Archived publication
This publication is no longer current or has been superseded.
3 Financial Statements for the Ministry for the Environment
Performance Indicators for the Year Ended 30 June 2005
| Unit | Actual 30/06/2005 |
Supplementary estimates 30/06/2005 |
|
|---|---|---|---|
| Operating results | |||
| Revenue: Crown | $000 | 39,830 | 39,830 |
| Revenue: departments and other | $000 | 230 | 223 |
| Output expenses | $000 | 39,097 | 40,053 |
| Gain on sale of assets | $000 | 12 | 5 |
| Net surplus | $000 | 975 | 5 |
| Working capital | |||
| Net current assets | $000 | 502 | 492 |
| Current ratio | Ratio | 1.05 | 1.18 |
| Resource utilisation | |||
| Fixed assets | |||
| Total fixed assets at year-end | $000 | 2,003 | 2,001 |
| Value per employee | $000 | 8.3 | 8.4 |
| Additions as % of fixed assets | % | 88.0 | 89.1 |
| Fixed assets as % of total assets | % | 16.9 | 38.8 |
| Taxpayers' funds | |||
| Level at year-end | $000 | 1,843 | 1,843 |
| Level per employee | $000 | 7.6 | 7.7 |
| Net cash flows | |||
| Surplus/(deficit) from operating activities | $000 | 635 | (3,152) |
| Surplus/(deficit) from investing activities | $000 | (1,199) | (1,778) |
| Surplus/(deficit) from financing activities | $000 | 779 | 779 |
| Net increase/(decrease) in cash held | $000 | 215 | (4,151) |
| Human resources | |||
| Staff turnover | % | 15.4 | 12.0 |
| Average length of service | Years | 4.0 | 4.6 |
| Total staff | No. | 242 | 239 |
Statement of Financial Performance for the Year Ended 30 June 2005
| Actual 30/06/2004 $000 |
Notes | Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary estimates 30/06/2005 $000 |
|
|---|---|---|---|---|---|
| Revenue | |||||
| 38,088 | Crown | 39,830 | 36,916 | 39,830 | |
| 211 | Other | 1 | 242 | 10 | 228 |
| 38,299 | Total revenue | 40,072 | 36,926 | 40,058 | |
| Expenditure | |||||
| 15,184 | Personnel | 2 | 16,568 | 16,100 | 17,223 |
| 21,944 | Operating | 3 | 22,175 | 20,294 | 22,451 |
| 421 | Depreciation | 4 | 327 | 500 | 352 |
| 29 | Capital charge | 5 | 27 | 27 | 27 |
| 37,578 | Total expenses | 39,097 | 36,921 | 40,053 | |
| 721 | Net surplus from operations | 975 | 5 | 5 |
Statement of Financial Position as at 30 June 2005
| Actual 30/06/2004 $000 |
Notes | Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary estimates 30/06/2005 $000 |
|
|---|---|---|---|---|---|
| 343 | Taxpayers' funds | 1,843 | 343 | 1,843 | |
| 343 | Total taxpayers' funds | 1,843 | 343 | 1,843 | |
| Represented by: | |||||
| Current assets | |||||
| 7,208 | Bank | 7,423 | 3,656 | 3,057 | |
| 110 | Pre-payments | 59 | 45 | 100 | |
| 299 | Debtors and receivables | 6 | 2,329 | 0 | 0 |
| 7,617 | Total current assets | 9,811 | 3,701 | 3,157 | |
| Non-current assets | |||||
| 570 | Fixed assets | 7 | 503 | 562 | 2,001 |
| 0 | Work in progress | 7 | 1,500 | 0 | 0 |
| 8,187 | Total assets | 11,814 | 4,263 | 5,158 | |
| Current liabilities | |||||
| 5,937 | Creditors and payables | 8 | 7,571 | 2,865 | 2,010 |
| 655 | Employee entitlements | 9 | 763 | 450 | 650 |
| 721 | Provision for repayment of surplus to the Crown | 975 | 5 | 5 | |
| 7,313 | Total current liabilities | 9,309 | 3,320 | 2,665 | |
| Non-current liabilities | |||||
| 531 | Employee entitlements | 9 | 662 | 600 | 650 |
| 7,844 | Total liabilities | 9,971 | 3,920 | 3,315 | |
| 343 | Net assets | 1,843 | 343 | 1,843 |
Statement of Movements in Taxpayers' Funds for the Year Ended 30 June 2005
| Actual 30/06/2004 $000 |
Note | Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary estimates 30/06/2005 $000 |
|
|---|---|---|---|---|---|
| 343 | Taxpayers' funds brought forward as at 1 July | 343 | 343 | 343 | |
| 721 | Net surplus from operations | 975 | 5 | 5 | |
| 721 | Total recognised revenues and expenses for the year | 975 | 5 | 5 | |
