Notes to the financial statements | For the year ended 31 December 2022

12. Provisions

Accounting policy

A provision is recognised for future expenditure of uncertain amount or timing when there is a present obligation (either legal or constructive) as a result of a past event; it is probable that an outflow of future economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Lease make-good

The lease make-good provision is based on an estimate of future costs to restore leased premises back to the condition when the lease period commenced.

In respect of a number of leased premises, Te Wānanga o Aotearoa is required at the expiry of the lease term to makegood any fixtures or fittings installed in the premises. In many cases, Te Wānanga o Aotearoa has the option to renew these leases, which impacts on the timing of expected cash outflows to make-good the premises.

The cash flows associated with the non-current portion of the lease make-good provision are expected to occur in May 2024, November-December 2024, January 2025, August-September 2025, November 2025, April 2026, December 2026, and May 2028. Information about Te Wānanga o Aotearoa leasing arrangements are disclosed in note 21.