Auditor General’s overview
The 2020-21 financial year marked the end of a four-year transition of local government financial auditing to my Office. The transition has brought many challenges as local governments and regional councils (entities) adjusted to our robust audits and we have learnt about the intricacies of the sector. Despite the challenges, it has been rewarding to facilitate financial reporting improvements and increase transparency of this important layer of government which impacts all West Australians. I have included a brief review of the transition at the beginning of this report.
For the 2020-21 audit cycle, we have completed 132 of 148 audits by 30 June 2022, with 16 outstanding. We have seen a demonstrated effort by the sector to improve the quality and timeliness of their annual financial reports and pleasingly reported a 15% decrease in weaknesses in financial management controls. This follows a 12% decrease the year before. To see this reduction in management control issues, across a larger number of audited entities, shows a comprehensive response by the sector to improve their current practices and strengthen the integrity of their financial reporting environment.
However, two entities received a qualified opinion on their financial reports and there may be further qualifications on the opinions not yet issued. We also reported a higher rate of material non-compliance and information system control weaknesses than previously.
In this report I have also included previously unreported outstanding opinions from 2019-20 for the Shires of Wiluna and Yalgoo. For both entities I issued a disclaimer of opinion as I was unable to obtain sufficient appropriate audit evidence on their books and records because of deficiencies in their internal controls and record keeping. A disclaimer of opinion is a serious matter for my Office as there is a missed opportunity for assurance over financial accountability and continuous improvement. This leads to a lack of confidence in the appropriate use of public monies.
To support continuous improvement in the local government sector, I encourage entities to review the findings of their audits, as well as this audit results report. Each entity should consider our recommendations in the context of their own operating environments and governance frameworks.
I note the newfound willingness and leadership of the Department of Local Government, Sport and Cultural Industries to enhance financial reporting, reduce complexity and cost, and enable improved governance for the sector. This report also outlines its progress on our previous recommendations.
Finally, I wish to acknowledge my incredibly hardworking staff, our contract audit firm partners and staff in the audited entities for their dedication to this year’s audit process. Your professionalism and cooperation in working through uncommon challenges to complete the audits is appreciated.
Executive summary
Review of the four-year transition
The 2020-21 financial audit was the first year the Auditor General had responsibility for all 148 local government audits, marking the end of the four-year transition provided in the Local Government Amendment (Auditing) Act 2017.
A challenging transition
The transition has not been easy for the Office of the Auditor General (OAG) or entities, but Parliament was correct to acknowledge that change and improvement was needed for the sector. In too many cases, the quality of both financial reporting and audit was not what ratepayers and communities would rightly expect.
Our audits have brought greater rigour, scrutiny and sector-wide oversight. While challenging for many local governments and regional councils (entities), they have responded positively, particularly when they have understood that this helps them provide better transparency, accountability and financial management.
How challenging entities have found it to adapt to our requirements and approach was not predictable. Many smaller entities, who we might have expected to struggle, have adapted relatively easily while some of the larger ones with greater capacity have found it difficult. This has been particularly interesting given that all entities, regardless of size and complexity have to comply with the same legislative and regulatory framework.
Setting the baseline
As is often the case, the initial stages of reform have revealed many of the issues that need fixing. For the local government sector this includes the quality and timeliness of financial reporting and the need to aim for better practice, not just meet minimum levels of compliance. Our office has prepared guidance on preparing financial statements1 and other topics2 which entities have been encouraged to use.
Achieving consistency in some key areas underpins ongoing improvement. One area we continue to report on each year3 is inconsistencies in property and asset valuation methodologies. Entities can see significant valuation swings depending on the valuer they appoint and the assumptions the valuer makes. While regulation changes mean a formal valuation is no longer required each year, entities still need to ensure their assets are recorded at fair value. Forthcoming guidance from the Australian Accounting Standards Board and in turn the Department of Local Government, Sport and Cultural Industries (DLGSC) may help.
Through the transition we have come to understand much better the extent of reporting and compliance required of entities, in some cases exceeding that required of the State government sector. We have advocated to, and worked with, the DLGSC for a reduction in these requirements and are pleased new model financial statements, with decreased reporting but without a loss of key disclosures, will be available for entities in 2022-23. We will continue to liaise with the DLGSC on other proposed reforms that aim to increase accountability, transparency and efficiency for the sector.
The transition has also identified areas of improvement for our Office. Specifically, we have had to increase the training of our employees and contract audit firms to adequately understand the local government environment, which differs in some significant ways to the State and tertiary sectors. We also intend to increase the time our auditors spend onsite to further improve the engagement, efficiency and timeliness of audits.
We are also determined not to allow any overruns from our State sector audits to impact our delivery of local government audits, as it did for the 2020-21 audit cycle (due to a record number of State government entity audit qualifications). This means if State entities are not audit-ready or we encounter delays undertaking their audits, our teams will move on to the local government program as scheduled, even if State entities are not finalised. Our resolve on this matter will be tested during the 2021-22 audits, but we look forward to reporting back to the Parliament and all our audited entities on how this approach unfolds.
Seeing results
While the timeliness and quality of annual financial reports have been significant issues through the transition, there are signs of improvement. The reduction since 2018-19 in financial management control weaknesses shows a clear effort by entities to improve their current practices and strengthen the integrity of their financial reporting environment. Although the upward trend in material matters on non-compliance indicates there is still improvement needed. The following table shows entities’ audit results over the past four years.
Audit year | 2017-18 | 2018-19 | 2019-20 | 2020-21 |
---|---|---|---|---|
Number of entities subject to OAG audit | 46 | 112 | 132 | 148 |
Clear audit opinions | 44 | 107 | 129 | 130* |
Qualified opinions | 2 | 5 | 1 | 2* |
Disclaimers of opinion | 0 | 0 | 2 | 0* |
Material matters of non-compliance | 36 | 93 | 101 | 193* |
Management control issues | 198 | 802 | 704 | 601* |
* Some 2020-21 audits are still ongoing and therefore these results are for 132 entities only.
Table 1: Audit results for four year transition period
Understanding of the significant role of audit committees in the annual reporting and audit process has also improved. Better informed and active audit committees are now more suitably equipped to quality review the financial report and assess the accountability and integrity of entities’ reporting, control environment and risk management practices.
Where to from here
There is still a long way to go but we are committed to working with entities, the DLGSC and sector associations4 to continue improving the sector and our own processes to aid timely reporting to the community and Parliament.
From the 2021-22 financial year audits we will recognise the top entities who demonstrate best practice in the sector, as we do for the State and tertiary sectors. Our best practice assessment criteria include:
- clear opinions on financial reports and controls
- the number and significance of control weaknesses raised in management letters
- good quality financial reports, supported by reliable working papers and submitted for audit within the agreed timeframe
- management resolution of accounting standards and presentation issues
- availability of key staff during the audit process.
For 2020-21, OAG staff performed 21 audits in-house, with the other 127 performed by contract audit firms on our behalf. We expect to increase the number of audits we perform
in-house over time. However, a large proportion will continue to be performed by our accredited contract audit firms. These are periodically re-tendered to provide open and fair competition and to ensure value for money.
Introduction
This report contains findings from our 2020-21 financial audits of the local government sector. It includes the results for 132 of the 148 entities (Appendix 1), with the remaining 16 entities’ results to be tabled in Parliament once their audits are completed.
Our annual financial audits focus on providing assurance over an entity’s financial report. The Auditor General provides an opinion on the report which can be:
- clear – this indicates satisfactory financial controls and that the financial report is based on proper accounts, presented fairly, complies with relevant legislation and applicable accounting standards, and fairly represents performance during the year and the financial position at year end
- clear with an emphasis of matter – this brings attention to a matter disclosed in the entity’s financial report but is not significant enough to warrant a qualified opinion
- qualified – these opinions are given when the audit identifies that the financial report is likely to be misleading to users, controls were inadequate or there was a material conflict with applicable financial reporting frameworks
- disclaimer of opinion – issued when the auditor is unable to form an opinion due to insufficient evidence being available. This is the most serious audit opinion and is only issued after we have exhausted our efforts to achieve the desired audit objectives.
During an audit we also make recommendations to entities on relevant matters of compliance, financial management and information system controls. A summary of our findings is included in this report.
Also included are matters we have noted which have or may impact an entity’s financial report. This year this includes how entities account for the rehabilitation of landfill sites, changes to the accounting treatment for cash in lieu of public open space from developer contributions, inconsistences in how entities value assets and changes to accounting standards.
The appendix includes other opinions and certifications issued for the State government sector since 18 November 2021.
Year at a glance
Recommendations
- We encourage entities to make use of our WA Public Sector Financial Statements – Better Practice Guide (available at audit.wa.gov.au) to improve their financial management and reporting practices, processes and procedures (page 16).
- Local government entities should ensure they maintain the integrity of their financial control environment by:
- periodically reviewing and updating all financial, asset, human resources, governance, information systems and other management policies and procedures and communicating these to staff
- conducting ongoing reviews and improvement of internal control systems in response to regular risk assessments
- regularly monitoring compliance with relevant legislation
- promptly addressing control weaknesses brought to their attention by our audits and other audit and review mechanisms
- ensuring they consider new and revised accounting standards for their impact on financial operations to prepare a compliant financial report at year end (page 27).
- The Department of Local Government, Sport and Cultural Industries should provide guidance to assist entities with understanding the requirements of and interpreting the Australian Accounting Standards Board (AASB) accounting requirements to ensure greater accounting consistency across the sector, including recognising provisions for the rehabilitation of landfills and other contaminated sites (page 30).
- The Department of Local Government, Sport and Cultural Industries should continue to work with local government stakeholders towards the introduction of model financial statements for the 2022-23 financial year (page 41).
Timeliness and quality of financial reporting
Reporting requirements
Each entity is required to prepare an annual financial report that includes:
- a Statement of Financial Position, Statement of Comprehensive Income by Nature or Type, Statement of Comprehensive Income by Program, Statement of Changes in Equity and Statement of Cash Flows
- a Rate Setting Statement
- seven financial ratios required under section 50(1) of the Local Government (Financial Management) Regulations 1996 (FM Regulations)
- other note disclosures such as trading undertakings and major land transactions.
We have previously recognised that the quantity of detail reported in some aspects is onerous and exceeds that reported by most Western Australian (WA) State government entities and by local governments in other jurisdictions. From page 38 we have summarised DLGSC’s progress with some reforms in this regard including the recent changes to the Local Government Regulations Amendment (Financial Management and Audit) Regulations 2022, gazetted on 17 June 2022.
Review of financial reports submitted for audit
Timeliness
Under section 6.4(3) of the Local Government Act 1995 (LG Act), entities must submit their annual financial reports to the OAG for audit by the statutory deadline of 30 September. Of the 148 entities:
- 120 met the 30 September deadline
- 13 did not
- 17 received approval from the Minister to extend their submission deadline, of these:
- 8 met the extended deadline
- 7 did not
- 2 did not require the extension as they met the 30 September deadline and are included in the 120 figure above.
