Source: https://oag.govt.nz/2008/local-govt/appendix.htm
Timestamp: 2019-08-25 03:29:15
Document Index: 784283378

Matched Legal Cases: ['art 2', 'art 3', 'art 4', 'art 5', 'art 6', 'art 7', 'art 8', 'art 9', 'art 10', 'art 11', 'art 12', 'art 13', 'art 14', 'art 15', 'art 16', 'art 17']

Appendix: Details of non-standard audit reports issued — Office of the Auditor-General New Zealand
Appendix: Details of non-standard audit reports issued
Part 2: Invercargill City Council and its subsidiary companies
Part 3: Amendments to Long-Term Council Community Plans
Part 4: The right debate
Part 5: Reporting on effects of activities in the annual report
Part 6: Approach to auditing the 2009-19 Long-Term Council Community Plans
Part 7: Transition to New Zealand equivalents to International Financial Reporting Standards
Part 8: Non-standard audit reports issued in 2007
Part 9: Non-profit council-controlled organisations
Part 10: Local authorities' exposure to liabilities from leaky home claims
Part 11: Local authority communications in an election year
Part 12: Local Authorities (Members' Interests) Act 1968
Part 13: Inquiries during 2006/07
Part 14: Financial performance of the fish and game council sector
Part 15: Issues for provincial patriotic councils seeking to cease operations
Part 16: Performance audits in the local government sector
Part 17: Good practice guide on audit committees in the public sector
Appendix: Details of non-standard audit reports issued Local government: Results of the 2006/07 audits. https://oag.govt.nz/2008/local-govt/appendix.htm https://oag.govt.nz/@@site-logo/controller_ag_international_400x37.png
Local government: Results of the 2006/07 audits.
These details relate to non-standard audit reports issued during the 2007 calendar year. Where an entity is directly or indirectly controlled by one or more city or district councils, we have listed them in brackets.
We disagreed with the Trustees ceasing to recognise the monetary value for an artwork asset it owns, and writing off the previous value of the artwork asset in its financial statements. The Trustees' decision resulted in an overstatement of the expenditure and deficit in the Statement of Financial Performance and an understatement of the assets and equity of the Trust. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires artwork assets to be recognised at fair value and depreciated.
Hawke's Bay Cultural Trust (Hastings District Council and Napier City Council)
We disagreed with the Trustees not recognising the collection assets of the Cultural Trust, nor the associated depreciation expense, in the Trust's financial statements. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires collection assets not previously recognised to be recognised at fair value and depreciated.
We disagreed with the Trustees not recognising the collection assets of the Trust, nor the associated depreciation expense, in the Trust's financial statements. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires collection assets not previously recognised to be recognised at fair value and depreciated. In addition, our audit was limited because we were unable to verify certain revenue because of limited controls over the receipt of that revenue.
The Museum of Transport and Technology Board
Financial statements year ended: 30 June 2006 and 30 June 2007
We disagreed with the Board not recognising the museum collection assets of the Museum, nor the associated depreciation expense, in the Museum's financial statements. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires museum collection assets not previously recognised to be recognised at fair value and depreciated.
Financial statements years ended: 30 June 2006 and 30 June 2007
We disagreed with the Trust Board not recognising the museum collection assets of the Museum Trust, nor the associated depreciation expense, in the Museum Trust's financial statements. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires museum collection assets not previously recognised to be recognised at fair value and depreciated.
We disagreed with the Trust Board not recognising the museum collection assets of the Museum Trust, nor the associated depreciation expense, in the Museum Trust's financial statements. These are departures from New Zealand equivalent to International Financial Reporting Standard No. 16: Property, Plant and Equipment, which requires museum collection assets not previously recognised to be recognised at fair value and depreciated.
We disagreed with the Board not preparing annual financial statements in accordance with section 41(2) of the Public Finance Act 1989 and not complying with generally accepted accounting practice. Our audit was limited because we were unable to verify certain revenue because of limited controls over the receipt of that revenue.
Bendigo Construction Limited (Invercargill City Council)
Financial statements for year ended: 30 June 2005
We were unable to form an opinion on the financial statements because of the potential effect of a limitation in evidence available to us. The evidence was limited because:
The Board did not provide the representations that we sought.
We were unable to verify certain revenue and expenditure because of limited controls over the completeness of revenue and expenditure.
The financial statements of the company had not been previously audited, therefore we did not form an opinion about the comparative information or the effect of any misstatement of comparative figures on the results for the year ended 30 June 2005.
