- Title page
- Commissioner's Overview
- Our Strategic Direction
- The Role of the State Services Commission
- Delivering Better Public Services
- Organising for the Future
- Responding to Changing Needs
- Our Success in 2016/17
- Strategy and Policy
- Integrity, Ethics and Standards
- System and Agency Performance
- Workforce and Talent Management
- Corporate Services
- Report on Strategic Intentions
- End-of-Year Reporting
- Statement of Responsibility
- Independent Auditors Report
- Statement of Performance
- Statement of Budgeted and Actual Departmental and Non-departmental Expenses and Capital Expenditure Incurred Against Appropriations
- Financial Statements and Schedules
- Departmental Financial Statements
- Notes to the Departmental Financial Statements and Non-departmental Schedules
- Non-departmental Schedules
- List of Acronyms
Notes to the Departmental Financial Statements and Non-departmental Schedules
(for the year ended 30 June 2017)
1 - Statement of accounting policies
The State Services Commission (SSC) is a New Zealand government department as defined by section 2 of the Public Finance Act 1989.
In addition, SSC has reported separately, in the Non-departmental Schedules, which present financial information on public funds managed by SSC on behalf of the Crown.
The primary objective of SSC is to provide services to the public rather than making a financial return. Accordingly, SSC has designated itself as a Public Benefit Entity (PBE) for financial reporting purposes.
The Financial Statements of SSC are for the year ended 30 June 2017. The Forecast Financial Statements are for the year ending 30 June 2018. These Financial Statements were authorised for issue by the Chief Executive on 27 September 2017.
The Departmental Financial Statements and the financial information reported in the Non-departmental Schedules are consolidated into the Financial Statements of the Government and, therefore, readers of these schedules should also refer to the Financial Statements of the Government for the year ended 30 June 2017.
Statement of compliance
The Departmental Financial Statements and unaudited Departmental Forecast Financial Statements of SSC have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with New Zealand Generally Accepted Accounting Practices (NZ GAAP), Treasury Instructions and Treasury Circulars. These Financial Statements comply with PBE accounting standards as appropriate for Tier 2 entities. These Financial Statements have been prepared in accordance with Tier 2 NZ PBE accounting standards as the departmental expenditure for SSC is below $30 million. Measurement and recognition rules applied in the preparation of the Non-departmental Supplementary Financial Schedules are consistent with NZ GAAP and Crown accounting policies and are detailed in the Financial Statements of the Government.
Basis of preparation
The Departmental Financial Statements and Non-departmental Schedules have been prepared on a going concern basis, and the accounting policies have been applied consistently throughout the period.
The Departmental Financial Statements and Non-departmental Schedules have been prepared on an historical cost basis with the exception of Artwork.
Functional and presentation currency
The Departmental Financial Statements and Non-departmental Schedules are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of SSC is New Zealand dollars.
Changes in accounting policies
There have been no changes in accounting policies during the financial year.
The budget figures are those included in the Department's Budget Estimates for the year ended 30 June 2017, which are consistent with the financial information in the Main Estimates. The budget figures are unaudited.
Basis of preparation
Forecast Departmental Financial Statements and Non-departmental Schedules have been prepared in accordance with the accounting policies expected to be used in the future for reporting historical general purpose financial statements and based on a group basis including the Social Investment Agency, which is a Departmental Agency.
These Forecast Financial Statements are unaudited and have been prepared in accordance with, and comply with, FRS 42 Prospective Financial Statements.
These financial forecasts are based on Budget Economic Fiscal Update 2017 (BEFU) and have been prepared on the basis of assumptions as to future events that SSC reasonably expects to occur, associated with the actions it reasonably expects to take. They have been compiled on the basis of existing government policies and ministerial expectations at the date that the information was prepared.
The main assumptions were as follows:
- SSC's activities and output expectations will remain substantially the same as the previous year focusing on the Government's priorities.
- Personnel costs were based on current wages and salary costs, adjusted for anticipated remuneration changes.
- Operating costs were based on historical experience and other factors that are believed to be reasonable in the circumstances and are SSC's best estimate of future costs that will be incurred.
- Inclusion of Leadership Development Centre and Social Investment Agency.
Additional factors that could lead to material differences between the Forecast Financial Statements and the 2017/18 Actual Financial Statements include changes to the baseline budget through new initiatives, transfer of funding across financial years or technical adjustment.
