Please note:  These minutes are yet to be confirmed as a true record of proceedings

CITY OF BUSSELTON

MINUTES FOR THE Audit Committee MEETING HELD ON 13 November 2020

TABLE OF CONTENTS

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

1....... Declaration of Opening and Announcement of Visitors. 2

2....... Attendance. 2

3....... Public Question Time. 2

4....... Disclosure Of Interests. 2

5....... Confirmation Of Minutes. 3

5.1          Minutes of the Audit Committee Meeting held 27 May 2020. 3

6....... Reports. 4

6.1          CITY OF BUSSELTON 2019/2020 ANNUAL FINANCIAL REPORT, AUDITORS' REPORT AND MANAGEMENT LETTER. 4

7....... General Discussion Items. 93

8....... Next Meeting Date. 93

9....... Closure. 93

 


Audit Committee                                                                  3                                                            13 November 2020

MINUTES

 

MINUTES OF Audit Committee HELD IN Committee Room, Administration Building, Southern Drive, Busselton, ON 13 November 2020 AT 9.30am.

 

1.               Declaration of Opening and Announcement of Visitors

The Presiding Member opened the meeting at 9.33am.

 

2.               Attendance 

Presiding Member:

 

Members:

 

Cr Paul Carter

 

 

Cr Grant Henley    

Cr Phill Cronin

Cr Jo Barrett-Lennard

 

Officers:

 

Mr Tony Nottle, Director, Finance and Corporate Services

Mr Paul Sheridan, Manager, Financial Services

Ms Melissa Egan, Governance Officer

 

Office of the Auditor General:

 

Ms Carley Meagher, Director Financial Audit,

Office of the Auditor General of Western Australia (by electronic attendance)

 

The presence of Ms Meagher at the meeting fulfilled the City’s local government obligations under section 7.12A(2) of the Local Government Act, to meet with the Auditor of the Local Government (Office of the Auditor General).

 

Apologies:

 

Nil

 

3.               Public Question Time

Nil

 

4.               Disclosure Of Interests

Nil


 

5.               Confirmation Of Minutes

5.1             Minutes of the Audit Committee Meeting held 27 May 2020

Committee Decision

AU2011/044           Moved Councillor P Cronin, seconded Councillor J Barrett-Lennard

That the Minutes of the Audit Committee Meeting held 27 May 2020 be confirmed as a true and correct record.

CARRIED 4/0

 


Audit Committee                                                                  5                                                            13 November 2020

6.               Reports

6.1             CITY OF BUSSELTON 2019/2020 ANNUAL FINANCIAL REPORT, AUDITORS' REPORT AND MANAGEMENT LETTER

STRATEGIC GOAL

6. LEADERSHIP Visionary, collaborative, accountable

STRATEGIC OBJECTIVE

6.1 Governance systems, process and practices are responsible, ethical and transparent.

SUBJECT INDEX

Financial Operations

BUSINESS UNIT

Financial Services

REPORTING OFFICER

Manager Financial Services - Paul Sheridan

AUTHORISING OFFICER

Director Finance and Corporate Services - Tony Nottle

NATURE OF DECISION

Executive: substantial direction setting, including adopting strategies, plans and policies (excluding local planning policies), tenders, setting and amending budgets, funding, donations and sponsorships, reviewing committee recommendations

VOTING REQUIREMENT

Simple Majority

ATTACHMENTS

Attachment a   OAG Draft Opinion 2019-20

Attachment b    2019-20 Management Letter

Attachment c    Annual Financial Statements 2019-20 - Draft

Attachment d   OAG Opinion 2019-2020 Adopted by Committee  

 

OFFICER RECOMMENDATION

That the Council:

1.         accepts the 2019/20 Annual Financial Report including Auditors Report and Audit Management Report as per the attached documentation; and

2.         notes that it has met the requirements of section 7.12A(2) of the Local Government Act 1995 with the Audit Committee, on behalf of Council, having met with a representative of the Office of the Auditor General on the 13th November 2020.

 

Committee Recommendation

AU2011/045           Moved Councillor G Henley, seconded Councillor P Cronin

That the Council:

1.         accepts the 2019/20 Annual Financial Report including Auditors Report as amended and as attached at Attachment D and Audit Management Report as per the attached documentation; and

2.         notes that it has met the requirements of section 7.12A(2) of the Local Government Act 1995 with the Audit Committee, on behalf of Council, having met with a representative of the Office of the Auditor General on the 13th November 2020.

