Appendix: Details of the non-standard audit reports issued

Local government: Results of the 2005/06 audits.

These details relate to non-standard audit reports issued during the 2006 calendar year.

Adverse opinions

Southland Museum and Art Gallery Trust Board Incorporated^a

Financial statements year ended: 30 June 2006

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 report. 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 preparing a statement of intent for the year beginning 1 July 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Trust Board did not adopt a statement of intent for the year beginning 1 July 2006. However, the financial report of the Museum Trust fairly reflected the cash flows.

The Canterbury Museum Trust Board

Financial statements year ended: 30 June 2005

Otago Museum Trust Board^b

Financial statements year ended: 30 June 2006

Hawke’s Bay Cultural Trust^c

Financial statements year ended: 30 June 2006

We disagreed with the Trustees not recognising the collection assets of the Cultural Trust, nor the associated depreciation expense, in the Cultural Trust’s financial report. 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.

Wairarapa Cultural Trust^d

Financial statements year ended: 30 June 2006

We disagreed with the Trustees not recognising the general collection assets, nor the associated depreciation expense, in the Trust’s financial report. These are departures from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires general collection assets not previously recognised to be recognised initially at fair value and depreciated. In addition, we were unable to verify material revenues due to limited control over those revenues before they were recorded. However, the financial report fairly reflected the Trust’s cash flows.

a Council-controlled organisation controlled by Gore District Council, Invercargill District Council, and Southland District Council.

b Council-controlled organisation controlled by Dunedin City Council.

c Trust controlled by Hastings District Council and Napier City Council.

d Trust controlled by Masterton District Council, Carterton District Council, South Wairarapa District Council, and Masterton Trust Lands Trust.

Disclaimer of opinion

Charleston Goldfields Hall Board

Financial statements for the three-year period ended: 30 June 2005

Our audit was limited because the Board did not prepare its annual financial report in accordance with the Public Finance Act 1989, which requires its financial report to comply with generally accepted accounting practice in New Zealand. As a result, we were unable to form an opinion on the financial report. Our audit was also limited because we were unable to verify certain revenue because of limited control over the receipt of that revenue. In addition, the Board did not maintain appropriate accounting records to support some payments.

“Except-for” opinions

Hutt City Council and group

Financial statements year ended: 30 June 2006

We disagreed with the city council and group not recognising the land and buildings and infrastructural assets it owns in the Statement of Financial Position at fair value at 30 June 2006. This is a departure from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment. The departure occurred because the city council and group did not comply with its own accounting policies, which state that land and buildings and infrastructural assets are recognised at fair value. There were reliable indicators the land and buildings and infrastructural assets were recorded in the financial statements at a carrying value that is materially different from its fair value. However, the financial report of the city council and group fairly reflected the results of operations, cash flows, and service performance.

Montford Trimble Foundation^e

Financial statements year ended: 30 June 2005

We disagreed with the Foundation not having performance targets and other measures for measuring performance in its Annual Plan for the year beginning 1 July 2004, as required by the Local Government Act 2002, and therefore not being able to prepare performance information that fairly reflects its service performance. However, the financial report of the Foundation fairly reflected the financial position, results of its operations, and cash flows.

Advance Whangarei Limited^f

Financial statements year ended: 30 June 2005

We disagreed with the company not preparing and reporting on performance information that gives a true and fair view of its service achievements for the year ended 30 June 2005, as required by the Local Government Act 2002. However, the financial report of the company gave a true and fair view of the financial position, results of its operations, and cash flows. We noted a breach of the Local Government Act 2002 because the Board did not adopt a statement of intent for the year beginning 1 July 2005. We also noted the disclosures in the financial report that referred to the going concern assumption appropriately not being used in preparing the financial report because the company was expected to be disestablished and all assets and liabilities vested in the Whangarei District Council.

Hawkes Bay Incorporated^g

Financial statements year ended: 30 June 2005

We disagreed with the Trustees not preparing a statement of intent for the year beginning 1 July 2004, as required by the Local Government Act 2002, and therefore not being able to prepare performance information that fairly reflects its service achievements. However, the financial report of the Trust fairly reflected the financial position and results of its operations.

Tourism Dunedin Trust^h

Financial statements year ended: 30 June 2005

We disagreed with the Trustees not preparing a statement of intent for the year beginning 1 July 2004, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Trust did not adopt a statement of intent for the year beginning 1 July 2005. However, the financial report of the Trust fairly reflected the financial position and results of its operations.

Waitaki District Health Services Trustⁱ

Financial statements year ended: 30 June 2005 and 30 June 2006

We disagreed with the Trustees not preparing a statement of intent for the years beginning 1 July 2004 and 1 July 2005 respectively, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Trustees did not adopt a statement of intent for the years beginning 1 July 2005 and 1 July 2006 respectively. However, the financial report of the Trust fairly reflected the financial position and results of its operations.

The Southern Rural Fire Authority

Financial statements year ended: 30 June 2005 and 30 June 2006

We disagreed with the committee not preparing a statement of intent for the years beginning 1 July 2004 and 1 July 2005 respectively, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the committee did not adopt a statement of intent for the years beginning 1 July 2005 and 1 July 2006 respectively. However, the financial report of the Authority fairly reflected the financial position, results of its operations, and cash flows.

Southland Flood Relief Fund^j

Financial statements year ended: 30 June 2005 and 30 June 2006

We disagreed with the Trustees not preparing a statement of intent for the years beginning 1 July 2004 and 1 July 2005 respectively, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Trustees did not adopt a statement of intent for the years beginning 1 July 2005 and 2006 respectively. However, the financial report of the Fund fairly reflected the financial position and results of operations.

Invercargill Community Recreation and Sports Trust^k

Financial statements year ended: 30 June 2006

We disagreed with the Trustees not preparing a statement of intent for the year beginning 1 July 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Trustees did not adopt a statement of intent for the year beginning 1 July 2006. However, the financial reports of the Trust fairly reflected the financial position and results of its operations.

Whangarei District Airport

Financial statements year ended: 30 June 2006

We disagreed with the committee not preparing a statement of intent for the year beginning 1 July 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the committee did not adopt a statement of intent for the year beginning 1 July 2006. However, the financial report of the airport fairly reflected the financial position and results of its operations.

Southland Regional Heritage Committee

Financial statements year ended: 30 June 2006

We disagreed with the committee not preparing a statement of intent for the year beginning 1 July 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the committee did not adopt a statement of intent for the year beginning 1 July 2006. However, the financial report of the joint committee fairly reflected the financial position, results of its operations, and cash flows.

Ashburton Stadium Complex Trust^l

Financial statements year ended: 30 June 2006

We disagreed with the Board of Trustees not preparing a statement of intent for the year beginning 1 July 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Board of Trustees did not adopt a statement of intent for the year beginning 1 July 2006. However, the financial report of the Trust fairly reflected the financial position, results of its operations, and cash flows.

North Shore Domain and North Harbour Stadium Trust Board^m

Financial statements year ended: 28 February 2006

We disagreed with the Board of Trustees not preparing a statement of intent for the year beginning 1 March 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that fairly reflects its service achievements. We also noted a breach of the Local Government Act 2002 because the Trust did not adopt a June balance date that was consistent with its parent entity. However, the financial report of the Trust fairly reflected the financial position and results of its operations. In addition, we noted the disclosures in the financial statements that referred to uncertainties surrounding the going concern assumption. The validity of the going concern assumption was dependent on the continued financial support of the Trust’s parent entity.

