Appendix: Details of the non-standard audit reports issued in 2008
Central government: Results of the 2007/08 audits.
Adverse opinions
Adverse opinions for public entities other than schools
| Royal New Zealand Navy Museum Trust Incorporated Financial statements year ended: 30 June 2007 We disagreed with the Trustees not recognising the museum 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 museum collection assets not previously recognised to be recognised at fair value and depreciated where appropriate. In addition, we were unable to verify some material revenues due to limited controls over those revenues. |
| RNZAF Museum Trust Board Financial statements year ended: 30 June 2008 We disagreed with the Trustees not recognising the museum 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 museum collection assets not previously recognised to be recognised at fair value and depreciated where appropriate. |
| Queen Elizabeth II Army Memorial Museum Financial statements year ended: 30 June 2008 We disagreed with the Trustees 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 where appropriate. |
Disclaimers of opinion
Disclaimers of opinion for schools
| Te Kura Kaupapa Maori O Ruamata Financial statements year ended: 31 December 2004 We were unable to form an opinion on the financial statements because there was a limitation in evidence:
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Except-for opinions
Except-for opinions for public entities other than schools
| Auckland District Health Board and Group Financial statements year ended: 30 June 2007 We disagreed with the Health Board not recognising the land and buildings and associated fit-out and services it owns in the Statement of Financial Position at fair value. This is a departure from Financial Reporting Standard No. 3: Accounting for Property, Plant and Equipment, which requires the revaluation of all assets within a class of assets to be recorded 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 and group's financial position, results of operations, cash flows, and achievements measured against performance targets for the year. |
| Christchurch Polytechnic Institute of Technology and Group Financial statements year ended: 31 December 2007 We disagreed with the Council not preparing consolidated financial statements for the group in accordance with New Zealand Equivalent to International Accounting Standard 27 (NZ IAS 27): Consolidated and Separate Financial Statements. Because the Council did not prepare group financial statements in accordance with NZ IAS 27 for the year ended 31 December 2006, there is no comparative information for the group in the 2007 financial statements. We also reported that, if it were not for the departure from NZ IAS 27, the financial statements would have fairly reflected the Institute and group's financial position, results of operations, cash flows, and achievements measured against performance targets for the year. |
| Massey University and Group Financial statements year ended: 31 December 2007 Our audit was limited because the University did not carry out a revaluation of land and buildings to ensure that the value of the land and buildings was not materially different to fair value. This is a departure from New Zealand Equivalent to International Accounting Standard 16: Property, Plant and Equipment, which requires that entities recognise land and buildings at fair value and carry out revaluations with enough regularity to ensure that the revalued land and buildings are not included at a value that is materially different to fair value. |
| UCOL International Limited (Universal College of Learning) Financial statements year ended: 31 December 2007 Our audit was limited because the company was unable to establish the amount of tax-related liabilities to be recognised in its financial statements as required by New Zealand Equivalent to International Accounting Standard 12: Income Taxes, or file returns to the Income Tax Department of India for activities carried out in India from 2004 to 2007. |
| Ngati Whakue Educational Endowment Trust Board Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to confirm the value of the Board’s land that was classified as investment property. The land had not been revalued but instead was recognised at its rating value. This is a departure from Statement of Standard Accounting Practice No. 17: Accounting for Investment Properties and Properties Intended for Sale, which requires the investment property to be revalued annually to net current value. |
| Massey Ventures Limited and Group (Massey University) Financial statements years ended: 30 June 2005, 30 June 2006, and 30 June 2007 Our audit was limited because we were unable to verify that the unaudited financial information of the company’s associate was properly recorded and disclosed in the financial statements. The associate, which was not a public entity, is not under the Auditor-General's mandate and its shareholders elected not to have an audit carried out. |
| Te Wānanga o Aotearoa Te Kuratini o Ngā Waka Financial statements year ended: 31 December 2006 Our audit was limited because we were unable to determine whether any adjustments to the comparative information were necessary. The Wānanga and group did not maintain adequate systems and controls to identify all related party transactions between 1 January 2005 and 8 March 2005. |
| MO1 Limited (Te Wānanga o Aotearoa Te Kuratini o Ngā Waka) Financial statements year ended: 31 December 2006 Our audit was limited because we were unable to determine whether any adjustments to the comparative information were necessary. The company did not maintain adequate systems and controls to identify all related party transactions between 1 January 2005 and 8 March 2005. |
