Financial Statements for the Year Ended 30 June 2007

Statement of Accounting Policies for the Year Ended 30 June 2007

Reporting Entity

Te Puni Kōkiri is a Government Department as defined by section 2 of the Public Finance Act 1989.

These financial statements have been prepared in accordance with section 45 of the Public Finance Act 1989.

In addition, Te Puni Kōkiri has reported the Crown activities that it administers.

Statement of Departmental Accounting Policies

Measurement System

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.

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 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.

Revenue

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.

Cost Allocation

Te Puni Kōkiri has determined the cost of outputs using the cost allocation system outlined below.

Criteria for Direct Costs

‘Direct costs’ are those costs that are directly attributed to an output.

Criteria for Indirect Costs

‘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

Debtors and receivables are recorded at estimated realisable value, after providing for doubtful and uncollectible debts.

Operating Leases

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.

Fixed Assets

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

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:

Computer Equipment	4 years	25%
Motor Vehicles	5 years	20%
Office Equipment	5 years	20%
Furniture and Fittings	5 years	20%
Leasehold Improvements	5 - 12 years
Software Development	3 1/3 years	30%

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.

Employee Entitlements

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.

Statement of Cash Flows

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.

Financial Instruments

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.

Goods and Services Tax (GST)

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).

Taxation

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.

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.

Contingent Assets and Liabilities

Contingent assets and liabilities are disclosed at the point at which the contingency is evident.

Net Operating Surplus

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.

Taxpayers’ Funds

This is the Crown’s net investment in Te Puni Kōkiri.

Changes in Accounting Policies

There have been no changes to the accounting policies. All policies have been applied on a basis consistent with previous years.

Statement of Financial Performance for the Year Ended 30 June 2007

The Statement of Financial Performance shows the components of revenue and expenditure (exclusive of Goods and Services Tax) relating to all outputs produced by Te Puni Kōkiri.

30-Jun-06 Actual $000s		Note	30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	30-Jun-07 Supp Estimates $000s
	REVENUE
53,545	Crown		54,518	54,295	54,518
814	Department		572	420	764
1	Other		1	0	1
54,360	Total Revenue		55,091	54,715	55,283
	OUTPUT EXPENSES
26,612	Personnel Costs	1	28,156	30,322	28,143
25,507	Operating Costs	2	24,495	22,831	25,565
1,308	Depreciation	3	1,211	1,215	1,212
307	Capital Charge	4	363	347	363
53,734	Total Expenses		54,225	54,715	55,283
626	Net Operating Surplus		866	-	-

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Statement of Movements in Taxpayers’ Funds for the Year Ended 30 June 2007

The Statement of Movements in Taxpayers’ Funds shows the reconciliation of funds at the beginning of the year with the funds at the end of the year.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	30-Jun-07 Supp Estimates $000s
3,835	Taxpayers’ funds as at 1 July	4,835	4,835	4,835
626	Net Operating Surplus	866	0	0
626	Total recognised revenues and expenses for the year	866	0	0
1,000	Capital Contributions	0	0	0
(626)	Provision for repayment of surplus to the Crown	(866)	0	0
4,835	Taxpayers’ funds as at 30 June	4,835	4,835	4,835

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Statement of Financial Position as at 30 June 2007

The Statement of Financial Position shows the major classes of assets and major classes of liabilities and equity of Te Puni Kōkiri. The difference between the assets and liabilities is the taxpayers’ funds (net assets).

30-Jun-06 Actual $000s		Note	30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	30-Jun-07 Supp Estimates $000s
4,835	TAXPAYERS’ FUNDS		4,835	4,835	4,835
	Represented by:
	ASSETS
	CURRENT ASSETS
8,325	Cash		9,015	5,249	5,868
225	Prepayments		316	200	200
269	Short term receivables & advances		439	50	50
8,819	Total Current Assets		9,770	5,499	6,118
	NON-CURRENT ASSETS
4,066	Physical assets	5	3,462	3,647	3,534
4,066	Total Non-current Assets		3,462	3,647	3,534
12,885	Total Assets		13,232	9,146	9,652
	LIABILITIES
	CURRENT LIABILITIES
5,569	Creditors & Payables	6	5,536	2,510	3,151
626	Provision for repayment of surplus		866	0	0
1,848	Employee Entitlements	7	1,988	1,794	1,500
8,043	Total Current Liabilities		8,390	4,304	4,651
	NON-CURRENT LIABILITIES
7	Employee Entitlements	7	7	7	166
8,050	Total Liabilities		8,397	4,311	4,817
4,835	Net Assets		4,835	4,835	4,835

