Skip to content. | Skip to navigation.

Navigation

Appendix 2: Example disclosures for ITP early adoption of PBE IPSAS 41

Commentary for 31 December 2021 reporting by Te Pūkenga subsidiaries

This appendix illustrates those disclosures of the model that would be affected by the early adoption of PBE IPSAS 41 from PBE IPSAS 29. Under each note affected, a brief guidance narrative is provided that explains how the note would be affected and revised disclosures are provided. In preparing the disclosures, we have elected not to restate the comparative year information in accordance with the transitional provisions of PBE IPSAS 41.

Tier 2 concessions: The example disclosures identify by green highlight disclosure concessions available under the reduced disclosure regime for tier 2 entities. Tier 2 entities do not have public accountability and have total expenses that are over $2 million and less than $30 million. We encourage ITPs who are eligible to take advantage of the available disclosure concessions. Additional disclosure concessions might be available to an ITP in preparing its financial statements that are not identified by the model, as the model does not include all possible disclosures of the PBE accounting standards.

6 Cash and cash equivalents

Guidance: Disclosures added on the application of the expected credit loss model to cash and cash equivalents.
PBE IPSAS 30.42G Although cash and cash equivalents at 31 December 2021 are subject to the expected credit loss requirements of PBE IPSAS 41, no loss allowance has been recognised because the estimated loss allowance for credit losses is trivial.

7 Receivables1

Guidance – This entire note has been updated for the new credit risk disclosure of PBE IPSAS 41.

The accounting policy for receivables ECL is mandatory. However, an entity has an accounting policy choice for lease receivables (PBE IPSAS 41.87).

Receivables that result from transactions within the scope of PBE IPSAS 9 and 23 shall always measure the loss allowance at an amount equal to lifetime ECL.

For lease receivables that result from transactions within scope of PBE IPSAS 13 an entity may elect as their accounting policy to always measure the loss allowance at an amount equal to lifetime ECL (similar to receivables as illustrated below) or they may elect to assess changes in credit risk to determine whether to calculate the ECL on a 12-month or the lifetime basis.
PBE IPSAS 30.25 Accounting policy
PBE IPSAS 41.60

PBE IPSAS 41.87
Short-term receivables are recorded at the amount due, less an allowance for expected credit losses (ECL). This allowance is calculated based on lifetime ECL.
PBE IPSAS 30.42F(c) In measuring ECL, short-term receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due.
PBE IPSAS 30.42F(e) Short-term receivables are written off when there is no reasonable expectation of recovery.

Previous accounting policy for impairment of receivables
PBE IPSAS 29.72 For the previous year, the allowance for credit losses was based on the incurred credit loss model. An allowance for credit losses was recognised only when there was objective evidence of impairment that the amount due would not be fully collected.

Breakdown of receivables and further information

InstituteGroup
2021
$000
2020
$000
2021
$000
2020
$000
Student fee receivables
Student fee receivables 2,111 2,794 2,111 2,794
Less: Allowance for credit losses (267) (355) (267) (355)
Net student fee receivables 1,844 2,439 1,844 2,439
Other receivables
Commercial receivables 0 0 2,951 2,180
Research receivables 2,350 2,250 2,350 2,250
Receivables from subsidiaries 898 428 0 0
GST receivable 116 0 0 0
Other 163 100 277 225
Total receivables 5,371 5,217 7,422 7,094

 

