Whakatāne District Council has this week resolved a seven-year legislative breach in annual financial reporting that should see its debt levels reduced by more than $1.76 million.

Whakatāne Airport’s Annual Report 2018-2019 was published on the council’s website this week, after receiving an unmodified audit opinion from Audit NZ.

The council co-owns and manages the airport through a Council Controlled Organisation (CCO), in a 50/50 joint venture with the Ministry of Cities, Environment, Regions and Transport (MCERT), previously Ministry of Transport.

The council is legislatively required to adopt an independently audited annual report for the CCO within three months of the end of each financial year (by the end of September), under the Local Government Act 2002, and make it publicly available within a month of that date.

The council’s chief financial officer, Paul Davidson, said the council had been working with the Audit Office to resolve accounting disclosure issues with the Airport Annual Report, which arose back in 2019.

“This has taken considerable time and effort to resolve and has needed to be confirmed and cleared by Audit New Zealand’s Wellington office due to it being classified as a prior-period adjustment. Aligning this work with the Audit Office’s work programme has taken longer than anticipated,” he said.

During the 2018/19 year audit, the joint venture discovered systemic errors in reporting equity, recording contributions to annual losses, and errors with the Ministry of Transport agreed payments toward capital works.

These errors were traced back to 2012 and beyond.

Davidson said the council and MCERT’s 50/50 equity agreement set out how airport-related costs were shared between the two parties. However, the council, over time, had invested in some items to enhance the airport and its surrounds, which had not been funded 50/50.

“The difference in accounting treatment arose because the amount was recorded as equity, resulting in the 50/50 equity split between the two parties. The main alteration to the accounts is to change this treatment to grant funding, resulting in maintaining the 50/50 equity contribution,” Davidson said.

The audited report was adopted at a meeting on October 30.

Deputy mayor Julie Jukes thanked chief executive Steven Perdia during the meeting, for putting in place what was needed to have the audit completed.

“He took the initiative to resource this to get it across the line,” Jukes said.

The delay in resolving the issue has meant subsequent year’s reports also not being audited.

Now that the adjustments had been made, Davidson said he was expecting to have subsequent annual reports up to June 2026 ready for adoption by June next year, subject to auditor’s timelines.

The report to council stated that as the reports received audit clearance, it was expected that Ministry for Cities, Environment, Regions and Transport would then pay their partner share of the operating and capital expenses.

“This will clear long-standing debt that has been held in council receivables for a number of years,” the report said.

Both the council and MCERT had been accounting for the revenue-expense respectively in accounts. However, MCERT required an unmodified audit opinion before releasing payment.

“Until this requirement is met, the amount remains recorded as a debt owed to council.”

The outstanding balance recorded by the council was $1,768,615 as at September 30.

“This amount will need to be reconciled and confirmed by MCERT,” Davidson said.

The amount made up part of the council’s overall borrowing.

“Based on an average borrowing cost, the total interest incurred is approximately $350,000. Cost sharing for this amount has not yet been confirmed.”

The council also adopted its Annual Report 2025-2026 at the same meeting.

It received an unmodified opinion with some matters of emphasis. These matters related to uncertainties regarding local government reforms.

Davidson said it was the first time for several years the council had been able to adopt the annual report prior to the statutory deadline, largely due to issues with the auditing process, including, in 2021, when Covid 19 restrictions caused a shortage of auditors.