Annual Report 2005

• Setting the scene
• The work of the Ministry

• Financial information

• Statement of Objectives
• Audit Report

Ministry for Culture and Heritage Annual Report 2005 - financial information

Download Annual Report as PDF (640k)

In this section

Accountabilities

The Chief Executive of the Ministry was accountable to the Minister for Arts, Culture and Heritage for the production of the output classes under Vote Arts, Culture and Heritage detailed in the Statement of Objectives and Service Performance, and for the efficient use of the resources invested by the Crown in the Ministry. The Chief Executive of the Ministry was also accountable to the Minister for Sports and Recreation for the production of the output class under Vote Sport and Recreation as detailed in the Statement of Objectives and Service Performance. Negotiated services were also provided to the Minister of Broadcasting and the Associate Minister for Arts, Culture and Heritage.

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Expenditure administered by the Ministry

Vote Arts, Culture and Heritage

In 2004/05 the Ministry incurred expenses of $11.009 million (GST inclusive) in the provision of services under the departmental output classes [1] Heritage Services, International Cultural Diplomacy, and Policy Advice and Grants Administration.

The Ministry also incurred the following expenditure against non-departmental appropriations administered on behalf of the Crown:

• five output classes totalling $215.279 million for services supplied, mainly by arts, heritage and broadcasting Crown entities, comprising: ballet, orchestral, museum, public broadcasting, film archive and Māori performing arts activities, protection for historic places, and the promotion and support of New Zealand films and the arts.
• ten other expenses appropriations totalling $16.136 million being:
  • $2.305 million for New Zealand’s annual contribution to the Commonwealth War Graves Commission.
  • $478,000 on the development and maintenance of war graves, historic graves and monuments in New Zealand and overseas.
  • $100,000 towards the preservation of historic sites and artefacts in Antarctic.
  • $10.946 million in grants to regional museums for capital construction projects.
  • $316,000 towards the cost of Treaty commemorations held at Waitangi and within communities elsewhere in New Zealand.
  • $8,000 towards the operating costs of the Pūkaki Trust, which acts as the guardian on behalf of the Crown for the taonga Pūkaki in Rotorua.
  • $11,000 for enhancements to the Gallipoli section of the NZHistory.net.nz website, a project to mark the 90th anniversary of Anzac day.
  • $104,000 towards the cost of constructing a New Zealand Memorial in London.
  • $1.688 million to support the redevelopment of the Theatre Royal in Christchurch.
  • $180,000 to enable the Waitangi National Trust Board to design, and to consult with stakeholders on, its proposed building development programme in Waitangi.
• $9 million capital contribution to Te Papa for ongoing capital expenditure for museum operations, exhibition research and development, and acquisition of collection items, and an additional allocation of $1.868 million for the costs of upgrading Te Papa’s storage facility in Tory Street, Wellington.
• $3.849 million to Radio New Zealand to purchase transmitters in low density population areas to improve transmission arrangements ($99,000), and purchase its Auckland accommodation at
  171 Hobson Street ($3.750 million).
• $1.805 million capital funding towards the construction of the Tomb of the Unknown Warrior.
• $14,000 preliminary expenditure associated with the purchase of land for a National Memorial Park in Wellington.

The Ministry was responsible for making payments for the services supplied under non-departmental appropriations, for ensuring that these appropriations were not exceeded, and for managing and monitoring on behalf of Ministers the Crown’s interests in these organisations.

Vote Sport and Recreation

In 2004/05 the Ministry incurred expenses of $110,000 (GST inclusive) in the provision of services under the departmental output class Purchase Advice and Monitoring of Sport and Recreation Crown Entities.

The Ministry also administered the following non-departmental appropriations:

• three output classes totalling $42.920 million for services supplied by the New Zealand Sports Drug Agency and Sport and Recreation New Zealand (SPARC).
• $5 million to Sport Education Scholarships to enable emerging and talented New Zealanders to pursue tertiary study and elite-level sport development concurrently.
• 15 miscellaneous grants totalling $49,993, to support sports-related initiatives including participation in sport and recreation activities for groups, individuals and organisations that are unable to obtain support through organisations such as SPARC, local government and the New Zealand Lottery Grants Board.

The Ministry was responsible for making payments for the services supplied under non-departmental appropriations, for ensuring that these appropriations were not exceeded, and for managing and monitoring on behalf of Ministers the Crown’s interests in these organisations.

1. Outputs are defined as goods or services supplied by departments and other entities to external parties. Outputs have a variety of types, including policy advice, the administration of grants, and the provision of specific services. A class of outputs means a grouping of similar outputs.

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Financial Statements

Statement of Responsibility

In terms of sections 35 and 45 of the Public Finance Act 1989, I am responsible, as Chief Executive of the Ministry for Culture and Heritage, for the preparation of the Ministry’s financial statements and the judgements made in the process of producing those statements.

I have the responsibility of establishing and maintaining, and I have established and maintained, a system of internal control procedures that provide reasonable assurance as to the integrity and reliability of financial reporting.

In my opinion, these financial statements fairly reflect the financial position and operations of the Ministry for the year ended 30 June 2005.

Signed:

Martin Matthews
Chief Executive
30 September 2005

Countersigned by:

Matthew Archer
Manager Corporate Services
30 September 2005

STATEMENT OF ACCOUNTING POLICIES FOR YEAR ENDED
30 JUNE 2005

Reporting Entity

The Ministry for Culture and Heritage is a government department as defined by section 2 of the Public Finance Act 1989.

These are the financial statements of the Ministry for Culture and Heritage prepared pursuant to section 35 of the Public Finance Act 1989.

In addition the Ministry has reported the Crown activities and trust monies that it administers.

Measurement System

These financial statements have been prepared on the basis of historical cost.

Accounting Policies

The following particular accounting policies have been adopted in the preparation of these financial statements:

Budget Figures

The Budget figures are those presented in the Budget Night Estimates (Main Estimates) and those amended by the Supplementary Estimates (Supp. Estimates) and any transfer 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 from services to third parties. Third party revenue is predominantly derived through the undertaking of historical projects on a full cost-recovery basis and from the State Services Commission which funds the State Sector Superannuation Retirement Savings Scheme. Revenue is recognised when earned and is reported in the financial period to which it relates.

Fixed Assets

All fixed assets costing $1,000 or more are capitalised (except for computing equipment where the threshold has been set at $2,000 and software licensing and development costs where the threshold has been set at $5,000) and recorded at historical cost less accumulated depreciation.

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. Leasehold improvement costs include significant project management and related fees.

Depreciation

Depreciation is provided on a straight-line basis as follows:

Asset Category	Depreciation Rate
Office Furniture	20% per annum
Computer Equipment and Software: - Personal Computers	33 ⅓ % per annum
- Computer Equipment other than Personal Computers	25% per annum
- Software Licensing and Development Costs	33 ⅓ % per annum
Office Equipment	20% per annum
Works of Art	1% per annum

Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful lives of the improvements, whichever is shorter. Consequently, the depreciation rate for each asset will vary depending upon the lease period or useful life of the improvements when the work is completed.

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.

Debtors

Debtors are recorded at estimated realisable value, after providing for doubtful and uncollectible debts.

Leases

The Ministry leases office premises. As the lessor retains all the risks and rewards of ownership, these leases are classified as operating leases. Operating lease costs are expensed in the period in which they are incurred.

Provision for Employee Entitlements

Provision is made in respect of the Ministry’s liability for annual, long service and retirement leave. Annual leave has been calculated on an actual entitlement basis at current rates of pay. Long service leave has been calculated on an actuarial basis based on the present value of expected future entitlements. Retirement leave has been calculated on a proportion-of-entitlement basis at current rates of pay. Entitlements expected to be settled within 12 months of reporting date are recognised as current liabilities in the Statement of Financial Position.

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.

Foreign Currency

Foreign currency transactions are converted at the New Zealand dollar exchange rate at the date of the transaction. Where a forward 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 transaction to New Zealand dollars. Consequently, no exchange gain or loss resulting from the difference between the forward exchange contract rate and the exchange rate on date of settlement is recognised.

Financial Instruments

The Ministry is party to financial instruments as part of its normal operations. These financial instruments include bank accounts, debtors and creditors. Revenue and expenses in relation to all financial instruments are recognised in the Statement of Financial Performance. All financial instruments are recognised in the Statement of Financial Position at their estimated fair value.

Cost Allocation

The Ministry has 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/usage information.

Criteria for direct and indirect costs

Direct costs are those costs directly attributed to an output. Indirect costs are those costs that cannot be identified, in an economically feasible manner, with a specific output.

Direct costs assigned to outputs

Direct costs are charged directly to outputs. Personnel costs are charged directly to the unit within the output class to which they belong.

For the year ended 30 June 2005, direct costs accounted for 72% of the Ministry’s costs (2004: 69%).

Basis for assigning indirect and corporate costs to outputs

Indirect costs are assigned to business units based on the proportion of staff in the unit.

For the year ended 30 June 2005, indirect costs accounted for 28% of the Ministry’s costs (2004: 31%).

Goods and Services Tax (GST)

The Statement of Unappropriated Expenditure and the Statement of Departmental Expenditure and Appropriations are inclusive of GST. The Statement of Financial Position is exclusive of GST, except for Creditors and Debtors, 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 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. Accordingly, no charge for income tax has been provided for.

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. Commitments relating to employment contracts are not disclosed.

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

There have been no material changes to the Ministry’s 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 the previous year.

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2005

		2004/05	2004/05	2004/05	2003/04
		Actual $(000)	Main Estimates $(000)	Supp. Estimates $(000)	Actual $(000)
REVENUE	Note
Crown		9,472	8,350	10,567	8,143
Departments	1	214	60	229	144
Other	1	223	500	179	251
Total revenue		9,909	8,910	10,975	8,538
EXPENDITURE
Personnel costs	2	5,738	5,106	5,799	5,153
Operating costs	3	3,737	3,463	4,774	2,956
Depreciation	4	339	275	336	275
Capital charge	5	66	66	66	64
Total expenses		9,880	8,910	10,975	8,448
Net surplus		29	0	0	90

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

For information on major budget variances refer to Note 13 in the Notes to the Financial Statements.

STATEMENT OF MOVEMENTS IN TAXPAYERS' FUNDS FOR THE YEAR ENDED 30 JUNE 2005

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Taxpayers' funds as at 1 July	826	826	826	676
Net surplus	29	0	0	90
Total recognised revenues and expenses for the year	29	0	0	90
Capital contribution	0	0	0	150
Provision for repayment of surplus to the Crown	(29)	0	0	(90)
Taxpayers' funds as at 30 June	826	826	826	826

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2005

		2004/05	2004/05	2004/05	2003/04
		Actual	Main Estimates	Supp. Estimates	Actual
	Note	$(000)	$(000)	$(000)	$(000)
Taxpayers' Funds		826	826	826	826
Represented by:
Current Assets
Cash		696	697	817	874
Debtors and receivables	6	349	94	70	123
Prepayments		2	8	0	0
Total current assets		1,047	799	887	997
LESS Current Liabilities
Creditors and payables	8	595	632	521	680
Provision for repayment of surplus to the Crown		29	0	0	90
Deferred revenue		4	0	0	91
Provision for employee entitlements	9	282	172	250	256
Total current liabilities		910	804	771	1,117
Working Capital		137	(5)	116	(120)
ADD Non-Current Assets
Fixed assets	7	773	945	790	1,026
LESS Non-Current Liabilities
Provision for employee entitlements	9	84	114	80	80
Net Assets		826	826	826	826

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

For information on major budget variances refer to Note 13 in the Notes to the Financial Statements.

Signed:

Martin Matthews
Chief Executive
30 September 2005

Countersigned by:

Matthew Archer
Manager Corporate Services
30 September 2005

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Cash flows - Operating Activities
Cash was provided from:
Supply of outputs to
- Crown	9,416	8,350	10,608	8,102
- Customers	282	560	329	420
	9,698	8,910	10,937	8,522
Cash was applied to:
Produce outputs
- Personnel	(5,751)	(5,072)	(5,843)	(5,029)
- Operating	(3,690)	(3,497)	(4,854)	(2,721)
- Net GST paid	(193)	0	(41)	60
- Capital charge	(66)	(66)	(66)	(64)
	(9,700)	(8,635)	(10,804)	(7,754)
Net cash flows from operating activities	(2)	275	133	768
Cash flows - Investing Activities
Cash was provided from:
Sale of fixed assets	0	0	0	0
Cash disbursed for:
Purchase of fixed assets	(86)	(200)	(100)	(614)
Net cash flows from investing activities	(86)	(200)	(100)	(614)
Cash flows - Financing Activities
Cash was provided from:
Capital contribution	0	0	0	150
Cash disbursed for:
Repayment of surplus	(90)	0	(90)	(497)
Net cash flows from financing activities	(90)	0	(90)	(347)
Net increase in cash held	(178)	75	(57)	(193)
Add opening cash	874	622	874	1,067
Closing cash	696	697	817	874

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

For information on major budget variances refer to Note 13 in the Notes to the Financial Statements

RECONCILIATION OF NET SURPLUS TO NET CASH FLOW FROM OPERATING ACTIVITIES FOR THE YEAR ENDED 30 JUNE 2005

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Net surplus	29	0	0	90
Add/(less) non-cash items:
Depreciation	339	275	336	275
Inc/(dec) in non-current employee entitlements	4	0	0	(34)
Total non-cash items	343	275	336	241
Add/(less) movements in working capital items:
(Inc)/dec in debtors and receivables	(226)	0	53	(25)
(Inc)/dec in prepayments	(2)	0	0	0
Inc/(dec) in creditors and payables	(85)	0	(159)	369
Inc/(dec) in current employee entitlements	26	0	(6)	84
Inc/(dec) in deferred income	(87)	0	(91)	9
Working capital movement – net	(374)	0	(203)	437
Add/(less) investing activity items:
Net loss/(gain) on sale of fixed assets	0	0	0	0
Net cash flows from operating activities	(2)	275	133	768

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements

STATEMENT OF COMMITMENTS AS AT 30 JUNE 2005

The Ministry has non-cancellable leases on its office premises in Wellington. The Ministry occupies Level 5 (1,223.3sqm) and part of Level 1 (331.6sqm) in Radio New Zealand (RNZ) House under two separate lease contracts, which run until 2007 and 2006 respectively. A contract for the lease of basement space for storage purposes runs through until 30 June 2007. The accommodation lease for Level 5 includes 2 car parks. The amounts disclosed below as future commitments are based on the current rental rates.

	2004/05	2003/04
	Actual	Actual
Non-cancellable accommodation leases:	$(000)	$(000)
Less than one year	333	333
One to two years	215	328
Two to five years	0	209
More than 5 years	0	0
Total non-cancellable operating lease commitments	548	870

The total cost incurred in rental and leasing costs in 2004/05 was $ 353,000. This figure includes the cost of renting five additional car parks under cancellable operating lease agreements. The space allocation per person at balance date is approximately 18 square metres.

The Ministry does not have any non-departmental commitments as at 30 June 2005 (2004: Nil).

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

STATEMENT OF CONTINGENT LIABILITIES AS AT 30 JUNE 2005

Quantifiable contingent liabilities are as follows:
	2004/05	2003/04
	Actual	Actual
	$(000)	$(000)
Departmental	0	0
Non-Departmental	0	36,000

The Ministry reports no departmental or non-departmental contingent liabilities as at 30 June 2005.

The $36 million for 2003/04 was in respect of a Deed of Indemnification signed by the Minister of Finance for the exhibition Everyday Miracles: The Art of Stanley Spencer. No incident or claim on the government's indemnity occurred in respect of this exhibition, and the deed was lifted on 2 August 2004.

STATEMENT OF UNAPPROPRIATED EXPENDITURE FOR THE YEAR ENDED 30 JUNE 2005

(Figures are GST inclusive where applicable)

	2004/05	2004/05	2004/05	2004/05
	Actual	Main Estimates	Supp. Estimates	Unappropriated Estimates
	$(000)	$(000)	$(000)	$(000)
Vote Arts, Culture and Heritage
Other Expenses to be Incurred by the Crown:
New Zealand Memorial in London	104	1,500	0	104

In March 2004 the government approved funding of $3 million, allocating $1.5 million in 2004/05 and $1.5 million in 2005/06, to meet the costs of constructing a New Zealand Memorial in London. Approval was obtained in the 2005 March Baseline Update for the project’s full 2004/05 appropriation to be transferred into 2005/06 on the expectation that no costs would be incurred in 2004/05. However, the design phase proceeded more quickly than anticipated, and costs of some $104,000 were incurred in the last few weeks of the financial year. This is merely a timing issue and this $104,000 expenditure will be accommodated within the overall $3 million project budget.

