Annual Report for the year ended 30 June 2009
Part 4: Departmental financial statements (continued)
Notes to the financial statements
For the year ended 30 June 2009
Note 1: Statement of accounting policies
Reporting Entity
The Ministry of Defence (the Ministry) is a government department as defined by section 2 of the Public Finance Act 1989 and is domiciled in New Zealand.
In addition, the Ministry has reported on Crown activities which it administers.
The primary objective of the Ministry is to provide services to the public rather than making a financial return. Accordingly, the Ministry has designated itself as a public benefit entity for the purpose of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).
The financial statements of the Ministry are for the year ended 30 June 2009. The financial statements were authorised for issue by the Chief Executive of the Ministry on 30 September 2009.
Basis of preparation
The financial statements of the Ministry 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).
These financial statements have been prepared in accordance with, and comply with, NZ IFRS as appropriate for public benefit entities.
The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
The financial statements have been prepared on a historical cost basis, modified by the revaluation of certain financial instruments (including derivative instruments).
The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of the Ministry is New Zealand dollars.
Standards, amendments and interpretations issued but not yet effective and have not been early adopted
Standards, amendments and interpretations issued but not yet effective and have not been early adopted, and which are relevant to the Ministry include:
NZ IAS Presentation of Financial Statements (revised 2007) replaces NZ IAS 1 Presentation of Financial Statements (issued 2004) and is effective for reporting periods beginning on or after 1 January 2009.
The revised standard requires information in financial statements to be aggregated on the basis of shared characteristics and to introduce a statement of comprehensive income. This will enable readers to analyse changes in equity resulting from transactions with the Crown in its capacity as “owner” separately from “non-owner” changes. The revised standard gives the Ministry the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensive income). The Ministry expects it will apply the revised standard for the first time for the year ended 30 June 2010, and is yet to decide whether it will prepare a single statement of comprehensive income or a separate income statement followed by a statement of comprehensive income.
Amendments to NZ IFRS 7 Financial Instruments: Disclosures and is effective for reporting periods beginning on or after 1 January 2009. In the first year of application, the Ministry does not need to provide comparative information for the disclosures required by the amendments.
The amendments introduce a three-level fair value disclosure hierarchy that distinguishes fair value measurements by the significance of the inputs used. These disclosures are expected to provide more information about the relative reliability of fair value measurements. In addition, the amendments enhance disclosure requirements on the nature and extent of liquidity risk arising from financial instruments to which an entity is exposed. The amendments clarify current requirements to address application issues. The amendments also reinforce the principles of NZ IFRS 7 to ensure that information disclosed enables users to evaluate the nature and extent of liquidity risk arising from financial instruments and how the entity manages this risk. The Ministry intends to adopt this standard for the year ending 30 June 2010 and has not determined the potential impact of the new standard.
Revenue
Revenue is measured at the fair value of consideration received.
Revenue Crown
Revenue earned from the supply of outputs to the Crown is recognised as revenue when earned.
Interest
Interest income is recognised using the effective interest method.
Capital charge
The capital charge is recognised as an expense in the period to which the charge relates.
Operating leases
An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term.
Financial instruments
Financial assets and financial liabilities are initially measured at fair value plus transaction costs unless they are carried at fair value through profit or loss in which case the transaction costs are recognised in the statement of financial performance.
Cash and cash equivalents
Cash includes cash on hand and funds on deposit with banks.
Debtors and other receivables
Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate, less impairment changes.
Impairment of a receivable is established when there is objective evidence that the Ministry will not be able to collect amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter into bankruptcy, and default in payments are considered indicators that the debtor is impaired. The amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted using the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of financial performance. Overdue receivables that are renegotiated are reclassified as current (i.e. not past due).
Property, plant and equipment
Property, plant and equipment consists of leasehold improvements, furniture and office equipment.
Property, plant and equipment is shown at cost, less accumulated depreciation and impairment losses.
