The Hills Shire Council is regarded as a top tier Council and is one of the most well-managed Local Government areas in Australia

(1)

T H E H I L L S S H I R E C O U N C I L

2 0 2 0 - 2 0 2 1

FINANCIAL

STATEMENTS

(2)

T H E H I L LS S H I R E C O U N C I L | F I N A N C I A L STAT E M E N T S | 2 0 2 0 - 2 0 2 1

2 During this global pandemic, The Hills Shire Council’s financial position has remained strong and debt free. It is predicted to remain in this position into the foreseeable future. Council has achieved consistent operating surpluses over the past 19 years. Council has also been able to continue to deliver the capital works program, while also continuing to have no infrastructure backlogs.

The Hills Shire has a population of around 182,506 people and 71,172 rate assessments, and has a staff to population ratio of 328 which is one of the lowest when compared to other metropolitan Councils. It is estimated that the population of The Hills Shire will increase to more than 290,900 people by 2036.

The Hills Shire Council is regarded as a top tier Council and is one of the most well-managed Local Government areas in Australia. This can be attributed to a number of factors including strict budgetary control measures at all levels of operations, prudent investing in the maintenance of infrastructure and adopting a cost-conscious approach to the allocation of money provided by ratepayers. These results have been possible due to its financial management practices and having the strict discipline by both past and present Councils in adherence to its Financial Charter, prudent management and fiscal responsibility.

In FY20-21, Council expended $262.4M to provide recurrent operations and capital works.

This expenditure covers a broad range of services including civil and parks asset maintenance, community facilities, town planning, regulatory functions, waste and recycling, aged care, child care, community service, libraries, community events and economic development activities.

Council also constructs new infrastructure in developing areas such as Balmoral Road, North Kellyville, Box Hill areas and the North West Metro Station Precincts. Included in total expenditure of $262.4M, as at 30 June 2021, 244 projects were completed to the total value of

$70.8M. Furthermore, 20 land acquisitions were made at a total cost of $39.6M.

The Operating Surplus for FY20-21 totals

$112.6M compared to $173.3M in FY19-20. This decrease was mainly due to non-cash statutory adjustments such as re-classification of capital grants and revaluation write down for Investment Properties.

Total cash and investments held as at 30 June 2021 increased from $432.0M to $471.5M.

This was due to greater than anticipated grants and contributions received for infrastructure projects. Total Cash and Investments are made up of Internally Restricted (requires a Council Resolution to reallocate the funds) and Externally Restricted (must be used for the purpose it was given) funds. Internally Restricted funds commonly known as Reserves total $287.8M compared to $242.9M as at 30 June 2020.

Council manages $3.8B worth of infrastructure assets, including roads, bridges, buildings, halls, land, recreation and leisure facilities, drains, libraries and parks.

All the financial ratios (with the exception of Own Source Operating Revenue and Buildings and Infrastructure Renewals Ratio) are above the Industry Benchmarks. They are detailed in the Financial Statements.

COVID-19 Financial Impact

COVID-19 has had an impact on Council operations in FY19-20 and FY20-21. The impact was driven largely by closure of Council’s venues including halls, community centres, face to face customer contact centre, outdoor sporting facilities, decreased attendance at child care centres, reduced operations at Hills Community Care and lower regulatory income.

In FY20-21 Council suffered loss of income amounting to $664K and this has been offset by savings in community events not going ahead

“By sticking to our values of Honesty, Integrity, Loyalty, Leadership and Safety we have proved to be a great Council.”

Chief Financial Officer’s

Report

(3)

as planned. This savings in expenditure was

$767K.

Council also received $7.2M from the Australian Government, Local Roads and Community Infrastructure Program to deliver priority local road and community infrastructure projects in order to boost the local economy and create jobs within the LGA and a

contribution towards the cost of the Emergency Services Levy.

Audit Opinion

The General and Special Purpose Financial Statements were again completed within 10 days after year end and were audited by the Audit Office and presented to Council on 24 August 2021.

An unqualified opinion was issued for FY20- 21. The Auditors’ report and their findings can be found in this document at the end of the General Purpose and Special Purpose Financial Statements.

Other Challenges

One of the biggest challenges for this Council is managing land acquisition liabilities that are created by the Contribution Plans in the new released areas. Under the current legislation,

Councils are required to acquire land listed under the Contribution Plans even though no contributions have been received from the developers.

Another challenge we are facing now is the ability to find skilled workers. Due to the large infrastructure projects around Sydney there is a long lead time in filling vacancies.

Looking Ahead

The 2021-2022 budget of $288M were formulated on a general rates increase of 2.0% as per the guidelines issued by the Independent Pricing and Regulatory Tribunal (IPART), employment costs based on Local Government Award increase of 2.0% and the application of a 1.4% CPI increase.

This budget will ensure that Council remains in a strong position to not only deliver current goals, but also to provide future growth and make the Hills Shire an even greater place to live and do business.

Chandi Saba

Group Manager, Finance & Organisational

Performance

(4)

4

Work is continuing on a project to create a Premier Rugby League Facility at Kellyville Memorial Park.

(5)

T H E H I L L S S H I R E C O U N C I L

for the year ended 30 June 2021

GENERAL PURPOSE

FINANCIAL STATEMENTS

(6)

6 General Purpose Financial Statements

for the financial year ended 30 June 2021

Chief Financial Officer’s Report 2

Understanding Council’s Financial Statements 7 Statement by Councillors and Management 9 Primary Financial Statements:

• Income Statement 10

• Statement of Comprehensive Income 11

• Statement of Financial Position 12

• Statement of Changes in Equity 13

• Statement of Cash Flows 14

• Notes to the Financial Statements 15 Independent Auditor’s Reports:

• On the Financial Statements (Sect 417 [2]) 89

• On the Conduct of the Audit (Sect 417 [3]) 92

Overview

The Hills Shire Council is constituted under the Local Government Act 1993 (NSW) and has its principal place of business at:

3 Columbia Court Norwest NSW 2153

Council’s guiding principles are detailed in Chapter 3 of the LGA and includes:

• principles applying to the exercise of functions generally by council,

• principles to be applied when making decisions,

• principles of community participation,

• principles of sound financial management, and

• principles for strategic planning relating to the development of an integrated planning and reporting framework.

