Guidance Note: Economic dependency Where a health service forms a view based on the criteria below, and any other relevant criteria, that they require a letter of support from the State Government, this should be discussed with the health service’s audit services provider. The text below is to be used as a guide only as individual hospital circumstances may differ. The financial performance and position of <ABC Health Service> has declined since the prior Commentary - Controlled entities An entity is controlled when the controlling entity is exposed, or has rights to variable returns from its involvement with the entity it controls, and has the ability to affect those rturns through its power over the controlled entity. AASB 10 (which superceds AASB 127 Consolidated and Separate Financial Statements) focuses on ‘control’ in determining whether an entity needs to consolidate another entity. Under AASB 10, control is assessed on the achievement of all three criteria; i.e. Commentary – Economic dependency power over the investee; exposure or rights to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s return. If all three criteria are met, the ‘control’ test will be met and the entity will need to be consolidated. It is strongly encouraged to liaise with VAGO once an assessment has been made. year, with the health service reporting a deficit net result before capital and specific items of $X,XXX,XXX (2014: $X,XXX,XXX), a net current asset position of $X,XXX,XXX (2014: $X,XXX,XXX), resulting in a current asset ratio of 0.XX (2014: 0.XX) and a (continued) cash outflow from operations of $X,XXX,XXX (2014: $X,XXX,XXX).
Commentary - Controlled entities An entity is controlled when the controlling entity is exposed, or has rights to variable returns from its involvement with the entity it controls, and has the ability to affect those rturns through its power over the controlled entity. AASB 10 (which superceds AASB 127 Consolidated and Separate Financial Statements) focuses on ‘control’ in determining whether an entity needs to consolidate another entity. Under AASB 10, control is assessed on the achievement of all three criteria; i.e. power over the investee; exposure or rights to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s return. If all three criteria are met, the ‘control’ test will be met and the entity will need to be consolidated. It is strongly encouraged to liaise with VAGO once an assessment has been made. Guidance Note: Economic dependency Where a health service forms a view based on the criteria below, and any other relevant criteria, that they require a letter of support from the State Government, this should be discussed with the health service’s audit services provider. The text below is to be used as a guide only as individual hospital circumstances may differ. The financial performance and position of <ABC Health Service> has declined since the prior year, with the health service reporting a deficit net result before capital and specific items of $X,XXX,XXX (2014: $X,XXX,XXX), a net current asset position of $X,XXX,XXX (2014: $X,XXX,XXX), resulting in a current asset ratio of 0.XX (2014: 0.XX) and a (continued) cash outflow from operations of $X,XXX,XXX (2014: $X,XXX,XXX). Commentary – Economic dependency
14-15%20Health%20Service%20Guidelines%20(FINAL).docx