Introduction

This report is our “annual report” on the audits for 2002-03 of the local government sector in the Auditor-General’s portfolio under the Public Audit Act 2001. Most of these audits are of regional and territorial local authorities and their subsidiary entities that were established and governed principally by the former Local Government Act 1974.

The new Local Government Act 2002 (the 2002 Act) has replaced the 1974 Act. The 2002 Act had a significant effect on the audits covered in this report and will have an even greater effect in following years.

Purposes of this report

The purposes of this report are to:

• tell Parliament and the local government sector about matters arising from carrying out our role as auditor of the sector
• describe examples of our expectations of “best practice” on various matters of financial management and reporting, governance, and administration, and
• describe work we are doing in preparation for our expanded role under the 2002 Act.

Contents of this report

The contents of this report are grouped into three parts:

Part 1 (starting on page 9) reports on matters that arose during the course of the 2002-03 annual audits. We have again identified those entities on whose financial reports we have issued a non-standard audit report during the past year (see pages 12-15).

Part 2 (starting on page 27) deals with other issues that arose during 2002-03 and that have some longer-term consequences. We have commented on a number of areas we gave particular attention to during our audits last year, and have highlighted issues for local authorities to consider in the future. We have again provided some comment on conflicts of interest, including our role under the Local Authorities (Members’ Interests) Act 1968 (see pages 80-84), and have also commented on the management of Bovine Tuberculosis Vector Control contracts (see pages 85-88).

Part 3 (starting on page 89) describes some of the issues we have identified for attention during this year’s 2003-04 annual audits. As in 2002-03, our focus is on local authorities’ implementation of new legislation; in particular the 2002 Act. We also provide an update on work we are doing to ensure we are well prepared for our role under the new legislation.