Statement of comprehensive revenue and expense
for the year ended 30 June 2022
|
Notes |
Actual 2022 |
Budget |
Actual 2021 |
---|---|---|---|---|
Revenue |
||||
Revenue from the Crown |
1 |
5,930 |
5,930 |
5,030 |
Interest revenue |
|
6 |
2 |
1 |
Other revenue |
1 |
51 |
- |
140 |
Total revenue |
|
5,987 |
5,932 |
5,171 |
|
||||
Expenses |
||||
Personnel costs |
2 |
3,399 |
3,986 |
3,050 |
Other expenses |
3 |
1,594 |
1,801 |
1,098 |
Depreciation and amortisation expense |
6,7 |
31 |
45 |
45 |
Total expenses |
|
5,024 |
5,832 |
4,193 |
Net surplus/(deficit) and total comprehensive revenue and expense |
|
963 |
100 |
978 |
The accompanying notes form part of these financial statements. Explanations of major variances from budget are provided in note 17.
Statement of changes in equity
for the year ended 30 June 2022
|
Notes |
Actual 2022 |
Budget |
Actual 2021 |
---|---|---|---|---|
Balance at 1 July |
|
2,066 |
1,838 |
1,088 |
Total comprehensive revenue and expense |
|
963 |
100 |
978 |
Balance at 30 June |
12 |
3,029 |
1,938 |
2,066 |
The accompanying notes form part of these financial statements. Explanations of major variances from budget are provided in note 17.
Statement of financial position
as at 30 June 2022
|
Notes |
Actual 2022 |
Budget |
Actual 2021 |
---|---|---|---|---|
Assets |
||||
Current assets |
||||
Cash and cash equivalents |
4 |
3,450 |
2,475 |
2,343 |
Debtors and other receivables |
5 |
90 |
36 |
101 |
Total current assets |
|
3,540 |
2,511 |
2,444 |
|
||||
Non-current assets |
||||
Property, plant and equipment |
6 |
75 |
65 |
77 |
Intangible assets |
7 |
17 |
12 |
23 |
Total non-current assets |
|
92 |
77 |
100 |
Total assets |
|
3,632 |
2,588 |
2,544 |
|
||||
Liabilities |
||||
Current liabilities |
||||
Creditors and other payables |
8 |
310 |
389 |
178 |
Lease incentive |
9 |
12 |
- |
12 |
Employee entitlements |
10 |
183 |
174 |
183 |
Total current liabilities |
|
505 |
563 |
373 |
|
||||
Non-current liabilities |
||||
Lease incentive |
9 |
22 |
22 |
34 |
Provisions |
11 |
76 |
65 |
71 |
Total non-current liabilities |
|
98 |
87 |
105 |
Total liabilities |
|
603 |
650 |
478 |
Net assets |
|
3,029 |
1,938 |
2,066 |
|
||||
Equity |
||||
Contributed capital |
|
500 |
500 |
500 |
Accumulated surplus/(deficit) |
|
2,529 |
1,438 |
1,566 |
Total equity |
12 |
3,029 |
1,938 |
2,066 |
The accompanying notes form part of these financial statements. Explanations of major variances from budget are provided in note 17.
Statement of cash flows
for the year ended 30 June 2022
Actual 2022 $000 |
Budget 2022 $000 |
Actual 2021 $000 |
|
---|---|---|---|
Cash flows from operating activities |
|||
Receipts from the Crown |
5,930 |
5,930 |
5,030 |
Interest received |
6 |
2 |
1 |
Receipts from other revenue |
89 |
- |
102 |
Payments to suppliers |
(1,496) |
(1,816) |
(1,139) |
Payments to employees |
(3,379) |
(3,988) |
(3,054) |
Goods and services tax (net) |
(20) |
(3) |
22 |
Net cash flow from operating activities |
1,130 |
125 |
962 |
|
|||
Cash flows from investing activities |
|||
Purchases of property, plant and equipment |
(23) |
- |
(58) |
Purchase of intangible assets |
- |
(25) |
- |
Net cash flow from investing activities |
(23) |
(25) |
(58) |
|
|||
Net increase/(decrease) in cash and cash equivalents |
1,107 |
100 |
904 |
Cash and cash equivalents at 1 July |
2,343 |
2,375 |
1,439 |
Cash and cash equivalents at 30 June |
3,450 |
2,475 |
2,343 |
The accompanying notes form part of these financial statements. Explanations of major variances from budget are provided in note 17.
