Part 4: Overview of audit results for the central government entities

Central government: Results of the 2011/12 audits.

4.1
In Parts 4 to 8, we provide an overview of the audit results for government departments, Crown entities (excluding tertiary education institutions (TEIs) and schools), Crown research institutes, district health boards (DHBs), State-owned enterprises (SOEs), and other central government entities such as Air NZ, regulatory bodies, and Māori Trust Boards.

4.2
Under the Public Audit Act 2001, our Office is required to audit and report the findings of those audits to Parliament.

4.3
During the year ended 31 December 2012,13 we issued 481 audit reports for entities in our central government portfolio (excluding TEIs, Rural Education Activity Programmes, and schools). Of these 481 audit reports, 400 were standard and 81 were non-standard.

4.4
Figure 2 sets out a summary of the results of our audit work.

Figure 2
Summary of central government portfolio 2011/12 audit results

Number of standard audit reports issued Number of non-standard audit reports issued
The Government's financial statements 0 1
Description and type of non-standard audit report/s issued

The audit report included an unmodified opinion and an "emphasis of matter" paragraph drawing attention to the uncertainties arising from the Canterbury earthquakes.
Government departments 35 5
Student Loan Scheme 1 0
Subsidiaries 10 3*
Total 46 8
Description and type of non-standard audit report/s issued

We issued five non-standard audit reports for government departments. The reports included unmodified opinions and "emphasis of matter" paragraphs drawing attention to the disclosures of four departments about their disestablishment on 1 July 2012 and disclosures by CERA about the uncertainties following the Canterbury earthquakes.

We also issued two modified (adverse) opinions for two trusts (which are a type of subsidiary) because of their failure to recognise and depreciate museum collection assets.
Crown research institutes 7 1
Subsidiaries 26 4*
Total 33 5
Description and type of non-standard audit report/s issued

Our audit report for Industrial Research Limited included an unmodified opinion and an "emphasis of matter" paragraph drawing attention to disclosures outlining uncertainties over the company's future.

We issued four non-standard audit reports for three subsidiaries for 2011/12. The reports included unmodified opinions and "emphasis of matter" paragraphs drawing attention to disclosures related to:
  • the disestablishment or expected disestablishment of:
    a. Paraco Technology Limited (a subsidiary of AgResearch); and
    b. Phytagro LLC New Zealand Branch, a subsidiary of Phytagro New Zealand Limited; and
  • the appropriate use of the "going concern" assumption for AgResearch (Meat Biologics Consortia) Limited for two years ended 30 June 2011 and 30 June 2012.
District health boards 17 4*
Subsidiaries 17 4*
Total 34 8
Description and type of non-standard audit report/s issued

We issued an unmodified opinion for Whanganui DHB. The audit report included an "emphasis of matter" paragraph drawing attention to disclosures outlining some financial difficulties.

We issued an unmodified opinion for Hutt Valley DHB, which included an "emphasis of matter" paragraph drawing attention to disclosures outlining the uncertainties about the carrying value of buildings given earthquake-strength issues.

We issued two modified (qualified) opinions for Counties Manukau DHB (for the two years ended 30 June 2011 and 30 June 2012) because we disagreed with how some funding from the Ministry of Health had been recognised.

We issued three non-standard reports for two subsidiaries of DHBs:
  • South Island Shared Service Agency Limited (for the two years ended 30 June 2011 and 30 June 2012); and
  • District Health Boards New Zealand Incorporated.
The reports included unmodified opinions and "emphasis of matter" paragraphs drawing attention to disclosures outlining the disestablishment or expected disestablishment of the subsidiaries.

We issued a modified (qualified) opinion for Auckland DHB Charitable Trust because we were unable to obtain enough assurance over the completeness of revenue.
Other Crown entities 59 10*
Subsidiaries 76 12
Total 135 22
Description and type of non-standard audit report/s issued

Nineteen audit reports included unmodified opinions and "emphasis of matter" paragraphs drawing attention to disclosures outlining:
  • the disestablishment or expected disestablishment of:
    1. Charities Commission;
    2. Alcohol Advisory Council of New Zealand;
    3. Health Sponsorship Council;
    4. Crown Health Financing Agency;
    5. Mental Health Commission;
    6. Public Trust Investment Funds – New Zealand and Australian Equities Investment Fund (No. 67), International Equities Investment Fund (No. 68); and
    7. Balanced Income (Public Trust Investment Fund No. 13).
  • uncertainties about the value of unlisted investments for
    1. the Public Trust and Group; and
    2. New Zealand Venture Investment Fund Limited and Group (including nine subsidiaries); and
  • uncertainties following the Canterbury earthquakes and the appropriate use of the going concern assumption for the Earthquake Commission.
We issued a modified (qualified) opinion for the New Zealand Fire Service Commission (for the two years ended 30 June 2011 and 30 June 2012) because performance information had not been collected on some outcome and performance measures.