Further details of entities’ timeliness are provided in Appendix 1. Failure to provide good quality financial statements in a timely manner causes delays in the start and therefore the finalisation of audits.
We completed 86 of 148 audits (58%) by 31 December 2021 (compared to 65 of 132 audits (49%) by the same time last year) as required by section 7.9 of the LG Act. While this is an improvement from the previous year, we again encountered issues with the quality and timeliness of information provided by entities. Some entities experienced problems with insufficient evidence to support the financial report and numerous errors requiring correction. We also noted resourcing constraints impacting the sector, most notably in regional entities, which undoubtedly added to the challenge. Finally, we acknowledge the impact of delayed audit completions in numerous State sector entities on our ability to commence some local government entity audits.
Quality
We rate the quality of entities’ financial statements that they submit for audit. Roughly half had statements that were of a reasonable standard and required minimal revisions or adjustments.
However, the remaining entities:
- had poor record keeping practices which delayed providing the necessary information for audit
- had numerous errors in their financial statements and disclosure requirements were not met
- experienced finance staff turnover and attrition during crucial times in the financial year, or key personnel were not available to respond to the auditors at key times as they had taken leave.
We identified numerous errors that were corrected by the entities during the audit process. These errors included:
- incorrect valuation method used
- incorrect revenue recognition of funds received in advance
- bank reconciliations for the municipal account not reconciled, resulting in back dated payments not being identified in a timely manner
- incorrect recognition of borrowings and cash and cash equivalents
- land assets not held at their fair value with revaluation recognised through revaluation reserve
- not correctly accounting for their share of investment in associate
- overstatement of employee benefits and misclassification between the current and non-current portion of long service leave provisions.
Also disappointing was the number of entities submitting many versions of their financial statements to us during the audit process. This results in significant additional work for both the entity and the auditor, and delays the finalisation of the audit. For example, one entity submitted 21 versions of its financial statements.
To ensure timely and accurate financial reports it is important that management in each reporting entity keeps proper accounts and records. Management should undertake appropriate oversight reviews of systems and processes throughout the financial year and after year end to improve the quality of their financial reporting.
To assist public sector entities to assess their financial management and reporting practices, our Office tabled the Western Australian Public Sector Financial Statements – Better Practice Guide. This practical guide and toolkit set out better practice principles which, when applied, support a strong governance framework and an efficient and effective financial statement preparation process. While the guide is not prescriptive or obligatory, it should assist entities to implement better practices, processes and procedures, and achieve more efficient and timely financial reporting for their entity.
Each year when we table our annual audit results report of State government entities, we assess them on their financial reporting and financial controls. We then recognise those State entities that achieve good practice by assessing the number and significance of control weaknesses, the quality of their financial statements, audit readiness, management resolution of accounting standards and the availability of key staff during the audit process.
In 2021-22, we will examine the local government sector and recognise the top best practice entities in our annual audit results report. On page 10 we have outlined our assessment criteria. We hope that reporting top achieving entities from across the sector will increase the effectiveness and efficiency of the financial statement preparation process and contribute to improving the quality of financial reports submitted for audit.
Recommendation
- We encourage entities to make use of our WA Public Sector Financial Statements – Better Practice Guide to improve their financial management and reporting practices, processes and procedures.
Summary of audit opinions
For the financial year ending 30 June 2021 we issued clear auditor’s reports for 130 entities by 30 June 2022. Two audit opinions were modified (qualified), while we included emphasis of matter paragraphs in the audit reports of 24 entities.
The auditor’s report includes:
- the audit opinion on the annual financial report
- any significant non-compliance in relation to the financial report or other financial management practices
- any material matters that indicate significant adverse trends in the financial position of the entity
- other matters the auditors deem necessary to highlight.
Under the LG Act, an entity’s chief executive officer (CEO) is required to publish its annual report, including the audited financial report and the auditor’s report, on the entity’s website within 14 days of the annual report being accepted by the entity’s council. Appendix 1 outlines the date we issued each entity’s 2020-21 auditor’s report.
We also finalised the 2019-20 auditor’s report for two entities.
Two disclaimers of opinion for 2019-20
On 16 June 2021, we tabled the results of 117 entities’ 2019-20 financial audits in Parliament. On 24 November 2021, we reported a further 13 entities’ results in our State government entities audit report. At that time, results remained outstanding for the Shires of Wiluna and Yalgoo. We were unable to express an opinion on their financial audit reports and have now issued them a disclaimer of opinion.
For both entities, we were unable to obtain sufficient appropriate audit evidence on the books and records of the Shires. This was due to numerous significant deficiencies in the Shires’ internal controls and in some cases, records not being adequately maintained. See Appendix 2 for the full details of the disclaimers.
The absence of sufficient appropriate evidence is a significant impediment for the auditor and a serious matter for both the auditor and those who rely on the auditor’s opinion. If an auditor is unable to obtain the required evidence, they have few options. One option is to issue a disclaimer of opinion.
Such an opinion is only issued after we have exhausted our efforts to achieve the desired audit objectives. It is the first time this Office has issued such an opinion for a local government entity since becoming responsible for auditing the sector in 2017. It is also the first issued by our Office on a financial report for any WA government entity in 25 years.
A disclaimer of opinion on financial statements is a serious matter as we were unable to provide assurance over financial accountability. This can lead to a lack of confidence in the appropriate use of public monies.
Given the nature and timing of these disclaimers of opinion it is, regrettably, our expectation that issues requiring these disclaimed audit opinions may continue into 2021 and 2022 in some manner. However, we are aware that both entities have been working to address these concerns since the matters were first raised.
Response from Shire of Yalgoo
The Shire acknowledges the effort of the OAG in undertaking the 2019-2020 audit. We also confirm that we recognise the seriousness of the issues raised by the audit and give our assurance that a plan of action has already been implemented. We continue to do work under that plan. The Shire would also like to identify a number of factors which influenced the audit result, including:
- resourcing constraints
- changes of CEO
- communication between Shire and audit team
- timing of release of audit report.
We are conscious that the existence of these factors does not amount to an excuse for the deficiencies identified. On the other hand, we hope their existence will go some way to helping explain how those factors, rather than a culture of disregard for the need to ensure proper controls and compliance, contributed to the audit result.
17 June 2022
Two qualified audit opinions for 2020-21
We issue a qualified opinion in our auditor’s report on an annual financial report if we consider it is necessary to alert readers to material inaccuracies or limitations in the financial report that could mislead readers.
In 2020-21, two entities received a qualified audit opinion. This is an improvement from four qualifications issued in 2019-20 and six in 2018-19.
The Shires of Goomalling and Sandstone received qualified opinions because their infrastructure assets had not been valued with sufficient regularity and therefore, we were unable to determine if they were fairly stated. For the full details of the qualified opinions see Appendix 3.
Audits in progress
The 16 audits still being finalised may result in modified opinions. Generally, audits in progress relate to:
- entities having more significant or complex issues to be resolved from a financial reporting and auditing perspective
- entities not having the in-house expertise needed to manage their financial reporting.
While some entities collaborate and seek help to overcome these issues, this is often informal and ad-hoc.
Twenty-four entities received emphasis of matter paragraphs
Under Australian Auditing Standards, if a matter is appropriately presented or disclosed in the financial report, but in our judgement is of such importance that it should be drawn to the attention of readers, we may include an emphasis of matter (EoM) paragraph in our auditor’s report.
In 2020-21, 25 EoM paragraphs have been included to bring to the reader’s attention to:
- restatements of comparative figures or balances (11 entities)
- restatements and guarantee payments (four entities)
- changes to the basis of accounting used by the entity (six entities)
- the recording of a joint venture (two entities)
- a contingent liability (one entity)
- an event occurring after the end of the reporting period (one entity).
A full description of these matters is at Appendix 4.
In previous years, we included an EoM in all entities’ auditor’s reports to draw attention to their previous recognition of some categories of land, including land under roads, at zero cost.
Seventy-five entities had 193 material matters of non-compliance with legislation
We reported 193 matters of non-compliance to 75 entities. Under Regulation 10(3)(b) of the Local Government (Audit) Regulations 1996 (LG Audit Regulations), we are required to report any matters indicating that an entity is non‑compliant with:
- part 6 of the LG Act
- FM Regulations
- applicable financial controls in any other written law.
The matters may relate to the financial report or to other financial management matters.
The most commonly reported matters related to:
- financial ratios not being reported (28 entities)
- a lack of evidence that enough quotations were obtained to test the market or documentation to explain why other quotes were not sought (22 entities)
- no evidence of independent review and approval of journal postings to the financial ledger (13 entities)
- a financial management review was not completed every three years as required
(13 entities) - changes made to the supplier master files were not independently reviewed and approved (12 entities)
- bank reconciliation processes were incomplete (12 entities).
Other matters included procurement without purchase orders, incomplete monthly reconciliations of fixed assets, payroll and employment non-compliance, and purchase orders raised, approved and paid by the same person. For the convenience of Parliament and the public, we have summarised the noteworthy matters in more detail at Appendix 5.
In determining which matters to examine through audit procedures (on a risk-based sample and rotational basis) and report, we apply the principles of materiality, as required by Auditing Standard ASA 320 Materiality in Planning and Performing an Audit. Factors that we consider include the extent and frequency of the non-compliance, and its effect or potential effect.
We also consider Regulation 5(1) of the FM Regulations to be particularly important because failure to effectively apply those requirements can result in significant financial loss, inefficiency, financial misreporting or fraud.
If we find matters of non-compliance at an entity, we will report this in the auditor’s report which becomes part of their annual report published on their website. There was no discernible trend regarding the type or size of entity to which these findings relate.
Adverse trends in the financial position of 109 entities
We conducted a high-level assessment of whether the seven financial ratios reported in each entity’s financial report achieved the standards set by the DLGSC. This year, we reported that 156 ratios at 109 entities indicated adverse trends of which the asset sustainability and the operating surplus ratios were the most commonly reported as adverse. Last year, for the 2019-20 audits, the comparative figures were 139 ratios with adverse trends at 89 entities. Entities report their ratios for the current year and the preceding three years. Our trend analysis is therefore limited to these four years.
We are required by Regulation 10(3)(a) of the LG Audit Regulations to report ‘any material matters that in the opinion of the auditor indicate significant adverse trends in the financial position or the financial management practices of the local government’. When determining if a trend was significant and adverse, in some instances we allowed for a ratio to be slightly lower than the DLGSC standard. We allowed this in recognition that failing to meet some standards is more significant and representative of an entity’s financial position than failing to meet others.
Our financial audit assessments of the ratios are conducted objectively on the audited figures from the financial report on a comparable and consistent basis. Our assessments do not consider other aspects of the entity’s finances or the inter-relationships between the ratios. These considerations are outside the scope of the legislative audit requirement of Regulation 10(3)(a) and more relevant to a performance audit into adverse trends.
We issued 275 audit certifications
In addition to the auditor’s reports on annual financial statements, we also conduct audit work to certify other financial information produced by entities. These audit certifications enable entities to meet the conditions of State or Commonwealth funding or specific grant requirements or legislation (acquittals). Our audit certification of these statements may be required to enable entities to receive ongoing funding under existing agreements or to apply for new funding.
