In August the Court of Appeal upheld Forest & Bird's appeal that a land swap involving areas of the Ruahine Forest Park which would allow the Ruataniwha Dam to proceed, was unlawful.
In his report, Mr Lucy stated this decision had significantly reduced the probability of gaining access to the land required through that means.
Late last month the Minister for Conservation and HBRIC applied for leave to appeal this decision to the Supreme Court, and for urgency.
Currently, HBRIC is also pursuing alternative means of gaining access to the land through the Public Works Act.
However, Mr Lucy stated they had been unable to obtain sufficient appropriate audit evidence that it was probable access to the land required would be obtained.
"It is uncertain, and unable to be determined at the date of this report, whether the RWSS assets are impaired."
The council had not impaired the intangible asset "because it considers the final outcome of the litigation, and the timing and likelihood of alternative means to gain access to the required land, is uncertain".
Although the report was carried, there was discussion on Mr Lucy's qualified opinion during yesterday's meeting.
Councillor Rex Graham said he did not understand why Mr Lucy had not impaired the accounts, given he had not found any probable evidence there was access to the land.
He suggested Mr Lucy should have said that if there was a change in the balance of the council - as appeared to have happened in the elections - this would also create "probable" risk.
Councillor Tom Belford said he agreed with points made by councillor Alan Dick and Mr Graham.
"It's very clearly stated why it's qualified because the signal is definitely out there, in front of the public," he said.
"The part of what councillor Dick said that I don't agree with is I don't think [Mr Lucy] did his job."
The auditor should have drawn a conclusion "as opposed to writing a carefully crafted political compromise statement", Mr Belford said.
"But be that as it may it is clearly a qualified opinion, a very specific point which is basically whether the project will proceed or not."
The report states there would be enough information in December - for the HBRIC half-year report- about the probability of success of acquiring the land.
HBRIC would then have a "sounder basis for assessing whether impairment of the RWSS assets is required".
