E.75i
STATEMENT OF PERFORMANCE
EXPECTATIONS
2015/2016
E.75
Table of Contents
Statement of Responsibility
2
Statement of Performance Expectations
3
Part One – Our operational outputs
5
Managing the Government’s Investment in the Tertiary Education Sector
5
Ownership Monitoring of Tertiary Education Institutions
7
Tertiary Education and Training Advice
8
Part Two – Tertiary education sector outputs
9
Tertiary Education: Student Achievement Component
9
Training for Designated Groups
12
Community Education
13
Tertiary Education Grants and Other Funding
15
Centres of Research Excellence
17
Performance-Based Research Fund
18
Tertiary Scholarships and Awards
19
Support to Apprentices
20
Literacy and Numeracy Assessment Tool
21
Part Three – Forecast Financial Statements
22
2
Statement of Responsibility
This Statement of Performance Expectations 2015/16 is produced in accordance with the requirements of sections
149B to 149M of the Crown Entities Act 2004.
We have prepared this statement of performance expectations as required under the Crown Entities Act 2004. We take responsibility for the statement’s content, including the assumptions used in preparing the forecast financial
statements and the other required disclosures. The Tertiary Education Commission will not be updating these
prospective financial statements following their publication.
We use and maintain internal controls to ensure the integrity and reliability of our performance and financial reporting.
We certify that the information contained in this Report is consistent with the appropriations contained in the
Estimates of Appropriations for the year ending 30 June 2016 that were laid before the House of Representatives
under section 9 of the Public Finance Act 1989.
Signed on behalf of the Board of the Tertiary Education Commission:
JOHN SPENCER
CHAIR
TERTIARY EDUCATION COMMISSION
June 2015
NIGEL GOULD
CHAIR
AUDIT AND RISK COMMITTEE
TERTIARY EDUCATION COMMISSION
June 2015
3
Statement of Performance Expectations
The purpose of a Statement of Performance Expectations is to:
• set annual performance expectations
• provide a base against which actual performance can be assessed
• provide an explanation of how performance will be assessed
• provide forecast financial statements.
Our Statement of Performance Expectations 2015/16 complements our Statement of Intent 2015/16-2018/19 (SOI). The
SOI describes what the Tertiary Education Commission Te Amorangi Mätauranga Matua (TEC) intends to achieve over
the next four years.
The TEC is charged with giving effect to the Tertiary Education Strategy 2014-19 and invests in the provision of
tertiary education, training and research.
The Tertiary Education Strategy sets out six strategic priorities that will help to deliver what New Zealand needs from
tertiary education:
• Priority 1: Delivering skills for industry
• Priority 2: Getting at-risk young people into a career
• Priority 3: Boosting achievement of Mäori and Pasifika
• Priority 4: Improving adult literacy and numeracy
• Priority 5: Strengthening research-based institutions
• Priority 6: Growing international linkages.
The TEC is one of a large number of organisations working to support and enhance what our tertiary education
system delivers for New Zealanders.
4
The table below shows how our operational outputs, the tertiary education sector outputs and our impacts link to
the Tertiary Education Strategy priorities.
THE TERTIARY EDUCATION STRATEGY
PRIORITY 1
Delivering
skills for
industry
PRIORITY 2
PRIORITY 3
Getting at-risk
young people
into a career
Boosting
achievement
for Mäori and
Pasifika
PRIORITY 4
Improving
adult literacy
and numeracy
PRIORITY 5
PRIORITY 6
Strengthening
research-based
institutions
Growing
international
linkages
WHAT WE WANT TO ACHIEVE – OUR IMPACTS
An increased proportion of the
population with a tertiary qualification
Priorities 1,2,3,4,5
WHAT WE DO
OUR OUTPUTS
(REFER TO PAGES 5-8)
Managing the Government’s Investment in the Tertiary Education Sector
$39.955 million
Ownership Monitoring of
Tertiary Education Institutions
$2.567 million
Tertiary Education and Training Advice
$3.837 million
A tertiary system that is more
responsive to the needs of employers
and learners Priorities 1,2,3,4,5,6
Higher-quality and more relevant
research Priorities 5,6
HOW WE INVEST
TERTIARY EDUCATION SECTOR OUTPUTS
(REFER TO PAGES 9-21)
TEACHING AND LEARNING
RESEARCH
Tertiary Education Student
Achievement Component
$2,076.803 million
Community Education
$72.923 million
Centres of
Research Excellence
$50.705 million
Training for Designated
Groups
$321.080 million
Tertiary Education Grants
and Other Funding
$32.120 million
Performance-Based
Research Fund
$293.750 million
Secondary-Tertiary
Interface
$16.676 million
English for Migrants
$0.807 million
BENEFITS AND OTHER UNREQUITED EXPENSES
NON-DEPARTMENTAL
CAPITAL EXPENDITURE
Tertiary Scholarships and Awards
$12.856 million
Literacy and Numeracy
Assessment Tool
$0.825 million
Support to Apprentices
$3.000 million
5
Part One – Our operational outputs
Funding the activities of the Tertiary Education Commission
The TEC has three key operational output classes:
• Managing the Government’s Investment in the Tertiary Education Sector
• Ownership Monitoring of Tertiary Education Institutions
• Tertiary Education and Training Advice.
MANAGING THE GOVERNMENT’S INVESTMENT IN THE TERTIARY EDUCATION SECTOR
This appropriation is limited to developing, implementing and managing an investment system that aligns planning,
funding, monitoring and quality assurance of tertiary education in accordance with the provisions of the Education
Act 1989 and other relevant legislation.
This appropriation is intended to achieve effective investment in the tertiary education sector by ensuring that
education, training and research activities align with Government priorities and outcomes for tertiary education.
Cost and funding
2015/16
$000
Income
Crown – Managing the Government’s Investment in the Tertiary Education Sector
39,955
Immigration NZ – Funding for Administration of English for Migrants
74
Other
8
Interest on Bank Deposits
1,802
Total income
41,839
Expenses
40,593
Net funded to the TEC reserves
1,246
The TEC manages the Government’s investment in the tertiary education sector in three main ways:
• Managing the investment system
Our key activities in managing the investment system include assessing and approving Investment Plans and
contracts against gazetted content and criteria and making payments after Investment Plans and contracts have
been approved.
• Monitoring investment in tertiary education organisations
We monitor and analyse how well tertiary education organisations govern and manage themselves. We also audit
the performance of tertiary education organisations. We undertake evaluations and quantitative studies of key
initiatives as part of our programme to monitor and report on sector, fund and investment performance.
• Providing information
We provide information and advice to government (including ownership monitoring advice) about tertiary
education organisations and on the tertiary education sector. We also provide information to the sector, students,
other government agencies and external stakeholders. We publish information on tertiary education
organisations’ performance, funds, educational performance and research.