Reconciliation of net surplus/(deficit) to net cash flow from operating activities
|
Actual |
Actual |
---|---|---|
Net surplus/deficit |
963 |
978 |
Add/(less) non-cash items |
||
Depreciation and amortisation expense |
31 |
45 |
Lease make good provision and lease incentive |
(7) |
(1) |
Total non-cash items |
24 |
44 |
|
||
Add /(less) movements in working capital items |
||
Debtors and other receivables |
11 |
(6) |
Creditors and other payables |
132 |
(50) |
Employee entitlements |
- |
(4) |
Net movements in working capital items |
143 |
(60) |
Net cash flow from operating activities |
1,130 |
962 |
The accompanying notes form part of these financial statements. Explanations of major variances from budget are provided in note 17.
Statement of accounting policies
Reporting entity
The New Zealand Productivity Commission Te Kōmihana Whai Hua o Aotearoa (the Commission) is a Crown entity in terms of the Crown Entities Act 2004. It was established under the New Zealand Productivity Commission Act 2010 and its parent is the Crown. The Commission’s principal activities are to:
- undertake in-depth inquiries on topics referred to it by the Government;
- carry out productivity-related research that assists to improve productivity over time; and
- promote public understanding of productivity-related matters.
The Commission is a public benefit entity (PBE) for financial reporting purposes. The financial statements for the Commission are for the year ended 30 June 2022, and were approved by the Board on 28 February 2023.
Basis of preparation
The financial statements have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period.
Statement of compliance
The financial statements have been prepared in accordance with the requirements of the Crown Entities Act 2004, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP).
The Commission has applied the suite of Tier 2 Public Benefit Entity International Public Sector Accounting Standards (PBE IPSAS 1 RDR 28-3) in preparing the 30 June 2022 financial statements. The Commission has expenses of less than $30 million.
Measurement base
The financial statements have been prepared on a historical cost basis. Cost is the fair value of the consideration given in exchange for assets.
Functional and presentation currency
The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of the Commission is New Zealand dollars.
Changes in accounting policies
The International Financial Reporting Interpretations Committee issued an agenda decision whereby a customer does not recognise an intangible asset from customisation and configuration costs arising from software as a service arrangement if the supplier demonstrates control of the software. The new accounting policy is effective from 1 July 2021 and must be applied retrospectively.
There have not been any implementation costs capitalised from software as a service arrangement, therefore, this change in accounting policy does not have an impact on the Commission.
There have been no other changes in accounting policies during the financial year.
Comparatives
When the presentation or classification of items in the financial statements are amended or accounting policies are changed, comparative figures are restated to ensure consistency with the current period, unless it is impractical to do so.
Accounting standard effective 30 June 2022
An amendment to PBE IPSAS 2 Cash Flow Statements require entities to provide disclosures that enable users of financial statements to evaluate the changes in liabilities arising from financing activities, including both changes arising from cash and non-cash changes. The Commission does not have cash flow from financing activities, therefore, a disclosure has not been presented.
Standards issued and not early adopted
Standards and amendments, issued but not yet effective, that have not been early adopted are:
PBE IPSAS 41 Financial Instruments
The XRB issued PBE IPSAS 41 Financial Instruments in March 2019. This standard supersedes PBE IFRS 9 Financial Instruments, which was issued as an interim standard. It is effective for reporting periods ending on or after 30 June 2023. Although the Commission has not assessed the effect of the new standard, it does not expect any significant changes as the requirements are similar to PBE IFRS 9. The Commission does not intend to adopt the standard early.
PBE FRS 48 Service performance reporting
PBE FRS 48 replaces the service performance reporting requirements of PBE IPSAS 1 and is effective for reporting periods beginning on or after 30 June 2023. The Commission has determined the main impact of the new standard is that additional information will need to be disclosed on those judgements that have the most significant effect on the selection, measurement, aggregation, and presentation of service performance information.