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Statement of Cash Flows for the Year Ended 30 June 2007

The Statement of Cash Flows shows the cash received and paid by Te Puni Kōkiri during the year, from its activities.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	30-Jun-07 Supp Estimates $000s
	CASH FLOWS-OPERATING ACTIVITIES
	Cash was provided from:
	Supply of outputs to
53,545	Crown	54,518	54,295	54,518
814	Department	572	420	764
(93)	Other	(260)	0	245
54,266	54,830	54,715	55,527
	Cash was disbursed for:
	Production of outputs
(26,593)	Personnel	(28,016)	(30,322)	(28,332)
(26,811)	Operating	(24,505)	(22,696)	(27,983)
(210)	Net GST Paid	(40)	0	0
(307)	Capital Charge	(363)	(347)	(363)
(53,921)	(52,924)	(53,365)	(56,678)
345	Net cash flows from operating activities	1,906	1,350	(1,151)
	CASH FLOWS-INVESTING ACTIVITIES
	Cash was provided from:
35	Sale of physical assets	48	200	200
	Cash was disbursed for:
(2,689)	Purchase of physical assets	(638)	(913)	(880)
(2,654)	Net cash flows from investing activities	(590)	(713)	(680)
	CASH FLOWS-FINANCING ACTIVITIES
	Cash was provided from:
1,000	Capital Contributions	0	0	0
	Cash was disbursed for:
(1,808)	Repayment of surplus	(626)	0	(626)
(808)	Net cash flows from financing activities	(626)	0	(626)
(3,117)	Net Increase/(Decrease) in Cash Held	690	637	(2,457)
11,442	Add opening cash balance	8,325	4,612	8,325
8,325	closing cash Balance	9,015	5,249	5,868

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Reconciliation of Net Operating Surplus to Net Cash Flows from Operating Activities for the Year Ended 30 june 2007

The Reconciliation of Net Operating Surplus to Net Cash Flows from Operating Activities shows the non-cash adjustments and other adjustments applied to the net operating surplus as reported in the Statement of Financial Performance on page 73 to arrive at the net cash flows from operating activities disclosed in the Statement of Cash Flows on page 76.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	30-Jun-07 Supp Estimates $000s
626	Net Operating Surplus	866	0	0
	Add: Non-cash items
1,308	Depreciation	1,211	1,215	1,212
1,308	Total non-cash items	1,211	1,215	1,212
	Add/(Less) movements in working capital items
(182)	(Increase)/Decrease in debtors and receivables	(170)	0	219
88	(Increase)/Decrease in prepayments	(91)	0	25
(1,517)	Increase/(Decrease) in Creditors & Payables	(33)	0	(2,418)
19	Increase/(Decrease) in current employee entitlements	140	135	(189)
(1,592)	Net movements in working capital	(154)	135	(2,363)
	Add/(Less) investing activity
3	Loss/(Gain) on sale of fixed assets	(17)	0	0
3	Total investing activity	(17)	0	0
345	Net cash flow from operating activity	1,906	1,350	(1,151)

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Statement of Commitments as at 30 June 2007

The Statement of Commitments shows the future contractual obligations (exclusive of GST) of Te Puni Kōkiri that will become liabilities if and when the terms and conditions of existing contracts are met.

Operating leases include lease payments for premises and motor vehicles.

Te Puni Kōkiri has long-term leases on its premises in New Zealand. The annual lease payments are subject to regular reviews, ranging from one year to four years. The amounts disclosed below as future commitments are based on the current rental rates.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
	Accommodation lease commitments
2,894	Less than one year	3,137
2,779	One to two years	2,972
5,969	Two to five years	3,660
170	More than five years	107
11,812	Total accommodation lease commitments	9,876
	Other operating commitments
434	Less than one year	549
352	One to two years	165
88	Two to five years	16
0	More than five years	0
874	Total other operating commitments	730
12,686	Total commitments	10,606

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Statement of Contingent Assets and Liabilities as at 30 June 2007

The Statement of Contingent Assets and Liabilities shows amounts at balance date that could potentially become assets or liabilities depending on the occurrence of one or more uncertain future events after 30 June 2007. It does not include general or unspecified business risks or conditions.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
	Contingent Liabilities
138	Personnel claims	0
138	Total Contingent Liabilities	0

Statement of Unappropriated Expenditure and Capital Expenditure as at 30 June 2007

In terms of the Public Finance Act 1989, approval has been sought under section 26(c) from the Minister of Finance for unappropriated expenditure totalling $0.093million (there was no unappropriated expenditure for the year ended 30 June 2006).

