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Hospital Circular 6 /2005

Date Issued: 31 March 2005
Distribution: Public Hospitals

Subject: Accounting Treatment of Bond Retention, Bond Interest and Accommodation Charges

Purpose: To advice on the required accounting treatment of revenue derived from the interest earned on accommodation bonds and retention amount and accommodation charges.

These revenues must initially be treated as capital purpose income in the capital fund.

These revenues should be applied firstly to capital works and secondly for the retirement of debt relating to residential care as prescribed by the Aged Care Act 1997. .

Where capital expenditure reasonably necessary to comply with the certification principles and meeting accreditation requirements is less than the amount received as capital purpose income, the balance of these accommodation payments can be used to improve the quality and range of aged care services. At this point the nature of the income changes from capital to operating. It is appropriate at that time (not before) to classify the income as operating revenue in order to match the expenses incurred.

As these funds are used for aged care services as prescribed, these should be reported in the following operating revenue ranges under the J0000 and J2000 series of cost centres.

• The Interest on accommodation bonds for residents should be recorded under account code range 58501 - 58518.
• The Retention on accommodation bonds for residents should be recorded under account code range 57681 - 57699.
• The Accommodation charges for High Care should be recorded under account 50101 - 50149.
• The Accommodation charges, if applicable, for Low Care residents should be recorded under account 50201 - 50249.

This policy is effective immediately.

For queries on the above matters please contact:
Victor Liew on 9616-7450 or email victor.liew@dhs.vic.gov.au

Approved by: