Annual Report 2005-2006 - New Zealand Customs Service

Financial Statements
S t a t e m e n t o f A c c o u n t i n g P o l i c i e s
F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 0 6
R e p o r t i n g E n t i t y
New Zealand Customs
Service is a Government
Department as defined by the
Public Finance Act 1989.
M e a s u r e m e n t S y s t e m
The general accounting systems
recognised as appropriate
for the measurement and
reporting of results and financial
position on an historical cost
basis have been followed.
A c c o u n t i n g P o l i c i e s
The following particular
accounting policies, which
materially affect the measurement
of financial results and financial
positions have been applied.
Budget Figures
The Main Forecast figures are
those presented in the Statement
of Intent for the year ended 30 June
2006. Supplementary Estimates
figures include subsequent changes.
Revenue
The New Zealand Customs
Service derives revenue through
the provision of outputs to the
Crown, and services to third parties.
Such revenue is recognised when
earned and is reported in the
financial period to which it relates.
Cost Accounting
The New Zealand Customs
Service has determined the costs
of outputs using a cost allocation
system, which is 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, where appropriate.
This includes depreciation
and occupancy costs.
For the year ended 30 June 2006
direct costs accounted for 77 percent
of the New Zealand Customs
Service’s costs (2005: 78 percent).
Basis for Assigning Indirect and
Corporate Costs to Outputs
Indirect costs are assigned
to outputs based on a
proportion of direct staff costs
usage for each output.
For the year ended 30 June 2006,
indirect costs accounted for 23 percent
of the New Zealand Customs
Service’s costs (2005: 22 percent).
Debtors and Receivables
Debtors and receivables are
recorded at estimated realisable
value, after providing for doubtful
and uncollectable debts.
Operating Leases
Lease payments, where the
lessors effectively retain substantially
all of the risks and benefits of
ownership of the leased item, are
classified as operating leases.
Payments under these leases
are charged as expenses in the
periods in which they are incurred.
Fixed Assets
All fixed assets costing individually
$200 or more, or as a group of assets
more than $10,000, are capitalised
and recorded at historical cost.
Depreciation
Depreciation of fixed assets, other
than work in progress, 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 5 years
equipment
Plant and equipment 5 to 10 years
Computer hardware 4 years
Computer software 5 to 10 years
Motor vehicles 5 years
Launch and watercraft 10 to 15 years
The costs of leasehold
improvements are capitalised
and amortised over the unexpired
period of the lease or the estimated
remaining useful lives of the
improvements, whichever is shorter.
38 New Zealand Customs Service – A N N U A L R E P O R T 2 0 0 5 – 2 0 0 6