Tasman District
Council
Agenda – 31 October 2024
5 Reports
5.1
Adoption of Annual
Report
Decision Required
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Report
To:
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Tasman
District Council
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Meeting
Date:
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31
October 2024
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Report
Author:
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Brylee
Wayman, Senior Community Policy Advisor - Data Analyst; Charlotte Thomas,
Senior Financial Accountant; Shashini Weerakoon, Assistant Financial
Accountant
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Report
Authorisers:
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Mike
Drummond, Chief Financial Officer
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Report
Number:
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RCN24-10-27
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1. Purpose
of the Report / Te Take mō te Pūrongo
1.1 The
purpose of this report is to seek the adoption of the Annual Report 2024 and
approval of the Annual Report Summary 2024.
1.2 Note
that there may be changes to the versions of the Draft Annual Report and Draft
Annual Report Summary attached to this report after the agenda is published and
prior to the meeting because of the ongoing audit. A schedule of changes and
revised versions of the attached documents will be tabled at the meeting if
necessary.
2. Summary
/ Te Tuhinga Whakarāpoto
2.1 This
report presents the Annual Report and its Summary (Attachments 1, 2 and 3)
for the year ended 30 June 2024. The full Annual Report has been audited by
Audit New Zealand on behalf of the Controller and Auditor-General. This
year’s Annual Report consists of two separate volumes:
2.1.1 Volume 1 contains overview
information and reports on financial and non-financial performance by activity.
2.1.2 Volume 2 contains the financial
statements and their notes.
2.2 The
Annual Report is a key record to assist elected members and the public to
understand the activities and services provided throughout the year. This is
the third year for which the Annual Report describes delivery against the Long
Term Plan (LTP) 2021-2031.
2.3 The
accounting surplus is $26.0 million. This is $7.9 million lower than the
budget. The Council recorded a total net debt position of $247.8 million
against the Annual Plan budget of $249.9 million.
2.4 The
Council should be aware that the accounting surplus is influenced by non-cash
items, such as valuation changes and the income for capital projects. While
capital income is recorded in the Statement of Comprehensive Revenue (income
statement), the related expenditure is reflected in the Statement of Financial
Position (balance sheet). Therefore, the reported accounting surplus does not
mean that the Council is over rating our communities.
2.5 One
hundred and nine (109) targets are reported on through this Annual Report. In
2023/2024, we achieved 74 of our targets fully and a further five were within
5% of the target. We did not achieve 26 and there were four that we either did
not have the complete information available to report on or were not due to be
measured this year. This is a slight improvement on the performance results in
2022 and 2023.
3. Recommendation/s
/ Ngā Tūtohunga
That the Tasman District Council
1. receives
the Adoption of Annual Report RCN24-10-27; and
2. notes that the signed report from Audit New Zealand on
the Annual Report 2024 will be provided following the 31 October 2024 Council
meeting; and
3. notes that the Audit and Risk Committee, on 3 October
2024, recommended to the Council the adoption of the 2024 Annual Report,
subject to the remaining audit matters being resolved satisfactorily; and
4. adopts the Annual Report 2024, in Attachments 1 and 2
to the agenda report, including the audit report tabled at the 31 October 2024
Council meeting, pursuant to section 98 of the Local Government Act 2002; and
5. approves the Annual Report Summary 2024, in Attachment
3 to the agenda report, and notes that this will be audited before being made
publicly available within one month of this meeting, pursuant to section 98 of
the Local Government Act 2002; and
6. authorises the Mayor and Chief Executive
Officer to sign the Statement of Compliance and Responsibility for the Annual
Report 2024, on behalf of the Council; and
7. authorises
the Mayor and Chief Executive Officer to sign the Letter of Representation to
the auditor for the Annual Report 2024, on behalf of the Council; and
8. delegates to the Chief Executive Officer the ability
to sign off any minor editorial amendments to the Annual Report and the
Summary, prior to them being printed and made available on the Council’s
website.
4.1 The
purpose of an annual report under the Local Government Act 2002 is to:
4.1.1 compare the actual activities and the actual performance
of the local authority in the year with the intended activities and the
intended level of performance, as set out in respect of the year in the Long
Term Plan and the Annual Plan; and
4.1.2 promote the local authority’s accountability to
the community for the decisions made throughout the year by the local
authority.
