NZLC - Report 33: Annual Report 1995

For the year under review the Commission budgeted to operate at a deficit, funding the shortfall in income from its reserves. The Commission’s deficit budgeting strategy is designed to enable it to achieve its planned long-term operating level. The Commission’s reserves will be used in the coming year in a capital replacement programme and to meet part of its operating deficit. An increase in the annual appropriation may be necessary to enable the Commission to sustain its strategic operating goals.

In the 1994/95 year the Commission budgeted for operating expenditure of $3 725 034 of which $3 019 560 was to be provided by way of appropriation and $705 474 from other income and reserves.

The Commission’s actual operating expenditure was $3 349 214 of which $3 019 566 was by way of appropriation and $329 658 from other income and reserves.

FINANCIAL STATEMENTS

We acknowledge responsibility for the preparation of these financial statements and for the judgments used herein.

We acknowledge responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of the Commission’s financial reporting.

In our opinion these annual financial statements fairly reflect the financial position and operations of the Law Commission for the year ended 30 June 1995.

The financial statements presented here for the reporting entity, the Law Commission, are prepared pursuant to section 17 of the Law Commission Act 1985 and section 41(1) of the Public Finance Act 1989.

The accounting principles recognised as appropriate for the measurement and reporting of results and financial position on an historical cost basis have been applied.

There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years. Comparative figures have been restated where necessary to conform to the current year presentation.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995

Interest rates for deposits maturing in one month range from 9.20% to 9.55%. Interest rates for deposits maturing in two and three months are 9.00% and 9.05% respectively. The fair value of financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position.

