ED AWAS 1 feedback tool

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The ED AWAS 1 proposes that it be applied in preparing and presenting a general purpose water accounting report for a water report entity.

The proposed definition of a water report entity is:

A water entity in respect of which it is reasonable to expect the existence of users who depend on general purpose water accounting reports for information about water, or rights or other claims to water, which will be useful to them for making and evaluating decisions about the allocation of resources.

The proposed definition of a water entity is:

A physical entity, an organisation or individual, that:

• holds or transfers water; or
• holds or transfers rights or other direct or indirect claims to water; or
• has inflows and/or outflows of water; or
• has responsibilities relating to the management of water.

The proposed definition of a general purpose water accounting report is:

A water accounting report intended to meet the information needs common to users who are unable to command the preparation of water accounting reports tailored to satisfy their information needs.

The ED AWAS 1 thus adopts a water report entity concept that is tied to the information needs of users. Accordingly, general purpose water accounting reports are required to be prepared for a water entity when it is reasonable to expect the existence of users who are:

• dependent on water accounting reports for information about water, or rights or other claims to water, which will be useful to them for making and evaluating decisions about the allocation of resources; and
• unable to command the preparation of special purpose water accounting reports to satisfy their information needs. 

Question 1
Do you agree with the proposed definition of a water report entity? If not, how should a water report entity be defined and why?

Question 2
Do you agree with the proposed definition of a general purpose water accounting report? If not, how should a general purpose water accounting report be defined and why?

Question 3
Do you agree that the requirement to prepare a general purpose water accounting report should be tied to the information needs of users? If not, what basis for the preparation of general purpose water accounting reports should be applied and why?

The ED AWAS 1 proposes that the objective of a general purpose water accounting report is to provide information to users of that report that will be useful in:

1. making and evaluating decisions about the allocation of resources; and
2. understanding and evaluating the accountability of managers, management groups or governing bodies of the water report entity for the water assets and water liabilities of the water report entity.

Question 4
Do you agree with the proposed objective of general purpose water accounting reports? If not, what should be the objective and why?

The ED AWAS 1 proposes that with the exception of physical water flow information, general purpose water accounting reports are to be prepared using the accrual basis of water accounting.

Question 5
Do you agree with the proposal to apply the accrual basis of water accounting in the preparation of general purpose water accounting reports? If not, what should be the basis and why?

The ED AWAS 1 proposes to define prior period errors as:

Omissions from, or misstatements in, the water report entity's general purpose water accounting report for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

1. was available when the general purpose water accounting report for those periods were issued; and
2. could reasonably have been expected to be obtained and taken into account in the preparation and presentation of those general purpose water accounting reports.

The ED AWAS 1 also proposes that prior period errors be corrected in the first general purpose water accounting report issued after their discovery by restating the comparative information presented for the prior period(s) to correct the errors in the period in which they occurred. To the extent that the error occurred before the earliest prior period presented, the error is corrected by restating the opening balances of water assets and water liabilities for the earliest prior period presented.

The ED AWAS 1 also proposes specific disclosure requirements related to prior period errors (ED AWAS 1: 130-131).

Question 6
Do you agree with the proposed definition of a prior period error? If not, how should a prior period error be defined and why?

Question 7
Do you agree with the proposal to require prior period errors to be corrected by restating the comparative information presented for the prior period(s) to ensure they are corrected in the period in which they occurred? If not, how should prior period errors be accounted for and why?

Question 8
Do you agree with the proposed disclosure requirement related to error corrections? If not, what alternative or additional information should be disclosed and why?

The ED AWAS 1 proposes that a general purpose water accounting report includes a Contextual Statement that provides information that enables users to understand the physical and administrative aspects of the water report entity, and also provides information about the water assets and water liabilities of the water report entity, including any conditions that have had an impact on the management of those water assets and water liabilities.

Question 9
Do you agree that the Contextual Statement should provide information that enables users to understand the physical and administrative aspects of the water report entity, as well as providing information about the water assets and water liabilities of the water report entity, including any conditions that have had an impact on the management of those water assets and water liabilities? If not, why not?

Question 10
What, if any, additional information should be required to be provided in the Contextual Statement and why?

The ED AWAS 1 proposes that a general purpose water accounting report includes an Accountability Statement, and sets out the information to be included in that Accountability Statement. The objective of the information is to assist users to assess whether:

1. the general purpose water accounting report has been prepared and presented in accordance with Australian Water Accounting Standards;
2. externally imposed requirements relevant to managing the water assets and water liabilities have been complied with; and
3. best practices for managing water assets and water liabilities have been applied.

