How TEIs can enter into a finance lease

Me pēhea te tomo pūtea rīhi a ngā kura mātauranga matua

Last updated 3 November 2016
Last updated 11/03/2016

Tertiary education institutions (TEIs) need the consent of the Secretary for Education to enter into financial leases.

Operating leases are treated differently and currently do not require the consent of the Secretary for Education.

TEIs should follow the relevant accounting standards when determining whether a lease is financial or operating.  It may also be useful to discuss any documentation with your auditors who can confirm how these leases should be treated.

What information we require for a finance lease application

We require the following information for assessing an approval to borrow where a finance lease of less than $1 million is involved:

  • the lease amount(s)
  • the start date and expiry date for the equipment lease (or expected dates for the proposed lease(s))
  • a schedule of the lease terms, ie, payment amounts, dates of payments, etc
  • the additional revenue expected to be generated by the leased equipment and/or cost savings made
  • a description of any cost-benefit analysis completed before the decision to enter into the leases
  • the reason(s) for acquiring the equipment by way of a finance lease versus entering into an operating lease or outright purchase
  • how the lease(s) will impact on the TEI’s statement of financial position, statement of financial performance and statement of cashflows over the term of the lease(s)
  • any other comments you may wish to make to support your application for a finance lease.