1872
THE NEW ZEALAND GAZETTE
No. 71

(c) Taxation: Taxation charged against net profit includes both current and deferred tax.

Deferred taxation arises from timing differences related to:

(i) Interest accrued on investments.

(ii) Depreciation charges.

The previous policy of providing for the ensuing year's provisional taxation has been discontinued. The resultant over provision for taxation made in prior years, has been transferred to the appropriation account.

(d) Valuation of Investments: Investments are recorded at cost. Both New Zealand Government and local authority securities are normally held to maturity and their value on redemption approximates cost.

OTAGO SAVINGS BANK
BALANCE SHEET AS AT 31 MARCH 1977

Depositors' accounts

$
Ordinary accounts .. .. .. 43,686,316
Thrift accounts .. .. .. 1,222,504
Special purpose accounts .. .. 5,614,621
Home layby accounts .. .. 107,376
Home and farm ownership accounts .. 821,280

51,452,097
Investment accounts and housing bonds 17,187,860

Total liability to depositors .. 68,639,957

National Savings Accounts .. .. 197,161
Add interest suspense account .. 3,441

200,602

Other liabilities

Interest accrued on investment accounts .. 641,401
Interest accrued on other depositors' funds .. 17,438
Owing to other trustee savings banks .. 33,672
Staff provident fund .. .. 438,986
Sundry creditors .. .. 74,369

Total other liabilities .. .. 1,205,866
Provision for donations .. .. 70,000
Reserve fund .. .. 3,064,016

$73,543,170

Current assets:

$
Cash on hand and at bank .. .. 579,647
Fixed deposits .. .. 2,300,000
Interest accrued on investments .. 1,013,162
Owing by other trustee savings banks .. 24,613
Taxation overpaid .. .. 23,928
Sundry debtors .. .. 26,349

Total current assets .. .. 3,967,699

Investments:

New Zealand Government stock at face value (See note (i) below) .. 31,267,659
Local authority securities at cost .. 2,565,491
Mortgages .. .. 33,269,624
Personal loans (less interest yet to mature) .. .. 523,961
Shares in Allied Computer Processors Limited at cost .. .. 13,750

Total ordinary investments .. 67,640,485

National savings securities:

New Zealand Government stock at cost 197,161
Cash on hand and at bank .. .. 3,441

Total national savings securities .. 200,602

Fixed Assets

Depreciation
Cost Price to date Book value
Land and buildings .. 2,052,198 553,847 1,498,351
Vehicles, equipment, furniture, etc. .. 575,875 339,842 236,033

Total Fixed Assets .. .. 1,734,384

$73,543,170

Note (i): New Zealand Government stock at cost price: $31,246,087.

T. K. S. SIDEY, President.
A. L. FLEURY, General Manager.

AUDITORS' REPORT

We report that we have examined the books and accounts of the Otago Savings Bank for the year ended 31 March 1977 and have received all the information and explanations we have required.

In our opinion, the accompanying balance sheet and profit and loss account, together with the notes thereon, present fairly the financial position of the bank at 31 March 1977 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

GILFILLAN & CO.
HUTCHISON, HULL & CO.} Chartered Accountants.
Dunedin.
29 April 1977.

OTAGO SAVINGS BANK
PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31 MARCH 1977

Interest to Depositors

$
On open accounts .. .. .. 1,233,856
Closed accounts and matured investment accounts 476,269
Accrued on investment accounts .. 641,401
Accrued on other depositors funds .. 17,438
Home lay-by accounts—suspensory free deposits 711

2,369,675
Administrative expenses .. .. 1,698,042
Trustees' honoraria .. .. 6,749
Depreciation .. .. 58,775
Provision for taxation .. .. 174,159
Net profit carried down .. .. 446,192

$4,753,592

Interest on investments

$
From New Zealand Government stock .. 1,783,624
From local authorities stock .. 151,614
From mortgages .. .. 2,328,467
From other sources .. .. 294,631
Income from other sources .. .. 195,256

$4,753,592

PROFIT AND LOSS APPROPRIATION ACCOUNT

Provision for donations .. .. .. 70,000
Transfer to reserve .. .. .. 376,192

$446,192

Net profit brought down .. .. .. 446,192

$446,192

NOTES TO THE ACCOUNTS

Note 1: ACCOUNTING POLICIES

The accounting policies which the bank considers appropriate for the measurement of its results and financial position under the historical cost convention are as follows:

A. Recognition of Income: Income shown in the Profit and Loss Account is earned in the current year. In the case of Personal Loans the policy is to add interest to the advance at the commencement of the loan, and to bring this interest into revenue during the appropriate financial years in accordance with the "Rule of 78".

B. Expenditure:

(1) Interest credited to depositors—Interest on open accounts at the 31st March represents the interest paid for the year. Accounts which are credited with interest during the year have had an appropriate adjustment made for the interest accrued to 31st March.

(2) Other expenses—Other expenses, including expenditure on computer programme development, are charged to the accounts in the year in which the expenditure is incurred.

(3) Depreciation—Fixed assets, other than freehold land, are generally depreciated on a straight line basis at rates estimated to write off the cost less residual value over the useful life of each class of asset. The principal annual rates in use are:

Buildings: 1% to 2½%.
Office furniture and equipment: 10% to 15%.