Statement of Significant Accounting Policies
Reporting Entity
The New Zealand Customs Service is a Government Department as defined by section 2 of the Public Finance Act 1989.
These are the forecast financial statements of the New Zealand Customs Service for the year ended 30 June 2007 prepared pursuant to section 34A of the Public Finance Act 1989.
Measurement Base
The measurement base applied is that of the forecast value of actual transactions (the historic cost method) adjusted for revaluation of certain fixed assets.
Revenue
Revenue is recognised when earned and is reported in the financial period to which it relates.
Cost Allocation
The New Zealand Customs Service has derived the cost of outputs shown in these statements using a cost allocation system.
Overhead costs are allocated to output classes on the basis of cost drivers that appropriately link indirect costs to the output class.
The cost drivers include numbers of staff employed and area occupied. These are consistent with those used in previous years.
Debtors and Receivables
Receivables are recorded at estimated realisable value, after providing for doubtful and uncollectable debts.
Leases
The New Zealand Customs Service leases office premises. As all the risks and ownership are retained by the lessor, these leases are classified as operating leases. Operating lease costs are expensed in the period in which they are incurred.
Fixed Assets
The initial cost of a fixed asset is the value of the consideration given to acquire or create the asset and any directly attributable costs of bringing the asset to working condition for its intended use.
All fixed assets costing individually more than $200 or as a group of assets, more than $10,000, are capitalised and recorded at historical cost.
Depreciation
Depreciation of fixed assets is provided on a straight line basis so as to allocate the cost of assets, less any estimated residual value, over their useful lives. The estimated economic useful lives are:
| Furniture and office equipment |
5 years |
| Plant and equipment |
5 years |
| X-ray equipment |
10 years |
| Computer hardware |
4 years |
| Computer software |
5 to 10 years |
| Motor vehicles |
5 years |
| Launch and watercraft |
4 to 10 years |
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.
Employee Entitlements
Annual leave and time off in lieu have been calculated on an actual entitlement basis at current rates of pay while the other provisions have been calculated on an actuarial basis based on the present value of expected future entitlements.
Foreign Currency
Foreign currency transactions are converted at the average New Zealand dollar exchange rate at the average rate of transaction for the month. Where a forward exchange contract has been used to establish the price of a transaction, the forward rate specified in that foreign exchange contract is used to convert that foreign exchange contract into New Zealand dollars. Consequently no exchange gain or loss resulting from the difference between the forward exchange rate and the spot exchange rate on the date of settlement is recognised.
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.
GST
The financial statements have been prepared on a GST exclusive basis except where stated.
Financial Instruments
Customs is party to financial instruments as part of its normal operations. These financial instruments include bank accounts, short-term deposits, debtors and creditors, and forward exchange contracts. Apart from forward exchange contracts, all financial instruments are recognised in the forecast statement of financial position and all revenues and expenses in relation to all financial instruments are recognised in the forecast statement of financial performance. All financial instruments are recognised in the statement of forecast financial position.
Changes in Accounting Policies
There have been no changes in accounting policy included in these forecast financial statements from that used in the prior period.