The Queensland Auditor-General has proposed changes to the Local Government Act which would require all Councils to establish independently-chaired audit committees.
Delivering his report Local Government Entities: 2018-19 Results of Financial Audits to Parliament, Brendan Worrall said the State’s 77 councils were involved in a wide range of activities.
“Examples range from delivering key community services, such as roads, water, sewerage, and waste management, to providing banking, retail, cultural, and recreational services to their communities,” Mr Worrall said.
“We found that all council financial statements completed to date are reliable and comply with relevant laws and standards,” he said.
“We found that councils have been generally more timely in finalising their financial statements.”
He said four councils — Doomadgee Aboriginal Shire Council, Palm Island Aboriginal Shire Council, Richmond Shire Council and Woorabinda Aboriginal Shire Council — had yet to finalise their 2018-19 financial statements.
“The Councils have continued to improve their year-end processes and the quality of their draft financial statements, which has helped them to reduce the average time required to finalise their financial statements,” Mr Worrall said.
“Five councils did not meet their statutory reporting deadline because they had problems completing their asset valuation process,” he said.
“More than half of the councils continue to spend more delivering services to their community than they receive in revenue from rates, fees and charges, and grants – this is particularly the case in rural, remote and Indigenous areas.”
He said councils needed to know which services their communities valued to enable them to make informed decisions about which services to provide.
“Being financially sustainable is a challenge for grant-dependent councils, as grant funding fluctuates, and there is lack of certainty about the amounts that will be available in the future,” Mr Worrall said.
“The Department of Local Government, Racing and Multicultural Affairs sets the ratios that councils use to measure sustainability,” he said.
“The Department needs to consider if these ratios are still relevant or if they should be more fluid, to address the changing needs of councils.”
He said an active audit committee and internal audit function could support a council in ensuring internal controls were effective, particularly during times of change, and in monitoring the timely resolution of audit recommendations.
“We propose that the Department amends the Local Government Act 2009 to require all councils to have audit committees and all audit committee chairs to be independent,” Mr Worrall said.
