Local governments (councils) are involved in a wide range of activities. Examples range from providing community services—such as roads, water and sewerage—to recreation and cultural facilities, to an estimated 4.8 million Queenslanders. The Queensland population is expected to increase by eight per cent in the next five years. This, combined with rising community expectations for service delivery, volatility in revenue sources, and the financial burden of maintaining and renewing extensive infrastructure networks, has councils concerned about their financial position.
All local governments, and most entities they control, prepare annual financial statements. A broad range of parties use these financial statements, including parliamentarians, councillors, taxpayers, employees and the community. For the statements to be useful, the information reported must be accurate and timely. Timely and accurate financial reporting is essential for effective decision-making, managing public funds and assets, and the delivery of public accountability.
This report summarises the results of our financial audits of the 77 Queensland councils and 81 of the related entities they control. It also summarises our analysis of the financial position, performance and sustainability of councils as well as the timeliness and quality of financial reporting. We also evaluate the strength of the internal controls that councils have designed, implemented, and maintained.
As part of each audit, we make recommendations to individual councils about how to improve their financial management.
In addition, we recommend that councils:
1. make the financial statements of their controlled entities publicly available (Chapter 2)
2. assess their processes for ensuring that their asset registers are complete and remain current over time (Chapter 2) including:
- performing physical stocktakes and updating asset registers
- implementing control improvements over the recognition of contributed assets
3. identify their related parties and related party transactions including terms and conditions, and prepare a draft note with data for inclusion in their pro forma financial statements to be presented to their audit committees or council (Chapter 2)
4. critically examine their service levels and costs for service delivery and plan in the longer term to be able to earn enough operating revenue to meet operational expenditure (Chapter 3)
5. assess the maturity of their risk management practices, develop an action plan for improvements, and track progress towards agreed targets (Chapter 4)
6. assess their business continuity and disaster recovery capabilities, identify areas for improvement, and establish or update their plans (Chapter 4)
7. retain or re-establish their audit committees to ensure there is effective oversight of their internal control frameworks, financial reporting, and legislative compliance (Chapter 4).