6
How performance will be measured
Dimension
Actual
2013/14
Target
2014/15
Target
2015/16
Managing the investment system
Plans for tertiary education organisations demonstrate
evidence of alignment with employer, community and
learner needs
Quality
100%
100%
100%
Plans for tertiary education organisations include
targets for improving achievement rates for priority
groups in the Tertiary Education Strategy
Quality
100%
100%
100%
Quality
Quantity
Timeliness
100%
100%
100%
Quantity
40
25-30
audits
25-30
audits
Timeliness
95%
95%
95%
Quality
100%
100%
100%
Quantity
100%
100%
100%
Quality
100%
100%
100%
Quantity
New
measure
New
measure
5-7
Payments are made to tertiary education organisations
as per the agreed contractual terms and conditions
Monitoring investment in tertiary education organisations (TEOs)
Number of tertiary education organisations audited by
the Tertiary Education Commission
Percentage of audits completed within 70 days
according to audit compliance standards
Percentage of TEOs where an appropriate action plan is
initiated (as per the TEC performance consequences
framework) on the basis of an identified material breach
of TEC’s rules or requirements
Percentage of Investment Plans that are monitored
Appropriate actions are undertaken in accordance with
the Performance Consequences Framework
http://www.tec.govt.nz/Funding/Monitoring-andreporting/Performance-Consequences-Framework/
The number of tertiary education organisations that are
the subject of a focused review
Evaluations and quantitative studies of TEC initiatives
are undertaken in accordance with agreed standards
Number of evaluations and quantitative studies of TEC
initiatives undertaken
Quality
100%
100%
100%
Quantity
4
3
3
New
measure
New
measure
Baseline
to be
established
Providing information
Percentage of independently assessed externally
focused publications that meet 6 or more elements of
the TEC Plain English Standard
Quality
7
OWNERSHIP MONITORING OF TERTIARY EDUCATION INSTITUTIONS
This appropriation is limited to monitoring and advisory services – including interventions – on the Government’s
ownership interest in tertiary education institutions.
This appropriation is intended to achieve protection of the Crown’s ownership interest in tertiary education
institutions through monitoring risks and financial viability and providing advice on tertiary education institution
council appointments.
2015/16
$000
Cost and funding
Income
Crown – Ownership Monitoring of Tertiary Education Institutions
2,567
Other
–
Total income
2,567
Expenses
4,294
Net funded to the TEC reserves
(1,727)
How performance will be measured
Dimension
Actual
2013/14
Target
2014/15
Target
2015/16
Ownership risks are assessed and appropriate
mitigation strategies are put in place
Quality
100%
100%
100%
Ownerships risks are reported and advice is provided to the Minister
Quality
100%
100%
100%
Percentage of TEIs where close monitoring and
engagement is taken after having received a high-risk
rating under Financial Monitoring Framework
Quantity
100%
100%
100%
Recommendations on ministerial appointments to TEI
councils are made and the appointment process is
managed effectively in a timely way
Timeliness
100%
100%
100%
Performance measures
8
TERTIARY EDUCATION AND TRAINING ADVICE
This appropriation is limited to providing advice and support to Ministers on the tertiary sector and tertiary education
and training issues.
This appropriation is intended to achieve the delivery of timely and high-quality advice and support to Ministers on
the tertiary sector and tertiary education and training issues.
The key activity in this output is to provide information and advisory services to the Minister.
2015/16
$000
Cost and funding
Income
Crown – Tertiary Education and Training Advice
3,837
Other
–
Total income
3,837
Expenses
5,692
Net funded to the TEC reserves
(1,855)
How performance will be measured
Performance measures
Percentage of ministerial items provided to
Ministers requiring redraft due to avoidable
errors. Avoidable errors means factual, spelling,
grammatical or formatting errors
Percentage of ministerial items provided to
Ministers within agreed timeframes
Number of adverse findings from the Office of the Ombudsman or the Office of the Privacy Commissioner in relation to the TEC’s
decisions on Official Information Act 1982 or
Privacy Act 1993 requests
Dimension
Actual
2013/14
Target
2014/15
Target
2015/16
Quality
4%
<5%
<5%
Timeliness
95%
95%
95%
Quantity
New
measure
New
measure
0
9
Part Two –
Tertiary education sector outputs
The TEC is one of seven State sector education agencies that work collaboratively towards the Government’s vision of a
world-leading education system that equips all New Zealanders with the knowledge, skills and values to be successful.
Teaching and Learning
TERTIARY EDUCATION: STUDENT ACHIEVEMENT COMPONENT
This appropriation is limited to funding for teaching and learning services for enrolled students in approved courses
at tertiary education organisations to achieve recognised tertiary qualifications.
This appropriation is intended to achieve learners’ attainment of recognised tertiary qualifications by funding
education and training opportunities.
Funding education and training links to the Tertiary Education Strategy Priorities 1-5:
• Priority 1: Delivering skills for industry
• Priority 2: Getting at-risk young people into a career
• Priority 3: Boosting achievement of Mäori and Pasifika
• Priority 4: Improving adult literacy and numeracy
• Priority 5: Strengthening research-based institutions.
Tertiary Education: Student Achievement Component Funding
2015/16
Forecast
$000
Revenue
2,076,803
Expenditure
2,076,803
Net funding to be returned to the Crown
–
10
How performance will be measured
Performance measures
Actual Funded
(estimate)
2013
Actual Funded
(estimate)
2014
Forecast
2015
Target
2016
Target
2017
Assessment of Performance
Number of funded
Domestic Equivalent
Full-time Students (EFTS)
at Levels 1 and 2
15,294
13,717
12,800
±3%
12,700
±3%
12,700
±3%
118,508
117,857
111,600
±5%
111,200
±5%
109,300
±5%
• Institutes of
Technology and
Polytechnics (ITP)
57,830
56,280
52,600
±5%
52,500
±5%
51,600
±5%
• Wänanga
17,648
18,348
17,600
±5%
17,500
±5%
18,300
±5%
• Private Training
Establishments
23,977
23,322
21,400
±5%
21,300
±5%
22,000
±5%
233,257
229,524
226,700
(Note 2)
225,900
(Note 2)
224,600
(Note 2)
Number of funded
Domestic Equivalent
Full-time Students (EFTS)
at Level 3 and above by
sub-sector (Note 1)
• Universities
Total EFTS
Note 1 – The Student Achievement Component (SAC) Level 3 and above forecast and target measures, by sub-sector, are shown at 95% of expected delivery.
Note 2 – Total EFTS represents the aggregation of all SAC commitments at 100% of expected delivery.
11
Investment Plan performance commitments targets for Student Achievement Component funding
Student Achievement Component
funding
2013 Sector
Commitment
2013 Actual
2015 Sector
Commitment
2016 Sector
Commitment
Proportion of SAC-funded Mäori
enrolments at NZQF Levels 4 and above
>15%
18%
18%
19%
Proportion of SAC-funded Pasifika
enrolments at NZQF Levels 4 and above
>7%
9%
10%
10%
>51%
63%
64%
64%
2013
Commitment
2013 Actual
2015
Commitment
2016
Commitment
83%
83%
84%
85%
Mäori learners at NZQF Levels 4 and above
78%
78%
81%
82%
Pasifika learners at NZQF Levels 4 and above
75%
73%
77%
78%
Under-25-year-old learners at NZQF
Levels 4 and above
84%
85%
85%
86%
70%
78%
77%
77%
Mäori learners at NZQF Levels 4 and above
63%
71%
71%
72%
Pasifika learners at NZQF Levels 4 and above
60%
63%
66%
68%
Under-25-year-old learners at NZQF
Levels 4 and above
68%
71%
71%
71%
36%
39%
40%
41%
66%
73%
76%
77%
Proportion of SAC-funded under-25year-old enrolments at NZQF Levels 4
and above
Sector performance commitment shifts
linked to funding
Course completion
All learners
Qualification completion
All learners
Progression
From NZQF Levels 1-3 to Levels 4 and above for all learners
Retention
For all learners across all NZQF all levels and all learners
Actuals for 2014 were unavailable at time of publishing.
