Appendix 2: Summaries of the non-standard audit reports issued in 2017
Local government: Results of the 2016/17 audits.
Modified audit opinions – Disclaimers of opinion
| Kaikōura District Council |
| Year ended 30 June 2017 The earthquake on 14 November 2016 damaged the Council's assets and affected its delivery and management of services afterwards. As a result, we were unable to form an opinion on the statement of service provision because the Council was unable to report any performance for the reporting period. In addition, our audit of the Council's financial statements was limited because we were unable to confirm impairment losses, asset write-offs, and the carrying value of damaged assets, because the Council could not determine the extent of damage to its property, plant and equipment. This also meant that we were unable to confirm whether the repair expenditure that has been incurred after the earthquake should have been classified as either capital or operating expenditure. We also drew attention to the disclosures in the financial statements that outlined the uncertainties associated with recognising the Council's insurance proceeds. |
| Titanium Park Joint Venture (Hamilton City Council) |
| Year ended 30 June 2016 We were unable to form an opinion on the financial statements because we were unable to obtain enough evidence to support the value of development properties, which are the main assets of the joint venture. In addition, we drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of going concern when preparing the financial statements because the joint-venture parties had agreed to bring the joint venture to an end. |
Modified audit opinions – Adverse opinions
| Canterbury Museum Trust Board |
| Years ended 30 June 2016 and 30 June 2017 We disagreed with the Trustees not recognising the museum collection assets they own, nor the associated depreciation expense, in the Trust's financial statements, in keeping with the requirements of generally accepted accounting practice. |
Modified audit opinions – Qualified opinions
| Hurunui District Council |
| Year ended 30 June 2017 The earthquake that struck the Kaikōura area on 14 November 2016 damaged the Council's assets and affected its delivery and management of services afterwards. As a result, our audit was limited because we were unable to get enough audit evidence to confirm the value of impairment losses, asset write-offs, and the carrying value of damaged assets, because the Council could not determine the extent of damage to its property, plant and equipment. This also meant that we were unable to confirm whether the repair expenditure that has been incurred after the earthquake should have been classified as either capital or operating expenditure. In addition, our audit was limited because we were unable to obtain enough audit evidence to verify some performance measures because the recording of these services was interrupted by the earthquake. We also drew attention to the disclosures in the financial statements that outlined the uncertainties associated with recognising the Council's insurance proceeds. |
| Christchurch City Council |
| Year ended 30 June 2017 Our audit on the comparative information was limited because we were unable to get enough appropriate audit evidence on the City Council's valuation of the roading network and stormwater system. This is because the City Council had been unable to quantify the financial impact of unrepaired earthquake damage to the roading network and stormwater system in the year ended 30 June 2016. In addition, our audit of the comparative information was limited because the City Council had treated $54.4 million of costs incurred by the Stronger Christchurch Infrastructure Rebuild Team as capital work in progress for the year ended 30 June 2016, which was not in keeping with the asset capitalisation criteria in the accounting standards. |
| Carterton District Council |
| Years ended 30 June 2016 and 30 June 2017 Our audit was limited on the District Council's performance information because we were unable to get enough appropriate audit evidence about the completeness of some complaint and response time information. This was because the District Council's system for recording complaints and response times was not reliable. In addition, we drew attention to disclosures about the uncertainty of the outcome of a proposal to amalgamate the Carterton, Masterton, and South Wairarapa District Councils into a single Wairarapa District Council, which would not be determined until after the date of the annual report for 30 June 2017. |
| Hawke's Bay Regional Council |
| Year ended 30 June 2017 Our audit was limited because we were unable to get enough appropriate audit evidence to verify that the expenditure for developing the Ruataniwha Water Storage Scheme is recoverable or to determine the deferred tax balances that should arise from the impairment of the Ruataniwha Water Storage Scheme intangible asset. |
| Manawatu District Council |
| Year ended 30 June 2017 Our audit of some comparative information was limited because we were unable to get enough appropriate audit evidence about the completeness of some response time information reported in the statement of service performance. Previously, the Council had been unable to report accurate response time performance because the system for recording response times was not reliable, because of inaccurate or omitted source data. The Council has fixed issues with missing or incomplete data about response times. However, because the comparative information could not be fixed, we could not compare the 2017 performance information with the 2016 performance information. |
| Vbase Limited (Christchurch City Council) |
| Year ended 30 June 2017 Our audit was limited because we were unable to obtain enough appropriate audit evidence to support the assumptions made in calculating deferred tax balances. This is because repairs to the town hall are under way, and the assessment of tax treatment of the repair costs will not be made until the work is complete. We also drew attention to disclosures in the financial statements outlining that the future business structure and the operations of the company are being reviewed. |
