Accounting and auditing matters
Presentation: Review of 2008 TEI audit results.
General overview of matters noted
- Statement of responsibility
- Other forms of description such as "Management statement" not appropriate to use
- Statement not dated by the people signing it
- No reference made to the statement of service performance
- Quoting the incorrect basis for the statement of responsibility, for example, the Public Finance Act 1989
- Correct basis is section 155, Crown Entities Act 2004
- Property, plant, and equipment
- Disclosure of Crown-owned property important
- Disclosure of revaluations could be improved
- Significant assumptions used to determine depreciated replacement cost for buildings not disclosed as required by NZ IAS 16, para 77, for example, determining gross replacement cost
- The total fair value of PPE valued by each valuer not disclosed as required by NZ IAS 16, para 77.2(c)
- Basis for determining fair value not disclosed or not clear as required by NZ IAS 16, para 77.2(d)
- No information about the name of the valuer and/or the date of the valuation as required by NZ IAS 16, para 77.2(a) and (c)
- Evidence of instances where accumulated revaluation reserve on disposal of land and buildings not transferred to retained earnings as required by NZ IAS 16, para 41
- Disclosure of auditor's remuneration
- Other remuneration paid is required to be disclosed under NZ IAS 1, para 94.1
- Description of other non-statutory audit services provided by the auditor required to be disclosed
- Capital commitments
- Some disclosure noted appeared to be based on total project costs
- Disclosure should be based on the contractually committed costs
- Nature of the capital commitment should be disclosed as required by the standards
- Categorisation needed - PPE (NZ IAS 16), intangible assets (NZ IAS 38), investment properties (NZ IAS 40)
- Accounting policies
- Method of accounting for subsidiaries not stated - fair value or cost under NZ IAS 27, para 42(c)
- Not clear how GST has been treated in the statement of cash flows - has a gross or net presentation been used?
- As TEIs are public benefit entities, value in use for impairment testing of PPE should be based on a depreciated replacement cost, not cash flows (cash generating units)
- Standards issued but not yet effective
- Instances of no disclosure noted, or disclosure not complete
- Information provided about irrelevant standards, for example, NZ IFRS 8 Operating Segments
- Statement of movements in equity
- Total recognised income and expenses for the year not disclosed as required by NZ IAS 1, para 96(c)
- Contributions from the Crown shown within total recognised income and expenses. As these are transactions with the Crown as owner, these should be shown separately outside the total for recognised income and expenses
- Other disclosure issues noted
- Poor disclosure of significant accounting judgements and measurement uncertainty
- Poor disclosure of liquidity analysis, sensitivity analysis, categories of financial instruments, capital management
