Reports and Publications

• Annual Report 2006
  • Contents
  • Part 1: Overview
  • Part 2: Statement of responsibility and audit report
  • Part 3: Departmental financial statements
  • Part 4: Non-departmental schedules
  • Part 5: Other information

Within this section

• Audit Report

Annual Report for the year ended 30 June 2006

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Part 2: Statement of responsibility and audit report (continued)

Audit New Zealand

Audit report to the readers of Ministry of Defence's financial statements for the year ended 30 June 2006

The Auditor-General is the auditor of Ministry of Defence (the Ministry). The Auditor-General has appointed me, J R Smaill, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements of the Ministry, on his behalf, for the year ended 30 June 2006.

Unqualified opinion

In our opinion the financial statements of the Ministry of Defence comprising the Statement of Objectives and Service Performance, Statement of Accounting Policies, Statement of Financial Performance, Statement of Movements in Taxpayers’ Funds, Statement of Financial Position, Statement of Cash Flows, Reconciliation of Net Operating Surplus to Net Operating Activities, Statement of Commitments, Statement of Contingent Assets and Liabilities, Statement of Unappropriated Expenditure, Statement of Departmental Expenditure and Appropriations, Notes 1 to 15 to the Financial Statements, Statement of Non-Departmental Accounting Policies, Schedule of Non Departmental Revenue and Receipts, Schedule of Non Departmental Expenses, Schedule of Non Departmental Assets, Schedule of Non Departmental Liabilities, Schedule of Non-Departmental Commitments, Statement of Non Departmental Expenditure and Appropriations and Notes C1 to C4 of the Schedules:

• Comply with generally accepted accounting practice in New Zealand; and
• Fairly reflect:
  • the Ministry's financial position as at 30 June 2006;
  • the results of its operations and cash flows for the year ended on that date;
  • its standards of delivery performance achieved, as compared with the forecast standards outlined in the statement of forecast service performance adopted at the start of the financial year and its actual revenue earned and output expenses incurred, as compared with the forecast revenues and output expenses outlined in the statement of forecast service performance adopted at the start of the financial year and
  • the schedules of non-departmental activities in part 4 fairly reflect the assets, liabilities, revenues, expenses, contingencies and commitments managed by the Ministry on behalf of the Crown for the year ended 30 June 2006.

The audit was completed on 22 September 2006, and is the date at which our opinion is expressed.

The basis of our opinion is explained below. In addition, we outline the responsibilities of the Secretary of Defence and the Auditor, and explain our independence.

Basis of opinion

We carried out the audit in accordance with the Auditor-General's Auditing Standards, which incorporate the New Zealand Auditing Standards.

We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements did not have material misstatements, whether caused by fraud or error.

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader's overall understanding of the financial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.

The audit involved performing procedures to test the information presented in the financial statements. We assessed the results of those procedures in forming our opinion.

Audit procedures generally include:

• determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;
• verifying samples of transactions and account balances;
• performing analyses to identify anomalies in the reported data;
• reviewing significant estimates and judgements made by the Secretary of Defence;
• confirming year-end balances;
• determining whether accounting policies are appropriate and consistently applied; and
• determining whether all financial statement disclosures are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements or statement of service performance.

We evaluated the overall adequacy of the presentation of information in the financial statements. We obtained all the information and explanations we required to support our opinion above.

Responsibilities of the Secretary of Defence and the Auditor

The Secretary of Defence is responsible for preparing financial statements in accordance with generally accepted accounting practice in New Zealand. The financial statements must fairly reflect the financial position of the Ministry as at 30 June 2006 and the results of its operations and cash flows for the year ended on that date. The statement of service performance must fairly reflect, for each class of outputs, the Ministry's standards of delivery performance achieved and revenue earned and expenses incurred, as compared with the forecast standards, revenue and expenses adopted at the start of the financial year. In addition, the schedules of non-departmental activities must fairly reflect the assets, liabilities, revenues, expenses, contingencies and commitments managed by the Ministry on behalf of the Crown for the year ended 30 June 2006. The Secretary of Defence's responsibilities arise from sections 45A, 45B and 45(1)(f) of the Public Finance Act 1989.

We are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001 and section 45D(2) of the Public Finance Act 1989.

Independence

When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand.

In addition to the audit we have carried out an assignment in the area of tender process assurance, which is compatible with those independence requirements. Other than the audit and this assignment, we have no relationship with or interests in the Ministry.

J R Smaill
Audit New Zealand
On behalf of the Auditor-General
Wellington, New Zealand

Matters relating to the electronic presentation of the audited financial statements

This audit report relates to the financial statements of the Ministry of Defence for the year ended 30 June 2006 included on Ministry of Defence’s web site. The Ministry of Defence ’s Secretary of Defence is responsible for the maintenance and integrity of the Ministry of Defence’s web site. We have not been engaged to report on the integrity of the Ministry of Defence’s web site. We accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site. The audit report refers only to the financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements and related audit report dated 22 September 2006 to confirm the information included in the audited financial statements presented on this web site. Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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