4.2 The
Audit and Risk Committee considered a draft Annual Report at its meeting on 3
October 2024, in the Confidential Session. However, at that stage, Audit NZ had
not completed its audit and there were outstanding audit matters to be
resolved.
4.3 The
Audit and Risk Committee recommended that the Council adopt the Annual Report
2024, subject to the remaining audit matters being resolved
satisfactorily. The Committee’s resolutions are yet to be confirmed
but were as follows:
That the Audit and Risk
Committee
1. receives
the Draft Annual Report 2024 RFNAU24-10-4; and
2. notes
that the Annual Report audit will be finalised before the Annual Report
is presented to the Full Council meeting on the 31 October 2024 for adoption;
and
3. recommends
to the Council the adoption of the 2024 Annual Report and Annual Summary
subject to the remaining audit matters being resolved satisfactorily for the
year ended 30 June 2024 pursuant to Section 98 of the Local Government Act
2002.
4. delegates
the ability to conclude whether the outstanding audit matters have been
resolved satisfactorily to the Audit and Risk Committee Chair Graeme McGlinn
and two other members of the Committee being, Independent Member A Elstob and
Cr Mackenzie.
4.4 The Chair of the Audit and
Risk Committee or his nominee will provide a verbal update and assurance that
the remaining audit matters have been resolved satisfactorily at the meeting,
(assuming that is the case).
4.5 Note
that there are likely to be changes to the versions of the Draft Annual Report
and Draft Annual Report Summary attached to this report after the agenda is
published and prior to the meeting because of the ongoing audit. A
schedule of changes and revised versions of the attached documents will be
tabled at the meeting if necessary.
4.6 Following the adoption of the
Annual Report 2024, the next steps are:
4.6.1 the Statement of Compliance and Responsibility and the
Letter of Representation to the auditor are signed by the Mayor and Chief
Executive Officer; and
4.6.2 the Annual Report 2024 is published on the
Council’s website; and
4.6.3 the professionally designed version of the Annual Report
2024 and Annual Report Summary 2024 are prepared, audited, and made publicly
available (within one month of this meeting) on the Council’s website and
at Council service centres and libraries.
5. Analysis
and Advice / Tātaritanga me ngā tohutohu
Financial Results
5.1 The accounting surplus is $26.0 million,
which is $7.9 million lower than the budget. This is
due to revenue being $8.4 million higher than budget and expenditure being
$16.3 million higher than budget.
5.2 The revenue
increase was mostly due to non-cash vested asset income being $26.1 million
higher than planned, driven by growth. This was offset mostly by delays in
government capital grants and subsidies, and a fair value loss on forestry due
to harvest and log price assumptions. Increased expenditure was mostly due to
increased interest costs, forestry expenditure, maintenance costs and increased
depreciation. This is explained further in Note 36 to the Financial Statements.
5.3 The Council recorded a total net
debt position of $247.8 million which was close to the Annual Plan budget of
$249.9 million.
5.4 In Other Comprehensive Revenue, the
valuation gains of $105.1 million are due to revaluation of Three Waters’
assets, Coastal and Waste Management, mainly driven by cost inflation and
application of a new facility distribution valuation method.
5.5 The
valuations were undertaken by Marsh Valuation Services. The valuations involved
a combination of physical inspections and desktop assessments using Tasman
District Council’s detailed information provided. This valuation is
completed in line with the NZ IPSAS 17 Property, Plant and Equipment.
Service Performance Results
5.6 The
Council measures its performance each year using a core set of indicators that
are determined through the Long-Term Plan (LTP) and Annual Plan. The results
present a high-level view of performance. More results from other
performance, environmental and regulatory monitoring can be found in the public
reports held on the Council’s website or by contacting the Council.
5.7 We
have 109 targets that we report on through this Annual Report. In 2023/2024, we
achieved 74 of our targets fully and a further five were within 5% of the
target. We did not achieve 26 and there were four that we either did not have
the complete information available to report on or were not due to be measured
this year. This is a slight improvement on the performance results in 2022 and
2023.