12
TRAINING FOR DESIGNATED GROUPS
This appropriation is limited to the purchasing and arranging of training linked to the New Zealand Qualifications
Framework and the purchase of both on-job and off-job training places, including delivery of fully or partially funded
training places and other industry-training related projects.
This appropriation is intended to achieve an increase in the number of young people and employees with
qualifications valued by employers through investing in training.
Funding qualifications valued by employers links to the Tertiary Education Strategy Priorities 1 and 2:
• Priority 1: Delivering skills for industry
• Priority 2: Getting at-risk young people into a career.
Training for Designated Groups
2015/16
Forecast
$000
Income
321,080
Expenses
321,080
Net funding to be returned to the Crown
–
How performance will be measured
Actual
Funded
(estimate)
2013
Actual
Funded
(estimate)
2014
Forecast
2015
(Note 1)
Target
2016
(Note 1)
Target
2017
(Note 1)
• Industry Training – funded standard
training measures
33,376
26,949
27,600
±5%
27,600
±5%
27,900
±5%
• Apprentices – funded standard training measures
11,932
13,301
15,400
±5%
15,400
±5%
15,400
±5%
7,380
9,429
9,400
±5%
9,400
±5%
9,400
±5%
13,121
13,606
373 schools
371 schools
13,300
±5%
Up to
375 schools
13,300
±5%
Up to
375 schools
13,300
±5%
Up to
375 schools
Performance measures
Assessment of Performance
Total training:
• Youth Guarantee – total funded
Equivalent Full-time Students (EFTS)
• Gateway – total participants and
number of schools
Note 1 – The forecast and target measures are shown at 95% of expected delivery.
Industry training participation and educational performance measure forecasting is being developed.
13
COMMUNITY EDUCATION
This appropriation is limited to funding for adult and community education and literacy, numeracy and English
language provision.
This appropriation is intended to achieve improvement in literacy and numeracy skills for learners who have low skills
in these areas by funding foundational learning programmes.
Funding foundational learning programmes links to the Tertiary Education Strategy Priority 4:
• Priority 4: Improving adult literacy and numeracy.
Community Education
2015/16
Forecast
$000
Revenue
72,923
Expenditure
72,923
Net funding to be returned to the Crown
–
14
How performance will be measured
Actual
Funded
2013
Actual
Funded
2014
Forecast
2015
(Note 1)
Target
2016
(Note 1)
Target
2017
( Note 1)
377,069
366,184
375,300
±5%
375,300
±5%
375,300
±5%
1,721
1,688
2,000
±5%
2,000
±5%
2,000
±5%
• as Mäori or Pasifika
35%
32%
• with English-language needs
30%
32%
All-50%
All-50%
All-50%
• as having low or no formal qualifications
61%
57%
Intensive Literacy and Numeracy
– funded number of learners
4,627
5,016
4,500
±5%
4,500
±5%
4,500
±5%
English for Speakers of Other Languages (ESOL)
– funded number of learners, including:
1,370
3,456
3,500
(Note 2)
3,500
(Note 2)
2,700
(Note 2)
• ESOL funded number of learners
894
2,932
2,800
±5%
2,800
±5%
2,000
±5%
• Refugee English funded number of learners
476
524
500
±5%
500
±5%
500
±5%
Workplace Literacy Fund – funded number of
learners, including:
5,403
6,183
5,300
(Note 2)
5,400
(Note 2)
5,400
(Note 2)
• Tertiary Education Organisations led (Note 3)
2,767
3,205
4,200
±5%
4,300
±5%
4,300
±5%
• employee targeted (Note 3)
1,724
2,069
–
–
–
912
909
900
±20%
900
±20%
900
±20%
Performance measures
Adult and community education
Total number of school-based adult and
community education hours funded
Number of funded Domestic Equivalent Fulltime Students (EFTS) in Tertiary Education
Institutions-based programmes
Among the priority groups identified in the
Tertiary Education Strategy, percentage of
learners identified
Literacy and numeracy
• employer led (Note 1)
Note 1 – The forecast and target measures are shown at 95% of expected delivery, with the exception of Workplace
Literacy – employer led, which has a range of 700 to 1,100.
Note 2 – The totals represent the aggregation of all commitments at 100% of expected delivery.
Note 3 – The decrease for the Workplace Literacy Fund is owing to the rationalisation of this fund, including a fixed
funding rate. As part of this rationalisation, employee targeted provision was incorporated into the Tertiary Education
Organisations led part of the Workplace Literacy Fund. This took effect in January 2015.
15
TERTIARY EDUCATION GRANTS AND OTHER FUNDING
This appropriation is limited to providing contestable funding and miscellaneous funding to tertiary education organisations.
This appropriation is intended to achieve improvement in educational outcomes for priority learner groups and
enhance the educational capability of tertiary education organisations by investing in activities focused on these
groups and organisations.
Investing in priority learner group activities links to the Tertiary Education Strategy Priorities 3 and 4:
• Priority 3: Boosting achievement of Mäori and Pasifika
• Priority 4: Improving adult literacy and numeracy.
2015/16
Forecast
$000
Tertiary Education Grants and Other Funding
Revenue
32,120
Expenditure
32,120
Net funding to be returned to the Crown
–
How performance will be measured
Performance measure
Plans and funding agreements are consistent with
funding rules and objective of fund
Dimension
Actual
2013/14
Target
2014/15
Target
2015/16
Quality
100%
100%
100%
16
SECONDARY-TERTIARY INTERFACE (VOTE EDUCATION)
The Ministry of Education provides funding to the TEC from this appropriation to fund Trades Academies in the
tertiary setting. The Ministry of Education is responsible for reporting the performance of this appropriation.
Secondary-Tertiary Interface (Vote Education)
2015/16
Forecast
$000
Revenue
16,676
Expenditure
16,676
Net funding to be returned to the Crown
–
ENGLISH FOR MIGRANTS (VOTE IMMIGRATION)
The TEC administers a programme under contract with Immigration New Zealand (English for Migrants). Immigration
New Zealand is responsible for reporting the performance of this appropriation. English for Migrants (Vote Immigration)
2015/16
Forecast
$000
Revenue
0.807
Expenditure
0.807
Net funding to be returned to the Crown
–
17
Research
CENTRES OF RESEARCH EXCELLENCE
This appropriation is limited to the purchase of cooperative and collaborative tertiary research in areas of research
strength in the tertiary education sector through the contestable Centres of Research Excellence Fund.