Significant accounting policies
The significant accounting policies which materially affect the measurement of financial performance, position and cash flows have been applied consistently for all reporting periods covered by these financial statements. The policies satisfy the concepts of relevance and reliability ensuring the substance of the underlying transactions or other events is reported. Significant accounting policies are included in the notes to which they relate.
Goods and services tax
All items in the financial statements are presented exclusive of goods and services tax (GST), except for receivables and payables, which are presented on a GST-inclusive basis. Where GST is not recoverable as input tax then it is recognised as part of the related asset or expense. The net GST recoverable from, or payable to Inland Revenue (IR) is included as part of receivables or payables in the Statement of Financial Position.
The net GST paid to, or received from IR, including the GST relating to investing and financing activities, is classified as a net operating cash flow in the Statement of Cash Flows.
Income tax
The Commission is a public authority and consequently is exempt from income tax under section CW 38 of the Income Tax Act 2007. Accordingly, no provision has been made for income tax.
Foreign currency transactions
Foreign currency transactions are translated into New Zealand dollars (the functional currency) using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit.
Budget figures
The budget figures are derived from the Statement of Performance Expectations as approved by the Board. The budget figures are unaudited and have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted by the Board in preparing these financial statements.
Performance outputs
Direct costs are charged directly to outputs. Research personnel costs are allocated to outputs based on the time spent. The indirect costs of support groups and overhead costs are charged to outputs based on the proportion of direct costs of each output.
Critical accounting estimates and assumptions
In preparing these financial statements the Commission has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical judgements in applying accounting policies
Management has exercised the following critical judgements in applying accounting policies:
Leases classification
Determining whether a lease agreement is a finance lease, or an operating lease requires judgement as to whether the agreement transfers substantially all the risks and rewards of ownership to the Commission. Judgement is required on various aspects that include, but are not limited to, the fair value of the leased asset, the economic life of the leased asset, whether or not to include renewal options in the lease term and determining an appropriate discount rate to calculate the present value of the minimum lease payments. Classification as a finance lease means the asset is recognised in the Statement of Financial Position as property, plant and equipment, whereas for an operating lease no such asset is recognised. The Commission has exercised its judgement on the appropriate classification of equipment leases and has determined that none of the lease arrangements are finance leases.
Breach of statutory deadline
Section 156(1)(a) of the Crown Entities Act 2004 required the Commission to provide the Auditor-General with the Commission’s financial statements and statement of performance by 30 September 2022. The Commission was only able to provide the Auditor-General with the statement of performance in December 2022. This meant the Auditor-General was unable to deliver an audit report by 31 December 2022, as required by Section 156(3)(b) of the Crown Entities Act 2004. Delivery of the Statement of Performance to Audit New Zealand was delayed due to Commission staff capacity and Audit NZ availability.
Notes to the financial statements
Note 1 Revenue
Revenue is measured at fair value of consideration received or receivable. Revenue is derived through the provision of outputs for the Crown, services to third parties and investment income.
Revenue from the Crown
Revenue from the Crown transactions are considered to be non-exchange transactions. The Commission is primarily funded through revenue received from the Crown. The funding is restricted in its use for the purpose of the Commission meeting its objectives as specified in its founding legislation and the scope of the relevant government appropriations. Apart from these general restrictions, the Commission considers there are no conditions attached to the funding.
Revenue from the Crown is recognised as revenue when earned and is reported in the financial period to which it relates. The fair value of revenue from the Crown has been determined to be equivalent to the amounts due in the funding arrangements.
Interest
Interest revenue is recognised using the effective interest method.
Other revenue
Other revenue transactions are considered to be exchange transactions. They are personnel costs recovered for employees who work on secondment in other organisations.
Other revenue is recognised as revenue when earned and is reported in the financial period to which it relates.
Note 2 Personnel costs
Personnel costs are recognised in the period to which they relate.