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
	Departmental Output Expenses:
0	Services to the Māori Trustee	93

Forecasts of salary increases by the Māori Trustee were discovered to be incorrect in the last month of the financial year. This resulted in unappropriated expenditure of $0.093m.

Forecasts prepared in May, when final remuneration decisions were taken, indicated that no additional appropriation was required in 2006/07 and therefore no changes were requested in the Supplementary Estimates.

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Statement of Departmental Expenditure and Capital Expenditure Appropriations for the Year Ended 30 June 2007

The Statement of Departmental Expenditure and Capital Expenditure Appropriations show expenditure (exclusive of Goods and Services Tax) against funds appropriated by Parliament.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	30-Jun-07 Supp Estimates $000s
	VOTE: MĀORI AFFAIRS
	Appropriation for classes of outputs
7,040	Policy and Monitoring - Social and Cultural	6,035	5,578	6,042
11,063	Policy and Monitoring - Economic and Enterprise	11,858	14,326	12,636
7,467	Policy - Crown Māori Relationships	6,898	6,443	6,988
10,309	Relationships and Information	9,922	9,662	10,053
13,528	Operations Management	14,731	14,317	14,875
4,327	Services to the Māori Trustee	4,781	4,389	4,689
53,734	Total Appropriations for Classes of Outputs	54,225	54,715	55,283

The accompanying accounting policies and notes form part of these Financial Statements.

For information on major variances against budget refer Note 9: Explanation for Significant Variances.

Notes to the Financial Statements for the Year Ended 30 June 2007

Note 1: Personnel Costs

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
25,357	Salaries and Wages	27,483
1,255	Other Personnel Costs	673
26,612	Total Personnel Costs	28,156

Note 2: Operating Costs

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
129	Audit fees for audit of financial statements	136
3	Other fees charged by auditors	9
2,765	Operating lease rentals	2,992
209	Overseas and Pacific Travel	152
1,810	Domestic Travel	1,866
924	Printing, Books and Publicity	900
2,154	Contract Workers	1,336
4,805	Consultancy Fees	4,267
979	MBFS Commission	1,564
3,503	Programmes	4,426
1,309	Telecommunications	1,231
192	Computer Related Expense	186
6,725	Other Operating Costs	5,430
25,507	Total Operating Costs	24,495

Note 3: Depreciation Charge

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
363	EDP Equipment	288
295	Motor Vehicles	296
16	Office Equipment	4
122	Furniture & Fittings	126
222	Leasehold Improvements	426
290	Software Systems	71
1,308	Total Depreciation Costs	1,211

Note 4: Capital Charge

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
307	Te Puni Kōkiri pays a capital charge to the Crown on its taxpayers’ funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2007 was 7.5% (2006: 8.0%).	363

Note 5: Fixed Assets

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
	EDP Equipment
1,529	Cost	1,614
(906)	Accumulated depreciation	(1,192)
623	EDP Equipment - net book value	422
	Motor Vehicles
1,538	Cost	1,464
(517)	Accumulated depreciation	(668)
1,021	Motor vehicles - net book value	796
	Office Equipment
252	Cost	252
(242)	Accumulated depreciation	(245)
10	Office Equipment - net book value	7
	Furniture and Fittings
725	Cost	792
(171)	Accumulated depreciation	(298)
554	Furniture and Fittings - net book value	494
	Leasehold Improvements
2,164	Cost	2,298
(397)	Accumulated depreciation	(822)
1,767	Leasehold Improvements - net book value	1,476
	Software Development
1,556	Cost	1,709
(1,521)	Accumulated depreciation	(1,557)
35	Software Development - net book value	152
	Work in Progress
56	Software development	115
56	Work in Progress - book value	115
	Total Fixed Assets
7,820	Cost	8,244
(3,754)	Accumulated depreciation	(4,782)
4,066	Total Net Book Value of Fixed Assets	3,462

Note 6: Creditors and Payables

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
1,176	Trade Creditors	1,849
4,231	Accrued Expenses	3,565
162	GST payable	122
5,569	Total Creditors and Payables	5,536

Note 7: Employee Entitlements

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
	CURRENT LIABILITIES
1,407	Annual Leave	1,650
398	Salaries and Wages	317
43	Long Service and Retirement Leave	21
1,848	Total current portion	1,988
	NON-CURRENT LIABILITIES
7	Long Service and Retirement Leave	7
7	Total non-current portion	7
1,855	Total employee entitlements	1,995

Note 8: Explanation for Significant Budget Changes

Refer to “The Supplementary Estimates of Appropriations for the year ending 30 June 2007” for an explanation of significant budget changes between the 2006/07 Main Estimates and 2006/07 Supplementary Estimates for Vote Māori Affairs (B.7 – Pages 326 and 329).