This appropriation is intended to achieve delivery of high-quality research by purchasing cooperative and
collaborative research in areas of research strength in the tertiary education sector.
Purchasing research is linked to the Tertiary Education Strategy Priorities 5 and 6:
• Priority 5: Strengthening research-based institutions
• Priority 6: Growing international linkages.
2015/16
Forecast
$000
Centres of Research Excellence
Income
50,705
Expenses
50,705
Net funding to be returned to the Crown
–
How performance will be measured
Performance measure
Centres of Research Excellence Annual Plans are
assessed against assessment criteria and have been
revised, where appropriate, by end of March (Note 1)
Centres of Research Excellence Annual Reports are
reviewed against research plans and meet assessment
criteria (Note 2)
Dimension
Actual
2013/14
Target
2014/15
Target
2015/16
Quality
Achieved
Achieved
Achieved
Quality
Achieved
Achieved
Achieved
Note 1 – The key criteria are compliance with contractual requirements for annual plans and alignment of activities
with the generic Centre of Research Excellence (CoRE) purpose and the individual CoRE’s strategy.
Note 2 – The key criteria are compliance with contractual reporting requirements and delivery on, and alignment with,
the predecessor annual plan.
18
PERFORMANCE-BASED RESEARCH FUND
This appropriation is limited to funding research and research-based teaching on the basis of measured research
quality in tertiary education organisations.
This appropriation is intended to achieve an increase in, or maintain the quality of, research and research-based
teaching and learning and to improve investment in research within the tertiary sector.
Funding research and research-based teaching is linked to the Tertiary Education Strategy Priorities 5 and 6:
• Priority 5: Strengthening research-based institutions
• Priority 6: Growing international linkages.
2015/16
Forecast
$000
Performance-Based Research Fund
Revenue
293,750
Expenditure
293,750
Net funding to be returned to the Crown
–
How performance will be measured
Performance measures
Dimension
Actual
2013
Target
2014
Quantity
3,971
3,916
Quantity
-3.5%
2-4%
Research degree completions
(measured by Performance-Based
Research Fund (PBRF) – eligible research
degree completions)
Percentage increase in amount of
external income for PBRF – eligible
providers
Target
2015
Target
3,900
3,900
2%
2%
±5%
2016
±5%
19
Benefits and other Unrequited Expenses
TERTIARY SCHOLARSHIPS AND AWARDS
This appropriation is limited to providing scholarships for tertiary students and other awards in the tertiary sector,
and the provision of scholarships and bursaries to Mäori and Pasifika students. It includes training assistance under
Queen Elizabeth 11 Study Awards and recognition of outstanding tertiary education teachers.
This appropriation is intended to provide a stipend for domestic sixth-year medical trainee interns and other scholarships.
The TEC is only responsible for two components of this appropriation. The Ministry of Education is responsible for the
other components. The TEC responsible for:
• Trainee Medical Intern Grant
• Tertiary Teaching Awards.
Tertiary Scholarships and Awards
2015/16
Forecast
$000
Revenue
12,856
Expenditure
12,856
Net funding to be returned to the Crown
–
An exemption was granted under s.15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information
is unlikely to be informative because this appropriation is solely for payments of Tertiary Scholarships and Awards
under the Education Act 1989. Performance information relating to the administration of the payment is provided
under the Stewardship of the Tertiary System appropriation.
20
SUPPORT TO APPRENTICES
This appropriation is limited to payments to New Zealand Apprentices who are eligible for the Apprenticeships Re-boot, and Mäori and Pasifika Trades Trainees towards their tools and other training related costs.
This appropriation is intended to assist people establishing a career in industry by providing financial assistance.
In 2015/16 this appropriation relates to funding Mäori and Pasifika Trades Training (MPTT) tools for employees and is
linked to the Tertiary Education Strategy Priorities 1 and 3:
• Priority 1: Delivering skills for industry
• Priority 3: Boosting achievement of Mäori and Pasifika.
Support to Apprentices
2015/16
Forecast
$000
Revenue
3,000
Expenditure
3,000
Net funding to be returned to the Crown
–
An exemption was granted under s.15D(2)(b)(ii) of the Public Finance Act 1989, as additional performance information
is unlikely to be informative because this appropriation is solely for payments of Apprenticeships Re-boot subsidy
under the Education Act 1989. Performance information relating to the administration of the payment is provided
under the Managing the Government’s Investment in the Tertiary Education Sector appropriation.
21
Non-departmental Capital Expenditure
LITERACY AND NUMERACY ASSESSMENT TOOL
This appropriation is limited to development of the online assessment tool for adult and youth literacy and numeracy.
This appropriation is intended to achieve the delivery of online assessment tools for adult and youth literacy and
numeracy to improve literacy and numeracy skills.
Development of the online assessment tool links to the Tertiary Education Strategy Priority 4:
• Priority 4: Improving adult literacy and numeracy.
2015/16
Forecast
$000
Literacy and Numeracy Assessment Tool
Revenue
825
Expenditure
825
Net funding to be returned to the Crown
–
How performance will be measured
Performance measure
Online assessment tools for adult literacy and
numeracy are developed on time and are fit for purpose
Dimension
Quality
Timeliness
Actual
2013/14
Target
2014/15
Target
2015/16
Achieved
Achieved
Achieved
22
Part Three –
Forecast Financial Statements
Forecast Statement of Comprehensive Revenue and Expenses
FOR THE YEARS ENDING 30 JUNE
Budget
2015
$000
Budget
2016
$000
Forecast
2017
$000
Forecast
2018
$000
Forecast
2019
$000
REVENUE
Operating Revenue:
Vote Tertiary Education – Ministry of Education (MoE)
47,140
46,359
46,119
47,264
45,853
Contract Revenue – Immigration New Zealand (INZ)
76
74
73
73
73
Other Revenue
99
8
–
–
–
47,315
46,441
46,192
47,337
45,926
2,850,409
2,879,913
2,891,495
2,879,493
2,881,396
Total Operating Revenue
Grants Revenue:
Vote Education/Tertiary Education – MoE
Contract Revenue – INZ
Total Grants Revenue
828
807
807
807
807
2,851,237
2,880,720
2,892,302
2,880,300
2,882,203
1,043
1,802
1,316
1,412
1,356
–
500
500
500
500
Finance Revenue:
Interest Income on Bank Deposits – Operating
Interest Income on Bank Deposits – Grants
Total Finance Revenue
1,043
2,302
1,816
1,912
1,856
2,899,595
2,929,463
2,940,310
2,929,549
2,929,985
Personnel
24,832
26,892
25,498
26,005
26,569
Operating
17,118
18,768
17,655
17,500
15,487
803
777
908
816
801
TOTAL REVENUE
EXPENSES
Operating Expenses:
Depreciation
Amortisation
4,387
4,142
3,947
4,428
4,425
47,140
50,579
48,008
48,749
47,282
2,850,409
2,879,913
2,891,495
2,879,493
2,881,396
828
807
807
807
807
Total Grants Expenses
2,851,237
2,880,720
2,892,302
2,880,300
2,882,203
TOTAL EXPENSES
2,898,377
2,931,299
2,940,310
2,929,049
2,929,485
1,218
(1) (2,336)
(1) (500)
–
–
–
500
500
500
500
–
500
500
Total Operating Expenses
Grants Expenses:
Grants Expenses – MoE
Contract Expenses – INZ
Surplus/(Deficit)
Operating Surplus/(Deficit)
Grants Surplus/(Deficit)
Total Comprehensive Revenue and Expenses
for the Year
1,218
(1,836)
(1) The TEC plans to operate at a deficit for two years which will be funded from a surplus generated in 2014/15.