For the 2020-21 audit cycle we are responsible for conducting 139 certifications for the Local Roads and Community Infrastructure Program (LRCI Program). The $3 billion Commonwealth-funded program supports entities to deliver priority local road and community infrastructure projects across Australia.
Under the LRCI Program, entities who are eligible for funding must provide the Commonwealth Department of Infrastructure, Transport, Regional Development, Communications and the Arts with an audited 2020-21 annual report by 31 October 2021. This must be audited by an appropriate auditor.
As defined by the National Land Transport Act 2014, our Office is the appropriate auditor given entities’ accounts are required by law to be audited by the Auditor General of a State.
Appendix 6 lists the 275 certifications we have issued for 2020-21 and the date of issue including:
- 11 claims by administrative authorities for pensioner deferments under the Rates and Charges (Rebates and Deferments) Act 1992
- 136 statements acquitting Roads to Recovery funding under the National Land Transport Act 2014
- 125 statements acquitting the LRCI Program funding (14 certifications outstanding)
- three other certifications for projects by entities.
Control weaknesses
Management controls
We report to entity CEOs on all control weaknesses relating to expenditure, revenue, financial management, asset management and human resources. Control weaknesses that represent matters of material non-compliance form part of the overall auditor’s report that we provide under section 7.12AD of the LG Act to the mayor, president or chairperson, the CEO and the Minister for Local Government.
Our management letters provide a rating for each matter reported. We rate matters according to their potential impact and base our ratings on the audit team’s assessment of risks and concerns about the probability and/or consequence of adverse outcomes if action is not taken. We consider the:
- quantitative impact – for example, financial loss from error or fraud
- qualitative impact – for example, inefficiency, non-compliance, poor service to the public or loss of public confidence.
Risk category | Audit impact |
---|---|
Significant | Finding is potentially a significant risk if not addressed by the entity promptly. A significant rating could indicate the need for a modified audit opinion in the current year or in a subsequent reporting period if not addressed. However, even if the issue is not likely to impact the audit opinion, it should be addressed promptly. |
Moderate | Finding is of sufficient concern to warrant action being taken by the entity as soon as practicable. |
Minor | Finding is not of primary concern, but still warrants action being taken. |
Table 2: Risk categories for matters reported to management
During 2020-21, we alerted 126 entities to control weaknesses that needed their attention. In total we reported 601 control weaknesses across the three risk categories as shown in Figure 1. This is a decrease compared to the figures from 2019-20 where we reported 704 control weakness of which 222 were significant, 399 moderate and 83 were minor findings.
Figure 2 shows the number of weaknesses in each risk category for the differing number of entities we audited during our first four years of local government auditing and the comparative proportion of weaknesses in each risk category. The chart shows that the number of control weaknesses across all ratings has decreased for 2020-21, noting that each year’s figures represent findings across an increasing population of audited entities during the transition period.
However, we found that 95 control weakness (15.8%) at 39 entities were unresolved from the prior year. This proportion compares with 2019-20 where 15% of issues were unresolved from the prior year. It is important that these issues are addressed promptly and requires entities to improve policies, practices and procedures to maintain or enhance the integrity of financial reporting.
The 601 control weakness identified in 2020-21 are presented in their different financial management control categories in Figure 3. This figure also shows that expenditure and financial management controls continue to represent the highest proportion of weaknesses across the financial control environment. However, it was pleasing to see that the control weaknesses relating to expenditure, financial management, and payroll and human resources have decreased for 2020-21. This is a positive trend. An increase in audit findings related to asset management suggests greater focus may also be required by entities on the controls around this aspect of financial management.
Following are examples of control weaknesses identified in the major categories of audit findings.
Expenditure
We reported that good procurement procedures, such as obtaining quotes and completing purchase orders to start the ordering process and accountability trail, were not routinely practiced. In summary:
- We found purchase order control weaknesses at 33 entities. Purchase orders were often raised after the goods had been supplied or after the supplier’s invoice had been received. The lack of adequate controls over purchase ordering increases the risk of inappropriate purchases or the entity being committed to pay for purchases made by officers who do not have authority or who have exceeded their delegated purchase limits.
- At 22 entities we continued to find instances where quotes were not obtained as required by the entities’ policy guidelines. There were also instances where evidence of quotes was not kept. This increases the risk of favouring specific suppliers and/or not obtaining value for money.
- At 15 entities we reported that changes were made to the supplier master file without appropriate evidence of authorisation or there was no independent review to confirm checking for related party interests, authorisation, completeness and accuracy. These review procedures are essential as technology has increased the risk of fraud.
- We identified credit card control weaknesses at 14 entities. These included instances such as:
- transactions not listed separately in the payments submitted to council each month
- certain staff allocated a credit card who had not signed a credit card holder agreement
- no evidence of independent review for staff credit card monthly expenditure
- receipts not available for certain credit card transactions.
- In some entities there was not adequate separation of tasks between ordering and receiving goods. Without this segregation, the entity needs other controls to ensure that all payments for goods are reviewed and authorised by an independent officer.
Financial management
The accounting procedures and practices of the financial management team should include appropriate controls for preparing the entity’s financial report and mandatory annual reporting requirements.
- At 27 entities we found that bank reconciliations were either not routinely prepared on a monthly basis or were not reviewed by a second officer. The bank reconciliation is a key control. If not performed regularly and independently reviewed, there is a risk of erroneous or unusual (including fraudulent) reconciling items not being detected and investigated in a timely manner.
- At 17 entities we found instances where journal entries were made without supporting documentation or were not reviewed by an independent officer. These can represent significant adjustments to previously approved accounting transactions. Unauthorised journals could result in errors in financial reports or fraud. They should therefore be clearly explained and subject to independent review.
- At 15 entities we found a lack of review of policies and procedures.
- At 11 entities we found that access to the financial management, payroll and human resources systems was not restricted to appropriate staff. In some instances, we considered more staff than necessary had passwords to access key systems. Access privileges need to be monitored on a regular basis by a senior staff member.
Payroll and human resources
Payroll and human resource management are essential elements of any employer’s business. During our interim and final audits of entities we reported:
- Across 20 entities we found some employees were not taking their annual and long service leave entitlements and therefore accumulating excessive leave balances. Entities should have a leave management plan to ensure suitable staff can undertake the roles of key staff while they are on leave and to continue to deliver the entity’s required services. Infrequent taking of leave and associated rotation of staff roles increase the likelihood of fraud remaining undetected.
- At 12 entities we found commencement and termination processes were not completed promptly to ensure timely and accurate processing and payment of staff. Evidence needs to be retained of all employment contracts, which should be signed by both parties on execution.
- At 12 entities we found monthly payroll reconciliations were not prepared in a timely manner and independently reviewed, increasing the risk of errors and/or potential fraud remaining undetected and misstated financial statements.
- At 11 entities we found instances where changes made to employee master files were either not supported by appropriate authorisation from the employee or not independently reviewed for accuracy and completeness. This is important to reduce the risk of payroll errors or fraud.
Asset management
We identified several weaknesses in the controls over assets. These included:
- a lack of evidence of review of fixed asset reconciliations at 14 entities
- asset management plans not completed or sufficiently updated at eight entities. This may impact the strategic planning process and is likely to result in misstatement of the asset renewal funding ratio in the financial report
- no asset stocktake policy or procedures in place at seven entities. The absence of a periodic asset stocktake means that discrepancies between the accounting and physical records will not be detected and corrected on a timely basis. This could result in failure to detect theft or loss and/or a misstatement of asset balances in the annual financial report
- a lack of comprehensive asset management procedures to manage non-current assets at six entities. Good policies and procedures provide essential guidance for staff to manage an entity’s assets in accordance with management’s expectations. Lack of formal and comprehensive policies and procedures that are readily available to staff increases the risk of mismanagement and recording of assets.
Other asset issues we found included:
- the entity not performing an assessment to determine the correct classification of vested improvements on vested land required to be separately classified as right-of-use assets
- asset revaluations not completed in a timely manner
- no documented inventory control policy and procedure for employees to follow to ensure that inventory is physically safeguarded and all movements are recorded accurately and completely in the accounting records
- incorrect application of the useful life of assets in depreciation calculations which could result in an over/understatement of the depreciation and hence of the carrying value of the assets in the financial statements.
Revenue
Good controls over revenue help to ensure that all monies due to the entity are accurately charged, collected and reported in the financial statements. During our interim and final audits, we reported:
- charges being raised prior to a completed review of the rates billing verification register
- fees were not correctly recorded in the financial system and customers were charged the incorrect fee
- no register of infringements issued by the entity
- interim rate notices had not been issued throughout the year by the entity
- rateable values reconciliation not completed
- a lack of a formal process to assess the revenue recognition criteria for new grant funding received
- revenue not recognised in accordance with AASB 15 or AASB 1058. As application of these standards may result in delayed income recognition, the entity’s revenue may be overstated for the 2020-21 financial year.
Recommendation
2. Local government entities should ensure they maintain the integrity of their financial control environment by:
- periodically reviewing and updating all financial, asset, human resources, governance, information systems and other management policies and procedures and communicating these to staff
- conducting ongoing reviews and improvement of internal control systems in response to regular risk assessments
- regularly monitoring compliance with relevant legislation
- promptly addressing control weaknesses brought to their attention by our audits, and other audit and review mechanisms
- maintain currency with new and revised accounting standards for their impact on financial operations in order to prepare a compliant financial report at year end.
Information system controls
In 2020-21, we reported 358 information system control weaknesses to 45 entities, with 10% (37) of these rated as significant and 71% (254) as moderate. Last year we reported 328 control weaknesses to 50 entities. As these weaknesses could significantly compromise the confidentiality, integrity and availability of information systems, entities should act promptly to resolve them.
Entities rely on information systems to prepare their financial statements and to deliver a wide range of services to their communities. It is important that entities implement appropriate controls to maintain reliable, secure and resilient information systems.
Audits of general computer controls help entities measure and improve the effectiveness and reliability of services and financial reporting. These audits are performed as an integral part of, and inform, our financial audit program
Our capability assessments at 12 of the 45 entities show that none met our expectations across all six control categories and 68% of the audit results were below our minimum benchmark. Information and cyber security remain significant risks again this year and need urgent attention. Compared to 2019-20, there have been some improvements in change control but very little progress in management of information technology (IT) risks, physical security and IT operations. Entities need to improve in all six control categories.
Of the weaknesses identified in 2020-21:
- 47% related to information security issues. These included system and network vulnerabilities, and unauthorised and inappropriate access
- 28% related to IT operations issues. In particular, there were issues in inadequate monitoring and logging of user activity, poor handling of information and lack of review of user access privileges
- 13% related to business continuity. For example, disaster recovery and business continuity plans were lacking or out-of-date
- 12% related to inappropriate IT risk management, poor environmental controls for the server room and a lack of change management controls.
The information provided above is included in our Information Systems Audit Report 2022 – Local Government Entities, tabled on 28 June 2022. Further details of the information systems audit work and case studies are included in that report.