This unappropriated expenditure has been approved by the Minister of Finance in terms of section 12 of the Public Finance Act 1989.

These statements are to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

STATEMENT OF DEPARTMENTAL EXPENDITURE AND APPROPRIATIONS FOR THE YEAR ENDED 30 JUNE 2005

(Figures are GST inclusive where applicable)

	2004/05	2004/05	2004/05	2004/05	2004/05
	Expend- iture Actual	Appro- priation Main Estimates	Appro- priation Supp. Estimates	Section 5 Transfers	Final Appro- priation
	$(000)	$(000)	$(000)	$(000)	$(000)
Vote Arts, Culture and Heritage Appropriations for classes of outputs
Heritage Services	5,254	5,254	5,193	79	5,272
International Cultural Diplomacy	1,211	0	2,350	0	2,350
Policy Advice and Grants Administration	4,544	4,660	4,694	(79)	4,615
Total Vote Arts, Culture and Heritage	11,009	9,914	12,237	0	12,237
Vote Sport and Recreation Appropriations for classes of outputs
Purchase Advice and Monitoring of Sport and Recreation Crown Entities	110	110	110	0	110
Total	11,119	10,024	12,347	0	12,347

Appropriations provide each Vote Minister with the authority to spend public money or incur expenses or liabilities on behalf of the Crown.

Changes to Appropriations in 2004/05 Supplementary Estimates

The Ministry's 2004/05 departmental output class appropriations were increased by $2.323 million in the 2004/05 Supplementary Estimates. A brief explanation for the changes to three Vote Arts, Culture and Heritage departmental output classes is as follows.

Heritage Services: This appropriation was reduced by $61,000 due to

• a forecast reduction in contract history activity (-$253,000);
• a transfer of funding for the New Zealand Memorial in London from 2003/04 ($85,000) and to 2005/06
  (-$60,000);
• a transfer of funding for Te Ara - the Encyclopedia of New Zealand from 2003/04 ($62,000);
• a transfer of funding from Crown appropriation Gallipoli Memorial Projects for the development of an Anzac Day website ($56,000);
• an increase for the State Sector Retirement Savings Scheme ($26,000); and
• an increase for recovery of remuneration for staff seconded to Department of Internal Affairs ($23,000).

The establishment of the International Cultural Diplomacy output class from 2004/05, funded $2.350 million annually.

Policy Advice and Grants Administration: This appropriation was increased by $34,000 due to

• an increase for recovery of remuneration for staff seconded to Ministry of Economic Development ($70,000); and
• a decrease for the State Sector Retirement Savings Scheme (-$36,000).

Expense transfer from 2004/05 to 2005/06

Approval has been obtained to carry forward $1.219 million of the unspent $1.228 million operating funding to 2005/06 as follows: $18,000 under the Heritage Services departmental output class for two projects – Te Ara, the online Encyclopedia of New Zealand ($3,000) and the New Zealand Memorial in London ($15,000); $1.137 million for the International Cultural Diplomacy Programme, and $64,000 for the Cultural Well-being project under the Policy Advice and Grants Administration output class.

This statement is to be read in conjunction with the accompanying Statement of Accounting Policies and Notes to the Financial Statements.

STATEMENT OF TRUST MONEY ADMINISTERED ON BEHALF OF THE CROWN FOR THE YEAR ENDED 30 JUNE 2005

The following trust money was administered on behalf of the Crown under Part VII of the Public Finance Act 1989.

The statement shows the opening and closing net assets and the movements during the year.

	Opening Net Assets 2004/05	Capital Contr- ibutions	Capital Distri - butions (Awards)	Revenue	Expenses	Closing Net Assets 2004/05
	$(000)	$(000)	$(000)	$(000)	$(000)	$(000)
New Zealand Encyclopedia	1	0	0	0	0	1
New Zealand Historical Atlas	71	0	0	8	0	79
New Zealand History Research	1,482	0	(90)	93	0	1,485
Australian Trust for Oral History	1,458	0	(84)	89	0	1,463
Dictionary of New Zealand Biography	415	0	0	27	(26)	416
Total	3,427	0	(174)	217	(26)	3,444

 

Under the Public Finance Act 1989 and by delegation from the Secretary to the Treasury, trust money can only be invested on deposit with New Zealand registered banks or in New Zealand Government Stock. Trust money is also managed so there is no significant concentration of credit risk. Interest rate risk is managed by investing across a wide range of maturity dates, but subject to liquidity requirements.

New Zealand Encyclopedia Trust

This trust was established to hold New Zealand Lottery Grants Board funds to be used for the feasibility study on the production of the Encyclopedia of New Zealand. The feasibility study was completed in 2001/02 and the government allocated funding for the online Encyclopedia of New Zealand project from 2002/03. The Trust is being held open to receive funds from sales of Encyclopedia publications. The funds will be used for the updating and publication of subsidiary volumes.

New Zealand Historical Atlas Trust

This trust was established to hold New Zealand Lottery Grants Board funds, donations and royalties from sales to be used for the production of the New Zealand Historical Atlas and subsidiary volumes.

New Zealand History Research Trust

This trust was established to hold New Zealand Lottery Grants Board funds to make awards to individuals for historical research and writing projects. During the 2004/05 financial year 13 awards in history were made totalling $90,000 and ranging in value from $3,000 to $12,000 (2003/04: 11 awards; $92,687.50; $2,000 to $30,000).

