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A Guide to the Public Finance Act (2005)

Whole-of-Government Financial Statements

Key Points

  • The Government is required to produce monthly and annual consolidated financial statements for the Government reporting entity.
  • These financial statements provide information on the Government’s assets and liabilities, revenue and expenses and cash flows.
  • In common with appropriations and financial forecasts, the financial statements are prepared using the accrual basis of accounting and in accordance with generally accepted accounting practice (GAAP).
  • Many of the items reported in the financial statements of the Government are similar to the items reported in the financial statements of other entities. However, the Government also reports on some rights and obligations and transactions that are unique to governments including taxes obtained from the use of sovereign powers and non-exchange transactions such as welfare benefits.
  • The Auditor-General is responsible for expressing an independent opinion on the annual financial statements of the Government.

Introduction

This Chapter:

  • explains the purpose of producing consolidated financial statements for the Government reporting entity
  • describes the contents of the consolidated financial statements of the Government reporting entity, and
  • outlines who has responsibility for producing, presenting, auditing and scrutinising the consolidated financial statements of the Government reporting entity.

Before reading this Chapter, readers are encouraged to read Chapter 1 which provides information on relevant features of New Zealand’s public financial management system including the adoption of accrual accounting and the nature of the financial reporting standards applied by the New Zealand Government.

The Act requires that the Government prepare monthly and annual consolidated financial statements for the Government reporting entity (commonly referred to as the financial statements of the Government). The Government’s financial year runs from 1 July to 30 June.

These financial statements provide information for decision-making and are a critical component of the accountability process. The Government uses these statements to give a comprehensive account of its use of resources and its assets and liabilities.

In order to understand these financial statements it is necessary to understand which entities are included in the financial statements of the Government.

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