1 The allowance for credit losses at 31 December 2021 and 1 January 2021 was determined as follows:
PBE IPSAS 30.42N

PBE IPSAS 30.IG22D
31 December 2021 Receivable days past due
Current 1 to 30 days 31 to 90 days More than 90 days Total
PBE IPSAS 30.42G(a) Expected credit loss rate 4.7% 10.2% 17.7% 45.9%
Gross carrying amount ($000) 922 569 424 196 2,111
Lifetime expected credit loss ($000) 44 58 75 90 267
PBE IPSAS 30.42N
PBE IPSAS 30.IG22D
1 January 2021 Receivable days past due
Current 1 to 30 days 31 to 90 days More than 90 days Total
PBE IPSAS 30.42G(a) Expected credit loss rate 4.7% 10.2% 17.7% 45.9%
  Gross carrying amount ($000) 1,220 753 561 259 2,794
  Lifetime expected credit loss ($000) 58 79 99 119 355
PBE IPSAS 30.42G(a),(b) The expected credit loss rates for receivables at 31 December 2021 and 1 January 2021 are based on the payment profile of revenue on credit over the previous 2 years at the measurement date and the corresponding historical credit losses experienced for that period. The historical loss rates are adjusted for current and forward-looking macroeconomic factors that might affect the recoverability of receivables. Given the short period of credit risk exposure, the impact of macroeconomic factors is not considered significant.
PBE IPSAS 30.42G(c) There have been no changes during the reporting in the estimation techniques or significant assumptions used in measuring the loss allowance.
The movement in the allowance for credit losses is as follows:
2021
$000
2020
$000
PBE IPSAS 30.49P Allowance for credit losses as at 1 January 2021 calculated under PBE IPSAS 29 235 228
PBE IPSAS 41.173 PBE IPSAS 41 expected credit loss adjustment - through opening accumulated surplus/deficit 120 N/A
Opening allowance for credit losses as at 1 January 2021 355 228
Revision in loss allowance made during the year (25) 192
PBE IPSAS 30.42I(c) Receivables written off during the year (63) (185)
Balance at 30 June 267 235

1: For the credit risk disclosures of PBE IPSAS 30, entities, will need to consider how much detail to disclose, how much emphasis to place on different aspects of disclosures requirements, the appropriate level of aggregation or disaggregation, and whether users of financial statement need additional explanation to evaluate the quantitative information disclosed (PBE IPSAS 30.42D)

9 Other financial assets

Guidance – The accounting policy section has been updated, new information added in relation to equity investments designated at fair value through other comprehensive revenue and expense, and new information added about impairment of instruments subject to credit risk.

There are new disclosure requirements for concessionary loans. If this is applicable, refer to PBE IPSAS 30: Financial Instrument: Disclosures paragraph 37 and 37A.

PBE IPSAS 30.25 Accounting policy
PBE IPSAS 41.57 Financial assets are initially recognised at fair value plus transaction costs unless they are measured at fair value through surplus or deficit, in which case the transaction costs are recognised in the surplus or deficit.
Term deposits and loans to subsidiaries
PBE IPSAS 41.61(a) Term deposits and loans to subsidiaries are initially measured at the amount invested, as this reflects fair value for these market-based transactions. Interest is subsequently accrued and added to the investment and loan balance. A loss allowance for expected credit losses is recognised if the estimated loss allowance is not trivial.
New Zealand Government bonds
PBE IPSAS 41.41 Surplus funds are invested in New Zealand Government bonds and might be sold prior to maturity for liquidity reasons. Consequently, they are classified at fair value through other comprehensive revenue and expense.
PBE IPSAS 41.61 After initial recognition, the bonds are measured at their fair value, with gains and losses recognised in other comprehensive revenue and expense. These debt instruments are subject to impairment assessments.
PBE IPSAS 41.111 On disposal of the investment, the financial asset is derecognised, and the cumulative gain or loss previously recognised in other comprehensive revenue and expense is reclassified from equity to surplus or deficit as a reclassification adjustment.
Managed fund
PBE IPSAS 41.43 The managed fund is a portfolio of financial assets that are actively traded with the intention of making profits. Therefore, the managed fund is measured at fair value through surplus/deficit.
PBE IPSAS 41.61 After initial recognition, the managed fund is measured at fair value, with gains and losses recognised in the surplus or deficit.
Unlisted shares
PBE IPSAS 41.43 Unlisted shares that are not held for trading are irrevocably designated at fair value through other comprehensive revenue and expense at initial recognition.
PBE IPSAS 41.101 After initial recognition, the shares are measured at their fair value, with gains and losses recognised in other comprehensive revenue and expense. These equity instruments are not subject to impairment assessments. When sold, the cumulative gain or loss previously recognised in other comprehensive revenue and expense is transferred within equity to general funds.
PBE IPSAS 29.48,64(b) Previous accounting policies for other financial assets

