines of international accounting standards?", there has been considerable international development in water statistics. The United Nations Statistical Division has produced International Recommendations for Water Statistics (IRWS) and an international statistical standard the System Integrated Environmental-Economic Accounting (SEEA), including a specific standard for Water (SEEA-W). The SEEA is consistent with the international economic accounting framework, the System of National Accounts. International statistical standards have the endorsement of the international statistical community, are widely used and allow for international comparisons.
Since the late 1990s the Australian Bureau of Statistics (ABS) has produced the Water Account, Australia (ABS catalogue no. 4610.0). The ABS Water Account uses the IRWS and SEEA-W framework. It provides answers to questions such as: who uses water, how much water did they use, and for what purpose, how much is paid for water, who supplied the water and where did the water come from (e.g. surface water and groundwater)? The ABS Water Account is produced at a National and state and territory level and, where possible, at the regional level. It aims to highlight the drivers, pressures, impacts and responses of environmental and water management policies and practices on water resources. Further information on the ABS Water Account, Australia.
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