❓ Hon Adele Farina questions the financial compliance of WA local governments, particularly in the South West region, revealing issues ranging from leave accruals to incorrect accounting practices. The Department is taking steps to address these issues through communication and audits.
AnsweredQoN 3552Legislative Council
QuestionView source ↗
I refer to financial compliance and control issues experienced by local governments, and I ask: (a) how many local governments were identified as having financial compliance and control issues in 2014-15; and (b) how many of the local governments identified in (a) were located in the South West region, and: (i) which South West local governments were identified as having financial compliance and control issues in 2014-15; (ii) what specific issues of concern have been identified; (iii) have the issues been addressed by the identified local governments; and (iv) if yes to (iii), how have they been addressed?
AnswerView source ↗
Answered
1 December 2015
Responded by
Minister for Mental Health representing the Minister for Local Government
Response time
42 days
(a) Thirty four
(b) Five
(i) Shires of Boyup Brook, Bridgetown-Greenbushes, Denmark, Manjimup and Waroona
(ii) Various matters which principally relate to the following:
- large accumulation of annual and long service leave;
- annual budgets and annual financial reports not submitted to the Department within statutory timeframes;
- statutory information on borrowings not included in annual budget and/or annual financial report;
- various reconciliations not completed at time audit visit undertaken;
- incorrect allocation of some plant costs;
- instances where invoices for credit card purchases could not be provided;
- instances where purchase orders not used prior to incurring expenditure;
- old outstanding items on bank reconciliations;
- dormant account balances carried forward for a number of years;
- long outstanding sundry debtors and infringements - dating back to 2008;
- accrued expenses at 30 June not supported by subsequent supplier invoices;
interim rating not up-to-date;
- Statement of Equity reporting accumulated losses for several years, likely to relate to overstatement of depreciation expense; and
- industry benchmarks not achieved in four or more of seven statutory ratios and liquidity issues identified.
(iii) Yes. Usual practice is for auditors to follow-up on the matters identified during the interim audit for the following year.
(iv) The Department of Local Government and Communities wrote to Shire Presidents of four south west local governments that had not achieved benchmarks in four or more financial/asset management ratios or which had compliance, governance or liquidity issues, requesting a council response on strategies to be implemented to address the matters identified. Responses have been received from three of the four on action proposed to address the matters identified. A follow-up letter to the
local government that has not responded will be issued to the newly elected Shire President.
I have directed the auditor to examine the 2014/15 accounts and annual financial report submitted for audit by the local government which has been reporting accumulated losses in its Statement of Equity. The auditor has until
30 November 2015 to prepare a report thereon and provide a copy of that report to me.
(b) Five
(i) Shires of Boyup Brook, Bridgetown-Greenbushes, Denmark, Manjimup and Waroona
(ii) Various matters which principally relate to the following:
- large accumulation of annual and long service leave;
- annual budgets and annual financial reports not submitted to the Department within statutory timeframes;
- statutory information on borrowings not included in annual budget and/or annual financial report;
- various reconciliations not completed at time audit visit undertaken;
- incorrect allocation of some plant costs;
- instances where invoices for credit card purchases could not be provided;
- instances where purchase orders not used prior to incurring expenditure;
- old outstanding items on bank reconciliations;
- dormant account balances carried forward for a number of years;
- long outstanding sundry debtors and infringements - dating back to 2008;
- accrued expenses at 30 June not supported by subsequent supplier invoices;
interim rating not up-to-date;
- Statement of Equity reporting accumulated losses for several years, likely to relate to overstatement of depreciation expense; and
- industry benchmarks not achieved in four or more of seven statutory ratios and liquidity issues identified.
(iii) Yes. Usual practice is for auditors to follow-up on the matters identified during the interim audit for the following year.
(iv) The Department of Local Government and Communities wrote to Shire Presidents of four south west local governments that had not achieved benchmarks in four or more financial/asset management ratios or which had compliance, governance or liquidity issues, requesting a council response on strategies to be implemented to address the matters identified. Responses have been received from three of the four on action proposed to address the matters identified. A follow-up letter to the
local government that has not responded will be issued to the newly elected Shire President.
I have directed the auditor to examine the 2014/15 accounts and annual financial report submitted for audit by the local government which has been reporting accumulated losses in its Statement of Equity. The auditor has until
30 November 2015 to prepare a report thereon and provide a copy of that report to me.
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