Australian Sesquicentennial Gift Trust for Awards in Oral History

This trust was established to hold funds from the Government of the Commonwealth of Australia. The income from these funds is used for the promotion of oral history in New Zealand.

During the 2004/05 financial year 18 awards in oral history were made totalling $83,540 and ranging in value from $2,000 to $6,200 (2003/04: 13 awards; $42,900; $1,000 to $5,080).

Dictionary of New Zealand Biography Trust

This trust was established to hold funds from the New Zealand Lottery Grants Board, funds from publication sales, and funds raised by private sponsorship or fundraising for the production of the Dictionary of New Zealand Biography and subsidiary volumes.

Notes to the Financial Statements for the Year ended 30 June 2005

Note 1: Third Party Revenue

Third party revenue was derived from the following sources.

	2004/05			2003/04
	Other Government Departments	Other Sources		Other Government Departments	Other Sources
Contract history projects	94	219		119	238
Seconded Staff	68	0		0	0
State Sector Retirement Savings Scheme (SSRSS) funding from State Services Commission	52	0		23	0
Publication sales	0	3		2	12
Antiquities dealers licences	0	1		0	1
Total third party revenue	214	223		144	251

 

Note 2: Personnel Costs

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Salaries and wages	5,464	4,848	5,517	4,913
Training and development	63	80	80	99
Superannuation	103	128	102	55
Other personnel costs	108	50	100	86
Total personnel costs	5,738	5,106	5,799	5,153

Note 3: Operating Costs

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Administration costs [2]	1,729	2,532	1,777	2,117
Rental and leasing costs	353	291	354	320
Other occupancy costs	114	105	108	104
Publicity and research	247	215	218	120
IT and communications	294	300	301	275
International Cultural Diplomacy Programme delivery costs	979	0	1,995	0
Audit fees (Audit New Zealand)	21	20	21	20
Fees to auditors for other services provided	0	0	0	0
Total operating costs	3,737	3,463	4,774	2,956

2. The variance in administration costs between 2003/04 and 2004/05 of $388,000 was primarily due to professional services used to assist with the design of the website for Te Ara - the Encyclopedia of New Zealand leading up to the launch of Te Ara in February 2005.

Note 4: Depreciation

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Computer Equipment	93	75	94	78
Computer Software	79	35	75	37
Office Equipment	24	25	24	22
Office Furniture	42	40	42	41
Leasehold improvements	101	100	101	97
Works of Art	0	0	0	0
Total depreciation	339	275	336	275

 

Note 5: Capital Charge

The Ministry pays a capital charge to the Crown on its taxpayers’ funds as at 30 June and
31 December each year. The capital charge rate for the year ended 30 June 2005 was 8% (2004: 8.5%)

Note 6: Debtors and Receivables

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Debtor Crown	97	0	0	41
Trade debtors	105	54	30	49
GST receivables	102	0	0	0
Other receivables	45	40	40	33
Total debtors and receivables	349	94	70	123

Note 7: Fixed Assets

	2004/05	2003/04
	Actual	Actual
	$(000)	$(000)
Computer Equipment
At Cost:
Opening Balance	348	297
Additions	16	214
(Disposals)	0	(163)
Closing Balance	364	348
Accumulated Depreciation:
Opening Balance	132	217
Depreciation Charge	93	78
(Disposal)	0	(163)
Closing Balance	225	132
Computer Equipment – net current value	139	216
Computer Software
At Cost:
Opening Balance	181	0
Additions	47	181
(Disposals)	0	0
Closing Balance	228	181
Accumulated Depreciation:
Opening Balance	37	0
Depreciation Charge	79	37
(Disposal)	0	0
Closing Balance	116	37
Computer Software – net current value	112	144
Office Equipment
At Cost:
Opening Balance	118	124
Additions	0	33
(Disposals)	0	(39)
Closing Balance	118	118
Accumulated Depreciation:
Opening Balance	56	73
Depreciation Charge	24	22
(Disposal)	0	(39)
Closing Balance	80	56
Office Equipment – net current value	38	62
Office Furniture
At Cost:
Opening Balance	296	486
Additions	12	15
(Disposals)	0	(205)
Closing Balance	308	296
Accumulated Depreciation:
Opening Balance	214	378
Depreciation Charge	42	41
(Disposal)	0	(205)
Closing Balance	256	214
Office Furniture – net current value	52	82
Leasehold Improvements
At Cost:
Opening Balance	727	584
Additions	0	168
(Disposals)	0	(25)
Closing Balance	727	727
Accumulated Depreciation:
Opening Balance	215	143
Depreciation Charge	101	97
(Disposal)	0	(25)
Closing Balance	316	215
Leasehold Improvements – net current value	411	512
Works of Arts
At Cost:
Opening Balance	10	3
Additions	11	7
(Disposals)	0	0
Closing Balance	21	10
Accumulated Depreciation:
Opening Balance	0
Depreciation Charge	0	0
(Disposal)	0	0
Closing Balance	0	0
Works of Arts – net current value	21	10
Total Fixed Assets
At Cost:
Opening Balance	1,680	1,494
Additions	86	618
(Disposals)	0	(432)
Closing Balance	1,766	1,680
Accumulated Depreciation:
Opening Balance	654	811
Depreciation Charge	339	275
(Disposal)	0	(432)
Closing Balance	993	654
Total Carrying amount of Fixed Assets – net current value	773	1,026

Note 8: Creditors and Payables

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Trade creditors	178	222	221	319
PAYE payable	70	110	75	113
GST payable	0	50	50	91
Accrued expenses	347	250	175	157
Total creditors and payables	595	632	521	680

  Note 9: Provision for Employee Entitlements

	2004/05	2004/05	2004/05	2003/04
	Actual	Main Estimates	Supp. Estimates	Actual
	$(000)	$(000)	$(000)	$(000)
Current Liabilities
Annual leave	255	147	225	238
Long service leave	27	25	25	18
Total current portion	282	172	250	256
Non-Current Liabilities
Long service leave	25	54	20	23
Retirement leave	59	60	60	57
Total non-current portion	84	114	80	80
Total employee entitlements	366	286	330	336

Note 10: Financial Instruments

The Ministry is party to financial instrument arrangements as part of its everyday operations. These financial instruments include bank balances, trade debtors, trade creditors and foreign currency forward contracts on behalf of the Crown.

