NSW Auditor-General, Bola Oyetunji, has released his report on the financial performance of the state’s councils for the year ended 30 June 2024.
Unqualified audit opinions were issued for 124 of 128 councils, 8 of 9 county councils, and 11 of 13 joint organisations. Disclaimers of opinion were issued for Glen Innes Severn Council and the New England Weeds Authority, while qualified audit opinions were issued for Snowy Valleys Council and Moree Plains Shire Council.
The Auditor-General (pictured) found there were 35 councils that met none or just one of the three key financial sustainability benchmarks.
Sixteen councils were found to have insufficient cash and investments, not subject to external restrictions, to meet three months of their expenses (excluding depreciation and interest).
“Revenue growth lags expenditure growth after adjusting for inflation, resulting in negative growth in real terms,” the Audit Report states.
“About 40% of councils did not break even in 2023–24.”
The Audit Office found that cyber security controls have improved for councils, especially regarding cyber governance. However, control gaps were identified in cyber security training and risk management of third-party systems.
Mr Oyetunji recommended the Department of Planning, Housing and Infrastructure reduce councils’ financial reporting burden, and remove non-value-adding disclosures from financial statements.
“Councils should perform more robust month-end processes, quality reviews of financial statements and supporting working papers before they are submitted for audit,” he said.
LGNSW has welcomed the report, noting the news that the number of qualified audits has fallen.
“This in large part reflects the Auditor-General’s sensible approach for councils that quite correctly do not recognise RFS mobile assets (the red fleet) in their accounts. These are NSW Government assets and should be reflected as such. This is an excellent outcome for the local government sector,” LGNSW said in a statement.
“Not surprisingly, the report highlights what LGNSW and many in the local government sector have been saying for a long time – that there are significant and growing concerns about the financial sustainability of councils in NSW.”
LGNSW also noted the Auditor-General’s observation that “NSW councils continue to have a higher regulatory financial reporting burden compared to councils in other Australian states and territories”.
The Association said this is an important finding, that it welcomes along with any move to reduce financial reporting burden on councils.
“Councils in NSW welcome all measures towards greater transparency and accountability of our sector and we thank the Auditor-General for again highlighting the growing concerns over the financial sustainability of the local government sector. We look forward to working with the State and Federal Governments to alleviate the financial sustainability of councils.”
The Auditor-General also found timeliness had improved, with 88% of councils lodging their audited financial statements by the statutory deadline of 31 October compared to 67% in the previous year.
Read the Auditor-General’s report here.
