Auditor-General's overview

Local government: Results of the 2013/14 audits.

Challenging times continued for local authorities in 2013/14. Elected members, many in office for the first time, are being asked to respond to matters of growing complexity, urgency, and consequence. Decisions about significant infrastructure investments are mounting for many local authorities, as are pressures to "manage-down" increasing operational costs and rates demands.

Good governance and effective management are imperative.

Last year, I emphasised the need for local authorities to correct deficiencies in their rating practices, as many rating practices did not meet minimum statutory requirements. Local authorities had already set rates for 2013/14 when deficiencies in the 2012/13 rates were identified, so many deficiencies continued. However, I expect that local authorities will have made necessary improvements to next year's rating practices.

I also commented last year on the value of audit and risk committees. Elected members are responsible for overseeing significant decisions. Such decisions often involve risk. Some local authorities have improved their audit and risk management practices in 2013/14. A review we carried out recently suggests that this is a needed area of focus.

Trends in the 2013/14 annual reports highlight many of the challenges facing local authorities. The results indicate that local authorities are attempting to smooth out rate increases over time and keep spending and debt under control. I recently published a report entitled Water and roads: Funding and management challenges. The report noted that many local authorities did a reasonable job managing short-term and medium-term infrastructure delivery, but struggled to strategically plan for and fund their long-term needs. Local authorities will need to protect and enhance their capability to obtain good data and make long-term decisions about their networks as renewal needs increase. There is a significant renewal challenge ahead for many local authorities.

We noted that more local authorities left finalising their financial statements until the last two weeks of October 2014, nearly four months after their balance date. Communities and businesses have a right to expect accurate and timely information to help hold their local authority to account. Communities expect those they entrust with governance responsibilities to be accountable. Adopting and publishing financial statements is a key measure of accountability. In 2014, three local authorities failed to meet the statutory deadline for adopting their annual reports.

Local authorities are presently consulting on their long-term directions for 2015-25. Addressing the issues noted above will be important for communities to have confidence that affordable services can be maintained.

Signature - LP

Lyn Provost
Controller and Auditor-General

20 February 2015

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