Auditor-General's overview

Local government: Results of the 2011/12 audits.

The 2011/12 year was a demanding one for local authorities. They had to prepare three-yearly long-term plans for 2012-22 and then swiftly complete the 2011/12 annual reports, among other challenges.

Only one local authority did not adopt its annual report within the statutory time frame. This is a significant improvement compared to previous years. Timely reporting is an important part of accountability.

The 2012/13 year will see local authorities meeting new disclosure requirements that will affect the content of their annual reports. Also, in the next few years, local authorities and other public entities will adopt a new financial reporting framework. Although the new approach will not be a "silver bullet", we expect the resulting financial reports will provide more useful accountability information and more straightforward reporting requirements, particularly for smaller local authorities.

This report continues our approach to assessing long-term financial performance and the potential for financial risk and uncertainty using a set of indicators. I consider that this approach has merit but is not perfect – it is just one way to view financial prudence and financial sustainability. I welcome comments on how our approach can be refined.

We note in this report that local authorities have generally good anti-fraud frameworks, but they cannot be complacent. Local authorities and all public entities need to continue to be vigilant in the current economic climate if New Zealand is to maintain our good record of keeping fraud at bay.

Also significant for the local government sector, our Office reported this year on the creation of Auckland Council and group. Although there were many opportunities for things to go wrong, the transition so far has largely gone well.

During 2011/12, we also published our first report on the Canterbury recovery, which highlighted the challenges that local authorities face as a result of a significant disaster. Every local authority needs to seriously consider how it manages assets, procurement practices, insurance, and governance and accountability arrangements.

Signature - LP

Lyn Provost
Controller and Auditor-General

21 March 2013

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