Forecast Departmental Financial Statements
Statement of significant underlying assumptions
These forecast financial statements have been compiled on the basis of government policies at the time the statements were finalised.
These forecast financial statements comply with generally accepted accounting practice and the Public Finance Act 1989.
The accrual basis of accounting has been used for the preparation of these financial statements.
These statements have been prepared on a going-concern basis.
Statement of significant accounting policies
Reporting entity
The Department of Building and Housing is a government department as defined by the Public Finance Act 1989.
Our financial statements have been prepared pursuant to the Public Finance Act 1989.
In addition, we have reported the Crown activities that we administer.
Measurement system
The financial statements have been prepared on a historical cost basis.
Accounting policies
Commitments
Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments to the extent that they are equally unperformed obligations.
Contingent liabilities
Contingent liabilities are disclosed at the point at which the contingency is evident.
Cost allocation
We have determined the cost of outputs using the cost allocation system outlined below.
Cost allocation policy: Direct costs are charged directly to significant activities. Indirect costs are charged to significant activities based on cost drivers and related activity and use information.
Criteria for direct and indirect costs: 'Direct costs' are those costs directly attributable to an output. 'Indirect costs' are those costs that cannot be identified, in an economically feasible manner, with a specific output.
Receivables
Receivables are stated at the amounts expected to be ultimately collected in cash.
Depreciation
Depreciation of fixed assets is calculated on a straight-line basis to allocate the cost of the asset over its economic life.
The depreciation rates applied are:
Office equipment 20%
Leasehold improvements 10-20%
Furniture and fittings 10%
Computer hardware 25%
Software development and licences 12.5-33%
Communications equipment 25%
Motor vehicles 16%
Leased assets 25%
The cost of leasehold improvements is capitalised and amortised over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is shorter. The depreciation rate for motor vehicles is based on rates that will write down the cost of vehicles to their estimated residual value (40 percent of retail value at time of purchase) over 4 years.
Employee entitlements
Liabilities for annual leave are recognised as they accrue to employees. Provision is also made for payments of long-service leave, retiring leave and resigning leave obligations to employees. Annual leave provisions, retiring leave and resigning leave have been calculated on an actual entitlement basis at current rates of pay. Long-service leave is calculated on a present-value basis.
Financial instruments
We are party to financial instruments as part of our normal operations. These financial instruments include accounts payable and receivable, cash and short-term deposits. Revenues and expenses in relation to all financial instruments are recognised in the Statement of Forecast Financial Performance.
Foreign currency
Foreign currency transactions are recorded at the date of settlement of the transaction.
Goods and services tax (GST)
The Statement of Forecast Financial Position is exclusive of GST, except for payables and receivables, which are stated inclusive of GST. All other statements are GST-exclusive.
Leases
Finance leases: A liability equal to the present value of the future minimum lease payments is recognised for office equipment acquired by way of finance lease. Each lease payment is apportioned between the finance charge and the reduction of the outstanding liability. The interest expense component of the finance lease payments is recognised in the Statement of Forecast Financial Performance using the effective interest rate method.
Operating leases: We lease office premises. These leases are operating leases and the costs are expensed in the period in which they are incurred.
Property, plant and equipment
Fixed assets costing more than $2,000 are capitalised and recorded at historical cost. Any write-down of an item to its recoverable amount is recognised in the Statement of Forecast Financial Performance. No revaluations have been performed on any class of fixed assets.
Revenue
We derive revenue through the provision of outputs to the Crown, for services to third parties and from interest on the Residential Tenancies Trust Account. Revenue is recognised when earned and is reported in the financial period to which it relates.
Residential Tenancies Trust Account: In accordance with the Residential Tenancies Act 1986, we administer a trust account for tenancy bond investments. Interest is payable to us and interest income is recognised on an accrual basis.
Statement of Cash Flows
Cash means cash balances on hand and held in bank accounts. Operating activities include cash received from all our income sources and record the cash payments 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.
Taxation
Government departments are exempt from the payment of income tax in terms of the Income Tax Act 1994. Accordingly, no charge for income tax has been provided for.
Taxpayers' funds
This is the Crown's net investment in the Department.
Changes in accounting policies
There were no changes in accounting policies, including cost allocation accounting policies, since the date of the last audited financial statements.
All policies have been applied on a basis consistent with other years.