A description of the nature of Council’s operations and its principal activities are provided in Note B1-2.

Through the use of the internet, we have ensured that our reporting is timely, complete and available at

minimum cost. All press releases, financial statements and other information are publicly available on

our website: www.thehills.nsw.gov.au

(7)

General Purpose Financial Statements

Understanding Council’s Financial Statements

Introduction

Each year NSW local governments are required to present audited financial statements to their council and community.

What you will find in the Statements

The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 2021.

The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government.

About the Councillor/Management Statement

The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements.

About the Primary Financial Statements

The financial statements incorporate five “primary” financial statements:

1. The Income Statement

Summarises Council’s financial performance for the year, listing all income and expenses. This statement also displays Council’s original adopted budget to provide a comparison between what was projected and what actually occurred.

2. The Statement of Comprehensive Income

Primarily records changes in the fair value of Council’s Infrastructure, property, plant and equipment.

3. The Statement of Financial Position

A 30 June snapshot of Council’s financial position indicating its assets, liabilities and “net wealth”.

4. The Statement of Changes in Equity

The overall change for the year (in dollars) of Council’s “net wealth”.

5. The Statement of Cash Flows

Indicates where Council’s cash came from and where it was spent. This statement also displays Council’s original adopted budget to provide a comparison between what was projected and what actually occurred.

About the Notes to the Financial Statements

The Notes to the Financial Statements provide greater detail and additional information on the five primary financial statements. About the Auditor’s Reports Council’s financial statements are required to be audited by the NSW Audit Office. In NSW the auditor provides 2 audit reports:

1. an opinion on whether the financial statements present fairly the Council’s financial performance and position, and

2. their observations on the conduct of the audit, including commentary on the Council’s financial performance and financial position.

Who uses the Financial Statements?

The financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the audit report.

The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements.

Council is required to forward an audited set of financial statements to the Office of Local Government.

(8)

8 A qualified audit opinion was issued in FY16/17 relating to the valuation method applied for Land under Roads (LUR). In addition, concerns were raised in relation to the valuation of Community land after the initial purchase. Workshops were held with Councillors on 28 June 2018 and 7 August 2018 along with the Auditor General and her staff, to discuss these items in detail. It was concluded that additional notes will be included to show the results if these Standards were not applied.

Community Land

As per Australian Accounting Standard AASB 116, all infrastructure assets must be initially recorded at cost, and subsequent measurement must be at revalued amounts. Australian Accounting Standard AASB 13 (11) states that all assets must be measured at fair value and must take into account restrictions on the sale or use of the asset.

Following table details amounts written off as per accounting standards for the respective years.

$M Initial Purchase Price

Write Off Fair Value as at 30 June

FY 17/18 61.6 (49.6) 12.0

FY 18/19 91.5 (55.9) 35.6

FY 19/20 20.2 (15.8)* 4.4

FY 20/21 34.5 (15.9)* 18.6

Total 207.8 (137.2) 70.6

* This write-down is only related to the land acquired this year and does not include changes due to valuations received from Valuer General.

Land Under Roads

Land under Roads (LUR) was first brought into the Hills Shire Council books in 2009 at a valuation of $1.8 billion. LUR was last revalued in 2014 and as at 30 June 2017 this valuation was $2.4 billion.

This was based on an average residential unit value of $107 per sq/metre, and no discount factor was applied. Prior to FY 16/17, this method was a specified option under the Office of Local Government Code of Accounting Practice.

For valuation of LUR, one of the methods recommended by Office of Local Government (OLG) is the ‘Englobo’ method which requires applying a discount of 90% on the average value. In FY 17/18, application of this “Englobo” methodology resulted in a write-off of $1.47b and was reflected in the opening balance.

In FY 18/19, Council purchased LUR valued at $4.7m which was written down by $3.9m against the Income Statement. In FY 19/20 LUR valued at $16.8m was not written down as land valuations received from Valuer General increased by $66.35m of which $3.9m that was written off in FY 18/19 was reversed and shown as income in FY 19/20. This financial year Council has acquired LUR valued at $19.0m of which $14.3m has been written off against Asset Revaluation Reserve in the Statement of Financial Position.

Impact on Statutory Financial Statements

Non GAAP Before Write-down

Write-down Applying Accounting Standards After Adjustments

Non-Current Assets

Community Land $708.35M ($137.16)M $571.19M

Land Under Roads $2.50B ($1.48)B $1.02B

(9)

General Purpose Financial Statements

Statement by Councillors and Management

MADE PURSUANT TO SECTION 413(2)(C) OF THE LOCAL GOVERNMENT ACT 1993 (NSW)

The attached general purpose financial statements have been prepared in accordance with:

• the Local Government Act 1993 and the regulations made thereunder,

• the Australian Accounting Standards and other pronouncements of the Australian Accounting Standards Board

• the Local Government Code of Accounting Practice and Financial Reporting.

To the best of our knowledge and belief, these statements:

• present fairly the Council’s operating result and financial position for the year

• accord with Council’s accounting and other records.

We are not aware of any matter that would render these statements false or misleading in any way.

Signed in accordance with a resolution of Council made on 24 August 2021.

