About the Model Financial Statements
Model financial statements: Crown Service Enterprise 2010-11.
Objective
The main objective of this model is to guide Crown entities in preparing financial statements that comply with NZ IFRS.
The model financial statements have been prepared using a fictitious non-company Crown entity, Crown Service Enterprise (CSE).
CSE is a “public benefit entity” for financial reporting purposes. The model is not intended to provide guidance for those Crown entities that are assessed as “profit-oriented entities” for financial reporting purposes.
The model is not intended to provide specific guidance on the statutory reporting requirements for certain types of Crown entities. In particular, the model financial statements do not cover the specific statutory reporting requirements of Tertiary Education Institutions and Crown Research Institutes under their applicable legislation.
The model is not intended to provide specific guidance on the statutory reporting requirements of those entities listed in Schedule 4 of the Public Finance Act 1989 (PFA). Sections 45M to 45O of the PFA detail those sections of the Crown Entities Act 2004 (CEA) that apply to schedule 4 entities.
Main updates to the model
The table below explains the main updates to the model since it was previously published in 2008. Due to the time that has elapsed since the previous publication, we have indicated changes to the model that are relevant for the first-time in the 30 June 2011 financial statements and those that were first relevant to prior year financial statements.
Changes to the model financial statements that are relevant to the 30 June 2011 financial statements
| Page number |
Note number |
Description of change |
|---|---|---|
| 15 | 1 | Changes in accounting policies – a narrative has been inserted explaining the early adoption of the amendments to NZ IFRS 7 Financial Instruments: Disclosures and the revised NZ IAS 24 Related Party Disclosures. |
| 16 | 1 | Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted – a narrative has been inserted for the new financial instruments standard NZ IFRS 9 Financial Instruments. |
| 26 | 9 | Credit risk disclosures – the carrying amount of financial assets that would otherwise be past due or impaired whose terms have been renegotiated is no longer disclosed as this disclosure requirement has been deleted from the revised NZ IFRS 7. |
| 37 | 24 | Related party transactions – new disclosures have been inserted for the early adoption of the revised NZ IAS 24. The main effect is to increase the level of disclosure for related party transactions with government-related entities. |
Changes to the model financial statements that were first relevant to prior year financial statements
| Page number |
Note number |
Description of change |
|---|---|---|
| 11 | - | The previously presented statement of financial performance has been replaced with a statement of comprehensive income. A statement of comprehensive income is required to be prepared under the revised NZ IAS 1 Presentation of Financial Statements. |
| 11 | - | The previous items of "other revenue" and "gains" have been aggregated into a new item "other income" to simplify the presentation of income. |
| 13 | - | The format of the statement of changes in equity has been updated to comply with the revised NZ IAS 1. |
| 17 | 1 | Borrowing costs – a disclosure has been added stating the CSE has elected to defer adoption of the revised NZ IAS 23 Borrowing Costs (Revised 2007). |
| 18 | 1 | Derivative financial instruments – an accounting policy has been added for the current/non-current classification of foreign exchange derivatives. |
| 18 | 1 | Inventories – the accounting policy for inventory held for distribution has been updated for the amendment to NZ IAS 2 Inventories, which changed the measurement of inventory held for distribution to cost, adjusted when applicable for any loss of service potential. The basis for determining the loss in service potential of held for distribution inventory has been disclosed as required by the amended NZ IAS 2. |
| 20 | 1 | Borrowings – a narrative has been added explaining the criteria for classifying borrowings between current and non-current. |
| 20 | 1 | Employee entitlements – an accounting policy has been added for the current/non-current classification of employee entitlements. |
| 22 | 1 | Equity – a narrative has been added explaining the nature and purpose of each reserve within equity to comply with NZ IAS 1.79(b). |
| 27 | 11 | Derivative financial instruments – the fair value disclosures for forward foreign exchange contracts have been improved to better meet the requirements of NZ IFRS 7.27. |
| 27 | 13 | Non-current assets held for sale – the amount of the accumulated revaluation reserves for property classified as held for sale has been disclosed to comply with NZ IFRS 5.38. |
| 29 | 14 | Property, plant, and equipment – the valuation methods and assumption disclosures have been improved to better meet the requirements of NZ IAS 16.77. |
| 31 | 17 | Borrowings – information about loan covenants has been added. The fair value of finance leases has been disclosed to comply with NZ IFRS 7. |
| 37 | 23 | Contingencies – updated information has been provided for the DBP Contributors Scheme contingency disclosure. |
| 40 | 28B | Fair value hierarchy disclosures – a table and related information has been added for the amended fair value disclosures of NZ IFRS 7 for those instruments measured at fair value in the statement of financial position. |
| 42 | 28C | Credit quality of financial assets – a table with information about the credit quality of financial assets has been added to better comply with NZ IFRS 7.36(c). |
| 42 | 28C | Liquidity risk – additional columns of information have been added in the liquidity risk tables. |
| General | - | Disclosures and notes about the first-year adoption of NZ IFRS have been deleted as this information is not required to be repeated in future financial statements. |
Content
Included in the model are:
- a statement of responsibility;
- a statement of comprehensive income;
- a statement of financial position;
- a statement of changes in equity;
- a statement of cash flows;
- a statement of accounting policies; and
- notes to the financial statements.