| Ivey Hall and Memorial Hall 125th Anniversary Appeal Gifting Trust (Lincoln University) Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. |
| Ivey Hall and Memorial Hall 125th Anniversary Appeal Taxable Activity Trust (Lincoln University) Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. |
| Wilson Home Trust (Waitemata District Health Board) Financial statements year ended: 30 June 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. |
| Creative Campus Enterprises Limited (Massey University) Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. We also noted that the going concern assumption had appropriately not been used in preparing the financial statements because the company was wound up on 31 March 2008. |
Except-for opinions for schools
| Remuera Primary School Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| Wellington Girls’ College Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| New Plymouth Girls' High School Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| Wanganui City College Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| Mornington School Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| Te Wharekura Rakaumangamanga Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| St Peter’s College (Epsom) Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees not preparing group financial statements. This is a departure from New Zealand Equivalent to International Accounting Standard 27: Consolidated and Separate Financial Statements, which requires the Board of Trustees to present consolidated financial statements. |
| Wellington East Girls' College Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees' decision to increase the amount owing to trusts for bequests received to help restore the capital value of the bequests. This is a departure from New Zealand Equivalent to International Accounting Standard 37: Provisions, Contingent Liabilities and Contingent Assets, which requires the amount of provisions to be based on the level of present obligation. |
| St Joseph's School (Upper Hutt) Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to obtain satisfactory evidence to support the cost and the associated grant for the land and building occupied by the school that was recorded in the school’s financial statements. |
| Sacred Heart School (Thorndon) Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to obtain satisfactory evidence to support the cost and the associated grant for the land and building occupied by the school that was recorded in the school’s financial statements. |
| Huntly West School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain transactions. The receipt book was missing, and certain transactions were subject to allegations of theft and fraud. |
| Mansell Senior School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify some expenditure. Some source documentation had been manipulated or destroyed in the course of fraudulent activities. |
| Salford School Financial statements years ended: 31 December 2006 and 31 December 2007 Our audit was limited because we were unable to verify some revenue due to limited controls over that revenue and missing accounting records. |
| Kaingaroa Forest School Financial statements year ended: 31 December 2006 Our audit was limited because we were unable to verify some revenue due to limited controls over that revenue. |
| Whareorino School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. |
| Kiwitahi School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. |
| Piopio Primary School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over that revenue. |
| Karoro School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify some revenue due to limited controls over that revenue. |
| Waihi East School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify some revenue due to limited controls over that revenue. |
| Taumarunui High School and Community Trust Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify some revenue due to limited controls over that revenue. |
| Te Kura O Otangarei School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain expenses due to not being able to obtain appropriate documentation of those expenses. |
| Te Whanau A Apanui Area School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify certain revenue due to limited controls over the receipt of this revenue. We were also unable to verify certain expenses due to not being able to obtain appropriate documentation of those expenses. |
| Piri Piri School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify some revenue and expenses due to limited controls over those amounts. |
| Brandon Intermediate School Financial statements year ended: 31 December 2007 Our audit was limited because we were unable to verify some revenue and expenses due to limited controls over these amounts. |
| Whanganui Awa School Financial statements year ended: 31 December 2007 Our audit was limited because the Board of Trustees did not include a provision for cyclical maintenance in the financial statements. This is a departure from its reporting requirements. |
| St Matthew’s School (Marton) Financial statements year ended: 31 December 2007 Our audit was limited because the Board of Trustees did not include a provision for cyclical maintenance in the financial statements. This is a departure from its reporting requirements. |
| St Mary's School (Cambridge) Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees recognising expenditure incurred in previous years on capital works on the proprietor's land as fixed assets. The Ministry did not approve the use of funding for this purpose. Therefore, this expenditure did not meet the criteria and should have been written off. As a consequence, the fixed assets, equity, and surplus of the Board of Trustees were overstated. |
