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Goods and Service Tax (GST)
All items in the fi nancial statements
are presented exclusive of GST, except
for receivables and payables, which are
presented on a GST-inclusive basis. Where
GST is not recoverable as input tax it is
recognised as part of the related asset
or expense.
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 fi nancial position.
The net GST paid to, or received from the
IRD, including the GST relating to investing
and fi nancing activities, is classifi ed as an
operating cash fl ow in the statement of
cash fl ows.
Commitments and contingencies are
disclosed exclusive of GST.
Income tax
The Health and Disability Commissioner
is a public authority and consequently is
exempt from the payment of income tax.
Accordingly, no charge for income tax has
been provided for.
Budget fi gures
The budget fi gures are derived from the
statement of intent as approved by the
Health and Disability Commissioner at the
beginning of the fi nancial year. The budget
fi gures have been prepared in accordance
with NZ IFRS, using accounting policies that
are consistent with those adopted by the
Health and Disability Commissioner for the
preparation of the fi nancial statements.
Cost allocation
The Health and Disability Commissioner has
determined the cost of outputs using the
cost allocation system outlined below.
Direct costs are those costs directly
attributed to an output. Indirect costs are
those costs that cannot be identifi ed in
an economically feasible manner, with a
specifi c output.
Direct costs are charged directly to outputs.
Indirect costs are charged to outputs based
on cost drivers and related activity/usage
information. Depreciation is charged on the
basis of asset utilisation. Personnel costs
are charged on the basis of actual time
incurred. Other direct costs are assigned to
outputs based on the proportion of direct
staff costs for each output.
There have been no changes to the cost
allocation methodology since the date of
the last audited fi nancial statements.
Critical accounting estimates
and assumptions
In preparing these fi nancial statements,
the Health and Disability Commissioner
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, including expectations of future
events that are believed to be reasonable
under the circumstances. The estimates
and assumptions that have a signifi cant
risk of causing a material adjustment to
the carrying amounts of assets and
liabilities within the next fi nancial
year are discussed below.
Property, plant and equipment useful
lives and residual value
At each balance date the Health and
Disability Commissioner reviews the
useful lives and residual values of its
property, plant and equipment. Assessing
the appropriateness of useful life and
residual value estimates of property, plant
and equipment requires the Health and
Disability Commissioner to consider a
number of factors such as the physical
HDC ANNUAL REPORT 2012
53