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Notes to the non-departmental schedules and statements

Note 1: Statement of accounting policies

Reporting Entity  

These non-departmental schedules and statements present financial information on public funds that are managed by the Ministry on behalf of the Crown.

These non-departmental balances are consolidated into the Financial Statements of the Government for the year ended 30 June 2016. For a full understanding of the Crown’s financial position, results of operations, and cash flows for the year, refer to the Financial Statements of the Government for the year ended 30 June 2016.

Basis of Preparation

The non-departmental schedules and statements have been prepared in accordance with the accounting policies of the Financial Statements of the Government, Treasury Instructions, and Treasury Circulars.

Measurement and recognition rules applied in the preparation of these non-departmental statements and schedules are consistent with New Zealand generally accepted accounting practice (Tier 1 Public Sector Public Benefit Entity Accounting Standards) as appropriate for public benefit entities.

Significant Accounting Policies

Revenue

Revenue from fines and other receipts is recognised when received.

Grant expenditure

Non-discretionary grants are those awarded if the grant application meets specified criteria. They are recognised as expenditure when an application that meets the specified criteria for the grant has been received.

Discretionary grants are those grants where the Ministry has no obligation to award on receipt of the grant application. They are recognised as expenditure when approved by the grants approvals committee and the approval has been communicated to the applicant.

Grants with substantive conditions are recognised as an expense at the earlier of the grant payment date or when the grant conditions have been satisfied.

Foreign exchange

Foreign currency transactions are translated into New Zealand dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the schedule of non-departmental revenue or expenses.

Goods and services tax

All items in the financial statements, including appropriation statements, are stated exclusive of goods and services tax (GST), except for receivables and payables, which are stated on a GST-inclusive basis. In accordance with Treasury Instructions, GST is returned on revenue received on behalf of the Crown, where applicable. However, an input tax deduction is not claimed on non-departmental expenditure. Instead, the amount of GST applicable to non-departmental expenditure is recognised as a separate expense and eliminated against GST revenue on consolidation of the Financial Statements of the Government.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, and deposits held at call with banks with maturities of three months or less.

Debtors and other receivables

Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

Impairment of a receivable is established when there is objective evidence that the Ministry will not be able to collect amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, receivership or liquidation, and default in payments are considered indicators that the debtor is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the schedule of non-departmental expenses. When a debt is uncollectible, it is written-off against the allowance account for debtors. Overdue receivables that are renegotiated are reclassified as current (that is, not past due).

Property, plant and equipment

Property, plant and equipment administered by the Ministry on behalf of the Crown includes land, buildings and leasehold improvements. These assets are carried at fair value less subsequent impairment losses and, for non-land assets, less subsequent accumulated depreciation. Land and buildings are revalued every three years. If it is established during the intervening period that an item of plant, property and equipment’s carrying value may be materially different from its fair value, a revaluation will be sought.

Depreciation is charged on a straight-line basis at rates calculated to allocate the cost or valuation of an item of property, plant and equipment, less any estimated residual value, over its estimated useful life.

The Ministry, on behalf of the Crown, currently depreciates buildings at 2% per annum. Leasehold improvements are work in progress at 30 June 2016. A depreciation rate will be established for leasehold improvements when work on the fit-out of the Queen Elizabeth II Education Centre is completed in 2016/17.

Creditors and other payables

Creditors and other payables are recorded at their face value.

Commitments

Future expenses and liabilities to be incurred on non-cancellable contracts that have been entered into at balance date are disclosed as commitments to the extent that there are equally unperformed obligations. Information on non-cancellable capital and lease commitments are reported in the Schedule of Commitments.

Cancellable commitments that have penalty or exit costs in the agreement, on exercising that option to cancel, are included in the statement of commitments at the lower of the remaining contractual commitment and the value of that penalty or exit cost.

Budget figures

The budget figures are those included in the Information Supporting the Estimates of Appropriations (Budget) for the year ending 30 June 2016 and the Supplementary Estimates of Appropriations (Revised Budget) for the year ending 30 June 2016. The Budget is 2015 Budget Economic and Fiscal Update (BEFU 2015) and the Revised Budget is SUPPS 2016. The budget figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted in preparing these financial statements.

Critical accounting estimates and assumptions

In preparing these financial statements, estimates and assumptions have been made concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. There are no estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Trust Monies

The Ministry administers trust monies on behalf of the Crown under Part VII of the Public Finance Act 1989. Under the Act, and by delegation from the Secretary to the Treasury, trust money can only be invested on deposit with New Zealand registered banks or in New Zealand Government stock. Trust money is also managed so that there is no significant concentration of credit risk. Interest rate risk is managed by investing across a wide range of maturity dates, subject to liquidity requirements.