Note 9: Explanation for Significant Variances

The following notes explain significant variances between Main Estimates and Actuals.

Statement of Financial Performance (page 73)

	30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	Variance $000s
Personnel Costs	28,156	30,322	2,166
Operating Expenses	24,495	22,831	(1,664)

Personnel Costs – the variance mainly relates to delays experienced in appointing staff to new positions.

Operating Costs – additional operating costs were incurred mainly as a result of increased activity in Treaty of Waitangi claims and Māori Tourism, resulting in additional appropriation in the Supplementary Estimates, as well as use of consultants to undertake a number of projects that were not budgeted.

Statement of Financial Position (page 75)

	30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	Variance $000s
Cash	9,015	5,249	(3,766)
Creditors & Payables	5,536	2,510	(3,026)

Cash – the increase in cash is largely due to more than anticipated levels of Creditors and Payables and the Net Operating surplus.

Creditors and Payables – the variance is mainly due to larger year end accruals than originally forecast.

Statement of Departmental Expenditure and Capital Expenditure Appropriations (page 81)

	30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	Variance $000s
Policy and Monitoring - Economic and Enterprise	11,858	14,326	2,468

The variance mainly relates to the realignment of strategic priorities by shifting resources across other output classes. This particularly reflects increased activity around Treaty of Waitangi Claims and Settlements and the Māori Trust Office review within Policy - Crown Māori Relationships.

Note 10: Financial Instruments

Te Puni Kōkiri is party to financial instrument arrangements as part of its everyday operations. These include instruments such as bank balances, accounts receivable and accounts payable.

Credit Risk

Credit risk is the risk that a third party will default on its obligations to Te Puni Kōkiri, causing Te Puni Kōkiri to incur a loss. In the normal course of its business, Te Puni Kōkiri incurs credit risk from trade debtors, and transactions with financial institutions and the New Zealand Debt Management Office (NZDMO).

Te Puni Kōkiri does not require any collateral or security to support financial instruments with financial institutions that Te Puni Kōkiri deals with, or with the NZDMO, as these entities have high credit ratings. For its other financial instruments, Te Puni Kōkiri does not have significant concentrations of credit risk.

Fair Value

The fair value of financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.

Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. This could impact on the return on investments or the cost of borrowing. Te Puni Kōkiri has no significant exposure to interest rate risk on its financial instruments.

Under section 46 of the Public Finance Act Te Puni Kōkiri cannot raise a loan without Ministerial approval and no such loans have been raised. Accordingly, there is no interest rate exposure for funds borrowed.

Note 11: Related Party Information

Te Puni Kōkiri is a wholly owned entity of the Crown. The Government significantly influences the roles of Te Puni Kōkiri as well as being its major source of revenue.

Te Puni Kōkiri enters into numerous transactions with other government departments, Crown agencies and state-owned enterprises on an arm’s length basis. These transactions are not considered to be related party transactions.

Apart from those transactions described above, Te Puni Kōkiri has not entered into any related party transactions, except for where:

Te Puni Kōkiri staff who work in local communities may in a private capacity hold executive or advisory positions in local organisations. Some of these organisations may receive funding via Te Puni Kōkiri. These organisations are therefore considered related parties of Te Puni Kōkiri.

Te Puni Kōkiri staff are required to declare any real or potential conflicts of interest. Steps are then taken to ensure that staff members with a conflict of interest are not involved in any Te Puni Kōkiri decisions involving a group/organisation they may be involved with in a private capacity.

Note 12: Adoption of International Financial Reporting Standards

In December 2002 the New Zealand Accounting Standards Review Board announced that New Zealand International Financial Reporting Standards (NZ IFRS) would apply to all New Zealand reporting entities for the periods commencing on or after 1 January 2007. Entities had the option to adopt NZ IFRS for the periods beginning on or after 1 January 2005.

