A MOTION WAS SUBMITTED BY COUNCIL DR LOWE AND DETAILED BY COUNCIL THOMAS TO ADOP THE RECOMMENDATION IN THE REPORT. A MOTION WAS SUBMITTED BY COUNCIL HAY OAM AND DETAILED BY COUNCIL THOMAS TO ADOP THE RECOMMENDATION IN THE REPORT.
AUDIT COMMITTEE MEETING 15 AUGUST, 2017
GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017
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- Understanding Council’s Financial Statements 2. Statement by Councillors and Management
- Notes to the Financial Statements
- Independent Auditor’s Reports
- The Income Statement
- The Statement of Comprehensive Income This statement primarily records changes in the fair
- The Statement of Financial Position
- The Statement of Changes in Equity
- The Statement of Cash Flows
An opinion on whether the financial statements fairly reflect the Council's financial performance and position, and. The public can make submissions to the Board up to seven days after the public presentation of the financial statements.
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The financial statements set out the financial performance, financial position and cash flows of the Council for the financial year ended 30 June 2017. The Council is required to forward an audited set of financial statements to the Office of Local Government.
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Net gain on sale of assets Net share of interests in joint ventures and associates using the equity method. Net operating income for the year before grants and contributions made for capital purposes & border adjustments.
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Amounts that will not subsequently be transferred to operating income Gain (loss) on remeasurement of I,PP&E. Amounts that will later be transferred to operating income when certain conditions are met.
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Plus: cash and cash equivalents – beginning of year Cash and cash equivalents – end of year. Non-current assets held for sale and disposal groups Events occurring after the balance sheet date.
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Summary of significant accounting policies Functions/activities of the Council - financial information Functions/activities of the Council - component descriptions Income from current operations. Externally restricted infrastructure, tangible fixed assets and equipment Infrastructure, tangible fixed assets and equipment - current year impairments Liabilities, loans and provisions.
Summary of significant accounting policies
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Summary of significant accounting policies (continued)
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Trust funds and property held by the Council but not under the control of the Council are excluded from these reports. Council is a member of the following county councils (bodies established under the Local Government Act):.
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- current assets (including assets that are part of a disposal group) are not depreciated or depreciated while they are classified as held for sale. Financial assets at fair value through profit or loss are financial assets held for trading.
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The Council classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Financial assets carried at fair value through profit or loss are initially recognized at fair value and transaction costs are expensed in the income statement.
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Changes in the fair value of other monetary and non-monetary securities classified as available for sale are recognized in equity. The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for information purposes.
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The amount of the provision for impairment is the difference between the book value of the asset and the present value of the estimated future cash flows, discounted at the initial effective interest rate. If any such indication exists, the Board determines the fair value of the asset and revalues the asset at that amount.
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Provisions are measured at the present value of management's best estimate of the expenditure necessary to settle the present obligation at the reporting date. Obligations for wages and salaries, including non-monetary benefits, annual leave and cumulative sick leave that are expected to be settled in full within 12 months after the end of the period in which the employees render the related service, are recognized in respect of the employee performance through the end of the reporting period and are measured at the amounts expected to be paid when the obligations are settled.
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The present value of the defined benefit obligation is based on expected future payments arising from membership of the fund until the end of the financial year, calculated annually by independent actuaries using the projected unit credit method. The amount of employer contributions to the defined benefit section of the municipal pension scheme and recognized as a.
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Income, costs and assets are recognized less the associated VAT amount, unless the VAT incurred cannot be refunded from the tax authority. In this case, it is recognized as part of the acquisition price of the asset or as part of the expense.
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While ownership of the reserves remains in the hands of the Crown, the Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes for which the reserves are intended. Pursuant to section 119 of the Rural Fire Act 1997, all fire-fighting equipment purchased or manufactured wholly or out of money to the Trust shall be allocated to the council of the area for or on whose behalf the fire-fighting equipment was purchased or built'.
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Unless otherwise indicated, amounts in the financial statements are rounded to the nearest thousand dollars. Hills Shire Council Notes to Financial Statements for the year ended 30 June 2017 Note 2(a).
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Future Planning, Infrastructure and Transportation Planning, Community Planning and Special Infrastructure Projects, Place Management, Development Assessment Services and Subdivision and Development Certification. Costs associated with the Council's role as part of democratic governance, including elections, membership dues and expenses, subscriptions to local authority associations, council and policy committee meetings, area representation, and disclosure and compliance, along with the associated administration.
