Annual Report for the year ended 30 June 2006
Part 5: Other information
Equal employment opportunities
The Ministry has equal employment opportunity policy and procedures in place to ensure fairness and equity of opportunity for Ministry employees. The Ministry monitors its recruitment and retention of staff and progress made towards achieving equity is reported to the State Services Commission each year.
Management performance
Good employer practices and staff development
The Ministry reinforces to staff the value and importance of maintaining and refining an effective performance management system. The performance management system provides professional feedback and development opportunities for the continuous improvement of staff performance. This is to ensure that staff performance remains a critical success factor in the meeting the Government's defence goals.
Public service integrity
The Ministry provides instruction and guidance to employees about the ethical standards required of public servants. In addition, all employees are required to have current security clearances as a condition of their employment.
Quality
The Acquisition Division of the Ministry is ISO 9001 certified. This means that it implements continuous improvements to its management, policies and procedures.
Disability
The Ministry has a Disability Strategy Implementation Work Plan for each financial year.
Govt 3
The Ministry has signed up to this sustainable environment initiative.
E-government
The Ministry of Defence has incorporated the vision for electronic government into its Information Management and Knowledge Management Strategy and the e-government requirements have been at the fore of planning for information management projects. The Ministry has actively contributed to the e-services project, provided feedback on planned initiatives and participated in the Agency Leaders and CIO Fora.
Progress toward adopting International Financial Reporting Standards (IFRS)
Full adoption of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) does not occur until the 2007/08 financial year, although comparative information will be collected throughout 2006/07 in parallel with current reporting requirements.
As part of the transition to NZ IFRS, the Treasury requires a preliminary NZ IFRS opening balance sheet for 1 July 2006 (based on 30 June 2006 information) by October 2006 and an audited opening balance sheet by 20 December 2006.
In reporting expenditure during 2006/07, NZ IFRS interim reports for September, October and November 2006 will be provided to the Treasury by mid-December 2006. NZ IFRS interim reports for December 2006 to June 2007 will be provided to the Treasury with current Generally Accepted Accounting Practice (GAAP) information.
Under current standards, gains or losses on foreign-exchange forward contracts are not recognised, as any exposure to gains or losses on these contracts is generally offset by a related gain or loss on the item being hedged. Under NZ IFRS these foreign-exchange forward contracts will be valued at fair value, with any gains or losses being taken to the statement of financial performance. At present all foreign-exchange forward contracts entered into by the Ministry relate to non-departmental expenses not spent in the production of the Ministry's outputs, and any gains or losses recognised will not affect the Ministry's statement of financial performance, but be reflected in the Crown's statement of financial performance.
The Ministry will translate foreign currency transactions using the spot rate at the date of the transaction, and not the Ministry's cash rate that is derived from foreign-exchange forward contracts, as it presently does under GAAP. The effect of this change will be that non-departmental project expenditure will be influenced by spot rates and not foreign-exchange forward contract rates. Project costs recovered from New Zealand Defence Force will also be influenced by the use of spot rates, and the forecasting of annual expenditure and revenue cash flows is expected to be less accurate because of constant changes in spot rates. Hedge accounting will not apply.
Other changes in reporting financial information are expected to be minor, and no problems are envisaged in being able to extract added data. The Ministry has included in its 2005/06 financial statements the NZ IFRS requirement to recognise sick leave in the provision for employee entitlements. The Ministry's financial management and information system does not need to be modified in order to provide NZ IFRS financial information.
The 2005/06 financial statements prepared by the Ministry in this annual report are prepared under current New Zealand GAAP.
Organisation chart
View text equivalent of above image.
Staff numbers at 30 June 2006 were 60 (excluding the Chief Executive).
* As from 1 September 2006 Chris Seed is Acting Secretary of Defence.
Financial performance highlights
| 2005/06 Supp estimates $000 | 2005/06 Estimated
actual $000 |
2005/06 Actual $000 |
|
|---|---|---|---|
| Departmental activities |
|||
| Revenue: crown | 9,075 | 8,673 | 8,673 |
| Revenue: other | 469 | 469 | 368 |
| Output expenses | 9,544 | 9,142 | 8,450 |
| Net operating surplus/(deficit) | - | - | 591 |
| Additions to physical assets |
585 | 585 | 838 |
| Disposals of physical assets |
- | - | 17 |
| Taxpayers' funds |
1,555 | 1,555 | 1,555 |
| Net cash flows from operating, investing and financing activities | (506) | 104 | (33) |
| Non-departmental activities |
|||
| Capital expenditure-defence equipment |
492,490 | 444,677 | 414,639 |
| Total crown revenue and receipts | 396,082 | 396,282 | 396,452 |
Summary of appropriations (GST exclusive)
| Policy advice $000 | Audit and assessment of performance $000 |
Management of equipment procurement $000 |
Capital expenditure defence equipment $000 |
|
|---|---|---|---|---|
| Main estimates appropriation |
3,807 | 1,774 | 3,574 | 443,117 |
| Supplementary estimates change |
16 | 17 | 356 | 49,373 |
| Change by order in council under section 26A of the Public Finance Act 1989 |
- | - | - | - |
| Total amount appropriated for 2005/2006 |
3,823 | 1,791 | 3,930 | 492,490 |
| Estimated actual outturn for 2005/2006 as reported in 2006/2007 estimates |
3,602 | 1,764 | 3,776 | 444,677 |
| Audited actual outturn for 2005/2006 |
3,323 | 1,714 | 3,413 | 414,639 |
| Unappropriated expenditure, expenses or liabilities approved under section 26B of the Public Finance Act 1989 |
- | - | - | - |
| Unappropriated expenditure, expenses or liabilities requiring validating legislation | - | - | - | - |
Historical financial performance of significant items: Payments on behalf of the Crown
(a) Defence equipment
| 2005-06 $(000 |
2004-05 $(000 |
2003-04 $(000 |
2002-03 $(000) |
2001-02 $(000) |
2000-01 $(000) |
|
|---|---|---|---|---|---|---|
| Voted in Estimates | 492,490 | 377,184 | 335,870 | 405,812 | 177,361 | 342,488 |
| Actual Expenditure | 414,639 | 313,075 | 301,466 | 363,978 | 128,119 | 316,435 |
| Variance | 77,851 | 64,109 | 34,404 | 41,834 | 49,242 | 26,053 |
(b) GST on defence equipment
| 2005-06 $(000 |
2004-05 $(000 |
2003-04 $(000 |
2002-03 $(000) |
2001-02 $(000) |
2000-01 $(000) |
|
|---|---|---|---|---|---|---|
| Voted in Estimates | 27,395 | 24,245 |
48,224 |
40,116 |
35,424 |
41,202 |
| Actual Expenditure | 12,945 | 14,585 |
47,272 |
19,881 |
34,350 |
25,234 |
| Variance | 14,450 | 9,660 |
952 |
20,235 |
1,074 |
15,968 |
Historical financial performance of significant items: Receipts on behalf of the Crown
Sales of equipment to New Zealand Defence Force (excluding GST)
| 2005-06 $(000 |
2004-05 $(000 |
2003-04 $(000 |
2002-03 $(000) |
2001-02 $(000) |
2000-01 $(000) |
|
|---|---|---|---|---|---|---|
| Planned |
395,882 | 282,348 |
462,298 |
124,875 |
280,071 |
189,075 |
| Actual |
395,882 | 282,357 |
462,298 |
124,875 |
280,072 |
189,076 |
| Variance | - | (9) |
- |
- |
(1) |
(1) |