Te Puni Kōkiri intends to implement NZ IFRS in its annual financial statements for the year ending 30 June 2008. In complying with NZ IFRS for the first time, Te Puni Kōkiri will restate amounts previously reported under current New Zealand accounting standards (NZ GAAP) using NZ IFRS. This requires a restatement of opening balances as at 1 July 2006, with initial transitional adjustments recognised retrospectively and mainly against retained earnings (operating surplus) at that date. The amounts/transactions incurred during the year ending 30 June 2007 will also be restated and will impact the income statement (statement of financial performance) and the balance sheet (statement of financial position) for that period. However, transitional adjustments relating to those standards where comparatives are not required will only be made at 30 June 2007.

Transition Management

A conversion project involving finance staff was established to evaluate the differences, if any, between current policies and the policies of the financial statements of the Government. The project team assessed the impact of changes in financial reporting standards on Te Puni Kōkiri financial reporting and other related activities as well as designed and implemented processes to deliver financial reporting under NZ IFRS.

This project is largely complete and Te Puni Kōkiri expects to be in a position to comply with the requirements of NZ IFRS for the year ending 30 June 2008.

Impact on Transition to NZ IFRS

The purpose of this disclosure is to highlight the expected impact on Te Puni Kōkiri as a result of transition from current policies to NZ IFRS based on the standards that exist at the date of issue of these financial statements. As we progress towards 30 June 2008, Te Puni Kōkiri intends to continue to provide users of the financial statements with updated information about the likely impacts of NZ IFRS on its income statement and balance sheet. This note, therefore, only provides a summary of the significant potential impacts resulting from transition to NZ IFRS and should not be taken as an exhaustive list of all the differences between existing NZ GAAP and NZ IFRS. NZ IFRS 1 also allows a number of exemptions to assist in the transition to reporting under NZ IFRS. The explanatory comments below include details of the NZ IFRS 1 treatments adopted.

Changes in accounting policies on transition to NZ IFRS

The significant differences identified by Te Puni Kōkiri on transition to NZ IFRS are outlined below. It should not be regarded as a complete list of changes in accounting policies that will result from the transition to NZ IFRS, as some decisions have not been finalised where choices of accounting policies are available. It is possible that the actual impact of adopting NZ IFRS may vary from the information presented below, and the variation may be material.

Te Puni Kōkiri intends to provide further information, including quantifying the impacts of transitioning to NZ IFRS in our next Annual financial statements for the year ending 30 June 2008.

The estimated impact of transition to NZ IFRS from existing NZ GAAP is set out below. It is possible that the actual impact of adopting NZ IFRS may vary from the information presented below, and the variation may be material.

Departmental

Estimated Impact on Te Puni Kōkiri Departmental Equity, Total Liabilities and Total Assets on transition to NZ IFRS on 1 July 2006

	Total Equity $000	Total Liabilities $000	Total Assets $000
Total reported under NZ GAAP	4,835	8,050	12,885
NZ IFRS adjustments Employee Benefits (Additional sick leave liability)	(63)	63	-
Total NZ IFRS Adjustments	(63)	63	-
Restated totals under NZ IFRS at 1 July 2006	4,772	8,113	12,885

Employee Benefits

Te Puni Kōkiri recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that Te Puni Kōkiri anticipates it will be used by staff to cover those future absences.

Long service and retiring leave is calculated as the present value of the estimated future cash outflows.

Non-Departmental

	Total Equity $000	Total Liabilities $000	Total Assets $000
Total reported under NZ GAAP	44,232	19,440	63,672
NZ IFRS adjustments Restatement of Financial Assets	(794)	-	(794)
Total NZ IFRS Adjustments	(794)	-	(794)
Restated totals under NZ IFRS at 1 July 2006	43,438	19,440	62,878

Financial Assets

Rural Lending loans are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These are recognised initially at fair value plus transaction costs and subsequently measured at amortised cost using the effective interest rate method. Loans 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 and impairment 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.

Estimated Impact on Transition to NZ IFRS as at 30 June 2007

Te Puni Kōkiri has estimated the impact on Departmental and Non Departmental Equity, Total Liabilities, Total Assets and Income of transition to NZ IFRS as at 30 June 2007.

Note 13: Forecast Human Resources Levels

30-Jun-06 Actual			30-Jun-07 Actual	30-Jun-07 Statement of Intent
	HUMAN RESOURCES
16	Staff Turnover	%	11	15
5.4	Average Length of Service	Years	5.9	6.0
390	Total Staff	No.	384	406

Non-Departmental Financial Statements and Schedules

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
4,615	Revenues and Capital Receipts	5,912
97,740	Expenses	91,423
63,672	Assets	66,736
19,440	Liabilities	7,127

The following 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 2006/07.

Statement of Non-Departmental Accounting Policies

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 polices. The financial statements have been prepared on an historical cost basis.