(10)

10

§Statement§

Original unaudited

budget Actual Actual

2021 $ '000 Notes 2021 2020

Income from continuing operations

107,538 Rates and annual charges B2-1 107,907 106,023

22,221 User charges and fees B2-2 22,224 19,607

4,738 Other revenue B2-3 4,971 6,494

15,002 Grants and contributions provided for operating purposes B2-4 18,404 21,730 124,700 Grants and contributions provided for capital purposes B2-4 132,057 148,122

5,279 Interest and investment income B2-5 5,452 8,328

3,559 Other income B2-6 3,641 6,857

557 Net gains from the disposal of assets B4-1 – 1,565

283,594 Total income from continuing operations 294,656 318,726

Expenses from continuing operations

61,905 Employee benefits and on-costs B3-1 58,523 55,079

61,278 Materials and services B3-2 64,058 61,126

– Borrowing costs B3-3 42 33

24,233 Depreciation, amortisation and impairment for non-financial assets

B3-4 23,805 23,411

4,912 Other expenses B3-5 31,729 5,787

– Net losses from the disposal of assets B4-1 3,856 –

152,328 Total expenses from continuing operations 182,013 145,436 131,266 Operating result from continuing operations 112,643 173,290 131,266 Net operating result for the year attributable to Council 112,643 173,290

6,566 Net operating result for the year before grants and

contributions provided for capital purposes (19,414) 25,168

The above Income Statement should be read in conjunction with the accompanying notes.

Income Statement

for the year ended 30 June 2021

(11)

§Note/Subtotal§

$ '000 Notes 2021 2020

112,643 173,290

§Subnote§

C1-6 (21,293) (18,209) (21,293) (18,209) (21,293) (18,209) Net operating result for the year – from Income Statement

Other comprehensive income:

Amounts which will not be reclassified subsequently to the operating result Gain (loss) on revaluation of infrastructure, property, plant and equipment Total items which will not be reclassified subsequently to the operating result

Total other comprehensive income for the year

Total comprehensive income for the year attributable to

Council 91,350 155,081

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Statement of Comprehensive Income

(12)

12 Statement of Financial Position

§Statement§

$ '000 Notes 2021 2020

C1-1 46,690 39,057

C1-2 228,769 313,127

C1-4 15,977 17,138

C1-5 10,575 10,525

404 167

302,415 380,014 ASSETS

Current assets Cash and cash equivalents Investments

Receivables Inventories Other

Total current assets Non-current assets

C1-2 196,000 79,769

C1-4 10,131 8,979

C1-6 3,752,191 3,625,851

C1-7 63,390 90,146

C2-1 999 564

4,022,711 3,805,309 4,325,126 4,185,323

C3-1 37,161 32,179

C3-2 54,672 11,927

C2-1 350 193

Investments Receivables

Infrastructure, property, plant and equipment Investment property

Right of use assets Total non-current assets Total assets

LIABILITIES Current liabilities Payables

Contract liabilities Lease liabilities

Employee benefit provisions C3-3 18,393 18,202

110,576 62,501

C3-1 790 903

C2-1 690 388

C3-3 588 615

C3-4 3,309 3,093

5,377 4,999

115,953 67,500

4,209,173 4,117,823

C4-1 3,539,590 3,426,947

C4-1 669,583 690,876

4,209,173 4,117,823 Total current liabilities

Non-current liabilities Payables

Lease liabilities

Employee benefit provisions Provisions

Total non-current liabilities Total liabilities

Net assets

EQUITY

Accumulated surplus IPPE revaluation reserve Council equity interest

Total equity 4,209,173 4,117,823

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

(13)

§Note/Subtotal§ as at 30/06/21as at 30/06/20 $ '000NotesAccumulated surplus IPPE revaluation reserveTotal equityAccumulated surplus

IPPE revaluation reserveTotal equity 3,426,947690,8764,117,8233,255,847709,0853,964,932 –––(2,190)–(2,190) 3,426,947690,8764,117,8233,253,657709,0853,962,742

§Subnote§ 112,643–112,643173,290–173,290 112,643– 112,643173,290–173,290 C1-6–(21,293)(21,293)–(18,209)(18,209) – (21,293)(21,293)–(18,209)(18,209) 112,643(21,293)91,350173,290(18,209)155,081 3,539,590669,5834,209,1733,426,947690,8764,117,823

Opening balance at 1 July Changes due to AASB 1058 and AASB 15 adoption Restated opening balance Net operating result for the year Restated net operating result for the period Other comprehensive income Gain (loss) on revaluation of infrastructure, property, plant and equipment Other comprehensive income Total comprehensive income Closing balance at 30 June The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Stat ement of Chang es in Equity

(14)

14

§Statement§

Original unaudited

budget Actual Actual

2021 $ '000 Notes 2021 2020

Cash flows from operating activities Receipts:

108,012 Rates and annual charges 106,888 106,388

22,194 User charges and fees 21,292 24,717

5,278 Investment and interest revenue received 6,041 10,296

140,442 Grants and contributions 142,750 113,993

– Bonds, deposits and retention amounts received 2,994 3,412

8,287 Other 8,818 19,099

Payments:

(62,113) Employee benefits and on-costs (58,359) (53,662)

(64,050) Materials and services (62,072) (46,232)

– Borrowing costs (42) (33)

(4,912) Other (5,107) (35,950)

153,138 Net cash flows from operating activities ^F1-1 163,203 142,028 Cash flows from investing activities

Receipts:

– Sale of investment securities 185,001 199,623

884 Sale of infrastructure, property, plant and equipment 631 3,224

Payments:

– Purchase of investment securities (216,874) (266,756)

(130,928) Purchase of infrastructure, property, plant and equipment (124,046) (76,927)

– Purchase of real estate assets (48) (119)

(130,044) Net cash flows from investing activities (155,336) (140,955) Cash flows from financing activities

Payments:

– Principal component of lease payments (234) (340)

– Net cash flows from financing activities (234) (340)

23,094 Net change in cash and cash equivalents 7,633 733

39,057 Cash and cash equivalents at beginning of year 39,057 38,324

62,151 Cash and cash equivalents at end of year ^C1-1 46,690 39,057

392,869 plus: Investments on hand at end of year C1-2 424,769 392,896

455,020 Total cash, cash equivalents and investments 471,459 431,953

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

Statement of Cash Flows

(15)

