Appendix 2: Summaries of the non-standard audit reports issued in 2016
Local government: Results of the 2015/16 audits.
Modified audit opinions – disclaimers of opinion
| Titanium Park Limited (Hamilton City Council) |
| Year ended 30 June 2015 We were unable to form an opinion on the company's 30 June 2015 financial statements because we were unable to get enough appropriate audit evidence to support the carrying value of the development properties of $16.067 million, which is the major asset of the Titanium Park Joint Venture (which is due to be disestablished) and which is to be allocated to the joint venture partners, of which the company is a 50% partner. |
| Titanium Park Joint Venture (Hamilton City Council) |
| Year ended 30 June 2015 We were unable to form an opinion on the financial statements because we were unable to get enough appropriate audit evidence to support the carrying value of development properties, which are the main assets of the joint venture, and which was stated at the lower of cost and net realisable value. In addition, we drew attention to the disclosures in the financial statements that referred to the financial statements being appropriately prepared on a disestablishment basis because the joint venture parties have agreed to bring the joint venture to an end. |
Modified audit opinions – adverse opinions
| Sicon Limited and Geotech Limited Joint Venture |
| Years ended 30 June 2013 and 30 June 2014 The joint venture did not report performance information that reflected the joint venture's achievements against performance targets because it did not prepare statements of intent. This is a departure from the Local Government Act 2002, which requires a statement of intent and performance information to be prepared. Also, we drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because of the joint venture partners' decision to wind up the joint venture on 12 June 2015. |
| Canterbury Museum Trust Board |
| Year ended 30 June 2015 The Trustees did not recognise the Trust Board's museum collection assets it owns, nor the associated depreciation expense, in the Trust's financial statements. This is not in keeping with Public Benefit Entity International Public Sector Accounting Standard 17 (PBE IPSAS 17): Property, Plant and Equipment, which requires assets to be recognised and depreciated over the useful lives in the financial statements. |
| Otago Museum Trust Board |
| Year ended 30 June 2016 The Trustees did not recognise the Trust Board's museum collection assets it owns, nor the associated depreciation expense, in the Trust's financial statements. This is not in keeping with Public Benefit Entity International Public Sector Accounting Standard 17 (PBE IPSAS 17): Property, Plant and Equipment, which requires assets to be recognised and depreciated over the useful lives in the financial statements. |
Modified audit opinions – qualified opinions
| Christchurch City Council and Group |
| Year ended 30 June 2016 Because of the effects of the earthquakes on the assets owned by the City Council and group, it has been difficult for the Council to prepare financial statements that comply with generally accepted accounting practice and legislation. As a result, our work was limited – we were unable to obtain sufficient audit evidence about a range of matters: Valuation of the roading network system, and stormwater system The Council was unable to quantify the financial effect of unrepaired earthquake damage to its roading network and stormwater systems. As a result, we were unable to confirm that the valuations had adequately accounted for the unrepaired earthquake damage to these assets. Capital work in progress balance The Council was unable to accurately determine the value of projects that were operating expenditure in nature and included in the capital work in progress being completed by the Stronger Christchurch Infrastructure Rebuild Team (SCIRT). Further, during the year ended 30 June 2016, the Council treated $54.4 million of costs incurred by SCIRT as capital work-in-progress, which was not in keeping with PBE IPSAS 17: Property, Plant and Equipment, because these costs did not meet the asset capitalisation criteria. Due to the limitations in scope affecting our audit, we were unable to obtain audit evidence in "what did it cost" sections and the associated variance explanations, including the reported comparative information in the statement of service provision. Also, we drew attention to the disclosures in the financial statements outlining the Council recognising an impairment expense of $99.5 million relating to Lyttelton Port Company Limited. |
| Hawke's Bay Regional Council and Group |
| Year ended 30 June 2016 Our audit was limited because we could not obtain enough evidence to verify the carrying value of the development expenditure intangible asset for the Ruataniwha Water Storage Scheme, because land exchange required for the Scheme is subject to litigation. |
| Hawke's Bay Regional Investment Company Limited and Group (Hawke's Bay Regional Council) |
| Year ended 30 June 2016 Our audit was limited because we could not obtain enough evidence to verify the carrying value of the development expenditure intangible asset for the Ruataniwha Water Storage Scheme, because land exchange required for the Scheme is subject to litigation. |
| Manawatu District Council and Group |
| Year ended 30 June 2016 Our audit of the District Council's performance information was limited because we could not get enough assurance about the completeness of response times to attend to and resolve services and faults requests from ratepayers. The District Council was not able to report accurate response time performance measures because the system for recording the response times was not reliable, due to inaccurate or omitted source data. |
| Titanium Park Limited (Hamilton City Council) |