These Forecast Financial Statements were authorised for issue by the Chief Executive of SSC on 26 April 2017. The Chief Executive is responsible for the Forecast Financial Statements presented, including the appropriateness of the assumptions underlying the Forecast Financial Statements and all other required disclosure. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual financial results achieved for the period covered are likely to vary from the information presented, and the variations may be material.
Statement of cost allocation policies for Departmental Financial Statements
SSC has determined the cost of outputs and categories using the following cost allocation system:
- Direct costs are expenses incurred from activities in producing outputs. These costs are charged directly to the related appropriations.
- Indirect costs are expenses incurred by corporate services functions that cannot be identified with a specific output. Indirect costs are allocated to each appropriation based on full-time equivalent personnel.
There have been no changes in SSC's general cost accounting policies since the date of the last audited Financial Statements.
Since March 2012, SSC has been party to receiving shared services from CASS incorporating the Treasury, SSC and DPMC for the delivery of finance, human resources, information management and information technology functions. Costs for these are treated as indirect costs.
Critical accounting estimates and assumptions
There are no critical accounting estimates and assumptions made in preparing these Financial Statements.
2 - Revenue
Revenue Crown - non-exchange
Revenue from the Crown is measured based on SSC's funding entitlement for the reporting period as reported in the Departmental Financial Statements.
The funding entitlement is established by Parliament when it passes the Appropriation Acts for the financial year. The amount of revenue recognised takes into account any amendments to appropriations approved in the Appropriation (Supplementary Estimates) Act for the year and certain other unconditional funding adjustments formally approved prior to balance date. There are no conditions attached to the funding from the Crown. However, SSC can incur expenses only within the scope and limits of its appropriations.
The fair value of Revenue Crown has been determined to be equivalent to the funding entitlement.
PIF reviews - exchange
Revenue from reviews is recognised based on percentage completed.
Recovery of rental costs and secondments - exchange
Recovery of rental costs and secondments from participating agencies is recognised as revenue on a straight line basis.
Breakdown of other revenue and further information
|1,292||Agency contribution towards PIF reviews||1,175|
|2,176||Other revenue (including recoveries)||3,051|
|3,468||Total other and departmental revenue||4,226|
3 - Personnel costs
4 - Capital charge
SSC pays a capital charge to the Crown based on its equity as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2017 was 7% from 1 July 2016 to 31 December 2016 and 6% from 1 January 2017 (2016: 8.0%).
5 - Other operating expenses
Unaudited Forecast Group
|200||Leadership Development Centre funding||50||-||-|
|441||Chief executives' recruitment costs||532||638||400|
|67||Fees to Audit New Zealand for audit of financial statements||69||80||80|
|859||Rental and operating lease costs||838||838||838|
|262||Other occupancy costs||236||337||302|
|170||IT and communication costs||348||522||524|
|14||Loss on disposal of property, plant and equipment||205||-||-|
|3,478||Costs paid to the Treasury for CASS||3,686||3,949||3,920|
|1,405||Other operating costs||3,334||1,509||15,126|
|9,536||Total operating costs||11,606||9,463||22,417|
6 - Property, plant and equipment and intangible assets
|Works of Art
|Balance at 1 July 2015||172||1,463||106||995||170||2,906|
|Balance at 1 July 2016||189||1,463||92||995||314||3,053|
|Balance at 30 June 2017||204||-||92||1,115||144||1,555|
|Accumulated depreciation and impairment losses|
|Balance at 1 July 2015||95||816||-||739||92||1,742|
|Balance at 1 July 2016||115||1,035||-||905||128||2,183|
|Elimination on disposal||-||(1,345)||-||-||(157)||(1,502)|
|Balance at 30 June 2017||137||-||-||950||31||1,118|
|At 1 July 2015||77||647||106||256||78||1,164|
|At 1 July 2016||74||428||92||90||186||870|
|At 30 June 2017||67||-||92||165||113||437|
|Asset Type||Useful Life||Depreciation/Amortisation Rate||Method|
|Office equipment||1 - 5 years||20% – 25%||Straight line|
|Leasehold improvements||5 years||20%||Straight line|
|Works of art||N/A||N/A||N/A|
|Furniture and fittings||3 - 5 years||20% – 33.33%||Straight line|
|Intangible||3 - 5 years||20% – 33.33%||Straight line|
7 - Employee entitlements (departmental)
|59||Accrued salaries and performance pay||124|
|3||Retirement and long service leave||21|
|825||Total current portion||873|
|95||Long service leave||98|
|285||Total non-current portion||98|
|1,110||Total employee entitlements||971|
The present value of the retirement and long service leave obligations depends on a number of factors. Two key assumptions used in calculating this liability include the discount rate and the salary-inflation factor. Any changes in these assumptions will impact on the carrying amount of the liability.
