Chapter 5: Financial Components of the Financial Summary Section 5.1 Financial Statements and Projections. 5.2 Funding Strategy. 5.3 Valuation Forecasts. 5.4 Key Assumptions. 5.1 Financial Statements and Projections Full details of Council's accounting policies for property, plant and equipment (including network infrastructural assets) are provided in its Statement of Accounting Policies in all the Annual Plans (including LTP) and Annual Reports. In brief all expenditure over $500 on items expected to operate for more than 12 months (capital expenditure) is added to the fixed asset value and then depreciated over the estimated useful life of the asset. Income levels are set at a level to cover depreciation expense as well as cash expenses, the income "funding" depreciation is accumulated in a depreciation reserve to fund capital expenditure and/or repayment of loans raised to fund capital expenditure. Other expenditure is classified as operating expenditure and is expensed in the period incurred. Capital expenditure is funded from designated revenues (including development contributions); depreciation reserves as above; other reserves as available/appropriate; loans (generally 20 year table mortgage). Capital expenditure is smoothed at a whole of council level for strategic infrastructural expenditure. The current target is for total (un-inflated) expenditure to not exceed $35M p.a. Operating expenditure is funded from rates and charges. The funding policy is reviewed at least every three years and is included in the Long Term Plan. The financial statements of Marlborough District Council are published in detail in the Long Term Plan and the Annual Reports. They are prepared in accordance with the Local Government Act 2002 and comply with Generally Accepted Accounting Practices in New Zealand. They comply with NZIFRS and other applicable financial reporting standards as appropriate to public benefit entities. Page 72