| Year ended 30 June 2016 Our audit was limited because we were unable to verify the amount of impairment expense for the development property in 2016. This is because a disclaimer of opinion was issued for the year ended 30 June 2015 when we did not get enough appropriate audit evidence to support the carrying value of the development property. |
| Dunedin City Holdings Limited Group (Dunedin City Council) |
| Year ended 30 June 2016 Our audit was limited because we could not determine the value of stadium assets, which should have been recognised in the financial statements. This was because the group had not carried out an assessment of the value of the stadium assets on a basis that is consistent with public benefit entity accounting standards. |
| Contemporary Art Foundation (Auckland Council) |
| Year ended 30 June 2015 Our audit was limited because we could not get enough assurance about the fair value of the buildings as at 30 June 2015. This is because the Trust did not obtain a new valuation as at 30 June 2015. |
| Invercargill City Holdings Limited Group (Invercargill City Council) |
| Year ended 30 June 2016 Our audit was limited because the company's group financial statements included unaudited financial information for the year ended 30 June 2016 that related to an associate, IFS Forestry Group Limited, and we were unable to get enough audit evidence to confirm that financial information. |
| Invercargill City Forests Limited (Invercargill City Council) |
| Year ended 30 June 2016 Our audit was limited because company's financial statements included unaudited financial information for the year ended 30 June 2016 that related to an associate, IFS Forestry Group Limited, and we were unable to get enough audit evidence to confirm that financial information. |
| Hauraki Rail Trail Charitable Trust |
| Years ended 30 June 2015 and 30 June 2016 Our audit was limited because we could not get enough assurance about the completeness of commission revenue. The Trustees had limited controls over that revenue. |
| The World Buskers' Festival Trust (Christchurch City Council) |
| Year ended 30 June 2016 Our audit was limited because we could not get enough assurance about the completeness of door donations revenue for the year ended 30 June 2016. The Trustees had limited controls over that revenue. |
| Waimakariri Libraries Trust Incorporated (Waimakariri District Council) |
| Year ended 30 June 2015 Our audit was limited because we could not get enough assurance about the completeness of fundraising revenue. The Trustees had limited controls over that revenue. |
| Waipa Community Facilities Trust (Waipa District Council) |
| Year ended 30 June 2016 Our audit was limited because we could not get enough assurance about the completeness of the cash receipts. The Trustees had limited controls over those cash receipts. |
Unmodified opinions with "emphasis of matter" paragraphs
| Christchurch City Holdings Limited Group (Christchurch City Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements referring to the Group recognising an impairment of $99.5 million of its subsidiary, Lyttelton Port Company Limited. The impairment has arisen because the return generated by replacing destroyed assets did not meet the investment return established by the Board of the Port Company. |
| Lyttelton Port Company Limited Group (Christchurch City Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements referring to the company recognising an impairment of $99.5 million of assets. The impairment has arisen because the return generated by replacing destroyed assets did not meet the investment return established by the Board of Lyttelton Port Company Limited. |
| Command Building Services Limited (Christchurch City Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the uncertainties surrounding the going concern assumption. The validity of the going concern assumption depends on the company's reliance on continued financial support from City Care Limited. We also drew attention to the disclosures outlining that the company did not comply with the law because it failed to issue a statement of intent for the year ended 30 June 2016. |
| Creative HQ Limited (Wellington City Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements about the uncertainties in measuring the fair value of shares in incubator and accelerator companies. The uncertainties were due to the early stage nature of the investments, the absence of quoted market prices, and the reliance placed on the information supplied by the incubator and accelerator companies. |
| NZ Mutual Liability Riskpool |
| Year ended 30 June 2015 We drew attention to the disclosures in the financial statements that referred to the uncertainties associated with the outstanding claims liability and reinsurance receivables of the Scheme, and the inherent uncertainties involved in estimating those amounts using actuarial assumptions, including in relation to leaky building claims, which are subject to a high degree of uncertainty. |
| World Masters Games 2017 Limited (Auckland Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the going concern basis appropriately being used in preparing the financial statements because the company will continue in operation until the World Masters Games in 2017 and its related obligations are completed by 30 June 2017. The Board of Directors have not decided on the future of the company beyond 30 June 2017. |
| New Zealand Food Innovation Network Limited |
| Years ended 30 June 2013, 30 June 2014, 30 June 2015, and 30 June 2016 We drew attention to the disclosures in the financial statements about the company not complying with the law by failing to:
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| Feilding Civic Centre Trust (Manawatu District Council) |