Contents for the notes to the Financial Statements

A About Council and these financial statements

17

A1-1 Basis of preparation 17

B Financial Performance

20

B1 Functions or activities 20

B1-1 Functions or activities – income, expenses and assets 20

B1-2 Components of functions or activities 21

B2 Sources of income 22

B2-1 Rates and annual charges 22

B2-2 User charges and fees 23

B2-3 Other revenue 23

B2-4 Grants and contributions 25

B2-5 Interest and investment income 28

B2-6 Other income 28

B3 Costs of providing services 29

B3-1 Employee benefits and on-costs 29

B3-2 Materials and services 30

B3-3 Borrowing costs 30

B3-4 Depreciation, amortisation and impairment of non-financial assets 31

B3-5 Other expenses 31

B4 Gains or losses 32

B4-1 Gain or loss from the disposal, replacement and de-recognition of assets 32

B5 Performance against budget 33

B5-1 Material budget variations 33

C Financial position

35

C1 Assets we manage 35

C1-1 Cash and cash equivalents 35

C1-2 Investments 36

C1-3 Restricted cash, cash equivalents and investments 37

C1-4 Receivables 38

C1-5 Inventories 40

C1-6 Infrastructure, property, plant and equipment 42

C1-7 Investment properties 45

C2 Leasing activities 46

C2-1 Council as a lessee 46

C2-2 Council as a lessor 47

C3 Liabilities of Council 49

C3-1 Payables 49

C3-2 Contract Liabilities 49

C3-3 Employee benefit provisions 50

C3-4 Provisions 52

C4 Reserves 54

C4-1 Nature and purpose of reserves 54

(16)

16 Contents for the notes to the Financial Statements

for the year ended 30 June 2021 (continued)

D Risks and accounting uncertainties

55

D1-1 Risks relating to financial instruments held 55

D2 Fair value measurement 58

D3-1 Contingencies 63

E People and relationships

66

E1 Related party disclosures

E1 Key management personnel (KMP) 66

E1-2 Councillor and Mayoral fees and associated expenses 67

E2 Other relationships 68

E2-1 Audit fees 68

F Other matters

69

F1-1 Statement of Cash Flows information 69

F2-1 Commitments 70

F3 Statement of developer contributions as at 30 June 2021

F3-1 Summary of developer contributions 71

F3-2 Developer contributions by plan 72

F4 Statement of performance measures

F4-1 Statement of performance measures – consolidated results 76

G Additional Council disclosures (unaudited)

G1-1 Statement of performance measures – consolidated results (graphs) 79 G1-2 Statement of developer contributions without Internal Borrowings 80

G1-3 Council information and contact details 88

(17)

A About Council and these Financial Statements

A1-1 Basis of preparation

These financial statements were authorised for issue by Council on 24 August 2021. Council has the power to amend and reissue these financial statements in cases where critical information is received from public submissions or where the OLG directs Council to amend the financial statements.

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Australian Accounting Interpretations, the Local Government Act 1993 (Act)

and Local Government (General) Regulation 2005 (Regulation), and the Local Government Code of

Accounting Practice and Financial Reporting.

Council is a not for-profit entity.

The financial statements are presented in Australian dollars and are rounded to the nearest thousand dollars.

Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain infrastructure, property, plant and equipment and investment property.

Significant accounting estimates and judgements

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council’s accounting policies.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Council and that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

Council makes estimates and assumptions concerning the future.

The resulting accounting estimates will, by definition, seldom equal the related actual results.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include:

(i) estimated fair values of investment properties – refer Note C1-7

(ii) estimated fair values of infrastructure, property, plant and equipment – refer Note C1-6 (iii) employee benefit provisions – refer Note C3-3

Significant judgements in applying the Council’s accounting policies i. Impairment of receivables – refer Note C1-4.

ii. Determination of whether performance obligations are sufficiently specific and whether the contract is within the scope of AASB 15 Revenue from Contracts with Customers and / or AASB 1058 Income of Not-for-Profit Entities – refer to Notes B2-2 to B2-6.

iii. Determination of the lease term, discount rate (when not implicit in the lease) and whether an arrangement contains a lease - refer to Note C2-1.

Monies and other assets received by Council

The Consolidated Fund

In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund.

Cash and other assets of the following entities have been included as part of the Consolidated Fund:

• General purpose operations

• Child Care Centres

(18)

18 A1-1 Basis of preparation

(continued)

The Trust Fund

In accordance with the provisions of Section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the council in trust which must be applied only for the purposes of, or in accordance with, the trusts relating to those monies.

Trust monies and property subject to Council’s control have been included in these reports.

A separate statement of monies held in the Trust Fund is available for inspection at the council office by any person free of charge.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of Financial Position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities that are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.

Volunteer services

Council has many volunteers working in various areas. These volunteer services have not been recognised as income as per AASB 1058.18. This is because the fair value of such services cannot be reliably measured and it would not have been purchased if they were not donated.

New accounting standards & interpretations issued but not yet effective

New accounting standards and interpretations issued not yet effective

Certain new accounting standards and interpretations (ie. pronouncements) have been published by the Australian Accounting Standards Board that are not mandatory for the 30 June 2021 reporting period.

Council has elected not to apply any of these pronouncements in these financial statements before their operative dates.

As at the date of authorisation of these financial statements Council does not consider that any of these new (and still to be applied) standards and interpretations are likely to have a material impact on the Council’s future financial statements, financial position, financial performance or cash flows.

AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Noncurrent

AASB 2020-6 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Noncurrent – Deferral of Effective Date

This Standard amends AASB 101 Presentation of Financial Statements to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current.

For example the amendments clarify that a liability is classified as non-current if an entity has the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period. The meaning of settlement of a liability is also clarified.

Council does not expect any material impact from the above amendments and to its classification of liabilities as current or non-current.

This standard has an effective date for the 30 June 2024 reporting period.

AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018- 2020 and Other Amendments

This Standard amends a number of standards as follows:

• AASB 1 to simplify the application of AASB 1 by a subsidiary that becomes a first-time adopter

after its parent in relation to the measurement of cumulative translation differences,

(19)

A1-1 Basis of preparation

(continued)

• AASB 3 to update a reference to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations,

• AASB 9 to clarify the fees an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability,

• AASB 116 to require an entity to recognise the sales proceeds from selling items produced while preparing property, plant and equipment for its intended use and the related cost in profit or loss, instead of deducting the amounts received from the cost of the asset,

• AASB 137 to specify the costs that an entity includes when assessing whether a contract will be loss-making and

• AASB 141 to remove the requirement to exclude cash flows from taxation when measuring fair value, thereby aligning the fair value measurement requirements in AASB 141 with those in other Australian Accounting Standards.

Council does not expect any material impact from the above amendments.

This standard has an effective date for the 30 June 2023 reporting period.

New accounting standards adopted during the year

During the year Council adopted all accounting standards and interpretations (as issued by the Australian Accounting Standards Board) which were mandatorily effective from the first time at 30 June 2021.

Those newly adopted standards did not have an impact on Council’s reported financial position,

financial performance and/or associated financial statement disclosures.

(20)

2 0

§Note/Subtotal§ §TocItem§§TocItem§ §Subnote§ Income, expenses and assets have been directly attributed to the following functions or activities. Details of those functions or activities are provided in Note B1-2. IncomeExpensesOperating resultGrants and contributionsCarrying amount of assets $ '0002021202020212020202120202021202020212020 16,71218,00136,97536,802(20,263)(18,801)7,78010,968242,897247,016 32,38833,90816,83314,99215,55518,91628,67329,949320,967310,838 109,567130,59547,63442,43161,93388,164107,717122,5453,189,1923,068,369 40,35641,68148,14944,369(7,793)(2,688)593551–– 6,8806,74532,4226,842(25,542)(97)––572,070559,100 88,75387,796––88,75387,7965,6985,839––

Functions or activities Building a Vibrant Community & Prosperous Economy Shaping Growth Delivering & Maintaining Infrastructure Valuing Our Surroundings Proactive Leadership (Governance) General Purpose Revenue Total functions and activities294,656318,726182,013145,436112,643173,290150,461169,8524,325,1264,185,323

B F inancial P erf or mance B1 F unctions or A ctivities B1 -1 F unctions or activities – income , e xpenses and assets

(21)

B1-2 Components of functions or activities

Details relating to the Council’s functions or activities as reported in B1-1 are as follows:

Building a Vibrant Community & Prosperous Economy

Community Buildings, Children’s Services, Civic Events, Communications & Marketing, Community Facilities Hire, Community Services, Economic Development, Fire Control & State Emergency Services, Aged & Disabled Services, Library Services and the Fitness & Aquatic Centre.

Shaping Growth

Asset Management, Traffic & Parks, Forward Planning, Infrastructure & Transport Planning, and Waterways & Stormwater Asset Planning.

Delivering & Maintaining Infrastructure

Capital Works Management, Civil Maintenance, Fleet & Depot Services and Parks & Bushland Maintenance.

Valuing Our Surroundings

Development Assessment, Environment & Public Health, Regulatory Services, Subdivision &

Development Certification, Sustainability and Waste Management.

Proactive Leadership (Governance)

Costs relating to the Council’s role as a component of democratic government, including elections, members fees and expenses, subscriptions to local authority associations, meetings of council and policy making committees, area representation and public disclosure and compliance, together with related administration.

General Purpose Revenue

This includes Rates and Annual Charges (including ex-gratia), untied general purpose grants and

unrestricted interest and investment income.

(22)

2 2

B2 Sources of Income B2-1 Rates & Annual Charges

§Note/Subtotal§

$ '000 Timing 2021 2020

§TocItem§§Subnote§

2 70,221 66,890

2 226 223

2 8,372 8,063

2 (735) (680)

78,084 74,496

391 386

78,475 74,882

2 28,082 29,876

2 1,615 1,564

2 (594) (651)

29,103 30,789

2 329 352

29,432 31,141

107,907 106,023

107,907 106,023 Ordinary rates

Residential Farmland Business

Less: pensioner rebates (mandatory) Rates levied to ratepayers Pensioner rate subsidies received Total ordinary rates

Annual charges

(pursuant to s.496, s.496A, s.496B, s.501 & s.611)

Domestic waste management services Stormwater management services Less: pensioner rebates (mandatory) Annual charges levied

Pensioner subsidies received:

–Domestic waste management Total annual charges

Total rates and annual charges

Timing of revenue recognition for rates and annual charges Rates and annual charges recognised at a point in time (2)

Total rates and annual charges 107,907 106,023

Council has used 2019 year valuations provided by the NSW Valuer General in calculating its rates.

Accounting policy

RatesandannualchargesarerecognisedasrevenuewhentheCouncilobtainscontrolovertheassetscomprisingthese receiptswhichisthebeginningoftheratingperiodtowhichtheyrelate.

Prepaidratesifany,andareofamaterialamount,arerecognisedasafinancialliabilityuntilthebeginningoftheratingperiod.

(23)

§Note/Subtotal§

$ '000 ^Timing 2021 2020

Specific user charges

(per s.502 - specific 'actual use' charges) Other user charges and fees

2 9,675 9,425

2 528 460

2 479 359

2 9 11

10,691 10,255

2 1,200 1,105

2 1,548 1,177

2 5,178 4,049

2 – 1

2 4 4

2 70 85

2 376 384

2 994 657

2 2,163 1,890

LFees and charges – statutory and regulatory functions (per s.608) Planning and building regulation

Registration fees Section 603 certificates General administration

Total fees and charges – statutory/regulatory

LL Fees and charges – other (incl. general user charges (per s.608)) Aged care

Cemeteries Child care Corporate services Engineering works Library

Other support services Parks and gardens Public halls

Total fees and charges – other 11,533 9,352

22,224 19,607

– –

22,224 19,607

Total user charges and fees

Timing of revenue recognition for user charges and fees User charges and fees recognised over time (1)

User charges and fees recognised at a point in time (2) Total user charges and fees

Revenuearisingfromuserchargesandfeesisrecognisedwhenorastheperformanceobligationiscompletedandthe customerreceivesthebenefitofthegoods/servicesbeingprovided.