Note 2: Buildings

 

 

Massey Memorial

National War Memorial

Total buildings

$000

$000

$000

Cost or valuation

   

 

Balance at 1 July 2014

1,520

8,079

9,599

Additions

                 -  

1,741

1,741

Revaluation

 (820)

 (2,600)

 (3,420)

Balance at 30 June 2015 and 1 July 2015

700

7,220

7,920

Additions

                 -  

142

142

Revaluation

                 -  

                 -  

                 -  

Balance at 30 June 2016

700

7,362

8,062

Accumulated depreciation and impairment losses

   

 

Balance at 1 July 2014

60

318

378

Depreciation expense

30

159

189

Depreciation reversal on revaluation

 (90)

 (477)

 (567)

Balance at 30 June and 1 July 2015

                 -  

                 -  

                 -  

Depreciation expense

14

144

158

Depreciation reversal on revaluation

                 -  

                 -  

                 -  

Balance at 30 June 2016

14

144

158

Carrying amounts

   

 

At 1 July 2014

1,460

7,761

9,221

At 30 June and 1 July 2015

700

7,220

7,920

At 30 June 2016

686

7,218

7,904

 

The National War Memorial and Massey Memorial were revalued as at 30 June 2015 by Aon Risk Solutions (an independent registered valuer) using depreciated building cost in accordance with NZ IAS PBE standards. The Ministry on behalf of the Crown revalues the memorials every three years. The balance of the revaluation reserve at 30 June 2016 is nil (2015: nil).


Note 3: Land

 

 

Massey Memorial

National War Memorial

Pukeahu National War Memorial Park

Total     Land

$000

$000

$000

$000

Cost or valuation (and carrying amounts)

 

 

 

 

Balance at 1 July 2014

560

5,500

8,619

14,679

Additions

              -  

                -  

14,673

14,673

Disposals

              -  

                -  

                 -  

 -

Revaluation

255

 (1,000)

 (2,502)

 (3,247)

Balance at 30 June and 1 July 2015

815

4,500

20,790

26,105

Additions

              -  

                -  

             1,145

  1,145

Disposals

              -  

                -  

                   -  

          -  

Revaluation

              -  

                -  

                   -  

          -  

Balance at 30 June 2016

815

4,500

21,935

27,250

 

The National War Memorial, New Zealand Memorial Park and the Massey Memorial were revalued as at 30 June 2015 by Aon Risk Solutions (an independent valuer) using market-based evidence in accordance with NZ IAS PBE accounting standards. The Ministry on behalf of the Crown revalues the land every three years. The balance of the revaluation reserve at 30 June 2016 is $1.503 million (2015: $1.503 million).

Note 4: Leasehold improvements

 

 

Queen Elizabeth II Pukeahu Education Centre

Total buildings

$000

$000

Cost or valuation

 

 

Balance at 1 July 2014

-

-

Additions

                 -  

-

Revaluation

 -

-

Balance at 30 June 2015 and 1 July 2015

-

-

Additions

                 223  

223

Revaluation

                 -  

                 -  

Balance at 30 June 2016

223

223

Accumulated depreciation and impairment losses

 

 

Balance at 1 July 2014

-

-

Depreciation expense

-

-

Depreciation reversal on revaluation

 -

-

Balance at 30 June and 1 July 2015

                 -  

                 -  

Depreciation expense

-

-

Depreciation reversal on revaluation

                 -  

                 -  

Balance at 30 June 2016

-

-

Carrying amounts

 

 

At 1 July 2014

-

-

At 30 June and 1 July 2015

-

-

At 30 June 2016

223

223

 

In 2016 work started on the refurbishment of the former Home of Compassion crèche located within Pukeahu National War Memorial Park. As at 30 June 2016, the fit-out was work in progress (2015: nil).

 

Note 5: Financial Instruments

The carrying amounts of financial assets and financial liabilities in each of the financial instrument categories are as follows:

 

 

Actual

Actual

2015

2016

$000

$000

Loans and receivables

 

 

Cash and cash equivalents

12,119

7,018

Debtors and other receivables

                     -

                      -

Total loans and receivables

12,119

7,018

Financial liabilities measured at amortised cost

 

 

Creditors and other payables

89

738

Credit risk

Credit risk is the risk that a third party will default on its obligation, causing a loss to be incurred. Credit risk arises from debtors and deposits with banks.  Funds must be deposited with Westpac, a registered bank. The maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and cash equivalents and net debtors. There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired. Other than Westpac bank, there are no significant concentrations of credit risk.

Note 6: Explanations of major variances against budget

The major variances from the Ministry’s non-departmental estimated figures in the Main Estimates are as follows:

Schedule of revenue and expenses

Regional Museums

This appropriation was $7.000 million less than budget, as this multi-year appropriation has been transferred into a new multi-year appropriation (Regional Culture and Heritage Fund) from 2016/17.

New Zealand Screen Production Grant

This appropriation was $25.595 million less than budget due to the expected timing of various film productions in 2015/16.

Schedule of non-departmental assets

Land and Buildings

Land was $4.932 million and buildings $3.510 million less than budget due to re-measurement of the Massey Memorial, the National War Memorial and Pukeahu National War Memorial Park in 2014/15 after Budget 2015, and the timing of land and building improvements at Pukeahu National War Memorial Park.

 


Updated on 16th March 2017