For the prior year, an allowance for credit losses for instruments exposed to credit risk was recognised only when there was objective evidence of impairment. Additionally, for unlisted shares:
  • impairment losses were recognised in the surplus or deficit; and
  • some unlisted shares were previously measured at cost;
  • the cumulative gain or loss recognised in other comprehensive revenue and expense was transferred to the surplus or deficit on disposal of the investment.
PBE IPSAS 29.70,76,77 A significant or prolonged decline in the fair value of the investment below its cost was considered objective evidence of impairment. If impairment evidence existed, the cumulative loss recognised in other comprehensive revenue and expense was transferred from equity to the surplus or deficit.
Break down of investments and further information
Equity investments
PBE IPSAS 30.14A Equity investments designated at fair value through other comprehensive revenue and expense comprise of:
2021
$000
2020
$000
Invest Tech Limited 204 150
StartUp Hub Limited 200 66
FutureFuel Limited 202 250
Total equity investments 606 466
PBE IPSAS 30.14A(b) The Institute has designated these equity investments at fair value through other comprehensive revenue and expense. This measurement basis is considered more appropriate than through surplus or deficit because the investments have been made for long-term strategic purposes rather than to generate a financial return through trading.
Loss allowance for term deposits, Government bonds, and loans to subsidiaries
PBE IPSAS 30.42F The Institute considers there has not been a significant increase in credit risk for investments in term deposits, Government bonds, and loans to subsidiaries because the issuer of the investment continues to have low credit risk at balance date. Term deposits are held with banks that have a long-term AA- investment external grade credit rating and the New Zealand Government has a credit rating of AA+, which indicates that these entities have a very strong capacity to meet their financial commitments. The balance of loans to subsidiaries is immaterial.

No loss allowance for expected credit losses has been recognised because the estimated 12-month expected loss allowance for credit losses is trivial.

24A Financial instruments categories

PBE IPAS 30.11 Guidance – The financial instrument categories disclosure for the 2021 year have been updated for the new PBE IPSAS 41 financial instrument categories.
The carrying amounts of financial assets and liabilities in each of the financial instrument categories are as follows:
Institute Group
2021
$000
2020
$000
2021
$000
2020
$000
Mandatorily measured at fair value through surplus or deficit – (2020: Held for trading)
PBE IPSAS 30.11(a)(ii) Financial Assets:
Derivative instruments 203 17 203 17
Managed fund 0 0 8,320 8,919
Total 203 17 8,523 8,936
Financial liabilities:
Derivative instruments 105 32 105 32
PBE IPSAS 30.11(f) Financial assets measured at amortised cost (2020: Loans and receivables)
Cash and cash equivalents 5,922 19,966 22,983 31,754
Receivables 5,371 5,217 7,422 7,094
Other financial assets:
Term deposits 9,796 5,191 9,796 5,386
Loans to subsidiaries 735 281 0 0
Total 21,824 30,655 40,201 44,234
PBE IPSAS 30.11(h) Financial assets measured at fair value through other comprehensive revenue and expense
Other financial assets:
New Zealand Government bonds 179 164 179 164
Shares (designated) 606 466 606 466
Total 785 630 785 630
PBE IPSAS 30.11(g) Financial liabilities measured at amortised cost
Payables 15,191 12,870 16,665 13,724
Secured loans 16,252 0 16,252 0
Total financial liabilities at amortised cost 31,443 12,870 32,917 13,724

24C Financial instrument risks

Guidance – The credit risk exposure by credit rating disclosure has been updated to remove information about counterparties without credit ratings and to provide information about whether impairment is based on 12-month or lifetime expected credit losses.
PBE IPSAS 30.42M Credit risk exposure by credit risk rating grades
The gross carrying amount of financial assets, excluding receivables, by credit rating is provided below by reference to Standard and Poor’s credit ratings
Institute Group
2021
$000
2020
$000
2021
$000
2020
$000
Cash at bank and term deposits
AA 10,217 16,352 21,306 24,141
AA– 5,501 8,805 11,473 12,999
Total cash at bank and term deposits 15,718 25,157 32,779 37,140
Government bonds
AAA 179 164 179 164
Derivative financial instrument assets
AA 203 17 203 17
Managed fund (bonds)
AAA– 0 0 936 1,026
AA– 0 0 2,246 2,462
A 0 0 562 615
Total managed fund 0 0 3,744 4,103
All instruments in this table have a loss allowance based on 12-month expected credit losses.