STATEMENT OF SERVICE PERFORMANCE FOR THE YEAR ENDED 30 JUNE 1995

Statement of objectives for 1994/95	Performance measures	Outputs produced
The Law Commission’s objectives are:
Projects	Projects	Projects
To carry through their various stages towards final report the projects for the reform and development of particular areas of law which have been included in the Commission’s programme.	Quantity The number of projects included in the Commission’s programme is to be as determined by the Commission, taking account of section 7 of the Law Commission Act 1985. The number of publications to be produced, or amount of other work to be done, within each project, is to be as set out in project plans approved by the Commission.	Quantity The projects on the Commission’s programme during the period were (a) those included in the programme as at l July 1994 (listed in the Commission’s report for the year ended 30 June 1994); (b) a project on Women’s Access to Justice, added to the programme in May 1995 following extensive preliminary activity which began in September 1994. The publications produced or other work done in the period 1 July 1994 to 30 June 1995 (including the preliminary activity on Women’s Access to Justice) were as set out in project plans approved by the Commission. During the period the Commission approved modifications to some plans to take account of changed priorities or developments within the project itself. See narrative account, pages 2 to 10, for a description of all work done.
	Quality The Commission’s project work is to be of the standard set by the Commission, as assured by its internal processes and external review.¹	Quality All the Commission’s project work (including the preliminary activity on Women’s Access to Justice) was performed to the standard set by the Commission, as assured by its internal processes and external review.¹
	Time The time for the production of project work is to be as set out in approved project plans.	Time The time taken for the production of project work (including the preliminary activity on Women’s Access to Justice) was as set out in approved project plans, with such modifications as the Commission approved to take account of changed priorities or developments within the project itself.
	Cost The cost of project work is to be within the approved project budget.	Cost The Commission set individual project budgets for all work to be done (including the preliminary activity on Women’s Access to Justice) in the period 1 July 1994 to 30 June 1995 (or beyond if the budgeted phase of the project was to extend beyond the end of the financial year). Time and other expenditure was recorded against the project budget, and the Commission received regular (monthly) reports of actual time and cost against the project budget. The Commission’s expenditure on its projects as a whole was $2,532,496.²
Follow-up
To follow up all final reports by taking part in discussions with interested individuals and groups, privately and in public forums, on the meaning and effect of the Commission’s recommendations, discussing with relevant Ministers and their Departments the nature and the timing of the steps necessary to implement the Commission’s recommendations, and participating in appropriate ways in the preparation of legislation implementing the Commission’s recommendations and in the parliamentary processes leading to its enactment.	Quantity Follow-up is to be discussed at the regular policy meetings between the Law Commission and the Department of Justice; be discussed with the Minister of Justice, other Ministers or departments and parliamentary select committees as requested, or on the Commission’s initiative where appropriate; involve participation in, or the convening of, seminars and conferences as appropriate and as opportunity offers.²	Quantity Follow-up included regular discussions and correspondence with the Minister of Justice, the Leader of the House, and the Department of Justice about the inclusion in the Government’s legislative programme of draft Acts recommended by the Law Commission; submissions to the Social Services Select Committee in connection with the Commission’s recommendations on Community Safety: Mental Health and Criminal Justice Issues (NZLC R30). See narrative account, pages 10 to 12, for a description of all work done.
	Quality To the Commission’s standards, as assured by its internal processes and external review.¹	Quality All follow-up work was performed to the Commission’s standards, as assured by its internal processes and external review.¹
	Time As agreed, or otherwise at a time enabling the follow-up work to be effective, taking account of the Government’s legislative programme, the parliamentary timetable and other relevant factors.	Time All follow-up work was undertaken as agreed, or otherwise at a time enabling it to be effective, taking account of the Government’s legislative programme, the parliamentary timetable and other relevant factors.
	Cost Within the budget for follow-up.	Cost The Commission did not set a separate budget for follow-up for the 1994/95 financial year, but Commissioner and research officer time spent on discrete aspects of follow-up was charged to that output. The Commission’s expenditure on follow-up as a whole was $67,787.^2,3
Advisory work
To provide advice, in accordance with s 5(l)(c) of the Law Commission Act 1985, on proposals by other agencies for the review or reform of the law.	Quantity Advice is to be provided on proposals referred to the Law Commission by the Minister of Justice, other Ministers or select committees, and, to the extent that resources permit, by other government agencies, and on the Commission’s initiative where the proposals bear on the Commission’s project work or Commission involvement is an important step in achieving the Commission’s purpose and objectives.⁴	Quantity The Commission received 87 new requests for advice from Cabinet Ministers, departments and select committees and other sources in the year to 30 June 1995. See narrative account, page 12, for a summary of work done.
	Quality To the Commission’s standards as assured by its internal processes and external review.¹	Quality All advice was provided to the Commission’s standards as assured by its internal processes and external review.¹
	Time As agreed with the recipient, or otherwise at a time enabling the advice to be taken into account and acted upon within the timeframe of the recipient.	Time All advice was provided as agreed with the recipient, or otherwise at a time enabling the advice to be taken into account and acted upon within the timeframe of the recipient.
	Cost Within the budget for advisory work.	Cost The Commission set a budget of $484,795 for advisory work for the 1994/95 financial year. All Commissioner and research officer time spent on advisory work was charged to that output. The Commission’s expenditure on advisory work was $546,434.²
Legislation Advisory Committee
The output is the contribution to the work of the Legislation Advisory Committee to be provided by Sir Kenneth Keith in his capacity as a member of the Committee, the assistance of the Commission’s research and secretarial staff and the office accommodation made available for the Chairman of the Committee, Dr Mervyn Probine.	Quantity As agreed with the Committee, subject to the availability of the Commission’s resources.	Quantity The work done was as agreed with the Committee. See narrative account, pages 12 to 13, for a description of all work done.
	Quality To the Commission’s standards as assured by its internal processes and external review.¹	Quality All work was performed to the Commission’s standards as assured by its internal processes and external review.¹
	Time As agreed with the Committee.	Time All work was done within a timeframe agreed with the Committee.
	Cost To be within the Commission’s budget for its contribution to the work of the Legislation Advisory Committee.	Cost The Commission set a budget of $172,615 for its contribution to the work of the Legislation Advisory Committee for the 1994/95 financial year. All Commissioner and research officer time spent on that contribution was charged to that output. The Commission’s expenditure on the output as a whole was $202,497.^{2, 5}

1 In the case of the Commission’s project work, external review involves both the use of expert consultants—to contribute to the writing, or to consider and comment on successive drafts—and also wide consultation with interested agencies and groups. In the early stages of a project, external review is directed at the project outline, the issues to be addressed, and (in the case of the project on Women’s Access to Justice) the project terms of reference themselves. In the advanced stages of a project, external consultants contribute to the writing of, or consider and comment on drafts of, publications. Drafts are also frequently circulated to interested agencies and groups before publication. In most cases, a discussion paper is published and widely circulated, and submissions on it are invited and considered before the preparation of a final report which itself contains a description of the consultation process followed in the particular case.