| Dunedin City Holdings Limited (Dunedin City Council) |
| Year ended 30 June 2017 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. |
| The World Buskers' Festival Trust (Christchurch City Council) |
| Year ended 30 June 2017 Our audit was limited because we could not get enough assurance about door donation revenue because the Trustees had limited controls over that revenue. We also drew attention to disclosures in the financial statements outlining that the Trustees had appropriately used a basis other than that of a going concern when preparing the financial statements. The Trust was due to be dissolved after the 2018 World Buskers' Festival, with all remaining assets to be subsequently transferred to another entity with a similar charitable purpose. |
| Waipa Community Facilities Trust (Waipa District Council) |
| Year ended 30 June 2017 Our audit was limited because we could not get enough assurance about the Trust's cash receipts from trading and facilities activities. The Trustees had limited controls over that revenue. |
| Tararua Aquatic Community Trust (Tararua District Council) |
| Year ended 30 June 2016 Our audit was limited because we could not get enough assurance about the completeness of pool revenue for the year ended 30 June 2016. The Trustees had limited controls over that revenue. |
| Otago Museum Trust Board |
| Year ended 30 June 2017 We disagreed with the Trustees not recognising certain museum collection assets they own, nor the associated depreciation expense, in the Trust's financial statements, in keeping with the requirements of generally accepted accounting practice. |
Unmodified opinions with "emphasis of matter" paragraphs
| Greater Wellington Regional Council |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds that are expected to be received and the related costs to repair or replace assets, and the estimates that have had to be made to account for the possible impairment of assets and the related tax treatment. |
| Manawatu-Wanganui Regional Council |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the uncertainties in measuring the fair value of the Council's investment in CentrePort Limited. CentrePort Limited has experienced a significant amount of damage from the Kaikōura earthquake. As a result, there is a high degree of uncertainty about the level and timing of insurance proceeds to be received, the amount and timing of future capital expenditure that will need to be incurred to repair assets, and any current or future changes in demand for CentrePort Limited's operations. |
| Masterton District Council |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the uncertainty of the outcome of a proposal to amalgamate the Carterton, Masterton, and South Wairarapa District Councils into a single Wairarapa District Council, which would not be determined until after the date of the annual report. |
| South Wairarapa District Council |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the uncertainty of the outcome of a proposal to amalgamate the Carterton, Masterton, and South Wairarapa District Councils into a single Wairarapa District Council, which would not be determined until after the date of the annual report. |
| Marlborough District Council |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the uncertainties over the damage done to some of the District Council's assets as a result of the Kaikōura earthquake. |
| CentrePort Limited Group (Greater Wellington Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds that are expected to be received and the related costs to repair or replace assets, and the estimates that have had to be made to account for the possible impairment of assets and the related tax treatment. |
| CentrePort Properties Limited Group (Greater Wellington Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds that are expected to be received and the related costs to repair or replace assets, and the estimates that have had to be made to account for the possible impairment of assets and the related tax treatment. |
| Harbour Quays F1F2 Limited (Greater Wellington Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds that are expected to be received and the related costs to repair or replace assets and the estimates that have had to be made to account for the possible impairment of the company's building. We also drew attention to disclosures in the financial statements outlining the uncertainties about the company's ability to continue as a going concern because the Board of Directors has not decided whether to replace the building or to wind up the company. |
| Harbour Quays A1 Limited (Greater Wellington Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds expected to be received because the company's investment property is likely to be demolished. We also drew attention to disclosures in the financial statements outlining the uncertainties about the company's ability to continue as a going concern because the Board of Directors has not decided whether to replace the building or to cease operations. |
| MWRC Holdings Limited (Manawatu-Wanganui Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the uncertainties in measuring the fair value of the company's investment in CentrePort Limited. CentrePort Limited has experienced a significant amount of damage from the Kaikōura earthquake. As a result, there is a high degree of uncertainty about the level and timing of insurance proceeds to be received, the amount and timing of future capital expenditure that will need to be incurred to repair assets, and any current or future changes in CentrePort Limited's services and operations. |
| WRC Holdings Limited (Greater Wellington Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds that are expected to be received and the related costs to repair or replace assets, and the estimates that have had to be made to account for the possible impairment of assets and the related tax treatment. |
| Port Investments Limited (Greater Wellington Regional Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements outlining the uncertainties related to the effects of the Kaikōura earthquake. These uncertainties include the estimates that have been made to value the insurance proceeds that are expected to be received and the related costs to repair or replace assets, and the estimates that have had to be made to account for the possible impairment of assets and the related tax treatment. |
