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Notes to the non-departmental statements and schedules for the year ended 30 June 2011

Notes to the non-departmental statements and schedules for the year ended 30 June 2011

Note 1: Statement of accounting policies

­Reporting entity

These non-departmental statements and schedules 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 2011. 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.

Basis of preparation

The non-departmental statements and schedules have been prepared in accordance with the Government’s accounting policies as set out in 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 NZ GAAP, as appropriate for public benefit entities.

There have been no changes in accounting policies during the financial year.

Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements and schedules.

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 is received.

Discretionary grants are grants that the Ministry has no obligation to award. They are recognised as expenditure when the grants approvals committee’s decision has been communicated to the applicant.

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

Most items in the financial statements, including appropriation statements, are stated exclusive of goods and services tax (GST). The only exceptions are receivables and payables, which are stated on a GST-inclusive basis (in 2010/11 GST changed from 12.5% to 15%). 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.

Debtors and other receivables

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

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.

Indicators that the debtor is impaired include significant financial difficulties, the probability that it will enter into bankruptcy, and default in payments. 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 Statement of Comprehensive Income. Overdue receivables that have been renegotiated are reclassified as current (ie, not past due).

Creditors and other payables

Creditors and other payables are non-interest bearing and are normally settled on 30-day terms. The carrying value of creditors and other payables therefore approximates their fair 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.

Commitments that will incur penalty or exit costs if an option to cancel is exercised are included in the statement of commitments at the value of that penalty or exit cost.

Budget figures

The budget figures are consistent with the financial information in the Main Estimates. These financial statements also present the updated budget information from the Supplementary Estimates.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and funds on deposit with banks.

Property, plant and equipment

The property, plant and equipment assets administered by the Ministry on behalf of the Crown are the National War Memorial and the Massey Memorial. These assets are carried at fair value less subsequent impairment losses and, for non-land assets, less subsequent accumulated depreciation. They are revalued every three years. If it is established during the intervening period that a memorial’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.

Critical accounting estimates and assumptions

In preparing these financial statements, the Ministry on behalf of the Crown has made estimates and assumptions that may differ from the subsequent actual results.

Where appropriate, the judgment or assumption that the Ministry has made on behalf of the Crown is provided in the relevant accounting policy or in the relevant note.

Estimates and assumptions are reviewed on an ongoing basis. They are based on historical experience and other factors that are believed to be reasonable under the circumstances. Where revisions to accounting estimates are made, these are recognised in the period in which the estimate is revised.

Note 2: Buildings

 

Massey Memorial

$000

National
War Memorial

$000

Total

buildings

$000

Cost or valuation

 

 

 

Balance at 1 July 2009

1,250

8,530

9,780

Revaluation increase

Balance at 30 June and 1 July 2010

1,250

8,530

9,780

Balance at 30 June 2011

1,250

8,530

9,780

Accumulated depreciation and impairment losses

 

 

 

Balance at 1 July 2009

Depreciation expense

25

171

196

Balance at 30 June and 1 July 2010

25

171

196

Depreciation expense for year ended 30 June 2011

25

171

196

Balance at 30 June 2011

50

342

392

Carrying amounts

 

 

 

At 1 July 2009

1,250

8,530

9,780

At 30 June and 1 July 2010

1,225

8,359

9,584

At 30 June 2011

1,200

8,188

9,388

The National War Memorial and Massey Memorial were revalued as at 30 June 2009 by Beca Valuations (an independent valuer) using depreciated building cost in accordance with NZ IAS 16. The Ministry on behalf of the Crown revalues the memorials every three years. The balance of the revaluation reserve at 30 June 2011 is $1.675 million.

Note 3: Land

 

Massey Memorial

$000

National
War Memorial

$000

new zealand Memorial park

$000

Total

buildings

$000

Cost or valuation (and carrying amounts)

 

 

 

 

Balance at 1 July 2009

550

5,530

4,967

11,047

Balance at 30 June and 1 July 2010

550

5,530

4,967

11,047

Additions

450

450

Balance at 30 June 2011

550

5,530

5,417

11,497

 

The National War Memorial and Massey Memorial were revalued as at 30 June 2009 by Beca Valuations (an independent valuer) using market-based evidence in accordance with NZ IAS 16. The Ministry on behalf of the Crown revalues the memorials every three years. The balance of the revaluation reserve at 30 June 2011 is $4.770 million.

