No breach by Wanneroo Mayor and councillors

An audit has found two of the City of Wanneroo’s financial ratios do not fit the Department of Local Government’s guidelines.

A REPORTING oversight by City of Wanneroo administration staff has not resulted in the Mayor and councillors breaching their obligations, according to the Department of Local Government.

But the city is still in a situation where it did not meet the department’s guidelines on asset sustainability ratios in the 2017-18 financial year with the department saying ratios are being reviewed as part of the current Local Government Act 1995 review and the city saying it is solvent and the ratios are an industry issue.

A Department of Local Government spokesman said there was no basis for suspension of the council due to the reporting oversight.

“The department would consider the city’s non-compliance in not responding within the prescribed timeframe as an oversight,’’ he said.

“With the 2017-18 financial statement audits, 78 local governments had a significant matter reported in their audit report.

“Within those 78 audit reports, the asset sustainability ratio was referred to on 37 occasions and the current ratio on three occasions.

He said the compliance requirement was to report the ratio and the city had complied with that requirement but operational guideline No. 18 on financial ratios issued by the department included standards to help interpret the ratios and it was the city’s performance against those standards that the auditor had commented on.’’

During question time at the councils ordinary meeting on Tuesday, September 24 Mindarie resident Joan Warren questioned the council about when it about the state of the city’s finances and what action it had taken.

At its August 27 meeting the City of Wanneroo included a report on matters of significance highlighted in the 2017-18 Audit Report, which included a letter from the Department of Local Government.

The letter said the auditor general had identified significant adverse trends in the financial position – current ratio and asset sustainability ratio below the department standard for the past three years.

The department’s guideline said the current ratio was used to determine if a local government had sufficient assets to meet its short term commitments.

In relation to the current ratio the officer’s report acknowledged the city did not meet the department’s guidelines but said it had managed its payment commitments without any recorded delay’s in its payment cycles for creditor and staff commitments.

The officer’s explanation for the asset sustainability ratio not meeting the department’s guidelines was that with the city’s current mix of old and new assets and continued high growth a lower than average ratio was expected with the current condition of assets and level of renewal confirming that position.

The report said administration staff had presented the oversight to the audit and risk committee on November 13 last year and the council a fortnight later.

It also said the council was unable to meet the ratios and believed the department’s guideline ratios were of concern to other local governments so the council intended to write to the department explaining the situation and asking to have the ratios reviewed.

The department spokesman said the matter was described as significant in the audit report and triggered a requirement under the Act for the city to report to the Minister and the ratepayers (via the city’s website) on what actions the city had taken or intends to take in respect of the matters raised.

“By not reporting to the minister within three months of receiving the audit report, the city was non-compliant, however, the fact the city responded to the department’s follow up means the non-compliance has been addressed and there is not considered to be any further follow up required by the department or Minister,’’ he said.