CARRIED 4/0

 

Reasons:              The Auditors Report accepted by the Committee had been amended pursuant to discussions with, and the consent of, Ms Meagher, the representative of the Office of the Auditor General.

 


 

EXECUTIVE SUMMARY

The draft Auditors Report and Management Letter with attachment, in relation to the 2019/20 Annual Financial Statements, were received from the Office of the Auditor General on 9 November 2020, and are provided to Committee Members as attachments to this report, along with the final draft of the 2019/20 Annual Financial Statements.

 

Pursuant to its Instrument of Appointment, it is relevant that the Audit Committee considers the 2019/20 Annual Financial Statements, Auditors Report and Management Letter and where appropriate, makes recommendation/s in respect of these reports.

 

In addition, the local government is required to meet with its auditor at least once every year in accordance with section 7.12A(2) of the Local Government Act 1995 (the Act).

 

BACKGROUND

Pursuant to Section 7.9 of the Act, an Auditor is required to examine the accounts and annual financial report submitted by a local government for audit. The Auditor is also required, by 31 December following the financial year to which the accounts and report relate, to prepare a report thereon and forward a copy of that report to:

(a)       The Mayor or President

(b)      The Chief Executive Officer; and

(c)       The Minister

 

Furthermore, in accordance with Regulation 10(4) of the Local Government (Audit) Regulations 1996 (the Regulations), where it is considered appropriate to do so, the Auditor may prepare a Management Report to accompany the Auditor’s Report, which is also to be forwarded to the persons specified in Section 7.9 of the Act.

 

The Management Report provides an overview of the audit process and outcomes, whilst also identifying any matters that, whilst generally not material in relation to the overall audit of the financial report, are nonetheless considered relevant to the day to day operations of the City.

 

Representatives of the Audit Committee and City officers met with the OAG at an entrance meeting held on 28 May 2020. At this meeting, the OAG outlined the process for the annual audit.

The audit took place from 29 September to 9 October 2020. An exit meeting was held with representatives of the Audit Committee and City administration on 9 October 2020. The OAG has since provided their draft audit report, opinion 9 November 2020, which is attached to this report.

OFFICER COMMENT

The OAG have confirmed that once again the City has been provided with an unqualified audit opinion (clear audit).

 

The Audit Committee should note the following Auditor’s comments:

“Opinion

I have audited the annual financial report of the City of Busselton which comprises the Statement of Financial Position as at 30 June 2020, the Statement of Comprehensive Income by Nature or Type, Statement of Comprehensive Income by Program, Statement of Changes in Equity, Statement of Cash Flows and Rate Setting Statement for the year then ended, and notes comprising a summary of significant accounting policies and other explanatory information, and the Statement by the Chief Executive Officer.

 


 

In my opinion the annual financial report of the City of Busselton:

(i)        is based on proper accounts and records; and

(ii)       fairly represents, in all material respects, the results of the operations of the City for the year ended 30 June 2020 and its financial position at the end of that period in accordance with the Local Government Act 1995 (the Act) and, to the extent that they are not inconsistent with the Act, Australian Accounting Standards.”

 

and

 

“Emphasis of Matter – Basis of Accounting

I draw attention to Note 1 and 11 to the financial report, which describes the basis for accounting. The financial report has been prepared for the purpose of fulfilling the City’s financial reporting responsibilities under the Act. Regulation 17A of the Local Government (Financial Management) Regulations 1996 (Regulations), requires a local government to measure vested improvements at fair value and the associated vested land at zero cost. This is a departure from AASB 16 Leases which would have required the entity to measure the vested improvements also at zero cost. My opinion is not modified in respect of this matter.

 

I draw attention to Note 1 and 11 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the City’s financial reporting responsibilities under the Act. In respect of the comparatives for the previous year ended 30 June 2019, Regulation 16 of the Local Government (Financial Management) Regulations 1996 (Regulations), did not allow a local government to recognise some categories of land, including land under roads, as assets in the financial report. My opinion is not modified in respect of this matter.

 

The Auditor’s Management Report provides an overview of the approach undertaken in respect of the annual audit process, and the associated outcomes of the audit.”

