Statement of Expenditure Appropriations

for the year ended 30 June

* Includes adjustments made in Supplementary Estimates and transfers under section 26A of the Public Finance Act 1989.

At the close of the year, the Ministry was required to seek approval from the Minister of Finance under Section 26B of the Public Finance Act 1989 to unappropriated expenses in the Fisheries Operations Departmental Output Expense. The amount involved an overspend of $266,000 in an Output Expense budget of $23.98 million (1.1 percent). This unappropriated expenditure related to additional expenditure on scampi litigation and the establishment of the infrastructure to support the development of objectives-based management and fisheries plans initiative.

These financial statements should be read in conjunction with the statement of accounting policies on pages 51 to 53 and the notes to the financial statements on pages 62 to 71.

Transition to New Zealand Equivalents to International Financial Reporting Standards

The Minister of Finance has announced that the Crown will first adopt New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) for its financial year ending 30 June 2008. Management has performed a preliminary assessment to determine those standards likely to impact the Ministry’s financial performance, financial position and disclosures. The implementation guidance and Crown accounting policies issued by the Treasury have also been considered.

At this time it is expected that the impact of NZ IFRS will be confined to a few specific areas:

• Employee benefits, including the requirement for recording a provision for sick leave
• Reclassification of software from property, plant and equipment to intangible assets
• Land, buildings and vessels measured at deemed cost less accumulated depreciation
• Removal of fishing quota from the non departmental schedule of assets. Crown owned fishing quota is an internally generated asset

The disclosures made in this note are based on management’s knowledge of the expected NZ IFRS requirements and applied to the current facts and circumstances of the Ministry. The actual impact of adopting NZ IFRS may vary from the information presented in this note and this variation may be material.

Department Statement of Financial Position at 30 June 2007

(In thousands of New Zealand dollars)

Explanatory notes

1. At 30 June 2007, an amount of $722,000 has been reclassified from a revaluation reserve recognised under previous GAAP to general funds. The amount represents the balance of the revaluation reserve at 30 June 2007 in respect of assets for which the net book value under previous GAAP has been used as deemed cost under NZ IFRS.
2. Under previous GAAP, computer software development expenditure was classed as property, plant and equipment. Under NZ IFRS, these expenditures are classified as an intangible asset. The effect is to increase intangible assets by $2,588,000 at 30 June 2007, and decrease property, plant and equipment by a corresponding amount.
3. In accordance with NZ IFRS, provision has been made for sick leave. The effect is to increase total liabilities for employee entitlements by a net amount of $131,000 at 30 June 2007, and decrease taxpayer’s funds by the same amount.