Councils stung with rising audit costs

The cost to produce a council's annual report has come under scrutiny, with Kaikōura pouring about 1% of its yearly expenses just into the audit.

Kaikōura District Council's 2025/26 annual report received an ''unqualified opinion'' from the Audit Office for the second year running, meaning there were no material issues identified by the auditors.

But the audit cost more than $200,000 out of the council's expenses for the year of $23.9m, with the Audit Office spending more than 900 hours working on the audit, council corporate services senior manager Peter Kearney said.

The annual report was adopted at a council meeting on Wednesday, October 28.

''It's a very significant piece of work. It's a report that costs a hell of a lot of money and whether it's value for money for the community, I won't talk to that now.

''But it's a major undertaking of work for the community and there's a lot of hours behind the scenes, with plenty of late nights and weekend work,'' he said, paying tribute to council finance and business partnering manager Cherie Kaa.

Speaking at Wednesday's meeting, Audit Office associate audit director Jenna Hills said the audit had ''gone well overall''.

She acknowledged it had not been ''a routine year'', as the council had completed an overhaul of its IT system, established a new water services council controlled organisation and faced the uncertainty of local government reform.

The council's total revenue was $21.12m, down from the budgeted $30.24m, due to delays in capital projects, including infrastructure for the Ocean Ridge sub-division, which is subject to an Infrastructure Acceleration Fund grant.

The council's debt as at June 30 was $9.3m, less than the budgeted $10.3m.

Rising audit costs are hitting councils across the country, with Waimakariri Mayor and Local Government New Zealand (LGNZ) vice-president Dan Gordon among those raising concerns.

At the same time, the Government is proposing a two to four percent rates cap.

The Waimakariri District Council budgeted close to $500,000 to pay for auditing its 2025/26 annual report and next year's Long Term Plan.

''Every dollar we're required to spend on audit compliance is a dollar we can't spend doing good in our community," Mr Gordon said.

But Local Government Minister Simon Watts said ratepayers deserved confidence that councils' long-term plans and annual reports were ''robust and spending is properly scrutinised''.

"I also recognise concerns that multiple audits may add unnecessary costs, ultimately borne by ratepayers.

''I would encourage LGNZ to develop options for the next Government to consider, ensuring audit requirements and compliance costs are proportionate to risk while maintaining strong accountability."