Grants received Operating leases Grants are recognised as revenue when they become receivable unless there is an obligation in substance to return the funds if conditions of the grant are not met. If there is such an obligation, the grants are initially recorded as grants received in advance and recognised as revenue when conditions of the grant are satisfied. An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset to the lessee. Grant expenditure Discretionary grants are those grants where the Commission has no obligation to award on the receipt of a grant application and are recognised as expenditure when approved by the Commission and the approval has been communicated to the applicant. Project and programme costs Costs that are directly attributable to a project activity are reported in the statement of comprehensive revenue and expense as project and programme costs. This includes the cost of travel where the primary purpose of the travel relates to the project activity. Leases Finance leases A finance lease is a lease that transfers to the lessee substantially all of the risks and rewards incidental to ownership of an asset, whether or not title is eventually transferred. At the commencement of the lease term, finance leases where the Commission is the lessee are recognised as assets and liabilities in the statement of financial position at the lower of the fair value of the leased item or the present value of the minimum lease payments. The finance charge is charged to the surplus or deficit over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability. The amount recognised as an asset is depreciated over its useful life. If there is no reasonable certainty as to whether the Commission will obtain ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life. 44 Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term. Lease incentives received are recognised in the surplus or deficit in the statement of comprehensive revenue and expense as a reduction in rental expense over the lease term. Foreign currency transactions Foreign currency transactions are translated into New Zealand dollars using the spot exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the surplus or deficit in the statement of comprehensive revenue and expense. Cash and cash equivalents Cash and cash equivalents include cash on hand and funds on deposit at banks with an original maturity of three months or less. Short-term deposits Short-term deposits include funds on deposit at banks with an original maturity of more than three months but not more than 12 months and are initially measured at the amount invested. Receivables Short-term receivables are recorded at their face value, less any provision for impairment. A receivable is considered impaired when there is evidence that the Commission will not be able to collect the amount due. The amount of the impairment is the difference between the carrying amount of the receivable and the present value of the amounts expected to be collected. Human Rights Commission