Part 10: About the audit reports issued in 2012
10.1
In this Part, we provide an overview of the audit results for local authorities. We set out the nature of our audit reports and explain the key concepts and frameworks applied in determining the appropriate form of report in Appendix 2.
10.2
We issued 647 audit reports for local government entities during the year ended 31 December 2012.36 Of the 647 reports, 559 were standard audit reports and 88 were non-standard audit reports.
10.3
The 647 reports do not include the 77 audit reports we issued on local authorities' 2012-22 long-term plans. The audit results of the long-term plans are set out in our report, Matters arising from the 2012-22 local authority long-term plans.
10.4
Paragraphs 10.5-10.20 summarise the standard and non-standard audit reports that we issued.37
Local authorities
10.5
For 2011/12, we issued 73 standard audit reports and six non-standard audit reports for local authorities.
10.6
The following summarises the six non-standard audit reports.38 We issued:
- three audit reports with unmodified opinions that included an "emphasis of matter" paragraph highlighting disclosures about deficiencies in the 2009-19 long-term plans;
- one audit report with an unmodified opinion for the year ended 30 June 2011 that included an "emphasis of matter" paragraph drawing attention to a range of matters;
- one modified (qualified) opinion because we could not get appropriate audit evidence to support the estimates of the time taken to respond to complaints and requests for service; and
- one modified (disclaimer) opinion because of the significant damage to this local authority's assets caused by the Canterbury earthquakes.
Council-controlled organisations
10.7
We issued 158 standard audit reports and 32 non-standard audit reports of council-controlled organisations for the year.
10.8
The following summarises the 32 non-standard audit reports.39 We issued:
- 15 audit reports with unmodified opinions that included "emphasis of matter" paragraphs highlighting disclosures because of one of the following matters:
- an entity's disestablishment or expected disestablishment; or
- the absence of a statement of performance because the entity was inactive; or
- in relation to the appropriate use of the going concern assumption;
- four modified (qualified) opinions because we could not get enough assurance on the completeness of all the revenue and/or expenditure of the entities;
- six modified (adverse) opinions because of the failure to recognise and depreciate museum collection assets of the entities;
- two modified (adverse) opinions because we disagreed with performance measures and targets that the entities had used to report performance that were not set out in advance in their statements of intent;
- two modified (adverse) opinions for the two years ended 30 June 2012 because this entity reported against performance measures and targets that were not set out in advance in its statements of intent; and
- three modified (disclaimer) opinions because of the significant damage to assets caused by the Canterbury earthquakes.
Energy companies and their subsidiaries
10.9
We issued 67 standard audit reports and four non-standard audit reports of energy companies and their subsidiaries for the year.
10.10
The following summarises the four non-standard audit reports.40 We issued:
- one audit report with an unmodified opinion that included an "emphasis of matter" paragraph drawing attention to the entity's disclosures relating to some serious financial difficulties;
- one audit report with an unmodified opinion that included an "emphasis of matter" paragraph drawing attention to the entity's disclosures about the sale of its electrical contracting and the Wellington linework business units;
- one modified (disclaimer) opinion because we could not conclude whether the entity's non-financial performance targets gave a true and fair view of its achievements; and
- one modified opinion because we could not get enough assurance about the accuracy of some of the entity's non-financial performance information.
Airports and their subsidiaries
10.11
We issued 20 standard audit reports, and one non-standard audit report for airports and their subsidiaries for the year.
10.12
We issued one modified (qualified) opinion to an entity because it did not report performance information for the year ended 30 June 2010.
Port companies and their subsidiaries
10.13
We issued 30 standard audit reports for port companies and their subsidiaries for the year. We did not issue any non-standard reports for port companies or their subsidiaries.
Licensing trusts and their subsidiaries
10.14
We issued 33 standard audit reports and nine non-standard audit reports for licensing trusts and their subsidiaries for the year.
10.15
The following summarises the nine non-standard audit reports.41 We issued:
- six audit reports with unmodified opinions that included "emphasis of matter" paragraphs drawing attention to disclosures outlining the disestablishment or expected disestablishment of the entities;
- two modified (disclaimer) opinions to one licensing trust because its financial statements were not prepared in keeping with the New Zealand equivalents to International Financial Reporting Standards for the two years ended 31 March 2011; and
- one modified (qualified) opinion to one entity because we were unable to get enough assurance on the completeness of its revenue.
Miscellaneous other local government entities
10.16
We issued 53 standard audit reports and four non-standard audit reports for miscellaneous other local government entities for the year.
10.17
The following summarises the four non-standard audit reports. We issued:42
- three reports with unmodified opinions that included "emphasis of matter" paragraphs drawing attention to disclosures relating either to the use of the going concern assumption or to the disestablishment or expected disestablishment of the entities; and
- one modified (qualified) opinion to an entity for the year ended 30 June 2010 because we were unable to verify that the entity had properly recorded all revenue.
Small entities
10.18
We issued 125 standard audit reports, and 32 non-standard audit reports for small entities 43 for the year.
10.19
The following summarises the 32 non-standard audit reports.44 We issued:
- two audit reports with unmodified opinions to an entity for the two years ended 30 June 2012 that included an "emphasis of matter" paragraph drawing attention to disclosures outlining the fundamental uncertainties about the validity of the going concern assumption;
- one audit report with an unmodified opinion to an entity for the year ended 30 June 2009 that included an "emphasis of matter" paragraph drawing attention to the use of the disestablishment basis in preparing the financial statements;
- five modified (disclaimer) opinions to an entity for the five years to 31 March 2011 because we were unable to get enough assurance about how completely it had recorded revenue; and
- 24 modified (qualified) opinions because we were unable to get enough assurance about the completeness of revenue and/or expenditure from these entities.
10.20
In Part 11, we provide details of the non-standard audit reports that we issued.
36: Local authorities, most CCOs, airports, port companies, other local government miscellaneous entities, administering bodies and boards, and local authority sinking fund commissioners have a 30 June balance date. Energy companies, licensing trusts, and cemeteries have a 31 March balance date. Fish and Game Councils have a 31 August balance date, and other entities, including some CCOs and other local government miscellaneous entities, have a balance date in March, August, October, or December.
37: The figures for the number of audit reports may include audit reports that relate to more than one financial period; for example, for the year ended 30 June 2011 and 30 June 2012. In most instances, we issue an audit report for each financial period.
38: This number includes two audit reports that related to previous financial periods.
39: This number includes nine audit reports that related to previous financial periods.
40: This number includes two audit reports that related to previous financial periods.
41: This number includes four audit reports that related to previous financial periods.
42: This number includes one audit report that related to a previous financial period.
43: This is made up of Administering Bodies and Boards, Cemeteries, Fish and Game Councils, and Local Authority Sinking Fund Commissioners.
44: This number includes 29 audit reports that related to previous financial periods.
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