To the Readers of the Department of Corrections' Financial Statements for the Year Ended 30 June 2006
The Auditor-General is the auditor of the Department of Corrections (the Department). The Auditor General has appointed me, Stephen Lucy, using the staff and resources of Audit New Zealand, to carry out the audit of the financial statements of the Department, on his behalf, for the year ended 30 June 2006.
In our opinion the financial statements of the Department of Corrections comprising the Statement of Accounting Policies, Statement of Financial Performance, Statement of Movement in Taxpayers’ Funds, Statement of Financial Position, Statement of Cash Flows, Statement of Commitments, Statement of Contingent Liabilities, Statement of Unappropriated Expenditure, Statement of Departmental Expenditure and Appropriations, Statement of Trust Monies, Notes 1 to 20 to the Financial Statements and Statement of Service Performance:
- comply with generally accepted accounting practice in New Zealand; and
- fairly reflect:
- the Department’s financial position as at 30 June 2006;
- the results of its operations and cash flows for the year ended on that date; and
- 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.
The audit was completed on 29 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 Chief Executive 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 Chief Executive;
- 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 Chief Executive and the Auditor
The Chief Executive 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 Department 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 Department’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. The Chief Executive’s responsibilities arise from sections 45A and 45B 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.
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 entered into the following engagements that are compatible with those independence requirements:
- a review of the victim notification system
- internal budget allocation review
- provision of assistance to internal audit on the Regional Prison Development Project
- a review of departmental fixed asset accounting functions
Other than the audit and these assignments, we have no relationship with or interests in the Department.
S B Lucy
Audit New Zealand
On behalf of the Auditor-General
Wellington, New Zealand