Individual assets, or groups of assets, are capitalised if their cost is greater than $5,000. The value of an individual asset that is less than $5,000 and is part of a group of similar assets is capitalised.
Additions
The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits or service potential associated with the item will flow to the Ministry and the cost of the item can be measured reliably.
In most instances, an item of property, plant and equipment is recognised at its cost. Where an asset is acquired at no cost, or for a nominal cost, it is recognised at fair value as at the date of acquisition.
Disposals
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses on disposals are included in the statement of financial performance.
Subsequent costs
Costs incurred subsequent to initial acquisition are capitalised only when it is probable that future economic benefits or service potential associated with the item will flow to the Ministry and the cost of the item can be measured reliably.
Depreciation
Depreciation is provided on a straight-line basis on all property, plant and equipment at rates that will write off the cost (or valuation) of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of assets have been estimated as follows:
- Leasehold improvements 5-18 years
- Furniture 3-10 years
- Office equipment 5-10 years
- Computer equipment 3 years
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is the shorter.
The residual value and useful life of an asset is reviewed, and adjusted if applicable, at each financial year-end.
Intangible assets
Software acquisition
Computer software that is not integral to the operation of the hardware is recorded as an intangible asset at cost and amortised on a straight line basis.
Costs associated with maintaining computer software are recognised as an expense when incurred. Direct costs that are associated with the development of the software are recognised as an intangible asset. Direct costs include the software development, employee costs and an appropriate portion of relevant overheads.
Staff training costs are recognised as an expense when incurred.
Amortisation
The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date that the asset is derecognised. The amortisation charge for each period is recognised in the statement of financial performance.
The useful lives and associated amortisation rates of major classes of intangible assets have been estimated as follows:
- Acquired computer software 3-5 years
Impairment of non-financial assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. An intangible asset that is not yet available for use at the balance sheet date is tested for impairment annually.
Property, plant and equipment and intangible assets that have a finite useful life are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use.
Value in use is depreciated replacement cost for an asset where the future economic benefits or service potential of the asset are not primarily dependent on the asset's ability to generate net cash inflows and where the entity would, if deprived of the asset, replace its remaining future economic benefits or service potential.
If an asset's carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written down to the recoverable amount.
Any impairment loss is recognised in the statement of financial performance.
Creditors and other payables
Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.
Employee entitlements
A provision is made in respect of the Ministry's liability for annual, sick, long service and retirement leave. Entitlements which are expected to be paid within twelve months of the reporting date are measured at nominal values on an actual entitlement basis, at current rates of pay. These include salaries and wages accrued up to balance date, annual leave earned but not yet taken at balance date, retiring and long service leave entitlements expected to be settled within 12 months and sick leave.
The Ministry recognises a liability for sick leave to the extent absences in the coming year are expected to be greater than the sick leave entitlements earned in the coming year. The amount is calculated based on the unused sick leave entitlement that can be carried forward at balance date, to the extent that the Ministry anticipates it will be used by staff to cover those future absences.
Entitlements payable beyond twelve months, such as long service and retirement leave, are calculated based on the present value of expected future entitlements.
Superannuation schemes
Defined superannuation schemes
Obligations for contributions to the State Sector Retirement Savings Scheme, Kiwisaver and the Government Superannuation Fund are accounted for as defined contribution schemes and are recognised as an expense in the statement of financial performance as incurred.
Provisions
The Ministry recognises a provision for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event, it is probable that an outflow of future economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as a finance cost.
Taxpayers' funds
Taxpayers' funds is the Crown's investment in the Ministry and is measured as the difference between total assets and total liabilities. Taxpayers' funds is disaggregated and classified as general funds and property, plant and equipment revaluation reserves.
Commitments
Expenses yet to be incurred on non-cancellable contracts that have been entered into on or before balance date are disclosed as commitments to the extent that there are equally unperformed obligations.
Cancellable commitments that have penalty or exit costs explicit in the agreement on exercising that option to cancel are included in the statement of commitments at the value of that penalty or exit cost.