Credit Risk

Credit risk is the risk that a third party will default on its obligations to the Ministry, causing the Ministry to incur a loss. In the normal course of its business the Ministry incurs credit risk from trade debtors, and transactions with financial institutions.

The Ministry does not require any collateral or security to support financial instruments with financial institutions that the Ministry deals with as these entities have high credit ratings. For its other financial instruments the Ministry does not have significant concentrations of credit risk.

Fair Value

The fair value of financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.

Currency Risk

Currency risk is the risk that debtors and creditors due in foreign currency will fluctuate because of changes in foreign exchange rates. Owing to the nature and limited number of foreign exchange transactions undertaken, the Ministry has no significant exposure to currency risk.

Interest Rate Risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. This could impact on the return on investments or the cost of borrowing. The Ministry has no significant exposure to interest rate risk on its financial instruments.

Under section 46 of the Public Finance Act the Ministry cannot raise a loan without Ministerial approval, and no such loans have been raised. Accordingly, there is no interest rate exposure for funds borrowed ( 30 June 2004: Nil).

Note 11: Related Party Information

The Ministry is a wholly owned entity of the Crown. The government significantly influences the roles of the Ministry as well as being its major source of revenue.

The Ministry enters into numerous transactions with other government departments and Crown entities. These transactions are not considered to be related party transactions.

Note 12: Contingencies

The Ministry has no contingent assets for the year ended 30 June 2005 (2004: Nil).

Contingent liabilities are separately disclosed in the Statement of Contingent Liabilities.

Note 13: Variance Explanations

Statement of Financial Performance

On the 28 May 2004, the government approved revenue Crown funding of $2.089 million annually from 2004/05 for the establishment and management of the Cultural Diplomacy International Programme under a new departmental output class International Cultural Diplomacy. The aim of the Cultural Diplomacy International Programme is to help establish and/or maintain a New Zealand cultural presence in key overseas regions or countries in order to boost New Zealand's profile and economic, trade, tourism, diplomatic and cultural interests.

The 2004/05 budget provided additional revenue Crown funding of $434,000 to establish an IT Advisor role, to cover the cost of website hosting of Te Ara - the Encyclopedia of New Zealand, and for the appointment of an additional oral historian.

The above factors account for the significant baseline movements between 2003/04 and 2004/05.

Approval in principle was obtained to carry forward any unspent operating funding in the 2004/05 financial year to 2005/06 for Te Ara, the online Encyclopedia of New Zealand project ($14,000), the New Zealand Memorial in London project ($13,000), the Cultural Well-Being project ($57,000), and for the International Cultural Diplomacy Programme ($1.011 million). These underspends total $1.095 million, which equals the variance between the 2004/05 total expenses and total revenue Crown recognised in the Statement of Financial Performance and the Supplementary Estimates figures. The actual amount of expense transfers is restricted to the amount of unspent appropriation available under the output classes to which the above activities relate, and is disclosed as a note under the Statement of Departmental Expenditure and Appropriations.

The $29,000 operating surplus was primarily generated from contract history projects for public sector clients. This surplus will be returned to the Crown as required under the Public Finance Act 1989.

Statements of Financial Position and Cash Flows

The $257,000 improvement in the Ministry's working capital position from 2003/04 (-$120,000) to 2004/05 ($137,000) is due to capital expenditure being less than the depreciation expense incurred in 2004/05. Cash reserves were depleted in 2003/04 due to capital expenditure that was required to upgrade the Ministry's computer network hardware and software, to implement technology associated with Te Ara - the Encyclopedia of New Zealand project and to reconfigure the Ministry's premises. During 2004/05 there was an outlay of $614,000 on fixed assets, whereas in 2004/05 $86,000 was spent (refer Statement of Cash Flows).

Note 14: Post Balance Date Events

There are no post balance sheet date events to report.

NON-DEPARTMENTAL SCHEDULES AND STATEMENTS: VOTE ARTS, CULTURE AND HERITAGE AND VOTE SPORT AND RECREATION FOR THE YEAR ENDED 30 JUNE 2005

Reporting Entity

The following non-departmental statements and schedules record the revenue and receipts, expenses, expenditure, assets and liabilities that the Ministry administers on behalf of the Crown.

Statement of Accounting Policies: Non-Departmental

Measurement and recognition rules applied in the preparation of these non-departmental financial schedules and statement are consistent with generally accepted accounting practice and Crown accounting policies.

The Crown uses foreign exchange forward contracts to manage foreign exchange exposure. The notional principal amount outstanding at balance date on hedged purchase commitments with respect to the annual payment made to the Commonwealth War Graves Commission to maintain overseas war graves and memorials was $ 2.337 million (30 June 2004: $2.458 million).

Accounting standard FRS-3 Accounting for Property, Plant and Equipment requires all cultural and heritage assets that meet the definition of Property, Plant and Equipment and can be reliably measured, to be recognised in the entity’s financial statements. The National War Memorial and Massey Memorial are Crown heritage property assets managed by the Ministry. These assets are carried at fair value and are revalued at least every three years, in accordance with FRS-3. In the intervening period between the scheduled revaluations if it is established that either or both Memorials carrying value may be materially different from its fair value a revaluation will be sought.

