The public may make comments to the Board up to seven days after the public presentation of the annual accounts. 6 The Hills Shire Council Financial Statements 2017-2018 GENERAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018.
BASIS OF PREPARATION
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 monies and other funds received by the Council in trust and to be used only for for the purposes or in accordance with the funds in relation to these funds. Revenues, expenses and assets are recognized net of the related GST, unless the resulting GST cannot be recovered from the tax authority.
BASIS OF PREPARATION (continued)
At the date of approval of these financial statements, the Board is of the opinion that none of the standards set out below is likely to have a material impact on the Board's future financial condition. A lease liability is initially measured at the present value of the lease payments due over the lease term.
INCOME FROM CONTINUING OPERATIONS
Income from continuing operations
Income from continuing operations (continued)
TOTAL USER CHARGES AND FEES
TOTAL INTEREST AND INVESTMENT REVENUE
- INCOME FROM CONTINUING OPERATIONS (continued)
- EXPENSES FROM CONTINUING OPERATIONS
- Expenses from continuing operations
- Expenses from continuing operations (continued)
- EXPENSES FROM CONTINUING OPERATIONS (continued)
Add: capital grants recognized in the current period but not yet used. Less: capital support recognized in the previous reporting period, now used. Expenditures from regular operations (continued). c) Depreciation and impairment (continued) Impairment / revaluation of IPP&E.
TOTAL OTHER EXPENSES
- GAINS OR LOSSES FROM THE DISPOSAL OF ASSETS
- Gains or losses from the disposal of assets
- Receivables
- Receivables (continued)
- Inventories and other assets
The Council classifies its financial assets into the following categories: financial assets at fair value through profit or loss; loans and receivables; investments held until maturity; and available-for-sale financial assets. Financial assets at fair value through profit or loss are financial assets held for trading.
TOTAL INVENTORIES (b) Other assets
For loans and receivables, the amount of loss is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses not yet incurred), discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the income statement.
TOTAL OTHER ASSETS
INVENTORIES AND OTHER ASSETS
INVENTORIES AND OTHER ASSETS (continued)
Inventories and other assets (continued)
NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE (AND DISPOSAL GROUPS)
Non-current assets classified as held for sale (and disposal groups)
Increases in the carrying amounts arising from revaluation are credited against the asset revaluation reserve. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Investment property
INVESTMENT PROPERTY
Goods and services – operating expenses Security bonds, deposits and reserves Other (City of Parramatta). a) Payables and borrowings related to limited assets. There are no restricted assets (external or internal) applicable to the above payables and borrowings. The following payables and borrowings, although classified as current, are not expected to be settled in the next 12 months.
These amounts represent liabilities for goods and services provided to the Board before the end of the financial year that have not been paid.
PROVISIONS
Provisions
Provisions (continued)
PROVISIONS (continued)
ACCUMULATED SURPLUS, REVALUATION RESERVES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS
ACCUMULATED SURPLUS, RVALUATION RESERVES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS (continued).
ACCUMULATED SURPLUS, REVALUATION RESERVES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS (continued)
STATEMENT OF CASH FLOWS - ADDITIONAL INFORMATION
Statement of cash flows – additional information
COMMITMENTS FOR EXPENDITURE
Commitments for expenditure
CONTINGENCIES AND OTHER LIABILITIES/ASSETS NOT RECOGNISED
Contingencies and other liabilities/assets not recognised
- Guarantees
- Other liabilities (i) Insurance
CONTINGENCIES AND OTHER LIABILITIES/ASSETS NOT RECOGNISED (continued)
Contingencies and other liabilities/assets not recognised (continued)
- Other liabilities (continued) (iv) HIH Insurance
Financial risk management
FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued)
The main risk associated with these receivables is credit risk – the risk that debts due and payable to the Council may not be settled in full. Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be available to meet payment obligations when due. Borrowing is also subject to interest rate risk – the risk that movements in interest rates may adversely affect funding costs and debt service requirements.
The municipality manages this risk by borrowing on a long-term basis and setting the interest on the basis of an extension of 4 years.