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 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.

Comparatives

To ensure consistency with the current year, certain comparative information has been restated or reclassified where appropriate. This has occurred:

• where classifications have changed between periods, and (if appropriate).
• where Te Puni Kōkiri has made additional disclosure in the current year and where a greater degree of disaggregation of prior year amounts and balances is therefore required.

Revenue

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.

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 Payables or Debtors and Receivables (as appropriate).

Debtors and Receivables

Debtors and receivables are recorded at estimated realisable value, after providing for doubtful and uncollectible debts.

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.

Contingent Liabilities

Contingent liabilities are disclosed at the point at which the contingency is evident.

Changes in Accounting Policies

There have been no changes to the accounting policies. Accounting policies have been applied on a basis consistent with previous years.

Schedule of Non-Departmental Revenue for the Year Ended 30 June 2007

The Schedule of Non-Departmental Revenue shows budgeted revenue against actual revenue. Figures are GST exclusive.

30-Jun-06 Actual $000s		Note	30-Jun-07 Actual $000s	30-Jun-07 Supp Estimates $000s
	Current Revenue
	Non-Tax Revenue
(25)	Interest on Advances		73	160
35	Miscellaneous Receipts		26	0
4,327	Māori Trustee	1	4,741	3,802
6	Mortgage Repayments Intended for Housing Corporation of New Zealand		3	10
4,343	Total Current Revenue		4,843	3,972
	Capital Revenue
272	Repayment of Advances		1,069	325
272	Total Capital Revenue		1,069	325
4,615	Total Crown Revenue		5,912	4,297

The accompanying accounting policies and notes form part of these Financial Statements.

Schedule of Non-Departmental Expenses for the Year Ended 30 June 2007

The Schedule of Expenses summarises Non-Departmental expenses that Te Puni Kōkiri administers on behalf of the Crown. Further details are provided in the Statement of Expenditure and Capital Expenditure Appropriations on pages 96 to 97 Figures are GST exclusive.

30-Jun-06 Actual $000s		Note	30-Jun-07 Actual $000s	30-Jun-07 Supp Estimates $000s
	Non-Departmental Expenses
	Total Operating Annual Appropriations
67,252	Total Non-Departmental Output Expenses		85,179	89,141
477	Total Benefits and Other Unrequited Expenses		480	480
29,193	Other Expenses incurred by the Crown		5,076	5,251
96,922	Total Operating Annual Appropriations		90,735	94,872
794	Capital Contributions		664	1,922
24	Appropriations for Other Expenses		24	37
	Provision for Write Off’s
(5)	Rural Lending		(34)	0
0	Māori Land Development		0	0
4,327	Māori Trustee	1	4,741	4,649
4,322	Total Provision for Write Off’s		4,707	4,649
102,062	Total Non-Departmental Expenses		96,130	101,480

The accompanying accounting policies and notes form part of these Financial Statements.

Statement of Non-Departmental Expenditure and Capital Expenditure Appropriations for the Year Ended 30 June 2007

The Statement of Non-Departmental Expenditure and Capital Expenditure Appropriations shows expenditure and capital payments incurred against funds appropriated by Parliament. Te Puni Kōkiri administers these appropriations on behalf of the Crown. Figures are GST exclusive.

