Statement of Intent 2006 - Forecast Financial Statements
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Forecast Statement of Financial Performance
For the year ending 30 June 2007
| 2005/2006 | 2006/20071 | ||
|---|---|---|---|
| Budgeted $000 | Estimated Actual $000 | Budgeted $000 |
|
| Revenue | |||
| Crown | 681,077 | 681,077 | 1,081,762 |
| Department | 24,945 | 24,945 | 14,106 |
| Other | 4,494 | 4,494 | 6,331 |
| Total revenue | 710,516 | 710,516 | 1,102,199 |
| Expenses | |||
| Personnel | 362,295 | 362,295 | 554,821 |
| Financial Plan Costs | - | - | 93,754 |
| Operating | 307,470 | 307,470 | 378,035 |
| Depreciation | 37,252 | 37,252 | 58,958 |
| Capital charge | 3,499 | 3,499 | 16,631 |
| Total expenses | 710,516 | 710,516 | 1,102,199 |
| Surplus/(deficit) from operations | - | - | - |
| Profit on sale of fixed assets | - | - | - |
| Net surplus/(deficit) | - | - | - |
Forecast Statement of Financial Position
As at 30 June 2007
| 2005/2006 | 2006/2007 | ||
|---|---|---|---|
| BUDGETED $000 | ESTIMATED ACTUAL $000 | BUDGETED $000 |
|
| Taxpayers' Funds | |||
| General funds | 104,870 | 104,870 | 267,655 |
| Revaluation Reserves | 7,689 | 7,689 | 27,740 |
| Total Taxpayers' funds | 112,559 | 112,559 | 295,395 |
| Represented by: | |||
| Assets | |||
| Current assets | |||
| Bank | 90,233 | 90,233 | 120,305 |
| Prepayments | 3,299 | 3,299 | 3,299 |
| Accounts receivable | 3,422 | 3,422 | 5,000 |
| Crown receivable | - | - | 830 |
| Properties intended for sale | - | - | 1,726 |
| Total current assets | 96,954 | 96,954 | 131,160 |
| Fixed assets | 102,974 | 102,974 | 303,529 |
| Total assets | 199,928 | 199,928 | 434,689 |
| Less Liabilities | |||
| Current liabilities: | |||
| Accounts payable and accruals | 48,070 | 48,070 | 71,853 |
| Other short-term liabilities | 23,394 | 23,394 | 38,975 |
| Other provisions | 4,310 | 4,310 | 9,132 |
| Total current liabilities | 75,774 | 75,774 | 119,960 |
| Non-current liabilities: | |||
| Provision for employee entitlements | 11,595 | 11,595 | 19,334 |
| Total liabilities | 87,369 | 87,369 | 139,294 |
| Net assets | 112,559 | 112,559 | 295,395 |
Forecast Statement of Cash Flows
For the year ending 30 June 2007
| 2005/2006 | 2006/2007 | ||
|---|---|---|---|
| Budgeted $000 | Estimated Actual $000 | Budgeted $000 |
|
| Cash flows from operating activities | |||
| Cash provided from: | |||
| Supply of outputs | 710,516 | 710,516 | 1,101,369 |
| Cash disbursed to: | |||
| Production of outputs | 671,465 | 671,465 | 1,000,663 |
| Capital charge | 3,499 | 3,499 | 16,631 |
| Net operating cash flows | 35,552 | 35,552 | 84,075 |
| Cash flows from investing activities | |||
| Cash provided from: | |||
| Sale of fixed assets | 1,700 | 1,700 | 2,328 |
| Cash disbursed to: | |||
| Purchase of fixed assets | 36,627 | 36,627 | 56,331 |
| Net investing cash flows | (34,927) | (34,927) | (54,003) |
| Cash flows from financing activities | |||
| Cash provided from: | |||
| Capital contribution from the Crown | - | - | 182,836 |
| Cash disbursed to: | |||
| Payment of net surplus to the CrownPurchase of Child Youth and Family Services net assets | 17,932- | 17,932- | -182,836 |
| Net financing cash flows | (17,932) | (17,932) | - |
| Net increase/(decrease) in cash | (17,307) | (17,307) | 30,072 |
| Cash at beginning of period | 107,540 | 107,540 | 90,233 |
| Cash at end of period | 90,233 | 90,233 | 120,305 |
Reconciliation of Net Cash Flows from Operating Activities to Net Surplus / (Deficit) in the Operating Statement
For the year ending 30 June 2007
| 2005/2006 | 2006/2007 | ||
|---|---|---|---|
| Budgeted $000 | Estimated Actual $000 | Budgeted $000 |
|
| Net operating surplus/(deficit) | - | - | - |
| Add Non-cash items: | |||
| Depreciation | 37,252 | 37,252 | 58,958 |
| Other non-cash items | (1,700) | (1,700) | (22,674) |
| Add working capital movements: | |||
| (Increase)/decrease in: | |||
| Accounts receivable | - | - | (1,578) |
| Prepayments | - | - | - |
| Crown receivable | - | - | (830) |
| Properties intended for Sale | - | - | (1,726) |
