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The Department of the Prime Minister and Cabinet is a government department defined by Section 2 of 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 D1)
Support services to the Governor-General and maintenance of the residences
(Output D2)
Intelligence assessments on developments overseas (Output D3)
The financial statements have been prepared in accordance with Section 35 of 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 Section 5 of the Public Finance Act 1989.
The Statement of Unappropriated Expenditure and Statements of Departmental and Non-Departmental Expenditure and Appropriations are inclusive of GST. All other statements are GST exclusive. The Statement of Financial Position is also 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).
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 | 14% |
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 87 of total departmental appropriation for output costs. (This compares with 90 in 2001/02.)
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 13% of total departmental appropriation for output
costs.(This compares with 10% in 2001/02.)
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
retiring 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.