Audit NZ calls for council tune up

Audit NZ wants TCC to change some of its management practices. File Photo.

Audit New Zealand is requiring Tauranga City Council to change its ways over a variety of issues discovered during an audit carried out last year.

Included are how internal costings are managed - an issue which in 2016 saw $1 million worth of staff time spent on various projects, including the civic heart project, reclassified from capital to operating costs at the end of the calendar year.

Audit NZ says the capitalised staff time which is based on timesheets, was not reviewed for accuracy and authorisation and incorrectly coded.

Project manager timesheets were not approved on a one- up basis and there were instances where operating expense items were being capitalised, says the audit report.

“We were advised that there are limitations around the time reporting in that it cannot identify the list of Works in Progress as at a particular date in the past.

“This meant we could not obtain the system reports required to enable adequate review of additions to works in progress. We were therefore forced to adopt alternative audit procedures for satisfy the WIP additions were correct.

“These alternative procedures delayed the audit.”

The audit results were received at the city council's Audit, Finance, risk and Monitoring Committee this week.

“I think it looked to me as though they didn't have any comments about the financial type audit so they tended to look at the non-financial things,” says committee chair Gail McIntosh.

“In my view there's nothing alarming or urgent. It happens every year that management report. One year they said the cash handling was up the crap. The council contracted out, got rid of it.

“Like all auditors they are trying to find something wrong to justify their existence. They can't come back and say we are perfect, because people would then say why are you wasting money on it – because it's a requirement.”

The internal costing issues arise because when a bill comes in to council someone quickly codes it to somewhere or other, and then at the end of the financial year or end of the project staff have another look and decide if the wages are correctly coded, says Gail. But some projects last over several years.

Audit NZ says projects should be capitalised during the year, because it can have an impact on the amount of depreciation charged on an assets during the final year of operation.

The management comment from council is that the council is continuing to improve processes around capitalisation of assets. And alignment of new assets with the Acela Asset system.

The delay in 2015/16 was primarily to avoid complications with revaluation of infrastructure assets.

Some capitalisation at year end including vehicles purchased in June did not take place due to time pressures.

The audit also found fault with the council's handling of complaints regarding sewerage overflows, and complaints about the city stormwater system.

In both cases the city was encouraged to change in line with department of internal affairs guidelines.



16 Comments

Audit NZ

Posted on 29-03-2017 12:18 | By Roadkill

The fact that they have bothered to mention it is really something to be concerned about, it has to be REALLY BAD for them to notice anything. Audit NZ are really about making sure that Councils can do whatever as long as someone has ticked a box or two needed then all becomes self justified. The same applies for TCC staff "preferred" options. Councillors like Audit NZ just rubber stamp it all.

It's a worry...

Posted on 29-03-2017 11:28 | By morepork

...when the audited dismiss the findings of an audit, try to justify their own shortcomings, and just make themselves right. There is an unwarranted arrogance in seeing the "checks and balances" in a process as unnecessary, and "seeking to justify their own existence". Honest and enlightened Management see the arrival of auditors as a good chance to get independent feedback on how they are doing. If it isn't favourable, good, there are things we can improve; at least we know the areas that need some attention. To assume that everything is perfect and cannot be improved is both foolish and lacking vision. Would you retain a Financial Consultant who believed they were so perfect there was no need for them to comply with Industry checks, and who sees regulation as annoying meddling? I wouldn't. And I'll be keeping this in mind at the next local elections.

Questions were asked

Posted on 25-03-2017 15:41 | By Roadkill

But Gail failed to even respond perhaps that needs to be looked at a little bit to

Mr Mayor, appreciate Cr. Gail McIntosh dwarfs you BUT ....

Posted on 03-03-2017 17:55 | By Murray.Guy

Mayor Greg Brownless, remove Gail McIntosh from any positions of influence and leadership. Cr. McIntosh has breached the elected members 'code of conduct', and not for the first time, and must be reminded that to repeatedly breach the 'code of conduct' there must be repercussions. In addition to belittling the role of Auditors of Audit NZ and further undermining the credibility of elected members in the eyes of the community, Gail McIntosh belittles our CEO Garry Poole and Deputy CEO Christine Jones, both being auditors with Audit NZ prior to their Local Government roles. I am mindful that a draft Audit report is first presented to the CEO and Mayor, likely revised downwards, softened, before the final public version.

Only one problem -

Posted on 02-03-2017 23:30 | By The Caveman

You cannot SACK Gail McIntosh until the next council elections!!!

Crap?

