lachlan shire council · lachlan shire council is a body politic of nsw, australia – being...
TRANSCRIPT
Lachlan Shire Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017
“The Heart of NSW”
Financial Statements 2017
page 1
Lachlan Shire Council
General Purpose Financial Statements for the year ended 30 June 2017
Contents
1. Understanding Council’s Financial Statements
2. Statement by Councillors and Management
3. Primary Financial Statements:
– Income Statement– Statement of Comprehensive Income– Statement of Financial Position– Statement of Changes in Equity– Statement of Cash Flows
4. Notes to the Financial Statements
5. Independent Auditor’s Reports:
– On the Financial Statements (Sect 417 [2])– On the Conduct of the Audit (Sect 417 [3])
Overview
(i) These financial statements are General Purpose Financial Statements and cover the operations forLachlan Shire Council.
(ii) Lachlan Shire Council is a body politic of NSW, Australia – being constituted as a local government areaby proclamation and is duly empowered by the Local Government Act 1993 (LGA).
Council’s guiding principles are detailed in Chapter 3 of the LGA and includes:
principles applying to the exercise of functions generally by council,
principles to be applied when making decisions,
principles of community participation,
principles of sound financial management, and
principles for strategic planning relating to the development of an integrated planning and reporting framework.
A description of the nature of Council’s operations and its principal activities are provided in Note 2(b).
(iii) All figures presented in these financial statements are presented in Australian currency.
(iv) These financial statements were authorised for issue by the Council on 30 November 2017.Council has the power to amend and reissue these financial statements.
8
9
7679
Page
4
67
5
2
3
Financial Statements 2017_
Lachlan Shire Council General Purpose Financial Statements for the year ended 30 June 2017 Understanding Council’s financial statements
page 2
Introduction Each year, individual local governments across New South Wales are required to present a set of audited financial statements to their council and community. What you will find in the statements The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 2017. The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government. About the Councillor/Management Statement The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements. About the primary financial statements The financial statements incorporate five ‘primary’ financial statements: 1. The Income Statement
Summarises Council's financial performance for the year, listing all income and expenses. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred. 2. The Statement of Comprehensive Income
Primarily records changes in the fair value of Council's Infrastructure, Property, Plant and Equipment. 3. The Statement of Financial Position
A 30 June snapshot of Council's financial position indicating its assets, liabilities and “net wealth”. 4. The Statement of Changes in Equity
The overall change for the year (in dollars) of Council’s “net wealth”.
5. The Statement of Cash Flows
Indicates where Council's cash came from and where it was spent. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.
About the Notes to the Financial Statements The Notes to the Financial Statements provide greater detail and additional information on the five primary financial statements. About the Auditor’s Reports Council’s annual financial statements are required to be audited by the NSW Audit Office. In NSW the auditor provides 2 audit reports: 1. an opinion on whether the financial statements
present fairly the Council’s financial performance and position, and
2. their observations on the conduct of the audit, including commentary on the Council’s financial performance and financial position.
Who uses the financial statements? The financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the Audit Report. The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements. Council is required to forward an audited set of financial statements to the Office of Local Government.
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 4
Lachlan Shire Council
Income Statement for the year ended 30 June 2017
$ ’000
Income from continuing operationsRevenue:Rates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesOther income:Net gains from the disposal of assets
Total income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationImpairmentOther expensesNet losses from the disposal of assets
Total expenses from continuing operations
Operating result from continuing operations
Net operating result for the year
Net operating result attributable to Council
Net operating result for the year before grants andcontributions provided for capital purposes
Original budget as approved by Council – refer Note 16
2,954
2,954
1,947
–
3,459
21,393
Actual 2016
Actual
8,249
1,124 1,636
2,954
30,088
4,264
2,854 1,007
–
39,293
5,369 10,723
3,948
2,488
11,796
9,913 –
3,211
29,046
3,948
1
3,948 3,459
33,042
35,834
5– 4e4d
8,852 8,791
Notes
3a
3d3c
2017
1,036
2017
4,441 958 795
9,749 –
7,565
3,524
Budget 1
3e,f
4d
5
4b4c
4,136
972
3b
4a
3e,f
250
75 4,051
16,349 1,460
32,994
3,079
16,762
605
10,412
129
54 11,609
319 3,333
57
3,459
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 5
Lachlan Shire Council
Statement of Comprehensive Income for the year ended 30 June 2017
$ ’000
Net operating result for the year (as per Income Statement)
Other comprehensive income:
Amounts which will not be reclassified subsequently to the operating result
Gain (loss) on revaluation of I,PP&EImpairment (loss) reversal relating to I,PP&ETotal items which will not be reclassified subsequentlyto the operating result
Amounts which will be reclassified subsequently to the operating resultwhen specific conditions are metNil
Total other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income attributable to Council
1,726
Actual 2016
(738) 4,680
4,680
1,726 (4,197)
Notes
20b (ii)1,726
3,459
20b (ii)
2,954
– (4,394) 197
Actual 2017
(4,197)
(738)
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 6
Lachlan Shire Council
Statement of Financial Position as at 30 June 2017
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherTotal current assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentIntangible assetsTotal non-current assets
TOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilities
TOTAL LIABILITIES
Net assets
EQUITYRetained earningsRevaluation reservesCouncil equity interest
Total equity
7,500
4,768
12,102
369,831
369,831
172,357
369,831
20
624
356,019
1,757
369,093
200,933
6,522
– 4,765
349,084
7,334
3
168,160
–
13,724
4,765
26,600
2017
207
7,202
2,152
– 5,640
18
138
2,205
25,914
6,000
1,594 100
299
Actual
1,979
2,064
2016Actual
339,498
96 10 115 10
10
25
20
10
7
8
6a6b7
6b
8
8
197,474
Notes
10
9
10
10
369,093
369,093
347,666
35,151
2,956
4,839
173
162
382,817
9
19,648 3,230
2,356
381,933
Financial Statements 2017
Lachlan Shire Council
Statement of Changes in Equity for the year ended 30 June 2017
2017
$ ’000
Opening balance (as per last year’s audited accounts)
a. Correction of prior period errorsb. Changes in accounting policies (prior year effects)
Revised opening balance
c. Net operating result for the year
d. Other comprehensive income – Revaluations: IPP&E asset revaluation rsve – Impairment (loss) reversal relating to I,PP&EOther comprehensive income
Total comprehensive income (c&d)
e. Distributions to/(contributions from) non-controlling interestsf. Transfers between equity
Equity – balance at end of the reporting period
197
3,459
(4,197)
369,831 – 369,831 –
– – – – – – – – – –
172,357 197,474
–
1,726 –
2,954 1,726 4,680 –
– 1,726 1,726 –
4,680
– – – – – – – – 1,726 1,726 –
2,954 –
1,726
2,954 – 2,954 –
194,520 170,631 365,151 – 365,151 –
interest interest
– – – –
equity(Refer 20b)
– –
365,151 – – – – –
– –
365,151 –
earningsRetained reserve Council controlling Total
revaluation Other Non-2016
–
200,933 168,160 369,093 – 369,093
–
–
– – – –
(738) –
– –
3,459 (4,197) (738) –
– – – –
– (4,197) (4,197) – – 20b (ii) (4,394) (4,394) (4,394)
– 20b (ii) – 197 197 –
– 3,459 – 3,459 –
197,474 172,357 369,831 – – 20 (d) – – – – – 20 (c) – – – – – –
–
2017
197,474 172,357 369,831 – 369,831
Retained reserve Council controlling TotalNotes earnings (Refer 20b) interest interest
reserves(Refer 20b)
–
Other Non-
equity
369,831
Assetrevaluation
– –
reserves
194,520 170,631
Asset
(Refer 20b)
This statement should be read in conjunction with the accompanying notes. page 7
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 8
Lachlan Shire Council
Statement of Cash Flows for the year ended 30 June 2017
$ ’000
Cash flows from operating activitiesReceipts:Rates and annual chargesUser charges and feesInvestment and interest revenue receivedGrants and contributionsBonds, deposits and retention amounts receivedOtherPayments:Employee benefits and on-costsMaterials and contractsBorrowing costsBonds, deposits and retention amounts refundedOtherNet cash provided (or used in) operating activities
Cash flows from investing activitiesReceipts:Sale of investment securitiesSale of real estate assetsSale of infrastructure, property, plant and equipmentDeferred debtors receiptsPayments:Purchase of investment securitiesPurchase of infrastructure, property, plant and equipmentPurchase of real estate assetsNet cash provided (or used in) investing activities
Cash flows from financing activitiesReceipts:Proceeds from borrowings and advancesPayments:Repayment of borrowings and advancesNet cash flow provided (used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Plus: cash and cash equivalents – beginning of year
Cash and cash equivalents – end of the yearAdditional Information:plus: Investments on hand – end of year
Total cash, cash equivalents and investments
Please refer to Note 11 for additional cash flow information
6b
36,456
34,100
3,553
2,995
11a 2,356
1,004
(9,814)
3,618
Notes
(11,796)
(72)
1,461
1,218
1,891
243
(14,487)
11a
(9)
50
1,900
(350) (14,787)
600 –
–
–
13,814 (3,211)
11b
(4,051)
972
2017
4,136
– 18,009 1,036
8,791
Budget
– (14,824)
–
27,712
2,064
25,648
(47)
521
–
1,543
(40,898)
1,900
23
(21,476)
(16,272) (16,189)
2,064
292
1,853
– (23) (13,242)
–
(3,231)
18,810 32,446 282
5,223 71
940
14,628 17,815
207
Actual
–
18,167 – 137
(4,818)
(37) (8,451)
(12,604)
(8) –
(4,467)
20162017
912
8,839
24,247
3,998
Actual
8,403
Financial Statements 2017
page 9
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Contents of the notes accompanying the financial statements
Details
Summary of significant accounting policiesCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsGains or losses from the disposal of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investments – detailsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentExternally restricted infrastructure, property, plant and equipmentInfrastructure, property, plant and equipment – current year impairmentsPayables, borrowings and provisionsDescription of (and movements in) provisionsStatement of cash flows – additional informationCommitments for expenditureStatement of performance measures:13a (i) Local government industry indicators (consolidated)13a (ii) Local government industry graphs (consolidated)13b Local government industry indicators (by fund)Investment propertiesFinancial risk managementMaterial budget variationsStatement of developer contributionsContingencies and other liabilities/assets not recognisedInterests in other entities
Financial result and financial position by fund‘Held for sale’ non-current assets and disposal groupsEvents occurring after the reporting dateDiscontinued operationsIntangible assetsReinstatement, rehabilitation and restoration liabilitiesFair value measurementRelated party disclosures
Additional council disclosures
Council information and contact details
n/a – not applicable
52 n/a
60 n/a
56
64 n/a
58
62
61
75
6665
64 n/a
68
64 n/a
10222324
78
9(a)9(b)
29
29
35
45
59
52
Page
1
25
19
1516
20
21
47
46
41
42
18
1213
23
26
Note
22
14
10(a)10(b)
17
6(a)
4
6(c)
9(c)
11
24
2(a)
32(b)
6(b)
5
28 73
38
34
3536
44
42
43
39
Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
27
5048
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies
page 10
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Australian Accounting Interpretations, the Local Government Act 1993 (NSW) and Regulations, and the Local Government Code of Accounting Practice and Financial Reporting. Council is a not for-profit entity for the purpose of preparing these financial statements. (i) New and amended standards adopted by
Council There have been no new accounting standards adopted in this year’s financial statements which have had any material impact on reported financial position, performance or cash flows. (ii) Early adoption of standards Council has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2016. (iii) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of property, plant and equipment and investment property. (iv) Significant accounting estimates and
judgements The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Council and that
are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: (i) Estimated fair values of investment properties
(ii) Estimated fair values of infrastructure, property, plant and equipment,
(iii) Estimated tip remediation provisions. Significant judgements in applying the Council's accounting policies (i) Impairment of Receivables Council has made a significant judgement about the impairment of a number of its receivables in Note 7. (b) Revenue recognition Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Council and specific criteria have been met for each of the Council’s activities as described below. Council bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is measured at the fair value of the consideration received or receivable. Revenue is measured on major income categories as follows: (i) Rates, annual charges, grants and
contributions Rates, annual charges, grants and contributions (including developer contributions) are recognised as revenue when the Council obtains control over the assets comprising these receipts. Developer contributions may only be expended for the purposes
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 11
for which the contributions were required, but the Council may apply contributions according to the priorities established in work schedules. Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates. Control over granted assets/contributed assets is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured, and is valued at their fair value at the date of transfer. Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner or used over a particular period and those conditions were un-discharged at reporting date, the unused grant or contribution is disclosed in Note 3(g). The note also discloses the amount of unused grant or contribution from prior years that was expended on Council’s operations during the current year. A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided at reporting date. (ii) User charges and fees User charges and fees (including parking fees and fines) are recognised as revenue when the service has been provided or when the penalty has been applied, whichever first occurs. (iii) Sale of infrastructure, property, plant and
equipment The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer. (iv) Interest Interest income is recognised using the effective interest rate at the date that interest is earned. (v) Rent Rental income is accounted for on a straight-line basis over the lease term.
(vi) Dividend income Revenue is recognised when the Council’s right to receive the payment is established, which is generally when shareholders approve the dividend. (vii) Other income Other income is recorded when the payment is due, the value of the payment is notified, or the payment is received, whichever occurs first. (c) Principles of consolidation (i) The Consolidated Fund In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund. Cash and other assets of the following entities have been included as part of the Consolidated Fund: General purpose operations Water service Sewerage service
Due to their immaterial value and nature, the following committees, entities and operations have been excluded from consolidation: • Burcher Development Management Committee • Bena Cemetery Management Committee • Condobolin Community Centre Management
Committee • Condobolin Senior Citizens Hall Management
Committee • Fifield Community Facilities Committee • Kiacatoo Hall & Recreation Ground Management
Committee • Lake Cargelligo Memorial Hall Management Committee • Lake Cargelligo Tennis Management Committee • Lake Cargelligo Tourism Management Committee • Lake Cargelligo Showground Management
Committee • Tottenham Memorial Hall Management
Committee • Tottenham Racecourse Management Committee • Tottenham Recreation Ground Management
Committee
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 12
• Tottenham/Albert Cemetery Management Committee
• Tullibigeal Hall, Cemetery, Recreation Ground Management Committee
• Vermont Hill Hall & Recreation Ground Management Committee
(ii) The Trust Fund In accordance with the provisions of Section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the Council in trust which must be applied only for the purposes of, or in accordance with the trusts relating to those monies. Trust monies and property subject to Council’s control have been included in these reports. Trust monies and property held by Council but not subject to the control of Council have been excluded from these reports. A separate statement of monies held in the Trust Fund is available for inspection at the Council office by any person free of charge. (iii) County Councils Council is not a member of any county councils. (iv) Interests in other entities Subsidiaries Council has no interest in any subsidiaries. Joint arrangements Council has no interest in any joint arrangements. (d) Leases Leases of property, plant and equipment where Council, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is
allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that Council will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to Council as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Lease income from operating leases where Council is a lessor is recognised as income on a straight-line basis over the lease term. (e) Impairment of assets Intangible assets that have an indefinite useful life or are not yet available for use are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 13
(f) Cash and cash equivalents For Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand; deposits held at call with financial institutions; other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value; and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position. (g) Inventories (i) Raw materials and stores, work in progress
and finished goods Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour, and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. (ii) Inventory held for distribution Inventory held for distribution is held at cost, adjusted where applicable for any loss of service potential. (iii) Land held for resale/capitalisation of
borrowing costs Land held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. When development is completed
borrowing costs and other holding charges are expensed as incurred. Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses. (h) Non-current assets (or disposal groups)
held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets; assets arising from employee benefits; financial assets; and investment properties that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 14
(i) Investments and other financial assets Classification Council classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or
loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Assets in this category are classified as current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which that are classified as non-current assets. Loans and receivables are included in other receivables (note 8) and receivables (note 7) in the Statement of Financial Position. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Receivables are generally due for settlement within 30 days. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that Council’s management has the positive intention and ability to hold to maturity. If Council were to sell other than an insignificant
amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, that are classified as current assets. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Recognition and de-recognition Regular purchases and sales of financial assets are recognised on trade-date: the date on which Council commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and Council has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities. Subsequent measurement Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 15
Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity. Impairment Council assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. (i) Assets carried at amortised cost For loans and receivables the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Council may measure impairment on the basis of an instrument’s fair value using an observable market price. Collectability of receivables is reviewed on an on-going basis. Debts that are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of receivables) is used when there is objective evidence that Council will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the impairment loss is recognised in the income statement within other expenses. When a receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement. Investment Policy Council has an approved investment policy complying with Section 625 of the Local Government Act 1993 (NSW) and Clause 212 of the Local Government (General) Regulation 2005 (NSW). Investments are placed and managed in accordance with that policy and having particular regard to authorised investments prescribed under the Ministerial Local Government Investment Order. Council maintains an investment policy that complies with the Act and ensures that it, or its representatives, exercise the care, diligence and skill that a prudent person would exercise in investing Council funds. Council amended its policy following revisions to the Ministerial Local Government Investment Order (the Order) arising from the Cole Inquiry recommendations. Certain investments the Council holds are no longer prescribed; however, they have been retained under grandfathering provisions of the Order. These will be disposed of when most financially advantageous to Council. (j) Fair value estimation – financial
instruments The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date.