Issues impacting entity reporting
Rehabilitation of landfill sites
Issue
Many entities have landfill sites which they manage. Depending on the size and scale of these sites, there are different requirements to rehabilitate them. Where entities have an obligation to remediate the landfill site, they should include the rehabilitation costs as a provision in their financial report. The absence of a rehabilitation plan and cost estimate does not remove the need to record a provision.
From the time it is evident that recognising a liability is required, to actually reporting one, a process of planning is needed, and this can take a while. In the meantime, readers should be alerted to the fact that a liability will be created by the entity showing a contingent liability in their financial reports. This is shown in the example below.
What we found
We’ve found that some entities are not including these provisions for rehabilitation and others that are, are accounting for them differently. There is a possible role for the DLGSC to provide guidance in this area to ensure entities are correctly accounting for rehabilitation provisions.
Example: City of Kalgoorlie-Boulder
The City has operated the Yarri Road Refuse Facility in east Kalgoorlie since 1993. The site operates under a Class II landfill license under Part V of the Environmental Protection Act 1986 which requires licensing.
The City has never previously recognised a provision for landfill rehabilitation. It has disclosed a contingent liability for at least the three previous annual financial reports to fully restore the site at the end of its useful life. The City was also undertaking work to establish the scope and estimate the cost of the restoration, which was unable to be reliably estimated in previous financial reports.
During the 2020-21 period, the City engaged a third-party expert to prepare a closure and post-closure management plan and provide a comprehensive estimation of the future costs for the site closure, capping, restoration and monitoring activities. The plan was finalised in March 2021 and a landfill rehabilitation provision of $28.8 million was recognised.
Recommendation
3. The Department of Local Government, Sport and Cultural Industries should provide guidance to assist entities with understanding the requirements of and interpreting the AASB accounting requirements to ensure greater accounting consistency across the sector, including recognising provisions for the rehabilitation of landfills and other contaminated sites.
Valuation of assets
Issue
As reported in previous years, we have concerns about inconsistencies in the valuation of property and infrastructure in the local government sector, including the variety of valuation methods used, especially for land assets with restricted use.
Valuation concerns arise from entities engaging different valuers who use different methods or interpret some principles of the Australian Accounting Standards differently. Consequently, entities can see significant valuation swings when they change their valuer, depending on which assumptions the valuer uses. Most entities revalued their restricted land assets in 2017 or 2018 in accordance with the FM Regulations. Their next three to five yearly valuations are due at the latest by 2022 or 2023.
As mentioned last year, the AASB and the International Public Sector Accounting Standards Board have projects underway relating to fair value of public assets. Our Office will work with other audit offices to prepare a submission to these fair value projects and with the DLGSC on the audit impacts of any changes.
Even though a formal valuation is not required to be undertaken every year, the requirement for such assets to be at fair value remains. Thus, each entity needs to do enough, at a minimum, to be able to conclude that the carrying value at the reporting period approximates its fair value. This would entail, amongst other things, condition assessments, assessing recent pricing movements in materials and labour, and other relevant material factors.
What we found
A few examples of entities experiencing some valuation issues were:
- City of Albany – the City has no formal process for assessing the valuation of infrastructure assets, land and buildings in financial years between the formal valuation assessments required by the FM Regulations. Without this, an asset may not be correctly recorded at fair value in accordance with AASB 116 and AASB 13. The City was notified of the finding during an interim audit and completed an assessment as part of its end of financial year procedures.
- City of Subiaco – the City’s investment property increased by $12.3 million (11%) compared to the prior year due to a revaluation to fair value at 30 June 2021 based on an independent valuation of $125 million, which resulted in a net gain of $29 million. The City also reported an increase to Revaluation Surplus of $35.8 million (28%) compared to the prior year.
- Town of Cottesloe – during 2020-21, an independent valuation of land and buildings resulted in a decrease in fair value of $20.5 million compared to the prior year. This related to an interest the Town has in the Wearne Hostel (refer below).
- Four entities hold an equal share in the Wearne Hostel site at 1 Gibney Street, Cottesloe but value it differently. We found one valuation almost double that of the other. The Towns of Claremont and Mosman Park have valued their respective interests separately without restrictions, while the Shire of Peppermint Grove and Town of Cottesloe have valued with restrictions (i.e. title showing zoning for use only as an aged care facility), resulting in a much lower valuation. We acknowledged the inconsistency in financial reporting for the same asset but accepted both valuations (restricted and unrestricted) as they are currently permissible under the relevant accounting standard and DLGSC financial reporting framework.
Developer contributions – Accounting for cash in lieu of public open space
Issue
When subdividing residential land in WA, a minimum of 10% of the gross subdivisible area must be given up free of cost by the landowner for public open space. The landowner can make a cash payment to an entity in lieu of all or part of the public open space contribution, which must be agreed by the entity and approved by the Western Australian Planning Commission.
Amendments to section 154 of the Planning and Development Act 2005 (PD Act) changed the accounting treatment for cash in lieu of public open space contributions received on or after 12 September 2020. Entities receiving any cash in lieu funds should now place them in a reserve account for each subdivision within the municipal account, in accordance with section 6.11 of the LG Act.
The account should clearly set out the purpose for which the money is held, the landholding from which it was obtained and the date on which it was paid to the entity. Section 154(3) of the PD Act also requires interest earned on any invested funds to be applied to the respective reserve account.
The DLGSC provided guidance to entities on the accounting treatment for cash in lieu received on or after 12 September 2020, from 10 April 2006 until 11 September 2020, and prior to 10 April 2006. One entity sought its own legal advice.
What we found
While some entities were not prepared, the majority of affected entities accounted for the funds appropriately and complied with revised legislative requirements.
Some entities had differing treatments, for example:
- We noted that money paid to the City of Albany in lieu of open space, post
12 September 2020 and amounting to $30,000, was not placed in a reserve account in accordance with section 6.11 of the LG Act. On being notified of the finding during the interim audit, the City rectified this as part of their annual procedures, had a newly created public open space reserve account endorsed by Council and correctly reported the received funds in the annual financial statements for the year ended 30 June 2021. - The City of Cockburn, on obtaining legal advice, chose to adopt a different accounting treatment than recommended by the DLGSC. It accounted for all cash in lieu of public open space in the municipal fund, rather than some in trust and some in the municipal fund.
- We found the accounting for cash in lieu by the City of Greater Geraldton is classified in accordance with the PD Act, with an exception that funds amounting to $378,000 should have been classified as trust rather than in reserves, as it was received between 10 April 2006 and 11 September 2020. We accepted this as reasonable and agreed with management on the classification of the funds.
Implementation of Service Concession Grantors Standard AASB 1059
Issue
Entities were required to apply a new standard, AASB 1059 Service Concession Arrangements: Grantors, for years beginning on or after 1 January 2020 (the 2020-21 reporting year). This standard is applicable to entities (grantors) that enter service concession arrangements with generally private sector operators.
It requires grantors to recognise a service concession asset and, where applicable, a service concession liability on the balance sheet. Alternatively, a service concession asset may result from the reclassification of an existing item of property, plant and equipment.
An arrangement within the scope of this standard typically involves an operator constructing the assets used to provide a public service or upgrading the assets (for example, by increasing their capacity) and operating and maintaining the assets for a specified period. Such arrangements are often referred to as public-private partnerships.
An example of a major service concession arrangement for WA local government is the Resource Recovery and Facility Agreement involving the Mindarie Regional Council, a regional entity, and its constituent member entities – the Cities of Perth, Stirling, Joondalup, Wanneroo and Vincent, and the Towns of Victoria Park and Cambridge.
Under this agreement the operator constructed and has the responsibility to manage the facility for the purpose of waste processing activities on behalf of the Mindarie Regional Council. The agreement was entered into for a 20-year term ending June 2030. On termination of the agreement, the Mindarie Regional Council would assume all rights and responsibilities in relation to the assets and liabilities of the Service Concession Arrangement.
What we found
For most entities there was no material impact to the financial statements in 2020-21.
Other changes to accounting standards
What we found
As we reported in November 20215, the reporting of revenue and income by not-for-profit entities under AASB 15 and AASB 1058, which were applied from 1 July 2019, has brought challenges in interpretation and implementation. It is expected that the AASB will propose further guidance and examples in 2022 that have the potential to change current accounting practice.
Impact of emergencies
COVID-19
We have continued to note the impact of COVID-19 responses on entities’ financial reporting processes and control environments. Part of our 2020-21 audits considered the impact faced by entities, given State and international border restrictions were in place during the financial year and in February, April and May 2021 the WA Government announced lockdowns and other restrictions in response to managing COVID-19 community transmission. Some of the impacts are summarised below.
Disruption of services and reduced revenue
Entities were faced with venue closures and restrictions for public and private gatherings resulting in event cancellations and reduced capacity. A few examples identified during our audits are listed below where entities experienced an impact to the community and disruption of services:
- City of Greater Geraldton – reported that Recreation and Culture income was down from $4.2 million in the prior year to $1.6 million in 2020-21 (62%). This decrease is mainly due to the recreation and culture sector being heavily impacted by COVID-19 restrictions including the stand down of theatre and events staff. The Queens Park Theatre was completely closed for the nine months to March 2021 with partial reopening from April to June 2021. All events and cultural projects at the City were either scaled back or not held due to State mandated restrictions.
- City of Melville –- the City reported a 10% decrease in rates revenue for 2020-21 compared to the prior year. Rates concessions (approved by the Council in April 2020) applied in the 2020-21 budget under the COVID-19 Stimulus package amounted to approximately $10 million. The City also reported a 56% decrease in interest earnings from $4.4 million in the prior year to $1.9 million in 2020-21. As part of section 6.45 of the LG Act modified under the Local Government (COVID-19 Response) Order 2020 to cushion ratepayers from the adverse economic effects of COVID-19, the City reduced interest rates to 2% on:
- unpaid rates subject to an instalment program (previously 4%)
- all unpaid rates and services (previously 8%)
- unpaid underground power and streetscape charges (previously 4%).
This also led to a decrease in rates receivable balances at year end.
- The City of Rockingham – committed to a rate freeze for 2020-21 due to the COVID-19 pandemic. In addition, the City provided a concession totalling $846,773. The concession was to ensure that residential properties were not charged more rates than they would have paid in 2019-20 due to the statutory Gross Rental Value revaluation the City was required to apply. The City also reduced interest rate charges on unpaid rates and other service charges and therefore reported a $2.2 million (67%) decrease in interest earnings compared to the prior year. Payments by residents however have continued to be repaid in 2021 with a resulting effect of lower receivable balances compared to the prior year.
- City of Stirling – as part of the City’s COVID-19 response in 2020-21, the Council committed to a one-off concession to ensure no ratepayer was asked to pay more than the previous year. The City also introduced rates smoothing in addition to its one, two and four instalment options. In accordance with the Local Government (COVID-19 Response) Order 2020, the City did not charge
- interest where an owner selected to pay rates and service charges through an instalment option
- overdue interest to ratepayers with overdue rates and service charges.