Posted on 02-03-2017 15:35 | By Mackka

I guess if a councillor can say it - I can! Gail McIntosh - you are talking a load of 'crap' You are not fit to be a councillor!!

indepenant audit

Posted on 02-03-2017 15:17 | By phoenix

The day when someone in a council anywhere, admits they have done something wrong,and says, Sorry rate payers, now we have to change and do this correctly,I will do two things.Recover from the shock, and then write down their name to vote for them next time at the ballot box.

golly gosh

Posted on 02-03-2017 15:10 | By old trucker

I agree with Murray Guy, its all about covering up everything,i would like to know who signed off that STUPID FOOTPATH on Ngatai Rd and Vale street, there is not enough people to use it for goodness sake,and must have cost thousands to make (Cons) ultants meetings etc, only kids are working on it, i went past and they were standing around ,1 hr later they had not moved,my gosh TCC what a shambles, what Number on Time Sheet is Standing around,my thoughts ONLY. also AGREE with BY penguin, Gail needs to go, (hang on) this is one of the old school, GO Murray,you are the BEST,Thanks Sunlive, 10-4 out.

Come on Gail, really....

Posted on 02-03-2017 13:25 | By Kaimai

"Some capitalisation at year end including vehicles purchased in June did not take place due to time pressures" - was it a vehicle or not? Who in council can't tell whether a vehicle is a vehicle? Perhaps council should drug test those that can't tell whether a vehicle is a vehicle.I couldn't give a damn whether the vehicle was capitalised or not - will my rates go down? Not likely. Will my rates go up? Very likely.

Gail...

Posted on 02-03-2017 12:25 | By penguin

...should look carefully at her words then apply them to herself, especially in regard to justifying one's existence. Her comments are immature, pathetic and disgusting. At the very least she should be grown-up enough to publicly apologise to the auditors for her rant. Then the next step for her would be to resign.

Gobsmacking

Posted on 02-03-2017 08:54 | By Chris

I absolutely cannot believe the comments made by Gail McIntosh. She would be correct if she had just said that these audit points were fairly routine and nothing of grave concern. But she went on to say that this is about audit staff justifying their existence. What a lot of nonsense, this is about audit staff trying to improve the processes of Council, which is good every everyone (except those who have something to hide). It is extremely worrisome that the chair of one of the most important compliance committees would say such things about an Audit NZ report.

Audit NZ

Posted on 02-03-2017 08:31 | By Ratepayer

I cannot imagine Audit NZ would be impressed with this flippant put-down. They do after all have professional integrity and they are compelled by their directive to say-it-as-they-find-it.

Alarming

Posted on 02-03-2017 08:09 | By Petrolhead

The most alarming thing in this article is Gail McIntosh's comments belittling the value of external audits as little more than someone looking to justify their existence - this it the person who chairs the AFRM Committee! All businesses know that when embarking on major capital spend you need to be aware of the long gestation period before capitalisation is possible, costs incurred between fiscal years in this early phase simply must be operational expense, the temptation to code as capital from the start is dangerous and predictably often results in exactly what happened here, a late and large blow out in operational costs at year end. If council cant see this as a problem with lacking visibility on operational spend until the last minute then I really am alarmed!

Surprise surprise

Posted on 01-03-2017 19:24 | By nerak

'Audit NZ says the capitalised staff time which is based on timesheets, was not reviewed for accuracy and authorisation and incorrectly coded.' And a bit worrying that when a bill comes into council someone quickly codes it somewhere or other(???) and then at the end of the financial year or end of the project staff have another look and decide if the wages are correctly coded... No prizes for guessing just where our rates are going folks, down the great gurgler of abject incompetency! Coding accounts 101, come on council staff. Just who is justifying a job?

Committee chair Gail McIntosh, you are offensive

Posted on 01-03-2017 17:59 | By Murray.Guy

It is grossly inappropriate and arrogant of committee chair Gail McIntosh to state Like all auditors they are trying to find something wrong to justify their existence. Accountant Gail McIntosh and her co-conspirators have mismanaged our local council resulting in excessive rate and debt increases despite buoyant economic environment times and low interest rates. Many past audits have been full of praise, devoid of glaring inconsistencies and misleading statements. The role of the auditor is little different to getting an annual medical, a warrant of fitness on our vehicle and a 'clean bill of health' is always greatly appreciated and a critical process. I'd like the auditing process to dig a lot deeper.

Mmmm

Posted on 01-03-2017 15:50 | By chewy

There could be others involved in this audit trying to justify their existence too.

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Beauty after the storm. Photo: Tracy Hardy. Send us your photos from around the Bay of Plenty. photos@thesun.co.nz