Transfers through contributed capital

FRD 119A		TRANSFERS THROUGH CONTRIBUTED CAPITAL
Purpose	1.1	To prescribe the requirements for transfers as contributions by or distributions to owners.
Application	2.1	This Financial Reporting Direction (FRD) applies to any ‘department’ as defined in part (a) of Section 3 of the Financial Management Act 1994 or ‘public body’ as defined in Section 3 of the Financial Management Act 1994. A public sector entity classified as a public financial corporation or a public non-financial corporation within the latest Financial Report for the State of Victoria that does not meet the definition of a ‘public body’ is encouraged to refer to this FRD for guidance.
Operative Date	3.1	For the reporting period 1 July 2012 to 30 June 2013: FRD 119A Transfers through Contributed Capital applies for transfers arising from restructures of administrative arrangements, and FRD 119 Contributions applies for all other transfers.
	3.2	For reporting periods commencing on or after 1 January 2013: FRD 119A fully applies, and supersedes FRD 119.
		General information
Principles/requirements	4.1	To recognise a transfer as contribution by owners, the transfer must meet the definition of contribution by owners in accordance with AASB 1004 Contributions.
	4.2	Consistent with AASB Interpretation 1038 Contributions by Owners made to Wholly–owned Public Sector Entities, if a transfer of assets or net assets is to be accounted for as a contribution by owners by the transferee, then the transferor must classify the transfer as a distribution to owners.
	4.3	Transactions classified as contributions by or distributions to owners are recognised as a direct adjustment to equity through contributed capital if sufficient balance or subject to paragraph 9.1.
		Transfers accounted for as contributions by or distributions to owners
	5.1	The following transfers are required to be accounted for as contributions by or distributions to owners: restructure of administrative arrangements (as defined by AASB 1004 Contributions); parliamentary appropriations that are: additions to net asset base (ATNAB) appropriations; and payments on behalf of the State (POBOS) and special appropriations for capital expenditure purposes, including those that are directly onpassed to another transferee whollyowned and controlled by the State. return of an asset or net assets to owners prior to sale, or transfer under FRD 117 Contributions of Existing Non-financial Assets to Third Parties;
Principles/requirements (continued)		all ‘other transfers’ designated by the transferor’s portfolio Minister as contributions by or distributions to owners at or before the date of the transfer.
		Evidence and timing of government decisions
	6.1	Appendix A lists the types of transfers outlined in paragraph 5.1 together with the corresponding evidence of the related government decision and timing requirements.
	6.2	For ‘other transfers’ described in paragraph 5.1(d), as a minimum the following details are required in the evidence signed by the transferor portfolio Minister to meet the designation requirements: the names of the transferor and transferee; nature of the transfer items (e.g. land, property, plant or equipment); an estimate of the transfer amount if the precise amount is not known at the time of designation; the date of transfer; a statement that clearly shows that the Ministerial approval is for the transfer to be designated as contributions by or distributions to owners; the date approved by the Minister.
		Evidence of transfer amounts by CFAOs (including zero net asset transfers)
	7.1	For transfers that arise from restructure of administrative arrangements or ‘other transfers’ that are designated as contributions by or distributions to owners, the Chief Finance and Accounting Officers (CFAOs) of the transferor and transferee entities are required to evidence the mutually agreed transfer amounts, including those transfers that result in zero net assets.
	7.2	Where the transferor or the transferee (or both) is not a department, the CFAOs of the relevant portfolio departments are to be notified of the agreed transfer amounts as soon as practical but before the end of the respective reporting period.
	7.3	As a minimum, the documentation evidencing the transfer amounts shall include: the names of the transferor and transferee; a reference to the evidence of government decisions required in paragraph 6.1; a list detailing the assets and/or liabilities transferred and the respective amounts; reclassification in equity and/or any resultant income/expense impact due to insufficient contributed capital (as required by paragraph 9.1); date of the transfer; signatures of both CFAOs of the transferor and transferee.
Principles/requirements (continued)		Measurement basis
	8.1	Transfers must be measured at: the carrying amount for transfers outlined in paragraph 5.1(a), (c) and (d); and fair value for transfers outlined in paragraph 5.1(b).
		Insufficient contributed capital for distributions to owners
