Appendix 2: Non-standard audit reports issued in 2015

Energy sector: Results of the 2014/15 audits.

For a plain English explanation of the different forms of audit reports, please read our blog post, The Kiwi guide to audit reports, available at blog.oag.govt.nz.

Audit of annual financial statements

Modified audit opinions – disclaimers of opinion

Energy company	Summarised extract from the audit report
Counties Power Limited Network Waitaki Limited	We were unable to form an opinion on two performance measures that are used to measure the network reliability performance – the System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI) – in the statement of service performance. We could not confirm the completeness and accuracy of all the SAIDI and SAIFI outages because of: no independent evidence recording electricity connection faults; and limited control over the completeness and accuracy of interconnection point data representing individual customer connections to the network. Also, we could not provide assurance on the comparative information presented in the 31 March 2015 statement of service performance because we needed to issue a disclaimer of opinion on the company and group's previous year's statement of service performance (because of the same limitations). We issued an unmodified opinion on the financial statements and the other performance measures in the statement of service performance for the year ended 31 March 2015.

Modified audit opinions – qualified opinions

Energy company	Summarised extract from the audit report
Solid Energy New Zealand Limited	Our audit was limited because we were unable to obtain sufficient evidence to confirm the fair value of the mining operation assets used to support the impairment of $256.6 million recognised in the financial statements. We also drew attention to the disclosures in the financial statements which: stated that the financial statements have been prepared on a non-going-concern basis. After year-end, the group (other than Nature's Flame Italia SRL (in Liquidation)) entered into a Deed of Company Arrangement with its creditors, which will result in the group's assets being offered for sale over the next two and a half years to March 2018; and gave additional information about the companies being placed in voluntary administration, the appointment of Administrators, and the execution of the Deed of Company Arrangement and a Restructured Debt Deed, which occurred after the group's balance date.
Spring Creek Mining Company	Our audit was limited because we were unable to obtain sufficient evidence to confirm the fair value of the mining operation assets used to support the impairment of $5.5 million recognised in the financial statements. We also drew attention to the disclosures in the financial statements which: stated that the financial statements have been prepared on a non-going-concern basis. After year-end, Solid Energy New Zealand Limited group (subject to a Deed of Company Arrangement) entered into a Deed of Company Arrangement with its creditors, which will result in the group's assets being offered for sale over the next two and a half years to March 2018; and gave additional information about the Solid Energy New Zealand Limited group being placed in voluntary administration, the appointment of Administrators, and the execution of the Deed of Company Arrangement and a Restructured Debt Deed, which occurred after the group's balance date.

Unmodified audit opinions with "emphasis of matter" paragraphs

Energy company	Summarised extract from the audit report
Biodiesel New Zealand Limited Coal Bed Methane Limited Coal New Zealand International Limited Coal New Zealand Limited Pike River (2012) Limited Solid Energy Briquettes Limited Solid Energy Land Holdings Limited Stockton Alliance Limited Terrace Coal Mine Limited	We drew attention to the disclosures in the financial statements which: stated that the financial statements have been prepared on a non-going-concern basis. After year-end, Solid Energy New Zealand Limited group (subject to a Deed of Company Arrangement) entered into a Deed of Company Arrangement with its creditors, which will result in the group's assets being offered for sale over the next two and a half years to March 2018.; and gave additional information about the Solid Energy New Zealand Limited group being placed in voluntary administration, the appointment of Administrators, and the execution of the Deed of Company Arrangement and a Restructured Debt Deed, which occurred after the group's balance date.
Coalcorp Services Limited	We drew attention to the disclosures in the financial statements which: stated that the financial statements have been prepared on a non-going-concern basis. After year-end, Solid Energy New Zealand Limited group (subject to a Deed of Company Arrangement) entered into a Deed of Company Arrangement with its creditors, which will result in the group's assets being offered for sale over the next two and a half years to March 2018; and gave additional information about the cancellation of the Company's captive insurance licence, the Solid Energy New Zealand Limited group being placed in voluntary administration, the appointment of Administrators, and the execution of the Deed of Company Arrangement and a Restructured Debt Deed, which occurred after the group's balance date.
Wanganui Gas Limited	We drew attention to the disclosures in the financial statements that the company had not prepared a statement of corporate intent for the year ended 30 June 2015, as required by the Energy Companies Act 1992. We also drew attention to disclosures about the company reporting its performance information according to measures that would have been agreed and approved by the Board of Directors in the statement of corporate intent for the year ended 30 June 2015 if a statement of corporate intent had been prepared under the Energy Companies Act 1992.

Audit of regulatory information

Modified audit opinions – disclaimer of opinion

Energy company and type of report	Summarised extract from the audit report
Aurora Energy Limited: Default price-quality path compliance statement	We were unable to form an opinion on the 2012 comparative SAIDI and SAIFI statistics because of the limited control over the completeness and accuracy of SCADA data records for service interruptions. We issued an unmodified opinion on the price-quality path information and 2011, 2013, 2014, and 2015 reliability assessment information.

Modified audit opinions – qualified opinions

Energy company and type of report	Summarised extract from the audit report
Alpine Energy Limited: Regulatory information disclosure Counties Power Limited: Regulatory information disclosure Electricity Invercargill Limited: Regulatory information disclosure The Lines Company Limited: Regulatory information disclosure Network Waitaki Limited: Regulatory information disclosure	There are inherent limitations on the ability of the Company to collect and record the network reliability information required to be disclosed. Therefore, there is no independent evidence available to support the completeness and accuracy of recorded faults. Control over the completeness and accuracy of interconnection point (ICP) data included in the SAIDI and SAIFI calculations is limited throughout the year.

Unmodified audit opinion with "emphasis of matter" paragraph

Energy company and type of report	Summarised extract from the audit report
The Lines Company Limited: Default price-quality path compliance statement	We drew attention to the disclosures in the compliance statement that described the uncertainty due to the system limitations regarding the estimation of the quantities for which the prompt payment discounts apply.