Goods and Services Tax (GST)
All items in the financial statements, including appropriation statements, are stated exclusive of GST, except for receivables and payables, which are stated on a GST inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or expense.
The net amount of GST recoverable from, or payable to, the Inland Revenue Department (IRD) is included as part of receivables or payables in the statement of financial position.
The net GST paid to, or received from the IRD, including the GST relating to investing and financing activities, is classified as an operating cash flow in the statement of cash flows.
Commitments and contingencies are disclosed exclusive of GST.
Income tax
Government departments are exempt from income tax as public authorities. Accordingly, no charge for income tax has been provided for.
Budget figures
The budget figures are those included in the Ministry's statement of intent for the year-ended 30 June 2009, which are consistent with the financial information in the Main Estimates. In addition, the financial statements also present the updated budget information from the Supplementary Estimates.
Statement of cost accounting policies
The Ministry has determined the cost of outputs using the cost allocation system outlined below:
- Criteria for direct and indirect costs
- "Direct costs" are those costs directly attributed to an output.
- “Indirect costs” are those costs that cannot be identified in an economically feasible manner with a specific output.
- Direct costs assigned to outputs
- Direct costs are assigned to outputs by charging payments to specific job numbers. Selection of a “general cost” job number within an output class will treat the expense as a direct cost to the output class even though a specific job within the output class has not been identified.
- For the year ended 30 June 2009, direct costs accounted for 65% of the Ministry's costs (30 June 2008 = 71%).
- Basis for assigning indirect and corporate costs to outputs
- Indirect costs are assigned to outputs by charging payments to a corporate job number. The accounting system is programmed to allocate corporate job costs to the three output classes on a predetermined percentage for each expense item. The percentage number is an assessment of services to be provided to each output class in the ensuing year. The percentage numbers remain constant for the financial year.
- For the year ended 30 June 2009, indirect costs accounted for 35% of the Ministry's costs (30 June 2008 = 29%).
There have been no changes in cost accounting policies since the date of the last audited financial statements.
Critical accounting estimates and assumptions
In preparing these financial statements the Ministry may make estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. No estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year have been made in the preparation of these financial statements are discussed below:
- Retirement and long service leave – Note 11 provides and analysis of the exposure in relation to estimates and uncertainties surrounding retirement and long service leave liabilities.
Critical judgements in applying the Ministry's accounting policies
Management has not exercised any critical judgements in applying the Ministry's accounting policies for the period ended 30 June 2009.
Note 2: Revenue other
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| State Sector Retirement Saving Scheme recovery |
163 | 161 |
| Pre-acquisition project costs from NZ Defence Force |
52 | 103 |
| Pay and Employment Equity Review recovery |
18 | 9 |
| Total revenue other | 233 | 273 |
Note 3: Personnel costs
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Salaries and wages |
5,989 | 6,168 |
| Employer contributions to defined contributions plans |
217 | 218 |
| Increase/(decrease) in employee entitlements |
(2) | 99 |
| Total personnel costs | 6,204 | 6,485 |
Employer contributions to defined contribution plans include contributions to the State Sector Retirement Savings Scheme, Kiwisaver and Government Superannuation Fund.
Note 4: Capital charge
The Ministry pays a capital charge to the Crown on its taxpayers' funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2009 was 7.5% (2008 = 7.5%).