These non-departmental balances are consolidated into the Crown Financial Statements and therefore readers of these statements and schedules should also refer to the consolidated audited Crown Financial Statements for the year ended 30 June 2005.

SCHEDULE OF NON-DEPARTMENTAL REVENUE AND RECEIPTS FOR THE YEAR ENDED 30 JUNE 2005

(Figures are GST inclusive where applicable)

The schedule of revenue and receipts summarises non-departmental revenue that the Ministry collects on behalf of the Crown.

	2004/05	2004/05	2003/04
	Actual	Forecast	Actual
	$(000)	$(000)	$(000)
Vote Arts, Culture and Heritage
Broadcasting Standards Authority - Fines	11	0	14
Total non-departmental revenue and receipts	11	0	14

 

SCHEDULE OF NON-DEPARTMENTAL EXPENSES FOR THE YEAR ENDED 30 JUNE 2005

(Figures are GST inclusive where applicable)

The schedule of expenses summarises non-departmental expenses that the Ministry administers on behalf of the Crown. Further details are provided in the Statement of Non-Departmental Expenditure and Appropriations.

	2004/05	2004/05	2003/04
	Expenditure	Appropriation	Expenditure
	Actual	Voted *	Actual
	$(000)	$(000)	$(000)
Vote Arts, Culture and Heritage
Non-departmental output classes	215,279	215,279	183,319
Other expenses to be incurred by the Crown	16,136	19,381	11,264
Depreciation – Buildings	176	0	143
Revaluation losses	818	0	542
Total Vote Arts, Culture and Heritage	232,409	234,660	195,268
Vote Sport and Recreation
Non-departmental output classes	42,920	42,920	29,262
Benefits and other unrequited expenses	5,000	5,000	5,000
Other expenses to be incurred by the Crown	50	50	100
Total Vote Sport and Recreation	47,970	47,970	34,362
Total non-departmental expenses	280,379	282,630	229,630

These schedules are to be read in conjunction with the accompanying Statement of Accounting Policies.

* This includes adjustments made in the Supplementary Estimates.

STATEMENT OF NON-DEPARTMENTAL EXPENDITURE AND APPROPRIATIONS FOR THE YEAR ENDED 30 JUNE 2005

(Figures are GST inclusive where applicable)

The Statement of Non-Departmental Expenditure and Appropriations details expenditure incurred against each appropriation administered by the Ministry on behalf of the Crown.

	2004/05	2004/05	2003/04
	Expenditure	Appropriation	Expenditure
	Actual	Voted *	Actual
	$(000)	$(000)	$(000)
Vote Arts, Culture and Heritage Appropriations for non-departmental output classes
Management of Historic Places	7,682	7,682	6,547
Museum Services	21,231	21,231	20,851
Performing Arts Services	16,788	16,788	16,188
Promotion and Support of Arts and Film	28,960	28,960	17,703
Public Broadcasting Funding	140,618	140,618	122,030
Sub-total	215,279	215,279	183,319
Appropriations for other expenses to be incurred by the Crown
Antarctic Heritage Trust	100	100	100
Commonwealth War Graves	2,305	2,305	2,213
Development and Maintenance of War Graves, Historic Graves and Monuments	478	631	328
Gallipoli Memorial Projects	11	113	0
Kerikeri Heritage Bypass	0	1,712	0
New Zealand Memorial in London	104	0	0
Pūkaki Trust	8	8	8
Regional Museums	10,946	12,300	8,300
Theatre Royal Christchurch	1,688	1,688	0
Treaty of Waitangi Commemorations	316	324	315
Waitangi National Trust Board	180	200	0
Sub-total	16,136	19,381	11,264
Appropriations for capital investment in other organisations
Museum of New Zealand Te Papa Tongarewa	10,868	10,868	9,000
Radio New Zealand	3,849	3,849	0
Sub-total	14,717	14,717	9,000
Purchase or development of capital assets by the Crown
National Memorial Park in Wellington	14	6,000	0
Tomb of the Unknown Warrior	1,805	1,806	511
Sub-total	1,819	7,806	511
Total Vote Arts, Culture and Heritage	247,951	257,183	204,094
Vote Sport and Recreation Appropriations for non-departmental output classes
Drugs Testing of Sports Persons	1,531	1,531	1,281
Sport, Fitness and Leisure Programmes	37,389	37,389	23,981
High Performance Sport	4,000	4,000	4,000
Sub-total	42,920	42,920	29,262
Benefits and other unrequited expenses
Sport Education Scholarships	5,000	5,000	5,000
Appropriations for other expenses to be incurred by the Crown
Miscellaneous Grants	50	50	50
New Zealand Sports Hall of Fame	0	0	50
Sub-total	50	50	100
Total Vote Sport and Recreation	47,970	47,970	34,362

* This includes adjustments made in the Supplementary Estimates.

Explanation of major budget variances under Vote Arts, Culture and Heritage

Other expenses to be incurred by the Crown

An explanation for the $104,000 expenditure incurred towards the construction of the New Zealand Memorial in London is provided under the Statement of Unappropriated Expenditure.