| Capital contribution | 1,500 | 0 | 1,500 | ||
| (721) | Provision for repayment of surplus to the Crown | (975) | (5) | (5) | |
| 343 | Taxpayers' funds as at 30 June | 1,843 | 343 | 1,843 |
Statement of Cash Flows for the Year Ended 30 June 2005
| Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary estimates 30/06/2005 $000 |
|
|---|---|---|---|---|
| Cash flows from operating activitiesCash provided from: | ||||
| 38,088 | Supply of outputs to Crown | 39,830 | 36,916 | 39,830 |
| (83) | Supply of outputs to departments | 400 | 0 | 495 |
| 2 | Supply of outputs to others | 12 | 5 | 27 |
| Cash disbursed to: | ||||
| (14,942) | Personnel expenses | (16,414) | (16,100) | (17,353) |
| (19,498) | Operating expenses | (20,954) | (20,229) | (26,124) |
| (770) | Net GST | (2,212) | 0 | 0 |
| (29) | Capital charge | (27) | (27) | (27) |
| 2,768 | Net cash flows from operating activities | 635 | 565 | (3,152) |
| Cash flows from investing activities | ||||
| Cash provided from: | ||||
| 21 | Sale of fixed assets | 12 | 15 | 5 |
| Cash disbursed to: | ||||
| (296) | Purchase of fixed assets | (1,211) | (400) | (1,783) |
| (275) | Net cash flows from investing activities | (1,199) | (385) | (1,778) |
| Cash flows from financing activities | ||||
| Cash provided from: | ||||
| 0 | Capital contributions | 1,500 | 0 | 1,500 |
| Cash disbursed to: | ||||
| (3,079) | Repayment of surplus to Crown | (721) | (5) | (721) |
| (3,079) | Net cash flows from financing activities | 779 | (5) | 779 |
| (586) | Net increase/(decrease) in cash held | 215 | 175 | (4,151) |
| 7,794 | Opening cash balance at 1 July | 7,208 | 3,481 | 7,208 |
| 7,208 | Closing cash and deposits as at 30 June | 7,423 | 3,656 | 3,057 |
Reconciliation of Net Operating Surplus to Net Cash Flow From Operating Activities for the Year Ended 30 June 2005
| Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
|||
|---|---|---|---|---|
| 721 | Net surplus from operations | 975 | ||
| Add non-cash items | ||||
| 421 | Depreciation | 327 | ||
| Add non-cash provision | ||||
| 148 | Increase/(decrease) in provisions for employee entitlements | 239 | ||
| Add/(less) movements in working capital items | ||||
| (62) | Decrease/(increase) in pre-payments | 51 | ||
| (283) | Decrease/(increase) in debtors and receivables | (2,030) | ||
| 1,808 | Increase/(decrease) in creditors and payables | 1,082 | ||
| Add/(less) investing activity | ||||
| 15 | Net loss/(gain) on sale of fixed assets | (9) | ||
| 2,768 | Net cash flow from operating activities | 635 |
Statement of Commitments as at 30 June 2005
The amounts disclosed below include amounts for both accommodation and operating leases in Wellington, Christchurch and Auckland.
Operating commitments include lease payments for premises, telephone contracts and maintenance contracts for its computer systems. All commitments are disclosed at current rental rates.
| 30/06/2005 $000 |
30/06/2004 $000 |
|
|---|---|---|
| Operating and accommodation lease commitments (GST exclusive) | ||
| Not later than one year | 7,387 | 1,806 |
| Later than one year but not later than two years | 2,919 | 1,992 |
| Later than two years but not later than five years | 6,353 | 3,743 |
| Later than five years | 6,060 | 9,007 |
| Total operating and lease commitments | 22,719 | 16,548 |
| Capital commitments | 0 | 0 |
| Total commitments | 22,719 | 16,548 |
Statement of Contingencies as at 30 June 2005
There were no contingent liabilities as at 30 June 2005. (2004: Nil)
Statement of Unappropriated Expenditure for the Year Ended 30 June 2005
Departmental appropriations
Departmental output classes were produced within appropriation (30 June 2004: no unappropriated expenditure).