Note 5: Other operating expenses
| Actual 30/6/2008 $000 | Actual 30/6/2009 $000 |
|
|---|---|---|
| Operating expenses | ||
| Consultancy | 250 | 1,988 |
| Professional services | 167 | 90 |
| Audit fees for financial statements | 114 | 116 |
| Auditors - fees for transition to NZ IFRS | 16 | - |
| Share of NZDF costs for maintaining services | 475 | 507 |
| Grants and contributions | 68 | 82 |
| Subscriptions | 25 | 23 |
| General maintenance and servicing | 56 | 31 |
| Travel and related costs | 371 | 260 |
| Courses, conferences and exhibitions | 100 | 51 |
| Rental of premises | 399 | 458 |
| Legal | 147 | 954 |
| Printing and stationery | 32 | 46 |
| Computer expenses | 132 | 211 |
| Electronic information, Acts and Regulations | 78 | 78 |
| Other operating costs | 324 | 284 |
| Total operating | 2,754 | 5,179 |
Note 6: Debtors and other receivables
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Debtors | 195 | 169 |
| Less: provision for doubtful debts | - | - |
| Net debtors |
195 | 169 |
| GST receivables |
- | - |
| Total debtors and other receivables | 195 | 169 |
The carrying value of debtors and other receivables approximates their fair value.
As at 30 June 2008 and 2009, all overdue receivables have been assessed for impairment and appropriate provisions applied, as detailed below:
2008 |
2009 |
|||||
|---|---|---|---|---|---|---|
| Gross | Impairment | Net | Gross | Impairment | Net | |
| Not past due | 128 | - | 128 | 169 | - | 169 |
| Past due 1-30 days | 66 | - | 66 | - | - | - |
| Past due 31-60 days | 1 | - | 1 | - | - | - |
| Past due 61-90 days | - | - | - | - | - | - |
| Past due > 91 days | - | - | - | - | - | - |
| Total | 195 | - | 195 | 169 | - | 169 |
Note 7: Property, plant and equipment
| Leasehold improvements $000 | Office Furniture $000 | Office and Computer Equipment $000 | Total $000 |
|
|---|---|---|---|---|
| Cost or valuation | ||||
| Balance at 1 July 2007 | 2,378 | 228 | 1,057 | 3,663 |
| Additions | 17 | 17 | 69 | 103 |
| Disposals | (15) | - | - | (15) |
| Balance at 30 June 2008 | 2,380 | 245 | 1,126 | 3,751 |
| Balance at 1 July 2008 | 2,380 | 245 | 1,126 | 3,751 |
| Additions | 3 | 34 | 164 | 201 |
| Disposals | - | - | - | - |
| Balance at 30 June 2009 | 2,383 | 279 | 1,290 | 3,952 |
| Accumulated depreciation and impairment losses | ||||
| Balance at 1 July 2007 | 40 | 38 | 952 | 1,030 |
| Depreciation expense | 134 | 21 | 56 | 211 |
| Eliminate on disposal | - | - | - | - |
| Impairment losses | - | - | - | - |
| Balance at 30 June 2008 | 174 | 59 | 1,008 | 1,241 |
| Balance at 1 July 2008 | 174 | 59 | 1,008 | 1,241 |
| Depreciation expense | 170 | 21 | 27 | 218 |
| Eliminate on disposal | - | - | - | - |
| Impairment losses | - | - | - | - |
| Balance at 30 June 2009 | 344 | 80 | 1,035 | 1,459 |
| Carrying amounts | ||||
| At 1 July 2007 | 2,338 | 190 | 105 | 2,633 |
| At 30 June and 1 July 2008 | 2,206 | 186 | 118 | 2,510 |
| At 30 June 2009 | 2,039 | 199 | 255 | 2,493 |
There are no restrictions over the title of the Ministry's property, plant and equipment, nor are any property, plant and equipment assets pledged as security for liabilities.
