Introduction

This report is our “annual report” on the audits for 2003-04 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 under and governed principally by the former Local Government Act 1974 (the 1974 Act).

The Local Government Act 2002 (the 2002 Act) has replaced the 1974 Act. The 2002 Act has had a significant effect on the audits covered in this report. The full accountability effect of the 2002 Act will be in 2004-05 when all councils will, for the first time, be reporting against their Long-Term Community Council Plan (LTCCP), adopted in either 2003 or 2004.

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 the ongoing planned 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 5 parts:

Part 1 (pages 9-43) reports on matters that arose during the course of the 2003-04 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 paragraphs 1.201-1.214).

Part 2 (pages 45-60) deals with other issues that arose during 2003-04 that have some longer-term consequences or raised particular questions. We have commented on a number of areas we gave particular attention to during our audits last year (or came to our attention through our inquiries work), and have highlighted issues for local authorities to consider in the future. We have provided some comment on a range of matters we have dealt with, including Manukau City Council’s provision of resource and building consents, the STV vote count processing failure at the 2004 local authority elections, certain land transactions, water and sanitary services, and decisions made in relation to donations.

Part 3 (pages 61-87) looks at specific matters associated with planning and reporting under the 2002 Act. We note issues that need to be taken into account when preparing an Annual Report and Summary Annual Report under the new Act. We also focus on what we have observed from the LTCCPs prepared for 2003-04 and our approach to the audit of the 2006-07 LTCCPs.

Part 4 (pages 89-92) outlines topics that we anticipate reporting on in the next 12 months.

Part 5 (pages 93-97) reflects on the operation of the Local Authorities (Members’ Interests) Act 1968. It also contains a review of the small Provincial Patriotic Council sector.