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 16
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. Council uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments. (k) Infrastructure, property, plant and
equipment (IPPE) Council’s assets have been progressively revalued to fair value in accordance with a staged implementation advised by the Office of Local Government. At reporting date, the following classes of IPPE were stated at their fair value: Externally valued: • Operational land • Water and sewerage networks • Roads assets including roads, bridges and
footpaths • Bulk earthworks • Stormwater drainage
Internally valued: • Land improvements • Community land • Buildings – specialised/non-specialised • Other structures • Swimming pools • Other open space/recreational assets • Other infrastructure
As approximated by depreciated historical cost: • Plant and equipment • Other assets
Non-specialised assets with short useful lives are measured at depreciated historical cost as an
approximation of fair value. Council has assessed that any difference between fair value and depreciated historical cost is unlikely to be material. Water and sewerage network assets are indexed annually between full revaluations in accordance with the latest indices provided in the NSW Office of Water Rates Reference Manual. For all other asset classes, Council assesses at each reporting date whether there is any indication that a revalued asset’s carrying amount may differ materially from that which would be determined if the asset were revalued at the reporting date. If any such indication exists, Council determines the asset’s fair value and revalue the asset to that amount. Full revaluations are undertaken for all assets on a five-year cycle. Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve. To the extent that the increase reverses a decrease previously recognising profit or loss relating to that asset class, the increase is first recognised as profit or loss. Decreases that reverse previous increases of assets in the same class are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the class; all other decreases are charged to the Income Statement. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Council and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Capitalisation thresholds Items of infrastructure, property, plant and equipment are not capitalised unless their cost of acquisition exceeds the following; Land - Council land 100% capitalised - Open space 100% capitalised - Land under roads (purchases after 30/6/08) 100% capitalised
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 17
Plant and equipment Office furniture > $3,000 Office equipment > $3,000 Other plant and equipment > $3,000 Buildings and land improvements Park furniture and equipment > $3,000 Building - Construction/extensions 100% capitalised - Renovations > $3,000 Other structures > $5,000 Water and sewer assets Reticulation extensions > $5,000 Other > $5,000 Stormwater assets Drains and culverts > $5,000 Other > $5,000 Transport assets Road construction and reconstruction > $10,000 Reseal/re-sheet and major repairs > $10,000 Bridge construction and reconstruction > $10,000 Other infrastructure assets Swimming pools > $10,000 Other open space/recreational assets > $10,000 Other infrastructure > $10,000 Depreciation Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives as follows: Plant and equipment - Office equipment 5 to 10 years - Office furniture 10 to 20 years - Computer equipment 3 years - Vehicles 5 to 10 years - Heavy plant/road making equipment 5 to 10 years - Other plant and equipment 5 to 15 years
Other equipment - Playground equipment 5 to 15 years - Benches, seats etc. 10 to 20 years Buildings - Buildings: masonry 50 to 100 years - Buildings: other 20 to 40 years Water and sewer assets - Dams and reservoirs 80 to 100 years - Bores 20 to 40 years - Reticulation pipes: PVC 70-80 years - Reticulation pipes: other 25 to 75 years - Pumps and telemetry 15 to 20 years Stormwater assets - Drains 80 to 100 years - Culverts 50 to 80 years Transportation assets - Sealed roads: surface 20 years - Sealed roads: structure 60 years - Unsealed roads 30 years - Bridge: concrete 80-100 years - Road pavements 50-60 years - Kerb, gutter and footpaths 40 years Other infrastructure assets - Bulk earthworks Infinite The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. (l) Investment property Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not occupied by the Council. Investment property is carried at fair value, which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, Council uses alternative valuation
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 18
methods such as recent prices in less active markets, or discounted cash flow projections. Changes in fair values are recorded in the income statement as part of other income. Properties that are under construction for future use as investment properties are regarded as investment properties. These are also carried at fair value unless the fair value cannot yet be reliably determined. Where that is the case, the property will be accounted for at cost until either the fair value becomes reliably determinable or construction is complete. (m) Payables These amounts represent liabilities for goods and services provided to the Council prior to the end of financial year that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (n) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or finance cost.
Borrowings are classified as current liabilities unless Council has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (o) Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. (p) Provisions Provisions are recognised when Council has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. (q) Employee benefits (i) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be wholly settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 19
reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Other long-term employee benefit obligations The liability for long service leave and annual leave that is not expected to be wholly settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the Statement of Financial Position if the Council does not have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is expected to occur. (iii) Retirement benefit obligations All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees. Defined Benefit Plans A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised in the Statement of Financial Position, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost.
The present value of the defined benefit obligation is based on expected future payments that arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. However, when this information is not reliably available, Council accounts for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans, i.e. as an expense when it becomes payable. Defined Contribution Plans Contributions to defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (r) Land under roads Land under roads is land under roadways and road reserves including land under footpaths, nature strips and median strips. Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051 Land Under Roads. Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 Property, Plant and Equipment. (s) Self-insurance Council does not self-insure. (t) Intangible assets IT development and software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 20
and service, direct payroll, and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight line basis over periods generally ranging from three to five years. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility, and where Council has an intention and ability to use the asset. (u) Crown reserves Crown Reserves under Council’s care and control are recognised as assets of the Council. While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated. Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating to the reserves are recognised within Council’s Income Statement. (v) Rural fire service assets Under section 119 of the Rural Fire Services Act 1997 (NSW), “all fire fighting equipment purchased or constructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or on behalf of which the fire fighting equipment has been purchased or constructed”. Until such time as discussions on this matter have concluded and the legislation changed, Council will recognise rural fire service assets including land, buildings, plant and vehicles. (w) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to the taxation authority is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which that are recoverable from, or payable to the taxation authority are presented as operating cash flows. (x) New accounting standards and
interpretations issued not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and which have not been applied. As at the date of authorisation of the financial statements, the standards and interpretations listed below were in issue but not yet effective. Effective for annual reporting periods beginning on or after 1 January 2017
AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15
AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15
AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112]
AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
AASB 2016-4 Amendments to Australian Accounting Standards – Recoverable Amount of Non-Cash-Generating Specialised Assets of Not-for-Profit Entities
AASB 2016-7 Amendments to Australian Accounting Standards - Deferral of AASB 15 for Not-for-Profit Entities
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 21
Effective for annual reporting periods beginning on or after 13 February 2017 AASB 2017-2 Amendments to Australian Accounting Standards - Further Annual Improvements 2014- 16 Cycle Effective for annual reporting periods beginning on or after 13 December 2017 AASB 2017-1 Amendments to Australian Accounting Standards - Transfers of Investment Property, Annual Improvements 2014-2016 Cycle and Other Amendments Effective for annual reporting periods beginning on or after 1 January 2018 AASB 9 Financial Instruments (December 2009)
AASB 15 Revenue from Contracts with Customers
AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)
AASB 2014-1 Amendments to Australian Accounting Standards (Part E)
AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) AASB 1057 Application of Australian Accounting Standards
AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15
AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions
AASB 2016-6 Amendments to Australian Accounting Standards - Applying AASB 9 Financial Instruments with AASB 4 Insurance Contracts Effective for annual reporting periods beginning on or after 1 January 2019 AASB 16 Leases
AASB 16 Leases (Appendix D)
AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Nor-for-Profit Entities
AASB 1058 Income of Not-for-Profit Entities
AASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities The full impact of these standards has yet to be ascertained or quantified but will range from additional and/or revised disclosures to changes in how certain transactions and balances are accounted for. (y) Rounding of amounts Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars. (z) Comparative figures To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes. (aa) Disclaimer Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.
Financial Statements 2017
page 22
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 2(a). Council functions/activities – financial information
General purpose income 1
1. Includes: rates and annual charges (incl. ex-gratia), untied general purpose grants and unrestricted interest and investment income.
2017Actual
2016Actual
2016 2017
$ ’000 Income, expenses and assets have been directly attributed to the following functions/activities.Details of these functions/activities are provided in Note 2(b).
Income from continuing operations
Expenses from continuing operations
Total assets held (current and non-current)
Functions/activities
20172016Actual Actual Actual
Grants included in income from continuing operations
Operating result from continuing operations
Originalbudget
OriginalActual
2017 20162017(453)
(3,316) (3,614) 206
2017Actual
Originalbudget
2017Actualbudget
60 844 875 474
1 2 4,691
350 4,189
406 454 1 1,375 4,489
Health Environment 1,115
888 1,005 123 187
279 828 Public order and safety
Governance Administration
(368) 1,483 1,637 977
1,127 1,685 2,098 (753)
40 899
1,801
780
5,845
(657) 810
143 402
1,212
976 Housing and community amenities 257 Water supplies
Recreation and culture 216
3,916 Sewerage services 1,518
5,052 4,214 1,829
976
1,196 Community services and education 1,048
4,076 4,068 4,244 1,536 1,616
9,700
(719) 1,463 (152)
88
692
3,613 1,525 1,567
59 8,142
522 3,098 3,557
Transport and communication 7,259 Mining, manufacturing and construction 71 78
8,145 141 93
8,132 (63)
(1,555) 8,193 – –
194,581
18,255 806 65 19,195
Actual2017
95 2016
211 253 1,928
262 57,530 13,305
27,830 63,896 27,808 18
233
(712) (799)
294 – (349)
(3,715) (404)
Actual
25 –
11 138
245 1,044
1,208 51,028 40,097
5,605 2,189
8,600 12,990 43 93
(565) – (770) –
746 (1,061)
30 79 717 1,264
1,775 2,282 2,815 (886) (558)
808 (549)
(4,649) (660)
(3,035) (98)
(2,882) (2,637)
(240)
–
(873) (22)
(15,139)
30,088
– –
30,088
–
–
–
7,877 (10,746)
2,954
(29) 4,100 4,469
18 (139)
(10,670)
3,948
– –
3,459
1,220
13,700 14,618 18,598
5,640 381,245
51 28
382,271
5,795 5,482 (603) 197,963
381,933
– 688
382,817
546
13,754
– 12,706
20,583
– 8,114
35,834 29,046 33,042
– – –
1,228 1,435
– –
–
1,195 617
19,342 29,046 35,834
13,700
20,695 Share of gains/(losses) in associates
continuing operations
18,598 and joint ventures (using the equity method)
Operating result from
–
Economic affairs
18,376 Total functions and activities
1,089
14,618
39,293 32,994
Financial Statements 2017
page 23
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 2(b). Council functions/activities – component descriptions
Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:
GOVERNANCE
ADMINISTRATION
PUBLIC ORDER AND SAFETY
HEALTH
ENVIRONMENT
COMMUNITY SERVICES AND EDUCATION
HOUSING AND COMMUNITY AMENITIES
WATER SUPPLIESSEWERAGE SERVICES
RECREATION AND CULTURE
MINING, MANUFACTURING AND CONSTRUCTION
TRANSPORT AND COMMUNICATION
ECONOMIC AFFAIRSIncludes camping areas and caravan parks; tourism and area promotion; industrial development promotion; saleyards and markets; real estate development; commercial nurseries; and other business undertakings.
Includes administration and education; social protection (welfare); migrant, Aboriginal and other communityservices and administration (excluding accommodation – as it is covered under ‘housing and communityamenities’); youth services; aged and disabled persons services; children’s’ services, including family day care;child care; and other family and children services.
Includes public cemeteries; public conveniences; street lighting; town planning; other community amenities,including housing development and accommodation for families and children, aged persons, disabled persons,migrants and Indigenous persons.
Includes public libraries; museums; art galleries; community centres and halls, including public halls andperforming arts venues; sporting grounds and venues; swimming pools; parks; gardens; lakes; and othersporting, recreational and cultural services.
Includes building control, quarries and pits, mineral resources, and abattoirs.
Urban local, urban regional, includes sealed and unsealed roads, bridges, footpaths, parking areas, andaerodromes.
Includes noxious plants and insect/vermin control; other environmental protection; solid waste management,including domestic waste; other waste management; other sanitation; and garbage, street cleaning, drainageand stormwater management.
Includes costs relating to Council’s role as a component of democratic government, including elections,members’ fees and expenses, subscriptions to local authority associations, meetings of Council and policy-making committees, public disclosure (e.g. GIPA), and legislative compliance.
Includes corporate support and other support services, engineering works, and any Council policy compliance.
Includes Council’s fire and emergency services levy, fire protection, emergency services, beach control,enforcement of regulations and animal control.
Includes immunisation, food control, health centres etc.
Financial Statements 2017
page 24
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations
$ ’000
(a) Rates and annual charges
Ordinary ratesResidentialFarmlandMiningBusinessTotal ordinary rates
Special ratesNil
Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesStormwater management servicesWater supply servicesSewerage servicesWaste management services (non-domestic)Total annual charges
TOTAL RATES AND ANNUAL CHARGES
Council has used 2014 year valuations provided by the NSW Valuer General in calculating its rates.
