About the model financial statements
Te Motu Regional Economic Development Trust: Model financial statements 2008/09.
Objective
The principal objective in producing the model is to guide a CCO in preparing NZ IFRS compliant financial statements.
The model financial statements have been prepared using a fictitious entity, Te Motu Regional Economic Development Trust (the Trust).
Although this model is based on a CCO that is a charitable trust, most of the model would apply equally to CCOs that are of a different legal nature (e.g incorporated societies or companies).
The model is prepared on the basis that the Trust is a public benefit entity for the purposes of NZ IFRS.
Updates to the model
The tables below explain the updates to the model. These are grouped into financial instrument changes and other changes. The page numbers below refer to the 30 June 2009 model.
Financial instrument disclosure changes
Although NZ IFRS 7 Financial Instruments: Disclosures (NZ IFRS 7) was applied in the prior model, we have made significant changes to the financial instrument disclosures in this update. The changes to financial instrument disclosures reflect increased practical knowledge developed in the application of the NZ IFRS 7 disclosure requirements, and the evolving good practice that has been generated from application by early adopters.
It is important to highlight that there may be more than one way of presenting the information required by NZ IFRS 7, and the extent of certain disclosure requirements will depend on the materiality of risks arising from financial instruments. Councils will need to consider the most appropriate presentation, and the extent of disclosures, based on their particular facts and circumstances.
| Page number | Note number | Description of change |
|---|---|---|
| 12 | 1 | We have highlighted that the recent amendment to NZ IAS 32, Puttable Financial Instruments and Obligations Arising on Liquidation, may permit limited life Trust’s “equity” to be presented as “equity” if certain conditions are satisfied. Prior to this amendment, a limited life Trust's “equity” may have been classified as a liability. |
| 14 | 1 | The accounting policy for debtors and other receivables has been expanded to provide information on the indicators that a receivable may be impaired and when a receivable is written‑off against the provision for impairment. |
| 15 | 1 | An accounting policy for creditors and other payables has been added. |
| 18 | 8 | Note 8 Debtors and other receivables: Further information on those receivables that are collectively or individually impaired has been inserted as required by the NZ IFRS 7 credit risk disclosures. |
| 26 | 25 | Sensitivity analysis: A disclosure has been included explaining why a sensitivity analysis has not been presented for market risks. |
| 26 | 25 | Credit quality of financial assets: Information has been disclosed about the credit quality of financial assets that are neither overdue or impaired, which demonstrates one way the requirements of NZ IFRS 7.36(c) could be met. |
| 27 | 25 | Liquidity risk: A table has been inserted presenting the contractual maturity analysis for all financial liabilities in a single table. |
Other changes
| Page number | Note number | Description of change |
|---|---|---|
| The NZ IFRS 1 First-time Adoption of NZ IFRS (NZ IFRS 1) transitional disclosures required to be disclosed in an entity’s first NZ IFRS financial statements have not been included in the updated model. There is no requirement to disclose the NZ IFRS 1 transitional disclosures in reporting periods subsequent to the first financial statements prepared under NZ IFRS. | ||
| 9,23 | Statement of changes in equity: The updated model demonstrates the required adjustment to opening retained earnings on the initial adoption of the amendment to NZ IAS 2 Inventories. | |
| 12 | 1 | Changes in accounting policies: A narrative has been inserted explaining the initial adoption of the amendment to NZ IAS 2 Inventories. |
| 12 | 1 | Standards, amendments, and interpretations issued that are not yet effective and not early adopted: Information on those relevant standards, amendments, and interpretations that have not been early adopted has been updated. |
| 19 | 9 | Inventories: The note has been amended to reflect the revised accounting policy for inventory held for distribution (as required by the amended NZ IAS 2). This includes disclosing the basis for determining the loss in service potential for inventories held for distribution. |
| 27 | 26 | Reclassification of expenses: A note explaining a reclassification of the presentation of expenses has been included to give guidance on how NZ IAS 1.38 may be applied. |
Content
Included in the model is:
- Statement of financial performance,
- Statement of changes in equity,
- Statement of financial position,
- Statement of cash flows,
- Statement of accounting policies, and
- Notes to the financial statements.
The model has not applied the differential reporting exemptions that may be available to qualifying entities under the differential reporting framework. Appendix A of the Framework for Differential Reporting for Entities Applying the New Zealand Equivalents to International Financial Reporting Standards details the full and partial exemptions available to qualifying entities.
The model does not include all the information that is required to be disclosed in a CCO's annual report by sections 67 to 69 of the Local Government Act 2002 (the LGA). In particular the model does not include the non-financial performance information required under section 68 of the LGA.
Not all of the accounting policies and notes will be applicable to a particular CCO. The model is not intended to cover all of the possible financial reporting issues that could arise in the sector. We have included in the model a range of accounting policies and notes, focusing on those that we would expect to occur commonly in the sector. CCOs that need to report on other matters not covered by this model may want to refer to the Local Government model financial statements available on the Audit New Zealand website, which provide a wider range of disclosures.
The model illustrates a possible financial statement format. For example, the statement of financial performance has been prepared by classifying expenses based on the nature of the expenditure. Alternatively, expenses could be classified based on their function. This is just one example where there may be more than one way in disclosing the information required under NZ IFRS.
Entities will need to make choices about the accounting policies and presentation options appropriate for their circumstances.
The model does not address all the possible recognition and disclosure requirements of NZ IFRS. Entities should not use the model as a substitute for referring to individual NZ IFRS standards and interpretations applicable to their specific circumstances.
We have included references to specific NZ IFRS standards in the left margin of the model and a subject index for easy searching.
Standards not covered by the model
The model does not consider any recognition or disclosure requirements of the following standards:
- NZ IFRS 1 First-time Adoption of New Zealand Equivalents to International Financial Reporting Standards
- NZ IFRS 2 Shared-based Payment;
- NZ IFRS 3 Business Combinations;
- NZ IFRS 4 Insurance Contracts;
- NZ IFRS 6 Exploration for and Evaluation of Mineral Resources;
- NZ IFRS 8 Operating Segments;
- NZ IAS 11 Construction Contracts;
- NZ IAS 21 The Effects of Changes in Foreign Exchange Rates;
- NZ IAS 26 Accounting and Reporting by Retirement Benefit Plans;
- NZ IAS 27 Consolidated and Separate Financial Statements;
- NZ IAS 28 Investment in Associates;
- NZ IAS 29 Reporting in Hyperinflationary Economies;
- NZ IAS 31 Interests in Joint Ventures;
- NZ IAS 33 Earnings per Share;
- NZ IAS 34 Interim Financial Reporting;
- NZ IAS 40 Investment Property; and
- NZ IAS 41 Agriculture.
In addition, any standards, interpretations and amendments issued after January 2009 will not be reflected in this set of financial statements.
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