Treasury Instructions 2011

Published 1 Jul 2011

Treasury Instructions are issued under Section 80 of the Public Finance Act 1989.

Treasury Instructions were extensively revised from 1 July 2007 as a result of the adoption of New Zealand International Financial Reporting Standards into generally accepted accounting practice from that date.

Treasury Circulars in areas of public sector financial management also need to be referred to as appropriate.

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1 Introduction to Treasury Instructions 1.1 General 1.2 Date of issue 1.3 Structure of Treasury Instructions 1.4 Application of Treasury Instructions 1.5 Access to Treasury Instructions 1.6 Review of Treasury Instructions 1.7 Changes since last update 1.8 Relationship between Treasury Instructions and Treasury Circulars 2 Principles for the development of accounting policies for external financial reporting 2.1 Introduction 2.2 Legislative requirements 2.3 New Zealand generally accepted accounting practice 2.3.1 Asserting compliance with NZ GAAP 2.3.2 Objectives of general purpose financial reporting 2.3.3 Assumptions underlying general purpose financial reports 2.3.3.1 The accrual basis of accounting 2.3.3.2 The "going concern" concept 2.3.4 Qualitative characteristics of external financial reports 2.3.4.1 Understandability 2.3.4.2 Relevance 2.3.4.3 Reliability 2.3.4.4 Comparability 2.3.5 Materiality 2.3.6 Financial elements 2.3.6.1 Assets 2.3.6.2 Liabilities 2.3.6.3 Equity (Taxpayers' funds) 2.3.6.4 Income 2.3.6.5 Expenses 2.4 Accounting policies 3 Accounting policies for external financial reporting by the Government 3.1 Introduction 3.2 Reporting entity 3.2.1 Public benefit entity 3.3 General accounting policies 3.4 Judgements and estimations 3.5 Specific accounting policies 3.5.1 Reporting and forecast period 3.5.2 Basis of combination 3.5.3 Income 3.5.3.1 Taxation revenue levied through the Crown's sovereign power 3.5.3.2 Revenue earned through operations 3.5.3.3 Interest income 3.5.3.4 Dividend income 3.5.3.5 Rental income 3.5.3.6 Donated or subsidised assets 3.5.4 Expenses 3.5.4.1 General 3.5.4.2 Welfare benefits and entitlements 3.5.4.3 Grants and subsidies 3.5.4.4 Interest expense 3.5.5 Foreign currency 3.5.6 Sovereign receivables and taxes repayable 3.5.7 Financial instruments 3.5.7.1 Financial assets 3.5.7.2 Financial liabilities 3.5.7.3 Derivatives 3.5.7.4 Hedging 3.5.8 Inventories 3.5.9 Property, plant and equipment 3.5.10 Equity accounted investments 3.5.11 Biological assets 3.5.12 Intangible assets 3.5.13 Non-current assets held for sale and discontinued operations 3.5.14 Investment property 3.5.15 Employee benefits 3.5.15.1 Pension liabilities 3.5.15.2 Other employee entitlements 3.5.15.3 Termination benefits 3.5.16 Insurance contracts 3.5.17 Leases 3.5.18 Other liabilities and provisions 3.5.19 Contingent assets and contingent liabilities 3.5.20 Commitments 3.5.21 Comparatives 3.5.22 Segment analysis 3.5.23 Related parties 4 Accounting and forecasting policy parameters for departmental external financial reporting 4.1 Explanatory note 4.2 Particular accounting policies: General 4.2.1 Statement of Responsibility 4.2.2 Combination of sub-entities 4.2.3 Goods and Services Tax. 4.3 Particular accounting policies: Statement of Financial Performance items 4.3.1 Revenue recognition 4.3.2 Revenue and expense offsetting 4.3.2.1 Insurance proceeds 4.3.3 Losses arising from natural disasters 4.3.3.1 Destroyed assets 4.3.3.2 Damaged assets 4.3.3.3 Repairing assets that have been impaired 4.3.4 Capital charge 4.4 Particular accounting policies: Statement of Financial Position items 4.4.1 