By Hayes Knight – 12 December 2012

On-going challenges with the Novopay system mean that we are still unsure exactly what information will be provided with regards year end accruals. We are hopeful that the remaining problems with Novopay will be able to be fixed to at least allow the banked staffing position to be calculated at year end.

We have been fielding a few early questions about banked staffing so thought it might be timely to revisit the measurement and disclosures required in your annual financial statements.

Overuse of banked staffing

If your school has overused your staffing entitlement at the end of the year, this amount will be deducted from your operations grant in 2013. Therefore a liability should be recognised in your financial statements.  However, the liability should be reduced by any under-spending in the first 3 months of the following year, i.e. before the end of the banked staffing year.

Don’t let this hold up sending in your financial statements though.  Just use the most recent information you have to calculate the accrual.  If there is a significant difference that needs to be adjusted, we will work with you to do this at the end of the audit process when we are making any other adjustments to your financial statements.  You will need to provide your auditors with evidence of this under-spending in the first 3 months of the 2013 financial year.

Underuse of banked staffing

If your school has underused your banked staffing, you can recognise an asset for the amount of the underuse that you expect to utilise before the end of the banked staffing year.  Such an asset may only be recognised when your school is able to provide satisfactory evidence of an overspend in the first 3 months of 2013.

In 2010, the banked staffing scheme was amended to provide cash reimbursements to schools that do not utilise their full staffing entitlement before the end of March.  Again in 2013, these reimbursements will not be made until sometime in April or May when the full extent of underspend by all schools is known by the MOE.  If the cash reimbursement is known at the time of finalising the financial statements, an asset can be recognised in your balance sheet for that amount.

However, if the time of completing your financial statements is earlier and your school has underused its entitlement, a contingent asset should be disclosed to recognise the possibility of the future cash reimbursement.  This disclosure is only recognised in the notes to your financial statements due to the uncertainty of the amount of the reimbursement.  Such a note should read as follows:

There is a contingent asset relating to a possible cash re-imbursement from the Ministry of Education for under spending the school’s banking staffing entitlement during 2012.  The Ministry has yet to determine whether an amount is to be paid to the school.  Any such reimbursement cannot be reliably measured at the date of signing these financial statements, but is unlikely to be the full value of the $….., which was the banking staffing underspend at 31 December 2012.  If any amount is received, it will be recorded as income in the 2013 financial year.

If you are unsure of the appropriate disclosure, we suggest you contact your financial service centre or auditor.