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Looking Ahead

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Academic year: 2023

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The municipality is obliged to send audited annual accounts to the municipality. The financial statements are presented in Australian dollars and are rounded to the nearest thousand.

Historical cost convention

The Council has the authority to amend and reissue these financial statements in cases where it receives critical information from public submissions or when the OLG instructs the Council to amend the financial statements. The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below.

Significant accounting estimates and judgements

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations, the Local Government Act 1993(Act) and the Local Government (General) Regulation 2005 (Regulation), and the Local Government Code of Accounting Practice and Financial Reporting.

Monies and other assets received by Council The Consolidated Fund

Income, expenses and assets are recognized net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case, it is recognized as part of the cost of acquiring the asset or as part of the expense.

Goods and Services Tax (GST)

In accordance with the provisions of section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and segregated trust fund is maintained to account for all money and property received in trust by the council and which may only be used for the purposes of or in accordance with the trusts in respect of those monies. A separate statement of the funds in the Trust Fund is available for public inspection at the town hall free of charge.

Volunteer services

IAS 116 requires the company to recognize revenue from the sale of items produced during the preparation of the tangible fixed asset for its intended use, and the related costs in profit or loss, instead of deducting the amounts received from the asset's purchase value. During the year, the Council adopted all accounting standards and interpretations (as issued by the Australian Accounting Standards Board) that were first effective on 30 June 2021.

New accounting standards adopted during the year

IAS 137 to determine the costs that the company includes in assessing whether the contract will result in a loss, and. Costs relating to the Council's role as an integral part of democratic government, including elections, membership fees and expenses, subscriptions to local authority associations, Council and policy-making committee meetings, area representation and public disclosure and compliance, together with associated administration.

Ordinary rates

Annual charges

Accounting policy

Specific user charges

Timing of revenue recognition for other revenue

General purpose grants and non-developer contributions (untied)

General purpose (untied) Current year allocation

Amount recognised as income during current

Special purpose grants and non-developer contributions (tied)

Total special purpose grants and

Comprising

Developer contributions

Total developer contributions

Capital grants received by the Council to enable the Council to acquire or construct a piece of infrastructure, property, plant and equipment to established specifications that the Council will control and that is enforceable are recognized as revenue when the obligation to build or purchase is completed. While the council generally recognizes these amounts as part of a development consent order, such developer contributions are not recognized as revenue until they are received by the council because of the possibility that individual development consents cannot be followed by the applicant and, as a result, would not be payable to the Council.

Interest and investment income is attributable to

For acquisitions of assets, the revenue is recognized when the asset is acquired and controlled by the Board. Developer contributions may only be spent for the purposes for which the contributions were required, but the Council may apply contributions according to the priorities established in work schedules.

Total gross reversal of revaluation decrements on IPPE

The council contributes to various defined benefit plans and defined contribution plans on behalf of its employees. Prepaid contributions are recognized as an asset to the extent that there is a possibility of cash repayment or reduction of future payments.

Depreciation and amortisation

The Council's original budget was adopted by the Council on and shall not be revised. While these general accounts include the original budget adopted by the Council, the Act requires the Council to revise its financial budget on a quarterly basis so that it is able to manage the variation between actual and budget that invariably occurs during the year.

REVENUES

Many factors influenced the original projections on which the budget was based. The following explains material deviations between the original budget and actual results of more than 10% or where the deviation is material in nature.

EXPENSES

STATEMENT OF CASH FLOWS

The original budget includes only capital expenditures, but the actuals shown also reflect off-budget purchases and redemptions of investments. For the purposes of presenting the statement of cash flows, cash and cash equivalents include: cash on hand; demand deposits with financial institutions; other short-term, highly liquid investments with original maturities of three months or less that can be readily exchanged for known amounts of cash and are subject to insignificant risk of change in value; and bank overdrafts.