	9.1	Where there is insufficient contributed capital for distributions to owners, the entity must reclassify its accumulated surplus to contributed capital to the extent required to effect the distribution. If there is still insufficient contributed capital after such reclassifications, the balance must be recognised as an expense. In accordance with Appendix C of FRD 103D Non-current physical assets, if the distribution involves a distribution of asset(s), the entity shall first reclassify any related revaluation surplus to accumulated surplus prior to the distribution.
	9.2	Entities are required to document any reclassifications of equity resulting from insufficient contributed capital.
	9.3	Evidence of all reclassifications of equity (see Appendix B for guidance) should be sent to the Consolidated and Reporting Analysis team of the Department of Treasury and Finance (DTF) once approved by the relevant CFAOs.
		Consistency of accounting for transfers through contributed capital
	10.1	AASB Interpretation 1038 Contributions by Owners made to Wholly–owned Public Sector Entities requires consistent accounting treatments by the transferor and transferee if a transfer is to be accounted for as a contribution by or distribution to owners.
	10.2	Where applying paragraph 9.1 to distribution to owners has resulted in the classification of all or part of the transfer as an expense, the counterparty to the transfer (and any interposed parent department) must classify an equivalent amount of the transfer through income/expense. The CFAOs will need to document and mutually agree on the accounting treatment in accordance with paragraphs 7.1 and 7.2.
		Redesignation
	11.1	A transfer accounted for as contribution by or distribution to owners shall not be redesignated as income or expense. Similarly, a transfer accounted for as income or expense shall not be redesignated as contribution by or distribution to owners.
Guidance		General information
	12.1	Consistent with the requirements in AASB 1004 Contributions and AASB Interpretation 1038, transfers between entities whollyowned and controlled by the State can only be accounted for as contributions by or distributions to owners based on a government decision in the form of: restructures of administrative arrangements; parliamentary appropriations; return of an asset or net assets to owners prior to sale, or transfer under FRD 117; and ‘other transfers’ designated by the transferor’s portfolio Minister.
	12.2	Appendix A outlines the evidence requirements of government decisions, and the related timing requirements to account for transfers as contributions by or distributions to owners. Failure to present the evidence of government decisions or adherence to the timing requirements of transfers will result in the transfer being accounted for as income or expense through the operating statement.
		Restructure of administrative arrangements
	13.1	Consistent with the requirements and definitions in AASB 1004 and AASB 3 Business Combinations, restructure of administrative arrangements involves the transfers of activities that are considered businesses. Such reorganisation of activities between departments/entities whollyowned and controlled by the State does not include the transfer of an individual asset/liability or a group of assets/liabilities that are not a business. The main forms of restructures of administrative arrangements are those arising from: changes in machinery of government – these are transfers of a business (including functions or programs) between entities usually effected by an Administrative Order; or one-off or partial restructures by way of legislative change which may result in the establishment of new statutory bodies or entities; and any other activities transferred based on evidence of a government decision.
		Appropriations designated by this FRD as contributions by owners
	14.1	In addition to ATNAB appropriations, appropriations designated by this FRD to meet the definition of contributions by owners are:
		payments on behalf of the State (POBOS) for capital expenditure purposes; and special appropriations for capital expenditure purposes.
	14.2	Consistent with the principles in AASB Interpretation 1038, funding that is onpassed directly to another entity whollyowned and controlled by the State shall be recognised as contributions by owners by the ultimate transferee as long as there is evidence of a direct line of sight between the original funding decision made by the government and the funds onpassed.
Guidance (continued)	14.3	In circumstances where the appropriation funding is used to acquire or construct a nonfinancial asset that is subsequently transferred, such transfers no longer reflect ‘funding’ transfers, and therefore cannot be deemed as contribution by owners without further evidence of a government decision. Such transfers, if not part of a restructure of administrative arrangements, would require designation in accordance with the requirements for ‘other transfers’.
		Designation by the transferor’s portfolio Minister
	15.1	Transfers of individual assets/liabilities or groups of assets/liabilities that do not meet the definition of a business for restructure of administrative arrangements are classified as ‘other transfers’, requiring designation as contributions by or distributions to owners by the transferor’s portfolio Minister at or before the date for the transfer.