53
3,452
8,852
557 52
Notes
1,059
50 3,807
1,198
5,400
581
30
975
236
20162017
8,249
Actual
1,023
280
4,048
Actual
5,048
1,194 1,273 347
3,201 339
Financial Statements 2017
page 25
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’000
(b) User charges and fees
Specific user charges (per s.502 – specific ‘actual use’ charges)Water supply servicesTotal user charges
Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Private works – section 67Regulatory/ statutory feesSection 149 certificates (EPA Act)Section 603 certificatesTotal fees and charges – statutory/regulatory
(ii) Fees and charges – other (incl. general user charges (per s.608))AerodromeCaravan parkCemeteriesChild careMeals on Wheels & Community CareLease rentalsLeaseback fees – Council vehiclesLibrary and art galleryPark rentsRMS (formerly RTA) charges (state roads not controlled by Council)SaleyardsSports stadiumsWaste disposal tipping feesHall HireOtherTotal fees and charges – other
TOTAL USER CHARGES AND FEES
– 66
325
119
1,508
2
Notes
184 7
3 –
4,441
1,471
57
18
4,264
12
99
1
59
19
Actual
116
13
2,559
Actual
165
89
2,628
229
2016
2,559
2017
44
2,628
374
17 12
180
461 33
117
20 448
135
4
25
4
315 59
4 4
218
Financial Statements 2017
page 26
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’000
(c) Interest and investment revenue (including losses)
Interest – Interest on overdue rates and annual charges (incl. special purpose rates) – Interest earned on investments (interest and coupon payment income) – Interest on deferred debtorsTOTAL INTEREST AND INVESTMENT REVENUE
Interest revenue is attributable to:Unrestricted investments/financial assets:Overdue rates and annual charges (general fund)General Council cash and investmentsRestricted investments/funds – external:Water fund operationsSewerage fund operationsDomestic waste management operationsOther externally restricted assetsTotal interest and investment revenue recognised
(d) Other revenues
Legal fees recovery – rates and charges (extra charges)Legal fees recovery – otherCommissions and agency feesDiesel rebateInsurance claim recoveriesReimbursement – CBA CDOReimbursements – OtherSales – generalOtherTOTAL OTHER REVENUE
1 1
290
958 1,124
23
413
221
1
465
1
29
8
165 156
67
21 119 108
39
958
221
1,124
55 29 463
273
Notes
1,063
24
481
898
43 795
– 626
21
1,636 151
60 55
6 –
2016Actual
2017Actual
Financial Statements 2017
page 27
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’000
(e) Grants
General purpose (untied)Financial assistance – general componentFinancial assistance – local roads componentFinancial Assistance Grant received in advanceFinancial assistance – general componentFinancial assistance – local roads componentPensioners’ rates subsidies – general componentTotal general purpose
Specific purposePensioners’ rates subsidies: – Water – Sewerage – Domestic waste managementWater suppliesSewerage servicesAnimal ControlBushfire and emergency servicesChild careCommunity careEconomic developmentEmployment and training programsEnvironmental protectionFootpathsLibraryLibrary – per capitaNoxious weedsPublic hallsRecreation and cultureStreet lightingTown planningTransport (roads to recovery)Transport (other roads and bridges funding)Transport (flood damage)TourismYouthWaste managementAerodromesTotal specific purposeTotal grantsGrant revenue is attributable to:– Commonwealth funding– State funding– Other funding
2,693 – – – 1,617 – – –
– 40 5
2,300 – – 15
1 – –
46
– –
86
–
–
–
–
471 100
21 7 – –
– – 4 5 – 2
–
– –
2016
208 5
40
20
20
–
35
5,417
–
–
227
1,773 –
13,531
725 12,762
–
16,160
15 –
435 562
4,060
40
–
35
–
2,035
165
18 13
18,195
18,195
5,489 13,531
44
–
50
25
18
43
37
3,150
36
–
–
340
2,971 5,107
–
– –
1,024
–
2017
–
2017
–
12,706
2016Operating
–
–
25 –
238
–
–
–
–
5,210
–
20
68
8,114
Operating
–
Capital
–
–
13
– 30
–
–
200
Capital
–
–
–
–
341 2,027
2,388
–
–
–
18 25
–
– –
310
2,388 –
–
–
–
223
–
–
223
15
301
–
–
2,388
–
–
223
223
–
Financial Statements 2017
page 28
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’000
(f) Contributions
Developer contributions:(s93 & s94 – EP&A Act, s64 of the LGA):S 94A – fixed development consent leviesTotal developer contributions
Other contributions:Business developmentCaravan ParksCemeteriesParks gardens and reservesRecreation and cultureRoads and bridgesRMS contributions (regional roads, block grant)FESL Admin SubsidyOtherTotal other contributionsTotal contributions
TOTAL GRANTS AND CONTRIBUTIONS
$ ’000
(g) Unspent grants and contributions
Certain grants and contributions are obtained by Council on conditionthat they be spent in a specified manner:
Unexpended at the close of the previous reporting period
Add: grants and contributions recognised in the current period but not yet spent:
Less: grants and contributions recognised in a previous reporting period now spent:
Net increase (decrease) in restricted assets during the period
Unexpended and held as restricted assets
Comprising: – Specific purpose unexpended grants – Developer contributions – Other contributions
3,231
Actual
7
2016
466
– – 7 7 94 –
39
–
2017
–
Capital
–
3,231
2,854
672
16,762
36
Actual
400
581
876
2017
3,033
–
61 3,089
3,198
21,393
–
–
11
8 – –
– 17
23
45
Operating Operating
3,198
295
2016
–
497 295
20
446 – –
20 16
–
–
52
1,007
Capital 2017 2016
295
63
(20)
16
784
–
828
12
–
–
768
268
876
(202)
29
21
(231)
–
601
12 –
12 15
Financial Statements 2017
page 29
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations
$ ’000
(a) Employee benefits and on-costs
Salaries and wagesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)Protective clothingOtherTotal employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSED
Number of ‘full-time equivalent’ employees (FTE) at year endNumber of ‘full-time equivalent’ employees (FTE) at year end (incl. vacancies)
(b) Borrowing costs
(i) Interest bearing liability costsInterest on loansTotal interest bearing liability costs expensed
(ii) Other borrowing costsDiscount adjustments relating to movements in provisions (other than ELE) – Remediation liabilitiesTotal other borrowing costsTOTAL BORROWING COSTS EXPENSED
54
26 57 –
–
1,309
75
606
(1,089)
Notes 2017
–
590
–
129
– –
54
9,283
120
218
54
135
Actual
11,931
54
10,412
896 997
12,698 128
197
135
(1,519)
2016
57 57
125
Actual
11,609
1,605
140
8,406
–
Financial Statements 2017
page 30
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations (continued)
$ ’000
(c) Materials and contracts
Raw materials and consumablesContractor and consultancy costs – Aerodromes – Aged and Disabled – Animal Control – Buildings Dwellings – Caravan Parks – Cemeteries – Children's Services – Corporate Services – Engineering Office & Operations – Flood Works – Halls & Community Centres – Health – Home & Community Care – Libraries – Medical Health Centres – Noxious Weeds – Other Community Services & Amenties – Other Economic Affairs – Parks & Reserves – Pits & Quarries – Private Works – Public Amenities – Roads Infrastructure – Rural Fire Service & SES – Sewerage – Sports Grounds & Recreation Facilities – Street Cleaning – Swimming Pools – Tourism – Town Planning Office – Waste – Water – Works Depots/Workshops/PlantAuditors remuneration (1)
Legal expenses: – Legal expenses: debt recovery – Legal expenses: otherOperating leases: – Operating lease rentals: minimum lease payments (2)
Total materials and contractsLess: capitalised costsTOTAL MATERIALS AND CONTRACTS
–
8 65
8
620
435
–
6,810 –
18
104
11
13 115
24
36
1,103
203
5,369 (10,087)
12
87
89
710
83
31
7 7
105 17,652
614
2016Actual
9,447
1,075
248
128
33
47
–
221
7
1,527 987 57 38
95
22 57
2,797
69
9 2
677
369 196
2,934
72
22
17
8
291
358
69
10
12
Notes
129
18
51
266
2017Actual
62
424 8 7
14
13
276
54
(11,730)
65 65 40
7,565
17,099
40
Financial Statements 2017
page 31
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations (continued)
$ ’000
(c) Materials and contracts (continued)
1. Auditor remunerationa. During the year, the following fees were incurred for services provided by the Auditor-General:
(i) Audit and other assurance services – Audit and review of financial statements: Auditor-GeneralRemuneration for audit and other assurance services
Total Auditor-General remuneration
b. During the year, the following fees were incurred for services provided by the other Council’s Auditors:
(i) Audit and other assurance services – Audit and review of financial statements: Council’s Auditor – Other audit and assurance services – Internal AuditsRemuneration for audit and other assurance services
Total remuneration of other Council's Auditors
Total Auditor remuneration
2. Operating lease payments are attributable to:Other
Actual Actual Notes
40
2017 2016
35
69
35 –
34
105 105 104
34 40
– 34
–
35 –
40
40
104
–
Financial Statements 2017
page 32
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations (continued)
$ ’000
(d) Depreciation, amortisation and impairment
Plant and equipmentOffice equipmentFurniture and fittingsLand improvements (depreciable)Infrastructure: – Buildings – non-specialised – Buildings – specialised – Other structures – Roads – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage networkOther assets – Library booksAsset reinstatement costsIntangible assetsTotal gross depreciation and amortisation costsLess: capitalised costsTotal depreciation and amortisation costs
ImpairmentInfrastructure: – RoadsTotal gross impairment costs
Impairment of investments – OtherTotal gross impairment costs (investments)
Less: IPP&E impairments (to)/from equityTotal impairment costs
TOTAL DEPRECIATION ANDIMPAIRMENT COSTS EXPENSED
Notes
(4,394)
9 & 26
–
107 1,465
524
90 835
25
– 9a
4,394
129
87 1,100
188 4,700
287 67
10,852
239 4,251
271
Actual Actual
69
129
17
2017
–
514
1,870 1,667 42
9,749
74
35
1,435
–
45
88
10,723
21
88 22
–
2016
171 35
68
9,749
129 –
–
– 10,723
4,394 –
9,749
Financial Statements 2017
page 33
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations (continued)
$ ’000
(e) Other expenses
AdvertisingBad and doubtful debtsBank chargesCleaningComputer software chargesContributions/levies to other levels of government – Emergency services levy (includes FRNSW, SES, and RFS levies) – Lower Lachlan community services – NSW fire brigade levy – NSW rural fire service levy – Western plans regional developmentCouncillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Donations, contributions and assistance to other organisations (Section 356)Electricity and heatingInsuranceInvestment advisory servicePostagePrinting and stationeryStreet lightingTelephone and communicationsValuation feesInternal Audit and Risk CommitteeTOTAL OTHER EXPENSES
12
3,333
–
83
212
46
86
313
13
114
47
32
252
12
39 4
123
35
Actual Notes
63
722 755 749
32
24
2017
–
50
87
109
43
31
–
32 142
57
2016Actual
212
38
115
24
–
106
86
3,079
696 12
173 178
308
3 32
110
Financial Statements 2017
page 34
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 5. Gains or losses from the disposal of assets
$ ’000
Property (excl. investment property)Proceeds from disposal – propertyLess: carrying amount of property assets sold/written offNet gain/(loss) on disposal
Plant and equipmentProceeds from disposal – plant and equipmentLess: carrying amount of plant and equipment assets sold/written offNet gain/(loss) on disposal
Real estate assets held for saleProceeds from disposal – real estate assetsLess: carrying amount of real estate assets sold/written offNet gain/(loss) on disposal
Financial assets*Proceeds from disposal/redemptions/maturities – financial assetsLess: carrying amount of financial assets sold/redeemed/maturedNet gain/(loss) on disposal
NET GAIN/(LOSS) ON DISPOSAL OF ASSETS
(3,970)
3,390
– (18,810)
Notes
437
1,833
2017
9
(7,360)
(1,396)
282
Actual
(3,524)
32,446
(32)
(204)
203
2016
(407)
(319)
(103) 71
(820)
(273)
(83)
737
Actual
18,810
– (32,446)
Financial Statements 2017
page 35
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 6a. – Cash assets and Note 6b. – investments
$ ’000
Cash and cash equivalents (Note 6a)Cash on hand and at bankCash-equivalent assets 1
– Deposits at callTotal cash and cash equivalents
Investments (Note 6b) – Long term depositsTotal investmentsTOTAL CASH ASSETS, CASHEQUIVALENTS AND INVESTMENTS
1 Those investments where time to maturity (from date of purchase) is < 3 mths.
Cash, cash equivalents and investments wereclassified at year end in accordance withAASB 139 as follows:
Cash and cash equivalentsa. ‘At fair value through the profit and loss’
Investmentsa. ‘Held to maturity’Investments
Refer to Note 27. Fair value measurement for information regarding the fair value of investments held.
(77)
7,500
Non-current
7,500 6,000
21,712 6,000
–
7,500
2,141 –
7,500
2,064 – 2,578
Notes
2017Actual
Current
2017Actual
(222)
Actual 2016
Current
26,600
26,600 26,600
2,356
– –
6,000
Non-current
–
Actual 2016
–
6,000
7,500
19,648
–
2,064
19,648
6,000 19,648
28,956
26,600
2,356
19,648
Financial Statements 2017
page 36
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 6c. Restricted cash, cash equivalents and investments – details
$ ’000
Total cash, cash equivalentsand investments
attributable to:External restrictions (refer below)Internal restrictions (refer below)Unrestricted
$ ’000
Details of restrictions
External restrictions – included in liabilitiesNil
External restrictions – otherDeveloper contributions – general (D)RMS (formerly RTA) contributions (E)Specific purpose unexpended grants (F)Water supplies (G)Sewerage services (G)Domestic waste management (G)Stormwater management (G)Lachlan aged and community servicesMeals on wheelsExternal restrictions – otherTotal external restrictions
D Development contributions which are not yet expended for the provision of services and amenities in accordancewith contributions plans (refer Note 17).
E RMS contributions which are not yet expended for the provision of services and amenities in accordance withthose contributions.
F Grants which are not yet expended for the purposes for which the grants were obtained. (refer Note 1 (b)) G Water, sewerage, domestic waste management (DWM) and other special rates/levies/charges are externally
restricted assets and must be applied for the purposes for which they were raised.
25 29 –
337
2016
balance
70
6,345 (1)
21
restrictions
25 – –
276
–
2017
–
828 – – 12
29
(206)
(293) 14,692
7,010
36
14,692 (293)
631
–
71
1,009
(71)
(15)
13,976 13,976
1,009
Non-current
12
7,500
15
restrictions
281
Current
balance
– 318
7,500
7,500
6,724 6,346
268
286 –
–
10,997 7,976
6,000
28,956 6,000
28,956 21,712
Transfers to
7,192
–
2017 Closing Transfers from
– 21,446
21,712
6,000
2,739
Opening
Non-current
–
2017 2016Actual Actual
Current Actual Actual
Financial Statements 2017
page 37
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 6c. Restricted cash, cash equivalents and investments – details (continued)
$ ’000
Internal restrictionsPlant and vehicle replacementCapital ImprovementsEmployees leave entitlementCarry over worksDepot replacementAerodromesChambers / computer equipmentCondobolin main street improvementsEmergency servicesGravel pit restorationGumbend LakeHousing/land developmentInsuranceCondobolin medical centreSelf care unitsSRA grounds hallSwimming poolsTimber bridgesTip restorationTottenham swimming pool amenitiesTown planningWaste managementCondobolin CemeteryCondobolin District Retirement VillageFinancial Assistance Grant - Gen ComponentTotal internal restrictions
TOTAL RESTRICTIONS
Opening restrictions
Transfers to
2,502
Closing
(323)
balance Transfers from
(5,164) 1,167 –
(14) 4,808
(399)
2,026
(4,011)
169
–
368
124
1,094
360
31 (53) (83)
61
2,693
(37) 83
48
21,446
1,447 69
414 84
(12,125)
115
36,138
(58)
357
(12,418)
25
–
–
–
118
(545)
207
3,065 11
3,610 –
23,583
(350)
–
restrictions
(32)
52
– 26
2,350 (998)
35
100
–
95
2,825
1,094
– 39
–
50 318
–
24,973
10,997
141
11 –
173
26 27
173
–
(57) –
(1)
84
69
– 48
22,574
180
–
–
–
2,693
241
–
2,764
1,267
balance
92
5,923 837
577
330
6,055
133
225 68
–
115
343 248 134
2017
Financial Statements 2017
page 38
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 7. Receivables
$ ’000
PurposeRates and annual chargesInterest and extra chargesUser charges and feesAccrued revenues – Interest on investmentsDeferred debtorsNet GST receivableOther debtorsTotal
Less: provision for impairmentRates and annual chargesUser charges and feesTotal provision for impairment – receivables
TOTAL NET RECEIVABLES
Externally restricted receivablesWater supply – Specific purpose grants – Rates and availability charges – OtherSewerage services – Rates and availability charges – OtherDomestic waste managementStormwater managementTotal external restrictionsInternally restricted receivablesNilUnrestricted receivablesTOTAL NET RECEIVABLES
Notes on debtors above:(i) Rates and annual charges outstanding are secured against the property.(ii) Doubtful rates debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.(iii) Interest was charged on overdue rates and charges at 8.00% (2016 8.50%).