Debt securities at amortised cost

External restrictions – other

Internal restrictions

Purpose

Total provision for impairment –

Externally restricted receivables

Movement in provision for impairment of receivables

The Board writes off a trade debtor when there is information indicating that the debtor is in serious financial difficulty and there is no realistic prospect of recovery, e.g. Where the Board renegotiates the terms of receivables due from certain customers, the new expected cash flow is discounted at the original effective interest rate and any resulting difference in the carrying value is recognized in profit or loss.

Details for real estate development

Movements

Current inventories not anticipated to be settled within the next 12 months

Decreases that reverse previous increases of assets in the same class are first charged directly to equity against revaluation reserves to the extent of the remaining reserve attributable to the class; all other reductions are charged against the Income Statement. Land under roads acquired after 1 July 2008 is recognized in accordance with AASB 116 Property, Plant and Equipment.

At fair value

At the commencement of the lease, the Council recognizes the right-of-use asset and the associated lease liability for the entire lease term. If the lease liability is remeasured, the right-of-use asset is adjusted to reflect the remeasurement.

Payables relating to restricted assets

Current payables not anticipated to be settled within the next twelve months

The contractual obligation relates to grants and contributions received before the revenue recognition criteria in AASB 15 are met as performance obligations are ongoing. Therefore, funds received are recorded as a contract liability at the time of receipt and are recognized as revenue after the performance obligation is satisfied.

Total revenue recognised that was included in the contract liability

The income is recognized as the Council constructs the asset and the contract liability reflects the funding received which cannot yet be recognized as income. Revenue is recognized which is included in the contract liability balance at the beginning of the period.

Employee benefit provisions relating to restricted assets

Current employee benefit provisions not anticipated to be settled within the next twelve months

Description of and movements in provisions

This provision should recognize responsibility in relation to environmental obligations to maintain biodiversity areas in accordance with the terms and conditions of BSAs.

Nature and purpose of provisions

Infrastructure, property, plant and equipment revaluation reserve

Interest rate risk – the risk that movements in interest rates may affect returns and income. Credit risk – the risk that the investment counterparty will not meet their particular obligations to a financial instrument, resulting in a financial loss to the Council – whether of a capital or income nature.

Credit risk profile

Council manages the credit risk associated with these receivables by monitoring outstanding debt and applying strict collection procedures. There are no significant concentrations of credit risk, except that due to the nature of the business, the municipality has significant credit risk in its local environment.

Receivables – rates and annual charges

Credit risk for liquid funds and other short-term financial assets is considered negligible, as the counterparties are reputable banks with high external credit ratings. The maximum exposure to credit risk at the reporting date is the carrying amount of each receivable class in the financial statements.

Receivables - non-rates and annual charges

The fair value of assets and liabilities must be estimated in accordance with different accounting standards either for recognition and measurement requirements or for disclosure purposes. The Council engages an external, independent and qualified appraiser to determine the fair value of the Council's investment properties.

Investment property

During the year, there were no transfers between Level 1 and Level 2 fair value hierarchies for recurring fair value measurements. Where the Council is unable to derive fair value estimates using quoted market prices of identical assets (ie Level 1 inputs), the Council instead uses a spread of both observable inputs (Level 2 inputs) and unobservable inputs (Level 3 inputs).

Infrastructure, property, plant and equipment (IPPE)

Other liabilities

A number of cases are currently listed for consideration in the Land and Environment Court. Capital expenditure which is committed on the accounting date, but which is not recognized in the accounts as liabilities:.

Property, plant and equipment

Operating performance ratio Total continuing operating revenue

Own source operating revenue ratio Total continuing operating revenue

2.(a) Own source operating revenue ratio excluding

  • Unrestricted current ratio Current assets less all external
  • Debt service cover ratio Operating result before capital
  • Rates and annual charges outstanding percentage
  • Cash expense cover ratio Current year’s cash and cash
  • mths 32.36 mths 30.38 mths >3.00 mths
    • Operating performance ratio
    • Own source operating revenue ratio

This ratio fell below the benchmark due to increases in developer contributions and subdivision commitments received compared to prior years.

