CLASSIFICATION OF LEASES: From 2015 onwards schools are reporting under PBE (Public Benefit Entity) IPSAS (International Public Sector Accounting Standards). Under these standards, if a lease meets certain criteria, it is treated as a finance lease rather than an operating lease. This change is important for schools, as finance leases are classified as borrowing, whereas operating leases are not. Boards will be aware that the Crown Entities Regulations limit the amount of debt servicing of a Board's borrowing to no more than 10% of the school's Operational funding. The new accounting standards provides the following definition for leases: A lease is classified as a finance lease if it transfers substantially all the risk and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Please be aware of this change when you are signing any new lease agreements other than TELA Laptop leases. Any leases taken out in 2016 will be assessed by your service provider and treated appropriately. In most cases, if the lease was nearing the end of its term in 2015, with the permission of the auditors we have allowed that lease to run its course under the accounting treatment used when it was first taken out.