Mackenzie Holdings Limitedⁿ

Financial statements year ended: 30 June 2006

We disagreed with the Board not preparing a statement of intent for the year beginning 1 July 2005, as required by the Local Government Act 2002, and therefore not preparing performance information that gives 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 adopt a statement of intent for the year beginning 1 July 2006. However, the financial report of the company fairly reflected the financial position, results of its operations, and cash flows. We noted the disclosures in the financial statements that referred to the going concern assumption appropriately not being used in preparing the financial statements because the company’s operations will not be continued under the current structure.

Mapiu Domain Board

Financial statements year ended: 30 June 2005

The Board did not comply with section 41(2)(k) of the Public Finance Act 1989, because it did not include budget figures for the year in the Statement of Financial Position. In addition, our audit was limited because we were unable to verify certain revenue due to limited control over receipt of that revenue. However, the financial report of the Domain Board fairly reflected the financial position, results of its operations, and cash flows.

Waste Disposal Services^o

Financial statements year ended: 30 June 2006

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 2002 was not applied back over the periods to which they related and therefore depreciation for previous periods was understated. This is a departure from FRS-15: Provisions, Contingent Liabilities and Contingent Assets, which requires that full liability be recognised at the point that the obligation is established. However, the financial report of the joint venture fairly reflected the cash flows and its service performance.

Transwaste Canterbury Limited and Group^p

Financial statements year ended: 30 June 2006

Our audit was limited because the financial report of the company’s subsidiary had not previously been audited. As a result, we were unable to form an opinion on the comparative figures presented for the group. However, the financial report of the company and group gave a true and fair view of the financial position, results of its operations, cash flows, and its service performance for the current year.

Tauranga Art Gallery Trust^q

Financial statements year ended: 30 June 2006

Our audit was limited because there were limited controls over donation revenue before it was recorded in the previous financial year. As a result, we were unable to form an opinion on the comparative information presented for the Trust. However, the financial report of the Trust fairly reflected the financial position, results of its operations, and its service performance for the current year.

North Canterbury Fish & Game Council

Financial statements year ended: 31 August 2006

Our audit was limited because there were limited controls over license revenue before it was recorded in the previous financial year. As a result, we were unable to form an opinion on the comparative information presented for the council. However, the financial report of the council fairly reflected the financial position, results of its operations, cash flows, and its service performance for the current year.

Fish and Game New Zealand – West Coast Region

Financial statements year ended: 31 August 2006

Waitemata Infrastructure Limited^r

Financial statements year ended: 30 June 2006

Our audit was limited because the financial report of the company had not previously been audited. As a result, we were unable to form an opinion on the comparative information. However, the financial report of the company gave a true and fair view of its financial position and the results of its operations for the current year.

Nelson Creek Recreation Reserve Board

Financial statements year ended: 30 June 2003, 30 June 2004 and 30 June 2005

Our audit was limited because we were unable to verify certain revenue due to limited control over the receipt of that revenue.

Richmond Pool Charitable Trusts

Financial statements year ended: 30 June 2005

Our audit was limited because we were unable to verify certain revenue due to limited control over the receipt of that revenue.

Carparking Joint Venture^t

Financial statements year ended: 30 June 2006

Our audit was limited because we were unable to verify certain revenue due to limited control over the receipt of that revenue.

e Trust controlled by Masterton District Council.

f Council-controlled organisation controlled by Whangarei District Council.

g Council-controlled organisation controlled by Hawkes Bay Regional Council, Hastings City Council and Napier City Council.

h Council-controlled organisation controlled by Dunedin City Council.

i Council-controlled organisation controlled by Waitaki District Health Services Limited.

j Council-controlled organisation controlled by Gore District Council.

k Council-controlled organisation controlled by Invercargill City Council.

l Council-controlled organisation controlled by Ashburton City Council.

m Council-controlled organisation controlled by North Shore City Council.

n Council-controlled organisation controlled by MacKenzie District Council.

o Council-controlled organisation controlled by Manukau City Council.

p Council-controlled organisation controlled by Christchurch City Council.

q Council-controlled organisation controlled by Tauranga City Council.

r Council-controlled organisation controlled by Auckland City Council.

s Council-controlled organisation controlled by Tasman District Council.

t Council-controlled organisation controlled by Christchurch City Council.

