Seven years late: Whakatāne Airport annual report finally signed off

Whakatāne District Council has resolved systematic accounting errors in the airport's annual report - seven years after its original reporting deadline.

This could wipe more than $1.76 million of debt from the council's books due to a funding arrangement with the Ministry of Cities, Environment, Regions and Transport (MCERT).

Whakatāne Airport's Annual Report 2018-2019 was published on the council's website this week, after Audit NZ approved it with a clean bill of health (unmodified opinion).

The district council co-owns and manages the airport through a Council Controlled Organisation (CCO), in a 50/50 joint venture with MCERT.

Whakatāne District Council is legally required to adopt an audited annual report for the CCO within three months of the end of each financial year (end of September), 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 (now part of MCERT) 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 for taking the initiative to get it across the line.

The delay in resolving the issue meant subsequent year's reports were not audited. 

Davidson said he now expected to have subsequent annual reports up to June 2026 ready for adoption by June next year, subject to the auditor's timeliness.

Now that its received audit clearance, MCERT was expected to pay their partner share of the operating and capital expenses, the report to council said

"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 Whakatāne District Council 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.