Appendix 1: Details of Non-standard Audit Reports Issued

Local government: results of the 2002-03 audits.

“Adverse” Opinions

Name of Entity	Financial Statements Period Ended	Reason for Opinion
Tasman Bays Heritage Trust (Inc.) and Group	30 June 2002 and 30 June 2003	The Trust Board did not recognise the value of donated additions to the exhibits and collections it and Group owns, and has not provided depreciation on exhibits and collections. These are departures from Financial Reporting Standard No.3: Accounting for Property, Plant and Equipment (FRS-3). We also reported that, if it were not for the departures from FRS-3, the financial statements would have fairly reflected the Board’s financial position, results of operations, and cash flows.
Hawke’s Bay Cultural Trust	30 June 2003	The Trust did not recognise the value of collection assets it owns in the Statement of Financial Position, and has not provided depreciation on collection assets. These are departures from Financial Reporting Standard No.3: Accounting for Property, Plant and Equipment (FRS-3) which requires museum collection assets not previously recognised, to be recognised at fair value and depreciated. We also reported that, if it were not for the departures from FRS-3, the financial statements would have fairly reflected the Board's financial position, and results of operations.
Wairarapa Cultural Trust	30 June 2003	The Trust Board did not recognise the amount of donated additions to exhibits and collections during the year as revenue, and did not provide depreciation on those assets. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment (FRS-3). We also reported that, if it were not for the departure from FRS-3, the financial statements would have fairly reflected the Board’s financial position, results of operations, and cash flows.
Canterbury Museum Trust Board	30 June 2003	The Board did not recognise the value of the heritage assets it owns in the Statement of Financial Position, and has not provided depreciation on the heritage assets. This is a departure from Financial Reporting Standard No.3: Accounting for Property, Plant and Equipment (FRS-3). We also reported that, if it were not for the departure from FRS-3, the financial statements would have fairly reflected the Board’s financial position, results of operations, and cash flows.
Otago Museum Trust Board	30 June 2003	The Board did not recognise the value of the Trust museum collection assets it owns in the Statement of Financial Position. This is a departure from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment (FRS-3) which requires museum collection assets not previously recognised to be recognised at fair value. We also reported that, if it were not for the departure from FRS-3, the financial statements would have fairly reflected the Board’s financial position and results of operations.
Museum of Transport and Technology Board	30 June 2003	The Board did not recognise the value of the heritage assets it owns in the Statement of Financial Position, and did not provide depreciation on heritage assets. This is a departure from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment (FRS-3). We also reported that, if it were not for the departure from FRS-3, the financial statements would have fairly reflected the Board’s financial position, results of operations, and cash flows.
Patriotic and Canteen Funds Board	30 September 2003	The Board did not prepare annual financial statements in accordance with the Public Finance Act 1989, and their financial statements did not comply with generally accepted accounting practice in New Zealand. We were unable to form an opinion as to whether the limited financial information presented did fairly reflect the assets, liabilities, receipts and payments of the Board because there was no system of control over cash receipts and cash payments, which form a significant part of the Board’s transactions.
Bruce Bay Hall Board	30 June 2001 and 30 June 2002	These Boards did not prepare annual financial statements in accordance with the Public Finance Act 1989, and their financial statements did not comply with generally accepted accounting practice in New Zealand. However, the limited financial information presented did fairly reflect the assets, liabilities, receipts, and payments of the Boards.
Waitaha Hall Board	30 June 2002 and 30 June 2003
Haast Community Hall Board	30 June 2003
Nelson Creek Recreation Reserve Board	30 June 2003	The Board did not prepare annual financial statements in accordance with the Public Finance Act 1989, and its financial statements did not comply with generally accepted accounting practice in New Zealand. In addition, the Board was unable to provide supporting documentation for some payments it made, and there are limited controls over the donations it has received. However, the limited financial information presented did fairly reflect the assets and liabilities of the Board.
Oamaru Racecourse Reserve Trustees	30 June 2002	The Trustees breached the law by transferring their operations to another party, which was contrary to the Trustees’ statutory obligation to be responsible for the Reserve. The financial reports did not meet the statutory reporting requirements of the Trustees because they did not contain all the assets and liabilities nor all the revenues and expenses that they otherwise would have, had the transfer not occurred.

