2016-02-09
4698. MS DUNN — To ask the Minister for Agriculture: In relation to the 2014–2015 VicForests Annual Report which includes the restatement of its 2014 financial results by $1.7 million because of incorrect taxation calculations and the effect of this on VicForests tax liabilities and assets for 2014:
(1) How was this error discovered;
(2) Is this an internal VicForests error;
(3) Is this an error external to VicForests;
(4) Has corrective action been taken to ensure this error does not occur again;
(5) Have any staff been reprimanded for this error;
(6) Have there been any repercussions as the result of this error;
(7) Have you requested VicForests examine their financial statements for other errors; and
(8) Does the VicForests board have an Audit Committee and, if so, has the Audit Committee of VicForests engaged any professional advisers to conduct a special review of VicForests' financial statements.
ANSWER:
(1) The change in taxation treatment, regarding amortisation and regeneration cost deductions, was a result of a review of financial policies undertaken in conjunction with the 2014-15 financial audit. Note 9(e) on page 44 of the VicForests 2014-15 Annual Report explains that: “The 2014 balances have been restated to include additional deductions for amortisation and regeneration costs in accordance with Taxation Ruling 95/6 (“TR 95/6”) incurred during the period 1 July 2008 to 30 June 2014.”
(2,3,4) As VicForests had previously adopted a conservative approach, in relation to regeneration and amortisation costs, the taxation adjustment was not reflected in previous years. VicForests developed both the previous and revised approach in conjunction with tax specialists and in consultation with their financial auditors. VicForests' accounts are annually audited by the Victorian Auditor General's Office including the tax treatment for amortisation and regeneration costs.
(5) VicForests staff were not subjected to reprimands for reviewing and improving financial policies.
(6) As a result of the revised accounting approach, VicForests will seek the Australian Tax Office to revise its tax assessment of VicForests so that there is a decrease in tax payable by VicForests.
(7) VicForests' financial statements are annually audited by the Victorian Auditor General's Office.
(8) VicForests has an Audit and Risk Committee. The functions of the Audit and Risk Committee are outlined on page 7 of the VicForests Annual Report 2014-15:
The Audit and Risk Committee oversees and advises the Board on matters of accountability relating to financial accounting practices, risk management, internal control systems, external financial reporting and the internal and external audit function. In fulfilling its role the Committee must meet the requirements of the Victorian Government's Financial Management Compliance Framework”.
VicForests' accounts are also annually audited by the Victorian Auditor General's Office.
Hon Jaala Pulford MP
Minister for Agriculture