	15.2	This FRD does not prescribe the instrument used for obtaining the Ministerial designation. However, compliance with the timing and the minimum documentation requirements (refer to paragraph 6.2) must be evidenced for the transfer to be designated as contribution by or distributions to owners. Acceptable documentation could be in the form of briefs, memorandums etc.
	15.3	As precise transfer amounts are not required at the time of the designation by the relevant transferor Minister (this is a requirement of CFAOs, refer to paragraphs 7.1 and 16.1), the designation of ‘other transfers’ as contributions by or distributions to owners can be sought from the transferor’s portfolio Minister before the transferor/transferee reach agreement on the transfer amounts.
		Evidence of transfer amounts by CFAOs (including zero net assets transfers and return of existing nonfinancial assets to owners)
	16.1	Approval of the transfer amounts is not required as part of a government decision to account for a transfer as contribution by or distribution to owners. However, the transferor and transferee CFAOs are expected to establish documentary evidence and sign-off on the agreed transfer amounts in accordance with the requirements in paragraph 7.3. An example of such documentation is provided in Appendix B. CFAOs are required to evidence all transfers, including: those that result in zero net asset transfers; and where an entity must return nonfinancial assets to owners prior to the sale, or transfer under FRD 117.
		Insufficient contributed capital for distributions to owners (reclassification of equity)
	17.1	Under FRD 119A, CFAOs can reclassify equity without further ministerial approval to the extent required to effect the following distributions to owners: where the transferor has insufficient contributed capital to transfer an asset or net assets; or where a transferee has insufficient contributed capital to cover the receipt of a liability or net liabilities.
Guidance (continued)	17.2	In accordance with the guidance in Appendix C of FRD 103D, for distributions of nonfinancial physical assets, entities must first reclassify any related revaluation surplus to the accumulated surplus, irrespective of the sufficiency of contributed capital balance. If the asset revaluation surplus included in equity is not known, management will need to apply judgement and document the methodology used to determine an appropriate estimation of the related amount.
	17.3	Subsequent to the reclassification in paragraph 17.2 above, where there is insufficient contributed capital for distributions to owners, the entity must reclassify its accumulated surplus to contributed capital to the extent required to effect the distribution. If there is still insufficient contributed capital after such reclassifications, the balance must be recognised as an expense.
		Accounting pathways including return of nonfinancial assets to government as owners
	18.1	Appendix C illustrates the accounting pathways between portfolio departments and entities for transfers designated as contributions by or distributions to owners.
	18.2	In particular, transfers across portfolio entities and those involving a sale, or contributions of non-financial assets under FRD 117, will involve transactions via the interposed parent departments. The evidence of government decision used by the ultimate transferor/transferee (refer to paragraphs 6.1 and 6.2, and Appendix A) can be also used as evidence for the accounting transactions of the interposed parent departments.
	18.3	Detailed guidance on the accounting transactions via interposed parent departments can be sourced from AASB Interpretation 1038 and BFMG 46 Contributed Capital: accounting for and reconciliation between the department’s administered investment in controlled entities and contributed capital.
		Exclusions from accounting as contributions by owners or distributions to owners
	19.1	The following transfers are not accounted for through contributed capital, and must be recognised through income/expense: transfers made as consideration by the transferee for the provision of assets or services at fair value to the transferor; and Parliamentary appropriations that are: provisions for outputs; and POBOS and special appropriations that are not for capital expenditure purposes.
		Impairment
	20.1	The decision by owners to transfer assets is not an indication to the transferor that the asset is impaired. However, the transferor should consider whether there are any indications that the asset should be tested for impairment.
Definitions		Appropriations for capital expenditure purposes – means the authority given by Parliament for payments from the Consolidated Fund for capital expenditure purposes. Appropriations may be in the nature of : additions to net asset base (ATNAB); payments on behalf of the State (POBOS); special appropriations.
		Business (in accordance with AASB 3) – means an integrated set of activities and assets conducted and managed for the purpose of providing: a return to investors; or lower costs or other economic benefits directly and proportionately to policyholders or participants. A business generally consists of inputs and processes applied to those inputs, that have the ability to create outputs such as the generation of revenues or the provision of services free of charge. If goodwill is present in a transferred set of activities and assets, the transferred set shall be presumed to be a business. This definition includes the activities and functions of not-for-profit entities which includes departments (an administration arm of government) and other public sector agencies.