5.8 Over
the last three years, the number of performance targets we have met has
increased, with the number fully achieved increasing from 69 to 74. The number
not measured has stayed approximately the same, along with the number of
performance measures which have not achieved their target.
5.9 In
some cases, external factors such as inflation, weather, business downturn, and
staff shortages affected performance (e.g. earnings from Council Enterprises,
resource and building consents services, and water advisory notices). In other
cases, further investment is required to address performance issues, such as
drinking water standards and road resurfacing.
Quality Control
5.10 Audit
NZ is the Council’s auditor for the Annual Report 2023/2024.
5.11 Audit NZ conducted an interim audit in May
2024, and the full audit started on 16 September 2024.
5.12 The Strategic Policy Team, with input from
all budget holders, third-tier managers and specific technical staff,
coordinates non-financial reporting. The process involves initial input, then
review by the budget holders and third-tier managers, with sign-off provided by
Group Managers.
5.13 Senior management for the Mayor will prepare a letter of
representation, confirming they are satisfied that the Annual Report is an
accurate reflection of the Council’s affairs for the 2023/2024 financial
year. A signed copy will be made available at the Council meeting on
31 October 2024.
6.1 The options are outlined in the
following table:
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Option
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Advantage
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Disadvantage
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1.
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Adopt the Annual Report
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Consistent with recommendation from Audit
and Risk Committee.
Ensures adoption within statutory
timeframe.
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2.
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Do not adopt the Annual Report.
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Will not meet statutory timeframe for
adoption.
Any material changes require the auditor
to review the Annual Report again prior to re-issuing their audit opinion.
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6.2 Option 1 is recommended.
7.1 Section 99 of the Local Government Act
2002 mandates that all local authorities must have their Annual Report, and
Summary Annual Report, audited by the Office of the Auditor- General.
7.2 Under the Local Government Act 2002,
Section 98 (3), the Council’s annual report must be completed and
adopted, by resolution, within four months after the end of the financial year
to which it relates, which is 31 October 2024. Within one month after the
adoption of its annual report, the Council must make it publicly available, as
well as a summary of the information in the annual report. The summary must
represent, fairly and consistently, the information regarding the major matters
dealt with in the annual report.
7.3 The Annual Report has been prepared to
fulfil the requirements of Part 3, Schedule 10 of the Local Government Act
2002.
8. Iwi
Engagement / Whakawhitiwhiti ā-Hapori Māori
8.1 The Annual Report reports on the
activities that the local authority has undertaken in the year to establish and
maintain processes to provide opportunities for Māori to contribute to the
decision-making processes of the local authority.
9. Significance
and Engagement / Hiranga me te Whakawhitiwhiti ā-Hapori Whānui
9.1 The decision is whether to adopt the
Annual Report 2023. This decision is considered of low significance. There is
no opportunity for public input to change the Council’s results for the
year and no public consultation or engagement is considered necessary. The
Annual Report will be made publicly available following its adoption.
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Issue
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Level of
Significance
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Explanation of Assessment
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1.
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Is there a high level
of public interest, or is decision likely to be controversial?
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Low
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Public interest in
this decision is considered low.
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2.
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Are there impacts on
the social, economic, environmental or cultural aspects of well-being of the
community in the present or future?
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Low
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The decision has very
low impact on the well-being of the community.
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3.
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Is there a
significant impact arising from duration of the effects from the decision?
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Low
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4.
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Does the decision
relate to a strategic asset? (refer Significance and Engagement Policy for
list of strategic assets)
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Low
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The Annual Report
documents the financial and non-financial performance of several strategic
assets. However, it is not a mechanism by which the ownership nor operation
of strategic assets can be altered.
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5.
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Does the decision
create a substantial change in the level of service provided by Council?
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Low
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No impact on levels
of service.
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6.
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Does the proposal,
activity or decision substantially affect debt, rates or Council finances in
any one year or more of the LTP?
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Low
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The decision has no
substantive impact on the Council’s finances.
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7.
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Does the decision
involve the sale of a substantial proportion or controlling interest in a CCO
or CCTO?
