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Notes to the financial statements

For the year ended 30 June 2008

1. Statement of accounting policies for the year ended 30 June 2008

Reporting entity and statutory basis

Statistics New Zealand (referred to in full or as ‘the department’) is a government department as defined by section 2 of the Public Finance Act 1989. These financial statements, which are prepared pursuant to section 45 of the Public Finance Act 1989, encompass the activities of Statistics New Zealand for the year ended 30 June 2008.

For purposes of appropriation under the Public Finance Act 1989, the department’s outputs are grouped as follows:

Official statistics – Multi-class output appropriation (MCOA)

  • Coordination of government statistical activities
  • Population, social and labour force statistical information services
  • Economic and business statistical information services.

Multi-year appropriation (MYA)

  • 2011 Census of Population and Dwellings.

The primary objective of Statistics New Zealand is to provide services to the public rather than making a financial return. Accordingly, Statistics New Zealand has designated itself as a public benefit entity for the purposes of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).

The financial statements of Statistics New Zealand are for the year ended 30 June 2008. The financial statements were authorised for issue by the Government Statistician on 30 September 2008.

Basis of preparation

The financial statements of Statistics New Zealand have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with New Zealand generally accepted accounting practices (NZ GAAP).

These financial statements have been prepared in accordance with, and comply with, NZ IFRS as appropriate for public benefit entities. This is the first set of financial statements prepared using NZ IFRS. The comparatives for the year ended 30 June 2007 have been restated to NZ IFRS accordingly. Reconciliations of equity and net surplus/(deficit) for the year ended 30 June 2007, under NZ IFRS, to the balances reported in the 30 June 2007 financial statements are detailed in note 22.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and in preparing an opening NZ IFRS statement of financial position as at 1 July 2006 for the purposes of the transition to NZ IFRS.

The financial statements have been prepared on a historical cost basis.

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of Statistics New Zealand is New Zealand dollars.


Revenue is measured at the fair value of consideration received.

Revenue Crown

Revenue earned from the supply of outputs to the Crown is recognised as revenue when earned.

Sale of publications

Sale of publications is recognised when the product is sold to the customer. The recorded revenue is the gross amount of the sale.

Other income

Revenue from contracted surveys is recognised to the extent that the service has been completed by Statistics New Zealand.

Rental income

Lease receipts under an operating sub-lease are recognised as income on a straight-line basis over the lease term.

Capital charge

The capital charge is recognised as an expense in the period to which the charge relates.


Operating leases

An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.

Cash and cash equivalent

Cash includes cash on hand and funds in the bank.

Debtors and other receivables

Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate, less impairment changes if relevant.

Impairment of a receivable is established when there is objective evidence that Statistics New Zealand will not be able to collect amounts due, according to the original terms of the receivable. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate, if applicable.

Property, plant and equipment

Property, plant and equipment consists of computer equipment, leasehold improvements, furniture and fittings, office equipment, and motor vehicles. All property plant and equipment is shown at cost, less accumulated depreciation and impairment losses.

Property, plant and equipment is capitalised if the cost is greater than $1,000.

Computer equipment assets are assigned a unique identifier, therefore assets under $1,000 are capitalised in the asset register to assist with the stocktake. The assets are treated as either an individual asset or part of another asset.

Library assets, irrespective of their cost, are capitalised at year-end and are treated as a pool asset depending on their life (5, 10 or 15 years).


The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to Statistics New Zealand, and the cost of the item can be measured reliably. All items of property, plant and equipment are recognised at cost.


Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the statement of financial performance.

Subsequent costs

Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to Statistics New Zealand, and the cost of the item can be measured reliably.


Depreciation is provided on a straight-line basis on all property, plant and equipment, at rates that will write-off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of assets have been estimated as follows:

Furniture and fittings 7 years
Leasehold improvements Remaining term of the lease, or the estimated remaining useful life of the improvements, whichever is the shorter.
Library collection 5 to 15 years
Motor vehicles 3 to 5 years
Office equipment 5 years
Computer equipment 3 to 5 years

The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end.

Intangible assets

Software acquisition and development

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Costs associated with maintaining computer software are recognised as an expense when incurred. Costs that are directly associated with the development of software for internal use by Statistics New Zealand, are recognised as an intangible asset. Direct costs include the software development, employee, and directly applicable operating costs.


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 period is recognised in the statement of financial performance. The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:

Software 3 to 5 years
Capitalised developments

        Basic infrastructure systems

10 years

        Capture and processing systems

5 to 7 years

        Output systems

5 years

        Dissemination and access systems

3 years

        Office automation tools

5 years


Impairment of non-financial assets

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. An intangible asset that is not yet available for use at the balance sheet date is tested for impairment annually.

Property, plant and equipment, and intangible assets that have a finite useful life, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use.

Value in use is depreciated replacement cost for an asset, where the future economic benefits or service potential of the asset are not primarily dependent on the asset’s ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.

If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount.

Creditors and other payables

Creditors and other payables are initially measured at fair value.