Generally all other receivables are non-interest bearing.(iv) Please refer to Note 15 for issues concerning credit risk and fair value disclosures.
–
146
Non-current
–
Current 2016
307
351
–
–
1,093 –
(7)
155 –
131 2
524
196
– (169)
–
(51)
309 6 –
–
–
–
3
(199)
2,256
225
–
– –
138
–
672
–
– 129
2,205 3,230
1,048
1,592 138
–
1,157 162 162
1,638 8
135 – 178
– – 110
– –
(111)
113
(51)
– –
(199)
162
(169)
138
72 –
3,230
(7)
(111)
361
1,026
18
–
3,341 3
–
2,205
292
Current
227 97
Non-current
– – 2,056
486
2017Notes
202
Financial Statements 2017
page 39
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 8. Inventories and other assets
$ ’000
(a) Inventories
(i) Inventories at costReal estate for resale (refer below)Stores and materialsTotal inventories at cost
(ii) Inventories at net realisable value (NRV)Nil
TOTAL INVENTORIES
(b) Other assets
PrepaymentsTOTAL OTHER ASSETS
Externally restricted assetsThere are no restrictions applicable to the above assets.
Total unrestricted assetsTOTAL INVENTORIES AND OTHER ASSETS
– 830
207
Current
624
624 1,149
1,997 207 207 2,965 1,997
–
2,965 624 624
–
– 207
1,959
– 9
624
207
–
997
18 18
1,979
9
2,956
2017
2,956
2016
1,979
Non-current Non-current Current Notes
Financial Statements 2017
page 40
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 8. Inventories and other assets (continued)
$ ’000
Other disclosures
(a) Details for real estate developmentResidentialIndustrial/commercialTotal real estate for resale(Valued at the lower of cost and net realisable value)
Represented by:Acquisition costsTotal costsTotal real estate for resale
Movements:Real estate assets at beginning of the year – Purchases and other costs – WDV of sales (expense)Total real estate for resale
(b) Inventory write downsThere were no amounts recognised as an expense relating to the write down of inventory balances held during the year.
Refer to Note 27. Fair value measurement for information regarding the fair value of other assets held.
624
207
440
(440)
184
624 830
933
646
207
997 624
207 830
207
–
624
830
167 (103) – 830
– – 23
997 624 624
830 207
997
624 830
997
5
97
997
521 184 110 476
2016Non-current
2017Non-current Current Current
Financial Statements 2017
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 9a. Infrastructure, property, plant and equipment
Asset class
$ ’000
Plant and equipment 25,103 15,023 10,080 2,591 592 (1,262) (1,667) – (42) – – 27,024 16,732 10,292 Office equipment 1,262 967 295 – – (9) (42) – 42 – – 1,253 967 286 Furniture and fittings 2,311 1,903 408 75 37 (125) (45) – – – – 2,299 1,949 350 Land: – Operational land 3,842 – 3,842 – 116 (8) – – (11) (908) 3,031 – 3,031 – Community land 3,294 – 3,294 – – – – – – – 84 3,378 – 3,378 Land improvements – non-depreciable 464 – 464 – – – – – – – – 464 – 464 Land improvements – depreciable 4,345 2,750 1,595 161 371 – (88) – – – – 4,877 2,838 2,039 Infrastructure: – Buildings – non-specialised 13,340 5,523 7,817 – 9 (212) (90) – – – – 13,137 5,613 7,524 – Buildings – specialised 72,666 33,769 38,897 235 1,396 (7,127) (835) – 4 – – 67,045 34,475 32,570 – Other structures 6,709 1,239 5,470 – 200 (13) (239) – – – – 6,895 1,477 5,418 – Roads 246,568 74,387 172,181 4,496 717 – (4,251) (4,394) – – 251,645 82,896 168,749 – Bridges 27,154 4,490 22,664 57 – – (271) – – – – 27,211 4,761 22,450 – Footpaths 3,647 541 3,106 – 11 – (69) – – – – 3,658 610 3,048 – Stormwater drainage 8,448 3,550 4,898 – 82 – (107) – – – – 8,530 3,657 4,873 – Water supply network 100,065 48,986 51,079 124 1,547 – (1,465) – – – 1,492 90,066 37,289 52,777 – Sewerage network 37,828 17,011 20,817 225 37 – (524) – – – (471) 35,568 15,484 20,084 Other assets: – Library books 1,097 921 176 – 13 – (21) – (4) – – 1,106 942 164 Reinstatement, rehabilitation and restoration assets (refer Note 26): – Tip assets 2,380 379 2,001 – – – – – – – – 2,380 379 2,001
TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.
Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).
Refer to Note 27. Fair value measurement for information regarding the fair value of other infrastructure, property, plant and equipment.
Revaluation increments
to equity (ARR)
Net carrying amount
560,523 211,439 349,084 7,964 (8,756) (9,714) (4,394) 5,128 339,498 (908) 1,105 549,567 210,069 (11)
as at 30/6/2017
Impairment loss
(recognisedin equity)
Net carrying amount
Asset movements during the reporting period
Accumulated depreciation
and impairment
Gross carrying amount
Gross carrying amount
Accumulated depreciation and
impairment
as at 30/6/2016
Adjustmentsand transfers
Additionsnew assets
Additionsrenewals
Carrying value
of disposals
Depreciation expense
Revaluation decrements
to equity (ARR)
page 41
Financial Statements 2017
page 42
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 9b. Externally restricted infrastructure, property, plant and equipment
Note 9c. Infrastructure, property, plant and equipment – current year impairments
(i) Impairment losses recognised in the Income Statement: – Condobolin SRA HallTotal impairment losses
IMPAIRMENT OF ASSETS – GAINS/(LOSSES) in P/L
(ii) Impairment losses recognised direct to equity (ARR): – Regional and Local Roads - FloodingTotal impairment losses
IMPAIRMENT OF ASSETS – DIRECT to EQUITY (ARR)
145,675 68,850 76,825
Actual
(129)
–
(129)
Actual
(4,394) 20 (ii)
(4,394)
–
6 16 192 1 191 345 109 236 697 170 527
102,325
– 178 178
53,339 106,553
241
48,986
28 – 28
3,260 1,802 1,458
$ ’000
Total sewerage services
Class of asset
Water supply
22
(129)
–
Actual2017
Other structures
Land
Buildings
– Operational land
Domestic waste management
52,777
Buildings15,484
38,425
110
Infrastructure382
Plant and equipment
42
Infrastructure
– Operational land
Plant and equipment Land
– Operational land
Total water supply
Buildings
Sewerage services Plant and equipment
68 123 321
507
54 56
191
15 4 192 11 148 48
77,699
17,310 21,115
110 61 49
–
132,946
37,828 35,567
– Improvements – depreciable
Land
TOTAL RESTRICTED I,PP&E Total DWM
(4,394)
165 – 165
Gross carrying amount
Accumulated depn. and
impairment
Net carrying amount
790 582 208
20,083 17,011 20,817
51,370 55,183
231 10
61
36,402 15,784 20,618
1,466
55,247 124 383
Actual2016
–
–
–
4(d)
3,423
42
–
265
233
37,289
–
39,339
241
Gross carrying amount
Accumulated depn. and
impairment
Net carrying amount
849
233 4,889
90,066
584
96,037
212 212
56,698
11 181 100
239 2
Financial Statements 2017
page 43
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 10a. Payables, borrowings and provisions
$ ’000
PayablesGoods and servicesAccrued expenses: – Borrowings – Salaries and wages – Other expenditure accrualsSecurity bonds, deposits and retentionsTotal payables
Income received in advancePayments received in advanceTotal income received in advance
BorrowingsLoans – secured 1
Total borrowings
ProvisionsEmployee benefits:Annual leaveSick leaveLong service leaveGratuitiesOther leaveSub-total – aggregate employee benefitsAsset remediation/restoration (future works)Rebate on real estate for resaleTotal provisions
(i) Liabilities relating to restricted assetsThere are no restricted assets (external or internal) applicable to the above liabilities.
1. Loans are secured over the general rating income of Council Disclosures on liability interest rate risk exposures, fair value disclosures and security can be found in Note 15.
–
–
– 170
– 100
Non-current
262
948
4,839
4,839
1,632
4,759
–
–
810
1,757
3
244 –
–
– 162
–
–
Current 2017
Non-current
17
– 1,757 96
2,152
2016
1,509
Notes
–
–
– –
–
Current
115
1,594
3 –
220 –
100
– –
– 6 – 6
– 1,009
4,759 26
–
1,628
421
–
–
2,417
406 274
1,534
210
5,640 4,765
4,768 TOTAL PAYABLES, BORROWINGS AND PROVISIONS
–
7,334
115 – –
–
352
–
7,202
–
–
–
5,640
6,522
4,765
96
Financial Statements 2017
page 44
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 10a. Payables, borrowings and provisions (continued)
$ ’000
(ii) Current liabilities not anticipated to be settled within the next twelve months
The following liabilities, even though classified as current, are not expectedto be settled in the next 12 months.
Provisions – employees benefits
Note 10b. Description of and movements in provisions
a. Employees leave entitlements and on-costs represents those benefits accrued and payable and an estimate of those that will become payable in the future as a result of past service.
b. Asset remediation, reinstatement and restoration provisions represent the present value estimate of future costs Council will incur in order to remove, restore and remediate assets and/or activities as a result of past operations.
2,247
Actual
1,628
2016
210 274
Asset remediation–
– 98 –
Annual leave
406 4,759
Decrease due to payments
– – Sick leave
Openingbalance
as at 1/7/16
–
Long service leave
1,009
– –
Additional provisions
Gratuities
TOTAL
– 15
–
2017
421 –
Class of provision
Other 6
2016
(789)
– Other leave
–
2,417 (61)
1,534
948
10,405 (801)
Unused amounts reversed
Remeasurement effects due to
discounting
–
–
–
– 9,604
1,632
4,759
2,247
Closingbalance
as at 30/6/17
1,443
–
1,443
– 6
– – –
–
– (64) – –
Actual2017
Financial Statements 2017
page 45
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 11. Statement of cash flows – additional information
$ ’000
(a) Reconciliation of cash assets
Total cash and cash equivalent assetsLess bank overdraftBalance as per the Statement of Cash Flows
(b) Reconciliation of net operating result to cash provided from operating activities
Net operating result from Income StatementAdjust for non-cash items:Depreciation and amortisationNet losses/(gains) on disposal of assetsImpairment losses recognition – I,PP&ELosses/(gains) recognised on fair value re-measurements through the P&L:Unwinding of discount rates on reinstatement provisions
+/- Movement in operating assets and liabilities and other cash items:Decrease/(increase) in receivablesIncrease/(decrease) in provision for doubtful debtsDecrease/(increase) in inventoriesDecrease/(increase) in other assetsIncrease/(decrease) in payablesIncrease/(decrease) in accrued interest payableIncrease/(decrease) in other accrued expenses payableIncrease/(decrease) in other liabilitiesIncrease/(decrease) in employee leave entitlementsIncrease/(decrease) in other provisionsNet cash provided from/(used in)operating activities from the Statement of Cash Flows
(810)
2,954
57
42
2017
–
9
–
2016
7
3,459
14,628
(801)
–
17 290
339
612
17,815
3,524
Notes
90
699
1,663 297
(9)
275 124
10
2,356
2,356 –
9,749
– (153)
319 129
2,064
6a
Actual
2,064
–
(1,162)
Actual
10,723
Financial Statements 2017
page 46
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 11. Statement of cash flows – additional information (continued)
$ ’000
(c) Non-cash investing and financing activitiesNil
(d) Financing arrangements
(i) Unrestricted access was available at balance date to the following lines of credit:
Bank overdraft facilities (1)
Credit cards/purchase cardsTotal financing arrangements
Amounts utilised as at balance date:– Credit cards/purchase cardsTotal financing arrangements utilised
1. The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. Interest rates on overdrafts are interest rates on loans and other payables are disclosed in Note 15.
(ii) Secured loan liabilitiesLoans are secured by a mortgage over future years rate revenue only.
Note 12. Commitments for expenditure
(a) Capital commitments (exclusive of GST)Nil
(b) Finance lease commitmentsNil
(c) Operating lease commitments (non-cancellable)
a. Commitments under non-cancellable operating leases at the reporting date, but not recognised as liabilities are payable:
Within the next yearLater than one year and not later than 5 yearsTotal non-cancellable operating lease commitments
b. Non-cancellable operating leases include the following assets:PhotocopiersContingent rentals may be payable depending on the condition of items or usage during the lease term.
Conditions relating to operating leases:– All operating lease agreements are secured only against the leased asset.– No lease agreements impose any financial restrictions on Council regarding future debt etc.
13
Actual
16
500
16
500 52
Actual
20162017Actual
102 –
552
13
68 136
34
52 552
Notes
68
Actual
Financial Statements 2017
page 47
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 13a(i). Statement of performance measurement – indicators (consolidated)
$ ’000
Local government industry indicators – consolidated
1. Operating performance ratioTotal continuing operating revenue (1) excluding capitalgrants and contributions less operating expensesTotal continuing operating revenue (1) excluding capitalgrants and contributions
2. Own source operating revenue ratioTotal continuing operating revenue (1)
excluding all grants and contributionsTotal continuing operating revenue (1)
3. Unrestricted current ratioCurrent assets less all external restrictions (2)
Current liabilities less specific purpose liabilities (3, 4)
4. Debt service cover ratioOperating result (1) before capital excluding interestand depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows)plus borrowing costs (Income Statement)
5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible
6. Cash expense cover ratioCurrent year’s cash and cash equivalentsplus all term depositsPayments from cash flow of operating andfinancing activities
Notes
(1) Excludes fair value adjustments and reversal of revaluation decrements, net gain/(loss) on sale of assets and the net share of interests in joint ventures and associates.(2) Refer Notes 6-8 inclusive. Also excludes any real estate and land for resale not expected to be sold in the next 12 months.(3) Refer to Note 10(a).(4) Refer to Note 10(a)(ii) – excludes all payables and provisions not expected to be paid in the next 12 months (incl. ELE).
x12 16.85 mths
137.94x 0.00x >2x
< 5% Metro<10% Rural
0.00x
13.8 mths
15,046
Amounts
38.29%
4,129
9,549
3.32x
6.56%
5,759
>0.00%
>60.00%
Prior periods
8.73%
46.22%
>1.5x3.06x
101
20172017Indicator
2016
716
36,439
Benchmark
13,932
2,164 36,456
45.26%39,293
26,321
7.50%
> 3 mths19.0 mths
7.07%11.33%
4.57x
2015
-10.59%
Financial Statements 2017
page 48
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 13a(ii). Local government industry indicators – graphs (consolidated)
Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
This ratio measures Council’s
achievement of containing operating expenditure within operating revenue.