Our audit report for the New Zealand Oil Pollution Fund (which is a subsidiary of Maritime New Zealand) included an "emphasis of matter" paragraph drawing attention to disclosures outlining the uncertainties associated with the responses to the oil spill after the grounding of the container vessel MV Rena.
Central Government Other** 43 25
Subsidiaries 19 0
Total 62 25
Description and type of non-standard audit report/s issued
 
Of the non-standard reports, 22 included "emphasis of matter" paragraphs drawing attention to disclosures outlining:
  • the disestablishment or expected disestablishment of:
    1. a. Learning State Limited;
    2. Ngai Tahu Ancillary Claims Trust; and
    3. Road Safety Trust;
  • uncertainties about the provision of secretariat and office functions in the future for 16 health regulatory entities and two secretariats; and
  • uncertainties after the Canterbury earthquakes and the appropriate use of the "going concern" assumption for Southern Response.
Three audit reports included modified (qualified) opinions:
  • the Māori Trustee and Group because we were unable to confirm the financial information of an associated company;
  • Ngati Whakaue Endowment Trust because we disagreed with the recognition of the value of land; and
  • New Zealand Maori Arts and Crafts Institute because we were unable to obtain enough assurance over the completeness of revenue.
Māori Trust Boards 14*** 3
Subsidiaries 2**** 2
Total 16 5
Description and type of non-standard audit report/s issued

We issued three audit reports that included "emphasis of matter" paragraphs drawing attention to disclosures outlining the disestablishment or expected disestablishment of:
  • Te Runanga o Ngati Porou and Group;
  • Treaty Relationship Company Limited and Group (year ended 30 June 2011); and
  • Northern Region Health Consortium Limited (year ended 30 June 2011).
For the Maniapoto Māori Trust Board, our audit report included an "emphasis of matter" paragraph drawing attention to disclosures outlining uncertainties over the trust board's future.

We also issued a modified (qualified) opinion for the Tauranga Moana Māori Trust Board (year ended 30 June 2011) because we were unable to confirm the valuation of the Board's investment in a joint venture.
State-owned enterprises 16 0
Subsidiaries 58 7*****
Total 74 7
Description and type of non-standard audit report/s issued

We issued non-standard audit reports for one SOE and five SOE subsidiaries. The reports included "emphasis of matter" paragraphs drawing attention to disclosures outlining:
  • the disestablishment or expected disestablishment of:
    a. PropertyInsight Limited;
    b. Whisper Tech Limited;
    c. Terrace Coal Mine Limited; and
    d. Biodiesel New Zealand Limited; and
  • the appropriate use of the "going concern" assumption for The ECN Group Limited.
We issued a modified (qualified) opinion for New Zealand Post Recycle Centre Limited (for the two years ended 30 June 2011 and 30 June 2012) because we were unable to obtain enough assurance over the completeness of revenue.
Total 400 81

* Including one audit report that related to a prior year.

** This group of miscellaneous entities includes those that do not neatly fit into other categories. It includes entities such as Air New Zealand, the Reserve Bank, the National Provident Fund, Producer Boards, and Health and Medical Councils.

*** The number includes five audit reports for previous years.

**** The number includes two audit reports for previous years.

***** The number includes one audit report for a prior year.

4.5
We have already discussed our audit of the Government's financial statements in Part 2. In the following Parts, we discuss our other audit findings in more detail. Part 5 discusses non-standard reports. Part 6 looks at our audits of government departments. Part 7 discusses our audits of Crown entities (excluding TEIs, schools, and DHBs). Part 8 discusses our audits of SOEs.

4.6
We encourage those readers unfamiliar with the concepts and frameworks applied to our audit work to read Appendix 1. This Part and later Parts presume a working knowledge of the concepts and frameworks.

4.7
Our Office has published more-detailed sector reports on entities in the education, transport, and health sectors and has also provided a more-detailed overview of our findings for Crown research institutes.

13: Our audit reports were issued between 1 January and 31 December 2012. Most of these reports relate to 2011/12 except where we explain (arrears). We note where balance dates differ from 30 June.

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