Non-departmental appropriations
The Ministry has incurred unappropriated expenditure during the year of $309,843,000 (2003/04: no unappropriated expenditure). This is shown below:
| Actual 30/06/2004 $000 |
Actual 30/6/2005 $000 |
Appropriation 30/6/2005 $000 |
Unappropriated expenditure 30/06/2005 $000 |
|
|---|---|---|---|---|
| Vote Climate Change and Energy Efficiency | ||||
| Other Expenses | ||||
| 0 | Kyoto Protocol liability | 309,843 | 0 | 309,843 |
| 0 | 309,843 | 0 | 309,843 |
The unappropriated expenditure during 2004/05 relates to the recognition of New Zealand's Kyoto Protocol liability. This was not included in the Supplementary Estimates because of the timing around finalisation of the revised net emissions position, which provide the quantity estimate for calculation of the liability.
A full explanation of this Provision is included in Note 1 on page 54.
This unappropriated expenditure has been notified to the Minister of Finance through the ministerial certification process in terms of the Public Finance Act 1989 and will be included in legislation to validate this unappropriated expenditure.
Statement of Departmental Expenditure and Appropriations for the Year Ended 30 June 2005
(Figures are GST inclusive where applicable)
|
Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
Appropriation* 30/06/2005 $000 |
|
|---|---|---|---|
| Vote: Environment | |||
| Appropriations for classes of outputs | |||
| 27,398 | Environmental Policy Advice | 27,607 | 27,668 |
| 729 | Administration of Sustainable Management Fund | 741 | 745 |
| 1,493 | Bioethics Council | 1,296 | 1,503 |
| 845 | Waitaki Decision-Making Body | 1,822 | 2,260 |
| 30,465 | Total | 31,466 | 32,176 |
| Vote: Climate Change and Energy Efficiency | |||
| Appropriation for departmental output class | |||
| 233 | Policy Advice - Energy Efficiency and Conservation | 238 | 243 |
| 7,998 | Policy Advice - Climate Change | 9,150 | 9,378 |
| 3,669 | Carbon Monitoring Programme | 3,252 | 3,262 |
| 11,900 | Total | 12,640 | 12,883 |
* This includes adjustments made in the supplementary estimates and transfers under the Public Finance Act 1989.
Statement of Non-Departmental Expenditure and Appropriations for the Year Ended 30 June 2005
(Figures are GST inclusive where applicable)
| Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
Appropriation* 30/06/2005 $000 |
|
|---|---|---|---|
| Vote: Environment | |||
| Appropriations for non-departmental output classes | |||
| 5,000 | Clean up of orphan Crown contaminated sites | 2,000 | 2,000 |
| 4,088 | Development and implementation of sustainable management | 3,359 | 4,324 |
| 11,617 | Hazardous substances and new organisms assessment and management | 13,200 | 13,200 |
| 2,500 | Residual Catchment works | 0 | 0 |
| 450 | Sustainable land management: promotion and training | 450 | 450 |
| 23,655 | Subtotal | 19,009 | 19,974 |
| Appropriations for other expenses to be incurred by the Crown | |||
| 12,099 | Loss on Disposal - Crown Land | 0 | 0 |
| 20 | Montreal Protocol on Ozone Protection | 20 | 20 |
| 14 | Subscription to Basel Convention | 14 | 14 |
| 235 | United Nations Environment Programme | 336 | 336 |
| 1,546 | Legal and Environment Centre Grants | 1,376 | 1,550 |
| 0 | International Subscriptions | 38 | 38 |
| 1,800 | The Sir Peter Blake Memorial Trust | 0 | 0 |
| 15,714 | Subtotal | 1,784 | 1,958 |
| 39,369 | Total for Vote: Environment | 20,793 | 21,932 |
| Vote: Climate Change and Energy Efficiency | |||
| Appropriations for non-departmental output classes | |||
| 12,126 | Energy Efficiency and Conservation Authority | 12,445 | 12,445 |
| 12,126 | Subtotal | 12,445 | 12,445 |
| Appropriations for other expenses to be incurred by the Crown | |||
| 2,478 | Energy efficiency and renewable energy grants and assistance | 4,261 | 6,000 |
| 102 | Framework Convention on Climate Change | 102 | 102 |
| 0 | Kyoto Protocol Liability | 309,843 | 0 |
| 2,580 | Subtotal | 314,206 | 6,102 |
| Capital investment in organisations other than departments | |||
| 1,652 | Crown Energy Efficiency | 2,000 | 2000 |
| 1,652 | Subtotal | 2,000 | 2000 |
| 16,358 | Total for Vote: Climate Change and Energy Efficiency | 328,651 | 20,547 |
* This includes adjustments made in the Supplementary Estimates and transfers under the Public Finance Act.
