Notes to the Financial Statements

For the year ended 30 June 2005

1 SIGNIFICANT ACCOUNTING POLICIES

The following accounting policies have been adopted in the preparation of the financial statements. Unless otherwise stated these policies are consistent with those adopted in the previous year.

GENERAL STATEMENT

The financial statements constitute a general purpose financial report which has been prepared in accordance with Accounting Standards, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board, and Urgent Issues Group (UIG) Consensus Views as applied by the Treasurer’s Instructions. Several of these are modified by the Treasurer’s Instructions to vary application, disclosure, format and wording.The Financial Administration and Audit Act and the Treasurer’s Instructions are legislative provisions governing the preparation of financial statements and take precedence over Accounting Standards, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board, and UIG Consensus Views. The modifications are intended to fulfil the requirements of general application to the public sector, together with the need for greater disclosure and also to satisfy accountability requirements.

If any such modification has a material or significant financial effect upon the reported results, details of that modification and where practicable, the resulting financial effect, are disclosed in individual notes to these financial statements.

BASIS OF ACCOUNTING

The financial statements have been prepared on the accrual basis of accounting using the historical cost convention, except for certain assets and liabilities which, as noted, are measured at fair value.

a) Service appropriation

Service appropriations are recognised as revenues in the period in which the Public Transport Authority of Western Australia (PTA) gains control of the appropriated funds. PTA gains control of appropriated funds at the time those funds are deposited into PTA’s bank account or credited to the holding account held at the Department of Treasury and Finance.

b) Contributed equity

Under UIG 38 “Contributions by Owners Made to Wholly-Owned Public Sector Entities” transfers in the nature of equity contributions must be designated by the Government (owners) as contributions by owners (at the time of, or prior to transfer) before such transfers can be recognised as equity contributions in the financial statements. Capital contributions (appropriations) and the non-discretionary transfer of net assets from other government agents have been designated as contributions by owners and have been credited directly to Contributed Equity in the Statement of Financial Position.

c) Grants and other contributions revenue

Grants, donations, gifts and other non-reciprocal contributions are recognised as revenue when PTA obtains control over the assets comprising the contributions. Control is normally obtained upon their receipt. Contributions are recognised at their fair value. Contributions of services are only recognised when a fair value can be reliably determined and the services would be purchased if not donated.

d) Revenue recognition

Revenue from the provision of services, goods and disposal of other assets, is recognised when PTA has provided the services, goods or other assets to the customer, except for the following:

e) Acquisitions of assets

The cost method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given up or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Assets acquired at no cost or for nominal consideration, are initially recognised at their fair value at the date of acquisition. Assets costing less than $5,000 are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total).