- Shire of Harvey – reported a reduction in interest earnings from $1.3 million in the prior year to $395,000 in 2020-21 (69%) mostly due to the decrease in interest rates paired with a decrease in interest earnings from rates revenue due to rate relief from COVID-19.
- Shire of Ngaanyatjarraku – statutory environmental health functions such as food inspections were delayed as they were not deemed to be an essential service by the WA Police Force and G2G passes were not approved for the visiting environmental health officer. Indoor sport and recreation activities were cancelled and program changes were made to enable limited activities to provide food and essential services in compliance with COVID-19 directions.
Entities’ expenses for directly managing the impact of COVID-19
Differentiating between COVID-19 specific expenditure and normal expenditure was difficult as entities generally did not separately account for these expenses. In general, entities did not report incurring any significant expenditure as potential extra expenses were offset by savings elsewhere. Some interesting examples are noted below:
- Shire of Broome – the Shire’s current three year COVID-19 recovery plan focuses on significant infrastructure projects. The State and Commonwealth Governments have co-invested in most of these projects. The intent of the projects is to reinvigorate the region and stimulate the local economy (e.g. jobs and tourism) which will assist in COVID-19 recovery.
- Shire of Denmark – the Shire experienced challenges in securing contractors and equipment from interstate and intrastate due to COVID-19 restrictions. Cost of contractors, materials and supplies has risen on average 20% over the past 12 months. Due to significant increases in available State and Commonwealth funding, it is increasingly difficult to secure available contractors to complete works within funding condition timeframes. The impact of COVID-19 has fast-tracked the Shire to implement more services and application processes online for the community to access.
- Shire of Dowerin – while the financial impact of COVID-19 on the Shire was minimal throughout 2020-21, additional resources were allocated including:
- staff resources to keep up-to-date with relevant information and mandates
- preparing and implementing the Shire’s COVID-19 plan and working-from-home processes
- increased community communication and engagement
- additional cleaning.
The Shire had also experienced delays in completion of road construction and building projects due to contractors not being available and an increased cost of materials, freight and contractors.
- Shire of Gnowangerup – the main impact for the Shire includes significantly reduced availability of contractors, particularly building-related trades, and reduced availability of vehicles. This has impacted the Shire’s ability to complete projects within timeframes and budgets. Some capital expenditure items in the current year budget will carry over to the new financial year as a result.
Stimulus or initiatives administered by entities
Below are some examples where entities played a role in distributing funds and providing relief to their communities in 2020-21:
- City of Gosnells – the City reported $1.4 million in COVID-19 concessions for ratepayers and relief for lessees.
- City of Greater Geraldton – the City offered rent relief to some tenants who were badly affected by the pandemic. The rent relief was in line with the Commercial Tenancies (COVID-19 Response) Act 2020 and was available to tenants that had experienced a reduction of revenue of at least 30% over the previous year. The relief was in two parts: a portion of the rent was to be waived and another portion was to be deferred.
- City of Kalamunda – a COVID-19 Crisis Relief Fund reserve was established by the City at the beginning of the financial year of $1 million to provide innovation grants of up to $5,000 and $1,000 rate relief to each eligible ratepayer. However, only $216,000 was paid out during the year to 30 June 2021. The balance of the fund was returned to the City’s bank account and the Crisis Relief Fund reserve was closed with the Council’s approval. The City also offered a total of $22,000 in rates exemptions under its COVID-19 financial hardship policy for the year ended 30 June 2021.
- City of Karratha – the City received a one-off contribution of $1 million from Rio Tinto for COVID-19 recovery which was used to support the City’s business and community funding packages. This included Try Local Vouchers, sporting group grants, tourism operator incentives, health fee waivers, business grants and Meet the Street funding. In addition, the City provided a number of other COVID-19 business and community support initiatives such as a freeze on rate and fee increases, deferral of rate collection, financial hardship support and lease fee relief.
- City of Subiaco – in response to the pandemic, the City resolved through its annual budget 2020-21 to provide a one-off contribution of $2 million against total rates levied. This contribution was funded through a transfer from the Capital Investment Reserve. The $2 million contribution to rates was applied proportionately to the number of rates levied per property, including properties paying minimum rates.
- Shire of Dalwallinu – the Shire adopted a financial hardship policy during 2019-20 to assist the community members who may have been affected by the COVID-19 pandemic. This policy was amended during 2020-21 to also include other unexpected items that may result in payment difficulties.
- Shire of Dandaragan – the Shire implemented a range of measures to respond to the challenges of COVID-19 including removing or heavily discounting interest charges on rates and debts, deferring community group loans and providing $5,000 cash grants to community groups to enhance their facilities. A significant increase in infrastructure investment was undertaken targeting civil works that could employ the local workforce, in particular deckhands, who were impacted by disruption to the crayfishing industry. A COVID-19 community building program was established to support those at high risk including seniors, people with a disability or underlying health issue, people from culturally and linguistically diverse backgrounds, and indigenous people. The Shire also developed a COVID-19 webpage providing information and tools for its community such as the COVID-Readiness Household Plan.
Future potential effect of COVID-19
As responses to COVID-19 continue to impact well beyond this reporting period and constrain the functions and responsibilities of entity operations, the risk increases that other critical areas may not receive the focus or priority they deserve. We encourage staff and management to be mindful of gaps where more visible financial and operational controls may cease to operate effectively, including in altered work arrangements such as staff working from home.
Cyclone Seroja
On 11 April 2021, Cyclone Seroja intensified into a category 3 tropical cyclone and crossed the WA coast just south of Kalbarri. Impacts to Kalbarri and the nearby town of Northampton were severe, with many locations recording maximum wind gusts more than 170 km/h. Many buildings and roads sustained significant structural damage or were destroyed. An emergency situation was declared at 3.50 pm on 11 April for 45 local government areas. Services were disrupted, facilities were closed and significant damage occurred to critical infrastructure. Secondary impacts included loss of power and communications for an extended period, and a primary focus for affected communities on repair and recovery.
Examples of the financial implications arising from this emergency event in the region are as follows:
- Shire of Mingenew – at its May 2021 Ordinary Council Meeting, Council voted unanimously to waive a range of building and planning application fees to assist those impacted to rebuild, and waived some planning requirements for temporary buildings at its August 2021 Ordinary Meeting.
- Shire of Northampton – cyclone damage led to a write-down of Property, Plant and Equipment of $1.1 million and Infrastructure of $178,000 for the 2020-21 financial year. Additional funding of $500,000 was received from the Local Government Insurance Scheme for operational repairs, and materials and contracts costs increased by $1 million from $2.3 million in the prior year to $3.3 million in 2020-21 due to additional work required to restore the Shire’s townsites.
- Shire of Chapman Valley – damages to the Shire’s assets were not extensive. However, the cyclone impacted staff resources due to time taken away from core business to attend to local recovery initiatives. During the financial year the Shire restored some properties and certain work had to be carried forward to financial year 2021-22.
- City of Greater Geraldton arranged additional resources immediately following the cyclone to aid clean-up efforts. The City also spent more than $500,000 on clearing vegetation and concentrated on rural road maintenance and removing and mulching fallen vegetation.
- Shire of Morawa experienced 202 requests for emergency welfare assistance, with
104 homes damaged and 23 primary producer properties impacted. The council spent $141,962 in the immediate response to the cyclone with the majority being for the clearing of roads, removing fallen trees and town clean-up.
Opportunities for the DLGSC to improve the efficiency of financial reporting
Our audits have once again highlighted the need for the DLGSC to provide centralised professional support to assist entities to fulfil their financial reporting requirements. We have previously raised the need for the DLGSC to provide professional advice on preparing for changes in accounting standards and legislation. This would be both financially beneficial and time efficient for all entities. This section includes updated information on the steps the DLGSC is taking to enhance financial reporting, reduce complexity and costs, and enable improved governance. It is important to note that while some of these issues may relate to all entities, others may only be applicable to some.
Quality and timeliness
In 2019-20, and in prior reports, we reported that many entities would benefit from centralised support from the DLGSC similar to that provided to State government entities by the Department of Treasury through the Treasurer’s Instructions. This would help to improve the overall quality of the sector’s financial reports and also reduce the reporting burden on smaller entities. We identified the need for actions such as:
- decluttering entities’ financial reports
- implementing tiered reporting for entities that differ in the size or complexity of their operations
- providing a model financial report with current sample notes
- providing technical and accounting standards support to entities through a help desk.
Further, we suggested the DLGSC’s support should pursue timely regulation amendments and provide suitable guidance to assist entities to update their accounting practices. This would help ensure that their future reporting is compliant with all current accounting standards and improve the financial report framework.
While our Office produced the Western Australian Public Sector Financial Statements – Better Practice Guide to assist entities to implement better practices for more efficient and timely financial reporting, centralised assistance offered by the DLGSC will achieve consistency, improve financial reporting standards and could offer practical accounting assistance.
Response from the DLGSC
DLGSC has made significant progress towards addressing the recommendations via its local government model financial statements project which commenced in September 2021. DLGSC expects to fully address all recommendations by the end of financial year 2022-23. This has been largely driven by DLGSC’s commitment to deliver efficiencies and better financial reporting outcomes for the local government sector. As a result, DLGSC has met and is on track to meet several critical milestones, including:
- delivery of the first tranche of decluttered financial reports for 2021-22 by 1 July 2022. The required amendments to the FM Regulations and LG Audit Regulations were gazetted on 17 June 2022
- delivery of a further second tranche of decluttered financial reports for 2022-23 by 28 April 2023
- implementing reduced financial reporting for smaller entities for the financial year 2022-23, onwards
- providing model financial statements templates with guidelines for the financial year 2022-23, onwards
- providing technical and accounting standards support from June 2022 via a dedicated email support line.
Review of financial ratios
We are required by Regulation 10(3)(a) of the LG Audit Regulations to report ‘any material matters that in the opinion of the auditor indicate significant adverse trends in the financial position or the financial management practices of the local government’.
It has been our view since becoming the auditor for the sector that the annual financial report audit does not provide the opportunity for a thorough assessment of any adverse trends that may be apparent from the ratios. We have also previously supported the need for the DLGSC to develop more thorough and balanced performance assessment criteria to replace the existing reporting and audit of seven financial ratios and any adverse trends in these ratios.
In 2019-20, we also reported that the Western Australian Local Government Association (WALGA) had recommended changes to the ratios in its Local Government Financial Ratios Report provided to the WALGA State Council Meeting on 5 May 2021. The report included recommendations for prescribed ratios and other financial reporting related matters. Along with ratio changes, the group also recommended the DLGSC prepare a model set of financial statements and annual budget statements in consultation with the local government sector.
Response from the DLGSC
The DLGSC has taken on board the OAG’s views and recognised the contributions of key stakeholders in respect of the financial ratios and their intended purpose and outcomes. The DLGSC’s approach to financial reporting of ratios has been largely underpinned by the OAG recommendations and the need to bring local government financial reporting in line with better practice frameworks.
