Annual Report 30 June 1999

NOTE 1:    STATEMENT OF ACCOUNTING POLICIES

(a)    Reporting Entity

The financial statements presented here for the reporting entity, the Securities Commission, are prepared pursuant to section 30 of the Securities Act 1978 and section 41 of the Public Finance Act 1989.

(b)    Measurement System

The accounting principles recognised as appropriate for the measurement and reporting of results and financial position on an historical cost basis have been applied with the exception that the library is periodically revalued.

(c)    Accounting Policies

• Budget Figures: The budget figures are those approved by Commission Members on 17 December 1998 following prolonged discussion with the Government about the Commission's income for the year. The budget figures were prepared in accordance with generally accepted accounting practice and are consistent with the accounting policies adopted by Commission Members for the preparation of the financial statements.

• Depreciation: Fixed assets, other than the library, are shown at historical cost and have been depreciated on the following bases:
  - office furniture - 20% of diminishing value,

  - office equipment - straight line over five years,

  - leasehold improvements - straight line over nine years.

• Library: All library acquisitions are recorded at cost. The library is depreciated on a straight line basis over 10 years. The library is revalued to current market value every three years by an independent valuer. In the year that the periodic revaluation of the library is undertaken any difference between the depreciated value of the library and the current market value is recognised in the Asset Revaluation Reserve. If this results in a debit balance in the Asset Revaluation Reserve, the balance is expensed in the Statement of Financial Performance.

• Short Term Deposits: Short term deposits are shown at cost.

• Employee Annual Leave: Provision is made in respect of the Commission's liability for employee annual leave entitlement, which has been calculated on an actual entitlement basis at current remuneration rates.

• GST: GST is accounted for by the net method.

• Financial Instruments: All financial instruments are recognised in the Statement of Financial Position.

• Income Tax: The Commission is exempt from income tax under the Income Tax Act 1994.

(d)    Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used last year.

NOTE 2:    REMUNERATION OF MEMBERS OF THE COMMISSION

	1999 $	1998 $
Members' fees	114,737	123,612
Chairman's remuneration	220,850	211,650
(salary, superannuation and allowance)		211,650
Total remuneration paid to Members of the Commission	$335,587	$335,262

NOTE 3:    EMPLOYEE REMUNERATION

During the year, the number of employees of the Commission, not being Members, who received remuneration and other benefits in excess of $100,000 were:

NOTE 4:    RECONCILIATION OF STATEMENT OF FINANCIAL PERFORMANCE WITH STATEMENT OF CASH FLOWS

	1999 $	1998 $
Reported Surplus (Deficit)	(79,938)	63,335
Add non-cash item:
- Depreciation	108,551	84,239
Add item classified as investing activity:
- Loss (Profit) on sale of fixed assets	--	(421)
Movement in working capital:
- Increase (Decrease) in creditors	(15,638)	4,628
- Increase in receivables	(23,767)	(7,957)
- Decrease in prepayments	--	--
	(39,405)	(3,329)
Net cash inflow (outflow) from Operating Activities	$(10,792)	$143,824

NOTE 5:    FIXED ASSETS

	1999 Cost / Valuation $	Depreciation $	Net Book Value $
Assets at Cost
Office Equipment	372,054	210,250	170,804
Office Furniture	73,707	52,876	20,831
Leasehold Improvements	173,319	86,880	86,439
Assets at Valuation plus
Additions at Cost
Library	192,660	19,266	173,394
	$811,740	$360,272	$451,468

	1998 Cost / Valuation $	Depreciation $	Net Book Value $
Assets at Cost
Office Equipment	258,742	155,910	102,832
Office Furniture	71,062	48,108	22,954
Leasehold Improvements	168,368	67,622	100,746
Assets at Valuation plus
Library	162,877	--	162,877
	$661,049	$271,640	$389,409

The library was last revalued on 30 June 1998 by Mrs S. Lambert of Lamberts Library Services.

NOTE 6:    EMPLOYEE ENTITLEMENTS

Creditors and Accruals include employee annual leave entitlements amounting to $28,367.

NOTE 7:    DISCLOSURE OF CASH FLOWS

The cash flows relating to the Commission's investing activities have been netted off in the Statement of Cash Flows. The amounts involved are held in short term deposits which are rolled over frequently through the year.

NOTE 8:    FINANCIAL INSTRUMENTS

(i)    Credit Risk
Financial instruments which potentially subject the Commission to credit risk consist of bank balances, bank short term deposits and accounts receivable.
The Commission's investments are deposited with a registered bank in New Zealand.
The Commission does not require collateral or security to support financial instruments.
There is no significant concentration of credit risk pertaining to accounts receivable.

(i)    Credit Risk
All financial instruments are recognised in the Statement of Financial Position and are stated at fair values.

NOTE 9:    LEASE COMMITMENTS

The Commission has the following operating lease commitments, which are subject to review under the terms of the leases, with terms of more than one year:

NOTE 10:    CAPITAL COMMITMENTS

There are no capital commitments at balance date (1998 $130,847).

NOTE 11:    CONTINGENT LIABILITIES

There are no contingent liabilities at balance date (1998 Nil).

NOTE 12:    TRANSACTIONS WITH RELATED PARTIES

During the year there were nil transactions with related parties (1998 $43,188).
No related party debts have been written off or forgiven during the year.

NOTE 13:    BUDGET VARIANCES

(i)    Income
Income for the year was $42,000 above budget. The variance related mainly to increased fee income arising under the Securities (Fees) Regulations 1998 which came into effect on 19 January 1999.

(ii)    Expenditure
Expenditure for the year was $100,000 below budget. Owing to uncertainty about the likely level of income, particularly in the early part of the year, the Commission imposed general constraints on expenditure.