		Chief finance and accounting officer – means the officer responsible for the accounting and financial management of that department/entity in accordance with s43 of Part 7 Accounting and Reporting of the Financial Management Act 1994 and s3.1.2 of Standing Directions of the Minister for Finance under the Financial Management Act 1994.
		Contributed capital (or contributed equity)  means the accumulation of net contributions by owners/distributions to owners. It is the balance of equity (net worth) excluding accumulated surplus/deficit and accumulated reserves.
		Contributions by owners – means the future economic benefits that have been contributed to the entity by another public sector entity whollyowned and controlled by the State, other than those which result in liabilities, that give rise to a financial interest in the net assets of the entity which: conveys entitlement both to distributions of future economic benefits by the entity during its life, such distributions being at the discretion of the ownership group or its representatives, and to distributions of any excess of assets over liabilities in the event of the entity being wound up; and/or can be sold, transferred or redeemed.
		Distributions to owners – means a reduction of the contributed capital in the form of: distribution of assets or net assets to the owner by the original transferor; or receipt of liabilities or net liabilities by the ultimate transferee.
		Government – means the Victorian State Government.
		State – means the Victorian State Government.
		Owner – means the Victorian State Government.
		Interposed parent department – means the portfolio department of an entity.
Definitions (continued)		Transferor Portfolio Minister – means the relevant portfolio Minister for the transferor department or entity.
		Restructure of administrative arrangements – means the reallocation or reorganisation of assets, liabilities, activities and responsibilities amongst the entities that the government controls that occurs as a consequence of a rearrangement in the way in which activities and responsibilities as prescribed under legislation or other authority are allocated between the government’s controlled entities (as defined in AASB 1004).
		Transfers – means the transfers of assets and/or liabilities between Victorian public sector entities, and excludes transfers that are made as consideration for the provision of goods and/or services by the transferee at fair value to the transferor.
		Public sector entity – means departments and entities whollyowned and controlled by the State. It excludes local government entities, universities, denominational hospitals and any other non-controlled entities such as certain companies and trusts. For the purposes of this FRD, the latest annual Financial Report for the State of Victoria lists the entities that are considered controlled by the State. This list is subject to regular updates. An entity that is not listed as a controlled entity in the latest Financial Report for the State of Victoria and wishes to apply this FRD must demonstrate to the Consolidation and Reporting Analysis Team of DTF that the entity is a public sector entity.
Relevant Pronouncements				AASB Interpretation 1038 Contributions by Owners Made to Wholly-Owned Public Sector Entities (issued December 2007); AASB 1004 Contributions (issued December 2007); AASB 3 Business Combinations (revised October 2010); AASB 1049 Whole of Government and General Government Sector Financial Reporting (revised December 2012); Interpretation 17 Distributions of Non-cash Assets to Owners (revised June 2009); FRD 103D Non-Current Physical Assets (revised March 2009); FRD 117 Contributions of Existing Non-Financial Assets to Third Parties (issued June 2008); and BFMG 46 Contributed Capital: accounting for and reconciliation between the department’s administered investment in controlled entities and contributed capital.
Background				AASB Interpretation 1038 clarifies the circumstances for inter-governmental transfers that could be treated as contributions by owners (i.e. contributed capital). AASB 1004 and AASB Interpretation 1038 were revised as a result of the AASB’s short-term review of Australian Accounting Standards (incorporating AAS 27, 29 and 31) affecting the public sector. AASB 1004 now requires that all restructures of administrative arrangements are contributions by or distributions to owners. Refer to Appendix E for a History of this Direction.
Appendices				Appendix A  Evidence of government decisions and timing requirements for transfers through contributed capital Appendix B  Documentation example for CFAOs to evidence transfer amounts Appendix C  Pathways of transfers accounted for through contributed capital Appendix D  Decision tree on the classification and recognition of transfers through contributed capital Appendix E  History of this Direction

