Local Government Report 2018

Local Government Report 2018



on the 28th of February 2019 the Auditor General for New South Wales tabled in Parliament her analysis of the audited financial statements and performance audits of New South Wales councils the report covers the results of 138 councils for the 2017 18 financial year observations and recommendations were made across five key areas of the 135 councils that launched 2017 18 financial statements all received an unqualified audit opinion also included in the sector report was the 2016-17 results of Bayside Council which received a disclaimed opinion while more Council was lodged there financial statements on time many did sir during the last week before the 31 October deadline the quality of financial reporting requires improvement as there were seven high risk findings reported these related to the lack of reporting timetables work plans resources and Quality Assurance processes the auditor-general identified 83 high-risk findings in relation to governance and internal controls and recommends that these be addressed as a priority 39 of these issues relate to information technology particularly inadequate management of user access and system changes the number of councils with an audit risk and Improvement Committee increased during the years as did those with an internal audit function the Auditor General emphasized that given the important role that councils play in New South Wales it is critical that policies and practices be robust when it comes to procurement contract management risk management and compliance with legislations the report also found that internal controls over revenue purchasing payroll Treasury manual journals and reconciliations could improve the 39 high-risk issues that relate to information technology Menma counsels may be vulnerable to cyber security breaches potentially harming service delivery and exposing sensitive and personal information the report found that some councils have not formalized key IT policies have not registered their IT rests do not regularly report their own terrorists and do not adequately manage user access and system changes when it comes to outsourcing 72 councils use an external service provider for at least one IT function however the Auditor General found that many do not have an accurate record of IT vendors engaged and the services that they provide some are not undertaking an adequate risk assessment before engaging an IT service provider service level agreements do not always contain clearly defined key performance indicators and many do not periodically assess performance of the IT service provider the auditor-general found 21 high-risk issues in relation to councils asset management and accounting practices while most councils comply with requirements for an asset management strategy policy and plan the quality of these critical planning documents needs improvement when it comes to valuing assets the report found that in addition to process deficiencies that cause financial statement and prior period errors 63 councils do not formally reassess the remaining lives of infrastructure assets and the useful lives of similar assets buried across councils 16 councils recorded residual values for road assets which does not comply with the requirements of the Australian Accounting Standards the report said that the accuracy and completeness of councils asset registers should improve in terms of operating performance 35 councils did not keep operating expenses within operating revenue and 51 councils did not sufficiently generate their own source of revenue however the majority of councils met the liquidity and working capital performance measures this is the second report on local government that the Auditor General has presented since being given the mandate to audit the sector it notes that there has been a number of improvements across the sector in a short period of time but cautions that there is still more work to do during the year the auditor-general tabled in Parliament three performance audits on the local government sector looking at fraud control shared services and council reporting and there are three upcoming performance audit reports that will be tabled this year on the staff implications of council amalgamation waste management and the management of development applications to find out more about the local government sector in New South Wales explore the interactive dashboard on our website or read the full report you

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