Wednesday, April 17, 2024

Report finds councils making progress in challenging times

Auditor-General, John Ryan says his Office is encouraged by the progress being made by New Zealand’s local government sector.

In his latest report Insights into local government: 2021 presented to the House of Representatives today, Mr Ryan described 2020/21 as a challenging year for councils.

The Covid-19 pandemic, and several reform proposals affecting the local government sector, added pressure to councils at a time when nationwide skills shortages, higher staff turnover, and increased recruitment costs made delivering services more challenging, he said.

“We are encouraged by the progress the sector made in 2020/21. Councils and their staff should be commended for maintaining services in such a challenging environment.”

He said councils continued to invest in their infrastructure in 2020/21, delivering the highest capital expenditure programme for nine years.

“In response to historical underinvestment in their infrastructure assets, councils are also increasing their renewals expenditure when compared to depreciation expense,” he said.

“Despite increased investment in water infrastructure, we have not yet seen an improvement in reported performance. The lowest performance was for the ‘safety of drinking water’ measures.

“It is important to note that where drinking water measures are ‘not achieved’, this non-compliance does not necessarily mean there is an issue with water quality. We encourage councils to investigate the reasons for their non-compliance and prioritise remedial actions.”

He said effective governance of councils remains vital, as does the integrity of councillors and staff.

“In this regard, we are pleased to see continued effort by councils to enhance the effectiveness of audit and risk committees, in part by increasingly appointing independent chairpersons and members to these committees.”

Mr Ryan said the global auditor shortage, and delays caused by Covid-19, continued to provide challenges for councils and Office auditors in 2020/21.

“Despite this, most councils completed their audits by the extended statutory deadline of 31 December 2021.”

Twelve councils completed their audits late and two are yet to be completed.

Six councils received qualified audit opinions on their financial statements, and there were 19 qualifications on aspects of councils’ performance information, such as inaccuracies in the calculation of customer complaint information. In all instances, the qualification was limited to a disagreement or limitation of scope about a specific aspect of the annual report.

“Given its significance, we also drew attention in our audit reports to uncertainties arising from the Three Waters Reform Programme,” said Mr Ryan.

Read the full report here.

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