10-year Budget 2021-2031 independent auditor's report

Share on Facebook Share on Twitter Share on Linkedin Email this link

To the reader:

Independent auditor’s report on Auckland Council’s consultation document for its proposed 2021-31 long-term plan

I am the auditor for Auckland Council (the Council). The Local Government Act 2002 (the Act) requires the Council to prepare a consultation document when developing its long-term plan (LTP). Section 93C of the Act sets out the content requirements of the consultation document and requires an audit report on the Council’s 10-Year Budget 2021-2031. I have used my staff and resources, and appointed auditors and their staff, to complete the work for this report. I completed my report on 18 February 2021.

Opinion

In my opinion:

  • the consultation document provides an effective basis for public participation in the Council’s decisions about the proposed content of its 10-year Budget 2021-2031, because it:
    • fairly represents the matters proposed for inclusion in the LTP; and
    • identifies and explains the main issues and choices facing the Council and the Auckland region, and the consequences of those choices; and
  • the information and assumptions underlying the information in the consultation document are reasonable.

Emphasis of matters

Without modifying my opinion, I draw attention to the following disclosures in the consultation document. Uncertainty over three waters reforms Page 71 outlines the Government’s intention to make three waters reform decisions during 2021. The effect that the reforms may have on three waters services provided is currently uncertain because no decisions have been made. The consultation document was prepared as if these services will continue to be provided by the Council group, but future decisions may result in significant changes, which would affect the information on which the consultation document has been based.

Uncertainty over forecast funding

Page 70 outlines the Council’s key assumptions in respect of its financial projections. We draw specific attention to the following assumptions, which are subject to higher levels of uncertainty and could affect the Council’s ability to fund its planned capital expenditure:

  • Covid-19 border controls will remain until December 2022 with no further lock-downs.
  • The Government’s capital subsidies for Auckland Transport will be confirmed through the Auckland Transport Alignment Project at the same rate as previously agreed between the Crown and the Council.
  • The asset recycling target of $70 million per annum for the first three years of the plan and a $90 million permanent savings target (to be achieved in 2022 and maintained in subsequent years) will be met.

Changes in these assumptions could require the Council to reduce its planned capital expenditure and may result in a reduction in levels of service, without further increases in funding, either through rates or debt.

Uncertainty over the ownership of City Rail Link

The City Rail Link project is expected to be completed in late 2024. Page 70 outlines that an agreement has not yet been reached between the Crown and the Council over the future ownership of the assets that comprise the City Rail Link. The Council has assumed that it will need to fund $408 million of the future running costs over the 10 year period of the LTP and depreciation for 50% of the assets. Changes in this assumption will affect budgets for the future running costs and depreciation related to these assets, as disclosed in the underlying information to the consultation document.

Basis of opinion

Using my staff, and appointed auditors and their staff, I carried out my work in accordance with the International Standard on Assurance Engagements (New Zealand) 3000 (Revised): Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. In meeting the requirements of this standard, I took into account particular elements of the Auditor-General’s Auditing Standards and the International Standard on Assurance Engagements 3400: The Examination of Prospective Financial Information that were consistent with those requirements.

I assessed the evidence the Council has to support the information and disclosures in the consultation document. To select appropriate procedures, I assessed the risk of material misstatement and the Council’s systems and processes applying to the preparation of the consultation document.

I did not evaluate the security and controls over the publication of the consultation document.

Responsibilities of the Council and auditor

The Council is responsible for:

  • meeting all legal requirements relating to its procedures, decisions, consultation, disclosures, and other actions associated with preparing and publishing the consultation document and LTP, whether in printed or electronic form;
  • having systems and processes in place to provide the supporting information and analysis the Council needs to be able to prepare a consultation document and LTP that meet the purposes set out in the Act; and
  • ensuring that any forecast financial information being presented has been prepared in accordance with generally accepted accounting practice in New Zealand.

I am responsible for reporting on the consultation document, as required by section 93C of the Act. I do not express an opinion on the merits of any policy content of the consultation document.

Independence

In carrying out my work, I complied with the Auditor-General’s:

  • independence and other ethical requirements, which incorporate the independence and ethical requirements of Professional and Ethical Standard 1 (Revised); and
  • quality control requirements, which incorporate the quality control requirements of Professional and Ethical Standard 3 (Amended).

In addition to this report on the Council’s consultation document and all legally required external audits, I or my appointed auditors have provided assurance reports on:

  • a limited assurance engagement in respect to the Auckland Council’s Debenture Trust Deed and Master Trust Deed reporting certificates;
  • an assurance engagement in respect of information provided by the Auckland Council and Auckland Council Group as required by the terms of its foreign borrowings programme;
  • agreed-upon procedures engagements in relation to the requirements of the Freshwater Improvement Funding Deed; and
  • other engagements for Watercare Services Limited in the areas of cyber and security risk advisory, probity services, project assurance related to the central interceptor project and limited assurance on selected nonfinancial information.

These engagement are compatible with those independence requirements. Other than these engagements I have no relationship with, or interests in, the Council or any of its subsidiaries.


Greg Schollum
Deputy Auditor-General
Wellington, New Zealand


You should know

You can also find this independent auditor's report on page 72 of the 10-year Budget 2021-2031 Consultation Document.

