Reserve Bank of Australia Annual Report – 2007 Financial Statements Independent Auditor's Report

INDEPENDENT AUDITOR's REPORT

To the Treasurer

Scope

I have audited the accompanying financial statements of the Reserve Bank of Australia and controlled entities, which comprise: a directors’ statement; balance sheet; income statement; statement of distribution; statement of changes in capital and reserves; cash flow statement; summary of significant accounting policies, and other explanatory notes.

The Responsibility of the Board of Directors for the Financial Statements

The members of Board are responsible for the preparation and fair presentation of the financial statements in accordance with Finance Minister's Orders made under the Commonwealth Authorities and Companies Act 1997 and the Australian Accounting Standards (including the Australian Accounting Interpretations). This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the directors also state that the financial statements comply fully with International Financial Reporting Standards.

Auditors's Responsibility

My responsibility is to express an opinion on the financial statements based on my audit. My audit has been conducted in accordance with the Australian National Audit Office Auditing Standards, which incorporate the Australian Auditing Standards. These auditing standards require that I comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

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.

Auditor's Opinion

In my opinion, the financial statements of the Reserve Bank of Australia and controlled entities:

1. have been prepared in accordance with Finance Minister's Orders made under the Commonwealth Authorities and Companies Act 1997, and the Australian Accounting Standards (including the Australian Accounting Interpretations);
2. give a true and fair view of the matters required by the Finance Minister's Orders including the Reserve Bank of Australia and controlled entities’ financial position as at 30 June 2007 and of their financial performance and their cash flows for the year then ended; and
3. comply with International Financial Reporting Standards, as disclosed in Note 1.

Ian McPhee
Auditor-General

Sydney
9 August 2007

GPO Box 707 CANBERRA ACT 2601
Centenary House
19 National Circuit BARTON ACT
Phone (02) 6203 7500
Fax (02) 6273 5355
Email ian.mcphee@anao.gov.au