To assess the adequacy of working capital and its ability to satisfy obligations in the short term for
the unrestricted activities of Council.
This ratio reflects Council's ability to contain operating expenditure within its operating revenue. Council's long term financial plan provides for this ratio to
remain above benchmark in the future.
2016/17 ratio 11.33%
Purpose of own source operating
revenue ratio
Long term financial plans, including the special rate variation has led to
improvements in this ratio.
Commentary on 2016/17 result
Purpose of unrestricted current
ratio 2016/17 ratio 4.57x
Commentary on 2016/17 result
Purpose of operating
performance ratio
This ratio measures fiscal flexibility. It is
the degree of reliance on external funding
sources such as operating grants and
contributions.
Commentary on 2016/17 result
This reflects the increased grant funding received during the year.
2016/17 ratio 38.29%
7% 11%
-28% -11%
-35%-30%-25%-20%-15%-10%-5%0%5%
10%15%
2014 2015 2016 2017
Rat
io %
1. Operating performance ratio
44% 45% 46% 38%
0%
10%
20%
30%
40%
50%
60%
70%
2014 2015 2016 2017
Rat
io %
2. Own source operating revenue ratio
2.5 3.1 3.3
4.6
0.00.51.01.52.02.53.03.54.04.55.0
2014 2015 2016 2017
Rat
io (x
)
3. Unrestricted current ratio
Financial Statements 2017
page 49
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 13a(ii). Local government industry indicators – graphs (consolidated)
Benchmark: ――― Minimum >=2.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside Benchmark
Benchmark: ――― Minimum >=3.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
This ratio remains within the current benchmark (10%)
This ratio reflects Council's capacity to fund its operations. The long term financial plan provides that the benchmark will continue
to be exceeded in the future.
To assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of
recovery efforts.
2016/17 ratio 7.50%
This ratio measures the availability of operating cash to
service debt including interest, principal and
lease payments
Purpose of cash expense cover ratio
Commentary on 2016/17 result
2016/17 ratio 16.85 mths
2016/17 ratio 137.94x
Commentary on 2016/17 result
Council incurred external debt this year to fund the construction of the Condobolin
SRA Hall. Repayments are on a quarterly basis.
Commentary on 2016/17 resultPurpose of rates and annual charges
outstanding ratio
This liquidity ratio indicates the number of months a Council can continue paying
for its immediate expenses without
additional cash inflow.
Purpose of debt service cover ratio
137.9
0.0 0.0 0.0 0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
2014 2015 2016 2017
Rat
io (x
)
4. Debt service cover ratio
7.76% 8.73% 6.56% 7.50%
0%
2%
4%
6%
8%
10%
12%
2014 2015 2016 2017
Rat
io %
5. Rates, annual charges, interest and extra charges outstanding percentage
9.4
13.8
19.0 16.8
0.02.04.06.08.0
10.012.014.016.018.020.0
2014 2015 2016 2017
Rat
io (m
ths)
6. Cash expense cover ratio
Financial Statements 2017
page 50
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 13b. Statement of performance measurement – indicators (by fund)
$ ’000
Local government industry indicators – by fund
1. Operating performance ratioTotal continuing operating revenue (1) excluding capital grants and contributions less operating expensesTotal continuing operating revenue (1) excluding capital grants and contributions
2. Own source operating revenue ratioTotal continuing operating revenue (1) excluding capital grants and contributions Total continuing operating revenue (1)
3. Unrestricted current ratioCurrent assets less all external restrictions (2)
Current liabilities less specific purpose liabilities (3, 4)
Notes
(1) - (4) Refer to Notes at Note 13a(i) above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.
Water indicators Sewer indicatorsGeneral indicators 5 Benchmark
>60.00%
>0.00%
29.33%
4.57x
13.98% 8.78% -5.94% -1.77% 2.87% 0.72%
2017 2017 20172016 2016
No liabilities
No liabilities
No liabilities >1.5x
35.81% 79.01% 94.47% 86.61% 98.83%
2.46x No liabilities
2016
Financial Statements 2017
page 51
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 13b. Statement of performance measurement – indicators (by fund) (continued)
$ ’000
Local government industry indicators – by fund (continued)
4. Debt service cover ratioOperating result (1) before capital excluding interest and depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows) plus borrowing costs (IncomeStatement)
5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible
6. Cash expense cover ratioCurrent year’s cash and cash equivalents plus all term depositsPayments from cash flow of operating and financing activities
Notes
(1) Refer to Notes at Note 13a(i) above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.
2017
x12
Benchmark2017 2016 2017 2016
months months monthsmonths15.79 0.00 0.00 17.03 0.00
months
General indicators 5 Water indicators Sewer indicators
>2x
> 3 months
5.09% 11.19% 9.19%
0.00x 0.00x 0.00x 0.00x 0.00x
0.00 months
118.55x
5.74%
2016
13.98% 11.19% < 5% Metro<10% Rural
Financial Statements 2017
page 52
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 14. Investment properties
$ ’000
Council has not classified any land or buildings as ‘investment properties’.
Note 15. Financial risk management
Risk management
Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.
The Council’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.
Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.
Financial risk management is carried out by Council’s finance section under policies approved by the Council.
A comparison by category of the carrying amounts and fair values of Council’s financial assets and financialliabilities recognised in the financial statements is presented below.
Financial assetsCash and cash equivalentsInvestments – ‘Held to maturity’ReceivablesTotal financial assets
Financial liabilitiesPayablesLoans/advancesTotal financial liabilities
Fair value is determined as follows:
– Cash and cash equivalents, receivables, payables – are estimated to be the carrying value that approximates market value.
– Borrowings and held-to-maturity investments – are based upon estimated future cash flows discounted by the current mkt interest rates applicable to assets and liabilities with similar risk profiles, unless quoted market prices are available.
– Financial assets classified (i) ‘at fair value through profit and loss’ or (ii) ‘available-for-sale’ – are based upon quoted market prices (in active markets for identical investments) at the reporting date or independent valuation.
Refer to Note 27. Fair value measurement for information regarding the fair value of financial assets and liabilities.
1,433
2016
2016
2,092
3,444 3,392
2,392
2016
30,073
3,893
30,055
1,597 2,152 1,853
39,848
1,597 1,801
1,433 – –
2,354
Actual
6,064
NotesActual
40,983
2,356
21,655 35,147 25,648
Carrying value
34,100
2017Fair value
2017
4,005
2,064
2,343
2017
Financial Statements 2017
page 53
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 15. Financial risk management (continued)
$ ’000
Council’s objective is to maximise its return on cash and investments whilst maintaining an adequate level ofliquidity and preserving capital.
Council’s finance area manages the cash and Investments portfolio with the assistance of independentadvisors.
Council has an investment policy which complies with the Local Government Act 1993 and Minister’sinvestment order. This policy is regularly reviewed by Council and it’s staff and an investment report is tabled before Council on a monthly basis setting out the portfolio breakup and its performance.
The risks associated with the investments held are:
– Price risk – the risk that the capital value of Investments may fluctuate due to changes in market prices, whether there changes are caused by factors specific to individual financial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.
– Interest rate risk – the risk that movements in interest rates could affect returns and income.
– Credit risk – the risk that the investment counterparty will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council – be it of a capital or income nature.
Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasinginvestments with high credit ratings or capital guarantees.
Council also seeks advice from independent advisers before placing any funds in cash equivalents andinvestments.
(a) Market risk – price risk and interest rate risk
The following represents a summary of the sensitivity of Council’s Income Statement and accumulated surplus(for the reporting period) due to a change in either the price of a financial asset or the interest rates applicable.
It is assumed that the change in interest rates would have been constant throughout the reporting period.
2017Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates
2016Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates
(31)
Equity
28
(306) (31)
Profit
31
277
(306) 31
Decrease of values/rates
(28) 28 (28) (277) (277)
306 Equity Profit
277
306
Increase of values/rates
Financial Statements 2017
page 54
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 15. Financial risk management (continued)
$ ’000
(b) Credit risk
Council’s major receivables comprise (i) rates and annual charges and (ii) user charges and fees.
The major risk associated with these receivables is credit risk – the risk that debts due and payable to Councilmay not be repaid in full.
Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.
Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates and annual charges at higher than market rates which further encourages the payment of debt.
There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.
The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.
Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.
There are no material receivables that have been subjected to a re-negotiation of repayment terms.
A profile of Council’s receivables credit risk at balance date follows:
(i) Ageing of receivables – %Current (not yet overdue)Overdue
(ii) Ageing of receivables – valueRates and annual charges Other receivablesCurrent Current< 1 year overdue 0 – 30 days overdue1 – 2 years overdue 31 – 60 days overdue2 – 5 years overdue 61 – 90 days overdue> 5 years overdue > 91 days overdue
(iii) Movement in provision for impairment of receivablesBalance at the beginning of the year+ new provisions recognised during the yearBalance at the end of the year
68%
5 814
100%34%
annual
annual
2016
Other
Rates and
receivables
Rates and
100% 100%
annual
10%
2017 2017
charges receivables
220
4
90
41 34
Rates and
40
2016
92
42
670
37 35
1,893
310
178
713
annual Other
2016
524 1,705
44 50
1,902
Rates and
486
78%
100%
charges receivables
22%
charges Other
66%
Other
220
2,989 112
17
2017
62 55 206
receivables charges
32%90%
Financial Statements 2017
page 55
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 15. Financial risk management (continued)
$ ’000
(c) Liquidity risk
Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on handto meet payment obligations as and when they fall due.
Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.
Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.
The contractual undiscounted cash outflows (ie. principal and interest) of Council’s payables and borrowingsare set out in the maturity table below:
$ ’000
Trade/other payablesLoans and advancesTotal financial liabilities
Trade/other payablesTotal financial liabilities
Borrowings are also subject to interest rate risk – the risk that movements in interest rates could adverselyaffect funding costs and debt servicing requirements. Council manages this risk through the diversification ofborrowing types, maturities and interest rate structures.
The following interest rates were applicableto Council’s borrowings at balance date:
Trade/other payablesLoans and advances – fixed interest rate
Loan agreement breachesN/A
170
≤ 1 Year
2,160
–
170 – 1,427
maturity > 5 Yrs
162
to no3-4 Yrs
Subject
170
1-2 Yrs
– 170
4-5 Yrs
170 170 170
170 1,853
valuescash
2-3 Yrspayable in:
interest rateCarrying
– –
4,005
170 – 2,152
carryingActualTotal
2,152
1,427
1,597
– 1,597
–
–
4,444 1,442
– 2016
2017– 162
170
1,990 170
1,597 4.05%
–
1,597
2,292
value
outflows
n/a
2017
1,597
1,597 0.00%
2016Carrying
4,005 –
2,152
Average
1,853
interest rate
1,442 – –
–
n/avalue
–
Average
Financial Statements 2017
page 56
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 16. Material budget variations
$ ’000
Council’s original financial budget for 16/17 was adopted by the Council on 29 June 2016.
While the Income Statement included in this General Purpose Financial Report must disclose the originalbudget adopted by Council, the Local Government Act 1993 requires Council to review its financial budgeton a quarterly basis, so that it is able to manage the various variations between actuals versus budget thatinvariably occur throughout the year.
This note sets out the details of material variations between Council’s original budget and its actualresults for the year as per the Income Statement – even though such variations may have been adjusted forduring each quarterly budget review.
Note that for variations* of budget to actual :Material variations represent those variances that amount to 10% or more of the original budgeted figure.F = Favourable budget variation, U = Unfavourable budget variation
$ ’000
REVENUESRates and annual charges
User charges and fees
Interest and investment revenue
Other revenuesAnticipated proceeds from sale of assets was overestimated
Operating grants and contributionsCouncil received grant funding related to the flood event which was not budgeted for.Also two quarters of the 2018 Financial Assistance Grant was paid in advance.
Capital grants and contributionsWater and sewer grants of $1.026M and $300K respectively, were not in the original budget.
Net gains from disposal of assetsBudgeted net gains were not realised as sale of land and property (not budgeted) resulted in a net loss fromdisposal of assets.
20172017
F
U
2017
(78) (8%)
F
(250) (100%)
795
1%
F
61
21,393
1,460
250
16,349 31%
(18%)
U
Budget
8,791
4,136
U
---------- Variance* ----------
1,394
1,036
972
5,044
8,852
7%4,441
Actual
(177)
305
958
F
–
95%2,854
Financial Statements 2017
page 57
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 16. Material budget variations (continued)
$ ’000
EXPENSESEmployee benefits and on-costs
Borrowing costsLoan for the SRA Hall was drawn down later than anticipated. Interest repayments are on a quarterly basis.
Materials and contractsVariation to original budget can be principally attributed to unbudgeted flood maintenance, state road maintenance,additional waste collection service contract costs and water supply projects.
Depreciation and amortisation
Impairment expenses
Other expenses
Net losses from disposal of assetsA net loss was incurred from the sale of the Condobolin District Retirement Village, as the fair value exceedednet proceeds from the sale.
Budget variations relating to Council’s Cash Flow Statement include:
Cash flows from operating activities
Cash flows from investing activitiesBudget did not initially consider the impact of continuing low interest rates.
Cash flows from financing activities
–
0%(3,524)
54
2017
(3,514)
(2.0%)
11.7%
1,853
(14,487) (1,702)
F
(122)
13,814 14,628
U1,891
U(16,189)
(38)
–
–
814
(4%)
F
3,333
11,609
Actual
28%75
–
2017
(87%)
U3,524
7,565
0%
5.9%
3,211
9,913 F9,749
U
U
2%164
---------- Variance* ----------
2%
21 F
4,051
Budget
11,796 187
2017
F
Financial Statements 2017
page 58
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 17. Statement of developer contributions
$ ’000
Council recovers contributions, raises levies and enters into planning agreements on development works that are subject to a development consent issued by Council.All contributions must be spent/utilised for the specific purpose they were levied and any interest applicable to unspent funds must be attributed to remaining funds.
The following tables detail the receipt, interest and use of the above contributions and levies and the value of all remaining funds which are ‘restricted’ in their future use.
SUMMARY OF CONTRIBUTIONS AND LEVIES
Community facilities
S94 CONTRIBUTIONS – UNDER A PLAN
Community facilities36
assetrestricted
Internal Held as
– – – –
– 15
Total S94 revenue under plans
–
Non-cashCash
21
– 21
– 21 15 21
Total
Held as
– 36
36
InternalExpenditureborrowing
year
restricted(to)/from
during
during
–
– –
Interest
in year
–
36
36
36
–
–
– asset
borrowing
in year
–
Expenditure
(to)/from
15 Cash
15
– –
15
–
Opening received during the year
earnedContributions
received during the yearInterest
year
earned
Non-cash
– – 15
Total contributions
S94 contributions – under a plan
PURPOSE
PURPOSE Openingbalance
21
Contributions
balance
–
–
21
–
–
– –
–
–
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
Financial Statements 2017
page 59
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 18. Contingencies and other assets/liabilities not recognised
$ ’000
The following assets and liabilities do not qualify for (ii) Statewide Limitedrecognition in the Statement of Financial Position, buttheir knowledge and disclosure is considered relevant Council is a member of Statewide Mutual, a mutualto the users of Council’s financial report. pool scheme providing liability insurance to local
government.