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the company ceased trading on 30 June 2005. We noted the disclosure in the financial statements that referred to the fact that the Board did not prepare a Statement of Intent for the year beginning 1 July 2004 and consequently did not report group performance information because the company was to be wound up. We also noted a breach of the Companies Act 1993 because dividends were declared and paid despite the fact that the company had not satisfied the solvency test because its assets were less than its liabilities.
Financial statements for year ended: 30 June 2006
We were unable to form an opinion on the financial statements because of the potential effect of a limitation in evidence available to us. The evidence was limited because the Board did not provide the representations that we sought. In addition, we drew attention to the fact that we did not form an opinion on the financial statements for the year ended 30 June 2005 because:
The company had not been audited for the year ended 30 June 2004 and any misstatement of that year's figures would affect the results for the year ended 30 June 2005.
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the company ceased trading on 30 June 2005. We also noted the disclosure in the financial statements that referred to the fact that the Board did not prepare a Statement of Intent for the year beginning 1 July 2005 and consequently did not report group performance information because the company was to be wound up.
Bond Contracts Limited and Group (Invercargill City Council)
We were unable to form an opinion on the company and group financial statements because of the potential effect of a limitation in the scope of the audit. The scope of the audit was limited because:
We were unable to determine the validity of the use of the going concern assumption because there were indicators that the assumption may not be appropriate and the Board did not provide satisfactory evidence to support the use of the assumption.
The company was unable to assess and determine whether some fixed assets were recorded at more than their recoverable amounts.
The scope of the audit of the subsidiary, Bendigo Construction Limited, during the period it was an associate was limited and we were unable to confirm the share of the associate losses recorded by the company and group.
We noted the disclosure in the financial statements that referred to the fact that the Board did not prepare a Statement of Intent for the year beginning 1 July 2004 and consequently did not report group performance information.
We also drew attention to the fact that we did not form an opinion on the company and group financial statements for the year ended 30 June 2005 because:
We were unable to determine the validity of the use of the going concern assumption.
The Board did not provide us with the representations we sought.
The company did not determine whether some fixed assets were recorded at more than their recoverable amount.
We were unable to confirm the share of associate losses recorded by the company and group.
We noted the disclosure in the financial statements that referred to the fact that the Board did not prepare a Statement of Intent for the year beginning 1 July 2005 and consequently did not report group performance information.
Upper Hutt City Council and Group
We disagreed with the value at which the Council and Group recognised operational, restricted and infrastructural asset classes in the financial statements. The Council and Group accounting policy is to recognise operational, restricted and infrastructural asset classes at fair value. We identified reliable indicators to suggest that it was likely there had been a material increase in the value of the operational, restricted, and infrastructure asset classes. On this basis the Council departed from New Zealand equivalent to International Accounting Standard No. 16: Property, Plant and Equipment, which requires classes of property, plant and equipment that are revalued to be revalued with sufficient regularity to ensure that they are not included at a value that is materially different to fair value.
Invercargill City Holdings Limited and Group (Invercargill City Council)
Financial statements years ended: 30 June 2005 and 30 June 2006
Our audit was limited because of:
the scope of the audit of entities comprising the Bond Contracts Limited group (wholly owned by Invercargill City Holdings Limited) being limited;*
limitations in evidence to support the carrying value of the company's investment in Bond Contracts Limited; and
the Board not providing us with the representations we sought.
We disagreed with the Board only about comparative information because the Statement of Movements in Equity showed a prior period adjustment resulting from an error in the recognition of accrued revenue on maintenance contracts. This was a departure from Financial Reporting Standard No. 7: Extraordinary Items and Fundamental Errors, which allows for the recognition of a prior period adjustment only in the event of a fundamental error. In our view, the adjustment was not a fundamental error.
Tasman Bays Heritage Trust Incorporated (Nelson City Council and Tasman District Council)
We disagreed with the Trustees only about comparative information because the value of collection and exhibition assets donated to the Trust between 1 July 2000 and 30 June 2003 had not been recognised in the Trust's financial statements for the year ended 30 June 2005. Non-recognition of collection and exhibition assets was a departure from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment. We also noted a breach of the Local Government Act 2002 because the Trustees did not prepare a Statement of Intent for the year ended 30 June 2006.
Aurora Energy Limited (Dunedin City Council)
Financial statements year ended: 30 June 2007**
We disagreed with the company recognising the reduction in its deferred taxation liability arising from the revaluation of its network assets in previous years directly through the statement of changes in equity. This is a departure from the requirements of the New Zealand Equivalent to International Accounting Standard 12: Income Taxes.
Buller Health Trust (Buller District Council)
Financial statements year ended: 30 June 2002
Our audit was limited because the financial statements of the Trust had not previously been audited. Therefore, we did not form an opinion about the comparative information and noted that any misstatement of the comparative figures would affect the results for the year ended 30 June 2002
Our audit was limited in respect of comparative information only because the financial statements of the Trust had not been audited for the year ended 30 June 2001 and any misstatement of that year's figures would affect the results for the year ended 30 June 2002.