To the reader:

Independent auditor’s report on Auckland Council’s consultation document for its proposed 2021-31 long-term plan

I am the auditor for Auckland Council (the Council). The Local Government Act 2002 (the Act) requires the Council to prepare a consultation document when developing its long-term plan (LTP). Section 93C of the Act sets out the content requirements of the consultation document and requires an audit report on the Council’s 10-Year Budget 2021-2031. I have used my staff and resources, and appointed auditors and their staff, to complete the work for this report. I completed my report on 18 February 2021.

Opinion

In my opinion:

  • the consultation document provides an effective basis for public participation in the Council’s decisions about the proposed content of its 10-year Budget 2021-2031, because it:
    • fairly represents the matters proposed for inclusion in the LTP; and
    • identifies and explains the main issues and choices facing the Council and the Auckland region, and the consequences of those choices; and
  • the information and assumptions underlying the information in the consultation document are reasonable.

Emphasis of matters

Without modifying my opinion, I draw attention to the following disclosures in the consultation document. Uncertainty over three waters reforms Page 71 outlines the Government’s intention to make three waters reform decisions during 2021. The effect that the reforms may have on three waters services provided is currently uncertain because no decisions have been made. The consultation document was prepared as if these services will continue to be provided by the Council group, but future decisions may result in significant changes, which would affect the information on which the consultation document has been based.

Uncertainty over forecast funding

Page 70 outlines the Council’s key assumptions in respect of its financial projections. We draw specific attention to the following assumptions, which are subject to higher levels of uncertainty and could affect the Council’s ability to fund its planned capital expenditure:

  • Covid-19 border controls will remain until December 2022 with no further lock-downs.
  • The Government’s capital subsidies for Auckland Transport will be confirmed through the Auckland Transport Alignment Project at the same rate as previously agreed between the Crown and the Council.
  • The asset recycling target of $70 million per annum for the first three years of the plan and a $90 million permanent savings target (to be achieved in 2022 and maintained in subsequent years) will be met.

Changes in these assumptions could require the Council to reduce its planned capital expenditure and may result in a reduction in levels of service, without further increases in funding, either through rates or debt.

Uncertainty over the ownership of City Rail Link

The City Rail Link project is expected to be completed in late 2024. Page 70 outlines that an agreement has not yet been reached between the Crown and the Council over the future ownership of the assets that comprise the City Rail Link. The Council has assumed that it will need to fund $408 million of the future running costs over the 10 year period of the LTP and depreciation for 50% of the assets. Changes in this assumption will affect budgets for the future running costs and depreciation related to these assets, as disclosed in the underlying information to the consultation document.

Basis of opinion

Using my staff, and appointed auditors and their staff, I carried out my work in accordance with the International Standard on Assurance Engagements (New Zealand) 3000 (Revised): Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. In meeting the requirements of this standard, I took into account particular elements of the Auditor-General’s Auditing Standards and the International Standard on Assurance Engagements 3400: The Examination of Prospective Financial Information that were consistent with those requirements.

I assessed the evidence the Council has to support the information and disclosures in the consultation document. To select appropriate procedures, I assessed the risk of material misstatement and the Council’s systems and processes applying to the preparation of the consultation document.

I did not evaluate the security and controls over the publication of the consultation document.

Responsibilities of the Council and auditor

The Council is responsible for:

  • meeting all legal requirements relating to its procedures, decisions, consultation, disclosures, and other actions associated with preparing and publishing the consultation document and LTP, whether in printed or electronic form;
  • having systems and processes in place to provide the supporting information and analysis the Council needs to be able to prepare a consultation document and LTP that meet the purposes set out in the Act; and
  • ensuring that any forecast financial information being presented has been prepared in accordance with generally accepted accounting practice in New Zealand.

I am responsible for reporting on the consultation document, as required by section 93C of the Act. I do not express an opinion on the merits of any policy content of the consultation document.

Independence

In carrying out my work, I complied with the Auditor-General’s:

  • independence and other ethical requirements, which incorporate the independence and ethical requirements of Professional and Ethical Standard 1 (Revised); and
  • quality control requirements, which incorporate the quality control requirements of Professional and Ethical Standard 3 (Amended).

In addition to this report on the Council’s consultation document and all legally required external audits, I or my appointed auditors have provided assurance reports on:

  • a limited assurance engagement in respect to the Auckland Council’s Debenture Trust Deed and Master Trust Deed reporting certificates;
  • an assurance engagement in respect of information provided by the Auckland Council and Auckland Council Group as required by the terms of its foreign borrowings programme;
  • agreed-upon procedures engagements in relation to the requirements of the Freshwater Improvement Funding Deed; and
  • other engagements for Watercare Services Limited in the areas of cyber and security risk advisory, probity services, project assurance related to the central interceptor project and limited assurance on selected nonfinancial information.

These engagement are compatible with those independence requirements. Other than these engagements I have no relationship with, or interests in, the Council or any of its subsidiaries.


Greg Schollum
Deputy Auditor-General
Wellington, New Zealand


You should know

You can also find this independent auditor's report on page 72 of the 10-year Budget 2021-2031 Consultation Document.
Page last updated: 04 March 2021, 17:39