Income from continuing operations
TOTAL RATES AND ANNUAL CHARGES
TOTAL USER CHARGES AND FEES
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Income from continuing operations (continued)
TOTAL INTEREST AND INVESTMENT REVENUE
TOTAL OTHER REVENUE
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Financial assistance - general component Financial assistance - local road component Pensioner subsidies - general component Total general purpose.
TOTAL GRANTS AND CONTRIBUTIONS
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Expenses from continuing operations
TOTAL EMPLOYEE COSTS EXPENSED
TOTAL MATERIALS AND CONTRACTS
Expenses from continuing operations (continued)
- Operating lease payments are attributable to
Audit and review of financial statements: Board's Auditor Fee for audit and other assurance services Total Auditor Fee.
TOTAL DEPRECIATION AND IMPAIRMENT COSTS EXPENSED
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TOTAL OTHER EXPENSES
Gains or losses from the disposal of assets
NET GAIN/(LOSS) ON DISPOSAL OF ASSETS
TOTAL CASH ASSETS, CASH EQUIVALENTS AND INVESTMENTS
Receivables
TOTAL NET RECEIVABLES
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Inventories and other assets
TOTAL INVENTORIES
TOTAL OTHER ASSETS
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- Statement of cash flows – additional information
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- Statement of cash flows – additional information (continued)
- Commitments for expenditure
The Hills Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 9a. Fair value measurement for information regarding the fair value of other infrastructure, property, plant and equipment.
Local government industry indicators – consolidated
Operating performance ratio
Own source operating revenue ratio Total continuing operating revenue (1)
Unrestricted current ratio
Debt service cover ratio
Cash expense cover ratio Current year’s cash and cash equivalents
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This ratio fell below benchmark due to increases in developer contributions and subdivision commitments being compared. To assess the adequacy of working capital and its ability to meet short-term obligations for the unrestricted activities of the Board.
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Source for measure: Code of Accounting Practice and Financial Reporting #25 Ratio is out of measure Purpose of cash. This ratio measures the availability of operating cash to service debt including interest, principal and.
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The Council's cash expenditure ratio was well above the benchmark, indicating the Council's ability to pay immediate costs without. To assess the impact of uncollected interest rates and annual charges on the Council's liquidity and adequacy.
Investment properties
Financial risk management
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Financial risk management (continued)
Credit risk on rates and annual charges is minimized by the ability of the Council to secure a charge on the land associated with the debt – ie the land can be sold to recover the debt. The Council can also charge interest on arrears and annual charges at higher than market rates which further encourage the payment of debts.
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The biggest risk associated with these debtors is credit risk – the risk that debts due and payable to the Council cannot be repaid in full. Loans are also subject to interest rate risk – the risk that movements in interest rates could adversely affect funding costs and debt service requirements.
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Debts and loans are both subject to liquidity risk - the risk that insufficient funds will be available to meet payment obligations as and when they fall due. The Council manages this risk by diversifying loan types, maturities and interest rate structures.
Material budget variations
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Material budget variations (continued)
Statement of Development Contributions(continued) $'000 S94 CONTRIBUTIONS - UNDER A PLAN CONTRIBUTION PLAN NUMBER 5 - Castle Hill Roads Open Space Community Facilities Other CONTRIBUTION PLAN NUMBER 6 - Extractive Industries Roads. Statement of Development Contributions (continued) $'000 S94 CONTRIBUTIONS - UNDER A PLAN CONTRIBUTION PLAN NUMBER 9 - Castle Hill Town Center Roads Open Space Other CONTRIBUTION PLAN NUMBER 11 - Annangrove Industrial Roads Traffic Facilities.
Contingencies and other assets/liabilities not recognised
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Contingencies and other assets/liabilities not recognised (continued)
Interests in other entities
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Retained earnings, revaluation provisions, changes in accounting practices, changes in accounting estimates and errors (continued).
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As a result, the Council has adjusted the accumulated depreciation for the following asset classes at 30/6/15 to reflect the correct value of accumulated depreciation. In accordance with AASB 108 – Accounting Policies, Changes in Accounting Estimates and Errors, the above prior period errors have been recognized retrospectively.
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On 30 June 2015, the Board began applying the Strategic Asset Management module to calculate depreciation based on asset condition. Due to an error in the reports run on 30 Jun 15, accumulated depreciation reflected balances as at 30 Jun 16.