Employee entitlements

Short-term employee entitlements

Employee entitlements that Statistics New Zealand expects to be settled within 12 months of balance date are measured at nominal values, based on accrued entitlements at current rates of pay.

These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, retiring and long-service leave entitlements expected to be settled within 12 months, and sick leave.

Statistics New Zealand recognises a liability for sick leave to the extent that absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that Statistics New Zealand anticipates it will be used by staff to cover those future absences.

Statistics New Zealand recognises a liability and an expense for bonuses where it is contractually obliged to pay them, or where there is a past practice that has created a constructive obligation.

Long-term employee entitlements
Entitlements that are payable beyond 12 months, such as long-service leave and retiring leave, have been calculated on an actuarial basis. The calculations are based on:

  • likely future entitlements based on years of service, years to entitlement, the likelihood that staff will reach the point of entitlement, and contractual entitlements information
  • the present value of the estimated future cash flows. A weighted average discount rate of 4.25 percent and a salary inflation factor of 3.40 percent were used. The discount rate is based on the weighted average of government bonds, with terms to maturity similar to those of the relevant liabilities. The inflation factor is based on the expected long-term increase in remuneration for employees.

Superannuation schemes

Defined contribution schemes

Obligations for contributions to the State Sector Retirement Savings Scheme, KiwiSaver and the Government Superannuation Fund are accounted for as defined contribution schemes and are recognised as an expense in the statement of financial performance as incurred.


Statistics New Zealand recognises a provision 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 an outflow of future economic benefits will be required to settle the obligation, and
  • a reliable estimate can be made of the amount of the obligation.

Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.

Taxpayers’ funds

Taxpayers’ funds is the Crown’s investment in Statistics New Zealand and is measured as the difference between total assets and total liabilities. Taxpayers’ funds is classified as general funds.


Expenses yet to be incurred, on non-cancellable contracts that have been entered into on or before balance date, are disclosed as commitments to the extent that there are equally unperformed obligations.

Cancellable commitments that have penalty or exit costs, explicit in the agreement on exercising that option to cancel, are included in the statement of commitments at the value of that penalty or exit cost.

Commitments and contingencies are disclosed exclusive of GST.

Goods and services tax (GST)

All items in the financial statements, including appropriation statements, are stated exclusive of GST, except for receivables and payables, which are stated 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 amount of GST recoverable from, or payable to, Inland Revenue is included as part of receivables or payables in the statement of financial position.

The net GST paid to, or received from Inland Revenue, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows.

Income tax

Government departments are exempt from income tax, as public authorities. Accordingly, no charge for income tax has been provided for.

Budget figures

The budget figures are those included in Statistics New Zealand’s Statement of Intent 2008, which are consistent with the financial information in the Main Estimates. In addition, the financial statements also present the updated budget information from the Supplementary Estimates.

Statement of cost-accounting policies

Statistics New Zealand has determined the cost of outputs using the cost allocation system outlined below.

Direct costs are those costs directly attributed to an output. Indirect costs are those costs that cannot be identified with a specific output, in an economically feasible manner.

Statistics New Zealand has derived the costs of outputs shown in these financial statements using a cost driver to assign indirect costs. The cost drivers employed for assigning direct costs to outputs are based on direct charging and time recording.

The cost driver employed to allocate indirect costs to outputs is the proportion of Statistics New Zealand’s internal budget that is assigned to direct outputs. Indirect costs, excluding the costs of survey, compilation, and statistical databases and development projects, accounted for 42 percent of total costs for the year ended 30 June 2008 (2007: 52 percent). The percentage fluctuates from year to year, depending on the amount of direct funding received in relation to the five-yearly cycle of the Census of Population and Dwellings.

There have been no changes in cost accounting policies since the date of the last audited financial statements.

Critical accounting estimates and assumptions

In preparing these financial statements, Statistics New Zealand has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements 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. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in note 11, which provides an analysis of the exposure in relation to estimates and uncertainties surrounding retirement and long-service leave liabilities.

Critical judgements in applying Statistics New Zealand’s accounting policies

Management has exercised the following critical judgements about leases, in applying Statistics New Zealand accounting policies for the period ended 30 June 2008.

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 Statistics New Zealand. 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 with an operating lease no such asset is recognised.

Statistics New Zealand has exercised its judgement on rental leases, and has determined them to be operating leases.


2. Revenue other

revenue other


3. Personnel costs

personnel costs


4. Other operating expenses

note 4.


5. Capital charge

The department pays a capital charge to the Crown on its taxpayers’ funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2008 was 7.5 percent (2007: 7.5 percent).


6. Loss on disposal of fixed assets

During the year, the department replaced/disposed of some of its property, plant and equipment, which resulted in a loss for the year ended 30 June 2008 of $121,791 (2007: $30,867).


7. Debtors and receivables

debtors and other receivalbes

The carrying value of debtors and other receivables approximates their fair value.

The provision for doubtful debts has been calculated based on expected losses for the department’s debtors.

Movements in the provision for doubtful debts are as follows:

additional provisions

As at 30 June 2008 and 2007, all overdue receivables were assessed for impairment and appropriate provisions applied, as detailed below:



8. Creditors and other payables

creditors and other payables

Creditors and other payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value.