LIABILITIES NOT RECOGNISED: Membership includes the potential to share in eitherthe net assets or liabilities of the fund depending on
1. Guarantees its past performance. Council’s share of the netassets or liabilities reflects Council’s contributions to
(i) Defined benefit superannuation the pool and the result of insurance claims within contribution plans each of the fund years.
Council participates in an employer-sponsored The future realisation and finalisation of claimsdefined benefit superannuation scheme, and makes incurred but not reported to 30/6 this year may resultcontributions as determined by the superannuation in future liabilities or benefits as a result of pastscheme’s trustees. events that Council will be required to fund or share
in respectively.Member councils bear responsibility of ensuring thereare sufficient funds available to pay out the required (iii) StateCover Limitedbenefits as they fall due.
Council is a member of StateCover Mutual LimitedThe schemes most recent full actuarial review and holds a partly paid share in the entity.indicated that the net assets of the scheme werenot sufficient to meet the accrued benefits of the StateCover is a company providing workersschemes defined benefit member category with compensation insurance cover to the NSW localmember councils required to make significantly government industry and specifically Council.higher contributions in future years.
Council has a contingent liability to contribute furtherThe Local Government Superannuation Scheme equity in the event of the erosion of the company’showever is unable to provide Council with an accurate capital base as a result of the company’s pastestimate of its share of the net deficit and accordingly performance and/or claims experience or as a resultCouncil has not recorded any net liability from it’s of any increased prudential requirements from APRA.defined benefit scheme obligations in accordancewith AASB 119. These future equity contributions would be required
to maintain the company’s minimum level of netFuture contributions made to the defined benefit assets in accordance with its licence requirements.scheme to rectify the net deficit position will berecognised as an expense when they become (iv) Other guaranteespayable – similar to the accounting for definedcontributions plans. Council has provided no other guarantees other than
those listed above.
Financial Statements 2017
page 60
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 18. Contingencies and other assets/liabilities not recognised (continued)
$ ’000
LIABILITIES NOT RECOGNISED (continued): (iii) Potential land acquisitions due to planning restrictions imposed by Council (continued)
2. Other liabilitiesAs a result, where notified in writing by the various
(i) Third party claims owners, Council will be required to purchase theseland parcels.
The Council is involved from time to time in variousclaims incidental to the ordinary course of business At reporting date, reliable estimates as to the valueincluding claims for damages relating to its services. of any potential liability (and subsequent land asset)
from such potential acquisitions has not beenCouncil believes that it is appropriately covered possible.for all claims through its insurance coverage anddoes not expect any material liabilities to eventuate. ASSETS NOT RECOGNISED:
(ii) S94 plans (i) Land under roads
Council levies section 94/94A contributions upon As permitted under AASB 1051, Council has electedvarious development across the Council area through not to bring to account land under roads that itthe required contributions plans. owned or controlled up to and including 30/6/08.
As part of these plans, Council has received funds (ii) Infringement notices/finesfor which it will be required to expend the monies inaccordance with those plans. Fines and penalty income, the result of Council
issuing infringement notices is followed up and As well, these plans indicate proposed future collected by the Infringement Processing Bureau.expenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in Council’s revenue recognition policy for suchfuture years or where a shortfall exists by the use of income is to account for it as revenue on receipt.Council’s general funds.
Accordingly, at year end, there is a potential assetThese future expenses do not yet qualify as liabilities due to Council representing issued but unpaidas of the reporting date, but represent Council’s infringement notices. intention to spend funds in the manner and timingset out in those plans. Due to the limited information available on the status,
value and duration of outstanding notices, Council is(iii) Potential land acquisitions due to planning unable to determine the value of outstanding income.
restrictions imposed by Council
Council has classified a number of privately ownedland parcels as local open space or bushland.
Note 19. Interests in other entities
Council has no interest in any controlled entities, joint arrangements or associates.
Financial Statements 2017
page 61
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 20. Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
$ ’000
(a) Retained earnings
Movements in retained earnings were as follows:Balance at beginning of year (from previous years audited accounts)a. Net operating result for the yearBalance at end of the reporting period
(b) Revaluation reserves
(i) Reserves are represented by:
– Infrastructure, property, plant and equipment revaluation reserveTotal
(ii) Reconciliation of movements in reserves:
Infrastructure, property, plant and equipment revaluation reserve– Opening balance– Revaluations for the year– (Impairment of revalued assets)/impairment reversals– Balance at end of year
TOTAL VALUE OF RESERVES
(iii) Nature and purpose of reserves
Infrastructure, property, plant and equipment revaluation reserve– The infrastructure, property, plant and equipment revaluation reserve is used to record increments/decrements of non-current asset values due to their revaluation.
(c) Correction of error/s relating to a previous reporting period
Council made no correction of errors during the current reporting period.
(d) Voluntary changes in accounting policies
Council made no voluntary changes in any accounting policies during the year.
168,160 172,357
172,357
172,357
(4,394) 168,160
197,474 2,954
2016
170,631 197
200,933
9(a) 1,726
Actual
194,520 3,459
9(a),(c)
Notes 2017
172,357 168,160 172,357
197,474
Actual
168,160
–
Financial Statements 2017
page 62
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 21. Financial result and financial position by fund
Income Statement by fund$ ’000
Continuing operationsIncome from continuing operationsRates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationImpairmentOther expensesNet losses from the disposal of assetsTotal expenses from continuing operationsOperating result from continuing operations
Discontinued operations
Net profit/(loss) from discontinued operationsNet operating result for the year
Net operating result attributable to each council fundNet operating result attributable to non-controlling interests
Net operating result for the year before grants and contr and contributions provided for capital purposes
1 General fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal charges and recoveries made between the funds.
221
6,426
Actual
1,153 88
516 2,560
2017 2017
–
790
–
476
4,979 1,024
5,652
32,484
–
3,524 2,623
355
534
–
–
–
2,396
–
–
Actual
18 20
621
793
54
1,793
2017
1,273
2017
227 1,603
221
–
4,189
–
–
273
1,437 1,613
– –
273
10,633
1,830
7,602
–
– 790 273
2,396 1,557
Water
Actual
General1Sewer
791 1 21,355
3
Actual
30,088 790
–
–
2,396
–
518 192
46
–
(234) –
Financial Statements 2017
page 63
Lachlan Shire Council
Notes to the Financial Statements as at 30 June 2017
Note 21. Financial result and financial position by fund (continued)
Statement of Financial Position by fund$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as ‘held for sale’Total current assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using the equity methodIntangible assetsTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets
EQUITYRetained earningsRevaluation reservesTotal equity1 General Fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal receivables and payables between the funds.
General1
64
Actual
64,423 –
10,913
–
– –
27,809
– – –
27,809
– –
64,423
–
–
–
– – 115
13,724
– –
–
4,765
149,602
–
–
–
–
Actual
Sewer
6,522 –
40,418
276,861
–
–
–
–
1,672
20172017
178
9
22,985 –
–
–
–
1,203
1,445
267,600
262,182
– 22,063
1,089 18,284
–
162 –
6,420
3,951 1,380
5,746
207
–
4,365
– 20,618
–
Actual
2,956
0
Actual
1,305
– 56,698
– 4,750
2017
–
2017
Water
–
–
16,896
96
1,757
299 –
290,585
2,152 –
24,005
– 4,839 7,202
58,003
127,259 64,423 27,809 276,861 –
Financial Statements 2017
page 64
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 22. ‘Held for sale’ non-current assets and disposal groups
$ ’000
Council did not classify any non-current assets or disposal groups as ‘held for sale’.
Note 23. Events occurring after the reporting date
Events that occur between the end of the reporting period (30 June 2017) and the date when the financialstatements are ‘authorised for issue’ have been taken into account in preparing these statements.
Council has adopted the date of receipt of the Auditors’ Report as the applicable ‘authorised for issue’ daterelating to these General Purpose Financial Statements.
Accordingly, the ‘authorised for issue’ date is 30/11/17.
Events that occur after the reporting period represent one of two types:
(i) Events that provide evidence of conditions that existed at the reporting period
These financial statements (and the figures therein) incorporate all ‘adjusting events’ that provided evidence ofconditions that existed at 30 June 2017.
(ii) Events that provide evidence of conditions that arose after the reporting period
These financial statements (and figures therein) do not incorporate any ‘non-adjusting events’ that have occurredafter 30 June 2017 and which are only indicative of conditions that arose after 30 June 2017.
Council is unaware of any material or significant ‘non-adjusting events’ that should be disclosed.
Note 24. Discontinued operations
Council has not classified any of its operations as ‘discontinued’.
Financial Statements 2017
page 65
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 25. Intangible assets
$ ’000
Intangible assets represent identifiable non-monetary assets without physical substance.
Intangible assets are as follows:
Opening values:Gross book value (1/7)Accumulated amortisation (1/7)Accumulated impairment (1/7)Net book value – opening balance
Movements for the year– Purchases– Amortisation charges
Closing values:Gross book value (30/6)Accumulated amortisation (30/6)Accumulated impairment (30/6)
TOTAL INTANGIBLE ASSETS – NET BOOK VALUE 1
1. The net book value of intangible assets represent:
– Software
2016
382
(209)
(35)
(244)
161
– – 173
(209)
173
Actual Actual 2017
173 299
–
209
(174)
(35)
383
299
543
–
382
–
299 173
Financial Statements 2017
page 66
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 26. Reinstatement, rehabilitation and restoration liabilities
$ ’000
Council has legal/public obligations to make restore, rehabilitate and reinstate the following assets/operations:
Asset/operation
Garbage Tip RestorationBalance at end of the reporting period
Under AASB 116 – Property, Plant and Equipment, where the use of an asset results in the obligation todismantle or remove the asset and restore the site on which the asset stands, an estimate of such costs isrequired to be included in the cost of the asset.
An equivalent liability must be recognised under AASB 137 – Provisions, Contingent Liabilities and ContingentAssets.
The provision has been calculated by determining the present value of the future expenditures expected to beincurred. The discount rate used is the risk free borrowing rate applicable to Council.
Reconciliation of movement in provision for year:
Balance at beginning of yearAmounts capitalised to new or existing assets:Effect of a change in discount rates used in PV calculationsAmortisation of discount (expensed to borrowing costs)Total – reinstatement, rehabilitation and restoration provision
Amount of expected reimbursements
Of the above provisions for reinstatement, rehabilitation and restoration works, those applicable to garbageservices and waste management are able to be funded through future charges incorporated within Council’sannual domestic waste management charge.
–
NPV of provision
4,759
4,759 10(a) 4,759 4,759
4,759 4,759
3,039
year of
2035 to 2045
Estimated
2016restoration
– 1,663
4,759
57
2017
Financial Statements 2017
page 67
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 26. Reinstatement, rehabilitation and restoration liabilities (continued)
$ ’000
Provisions for close down and restoration and for environmental clean up costs – tips and quarries
RestorationClose down and restoration costs include the dismantling and demolition of infrastructure and the removal ofresidual materials and remediation of disturbed areas. Estimated close down and restoration costs are providedfor in the accounting period when the obligation arising from the related disturbance occurs, whether this occursduring the development or during the operation phase, based on the net present value of estimated future costs.
Provisions for close down and restoration costs do not include any additional obligations which are expected toarise from future disturbance. The costs are estimated on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments, eg updated cost estimatesand revisions to the estimated lives of operations, and are subject to formal review at regular intervals
Close down and restoration costs are a normal consequence of tip and quarry operations, and the majority ofclose down and restoration expenditure is incurred at the end of the life of the operations. Although the ultimatecost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineeringstudies using current restoration standards and techniques.
Other movements in the provisions for close down and restoration costs, including those resulting from newdisturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discountrates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of theassets to which they relate.
RehabilitationWhere rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure,provision is made for the estimated outstanding continuous rehabilitation work at each reporting date and thecost is charged to the Income Statement.
Provision is made for the estimated present value of the costs of environmental clean up obligations outstandingat the reporting date. These costs are charged to the Income Statement. Movements in the environmental cleanup provisions are presented as an operating cost, except for the unwinding of the discount which is shown as a borrowing cost.
Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques.
As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary inresponse to many factors including changes to the relevant legal requirements, the emergence of newrestoration techniques or experience at other locations. The expected timing of expenditure can also change, forexample in response to changes in quarry reserves or production rates. As a result there could be significantadjustments to the provision for close down and restoration and environmental clean up, which would affectfuture financial results.
Financial Statements 2017
page 68
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement
$ ’000
The Council measures the following asset and liability classes at fair value on a recurring basis:
– Infrastructure, property, plant and equipment
The fair value of assets and liabilities must be estimated in accordance with various accounting standards foreither recognition and measurement requirements or for disclosure purposes.
AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a‘level’ in the fair value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values:
2017
Recurring fair value measurements
Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and FittingsOperational landCommunity LandLand Improvements - non depreciableLand Improvements - depreciableBuildings - Non SpecialisedBuildings SpecialisedOther StructuresRoadsBridgesFootpathsWater Supply networkSewer Supply NetworkLibrary BooksTip restoration assetsStormwater DrainageTotal infrastructure, property, plant and equipment
Fair value measurement hierarchyLevel 1 Level 2
Significant
– 3,378 3,378 30/06/15 – – 464 464 30/06/15 – – 2,039 2,039 30/06/12 – – 7,524 7,524
30/06/17 – –
– – 339,498 339,498
30/06/17 – – 20,084 20,084 30/06/15 – – 164 164 30/06/16 – – 2,001 2,001 30/06/15 – – 4,873 4,873
30/06/15 – – 5,418 5,418 30/06/16 – – 168,749 168,749 30/06/15 – – 22,450 22,450 30/06/15 – – 3,048 3,048
30/06/12 – – 32,570 32,570
30/06/12 – – 350 350 30/06/17 – – 3,031 3,031 30/06/16 –
inputs
52,777
prices in observable
52,777
– 286
inputs
Level 3 TotalDate Quoted Significant
valuation active mktsof latest unobservable
30/06/15 – – 10,292 10,292 30/06/12 – 286
Financial Statements 2017
page 69
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values: (continued)
2016
Recurring fair value measurements
Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and FittingsOperational landCommunity LandLand Improvements - non depreciableLand Improvements - depreciableBuildings - Non SpecialisedBuildings SpecialisedOther StructuresRoadsBridgesFootpathsWater Supply networkSewer Supply NetworkLibrary BooksTip restoration assetsStormwater DrainageTotal infrastructure, property, plant and equipment
(2) Transfers between level 1 and level 2 fair value hierarchies
During the year, there were no transfers between level 1 and level 2 fair value hierarchies for recurring fairvalue measurements.