While the DLGSC has taken action to remove the reporting of financial ratios from the 2021-22 annual financial report, and the audit reporting of significant adverse trends and attestation of ratios, it is still committed to ensuring reliable information on local government financial and sustainability measures is available.
The DLGSC is undertaking a comprehensive review of the current financial health indicator, taking into consideration WALGA’s Financial Ratios Working Group recommendations. The review will assess the appropriateness of the current financial ratios and recommend a set of financial and sustainability measures that are evidence based and fit for purpose. This will then inform the information reported via the MyCouncil website.
The Western Australian Treasury Corporation (WATC) was engaged in late March 2022 to undertake a review of the financial health indicator to identify the most appropriate ratios to underpin it. A stakeholder group consisting of WATC, the DLGSC, WALGA, LG Professionals WA and a local government finance consultant has been established to help inform the review. Targeted stakeholder engagement is to be undertaken in due course for input and feedback on the proposed ratios and methods used to underpin the new financial health indicator.
The scope prepared for WATC requests that a report and new financial health indicator product is provided to the DLGSC by 31 August 2022. The DLGSC will then review the outcomes of the report before implementing the changes for the MyCouncil website in 2023.
Reduced disclosure reporting by entities
The quantity of information that is reported in the annual financial reports of entities is onerous and exceeds that reported by most State government entities. Entities also include several disclosures that are not common practice in other Australian states. This contributes to the time and cost to prepare and audit annual financial reports.
In 2019-20, we reported that opportunities still exist to introduce a tiered reporting structure and reduce the amount of detail in entity financial reports without impacting the usefulness and completeness for users. While the FM Regulations do not provide entities as much opportunity to reduce financial report disclosures as State government entities, we continue to encourage efforts to streamline financial framework obligations, particularly for small and medium sized entities, wherever it does not impair accountability and transparency.
Response from the DLGSC
The DLGSC fully recognises the need for tiered reporting based on complexity and size of entities, while still meeting the needs of the users of financial reports. The DLGSC has developed model financial statement templates based on Salaries and Allowances Tribunal banding.
The model financial statement template for Band 1 and 2 entities significantly reduces the existing level of disclosures required to be audited. Our recommendations to the Parliamentary Select Committee into Local Government have largely guided the DLGSC in the removal of the disclosures.
The Band 3 and 4 entity model financial statement template is also streamlined and removes further disclosures without compromising the accountability and transparency of financial reporting. The DLGSC has been working closely with the OAG to ensure critical information and compliance with Accounting Standards is retained. After sector consultation, it was agreed that the model financial statements for both Band 1 and 2, and Band 3 and 4 should be introduced from the 2022-23 financial year onwards.
Local Government Regulations Amendment (Financial Management and Audit) Regulations 2022
The first component of regulatory amendments to enable the model financial statements, the Local Government Regulations Amendment (Financial Management and Audit) Regulations 2022, were gazetted on 17 June 2022.
Key changes which are welcomed by our Office include the removal of the requirement for an annual financial report by an entity to include:
- financial ratios
- an auditor’s opinion on financial ratios, significant adverse trends and matters of non-compliance.
The changes made to the FM Regulations will reduce local government reporting requirements and the scope of audit reports and come into effect from 1 July 2022. As some 2021-21 audits are still in train, transitional provisions apply to financial reports in relation to 30 June 2021 whose audits are yet to be finalised.
Recommendation
4. The Department of Local Government, Sport and Cultural Industries should continue to work with local government stakeholders towards the introduction of model financial statements for the 2022-23 financial year.
Appendix 1: Status and timeliness of 2020-21 audits
We completed 132 of the 148 audits for 2020-21 by 30 June 2022. All entities are listed in alphabetical order below, as well as the type of audit opinion they received, when they received it and the timeliness of providing their financial statement to us for audit.
Timeliness of financial statements does not indicate quality. Roughly half of the entities’ financial statements submitted to us for audit were not of a reasonable standard and required revisions or adjustments due to errors or disclosure requirements not being met. In some cases more than a dozen versions of financial statements were submitted to our audit teams, with changes or availability of staff or information also impacting timelines. More information on issues around quality and timeliness is provided on pages 14 and 15.
Appendix 2: 2019-20 disclaimers of opinion
Entity and opinion | Opinion issued |
---|---|
Shire of Wiluna – Disclaimer of opinion It has not been possible to obtain sufficient appropriate audit evidence on the books and records of the Shire. This lack of evidence arises from numerous significant deficiencies in the internal controls implemented by the Shire and, in some cases, the necessary records not being adequately maintained. As a result of this matter, we are unable to determine if any adjustments might have been found necessary to the elements making up the Statement of Financial Position as at 30 June 2020, Statement of Comprehensive Income by Nature or Type, Statement of Comprehensive Income by Program, Statement of Changes in Equity, Statement of Cash Flows and Rate Setting Statement for the year then ended and related notes and disclosures. A qualified opinion was also issued for the year ended 30 June 2019 on the completeness of bank accounts for that year because we were unable to obtain a bank confirmation from a financial institution where at least one account was held for that year. | 22/12/2021 |
Shire of Yalgoo – Disclaimer of opinion We were unable to obtain sufficient appropriate audit evidence on the books and records of the Shire. This lack of evidence arises from numerous significant deficiencies in the internal controls implemented by the Shire and in some cases the necessary records not being maintained. As a result of this matter, we are unable to determine if any adjustments might have been found necessary to the elements making up the Statement of Financial Position as at 30 June 2020, the Statement of Comprehensive Income by Nature or Type, Statement of Comprehensive Income by Program, Statement of Changes in Equity, Statement of Cash Flows and Rate Setting Statement for the year then ended, related notes and disclosures and the Statement by the Chief Executive Officer. | 3/03/2022 |
Appendix 3: 2020-21 qualified opinions
Entity and opinion | Opinion issued |
---|---|
Shire of Goomalling – Qualified opinion The Shire of Goomalling was issued a qualified opinion as the Shire’s infrastructure assets were last valued in June 2015 for roads, drainage and footpaths and June 2016 for sewerage and other infrastructure. Because these infrastructure assets have not been revalued with sufficient regularity or in accordance with Regulation 17A(4)(b) of the FM Regulations, we were unable to determine if infrastructure assets reported in Note 9 of the annual financial report at $43,394,718 and $38,841,166 at 30 June 2021 and 30 June 2020 respectively are stated at fair value in the Statement of Financial Position. Additionally, we were unable to determine where there may be any consequential impact on the related balances, amounts and disclosures of depreciation on non-current assets, revaluation surplus in the Statement of Financial Position and Statement of Comprehensive Income and Note 19 Total Assets Classified by Function and Activity, or if any adjustments to these amounts are necessary. We also issued a qualified opinion for the year ended 30 June 2020 in relation to this matter. | 22/12/2021 |
Shire of Sandstone – Qualified opinion The Shire of Sandstone was issued a qualified opinion as the Shire’s roads and footpaths infrastructure, reported at values as at 30 June 2021 of $37,755,629 (2020: $36,803,492) and $71,845 (2020: $75,711) respectively in Note 9 of the annual financial report, were last valued in June 2014. Because the assets have not been revalued with sufficient regularity or in accordance with Regulation 17A(4)(b) of the FM Regulations, we were unable to determine if infrastructure as at 30 June 2021 of $39,718,887 (2020: $38,820,445) in the Statement of Financial Position is fairly stated. Additionally, we were unable to determine if any adjustments are necessary to the related balances and disclosures of revaluation surplus in the Statement of Financial Position and Statement of Changes in Equity and Note 11, Other Comprehensive Income in the Statement of Comprehensive Income and Note 17 Total Assets Classified by Function and Activity, as it was impracticable to do so. We also issued a qualified opinion for the year ended 30 June 2020 in relation to this matter. | 31/05/2022 |
Appendix 4: Emphasis of matter paragraphs included in auditor’s reports
The following list describes the matters that we highlighted through EoM paragraphs in 2021 audit reports:
Entity | Description of emphasis of matter paragraphs |
---|---|
City of Bunbury | Recording of joint venture – The City’s opinion draws attention to Note 25 to the financial statements which states that the City’s equity share in the Investment in Associate is still being negotiated and therefore cannot be reliably estimated at this time. Consequently, the investment is not currently reflected in the financial statements. The opinion is not modified in respect of this matter. |
City of Busselton | Restatement of comparative balances – Our EoM draws attention to the City’s Note 33 to the financial statements which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
City of Joondalup | Associate entity restatement and guarantee payment – Note 23 of the financial report (a) discloses the 2020 financial impact of the initial application of accounting standards AASB 1059 from the associate entity and (b) discloses a guarantee payment made by the City subsequent to the reporting date. The opinion is not modified in respect of this matter. |
City of Kalgoorlie-Boulder | Restatement of comparative balances – The opinion draws attention to Note 34 to the financial report which states that the amounts reported in the previously issues 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
City of Perth | Associate entity restatement and guarantee payment – Note 32 of the financial report which (a) discloses the 2020 financial impact of the initial application of accounting standards AASB 1059 from the associated entity and (b) discloses a guarantee payment made by the City subsequent to reporting date. The opinion is not modified in respect of this matter. |