Note 4: Financial Instruments

The carrying amounts of financial assets and financial liabilities in each of the NZ IAS 39 categories are as follows:

Actual 2009/10

$000

 

Actual
2010/11

$000

 

Loans and receivables

 

1,615

Cash and cash equivalents

14,521

Debtors and other receivables

 

Financial liabilities measured at amortised cost

 

53

Creditors and other payables

1,876

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 5: Explanations of major variations

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

Note

Actual 2010/11

$000

Main Estimates

Variance increase/

(decrease) 2010/11

$000

Variance increase/

(decrease)  2010/11

 %

 

Statement of non-departmental expenditure and capital expenditure against appropriations

Vote Arts, Culture and Heritage

 

 

 

 

Public Broadcasting Services

a

151,692

161,820

(10,128)

(6)

Commonwealth War Graves

b

2,674

3,243

(569)

(17)

Christchurch Earthquake: Heritage Buildings

c

2,302

-

2,302

-

New ZealandMemorial Park

d

450

-

450

-

Vote Sport and Recreation

 

 

 

 

Sport and Recreation Programmes

e

18,726

19,376

(650)

(3)

High Performance Sport

f

48,338

38,338

10,000

26

Loan to Rowing New Zealand

g

1,300

-

1,300

-

 

Schedule of non-departmental assets

 

 

 

 

Cash at bank and at hand

f

14,521

4,799

9,722

202

 

Schedule of non-departmental liabilities

 

 

 

 

Creditors and other payables

g

1,876

200

1,676

838

 

a) The expenditure (and appropriation) decreased by $10.128 million in 2010/11 because of two expense transfers. Firstly, in 2007 $25 million was allocated to Freeview for Digital television platform funding. Costs were expected to amount to $5 million per year over five years; however, in the first two years the full $5 million allocated was not required. Funding was transferred as far as possible into outyears. In 2010/11 the remaining $4.628 million of additional funding was transferred into 2011/12 to allow support for the Freeview platform to continue during the period of digital switchover.

Secondly, In April 2010 the Government agreed to TVNZ's proposal to commercialise one of two advertising-free digital channels that were being directly funded through the Ministry for Culture and Heritage. Funding had been appropriated for the two channels, TVNZ 6 and 7, until 30 June 2012. With the commercialisation of TVNZ 6, the remaining balance of the funding has been applied to TVNZ 7 only, and the payment schedule for the period 1 March 2011 – 30 June 2012 was revised accordingly, resulting in $5.500 million being transferred from 2010/11 into 2011/12.

b) Due to a favourable foreign exchange movement in relation to New Zealand’s annual contribution to the Commonwealth War Graves Commission, the full appropriation was not required during 2010/11.

c) Following the Canterbury earthquake in September 2010 the Government agreed to match funding from donations for the repair, restoration and strengthening of earthquake-damaged heritage buildings, up to a maximum of $10 million. As a result this new one-off appropriation was established during 2010/11, of which $2.302 million was spent.

d) $450,000 of the total $10 million Memorial Park appropriation was brought forward from 2013/14 into 2010/11 to allow interim landscape work to be completed.

e) Sport and Recreation Programmes (along with Vote Economic Development) were reprioritised during 2010/11 to provide a one-off loan to Rowing New Zealand to assist with funding of the 2010 World Rowing Championships. This resulted in the expenditure (and appropriation) decreasing by $650,000 for 2010/11, and a new non-departmental other expense appropriation being established entitled “Loan to Rowing New Zealand”.

f) An additional $10 million was provided by Cabinet during 2010/11 to fund the Government's high performance sport strategy.

g) A new one-off appropriation was established for 2010/11 to allow SPARC to provide a loan to Rowing New Zealand to assist with the funding of the 2010 World Rowing Championships.

h) Cash in the bank account and on hand is higher than budgeted in the Main Estimates due to the timing of disbursements. Collectively the Crown appropriations were in surplus; in particular Christchurch Earthquake: Heritage Buildings was under-spent by $7.698 million.

i) Creditors and other payables are lower than budgeted due to timing differences.


Updated on 23rd July 2015