Type of transfer ^1	Evidence of government decision	Date of government decision	Date of transfer
Restructures of administrative arrangements Machinery of government changes (e.g. reallocation of a business, including functions/programs)	Administrative Order ; or Alternative evidence (e.g. Ministerial brief, Memorandum)	On the date when the Order is signed; or On the date when the government decision is signed.	The transfer is deemed to occur on the date of gazettal or publication unless the order or a subsequent order specifies a separate effective date, in which case the transfer is deemed to occur on the later date. As specified in the alternative evidence.
One-off or partial restructures (e.g. establishment of the statutory bodies or entities)	Legislation	On the date when Royal Assent is received.	The transfer is deemed to occur on the date of gazettal or publication unless the order or a subsequent order specifies a separate effective date, in which case the transfer is deemed to occur on the later date.
Any other activities transferred based on evidence of government decision	Any form of evidence authorising government decision in relation to the activities transferred.	On the date when the evidence of the government decision is signed.	On or after the date when the evidence of government decision is signed.
Appropriations ATNAB^2	Appropriation Act	On the date when Royal Assent is received.	During the financial year specified for the respective Appropriation Act, on date(s) when the cash is drawn down.
POBOS^3 for ‘capital expenditure purposes’	Appropriation Act	On the date when Royal Assent is received.	During the financial year specified for the respective Appropriation Act, on date(s) when the cash is drawn down.
Special appropriations for ‘capital expenditure purposes’	Specific sections in other Acts	On the date when the Warrant is issued.	On date(s) when the cash is drawn down.
On-passed funds drawn down from the appropriations for ‘capital expenditure purposes’	Same evidence as for the appropriations: Appropriation Act (On-passed from ATNAB appropriations). Appropriation Act (on-passed from POBOS appropriations for ‘capital expenditure purposes’).	On the date when Royal Assent is received. On the date when Royal Assent is received.	During the financial year specified for the respective Appropriation Act, on date(s) when the cash is drawn down. During the financial year specified for the respective Appropriation Act, on date(s) when the cash is drawn down.
	Other Acts (on-passed from special appropriations for ‘capital expenditure purposes’).	On the date when Warrant is issued.	On date(s) when the cash is drawn down.
Return of a non-financial asset to owners prior to sale	Constitution Act 1975 and Financial Management Act 1994	On-going	On the date when the sale is settled.
Return of a non-financial asset prior to transfer under FRD 117	FRD 117 Contributions of Existing Non-financial Assets to Third Parties	On-going	On the date determined by the government.
‘Other transfers’ requiring formal designation by the transferor portfolio Minister.	A document signed by the relevant portfolio Minister in accordance with the requirements in paragraph 6.2 of this FRD.	The date of designation by the transferor portfolio Minister on or before the date of the transfer.	Transfer date specified which should be on or after the date of authorisation.