| Increase/(decrease) in: | |||
| Creditors and payables | - | - | 36,344 |
| Short-term liabilities | - | - | 15,581 |
| Add non-operating activity items: | |||
| Net loss/(gain) on sale of fixed assets | - | - | - |
| Net cash flows from operating activities | 35,552 | 35,552 | 84,075 |
Forecast Statement of Movements in Taxpayers' Funds
As at 30 June 2007
| 2005/2006 | 2006/2007 | ||
|---|---|---|---|
| Budgeted $000 | Estimated Actual $000 | Budgeted $000 |
|
| Net surplus for the year | - | - | - |
| Other recognised revenues and expenses: | |||
| Increase in revaluation reserves | - | ||
| Total recognised revenues and expenses for the period | - | - | - |
| Capital contribution from the Crown | - | - | 182,836 |
| Movements in Taxpayers' Funds for the year | - | - | 182,836 |
| Taxpayers' Funds as at beginning of the year | 112,559 | 112,559 | 112,559 |
| Taxpayers' funds as at 30 June | 112,559 | 112,559 | 295,395 |
Details of Forecast Fixed Assets by Category
As at 30 June 2007
|
| 2005/2006 | 30 June 2007 Projected Position | ||
|---|---|---|---|---|
| Estimated Actual NBV | Cost | Accumulated Depreciation | Net Book Value |
|
| $000 | $000 | $000 | $000 | |
| Land | 5,540 | 42,825 | - | 42,825 |
| Buildings | 11,237 | 138,528 | (7,892) | 130,636 |
| Leasehold improvements | 13,702 | 87,030 | (63,141) | 23,889 |
| Computer equipment and software | 36,002 | 238,274 | (182,557) | 55,717 |
| Office equipment and furniture | 3,451 | 33,667 | (25,327) | 8,340 |
| Motor vehicles | 13,135 | 39,412 | (17,197) | 22,215 |
| Work in progress | 19,907 | 19,907 | - | 19,907 |
| Total fixed assets | 102,974 | 599,643 | (296,114) | 303,529 |
Forecast Departmental Capital Expenditure
For the year ending 30 June 2007
Departmental capital expenditure to be incurred in accordance with section 24 of the Public Finance Act 1989.
| Departmental Capital Expenditure | 2006/07 | 2005/06 | 2004/05 | 2003/04 | 2002/03 | 2001/02 | |
|---|---|---|---|---|---|---|---|
| Forecast $000 | Estimated Actual $000 | Budget $000 | Actual $000 | Actual $000 | Actual $000 | Actual $000 |
|
| Land | - | - | - | - | - | - | - |
| Buildings | 2,471 | - | - | - | - | - | - |
| Leasehold improvements | 10,854 | 6,991 | 6,991 | 4,920 | 4,788 | 2,363 | 2,583 |
| Computer equipment and software | 32,057 | 23,955 | 23,955 | 16,210 | 33,344 | 9,899 | 16,672 |
| Office equipment and furniture | 3,199 | 1,081 | 1,081 | 911 | 3,175 | 698 | 938 |
| Motor vehicles | 7,750 | 4,600 | 4,600 | 4,588 | 3,048 | 7,197 | 2,839 |
| Total fixed assets | 56,331 | 36,627 | 36,627 | 26,629 | 44,355 | 20,157 | 23,032 |
Statement of Financial Performance Forecast for the Department
For the year ending 30 June 2007
| 2005/2006 | 2006/2007 | ||
|---|---|---|---|
| Budgeted $000 | Estimated Actual $000 | Budgeted $000 |
|
| Operating results | |||
| Revenue department | 24,945 | 24,945 | 14,106 |
| Revenue other | 4,494 | 4,494 | 6,331 |
| Output expenses | 710,516 | 710,516 | 1,102,199 |
| Net surplus | - | - | - |
| Working capital | |||
| Net current assets | 96,954 | 96,954 | 131,160 |
| Net current liabilities | 75,774 | 75,774 | 119,960 |
| Current ratio | 128% | 128% | 109% |
| Resource utilisation | |||
| Physical assets: | |||
| Total physical assets at year end | 102,974 | 102,974 | 303,529 |
| Additions as % of physical assets | 36% | 36% | 19% |
| Taxpayers' funds level at year-end | 112,559 | 112,559 | 295,395 |
| Taxpayers' funds as % of total assets | 56% | 56% | 68% |
| Forecast net cash flows | |||
| Net operating activities | 35,552 | 35,552 | 84,075 |
| Net investing activities | (34,927) | (34,927) | (54,003) |
| Net financing activities | (17,932) | (17,932) | - |
| Net increase/(decrease) in cash held | (17,307) | (17,307) | 30,072 |
Statement of Forecast Financial Performance for each Output Expense
For the year ending 30 June 2007
| Revenue | Total Expenses $000 |
|||
|---|---|---|---|---|
| Crown $000 | Department $000 | Other $000 |
||
| VOTE: SOCIAL DEVELOPMENT | ||||
| Community Services Card | 5,728 | 36 | - | 5,764 |