The model does not include all the information required to be disclosed by the CEA in a Crown entity’s annual report. In particular, the model does not include the disclosures required by sections:
- 151(1)(a),(2) – Information that is necessary to enable an informed assessment to be made on the Crown entity’s operations and performance for the financial year, including an assessment against the intentions, measures, and standards set out in the statement of intent prepared at the beginning of the year;
- 151(1)(b) – Statement of service performance in accordance with section 153;
- 151(1)(f) – Any direction given by a Minister in writing under any enactment during the financial year;
- 151(1)(g) – Information on compliance with the obligation to be a good employer (including a Crown entity’s equal employment opportunity programme);
- 151(1)(i) – Information required by section 20(3), which relates to the enforcement of certain natural person transactions; and
- 151(1)(j) – Information required by section 68(6), which relates to permission to act despite being interested in a matter.
The model has been prepared for an entity that does not have any subsidiaries. If a Crown entity is a parent of a Crown entity group, then the CEA requires the presentation of both parent and consolidated 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 Reporting Regime details the full and partial exemptions available to qualifying entities.
Not all of the accounting policies and notes will be applicable to each Crown entity. The model is not intended to cover all of the possible financial reporting issues that could arise in the sector. Although it is not practical for this model to cover all of the possible financial reporting issues that could arise in a Crown entity, we have included a wide range of accounting policies and notes, including all those that occur commonly in the sector.
The model illustrates a possible financial statement format for a Crown entity. For example, the statement of comprehensive income 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 of disclosing the information required under NZ IFRS.
While the model provides guidance on disclosure matters, it does not deal with the underlying accounting treatment.
Crown 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, measurement, presentation, and disclosure requirements of NZ IFRS. Crown 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 standards and legislation in the left margin of the model and a subject index on page 45 for easy searching. References to NZ IFRS are sourced from the January 2010 NZ IFRS volumes.
Standards not covered by the model
The model does not include the recognition, measurement, presentation, or disclosure requirements of the following standards:
- NZ IFRS 1 First-time Adoption of New Zealand Equivalents International Financial Reporting Standards;
- NZ IFRS 2 Share-based Payment;
- NZ IFRS 3 Business Combinations;
- NZ IFRS 6 Exploration for and Evaluation of Mineral Resources;
- NZ IFRS 8 Operating Segments;
- NZ IAS 11 Construction Contracts;
- NZ IAS 12 Income Taxes;
- NZ IAS 26 Accounting and Reporting by Retirement Benefit Plans;
- NZ IAS 27 Consolidated and Separate Financial Statements;
- NZ IAS 28 Investments in Associates;
- NZ IAS 29 Financial 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 28 February 2011 are not included in the model financial statements.
Terms used in the model
| ACC | Accident Compensation Corporation |
| CEA | Crown Entities Act 2004 |
| GAAP | Generally accepted accounting practice |
| GST | Goods and Services Tax |
| IRD | Inland Revenue Department |
| PFA | Public Finance Act 1989 |
| NZ IFRS | New Zealand equivalents to International Financial Reporting Standards |
