Our recommendations

Features of better annual reports

Most local authorities' annual reports have a similar reporting structure because of the legislative requirements, which specify the content for financial and non-financial reporting. However, local authorities can make the content more meaningful for their communities.

Some of the better practices we have seen for reporting performance information included:

• an overview performance report from the mayor (or chairperson) and the chief executive;
• selecting performance measures that together provided a balanced picture of the important aspects of the levels of service;
• information about the local authority that often included a description of the role and direction taken by the local authority and progress against identified milestones;
• a financial overview or highlights section that used graphics and narrative commentary to help readers interpret the financial information; and
• an analysis of where rates had been spent and sources of income for the local authority.

Recommendations to improve annual reports

We recommend that local authorities:

1. identify services and results (costs, outputs, impacts, and outcomes) that would benefit from longer-term (5 to 10 years) trend analysis and report that analysis, supported with commentary, in their annual reports;

2. analyse and evaluate their service performance, cost of service, and impact and outcome results to assess and report on cost-effectiveness;

3. include financial performance summaries that focus on the key issues and impacts, and key achievements during the financial year and over longer terms to reveal performance trends;

4. use graphs, diagrams, and other visual presentations to show performance, and support these with narrative and commentary as part of the context; and

5. consider reporting against key financial performance indicators to benchmark their performance and for assessing performance over time and against their financial strategy.