30-Jun-06 Actual $000s		Note	30-Jun-07 Actual $000s	30-Jun-07 Supp Estimates $000s
	Operating Annual Appropriations
	Non-departmental output expenses
40,332	Māori Television Broadcasting	2	40,332	40,332
11,019	Māori Radio Broadcasting	3	11,169	11,169
1,608	Administration of Māori Broadcasting	4	1,608	1,608
2,315	Promotion of the Māori Language	5	3,204	3,204
440	Iwi Housing Support		456	456
11,538	Māori Television Channel	6	11,538	11,538
	Māori Potential Funds
0	- Mātauranga (Knowledge)	7	6,202	6,250
0	- Whakamana (Leadership)	7	4,749	8,334
0	- Rawa (Resources)	7	5,921	6,250
0	Total Māori Potential Funds		16,872	20,834
67,252	Total Non-Departmental Output Expenses		85,179	89,141
	Benefits and other unrequited expenses
477	Rangatiratanga Grants		480	480
477	Total Benefits and Other Unrequited Expenses		480	480
	Other expenses to be incurred by the Crown
196	New Zealand Māori Council		196	196
178	Māori Wardens		178	178
1,027	Capacity Assessment	8	0	0
6,992	Building Capacity in Māori Communities	8	0	0
830	Māori Registration Service	9	626	626
3,645	Local Level Solutions/Development	8	0	0
1,396	Direct Resourcing of Local Level Solutions	8	0	0
6	Orakei Reserves Board Act		0	0
8	Payments to Housing Corporation of New Zealand		2	36
84	Te Putahi Paoho		131	131
175	Regional Tourism Organisations-Planning		160	160
1,493	Whānau Development: Enterprise	8	0	0
7,835	Whānau Development: Action and Research	8	0	0
1,509	Whānau Development: Sport and Culture	8	0	0
1,867	Māori Women’s Development Fund		1,867	1,867
1,952	Beyond Hui Taumata		1,909	2,000
0	Loss from sale of Mauao Reserve		0	50
0	Orakei Act 1991		7	7
29,193	Total Other Expenses to be Incurred by the Crown		5,076	5,251
96,922	Total Operating Annual Appropriations		90,735	94,872
	Capital Contributions to other persons or organisations
794	Rural Lending	11	164	1,262
0	Administration of Māori Broadcasting	4	0	160
0	Promotion of the Māori Language	5	500	500
794	Total Capital Contributions		664	1,922
	Appropriations for Other Expenses
24	Payments to Trust Boards		24	37
24	Total Other Expenses		24	37
97,740	Total Non-Departmental Appropriations		91,423	96,831

The accompanying accounting policies and notes form part of these Financial Statements.

Statement of Unappropriated Expenditure and Capital Expenditure as at 30 June 2007

In terms of the Public Finance Act 1989, approval has been sought under section 26(c) from the Minister of Finance for unappropriated expenditure totalling $0.093million (there was no unappropriated expenditure for the year ended 30 June 2006).

30-Jun-06 Actual $000		30-Jun-07 Actual $000
	0ther Expenses to be Incurred by the Crown:
0	Provision for Māori Trustee Debt	93

Forecasts of salary increases by the Māori Trustee were discovered to be incorrect in the last month of the financial year. This resulted in unappropriated expenditure of $0.093m in the Departmental Output Expenses - Services to the Māori Trustee.

As this appropriation is the full provisioning of the costs incurred by the Māori Trustee in relation to the funding it receives under the Departmental Output Expense - Services to the Māori Trustee, the unappropriated amount also impacts this appropriation.

The accompanying accounting policies and notes form part of these Financial Statements.

Schedule of Non-Departmental Assets as at 30 June 2007

Non-Departmental assets are administered by Te Puni Kōkiri on behalf of the Crown. As these assets are neither controlled by Te Puni Kōkiri nor used in the production of Te Puni Kōkiri outputs, they are not reported in the department’s Statement of Financial Position.

Non-Departmental Assets administered by Te Puni Kōkiri on behalf of the Crown include:

30-Jun-06 Actual $000s		Note	30-Jun-07 Actual $000s
	Current Assets
41,697	Cash		49,692
19,127	Accounts Receivable/Prepayments		15,002
60,824	Total Current Assets		64,694
	Non-Current Assets
	Māori Trust Office
50,500	Māori Trustee - Debt	1	55,241
(50,500)	Māori Trustee - Debt Provision	1	(55,241)
0	Total Non-Current Assets		0
	Investments
156	Section 460A Loans	10	156
	Rural Lending
3,792	Total Loans	11	2,641
(1,145)	Less : Provision for doubtful debts		(795)
2,647			1,846
	Māori Land Development
	Investments comprise Advances to -
179	Crown owned stations		179
(179)	Less : Provision for doubtful debts		(179)
0			0
2,803	Total Investments		2,002
	Property Plant and Equipment
45	Land		40
45	Total Property Plant and Equipment		40
63,672	Total non-departmental assets administered by Te Puni Kōkiri		66,736

The accompanying accounting policies and notes form part of these Financial Statements.

Schedule of Non-Departmental Liabilities as at 30 June 2007

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s	30-Jun-07 Supp. Estimates $000s
	Current Liabilities
19,218	Creditors and Payables	6,315	2,877
222	Other Liabilities	812	0
19,440	Total Current Liabilities	7,127	2,877

Schedule of Non-Departmental Commitments as at 30 June 2007

The Schedule of Non-Departmental Commitments shows the future contractual obligations (exclusive of GST) that will become liabilities if and when the terms and conditions of existing contracts are met.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
	Category
602	Whānau Development - Enterprise	0
0	Māori Potential Fund	14,428
53,798	Crown Entities & Non-Government Organisations	62,134
54,400	Total Crown Commitments by Category	76,562
	Out year commitments
54,400	Less than one year	73,832
0	One to two years	2,245
0	Two to five years	485
0	More than five years	0
54,400	Total Crown Commitments by Out Year	76,562

The accompanying accounting policies and notes form part of these Financial Statements.

