Key note address: Prof Jayne Godfrey, Water Accounting panel discussion

Professor Jayne M Godfrey
Professor of Financial Accounting, Monash University
Member, Water Accounting Standards Board

This speech was presented in the Water Accounting panel discussion held in Melbourne on Wednesday, 27 October 2010. This panel was hosted by The Institute and the Accounting and Finance Association of Australia and New Zealand (AFAANZ).

Disclaimer: The views expressed in this article are those of the author and not necessarily those of Monash University, the Water Accounting Standards Board, or any other organisation with which she is associated.


When the full impact of Australia's water crisis became known, accounting and water experts joined forces to create a new discipline to distinguish the truths, lies, errors and uncertainties in managing the world’s most precious resource. In a world-leading, critical component of Australia's multi-billion dollar water reform package, they created the discipline of water accounting. A water accounting conceptual framework has been written and an exposure draft on the preparation and presentation of a general purpose water accounting report has been published. Australia's approach is being evaluated internationally as well as nationally.


Water accounting reports and their assurance can play a vital role in facilitating economic, social and environmental decisions based upon assessments of water policies, water management, water allocations and water delivery. With policies such as water allocation and water pricing likely to be informed by water accounting, much is at stake for many stakeholders.


General purpose water accounting is a method for accounting for water and water rights that has been developed by Australia’s Water Accounting Standards Board. This is a method that accountants should recognise for its analogy with general purpose financial reporting. In the Exposure Draft of Australian Water Accounting Standard 1 The Preparation and Presentation of General Purpose Water Accounting Reports (ED AWAS 1), water accounting is defined to be a systematic process of identifying, recognising, quantifying, reporting, and assuring information about water, rights or other claims to water, obligations to deliver water or rights or other claims to water.


As the output of general purpose water accounting, general purpose water accounting reports (GPWAR) are analogous to general purpose financial reports (GPFR) in concept and in structure. They are designed to provide information about water that is useful to report users who are unable to otherwise command the information for themselves.


GPWAR include a Statement of Physical Flows, akin to the Cash Flow Statement, which shows how holdings of water moved during the reporting period. They also include accruals-based statements corresponding to the balance sheet and statement of comprehensive income: the Statement of Water Assets and Water Liabilities and the Statement of Changes in Water Assets and Water Liabilities. The Statement of Water Assets and Water Liabilities reports water and rights and other entitlements to water as water assets. It also reports water liabilities, which are obligations to provide either water or water rights or other entitlements to other parties. The Statement of Changes in Water Assets and Water Liabilities shows movements in water assets and water liabilities during the reporting period.


In addition, a GPWAR includes an independent attestation that the statements have been prepared and presented according to relevant standards; a contextual statement describing the physical and administrative aspects of the water report entity; and an accountability statement by those charged with governance, confirming that the GPWAR has been prepared and presented in accordance with relevant standards.


To understand the content and presentation of GPWAR, visit the Bureau of Meteorology website and read the full key note address.

Article last updated 17 December 2010