The University of Melbourne’s accounting practices are reliable, robust and in accordance with Australian accounting standards.
In line with the Australian Accounting Standard AASB 118–Revenue and external professional advice that we have received, we recognise unexpended government grant income as a current liability until services have been delivered.
This provides a more meaningful presentation of the University’s financial performance and position, and properly reflects our future liabilities and obligations.
The University of Melbourne, as per Deakin University, does not agree with the Victorian Auditor-General’s view that these payments are non-reciprocal government grants that should be treated as income in the year of receipt under Australian Accounting Standard AASB 1004–Contributions.
We are disappointed that we were not made aware of the Auditor-General’s intention to comment adversely on the reliability of the University’s financial report prior to publication.
From 1 January 2019, two new Australian accounting standards (AASB 15–Revenue from Contracts with Customers and AASB 1058–Income of Not-for-Profit Entities) will come into practice which are consistent with the University’s long-standing approach to revenue recognition and will result in the removal of the current audit qualification. We believe that this will settle a long-standing difference in interpretation of the relevant accounting standard.
The University of Melbourne's strong financial position is demonstrated by a total equity position of around $6 billion and the fact that it has received an AA+ credit rating by Standard and Poors for over a decade.
Furthermore, apart from the qualification which simply relates to a difference in technical interpretation of the relevant accounting standards, the Auditor-General believes that our accounts present fairly in all material respects.