The ED AWAS 1 also proposes specific sign-off requirements for the Accountability Statement and additional disclosure requirements when there has been non-compliance with AWAS or externally-imposed requirements for managing the water assets and water liabilities of the water report entity (paragraph 57).

Question 11
Do you agree with the proposed information to be included in the Accountability Statement? If not, what information should not be included and why?

Question 12
Should additional information be required to be included in the Accountability Statement? If so, why?

Question 13
Do you agree with the proposed sign-off requirements for the Accountability Statements? If not, what alternative sign-off requirements should be prescribed and why?

The ED AWAS 1 proposes that the Statement of Water Assets and Water Liabilities should provide information that enables users to understand the nature and volumes of water assets and water liabilities of a water report entity. The ED AWAS 1 proposes three line items to be presented in the Statement of Water Assets and Water Liabilities, and also proposes to require additional sub-classifications of these line items when the volume, nature or function of a sub-classified item is such that its separate presentation is relevant to an understanding of the water report entity's water assets and water liabilities.

Question 14
Are the three line items required by the ED AWAS 1 sufficient and appropriate? If not, what additional or alternative line items should be required and why?

Question 15
Do you agree with the proposed requirements for when to include additional sub-classifications of the three line items? If not, in what circumstances should additional sub-classifications be required and why?

The ED AWAS 1 proposes to define a water asset as:

Water, or the rights or other claims to water, which the water report entity either holds, or for which the water report entity has management responsibilities, and from which an individual or organisation that is a water report entity, or a group of stakeholders of a physical water report entity, derives future benefits.

The ED AWAS 1:65 proposes criteria for determining when an item that meets the definition of a water asset should be recognised in the Statement of Water Assets and Water Liabilities. In particular, it proposes that a water asset should be recognised only when:

1. it is probable that future benefits associated with the item will be derived by the individual or organisation that is a water report entity or by a group of stakeholders of a physical water report entity; and
2. the item's volume can be quantified with representational faithfulness.

The ED AWAS 1:66-69 propose guidance on the notion of future benefits, and the ED AWAS 1:70-76 propose guidance on the types of items expected to meet the definition of, and recognition criteria for, a water asset. 

Question 16
Do you agree with the proposed definition of a water asset? If not, how should a water asset be defined and why?

Question 17
Do you agree with the proposed criteria for recognising a water asset in the Statement of Water Assets and Water Liabilities? If not, what alternative recognition criteria should be applied and why?

Question 18
Is the proposed guidance in the ED AWAS 1:66-69 useful in clarifying the notion of future benefits? If not, what alternative or additional guidance should be included and why?

Question 19
Is the proposed guidance in the ED AWAS 1:70-76 useful in clarifying the application of the definition and recognition criteria for water assets? If not, what alternative or additional guidance should be included and why?

The ED AWAS 1 proposes that the definition of a water asset includes rights or other claims to water, and goes on to draw a distinction between present water rights and future water rights. The ED AWAS 1 proposes that to be capable of meeting the definition of a water asset, a right or other claim to water must represent a present right or other present claim to water. It proposes that a future water right is not, at the reporting date, a present right or other present claim to water of the water report entity and is therefore not recognised as a water asset in the Statement of Water Assets and Water Liabilities. However, the ED AWAS 1 proposes disclosure requirements for future water rights expected to be realised within 12 months of the reporting date (ED AWAS 1:140-146).

Question 20
Do you agree with the proposed distinction between a present water right and a future water right? If not, why not?

Question 21
Is the guidance in the ED AWAS 1:74-80 useful for distinguishing between a present water right and a future water right? If not, what alternative or additional guidance should be included and why?

Question 22
Do you agree with the proposed treatment of a future water right (i.e. not recognised as a water asset, but with information required to be disclosed)? If not, what alternative treatment should be applied and why?

The ED AWAS 1 proposes to define a contingent water asset as:

A possible water asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water report entity.

The ED AWAS 1 further proposes that because a contingent water asset does not meet the definition of a water asset, it is not recognised in the Statement of Water Assets and Water Liabilities.  Instead, the ED AWAS 1:147-149 propose that certain information be disclosed in the notes.

Question 23
Do you agree with the proposed definition of a contingent water asset? If not, how should a contingent water asset be defined and why?

Question 24
Is the proposed guidance in the ED AWAS 1:82-85 useful for determining whether an item represents a contingent water asset? If not, what alternative or additional guidance should be included and why?

Question 25
Do you agree with the proposed disclosure requirements for contingent water assets? If not, what alternative or additional information should be disclosed and why?

The ED AWAS 1 proposes to define a water liability as:

A present obligation of the water report entity, the discharge of which is expected to result in a decrease in the water report entity's water assets or an increase in another water liability.