Material budget variations
Material budget variations (continued)
MATERIAL BUDGET VARIATIONS (continued)
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)
Fair value measurement (continued)
FAIR VALUE MEASUREMENT (continued)
These assets were last revalued on 30 June 2015 in accordance with the fair valuation policy as mandated by the Office of Local Government. The Council's Community Land was revalued on 30 June 2018 in accordance with the fair valuation policy as mandated by the Office of Local Government. The Council's Operational Land was revalued on 30 June 2018 in accordance with the fair valuation policy as mandated by the Office of Local Government.
The Council's land under the roads was revalued on 30 June 2018 in accordance with the fair valuation policy set out by the Office of Local Government.
Local government industry indicators – consolidated
Operating performance ratio
Own source operating revenue ratio Total continuing operating revenue (1)
This ratio fell below the benchmark due to an increase in developer contributions and distributor allocations received in comparison. This ratio decreased compared to last year due to this year's change in asset depreciation policy. This ratio measures the availability of cash from operations to service debt, including interest, principal and.
This ratio decreased from 2017 to 2018 due to the completion of boundary adjustments and payment to the city.
COUNCIL INFORMATION AND CONTACT DETAILS
Development contribution outside internal loan in gs $ '000 Council currently has 9 Section 7.11 contribution plans for developers. Under the Environmental Planning and Assessment Act 1979 Council has significant obligations to provide section 7.11 (contribution to the provision or improvement of facilities or services) infrastructure in new release areas. Development contribution in connection with tribute with internal loan in gs(continued) $ '000 S7.11 CONTRIBUTION - UNDER ONE PLAN CONTRIBUTION PLAN NUMBER 9 - Castle Hill Town Center Roads Open space Second CONTRIBUTION PLAN NUMBER 11 - Annangrove Industrial Roads Traffic Facilities -Total for year (to )/forwardedOpening received underearned during borrowing the rest of the balance sheet year (Cash) – PURPOSE ContributionInterestExpensesInternalHol.
Road development development in tribut io n you are in loan in gs (continued) $ '000 S7.11 CONTRIBUTIONS – ACCORDING TO A PLAN CONTRIBUTION PLAN NUMBER 15 - Hill Area Drainage Roads Box Traffic Facilities Space open OTHER TAXES S7.12 – UNDER A PLAN CONTRIBUTION PLAN - Hills Section 94A Other CONTRIBUTION PLAN - North Kellyville Precinct 94A Other (329) Total per year(s)/by group Opening received during earned during borrowing reduced on balance of borrowing more limited in the year as.
Opinion
Basis for Opinion
Other Information
The Councillors’ Responsibilities for the Financial Report
Auditor’s Responsibilities for the Audit of the Financial Report
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Report on the Conduct of the Audit for the year ended 30 June 2018
The Hills Shire Council
SIGNIFICANT AUDIT ISSUES AND OBSERVATIONS
Council's operating result ($127.4 million, including the effect of depreciation of $21.5 million and impairment of Community land of $18.9 million) was the same as in 2016-17. Net profit before capital grants and contributions ($-11.9 million) was $38.6 million lower than the 2016-17 result. This was primarily due to the revaluation of Community land purchases made in million), non-recurring expenses of ($12.0 million) and additional depreciation ($8 million).
This was primarily due to the advance receipt of the 2017-2018 financial assistance in 2016-2017, resulting in a full year plus an additional quarterly payment of $2.5 million in the prior year.
FINANCIAL POSITION
Cash and Investments
PERFORMANCE RATIOS
Own source operating revenue ratio
Unrestricted current ratio
The standard set by the Office of Local Government (OLG) is greater than zero percent. The "Outstanding Rates and Annual Charges Report" assesses the impact of uncollected rates and annual charges on the council's liquidity and the adequacy of debt recovery efforts.
