QAO Report – Highlights from the 2017/18 report

by Owen Harvey, Executive Director Queensland

As all of us are no doubt aware, the Qld Audit Office (QAO) recently released the 2017-18 results of financial audits. In summary, and paraphrasing a number of the key messages:

Financial Sustainability – The report noted that Long Term financial sustainability remains a major risk for many councils. The five-year average operating surplus ratio continues to deteriorate, with the sector still spending more than it earns.

Financial Asset Data – Incomplete asset registers continue to be an issue across the sector. Twenty-five councils reported ‘found’ assets in 2017–18. These assets were not included in asset registers when they should have been, and they totalled $378.2 million. Without complete and accurate asset information, councils cannot adequately plan and manage their activities.

Asset Sustainability – 27 councils not having an asset management strategy and a further 19 councils having strategies that are significantly outdated, unfinished, or deficient, long-term asset management planning remains a key future challenge and risk for the sector.
The remaining useful lives of infrastructure assets in most council segments have decreased over the last five years. This indicates that many councils are not replacing or renewing their assets at the rate they are using them.

Governance – Good governance and financial stewardship are still not a priority for many councils. QAO identified 273 significant control weaknesses in 57 councils. The issues identified were systemic across the sector, with 62 per cent of issues raised in prior years remaining unresolved in 2017–18. This manifests in management attitudes to control, with poor ‘control consciousness’, weak governance, and ineffective oversight and monitoring common throughout the sector. Also of note was that risk management was identified as a continuing issue and during the 2017-18 year there were still 16 councils without appropriate risk management processes in place. In some cases, councils had not identified core business and fraud risks or had failed to complete risk treatment plans.

It is pleasing that a number of Councils that CT Management Group have been supporting over the past 18 months continue to show identified improvements in the QAO summaries across the key categories, as indicated by the report ratings scales.

We are currently supporting a number of Councils in:

  • Condition Assessments, GIS support and data collection to improve the quality of asset registers to enable better decision making and reporting.
  • Linking services with asset management and to financial planning which is vital for the financial sustainability of the organisation.
  • Financial Sustainability analysis, LTFP modelling and Rating Reviews.
  • Development and Implementation of appropriate Governance and Risk Management systems and controls.

To find out more about how CTMG can assist local governments taking control of their asset valuations, complete the form below.