The ED AWAS 1:86 proposes criteria for determining when an item that meets the definition of a water liability should be recognised in the Statement of Water Assets and Water Liabilities.  In particular, it proposes that a water liability should be recognised only when:

1. it is probable that the present obligation will result in a decrease in the water report entity's water assets or an increase in another water liability when the obligation is discharged; and 
2. the item's volume can be quantified with representational faithfulness.

The ED AWAS 1:87-91 propose guidance on the notion of a present obligation and examples of items expected to meet the definition of, and recognition criteria for, a water liability.

Question 26
Do you agree with the proposed definition of a water liability? If not, how should a water liability be defined and why?

Question 27
Do you agree with the proposed criteria for recognising a water liability in the Statement of Water Assets and Water Liabilities? If not, what alternative recognition criteria should be applied and why?

Question 28
Is the proposed guidance in the ED AWAS 1:87-91 useful in clarifying the notion of present obligations and the application of the definition of, and recognition criteria for, a water liability? If not, what alternative or additional guidance should be included and why?

The ED AWAS 1 proposes to draw a distinction between present obligations and future water commitments, and proposes that for an obligation to meet the definition of a water liability, it must be a present obligation of the water report entity.

The ED AWAS 1 proposes to define a future water commitment as an expected future demand on water influenced by the availability and management of the water assets and water liabilities of the water report entity.  Because a future water commitment is not, at the reporting date, a present obligation of the water report entity, the ED AWAS 1 proposes that it cannot be recognised as a water liability in the Statement of Water Assets and Water Liabilities.  However, the ED AWAS 1:140-146 propose disclosure requirements for future water commitments expected to be settled within 12 months of the reporting date.

Question 29
Do you agree with the proposed distinction between a present obligation and a future water commitment, including the proposed definition of a future water commitment? If not, what alternative distinction should be provided and why?

Question 30
Is the guidance in the ED AWAS 1:87-95 useful for distinguishing between a present obligation and a future water commitment? If not, what alternative or additional guidance should be included and why?

Question 31
Do you agree with the proposed treatment of future water commitments (i.e. not recognised as water liabilities, but with certain information required to be disclosed)? If not, what alternative treatment should be applied and why?

The ED AWAS 1 proposes to define a contingent water liability as:

A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the management of the water report entity. 

The ED AWAS 1 further proposes that because a contingent water liability does not meet the definition of a water liability, it is not recognised in the Statement of Water Assets and Water Liabilities.  Instead, the ED AWAS 1:147-149 propose that certain information about contingent water liabilities be disclosed in the notes.

Question 32
Do you agree with the proposed definition of a contingent water liability? If not, how should a contingent water liability be defined and why?

Question 33
Is the proposed guidance in the ED AWAS 1:97-100 useful for determining whether an item represents a contingent water liability? If not, what alternative or additional guidance should be included and why?

Question 34
Do you agree with the proposed disclosure requirements for contingent water liabilities? If not, what alternative or additional information should be disclosed and why?

The ED AWAS 1 proposes that the Statement of Changes in Water Assets and Water Liabilities provide information that enables users to understand changes in the volumes and nature of a water report entity's net water assets during the reporting period. It proposes five line items to be presented in the Statement of Changes in Water Assets and Water Liabilities, and also proposes to require additional sub-classifications of these line items when the volume, nature or function of a sub-classified item is such that its separate presentation is relevant to understanding changes in the water report entity's net water assets.

Question 35
Are the five line items required by the ED AWAS 1 sufficient? If not, what additional or alternative line items should be required and why?

Question 36
Do you agree with the proposed requirements for when to include additional sub-classifications of the five line items? If not, under what circumstances should additional sub-classifications be required and why?

The ED AWAS 1 proposes that the Statement of Physical Water Flows provide information that enables users to understand the nature and volumes of physical water flows experienced by the water report entity during the reporting period. It proposes five line items to be presented in the Statement of Physical Water Flows, and also proposes to require additional sub-classifications of these line items when the volume, nature or function of a sub-classified item is such that its separate presentation is relevant to understanding the physical water flows experienced by the water report entity.

Question 37
Are the five line items required by the ED AWAS 1 sufficient? If not, what additional or alternative line items should be required and why?

Question 38
Do you agree with the proposed requirements for when to include additional sub-classifications of the five line items? If not, under what circumstances should additional sub-classifications be required and why?

The ED AWAS 1 proposes to define a group water report entity as:

A water report entity comprising individual water entities and for which a group water accounting report is required to be prepared under regulation, statute or directive.