In determining the appropriate discount rate, the Department adopts the central table of risk-free discount rates and Consumer Price Index (CPI) assumptions provided by the Treasury to all departments.
If the discount rate were to differ by 1% from SSC's estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $8,000 higher or lower.
If the salary-inflation factor were to differ by 1% from SSC's estimates, with all other factors held constant, the carrying amount of the liability would be an estimated $8,000 higher or lower.
8 - Provisions
SSC is required at the expiry of the lease term in the Reserve Bank on 1 March 2018 to make good the premises. $0.119 million has been provided for this given that SSC has signed a new lease on 24 August 2017 extending the current lease to 28 February 2021.
|Opening balance at 1 July 2016||45||119||164|
|Additional provisions made||-||-||-|
|Closing balance at 30 June 2017||-||119||119|
9 - Related party transactions
All related party transactions have been entered into on an arm's-length basis.
SSC is a wholly-owned entity of the Crown. The Government significantly influences the roles of SSC as well as being its major source of revenue.
In conducting its activities SSC is required to pay various taxes and levies (such as GST, FBT, PAYE and ACC levies) to the Crown and entities related to the Crown. The payment of these taxes and levies, other than income tax, is based on the standard terms and conditions that apply to all tax and levy payers. SSC is exempt from paying income tax.
Key management personnel
|Leadership Team, including the State Services Commissioner|
|8||Full-time equivalent staff||7|
The above key management personnel compensation excludes the remuneration and other benefits the Minister of State Services receives. The Minister's remuneration and other benefits are not received only for her role as a member of key management personnel of SSC. The Minister's remuneration and other benefits are set by the Remuneration Authority under the Members of Parliament (Remuneration and Services) Act 2013 and are paid under Permanent Legislative Authority, and not paid by SSC.
Related party transactions involving key management personnel (or their close family members)
There were no related party transactions involving key management personnel or their close family members. No provision has been required, nor any expense recognised, for impairment of receivables from related parties (2016: Nil).
10 - Events after balance date
On 24 August 2017, SSC entered into a non-cancellable contract to lease the Reserve Bank office effective from 1 March 2018 to 28 February 2021. The annual rental under the agreement is $0.759 million per annum. The agreement is not included in the statement of commitments as it was entered into after the balance date. Further to this, since balance date SSC has entered into contracts for construction and furniture of $0.908 million associated with the refurbishment of the office space (2016: Nil).
11 - Explanation of major variances against budget
Statement of Comprehensive Revenue and Expense
The following major budget variations occurred between the 2016/17 Actuals and the 2016/17 Budget:
Other revenue was greater than originally budgeted by $1.306 million. This was mainly owing to increased revenue from insurance proceeds, and higher than expected and not budgeted for revenue from recoveries relating to secondment of SSC staff who were seconded to other departments. This was also partly offset by lower Auckland Policy Office membership revenue where a full contingent membership was assumed to take place in July 2016, however did not eventuate.
Other operating expenses
Other operating costs were $2.143 million higher than budgeted. This was mainly owing to higher consultancy costs relating to two significant projects. These were the South Auckland Investment Board place-based initiative post budget, and the write-off of existing leasehold improvements owing to a planned fit-out for the current property to occur in 2017/18. The lease has been renewed to 2021, with a further renewal option to 2024.
This was partially offset by lower sponsorship than expected resulting from the refund of unused sponsorship portion and a reduction in training and recruitment costs funded as part of the Treasury shared services during the year.
Statement of Financial Position
Total assets were higher by $0.341 million compared to budget. This was mainly owing to the increase in cash and Debtor Crown resulting from higher Crown revenue recognition.
12 - Change in organisational form
On 28 March 2017, the Leadership Development Centre Board of Trustees resolved to be dissolved and that a new branded business unit within SSC be created. Leadership Development Centre staff and assets transferred to SSC from 1 July 2017. The functions previously performed by the Leadership Development Centre Trust will now be performed by Leadership Development Centre as a branded cost centre within SSC. The Trust will be wound up during the 2017/18 financial year.
The Minister Responsible for Social Investment Hon Amy Adams announced on 21 April 2017 that the Social Investment Unit will be replaced by a new Social Investment Agency (SIA). On 1 July 2017, the SIA was created as a departmental agency of SSC. The group accounts forecasted in Financial Statements included the SIA.