STATEMENT OF ACCOUNTING POLICIES

Reporting Entity The Ministry of Fisheries is a Government Department as defined by section 2 of the Public Finance Act 1989.

These are the financial statements of the Ministry of Fisheries prepared pursuant to section 35 of the Public Finance Act 1989. In addition, the Ministry has reported activity undertaken on behalf of the Crown and trust monies which it administers.

Measurement Basis The general accounting principles recognised as appropriate for the measurement and reporting of financial performance and financial position on an historical cost basis, modified by the revaluation of certain property, plant and equipment, have been followed.

SPECIFIC ACCOUNTING POLICIES

Budget Figures The Budget figures are those presented in the Budget Night Estimates (Main Estimates), and those amended by the Supplementary Estimates, and any transfers made by Order-in-Council under section 5 of the Public Finance Act 1989.

Revenue The Ministry derives 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.

Cost Allocation Costs directly attributable to an output are allocated directly to the output as follows:

Those costs that cannot be allocated to an output in an economically feasible manner are assigned on the proportion of staff time spent on that output.

For the year ended 30 June 2004, direct costs accounted for 80% of the Ministry’s total costs (2003: 80%).

Debtors and Receivables Receivables are recorded at estimated realisable value after providing for doubtful and uncollectable debts.

Leased Assets comprise operating and finance leases.

Payments made under operating leases are recognised in the Statement of Financial Performance on a systematic basis over the period of the lease.

Leases that transfer substantially all the risks and rewards incidental to ownership of an asset to the Ministry are classified as finance leases and are capitalised. All finance leases are required to be approved by the Minister of Finance.

Property, Plant and Equipment Land and buildings are stated at fair value, as established by an independent valuation for the Ministry of Fisheries, with subsequent additions at cost. For the purpose of these financial statements, land and buildings, although owned by the Crown, are deemed as being owned by the Ministry as principal occupier or user.

Land, buildings and vessels are revalued on a cyclical basis. All assets within these classes are revalued at least every five years.

All other property, plant and equipment is stated at net book value (NBV) (i.e. cost less depreciation). Only property, plant and equipment with a cost in excess of $5,000 is capitalised.

Depreciation Depreciation of property, plant and equipment, other than freehold land and work in progress, is provided on a straight-line basis so as to allocate the depreciable cost (or valuation) of assets over their estimated useful lives. The estimated economic useful lives are:

The cost of leasehold improvements is capitalised and depreciated over the unexpired period of the lease, or the estimated remaining useful life of the improvement, whichever is shorter.

Items under construction are not depreciated. The total cost of a capital project is transferred to the appropriate asset class on its completion and then depreciated.

Inventories Inventories acquired for use in the provision of goods and services are expensed, except for bulk stocks, which are capitalised and expensed when used. Inventories are valued at cost less provision for obsolescence where applicable.

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 rates of pay. Employee entitlements to long service leave and retirement leave are recognised for all employees on the basis of an annual actuarial valuation, based on the present value of expected future entitlements.

Foreign Currency Foreign currency transactions are converted into New Zealand dollars at the exchange rate prevailing at the date of the transaction.

Statement of Cash Flows Cash means cash balances on hand and 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.

Financial Instruments The Ministry is party to financial instruments as part of its normal operations. These financial instruments include bank accounts, debtors and creditors.

All financial instruments are recognised in the Statement of Financial Position, and all revenues and expenses in relation to financial instruments are recognised in the Statement of Financial Performance.

Goods and Services Tax (GST) All financial information in this document is expressed exclusive of GST, except for:

1. Debtors and Receivables, and Creditors and Payables, which are expressed inclusive of GST in the Statement of Financial Position.
2. The Statement of Expenditure Appropriations and Statement of Unappropriated Expenditure, in which the GST on revenue earned is included where applicable.
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The amount of GST payable to or due from the Department of Inland Revenue at balance date is included in Creditors and Payables, or Debtors and Receivables, as appropriate.

Taxation Government Departments are exempt from the payment of income tax in terms of the Income Tax Act 1994.

Commitments Future expenses and liabilities to be incurred on non-cancellable operating leases, fisheries and biodiversity research contracts and registry services contracts entered into at balance date are disclosed as commitments to the extent they are equally unperformed obligations.

Contingent Liabilities Contingent liabilities are disclosed at the point at which the contingency is evident.

Taxpayers’ Funds This is the Crown’s net investment in the Ministry.

Changes in Accounting Policies The accounting policies of the Ministry have not been changed since the last audited financial statements. All policies have been applied on a basis consistent with previous years