Adoption of PBE IPSAS 41 Financial Instruments

Guidance – This note illustrates possible transition-related disclosures that would be made only in the first financial statements prepared using PBE IPSAS 41.
PBE IPSAS 3.33(a)
PBE IPSAS 41.156
The Council and group have elected to early adopt PBE IPSAS 41 Financial Instruments.
PBE IPSAS 3.33(b) In accordance with the transitional provisions of PBE IPSAS 41, the Institute has elected not to restate the information for previous years to comply with PBE IPSAS 41. The comparative information continues to be reported under PBE IPSAS 29. Adjustments arising from the adoption of PBE IPSAS 41 are recognised in opening equity at 1 January 2021.
PBE IPSAS 3.33(c) Accounting policies have been updated to comply with PBE IPSAS 41. The main updates are:
  • Note 7 Receivables: This policy has been updated to reflect that the impairment of short-term receivables is now determined by applying a lifetime expected credit loss model.
  • Note 9 Investments:
    • Term deposiment bonds, and loans to subsidiaries: This policy has been updated to explaits, Governn that a loss allowance for expected credit losses is recognised only if the estimated loss allowance is not trivial.
    • Share investments: This policy has been updated to remove references to impairment losses, as PBE IPSAS 41 no longer requires identification of impairment for equity investments measured at fair value through other comprehensive revenue and expense. Also, on disposal, the accumulated gains/losses are no longer transferred to surplus/(deficit) but are transferred to general funds.
On the date of initial application of PBE IPSAS 41, being 1 January 2021, the classification of financial instruments under PBE IPSAS 29 and PBE IPSAS 41 is as follows:
PBE IPSAS 30.49I Institute
Measurement category Carrying amount
Original PBE IPSAS 29 category New PBE IPSAS 41 category Closing balance 31 December 2020 (PBE IPSAS 29) Adoption of PBE IPSAS 41 adjustment Opening balance 1 January 2021 (PBE IPSAS 41)
$000 $000 $000
Cash at bank and on hand Loans and receivables Amortised cost 359 0 359
Call deposits Loans and receivables Amortised cost 1,849 0 1,849
Term deposits Loans and receivables Amortised cost 22,949 0 22,949
Receivables Loans and receivables Amortised cost 5,217 (120) 5,097
Derivative financial instruments FVTSD FVTSD – Mandatory 203 0 203
New Zealand Government bonds FVTOCRE FVTOCRE 179 0 179
Managed funds FVTSD – Held for trading FVTSD – Mandatory 0 0 0
Shares FVTOCRE FVTOCRE – Designated 606 0 606
Total financial assets 31,362 (120) 31,242
FVTOCRE = Fair Value through Other Comprehensive Revenue and Expense.

FVTSD = Fair Value through Surplus or Deficit.

The measurement categories and carrying amounts for financial liabilities have not changed between the closing 31 December 2020 and opening 1 January 2021 dates as a result of the transition to PBE IPSAS 41.
       
Group
Measurement category Carrying amount
Original PBE IPSAS 29 category New PBE IPSAS 41 category Closing balance 31 December 2020 (PBE IPSAS 29) Adoption of PBE IPSAS 41 adjustment Opening balance 1 January 2021 (PBE IPSAS 41)
$000 $000 $000
Cash at bank and on hand Loans and receivables Amortised cost 4,057 0 4,057
Call deposits Loans and receivables Amortised cost 1,849 0 1,849
Term deposits Loans and receivables Amortised cost 33,786 0 33,786
Receivables Loans and receivables Amortised cost 7,094 (120) 6,974
Derivative financial instruments FVTSD FVTSD 203 0 203
New Zealand Government bonds FVTOCRE FVTOCRE 179 0 179
Managed funds FVTSD – Held for trading FVTSD – Mandatory 8,320 0 8,320
Shares FVTOCRE FVTOCRE – Designated 606 0 606
Total financial assets 56,094 55,974
FVTOCRE = Fair Value through Other Comprehensive Revenue and Expenses.

FVTSD = Fair Value Through Surplus or Deficit.

The measurement categories and carrying amounts for financial liabilities have not changed between the closing 31 December 2020 and opening 1 January 2021 dates as a result of the transition to PBE IPSAS 41.