The Trust did not prepare a Statement of Intent for the years beginning 1 July 2004 and 1 July 2005 respectively, as required by the Local Government Act 2002. Therefore, it had not prepared performance information that fairly reflected its service achievements. We also noted a breach of the Local Government Act 2002 because the Board of Trustees did not prepare a Statement of Intent for the years beginning 1 July 2005 and 1 July 2006 respectively.
The Trust did not prepare a Statement of Intent for the year beginning 1 July 2006, as required by the Local Government Act 2002. Therefore, it had not prepared performance information that fairly reflected its service achievements.
Our audit was limited because the financial statements of the company had not previously been audited. We therefore did not form an opinion about the comparative information and noted that any misstatement of the comparative figures would affect the results for the year ended 31 March 2006.
Financial statements year ended: 31 March 2007
Our audit was limited in respect of comparative information only because the financial statements of the company had not been audited for the year ended 31 March 2005 and any misstatement of that year's figures would affect the results for the year ended 31 March 2006.
Tiromoana Station Limited (Christchurch City Council)
Our audit was limited in respect of comparative information only because the financial statements of the company had not been audited for the year ended 30 June 2004 and any misstatement of that year's figures would affect the results for the year ended 30 June 2005.
Sister Cities New Zealand Incorporated (Hastings District Council)
Our audit was limited in respect of comparative information only because we were unable to verify certain revenue because of limited controls over the receipt of that revenue for the year ended 30 June 2003.
Tourism Dunedin Trust (Dunedin City Council)
The Trust did not prepare a Statement of Intent for the year beginning 1 July 2005 as required by the Local Government Act 2002. Therefore, it had not prepared performance information that fairly reflected its service achievements. We also noted a breach of the Local Government Act 2002 because the Trust did not prepare a Statement of Intent for the year beginning 1 July 2006.
Tramway Reserve Trust (Selwyn District Council)
The Trust did not prepare a Statement of Intent for the year beginning 1 July 2004 as required by the Local Government Act 2002. Therefore, it had not prepared performance information that fairly reflected its service achievements.
Westland Holdings Limited and Group (Westland District Council)
The Company did not prepare a Statement of Intent for the year beginning 1 July 2005 as required by the Local Government Act 2002. Therefore, it had not prepared performance information that fairly reflected its service achievements. We also noted a breach of the Local Government Act 2002 because the Board did not prepare a Statement of Intent for the year beginning 1 July 2006.
Marlborough Airport Limited (Marlborough District Council)
The Company did not prepare a Statement of Intent for the year beginning 1 July 2006 as required by the Local Government Act. Therefore, it had not prepared performance information that fairly reflected its service achievements.
Varroa Agency Incorporated (Environment Canterbury)
The Agency did not prepare a Statement of Intent for the years beginning 1 July 2005 and 1 July 2006 respectively as required by the Local Government Act 2002. Therefore, it had not prepared performance information that gave a true and fair view of its service achievements. We also noted a breach of the Local Government Act 2002 because the Board did not prepare a Statement of Intent for the years beginning 1 July 2006 and 1 July 2007 respectively.
Pemberton Construction Limited (Waikato District Council)
The Company did not prepare a Statement of Intent for the year beginning 1 July 2006 as required by the Local Government Act 2002. Therefore, it had not prepared performance information that gave a true and fair view of its service achievements. We also noted the disclosure in the financial statements that the Board did not prepare a Statement of Intent for the year beginning 1 July 2007.
The Company did not prepare a Statement of Intent for the years beginning 1 July 2005 and 1 July 2006 as required by the Local Government Act 2002. Therefore, it had not prepared performance information that gave a true and fair view of its service achievements.
ARTNL Harbour Berths Limited (Auckland City Council)
The Company did not prepare a Statement of Intent for the year beginning 1 July 2005 as required by the Local Government Act 2002. Therefore, it had not prepared performance information that gave a true and fair view of its service achievements.
The Company did not prepare a Statement of Intent for the year beginning 1 July 2006 as required by the Local Government Act 2002. Therefore, it had not prepared performance information to give a true and fair view of its service achievements. We also noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the Company was to be wound up in the foreseeable future.
ARTNL Metro Limited (Auckland City Council)
The Company did not prepare a Statement of Intent for the year beginning 1 July 2006 as required by the Local Government Act 2002. Therefore, it had not prepared performance information to give a true and fair view of its service achievements. We also noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the Company was to be wound up in the next 12 months.