23
Forecast Statement of Changes in Equity
FOR THE YEARS ENDING 30 JUNE
Balance at 1 July
Capital Contribution – Vote Tertiary Education
Total Comprehensive Revenue and Expenses
Repayment of Grant Surplus
Balance at 30 June
Budget
2015
$000
Budget
2016
$000
Forecast
2017
$000
Forecast
2018
$000
Forecast
2019
$000
22,161
(2) 26,792
25,281
25,281
22,281
920
825
500
–
–
1,218
(1,836)
–
500
500
–
(500)
(500)
(500)
(500)
(2) 24,299
25,281
25,281
25,281
25,281
(2) The 2015 Closing Equity balance of $24,299 differs to the 2016 opening Equity balance of $26,792 owing to Budget 2016 using
closing forecast not closing budget figures.
24
Forecast Statement of Financial Position
AS AT 30 JUNE
Budget
2015
$000
Current Assets
Cash and Cash Equivalents
Prepayments
Debtors and Other Receivables
Budget
2016
$000
Forecast
2017
$000
Forecast
2018
$000
Forecast
2019
$000
37,114
40,683
41,302
43,329
45,998
487
336
350
364
378
1,150
1,196
1,196
1,196
1,196
38,751
42,215
42,848
44,889
47,572
Property, Plant and Equipment
1,814
4,666
5,058
4,742
4,441
Intangible Assets (Software)
9,475
7,914
8,020
6,082
3,487
Total Current Assets
Non-Current Assets
Work in Progress
2,891
3,100
1,800
1,800
1,800
Total Non-Current Assets
14,180
15,680
14,878
12,624
9,728
Total Assets
52,931
57,895
57,726
57,513
57,300
2,198
9,762
8,849
7,896
6,943
366
133
143
144
144
2,417
1,536
2,270
3,009
3,749
English for Migrants – Revenue in Advance
980
7,690
7,690
7,690
7,690
Provisions for Lease
204
206
206
206
206
Current Liabilities
Creditors and Other Payables
GST Payable
Employee Entitlements
Repayment of Grants Surplus
7,530
500
500
500
500
13,695
19,827
19,658
19,445
19,232
14,339
12,303
12,303
12,303
12,303
598
484
484
484
484
Total Non-Current Liabilities
14,937
12,787
12,787
12,787
12,787
Total Liabilities
28,632
32,614
32,445
32,232
32,019
Net Assets
24,299
25,281
25,281
25,281
25,281
General Funds
24,299
25,281
25,281
25,281
25,281
Total Equity
24,299
25,281
25,281
25,281
25,281
Total Current Liabilities
Non-Current Liabilities
English for Migrants – Revenue in Advance
Employee Entitlements
Equity
25
Forecast Statement of Cash Flows
FOR THE YEARS ENDING 30 JUNE
Budget
2015
$000
Budget
2016
$000
Forecast
2017
$000
Forecast
2018
$000
Forecast
2019
$000
47,140
46,359
46,119
47,264
45,853
Operating INZ
76
74
73
73
73
Operating Other
99
8
–
–
–
2,845,409
2,879,913
2,891,495
2,879,493
2,881,396
Cash Flows from Operating Activities
Cash was provided from:
Operating MoE
Grants MoE
Grants INZ
3,282
807
807
807
807
2,896,006
2,927,161
2,938,494
2,927,637
2,928,129
(2,851,237)
(2,880,486)
(2,892,291)
(2,880,299)
(2,882,203)
Payments to Employees
(24,103)
(25,405)
(24,758)
(25,261)
(25,825)
Other Operating Payments
(16,081)
(18,446)
(16,613)
(16,511)
(14,867)
(1,833)
(1,982)
(1,983)
(1,961)
(1,591)
63
(13)
7
–
–
(2,893,191)
(2,926,332)
(2,935,138)
(2,924,032)
(2,924,486)
2,815
829
2,856
3,605
3,643
1,043
1,802
1,316
1,412
1,356
–
500
500
500
500
1,043
2,302
1,816
1,912
1,856
Purchase of Property, Plant and Equipment
(1,645)
(4,805)
(500)
(500)
(500)
Purchase of Intangible Assets (Software)
(6,084)
(5,608)
(3,553)
(2,490)
(1,830)
(7,729)
(10,413)
(4,053)
(2,990)
(2,330)
Net Cash Flows from Investing Activities
(6,686)
(8,111)
(2,237)
(1,078)
(474)
Cash was applied to:
Grants Payments
Capital Charge
GST – Net
Net Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash was provided from:
Interest Income on Bank Deposits – Grants
Interest Income on Bank Deposits – Operating
Cash was applied to:
Cash Flows from Financing Activities
Cash was provided from:
Capital contribution MoE
920
825
500
–
–
Repayment of Grants Surplus (net) – MoE
(325)
–
(500)
(500)
(500)
Net Cash Flows from Financing Activities
595
825
–
(500)
(500)
(3,276)
(6,457)
619
2,027
2,669
Cash and Cash Equivalents at the Start of the Year
40,390
(3) 47,140
40,683
41,302
43,329
Cash and Cash Equivalents at the End of the Year
(3) 37,114
40,683
41,302
43,349
45,998
Cash was applied to:
Net Increase/(Decrease) in Cash and Cash Equivalents
(3) The 2015 closing Cash and Cash Equivalents balance of $37,114 differs to 2016 opening Cash and Cash Equivalents balance of
$47,140 owing to Budget 2016 using closing forecast not closing budget figures.
