1.1 Review of the 2004-05 year

Local government: Results of the 2004-05 audits.

During 2004-05, local authorities began preparing their Long-Term Council Community Plan (LTCCP) for 2006-16. They also prepared annual reports for the year 2004-05 under the provisions of the Local Government Act 2002 (the 2002 Act). For 77 authorities, this was the first time they were required to report under the full accountability requirements of the 2002 Act. It is also the second year of the implementation of the Local Government (Rating) Act 2002. This report provides information on the range of issues that arose during the year.

The main focus of our local government team during 2004-05 has been preparing for the audit of the LTCCP. Our preparation has included developing a methodology, training the auditors, briefing the local government sector, fully participating in sector training seminars, and providing ongoing support and a consistency check on the process as our auditors begin audit field work.

Response to legislative change continues to affect our work and the sector. For instance, the sector has indicated that changes to the Resource Management Act 1991, Drinking Water Standards, the new Building Act 2004, and planning for the implementation of dog control legislation have placed significant pressure on them, particularly in combination with the ongoing effects of the 2002 Act.

Important changes in the accounting and auditing profession also affect local government, particularly the adoption of New Zealand equivalents to International Financial Reporting Standards known as NZ IFRS.1

The public sector must adopt NZ IFRS for accounting periods beginning 1 January 2007. For practical reasons, the local government sector will comply one year earlier. The start of the comparative year in which opening balances need to be restated using NZ IFRS was 1 July 2005. This puts additional pressure on the sector at an already busy time.

We continue to receive increasingly complex requests from ratepayers seeking inquiries by us under the Public Audit Act 2001. We expect the level and complexity of requests to continue to increase during the coming years as the public and the sector alike become familiar with the 2002 Act. Many ratepayers demonstrate a sound understanding of the key principles behind the 2002 Act.

1: See paragraph 3.101 for an explanation of NZ IFRS.

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