Theperformanceobligationrelatestothespecificserviceswhichareprovidedtothecustomersandgenerallythepayment termsarewithin30daysoftheprovisionoftheserviceorinsomecasessuchascaravanparks,thecustomerisrequiredto payonarrivaloradepositinadvance.ThereisnomaterialobligationforCouncilinrelationtorefundsorreturns.

Whereanupfrontfeeischargedsuchasjoiningfeesfortheleisurecentrethefeeisrecognisedonastraight-linebasisover theexpectedlifeofthemembership.

LicencesgrantedbyCouncilarealleithershort-termorlowvalueandallrevenuefromlicencesisrecognisedatthetimethat thelicenceisgrantedratherthanoverthetermofthelicence.

§Subnote§

B2-3 Other revenue

$ '000 ^Timing 2021 2020

Fines 2 1,175 1,315

Legal fees recovery – rates and charges (extra charges) 2 – 4

Insurance claims recoveries 2 140 395

Sales – Southern Phone Shares 2 – 786

Building control 2 239 195

Community services and education 2 13 100

Corporate support 2 1,109 1,332

Engineering works 2 1,069 1,275

Environmental protection 2 788 747

Public libraries 2 12 44

Sales – biobanking credits 2 – 10

B2-2 User Charges and fees

(24)

2 4

$ '000 ^Timing 2021 2020

2 301 219

2 125 72

4,971 6,494

– –

4,971 6,494

Town planning Other

Total other revenue

Timing of revenue recognition for other revenue Other revenue recognised over time (1)

Other revenue recognised at a point in time (2)

Total other revenue 4,971 6,494

Accounting policy for other revenue

Wheretherevenueisearnedtheprovisionofspecifiedgoods/servicesunderanenforceablecontract,revenueisrecognised whenorastheobligationsaresatisfied.

Statutoryfeesandfinesarerecognisedasrevenuewhentheservicehasbeenprovided,thepaymentisreceivedorwhen thepenaltyhasbeenapplied,whicheveroccursfirst.

Otherrevenueisrecordedwhenthepaymentisdue,thevalueofthepaymentisnotified,orthepaymentisreceived,whichever occursfirst.

B2-3 Other revenue

(continued)

(25)

§Note/Subtotal§

Operating Operating Capital Capital

$ '000 Timing 2021 2020 2021 2020

2 1,802 1,815 – –

2 949 1,020 – –

2 1,928 1,921 – –

2 1,019 1,083 – –

5,698 5,839 – –

1 4,818 5,492 – –

2 400 394 – –

1 615 1,663 – –

1 95 87 – –

2 181 179 – –

2 509 554 – –

1 429 441 – –

2 253 1,305 – –

2 663 663 – –

2 – – 1,195 1,195

1 1,310 1,200 6,194 1,709

2 9 8 – –

2 257 525 46 537

2 1,881 2,129 26 527

2 – 6 372 –

2 – 179 – –

2 688 374 – –

2 598 692 – –

12,706 15,891 7,833 3,968

2 – – 41,589 60,312

– – 41,589 60,312

12,706 15,891 49,422 64,280

18,404 21,730 49,422 64,280

General purpose grants and non-developer

contributions (untied) General purpose (untied) Current year allocation

Financial assistance – general component Financial assistance – local roads component Payment in advance - future year allocation Financial assistance – general component Financial assistance – local roads component Amount recognised as income during current year

Special purpose grants and non-developer contributions (tied)

Specific Grants:

Aged care

Bushfire and emergency services Child care

Community care Environmental programs Library

Parks, heritage and cultural services Town planning

Street lighting

Transport (roads to recovery)

Transport (other roads and bridges funding) Contributions:

Community services Parks and gardens Roads and bridges Other contributions Community facilities Fire protection Town planning

Total special purpose grants and non-developer contributions – cash Non-cash contributions

Dedications – subdivisions (other than by s7.11) Total other contributions – non-cash Total special purpose grants and non-developer contributions (tied)

Total grants and non-developer contributions

Comprising:

– Commonwealth funding 10,203 10,447 2,075 1,195

– State funding 5,475 7,803 5,685 2,243

– Other funding 2,726 3,480 41,662 60,842

18,404 21,730 49,422 64,280

B2-4 Grants and contributions

(26)

2 6

$ '000 ^Notes ^Timing 2021 2020 2021 2020

F5

2 – – – 3,917

2 – – 72,603 75,952

– – 72,603 79,869

2 – – 10,032 3,973

– – 10,032 3,973

– – 82,635 83,842

– – 82,635 83,842

18,404 21,730 132,057 148,122

7,770 8,883 37,126 1,709

10,634 12,847 94,931 146,413

Developer contributions:

(s7.4 & s7.11 - EP&A Act, s64 of the LGA):

Cash contributions

S 7.4 – contributions using planning agreements

S 7.11 – contributions towards amenities/services

Total developer contributions – cash Non-cash contributions

S 7.11 – contributions towards amenities/services

Total developer contributions non-cash

Total developer contributions

Total contributions

Total grants and contributions

Timing of revenue recognition for grants and contributions

Grants and contributions recognised over time (1)

Grants and contributions recognised at a point in time (2)

Total grants and contributions 18,404 21,730 132,057 148,122

B2-4 Grants and contributions

(continued)

Developer contributions

(27)

Certain grants and contributions are obtained by Council on the condition they be spent in a specified manner or in a future period but which are not yet spent in accordance with those conditions are as follows:

$ '000 2021 2020 2021 2020

3,692 8,085 97 354

– 206 – –

338 5,245 35 –

(1,437) (5,038) (50) (51)

– – – (206)

– (764) – –

– (4,042) – –

2,593 3,692 82 97

– – 127,556 91,601

Unspent grants and contributions Unspent funds at 1 July

Add: correction adjustment to opening balance Add: operatinggrantsrecognisedasincomein

thecurrentperiodbutnotyetspent Less: capitalgrantsrecognisedinaprevious

reportingperiodnowspent

Less : Transfer to City of Parramatta (Developer Contributions)

Less: operatinggrantsreceivedinaprevious reportingperiodnowtransferredto liabilityaccount(AASB15) Less: Other Income received transferred to Internal Restrictions

Unspent funds at 30 June Developer Contributions Unspent funds at 1 July

Add: contributionsrecognisedasrevenuein the reporting year but not yet spent in

accordance with the conditions – – 73,873 81,926

Less: contributions recognised as revenue in previous years that have been spent

during the reporting year – – (67,075) (45,971)

– – 134,354 127,556

Unspent contributions at 30 June

§Subnote§

Accounting policy Grant income under AASB 15

Where grant income arises from an agreement which is enforceable and contains sufficiently specific performance obligations then the revenue are recognised when control of each performance obligations is satisfied.

The performance obligations are varied based on the agreement. Payment terms vary depending on the terms of the grant, cash is received upfront for some grants and on the achievement of certain payment milestones for others.

Each performance obligation is considered to ensure that the revenue recognition reflects the transfer of control and within grant agreements there may be some performance obligations where control transfers at a point in time and others which have continuous transfer of control over the life of the contract.

Where control is transferred over time, generally the input methods being either costs or time incurred are deemed to be the most appropriate methods to reflect the transfer of benefit.

Grant income

Assets arising from grants in the scope of AASB 1058 is recognised at the assets fair value when the asset is received.

Councils considers whether there are any related liability or equity items associated with the asset which are recognised in accordance with the relevant accounting standard.

Once the assets and liabilities have been recognised then income is recognised for any remaining asset value at the time that the asset is received

B2-4 Grants and contributions

(continued)

Unspent grants and contributions

(28)

2 8

Capital grants

CapitalgrantsreceivedtoenableCounciltoacquireorconstructanitemofinfrastructure,property,plantandequipmentto identifiedspecificationswhichwillbeunderCouncil’scontrolandwhichisenforceablearerecognisedasrevenueasandwhen theobligationtoconstructorpurchaseiscompleted.

Forconstructionprojects,thisisgenerallyastheconstructionprogressesinaccordancewithcostsincurredsincethisis deemedtobethemostappropriatemeasureofthecompletenessoftheconstructionprojectasthereisnoprofitmargin.

Foracquisitionsofassets,therevenueisrecognisedwhentheassetisacquiredandcontrolledbytheCouncil.

Contributions

Councilhasobligationstoprovidefacilitiesfromcontributionrevenuesleviedondevelopersundertheprovisionsofsections 7.4,7.11and7.12oftheEnvironmentalPlanningandAssessmentAct1979.

WhileCouncilgenerallyincorporatestheseamountsaspartofaDevelopmentConsentsOrder,suchdevelopercontributions areonlyrecognisedasincomeuponreceiptbyCouncil,duetothepossibilitythatindividualdevelopmentconsentsmaynot beacteduponbytheapplicantand,accordingly,wouldnotbepayabletoCouncil.

Developercontributionsmayonlybeexpendedforthepurposesforwhichthecontributionswererequired,buttheCouncil mayapplycontributionsaccordingtotheprioritiesestablishedinworkschedules.

§Subnote§

B2-5 Interest and investment income

$ '000 2021 2020

Interest on financial assets measured at amortised cost

– Overdue rates and annual charges (incl. special purpose rates) 188 303

– Cash and investments 4,648 7,879

Other 616 146

5,452 8,328

188 303

3,995 5,968

1,269 2,057

5,452 8,328

Total interest and investment income (losses)

Interest and investment income is attributable to:

Unrestricted investments/financial assets:

Overdue rates and annual charges (general fund) General Council cash and investments

Restricted investments/funds – external:

Development contributions –Section 7.11 and VPA

Total interest and investment income Accounting policy

Interest income is recognised using the effective interest rate at the date that interest is earned.

§Subnote§

B2-6 Other income

$ '000 Notes 2021 2020

Reversal of revaluation decrements on IPPE previously expensed

Land Under Roads (post 30/06/2008) – 3,912

Total gross reversal of revaluation decrements on IPPE

previously expensed – 3,912

Total reversal of revaluation decrements on IPPE previously

expensed charged to Income Statement C1-6 – 3,912

Rental income Other lease income

Lease Income 3,641 2,945

Total rental income C2-2 3,641 2,945

Reversal of revaluation decrements on IPPE previously expensed Land Under Roads (post 30/06/2008)

Total gross reversal of revaluation decrements on IPPE previously expensed

Total reversal of revaluation decrements on IPPE previously expensed charged to Income Statement

Rental income Other lease income Lease Income Total rental income

B2-4 Grants and contributions

(continued)

B2-5 Interest and investment income

B2-6 Other income

$ '000 Notes 2021 2020

Total other income 3,641 6,857

(29)

§Note/Subtotal§

$ '000 2021 2020

47,718 44,954

5,123 5,424

3,737 3,490

230 308

1,242 580

275 275

291 229

268 279

58,884 55,539

(361) (460)

58,523 55,079

556 541

598 579

Employee benefit expenses are recorded when the service has been provided by the employee.

Salaries and wages

Employee leave entitlements (ELE) Superannuation – defined contribution plans Superannuation – defined benefit plans Workers’ compensation insurance Fringe benefit tax (FBT)

Training costs (other than salaries and wages) Other

Total employee costs Less: capitalised costs

Total employee costs expensed

Number of ‘full-time equivalent’ employees (FTE) at year end

Number of ‘full-time equivalent’ employees (FTE) at year end (incl. vacancies) Accounting policy

Retirement benefit obligations

All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees.

