By Hayes Knight – 13 February 2013

Annually the MOE publishes guidance on a range of topics affecting school financial statements. One such document is the Annual Report Instructions. This has answers to a number of common issues the MOE is seeing in their day to day work.

If you haven’t already, we’d encourage everyone at your school involved in the financial statements preparation process to be familiar with this document.  It can be accessed here.

Below are a couple of topical issues where we often see mistakes made.  If they relate to your school, you may wish to refer to the full document for further guidance.

Schools Network Upgrade Project(SNUP)

While we saw a small number of SNUP projects occurring last year we expect to see many more of these in financial statements this year.

The accounting treatment for these capital projects is complicated somewhat by the fact that both the MOE and school contributes to the cabling and other hardware.  The MOE portion of any such projects should be recorded in your Statement of Movements in Equity as a capital injection (in much the same way as a furniture grant).  The full amount of the assets that have been purchased should be capitalised and depreciated over their useful life, as with any other fixed asset.

This situation has been clarified since last year when the SNUP project was still quite new.  If you treated these differently in your 2011 financial statements, it is very unlikely there will be any need to adjust that treatment.  However, if you have any concerns, please feel free to contact us.

Board Contributions to Capital Works

It is the board’s responsibility to ensure capital works projects are completed within budget. Where the board wishes to contribute to the project from its own funds, the board must obtain prior approval from the Ministry.

The treatment of board funded portions of MOE projects in your school’s financial statements depends on this approval process.  Board funded portions of MOE capital projects that are approved can be capitalised as fixed assets.  However any not approved by the MOE, including cost overruns, must be expensed in your Statement of Comprehensive Income.  Your auditors will need to see MOE approval for all capital projects that have been capitalised so making this available in your annual working papers file will be appreciated.