The Trust did not prepare a Statement of Intent for the year beginning 1 July 2006 as required by the Local Government Act 2002. Therefore, it had not prepared information that fairly reflected its service achievements. We also noted the disclosure in the financial statements that referred to uncertainty over the continued financial support from the trust's parent, Dunedin City Council, and the Trust meeting its 2008 budget. The validity of the going concern assumption was dependent on the continued support and the trust meeting its 2008 budget.
East Otago Community Sports and Cultural Centre Trust (Dunedin City Council)
Our audit was limited because we were unable to verify certain revenue because of limited controls over the receipt of that revenue.
Carparking Joint Venture (Christchurch City Council)
Village Pool Charitable Trust (Hastings District Council)
* The limitations in the scope of the audits of Bond Contracts Limited and Group for the years ended 30 June 2005 and 30 June 2006 are noted on page 107.
** We have been advised by the Board of its intention to withdraw and reissue the financial statements.
Explanatory paragraphs - emphasis of matter
We noted the disclosure in the financial statements that referred to the financials statements being appropriately prepared on the going concern basis because the Trustee of the Riskpool was able to levy members to cover any shortfall in equity in any fund.
We noted the disclosure in the financial statements that referred to uncertainty about the viability of Whisper Tech Joint Venture (the Joint Venture), which was the exclusive licensee of the company's assets and intellectual property under a licence agreement. The validity of the going concern assumption depended on financial support from the parties to the Joint Venture that were also significant shareholders in the company.
Whisper Tech Joint Venture
We noted the disclosure in the financial statements that referred to uncertainty over the continued financial support of the joint venturers. The validity of the going concern assumption depended on that support.
Far North Holdings Limited and Group (Far North District Council)
We noted that the chairman's report contained alternative versions of the statement of financial performance and statement of financial position to the audited financial statements. We noted that the statements outlined in the Chairman's report did not comply with generally accepted accounting practice and were not audited.
Advance Whangarei Limited (Whangarei District Council)
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the company was wound up on 30 June 2006.
Far North Developments Limited (Far North District Council)
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the company ceased operating.
ARRB Road Info Limited (New Plymouth District Council and South Taranaki District Council)
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because of the Board's intention to wind up the company.
Wellington Regional Economic Development Trust (Wellington City Council, Hutt City Council, and Porirua City Council)
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because of the Trustees' intention to wind up the trust.
America's Cup Village Limited and Group (Auckland Regional Council)
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the company was likely to be disestablished within 12 months.
Nga Tapuwae Community Facilities Trust (Manukau City Council)
Papatoetoe Licensing Trust
Financial statements year ended: 31 March 2006 and 31 March 2007
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the Trust was likely to be wound up after 31 March 2007.
Invercargill Licensing Trust - Charitable Trust
Whakatane District Council Sinking Fund Commissioners (Whakatane District Council)
We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the Sinking Fund was closed on 15 May 2007.
Explanatory paragraphs - breaches of law
Whakatane Airport Authority (Whakatane District Council)
We noted a breach of the Local Government Act 2002 because the Authority did not prepare a Statement of Intent for the year ended 30 June 2007. The Authority also did not have a statement of intent in place for the period beginning 1 July 2007.
Hawke's Bay Tourism Trust (Hawke's Bay Regional Council, Hastings District Council, and Napier City Council)
We noted a breach of the Local Government Act 2002 because the Trust did not prepare a Statement of Intent for the year ended 30 June 2006. We also noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because of the Trustees' intention to wind up the trust.
We noted a breach of the Local Government Act 2002 because the Trust did not prepare a Statement of Intent for the year ended 30 June 2007. We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because of the Trustees' intention to wind up the trust. We also noted the disclosure in the financial statements that the trust did not prepare a Statement of Intent for the period beginning 1 July 2007.
Hawke's Bay Economic Development Agency (Hawke's Bay Regional Council, Hastings District Council and Napier City Council)
We noted a breach of the Local Government Act 2002 because the Agency did not prepare a Statement of Intent for the year ended 30 June 2006. We noted the disclosure in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because of the Trustees' intention to wind up the Agency.
We noted a breach of the Local Government Act 2002 because the Trust did not prepare a Statement of Intent for the year beginning 1 July 2004.
Waikato Quarries Limited (Waikato District Council)
We noted a breach of the Local Government Act 2002 because the company did not prepare a Statement of Intent for the year ended 30 June 2006.
Port Westland Limited (Grey District Council)
We noted a breach of the Local Government Act 2002 because the company did not prepare a Statement of Intent for the year beginning 1 July 2007.
We noted a breach of the Local Government Act 2002 because the company did not prepare a Statement of Intent for the year ending 30 June 2007.
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