Statement of Non-Departmental Contingent Assets and Liabilities as at 30 June 2007

The Statement of Non-Departmental Contingent Assets and Liabilities shows amounts at balance date that could potentially become assets or liabilities depending on the occurrence of one or more uncertain future events after 30 June 2007. It does not include general or unspecified business risks or conditions. This schedule is exclusive of GST.

30-Jun-06 Actual $000s		30-Jun-07 Actual $000s
2,358	Income Tax and GST indemnity	2,358
120	Public Liability Claims	270
2,478	Total Contingent Liabilities	2,628

Where contingent liabilities have arisen as a consequence of legal action being taken against the Crown, the amount included is the amount claimed and thus the maximum potential cost. It does not represent either an admission that the claim is valid or an estimation of the possible amount of any award against the Crown.

Notes to the Non-Departmental Financial Statements and Schedules for the Year Ended 30 June 2007

Note 1: Māori Trustee

The Crown incurs expenditure via the Te Puni Kōkiri departmental appropriation under the output class “Services to the Māori Trustee”. There is an expectation that this expenditure will be repaid by the Māori Trustee to the Crown at some future date. A 100% provision against the Māori Trustee’s debt is shown to reflect that the debt has not yet been “called”.

Note 2: Māori Television Broadcasting

Promotion of Māori language and Māori culture through television broadcasting by Te Māngai Pāho.

Note 3: Māori Radio Broadcasting

Promotion of Māori language and Māori culture through radio broadcasting by Te Māngai Pāho.

Note 4: Administration of Māori Broadcasting

Purchase of administration services from Te Māngai Pāho to meet its statutory functions and deliver on the Government’s Māori broadcasting policy.

Note 5: 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 6: Māori Television Channel

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

Note 7: Māori Potential Funds

In 2006/07, three new Non-Departmental Output Expenses were established to enable Te Puni Kōkiri allocate non-departmental funding appropriations against the Māori Potential Framework. The three new Non-Departmental Output Expenses; Whakamana (leadership), Mātauranga (knowledge/skills) and Rawa (resources) are a direct link to the three strategic investment areas which were identified through the Māori Potential Approach.

Note 8: Transition to Māori Potential Funds

Due to the establishment of the three new Non-Departmental Output Expenses under the Māori Potential Funds, funding from the following Non-departmental appropriations was merged into Whakamana (leadership), Mātauranga (knowledge/skills) and Rawa (resources).

The appropriations are; Whānau Development – Action and Research, Whānau Development – Enterprise, Whānau Development – Sport and Culture, Capacity Assessment, Building Capacity in Māori Communities, Direct Resourcing of Local Level Solutions and Local Level Solutions/Development.

Note 9: 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 10: Section 460A Loans

This reflects advances and other assistance provided under section 460A of the Māori Affairs Act 1953, which is now administered by Te Puni Kōkiri under Part II of the Māori Affairs Restructuring Act 1989.

Note 11: 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 II of the Māori Affairs Restructuring Act 1989.

Note 12: Explanation for Significant Budget Changes

Refer to “The Supplementary Estimates of Appropriations for the year ending 30 June 2007” for an explanation of significant budget changes between the 2006/07 Main Estimates and 2006/07 Supplementary Estimates for Vote Māori Affairs (B.7 – Pages 326 to 329).

Note 13: Explanation for Significant Variances

The following notes explain significant variances between the Main Estimates and Actuals for Non-Departmental Expenditure.

Non-departmental Output Expenses	30-Jun-07 Actual $000s	30-Jun-07 Main Estimates $000s	Variance $000s
Mātauranga (Knowledge)	6,202	7,168	966
Whakamana (Leadership)	4,749	9,558	4,809
Rawa (Resources)	5,921	7,168	1,247

2006/07 was the first year of administering the above investment funds. As a result, expenditure was delayed due to the initial establishment of appropriate systems and processes.

An expense transfer into 2007/08 of $3.06 million was approved to fund Budget 2007 initiatives; Māori Wardens and Treaty 2U Touring Exhibition. An in-principle expense transfer into 2007/08 of up to $4 million has been approved to fund cross-agency partnered interventions.

Note 14: 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.

• Back to Key Internal Activities