6 JULY THE NEW ZEALAND GAZETTE 1953

                                RESERVE BANK OF NEW ZEALAND
                                    PROFIT AND LOSS ACCOUNT
                                FOR YEAR ENDED 31 MARCH 1978

                                      1978              1977

General charges including salaries, rent, $ $
cost of note issues, overseas debt
charges and other expenses .. 76,704,821 66,529,341
Balance of profit for year .. 24,542,617 16,948,790
$101,247,438 $83,478,131

                                                          1978              1977
                                                            $                 $

Balance of profit after making provision
for rebate on bills not yet due and for
sundry liabilities and contingencies in-
cluding loss on realisation of investments 101,247,438 83,478,131
$101,247,438 $83,478,131

                             PROFIT AND LOSS APPROPRIATION ACCOUNT

                                      1978              1977

Payment to New Zealand Government in $ $
terms of section 40 of Reserve Bank of
New Zealand Act 1964 .. 6,907,441 ..
Transfer to building reserve .. 5,000,000 2,000,000
Transfer to investments reserve .. 3,000,000 6,141,830
Transfer to insurance reserve .. 3,087,314 ..
Transfer to general reserve .. 300,000 ..
Adjustment in respect of compensation
received under sterling agreement (re-
lating to prior year) .. .. 1,899,519
13,155,303 6,907,441
Balance at end of year .. 18,294,755 10,041,349
$31,450,058 $16,948,790

                                                          1978              1977

Balance at beginning of year .. $ $
6,907,441 ..
Balance from profit and loss account .. 24,542,617 16,948,790
$31,450,058 $16,948,790 $31,450,058 $16,948,790

                          BALANCE SHEET AS AT 31 MARCH 1978

                                      1978              1977                                    1978              1977

Notes in circulation .. 439,604,574 401,012,987 Gold .. 699,210 704,901
Demand deposits: Overseas assets:
(a) State .. 164,995,389 181,635,014 (a) Current accounts and
(b) Banks .. 20,200,289 60,637,037 short term bills .. 272,749,597 239,204,270
(c) Marketing accounts .. 10,249,647 28,355,063 (b) Investments (see note
(d) Other .. 539,659,851 568,462,673 1(c)) .. 57,822,508 34,215,243
735,105,176 839,089,787 (c) Holdings of special
Time deposits .. 150,000,000 .. drawing rights .. 48,265,724 21,175,956
378,837,829 294,595,469
Liabilities in currencies other than New New Zealand coin .. 9,687,464 10,917,820
Zealand currency: Discounts .. 495,300 6,755,407
(a) Demand .. 443,110 298,080 Advances:
(b) Time .. 345,200,007 289,733,245 (a) To the State .. 398 501,113
345,643,117 290,031,325 (b) To marketing accounts 470,395,038 439,705,611
Allocations of special drawing rights by (c) Export credits .. 27,800,038 28,250,320
I.M.F. .. 84,195,075 83,758,146 (d) Other .. 487,219,815 3,770,161
Other liabilities .. 46,204,212 31,799,621 985,415,289 472,297,205
Capital accounts: Investments in New Zealand:
(a) General reserve .. 8,000,000 7,700,000 (a) New Zealand Govern-
(b) Other .. 38,988,965 28,011,751 ment securities .. 337,191,785 807,956,223
46,988,965 35,711,751 (b) Other .. 14,580,770 ..
Profit and loss appropriation account .. 13,155,303 6,907,441 (see note 1(c)) 351,772,555 807,956,223
Other assets .. 133,988,775 95,083,943

                                  $1,860,896,422    $1,688,311,058                    $1,860,896,422    $1,688,311,058

Notes: 1. Statement of Accounting Policies—The particular accounting policies adopted by the Bank which significantly affect the measurement
and reporting of its results and financial position on an historical cost basis are as follows:
(a) Foreign Currency Translations:
Overseas assets and liabilities at balance date are converted to New Zealand currency using the appropriate telegraphic transfer
rates ruling at 31 March 1978.
(b) Fixed Assets and Depreciation Policy:
The Bank's buildings at Wellington and Christchurch are depreciated over their estimated economic life on a straight line basis at
the rate of 1% per annum. The Bank's existing building at Auckland has been fully written off whilst preliminary expenditure on the
new building is reflected at cost (see note 3). The cost of all land acquired has been written off in prior years. All other fixed assets
are similarly treated in the year of acquisition.
(c) Investments:
Overseas investments are shown in the balance sheet at the New Zealand equivalent of foreign currency cost, NZ$57.8 million
(market value at balance date NZ$56.1 million). New Zealand investments are shown at the lower of cost or market value (market
value $353.4 million).
(d) Exchange Rate Fluctuations:
The profit or loss arising from appreciation or depreciation of the Bank's net overseas assets due to movements in basic exchange
rates is settled with Treasury in terms of section 26 of the Reserve Bank of New Zealand Act 1964. The loss in respect of the year
ended 31 March 1978, subject to such settlement was NZ$20,026,683.
2. Contingent Liability—In respect of an investment of 250,000 Estg. 1 shares in the Commonwealth Development Finance Co. Limited of
which 50p per share is uncalled. New Zealand equivalent $227,645.24.
3. Capital Commitment—Since 31 March 1978 a contract has been entered into for the construction of premises in Auckland. The contract
price is $9.5 million and construction is expected to take 3 years.

                                                                    R. W. R. WHITE, Governor.
                                                                      D. L. WILKS, Deputy Governor.

E. D. VALLANCE, Chief Accountant.

                          REPORT OF THE AUDITORS TO THE RESERVE BANK OF NEW ZEALAND

We have audited the accounts of the Reserve Bank of New Zealand for the year ended 31 March 1978 and have obtained all the informa-
tion and explanations we have required.
In our opinion the above balance sheet and profit and loss account are properly drawn up so as to give respectively a true and fair view
of the state of affairs of the Bank as at 31 March 1978, and of its results for the year then ended.

                                                                    CLARKE, MENZIES & CO.  }
                                                                  HUTCHISON HULL & CO.   }Chartered Accountants.

Wellington, New Zealand.
26 June 1978.