Local government: Results of the 2004-05 audits.

This report is our annual report on the audits of the local government sector conducted for 2004-05. Most of these audits were of regional and territorial local authorities and their subsidiary entities.

All regional and territorial local authorities reported under the full requirements of the Local Government Act 2002 (the 2002 Act) for the first time for the year ended 30 June 2005. This meant all councils reported actual performance against their first Long-Term Council Community Plan (LTCCP), adopted in either 2003 or 2004. This had a significant effect on their annual reporting responsibilities.

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;
  • describe our preparation for the audit of the 2006-16 LTCCP for adoption by 30 June 2006, and our findings to date; and
  • provide a brief outline of our focus regarding local government issues for the coming year, and the findings from some performance audits undertaken during the year that affect local government.

Contents of this report

The contents of this report are grouped into 7 parts, with one appendix:

  • Part 1 (pages 7 to 33) consists of 7 articles that report on matters that arose during the course of the 2004-05 annual audits. We have again identified those entities on whose reports we have issued a non-standard audit report.
  • Part 2 (pages 35 to 51) contains one article that describes the audit process, and considers our findings to date as local authorities prepare for the 2006-16 LTCCP.
  • Part 3 (pages 53 to 74) consists of 4 articles that deal with other local government issues arising during 2004-05. This section provides commentary on matters for the local government sector to consider relating to the implementation of International Financial Reporting Standards, on some major ratepayer enquiries considered by the Office, and on some issues arising in implementation of the 2002 Act and the Local Government (Rating) Act 2002.
  • Part 4 (pages 75 to 78) has one article that updates and reviews Reserve Boards (which manage and control reserve land).
  • Part 5 (pages 79 to 80) has one article associated with work undertaken by the Office on the Local Authorities (Members’ Interests) Act 1968.
  • Part 6 (pages 81 to 86) consists of 3 articles that provide information on a number of performance audits we undertook during the year that affect local government. These cover freshwater management, public private partnerships, and heritage assets.
  • Part 7 (pages 87 to 91) has one article that outlines the areas of focus that will affect local government in the Auditor-General’s proposed work programme for 2006-07.

Executive summary

The major themes arising from our review of 2004-05 are:

  • The local government sector continues to deal with a wide variety of issues.
  • The sector has increasingly committed more time and energy preparing for the adoption of an audited LTCCP by 30 June 2006. This was affecting the sector in 2004-05 with the development of community outcomes and planning for the development of LTCCPs. This work reaches conclusion throughout 2005-06.
  • Our work with the sector in early 2005-06, through the “self-assessment” approach to planning and the “key controls” review, show the sector’s readiness to complete robust LTCCPs is variable. Audit work in early 2006 shows there is potential for improvement in 2 core areas of the LTCCP:
    • specifying levels of service to be provided to the communities in response to their desires expressed through the community outcomes process; and
    • developing an effective performance reporting framework.
  • We are committed to the preparation of a report to Parliament after 30 June 2006, on our audit process and observations from the audit of 2006 LTCCPs.
  • Ratepayer enquiries have, to a large extent, focused on the consultation and decision-making processes of local government. This is to be expected as councils adjust to the Local Government Act 2002.
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