Superannuation schemes
Defined contribution schemes
Obligations for contributions to KiwiSaver are accounted for as a defined contribution superannuation scheme and are recognised as an expense in the surplus or deficit as incurred. The Commission also operates a ‘total remuneration’ policy, such that employer KiwiSaver contributions are part of total remuneration and not an additional benefit.
Defined benefit schemes
The Commission does not make employer contributions to any defined benefit superannuation schemes.
|
Actual |
Actual |
---|---|---|
Salaries and contractors |
2,583 |
2,308 |
Board fees |
651 |
656 |
Employer contributions to KiwiSaver defined contribution superannuation plan |
67 |
58 |
Other entitlements |
6 |
(9) |
Bonuses |
5 |
23 |
Other |
87 |
14 |
Total personnel costs |
3,399 |
3,050 |
Employee remuneration
|
Number of employees |
Number of employees |
---|---|---|
$100,000 – 109,999 |
3 |
3 |
$110,000 – 119,999 |
1 |
1 |
$120,000 – 129,999 |
2 |
- |
$130,000 – 139,999 |
2 |
3 |
$150,000 – 159,999 |
- |
- |
$160,000 – 169,999 |
- |
1 |
$170,000 – 179,999 |
2 |
2 |
$180,000 – 189,999 |
1 |
- |
$190,000 – 199,999 |
- |
1 |
$200,000 – 209,999 |
1 |
- |
$210,000 – 219,999 |
- |
2 |
Total employees |
12 |
13 |
Key personnel compensation
Remuneration |
Full-time |
Remuneration |
Full-time |
|
---|---|---|---|---|
Board members |
648 |
1.9 |
649 |
1.9 |
Leadership team |
803 |
4.0 |
715 |
3.3 |
Total key management personnel remuneration |
1,451 |
5.9 |
1,364 |
5.2 |
Key management personnel are Commissioners, Directors.
Board fees
Commissioners are appointed by the Crown and are the Board for the purposes of the Crown Entities Act 2004. All Commissioners are part-time and their fee is set by the Remuneration Authority.
|
Actual |
Actual |
---|---|---|
Ganesh Nana (Chair) |
305 |
140 |
Murray Sherwin (former Chair) |
- |
131 |
Gail Pacheco |
160 |
163 |
Andrew Sweet |
87 |
155 |
Bill Rosenberg |
96 |
60 |
Total Board member remuneration |
648 |
649 |
During the financial year, payments made, or payable to Lesley Mackle, committee member appointed by the Board, but who is not a Board member, was $4,000 (2021: $7,000).
The Commission has not provided a deed of indemnity to Board members for activities undertaken in the performance of the Commission’s functions. The Commission has not affected Directors’ and Officers’ liability and professional indemnity insurance cover during the financial year in respect of the liability or costs of Board members and employees. No Board or committee members received compensation or other benefits in relation to cessation (2021: Nil).
Note 3 Other expenses
|
Actual |
Actual 2021 |
---|---|---|
Fees to principal auditor for financial statement audit |
36 |
34 |
Consultancy |
884 |
375 |
Information technology and telecommunications |
218 |
276 |
Travel and transport |
20 |
25 |
Operating lease expense (office rental) |
208 |
196 |
Communication and engagement |
56 |
19 |
Training and development |
17 |
38 |
Other expenses |
155 |
135 |
Total other expenses |
1,594 |
1,098 |
Office rental
The non-cancellable operating lease expense relates to the lease of the 15th floor of Fujitsu Tower in Wellington. The lease expires in March 2025. The Commission as lessee exercised its right to renew in April 2016 with a rental rebate of $1,031.92 (GST exclusive) per month for 48 months from April 2021. A rental review was completed and applied from Oct 2021.
As the lessor retains substantially all the risk and rewards of ownership of the leased property, the operating lease payments are recognised in the surplus or deficit only in the period in which they occur.
Any lease incentive received or obligations to make good on the condition of the leased premises are recognised in the surplus or deficit over the term of the lease.
The future aggregate minimum lease payments to be paid under non-cancellable operating leases are as follows:
|
Actual |
Actual |
---|---|---|
Not later than one year |
207 |
186 |
Later than one year and not later than five years |
363 |
560 |
Total non-cancellable operating leases |
570 |
746 |
Note 4 Cash and cash equivalents
Cash and cash equivalents include operating and savings bank accounts held with Westpac. The carrying value of cash at bank and cash equivalents approximates fair value.
