Independent Auditor’s Report 2005-06

To the Treasurer

Scope

The financial statements and  Members’ responsibility

The financial statements comprise: • Statement by  Members;

• Income Statement, Balance Sheet and  Cash Flow Statement ;

• Statement of Changes in  Equity;

• Schedules of  Commitments and Contingencies; and

• Notes to and forming part of  the  Financial Statements

of the  Australian Reinsurance Pool  Corporation for  the  year ended 30  June 2006.

The  Members  of   the  Australian  Reinsurance  Pool  Corporation  are   responsible  for   preparing the financial statements  that   give a  true and   fair   view of the  financial position   and performance of  the Australian Reinsurance Pool Corporation, and that  comply with the Finance Minister ‘s Orders made under the  Commonwealth Authorities and  Companies Act  1997, Accounting Standards and mandatory financial reporting  requirements  in   Australia.   The members of the  Australian  Reinsurance  Pool Corporation are also responsible for the maintenance of  adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the  financial statements.

Audit Approach

I have conducted an independent audit of the financial statements in order to express an opinion on them to you.  My audit has been conducted in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing and Assurance Standards, in order to provide reasonable assurance as to whether the financial statements are free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing,   the inherent limitations of internal control, and the availability of  persuasive, rather than conclusive, evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

While the effectiveness of management’s internal controls over financial reporting was considered when determining the nature and extent of audit procedures, the audit was not designed to provide assurance on internal controls.

I have performed procedures to  assess  whether, in   all   material respects,  the   financial statements present fairly, in  accordance with the Finance Minister ‘s  Orders made under the Commonwealth Authorities and   Companies Act  1997, Accounting Standards and other mandatory financial reporting requirements  in   Australia, a view  which  is  consistent  with  my   understanding of  the Australian Reinsurance Pool Corporation’s financial position, and of  its  financial performance and cash flows.

The audit opinion is formed on the basis of these procedures, which included:

• examining,  on   a   test   basis,  information  to   provide  evidence supporting  the  amounts  and disclosures in the financial statements; and

• assessing the appropriateness of  the accounting policies and  disclosures used, and  the reasonableness of  significant accounting estimates made by  the Members of the   Australian Reinsurance Pool Corporation.

Independence

In conducting the audit, I have followed the independence requirements of the Australian National Audit Office, which incorporate the ethical requirements of the Australian accounting profession.

Audit Opinion

In my opinion, the financial statements of the Australian Reinsurance Pool Corporation:

(a) have been prepared in accordance with the Finance Minister’s Orders made under the Commonwealth Authorities and Companies Act  1997; and

(b) give a true and  fair view of the Australian Reinsurance Pool Corporation ‘s financial position as at 30 June 2006 and of  its   performance and  cash  flows for   the   year then ended, in accordance with:

(i) the matters required by the Finance Minister’s Orders; and

(ii) applicable Accounting Standards and other mandatory financial reporting requirements in Australia.

Australian National Audit Office

Warren Cochrane

Group Executive Director

Delegate of the Auditor-General

Canberra

26 September 2006