Schedule of Contingent Liabilities
as at 30 June 2012
| 2011 $000 |
2012 $000 |
|
|---|---|---|
Quantifiable Contingent Liabilities |
||
| 16,146 | Guarantees and indemnities | 18,680 |
| 4,172,545 | Uncalled capital | 5,114,088 |
| 132 | Legal proceedings and disputes | 132 |
| 1,385,342 | Other contingent liabilities | 1,226,738 |
| 5,574,165 | Total Contingent Liabilities | 6,359,638 |
Contingent liabilities are costs that the Crown will have to face if a particular event occurs. Typically, contingent liabilities consist of guarantees and indemnities, uncalled capital, legal disputes and claims. The contingent liabilities managed by the Treasury on behalf of the Crown are a mixture of operating and balance sheet risks and they vary greatly in magnitude and likelihood of realisation. In general, if a contingent liability were realised it would have a negative impact on the operating balance, net Crown debt and net worth. However, in the case of contingencies for uncalled capital, the negative impact would be restricted to net Crown debt.
Where contingent liabilities have arisen as a consequence of legal action being taken against the Crown, the amount included is the amount claimed and thus the maximum potential cost. It does not represent either an admission that the claim is valid or an estimation of the possible amount of any award against the Crown.
The majority of the quantified contingent liabilities shown above arise from the uncalled capital element of the Crown's investments in the Asian Development Bank and the World Bank, and promissory notes issued in favour of IMF.
The significant increase in contingent liabilities is owing to exchange rate fluctuations.
The Crown's exposure to DGS and WFGF is detailed in the Explanatory Notes to Supplementary Statements and Schedules - Non-departmental.
Unquantifiable Contingent Liabilities
The Treasury also administers a number of contingent liabilities that cannot be quantified. These arise primarily from institutional guarantees and indemnities. Readers are referred to the Financial Statements of the Government for further details.
Contingent Assets
The Department, on behalf of the Crown, has no contingent assets (2011: nil).
The Statement of Accounting Policies is an integral part of these supplementary financial schedules.
For a full understanding of the Crown's financial position and the result of its operations for the year, refer to the consolidated Financial Statements of the Government for the year ended 30 June 2012.
