Notes to the Non-departmental Financial Statements

Note 1: Statement of Non-Departmental Accounting Policies

These non-departmental statements and schedules record the expenses, revenue and receipts, assets and liabilities that Te Puni Kōkiri manages on behalf of the Crown.

The Non-Departmental balances are consolidated into the Financial Statements of the Government and therefore readers of these statements and schedules should also refer to the Financial Statements of the Government for 2009/10.

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 schedules and statements are consistent with New Zealand generally accepted accounting practice as appropriate for public benefit entities.

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

Statement of Compliance
These financial statements have been prepared in accordance with New Zealand generally accepted accounting practice. They comply with NZ IFRS and other applicable Financial Reporting Standards, as appropriate for public benefit entities.

Measurement System
Measurement and recognition rules applied in the preparation of the Non-Departmental statements and schedules are consistent with generally accepted accounting practice and the Financial Statements of the Government's accounting policies. The financial statements have been prepared on an historical cost basis.

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.

Accounting Policies
The following particular accounting policies that materially affect the measurement of financial results and financial position have been applied.

Budget Figures
The budget figures are those presented in the 2008 Main Estimates as amended by the 2008/09 Supplementary Estimates and any transfer made by Order in Council under section 26A of the Public Finance Act 1989.

Revenue
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.

Goods and Services Tax (GST)
The Statements of Non-Departmental Expenditure and Appropriations are exclusive of GST. The Statement of Financial Position is exclusive of GST, except for Creditors and Payables, and Debtors and Receivables, which are GST inclusive.

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 other Payables or Debtors and other Receivables (as appropriate).

Commitments
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.

Note 2: Māori Trustee

The Crown incurred expenditure via the Te Puni Kōkiri departmental appropriation under the output class “Services to the Māori Trustee”. There was an expectation that this expenditure would be repaid by the Māori Trustee to the Crown at some future date. However, with the passing of the Māori Trustee Amendment Act 2009, Cabinet have agreed to write-off the accumulated debt.

Note 3: Revaluation of Crown Land

Te Puni Kōkiri holds a number of Crown land blocks which are intended for disposal. The land blocks held for sale are revalued annually if there is a change in its disposal status during the year. For land blocks held for sale where there has not been a change, independent valuations are done regularly (3 years). All other land blocks are held at cost. For the 2008/09 financial year, Independent valuations were done by Veitch Morison Valuers Ltd, Garton and Associates, E.I. Clissold and QV Valuations between 26 May 2009 and 8 July 2009.

Note 4: Māori Television Broadcasting

Promotion of Māori language and Māori culture through television broadcasting by Te Mangai Paho.

Note 5: Māori Radio Broadcasting

Promotion of Māori language and Māori culture through radio broadcasting by Te Mangai Paho.

Note 6: Administration of Māori Broadcasting

Purchase of administration services from Te Mangai Paho to meet its statutory functions and deliver on the Government's Māori broadcasting policy.

Note 7: Promotion of the Māori Language

Purchase of initiatives to revitalise and develop the Māori language in New Zealand. This includes outputs from Te Taura Whiri I Te Reo Māori (Māori Language Commission) and involves the promotion of the Māori language in New Zealand.

Note 8: Māori Television Channel

Ongoing administration costs of the Māori Television channel for the Māori Television Service.

Note 9: Māori Trustee Functions

Purchase of trustee and land management functions from the Māori Trustee.

Note 10: Māori Potential Funds

Classified as three Non-Departmental Output Expenses; Whakamana (leadership), Matauranga (knowledge/skills) and Rawa (resources). The Māori Potential Funds provide funding to accelerate Māori development through directly investing in community programmes and activities and are a direct link to the three strategic investment areas which were identified through the Māori Potential Approach.

Note 11: Māori Registration Service

Contribution towards the establishment of a national Māori registration service, which will assist in linking Māori with their tribes and tribal groups and compiling comprehensive and accurate registers of their members.

Note 12: Re-erection of Mataatua Whare

This is limited to the erection of the Mataatua Whare at Whakatane, and the establishment of related facilities to support cultural tourism and development opportunities.

Note 13: Māori Women's Development Fund

This reflects administration funding for the Māori Women's Development Fund.

