Hamilton City Council audit report highlights issues in spending processes

In August 2025, KPMG outlined 35 recommendations for Hamilton City Council’s procurement process that could be implemented over three years. Photo / Hamilton City Council

An independent audit has found “significant areas of concern” with Hamilton City Council’s procurement process.

The KPMG audit found the council awarded $239.1 million in non-tendered contracts from 2021 to 2023.

The audit was commissioned in 2024 as part of the previous council’s long-term infrastructure planning, and will be discussed again tomorrow at the council’s Finance and Assurance Committee meeting.

Committee chairwoman Rachel Karalus, who was elected to the new council in October, said the audit highlighted the need to strengthen procurement systems and improve project management as council spending increased.

“The report indicates that there were some messy and poorly understood processes. So I think those are probably the biggest risk to us [as a council],” Karalus told the Waikato Herald.

The 2024 audit revealed “significant areas of concern” in the council’s procurement approach and said there was “improvement potential in all dimensions”.

Why the audit took place

KPMG, one of the world’s largest audit and advisory firms, was engaged by council staff in 2024 to conduct an independent maturity assessment of its procurement function and identify risks, governance gaps and areas for improvement.

The audit identified gaps in strategy, governance and oversight.

It found that 75% of the 1248 active contracts during the three-year period were awarded without an open competitive process.

Non-contested contracts are agreements issued without multiple suppliers bidding for the work.

The KPMG report also said that in the 2024–2034 Long Term Plan, expenditure was projected to grow 73% from 2021 to 2031, increasing daily spend from $1.7m to $2.9m.

Key findings noted by KPMG included that procurement “policies and guidelines are outlined but not complied with due to disagreements, perceived complexity and a lack of training”.

“The ability to centrally follow up on procurement activities is missing. Insights and reports are not flowing through to the executive leadership team.

Hamilton City Council was audited by KPMG in 2024. Photo / Hamilton City Council

“Compliance is not enforced and repeated non-compliance occurs without consequences.”

Further, it says “Insufficient communication between all HCC branches leads to ... poor decision-making... and risks.

“High workloads, frequent friction, and confrontational behaviours drive staff turnover in HCC’s procurement areas.”

The audit was first briefly discussed at a Strategic Risk and Assurance Committee meeting on September 3, 2024.

At that meeting, council management proposed a procurement task force and a programme of improvements.

Details of this were meant to be discussed at the committee’s next meeting, but the next meeting’s agenda does not include the report.

A year after the review took place, in September 2025, at a meeting of the Strategic Risk and Assurance Committee, KPMG outlined 35 specific initiatives to be delivered over the next three years to support better decision-making.

What’s ahead

Current councillors are now working through those 35 recommendations alongside council staff.

“The procurement subcommittee will work with the team to see which of those initiatives should be prioritised – what can we deliver quickly and for the biggest impact,” Karalus said.

Hamilton City councillor Rachel Karalus.

She said the council wanted to empower staff to implement improvements as soon as possible while ensuring elected members had appropriate oversight.

“We have a council that has a desire to empower the staff to now deliver this programme of work as quickly as possible, and to deliver the outcome at the earliest opportunity for the benefit of the community that we all serve.”

Karalus said procurement concerns were a recurring theme raised by residents during the local body election campaign.

“We went into the election, procurement concerns were one of the things that people spoke very vocally about,” she said.

She said procurement was one of the most important tools available to local government because it determined how public money was spent and whether projects delivered value for ratepayers.

“It enables us to have confidence that we are procuring services in a way that delivers value for money and ensures good community outcomes,” she said.

Who’s to blame?

Karalus said more information was needed before determining who was responsible, but she wanted to focus on improving future systems rather than blame.

“That’s not to avoid answering the question, simply that there hasn’t been the time for the inquiry to be made in order to make a firm comment,” she said.

Karalus said council staff had brought the audit findings to the attention of elected members and had worked openly with councillors on improving transparency and accountability.

“Staff have not been resistant to elected members around transparency and accountability,” she said.

The report and the proposed programme of work are expected to be formally discussed in Hamilton City Council chambers tomorrow.

Tom Eley is a multimedia journalist at the Waikato Herald. Before he joined the Hamilton-based team, he worked for the Weekend Sun and Sunlive. He previously worked as a journalist at Black Press Media in Canada and won a fellowship with the Vancouver Sun.