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To the readers of the Ministry of Transport's annual report for the year ended 30 June 2017

The AuditorGeneral is the auditor of the Ministry of Transport (the Ministry). The AuditorGeneral has appointed me, Kelly Rushton, using the staff and resources of Audit New Zealand, to carry out, on his behalf, the audit of:

  • the financial statements of the Ministry on pages 23 to 37, that comprise the statement of financial
    position, statement of commitments, statement of contingent liabilities and contingent assets as at 30 June 2017, the statement of comprehensive revenue and expense, statement of movements in equity, and statement of cash flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information;
  • the performance information prepared by the Ministry for the year ended 30 June 2017 on pages 18 to 20 and 55 to 77; and
  • the statements of expenses and capital expenditure of the Ministry for the year ended 30 June 2017 on pages 50 to 53 ; and
  • the schedules of non-departmental activities which are managed by the Ministry on behalf of the Crown on pages 39 to 49 that comprise:
    • the schedules of assets; liabilities; commitments; and contingent liabilities and assets as at 30 June 2017;
    • the schedules of revenue and receipts, and expenses for the year ended 30 June 2017;
    • the statement of trust monies for the year ended 30 June 2017; and
    • the notes to the schedules that include accounting policies and other explanatory information.

Opinion

In our opinion:

  • the financial statements of the Ministry on pages 23 to 37:

    • present fairly, in all material respects:

      • its financial position as at 30 June 2017; and

      • its financial performance and cash flows for the year ended on that date; and
    • comply with generally accepted accounting practice in New Zealand in accordance with Public Sector Benefit Reporting Standards.
  • the performance information of the Ministry on pages 18 to 20 and 55 to 77:
    • presents fairly, in all material respects, for the year ended 30 June 2017:

      • what has been achieved with the appropriation; and

        • what has been achieved with the appropriation; and

        • the actual expenses or capital expenditure incurred compared with the appropriated or forecast expenses or capital expenditure; and
      • complies with generally accepted accounting practice in New Zealand.
  • the statements of expenses and capital expenditure of the Ministry on pages 50 to 53 are presented fairly, in all material respects, in accordance with the requirements of section 45A of the Public Finance Act 1989.
  • the schedules of non-departmental activities which are managed by the Ministry on behalf of the Crown on pages 39 to 49 present fairly, in all material respects, in accordance with the Treasury Instructions:
    • the assets; liabilities; commitments; and contingent liabilities and assets as at 30 June 2017;
    • expenses; and revenue for the year ended 30 June 2017; and
    • the statement of trust monies for the year ended 30 June 2017.

Our audit was completed on 29 September 2017. This is the date at which our opinion is expressed.

The basis for our opinion is explained below. In addition, we outline the responsibilities of the Chief Executive
and our responsibilities relating to the information to be audited, we comment on other information, and we explain our independence.

Basis for our opinion

We carried out our audit in accordance with the AuditorGeneral’s Auditing Standards, which incorporate the Professional and Ethical Standards and the International Standards on Auditing (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are
further described in the Responsibilities of the auditor section of our report.

We have fulfilled our responsibilities in accordance with the AuditorGeneral’s Auditing Standards.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Responsibilities of the Chief Executive for the information to be audited

The Chief Executive is responsible on behalf of the Ministry for preparing:

  • Financial statements that present fairly the Ministry’s financial position, financial performance, and its cash flows, and that comply with generally accepted accounting practice in New Zealand.
  • Performance information that presents fairly what has been achieved with each appropriation, the expenditure incurred as compared with expenditure expected to be incurred, and that complies with generally accepted accounting practice in New Zealand.
  • Statements of expenses and capital expenditure of the Ministry, that are presented fairly, in accordance with the requirements of the Public Finance Act 1989.
  • Schedules of non-departmental activities, in accordance with the Treasury Instructions, that
    present fairly those activities managed by the Ministry on behalf of the Crown.

The Chief Executive is responsible for such internal control as is determined is necessary to enable the preparation of the information to be audited that is free from material misstatement, whether due to fraud or
error.

In preparing the information to be audited, the Chief Executive is responsible on behalf of the Ministry for assessing the Ministry’s ability to continue as a going concern. The Chief Executive is also responsible
for disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless there is an intention to merge or to terminate the activities of the Ministry, or there is no realistic alternative but to do so. The Chief Executive’s responsibilities arise from the Public Finance Act 1989.

Responsibilities of the auditor for the information to be audited

Our objectives are to obtain reasonable assurance about whether the information we audited, as a whole, is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit carried out in accordance
with the AuditorGeneral’s Auditing Standards will always detect a material misstatement when it exists. Misstatements are differences or omissions of amounts or disclosures, and can arise from fraud or error.
Misstatements are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the decisions of readers, taken on the basis of the information we audited.

For the budget information reported in the information we audited, our procedures were limited to checking that
the information agreed to the information in the 2015-2019 statement of intent and relevant Estimates and
Supplementary Estimates of Appropriations 2016/17, and the 2016/17 forecast financial figures included in
the Ministry’s 2015/16 Annual Report.

We did not evaluate the security and controls over the electronic publication of the information we audited.
As part of an audit in accordance with the AuditorGeneral’s Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. Also:

  • We identify and assess the risks of material misstatement of the information we audited, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Ministry’s internal control.
  • We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Chief Executive.
  • We evaluate the appropriateness of the reported performance information within the Ministry’s framework for reporting its performance.
  • We conclude on the appropriateness of the use of the going concern basis of accounting by the Chief
    Executive and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Ministry’s ability to continue as a going
    concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the information we audited or, if such disclosures are
    inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
    date of our auditor’s report. However, future events or conditions may cause the Ministry to cease to continue as a going concern.
  • We evaluate the overall presentation, structure and content of the information we audited, including the disclosures, and whether the information we audited represents the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Chief Executive regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.

Our responsibilities arise from the Public Audit Act 2001.

Other Information

The Chief Executive is responsible for the other information. The other information comprises the information included on pages 2 to 17, but does not include the information we audited, and our auditor’s
report thereon.

Our opinion on the information we audited does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

Our responsibility is to read the other information. In doing so, we consider whether the other information is
materially inconsistent with the information we audited or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on our work, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

The Minister of Transport’s report on relevant nondepartmental appropriations that is appended to the Ministry’s annual report is not part of the Ministry’s annual report. The Public Finance Act 1989 does not require the information in the Minister’s report to be audited and we have performed no procedures over the information in the Minister’s report.

Independence

We are independent of the Ministry in accordance with the independence requirements of the AuditorGeneral’s
Auditing Standards, which incorporate the independence requirements of Professional and Ethical Standard 1
(Revised): Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board.

Other than in our capacity as auditor, we have no relationship with, or interests, in the Ministry.

 

Kelly Rushton
Audit New Zealand
On behalf of the Auditor-General
Wellington, New Zealand

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