"Except-for" Opinions

Name of Entity	Financial Statements Period Ended	Reason for Opinion
Waitomo District Council and Group	30 June 2003	We disagreed with a subsidiary of the Council (Inframax Construction Limited) recognising a prior period adjustment resulting from a change in accounting estimate in the Council Group’s Statement of Movements in Equity. This is a departure from Financial Reporting Standard No. 7: Extraordinary Items and Fundamental Errors (FRS-7), which allows for the recognition of a prior period adjustment only in the event of a fundamental error.
Awakaponga Public Hall Board	30 June 2000	The Board did not prepare annual financial state- ments in accordance with the Public Finance Act 1989, which requires inclusion of a statement of objectives and a statement of service performance.
Mapiu Domain Board	30 June 2001	We were unable to verify some material revenues, because of limited control over those revenues. In addition, the financial reports did not include budgeted figures, and no statement of service performance was prepared (breaching requirements of the Public Finance Act 1989).
Whatitiri Domain Board	30 June 2002	No budgeted figures were included in the statements of financial performance, financial position, and cash flows (breaching a requirement of the Public Finance Act 1989).
Ruakaka Reserve Board	30 June 2002
Matata Recreation Reserve Board	30 June 2003
Wellington Provincial Patriotic Council	30 September 2001 and 30 September 2002	We were unable to verify revenues from collections and donations because of limited control over these revenues.
Carparking Joint Venture¹	30 June 2003	We were unable to verify car parking revenue because of limited control over these revenues prior to being recorded.
Inframax Construction Limited	30 June 2003	We disagreed with the company’s Board recognising in its Statement of Movements in Equity a prior period adjustment resulting from a change in accounting estimate. This is a departure from Financial Reporting Standard No.7: Extraordinary Items and Fundamental Errors (FRS-7), which allows for the recognition of a prior period adjustment only in the event of a fundamental error.
Waste Disposal Services Limited	30 June 2003	We disagreed with the accounting treatment of the landfill improvements asset. The asset was overstated because capitalisation of the closure and post-closure costs in 2003 was not applied back over the periods to which they related, and therefore depreciation for previous periods was understated.
Marton Aquatic and Leisure Trust	30 June 2002 and 30 June 2003	We were unable to verify revenues from pool admissions and confectionery sales because of limited control over these prior to being recorded.
Village Pool Charitable Trust	30 June 2003	We were unable to verify revenues from pool takings and shop sales because of limited control over these prior to being recorded.

Explanatory Paragraphs

Name of Entity	Financial Statements Period Ended	Subject matter covered
Chatham Islands Council	30 June 2003	We drew attention to uncertainties surrounding the going concern assumption. The validity of the going concern assumption was dependent on the successful conclusion of ongoing negotiations with the Government for additional funding.
Central Hawke’s Bay District Council and Group	30 June 2003	We drew attention to the fact that the Council had not complied with the Local Government Act 1974 in setting operating revenues at a level adequate to cover all projected operating expenses. In particular, the Council, having consulted its community as part of the Annual Plan process, had resolved not to set operating revenue at a level adequate to cover the decline in service potential (depreciation) relating to its bridges infrastructural assets.
America’s Cup Village Limited and Group	30 June 2003	We drew attention to the fact that the going concern basis had not been used in preparing the financial report.* * Justified because the entity was ceasing to exist.
Nelson Regional Airport Authority	31 March 2002
Hawke’s Bay Airport Authority	30 June 2003	We highlighted that: • the Authority’s joint venture partners planned to terminate the Authority and establish a company to undertake the airport activities, although no date had been set for termination; and • notwithstanding the planned termination, the going concern assumption had been used in preparing the financial report.

1: Carparking Joint Venture is a joint venture between Addington Raceway and the Christchurch City Council.