Approval has been obtained to carry forward the following unspent appropriated amounts to 2005/06:

• $144,000 of the remaining $153,000 against the Development and Maintenance of War Graves, Historic Graves and Monuments, to complete the repaving at the National War Memorial;
• the remaining $102,000 against the Gallipoli Memorial Projects, for the proposed exhibition at the Gallipoli visitor centre;
• the entire unspent $1.712 million towards the construction of the Kerikeri Heritage Bypass, to protect the nationally significant heritage buildings, Kemp House and the Stone Store;
• the remaining $1.354 million against Regional Museums, in order to be able to reconsider three applications for funding under the Regional Museums Policy for Capital Construction Projects within the 2005/06 round; and
• the remaining $20,000 against the Waitangi National Trust Board, to conduct a review of the future role of the Trust and the nature of the government’s involvement in its activity.

Purchase or development of capital assets by the Crown

Approval has been obtained to carry forward the remaining capital funding of $5.986 million to 2005/06 to purchase land in Buckle Street, opposite the National War Memorial in Wellington, for a National Memorial Park.

This statement is to read in conjunction with the accompanying Statement of Accounting Policies.

Schedule of Recipients of Non-Departmental Output Class Funding for the Year Ended 30 June 2005

(Figures are GST inclusive where applicable)

	$(000)
Management of Historic Places
New Zealand Historic Places Trust	7,547
New Zealand Archaeological Association	135
	7,682
Museum Services
Museum of New Zealand Te Papa Tongarewa	20,506
New Zealand Film Archive	704
Regional Museums: Auckland War Memorial Museum, Canterbury Museum, and Otago Museum	21
	21,231
Performing Arts Services
New Zealand Symphony Orchestra	11,390
Royal New Zealand Ballet	3,695
Aotearoa Traditional Māori Performing Arts Society	1,103
New Zealand Music Industry Commission	600
	16,788
Promotion and Support of Arts and Film
Arts Council of New Zealand Toi Aotearoa (Creative New Zealand)	16,728
New Zealand Film Commission	12,232
	28,960
Public Broadcasting Funding
Broadcasting Commission	105,989
Television New Zealand	30,119
National Pacific Radio Trust	2,109
Radio New Zealand International	1,716
Broadcasting Standards Authority	685
	140,618
Drugs Testing of Sports Persons
New Zealand Sports Drug Agency	1,531
Sport, Fitness and Leisure Programmes
Sport and Recreation New Zealand	37,389
High Performance Sport
Sport and Recreation New Zealand	4,000

SCHEDULE OF NON-DEPARTMENTAL ASSETS AS AT 30 JUNE 2005

	2004/05	2004/05	2003/04
	Actual	Forecast	Actual
	$(000)	$(000)	$(000)
Current assets
Cash and bank balances	500	561	557
Receivables and advances	2	0	4
Total current assets	502	561	561
Non-current assets
Physical assets:
Land
- Massey Memorial (at valuation 30 May 2003)	450	450	450
- National War Memorial (at valuation 30 June 2005)	4,600	1,940	1,940
- National Memorial Park in Wellington [3]	14	6,000	0
Buildings
- Massey Memorial (at valuation 30 May 2003)	832	832	832
Accumulated depreciation	(33)	(33)	(17)
- National War Memorial (at valuation 30 June 2005)	8,040	9,143	6,308
Accumulated depreciation	0	(285)	(126)
- Capital work in progress - Tomb of the Unknown Warrior	0	0	1,031
Total non-current assets	13,903	18,047	10,418
Total assets	14,405	18,608	10,979

The following points should be noted in addition to the above asset disclosures:

• The investment in Crown entities that the Ministry monitors is recorded within the Crown financial statements on a line-by-line basis.
• The Crown has a security interest in the capital assets owned by National Pacific Radio Trust.

The National War Memorial was revalued as at 30 June 2005 to provide for the inclusion of the Tomb of the Unknown Warrior, which was completed in November 2004 at a cost of $2.835 million. This revaluation resulted in a revaluation loss of $818,000 on the building and an increment to the land revaluation reserve of $2.660 million. Both this valuation and the earlier 30 May 2003 valuation were done by Beca Valuations using market-based evidence (land) and depreciated replacement cost (buildings) in accordance with accounting standard FRS-3. Both Memorials will be revalued to fair value as at 30 June 2006.

Buildings are depreciated at 2% per annum on a straight-line basis.

This schedule is to read in conjunction with the accompanying Statement of Accounting Policies.

3. $14,000 preliminary expenditure associated with the purchase of land for a National Memorial Park in Wellington. The government has appropriated $6 million to cover the full purchase cost. Negotiations with Transit New Zealand are expected to be completed in 2005/06.

SCHEDULE OF NON-DEPARTMENTAL LIABILITIES AS AT 30 JUNE 2005

 

	2004/05	2004/05	2003/04
	Actual	Forecast	Actual
	$(000)	$(000)	$(000)
Current liabilities
Creditors and payables	5,964	50	174
Total liabilities	5,964	50	174

 The greater than forecast liabilities at year-end is primarily due to the following two reasons:

• Late in the financial year, the government agreed to provide $1.969 million funding from the Regional Museums Policy for Capital Construction Projects to the Dowse Art Gallery as a contribution towards its redevelopment project. A memorandum of understanding between the Associate Minister for Arts, Culture and Heritage and the Hutt City Council was signed on 29 June 2005. The first payment instalment of $1 million was made on 11 July 2005.
• In the 2005 Budget government approved $3.849 million capital funding to enable Radio New Zealand to purchase transmitters in low density population areas to improve transmission arrangements ($99,000), and to purchase its Auckland accommodation at
  171 Hobson Street ($3.750 million). The $3.849 million funding was paid to Radio New Zealand on 24 August 2005 once approval had been obtained from the shareholding Ministers for the company to issue ordinary shares in accordance with sections 42, 44, and 45 of the Companies Act 1993.

This schedule is to read in conjunction with the accompanying Statement of Accounting Policies.

Page last updated: August 16, 2006

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