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Measurement and recognition rules applied in the preparation of the Departmental statements and schedules are consistent with generally accepted accounting practice and Crown accounting polices. The financial statements have been prepared on an historical cost basis.
The following particular accounting policies that materially affect the measurement of financial results and financial position have been applied.
The budget figures are those presented in the Budget Night Estimates as amended by the Supplementary Estimates and any transfer made by Order in Council under section 26A of the Public Finance Act 1989.
Te Puni Kōkiri derives revenue through the provision of outputs to the Crown and for services to third parties. Such revenue is recognised when earned and is reported in the financial period to which it relates.
Te Puni Kōkiri has determined the cost of outputs using the cost allocation system outlined below.
‘Direct costs’ are those costs that are directly attributed to an output.
‘Indirect costs’ are those costs that cannot be attributed in an economically feasible manner, to a specific output.
These include depreciation and capital charge which are charged to outputs on the basis of asset utilisation. The depreciation and capital charge of IT assets are allocated to outputs on the basis of budgeted staff hours attributable to each output.
Personnel costs (excluding those of Support Services Wāhanga and the Office of the Chief Executive) are allocated to outputs based on budgeted staff hours attributable to each output. Property and other premises costs, such as maintenance, are charged to wahanga (business units) on the basis of budgeted full time equivalents (FTEs).
Corporate overheads are allocated to outputs on the basis of budgeted staff hours attributable to each output.
Debtors and receivables are recorded at estimated realisable value, after providing for doubtful and uncollectible debts.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Payments under these leases are charged as expenses in the period in which they are incurred.
The initial cost of a fixed asset is the value of the consideration given to acquire or create the asset and any directly attributable costs of bringing the asset to working condition for its intended use. Fixed assets costing more than $5,000 are capitalised and recorded at historical cost.
Fixed assets costing less than $5,000 that are part of the approved Annual Replacement Programme of Te Puni Kōkiri are also capitalised.
The profit or loss on disposal of a fixed asset is the difference between the net disposal proceeds and the net carrying amount. This is credited or expensed to the Statement of Financial Performance.
Depreciation is provided on a straight line basis on all fixed assets, so as to allocate the cost of assets, less any estimated residual value, over their useful lives. The estimated economic useful lives and associated depreciation rates of classes of assets are:
The cost of leasehold improvements is capitalised and amortised over the unexpired period of the building lease or the estimated remaining useful life of the improvement, whichever is shorter.
Te Puni Kōkiri makes provision in respect of any liability for annual leave, long service leave and retiring leave. Annual leave is recognised as it accrues to employees at the greater of current rates of pay or average daily earnings over the previous 52 weeks. Long service and retiring leave is calculated on an actuarial basis based on the present value of expected future entitlements.
Cash means cash balances on hand and held in bank accounts.
Operating activities includes cash received from all income sources of Te Puni Kōkiri and cash payments made for the supply of goods and services.
Investing activities are those activities relating to the acquisition and disposal of non-current assets.
Financing activities comprise capital injections by, or repayment of capital to, the Crown.
Te Puni Kōkiri is party to financial instruments as part of its normal operations. These financial instruments include bank accounts, short-term deposits, debtors and creditors. All financial instruments are recognised in the Statement of Financial Position and all revenue and expenses in relation to financial instruments are recognised in the Statement of Financial Performance.
All foreign exchange transactions are translated at the rates of exchange applicable in each transaction. Te Puni Kōkiri does not carry any balances in foreign currencies.
The Statement of Financial Position is exclusive of GST, except for Creditors and Payables, and Debtors and Receivables, which are GST inclusive. All other statements are GST exclusive.
The amount of GST owing to or from the Inland Revenue Department at balance date, being the difference between Output GST and Input GST, is included in Creditors and Payables or Debtors and Receivables (as appropriate).
Government departments are exempt from the payment of income tax in terms of the Income Tax Act 2004. Accordingly, no charge for income tax has been provided for.
Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments to the extent that there are equally unperformed obligations.
Contingent assets and liabilities are disclosed at the point at which the contingency is evident.
The net operating surplus for the period is repayable to the Crown and a provision for this repayment is shown in the Statement of Financial Position.
This is the Crown’s net investment in Te Puni Kōkiri.
There have been no changes to the accounting policies. All policies have been applied on a basis consistent with previous years.
Last modified: 3/10/2008