City of Stirling | Associate entity restatement and guarantee payment – The City’s opinion draws attention to Note 26 of the financial report which (a) discloses the 2020 financial impact of the initial application of accounting standards AASB 1059 from the associate entity and (b) discloses a guarantee payment made by the City subsequent to reporting date. The opinion is not modified in respect of this matter. |
City of Vincent | Events occurring after the end of the reporting period – The City’s opinion included an EoM drawing attention to Note 30 of the financial report, which discloses a payment made by the City subsequent to the reporting period. The opinion is not modified in respect of this matter. Restatement of comparative balances – The City’s Opinion also includes an EoM drawing attention to Note 32 of the financial report which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
City of Wanneroo | Associate entity restatement and guarantee payment – The City’s opinion draws attention to Note 38 of the annual financial report, which discloses (a) the 2020 financial impact of the initial application of accounting standard AASB 1059 from the associate and (b) a guarantee payment made by the City subsequent to reporting date. The opinion is not modified in respect of this matter. |
Mindarie Regional Council | Contingent liability – The Council’s opinion included an EoM drawing attention to Note 34 which disclosed a contingent liability relating to the Tamala Park Waste Management Facility site. The opinion is not modified in respect of this matter. |
Pilbara Regional Council | Basis of accounting – The Council’s opinion draws attention to Note 1(a) of the annual financial report, which discloses that the Council has decided to wind up. Consequently, the annual financial report has been prepared on a liquidation basis. The opinion is not modified in respect of this matter. |
Rivers Regional Council | Basis of accounting – The Council’s opinion draws attention to Note 1(a) of the annual financial report, which discloses that the Council has decided to wind up after ministerial approval is received for the formation of a regional subsidiary. Consequently, the annual financial report has been prepared on a liquidation basis. The opinion is not modified in respect of this matter. |
Shire of Carnamah | Restatement of comparative balances – The Shire’s opinion draws attention to Note 24 (correction of error) and subsequently Note 27 (financial ratios) to the financial report which states that the amounts reported in the previously issued 30 June 2020 (including comparative figures) financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of Christmas Island | Restatement of comparative balances – The Shire’s opinion draws attention to Note 29 of the financial statements which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of Cocos (Keeling) Islands | Restatement of comparative balances – The Shire’s opinion draws attention to Note 25 of the financial report which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of Coorow | Restatement of comparative figures – The Shire’s opinion draws attention to Note 31 to the financial statements which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of East Pilbara | Restatement of comparative figures – The Shire’s opinion draws attention to Note 29 of the financial report which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of Gingin | Restatement of comparative figures – The EoM paragraph draws attention to Note 30 to the financial statements which states that the amounts reported in the previously issued 30 June 2020 annual financial report have been restated and disclosed as comparatives in this annual financial report. The opinion is not modified in respect of this matter. |
Shire of Halls Creek | Restatement of comparative balances – The Shire’s opinion draws attention to Note 26 to the financial statements which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of Harvey | Recording of joint venture – The EoM paragraph draws attention to Note 26 to the financial statements which states that the Shire’s equity share in the Investment in Associate is still being negotiated and therefore cannot be reliably estimated at this point of time. Consequently, the investment is not currently reflected in the financial statements. The opinion is not modified in respect of this matter. |
Shire of Meekatharra | Basis of accounting – The EoM paragraph draws attention to Note 1 to the financial report, which describes the basis for accounting. The financial report has been prepared for the purpose of fulfilling the Shire’s financial reporting responsibilities under the Act. Regulation 17A of the FM Regulations requires a local government to measure vested improvements at fair value and the associated vested land at zero cost. This is a departure from AASB 16 Leases which would have required the entity to measure the vested improvements also at zero cost. The opinion is not modified in respect of this matter. |
Shire of Mingenew | Basis of accounting – The Shire’s opinion included an EoM drawing attention to Note 28 of the financial statements which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Shire of Plantagenet | Restatement of comparative balances – The Shire’s opinion draws attention to Note 29 to the financial statements which states that the amounts reported in the previously issued 30 June 2020 financial report have been restated and disclosed as comparatives in this financial report. The opinion is not modified in respect of this matter. |
Tamala Park Regional Council | Basis of accounting – The Council’s opinion draws attention to Notes 1 and 10 to the financial report, which describes the basis for accounting. The financial report has been prepared for the purpose of fulfilling the Council’s financial reporting responsibilities under the Act. Regulation 17A of the FM Regulations requires a local government to measure vested improvements at fair value and the associated vested land at zero cost. This is a departure from AASB 16 Leases which would have required the entity to measure the vested improvements also at zero cost. The opinion is not modified in respect of this matter. |
Town of Victoria Park | Basis of accounting – The Town’s opinion draws attention to Note 36 of the annual financial report, which (a) discloses the 2020 financial impact of the initial application of accounting standards AASB 1059 from the associate entity and (b) discloses a guarantee payment made by the Town subsequent to reporting date. The opinion is not modified in respect of these matters. |
Appendix 5: Material matters of non-compliance with legislation
Issue | Finding |
---|---|
Financial ratios not reported | Twenty-eight entities did not report the Asset Renewal Funding Ratio, mostly for the three years, 2020, 2019 and 2018, in their annual financial report as required by FM Regulation 50(1)(c). Reasons for non-reporting included:
|
Quotes not obtained or no evidence retained |
At 22 entities there was inadequate or no evidence that enough quotations were obtained to test the market and no documentation to explain why other quotes were not sought. This practice increases the likelihood of not receiving value for money in procurement and/or favouritism of suppliers. |
Controls over accounting journal entries |
At 13 entities we found that accounting journal entries were often posted to the financial ledger with no evidence of independent review and approval by another person. Accounting journals can represent significant adjustments to previously approved accounting transactions and could result in, for example, one type of expenditure being re-coded to another type of expenditure. If not closely controlled, unauthorised journals could result in errors in financial reports or fraud. Journals should therefore be subject to independent review. |
Financial management review not completed |
At 13 entities the Financial Management Review was not completed every three years as required by Regulation 5(2)(c) of the FM Regulations. This regulation requires the CEO to undertake reviews of the appropriateness and effectiveness of the financial management systems and procedures of the local government regularly (and not less than once in every three financial years) and report those reviews to the local government. |
Masterfile changes and access |
At 12 entities changes made to the supplier master files were not independently reviewed and approved by a staff member. This increases the risk of unauthorised changes to key information and may make fraud or error more difficult to detect. |
Bank reconciliation process incomplete |
At 12 entities bank reconciliation processes of their municipal, reserve and/or trust account were not prepared, had long outstanding unreconciled items and/or there was no independent review by management. |
Procurement without purchase orders |
At seven entities purchase orders were not prepared or were prepared after the suppliers’ invoices were received. |
No fixed asset reconciliation |
At seven entities monthly reconciliations of fixed assets were not completed for the majority of the financial year. This increased the risk of misstatements, fraud and errors not being detected in a timely manner. |
Payroll and human resources findings |
Several findings of payroll and employment non-compliance were also reported at seven entities. Some examples include:
|
Procurement without appropriate segregation of duties |
At five entities we identified the same officer requisitioned, approved and raised the purchase order then also approved the associated invoice payment for a significant proportion of sampled purchase transactions. |
Review not performed of risk management, internal control and legislative compliance |
At four entities a review of systems and procedures in relation to risk management, internal control and legislative compliance was not completed at least once every three years as required by LG Audit Regulation 17. |
Depreciation | Three entities did not have adequate controls to determine if depreciation was being correctly calculated and recorded for certain infrastructure assets. This increased the risk of expenses being understated and assets being overstated. |
Accessed monies in reserve to fund operations | At one entity, a review of the cash and cash equivalents account revealed that the entity has accessed monies in reserve accounts to fund its operations. This is a breach of section 6.11(2)(a) of the LG Act, which requires the entity to give one month’s local public notice if the money in a reserve account is proposed to be used for another purpose. |
Procurement without tender |
At one entity, we identified no public tenders were invited for a contract with the value above $250,000 as required by section 11(1) of the Local Government (Functions and General) Regulations 1996. This increases the likelihood of not receiving value for money in procurement, and/or favouritism of suppliers. |
Records not presented to Council meetings as required by FM Regulations |
At one entity the statements of financial activity for the months of October and December 2020 were not prepared and presented to Council as required by section 6.4 of the LG Act and Regulation 34(1) of the FM Regulations. |
Other procurement and miscellaneous findings |
We reported other instances of non-compliance with procurement policies and procedures such as:
|
General computer control findings |
In depth findings of our information system audits at a selection of 45 entities are detailed in our Information Systems Audit Report 2022 – Local Government Entities, Report 22, tabled on 28 June 2022. In 2020-21, we reported 358 control weaknesses to 45 entities. Ten percent (37) of these rated as significant and 71% (254) as moderate. As these weaknesses could significantly compromise the confidentiality, integrity and availability of information systems, the entities should act promptly to resolve them. |