Statement of Accounting Policies for the Year ended 30 June 2005
Reporting entity
The Ministry for the Environment is a Government department as defined in the Public Finance Act 1989.
These are the financial statements of the Ministry for the Environment prepared pursuant to the Public Finance Act 1989.
In addition, the Ministry has reported the Crown activities it administered.
Measurement system
The financial statements have been prepared on the basis of historical cost.
Accounting policies
The following particular accounting policies, which materially affect the measurement of financial results and financial position, have been applied.
(i) Budget and appropriation figures
The Budget and appropriation figures are those presented in the Budget Night Estimates (Main Estimates) and those amended by the Supplementary Estimates and any transfer made by Order in Council under the Public Finance Act 1989 (Supplementary Estimates).
(ii) Revenue
The Ministry derived revenue through the provision of outputs to the Crown and for services to third parties. Such revenue is recognised when earned and is reported in the financial period to which it relates.
(iii) Cost allocation
The Ministry derived the costs of outputs using a cost allocation system, which is outlined below.
Cost allocation policy
Direct costs are charged directly to the Ministry's outputs. Indirect costs are charged to outputs based on a primary cost driver of salaried full time equivalents. There were no material changes to the cost allocation model during the 2004/05 year.
Criteria for direct and indirect costs
'Direct costs' are those costs directly attributed to an output. 'Indirect costs' are those costs that cannot be directly associated with a specific output.
Direct costs assigned to outputs
All direct operating costs are charged directly to outputs. Direct personnel costs are charged on the basis of the full time equivalents that are directly attributable to an output. For the year ended 30 June 2005 , direct costs accounted for 69% of the Ministry's costs (2004: 71%).
Indirect costs assigned to outputs
All indirect costs are assigned to outputs on a percentage basis calculated on the number of full time equivalents per output. For the year ended 30 June 2005 , indirect costs accounted for 31% of the Ministry's costs (2004: 29%).
(iv) Debtors and receivables
Debtors and receivables are recorded at estimated realisable value, after providing for doubtful debts.
(v) Operating leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Operating lease expenses are recognised on a systematic basis over the period of the lease.
(vi) Plant and equipment
All fixed assets are recorded at cost less accumulated depreciation. Fixed assets are recognised as individual items costing $1,500 (GST exclusive) or more, which have a useful life greater than one year.
(vii) Depreciation
Depreciation of fixed assets is calculated on a straight-line basis so as to allocate the cost of the assets, over their useful lives.
The estimated useful lives of the assets are:
| Depreciation rate (%) |
Useful life (years) |
|
|---|---|---|
| Furniture and fittings | 20 | 5 |
| Motor vehicles | 25 | 4 |
| Office equipment | 20 | 5 |
| Computer software | 33 | 3 |
| Computer hardware | 33 | 3 |
The cost of leasehold improvements (included in furniture and fittings) is capitalised and depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is shorter. Items classified as furniture and fittings but not deemed to be part of leasehold improvements are depreciated over their useful lives.
Losses and gains on disposal of fixed assets are taken into account in determining the operating result for the year.
(viii) Employee entitlements
Provision is made in respect of the Ministry's liability for annual leave, long service leave and retirement leave. Annual leave has been calculated on an actual entitlement basis at current values of pay. All annual leave is expected to be settled within 12 months of the reporting date.
Long service leave and retirement leave have been calculated on an actuarial basis, based on the present value of expected future entitlements. These have been provided for as long term liabilities on the statement of financial position.
(ix) Statement of cash flows
Cash means cash balances on hand and cash held in bank accounts.
Operating activities include cash received from all income sources of the Ministry and record the cash payments made for the supply of goods and services.
Investing activities are those activities relating to the acquisition and disposal of non-current assets.