| Creative HQ Limited (Wellington City Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about uncertainties in measuring the fair value of shares in incubator and accelerator companies. The uncertainties were due to the early stage of the investments, the absence of quoted market prices, and the reliance on information supplied by the incubator and accelerator companies. |
| Innovation Waikato Limited (Hamilton City Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about uncertainties over the future structure of the company and group, which is dependent on a restructuring decision to be made by Hamilton City Council. |
| Strada Corporation Limited (Waikato District Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements. The Board had decided to sell all of its operational assets and clear all of its liabilities. |
| Waikato Quarries Limited (Waikato District Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the company has ceased trading subsequent to the sale of its business assets. |
| NZ Mutual Liability Riskpool |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about 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 that are subject to a high degree of uncertainty. |
| Venture Southland |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about uncertainties over the future operations of Venture Southland. The outcome of a proposal to create a new entity that would incorporate the operations of Venture Southland is not known. In addition, Southland District Council and Gore District Council have provided notice of their intention to end the Heads of Agreement that established Venture Southland. |
| Wellington Cable Car Limited (Wellington City Council) |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about uncertainties surrounding the cessation of the trolley bus service, including the carrying value of the trolley bus network assets and inventory, and related expenses during the year. |
| Wellington Cable Car Limited (Wellington City Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about trolley bus services ceasing from 31 October 2017, and the associated decommissioning of the related network assets, which significantly affects the activities of the company. The company has not made any decision about its future operations. |
| Partnership Wellington Trust (Wellington City Council) |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors not complying with the law because it failed to issue a statement of intent for the period beginning 1 July 2015. We also drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the assets and liabilities, employees, and undertakings of the Trust were transferred to Wellington Regional Economic Development Agency Limited. The Board of Trustees intends to wind up the Trust by 30 June 2017. |
| Wanganui Joint Venture Airport (Whanganui District Council) |
| Year ended 30 June 2014 We drew attention to disclosures in the financial statements about the Airport not complying with the law because it did not complete its annual report within three months of the end of the financial year. |
| Tasman Farms Limited (New Plymouth District Council) |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern basis when preparing the financial statements because the Board of Directors have resolved to cease trading. |
| Tasman Farms Limited (New Plymouth District Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board appropriately using a basis other than that of a going concern when preparing the financial statements because New Plymouth District Council is considering options for the company, including plans to cease its operations. We also drew attention to disclosures in the financial statements about the Board appropriately not reporting performance information because of plans to wind up the company. |
| New Plymouth Airport Authority (New Plymouth District Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the joint venture appropriately using a basis other than that of a going concern when preparing the financial statements. The Airport Joint Venture arrangement with the Crown was terminated on 1 July 2017 when New Plymouth District Council purchased the Crown's share in the joint venture. |
| Canterbury Economic Development Company Limited |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements. The shareholders have determined that the company no longer has a purpose, and it is being removed from the companies register. We also drew attention to disclosures in the financial statements about the Board not complying with the law because it failed to prepare performance information, because the company had ceased operations in 2017 and did not have any performance to report. |
| Christchurch Agency for Energy (Christchurch City Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Trustees appropriately using a basis other than that of a going concern when preparing the performance report because the Trust intends to cease operations in the next 12 months, with any remaining assets transferred at the direction of the settlor of the Trust. |
| Westport Harbour Limited (Buller District Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board appropriately using a basis other than that of a going concern when preparing the financial statements because Buller District Council had instructed the company to transfer its operations to another entity in the group and to cease operations within 12 months. |
| Partnership Properties Limited (Hutt City Council) |
| Years ended 30 June 2015 and 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the company has fulfilled its purpose and is in the process of being removed from the companies register. We also drew attention to disclosures in the financial statements about the Board of Directors not complying with the law because it failed to issue a statement of intent by 30 June 2015 for the period beginning 1 July 2015. It failed to prepare performance information for the year ended 30 June 2016 because the company only performed as an agent for the purchase of property on behalf of Urban Plus Limited. It also failed to complete the annual report within three months after the end of the 2015 and 2016 financial years. |