Cash expense cover ratio
Building and infrastructure renewals ratio (unaudited)
Legislative compliance
SPECIAL PURPOSE FINANCIAL
STATEMENTS
92 The Hills Shire Council Financial Statements 2017-2018 SPECIAL PURPOSE FINANCIAL STATEMENTS for the financial year ended 30 June 2018. STATEMENT BY COUNCIL AND MANAGEMENT 93 2. Income Statement - Water Supply Business Activity n/a Income Statement Business Activity - Sewerage/A Income Statement - Other Business Activities 94 Statement of Financial Position - Water Supply Business Activity n/a Statement of Financial Position - Sewerage Business Activity n/a Statement of Financial Position - Other Business Activities 95 3. NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 4. i) These Special Purpose Financial Statements have been prepared for use by both the Council and the Office of Local Government in meeting their requirements in terms of National Competition Policy. In essence, the principle is that public enterprises, whether Commonwealth, State or local, must operate without net competitive advantages over other businesses as a result of their public ownership. iii) For the Council, the principle of competitive neutrality and public reporting only applies to declared business activities.
These include (a) those activities classified by the Australian Bureau of Statistics as business activities, which are water supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnover of more than 2 million. USD that the Council has formally declared as business activity (defined as category 1 activities). iv) In preparing these accounts for Council self-classified Category 1 businesses and ABS-defined activities, Councils must (a) adopt a corporatisation model and (b) apply full cost allocation including tax equivalent regime payments and debt guarantee fees (where the business benefits from the Council's borrowing position in relation to to commercial interest).
NET ASSETS
TOTAL EQUITY
SIGNIFICANT ACCOUNTING POLICIES (continued)
Significant accounting policies (continued)
However, where the Council does not pay certain taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all business activities nominated by the Council and are reflected in the Financial Statements for Special Purposes. The debt guarantee charge is designed to ensure that the council's business activities face the "true" costs of commercial borrowing in line with private sector competitors. To calculate a debt guarantee fee, the Council has determined what the differential borrowing rate would be between the commercial rate and the Council's borrowing rate for its business activities.
Business activities must generate a minimum yield equal to the Commonwealth 10-year bond yield, which is 2.25% as of 6/30/18.
END OF AUDITED SPECIAL PURPOSE FINANCIAL STATEMENTS
My responsibilities under the standards are described in the 'Auditor's responsibilities for auditing the financial report' section of my report. Other information includes the information in the council's annual report for the year ended 30 June 2018, apart from the financial report and my independent auditor's report thereon. The councilors are responsible for the preparation and fair presentation of the financial report and for determining that the accounting policies described in note 1 to the financial report are appropriate to meet the requirements of the LG Code.
A description of my responsibilities for the audit of the financial report can be found on the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar4.pdf.
SPECIAL SCHEDULES
Councils can claim the value of revenue lost due to assessment objections in any single year. I have audited the accompanying Special Schedule 2–Allowable Income for the general rates (Schedule) of Hills Shire Council (Council) for the year ending 30 June 2019. In my opinion, the Council's Schedule for the year ending 30 June 2019 is prepared, in all material respects, in accordance with the requirements of the Local Government Accounting and Financial Reporting Practice Code (LG Code) issued by the Local Government Office (LGO) and is consistent with the Council's books and records.
My responsibilities under the standards are described in the 'Auditor's Responsibilities for the Audit of the Annex' section of my report.
Emphasis of Matter – Basis of Accounting
I believe that the audit evidence obtained is sufficient and suitable as a basis for my audit conclusion. Government Act 1993, I have separately expressed an opinion on the annual accounts for general purposes and the annual accounts for special purposes. In connection with my revision of the form, it is my responsibility to read the other information and in that connection consider whether the other information is significantly inconsistent with the form or my knowledge gained during the revision, or otherwise appears to be materially incorrect information.
If, based on the work I have performed, I conclude that there is a material misstatement of the other information, I must disclose that fact.
The Councillors’ Responsibilities for the Schedule
Auditor’s Responsibilities for the Audit of the Schedule
Special schedule C OUNCIL OF THE S M I S H I S I S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S S 7 – R ep rt on I nfras Tru ct ure As scheduled on 3 0 J une 2 018 (continued) $'000 Notes: a Maintenance required is the amount identified in Council's asset management plans.
Infrastructure asset performance indicators * consolidated
- Buildings and infrastructure renewals ratio (1) Asset renewals (2)
- Infrastructure backlog ratio (1)
- Asset maintenance ratio Actual asset maintenance
- Cost to bring assets to agreed service level
Source of benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark Purpose of agreed. To assess the rate at which these assets are renewed relative to the rate of.
