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ED AWAS 1 feedback tool

The WASB invites comments on any aspect of the ED AWAS 1, Implementation Guidance and Basis for Conclusions. It would particularly welcome answers to the questions set out in this Invitation to Comment. Comments are most helpful if they:

  1. respond to the questions as stated;
  2. indicate the specific paragraph or paragraphs to which the comments relate;
  3. contain a clear rationale; and
  4. describe any other approaches the WASB should consider, if applicable.

Respondents need not comment on all of the questions and are encouraged to comment on any additional issues.

The WASB will consider all comments received through this feedback form by 30 June 2011. In considering the comments, the WASB will base its conclusions on the merits of the arguments, not on the number of responses supporting an approach.

The WASB plans to hold public round-table meetings after the comment deadline with selected respondents. Please indicate in your comments whether you are interested in taking part in a round-table meeting.

Part   of  : Contact information

Bold and red denotes required field.

 

Part   of  : Scope
(ED AWAS 1: paragraphs 2 - 4)

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. 

Part   of  : Objective of general purpose water accounting reports
(ED AWAS 1: 5; Basis for Conclusions (BC): paragraphs B17 - B18)

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.

Part   of  : Accrual basis of water accounting
(ED AWAS 1: 13-14; BC: B19-B23)

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.

Part   of  : Error corrections
(ED AWAS 1: 35-38; BC: B26-B27)

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).

Part   of  : Contextual Statement
(ED AWAS 1: 48-49; BC: B31-B32)

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.

Part   of  : Accountability Statement
(ED AWAS 1: 50-57; BC: B33-B39)

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).

Part   of  : Statement of Water Assets and Water Liabilities:
Information to be presented
(ED AWAS 1: 59-64; BC: B40-B42)

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.

Part   of  : Water assets
(ED AWAS 1: 65-76; BC: B43-B70)

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. 

Part   of  : Present versus future water rights
(ED AWAS 1: 74-80; BC: B68-B76)

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).

Part   of  : Contingent water assets
(ED AWAS 1: 81-85; BC: B77-B80)

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.

Part   of  : Water liabilities
(ED AWAS 1: 86-91; BC: B81-B100)

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.

Part   of  : Future water commitment
(ED AWAS 1: 88-91; BC: B101-B104)

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.

Part   of  : Contingent water liabilities
(ED AWAS 1: 96-100; BC: B105-B109)

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.

Part   of  : Statement of Changes in Water Assets and Water Liabilities:
Information to be presented
(ED AWAS 1: 103-106; BC: B110-B111)

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.

Part   of  : Statement of Physical Water Flows:
Information to be presented
(ED AWAS 1: 111-116; BC: B111-B112)

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.

Part   of  : Group water accounting reports
(ED AWAS 1: 117-121; BC: B112-B124)

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.

Part   of  : Note disclosures:
(ED AWAS 1: 122-166; BC: B125-B138)
Information about quantification approaches
(ED AWAS 1: 136-138)

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

Part   of  : Future prospects
(ED AWAS 1: 140-146; BC: B126-B129)

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.

Part   of  : Water market activity
(ED AWAS 1: 154-156; BC: B131-B132)

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

Part   of  : Water for environmental, social and cultural, and economic benefit
(ED AWAS 1: 157-160; BC: B133-B135)

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.

Part   of  : Segment information
(ED AWAS 1: 161-165; BC: B136-B138)

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.

Part   of  :

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.

Part   of  : Implementation guidance

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.

Part   of  : Model reports

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.



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