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Council draws line under shambles

Council draws line under shambles

http://www.themud.co.nz/#!shambles/cbxc

9 May 2013

A review by accounting giant Price Waterhouse Coopers has found current management at the Rotorua District Council cannot fully reconcile the previous management's financial assumptions.

The report into the review was released at the RDC on 8 May in a presentation headed by Mayor Steve Chadwick and Chief Executive Officer Geoff Williams.

The review cost $45,000 and the mayor was able to feel vindicated after being criticised when it was launched following her election in November 2013.

The review focussed on processes and the adequacy of past financial disclosures made to elected members and those made to the public during previous long-term plan and annual report processes, a council statement said.

"It confirms an overly complex and ineffective RDC financial reporting culture at the time, which hampered decision-making against a backdrop of rising costs and reducing revenue."

Asked by The Mud as to whether there was any suggestion that this complexity was seen as being in any way deliberate, Steve Chadwick denied this and added: "This report confirms that there was nothing covertly omitted from councillors."

Councillors who were serving at the time have been strongly criticised for not placing under greater scrutiny, what the review calls, the administration’s "overly complex and ineffective RDC financial reporting culture".

"I believe from this (review report) that it was an overly complex financial structure which the councillors dived into and loved the detail, and missed the critical issue, which was trends," the mayor said.

The previous reporting systems appear to have been so difficult to fathom that the new management team of CEO Geoff Williams and chief financial officer Dave Foster ended up drawing a line under December 2013 and starting afresh.

This is highlighted in the final statement in the report that "Neither the [new] financial nor operational management have been able to fully reconcile the assumptions put forward by the previous executive."

Asked by The Mud what this statement meant - given in accounting terms failing to reconcile meant things did not add up - Dave Foster said the new team came to the conclusion it was better to try to put [the situation] right rather than try to reconcile the history of what had occurred previously.

He had been doing this work for 25 years, and people had said he was good at it, but he could not get to the bottom of [what had happened].

"What we had to turn our minds to is what we need to do to put it right, so our reconciliation is very much focused on: What are we currently doing? what are we currently spending? and what are realistic numbers across each one of the activities that we deliver."

The new executive team had done three forecasts but had not tried to tie them back to the past and reconcile it, because "We don't actually see any future merit in that.'

Ends

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