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4. Council
Annual Report for the year ended 30 June 2024
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Reference Te Tohutoro:
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24/1895575
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Responsible Officer(s) Te Pou Matua:
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Niel
Koch, Group Financial Controller
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Accountable ELT Member Pouwhakarae:
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Bede
Carran, General Manager Finance, Risk & Performance / Chief Financial
Officer
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1. Purpose and Origin of the Report Te Pūtake Pūrongo
1.1 The
purpose of this report is to present the Council’s draft 2023/24 Annual
Report for approval.
1.2 Pursuant
to section 67 of the Local Government Act 2002 (LGA) the Council
is required to adopt its Annual Report by 31 October.
2. Audit and Risk Management Committee Recommendations
That the Council:
1. Receives the information in the Council Annual Report for the
year ended 30 June 2024 Report.
2. Notes that the Audit and Risk Management
Committee has reviewed the draft Annual Report for the year ended 30 June 2024
and is satisfied that proper process has been followed to ensure the Annual
Report and associated financial statements have been prepared in accordance
with applicable legislative requirements and accounting standards.
3. Approves the Letter of Representation for the
2023/24 Annual Report.
4. Authorises the Mayor and Chief Executive to
sign the Letter of Representation for the 2023/24 Annual Report.
5. Adopts the Christchurch City Council Annual
Report for the 2023/24 financial year, subject to receiving the final Annual
Report and the Auditor General’s report at its meeting on 30 October
2024.
6. Authorises the General Manager Finance, Risk
and Performance/CFO to make any necessary minor changes to the 2023/24 Annual
Report prior to publication.
7. Authorises the General Manager Finance, Risk
and Performance/CFO to produce and publish the 2023/24 Summary Annual Report.
3. Executive Summary Te Whakarāpopoto Matua
3.1 The
Council is required to adopt its Annual Report by the end of October.
3.2 To
provide the Council with assurance over the process for preparation of the
Annual Report the Audit and Risk Management Committee (ARMC) met on 17 October
2024 to undertake a review of both the draft Annual Report and the process of
its preparation. The Committee’s considerations and Recommendations are
attached (refer to Attachment A).
4. Background/Context Te Horopaki
4.1 The
Annual Report, refer to Attachments B and C, comprises four sections:
· The Council (also known as
the front section).
· Groups of Activities.
· Financial Statements.
· Summary information from Council-controlled
organisations.
4.2 Staff
note that the “Table of Contents” page numbering is not yet
updated. This will be completed once cosmetic improvements, pictures, etc. are
added by the Design and Communications team prior to publishing, which must be
no later than 30 November 2024.
4.3 The
Council section provides background information on the Council and
high-level summaries of achievements for the year.
4.4 The
Group of Activities (GOA) sections in the Annual Report includes commentary
on “what we do”, “what we did”, “how did we
measure up”, “how much did it cost” and “what
next” for each activity.
4.4.1 These
sections are prepared by the individual activity units in conjunction with the
Activity Units’ staff and their Finance Business Partners. Once
completed, a comprehensive review and sign off process is completed by General
Managers.
4.4.2 The
“how did we measure up” information has been prepared by the
Performance Management team and reviewed as part of the comprehensive sign off
review. The performance measures are linked back to the targets set as part of
the 2021-31 Long Term Plan.
4.4.3 The
summary graph below shows that of 214 (2023: 214) measures we use to track
performance:
· we have met
the target for 176, 82% (2023: 175, 82%)
· we have not
met the target for 38, 18% (2023: 39, 18%)
4.5 The Financial Statements have been prepared in accordance with generally accepted accounting
practice and the relevant Public Benefit Entity (PBE) accounting standards.
4.6 The
Council parent entity’s Surplus before Tax of $48.8 million was $44.5
million lower than budget of $93.4 million due to:
4.6.1 An
unbudgeted net loss of $38 million on infrastructure assets replaced as part of
the repairs and renewal programme, these non-cash losses are not budgeted for
in the Annual Plan due to uncertainty over the amount that maybe incurred.
4.6.2 Budgeted
staff costs of $21.4 million were not capitalisable under the accounting
standard PBE IPSAS 17, while this treatment is cash neutral the
non-capitalisation of labour increases Personnel Costs for operations and
consequently decreases the surplus.