26
Reconciliation of Total Comprehensive Revenue and Expenses
with the Net Cash Inflows from Operating Activities
FOR YEARS ENDING 30 JUNE
Budget
2015
$000
Budget
2016
$000
Forecast
2017
$000
Forecast
2018
$000
Forecast
2019
$000
1,218
(1,836)
–
500
500
803
777
908
816
801
4,387
4,142
3,947
4,428
4,425
6,408
3,083
4,855
5,744
5,726
Add/(Deduct) Movements in Working Capital
(2,550)
48
(183)
(227)
(227)
Less Interest received
(1,043)
(2,302)
(1,816)
(1,912)
(1,856)
2,815
829
2,856
3,605
3,643
Total Comprehensive Revenue and Expenses
Add/(Deduct) Non-Cash Items
Depreciation of Property, Plant and Equipment
Amortisation of Intangibles
Net Cash Flow from Operating Activities
27
Movement of Forecast Property, Plant and Equipment
Leasehold
Improvements
$000
Computer
Equipment
$000
Office
Equipment
$000
Furniture and
Fittings
$000
Motor
Vehicles
$000
Total
$000
Cost
2015 Budget
Balance at 1 July 2014
Additions
Balance at 30 June 2015
3,480
7,859
712
1,634
21
13,706
400
500
–
400
–
1,300
3,880
8,359
712
2,034
21
15,006
2,525
9,051
712
1,624
21
13,933
2016
Balance at 1 July 2015
Additions
3,500
500
–
–
–
4,000
Balance at 30 June 2016
6,025
9,551
712
1,624
21
17,933
6,025
9,551
712
1,624
21
17,933
2017
Balance at 1 July 2016
Additions
Balance at 30 June 2017
800
500
–
–
–
1,300
6,825
10,051
712
1,624
21
19,233
6,825
10,051
712
1,624
21
19,233
2018
Balance at 1 July 2017
Additions
Balance at 30 June 2018
–
500
–
–
–
500
6,825
10,551
712
1,624
21
19,733
6,825
10,551
712
1,624
21
19,733
2019
Balance at 1 July 2018
Additions
Balance at 30 June 2019
–
500
–
–
–
500
6,825
11,051
712
1,624
21
20,233
3,178
7,068
699
1,423
21
12,389
70
632
7
94
–
803
3,248
7,700
706
1,517
21
13,192
2,525
7,750
705
1,489
21
12,490
181
532
3
61
–
777
2,706
8,282
708
1,550
21
13,267
2,706
8,282
708
1,550
21
13,267
358
491
2
57
–
908
3,064
8,773
710
1,607
21
14,175
3,064
8,773
710
1,607
21
14,175
358
440
2
16
–
816
3,422
9,213
712
1,623
21
14,991
3,422
9,213
712
1,623
21
14,991
358
443
–
–
–
801
3,780
9,656
712
1,623
21
15,792
Accumulated Depreciation
2015 Budget
Balance at 1 July 2014
Depreciation Expenses
Balance at 30 June 2015
2016
Balance at 1 July 2015
Depreciation Expenses
Balance at 30 June 2016
2017
Balance at 1 July 2016
Depreciation Expenses
Balance at 30 June 2017
2018
Balance at 1 July 2017
Depreciation Expenses
Balance at 30 June 2018
2019
Balance at 1 July 2018
Depreciation Expenses
Balance at 30 June 2019
28
Movement of Forecast Property, Plant and Equipment (continued)
Leasehold
Improvements
$000
Computer
Equipment
$000
Office
Equipment
$000
Furniture and
Fittings
$000
Motor
Vehicles
$000
Total
$000
Carrying Amounts
At 1 July 2014
302
At 30 June 2015
791
13
211
–
1,317
632
659
6
517
–
1,814
–
1,301
7
135
–
1,443
At 30 June and 1 July 2016
3,319
1,269
4
74
–
4,666
At 30 June and 1 July 2017
3,761
1,278
2
17
–
5,058
At 30 June and 1 July 2018
3,403
1,338
–
1
–
4,742
At 30 June 2019
3,045
1,395
–
1
–
4,441
At 1 July 2015
29
Movement of Forecast Intangible Assets
Internally
Generated
Software
$000
Cost
2015 Budget
Balance at 1 July 2014
Additions
Balance at 30 June 2015
31,369
6,310
37,679
2016
Balance at 1 July 2015
Additions
Balance at 30 June 2016
34,304
4,998
39,302
2017
Balance at 1 July 2016
Additions
Balance at 30 June 2017
39,302
4,053
43,355
2018
Balance at 1 July 2017
Additions
Balance at 30 June 2018
43,355
2,490
45,845
2019
Balance at 1 July 2018
Additions
Balance at 30 June 2019
45,845
1,830
47,675
Accumulated Depreciation
2015 Budget
Balance at 1 July 2014
Depreciation Expenses
Balance at 30 June 2015
23,817
4,387
28,204
2016
Balance at 1 July 2015
Depreciation Expenses
Balance at 30 June 2016
27,246
4,142
31,388
2017
Balance at 1 July 2016
Depreciation Expenses
Balance at 30 June 2017
31,388
3,947
35,335
2018
Balance at 1 July 2017
Depreciation Expenses
Balance at 30 June 2018
35,335
4,428
39,763
2019
Balance at 1 July 2018
Depreciation Expenses
Balance at 30 June 2019
39,763
4,425
44,188
30
Movement of Forecast Intangible Assets (continued)
Internally
Generated
Software
$000
Carrying Amounts
At 1 July 2014
7,552
At 30 June 2015
9,475
At 1 July 2015
7,058
At 30 June and 1 July 2016
7,914
At 30 June and 1 July 2017
8,020
At 30 June and 1 July 2018
6,082
At 30 June 2019
3,487
Work in Progress
Internally
Generated
Software
$000
Property,
Plant and
Equipment
$000
Total
$000
Cost
2015 Budget
Balance at 1 July 2015
2,891
–
2,891
Additions
5,115
–
5,115
Transfer to Software/Property, Plant and Equipment
(5,115)
–
(5,115)
Balance at 30 June 2015
2,891
–
2,891
1,705
–
1,705
2016
Balance at 1 July 2015
Additions
5,593
4,800
10,393
Transfer to Software/Property, Plant and Equipment
(4,998)
(4,000)
(8,998)
Balance at 30 June 2016
2,300
800
3,100
2,300
800
3,100
2017
Balance at 1 July 2016
Additions
3,553
500
4,053
Transfer to Software/Property, Plant and Equipment
(4,053)
(1,300)
(5,353)
Balance at 30 June 2017
1,800
–
1,800
1,800
–
1,800
2018
Balance at 1 July 2017
Additions
2,490
500
2,990
Transfer to Software/Property, Plant and Equipment
(2,490)
(500)
(2,990)
Balance at 30 June 2018
1,800
–
1,800
1,800
–
1,800
2019
Balance at 1 July 2018
Additions
1,830
500
2,330
Transfer to Software/Property, Plant and Equipment
(1,830)
(500)
(2,330)
Balance at 30 June 2019
1,800
–
1,800
31
Forecast Revenue from the Crown and Planned Expenditure
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
$000
Expenditure
$000
GRANTS AND CONTRACT REVENUE
Vote Tertiary Education:
Non-Departmental Output Expenses
Community Education
72,923
72,923
Centres of Research Excellence
50,705
50,705
293,750
293,750
32,120
32,120
2,076,803
2,076,803
321,080
321,080
2,847,381
2,847,381
12,856
12,856
3,000
3,000
15,856
15,856
Performance-Based Research Fund
Tertiary Education Grants and Other Funding
Tertiary Education: Student Achievement Component
Training for Designated Groups
Total Non-Departmental Output Expenses
Benefits and Other Unrequited Expenses
Tertiary Scholarships and Awards
Support to Apprentices
Total Benefits and Other Unrequited Expenses
Vote Education:
Non-Departmental Other Expenses
Secondary Tertiary Interface
16,676
16,676
Total Non-Departmental Output Expenses
16,676
16,676
2,879,913
2,879,913
807
807
2,880,720
2,880,720
Grants Revenue – Vote Education/Tertiary Education
Contract Revenue:
Contract – Immigration New Zealand English for Migrants
Total Grants and Contract Revenue
32
Revenue to Fund the Tertiary Education Commission’s Operations
FOR THE YEAR ENDED 30 JUNE 2016
Revenue
$000
REVENUE TO FUND THE TERTIARY EDUCATION COMMISSION’S OPERATIONS
Vote Tertiary Education:
Non-Departmental Output Expenses
Managing the Government’s Investment in the Tertiary Education Sector
Tertiary Education and Training Advice
Ownership Monitoring of Tertiary Education Institutions
Vote Tertiary Education Operating Appropriations
39,955
3,837
2,567
46,359
Other Revenue
Contract – Immigration New Zealand – Funding for Administration of English for Migrants
Other Revenue
Total Operating and Contract Revenue
74
8
46,441
Non-Departmental Capital Expenditure
Literacy and Numeracy Assessment Tool
825
Total Non-Departmental Capital Expenditure
825
33
Reporting Entity
Summary of significant
accounting policies
Entities Act 2004 and was established on 1 January
Revenue
The TEC is a Crown entity as defined by the Crown
2003 pursuant to section 159C of the Education Act
1989. It is domiciled in New Zealand. The TEC’s ultimate
parent is the New Zealand Crown.
