1.2 Timeliness of annual reporting

1.201
The annual reports of local authorities provide information that assists communities to assess their performance. For this process to be effective, the information must be comprehensive and timely.

1.202
Each year, we examine the timeliness of annual reporting by local authorities.

1.203
Under the Local Government Act 2002 (the 2002 Act), each local authority is required to:

• complete and adopt its annual report, containing audited financial statements, within 4 months of the end of the financial year (by 31 October 2005 for the 2004-05 financial year);
• make its annual report publicly available within one month of adopting it (by 30 November 2005 for the 2004-05 financial year); and
• make a summarised version of the information contained in its annual report publicly available within one month of adopting the annual report (by 30 November for the 2004-05 financial year)²

1.204
The timing of the preparation and publication of the audited annual reports is determined by the local authority within the requirements of the 2002 Act. The audit process fits into the approach determined by the local authority.

Completion and adoption of annual reports

1.205
Figure 1.1 shows the dates by which the audits of local authorities were completed, as an indication of when local authorities were in a position to adopt their annual reports. The Figure shows that all except 3 local authorities were in a position to adopt their annual reports within the statutory time limit.

1.206
The results for October and November 2005 were affected by the changed reporting deadlines affecting most local authorities for the first time. Nine of the 86 local authorities had elected to prepare a Long-Term Council Community Plan in 2003 and therefore were required to report under the new provisions of the 2002 Act in 2003-04. This meant that they were required to complete and adopt their 2003-04 annual report by 31 October 2004. For those authorities, there was no change to the timing for their 2004-05 report. For the remaining 77 authorities, the 2004-05 year was the first time they were required to meet the new timing provisions. In the previous year, the date for completing and adopting 2003-04 annual reports had been 30 November 2004 – that is, one month later.

Figure 1.1
Date of completing local authority audits

* Invercargill City Council.

Public release of annual reports

1.207
We also reviewed the timing of the release of annual reports to the community. The 2002 Act requires annual reports to be released publicly no later than one month after they have been adopted, and the performance of local authorities in meeting this deadline is shown in Figure 1.2.

Figure 1.2
Public release of 2004-05 annual reports

* As Invercargill City Council has not adopted its annual report to date, the subsequent actions of the release of the report and its summary have also not been completed.

Public release of summary annual reports

1.208
We also reviewed the timing of the release of audited summaries of annual reports. The 2002 Act requires both the audited annual report and an audited summary to be released within one month after the annual report has been adopted. We view release of the audited summaries as an important part of the accountability cycle for local authorities. These summaries are the most accessible information for general readership and the easiest document to circulate and make widely available.

1.209
Figure 1.3 shows the performance of local authorities in releasing their annual report summaries.

Figure 1.3
Public release of audited summaries of 2004-05 annual reports

Summary

1.210 Although an improvement on 2003-04, the performance of local authorities in accounting effectively to their communities is a mixed one.

1.211
The timeliness of annual reporting by local authorities to their communities improved during 2004-05 largely due to the tighter statutory timeframes. Generally, the local authorities that adopted annual audited annual reports in November 2004 brought their reporting forward by the required one month. While few other voluntary gains were made, most local authorities adequately adjusted their procedures to complete and adopt their annual report within the prescribed statutory limit and then to release that information to the public.

1.212
We note that 12 local authorities with an adopted annual report had not complied with the requirement to make a summary report available by the statutory deadline. It is important to recognise that accountability is not achieved until the audited information is released to ratepayers, preferably in a summarised, user-friendly form. A number of local authorities will need to give this matter greater attention in 2005-06 to ensure that their reporting not only includes prompt audit clearance but also informs their communities promptly.

1.213
We will continue to monitor the performance of local authorities in meeting these important accountability responsibilities.

2: The actual timing required by any local authority was determined by when they completed and adopted their annual report. The dates noted in paragraph 1.203 represent the outside limits that these tasks needed to be accomplished by.