The Commission is only permitted to spend its cash and cash equivalents within the scope and limits of its appropriation.
|
Actual |
Actual |
---|---|---|
Operating bank account |
294 |
270 |
Savings bank account |
3,156 |
2,073 |
Total cash and cash equivalents |
3,450 |
2,343 |
Note 5 Debtors and other receivables
Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. The carrying value of debtors and other receivables approximates their fair value.
All trade debtors are due within 30 days. Trade debtors have been assessed for impairment based on expected credit losses. No provision for expected credit losses have been made as at 30 June 2022 (2021: $38,000).
Actual 2022 $000 |
Actual 2021 $000 |
|
---|---|---|
Receivables – exchange transactions |
||
Debtors and other receivables |
- |
38 |
Prepayments |
54 |
47 |
Receivables – non-exchange transactions |
||
GST receivable |
36 |
16 |
Total debtors and other receivables |
90 |
101 |
Note 6 Property, plant and equipment
Property, plant and equipment consists of the following asset classes: information technology equipment, furniture, office equipment, and leasehold improvements. The capitalisation thresholds are:
- Information technology equipment
$500 and over
- Furniture
No threshold
- Office equipment
$500 and over
- Leasehold improvements
No threshold
Additions
An item of property, plant and equipment is recognised as an asset only when it is probable that the future economic benefits or service potential associated with the item will flow to the Commission beyond one year or more, and the cost of the item can be measured reliably. Property, plant and equipment is recorded at historical cost less accumulated depreciation and any impairment losses. Depreciation on items of property, plant and equipment acquired in stages does not commence until the item of property, plant and equipment is in its final state and ready for its intended use. Subsequent expenditure that extends the useful life or enhances the service potential of an existing item of property, plant and equipment is capitalised. All other costs incurred in maintaining the useful life or service potential of an existing item of property, plant and equipment are recognised in the surplus or deficit as expenditure when incurred.
Disposals
Gains or losses arising from the sale or disposal of an item of property, plant and equipment are recognised in the surplus or deficit in the period in which the item of property, plant and equipment is sold or disposed of.
Depreciation
Depreciation is provided on a straight-line basis on all asset components to allocate the cost of the asset (less any estimated residual value) over its useful life. The residual values and remaining useful lives of property, plant and equipment are reviewed annually. This review includes a test of impairment to ensure the carrying amount remains recoverable. Any impairment losses are recognised in the surplus or deficit. The estimated useful lives of the major asset classes are:
- Information technology equipment
3 to 5 years
- Furniture
3 to 10 years
- Office equipment
5 to 10 years
- Leasehold improvements
3 to 10 years
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter. The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year end.
IT |
Furniture |
Office equipment |
Leasehold improvements |
Total |
|
---|---|---|---|---|---|
Cost or valuation |
|||||
Balance at 1 July 2021 |
217 |
128 |
100 |
266 |
711 |
Additions |
18 |
- |
7 |
- |
25 |
Disposals |
(3) |
- |
- |
- |
(3) |
Balance at 30 June 2022 |
232 |
128 |
107 |
266 |
733 |
|
|||||
Accumulated depreciation and impairment losses |
|||||
Balance at 1 July 2021 |
171 |
120 |
79 |
264 |
634 |
Depreciation expense |
18 |
1 |
5 |
1 |
25 |
Disposals |
(1) |
- |
- |
- |
(1) |
Balance at 30 June 2022 |
188 |
121 |
84 |
265 |
658 |
|
|||||
Carrying amounts |
|||||
At 30 June 2022 |
44 |
7 |
23 |
1 |
75 |
|
|||||
Cost or valuation |
|||||
Balance at 1 July 2020 |
175 |
127 |
86 |
265 |
653 |
Additions |
42 |
1 |
14 |
1 |
58 |
Disposals |
- |
- |
- |
- |
- |
Balance at 30 June 2021 |
217 |
128 |
100 |
266 |
711 |
|
|||||
Accumulated depreciation and impairment losses |
|||||
Balance at 1 July 2020 |
144 |
118 |
75 |
263 |
600 |
Depreciation expense |
27 |
2 |
4 |
1 |
34 |
Disposals |
- |
- |
- |
- |
- |
Balance at 30 June 2021 |
171 |
120 |
79 |
264 |
634 |
|
|||||
Carrying amounts |
|||||
At 30 June 2021 |
46 |
8 |
21 |
2 |
77 |
Property, plant and equipment have been assessed for impairment and no provisions for impairment have been made.