The TEC’s primary objective is to provide services to the
New Zealand public, as opposed to that of making a
financial return. Accordingly, the TEC has designated
itself as a public benefit entity (PBE) for financial
reporting purposes.
Basis of preparation
Statement of compliance
The TEC’s forecast financial statements have been
prepared in accordance with the Education Act 1989
and Crown Entities Act 2004. The purpose of the
forecast financial statements is to provide information
on the TEC’s future operating intentions, against which
it must report and be audited against at the end of the
fiscal year. Use of this information for any other
The TEC is primarily funded from the Crown. This
funding is restricted in its use for the purpose of the
TEC meeting its performance measures as specified in
this Statement of Performance Expectations.
The TEC considers there are no conditions attached to
the funding and it is recognised as revenue at the point
of entitlement.
The fair value of revenue from the Crown has been
determined to be equivalent to the amounts due in the
funding arrangements.
Grants received
Grants are recognised as revenue when they become
receivable unless there is an obligation in substance to
return the funds if conditions of the grant are not met.
If there is such an obligation, the grants are initially
recorded as grants received in advance and recognised
as revenue when conditions of the grant are satisfied.
purpose may not be appropriate. The reader of this
Capital charge
that these forecast financial statements contain no
financial year to which the charge relates.
from the forecast information presented.
Grants expenditure
The forecast financial statements have been prepared
the grant application meets the specified criteria and
Statement of Performance Expectations should note
actual results. Actual results achieved are likely to vary
in accordance with Generally Accepted Accounting
Practice in New Zealand (NZ GAAP) as appropriate for
public benefit entities and they comply with Tier 1
Public Benefit Entity (PBE) standards.
Presentation currency and rounding
The capital charge is recognised as an expense in the
Non-discretionary grants are those grants awarded if
are recognised as expenditure when an application that
meets the specified criteria for the grant has been
received.
Discretionary grants are those grants where the TEC has
no obligation to award on receipt of the grant application
The forecast financial statements have been prepared
and are recognised as expenditure when approved by the
presented in New Zealand dollars and all values are
communicated to the applicant. The TEC’s grants
on a historical cost basis. The financial statements are
Grants Approval Committee and the approval has been
rounded to the nearest thousand dollars ($000).
awarded have no substantive conditions attached.
Changes in Accounting Policies
Leases
policies adopted in the last audited financial statements.
An operating lease is a lease that does not transfer
There have been no changes from the accounting
Operating Leases
substantially all the risks and rewards incidental to
ownership of an asset to the lessee.
Lease payments under an operating lease are
recognised as an expense on a straight-line basis over
the lease term.
Lease incentives received are recognised in the surplus
or deficit as a reduction of rental expense over the
lease term.
34
Cash and cash equivalents
Subsequent costs
deposits held on call with banks, and other short-term
capitalised only when it is probable that future
three months or less.
the item will flow to the TEC and the cost of the item
Cash and cash equivalents includes cash on hand,
Costs incurred subsequent to initial acquisition are
highly liquid investments with original maturities of
economic benefits or service potential associated with
Receivables
Short-term receivables are recorded at their face value,
less any provision for impairment.
A receivable is considered impaired when there is
evidence that the TEC will not be able to collect the
amount due. The amount of the impairment is the
difference between the carrying amount of the
receivable and the present value of the amounts
expected to be collected.
Property, plant and equipment
Property, plant and equipment consist of the following
asset classes: leasehold improvements, computer
equipment, office equipment, furniture and fittings
and motor vehicles.
All assets classes are measured at cost, less
accumulated depreciation and impairment losses.
Additions
can be measured reliably.
The costs of day-to-day servicing of property, plant and
equipment are recognised in the surplus or deficit as
they are incurred.
Depreciation
Depreciation is provided on a straight-line basis on all
property, plant and equipment. The useful lives and
associated depreciation rates of major classes of property,
plant and equipment have been estimated as follows:
Computer
equipment
Office
equipment
Furniture and
fittings
Motor
vehicles
4 years
25% straight line
5 years
20% straight line
10 years
10% straight line
5 years
20% straight line
The cost of an item of property, plant and equipment is
Leasehold improvements are depreciated over the
future economic benefits or service potential
remaining useful lives of the improvements, whichever
cost of the item can be measured reliably.
The residual value and useful life of an asset is reviewed,
recognised as an asset only when it is probable that
unexpired period of the lease or the estimated
associated with the item will flow to the TEC and the
is the shorter.
Work in progress is recognised at cost less impairment
and is not depreciated.
In most instances, an item of property, plant and
equipment is initially recognised at its cost. Where an
asset is acquired through a non-exchange transaction, it
is recognised at its 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 reported net in the
surplus or deficit.
and adjusted if applicable, at each financial year end.
Intangible assets
Software acquisition and development
Acquired computer software licences are capitalised on
the basis of the costs incurred to acquire and bring to
use the specific software.
Costs that are directly associated with the development
of software for internal use are recognised as an
intangible asset. Direct costs include software
development, employee costs and an appropriate
portion of relevant overheads.
Staff training costs are recognised as an expense when incurred.
Costs associated with maintaining computer software
are recognised as an expense when incurred.
Costs associated with development and maintenance
of the TEC’s website are recognised as an expense
when incurred.
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Amortisation
The carrying value of an intangible asset with a finite life
is amortised on a straight-line basis over its useful life.
Employee entitlements
Short-term employee entitlements
Employee benefits that are due to be settled within 12
Amortisation begins when the asset is available for use
months after the end of the period in which the
The amortisation charge for each financial year is
based on accrued entitlements at current rates of pay.
and ceases at the date that the asset is derecognised.
employee renders the related service, are measured
recognised in the surplus or deficit.