Appendix A
Notes:

1. 
   The above transfers are taken to meet the definition of contributions by owners.
   
2. 
   Abbreviation for Additions to Net Asset Base;
   
3. 
   Abbreviation for Payments on Behalf of State.
   

Appendix B
Transfer from <>

Transfer to <>

on << insert date of transfer i.e. dd/mm/yyyy>>

This Statement is made pursuant to FRD 119A Transfers through Contributed Capital under the Financial Management Act 1994.

These transfers are to be accounted for as contributions by [distributions to] owners based on [‘Restructure of administrative arrangements’ OR ‘Other transfers’ designated by the Minister for <>].

[Attach a copy of the evidence of the government decision as outlined in Appendix A]

Transfer details

The value of the amounts being transferred is <>

Description <>

	$’000
Assets
Cash	n,nnn
Other financial assets	n,nnn
Intangibles	n,nnn
Property, plant and equipment	n,nnn
Liabilities
Employee benefits	(n,nnn)
Other liabilities	(n,nnn)
Net assets/Net liabilities	N,NNN

[Attach a list of the assets and / or liabilities transferred]

[Complete/delete the following table as appropriate]

Reclassifications of equity and resultant income/expense impact

Transferor of net assets [Transferee of net liabilities]	$’000	Transferee of net assets [Transferor of net liabilities]	$’000
Equity		Equity
Increase in accumulated surplus from revaluation surplus^1^,	x,xxx	Increase in contributed capital^2	n,nnn
Reduction in contributed capital^3	(n,nnn)
Reduction in accumulated surplus^4	(n,nnn)
Expense^5	y,yyy	Income	y,yyy

Approved by: << insert CFAO signature of transferor department/entity >> Chief Financial and Accounting Officer <> Date <>

<< insert CFAO signature of transferee department/entity >> Chief Financial and Accounting Officer <> Date <>

Type of transfer

Pathway

Explanations

1. 
   Authorised through appropriations
   

• 
  ATNAB, POBOS and special appropriations for capital expenditure purposes
  

Appropriations

Government departments.

Appropriations authorised through Appropriation Acts or other Acts are appropriated to departments only. No transfers of appropriations are allowed between departments.

• 
  On-passed funds from appropriations for capital expenditure purposes to an entity
  

On-passed

Funds

Appropriations

Government a department transferee entity.

These transfers occur in circumstances where the department and the transferee entity are wholly-owned and controlled by the State and where the department does not have control over the transferee entity. In these circumstances, the department, on behalf of the State, on-passes the funds to the transferee entity.

2. 
   Authorised through restructures of administrative arrangements or ‘other transfers’
   

1. 
   Portfolio entity 1 of Department 1 Department 1 (administered entity) Department 2 (administered entity) Portfolio entity 2 of Department 2; or
   

Transfers between portfolio entities of two departments will need to be returned to and contributed by the State (i.e. through the administered entities of the departments on behalf of the State).

2. 
   Portfolio entity Department (administered entity) Department (controlled entity)
   

Transfers from a portfolio entity to the department (i.e. the controlled entity) will first be returned to the administered entity of the department on behalf of the State.

3. 
   Transfers of non-financial assets under FRD 117
   

Transfer

Portfolio entity 1 of Department 1 Department 1 (administered entity ) External entity

The return of non-financial assets to the administered entity of department on behalf of the State before being transferred to an external party is designated as distribution to owners.

4. 
   Return of an asset or net assets to owner prior to sale
   

Sale

Portfolio entity 1 of Department 1 Department 1 (administered entity ) External entity

The return of non-financial assets to the administered entity of department on behalf of the State before being sold is designated as distribution to owners.


Appendix C
PATHWAYS OF TRANSFERS ACCOUNTED FOR THROUGH CONTRIBUTED CAPITAL

DECISION TREE ON THE CLASSIFICATION AND RECOGNITION OF TRANSFERS THROUGH CONTRIBUTED CAPITAL


Appendix D

Does it involve public sector entities?

