Independent financial report released

Mayor Steve Chadwick.

An independent financial report has identified serious problems with historical Rotorua District Council financial reporting and a lack of expertise at the top level of management.

But, the report has not found any evidence of intentional mishandling of council finances.

Rotorua mayor Steve Chadwick has welcomed the report's findings saying the slate was now clean and it was time to move forward.

Earlier this year, Mrs Chadwick called for an independent review of the council's annual financial reporting processes from 2011 to 2014. The review, undertaken by PWC at a cost of $45,000, was presented to councillors yesterday. The report states "financial reporting was too detailed and lacked appropriate summaries, financial impact assessments and commentaries to be meaningful and enable councillors to really understand the impact of their decision making".

It went on to state budget reforecasting lacked structure and was difficult to follow. "The RDC lacked depth in senior financial experience which was accentuated by the finance manager position being vacant during crucial stages of the 2013/14 Annual Plan development. The outgoing chief executive had to take greater responsibility for its production, on top of his other accountabilities.

"Following the chief executive's departure and commencement of the financial year in question, significant unfavourable anomalies have been discovered in both revenue and expenditure which the new finance team have not been able to fully reconcile."

It also stated that Rotorua Airport debt funding, along with expectations of third party funding which never eventuated, were unsustainable and should have been addressed earlier by the council. But, the report stated the council's new financial strategy was on the right track.

"It signals again that we have plenty of work ahead to secure sustainable long-term financial management and delivery of services for our community," Mrs Chadwick said. Councillor Janet Wepa, who presided over last year's Annual Plan process, said councillors did question former chief executive Peter Guerin but "it was a very difficult period. We were probably somewhat disjointed ... they just didn't pursue it.

"We were comforted by audit reports which were always clean and clear," she said.

Councillor Merepeka Raukawa-Tait said councillors should have asked for more clarification at the time.

"Yes, we could have done better," she said.

The review also made 16 recommendations for consideration, six of which have already been adopted or progressed by the council.

Mrs Chadwick, who was elected to the council in October last year, said debt and council finances were a hot topic during her election campaign and the review revealed these concerns were not communicated with clarity and consistency within the council or to the public. "Councils are responsible to the communities that have elected them and clearly outlining financial performance every year not only strengthens accountability to communities but also improves transparency."

Findings

*No evidence of intentional mishandling of council finances.
*Council lacked senior financial experience.
*Significant unfavourable anomalies discovered in revenue and expenditure.
*Rotorua Airport debt funding was unsustainable and should have been addressed earlier.
*Financial reporting too detailed.
*Council's new financial strategy on right track.