2.(a) Own source operating revenue ratio excluding S7.11, VPA and Subdivider Dedications Purpose of (a) own

  • Unrestricted current ratio
  • Debt service cover ratio
  • Rates and annual charges outstanding percentage
  • Cash expense cover ratio

Non-cash contributions represent the total value of infrastructure works provided by developers in lieu of contributions. Both the non-cash income and the associated dedicated assets do not form part of the Held as Restricted Asset balance due to their non-cash nature.

Elected members Dr Michelle Byrne

INDEPENDENT AUDITOR’S REPORT

Opinion

Basis for Opinion

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Other Information

The Councillors’ Responsibilities for the Financial Statements

Auditor’s Responsibilities for the Audit of the Financial Statements

A description of my responsibilities for the audit of the financial statements is available on the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar4.pdf.

SYDNEY

BAULKHAM HILLS NSW 2153

Report on the Conduct of the Audit for the year ended 30 June 2021

The Hills Shire Council

SIGNIFICANT AUDIT ISSUES AND OBSERVATIONS

Rural fire-fighting equipment not recognised in the financial statements

INCOME STATEMENT Operating result

FINANCIAL POSITION Cash and investments

PERFORMANCE Performance measures

The 'Own Resources Operating Income Ratio' measures the council's fiscal flexibility and the extent to which it relies on external sources of funding such as operating grants and contributions. Unrestricted Current Ratio The Unrestricted Current Ratio is specific to local government and represents the council's ability to meet its short-term obligations in a timely manner.

Infrastructure, property, plant and equipment renewals

The percentage of outstanding fees and annual charges assesses the impact of uncollected fees and annual charges on the municipality's liquidity and the adequacy of collection efforts. Cash coverage ratio This liquidity ratio indicates the number of months that the municipality can continue to pay its direct expenses without additional cash inflow.

OTHER MATTERS Legislative compliance

Special Purpose Financial Statements

SPECIAL PURPOSE

FINANCIAL STATEMENTS

A statement setting out the supplementary accounting policies adopted in the preparation of the special purpose financial statements (SPFS) for National Competition Policy (NCP) reporting purposes follows. The framework for its application is set out in the June 1996 NSW Government Policy Statement entitled 'Application of National Competition Policy to Local Government'. was also adopted.

Emphasis of Matter - Basis of Accounting

My responsibilities under the Standards are described in the "Accountant's Responsibilities for the Audit of the Financial Statements". The Board's annual report for the year ended 30 June 2021 contains other information in addition to the financial statements and my independent auditor's report thereon.

SPECIAL

SCHEDULES

Special Schedules

My responsibilities under the standards are described in the 'Auditor's responsibilities for the audit of the schedule' section of my report. The Board's annual report for the year ending 30 June 2021 includes other information in addition to the Annexure and my Independent Auditor's Report thereon.

The Councillors’ Responsibilities for the Schedule

As of the date of this independent auditor's report, the other information I have received consists of the General Purpose Financial Statements, the Special Purpose Financial Statements, and the Special Statement "Infrastructure Assets Report as of June 30, 2021." If, based on the work I have performed, I conclude that there is a material misstatement of the other information, I must report that fact.

Auditor’s Responsibilities for the Audit of the Schedule

In connection with my audit of the Schedule, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Schedule or my knowledge obtained in the audit, or otherwise appears materially misrepresented. The scope of my audit does not include and does not provide assurance:. that the Council carried out its activities effectively, efficiently and economically. on the security and controls on the electronic publication of the audited Annex on any website where it may be presented. about any other information that may be linked to/from the Schedule.

References

Related documents

Mr Hammond spoke to the NZTA Regional update report and noted the following:-  The NZTA Regional update report is a snapshot of NZTA business  In 2013, the Tasman District Council