16 OCTOBER THE NEW ZEALAND GAZETTE 4421

Appropriation Account—
Balance of Reserve Fund 1 April 1985 1,353,374 1,043,272
Less provision for donations 1,605,703 1,352,723
20,000 —
Add changes in reserves 1,585,703 1,352,723
176,072 651
Balance of Reserve Fund 31 March 1986 $1,761,775 $1,353,374

STATEMENT OF CHANGES IN FINANCIAL POSITION FOR YEAR ENDED 31ST MARCH 1986

Funds were Received from—
Operations:
Net profit after taxation $ 252,329 $ 309,451
Adjust for items not involving movement of funds:
– Depreciation 205,397 208,809
– Deferred taxation 44,651 253,188
502,377 771,448

Payment of Principal:
New Zealand Government stock 6,345,098 5,432,942
Local authorities securities 15,311 7,676
Mortgages and personal loans 9,494,139 9,662,974
15,854,548 15,103,592

Other Sources:
Depositors fund 3,313,461 4,292,699
Increase in working capital 679,691 —
4,011,152 4,292,699
20,368,077 20,167,739

These Funds Were Applied to:
Investments in:
New Zealand Government Stock 3,440,000 8,054,750
Mortgages and personal loans 8,613,466 11,188,980
Interest bearing deposits 7,883,418 213,291
19,936,884 19,457,021

Other Applications:
Fixed assets 431,193 399,854
Decrease in working capital — 310,864
431,193 710,718
$20,368,077 $20,167,739

Net Increase (Decrease) in Working Capital:
Cash resources 444,581 (94,826)
Interest accrued on investments (325,408) (130,379)
Debtors and prepayments (29,320) 100,813
Sundry creditors 34,080 (58,283)
Interest accrued on investment accounts 573,758 (128,189)
$697,691 ($310,864)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 1986

1. General Accounting Policies—
   The accounting policies as recommended by the New Zealand Society of Accountants for the measurement and reporting of results and financial position under the historic cost, modified by the revaluation of current assets, has been adopted consistent with the previous year. Reliance is place on the fact that the Bank is a going concern.

2. Particular Accounting Policies—
   (a) Recognition of Income—The income earned is recorded on an accrual basis and includes the amortization of premiums and discounts on the purchase of Government and local authority stock. Interest on personal loans is calculated according to the Rule of 78.
   (b) Expenditure—Interest on depositors accounts represents interest paid, credited or accrued for the financial year ended 31st March 1986. Other expenses, including computer development costs and losses associated with dealing in securities, have been charged to the accounts in the year in which the expenditure or loss was incurred.
   (c) Fixed Assets and Depreciation—Fixed assets are valued at cost less accumulated depreciation with the exception of land and buildings which are valued at 90 percent of a registered valuers valuation.
   Depreciation has been charged using the straight line method which writes off the asset over its useful economic life to its estimated residual value:

Buildings 80–100 years
Computer and office equipment 5–10 years
Furniture and fittings 5–20 years
Motor vehicles 2–5 years

(d) Taxation—Taxation charged against net profit is the estimated expense relating to the result for the year. It includes amount for taxation, the payment of which is deferred to future periods, because taxation practice differs from accounting policies in the treatment of:
(i) Interest accrued on investments,
(ii) Depreciation charges,
(iii) The amortization of profits and losses in respect of Government and local authority stock purchases and sales.