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Low
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8.
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Does the
proposal or decision involve entry into a private sector partnership or
contract to carry out the deliver on any Council group of activities?
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Low
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9.
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Does the proposal or
decision involve Council exiting from or entering into a group of
activities?
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Low
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10.
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Does the proposal
require particular consideration of the obligations of Te Mana O Te Wai
(TMOTW) relating to freshwater or particular consideration of current
legislation relating to water supply, wastewater and stormwater
infrastructure and services?
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Low
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10. Communication
/ Whakawhitiwhiti Kōrero
10.1 The Annual Report 2024 and the Annual Report
Summary 2024 will be professionally laid out for text, graphs, photographs and
infographics following adoption by the Council.
10.2 The Annual Report Summary 2024 will provide a
shorter record of the Council’s financial and non-financial performance
which may be more accessible to some members of the community.
10.3 Printed copies will be available at Council Service
Centres and Libraries, and digital copies will be posted on the Council’s
website. An article will be included in an issue of Newsline.
11. Financial
or Budgetary Implications / Ngā Ritenga ā-Pūtea
11.1 The Annual Report sets out in full the
Council’s financial accounts for the 2023/2024 year.
11.2 The fee for the audit of the Council’s Annual
Report is $274,000 (excluding $9,000 of disbursements) against an Annual Plan
audit cost budget of $189,000.
11.3 We have been advised of additional audit costs of
$30,000 to $40,000 due to extra work relating to the asset revaluations, roading performance measure work and the
Waimea Water Ltd accounting issues arising from the contractor dispute. The
actual additional cost will depend on these and any issues that they might need
to spend more time on resolving. That means the estimate for this audit will be
exceeded, but this cannot be accurately quantified at this time.
11.4 The unplanned increase in audit costs will increase
the Council’s operational deficit in the current year. These deficits are
recovered from future rates income. These additional costs will add additional
pressure to the 2025/26 Annual Plan budget.
11.5 The Office of the Auditor-General (OAG) has
informed all councils that they have been significantly under-recovering the
actual costs associated with conducting council audits. Consequently, their
future audit cost estimates will be adjusted to more accurately reflect these
actual costs. The Council will need to plan for a substantially higher level of
expenses in our budgets moving forward.
12.1 There are no significant risks associated with the
recommendations in this report. However, there is a significant risk that any
major amendment could delay the audit and/or the adoption of the Annual Report
by the statutory deadline, 31 October 2024.
13. Climate
Change Considerations / Whakaaro
Whakaaweawe Āhuarangi
13.1 The Annual Report 2024 documents work by the
Council undertaken in 2023/2024 in relation to climate change, particularly the
Climate Action Plan. However, adoption of the 2024 Annual Report has no impact
on resilience to climate change or the ability of the Council to further
respond to the impacts of climate change.
14. Alignment
with Policy and Strategic Plans / Te Hangai ki ngā aupapa Here me ngā
Mahere Rautaki Tūraru
14.1 The Annual Report is a key record for local
authorities to assist elected members and the public to understand the
activities and services provided throughout the year. This is the third Annual
Report which describes delivery against Tasman’s 10-Year Plan 2021
– 2031.
15. Conclusion
/ Kupu Whakatepe
15.1 The
accounting surplus is $26.0 million. This is $7.9 million lower than the
budget. The Council record total net debt position $247.8 million against the
Annual Plan budget of $249.9 million.
15.2 The Council fully or nearly achieved the majority
(72%) of its performance targets and did not achieve 24% of targets. The
remaining 4% either did not have the complete information available to
report on or were not due to be measured this year.
16. Next
Steps and Timeline / Ngā Mahi Whai Ake
16.1 Professional
design and production of the Annual Report and the Summary will be completed
over the following weeks after Council adoption.
16.2 The
Annual Report 2024 and Summary Annual Report 2024 will be available to the
public within one month from the date of adoption of the Annual Report, as
required by the Local Government Act 2002.
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1.⇩
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Draft Annual
Report Volume One
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12
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2.⇩
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Draft Annual
Report Volume Two
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201
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3.⇩
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Annual
Report Summary
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271
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