Part 1: Timeliness of annual reporting

1.1
The annual reports of local authorities provide information that assists communities to assess the performance of their local authorities. For this process to be effective, the information must be comprehensive and timely.

1.2
Each year, we examine the timeliness of annual reporting by local authorities.

1.3
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;
• make its annual report publicly available within one month of adopting it; and
• make a summary of the annual report publicly available within one month of adopting the annual report.¹

1.4
The local authority determines the timing of the preparation and publication of the audited annual reports within the requirements of the Act. We work with local authorities to fit our audit process into the approach determined by the local authority.

Summary

1.5
The timeliness of annual reporting by local authorities for 2006/07 was disappointing. There was significant additional work required for the transition to reporting under New Zealand equivalents to International Financial Reporting Standards (NZ IFRS). However, a significant number of local authorities need to better plan the completion, adoption, and release of the annual report to report within the statutory deadlines.

1.6
It is important that local authorities recognise that accountability is not achieved until the audited information is made available to ratepayers in a user-friendly form (the annual report summary). An increasing number of local authorities need to give this matter greater attention to ensure that their reporting not only includes prompt audit clearance but also informs their communities promptly.

1.7
We will continue to monitor the performance of local authorities in meeting these important statutory deadlines. With the transition to NZ IFRS now complete, we expect significant improvements to occur for reporting about 2007/08.

Completion and adoption of annual reports

1.8
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 only 69 local authorities, or 81%, were able to adopt their annual reports within the statutory time limit.

Figure 1.1
Date of completing 2006/07 local authority audits

1.9
This year, significantly fewer local authorities met the requirements of the Act. Additional work required for the transition to reporting under NZ IFRS significantly affected the results. However, those local authorities with annual reports that were not completed at the time of writing this Part show not only poor planning for the transition to NZ IFRS but also poor planning for routine elements of statutory annual reporting.

1.10
We note that, as at 30 November 2006, the only outstanding annual report was that of Invercargill City Council (see Part 2). In contrast, at 30 November 2007, there were 11 local authorities that still needed to complete their annual reports. Four of these were completed by the end of December 2007.

1.11
The seven local authorities with annual reports outstanding at 31 March 2008 (five months after the last possible statutory date for completing and adopting the 2006/07 annual report) were:

• Ashburton District Council;
• Buller District Council;
• Hurunui District Council;
• Invercargill City Council;
• Palmerston North City Council;
• Selwyn District Council; and
• Westland District Council.

1.12
These audits were delayed because:

• four local authorities provided poor quality and/or incomplete information to auditors;
• three local authorities did not assess fair value movements adequately, leading to unplanned infrastructure asset revaluations;
• staff changes or illness compounded poor project planning for three local authorities; and
• in the case of Invercargill City Council, there were delays in resolving issues from previous years.

1.13
We are very concerned by this lack of commitment to the timely completion and adoption of annual reports because without timely reporting it is very difficult for communities to assess the performance of their local authorities.

Public release of annual reports

1.14
We also reviewed the timing of the release of the annual reports to the community. The Act allows one month for public release from when a local authority adopts its annual report. Figure 1.2 shows the performance of local authorities in meeting this deadline.

Figure 1.2
Public release of 2006/07 annual reports

1.15
Figure 1.2 shows a slight drop in the number of local authorities meeting the statutory deadline. This is balanced against an improvement in the number of local authorities publishing their annual report within 10 days of its adoption. Most local authorities make their annual report available to the public on their website. In our view, if publication is on a website, there are very few reasons for not publishing in a timely manner.

Public release of summary annual reports

1.16
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 of the annual report being adopted. In our view, releasing the audited summaries is important for the accountability of local authorities. These summaries are the most accessible information for the general readership, and the easiest document to circulate and make widely available. Figure 1.3 shows the performance of local authorities in releasing their annual report summaries.

Figure 1.3
Public release of audited summary of 2006/07 annual reports

1.17
The performance of the sector in making summaries of annual reports available within the statutory deadline has declined. However, we note that there has been an improvement in those releasing the audited summary annual report within 10 days.

1.18
Of those local authorities that had completed and adopted their annual report before 31 March 2008, nine did not comply with the requirement to make a summary report available within one month of adopting their annual report. We were particularly disappointed to note that of those nine, two local authorities did not meet this requirement in 2005/06 either.² This trend suggests a lack of commitment to timely reporting to the community.

1.19
It requires planning and time to summarise an annual report and have it published. However, as with the publication of the annual report, it is a known obligation. We emphasise the need for local authorities to take a project planning approach to producing, auditing, and publishing their annual report and annual report summary.

1.20
We were pleased to see the more efficient local authorities achieving simultaneous publication of their summary and annual reports, because of sound planning. We encourage this approach within all local authorities.

1: The actual timing required of any local authority is determined by when they complete and adopt their annual report. The last possible dates for 2006/07 were for completing and adopting the annual report – 31 October 2007, for making the annual report publicly available – 30 November 2007, and for making the summary annual report publicly available – 30 November 2007.

2: Rodney District Council and Whangarei District Council have not published their annual report summary within the statutory deadline in either of the past two years. We note that the performance of both these councils declined in 2006/07, with the summaries being published within 42 days (33 days in 2005/06) and 47 days (32 days in 2005/06) respectively.

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