Part 4: Timeliness of annual reporting

4.1
In this Part, we set out when councils adopted their annual reports and publicly released their annual reports and summary annual reports. We also discuss the importance of the statutory requirements for adopting annual reports and their public release.

4.2
The Local Government Act 2002 requires councils to:

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

4.3
Appendix 1 provides more detail on when councils adopted and publicly released their annual reports and summary annual reports.

Adopting annual reports

4.4
In 2017/18, seven councils⁵ missed the deadline to complete and adopt their audited annual report within four months after the end of the financial year. Hurunui District Council and Kaikōura District Council had not adopted their audited annual report by 31 January 2019, which is three months after their statutory deadline and seven months after their balance date. The two councils had to work through complex asset recognition issues, which contributed to the delay, as did the audit of the valuations.

4.5
For 2017/18, more than twice the number of councils did not meet the statutory deadline in any given year since 2013/14 (see Figure 3). This is also the highest number of councils that have not met their reporting obligations since 2010/11.

Figure 3
Number of councils that did not meet the statutory deadline for adopting annual reports, 2013/14 to 2017/18

4.6
The increase in councils failing to meet the statutory deadline and delaying finalising annual reports is unsatisfactory. Although we acknowledge that in 2018 councils needed to prepare their LTPs, they knew the statutory obligations and should have had appropriate procedures in place to meet them.

4.7
Councils that do not meet the deadline are failing to provide their community and stakeholders with the timely information that they are entitled to receive.

4.8
Councils 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.

4.9
Through our audits, we know that some councils missed their statutory deadline because they had to resolve technical matters, such as the valuation of assets and how to account for unusual one-off transactions. To resolve these matters effectively, councils should get appropriate accounting advice and discuss their proposed treatment with their auditors at an early stage.

Public release of annual reports and summary annual reports

4.10
Three councils missed the one-month deadline for making their summary annual reports publicly available.

4.11
Figure 4 shows the number of councils that met the statutory deadline for releasing annual reports and summary annual reports from 2013/14 to 2017/18.

Figure 4
Performance in meeting the statutory deadline for releasing annual reports and summary annual reports, 2013/14 to 2017/18

* We excluded Kaikōura District Council and Hurunui District Council from our analysis because they had not adopted their annual reports at the time of writing.

4.12
Any delay undermines effective accountability, which can undermine communities' trust and confidence in their councils.

The importance of timely reporting

4.13
Annual reports provide information that helps communities to assess how well their council is performing. Therefore, the information in the annual reports must be comprehensive, understandable, accurate, and timely.

4.14
Releasing annual reports and summary annual reports is an important part of a council's accountability to its community. The summary annual report contains the most understandable information for most readers, and it is easy to circulate and make widely available.

4.15
We consider that many councils need to better manage how they produce and publish their annual reports and summary annual reports.

4.16
When adopting their annual reports in 2019, councils will need to take into consideration the local body election time frames.

4.17
Most councils publish their annual report on their website. We expect that all councils will publish their annual reports on their website within a few days of adopting them.