❓ Hon Giz Watson questions the Forest Products Commission's accounting practices for natural resource assets, particularly regarding fair value determination and climate change impact. The Minister provides some clarification, referencing existing plans and audits.
AnsweredQoN 5117Legislative Council
QuestionView source ↗
I refer to 2010-2011 Annual Report of the Forest Products Commission, and I ask -
(1) Regarding Note 2.01 on page 50 -
(a) will you please table copies of the specific Australian Accounting Standards, Framework, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board (the 'Standards') applicable to the determination of the fair value of natural resource assets;
(b) if the
Financial Management Act 2006
has taken precedence over the Standards applicable to the determination of the fair value of natural resource assets, will you please provide full details;
(c) if the Standards applicable to the determination of the fair value of natural resource assets have been modified by the Treasurer's instruction, will you please -
(i) table or set out the full text of the Treasurer's instruction;
(ii) identify when the modification was made;
(iii) identify the source and content of any advice that led to the modification being made; and
(d) what is the process for producing a Treasurer's instruction amending the Standards?
(2) Regarding Note 2.17 on page 57, Note 4.02 on page 61 and Note 27.2 on page 75 -
(a) if 'fair value of natural resource assets is based on their present location and condition' and is 'determined based on historical volume increases and historical cash flows, adjusted for known variances', does the Minister acknowledge that this model is incapable of taking into account best available predictions as to volume increase until several years after those predictions have come to pass;
(b) if no to (2)(a), how did the method of determining the fair value of natural resource assets used in the 2010-2011 Annual Report take into account best available predictions regarding the impact of an ongoing (not exceptional) hotter and drier climate in the south west on volume (please provide full details and calculations);
(c) if yes to (2)(a) -
(i) what, if any steps has the Minister taken to ensure the determination of fair value of natural resource assets in future annual reports will take into account best available predictions regarding volume increase;
(ii) will the Minister arrange for a revaluation of the fair value of natural resource assets;
(d) if the answer to (2)(c)(i) and/or (ii) is no or none, what is the reason for this; and
(e) for the 2010-11 Annual Report, will the Minister please explain the calculation of the fair value of natural resource assets in full detail, including specifying the historical volume increases, historical cash flows, known variances, assumptions and the basis for those assumptions, that were used in the calculation?
(3) Regarding Note 6.0, on pages 62 to 64, will the Minister please table copies of all Australian Accounting Standards (including Interpretations) applicable to the determination of the fair value of natural resource assets that have been issued or amended but were not operative until after the annual reporting period ended 30 June 2011?
(4) What criteria are used to evaluate whether the auditing methodology is reasonable?
(5) Does any evaluation compare predictions of past years with the actual returns for the relevant coupes?
(6) If no to (5), why not?
(7) If yes to (5), how did the actual financial return match the predictions?
(1) Regarding Note 2.01 on page 50 -
(a) will you please table copies of the specific Australian Accounting Standards, Framework, Statements of Accounting Concepts and other authoritative pronouncements of the Australian Accounting Standards Board (the 'Standards') applicable to the determination of the fair value of natural resource assets;
(b) if the
Financial Management Act 2006
has taken precedence over the Standards applicable to the determination of the fair value of natural resource assets, will you please provide full details;
(c) if the Standards applicable to the determination of the fair value of natural resource assets have been modified by the Treasurer's instruction, will you please -
(i) table or set out the full text of the Treasurer's instruction;
(ii) identify when the modification was made;
(iii) identify the source and content of any advice that led to the modification being made; and
(d) what is the process for producing a Treasurer's instruction amending the Standards?
(2) Regarding Note 2.17 on page 57, Note 4.02 on page 61 and Note 27.2 on page 75 -
(a) if 'fair value of natural resource assets is based on their present location and condition' and is 'determined based on historical volume increases and historical cash flows, adjusted for known variances', does the Minister acknowledge that this model is incapable of taking into account best available predictions as to volume increase until several years after those predictions have come to pass;
(b) if no to (2)(a), how did the method of determining the fair value of natural resource assets used in the 2010-2011 Annual Report take into account best available predictions regarding the impact of an ongoing (not exceptional) hotter and drier climate in the south west on volume (please provide full details and calculations);
(c) if yes to (2)(a) -
(i) what, if any steps has the Minister taken to ensure the determination of fair value of natural resource assets in future annual reports will take into account best available predictions regarding volume increase;
(ii) will the Minister arrange for a revaluation of the fair value of natural resource assets;
(d) if the answer to (2)(c)(i) and/or (ii) is no or none, what is the reason for this; and
(e) for the 2010-11 Annual Report, will the Minister please explain the calculation of the fair value of natural resource assets in full detail, including specifying the historical volume increases, historical cash flows, known variances, assumptions and the basis for those assumptions, that were used in the calculation?