– 3,294 3,294 30/06/15 – – 464 464 30/06/15 – – 1,595 1,595
valuation active mkts
Level 1 Level 2Significant Significant
of latest prices in observableDate Quoted
Level 3 TotalFair value measurement hierarchy
–
inputsunobservable
inputs
30/06/15 – – 10,080 10,080 30/06/12 – – 295 295
30/06/12 – – 7,817 7,817 30/06/12 – – 38,897 38,897
30/06/12 – – 408 408 30/06/15 – – 3,842 3,842 30/06/15 –
30/06/15 – – 3,210 3,210 30/06/15 – – 172,181 172,181 30/06/15 – – 22,664 22,664 30/06/15 – – 3,106 3,106 30/06/16 – – 53,339 53,339 30/06/16 – – 20,817 20,817 30/06/15 – – 176 176 30/06/16 – – 2,001 2,001 30/06/15 – – 4,898 4,898
– 349,084 349,084
Financial Statements 2017
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 27. Fair value measurement (continued)
page 70
(3) Valuation techniques used to derive level 2 and level 3 fair values Where Council is unable to derive fair valuations using quoted market prices of identical assets (i.e. level 1 inputs), Council instead utilises a spread of both observable inputs (level 2 inputs) and unobservable inputs (level 3 inputs). The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows: Financial assets Held to Maturity Valuation technique: ‘Cost approach’ Inputs Used (Level 2) Original investment value Loans and Receivables Valuation technique: ‘Cost approach’ Inputs Used (Level 2) Original investment value Financial liabilities Payables – Outstanding Creditor payments Valuation technique: ‘Cost approach’ Inputs used (Level 2) Cost of product or service Infrastructure, property, plant and equipment Plant & Equipment, Office Equipment and Furniture & Fittings
Plant & Equipment, Office Equipment and Furniture and Fittings are valued at cost but are disclosed at fair value in the notes. The carrying amount of these assets is assumed to approximate fair value due to the nature of the items. There has been no change to the valuation process during the reporting period. Operational & Community Land
Operational land was revalued as at 30 June 2017, by Scott Fullarton Valuations Pty Ltd. Level 2 inputs were used to value land held in freehold title and those with special use, which are restricted under the zoning objectives. Sale prices of comparable land parcels in close proximity were adjusted for differences in key attributes such as size and configuration. The most significant inputs into this valuation approach are price per square metre. Parks, reserves and other special use parcels where there was no observable market evidence. This land was valued utilising Level 3 inputs, with the valuer using professional judgement to adjust the rate per square metre from the sales evidence available. Buildings – Non Specialised and Specialised
Non-specialised and Specialised Buildings are valued using the cost approach. The approach estimated the replacement cost for each building by componentising the building into significant parts. While all buildings were physically inspected and the unit rates based on square metres from Construction Guides no market
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 27. Fair value measurement (continued)
page 71
based evidence ( Level 2) could be established. As such these assets were classified as having been valued as Level 3 valuation inputs. While the costs were current and the impact of depreciation negligible, the building has been classified as Level 3 as they are immaterial in relation to the overall value of the asset type. There has been no change to the valuation process during the reporting period. Roads
Roads comprise road carriageway, roadside shoulders & kerb & gutter. The cost approach using level 3 inputs was used to value this asset class. Valuations for this asset class were undertaken in-house based on actual cost and assumptions from Councils engineering department. No market value based evidence (level 2) inputs are available therefore Level 3 valuation inputs were used for this asset class. There has been no change to the valuation process during the reporting period. Bridges
Bridges were valued in-house using Engineering Department Assumptions. While all bridges were physically inspected and unit rate based on square meters was used there was no reliable market evidence (Level 2) as other inputs (such as estimates of residual value and pattern of consumption) require extensive professional judgement that impacts significantly on the final determination of fair value. There has been no change to the valuation process during the reporting period. Footpaths
Footpaths were valued in-house by Council’s engineering department and were based on actual cost per square metre. Footpaths are inspected annually and condition assessed.
There has been no change to the valuation process during the reporting period. Water Supply Network
Assets within this asset class comprise reservoirs, pumping stations and water pipelines.
The Water Supply network was revalued as at 30 June 2017, by Australis Asset Advisory Group.
The ‘cost approach’ (level 3) estimated the replacement cost for each asset by componentising the asset into significant parts with different useful lives and taking into account a range of factors. While the unit rates based on linear metres of certain diameter pipes and prices per pit or similar may be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impact significantly on the final determination of fair value. Additionally due to limitations in the historical records of very long lived assets there is uncertainty regarding the actual design, specifications and dimensions of some assets. These assets are indexed each year in line with the NSW Reference Rates Manual as published by the Office of Water. Sewer Network
Assets within this asset class comprise reservoirs, pumping stations and water pipelines.
The Water Supply network was revalued as at 30 June 2017, by Australis Asset Advisory Group.
The ‘cost approach’ (level 3) estimated the replacement cost for each asset by componentising the asset into significant parts with different useful lives and taking into account a range of factors. While the unit rates based on linear metres of certain diameter pipes and prices per pit or similar may be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impact significantly on the final determination of fair value.
Financial Statements 2017_
Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 27. Fair value measurement (continued)
page 72
Additionally due to limitations in the historical records of very long lived assets there is uncertainty regarding the actual design, specifications and dimensions of some assets. These assets are indexed each year in line with the NSW Reference Rates Manual as published by the Office of Water. Tip Assets
Assets in this class represent the expected cost of reinstatement, rehabilitation and restoration of Tip Sites within the Shire.
There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 73
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 28. Related party disclosures
$ ’000
a. Key management personnel
Key management personnel (KMP) of the council are those persons having the authority and responsibility for planning, directing and controlling the activities of thecouncil, directly or indirectly.
The aggregate amount of KMP compensation included in the Income Statement is:
Compensation:Short-term benefitsPost-employment benefitsOther long-term benefitsTermination benefits
Total
67
987
Actual2017810 79 31
Financial Statements 2017
page 74
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 28. Related party disclosures (continued)
$ ’000
b. Other transactions with KMP and their related parties
Council has determined that transactions at arm’s length between KMP and Council as part of Council delivering a public service objective (e.g. access to libraryor Council swimming pool by KMP) will not be disclosed.
Nature of the transaction
Fuel Supply for Rural Fire Service VehiclesNewspaper AdvertisingGravel Extraction and CrushingSupply of HardwareErection of Buildings & StructuresGravel RoyaltyVehicle Safety Inspection Reports, Windscreens ReplacementProperty Rental Income
Purchase of fuel from close relative of KMPKMP's are employed by local newspapers in which Council advertisesCouncil engages gravel extraction contractor which employs a close relative of a KMPCouncil purchases hardware from a KMP-owned businessCouncil engages a KMP to erect buildings in accordance with its Procurement & Disposal PolicyCouncil pays gravel royalty to a KMPCouncil engages a KMP to provide automotive servicesCouncil receives rental income from a KMP
Value of Outstanding
during year (incl. loans and debts expensecommitments) outstanding recognised
Terms and conditions Provisions Doubtfultransactions balance for doubtful debts
1 2 – 30-day terms on invoice – – Note $'000 $'000 $'000 $'000
3 1,771 – Weekly contract payments – – 2 29 2 30-day terms on invoice – –
5 23 – 30-day terms on invoice – – 4 1 – 30-day terms on invoice – –
7 7 – 30-day terms on invoice – – 6 1 – Annual payment – –
8 13 – Monthly lease – –
12345678
Financial Statements 2017
page 75
Lachlan Shire Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 29. Council information and contact details
Principal place of business:58 - 64 Molong StreetCondobolin NSW 2877
Contact detailsMailing address: Opening hours:PO Box 216 Mon - Fri. 8.30am to 4.30pmCondobolin NSW 2877
Telephone: 02 6895 1900 Internet:Facsimile: 02 6895 3478 Email:
Officers Elected membersGENERAL MANAGER MAYORRobert Hunt Arthur J Medcalf
RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSJohn Chapman
P PhillipsPUBLIC OFFICER B NelsonJohn Chapman M Blewitt
M ReesAUDITORS D CarterAudit Office of New South Wales P HarrisGPO Box 12 M FrankelSYDNEY NSW 2001 J Ridley
M Hall
Other informationABN: 82 815 250 829
http://[email protected]
INDEPENDENT AUDITOR’S REPORT Report on the general purpose financial statements
Lachlan Shire Council
To the Councillors of the Lachlan Shire Council
Opinion I have audited the accompanying financial statements of Lachlan Shire Council (the Council), which comprise the statement of financial position as at 30 June 2017, the income statement, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Statement by Councillors and Management.
In my opinion,
• the Council’s accounting records have been kept in accordance with the requirements of the Local Government Act 1993, Chapter 13, Part 3, Division 2 (the Division)
• the financial statements: - have been presented, in all material respects, in accordance with the requirements of this
Division - are consistent with the Council’s accounting records - present fairly, in all material respects, the financial position of the Council as at
30 June 2017, and of its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards
• all information relevant to the conduct of the audit has been obtained • no material deficiencies in the accounting records or financial statements have come to light
during the audit.
My opinion should be read in conjunction with the rest of this report.
Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’ section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for
Professional Accountants’ (APES 110).
page 76
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an Auditor-General
• mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.
I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
Other Matter The financial statements of the Council for the year ended 30 June 2016 were audited by another auditor who expressed an unmodified opinion on that financial statement on 25 November 2016.
The Councillors’ Responsibility for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the Local Government Act 1993, and for such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Councillors must assess the Council’s ability to continue as a going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting.
Auditor’s Responsibility for the Audit of the Financial Statements My objectives are to:
• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error
• issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.
A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar3.pdf. The description forms part of my auditor’s report.
page 77
My opinion does not provide assurance:
• that the Council carried out its activities effectively, efficiently and economically • on the Original Budget information included in the Income Statement, Statement of Cash Flows,
Note 2(a) and Note 16 budget variation explanations • on the attached Special Schedules • about the security and controls over the electronic publication of the audited financial
statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.
Karen Taylor Director, Financial Audit Services 30 November 2017 SYDNEY
page 78
Councillor John Medcalf Mayor Lachlan Shire Council PO Box 216 CONDOBOLIN NSW 2877
30 November 2017
Dear Mr Mayor
Report on the Conduct of the Audit for the year ended 30 June 2017
Lachlan Shire Council
I have audited the general purpose financial statements of the Lachlan Shire Council (the Council) for the year ended 30 June 2017 as required by s415 of the Local Government Act 1993 (the Act).
I expressed an unmodified opinion on the Council’s general purpose financial statements.
This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2017 is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my audit opinion on the general purpose financial statements issued under section 417(2) of the Act.
Contact: Karen Taylor
Phone no: 02 9275 7311
Our ref: D1731254/1750
page 79
Our insights inform and challenge government to improve outcomes for citizens
3
INCOME STATEMENT Operating result
2017 2016 Variance
$m $m %
Rates and annual charges revenue 8.9 8.2 7.3
Grants and contributions revenue 24.2 17.8 36.5
Employee benefits and on-costs 11.6 10.4 11.5
Materials and Contract expenses 7.6 5.4 40.9
Net Losses from the disposal of assets 3.5 0.3 1115.0
Operating result for the year 3.5 3.0 17.1
Net operating result before capital amounts 0.6 1.9 68.9
Note: variances are based on actual financials not rounded figures.
The growth in rates and annual charges was consistent with the IPART approved special rate variation allowing an increase of 7.4 per cent including the rate-pegging limit of 1.5 per cent.
Operating grants were higher following the advance receipt of the 2017-18 financial assistance grant in 2016-17 of $4.3 million. Capital grants were also higher with the receipt of $1.0 million for the Condobolin bore project.
Growth in employee costs was consistent with the growth in staff numbers. Materials and contract costs were higher due to a greater level of maintenance work than 2016. The substantial increase in the loss on disposal of assets was due to the sale of the Condobolin District Retirement Village.
The net operating result was generated across all funds. Note 21 reported surpluses in the general fund of $2.5 million, water fund $0.7 million and the sewer Fund of $0.3 million.
page 80
Our insights inform and challenge government to improve outcomes for citizens
4
STATEMENT OF CASH FLOWS 2016-17 saw a net cash inflow of $0.3 million, Council grew its cash, cash equivalents and investments balance over the past three years. Over this period, Council has generated operating cash flow surpluses allowing it to maintain and renew community infrastructure.
FINANCIAL POSITION Cash and Investments
2017 2016 Commentary
$m $m
External restrictions 14.7 14.0 Externally restricted balances include unexpended loans, grants, developer contributions water, sewer and domestic waste management charges. Balances are internally restricted due to Council policy or decisions for forward plans including works program. Unrestricted balances provide liquidity for day-to-day operations.
Internal restrictions 21.4 11.0
Unrestricted 0.3 2.7
Cash and investments 36.5 27.7
Debt At 30 June 2017, Council had external borrowings of $1.9 million ($Nil at 30 June 2016) and access to a $0.5 million ($0.5 million at 30 June 2016) bank overdraft facility. This facility was unused at year-end.
-10
0
10
20
30
40
2015 2016 2017
$m
Year ended 30 June
Statement of Cash Flows
Net cash flow Cash, cash equivalents and investments
page 81
Our insights inform and challenge government to improve outcomes for citizens
5
PERFORMANCE RATIOS The definition of each ratio analysed below (except for the ‘building and infrastructure renewals ratio’)
is included in Note 13 of the Council’s audited general purpose financial statements. The ‘building and
infrastructure renewals ratio’ is defined in Council’s unaudited Special Schedule 7.
Operating performance ratio Council’s operating performance ratio
exceeded the industry benchmark over the past two years. Advance receipt of the 2017-18 financial assistance grant contributed to the further improvement in this year’s
result. The ‘operating performances ratio’
measures how well council contained operating expenditure within operating revenue (excluding capital grants and contributions, fair value adjustments, and reversal of revaluation decrements). The benchmark set by the Office of Local Government (OLG) is greater than zero per cent.
Own source operating revenue ratio The increased level of grants and contributions, particularly from the advance receipt of the financial assistance grant, decreases Council’s
own source operating revenue ratio. The result is below the benchmark. The ‘own source operating revenue
ratio’ measures council’s fiscal
flexibility and the degree to which it relies on external funding sources such as operating grants and contributions. The benchmark set by OLG is greater than 60 per cent.
Unrestricted current ratio Council’s unrestricted current ratio exceeded the industry benchmark over the past three years. The ‘unrestricted current ratio’ is
specific to local government and represents council’s ability to meet its
short-term obligations as they fall due. The benchmark set by OLG is greater than 1.5 times.
-15-10
-505
1015
2015 2016 2017
Ratio%
Year ended 30 June
Operating performance ratio
Operating performance ratio Industry benchmark > 0%
0
20
40
60
80
100
2015 2016 2017
Ratio%
Year ended 30 June
Own source operating revenue ratio
Own source operating revenue ratioIndustry benchmark > 60%
0
1
2
3
4
5
2015 2016 2017
Ratiox
Year ended 30 June
Unrestricted current ratio
Unrestricted current ratio Industry benchmark > 1.5x
page 82
Our insights inform and challenge government to improve outcomes for citizens
6
Debt service cover ratio The result of this ratio is skewed by council drawing down a $1.9 million loan in October 2016 and accordingly the debt service costs were not for a complete year. The ‘debt service cover ratio’
measures the operating cash to service debt including interest, principal and lease payments. The benchmark set by OLG is greater than two times.
Rates and annual charges outstanding ratio
Council’s rates and annual charges
outstanding ratio is better than the benchmark for rural councils over the past three years. The ratio reflects Council’s sustained effort to effectively manage rates and charges recovery. The ‘rates and annual charges
outstanding ratio’ assesses the impact of uncollected rates and annual charges on council’s liquidity and the
adequacy of debt recovery efforts. The benchmark set by OLG is less than 10 per cent for rural councils.