Superannuation plans

Contributions to defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Council participates in a defined benefit plan under the Local Government Superannuation Scheme, however, sufficient information to account for the plan as a defined benefit is not available and therefore Council accounts for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans, i.e. as an expense when it becomes payable – refer to Note E3-1 for more information.

B3 Costs of providing services

B3-1 Employee benefits and on-costs

(30)

3 0

§Note/Subtotal§

$ '000 Notes 2021 2020

Raw materials and consumables 3,532 4,121

– Waste collection, disposal and recycling 24,315 22,694

– Roads, parks and buildings 12,760 11,314

– Aged and disabled 1,977 1,667

– Information technology 2,592 2,116

– Other contractor and consultancy costs 1,209 1,051

Audit Fees E2-1 118 129

Previously other expenses:

Councillor and Mayoral fees and associated expenses E1-2 540 494

Advertising 54 156

Bank charges 455 483

Electricity and heating 1,156 1,324

Insurance 1,363 1,186

Office expenses (including computer expenses) 574 620

Street lighting 2,924 3,019

Telephone and communications 1,090 1,148

Biobanking Future Management Plan Actions Expense 216 521

Professional charges 774 814

Project costs & other costs (amounts that are not material individually) 6,967 6,775

Voluntary charges 549 780

Legal expenses:

– Legal expenses: planning and development 615 401

– Legal expenses: other 278 313

64,058 61,126

64,058 61,126

42 33

Total materials and services

Total materials and services

§Subnote§

B3-3 Borrowing costs

(i) Interest bearing liability costs Interest on leases

Total interest bearing liability costs

Total interest bearing liability costs expensed

Total borrowing costs expensed 42 33

B3-2 Materials and services

(31)

§Note/Subtotal§

$ '000 Notes 2021 2020

2,723 2,829

113 139

Depreciation and amortisation Plant and equipment

Office equipment

Infrastructure: C1-6

– Buildings 3,927 3,910

– Roads 13,041 12,678

– Stormwater drainage 1,646 1,584

– Other open space/recreational assets 2,097 1,914

Right of use assets C2-1 258 357

23,805 23,411

23,805 23,411

Total gross depreciation and amortisation costs

Total depreciation and amortisation costs

Total depreciation, amortisation and impairment for non-financial assets

Depreciation and amortisation

Depreciationandamortisationarecalculatedusingthestraightlinemethodtoallocatetheircost,netoftheirresidualvalues, overtheirestimatedusefullives.UsefullivesareincludedinNoteC1-6forIPPEassets.

Depreciationiscapitalisedwherein-houseassetshavecontributedtonewassets.

Impairment of non-financial assets

Councilassetsheldatfairvaluethatarenotheldprimarilyfortheirabilitytogeneratenetcashflow,andthataredeemedto bespecialised,arenottestedforimpairmentsincetheseassetsareassessedonanannualbasistoensurethatthecarrying amountisnotmateriallydifferentfromfairvalueandthereforeanimpairmentlosswouldbecapturedduringthisassessment.

Intangibleassetsnotyetavailableforuse,aretestedannuallyforimpairment,ormorefrequentlyifeventsorchangesin circumstancesindicatethattheymightbeimpaired.

Othernon-financialassetsthatdonotmeetthecriteriaabovearetestedforimpairmentwhenevereventsorchangesin circumstancesindicatethatthecarryingamountmaynotberecoverable.Animpairmentlossisrecognisedfortheamountby whichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfair valuelesscoststosellandvalueinuse.

Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiable cashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets(cash-generatingunits).

Impairmentlossesforrevaluedassetsarefirstlyoffsetagainsttheamountintherevaluationsurplusfortheclassofasset, withonlytheexcesstoberecognisedintheIncomeStatement.

§Subnote§

B3-5 Other expenses

$ '000 Notes 2021 2020

26,756 –

C1-7 26,756 –

Fair value decrement on investment properties Fair value decrement on investment properties

Total fair value decrement on investment properties Other

Contributions/levies to other levels of government

– Department of planning levy 237 249

– Emergency services levy (includes FRNSW, SES, and RFS levies) 333 261

– NSW fire brigade levy 2,204 2,074

– NSW rural fire service levy 1,190 834

– Other (incl. ferries, registrations, valuer general and other) 1,009 2,369

Total other 4,973 5,787

Total other expenses 31,729 5,787

B3-4 Depreciation, amortisation and impairment of non-financial assets

Total other

Total other expenses

OtherexpensesarerecordedonanaccrualsbasiswhenCouncilhasanobligationfortheexpenses.

Impairmentexpensesarerecognisedwhenidentified.

(32)

3 2

§Note/Subtotal§

$ '000 ^Notes 2021 2020

C1-6

577 1,597

(108) (426)

469 1,171

C1-6

49 1,627

(4,377) (1,233)

(4,328) 394

C1-2

185,001 199,623

(185,001) (199,623)

– –

5 –

(2) –

3 –

(3,856) 1,565 Gain (or loss) on disposal of plant and equipment

Proceeds from disposal – plant and equipment

Less: carrying amount of plant and equipment assets sold/written off Gain (or loss) on disposal

Gain (or loss) on disposal of infrastructure

Proceeds from disposal – infrastructure

Less: carrying amount of infrastructure assets sold/written off Gain (or loss) on disposal

Gain (or loss) on disposal of investments

Proceeds from disposal/redemptions/maturities – investments Less: carrying amount of investments sold/redeemed/matured Gain (or loss) on disposal

Gain (or loss) on disposal of office equipment

Proceeds from disposal – office equipment

Less: carrying amount of office equipment assets sold/written off Gain (or loss) on disposal

Net gain (or loss) on disposal of assets

Gains and losses on disposals are determined by comparing proceeds with carrying amount. The gain or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer and the asset is de-recognised.