Annual Report - Northern Health

Note 1: Summary of Significant Accounting PoliciesNotes To and Forming Part of the Financial StatementsNorthern Health Annual Report 2011/2012(a) Statement of complianceThe financial statements are general purpose financial statements which has been prepared in accordance with the Financial Management Act 1994 and applicable Australian Accounting Standards(AASs) and Australian Accounting Interpretations. AASs includes Australian equivalents to International Financial Reporting Standards.The financial statements also comply with relevant Financial Reporting Directives (FRDs) issued by the Department of Treasury and Finance and relevant Standing Directions (SDs) authorised by theMinister for Finance.The entity is a not-for profit entity and therefore applies the additional Aus paragraphs applicable to “not-for-profit” entities under the AAS’s.The annual financial statements were authorised for issue by the Board of Northern Health on 20th August 2012.(b) Basis of accounting preparation and measurementAccounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance ofthe underlying transactions or other events is reported.The accounting policies set out below have been applied in preparing the financial report for the year ended 30 June 2012, and the comparative information presented in these financial statements forthe year ended 30 June 2011.The going concern basis was used to prepare the financial statements.These financial statements are presented in Australian dollars, the functional and presentation currency of Northern Health.The financial statements, except for cash flow information, have been prepared using the accrual basis of accounting. Under the accrual basis items are recognised as assets, liabilities, equity, incomeor expenses when they satisfy the definitions and recognition criteria for those items, that is they are recognised in the reporting period to which they relate regardless of when cash is received or paid.The financial statements are prepared in accordance with the historical cost convention, except for the revaluation of certain non-financial assets and financial instruments, as noted. Cost is based onthe fair values of the consideration given in exchange for assets. Exceptions to the historical cost convention include:Non current physical assets which subsequent to acquisition are measured at valuation and are re-assessed with sufficient regularity to ensure that carrying amounts do not materially differ from theirfair values;Available-for-sale investments which are measured at fair value with movements reflected in equity until the asset is derecognised;The fair value of assets other than land is generally based on depreciated replacement value.Historical cost is based on the fair values of the consideration given in exchange for assets.In the application of AASs management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. Theestimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis ofmaking the judgements. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects onlythat period or in the period of the revision, and future periods if the revision affects both current and future periods. Judgements made by management in the application of AASs that have significanteffects on the financial statements and estimates, with a risk of material adjustments in the subsequent reporting period, relate to:The fair value of land, buildings, infrastructure, plant and equipment;Actuarial assumptions for employee benefit provisions based on likely tenure of existing staff, patterns of leave claims, future salary movements and future discount rates.(c) Reporting EntityThe financial statements include all the controlled entities of Northern Health.The principle address is:185 Cooper StreetEppingVIC 3076A description of the nature of Northern Health's operations and its principal activities is included in the report of operations which does not form part of these financial statements.Northern Health Financial Report Appendix to the 2011 - 2012 Annual Report Page 6 of 60