Source: OAG
Appendix 6: Certifications issued
In addition to annual auditor’s reports, some entities needed to acquit moneys received from other sources under grant agreements or other legislation. We issued the following 275 certifications on statements of income and expenditure of entities, to help them discharge their financial reporting obligations, some being for Commonwealth grants.
Entity | Date certification issued | |
---|---|---|
Roads to Recovery Funding under the National Land Transport Act 2014 | Local Roads and Community Infrastructure Program | |
City of Albany | 28/10/2021 | 29/10/2021 |
City of Armadale | 16/11/2021 | 16/11/2021 |
City of Bayswater | 29/10/2021 | In progress |
City of Belmont | 26/10/2021 | 26/10/2021 |
City of Bunbury | 29/10/2021 | 29/10/2021 |
City of Busselton | 25/10/2021 | 26/10/2021 |
City of Canning | 28/10/2021 | 28/10/2021 |
City of Cockburn | 28/10/2021 | 29/10/2021 |
City of Fremantle | 27/10/2021 | In progress |
City of Gosnells | 29/10/2021 | 29/10/2021 |
City of Greater Geraldton | 28/10/2021 | 28/10/2021 |
City of Joondalup | 25/10/2021 | 26/10/2021 |
City of Kalamunda | 26/10/2021 | 29/10/2021 |
City of Kalgoorlie-Boulder | 21/03/2022 | 23/02/2022 |
City of Karratha | 27/10/2021 | 27/10/2021 |
City of Kwinana | 28/10/2021 | 29/10/2021 |
City of Mandurah | 5/11/2021 | 5/11/2021 |
City of Melville | 19/11/2021 | 19/11/2021 |
City of Nedlands | 29/10/2021 | In progress |
City of Perth | 26/10/2021 | 29/10/2021 |
City of Rockingham | 29/10/2021 | 29/10/2021 |
City of South Perth | 29/10/2021 | 1/11/2021 |
City of Subiaco | 29/10/2021 | 29/10/2021 |
City of Stirling | 8/10/2021 | 18/01/2021 |
City of Swan | 29/10/2021 | 29/10/2021 |
City of Vincent | 29/10/2021 | 28/10/2021 |
City of Wanneroo | 28/10/2021 | 29/10/2021 |
Shire of Ashburton | 7/12/2021 | 13/12/2021 |
Shire of Augusta-Margaret River | 28/10/2021 | 18/11/2021 |
Shire of Beverley | 28/10/2021 | 18/11/2021 |
Shire of Boddington | 2/02/2022 | 2/02/2022 |
Shire of Boyup Brook | 29/10/2021 | In progress |
Shire of Bridgetown-Greenbushes | 5/11/2021 | 22/11/2021 |
Shire of Brookton | 5/11/2021 | 31/01/2022 |
Shire of Broome | 26/10/2021 | 26/10/2021 |
Shire of Broomehill-Tambellup | In progress | In progress |
Shire of Bruce Rock | 27/10/2021 | 27/10/2021 |
Shire of Capel | 8/12/2021 | 8/12/2021 |
Shire of Carnamah | 29/10/2021 | 29/10/2021 |
Shire of Carnarvon | 12/11/2021 | 16/11/2021 |
Shire of Chapman Valley | 25/10/2021 | 28/10/2021 |
Shire of Chittering | 26/05/2022 | 29/04/2022 |
Shire of Christmas Island | 28/10/2021 | 18/11/2021 |
Shire of Cocos (Keeling Islands) | 1/12/2021 | 7/12/2021 |
Shire of Collie | 16/11/2021 | 18/11/2021 |
Shire of Coolgardie | 14/12/2021 | 8/02/2022 |
Shire of Coorow | 1/12/2021 | 16/11/2021 |
Shire of Corrigin | 27/10/2021 | 27/10/2021 |
Shire of Cranbrook | 26/10/2021 | 30/09/2021 |
Shire of Cuballing | 28/10/2021 | 4/11/2021 |
Shire of Cue | 11/11/2021 | 17/12/2021 |
Shire of Cunderdin | 2/05/2022 | 2/03/2022 |
Shire of Dalwallinu | 28/10/2021 | 8/03/2022 |
Shire of Dandaragan | 29/10/2021 | 29/10/2021 |
Shire of Dardanup | 27/04/2022 | 27/04/2022 |
Shire of Denmark | 28/10/2021 | 29/10/2021 |
Shire of Derby-West Kimberley | 30/03/2022 | 17/06/2022 |
Shire of Donnybrook-Balingup | 9/11/2021 | 15/12/2021 |
Shire of Dowerin | 11/11/2021 | 15/12/2021 |
Shire of Dumbleyung | 26/10/2021 | 28/10/2021 |
Shire of Dundas | 3/12/2021 | 6/05/2022 |
Shire of East Pilbara | 3/05/2022 | In progress |
Shire of Esperance | 23/03/2022 | 23/03/2022 |
Shire of Exmouth | 25/10/2021 | 28/10/2021 |
Shire of Gingin | 31/10/2021 | 22/11/2021 |
Shire of Gnowangerup | 29/10/2021 | 29/10/2021 |
Shire of Goomalling | 29/10/2021 | 22/04/2022 |
Shire of Halls Creek | 19/11/2021 | 29/10/2021 |
Shire of Harvey | 1/11/2021 | 26/11/2021 |
Shire of Irwin | 29/10/2021 | 26/11/2021 |
Shire of Jerramungup | 12/10/2021 | 23/12/2021 |
Shire of Katanning | 3/11/2021 | 22/12/2021 |
Shire of Kellerberrin | 26/10/2021 | 23/08/2021 |
Shire of Kent | 29/10/2021 | 26/10/2021 |
Shire of Kojonup | 26/10/2021 | 28/10/2021 |
Shire of Kondinin | 28/10/2021 | 29/10/2021 |
Shire of Koorda | 5/11/2021 | 31/03/2022 |
Shire of Kulin | 9/12/2021 | 6/12/2021 |
Shire of Lake Grace | 29/10/2021 | 26/11/2021 |
Shire of Laverton | 29/10/2021 | 13/12/2021 |
Shire of Leonora | 26/10/2021 | 3/11/2021 |
Shire of Manjimup | 28/10/2021 | 17/02/2022 |
Shire of Meekatharra | 27/10/2021 | 27/10/2021 |
Shire of Menzies | 21/12/2021 | 17/02/2022 |
Shire of Merredin | 28/06/2022 | 29/06/2022 |
Shire of Mingenew | 27/10/2021 | 29/10/2021 |
Shire of Moora | 22/12/2021 | In progress |
Shire of Morawa | 28/10/2021 | 28/10/2021 |
Shire of Mount Magnet | 28/10/2021 | 29/10/2021 |
Shire of Mount Marshall | 27/10/2021 | 27/10/2021 |
Shire of Mukinbudin | 25/02/2022 | 25/02/2022 |
Shire of Mundaring | 29/10/2021 | 13/12/2021 |
Shire of Murchison | 22/03/2022 | 21/03/2022 |
Shire of Murray | 28/10/2021 | 29/10/2021 |
Shire of Nannup | 8/12/2021 | In progress |
Shire of Narembeen | 28/10/2021 | 28/10/2021 |
Shire of Narrogin | 26/10/2021 | 26/10/2021 |
Shire of Northam | 3/11/2021 | 3/11/2021 |
Shire of Northampton | 26/10/2021 | 1/12/2021 |
Shire of Nungarin | 29/10/2021 | 29/10/2021 |
Shire of Ngaanyatjarraku | 28/10/2021 | 29/10/2021 |
Shire of Peppermint Grove | In progress | In progress |
Shire of Perenjori | 28/10/2021 | 28/10/2021 |
Shire of Pingelly | 29/10/2021 | 29/10/2021 |
Shire of Plantagenet | 26/10/2021 | 27/10/2021 |
Shire of Quairading | 8/11/2021 | 25/03/2022 |
Shire of Ravensthorpe | 21/12/2021 | 21/12/2021 |
Shire of Sandstone | 3/11/2021 | In progress |
Shire of Serpentine-Jarrahdale | 1/11/2021 | 1/11/2021 |
Shire of Shark Bay | 25/10/2021 | 26/10/2021 |
Shire of Tammin | 26/10/2021 | 29/10/2021 |
Shire of Three Springs | 29/10/2021 | 2/11/2021 |
Shire of Toodyay | 29/10/2021 | 29/10/2021 |
Shire of Trayning | 27/10/2021 | 29/10/2021 |
Shire of Upper Gascoyne | 27/10/2021 | 27/10/2021 |
Shire of Victoria Plains | 17/11/2021 | 17/11/2021 |
Shire of Wagin | 29/10/2021 | 31/03/2022 |
Shire of Wandering | 3/11/2021 | 5/11/2021 |
Shire of Waroona | 28/10/2021 | 28/10/2021 |
Shire of West Arthur | 29/10/2021 | 29/10/2021 |
Shire of Westonia | 27/10/2021 | 25/02/2022 |
Shire of Wickepin | 29/10/2021 | 16/05/2022 |
Shire of Williams | 29/10/2021 | 23/12/2021 |
Shire of Wiluna | In progress | In progress |
Shire of Wongan-Ballidu | 29/10/2021 | In progress |
Shire of Woodanilling | 23/02/2022 | 13/05/2022 |
Shire of Wyalkatchem | 26/10/2021 | 28/10/2021 |
Shire of Yalgoo | 22/03/2022 | 22/03/2022 |
Shire of Yilgarn | 24/11/2021 | 23/11/2021 |
Shire of York | 27/10/2021 | 27/10/2021 |
Shire of Wyndham-East Kimberley | 6/05/2022 | In progress |
Town of Bassendean | 29/10/2021 | 29/10/2021 |
Town of Cambridge | 28/10/2021 | 1/11/2021 |
Town of Claremont | 3/11/2021 | 10/11/2021 |
Town of Cottesloe | 26/10/2021 | 21/12/2021 |
Town of East Fremantle | 8/10/2021 | Deferred* |
Town of Mosman Park | 29/10/2021 | 29/10/2021 |
Town of Port Hedland | 4/04/2022 | 28/02/2022 |
Town of Victoria Park | 30/10/2021 | 30/10/2021 |
Entity | Date certification issued |
---|---|
Claims by administrative authorities – Pensioner deferments under the Rates and Charges (Rebates and Deferments) Act 1992 | |
City of Belmont | 2/03/2022 |
City of Busselton | 1/11/2021 |
City of Joondalup | 2/11/2021 |
City of Kalamunda21/12/2021Shire of Brookton – Drought Communities Programme – Extension | 8/12/2021 |
City of South Perth | 2/11/2021 |
City of Vincent | 10/11/2021 |
Shire of Dandaragan | 17/01/2022 |
Shire of Narrogin | 25/02/2022 |
Shire of York | 21/12/2021 |
Town of Cambridge | 4/01/2022 |
Town of Mosman Park | 15/12/2021 |
Entity certification | Date certification issued |
---|---|
Other certifications | |
City of Kalamunda – Development Contribution Area 1 – Forrestfield Light Industrial Area Stage 1 | 8/12/2021 |
Shire of Brookton – Drought Communities Programme – Extension | 17/09/2021 |
Shire of Dandaragan – Jurien Bay Civic Centre Outgoings | 20/01/2022 |
Appendix 7: Other opinions and certifications issued since 18 November 2021
State government entity opinions
Entity | Opinion relates to | Opinion issued |
---|---|---|
Albany Cemetery Board | Audit report on the Statement of Financial Position at 30 June 2021 | 15/12/2021 |
Bunbury Cemetery Board | Audit report on the Statement of Financial Position at 30 June 2021 | 4/02/2022 |
Kalgoorlie-Boulder Cemetery Board | Audit report on the Statement of Financial Position at 30 June 2020 | 21/12/2021 |
Kalgoorlie-Boulder Cemetery Board | Audit report on the Statement of Financial Position at 30 June 2021 | 21/02/2022 |
State government entity certifications
The following certifications were for the year ended 30 June 2021. The statements prepared by management were confirmed and no adverse reports were issued.
Entity | Certification relates to | Date issued |
---|---|---|
Commissioner of Main Roads | Statement of amounts expended or retained for expenditure under the Land Transport Infrastructure Projects (National Land Transport Act 2014). | 10/12/2021 |
Commissioner of Main Roads | Statement of amounts expended or retained for expenditure under the National Partnership on Infrastructure Projects in Western Australia. | 10/12/2021 |
Department of Local Government, Sport and Cultural Industries | Statement of payments made to Local Governments under the Local Government (Financial Assistance) Act 1995. | 26/11/2021 |
Royalties for Regions certifications
Entity | Royalties for Regions approved project | Date issued |
---|---|---|
Department of Primary Industries and Regional Development | Gascoyne Foodbowl Land Release | 3/02/2022 |
Department of Treasury | Governance of Royalties for Regions Program | 3/12/2021 |
WA Country Health Service | Albany Radiation Oncology | 29/11/2021 |
Bunbury Hospital Redevelopment | 29/11/2021 | |
Carnarvon Residential Aged Care Facility | 29/11/2021 | |
Collie Hospital Upgrade | 29/11/2021 | |
Derby Community Health Service | 29/11/2021 | |
Digital Innovation, Transport and Access to Care | 29/11/2021 | |
Dongara Aged Care | 29/11/2021 | |
Country Health Innovation – Emergency and Acute Workforce | 29/11/2021 | |
Expand the Ear Bus Program | 29/11/2021 | |
Geraldton Health Campus Redevelopment | 29/11/2021 | |
Kalgoorlie Health Campus Magnetic Resonance Imaging Suite | 29/11/2021 | |
Karratha Health Campus | 29/11/2021 | |
Kimberley Mobile Dialysis Unit | 29/11/2021 | |
Meet and Greet Unit | 29/11/2021 | |
Newman Health Service Redevelopment Project | 29/11/2021 | |
Nickol Bay Hospital Site | 29/11/2021 | |
Onslow Health Service Redevelopment Project | 29/11/2021 | |
Pilbara Health Initiative Phase 3 | 29/11/2021 | |
Remote Indigenous Health Clinics | 29/11/2021 | |
Renal Dialysis Services | 29/11/2021 | |
Renal Hostels | 29/11/2021 | |
Residential Aged and Dementia Care Investment Program | 29/11/2021 | |
Southern Inland Health Initiative – Stream 2a, 3 and 4 | 29/11/2021 | |
Tom Price Hospital Redevelopment | 29/11/2021 |
1 Office of the Auditor General, Western Australian Public Sector Financial Statements – Better Practice Guide, OAG, Perth, 2021.
2 Office of the Auditor General, ‘Better Practice Guidance’, OAG, accessed August 2022.
3 Office of the Auditor General, Audit Results Report – Annual 2017-18 Financial Audits of Local Government Entities, OAG, Perth, 2019, p. 20.
4 Western Australian Local Government Association (WALGA) and Local Government Professionals Australia WA.
5 Office of the Auditor General, Audit Results Report – Annual 2020-21 Financial Audits of State Government Entities, OAG, Perth, 2021, p 43.