Note 8: Intangible assets
| Acquired software $000 | Total $000 |
|
|---|---|---|
| Cost | ||
| Balance at 1 July 2007 | 527 | 527 |
| Additions | 61 | 61 |
| Disposals | - | - |
| Balance at 30 June 2008 | 588 | 588 |
| Balance at 1 July 2008 | 588 | 588 |
| Additions | 82 | 82 |
| Disposals | - | - |
| Balance at 30 June 2009 | 670 | 670 |
| Accumulated amortisation and impairment | ||
| Balance at 1 July 2007 | 389 | 389 |
| Amortisation expense | 51 | 51 |
| Disposals | - | - |
| Impairment losses | - | - |
| Balance at 30 June 2008 | 440 | 440 |
| Balance at 1 July 2008 | 440 | 440 |
| Amortisation expense | 54 | 54 |
| Disposals | - | - |
| Impairment losses | - | - |
| Balance at 30 June 2009 | 494 | 494 |
| Carrying amounts | ||
| At 1 July 2007 | 138 | 138 |
| At 30 June and 1 July 2008 | 148 | 148 |
| At 30 June 2009 | 176 | 176 |
There are no restrictions over the title of the Ministry's intangible assets, nor are any intangible assets pledged as security for liabilities.
Note 9: Creditors and other payables
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Creditors |
169 | 897 |
| Accrued expenses |
316 | 2,090 |
| GST payable | 121 | 34 |
| Accrued expenses for property, plant and equipment |
22 | 22 |
| Total creditors and other payables | 628 | 3,043 |
Creditors and other payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value.
Note 10: Repayment of surplus
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Net surplus/(deficit) |
155 | (2,231) |
| Total repayment of surplus | 155 | - |
The repayment of surplus is required to be paid by the 31st October of each year.
Note 11: Employee entitlements
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Current provisions are represented by: | ||
| Annual leave | 360 | 410 |
| Sick leave | 15 | 2 |
| Retirement and long service leave | - | - |
| Total current provision | 375 | 412 |
| Non-current employee entitlements are represented by: | ||
| Retirement and long service leave | 210 | 272 |
| Total employee entitlements | 585 | 684 |
Note 12: Taxpayers' funds
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| General Funds | ||
| Balance at 1 July |
3,416 | 3,416 |
| Net surplus/(deficit) |
155 | (2,231) |
| Capital contribution from the Crown | - | - |
| Provision for repayment of surplus to the Crown | (155) | - |
| General funds at 30 June | 3,416 | 1,185 |
Note 13: Reconciliation of net surplus/(deficit) to net cash from operating activities
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Net Surplus/(deficit) | 155 | (2,231) |
| Add/(less) non-cash items: | ||
| Depreciation and amortisation expense |
262 | 272 |
| Inc/(Dec) in non current employee entitlements | 22 | 62 |
| Total non-cash items | 284 | 334 |
| Add/(less) movements in working capital items: | ||
| (Inc)/Dec in debtors and other receivables | 11 | 26 |
| (Inc)/Dec in prepayments | (1) | 14 |
| Inc/(Dec) in creditors and other payables | 108 | 2,415 |
| Inc/(Dec) in current employee entitlements | 5 | 37 |
| Net movements in working capital items | 123 | 2,492 |
| Net cash from operating activities | 562 | 595 |
Note 14: Related party transactions and key management personnel
Related party transactions
The Ministry is a wholly owned entity of the Crown. The Government significantly influences the roles of the Ministry as well as being its major source of revenue.
The Ministry enters into transactions with other government departments, Crown entities and state-owned enterprises on an arm's length basis. Those transactions that occur within a normal supplier or client relationship on terms and conditions no more or less favourable than those which it is reasonable to expect the Ministry would have adopted if dealing with that entity at arm's length in the same circumstance are not disclosed.
Key management personnel compensation
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Salaries and other short-term employee benefits |
1,136 | 1,315 |
| Post employment benefits |
- | 37 |
| Other long term benefits | - | - |
| Termination benefits | - | - |
| Total key management personnel compensation | 1,136 | 1,352 |
Key management personnel include the Chief Executive, five Deputy Secretaries and for an interim period, two Acting Deputy Secretaries.
Note 15: Events after the balance sheet date
There have been no significant events after the balance sheet date.
Note 16: Financial instruments risks
The Ministry's activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Ministry has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature to be entered into.