| Gold Property Investment Limited (Hutt City Council) |
| Years ended 30 June 2015 and 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the company has fulfilled its purpose and is in the process of being removed from the companies register. We also drew attention to disclosures in the financial statements about the Board of Directors not complying with the law because it failed to issue a statement of intent by 30 June 2015 for the period beginning 1 July 2015. It failed to prepare performance information for the year ended 30 June 2016 because the company only performed as an agent for the purchase of property on behalf of Hutt City Council. It also failed to complete the annual report within three months after the end of the 2015 and 2016 financial years. |
| Hutt Property Investments Limited (Hutt City Council) |
| Years ended 30 June 2015 and 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the company has fulfilled its purpose and is in the process of being removed from the companies register. We also drew attention to disclosures in the financial statements about the Board of Directors not complying with the law because it failed to issue a statement of intent by 30 June 2015 for the period beginning 1 July 2015. It failed to prepare performance information for the year ended 30 June 2016 because the company only performed as an agent for the purchase of property on behalf of Hutt City Council. It also failed to complete the annual report within three months after the end of the 2015 and 2016 financial years. |
| Two Guys Properties Limited (Hutt City Council) |
| Years ended 30 June 2014, 30 June 2015, and 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the company has fulfilled its purpose and is in the process of being removed from the companies register. We also drew attention to disclosures in the financial statements about the Board of Directors not complying with the law because it failed to issue a statement of intent for the periods beginning 1 July 2014 and 1 July 2015. It failed to prepare performance information for the three years ended 30 June 2014 to 30 June 2016 because the company only performed as an agent for the purchase of property on behalf of Urban Plus Limited. It also failed to complete the annual report within three months after the end of the financial years. |
| Nelson Regional Economic Development Agency (Nelson City Council) |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about the Board appropriately using a basis other than that of a going concern when preparing the financial statements. The Nelson City Council has resolved to disestablish the Trust and transfer its operations, assets, and liabilities to Nelson Regional Development Limited from 1 July 2016. |
| World Masters Games 2017 Limited (Auckland Council) |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the Board has resolved to cease operations, subject to the written approval of not less than 75% of the members of the company. |
| 177 High Street Limited (Hutt City Council) |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements because the company has fulfilled its purpose and is in the process of being removed from the companies register. We also drew attention to disclosures in the financial statements about the Board of Directors not complying with the law because it failed to prepare performance information. This is because the company performed as an agent for the purchase of property on behalf of the Hutt City Council. It also failed to complete the annual report within three months after the end of the financial year. |
| North Shore Heritage Trust (Auckland Council) |
| Year ended 30 June 2015 We drew attention to disclosures in the financial statements about the Trustees appropriately using a basis other than that of a going concern when preparing the financial statements. The Trustees have resolved to wind up the Trust when its funds run out. |
| Vision Manawatu (Palmerston North City Council and Manawatu District Council) |
| Period ended 30 November 2016 We drew attention to disclosures in the financial statements about the Trustees appropriately using a basis other than that of a going concern when they prepared the performance report. The Trust ceased operations during September 2016. |
| South Canterbury Rural Fire District Committee |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about the Committee appropriately using a basis other than that of a going concern when preparing the financial statements. The Government has decided to establish a new national service that will take over the Committee's operations, assets, and liabilities. |
| Marlborough Kaikōura Rural Fire Authority |
| Year ended 30 June 2016 We drew attention to disclosures in the financial statements about the Committee appropriately using a basis other than that of a going concern when 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 |
| Year ended 30 June 2017 We drew attention to disclosures in the financial statements about the Board of Directors appropriately using a basis other than that of a going concern when preparing the financial statements. The Authority transferred its functions, operations, and response assets to Fire and Emergency New Zealand, in keeping with newly enacted legislation. |
| Len Lye Centre Trust (New Plymouth District Council) |
| Year ended 31 December 2016 We drew attention to disclosures in the financial statements about the Trustees appropriately using a basis other than that of a going concern when preparing the financial statements because the Trustees have resolved to wind up the Trust. |
| Christchurch Stadium Trust |
| Year ended 31 December 2016 We drew attention to disclosures in the financial statements about the Trustees appropriately using a basis other than that of a going concern when preparing the financial statements because the Trust has an obligation to decommission the stadium and wind up once Christchurch has a new permanent stadium. We also drew attention to the Trust's expected financial difficulties because the Trust would not be able to meet its loan and decommissioning obligations without support from external parties. |