Notes to the Non-Departmental Financial Statementsfor the year ended 30 June 2011
1. STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2011
Reporting entity
These non-departmental schedules and statements present financial information on public funds managed by the department on behalf of the Crown.
These non-departmental balances are consolidated into the Financial Statements of the Government of New Zealand. For a full understanding of the Crown’s financial position, results of operations and cash flows for the year, reference should also be made to the Financial Statements of the Government of New Zealand.
Accounting policies
The non-departmental schedules and statements have been prepared in accordance with the government’s accounting policies as set out in the Financial Statements of the Government of New Zealand and in accordance with the relevant Treasury instructions and Treasury circulars.
Measurement and recognition rules applied in the preparation of these non-departmental financial statements and schedules are consistent with New Zealand Generally Accepted Accounting Practice (NZ GAAP) as appropriate for public benefit entities.
The following particular accounting policies, which materially affect the measurement of financial results and financial position, have been applied.
Budget figures
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.
Goods and services tax (GST)
All statements are GST exclusive, with the exception of the Schedule of Non-Departmental Assets and Liabilities where the entries for creditors and payables are GST inclusive. In accordance with Treasury instructions, input-tax deduction is not claimed on non-departmental expenditure. Instead, the amount of GST applicable to non-departmental expenditure is recognised as a separate expense in the financial statements.
Valuation of property, plant and equipment
Land and buildings are recorded at fair value, as determined by an independent registered valuer. QV Valuations revalued land and buildings as at 30 June 2011. Fair value is determined using market-based evidence unless insufficient market-based evidence exists, in which case the land and buildings are valued at optimised depreciated replacement cost.
Land and buildings are revalued at least every three years. Additions between revaluations are recorded at cost.
Other artwork, ornaments and some antique furniture and fittings are revalued with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date. They are recorded at this fair value, less accumulated depreciation and impairment losses.
Any revaluation surplus arising on the revaluation of a class of asset is transferred directly to the asset revaluation reserve. A revaluation deficit in excess of the asset revaluation reserve balance for the class of property, plant and equipment is recognised in the Statement of Non-Departmental Expenses and Capital Expenditure against Appropriations in the period in which it arises.
Other items of property, plant and equipment are recorded at cost, less accumulated depreciation and impairment losses. All individual assets are capitalised if their purchase cost is $2,000 or greater.
Depreciation
All items of property, plant and equipment 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 property, plant and equipment for the current and comparative periods are as follows:
| Buildings | 1–33% |
|---|---|
| Fixtures and fittings | 10% |
| Furniture | 20% |
| Motor vehicles | 25% |
| Plant and equipment | 20% |
| Other assets | 2–20% |
The useful life of Government House Wellington’s building components has been revised during the year.
Commitments
Future payments are disclosed as commitments at the point where a contractual obligation arises, to the extent that they are equally unperformed obligations.
Financial assets and liabilities
All financial assets and financial liabilities are measured at amortised cost.
