Part 1: Introduction

1.1
In a change from previous years’ reports, this report on the 2009/10 audits of the local government sector is in two sections:

• Section A reports on the full results of the 2009/10 annual reporting round of local authorities; and
• Section B contains articles written in December to directly inform all local authority chief executives and mayors of what the Office was working on during 2010, and of the findings.

1.2
In this Part, we describe the content of Section A.

Timeliness of annual reporting

1.3
As we did in previous reports on the results of local government audits, we comment on important aspects of annual reporting by local authorities. Overall, this year’s results were disappointing. Local authorities’ annual reporting was less timely for 2009/10 than for the previous year. We consider this trend to be of concern.

Financial trends in annual reports

1.4
For the first time, we have reported our observations on the financial performance and position that can be determined by referring to local authorities’ audited financial statements. We have not gone beyond the information in those statements here because we believe they should be informative in their own right.

1.5
Because this is the first year that we have completed this analysis, our comments are descriptive. In future years, we expect to report more fully on trends.

1.6
Overall, we have observed that local authorities are generally in a sound financial position. However, some local authorities face challenging decisions about whether to keep providing the current levels of service to their communities.

1.7
On the whole, local authorities spent less on capital than they had budgeted for in the year ended 30 June 2010; about 78% of all capital expenditure planned by local authorities was actually spent. Local authorities’ annual reports clearly conveyed that the need to save money was the reason for the underspending.

1.8
Because of the lower capital expenditure, local authorities did not borrow as much as they had budgeted for.

Reducing and managing greenhouse gas emissions

1.9
For the first time, we report on the extent to which local authorities measure, reduce, and off set greenhouse gas emissions.

1.10
We found that some local authorities lead by example in improving their communities’ environmental well-being.

1.11
The effect of New Zealand’s Emissions Trading Scheme is not yet apparent, but we will continue to monitor this and report where appropriate.

Non-standard audit reports

1.12
In addition to reporting our opinion, we have increased the use of explanatory paragraphs in our audit reporting. We see merit in drawing attention to significant matters particularly relevant to the information an entity provides.

1.13
This year, in the Central Otago District Council and Tararua District Council audit reports, we included explanatory paragraphs about the councils' performance information. These two local authorities received a qualified audit opinion about their performance frameworks in their 2009-19 long-term council community plans. The councils had reported performance information for the current year against an appropriately revised performance framework. We were pleased with the effort these local authorities made to improve. The audit reports for these two local authorities drew attention to the improvements they had made.