Property, plant and equipment 4.4.2 Intangible assets 4.4.2.1 Computer software 4.4.3 Provision for return of operating surplus 4.4.4 Liability for capital withdrawals 4.4.5 Commitments 4.5 Forecasting Policies 4.5.1 General forecasting policies 4.5.2 Forecasting policies for financial assets and liabilities 4.5.3 Forecasting policies for derivatives 4.5.4 Forecasting policies for property plant and equipment 4.5.5 Forecasting departmental net assets 4.5.6 Other forecasting policies 5 Operating instructions: Cost accounting policy parameters 5.1 Disclosing cost accounting policies 5.2 Documenting cost accounting policies 5.3 Classifying direct and indirect costs 5.4 Bases and methods of assigning costs to outputs 5.4.1 Introduction 5.4.2 Assigning expenses 5.4.3 Attributing direct costs 5.4.4 Allocating indirect costs 5.4.5 Pre-established rates. 5.5 Consistency in applying cost accounting policies 5.5.1 Introduction 5.5.2 Consistency 5.5.3 Changes in cost accounting policies 5.6 Definition of terms 6 Operating instructions applying to departments as defined in the Public Finance Act 1989 6.1 Financial responsibility of Chief Executives 6.2 Reporting obligations 6.2.1 Annual financial statements of departments 6.2.1.1 Reporting requirements 6.2.1.2 Non-departmental activity 6.2.2 Provision of reports to Ministers 6.2.3 Provision of reports to the Treasury 6.2.4 Compliance with accounting and forecasting policies 6.2.5 Provision of other information 6.3 Departmental revenue, expenditure, assets and liabilities 6.3.1 Managing departmental expenditure 6.3.2 Emergency expenditure requiring Minister of Finance approval 6.3.3 Other expenditure requiring Minister of Finance approval 6.3.4 Foreign exchange exposure management 6.3.5 Departmental insurance and risk management 6.3.6 Prohibition on investing, borrowing or lending 6.3.6.1 Obtaining authority to enter into finance leases 6.3.7 Memorandum accounts 6.3.8 Management of Departmental Assets 6.4 Departmental other expenses 6.4.1 Introduction 6.4.2 Loss on sale of assets 6.4.3 Asset devaluations 6.4.4 Restructuring expenses 6.4.5 Asset write-off and impairment expenses arising from natural disasters 6.4.6 Disclosure of other expenses 6.4.7 Summary 6.5 Crown revenue, expenditure, assets and liabilities 6.5.1 Definition of Crown 6.5.2 Authority to operate Crown bank accounts 6.5.3 Collection of Crown revenue 6.5.4 Disbursement of Crown expenditure 6.5.5 Management of Crown assets 6.5.5.1 General requirements 6.5.5.2 Delegation of authority to write off Crown assets 6.5.6 Management of Crown liabilities 6.5.7 Provision of information to Treasury 6.5.8 Public Private Partnerships 6.6 Banking 6.6.1 Introduction 6.6.2 Bank accounts 6.6.3 Departmental bank accounts 6.6.4 New Zealand dollar Crown bank accounts 6.6.5 Foreign currency Crown bank accounts 6.6.6 Foreign currency holdings in departmental and Crown bank accounts 6.6.7 Power of Minister or the Treasury in relation to Crown or departmental bank accounts 6.6.8 Cash payment schedule 6.6.9 Investment of public money 6.7 Trust money 6.7.1 Legislative provisions 6.7.2 Notice of appointment 6.7.3 Accounting for trust money 6.7.4 Internal control and trust money 6.7.5 Reporting of trust money 6.7.6 Records of trust money 6.7.7 Trust bank accounts 6.7.8 Investment of trust money 6.7.9 Taxation 6.7.10 Definition of terms 6.8 Contingent liabilities 6.8.1 Introduction 6.8.2 Contingent liability types 6.8.3 Register of contingent assets and liabilities 6.8.4 Certification by Minister 6.8.5 Power to give guarantees and indemnities	trsy-instruc-11.pdf (358 KB) pp. 79

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