Audit Objective
This report summarises the financial audit results of the 77 Queensland local governments for the financial year ending 30 June 2018. It also summarises the financial audit results of the 83 entities they control that produced financial statements.
Overview
Queensland’s 77 local governments (councils) and the entities they control provide services to nearly 5 million Queenslanders. The councils vary widely in their size and location and in the broad range of services they provide—from delivering key community services such as roads, water, sewerage, and waste management, to providing banking, retail, cultural, and recreational services.
Recommendations
As part of each audit, we make recommendations to councils about how to improve their financial management.
We recommend that councils take prompt action to address individual recommendations and resolve internal control deficiencies, with a focus on those outstanding from prior years. This will help them to improve their financial stewardship and mitigate the risk of fraud or error.
We recommend that the Department of Local Government, Racing and Multicultural Affairs:
1. mandates that the chair of a council audit committee is an independent member
2. reviews the appropriateness of the net financial liabilities ratio, as most councils favour cash over debt.
We recommend, as we have in prior year reports, that the Department of Local Government, Racing and Multicultural Affairs mandates:
3. audit committees for all councils
4. that financial statements of controlled entities be made publicly available, preferably in a consistent location.
We recommend as we have in prior year reports, that councils:
5. continue to assess their processes for ensuring that asset registers are complete and remain current over time
6. review and update their month end close processes to include:
- monthly accrual statements of financial performance and position, and cash flow information
- variance analysis, key ratios, trends, and other non-financial information that will enable councillors and council executives to better understand their council’s financial performance and outlook
7. review their accounting for rehabilitation of landfills. This should include:
- assessing open and closed landfill sites and whether a liability has been recognised
- ensuring all future costs associated with their obligations under their environmental authority (licence) are included in the provision
8. review their monitoring controls and memberships of their controlled entities’ boards, and:
- appoint independent directors to provide specialist skills, experience, and diversity
- establish appropriate mechanisms for oversight and to manage conflicts of interest.
These recommendations should be addressed if councils and their entities are to improve their financial stewardship.