| St Joseph's Primary School (Opotiki) Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees recognising expenditure incurred in previous years on capital works on the proprietor's land as fixed assets. The use of funding for this purpose was not approved by the Ministry. Therefore, this expenditure did not meet the criteria and should have been written off. As a consequence, the fixed assets, equity, and surplus of the Board of Trustees were overstated. |
| Carmel College Financial statements year ended: 31 December 2007 We disagreed with the Board of Trustees transferring funds to the school’s proprietor without appropriate authority. |
Explanatory paragraphs
Explanatory paragraphs (emphasis of matter) for public entities other than schools
| University of Auckland Financial statements year ended: 31 December 2007 We drew readers’ attention to the Partnerships for Excellence funding, which was appropriated by the Crown as a capital appropriation for increasing the University's capability and should have been recognised as equity rather than recognised as income in advance. While this amount is not material to the financial statements as a whole, we felt it important to highlight to the readers of the financial statements. |
| Capital and Coast District Health Board Financial statements year ended: 30 June 2008 We drew readers’ attention to the disclosures in the financial statements that referred to the uncertainty about the validity of the going concern assumption. The validity of the going concern assumption depended on the Board negotiating additional funding from the Crown to support its cash flow requirements and ensuring that the Board's borrowings requirements do not exceed its available borrowing facilities. |
| New Zealand Institute for Crop and Food Research Limited Financial statements year ended: 30 June 2008 We drew readers’ attention to the disclosures in the financial statements that referred to the uncertainty about the outcome of the company's plans to raise new capital to finance the development of its products. The viability of the company depends on the success of the company's plans in generating the necessary capital, and after that on the commercial success of the company's products. The validity of the going concern assumption depends on the continued financial support of the parent company and the provision of working capital from an improvement in trading performance. |
| GraceLinc Limited (New Zealand Institute for Crop and Food Research Limited) Financial statements year ended: 30 June 2008 We drew readers’ attention to the disclosures in the financial statements that referred to the uncertainty about the outcome of the company's plans to raise new capital to finance the development of its products. The viability of the company depends on the success of the company's plans in generating the necessary capital, and after that on the commercial success of the company's products. The validity of the going concern assumption depends on the continued financial support of the parent company and the provision of working capital from an improvement in trading performance. |
| Western Institute of Technology at Taranaki and Group Financial statements years ended: 31 December 2006 and 31 December 2007 We drew attention to uncertainties surrounding the going concern assumption. The validity of the going concern assumption depends on the continuing financial support of the Crown in the forms of loans and guarantees. |
| Aupouri Maori Trust Board Financial statements year ended: 30 June 2007 We noted that the financial statements were appropriately prepared on the going concern basis because the Trust Board had confirmed that it would implement a recovery plan to address its financial difficulties. |
| Cardiff Holdings No.1 Limited (Genesis Power Limited) Financial statements year ended: 30 June 2008 We noted that the financial statements were appropriately prepared on the going concern basis because the parent company had confirmed that it would provide adequate support to ensure that it will meet its debts as they fall due. |
| Cardiff Holdings No.2 Limited (Genesis Power Limited) Financial statements year ended: 30 June 2008 We noted that the financial statements were appropriately prepared on the going concern basis because the parent company had confirmed that it would provide adequate support to ensure that it will meet its debts as they fall due. |
| GP No.1 Limited (Genesis Power Limited) Financial statements year ended: 30 June 2008 We noted that the financial statements were appropriately prepared on the going concern basis because the parent company had confirmed that it would provide adequate support to ensure that it will meet its debts as they fall due. |
| GP No.2 Limited (Genesis Power Limited) Financial statements year ended: 30 June 2008 We noted that the financial statements were appropriately prepared on the going concern basis because the parent company had confirmed that it would provide adequate support to ensure that it will meet its debts as they fall due. |
| Kupe Holdings Limited (Genesis Power Limited) Financial statements year ended: 30 June 2008 We noted that the financial statements were appropriately prepared on the going concern basis because the parent company had confirmed that it would provide adequate support to ensure that it will meet its debts as they fall due. |
| Air New Zealand Consulting Limited (Air New Zealand Limited) Financial statements year ended: 30 June 2007 We noted that the financial statements were appropriately prepared on the going concern basis because the parent company had confirmed that it would provide adequate support to ensure that it will meet its debts as they fall due. |
