Crs vote for a financial review rather than an audit

Councillors agreed to approach member for Bega Andrew Constance to request the NSW Auditor General and the Office of Local Government fund a review of council's financial position at March 31 2020, June 30 2020 and projected June 30 2021 with a focus on restricted and unrestricted cash reserves and the cash position.

The motion from Cr Russell Fitzpatrick followed a failed motion from Crs Mitchell Nadin and Robyn Bain asking for an independent audit of council's finances covering the period 2017-20.

Council's finances have been put in the spotlight after several different sets of figures appeared as the June 30, 2019 actual figures and questions have been raised with respect to council's cash reserves.

During discussion council's general manager Leanne Barnes "unequivocally" apologised for failing to raise with councillors at the time, the matter of a cash reserve deficit in 2018/19.

Ms Barnes said that council has commenced putting in place improvements (to financial reporting) but said the combination of the bushfires and COVID-19 had an effect on the finances and staff time and that putting a resolution in the business paper about the cash deficit, had "dropped off my to do list".

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Mayor Sharon Tapscott supported Cr Fitzpatrick's motion saying it was "primarily to protect the staff who have my unqualified support".

Cr Tapscott said she welcomed the extra resources so staff could get back to core business.

Cr Kristy McBain said that all councillors should have been aware of the financial position of council. She said the $85m in cash (the latest figure for council's cash reserves at June 30, 2020) "covers our costs".

"It's obviously disappointing to councillors and the community that errors occurred but they have been identified. I am surprised that Cr Nadin who sits on the audit committee (Audit Risk and Improvement Committee ARIC) did not attend the meetings and provide councillors with information," Cr McBain said.

Cr Nadin said he and Cr Bain had voted against accepting the audited accounts and in raising the motion and requesting the extraordinary meeting of council had brought the matter to the attention of councillors.

Cr Tony Allen sought clarification several times about the 2018/19 deficit of $8.79m.

"I would never ever have supported a budget that had a deficit of $8.9m . I am not finger pointing but if I can't understand this then I'm damn sure no ratepayer can understand it and it's all the more reason to sort it out, otherwise it will just hang there. It's an embarrassment to me and it's never occurred before in the 18 years I have been on council," Cr Allen said.

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Cr Allen along with Crs Nadin and Bain supported an independent audit but it was voted down with Cr Fitizpatrick's motion for an Office of Local Government appointed accountant to carry out a review.

There are questions about where the $8.79 deficit at June 30, 2019 leaves council cash reserves now but accounting officer Judy Jordan said there was $85.3m in the account although she was not able at this stage to say how it was split between the three cash reserves.

The figures shown in council's business paper showed a cash reserve of $65m which would have been insufficient to cover the commitments in its externally restricted reserve but council said the figure in the business paper was incorrect.

ACM asked council how did the difference arose.

"Councils quarterly budget review statement is predicated on all budgeted expenses being paid prior to 30 June 2020," council said.

"We know that this is not the case, we are aware from staff that some projects were not completed and will require council to carryover these budgets to 20-21, these amounts are not finalised as we await the final invoices for works carried out prior to June 2020," council said.

During the meeting Ms Jordan highlighted two expenses - $4.5m of unpaid operational expense and $7.8m of capital expenditure, both of which had not been paid. They have the potential to reduce the cash account by $12.3m but it is unclear from which reserves - externally restricted, internally restricted or unrestricted - the money would come.

"We know that some budgeted works were unable to commence prior to 30 June 2020 and these works will be subject to a revote report to council," council said.

This would mean the money would be brought forward but again it is not known which reserves are affected.

However council says that it has been advised of an advanced payment of the Financial Assistance Grant of $3.6m after the March quarterly review.

"We don't know of the above what the final effect these changes will make on the externally restricted funds," council said.

"ACM asked why the more recent figures, particularly the $85.3m cash reserve figure was not included in the business paper for the extraordinary meeting, given the paper was prepared last week.

"The report was on correcting an error in the quarterly budget review statement, it remains the report on the council's finances at the end of March," council said.