Financial result and financial position by fund
Held for sale’ non-current assets and disposal groups
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Events occurring after the reporting date
Boundary Adjustments
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Intangible assets
Reinstatement, rehabilitation and restoration liabilities
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Fair value measurement
Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly
Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
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Fair value measurement (continued)
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These assets were last revalued on 30 June 2015 in accordance with the fair value valuation policy as mandated by the Office of Local Government. Council's Operational Land was last revalued on 30 June 2013 in accordance with the fair value valuation policy as mandated by the Office of Local Government.
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Buildings were most recently reassessed per 30 June 2013 by Scott Fullarton Valuation Pty Ltd in accordance with the fair value valuation policy as mandated by the Office of Local Government. Council's Community Land was last revalued on 30 June 2016 in accordance with the fair value valuation policy as mandated by the Office of Local Government.
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Revaluation gains – unrealized results Other movements (corrections for previous periods) Other movements (from real estate). Other movement (prior period corrections) Other movement (loss of South M2) Closing balance – 6/30/16 Acquisitions (GBV) Divestments (WDV).
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The Hills Shire Council Notes to the Financial Statements for the Year Ended June 30, 2017 Note 28. Board key management personnel management (KMP) are those individuals who have the authority and responsibility for planning, directing and controlling the activities of the Board , direct or indirect.
Council information and contact details
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Statement of Developer Contribution without Internal Loan (continued) $ '000 S94 CONTRIBUTIONS – UNDER A PLAN CONTRIBUTION PLAN NUMBER 5 - Castle Hill Roads Open space Community Facilities Other CONTRIBUTION PLAN NUMBER 6 - Extractive Industries Roads –11,179–Total . Statement of Developer Contribution without Internal Borrowing (continued) $ '000 S94 CONTRIBUTION – UNDER ONE PLAN CONTRIBUTION SCHEDULE NUMBER 9 - Castle Hill Town Center Roads Open space Other CONTRIBUTION SCHEDULE NUMBER 11 - Annangrove Industrial Roads Traffic Facilities –( 4,418)–Total.
SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017
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- Statement by Councillors and Management 2. Special Purpose Financial Statements
- Auditor’s Report
These special purpose accounts have been prepared for use by both the Council and the Office of Local Government in meeting their requirements under National Competition Policy. In preparing these accounts for Council self-classified Category 1 businesses and ABS-defined activities, Councils must (a) adopt a corporatisation model and (b) use full cost attribution, including payments of a regime equal to tax, and debt guarantee fees (where the company benefits from Council borrowing against commercial interest rates).
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Total income from continuing operations Expenses from continuing operations Employee benefits and expenses Borrowing costs. Surplus (deficit) from continuing operations before capital amounts Grants and contributions provided for capital purposes.
NET ASSETS
Infrastructure, tangible fixed assets Investments calculated according to the capital method Total non-current assets.
TOTAL EQUITY
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- Significant accounting policies
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- Significant accounting policies (continued)
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In accordance with Pricing and Costing for Council Businesses - A Guide to Competitive Neutrality, Council has stated that the following should be considered business activities:. where gross business sales exceed $2 million) a. However, when the municipality fails to pay certain taxes generally paid by private sector businesses, such as income tax, those equivalent tax payments are applied to all business activities nominated by the municipality and appear in special purpose financial statements.
SPECIAL SCHEDULES for the year ended 30 June 2017
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Special Schedules 1
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Community centers and halls Performing arts venues Other performing arts Other cultural services Sports grounds and venues Swimming pools. Transport and communication Urban roads (UR) – local Urban roads – regional Sealed rural roads (SRR) – local Sealed rural roads (SRR) – regional Unsealed rural roads (URR) – local Unsealed rural roads (URR) – regional bridges on UR – local.
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Special List 7 Hills Shire Council - Infrastructure Assets Report as at 3 0 June 2 0 17 (continued) as at 30 June Notes: aMaintenance required is the amount set out in the Council's Asset Management Plans.
Infrastructure asset performance indicators * consolidated
- Infrastructure renewals ratio Asset renewals (1)
- Infrastructure backlog ratio
- Asset maintenance ratio Actual asset maintenance
- Cost to bring assets to agreed service level
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The OLG takes these amounts from the Board's Special Schedule 8 in the Financial Disclosure Statement (FDR) to manage this process. The Board is responsible for the preparation and fair presentation of Special Schedule 8 in accordance with the Local Government Code of Accounting Practice and Financial Reporting (Guidelines) Update No.