Reports are published, tabled in Parliament and copies are distributed to interested or affected individuals and groups, including major law firms. They are submitted to appropriate legal journals for review, and a great deal of informal feedback is received from Ministers and parliamentary select committees, legal and other professional societies, judges, members of the legal profession, and law reform agencies, interested bodies and individuals in other countries.

In the case of follow-up, advisory work and assistance to the Legislation Advisory Committee, external review consists of the informal feedback received in the course of any consultations with officials or others (including the Legislation Committee of the New Zealand Law Society) outside the Law Commission in the course of preparing the submission, advice or other document, or received from the recipient, together with evidence of the extent to which the submission, advice or other document is accepted and acted upon.

2 The Commission received regular (monthly) reports on the quantity and timeliness of all work done and on actual costs, as compared with budgeted costs, for each phase of its projects, for advisory work, and for assistance to the Legislation Advisory Committee.

3 For budgetary purposes, the Commission’s follow-up work is treated as if it were a single consolidated project. The Director received regular reports on the actual costs charged to particular items within the follow-up output.

4 For administrative and budgetary purposes, the Commission’s advisory work is treated as though it were a single, consolidated project. A budget is allocated in advance and resources organised so as to make one member of the research staff primarily available for advisory work. It is not always possible, however, to foresee the specific occasions on which the Commission will be asked (or will consider it appropriate) to provide advice and, consequently, what other research resources will have to be allocated to advisory work. Therefore the specification of quantity relates to the number of requests received and other items undertaken which bear on project work or enhance the achievement of the Commission’s purpose and objectives.

5 For budgetary purposes, the Commission’s contribution to the work of the Legislation Advisory Committee is treated as if it were a single consolidated project.

REPORT OF THE AUDIT OFFICE TO THE READERS OF THE FINANCIAL STATEMENTS OF THE LAW COMMISSION FOR THE YEAR ENDED 30 JUNE 1995

We have audited the financial statements on pages 19 to 31. The financial statements provide information about the past financial and service performance of the Law Commission and its financial position as at 30 June 1995. This information is stated in accordance with the accounting policies set out on page 23.

The Public Finance Act 1989 requires the Law Commission to prepare financial statements in accordance with generally accepted accounting practice which fairly reflect the financial position of the Law Commission as at 30 June 1995, the results of operations and cash flows and the achievements as measured against performance targets and other measures by which the Law Commission can be judged in relation to its objectives for the year ended 30 June 1995.

Section 43(1) of the Public Finance Act 1989 requires the Audit Office to audit the financial statements presented by the Members. It is the responsibility of the Audit Office to express an independent opinion on the financial statements and report its opinion to you.

The Controller and Auditor-General has appointed H C Lim of Audit New Zealand to undertake the audit.

An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:

We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.

Other than in our capacity as auditor acting on behalf of the Controller and Auditor-General, we have no relationship with or interests in the Law Commission.

Our audit was completed on 27 October 1995 and our unqualified opinion is expressed as at that date.

K J Keith	J E Lett
President	Finance Manager

Budget $	Note	1995 $	1994 $
	INCOME
3 019 560	Government grant	3 019 556	2 817 778
105 000	Interest received	218 852	152 334
9 000	Sale of publications	17 437	12 048
–	Miscellaneous	1 433	–
3 133 560	Total income	3 257 278	2 982 160
	EXPENDITURE
1 968 554	Personnel	1 944 024	1 655 866
147 000	Research and consultation	130 133	164 684
160 000	Publications	51 748	121 913
130 000	Travel	110 587	120 097
189 000	Library	154 934	139 433
525 960	Rent and rates	498 597	505 186
8 400	Audit fees	7 000	7 000
153 120	Depreciation	146 410	143 839
283 000	Services and supplies	248 727	227 278
160 000	Professional services	57 054	120 577
3 725 034	Total Expenditure	3 349 214	3 205 873
(591 474)	Deficit for year 3/4	(91 936)	(223 713)