Note 7 Intangible assets
Software acquisition
Computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Staff training costs are recognised as an expense when incurred. Costs associated with maintaining computer software are recognised as an expense when incurred. Assets are capitalised if the purchase price is $5,000 or greater.
Amortisation
The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each financial year is recognised in the surplus or deficit. The Commission’s intangible assets are acquired software with useful life between 3 to 15 years.
Actual 2022 $000 |
Actual 2021 $000 |
|
---|---|---|
Cost or valuation |
||
Balance at 1 July |
194 |
194 |
Additions |
- |
- |
Balance at 30 June |
194 |
194 |
|
||
Accumulated depreciation and impairment losses |
||
Balance at 1 July |
171 |
160 |
Amortisation expense |
6 |
11 |
Balance at 30 June |
177 |
171 |
|
||
Net carrying amount |
17 |
23 |
Note 8 Creditors and other payables
Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. Creditors and other payables are non-interest bearing and are settled on commercial terms and conditions, normally 30 days or less. Therefore, the carrying value of creditors and other payables approximates their fair value.
Actual 2022 $000 |
Actual 2021 $000 |
|
---|---|---|
Payables – exchange transactions |
||
Accrued expenses |
264 |
91 |
Payables – non-exchange transactions |
||
Taxes payable (PAYE) |
41 |
40 |
Other payables |
5 |
47 |
Total creditors and other payables |
310 |
178 |
Note 9 Lease incentive
Any unamortised lease incentive received is recognised as a liability in the Statement of Financial Position.
|
Actual |
Actual |
---|---|---|
Current portion |
12 |
12 |
Non-current portion |
22 |
34 |
Total lease incentive |
34 |
46 |
Note 10 Employee entitlements
At balance date, any unpaid employee entitlements earned by employees for salaries and annual leave are recognised as a liability in the Statement of Financial Position and recognised in the surplus or deficit. Entitlements are calculated on an actual entitlement basis at current rates of remuneration. The Commission recognises a liability and an expense for bonuses where it is contractually obliged to pay them, or where a past practice has created a constructive obligation. No provision has been made for sick leave as all sick leave is non-vesting and the average sick leave to be taken in future years by employees of the Commission is estimated to be less than the annual entitlement for sick leave.
The Commission does not offer retirement or long service leave benefits to its employees.
|
Actual |
Actual |
---|---|---|
Accrued annual leave |
120 |
119 |
Accrued salaries and wages |
63 |
64 |
Total employee entitlements |
183 |
183 |
Note 11 Provisions
A provision is recognised for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that expenditure will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The Commission is required at the expiry of the lease term to make good any damage caused to its leased office premises, and to remove any fixtures or fittings installed by the Commission. The Commission has the option to renew this lease, which affects the timing of expected cash outflows to make-good the premises. The cash flows associated with provision are expected to occur in March 2025. Information about the leasing arrangement is disclosed in note 3.
|
Actual |
Actual |
---|---|---|
Lease make-good |
||
Non-current portion |
76 |
71 |
Total provisions |
76 |
71 |
Movements within the provision:
|
Actual |
Actual 2021 |
---|---|---|
Balance at 1 July |
71 |
65 |
Additional provisions made |
5 |
6 |
Balance at 30 June |
76 |
71 |
Note 12 Equity
Equity is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into the following components:
- contributed capital
- accumulated surplus / (deficit)
The Commission is subject to the financial management and accountability provisions of the Crown Entities Act 2004, which impose restrictions in relation to borrowings, acquisition of securities, issuing guarantees and indemnities, and the use of derivatives. The Commission manages its equity as a by-product of prudently managing revenues, expenses, assets, liabilities, investments, and general financial dealings to ensure the Commission effectively achieves its objectives and purpose, while remaining a going concern.
