Auditor-General's overview

Central government: Results of the 2012/13 audits (Volume 1).

This report presents the results of our audit of the Government's 2012/13 financial statements and reports on the results of our review of whether government expenditure was appropriately authorised.

I intend to report in early 2014 on the 2012/13 audit results for central government entities. I will publish separate reports on the results of our audits of the social and health sectors, schools, and State-owned enterprises.

Financial statements of the Government

I issued a standard audit report, which included an unmodified opinion on the financial statements of the Government. This marks a change from the previous two years, when I drew attention to uncertainties resulting from the Canterbury earthquakes. Although some uncertainties remain, I consider that they are now less significant to the Government's financial statements.

My audit considered the accounting treatment of Solid Energy Limited's assets and liabilities, given the company's uncertain financial situation. I am satisfied that Solid Energy's assets and liabilities have been appropriately included in the Government's financial statements. Solid Energy is now expected to continue to be able to operate for the foreseeable future following the finalisation of a capital restructuring agreement subsequent to 30 June 2013, although this agreement has been subject to legal challenge.

The recovery from the Canterbury earthquakes remains a significant focus for central and local government in 2012/13. My Office has published two reports this year looking at aspects of the recovery process and it will remain a focus for me in future years because of the magnitude of the exercise and the level of public expenditure involved. In the context of my audit of the Government's financial statements, I considered the accounting treatment of the Government's share of costs:

  • to repair Canterbury infrastructure assets; and
  • to repair local roads in Canterbury.

I am satisfied with the treatment in both instances. My staff will continue to focus on developments as they prepare for and carry out our 2013/14 audit.

Another significant consideration in the 2012/13 audit was the accounting for and disclosure of minority interests in certain Crown companies, including Mighty River Power Limited. I am satisfied that the minority interest disclosures appropriately explain the effect of the partial sale of shares in Mighty River Power during the year.

Controller's 2012/13 report

Almost all government expenditure during 2012/13 was authorised by appropriations in the usual way. However, there were 13 instances of expenditure that was not authorised, which amounted to about $49 million in total.

In five instances, expenditure was outside the scope of, or without any, appropriation. This expenditure totalled about $40 million. The Treasury incurred most of this unappropriated expenditure $30 million relating to a capital injection for Crown Asset Management Limited.

During the year, I considered a request about whether funding for a deregistered party was being spent within the scope and purpose for which it was appropriated. I confirmed that, for as long as the party was recognised as a party for parliamentary purposes under Standing Orders, there is lawful authority for the party to receive party funding under the relevant legislation.

I continue to encourage departments to pay close attention to whether they have authority before spending.

Signature - LP 

Lyn Provost
Controller and Auditor-General

2 December 2013

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