| Debt Management - Former Beneficiaries | 19,272 | 180 | - | 19,452 |
| Family and Community Services | 25,008 | 90 | - | 25,098 |
| Policy and Purchase Advice | 36,033 | 1,388 | - | 37,421 |
| Services to Minimise the Duration of Unemployment and Move People into Work | 250,310 | 1,481 | - | 251,791 |
| Services to Protect the Integrity of the Benefit System | 36,526 | 300 | - | 36,826 |
| Services to Provide Benefit Entitlements and Obligations to Working Age Beneficiaries and to Promote Self-Sufficiency | 227,273 | 8,185 | 4,349 | 239,807 |
| Services to Seniors | 36,340 | 366 | - | 36,706 |
| Services to Students | 31,320 | 125 | - | 31,445 |
| Social Development Leadership | 2,879 | 52 | - | 2,931 |
| Sub Total | 670,689 | 12,203 | 4,349 | 687,241 |
| VOTE: SENIOR CITIZENS | ||||
| Senior Citizens Services | 1,124 | 18 | - | 1,142 |
| Sub Total | 1,124 | 18 | - | 1,142 |
| VOTE: VETERANS' AFFAIRS - SOCIAL DEVELOPMENT | ||||
| Processing and Payment of Pensions | 4,132 | 23 | - | 4,155 |
| Sub Total | 4,132 | 23 | - | 4,155 |
| VOTE: YOUTH DEVELOPMENT | ||||
| Enabling Youth Development | 2,542 | 12 | - | 2,554 |
| Facilitating Young People's Voices | 674 | 11 | - | 685 |
| Youth Development Policy Advice | 2,833 | 165 | 170 | 3,168 |
| Sub Total | 6,049 | 188 | 170 | 6,407 |
| VOTE: CHILD YOUTH AND FAMILY SERVICES | ||||
| Adoption Services | 8,390 | 32 | - | 8,422 |
| Care and Protection Services | 291,126 | 622 | 1,799 | 293,547 |
| Development and Funding of Community Services | 7,650 | 49 | - | 7,699 |
| Policy Advice and Ministerial Servicing | 4,586 | 49 | - | 4,635 |
| Prevention Services | 5,402 | 590 | 13 | 6,005 |
| Youth Justice Services | 82,614 | 332 | - | 82,946 |
| Sub Total | 399,768 | 1,674 | 1,812 | 403,254 |
| Total | 1,081,762 | 14,106 | 6,331 | 1,102,199 |
Statement of Underlying Assumptions
These forecast financial statements comply with generally accepted accounting practice. The measurement base applied is historical cost, adjusted for the revaluation of land and buildings.
The accrual basis of accounting has been used in the preparation of these forecast financial statements.
Statement of Accounting Policies
For the year ending 30 June 2007
Reporting Entity
The Ministry of Social Development is a government department as defined by section 2 (1) of the Public Finance Act 1989.
These are the forecast financial statements for the Ministry of Social Development prepared pursuant to Section 38 of the Public Finance Act 1989. The Department of Child, Youth and Family Services will merge with the Ministry of Social Development on 1 July 2006. The 2006/2007 forecast financial statements have been prepared on a consolidated basis to reflect the merger. The 2005/2006 Budget and the Estimated Actual 2005/2006 financial information presented in the financial statements are for the Ministry of Social Development only.
Measurement System
The forecast financial statements have been prepared on the historical cost basis, modified by the revaluation of land and buildings.
Revenue
The Ministry receives revenue from providing outputs to the Crown and for services to third parties. Revenue is recognised when it is earned and is reported in the financial period it relates to.
Cost Allocation
The Ministry accumulates and allocates costs to Departmental Output Expenses using a three-staged costing system which is outlined below.
Cost Allocation Policy
The first stage allocates all direct costs to output expenses as and when they are incurred. The second stage accumulates and allocates indirect costs to output expenses based on cost drivers, such as full-time equivalent staff (FTE) and workload information obtained from surveys, which reflect an appropriate measure of resource consumption/use. The third stage accumulates and allocates overhead costs to output expenses based on resource consumption/use where possible, such as FTE staff ratio, or if an appropriate driver cannot be found then in proportion to the costs charged in the previous two stages.