Explanatory paragraphs – emphasis of matter

Hawkes Bay Airport Authority

Financial statements year ended: 30 June 2005 and 30 June 2006

We noted the disclosures in the financial report that outlined that the financial report had been prepared on a going concern basis notwithstanding the fact that the Authority is planning to terminate. The disclosures outline that a company would be established to operate the airport in place of the Authority.

Lower Kokatahi Hall

Financial statements year ended: 30 June 2003

We noted the disclosures in the financial report that referred to the going concern assumption appropriately not being used in preparing the financial report because the assets and liabilities of the Board were vested in the Westland District Council on 26 June 2003. No significant transactions took place between this date and balance date.

Otara Licensing Trust

Financial statements year ended: 31 March 2005

We noted the disclosures in the financial report that referred to the going concern assumption appropriately not being used in preparing the financial report because the Trust was placed in liquidation.

Nga Tapuwae Community Facilities Trust

Financial statements year ended: 30 June 2004 and 30 June 2005

Papakura District Enterprise Board^u

Financial statements year ended: 30 June 2005 and period ended: 27 June 2006

Invercargill Licensing Trust Sports Foundation

Financial statements year ended: 31 March 2006

Rotorua District Council Sinking Fund Commissioners

Financial statements year ended: 30 June 2006

We noted the disclosures in the financial report that referred to the going concern assumption appropriately not being used in preparing the financial report because the sinking fund was expected to be wound up in the next 12 months.

Whakatane District Council Sinking Fund Commissioners

Financial statements year ended: 30 June 2006

Bay of Plenty Regional Council Sinking Fund Commissioners

Financial statements year ended: 30 June 2006

Far North District Council Sinking Fund Commissioners

Financial statements year ended: 30 June 2006

Cooks Gardens Trust Board

Financial statements year ended: 30 June 2006

We noted the disclosures in the financial report that referred to the vesting of some of the Board’s assets in Wanganui District Council.

u Council-controlled organisation controlled by Papakura District Council.

Explanatory paragraphs – breaches of law

Taupo Airport Authority

Financial statements year ended: 30 June 2006

We noted a breach of the Local Government Act 2002 because the Airport Advisory Committee did not adopt a statement of intent for the year ended 30 June 2006. However, the Airport Advisory Committee was able to report performance information against performance targets.

Data Capture Systems Ltd^v

Financial statements year ended: 30 June 2006

We noted a breach of the Local Government Act 2002 because the Board of Directors did not adopt a statement of intent for the year beginning 1 July 2005. However, the Board of Directors were able to report performance information against performance targets.

Taupo District Economic Development Advisory Board^w

Financial statements year ended: 30 June 2006

We noted a breach of the Local Government Act 2002 because the Board members did not adopt a statement of intent for the year beginning 1 July 2005. The breach occurred because the entity was established in April 2006 and it focused on the Board’s ongoing role as well as preparing a statement of intent for the year beginning 1 July 2006.

Mangere Cemetery Board

Financial statements year ended: 31 March 2003, 31 March 2004, 31 March 2005, and 31 March 2006

We noted a breach of the Burial and Cremation Act 1964 because the Cemetery Trustees engaged in the business of retailing headstones.

Pihama Cemetery Trustees

Financial statements year ended: 31 March 2005

We noted a breach of the Burial and Cremation Act 1964 because the Cemetery Trustees provided a loan to another local organisation.

Warea Cemetery Trustees

Financial statements year ended: 31 March 2005

We noted a breach of the Burial and Cremation Act 1964 because the Cemetery Trustees provided a grant to another local organisation.

v Council-controlled organisation controlled by Taupo District Council.

w Council-controlled organisation controlled by Taupo District Council.