Part 2: Timeliness in annual reporting

2.1
In this Part, we set out:

• the statutory requirements for adopting and publicly releasing an annual report; and
• when local authorities:
  • adopted their annual reports, and the reasons why some were late;
  • publicly released their annual reports; and
  • publicly released their summary annual reports.

Background

2.2
Annual reports provide information that helps communities to assess their local authorities' performance. For this process to be effective, the information must be comprehensive and timely.

2.3
Each year, we look at how timely local authorities' annual reports have been.

2.4
Under the Local Government Act 2002 (the Act), each local authority is required to:

• complete and adopt its annual report containing audited financial statements and service performance information within four months after the end of the financial year;³
• make its annual report publicly available within one month of adopting it; and
• make an audited summary of the annual report available within one month of adopting the annual report.

2.5
The local authority decides when the audited annual reports and summaries will be prepared and published, within the requirements of the Act.

Adopting annual reports

2.6
The Act allows local authorities four months after the end of the financial year to complete and adopt their annual reports. More local authorities did not meet this statutory deadline than in the previous two years, which concerns us.

2.7
Figure 1 shows the dates when our audits of local authorities were completed, which gives an indication of when local authorities were able to adopt their annual reports.

Figure 1
When local authority audits for 2008/09, 2009/10, and 2010/11 were completed

* We excluded the former Auckland local authorities in both the 2008/09 and 2009/10 financial year totals but included Auckland Council in 2010/11. Auckland Council prepared an eight-month "annual report" ended 30 June 2011 and was subject to the same statutory timeframe as other local authorities.

2.8
Eight local authorities (10%) failed to meet the statutory deadline for 2010/11, compared with seven for 2009/10. In addition, two local authorities' audits were still incomplete as at 31 January 2012 – that is, three months after their statutory deadline and seven months after their balance date.

2.9
Of the eight local authorities that failed to meet the statutory deadline in 2010/11, three (Central Hawkes Bay District Council, Ruapehu District Council, and Wairoa District Council) had failed to meet the deadline in 2009/10. In past years, the other five local authorities had been able to meet their deadlines.

2.10
The increase in the number of local authorities that failed to meet the statutory deadline and the delay in finalising annual reports as soon as possible are unsatisfactory. Local authorities know the statutory obligations and should have appropriate procedures to meet them. Those not meeting the deadline are failing to provide their community and stakeholders with the timely information that they are entitled to receive.

2.11
Two local authorities disclosed reasons for not meeting the statutory deadline in their annual report. Both stated that they had been waiting for information from a subsidiary entity. Where the audit of the subsidiary had been delayed and the subsidiary was significant to the local authority, this resulted in the delay in finalising the local authority's annual report.

2.12
The other local authorities that failed to meet the statutory deadline disclosed only that they were not able to adopt their annual report within four months after the end of the financial year and did not say why.

Releasing annual reports to the public

2.13
We looked at when local authorities released their annual report to the community. The Act allows up to one calendar month from when a local authority adopts its annual report to it releasing that report to the public. Figure 2 shows how well local authorities met this deadline.

Figure 2
When local authorities released their annual reports for 2008/09, 2009/10, and 2010/11

2.14
Five local authorities missed the one-month deadline for releasing their annual report to the community, and two of them have yet to finalise their annual reports.

2.15
Most local authorities make their annual report available to the public on their website. In our view, local authorities should be able to publish their annual reports on a website within a few days of adopting their reports. We expect the whole sector to be able to achieve this.

Releasing summary annual reports to the public

2.16
We 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. Releasing an audited summary is important to keep local authorities accountable. The summary is the most accessible information for most readers, and the easiest document to circulate and make widely available.

2.17
As Figure 3 shows, in 2010/11, a similar number of local authorities made summaries of annual reports available within the statutory deadline as in 2009/10.

Figure 3
When local authorities released their audited summary annual report, for 2008/09, 2009/10, and 2010/11

2.18
Four local authorities did not provide their communities with audited summaries of their annual reports within one month of adopting their annual report.⁴

2.19
Two local authorities have yet to adopt both their annual report and summary annual report. Until they do, we cannot comment on how they comply with the statutory timeframes for the public release dates of their summary annual report.

2.20
As with the annual report, local authorities know they must produce a summary annual report. We emphasise that local authorities need to project manage how they produce, audit, and publish their annual report summary.

3: If the date that the audit of a public entity's financial statements must be completed by falls on a non-working day, then the Interpretation Act 1999 requires that the statutory deadline should be read as the next working day. In 2010/11, Marlborough Anniversary Day fell on Monday 31 October 2011. Therefore, 1 November 2011 was the last possible date for any affected local authorities to complete and adopt their annual report.

4: One local authority had completed its annual report by 31 October 2011 but, as at 31 January 2012, had yet to release its audited summary annual report. Another local authority did not meet its statutory deadline for adopting its annual report by 31 October 2011 and had not yet issued its audited summary annual report as at 31 January 2012. These have been included in Figure 3 in the "Not yet issued at time of writing this report" row.