1.2 Timeliness of annual reporting

1.201
The annual reports of local authorities provide information that assists communities to assess the performance of the local authorities. 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 Act), each local authority is required to:

• complete and adopt its annual report, containing audited financial statements, within four months of the end of the financial year (by 31 October 2006 for the 2005/06 financial year);
• make its annual report publicly available within one month of adopting it (by 30 November 2006 for the 2005/06 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 2006 for the 2005/06 financial year).¹

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

Completion and adoption of annual reports

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Figure 1.1 shows the dates when the audits of local authorities were completed, which gives an indication of when local authorities were able to adopt their annual reports. It shows that all except two local authorities were able to adopt their annual reports within the statutory time limit.

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The results show that most local authorities met the requirements of the Act. Only two local authorities did not achieve the statutory deadline. The results are not significantly different from those of the previous year.

Public release of annual reports

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We also reviewed the timing of the release of annual reports to the community. The Act allows one month for public release from when the annual reports are adopted. We show the performance of local authorities in meeting this deadline in Figure 1.2.

Figure 1.1
Date of completing 2005/06 local authority audits

* Invercargill City Council and group had not adopted its 2005/06 annual report at the time of writing this report, and it had also not released the report and its summary.
** Banks Peninsula District Council was amalgamated into Christchurch City Council during the 2005/06 year, reducing the total number of local authorities to 85.

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Figure 1.2 shows that overall performance is improving. However, we remain concerned at the number of local authorities not meeting the deadline. Most local authorities make their annual report available to the public by publishing it on their website. We consider that publication could be more timely.

Figure 1.2
Public release of 2005/06 annual reports

* Invercargill City Council and group.

Public release of summary annual reports

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

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

Figure 1.3
Public release of audited summary of 2005/06 annual report

* Invercargil City Council and group.

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As with making the full annual report available, the performance of the sector in making summaries of annual reports available shows some improvement. Local authorities are in some cases achieving the statutory deadline more promptly. There are some difficulties in publishing a summary, and it takes considerable work to summarise an annual report and have it published. However, as with the publication of the annual report, it is a known obligation. The more efficient local authorities take a project planning approach to producing, auditing, and publishing their annual report. We are already seeing a number of local authorities achieving simultaneous publication of their summary and annual report, as a result of sound planning. We encourage this approach.

Summary

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Last year, we noted an improvement in timeliness in 2004/05 compared to previous years. However, we attributed this mainly to the tighter statutory deadlines required by the Act. In 2005/06, little further improvement was evident.

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Twelve local authorities did not comply with the requirement to make a summary report available within one month of adopting the annual report. Of those 12, two did not comply in both years.

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It is important to recognise that accountability is not achieved until the audited information is made available to ratepayers in a user-friendly form. A number of local authorities will need to give this matter greater attention in 2006/07 to ensure that their reporting not only includes prompt audit clearance but also informs their communities promptly.

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

1: The actual timing required of any local authority is determined by when they complete and adopt their annual report. The dates for 2005/06 noted in paragraph 1.203 were the last possible deadlines.