Note 14: Rural Lending

Rural Lending represents the remaining nominal value of the former Rural Loans Portfolio of the Department of Māori Affairs and Iwi Transition Agency programmes.

The only new advances being made under these provisions are those necessary to complete compensation obligations to lessees where compensation is payable in terms of leases issued under the provisions of Part XXIV of the Māori Affairs Act 1953 and now administered by Te Puni Kōkiri under Part 2 of the Māori Affairs Restructuring Act 1989.

Funding was appropriated in Budget 2009 to write-off these loans.

Note 15: Part 2 Loans Write-off

New appropriation in Budget 2009 to write-off the loan portfolio administered under Part 2 of the Māori Affairs Restructuring Act 1989. See note 14 above.

Note 16: Accounts Receivables/Prepayments

Accounts receivables/prepayments balance in 2008/09 is due to timing of the first quarterly payments to the Crown entities which had to be classified as prepayments.

Note 17: Crown owned stations

Crown owned stations were part of the old Māori Land Development programme which managed and operated the remaining Land Development schemes that was administered under Part 2 of the Māori Affairs Restructuring Act 1989.

The land blocks, as intended were being returned to the original owners with debts that could be serviced from on-going farming activities. Rawhiti station was one of the Crown owned stations in this scheme. This station was formally transferred to Office of Treaty Settlement in December 1997 for a total price which was less than the book value. The loss on sale of $179,000 was not appropriated and written off, but was treated as an asset of Te Puni Kōkiri, with a corresponding provision for full write-off. This has been formally written-off in 2009/10.

Note 18: Explanation for Significant Budget Changes

Refer to “The Supplementary Estimates of Appropriations for the year ending 30 June 2010” for an explanation of significant budget changes between the 2009 Main Estimates and 2009/10 Supplementary Estimates for Vote Māori Affairs (B.7 – Pages 170 to 172).

Note 19: Explanation for Major Variances against Supps.

Explanations for major variances between Te Puni Kōkiri's actual expenditure against the Supplementary Estimates of Appropriations for the year ending 30 June 2010 are as follows:

Statement of Non-Departmental Expenditure and Capital Expenditure

Non-Departmental Output Expense - Rawa: The variance is largely due to the expiry of the Tekau Plus contract on 30 June 2010, with an unexpended amount of $0.925 million (GST exclusive).

Schedule of Non-Departmental Assets:

Cash: The reduction in cash balance reflects the return of Crown surplus from previous years back to the New Zealand Debt Management Office.

Schedule of Non-Departmental Liabilities:

Creditors and Payables: The variance largely reflects the trade creditors balance as at balance date due to timing of the final cheque run for 2009/10.

Note 20: Financial instruments

- Total Loans and receivables 29,585 Financial liabilities measured at amortised cost 1,734 Creditors and other payables 5,902

30-Jun-09 Actual $000s		30-Jun-10 Actual $000s
	Loans and receivables
42,500	Cash and cash equivalents	29,585
22,138	Debtors and other receivables	-
64,638	Total Loans and receivables	29,585
	Financial liabilies measured at amortised cost
1,734	Creditors and other payables	5,902

The Ministry's activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Ministry has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature to be entered into.

Credit risk
Credit risk is the risk that a third party will default on its obligation to the Ministry, causing the Ministry to incur a loss. In the normal course of its business, credit risk arises from debtors, deposits with banks and derivative financial instrument assets. The Ministry is only permitted to deposit funds with Westpac, a registered bank, and enter into foreign exchange spot and forward contracts with the New Zealand Debt Management Office or any counterparty that meets the minimum credit rating criteria. These entities have high credit ratings. For its other financial instruments, the Ministry does not have significant concentrations of credit risk. The Ministry's 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.

Note 21: Crown Entities

In addition to the above, the Minister of Māori Affairs receives administration services in respect of the following Crown Entities:

• Te Māngai Pāho
• Te Taura Whiri I Te Reo Māori

The investment in these entities is recorded within the Financial Statements of the Government on a line by line basis. No disclosure is made in this schedule. Please refer to the Annual Reports at the following websites: Te Māngai Pāho at www.tmp.govt.nz

Māori Television Service at www.māoritelevision.com and Te Taura Whiri I Te Reo Māori at www.tetaurawhiri.govt.nz for information on their financial performance and position.

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