15th November 2016
UPDATE: Financial Reporting Q&A
Tēnā rā koutou katoa,
A number of questions have been raised in addition to the above. These are in relation to the financial statements provided in the Annual Report of the Trust for the upcoming Annual General Meeting.
This pānui is for those that have similar questions to be answered. The Trust is happy to respond to any questions in relation to the Annual Report.
Ngāti Pāhauwera Development Trust
- What is the overall costings for the Trustees and Directors? Wages for staff are valued at $1.5 million dollars for 13 people. No wonder we are losing money quickly.
Wages- Staff Wages Annual Report pg 24 $1.5m and Note 13 pg 45 identifies two sections, Project workers and administration/ management. For the 15-month period there were 18 workers under project management and 12 workers under trust/ company administration and management, total 30 staff members. Fourteen former staff members that contributed to trust activities are acknowledged on pg 9, the remainder are profiled on pgs 80-85 including our farm staff. This does not take into account the casual and shearing staff that are also employed on the farms. Trustee and Directors costs pg 24 $287367 for 2016 and $230862 for 2015 and they are profiled on pgs 77-79.
- All of the accounts held are in serious position of deficit. – As per your email you stated that the financials are not disintegrating, yet that is exactly what I see. If you can see a financial surplus please let me know.
Deficits- Both farm and the trust working accounts show operating deficits as a result of the investment in the farms and employment of staff. The consolidated income on pg 32 shows a surplus of $3255858 as a result of all investment and operating activities.
- What is going on with the carbon credits. Why are these being used as monitory assets, and which figure is the true and correct one.
Carbon Credits- The carbon credits were brought in for the first time in the March 2015 year after incorrectly being omitted from the original amount that was considered the “treaty settlement”. They should remain on the Balance Sheet at their market value whilst they are owned by the Trust. They are a volatile asset due to the political nature of the global warming issue and they can distort the results positively or negatively when their price changes. The current policy for carbon credits is to hold unless there is good reason to sell and the recognised gain reflects the balanced nature of the investment portfolio and the new reporting requirements.
- The share market is not looking good at the moment and a realistic figure may need to be given at the AGM or Sooner.
Share Market- Michael Chamberlain can provide a more informed update but shocks in the share market as a result of the USA elections and/ or other such non controllable events are not unusual. A balanced portfolio can absorb the effect of such fluctuations.
- Why are there no accounts for the Government funding that has come through. It is all mixed up in the expenses that runs the farms and the Trust Working account. Is this Legal? Government funds should at least have its own accountability report. And the expenses to verify.
Government funds- pg 22 identifies all government contracted income and the expenditure is detailed on pg 23 as part of the operating and administration costs because there are both programme and corporate costs for all government contracts. Where possible we keep the respective expenditure identified. In terms of legality the unqualified audit opinion affirms that the financial statements are reported according to the regulatory and accounting industry requirements and all accountability reports have been provided for all government contracts.
- Expenditure for Pihanui is nearly $1,000,000, is this true what is going on there, and who is authorizing all this money to go out.
Pihanui farm expenditure- pg 50 provides a farm breakdown but you are correct that expenditure is $1.1m and Luke Hansen can provide insight into the development expenditure invested in the farms and talk to the new structure being proposed.
- The farms are in deficit, fear of losing them to Mortgage or Loans are dangerous for the real whanau who whakapapa and this should be reported to the OTS.
Farm expenditure- there is no potential loss of property to banks as there are no mortgages on any trust properties. Luke will however talk to the farms and what is being proposed regarding the short/ medium term intentions to provide a return.
- I do not agree that our Rongoa should be sold off to the highest bidder. And no caravan is going to be parked up in the bush to prevent whanau from going in to use it. It is not tikanga to deprive our whanau of our natural medicines.
Rongoa- the trust has no plans on caravans and/or restrictions on accessing rongoa in fact we are trying to encourage and develop capacity in rongoa. There is an opportunity to harvest the flora for medicines to help our people which is part of the trust plans not to restrict whanau from accessing.
- Who are we paying 91, 099 for grazing, then I see someone is paying the Trust 88598 for grazing. There is a big loss there too..
Grazing- pg 30 grazing income $88598 relates to Chimney Creek and Rawhiti see pg 50 and pg 30 expenditure $91099 relates to the same, with the difference of $2501 as cartage between the farms. These are internal charges that are offset once the individual farm accounts are consolidated but are designed to track expenditure relating to each farm as shown on pgs 47-50. Peter Gillies can explain the nature of the accounting if you have any further queries.
The other matters of importance are;
- There are no issues of bankruptcy facing Ngati Pahauwera Development Trust, indicated by a financial position at 30.6.16 of $554k debt and some $19m in current assets from an asset base of $52m (pgs 34-35).
- There is no disrepute for the trust except for comments being apparently made on social media. Some members are not happy with decisions that have been made and choose social media as a medium to engage. The information is personal perspectives and not formal trust communications. The AGM is the opportunity to raise their concerns noting there are new trustees to bring concerns to the decision making table. The trust is also looking to improve their own formal communications.
- If you have any evidence of money laundering, then you should bring the matter to the attention of the appropriate authorities. The unqualified audit opinion indicates compliance to regulatory and industry reporting requirements. The trust uses two well established and reputable accounting firms and an auditor, so there is very little/ no room for impropriety.