2.6 Audit report
Statutory requirement: section 151(1)(e) of the CEA:
- An annual report must contain…in respect of the financial year to which it relates…
- the audit report in accordance with section 156;
The appointed auditor is required to provide an audit report for inclusion in the Crown entity's annual report.
The auditor forms an independent opinion as to whether the financial statements and supplementary schedules comply with GAAP and fairly reflect:
- the financial position of the reporting entity as at the balance date
- the results of the reporting Crown entity's operations and cash flows for the year ended on that date
- the 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
- the 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 as the start of the financial year, and
- any assets, liabilities etc managed by the Crown entity on behalf of the Crown.
An audit involves carrying out procedures to obtain audit evidence about the amounts and disclosures in the financial statements and statement of service performance. The procedures selected depend on the auditor's judgement, including assessing risks of material misstatement of the financial statements and statement of service performance, whether due to fraud or error. In making those risk assessments auditors consider relevant internal controls but not for the purpose of expressing an opinion on the effectiveness of those controls. The audit also involves evaluating:
- the appropriateness of accounting policies used and whether they have been consistently applied
- the reasonableness of the significant accounting estimates and judgements made by the governing body
- the adequacy of disclosures in the financial statements and statement of service performance, and
- the overall presentation of the financial statements and statement of service performance.