Saturday, May 25, 2024

Kiama looks to future following release of damning financial audit

Kiama Municipal Council has hit back at media coverage of the organisation’s damning 2021-22 Annual Financial Statements, which it has now placed on public exhibition.

In a statement, Council CEO, Jane Stroud said media reporting “that dwells on already well-known historical issues is simply a distraction”.

The audit of Council’s 2021-22 statements was delayed after it was found that the Council had overvalued some of its assets by more than $52.5 million in the previous financial year’s statements – resulting in the Council’s equity being $41 million less than what it reported.

The Council had tallied some property investments twice and had also miscalculated the value of its Blue Haven Bonaira Residential Aged Care facility by more than $49 million.

“We have been honest and open about the challenges facing Kiama Municipal Council and diligent in our reporting to the community or government entities such as ICAC, and the Office of Local Government,” said Council CEO, Jane Stroud.

“I am grateful that in January 2021 these hard and uncomfortable truths were shared publicly in reports such as the State of the Organisation, the Strategic Improvement Plan, and release of information concerning the construction of Blue Haven Bonaira.”

She said Council was already addressing the areas of concern in the audit statements, including a revaluation of the fixed asset register.

“This is a considerable, long term project, involving more than $550 million worth of community land, roads, and footpaths.”

“In recent months we’ve worked through about $200 million worth of assets, however it may take up to three years to finish the job alone, and have the qualifications removed from the financial statements.

“What’s particularly pleasing, and a huge credit to everyone involved, is the positive comments of the NSW Audit Office, when the statements were presented to councillors at their meeting on 19 September.

“They provide context to correct some of the assertions abounding in the news cycle today.”

Ms Stroud said that in the wake of “tumultuous” 2021, it was important to remember the 2020-21 financial statements received a pervasive and qualified audit opinion across the board.

“So to be able to release the 2021-22 statements containing just three qualifications: the opening balances from 2020-21, fixed assets valuations cycle (which is not complete) and a component of restricted and unrestricted cash reserves is remarkable…”

“What gives me confidence, and should give others, is that the audit opinion clearly states confidence that the decisions and direction of Council’s current strategy satisfy Going Concern requirements that were a major issue twelve months ago.

“We know we still have a long road ahead to lift the audit qualifaction and improve financial sustainability, but we are already two years along that journey since 2021, and many proactive and difficult decisions have been made by Councillors,” she said.

Mayor, Neil Reilly said that since being sworn in, Councillors and staff had worked tirelessly to address the financial challenges facing the organisation.

“We have restructured the organisation and worked digilently to address issues as they arose,” Mayor Reilly said.

“Our progress has been carefully monitored and measured by the Office of the Local Government through the performance improvement order, and watched over by the Minsiterial Appointed Financial Advisor.

“The journey of improvement continues and I am pleased to see yet another historical year of financial statement closed out, and to recognise the vast improvements made.

“The sooner we can have real time financial data at our finger tips, and start focusing on forward years and repaying our debts, rather than spending our time on historic issues, the better.

“I would like to commend the work of the Audit Risk and Improvement Committee, Finance Advisory Committee and my fellow councillors, who in the span of a single twelve months will oversee the completion and sign off of three years of financial statements.

“Their hard work, efforts and probing questions, help our organisation improve and position this Council ever closer to a brighter financial future. Playing catch up and correcting past challenges that have lasting impacts, is no easy task, and I thank them for their perseverance and dedication.

“My sincere hope is these statements will end remaining scepticism about the severity of the situation we faced in January 2021. I also hope it ends any doubt about the need for the measures we’ve put in place to fix the problems we encountered.”

Mayor Reilly said these measures included:

  • Cash flow
  • Tcorp renegotiation of the loan
  • Liquidity plan
  • Property divestment plan
  • Divestment of aged care service
  • Operational saving and service reviews

“Behind all these measures, and each council vote to support them, lies an extraordinary amount of blood, sweat and tears from council staff to produce the strategies needed to get where we want to be, back in the black, and able to stay that way.”

“On behalf of my fellow councillors, I want them to know, they have our full support, and heartfelt appreciation for their commitment and professionalism over what’s been an extraordinary few years.

“I also want to thank the NSW Audit Office for their generous remarks supporting these amazing public servants,” the Mayor said.

Read: www.kiama.nsw.gov.au/financialstatements2022.

Latest Articles