It also proposes to define a group water accounting report as:

The water accounting report of a group water report entity presented as a single water entity.

The ED AWAS 1: 117-121 also proposes procedures for preparing group water accounting reports.

Question 39
Do you agree with the proposed definition of a group water report entity? If not, how should a group water report entity be defined and why?

Question 40
Do you agree with the proposed definition of a group water accounting report? If not, how should a group water accounting report be defined and why?

Question 41
Are circumstances under which a group water accounting report would be required to be prepared clear from these proposed definitions? If not, what alternative or additional guidance should be included and why?

Question 42
Do you agree with the proposed procedures for preparing a group water accounting report? If not, what alternative or additional guidance should be included and why?

The ED AWAS 1 proposes specific disclosure requirements about the approaches used to quantify items presented in the water accounting statements.

Question 43
Do you agree with the proposed disclosure requirements about quantification approaches? If not, what additional or alternative information should be disclosed and why?

The ED AWAS 1 proposes to require information to be disclosed about the future prospects of the water report entity; in particular the extent to which water assets at the reporting date are expected to be available to settle water liabilities and other commitments within 12 months of the reporting date.

Question 44
Do you agree with the proposed disclosure requirements about future prospects? If not, what additional or alternative information should be disclosed and why?

The ED AWAS 1 proposes specific disclosure requirements about the trading of rights that relate to water of the water report entity.

Question 45
Do you agree with the proposed disclosure requirements about trading of rights that relate to water of the water report entity? If not, what additional or alternative information should be disclosed and why?

The ED AWAS 1 proposes specific disclosure requirements about how the water report entity's water assets have been used during the reporting period in the pursuit of:

1. environmental benefit;
2. social and cultural benefit; and
3. economic benefit.

Question 46
Do you agree with the proposed disclosure requirements about how the water report entity's water assets have been used during the reporting period in the pursuit of environmental, social and cultural, and economic benefit? If not, what additional or alternative information should be disclosed and why?

The ED AWAS 1 proposes specific disclosure requirements about discrete components of the water report entity when such information would be relevant to users of the general purpose water accounting report. Each such discrete component would be referred to as a segment.

The ED AWAS 1 also proposes that segments should be identified by considering the physical and administrative aspects of the water report entity.

Question 47
Are circumstances under which segment information would be required to be provided clear from the proposed requirements? If not, what alternative or additional guidance should be proposed and why?

Question 48
Do you agree with the proposed disclosure requirements for segments? What alternative or additional information should be disclosed and why?

The ED AWAS 1 proposes that events after the reporting date should be classified as either an 'adjusting event after the reporting period' or a 'non-adjusting event after the reporting period'.

The proposed definition of an adjusting event after the reporting period is:

An event that occurs between the end of the reporting period and the date when the Accountability Statement is signed that provides evidence of conditions that existed at the end of the reporting period.

The proposed definition of a non-adjusting event after the reporting period is:

An event that occurs between the end of the reporting period and the date when the Accountability Statement is signed that is indicative of conditions that arose after end of the reporting period.

The ED AWAS 1 proposes that volumes recognised in the water accounting statements:

1. shall be adjusted to reflect adjusting events after the end of the reporting period; and
2. shall not be adjusted to reflect non-adjusting events after the end of the reporting period.

The ED AWAS 1 also provides examples of items that represent adjusting and non-adjusting events after the end of the reporting period.

Question 49
Are the circumstances under which an event after the reporting period would be classified as either an adjusting event after the reporting period or a non-adjusting event after the reporting period clear from the proposed definitions and guidance within the ED AWAS 1? If not, what alternative definitions or guidance should be provided and why?

Question 50
Do you agree with the proposed treatment for adjusting events after the reporting period? If not, what treatment should be prescribed and why?

Question 51
Do you agree with the proposed treatment for non-adjusting events after the reporting period? If not, what treatment should be prescribed and why?

The ED AWAS 1 is accompanied by implementation guidance to assist practitioners with some of the more difficult aspects of the ED AWAS 1 to assist in the consistency and comparability of general purpose water accounting reports.

Question 52
Do you agree that the implementation guidance provided is appropriate? If not, why not?

Question 53
What additional or alternative implementation guidance should be provided and why?

The WASB has developed model water accounting reports to illustrate the application of the ED AWAS 1 for four fictitious water report entities that represent four different types of water entities, including:

• a water supply system;
• a major user of water;
• an urban utility supply system; and
• an environmental water rights holder.

Accordingly, the model reports demonstrate different types of water assets, water liabilities and note disclosures.

Question 54
Are the model reports useful in illustrating the application of the ED AWAS 1? If not, why not?