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The Department of the Prime Minister and Cabinet is a government department defined by the Public Finance Act 1989.
These financial statements incorporate the following classes of outputs of the Department of the Prime Minister and Cabinet:
Policy advice and secretariat and coordination services
(Output 1)
Support services to the Governor-General and maintenance
of the residences (Output 2)
Intelligence assessments on developments overseas (Output
3)
The financial statements have been prepared in accordance with the Public Finance Act 1989. They have also been prepared in accordance
with Treasury Instructions and generally accepted accounting practice.
The measurement base adopted is that of historical cost.
The budget figures are those presented in the Budget estimates (main estimates) and those amended by the supplementary estimates and any transfer made by Order in Council under the Public Finance Act 1989.
All statements are GST exclusive, with the exception of the Statement of Financial Position (where the entries for creditors and payables and for debtors and receivables are GST inclusive) and the Statement of Non-Departmental Expenditure and Appropriations.
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).
All fixed assets have been valued on historical cost basis. All individual assets or groups of assets are capitalised if their purchase cost is $2,000 or greater.
Gains and losses arising from the sale or disposal of assets have been included in the Statement of Financial Performance.
All fixed assets have been depreciated on a straight-line basis that reflects the decline in service potential of the asset during the reporting period. Specific rates of depreciation used for the various classes of fixed assets are as follows:
| Fixtures and fittings | 10% |
|---|---|
| IT equipment | 33% |
| Office equipment | 20% |
| Furniture | 20% |
| Motor vehicles | 25% |
| Kitchen equipment, e.g. domestic appliances | 20% |
| Major plant and equipment | 10% |
| Minor plant and equipment | 20% |
| Ground improvements | 20% |
The department is exempt from the payment of income tax in terms of the Income Tax Act 1994. Accordingly, no charge for income tax has been provided for.
The department is party to financial arrangements in the form of bank accounts, accounts receivable, accounts payable, and accruals as part of its everyday operations. These are reflected in the Statement of Financial Position at their fair value. Revenue and expenses in relation to the financial instruments are recognised in the Statement of Financial Performance in arriving at the operating surplus.
Direct costs are expenses incurred from activities in producing outputs. These costs are charged directly to the related output classes. Direct costs represent 82 per cent of total departmental appropriation for output costs. (This compares with 87 per cent in 2004/05.)
Indirect costs are expenses incurred by Corporate Services and by the Office of the Chief Executive. Indirect costs are allocated to each output class in proportion to the level of appropriation in relation to the total vote. Indirect costs represent 18 per cent of total departmental appropriation for output costs. (This compares with 13 per cent in 2004/05.)
The department leases office premises and photocopiers. As all risks and ownership are retained by the lessor, these leases are classified as operating leases. Operating lease costs are expensed in the period in which they are incurred.
Provision is made in respect of the department’s liability for annual, retirement, and long-service leave. Annual leave entitlements have been calculated on an actual entitlement basis at current rates of pay. Long-service leave and retirement leave have been calculated on an actuarial basis, based on the present value of expected future entitlements.
Future payments are disclosed as commitments at the point where a contractual obligation arises, to the extent that they are equally unperformed obligations. Commitments relating to employment contracts are not disclosed.
Contingent liabilities are disclosed at the point at which the contingency is evident.
There have been no changes in accounting policies, including cost-allocation accounting policies. All policies have been applied on bases consistent with those used in the previous period.