Financing activities comprise capital injections by, or repayment of capital to, the Crown.
(x) Financial instruments
The Ministry for the Environment is party to financial instrument arrangements as part of its normal operations. All financial instruments are recognised in the Statement of Financial Position and all revenues and expenses relating to financial instruments are recognised in the Statement of Financial Performance. The Ministry for the Environment has not entered into any off-balance sheet transactions.
The following methods and assumptions were used to value each class of financial instrument:
accounts receivable are recorded at expected realisable value
all other financial instruments including cash and bank and accounts payable are recognised at their estimated fair value.
(xi) Goods and Services Tax (GST)
All statements are GST exclusive, except where otherwise stated. Creditors and Payables and Debtors and Receivables in the Statement of Financial Position are stated inclusive of GST. The GST payable or receivable at balance date is included in creditors and payables or debtors and receivables.
(xii) Taxation
The Ministry is exempt from income tax in terms of the Income Tax Act 1994. Accordingly, no charge for income tax has been provided for.
(xiii) Commitments
Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments at the point a contractual obligation arises, to the extent that they are equally unperformed obligations.
(xiv) Contingencies
Contingent liabilities and contingent assets are disclosed at the point at which the contingency is evident.
(xv) Taxpayers' funds
Taxpayers' funds is the Crown's net investment in the Ministry.
(xvi) Changes in accounting policies
There have been no changes in accounting policies since the date of the last audited financial statements.
All policies have been applied on a basis consistent with other years.
Notes to the Financial Statements for the Year Ended 30 June 2005
1. Other revenue
| Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary
estimates 30/06/2005 $000 |
|
|---|---|---|---|---|
| 200 | Departmental | 206 | 0 | 196 |
| 0 | Other | 24 | 5 | 27 |
| 11 | Gain on sale of fixed assets | 12 | 5 | 5 |
| 211 | Total other revenue | 242 | 10 | 228 |
2. Personnel costs
Personnel costs include expenditure and provisions for salaries, wages, annual leave, retirement and long service leave.
3. Operating expenses
| Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary
estimates 30/06/2005 $000 |
|
|---|---|---|---|---|
| 4,542 | General and administration | 4,141 | 2,337 | 4,138 |
| 2,397 | Other operating costs | 3,026 | 3,919 | 2,701 |
| 2,590 | Rental and leasing | 1,495 | 1,660 | 1,509 |
| 12,325 | Consultancy | 13,421 | 12,324 | 14,061 |
| 43 | Audit fees for financial statements | 88 | 26 | 38 |
| 21 | Other services provided by Audit NZ | 1 | 28 | 4 |
| 26 | Loss on sale of fixed assets | 3 | 0 | 0 |
| 21,944 | Total operating expenditure | 22,175 | 20,294 | 22,451 |
4. Depreciation
| Actual 30/06/2004 $000 |
Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Supplementary
estimates 30/06/2005 $000 |
|
|---|---|---|---|---|
| 120 | Furniture and fittings | 17 | 198 | 34 |
| 31 | Office equipment | 25 | 25 | 27 |
| 17 | Computer software | 18 | 18 | 19 |
| 253 | Computer hardware | 267 | 259 | 272 |
| 421 | Total depreciation charge | 327 | 500 | 352 |
5. Capital charge
The Ministry pays a capital charge to the Crown on its average Taxpayers' Funds as at 31 December and 30 June each year. The capital charge rate for the year ended 30 June 2005 was 8% (2004: 8.5%).
6. Debtors and receivables
| Actual 30/06/2005 $000 |
Actual 30/06/2004 $000 |
|
|---|---|---|
| Trade debtors | 117 | 299 |
| Less provision for doubtful debts | 0 | 0 |
| GST receivable | 2,212 | 0 |
| Total debtors and receivables | 2,329 | 299 |
7. Fixed assets
| Cost 30/06/2005 $000 |
Accumulated depreciation 30/06/2005 $000 |
Net book value 30/06/2005 $000 |
Cost 30/06/2004 $000 |
Accumulated depreciation 30/06/2004 $000 |
Net book value 30/06/2004 $000 |
|
|---|---|---|---|---|---|---|
| Furniture and fittings | 83 | 55 | 28 | 82 | 38 | 44 |
| Office equipment | 321 | 263 | 58 | 318 | 238 | 80 |
| Computer software | 64 | 40 | 24 | 64 | 22 | 42 |
| Computer hardware | 1,091 | 698 | 393 | 1,058 | 654 | 404 |
| Total fixed assets | 1,559 | 1,056 | 503 | 1,522 | 952 | 570 |
Work in Progress as at 30 June 2005 is for the Environment House fit-out.
