8 OCTOBER
THE NEW ZEALAND GAZETTE
2829

OTAGO SAVINGS BANK
BALANCE SHEET AS AT 31 MARCH 1981

Depositors’ accounts—
Ordinary accounts .. .. 52,208,354
Thrift accounts .. .. 685,019
Special purpose accounts .. .. 8,435,261
Home lay-by accounts .. .. 14,904
Home and farm ownership accounts 4,304,915

65,648,453

Investment accounts, term deposits
and housing bonds .. .. 81,558,803

Total liability to depositors .. 147,207,256
National savings accounts .. 74,508
Add interest suspense accounts .. 1,328

75,836

Other liabilities
Interest accrued on investment
accounts and term deposits .. 4,279,234
Interest accrued on other de-
positors funds .. .. 588
Sundry creditors .. .. 180,756

Total other liabilities .. .. 4,460,578
Provision for donations .. .. 100,000
Provision for deferred taxation .. 931,448
Reserve fund (note 5) .. .. 4,574,668

$157,349,786

Current assets
Cash on hand and at bank .. .. 172,630
Fixed deposits .. .. 9,638,000
Interest accrued on investments .. 3,112,318
Taxation overpaid .. .. 197,278
Sundry debtors .. .. 59,468
Personal advances .. .. 381,259

Total current assets .. .. 13,560,953

Investments
N.Z. Government stock (note 2) .. 52,552,097
Local authority securities (note 2) 10,627,248
Mortgages .. .. 73,773,193
Personal loans (less interest yet to
mature) .. .. 3,784,157
Shares in allied computer proces-
sors limited at cost .. .. 13,750

140,750,445

National savings securities
N.Z. government stock at cost .. 74,508
Cash on hand and at bank .. .. 1,328

75,836

Fixed assets (note 3) .. .. 2,962,552

$157,349,786

D. C. McDONALD, President.
A. L. FLEURY, General Manager.

AUDITORS’ REPORT TO THE TRUSTEES OF THE OTAGO SAVINGS BANK
We have obtained all the information and explanations that we
have required. In our opinion proper accounting records have
been kept by the Bank so far as appears from our examination of
those records.
In our opinion, the financial statements give, using the historical
cost method, a true and fair view of the financial position of the
Bank at 31 March 1981, and the results of its operations and the
source and application of funds for the year ending on that date.

GILFILLAN MORRIS and CO.
HUTCHISON HULL and CO.
Chartered Accountants

Dunedin, 5 May 1981.

The notes and statement of source and application of funds on
pages 3 to 6 form part of these financial statements.

OTAGO SAVINGS BANK
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 1981

Interest on Investments—
From New Zealand Government stock .. .. 4,162,356
From local authorities stock .. .. 987,939
From mortgages .. .. 7,655,697
From other sources .. .. 1,926,418
Income from other sources .. .. 430,880

$15,163,290

Interest to depositors—
On open accounts .. .. .. 1,468,128
Closed accounts, matured investment accounts
and term deposits .. .. 4,143,161
Accrued on investment accounts and term
deposits .. .. .. 4,279,234
Accrued on other depositors’ funds .. .. 588

9,891,111
Administrative expenses .. .. 4,202,189
Trustees’ Honoraria .. .. 25,000
Depreciation .. .. .. 137,612
Provision for taxation (note 4) .. .. 365,122
Net profit carried down .. .. 542,256

$15,163,290

PROFIT AND LOSS APPROPRIATION ACCOUNT
Net profit brought down .. .. .. 542,256

$542,256

Provision for donations .. .. 100,000
Transfer to reserve .. .. 442,256

$542,256

The notes and statement of source and application of funds on
pages 3 to 6 form part of these financial statements.

NOTES TO THE ACCOUNTS YEAR ENDING 31 MARCH 1981

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:

Recognition of income—
Income shown in the profit and loss account is earned in the
current year and includes the amortisation of premiums and
discounts on the purchase of Government and local authority
stock. 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”.

Expenditure—
Interest credited to depositors—Interest on savings and current
accounts represents interest credited at 31 March and the interest
paid on closed accounts during the year. Investment accounts
which are credited with interest during the year have had an
appropriate adjustment made for the interest accrued to 31 March.

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

Depreciation—Fixed assets, other than freehold land, are
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 percent to 2.5 percent
Office Furniture and Equipment .. 10 percent to 15 percent

Taxation—Taxation charged against profits for the year is the
estimated expense for the year. Tax allocation accounting has been
adopted by the Bank for significant timing differences in respect
of accrued investment income, depreciation, capital profits and
losses and amortisations on Government and local authority
stock purchases and sales.

Valuation of assets—
Current assets and investments—All current assets and invest-
ments are shown at cost with the exception of Government and
local authority stock. On the basis that this stock will normally
be held to maturity, from the 1 April 1980 it has been valued at
cost adjusted by the amortisation of the discount or premium on
purchase, calculated on a yield basis, over the term of the stock.
The discount or premium is calculated after adjusting for interest
accrued in the purchase price. Prior to 1 April 1980, Government
and local authority stock was recorded at face value.

In certain instances, low yielding Government stock has been
realised for tax purposes in switch arrangements and the stock so
purchased is shown at the cost of the original holding.

Changes in Accounting Policies—
The policy in respect of the valuation of Government and local
authority stock and the recognition of income therefrom was
changed this year. In prior years the difference between the face
value and cost at the date of purchase was transferred to the
reserve fund. The effect of this change this year is not significant.