Market risk
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Ministry purchases capital equipment internationally and is exposed to currency risk arising from various currency exposures, primarily with respect to the United States, Canadian and Australian dollars and Euro. Currency risk arises from future capital purchases and recognised liabilities, which are denominated in a foreign currency.
The Ministry's foreign exchange management policy requires the Ministry to manage currency risk arising from future transactions and recognised liabilities by entering into foreign exchange forward contracts to hedge the entire foreign currency risk exposure. The Ministry's policy has been approved by the Treasury and is in accordance with the requirements of the Treasury Guidelines for the Management of Crown and Departmental Foreign Exchange Exposure.
Interest rate risk
Interest rate risk is the risk that the fair value of a financial instrument will fluctuate or, the cash flows from a financial instrument will fluctuate, due to changes in market interest rates.
The Ministry has no interest bearing financial instruments and, accordingly, has no exposure to interest rate risk.
Credit risk
Credit risk is the risk that a third party will default on its obligation to the Ministry, causing the Ministry to incur a loss.
In the normal course of its business, credit risk arises from debtors, deposits with banks and derivative financial instrument assets.
The Ministry is only permitted to deposit funds and enter into foreign exchange forward contracts with approved counterparties. These entities have high credit ratings. For its other financial instruments, the Ministry does not have significant concentrations of credit risk.
The Ministry's maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and cash equivalents, net debtors (note 6), and derivative financial instrument assets. There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired.
The Crown Retail Deposit Guarantee Scheme for deposits held with banks that have opted into the scheme provides a guarantee of $1 million per deposit or per guaranteed institution. Deposits beyond this level are not covered by this scheme.
Liquidity risk
Liquidity risk is the risk that the Ministry will encounter difficulty raising liquid funds to meet commitments as they fall due.
In meeting its liquidity requirements, the Ministry closely monitors its forecast cash requirements with expected cash drawdowns from the New Zealand Debt Management Office. The Ministry maintains a target level of available cash to meet liquidity requirements.
The table below analyses the Ministry's financial liabilities that will be settled based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.
| Less than 6 months $000 | Between 6 months and 1 year $000 | Between 1 year and 5 years $000 | Over
5 years $000 | Total $000 |
|
|---|---|---|---|---|---|
| Assets Current assets |
|||||
| Cash and cash equivalents | 2,074 | - | - | - | 2,074 |
| Debtors and other receivables | 169 | - | - | - | 169 |
Total current assets |
2,243 | - | - | - | 2,243 |
| Total assets |
2,243 | - | - | - | 2,243 |
| Liabilities Current liabilities |
|||||
| Creditors and other payables | 3,043 | - | - | - | 3,043 |
| Total current liabilities | 3,043 | - | - | - | 3,043 |
| Total liabilities | 3,043 | - | - | - | 3,403 |
| Net liquidity of continuing operations |
(800) | - | - | - | (800) |
Note 17: Categories of financial instruments
| Actual 2008 $000 | Actual 2009 $000 |
|
|---|---|---|
| Loans and receivables | ||
| Cash and cash equivalents |
1,917 | 2,074 |
| Debtors and other receivables (note 6) | 195 | 169 |
| Total loans and receivables | 2,112 | 2,243 |
| Financial liabilities measured at amortised cost | ||
| Creditors and other payables (note 9) | 628 | 3,043 |
Note 18: Capital management
The Ministry's capital is its equity (or taxpayers' funds), which comprise general funds only. Equity is represented by net assets.
The Ministry manages its revenues, expenses, assets, liabilities, and general financial dealings prudently. The Ministry's equity is largely managed as a by-product of managing income, expenses, assets, liabilities, and compliance with the Government Budget processes and with Treasury Instructions.
The objective of managing the Ministry's equity is to ensure the Ministry effectively achieves its goals and objectives for which it has been established, whilst remaining a going concern.
Note 19: Explanation of major variances against budget
The major variances from the Ministry's estimated figures in the statement of intent contained within the operating expenses and other payables relate to costs incurred with extended contract negotiations.
