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In pursuit of best accounting practices

August 15, 2013

In pursuit of best accounting practices

The land under public roads in Kapiti will be re-valued every three years to bring the process in line with other councils and modern accounting practices.

“This is not, and I emphasise not a move to allow Council to borrow more money than has already been laid down in the Long Term Plan,” said Councillor Ross Church, chair of the Corporate Business Committee of Council.

“The LTP containing debt schedules for the next 20 years was agreed to only after considerable debate and consultation and we are not planning to add to it.”

The Corporate Business Committee today unanimously agreed to change Council’s Accounting Policy so land under roads will be re-valued with work starting this November and updated at June 30, 2014.

Committee members also voted to send a letter to Local Government New Zealand and the Auditor General’s office requesting consensus on how local authorities across New Zealand value land under roads.

Most local authorities re-value the land under their roads but do so at varying times. Porirua City, Tauranga, Western Bay of Plenty, South Taranaki and Dunedin re-value the land under their roads every three years when all properties in their areas are re-valued.

Kapiti last re-valued land under roads in 2002.

Councillor Church said Council’s current position was inconsistent with good accounting practices.

“We re-value the land under public buildings and water reservoirs, and re-value public utilities such as water and waste water pipes, but we don’t do this on a regular basis with land under roads while many others do.”

Councillor Church said the re-valuation move had nothing to do with Council’s debt levels.

“When it comes to debt, lenders take a particular interest in our debt-to-revenue ratio i.e. our ability as a Council to pay off debt, much more so than our debt-to-asset ratio.

“It’s the same situation for a couple living on a limited income. The couple may wish to borrow $100,000 against the value of their property but the bank manager will want to know first and foremost whether they have a cash flow that can support repayments. It’s the same issue for a Council.

“The policy all CBC members agreed to this morning was about best accounting practices and not about borrowing more money.”


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