|
Actual |
Actual 2021 |
---|---|---|
Balance at 1 July |
2,066 |
1,088 |
Surplus/(deficit) for the year |
963 |
978 |
Balance at 30 June |
3,029 |
2,066 |
Note 13 Contingencies
The Commission has no contingent liabilities and no contingent assets as at 30 June 2022 (2021: Nil).
Note 14 Events after the balance date
There were no significant events after balance date (2021: Nil).
Note 15 Financial instruments
Actual 2022 $000 |
Actual 2021 $000 |
|
---|---|---|
Financial assets held at amortised costs |
||
Cash and cash equivalents |
3,450 |
2,343 |
Debtors and other receivables |
- |
38 |
Total financial assets held at amortised cost |
3,450 |
2,381 |
|
||
Financial liabilities measured at amortised cost |
||
Creditors and other payables |
269 |
158 |
Total financial liabilities measured at amortised cost |
269 |
158 |
Financial instrument risks
The Commission is a party to financial instrument arrangements as part of its everyday operations. These financial instruments include bank accounts, accounts receivable, and accounts payable. The Commission has policies to manage the risks associated with financial instruments. The Commission seeks to minimise exposure from financial instruments and does not enter into speculative financial instrument transactions.
Market risk
Interest rate risk
Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Cash flow interest rate risk is the risk that cash flows from a financial instrument will fluctuate because of changes in market interest rates. The Commission’s exposure to cash flow interest rate risk is limited to on-call bank accounts and short-term deposits, arising from the investment of surplus cash due to the timing of cash inflows and outflows.
Credit risk
Credit risk is the risk that a third party will default on its obligation to the Commission, causing it to incur a loss. The Commission invests surplus cash with registered banks. In the normal course of business, the Commission is exposed to credit risk from cash and term deposits with banks, debtors and other receivables. For each of these, the maximum credit exposure is best represented by the carrying amount in the Statement of Financial Position. Westpac Banking Corporation is the Commission’s main bank and has a S&P Global Ratings of AA-.
Liquidity risk
Management of liquidity risk
Liquidity risk is the risk that the Commission will encounter difficulty raising liquid funds to meet commitments as they fall due. The Commission has a low exposure to liquidity risk as it does not enter into credit arrangements, except for those available from suppliers as part of normal operating agreements. The Commission manages liquidity risk by continuously monitoring forecast and actual cash flow requirements and aims to maintain sufficient funds in current and on-call bank accounts and short-term fixed deposits to meet forecast liquidity requirements.
Note 16 Related party transactions
The Commission is a wholly-owned entity of the Crown. Related party disclosures have not been made for transactions with related parties that are within a normal supplier or client/recipient relationship on terms and conditions no more or less favourable than those that is reasonable to expect the Commission would have adopted in dealing with the party at arm’s length in the same circumstances. Further, transactions with other government agencies (for example, Government departments and Crown entities) are not disclosed as related party transactions when they are consistent with the normal operating arrangements between government agencies and undertaken on the normal terms and conditions for such transactions.
Key personnel
Commissioners are appointed by the Crown and are the Board for the purposes of the Crown Entities Act 2004. In addition to their role with the Commission, Commissioners have other interests and may serve in positions with other organisations, including organisations to which the Commission is related. Potential conflicts of interest are declared in an interests register. No Commissioner was exempted during the year from the requirement to not vote or take part in any decision despite being interested.
Refer to note 2 for a breakdown of key management personnel compensation.
Note 17 Explanation of major variances against budget
The net surplus for the Commission, from 1 July 2021 to 30 June 2022 was $963,000 (2020–21: net surplus of $978,000). In terms of the surplus of $963,000, the key area of underspend was $616,000 due to personnel vacancy lag particularly in senior positions, $177,000 mainly due to Commissioner vacancy and $188,000 in communications due to a change in planned communications activity.