Management of risk
Tourism New Zealand has developed a risk management framework and has undertaken a full risk assessment of its business.
Management is required to sign off on a half yearly basis that no new exposures have arisen and that existing risks are being properly
managed. Written policies and procedures exist covering those aspects of business which have the potential to generate risk for
Tourism New Zealand. Adherence to these policies minimises potential risk to Tourism New Zealand. Employees are required as part of
employment contracts to adhere to Tourism New Zealand policies and procedures.
Tourism New Zealand carries comprehensive insurance covering all normal business risks including Public Liability. Tourism New
Zealand has purchased insurance to provide Board members and Officers Liability, Employers Liability and Professional Indemnity
cover for Board members and employees. Tourism New Zealand also provides cover for its staff for offshore travel. Insured values are
reviewed annually and adjusted to reflect changes in business operations.
Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the
reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets,
liabilities, contingent liabilities, revenue and expenses. These judgements and estimates are based on historical experience and other
factors that are reasonable under the circumstances and form the basis for the carrying values of assets and liabilities. Actual results
may differ from these estimates under different assumptions and conditions.
Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions have
Make good provision
A provision has been made for a number of potential future restoration costs relating to make good clauses on four office rental leases.
The calculation of this provision requires assumptions such as the extent, if any, that Landlords will enforce the make good clauses
in the leases and building and demolition cost estimates. These uncertainties may result in future actual expenditure differing from
the amounts currently provided. The provision recognised for each lease is periodically reviewed and updated based on the facts and
circumstances available at the time. Changes to the estimated future costs for make good are recognised in the balance sheet by
adjusting both the expense or asset and provision. The related carrying amounts are disclosed in note 17.
Tourism New Zealand’s capital is its equity, which comprises accumulated funds and other reserves. Equity is represented by net
Tourism New Zealand is subject to the financial management and accountability provisions of the Crown Entities Act 2004, which
impose restrictions in relation to borrowings, acquisition of securities, issuing guarantees and indemnities and the use of derivatives.
Tourism New Zealand manages its equity as a by-product of prudently managing revenues, expenses, assets, liabilities, investments
and general financial dealings to ensure that Tourism New Zealand effectively achieves its objectives and purpose, whilst remaining a
Tourism New Zealand purchases a variety of foreign currencies to fund promotional activity offshore. As this is funded in NZ Dollars,
there is an exposure to foreign exchange risk through the movement of NZ Dollars against those foreign currencies. To manage this risk
and improve operational flexibility, a foreign exchange reserve was set up in 2009/10 that comprised of the realised gains from that
year to be used solely to offset future realised foreign exchange gains and losses.