4.7 Management
will work with Audit NZ to refine the methodology used to calculate
capitalisation rates.
4.8 After
adjusting for movements in assets, total assets increased by $731.5 million and
is mainly attributable to a $247 million increase in Council’s investment
in its Council-controlled organisations and $509 million increase in its
property, plant and equipment and principally its infrastructure assets.
4.9 The
Council’s total borrowings increased by $305 million to a balance of
$2.57 billion as at 30 June 2024, and was used to fund capital expenditure and
loan advances to related parties, principally Christchurch City Holdings
Limited. The Council’s total capital expenditure was $706 million
against a budget of $746 million.
4.10 Overall
the Council’s total equity increased by $421.6 million.
4.11 Net
cash flows from operations was $372.6 million.
4.12 The
summary information from Council-controlled organisations (CCOs) is sourced
from the financial statements and annual reports of these entities. These
entities all go through their own review and audit processes.
Audit progress
4.13 At
the time of writing this report, the audit was still in progress with some
adjustments possibly still to be finalised. The expectation is that all work
will be completed by Audit NZ prior to Council’s adoption meeting on 30
October 2024.
4.14 The
Council has incorporated all material changes requested by Audit NZ so
far. Audit NZ will attend the Council meeting to provide written
clearance on the Annual Report.
Audit representation letter
4.15 The
audit is carried out by Audit NZ on behalf of the Office of the Auditor
General. For the purposes of expressing an opinion on the information
presented in the Annual Report, Audit NZ will require a Letter of
Representation to be signed by Council (usually the Mayor and Chief
Executive). The Letter of Representation is in connection with the audit
of the financial statements and activities and services statements for both the
Council as parent and the group.
4.16 The
Letter of Representation is the mechanism for Council to confirm the accuracy
and completeness of information supplied along with specific representations
made to Audit NZ during the audit of the Annual Report.
4.17 With
the audit still in progress, Audit NZ will endeavour to share a draft Letter of
Representation with the Council prior to its meeting on 30 October 2024.
Audit opinion
4.18 Audit
New Zealand has verbally advised Council that it will receive a qualification
in respect of one mandatory performance measure (for smooth travel
exposure). In respect of the other parts of the audit report, Council
expects to receive an unqualified opinion on the Annual Report. Staff and
Audit NZ will provide an update at the meeting on 30 October 2024.
4.19 Should
there be any further material changes to the draft Annual Report, these will be
separately identified to the Council at its meeting on 30 October 2024.
Staff assurance process
4.20 The
Financial Statements and Group of Activities are subject to a review for
completeness and accuracy. To support this review a comprehensive
‘signoff matrix’ confirming the work undertaken is completed by
relevant staff, including the GM Finance, Risk & Performance / CFO and
eight business unit Heads (refer Attachment D for a copy of the final
sign-off matrix).
Preparation
of Summary Annual Report
4.21 The
Council is also required to prepare a Summary Annual Report. This is
currently being drafted and will be reviewed by Audit NZ. It will be sent for
design and formatting once the full Annual Report has been finalised.
4.22 At
the Council meeting, staff will seek approval from the Council to authorise the
GM Finance, Risk and Performance/CFO to produce and publish the 2023/24 Summary
Annual Report.
Options Considered Ngā Kōwhiringa Whaiwhakaaro
4.23 The
only reasonably practicable option available to the Council is to adopt its
Annual Report for the 2023/2024 financial year.
4.24 The
option of the Council declining to adopt its Annual Report for the 2023/2024
financial year was considered but ruled out, as this would result in Council
breaching the requirement, pursuant to section 67 of the LGA, to adopt its
Annual Report by 31 October.
Options Descriptions Ngā Kōwhiringa
4.25 Preferred
Option: The Council adopts its Annual Report for the 2023/24 financial
year.
4.25.1 Option
Description: The Council to adopt its Annual Report for the
2023/2024 financial year.
4.25.2 Option
Advantages
· Complying with
legislative adoption requirements to adopt an audited annual report by the end
of October 2024.