2. PROPERTY, PLANT AND EQUIPMENT
| Land1 | Building1 | Plant and equipment | Furniture and fittings | Motor vehicles | Other assets | Total | |
|---|---|---|---|---|---|---|---|
| 1 Land and buildings have been revalued to fair value as at 30 June 2011 by an independently contracted registered valuer, QV Valuations. | |||||||
| Cost | |||||||
| Balance at 1 July 2009 | 30,220 | 14,068 | 27 | 2,173 | 160 | 2,333 | 48,981 |
| Additions | – | 150 | – | – | – | – | 150 |
| Disposals | – | (578) | – | – | – | – | (578) |
| Revaluation increase/(decrease) | – | – | – | – | – | – | – |
| Balance at 30 June 2010 | 30,220 | 13,640 | 27 | 2,173 | 160 | 2,333 | 48,553 |
| Balance at 1 July 2010 | 30,220 | 13,640 | 27 | 2,173 | 160 | 2,333 | 48,553 |
| Additions | – | 16,237 | 8 | 280 | – | – | 16,525 |
| Revaluation increase/(decrease) | (1,372) | (7,942) | – | – | – | – | (9,314) |
| Transfer from work in progress | – | 25,320 | – | – | – | – | 25,320 |
| Disposals | – | – | (16) | (538) | – | (7) | (561) |
| Balance at 30 June 2011 | 28,848 | 47,255 | 19 | 1,915 | 160 | 2,326 | 80,523 |
| Accumulated Depreciation and Impairment Losses | |||||||
| Balance at 1 July 2009 | – | 479 | 27 | 985 | 160 | 521 | 2,172 |
| Depreciation expense | – | 1,099 | – | 354 | – | 106 | 1,559 |
| Eliminated on disposal | – | (578) | – | – | – | – | (578) |
| Eliminated on revaluation | – | – | – | – | – | – | – |
| Balance at 30 June 2010 | – | 1,000 | 27 | 1,339 | 160 | 627 | 3,153 |
| Balance at 1 July 2010 | – | 1,000 | 27 | 1,339 | 160 | 627 | 3,153 |
| Depreciation expense | – | 864 | – | 454 | – | 107 | 1,425 |
| Eliminated on disposal | – | – | (14) | (538) | – | (6) | (558) |
| Eliminated on revaluation | – | (1,415) | – | – | – | – | (1,415) |
| Balance at 30 June 2011 | – | 449 | 13 | 1,255 | 160 | 728 | 2,605 |
| Carrying value | |||||||
| At 30 June and 1 July 2010 | 30,220 | 12,640 | – | 834 | – | 1,706 | 45,400 |
| AT 30 June 2011 | 28,848 | 46,806 | 6 | 660 | – | 1,598 | 77,918 |
3. CREDITORS AND OTHER PAYABLES
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| 126 | Trade creditors | 35 |
| 2,245 | Creditors relating to capital expenditure | 581 |
| 65 | Accrued expenses | 74 |
| 83 | Other payables | 43 |
| 2,519 | Total creditors and other payables | 733 |
4. CATEGORIES OF FINANCIAL INSTRUMENTS
The carrying amounts of financial assets and financial liabilities in each of the NZ IAS 39 categories are as follows:
| 30.6.10 | 30.6.11 | |
|---|---|---|
| Actual $000 |
Actual $000 | |
| LOANS AND RECEIVABLES | ||
| 5,282 | Cash and cash equivalent | 4,559 |
| – | Sundry receivables | 6 |
| 5,282 | TOTAL LOANS AND RECEIVABLES | 4,565 |
| FINANCIAL LIABILITIES MEASURED AT AMORTISED COST | ||
| 2,519 | CREDITORS AND OTHER PAYABLES | 733 |
5. EXPLANATION OF MAJOR VARIANCES AGAINST BUDGET
Statement of Non-Departmental Expenses and Capital Expenditure against Appropriations
The appropriation for depreciation expenses on Crown assets increased by $648,000 in the Supplementary Estimates, because of the new revaluation.
At 30 June 2011, expenditure under permanent legislative authority (the Civil List Act 1979) was $346,000 below Supplementary Estimates because of changed or rescheduled travel intentions.
The appropriation for revaluation was not spent because of the higher than expected valuation following the completion of the Government House Conservation Project.
The appropriation for loss on sale of fixed assets was not spent because of the delay in the sale.
The Government House capital investment (the Government House Conservation Project) increased by $5.813 million in the Supplementary Estimates. This is a result of a carry-forward from 2009/10 ($976,000), a transfer from 2011/12 baseline to cover the increased costs because the project is progressing ahead of schedule ($5.437 million), and a fiscally neutral transfer to the operating budget ($600,000). The Government House Conservation Project is the department’s second fixed-term responsibility.
Schedule of Non-Departmental Assets and Liabilities
At 30 June 2011, the department’s bank balance was higher than shown in the Supplementary Estimates because of underspending in non-departmental expenses.
Creditors and other payables are lower than shown in the Supplementary Estimates because of early completion of the Government House Conservation Project.