8. Creditors and payables
| Actual 30/06/2005 $000 |
Actual 30/06/2004 $000 |
|
|---|---|---|
| Trade creditors | 3,179 | 1,695 |
| Accruals | 3,840 | 4,242 |
| Fixed asset payable | 552 | 0 |
| Total creditors and payables | 7,571 | 5,937 |
9. Employee entitlements
| Actual 30/06/2005 $000 |
Actual 30/06/2004 $000 |
|
|---|---|---|
| Current employee entitlements | ||
| Annual leave | 763 | 655 |
| Total current employee entitlements | 763 | 655 |
| Non-current employee entitlements | ||
| Retirement, long service leave and retention/refresher leave | 662 | 531 |
| Total non-current employee entitlements | 662 | 531 |
| Total employee entitlements | 1,425 | 1,186 |
The Retirement and Long Service Leave were valued by Aon Consulting as at 30 June 2005 . The major assumptions used in the actuarial valuation were:
a discount rate has been used in this valuation by finding the weighted averages of returns on government stock of different terms as at 30 June 2005 . The rates used in the valuation range from 5.68% to 6.13% depending on the term of the liability for each employee.
a long term annual rate of salary growth of 3% per year. A promotional salary scale that has been derived from the experience of New Zealand superannuation schemes has been adopted.
10. Provision for repayment of surplus to the Crown
The balance in the provision for repayment of surplus to the Crown for the current year is the gain on sale of fixed assets and surplus from operations.
11. Financial instruments
The Ministry is party to financial instrument arrangements as part of its everyday operations. These include instruments such as bank balances, investments, accounts receivable and accounts payable.
Credit risk
Credit risk is the risk that a third party will default on its obligations to the Ministry, causing the Ministry to incur a loss. In the normal course of business, the Ministry incurs credit risk from accounts receivable and transactions with financial institutions.
The Ministry does not require collateral or other security to support financial instruments with credit risk, as the Ministry deals with financial institutions which have high credit ratings. For its other financial instruments, the Ministry does not have significant concentrations of credit risk.
Fair value
The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.
Currency and interest rate risk
Currency risk is the risk that debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates. The Ministry has no significant exposure to currency risk on its financial instruments.
Interest rate risk is the risk that the Ministry's return on the funds it has invested will fluctuate due to changes in market interest rates. Under the Public Finance Act the Ministry cannot raise a loan without Ministerial approval and no such loans have been raised. Accordingly, there is no interest rate exposure on funds borrowed.
The Ministry has no significant exposure to interest rate risk on its financial instruments.
12. Contingencies
The Ministry does not have any contingent assets as at 30 June 2005 (2004: nil).
Contingent liabilities are disclosed separately in the Statement of Contingencies.
13. Major budget variations
The Ministry had very few significant variances. Listed below are the major variances measured against the Main Estimates.
(i) Statement of financial performance
| Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Variance $000 | |
|---|---|---|---|
| Other operating costs | 3,026 | 3,919 | (893) |
| Consultancy | 13,421 | 12,324 | 1,097 |
Other operating costs is lower than Budget as less was spent in this area. Consultancy is higher than budgeted as a result of more work undertaken in work programmes during the year.
(ii) Statement of financial position
| Actual 30/06/2005 $000 |
Main estimates 30/06/2005 $000 |
Variance $000 | |
|---|---|---|---|
| Bank | 7,423 | 3,656 | 3,767 |
| Creditors and payables | 7,521 | 2,865 | 4,656 |
The Ministry had a higher bank balance (than budgeted) due to suppliers/providers not providing invoices before the month end cut off. Many invoices as a result had to be accrued, hence the higher bank balance and creditors and payables.
14. Subsequent events
No significant events, which would materially affect the financial statements, occurred between 30 June 2005 and the date of signing the financial statements (2004: nil).
15. Related party transactions
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.
The Ministry enters into numerous transactions with government departments, Crown agencies and State-owned enterprises. These transactions are not considered to be related party transactions.
Apart from those transactions described above, the Ministry has not entered into any related party transactions.