Criteria for direct and indirect costs
Direct costs are all costs that vary directly with the level of activity and are causally related to, and readily assignable to, an output expense. Overhead costs are those costs that do not vary with the level of activity undertaken. Indirect costs are all costs other than direct costs and overhead costs.
Capital Charge
The Crown charges the Ministry a levy on taxpayers’ funds at the rate of 7.5% on the capital employed. This charge is based on the taxpayers’ funds held by the Ministry as at 31 December and 30 June each financial year, and paid in arrears. Under the differential capital charge scheme, notional interest is “earned” based on the daily cash balances held by the Ministry. Capital charge payable is reduced by the notional interest “earned”.
Receivables and Advances
Receivables and advances are stated at estimated net realisable value, after providing for doubtful and uncollectible debts.
Operating Leases
Leases where the lessor effectively retains substantially all the risk and benefits of ownership of the leased items are classified as operating leases. Payments under these leases are charged as expenses in the periods they are incurred, over the term of the lease.
Fixed Assets
Fixed assets are stated at historical cost or valuation, less accumulated depreciation.
Land and buildings are stated at fair value as determined by an independent registered valuer. Fair value is determined using market-based evidence, except for residential facilities which are valued at depreciated replacement value. Land and buildings are revalued at least every three years. Additions between revaluations are recorded at cost.
The results of revaluing land and buildings are credited or debited to an asset revaluation reserve for that class of asset. Where a revaluation results in a debit balance in the revaluation reserve, the debit balance will be expensed in the Forecast Statement of Financial Performance.
Family home equipment has a capitalisation threshold of $500. All other fixed assets with a cost price in excess of $2,000, are capitalised and recorded at historical cost. Any write-down of an item to its recoverable amount is recognised in the Forecast Statement of Financial Performance. The initial cost of a fixed asset is the value of consideration given to acquire or create the asset and directly attributable costs of bringing the asset up to the working condition for its intended use.
Depreciation
Depreciation is provided on a straight line basis on all fixed assets, other than freehold land and work in progress, at rates which will write-off the cost or valuation of the assets to their estimated residual values, over their estimated useful lives.
Estimated useful lives for the main clauses of assets fall within the following range:
| Type of assets | Estimated life (years) |
|---|---|
| Buildings(including components) | 10 to 50 |
| Leasehold improvements | 3 to 10 |
| Computer equipment | 3 to 5 |
| Software | 3 to 8 |
| Furniture, fittings and office equipment | 3 to 5 |
| Motor vehicles | 4 |
Leasehold improvements are capitalised and the cost is amortised over the unexpired period of the lease, or the estimated useful life of the improvements, whichever is shorter.
Assets under construction, classified as work in progress, are not depreciated. The total cost of a capital project is transferred to the appropriate asset category on its completion and then depreciated.
Income Tax
The Ministry is exempt from paying income tax in terms of the Income Tax Act 1994. Accordingly, no charge for income tax has been provided.
Goods and Services Tax (GST)
The Forecast Statement of Financial Position is exclusive of GST, except for Payables and Receivables, which are GST inclusive. All other statements are GST exclusive.
The amount of GST owing to or from the Inland Revenue Department at balance date, being the difference between output GST and input GST, is included in Payables or Receivables (as appropriate).
Financial Instruments
The Ministry is party to financial instruments as part of its normal operations. These forecast financial statements include bank accounts, short-term deposits, accounts receivable, Crown receivable and accounts payable.
All financial instruments are recognised in the Forecast Statement of Financial Position and revenues and expenses in relation to all financial instruments are recognised in the Forecast Statement of Financial Performance. All financial instruments are shown at their estimated fair value.
Employee Entitlements
A provision for employee entitlements is recognised as a liability when benefits have been earned but not yet received by employees at balance date. Employee benefits include annual leave, long service leave and retirement leave. Annual leave has been calculated on a nominal basis at current rates of pay while the other provisions are stated at the present value of the future cash outflows expected to be incurred.
Provisions
Provisions are recognised when management has approved a business decision that results in a present obligation to transfer economic benefits. The amount and/or timing of the expenditure that will be undertaken is uncertain but still probable and measurable.
Forecast Statement of Cash Flows
Cash includes cash balances on hand, in bank accounts.
Operating activities include the net cash received from all income sources of the Ministry and 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.
Taxpayers’ Funds
This is the Crown’s net investment in the Ministry.
Changes in Accounting Policy
The Ministry is not anticipating making any changes to any of the current accounting policies.
1 The Department of Child, Youth and Family Services will merge with the Ministry of Social Development on 1 July 2006. The 2006/2007 financial information is consolidated financial information that reflect the merged Ministry of Social Development. The 2005/2006 financial information is for the Ministry of Social Development prior to the merger.