Budget $	Note	1995 $	1994 $
	CURRENT ASSETS
10 516	Bank of New Zealand	8 134	3 580
150 000	Call deposits	125 000	100 000
1 675 000	Short-term deposits 1	2 200 000	2 275 000
1 000	Accounts receivable	1 583	4 407
23 253	Prepayments	30 621	18 846
40 000	Interest receivable	41 342	42 134
15 000	Goods and services tax	10 899	16 438
1 914 769		2 417 579	2 460 405
277 762	FIXED ASSETS 2	257 888	380 882
2 192 531	TOTAL ASSETS	2 675 467	2 841 287
	CURRENT LIABILITIES
210 000	Accounts payable and accruals	193 398	267 282
210 000	TOTAL LIABILITIES	193 398	267 282
1 982 531	ACCUMULATED FUNDS 3	2 482 069	2 574 005
2 192 531	TOTAL FUNDS EMPLOYED	2 675 467	2 841 287

Budget $	Note	1995 $	1994 $
	CASH FLOWS FROM OPERATING ACTIVITIES Cash was provided from:
3 019 560	Government grant	3 019 556	2 817 778
12 407	Receipts from customers	20 269	12 460
107 134	Interest	219 644	135 448
3 139 101		3 259 469	2 965 686
3 632 165	Cash was disbursed to: Suppliers and employees	3 282 931	3 008 812
(493 064)	Net cash used in operating activities 4	(23 462)	(43 126)
	CASH FLOWS FROM INVESTING ACTIVITIES Cash was provided from:
600 000	Investments	75 000	60 000
–	Proceeds from sale of fixed assets	1 433	–
600 000		76 433	60 000
50 000	Cash was applied to: Purchase of fixed assets	23 417	23 992
50 000		23 417	23 992
550 000	Net cash from investing activities	53 016	36 008
56 936	Net increase (decrease) in cash held	29 554	(7 118)
103 580	Add opening cash balance	103 580	110 698
160 516	Closing cash balance carried forward	133 134	103 580
10 516	Represented by: BNZ Current Account	8 134	3 580
150 000	BNZ Call Account	125 000	100 000
160 516		133 134	103 580

1 Short term investments
Maturity	1995 $	1994 $
One month	950 000	1 775 000
Two months	500 000	–
Three months	750 000	–
Four months	–	500 000
	2 200 000	2 275 000

New Zealand Law Commission

Part B

Finance

FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995

STATEMENT OF SERVICE PERFORMANCE FOR THE YEAR ENDED 30 JUNE 1995

REPORT OF THE AUDIT OFFICE TO THE READERS OF THE FINANCIAL STATEMENTS OF THE LAW COMMISSION FOR THE YEAR ENDED 30 JUNE 1995

2 Fixed assets
	1995
	Cost $	Accumulated Depreciation $	Book Value $
Computer equipment	393 918	348 506	45 412
Foundation library	185 643	–	185 643
Furniture and fittings	939 591	922 630	16 961
Office equipment	76 114	66 242	9 872
	1 595 266	1 337 378	257 888

	1994
	Cost $	Accumulated depreciation $	Book value $
Computer equipment	384 458	268 575	115 883
Foundation library	185 643	–	185 643
Furniture and fittings	935 824	867 131	68 693
Office equipment	69 425	58 762	10 663
	1 575 350	1 194 468	380 882

3 Accumulated funds
	1995 $	1994 $
Balance at 1/7/94	2 574 005	2 797 718
Excess expenditure over income	(91 936)	(223 713)
Balance at 30/6/95	2 482 069	2 574 005

4 Reconciliation of statement of financial performance to statement of cash flows
		1995 $	1994 $
Excess income over expenditure		(91 936)	(223 713)
Profit sale of assets	(1 433)
Depreciation	146 410	144 977	143 839
		53 041	(79 874)

Movements in working capital
Decrease in accounts receivable	2 824		18 351
Increase in prepayments	(11 775)		(1 552)
Decrease in interest receivable	792		(16 887)
Decrease in GST	5 539		(8 193)
Decrease in accounts payable	(73 883)	(76 503)	45 029
Net cash flow used in operating activities		(23 462)	(42 946)

5 Commitments
Non-cancellable operating leases for rental of accommodation and office equipment.
	1995 $	1994 $
One to two years	1 066 108	994 514
Two to five years	524 271	994 514
Beyond five years	–	–
	1 590 379	1 989 028