9. Repayment of surplus to the Crown

Under section 22 of the Public Finance Act 1989, no operating surplus can be retained by Statistics New Zealand.

Statistics New Zealand has a provision for repayment to the Crown of $320,852 operating surplus (2007: $216,594).


10. Provision for reorganisation

provision for reorganisation

The restructuring provision arises from the reorganisation of the department in 2006/07, and the remaining funds will be utilised within 12 months of the balance sheet date.


11. Employee entitlements

employee entitlements

Non-current liabilities for employee entitlements are recognised at net present cost. An inflation-adjusted estimate is made of the benefit. It is adjusted for the unearned portion and the probability of the employee becoming entitled, and then discounted to derive the net present cost.


12. Deferred revenue

Deferred revenue is the portion of operating revenue received which relates to future years. It will be recognised as income in the year when the services are provided.


13. Property, plant and equipment

note 13.


14. Intangible assets

note 14.


15. Taxpayers’ funds

note 15.


16. Reconciliation of net surplus/(deficit) to net cash from operating activities

note 16.


17. Related party transactions and key management personnel

Related party transactions

The department is a wholly-owned entity of the Crown. The Government significantly influences the roles of the department as well as being its major source of revenue.

The department enters into transactions with other government departments, Crown entities, and state-owned enterprises on an arm’s length basis. Transactions that occur within a normal supplier or client relationship, on terms and conditions no more or less favourable than those it is reasonable to expect the department would have adopted if dealing with that entity at arm’s length in the same circumstance, are not disclosed.

There are no other related party transactions.

No provision has been required, nor any expense recognised, for impairment of receivables from related parties.

Key management personnel compensation

personal compensation

Key management personnel included the Chief Executive and the 13 members of the Corporate Management Committee from 1 July 2007 to 18 November 2007. The board was formed from 19 November 2007, due to reorganisation, and includes the Chief Executive and the seven members of the senior management team.


18. Events after the balance sheet date

There have been no significant events after the balance sheet date.


19. Financial instrument risks

The department’s activities expose it to a variety of credit risk and liquidity risks.

Credit risk

A credit risk is the risk that a third party will default on its obligation to the department, causing the department to incur a loss. In the normal course of its business, credit risk arises from debtors.

The department is not permitted to invest any funds; this function is managed by the Treasury (New Zealand Debt Management Office). The department’s maximum credit exposure is represented by the total carrying amount of cash and cash equivalents, and net debtors (note 7).

Liquidity risk

Liquidity risk is the risk that the department will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the department closely monitors its forecast cash requirements with expected cash drawdown from the New Zealand Debt Management Office. The department maintains a target level of available cash to meet liquidity requirements. The table below analyses the department’s financial liabilities that will be settled, based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are undiscounted and based on the contractual cash flows.

creditors and other payables


20. Capital management

The department’s capital is its taxpayers’ funds, made up of general funds.

Equity is represented by net assets.

The department manages its revenue, expenses, assets, liabilities, and general financial dealings prudently.

The department’s equity is largely managed as a by-product of managing income, expenses, assets, liabilities, and compliance with the Government Budget processes and with Treasury instructions.

The objective of managing the department’s equity is to ensure the department effectively achieves the goals and objectives for which it has been established, while remaining a going concern.


21. Explanations of major variances against budget

Explanations for major variances form the department’s estimated figures in the statement of intent are as follows:

Statement of financial performance

Revenue other

Other revenue earned was $2.650 million less than anticipated, mainly due to third-party contracted surveys which did not eventuate during the year, and sale of publication customised output as a result of a new Budget initiative in 2007/08 (Making more Information Freely Available). These services are demand driven.


Underspending of $2.176 million, mainly due to deferred capital projects; for example, Making more Information Freely Available and expensing of work-in-progress. This was revised downwards at the Supplementary Estimates.


22. Explanation of transition to NZ IFRS

Transition to NZ IFRS

Statistics New Zealand’s financial statements for the year ended 30 June 2008 are the first financial statements that comply with NZ IFRS. The department has applied First-time Adoption of NZ IFRS (NZ IFRS 1) in preparing these financial statements. The department‘s transition date was 1 July 2006. The department prepared its opening NZ IFRS balance sheet at that date. The reporting date of these financial statements is 30 June 2008. The department’s NZ IFRS adoption date was 1 July 2007.

Exemptions from full retrospective application elected by the department

The only mandatory exception from retrospective application that applies to the department is the requirement for estimates, under NZ IFRS at 1 July 2006 and 30 June 2007, to be consistent with estimates made for the same date under previous NZ GAAP.

Reconciliation of equity

The following table shows the changes in equity resulting from the transition from previous NZ GAAP to NZ IFRS, as at 1 July 2006 and 30 June 2007.

note 22 table 1.

Reconciliation of surplus

The following table shows the changes in the department’s surplus, resulting from the transition from previous NZ GAAP to NZ IFRS for the year ended 30 June 2007.

note 22 table2.

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