A value assessment of the audit of an LTCCP

Project update 3, June 2008

Introduction

We are entering the phase of the LTCCP audit process where you will talk to your auditor about the size and nature of the audit. Your auditor will also negotiate the audit fees with you.

Long-term planning (currently in the form of the LTCCP) generates value for local government and its communities through:

  • initiating integrated long-term planning;
  • providing a basis for discussion of future objectives;
  • supporting continuous improvement and providing a performance management framework; and
  • reducing annual plan processes and associated costs.

An audit process can provide additional value to the value inherent in robust long-term planning. However, the discussion about the value of the audit process must be broader in scope than just considering the actual audit or “checking” process. In the following sections, we discuss what we consider to be three important areas where value is added to a council’s accountability, credibility, and trust.

Value added by the process of the audit

The audit process supports the credibility of the future options and funding requirements, which are necessary for genuine community consultation to occur.

The audit report assures the wider community that the LTCCP is financially prudent and sustainable. The inclusion of an audit report in an LTCCP helps to establish the relationship of trust necessary for councils and communities to plan their future together.

A process that checks the reasonableness of the information assists and ensures transparency. It also reduces suspicions that can arise from councils taking a “just trust us” approach to financial and asset management planning.

Value added by reporting on the audit

The audit of the LTCCP assures Parliament that local government’s delegated authority is used appropriately.

The audit process presents local government with a chance to display to central government its competent use of the authority delegated to it. As such, the audit process plays a role in building and maintaining the relationship of trust between central and local government.

The audit process gives assurance to local authorities and other agencies that the local authority’s plans are soundly based.

Poor planning of one local authority may adversely affect its stakeholders. This is particularly true where authorities share an environmental resource, or where the management of growth in one local authority will affect the infrastructure and environmental planning of the other local authorities around them.

Many local authorities already have working relationships, joint plans, and/or shared services arrangements with their neighbours and with other agencies. Therefore, the audit of the LTCCP acts as an additional assurance and provides confidence to such relationships.

Value added by establishing an evaluation framework

By using a common audit methodology and good practice standards prepared by the sector, auditing the LTCCP provides a national framework for assessing quality.

The audit framework is based on three important questions (based on the Local Government Act 2002, sections 84(4) and 94):

  • Does the LTCCP have good underlying information?
  • Does the LTCCP have meaningful performance measures?
  • Does the LTCCP comply with the requirements of legislation?

Every local authority should ask these questions of its LTCCP. We work with other stakeholders, such as the Society of Local Government Managers, to assist in the preparation of frameworks and guidance to help all councils meet their statutory obligations. This helps to reduce the cost to the sector which would be incurred if local authorities had to prepare their own frameworks to assess quality.

Local authorities face the costs of many small enquiries, including the hidden costs of the officials’ responses. The assurance to the public provided by the audit of an LTCCP could reduce these costs.

Conclusion

Long-term planning through the LTCCP process generates value for the local government sector through:

  • initiating integrated long-term planning;
  • providing a basis for discussing future objectives;
  • supporting continuous improvement and providing a performance management framework; and
  • reducing annual plan processes and associated costs.

An audit process adds value to an LTCCP by:

  • establishing credibility about future options and funding necessary for genuine community consultation to occur;
  • providing assurance to Parliament that local authorities are appropriately using delegated authority;
  • giving assurance to other local authorities and stakeholders that LTCCPs are soundly based; and
  • providing a national framework for assessing the quality of LTCCPs.
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