Does it arise from a Parliamentary appropriation?
Is it an Addition to Net Assets Base?
Is it a payment on behalf of State or a special appropriation for capital expenditure purposes?
Is it a contribution of other assets?
Has it been designated as contributions by owners?
It is not a contributions by owners transfer (therefore recognise as income or expense accordingly)
Transfers through contributed capital
Measure at carrying amount

Para 5.1(a), (c) and (d)

Measure at fair value

Para 5.1(b)

Y
Y

Y

Y

Y

Y

N

N

N

N

N

Does it involve a business?
Y

Does it arise from a restructure of administrative arrangements?

Y

N

N

Appendix E

HISTORY OF THIS DIRECTION

FRD 2

FRD 2 clarified that transfers of negative net assets do not meet the definition of ‘contributions by owners’ under the former Urgent Issues Group 38, and thus were prohibited from being treated as an adjustment to contributions by owners.

This FRD was subsequently reissued in February 2004 to clarify the application of the FRD; to clarify that the transfer of negative net assets was prohibited; to deem that all restructures of administrative arrangements were to be automatically accounted for as contributions by owners; and to remove references to Budget Papers in relation to Parliamentary appropriations.

FRD 2A

FRD 2A was issued in June 2006 to achieve consistency in the measurement of transfers arising from restructures between departments and those involving other entities. It confirmed that reclassifying asset revaluation reserves to accumulated funds on disposal of the assets is optional and that a reclassification of accumulated funds to contributions by owners is allowable once approved by the responsible Minister. FRD 2A also clarified the accounting treatment of any excess of net assets over the contributions by owners transferred, and it removed the requirement that the Minister for Finance be o reflect AIFRS changes in references. A template allocation statement was also produced to accompany this FRD.

FRD 119

FRD 119 was issued in December 2008 to update, clarify and simplify FRD 2A, including:

• 
  outlining the requirements for the transfer of related asset reserves to accumulated funds, and for the adjustment of retained earnings and accumulated funds for the transfer of assets previously revalued;
  
• 
  clarifying the requirements for designation and approval as contributions by owners; and
  
• 
  including the template allocation statement as Appendix B to this FRD.
  

FRD 119A

FRD 119A was issued in July 2013 to update and streamline requirements/guidance including:

• 
  from 1 July 2012  the alignment with AASB 1004 to account for transfers of liabilities under restructures of administrative/arrangements through contributed capital.
  
• 
  from 1 July 2013:
  

• 
  not prescribing the instrument used for obtaining the Ministerial designation for ‘other transfers’, provided that the details required by this FRD are satisfied;
  
• 
  allowing the designation by a Minister based on an estimate of the transfer amounts if the precise amount of the transfer is not known at the time of the designation;
  
• 
  allowing transfers of net liabilities to be accounted for through owner’s equity, as long as there evidence of a government decision that designates the transfer as contributions by or distributions to owners;
  
• 
  allowing CFAOs to approve the details of the transfer amounts for restructures of administrative arrangements and ‘other transfers’;
  
• 
  general revision to improve the clarity and understanding of the requirements and guidance.
  

1^ The transferor of an asset or net assets should first reclassify any related revaluation surplus to accumulated surplus prior to the distribution in accordance with the guidance in paragraph 4.1, Appendix C of FRD 103D.

2^ Equals the reduction in contributed capital and/or reduction in accumulated surplus.

3^ For transferee receiving liabilities or net liabilities, adjustments should be made via contributed capital until reaching a zero balance, with any remainder of the transferred liabilities being adjusted against accumulated surplus then expense. No adjustments are allowed to be made through revaluation surplus account as no relevant revaluation surplus exists prior to the transfer.

4^ Only required when there is insufficient contributed capital.

5^ Only required when there is insufficient contributed capital and accumulated surplus.

FRD 119A (August 2013)