Audit of the The Hills Shire Council For the year ending 30 June 2017
AGREEMENT OF TERMS
Audit of The Hills Shire Council for the year ending 30 June 2017
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The Hills Shire Council
Client Service Plan For the year ending 30 June 2017
THE HILLS SHIRE COUNCIL CLIENT SERVICE PLAN
INTRODUCTION
SCOPE
Special Purpose Financial Statements for ‘Declared Business Activities’ and Special Schedule No.8 ‘Permissible Income Calculation’
CONTROLLED ENTITIES
CLIENT ASSISTANCE
KEY ISSUES
Potential risk Audit team analysis Audit approach Depreciation and amortization The Council records depreciation on its infrastructure, property, plant and equipment using the straight-line method. There is an added risk due to the specialized nature and complexity in estimating the useful lives of the Council's assets.
AUDIT TIMETABLE
General Purpose and Special Purpose Financial Statements
The council submits audited accounts and the independent auditor's reports to the OLG and the Australian Bureau of Statistics. The council presents its audited accounts and the independent auditor's reports at the council meeting.
Other audits and acquittals
FINANCIAL REPORTING ISSUES AND DEVELOPMENTS
Understanding significant judgements and assumptions
Follow up of issues identified in the previous audit
Publications
Reporting misstatements and disclosure deficiencies in the financial statements
RELYING ON WORK PERFORMED BY INTERNAL AUDIT
GENERAL MATTERS
Involvement of others in aspects of the audit
Auditor-General’s Report to Parliament
AUDIT OFFICE BETTER PRACTICE GUIDES
OTHER ENGAGEMENTS
Roads to Recovery Program
The Statement has been prepared to enable the Board to comply with its reporting obligations under the law. The independent auditor's report on the statement will inform users that the statement has been prepared solely to meet the Board's reporting requirements under the law and therefore may not be suitable for any other purpose.
Application for Payment of Pensioner Concession Subsidy
The Audit Office website provides additional information on the terms and scope of this appointment.
Domestic Waste Management – Reasonable Cost Calculations
AUDIT FEES
YOUR AUDIT TEAM
Audit team
Involvement of other members in public practice
Auditor independence
Audit communications to ‘Those Charged with Governance’
31 Senior members of the audit team will attend Board meetings and inform those charged. Please advise the audit team if additional individuals charged with governance should be included in the communication.
Audit team engagement with management
The mayor, who will receive the independent auditor's report for the general purpose financial report and the special purpose financial statements and the report on the conduct of the audit. The Mayor also receives a copy of the Client Service Report and the Management Letter } The Audit and Risk Committee, which receives a copy of all the above reports.
WORKPLACE HEALTH AND SAFETY HARMONISATION LEGISLATION
We will liaise with management and those charged with governance to determine which meetings we will attend. The Terms of Engagement on the Audit Office website contain more information on the communication obligations of the Audit Office.
ORDINARY MEETING OF COUNCIL 15 AUGUST, 2017
IMPACTS Financial
The Hills Future - Community Strategic Plan
RECOMMENDATION
The presentation from Council’s External Auditor be received
The Financial Statements (Attachments1-3) as required by Section 413 of the Local Government Act 1993 be referred to Council on 22 August 2017 and the
ATTACHMENTS
General Purpose Financial Report for year ended 30 June 2017, Special Purpose Financial Reports for year ended 30 June 2017 and Special Schedules for year
Statement required by Section 413 of the Local Government Act, 1993 (1 page)
Statement required by the Local Government Code of Accounting Practice (1 page)
Audit Office - Client Service Plan (36 pages)
ITEM-3 INTERNAL AUDITORS REPORT
MEETING DATE: 15 AUGUST 2017
INTERNAL AUDIT COMMITTEE
KERRIE WILSON RESPONSIBLE OFFICER: GENERAL MANAGER
MICHAEL EDGAR
EXECUTIVE SUMMARY The Internal Audit report
REPORT
Internal Audit Report
July 2017
Part A: Executive Summary
- Audit Activity to 15 July 2017
- For the Information of the Committee 1 Governance and Legislative Changes
- External Reviews
- Key Council Documentation
- Local Government Internal Auditors Network (LGIAN) Meeting and Other Governance Activities undertaken in the period
This documentation was provided to the independent members of the Audit Committee in July 2017 for information. When the report is available, it will be forwarded to the members of the Audit Committee.