 

and

 

“Report on Other Legal and Regulatory Requirements

In accordance with the Local Government (Audit) Regulations 1996 I report that:

(i)        In my opinion, the following material matters indicate significant adverse trends in the financial position of the City:

a.        The Current Ratio as reported in Note 33 of the annual financial report is below the Department of Local Government, Sport and Cultural Industries (DLGSCI‘s standard of 1.0 for the last three financial years; and

b.        The Operating Surplus Ratio as reported in Note 33 of the annual financial report is below the DLGSCI’s basic standard of 0.01 for the last three financial years.

(ii)       All required information and explanations were obtained by me.

(iii)      All audit procedures were satisfactorily completed.

(iv)      In my opinion, the Asset Consumption Ratio and the Asset Renewal Funding Ratio included in the annual financial report were supported by verifiable information and reasonable assumptions.”

 

The Management Report also identifies any findings that, whilst not material in relation to the overall audit of the financial report, are considered relevant to the day to day operations of the City.

 

As part of the 2019/20 Financial Audit, the Auditor made one finding, deemed as moderate. Full details and City of Busselton Management comments can be seen in the 2019-20 Management Letter attachment:

“1.  Remote Access

Finding

We found that systems can be accessed remotely without the use of a Virtual Private Network (VPN) connection or multi factor authentication.  

 

The system is currently accessed by the majority of staff remotely via Remote Desktop Protocol (RDP), through a Remote Desktop Gateway with an SSL certificate installed.

 

Whilst this is an acceptable method of accessing the system remotely, it could be further strengthened through the use of multi factor authentication.

 

In addition, whilst the remote access server records remote logins and unsuccessful login attempts, there is no evidence that these are reviewed.”

 

Section 2.2(c) of the Audit Committee Terms of Reference determines that the Audit Committee is responsible and has the duty to formally meet with the auditor in accordance with the Act on behalf of the local government. Ms. Carly Meagher, Director Financial Audit, from the OAG, who is representing the Auditor General is attending the Audit Committee meeting. Ms. Meagher will present the audit report and respond to any queries arising from the 2019/20 Audit.

The presence of Ms. Meagher meets the requirements of 7.12A(2) of the Act.

Statutory Environment

Matters pertaining to the financial audit of a local government authority are detailed within:

§  Local Government Act 1995 - Section 7.9 and Section 7.12A.

§  Local Government (Financial Management) Regulations 1996.

§  Local Government (Audit) Regulations 1996 – Regulation 16

 

Relevant Plans and Policies

There are no relevant plans or policies to consider in relation to this matter.

Financial Implications

There are no financial implications associated with the Officer Recommendation.

Stakeholder Consultation

No external stakeholder consultation was required or undertaken in relation to this matter.

 

There is a requirement to include the audited financial statements within the City of Busselton Annual Report, which will be advertised to the public following its consideration by Council.

Risk Assessment

An assessment of the potential implications of implementing the Officer Recommendation has been undertaken using the City’s risk management framework, with risks assessed taking into account any controls already in place. No risks of a medium or greater level have been identified.

Options

The Audit Committee may determine to make specific recommendations in relation to the audit findings and the actions identified by management in addressing these.  Given the nature of the issue that arose and the fact that this will need to be managed operationally by the City’s Information Services team, with actions already proposed or underway, officers do not think specific resolutions are necessary.

CONCLUSION

The City achieved a clear audit for the financial year ending 30 June 2020 with only one (1) finding reported in the Management Report.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

Not applicable.

 


Audit Committee

12

13 November 2020

6.1

Attachment a

OAG Draft Opinion 2019-20

 





Audit Committee

14

13 November 2020

6.1

Attachment b

2019-20 Management Letter

 



Audit Committee

32

13 November 2020

6.1

Attachment c

Annual Financial Statements 2019-20 - Draft

 












































































Audit Committee

92

13 November 2020

6.1

Attachment d

OAG Opinion 2019-2020 Adopted by Committee

 



 


Audit Committee                                                                  93                                                          13 November 2020

7.               General Discussion Items

Nil

 

8.               Next Meeting Date

To be advised.

 

9.               Closure

The meeting closed at 10.11am.

 

 

 

 

 

 

THESE MINUTES CONSISTING OF PAGES 1 TO 93 WERE CONFIRMED AS A TRUE AND CORRECT RECORD ON ______________________________________

 

DATE:_____________________    PRESIDING MEMBER: ____________________________