Auditors Issue Urgent Recommendations To Carterton Council

Thursday, 27 February 2025, 10:19 pm
Article: Emily Ireland - Local Democracy Reporter

February 25, 2025

Audit NZ has dealt the latest blow in a battle of mutual dissatisfaction with Carterton District Council.

The council, which criticised the auditors’ performance at a meeting in December, voted to request a new auditing company.

At Wednesday’s meeting, councillors would discuss Audit NZ’s formal feedback on its Annual Plan audit.

It has issued two urgent recommendations to the council, citing accuracy, presentation and disclosure issues.

At a meeting late last year, councillors expressed dissatisfaction with auditing delays and cost overruns.

Shortly after, mayor Ron Mark, who could not attend the meeting, went into bat for Audit NZ and said they were “just doing their job” and a litany of errors were found in the documents council had provided them.

South Wairarapa District Council had also requested a change of auditor last year, citing dissatisfaction with Audit NZ.

Carterton District Council’s latest audit report would be discussed by elected members at Wednesday’s Audit and Risk Committee.

In the report, the council had been given an urgent recommendation to improve its financial and performance quality assurance process.

Audit NZ also issued an urgent recommendation to get more certainty over the council's investment in private equity firm Castlerock Limited Partnership, understood to be worth just under $1 million.

Auditor Karen Young said in her report that based on the review of the draft annual report provided by council management, they “identified many issues with the accuracy, presentation and disclosure of the annual report”.

“These issues included errors, inconsistencies, and other changes that management were required to make.”

As a result, additional audit effort was invested when reviewing the subsequent versions of the annual report and auditing the district council’s disclosures, Young said.

She said there was either “no quality assurance process or a process that was not robust enough” and that the draft annual report was “not of an acceptable standard and had to be reviewed a number of times”.

“There is a heightened risk that financial reports that are not reviewed may be prepared and may contain errors or omissions that could lead to poor decision making by management or council at any time during the year.”

Regarding the Castlerock Limited Partnership, Young said the overall investment had declined since inception, and that the council’s “finance team was unable to demonstrate any understanding of the investment”.
She recommended the council review the investment’s partnership agreement.

In response to the issues raised in the audit report, council management acknowledged the Castlerock investment was incorrectly classified in the financial statements.

“In addition, we agree that there is room for improvement in our processes, in particular quality assurance.”

The Castlerock investment was discussed by the council’s Investment Committee last week in public-exclusion, council chief executive Geoff Hamilton said.

“While we cannot comment on those matters in full, I can state that our investment partner Eriksens thoroughly analysed and reconfirmed the investment approach and long-term investments, noting that, by definition, these investments fluctuate in value.”

He said the council’s finance team did not make decisions on investments but followed Investment Committee and Council recommendations.

“Issues raised by Audit during the process included one classification issue, which was corrected, and that in Audit’s opinion, the timing of Castlerock’s own audit and our audit was problematic.

“This has been the case in previous years and is challenging to resolve.

“The Investment Committee noted that none of the previous Castlerock’s annual audits had raised issues of concern for Audit NZ, or council, other than the timing of the audit report.

“After considering the auditors comments, and feedback from our investment partner, the Investment Committee reconfirmed the Castlerock investment.”

- LDR is local body journalism co-funded by RNZ and NZ On Air.

© Scoop Media

Local Democracy Reporting

Content from the Local Democracy Reporting (LDR) service is published by Scoop as a registered New Zealand Media Outlet LDR Partner.