(3) Regarding Note 6.0, on pages 62 to 64, will the Minister please table copies of all Australian Accounting Standards (including Interpretations) applicable to the determination of the fair value of natural resource assets that have been issued or amended but were not operative until after the annual reporting period ended 30 June 2011?
(4) What criteria are used to evaluate whether the auditing methodology is reasonable?
(5) Does any evaluation compare predictions of past years with the actual returns for the relevant coupes?
(6) If no to (5), why not?
(7) If yes to (5), how did the actual financial return match the predictions?
AnswerView source ↗
Answered
1 May 2012
Responded by
Minister for Child Protection representing the Minister for Forestry
Response time
56 days
(1)(a) [See tabled paper no.]
(b)-(c) Not applicable.
(d) Where modification is required and has had a material or significant financial effect upon the reported results, details of that modification and the resulting financial effect are disclosed in the notes to the financial statements.
(2)(a) No.
(b) The Forest Products Commission relies on the evidence and detail of the works developed for the Forest Management Plan (FMP) (2004-2013), by the Conservation Commission of Western Australia and the Department of Environment and Conservation, which determines the sustainable yield of forest products and takes into account factors including forest growth, fire, climate change and dieback. These estimates are made consistent with the principles of ecologically sustainable forest management, which includes the precautionary principle.
(c)-(d) Not applicable.
(e) The south west valuations have been based on sustainable yield basis (as detailed within the FMP). In addition, within the volumes available under the sustainable yield, only those products with a current market have been included in the valuations. Net stumpage and other applicable have been included in the valuation assessment.
(3) Please refer to part (1)(a).
(4) The Office of the Auditor General (OAG) is responsible for auditing the Western Australian public sector. Please refer to the OAG's audit scope and methodology.
(5) Yes.
(6) Not applicable.
(7) The Department of Environment and Conservation (DEC) has prepared and submitted to the Conservation Commission and published reports which compare actual against predicted yields as part of the mid-term audit of the FMP. The audit prepared by DEC showed that realised yield was greater than forecast by 9 per cent in the case of jarrah sawlogs and by 30 per cent in the case of karri regrowth thinnings.
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(b)-(c) Not applicable.
(d) Where modification is required and has had a material or significant financial effect upon the reported results, details of that modification and the resulting financial effect are disclosed in the notes to the financial statements.
(2)(a) No.
(b) The Forest Products Commission relies on the evidence and detail of the works developed for the Forest Management Plan (FMP) (2004-2013), by the Conservation Commission of Western Australia and the Department of Environment and Conservation, which determines the sustainable yield of forest products and takes into account factors including forest growth, fire, climate change and dieback. These estimates are made consistent with the principles of ecologically sustainable forest management, which includes the precautionary principle.
(c)-(d) Not applicable.
(e) The south west valuations have been based on sustainable yield basis (as detailed within the FMP). In addition, within the volumes available under the sustainable yield, only those products with a current market have been included in the valuations. Net stumpage and other applicable have been included in the valuation assessment.
(3) Please refer to part (1)(a).
(4) The Office of the Auditor General (OAG) is responsible for auditing the Western Australian public sector. Please refer to the OAG's audit scope and methodology.
(5) Yes.
(6) Not applicable.
(7) The Department of Environment and Conservation (DEC) has prepared and submitted to the Conservation Commission and published reports which compare actual against predicted yields as part of the mid-term audit of the FMP. The audit prepared by DEC showed that realised yield was greater than forecast by 9 per cent in the case of jarrah sawlogs and by 30 per cent in the case of karri regrowth thinnings.
Notice: This document is created or edited using unregistered or evaluation copy of rtLib valid for testing or development purposes only. To use it for productive or any other purposes please register it. You may purchase the license on
http://www.rtlib.com
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