These include salaries and wages accrued up to balance
The useful lives and associated amortisation rates of
balance date and sick leave.
major classes of intangible assets have been estimated
as follows:
Computer
software
date, annual leave earned to but not yet taken at
A liability for sick leave is recognised to the extent that
absences in the coming year are expected to be greater
4 years
25% straight line
Impairment of property, plant and equipment
and intangible assets
The TEC does not hold any cash-generating assets.
Assets are considered cash-generating where their
primary objective is to generate a commercial return.
Non-cash-generating assets
Property, plant and equipment and intangible assets
held at cost 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 service amount. The
recoverable service amount is the higher of an asset’s
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 it will be used by staff
to cover those future absences.
A liability and an expense are recognised for bonuses
where there is a contractual obligation, or where there is a
past practice that has created a constructive obligation,
and a reliable estimate of the obligation can be made.
Long-term employee entitlements
Employee benefits that are due to be settled beyond 12
months after the end of the period in which the employee
renders the related service, such as long service leave and
retirement gratuities, have been calculated on an actuarial
basis. The calculations are based on:
• likely future entitlements accruing to staff, based on
fair value less costs to sell and value in use.
years of service, years to entitlement, the likelihood
Value in use is determined using an approach based on
contractual entitlement information
either a depreciated replacement cost approach,
restoration cost approach or a service units approach.
that staff will reach the point of entitlement and
• the present value of the estimated future cash flows.
The most appropriate approach used to measure value
Presentation of employee entitlements
availability of information.
are classified as a current liability. Non-vested long
in use depends on the nature of the impairment and
If an asset’s carrying amount exceeds its recoverable
service amount, the asset is regarded as impaired and
the carrying amount is written down to the recoverable
amount. The total impairment loss is recognised in the
surplus or deficit.
The reversal of an impairment loss is recognised in the
Sick leave, annual leave, and vested long service leave
service leave and retirement gratuities expected to be
settled within 12 months of balance date are classified
as a current liability. All other employee entitlements
are classified as a non-current liability.
Superannuation schemes
Defined contribution schemes
surplus or deficit.
Obligations for contributions to KiwiSaver, the
Payables
Retirement Savings Scheme are accounted for as
Short-term payables are recorded at their face value.
Government Superannuation Fund, and the State Sector
defined contribution superannuation schemes and are recognised as an expense in the surplus or deficit as incurred.
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Provisions
Cost allocation
uncertain amount or timing when there is a present
cost allocation system outlined below.
A provision is recognised for future expenditure of
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 measured at the present value of the
expenditure expected to be required to settle the
obligation using a pre-tax discount rate that reflects
The TEC has determined the cost of outputs using the
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 are charged directly to outputs. Indirect
costs are allocated to significant activities based on
full-time equivalents (FTEs) and direct labour hours.
current market assessments of the time value of money
The cost of internal services not directly charged to
the provision owing to the passage of time is
cost drivers, such as full-time equivalent and direct
‘finance costs’.
There have been no changes to the cost allocation
and the risks specific to the obligation. The increase in
activities is allocated as overheads, using appropriate
recognised as an interest expense and is included in
labour hours.
Onerous contracts
A provision for onerous contracts is recognised when
the expected benefits or service potential to be derived
from a contract are lower than the unavoidable cost of
meeting the obligations under the contract.
The provision is measured at the present value of the lower of the expected cost of terminating the
contract and the expected net cost of continuing with the contract.
methodology since the date of the last audited
financial statements.
Critical accounting estimates and assumptions
In preparing these financial statements, the TEC has
made estimates and assumptions concerning the future.
These estimates and assumptions may differ from the
subsequent actual results. Estimates and assumptions
are continually evaluated and are based on historical
experience and other factors. This includes
Equity
expectations of future events that are believed to be
assets and total liabilities. Equity is disaggregated and
assumptions that have a significant risk of causing a
Equity is measured as the difference between total
reasonable under the circumstances. The estimates and
classified into the following components.
material adjustment to the carrying amounts of assets
• contributed capital
• accumulated surplus/(deficit)
• withdrawal of capital.
Goods and services tax (GST)
and liabilities within the next financial year are
discussed below.
Estimating useful lives and residual values of property,
plant and equipment
At each balance date, the useful lives and residual values
All items in the financial statements are presented
of property, plant and equipment are reviewed.
which are presented on a GST-inclusive basis. Where
value estimates of property, plant and equipment
part of the related asset or expense.
the physical condition of the asset, expected period of
exclusive of GST, except for receivables and payables,
Assessing the appropriateness of useful life and residual
GST is not recoverable as input tax, it is recognised as
requires a number of factors to be considered, such as
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 a net operating cash flow in the statement
of cash flows.
Commitments and contingencies are disclosed
exclusive of GST.
use of the asset by the TEC and expected disposal
proceeds from the future sale of the asset.
37
An incorrect estimate of the useful life or residual value
will affect the depreciation expense recognised in the
surplus or deficit and carrying amount of the asset in
the statement of financial position. The TEC minimises
the risk of this estimation uncertainty by:
• physical inspection of assets
• asset replacement programmes
• review of second hand market prices for similar
assets
• analysis of prior asset sales.
The TEC has not made significant changes to past
assumptions concerning useful lives and residual values.
Estimating useful lives and residual values of
intangible assets
Critical judgements in applying accounting
policies
Management has exercised the following critical
judgements in applying accounting policies:
Leases classification
Determining whether a lease agreement is a finance
lease or an operating lease requires judgement as to
whether the agreement transfers substantially all the
risks and rewards of ownership to the TEC.
Judgement is required on various aspects that include,
but are not limited to, the fair value of the leased asset,
the economic life of the leased asset, whether or not to
include renewal options in the lease term, and
determining an appropriate discount rate to calculate
At each balance date, the useful lives and residual
the present value of the minimum lease payments.
appropriateness of useful life and residual value
recognised in the statement of financial position as
factors to be considered, such as the expected period of
operating lease no such asset is recognised.
values of intangible assets are reviewed. Assessing the
Classification as a finance lease means the asset is
estimates of intangible assets requires a number of
property, plant and equipment, whereas for an
use of the asset by the TEC, and obsolescence.
The TEC has exercised its judgement on the appropriate
An incorrect estimate of the useful life or residual value
will affect the amortisation expense recognised in the
surplus or deficit, and carrying amount of the asset in
the statement of financial position. The TEC minimises
the risk of this estimation uncertainty by:
• annual impairment test
• asset replacement programmes.
Significant underlying assumptions
These forecast financial statements have been
prepared on the basis of the following significant
assumptions:
• Grants income will be expensed in the year in which
it is appropriated
• Interest income is based on the expected interest
rate during the year
• Operating income is mostly expensed in the year in
which it is appropriated and any minor surpluses
are used to reinvest in capability.
classification of equipment leases, and has determined
none of its lease arrangements are finance leases.
The Tertiary Education Commission’s Statement of Performance 2015
is published online at www.tec.govt.nz/About-us/Publications
ISBN: 978-0-478-32038-1
Statement of Performance 2015 (Print and online)
www.tec.govt.nz
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Crown copyright © 2015
Except for the Tertiary Education Commission’s logo and the credited vignettes and
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