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The forecast financial statements have been prepared in accordance with Section 34A of the Public Finance Act 1989 and are consistent with generally accepted accounting practice. They comply with NZ IFRS and Financial Reporting Standards, No. 42: prospective Financial Statements (FRS-42), as appropriate for public benefit entities.
These are the first set of forecast financial statements complying with NZ IFRS for Te Puni Kōkiri, and NZ IFRS 1 has been applied.
An explanation of how the transition to NZ IFRS has affected the reporting financial position, financial performance and cash flows is provided below.
The purpose of the forecast financial statements is to facilitate parliamentary consideration of the appropriations for, and planned performance of, Te Puni Kōkiri.
Actual results achieved for the year to 30 June 2008 are likely to vary from information presented in these statements and the variances may be material. This maybe due to changes in existing policies that may change the funding requirement of Te Puni Kōkiri, and as a result have an impact on the prospective financial statements. The potential financial effect of this cannot be quantified now as it will depend on the quantum of the change that may be proposed.
These forecast financial statements have been prepared on the basis of assumptions as to future events that the Chief Executive of Te Puni Kōkiri reasonably expects to occur at the date this information was prepared. It is not intended that this published information will be updated.
These forecast financial statements have been compiled on the basis of government policies, and Te Puni Kōkiri’s Output Plan agreed with the Minister of Māori Affairs at the time the statements were finalised. The statements assume the functions and duties of Te Puni Kōkiri will remain consistent with those set out in the Ministry of Māori Development Act 1991.
Te Puni Kōkiri is a government department as defined by section 2 of the Public Finance Act 1989.
These forecast statements are consistant with generally accepted accounting practice and comply with FRS-42. They also comply with NZ IFRS, as appropriate for public benefit entities
The prospective financial statements have been prepared on an historical cost basis modified by the revaluation of certain assets and liabilities as identified in this statement of accounting policies.
The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of Te Puni Kōkiri is New Zealand dollars.
Te Puni Kōkiri derives revenue through the provision of outputs to the Crown and for services to third parties. Revenue is measured at the fair value of consideration received.
Revenue from supply of services is recognised at balance date on a straight line basis over the specified period for the services, unless an alternative method better represents the stage of completion of transaction.
Items of property, plant and equipment are initially recorded at cost. Where an asset is acquired for nil or nominal consideration the asset will be recognised initially at fair value, where fair value can be reliably determined, with the fair value of the asset received, less costs incurred to acquire the asset, also recognised as revenue in the Statement of Financial Performance.
Other property, plant and equipment, which include motor vehicles and office equipment are recorded at cost less accumulated depreciation and accumulated impairment losses.
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:
Te Puni Kōkiri has determined the cost of output classes 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 Wahanga 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.
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.
Designation of financial assets and financial liabilities by individual entities into instrument categories is determined by the business purpose of the financial instruments, policies and practices for their management, their relationship with other instruments and the reporting costs and benefits associated with each designation.
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.
Cash and cash equivalents include cash on hand, cash in transit, bank accounts and deposits with a maturity of no more than three months from date of acquisition.
Other financial assets have been designated as loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are recognised initially at fair value plus transaction costs and subsequently measured at amortised cost using the effective interest rate method. Loans and receivables issued with duration less than 12 months are recognised at their nominal value. Allowances for estimated irrecoverable amounts are recognised when there is objective evidence that the asset is impaired. Interest, impairment losses and foreign exchange gain and losses are recognised in the Statement of Financial Performance.
A provision for impairment of receivables is established when there is objective evidence that Te Puni Kōkiri will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the effective interest method.
Financial liabilities are recognised initially at fair value less transaction costs and subsequently measured at amortised cost using effective interest rate method. Financial liabilities entered into with duration less than 12 months are recognised at their nominal value. Amortisation and, in the case of monetary items, foreign exchange gains and losses, are recognised in the Statement of Financial Performance as is any gain or loss when the liability is derecognised.
Income, expenditure, assets and liabilities are recorded exclusive of GST.
There are no changes to accounting policies planned for 2007/2008.
The forecast financial statements for the year ended 30 June 2008 are the first set of financial statements of Te Puni Kōkiri that comply with NZ IFRS. Te Puni Kōkiri has applied NZ IFRS 1 in preparing these financial statements.
The transition date for Te Puni Kōkiri was 1 July 2006. Te Puni Kōkiri prepared its opening NZ IFRS balance sheet at that date. The reporting date of these financial statements is 30 June 2008. NZ IFRS adoption date for Te Puni Kōkiri is 1 July 2007.
In preparing these consolidated financial statements in accordance with NZ IFRS 1, Te Puni Kōkiri has applied the mandatory exceptions from full retrospective application of NZ IFRS.
Te Puni Kōkiri has not elected to apply any optional exemptions from full retrospective application.
The following table shows the changes in equity, resulting from the transition from previous NZ GAAP to NZ IFRS as at 1 July 2007 and 30 June 2007.
The impact on transition to International Financial Reporting Standards (IFRS) of $63,000 is the additional sick leave liability accrued under NZ IAS 19.
