Audit delays leave mayor ‘unimpressed’

5:49 pm on 25 January 2023
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Resourcing issues at Audit New Zealand have forced South Wairarapa and Masterton councils to defer the adoption of their 2021/22 annual reports, breaching statutory deadlines.

This has left South Wairarapa Mayor Martin Connelly "very unimpressed" that the auditor general "would allow this non-performance to happen", given he is charged with overseeing the proper conduct of public affairs.

"This is a highly unsatisfactory position for us to be in as it prevents our residents from getting the information they are entitled to regarding the council's performance," Connelly said.

South Wairarapa and Masterton are among dozens of councils whose annual reports were not signed off in time, due to resourcing issues at Audit New Zealand, caused by Covid-19 significantly affecting the availability of auditors internationally.

Given the concentration of public sector balance dates around 30 June, audit firms would normally supplement their permanent audit staff with senior auditors from overseas.

The extended period for which borders were closed, and immigration settings since borders were reopened, meant that Audit New Zealand was unable to secure permanent and supplementation resources in the way it had in the past.

As a result, the government extended the deadline for audits from 31 October to 31 December for the past two years.

Audit New Zealand is the auditor for 52 of the 78 councils for the 2021/22 audits.

The remaining 26 are audited by other audit service providers on the auditor general's behalf.

A spokesperson for the Office of the Auditor-General said just over half of all council audits were signed before the statutory deadline.

"There are no penalties for missing the deadline," he said.

"Where the deadline was missed, it will be noted in the audit opinion and the council's annual report that the deadline was missed.

"For those councils where the cause was the auditor shortage, we will make that clear."

He said South Wairarapa District Council's 2021/22 audit is now due to be completed by the end of February, and Masterton District Council's 2021/22 audit is due for completion by the end of March.

"The auditor general and Audit New Zealand are working hard to complete the audit work that was deferred because of Covid-19.

"These steps include reallocating work to auditing firms with capacity, recruiting skilled auditors from overseas, increasing our graduate intakes, and setting up international secondment arrangements."

Masterton Mayor Gary Caffell said the council's confidence in the work of Audit New Zealand was "unaffected" by the delay.

Masterton District Council's finance manager David Paris said the delay in auditing the Annual Report 2021/22 had been noted by the council's independently-chaired Audit and Risk Committee "but remains a low risk for the council".

"The operational impact will see the audit now done at the same time as the 2023/24 budget is being prepared," Paris said.

"I do not expect any significant changes to the draft annual report document as a result of the audit that is scheduled over the next month of February."

Carterton District Council approved its audited annual report on 21 December.

The normal statutory deadline of 31 October will apply in 2022/23 and Audit New Zealand expects to be able to meet that deadline for council audits this year.

Associate Local Government Minister Kieran McAnulty was disappointed that "through no fault of their own, [councils] haven't been able to implement their annual reports".

"I will be raising this with the auditor general, who is responsible for Audit New Zealand," he said.

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