Model Financial Statements (Extracts) - Ministry of Public Accountability 2010-11
About the updated model financial statements
The objective of the updated model financial statements (extracts) is to provide example financial statement disclosures for:
- standards issued and not yet effective that have not been early adopted, a disclosure requirement of paragraph 30 of NZ IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and
- the early adoption of NZ IAS 24 Related Party Disclosures for related party transactions.
We have not reproduced an entire set of the model financial statements. We have limited the update to the two key disclosure changes that apply to a government department’s 2010-11 financial statements.
Notes to the Financial Statements (Extracts)
| NZ IAS 1.10(e) | 1 Statement of accounting policies for the year ended 30 June 2011 | ||
| Early adoption of the revised NZ IAS 24 Related Party Disclosures | |||
| NZ IAS 24.28 | The Ministry has early adopted NZ IAS 24 Related Party Disclosures (Revised 2009). The effect of early adopting the revised NZ IAS 24 is:
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| NZ IAS 8.30,31 | Standards, amendments, and interpretations issued that are not yet effective and have not been early adopted1 | ||
| Standards, amendments, and interpretations issued but not yet effective that have not been early adopted, and which are relevant to the Ministry, are: | |||
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| As the External Reporting Board is to decide on a new accounting standards framework for public benefit entities, it is expected that all new NZ IFRS and amendments to existing NZ IFRS with a mandatory effective date for annual reporting periods commencing on or after 1 January 2012 will not be applicable to public benefit entities. This means that the financial reporting requirements for public benefit entities are expected to be effectively frozen in the short term. Accordingly, no disclosure has been made about new or amended NZ IFRS that exclude public benefit entities from their scope. | |||
| 21 Related party transactions | |||
| All related party transactions have been entered into on an arms’ length basis.2 | |||
| NZ IAS 24.26(a) | The Ministry is a wholly-owned entity of the Crown. The Government significantly influences the roles of the Ministry as well as being its major source of revenue. | ||
| NZ IAS 24.26(b)(i) | Significant transactions with government-related entities3 | ||
| The Ministry has received funding from the Crown of $230m (2010 $220m) to provide services to the public for the year ended 30 June 2011. | |||
| NZ IAS 24.26(b)(ii) | Collectively, but not individually, significant transactions with government-related entities4 | ||
| In conducting its activities, the Ministry is required to pay various taxes and levies (such as GST, FBT, PAYE, and ACC levies) to the Crown and entities related to the Crown. The payment of these taxes and levies, other than income tax, is based on the standard terms and conditions that apply to all tax and levy payers. The Ministry is exempt from paying income tax. | |||
| The Ministry also purchases goods and services from entities controlled, significantly influenced, or jointly controlled by the Crown. Purchases from these government-related entities for the year ended 30 June 2011 totalled $2.31m (2010 $2.21m). These purchases included the purchase of electricity from Genesis, air travel from Air New Zealand, legal services from Crown Law Office, and postal services from New Zealand Post. | |||
| Transactions with key management personnel | |||
| NZ IAS 24.17 | Key management personnel compensation | ||
| Actual 2010 $000 |
Actual 2011 $000 |
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|---|---|---|---|
| NZ IAS 24.17(a) | 855 | Salaries and other short-term employee benefits | 896 |
| NZ IAS 24.17(b) | 25 | Post-employment benefits | 28 |
| NZ IAS 24.17(c) | 20 | Other long-term benefits | 32 |
| NZ IAS 24.17(d) | 0 | Termination benefits | 64 |
| NZ IAS 24.17 | 900 | Total key management personnel compensation | 1,020 |
| Good practice | Key management personnel compensation includes the compensation of the Chief Executive and the five members of the Senior Management Team.5,6 | ||
| Key management personnel compensation excludes the remuneration and other benefits the Minister of Public Accountability receives. The Minister’s remuneration and other benefits are not received only for his role as a member of key management personnel of the Ministry. The Minister’s remuneration and other benefits are set by the Remuneration Authority under the Civil List Act 1979 and are paid under Permanent Legislative Authority, and not paid by the Ministry of Public Accountability. | |||
| NZ IAS 24.18(a),(b) | Related party transactions involving key management personnel (or their close family members) | ||
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| NZ IAS 24.18(c),(d) | No provision has been required, nor any expense recognised, for impairment of receivables from related parties. | ||
1: Although not a requirement of NZ IAS 8, it is good practice to disclose those standards, amendments, and interpretations that are not yet effective and which have been adopted early. The transitional provisions of a new standard, amendment, or interpretation may require disclosure if early adopted.
2: Disclosures that related party transactions were made on terms equivalent to those that prevail in arm’s length transactions are made only if such terms can be substantiated (NZ IAS 24.23).
3 The nature and amount of each individually significant transaction with a government-related entity shall be separately disclosed (NZ IAS 24.26(b)(i)). The significance of a transaction is assessed both on its size and nature.
4: A qualitative or quantitative indication of the extent of collectively, but not individually, significant, transactions with government-related entities shall be disclosed (NZ IAS 24.26(b)(ii)).
5: The disclosure of the composition of key management personnel provides useful information to readers as to who are key management personnel.
6: NZ IAS 24 defines key management personnel as those persons having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. For a government department, we would expect the compensation of the Chief Executive and members of the senior management team, or equivalent body, to be included in the key management personnel compensation disclosures. There may also be other individuals who meet the key management personnel definition of NZ IAS 24. Government departments will need to consider their specific circumstances in determining the individuals that should be included in the key management personnel compensation disclosures.
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