· Informs the
community on the Council’s performance in the delivery of its services,
activities, capital projects and on its financial stewardship.
4.25.3 Option
Disadvantages
· None
identified.
5. Financial Implications Ngā Hīraunga Rauemi
Capex/Opex Ngā Utu Whakahaere
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Recommended Option
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Cost to Implement
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Audit NZ fees and associated staff time
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Maintenance/Ongoing Costs
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N/A
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Funding Source
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Within existing opex budget
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Funding Availability
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Within existing opex budget
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Impact on Rates
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N/A - FY24 already recovered
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6. Considerations Ngā Whai Whakaaro
Risks and Mitigations Ngā Mōrearea me
ngā Whakamātautau
6.1 The
main risk is not adopting the Annual Report by the statutory date due to the
Auditor not being ready to provide the audit opinion. This is mitigated through
collaborative workings between management and Audit NZ to resolve any potential
material issues or misstatements.
Legal Considerations Ngā Hīraunga
ā-Ture
6.2 Statutory
and/or delegated authority to undertake proposals in the report:
6.2.1 Under
section 67 of the LG, the Council is required to adopt an Annual Report.
6.3 Other Legal Implications:
6.3.1 There
is no legal context, issue, or implication relevant to this decision.
Strategy
and Policy Considerations Te
Whai Kaupapa here
6.4 The
required decision:
6.4.1 Aligns
with the Christchurch
City Council’s Strategic Framework.
6.4.2 Is
assessed as low significance based on the Christchurch City Council’s
Significance and Engagement Policy. The level of significance was determined by
legislative requirements as well as the nature of the Annual Report which cover
all of the Councils services, activities and financial activities, noting that there is significant public interest in the Annual
Report. The compilation and adoption of the Annual Report is a statutory
accountability function exercised by governance.
6.4.3 Is
consistent with Council’s Plans and Policies.
6.5 This
report supports the Council's
Long Term Plan (2024 - 2034), as adoption is a legislative requirement.
Community
Impacts and Views Ngā Mariu ā-Hāpori
6.6 The decision affects the following wards/Community Board areas:
6.6.1 All
wards.
Impact
on Mana Whenua Ngā
Whai Take Mana Whenua
6.7 The
decision to adopt the Annual Report does not involve a significant decision in
relation to ancestral land, a body of water or other elements of intrinsic
value.
6.8 The
decision does not impact on our agreed partnership priorities with Ngā
Papatipu Rūnanga. The Annual Report contains information regarding Iwi
engagement and relations.
Climate
Change Impact Considerations Ngā Whai Whakaaro mā te Āhuarangi
6.9 The decisions in this report are unlikely to contribute
significantly to adaptation to the impacts of climate change or emissions
reductions, noting that the Annual Report provides commentary on
Council’s work and initiatives around climate change impacts and related
matters.
7. Next Steps Ngā Mahinga ā-muri
30 October 2024
Council meeting:
7.1 Audit
NZ to provide formal written clearance on the Council’s Annual Report for
the 2023/24 financial year.
7.2 The
Council to adopt its Annual Report.
From 1 November to 30 November 2024:
7.3 Under
the LGA the Council has one month to publish its Annual Report and Summary
Annual Report from the date of signing the Annual Report
7.4 Management
will work with the Communications and Engagement unit to ensure the adopted
FY24 Annual Report is published no later than 30 November 2024.
Attachments Ngā Tāpirihanga
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No.
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Title
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Reference
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Page
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a ⇩
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ARMC
Recommendations to the Council
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24/1897595
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11
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b ⇩
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Draft FY24
Annual Report - Volume 1
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24/1903715
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13
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c ⇩
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Draft FY24
Annual Report - Volume 2
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24/1903716
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237
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d ⇩
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Financial
Statements Sign Off Matrix
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24/1906623
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398
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In addition to the attached documents, the following background
information is available:
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Document
Name – Location / File Link
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Not
applicable
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Signatories Ngā Kaiwaitohu
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Author
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Niel Koch -
Group Financial Controller
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Approved By
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Russell Holden
- Head of Finance
Bede Carran -
General Manager Finance, Risk & Performance / Chief Financial Officer
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