WE LTEC ANNUAL REPORT 2015
NOTES TO THE FINANCIAL STATEMENTS
Effect of first-time adoption of PBE standards on accounting policies and disclosures
Wellington Institute of Technology (WelTec) is a Crown Entity governed by the Crown Entities Act 2004 and the Education Act 1989. It provides full-time and part-time tertiary education in New Zealand.
This is the first set of financial statements of WelTec and Group that is presented in accordance with PBE standards. WelTec and Group have previously reported in accordance with NZ IFRS (PBE). The accounting policies adopted in these financial statements are consistent with those of the previous financial year, except for instances when the accounting or reporting requirements of a PBE standard are different to requirements under NZ IFRS (PBE) as outlined below.
WelTec and Group consists of Wellington Institute of Technology and its trading subsidary WelTec Student Accommodation Limited (100% owned), and non-trading subsidiaries WelTec Enterprises Limited (100% owned) and WelTec Connect Limited (100% owned). WelTec Connect Limited has a 43.15% interest in Le Cordon Bleu New Zealand Institute Limited Partnership which is equity accounted. WelTec has a 50% interest in W² Shared Services Limited and W² Ventures Limited. WelTec also has a 50% interest two unincorporated joint ventures - Cybus and Computer Power Plus. All jointly owned entities are equity accounted into the Group financial statements. The primary objective of WelTec and Group is to provide tertiary education services for the benefit of the community rather than making a financial return. The financial statements of WelTec and the Group are for the year ended 31 December 2015. The financial statements were authorised for issue by the Council on 20 April 2016.
Basis of Preparation Statement of Compliance The financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand, and the requirements of the Crown Entities Act 2004 and the Education Act 1989. WelTec and the Group is a public benefit entity for the purpose of complying with generally accepted accounting practice in New Zealand (NZ GAAP). The financial statements of WelTec and the Group comply with Public Benefit Entity (PBE) standards. The financial statements have been prepared in accordance with Tier 1 PBE standards.
Measurement base The financial statements have been prepared on a historical cost basis, except for land, buildings and plant, which have been measured at fair value.
Functional and presentation currency The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($’000), except where indicated. The functional currency of WelTec and Group is New Zealand dollars (NZ$).
The changes to accounting policies and disclosures caused by first time application of PBE accounting standards are as follows: PBE IPSAS 23: Revenue from Non-Exchange Transactions PBE IPSAS 23 prescribes the financial reporting requirements for revenue arising fron non-exchange transactions. There is no equivalent financial reporting standard under NZ IFRS. The application of this standard effected the Group's accounting for government grant and domestic student fee income. In the previous financial year government grants and domestic student fee income were recognised on a consumption basis once entitlement to the funding was achieved. However, PBE IPSAS 23 requires revenue from non-exchange transactions, such as government grants, to be recognised as revenue as soon as the inflow of resources can be recognised as an asset in the financial statements, unless the inflow of resources meets the definition of and recognition criteria for a liability. Non-exchange income can only be deferred and recognised as a liability if there is a condition attached to the income that requires an entity to use the income as specificied or return the cash to the grantor. Application of PBE IPSAS 23 to government grant funding has resulted in non-student delivery funding being recognised 12 months earlier than reported in 2013 and 2014. Application of PBE IPSAS 23 to domestic student fee income has resulted in income previously considered "straddling" income being fully recognised in the year in which the students study contract became unconditional. The current year and comparative figures in the statement of financial performance and statement of financial position for 2013 and 2014 have been amended accordingly, as follows: