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The operational performance and audit committee reviewed and amended the draft annual report on Wednesday.
The draft report is expected to be adopted by the full council next week.
Environment Southland finished the year with a reported surplus of $3.274million.
However, much of the surplus is made up of government funds tagged for economic recovery projects that cannot be used for other work.
Day-to-day operating expenses remained at a $1.2million deficit, meaning everyday expenses were greater than everyday income.
Cost savings of $2.1million across the organisation resulted in a lower operating deficit than forecast.
Chairman Nicol Horrell said the annual report was an opportunity to reflect on the past year’s challenges and opportunities.
"Our community has demonstrated tremendous resilience in spite of these challenges," he said.
"We’re making the most of the opportunities presented through this adversity, like funding through the Government’s economic recovery package.
"This has meant we were able to start planning for, and start work on, upgrading our flood protection schemes in the Waiau, Mataura and Oreti River catchments."
The council had also managed to get a range of Jobs for Nature-funded biosecurity projects under way, particularly in Fiordland, and these were providing employment opportunities, he said.
The council continued to face challenges with the loss of its cruise ship business and uncertain investment income.
Decisions to take on debt and increase rates in the long-term plan process had been made to move into a financially prudent position, Mr Horrell said.
"The plan is well mapped out to repay debt and ensure our everyday income meets our everyday costs."