| Year ended 30 June 2016 We drew attention to the changes in accounting policies note in the statement of accounting policies, which outlines that the basis of accounting in the financial statements for the year ended 30 June 2015 was incorrectly applied and disclosed as NZ IFRS. As a result, amendments were made to the comparative information as disclosed in accordance with the appropriate basis of accounting, which is PBE Simple Format Reporting – Accrual (PS). We also acknowledged that the audit report for the year ended 30 June 2015 did not identify the use of an incorrect basis of accounting by the Trust. |
| Waitangi National Trust |
| Year ended 30 June 2016 We drew attention to the changes in accounting policies note in the statement of accounting policies which outlines that the basis of accounting in the financial statements for the year ended 30 June 2015 was incorrectly applied and disclosed as NZ GAAP Standards (Not-for-profit). As a result, amendments were made to the comparative information as disclosed in accordance with the appropriate basis of accounting, which is Tier 2 PBE Standards (RDR). We also acknowledge the audit report for the year ended 30 June 2015 did not identify the use of an incorrect basis of accounting by the Trust. |
| Independent Roadmarkers Taranaki Limited (Waitomo District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the non-going concern basis appropriately being used in preparing the financial statements because the company has ceased trading, business assets and liabilities have been sold, and any other obligations settled. |
| Oakura Farms Limited Joint Venture (New Plymouth District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the company has ceased operations and was removed from the Companies Office register effective 15 July 2016. |
| South Waikato Economic Development Trust (South Waikato District Council) |
| Year ended 30 June 2015 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Trustees resolved on 8 June 2015 to wind up the Trust on 30 June 2015. |
| Strada Corporation Limited (Waikato District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the realisation basis appropriately being used in preparing the financial statements because the Board has resolved to sell all its operational assets and extinguish all of its liabilities during the year ending 30 June 2017. |
| Te Horowhenua Trust (Horowhenua District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements about the financial statements being prepared on a dissolution basis because the Trust ceased with effect from 1 July 2016 when all of its functions, assets, and liabilities were transferred to Horowhenua District Council. |
| Wanganui Gas No 1 Limited (Whanganui District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements about the financial statements being prepared on a disestablishment basis because the Directors have resolved to wind up the company and transfer its assets and liabilities to Wanganui Gas Limited. |
| Kiwitea Rural Water Scheme |
| Year ended 30 June 2013 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Scheme's Committee ceased to administer and operate the Scheme from 30 June 2013. |
| New Plymouth Airport Joint Venture (New Plymouth District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Council and the Crown are in negotiation for the Council to purchase the Crown's share in the joint venture, which would result in the Airport Joint Venture arrangement with the Crown being terminated. |
| Len Lye Centre Trust (New Plymouth District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Trustees resolved to wind up the Trust prior to 30 June 2017. |
| Marlborough Kaikoura Rural Fire Authority |
| Year ended 30 June 2015 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Government has decided to establish a new national fire service that will take over the Authority's operations, assets, and liabilities. |
| Otago Rural Fire Authority |
| Years ended 30 June 2015 and 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Government has decided to establish a new national fire service that will take over the Authority's operations, assets, and liabilities. |
| Southern Rural Fire Authority |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Government has decided to establish a new national fire service that will take over the Authority's operations, assets, and liabilities. |
| Vision Manawatu Trust Incorporated (Palmerston North City Council and Manawatu District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the disestablishment basis appropriately being used in preparing the financial statements because the Trust will be wound up during September 2016. |
| Tauwhareparae Forests Limited (Gisborne District Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements of the company not having a statement of service performance because it was inactive and did not have any performance to report. The disclosures also outlined that the company did not comply with the law because it failed to complete a statement of intent for the period beginning 1 July 2016 by 30 June 2016. |
| Apex Environmental Limited (Christchurch City Council) |
| Year ended 30 June 2016 We drew attention to the disclosures in the financial statements about the company not complying with the law because it failed to prepare a statement of intent for the year beginning 1 July 2015. |
| Christchurch City Mayor's Welfare Fund Charitable Trust (Christchurch City Council) |
| Year ended 30 June 2015 We drew attention to the disclosures in the financial statements about the trust not complying with the law because it failed to prepare a statement of intent for the period beginning 1 July 2014. |
| City Care Ltd and John Fillmore Contracting Ltd Joint Venture (Christchurch City Council) |
| Years ended 30 June 2015 and 30 June 2016 We drew attention to the disclosures in the financial statements that referred to the joint venture breaching the law because it failed to prepare a statement of intent for the period ended 30 June 2015 and the periods beginning 1 July 2015 and 1 July 2016 by 30 June of the previous financial year. |