The Structure of the Internal Audit Report is as follows
Background to the Internal Audit Function, the Audit Committee, and the audit reporting practices at The Hills Shire Council
As the term of the current Board expires in September 2017, it is expected that the EOI process as outlined in the Audit Committee Charter will be implemented after that time. If changes to the Charter of the Audit Committee are required, it is expected that a report will be forwarded to the Board meeting scheduled for October 24, 2017 and that an EOI process (which includes the changes to the Charter of the Audit Committee) Audit Committee) will be undertaken once the changes are approved.
Risk Assessment Matrix
Depending on the commencement of Part 4A – Internal Audit, S428A of the Local Government (Management and Planning) Amendment Act 2016, amendments to the audit committee's charter may also be required to ensure compliance. In relation to the current independent members of the audit committee, both the Council and the Community highly value the commitment they have made to ensure that the tasks defined in the adopted audit charter are fulfilled.
List of outstanding audit recommendations (including management comments) at the reporting date
At the council meeting on 13 June 2017, The Draft Hills Shire Plan, consisting of the Hills Future Community Strategic Plan, Delivery Programme, Resource Strategy, Operational Plan, and Fees & Charges for the period 2017-2018 was adopted. Meeting of the local authorities' internal audit network (LGIAN) and other management activities carried out during the period.
Part B Comparison of the Actual and Planned Audit Activity undertaken in the 2017 period
Summary Councils KPI
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Part C. Details of the Internal Audit Activity undertaken in the period
C 1.1 Corruption Mitigation Strategy and processes (Audit item 3)
The ICAC is investigating allegations of corruption related to Emman Sharobeem, the former CEO of the Immigrant Women's Health Service (IWHS) and the Non-English Speaking Housing Women's Scheme Inc (NESH). In her capacity as CEO, Ms. Sharobeem was a government official for the purposes of the.
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The objective of the audit was to ensure that TOAA requirements were in place for the period ended 30 June 2017. These exceptions were identified in the quarterly compliance review of the 'A drives' system and have been addressed.
C2 Audit Activities currently being undertaken
In comparing the data on the "A drive" system with the RMS records, exceptions were noted that were errors that occurred in the transcription of information related to the RMS searches on the "A drives" system. The review of searches conducted in the RMS system was found to be accurate and undertaken for legitimate reasons.
C2.1 Legislation/Regulation
RMS to Council A drive records to ensure completeness and consistency Scope Access to the RMS Drives system for the period 1 July 2016 to 30 June 2016.
Part D: Details of recommendations outstanding at the date of this report and the action taken by Management to implement these
Status of Recommendations
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Part E Internal Audit Key Performance Measures
Service Delivery Benchmarks
Cost Control benchmarks
Key Information to be reported in the Annual Community Report Concerning the Audit Committee
Background: Internal audit functions; audit committee; and audit reporting practices at The Hills Shire Council.
Background to the: Internal Audit Function; the Audit Committee; and the audit reporting practices at The Hills Shire Council
- Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organisation’s operations
- Legislative Change
- Best Practice
- The Strategic Audit Plan
- Reporting
This guideline (guideline) defines best practices in local government in relation to internal audit and the audit committee. The internal audit regularly communicates its findings and recommendations to the audit committee, the general director and the management of the audited areas via an internal audit report.
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An internal audit report usually includes background information, audit objectives and scope, observations/findings/conclusions, key recommendations/. The internal audit report (and audit committee documents) are also forwarded to the Council for adoption to ensure greater transparency and accountability.
THSC Risk Matrix
Observations Risk Effect Assessment Recommendation and Action Plan Agreed Manager ResponsibleTo be implemented by: Status as at 15 July 2017 7 Role Statements From. Audit Observations Risk Impact Assessment Recommendation and Action Plan Agreed Manager Responsible To be implemented by: Status as of July 15, 2017 12.
RECOMMENDATION The report be received
Internal Audit Report to 15 July 2017 (24 pages)
ITEM-4 IT SECURITY STRATEGY
AUTHOR: MANAGER INFORMATION TECHNOLOGY WARWICK PURDY
RESPONSIBLE OFFICER: GENERAL MANAGER MICHAEL EDGAR
ATTACHMENTS Nil
ITEM-5 ACTING/GENERAL MANAGER'S EXPENSES
MICHAEL EDGAR RESPONSIBLE OFFICER: GENERAL MANAGER
MICHAEL EDGAR HISTORY
RECOMMENDATION 1. The report be received
The attached expenses be noted ATTACHMENTS
Expenses incurred by the Acting/General Manager since 15 June 2017 (1 page)
GENERAL MANAGER