| NIWA Natural Solutions Limited (National Institute of Water and Atmospheric Research Limited) Financial statements year ended: 30 June 2007 We noted that the financial statements were appropriately prepared on the going concern basis because the company had confirmed that it would rely on continued financial support from its parent company. |
| NIWA Natural Solutions Limited (National Institute of Water and Atmospheric Research Limited) Financial statements year ended: 30 June 2008 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 was to be wound up. |
| Architects Education and Registration Board Financial statements year ended: 31 March 2006, and period ended: 30 June 2006 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 was wound up at 30 June 2006. |
| Dunedin College of Education Financial statements year ended: 31 December 2006 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 College was merged with the University of Otago on 1 January 2007. |
| Iso-Trace Limited Financial statements year ended: 31 December 2007 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 was to cease operations in April 2008. |
| Ngai Tahu Ancillary Claims Trust Financial statements year ended: 30 June 2008 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 Trust will cease to operate following the transfer of the remaining claim property. |
| Transit New Zealand Financial statements year ended: 30 June 2008 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 entity was disestablished and merged with Land Transport New Zealand on 1 August 2008. |
| Immune Solutions Limited (University of Otago) Financial statements year ended: 31 December 2007 We noted that the company had disclosed that the budget figures in the financial statements were from an updated budget that were approved by the Board but that did not comply with the Crown Entities Act 2004, which requires the company's financial statements to include the forecast financial statements prepared at the start of the financial year. |
| Southland District Health Board Financial statements year ended: 30 June 2008 We noted that the Health Board had disclosed that the budget figures in the financial statements were from an updated budget that were approved by the Board but that did not comply with the Crown Entities Act 2004, which requires the Health Board's financial statements to include the forecast financial statements prepared at the start of the financial year. |
Explanatory paragraphs for schools
Emphasis of matter by type and number
| Serious financial difficulties (22 schools) Some schools are in serious financial difficulty, mainly because of large working capital deficits. We noted that 22 schools had included disclosures in their financial statements that outlined their financial difficulties and the actions they are taking to address the factors that had resulted in those difficulties. |
| Closures (7 schools) Accounting standards require schools that have been or are being closed to prepare their financial statements on the basis that they are not a “going concern”. We noted that seven closed schools had prepared their financial statements correctly. |
Breaches of law by type and number
| Expenditure on capital works on proprietor’s land (88 schools) In previous years, some Boards of Trustees had recognised as a fixed asset the expenditure on capital works on land owned by the schools’ proprietors. The use of funding for this purpose is not permitted by law unless the Boards of Trustees’ financial interests in the capital works have been agreed by the proprietors and the approval of the Ministry of Education has been obtained. We noted that 84 schools had regularised the expenditure on capital works on proprietors’ land by writing it off in accordance with the Ministry of Education‘s scheme. The other four schools had regularised the expenditure in other ways. |
| Not reporting by 31 May 2008 (76 schools) Boards of Trustees have a statutory obligation to issue their audited financial statements by 31 May 2008. We noted that 76 schools had breached the law by failing to meet this statutory reporting deadline, and had not disclosed the breach in their financial statements. |
| Not having a ten-year property plan (11 schools) Boards of Trustees have a statutory obligation to prepare and review annually, and have professionally reviewed every three years, a property plan that includes all the maintenance requirements of the school for a prospective 10-year period. We noted that 11 schools had breached the law by failing to annually update the 10-year property plan. |
| Not having a variation statement (9 schools) Schools are obliged by the Education Act 1989 to include, in their annual reports, statements comparing their performance against their objectives. We noted that nine schools had breached the law by not including such statements in their annual reports. |
| Borrowing without approval (6 schools) Boards of Trustees are not permitted to borrow above a prescribed limit without the approval of the Ministers of Education and Finance. We noted that six schools had breached the law by not seeking authority from the Ministers for borrowing above the limit. |
| Investing in non-approved institutions (5 schools) To safeguard public money, schools may invest their surplus funds only in approved banking and other institutions. We noted that five schools had breached the law by investing in non-approved banking institutions without the authority of the Ministers of Education and Finance. |
| Other reasons (9 schools) Our audit reports included explanatory paragraphs for other reasons:
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