NGV Annual Report 2003-04-Part 2 - National Gallery of Victoria

152 Report NGV Annual Report 2003/0424. The impacts of adopting AASB equivalents to IASB standardsThe National Gallery of Victoria has taken the following steps in managing the transition toAustralian equivalents to IFRS:• Commenced an education and training process for all stakeholders to raise awareness of the changes in reportingrequirements and the processes to be undertaken; and• Commenced a review of the National Gallery of Victoria’s current accounting policies and the proposed newstandards to identify key issues and the likely impacts resulting from the adoption of Australian equivalents toIFRS.The National Gallery of Victoria has identified several changes to the existing accounting policies that may have amaterial impact on the National Gallery of Victoria’s future financial position and performance following the adoptionof the requirements of Australian equivalent to IFRS (the new standards).These include:Valuation of AssetsIn accordance with the Victorian Government Policy, Revaluation of Non-Current Physical Assets, the NationalGallery of Victoria currently measures its non-current physical assets, other than plant and equipment, at fair valuesubsequent to initial recognition. Plant and equipment are measured on a cost basis. Revaluations are assessedannually and supplemented by independent assessments at least every three years.The new standard continues to offer a choice for measuring each class of non-current physical assets either atcost or at fair value. However, non-current assets measured at fair value will only be required to be revalued at leastevery three to five years and all assets in a class must be revalued at the same time.The Victorian government has not yet concluded whether it will make any changes to the valuation basis of anyclass of assets or the methodology or frequency at which revaluations are performed. The financial effects of anysuch changes are unknown.Impairment of AssetsUnder the new standards, an asset will be required to be assessed for impairment each year. If indicators ofimpairment exist, the carrying value of an asset will need to be assessed to ensure that the carrying value does notexceed its recoverable amount, which is the higher of its value-in-use and fair value less costs to sell.For the National Gallery of Victoria, value-in-use of an asset is its depreciated replacement cost. Other thaninventories and financial assets, impairment testing will apply to all assets regardless of whether they are measuredon a cost or fair value basis. Where the carrying value of an asset exceeds its recoverable amount, the differencewill be written-off as an impairment loss to the statement of financial performance except to the extent that thewrite-down can be debited to an asset revaluation reserve amount applicable to that asset. Any impairment lossesat transition date will be adjusted against the accumulated funds.Other changesIn addition, several other changes in requirements have been identified which are expected to lead to changesin methodology or processes, increased disclosures and possible changes in measurement of assets or liabilities.These changes are not expected to have a material impact.