Ordered to be published
VICTORIAN GOVERNMENT PRINTER December 2018
PP No 2, Session 2018
Dear Presiding Officers
Responsibility of public entities to achieve their objectives in reliability of financial reporting, effectiveness and efficiency of operations, compliance with applicable laws, and reporting to interested parties.
An audit opinion expressed if the auditor has sufficient appropriate audit evidence and concludes that misstatements, individually and in aggregate, are both material and pervasive in the financial report.
This appendix sets out the definitions and criteria we used to assess and report on financial sustainability risks across the local government sector.
These financial sustainability indicators are only indicative, highlighting ongoing and emerging financial sustainability risks at a sector and cohort level—metropolitan, interface, regional, large shire and small shire councils.
Figure D1 shows the risk ratings applied to issues raised in management letters. It also details what they represent and the expected time lines for the issue to be resolved.
Figure D1
Risk definitions applied to issues reported in audit management letters
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Rating |
Description |
Management action required |
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Figure C1
Financial reporting maturity framework
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Component |
Risk definition |
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|---|---|---|---|---|
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Developing |
Intermediate |
Mature |
Advanced |
|
|
Policies and procedures | ||||
Figure B1 lists the entities included in this report. It details the date an audit opinion was issued to each entity in the sector for their financial and performance reports for the year ended 30 June 2018, and the nature of the opinion issued.
Figure B1
Audit opinions issued for the local government sector for the year ended 30 June 2018
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Entity |
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We have consulted with DELWP and the councils named in this report, and we considered their views when reaching our audit conclusions. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report, or relevant extracts, to those agencies and asked for their submissions and comments. We also provided a copy of the report to DPC.
Responsibility for the accuracy, fairness and balance of those comments rests solely with the agency head.
Responses were received as follows:
In this part of the report we summarise the financial outcomes of the local government sector for the year ended 30 June 2018, and comment on the sustainability of the sector.
The detailed data and calculations that underpin our commentary are provided in Appendix E, which lists our financial sustainability indicators, risk assessment criteria, benchmarks and the results of each indicator for each of the councils for the eight financial years 2013–14 to 2020–21.
Entities require well‐designed and efficient internal controls to help them meet their objectives reliably and cost‐effectively, including delivering accurate and timely external and internal financial reports.
Councils and their related entities prepare an annual financial report, and councils also prepare a performance statement annually.
The financial report shows financial performance and position, and is prepared in line with relevant Australian Accounting Standards and applicable legislation. The performance statement outlines a council's performance against performance indicators set by the Minister for Local Government.
We audit both the financial reports and the performance statements.