Cash expense cover ratio Council’s high levels of liquidity results in it being well over the benchmark for the cash expense cover ratio over the past three years. This liquidity ratio indicates the number of months the council can continue paying for its immediate expenses without additional cash inflow. The benchmark set by OLG is greater than three months.
020406080
100120140160
2015 2016 2017
Ratiox
Year ended 30 June
Debt service cover ratio
Debt service cover ratio Industry benchmark > 2x
02468
1012
2015 2016 2017
Ratio%
Year ended 30 June
Rates and annual charges outstanding ratio
Rates and annual charges outsatanding ratioIndustry benchmark < 10%
0
5
10
15
20
2015 2016 2017
Rat
io(m
onth
s)
Year ended 30 June
Cash expense cover ratio
Cash expense cover ratioIndustry benchmark > 3 months
page 83
Our insights inform and challenge government to improve outcomes for citizens
7
Building and infrastructure renewals ratio
Council has not met the building and infrastructure renewals ratio benchmark over the past three years. Council will continue to focus on renewing its assets to maintain a standard acceptable to the community. The ‘building and infrastructure renewals ratio assesses the rate at which these assets are being renewed against the rate at which they are depreciating. The benchmark set by OLG is greater than 100 per cent. This ratio is sourced from council’s
Special Schedule 7 which has not been audited.
OTHER MATTERS New accounting standards implemented
AASB 124 ‘Related Party Disclosures’
Effective for annual reporting periods beginning on or 1 July 2016
AASB 2015-6 extended the scope of AASB 124 to include not-for-profit public sector entities. As a result, Council’s financial
statements disclosed the: compensation paid to key management personnel nature of related party relationships amount and nature of related party transactions,
outstanding balances and commitments and outstanding balances (including commitments).
Legislative compliance My audit procedures did not identify any instances of non-compliance with legislative requirements or a material deficiency in the Council’s accounting records or financial reports. The Council’s:
accounting records were maintained in a manner and form to allow the general purpose financial statements to be prepared and effectively audited
staff provided all accounting records and information relevant to the audit.
Karen Taylor Director, Financial Audit Services
020406080
100120
2015 2016 2017
Ratio%
Year ended 30 June
Building and infrastructure renewals ratio
Building and infrastructure renewals ratioIndustry benchmark > 100%
page 84
Lachlan Shire Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017
“The Heart of NSW”
SPFS 2017
page 1
Lachlan Shire Council
Special Purpose Financial Statements for the year ended 30 June 2017
Contents
1. Statement by Councillors and Management
2. Special Purpose Financial Statements:
Income Statement – Water Supply Business ActivityIncome Statement – Sewerage Business ActivityIncome Statement – Other Business Activities
Statement of Financial Position – Water Supply Business ActivityStatement of Financial Position – Sewerage Business ActivityStatement of Financial Position – Other Business Activities
3. Notes to the Special Purpose Financial Statements
4. Auditor’s Report
Background
These Special Purpose Financial Statements have been prepared for the use by both Council and the Office ofLocal Government in fulfilling their requirements under National Competition Policy.
The principle of competitive neutrality is based on the concept of a ‘level playing field’ between persons/entitiescompeting in a market place, particularly between private and public sector competitors.
Essentially, the principle is that government businesses, whether Commonwealth, state or local, should operatewithout net competitive advantages over other businesses as a result of their public ownership.
For Council, the principle of competitive neutrality and public reporting applies only to declared business activities.
These include (a) those activities classified by the Australian Bureau of Statistics as business activities beingwater supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnoverof more than $2 million that Council has formally declared as a business activity (defined as Category 1 activities).
In preparing these financial statements for Council’s self-classified Category 1 businesses and ABS-definedactivities, councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax-equivalentregime payments and debt guarantee fees (where the business benefits from Council's borrowing position bycomparison with commercial rates).
(iv)
7
n/a6
(i)
(ii)
16
(iii)
5
Page
34
n/a
2
SPFS 2017
page 3
Lachlan Shire Council
Income Statement of Council's Water Supply Business Activity for the year ended 30 June 2017
$ ’000
Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentWater purchase chargesCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts
Grants and contributions provided for capital purposesSurplus (deficit) from continuing operations after capital amounts
Surplus (deficit) from discontinued operationsSurplus (deficit) from all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]
SURPLUS (DEFICIT) AFTER TAX
Plus opening retained profitsPlus/less: prior period adjustmentsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentLess:– Tax equivalent dividend paid– Surplus dividend paidClosing retained profits
Return on capital %Subsidy from Council
Calculation of dividend payable:Surplus (deficit) after taxLess: capital grants and contributions (excluding developer contributions)Surplus for dividend calculation purposesPotential dividend calculated from surplus
1,078 2,628
– 273 25 – 2
4,006
614 –
1,487 1,523
34 – –
419 4,077
(71)
208 137
– 137
–
137
39,490 –
– – –
– –
39,627
-0.1%1,169
137 (208)
– –
Actual 2016
1,153 2,560
– 221 20 – 1
3,955
621 –
1,437 1,613
60 – –
458 4,189
– –
(234)
1,024 790
– 790
–
– –
Actual 2017
–
– –
40,417
-0.4%1,583
790
39,627 –
790 (1,024)
SPFS 2017
page 4
Lachlan Shire Council
Income Statement of Council's Sewerage Business Activity for the year ended 30 June 2017
$ ’000
Income from continuing operationsAccess chargesUser chargesLiquid trade waste chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts
Grants and contributions provided for capital purposesSurplus (deficit) from continuing operations after capital amounts
Surplus (deficit) from discontinued operationsSurplus (deficit) from all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]
SURPLUS (DEFICIT) AFTER TAX
Plus opening retained profitsPlus/less: prior period adjustmentsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentLess:– Tax equivalent dividend paid– Surplus dividend paidClosing retained profits
Return on capital %Subsidy from Council
Calculation of dividend payable:Surplus (deficit) after taxLess: capital grants and contributions (excluding developer contributions)Surplus for dividend calculation purposesPotential dividend calculated from surplus
(227) 32
– 192
1,557 46
1,536
–
–
– 10,917
0.2%445
259
–
– –
14
–
16
–
– 273 (14)
1,603
– 2
369 –
521 525
8 – 8 4
259
10,644
Actual 2017
– 290 18
1,273 88 – –
221
– 110
1,525
227 273
18 – 3
1,194 32
Actual 2016
–
11
– 11
0.1%409
– 11 (3)
8
10,633 –
10,644
355 –
476 534
– 3
– –
SPFS 2017
page 5
Lachlan Shire Council
Statement of Financial Position – Council's Water Supply Business Activity as at 30 June 2017
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal current assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesBank overdraftPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY
– –
– –
– –
64,423 –
64,423
22,688 39,628
–
–
–
40,418
–
–
1,089 1,388
– – – –
– –
58,003 56,557
–
56,698
3,951 3,582 1,380 789
6,420
1,375
– – 5,759
1,305 – –
–
62,316
Actual 2016
Actual 2017
64,423
–
– 55,182
62,316
–
–
– –
– – –
– –
–
–
– –
62,316 –
– –
62,316
24,005
64,423
SPFS 2017
page 6
Lachlan Shire Council
Statement of Financial Position – Council's Sewerage Business Activity as at 30 June 2017
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal current Assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesBank overdraftPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY
– –
– –
– –
20,618 21,115 –
10,913
–
– –
16,896 17,352
27,809
–
27,992
27,992
–
– – –
10,640
27,809
27,809
1,203
2017
–
Actual Actual
1,471
–
–
–
–
– –
–
– – –
3,796
5,746 5,420
– –
27,809
– – –
178 153 4,365
2016
– –
22,063 22,572
–
1,457 1,445
27,992
– –
– – –
–
–
27,992
–
SPFS 2017
page 7
Lachlan Shire Council
Special Purpose Financial Statements for the year ended 30 June 2017
Contents of the notes accompanying the financial statements
Details
Summary of significant accounting policies
Water Supply Business Best-Practice Management disclosure requirements
Sewerage Business Best-Practice Management disclosure requirements 133
Note Page
1
2
8
11
SPFS 2017
Lachlan Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies
page 8
A statement summarising the supplemental accounting policies adopted in the preparation of the Special Purpose Financial Statements (SPFS) for National Competition Policy (NCP) reporting purposes follows. These financial statements are SPFS prepared for use by Council and the Office of Local Government. For the purposes of these statements, the Council is a non-reporting not-for-profit entity. The figures presented in these Special Purpose Financial Statements have been prepared in accordance with the recognition and measurement criteria of relevant Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Australian Accounting Interpretations. The disclosures in these Special Purpose Financial Statements have been prepared in accordance with the Local Government Act 1993 (NSW), the Local Government (General) Regulation, and the Local Government Code of Accounting Practice and Financial Reporting. The statements are prepared on an accruals basis. They are based on historic costs and do not take into account changing money values or, except where specifically stated, current values of non-current assets. Certain taxes and other costs, appropriately described, have been imputed for the purposes of the National Competition Policy. National Competition Policy Council has adopted the principle of ‘competitive neutrality’ in its business activities as part of the National Competition Policy which is being applied throughout Australia at all levels of government. The framework for its application is set out in the June 1996 NSW government policy statement titled 'Application of National Competition Policy to Local Government'. The Pricing and Costing for Council Businesses, A Guide to Competitive Neutrality issued by the Office of Local Government in July 1997 has also been adopted. The pricing and costing guidelines outline the process for identifying and allocating costs to
activities and provide a standard for disclosure requirements. These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents, Council subsidies, return on investments (rate of return), and dividends paid. Declared business activities In accordance with Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities: Category 1 (where gross operating turnover is over $2 million) Water Supplies
Comprising the whole of the operations and assets of the water supply systems servicing the towns of Condobolin, Lake Cargelligo, Tottenham, Tullibigeal, Burcher and Fifield. Category 2 (where gross operating turnover is less than $2 million) Sewerage Services
Comprising the whole of the operations and assets of the sewerage reticulation and treatment system servicing the towns of Condobolin, Lake Cargelligo and Tottenham. Monetary amounts Amounts shown in the financial statements are in Australian currency and rounded to the nearest thousand dollars, except for Note 2 (Water Supply Best-Practice Management Disclosures) and Note 3 (Sewerage Best-Practice Management Disclosures). As required by the NSW Office of Water (Department of Primary Industries) the amounts shown in Note 2 and Note 3 are disclosed in whole dollars. (i) Taxation-equivalent charges Council is liable to pay various taxes and financial duties. Where this is the case, they are disclosed as a cost of operations just like all other costs.
SPFS 20177
Lachlan Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)
page 9
However, where Council does not pay some taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all Council-nominated business activities and are reflected in Special Purpose Financial Statements. For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities): Notional rate applied (%) Corporate income tax rate – 30% Land tax – the first $549,000 of combined land values attracts 0%. For the combined land values in excess of $549,001 up to $3,357,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $3,357,000 a premium marginal rate of 2.0% applies. Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $750,000. In accordance with the Department of Primary Industries Water (DPIW), a payment for the amount calculated as the annual tax equivalent charges (excluding income tax) must be paid from water supply and sewerage business activities. The payment of taxation equivalent charges, referred to in the NSW Office of Water Guidelines to as a ‘dividend for taxation equivalent’, may be applied for any purpose allowed under the Local Government Act, 1993. Achievement of substantial compliance to the NSW Office of Water Guidelines is not a prerequisite for the payment of the tax equivalent charges, however the payment must not exceed $3 per assessment. Income tax An income tax equivalent has been applied on the profits of the business activities. Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account in terms of assessing the rate of return required on capital invested.
Accordingly, the return on capital invested is set at a pre-tax level - gain/(loss) from ordinary activities before capital amounts, as would be applied by a private sector competitor. That is, it should include a provision equivalent to the corporate income tax rate, currently 30%. Income tax is only applied where a gain/ (loss) from ordinary activities before capital amounts has been achieved. Since the taxation equivalent is notional – that is, it is payable to Council as the ‘owner’ of business operations - it represents an internal payment and has no effect on the operations of the Council. Accordingly, there is no need for disclosure of internal charges in the SPFS. The rate applied of 30% is the equivalent company tax rate prevalent at reporting date. No adjustments have been made for variations that have occurred during the year. Local government rates and charges A calculation of the equivalent rates and charges payable on all category 1 businesses has been applied to all land assets owned or exclusively used by the business activity. Loan and debt guarantee fees The debt guarantee fee is designed to ensure that council business activities face ‘true’ commercial borrowing costs in line with private sector competitors. In order to calculate a debt guarantee fee, Council has determined what the differential borrowing rate would have been between the commercial rate and Council’s borrowing rate for its business activities. (ii) Subsidies Government policy requires that subsidies provided to customers, and the funding of those subsidies, must be explicitly disclosed. Subsidies occur when Council provides services on a less-than-cost-recovery basis. This option is exercised on a range of services in order for Council to meet its community service obligations.
SPFS 20177
Lachlan Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)
page 10
Accordingly, ‘subsidies disclosed’ (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by Council in any given financial year. The overall effect of subsidies is contained within the Income Statement of each reported business activity. (iii) Return on investments (rate of return) The NCP policy statement requires that councils with Category 1 businesses ‘would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field’. Such funds are subsequently available for meeting commitments or financing future investment strategies. The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement. The rate of return is calculated as follows: Operating result before capital income + interest expense
Written down value of I,PP&E as at 30 June As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 2.38% at 30/6/17. (iv) Dividends Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities. Local government water supply and sewerage businesses are permitted to pay an annual dividend from its water supply or sewerage business surplus. Each dividend must be calculated and approved in accordance with the DPIW guidelines and must not exceed:
(i) 50% of this surplus in any one year, or (ii) the number of water supply or sewerage
assessments at 30 June 2017 multiplied by $30
(less the payment for tax equivalent charges, not exceeding $3 per assessment).
In accordance with the DPIW guidelines a Dividend Payment form, Statement of Compliance, Unqualified Independent Financial Audit Report and Compliance Audit Report are required to be submitted to the DPIW.
SPFS 2017
page 11
Lachlan Shire Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 2. Water supply business best-practice management disclosure requirements
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
1. Calculation and payment of tax-equivalents[all local government local water utilities must pay this dividend for tax equivalents]
Calculated tax equivalents
Number of assessments multiplied by $3/assessment
Amounts payable for tax equivalents [lesser of (i) and (ii)]
Amounts actually paid for tax equivalents
2. Dividend from surplus50% of surplus before dividends[calculated in accordance with Best-Practice Management for Water Supply and Sewerage Guidelines]
Number of assessments multiplied by $30/assessment, less tax equivalentcharges/assessment
Cumulative surplus before dividends for the 3 years to 30 June 2017, less thecumulative dividends paid for the 2 years to 30 June 2016 and 30 June 2015
2017 Surplus 2016 Surplus 2015 Surplus2016 Dividend 2015 Dividend
Maximum dividend from surplus [least of (i), (ii) and (iii) above]
Dividend actually paid from surplus [refer below for required pre-dividend payment criteria]
Are the overhead reallocation charges to the water business fair and reasonable? a
3. Required outcomes for 6 criteria[to be eligible for the payment of a ‘dividend from surplus’, all the criteria below need a ‘YES’]
Completion of strategic business plan (including financial plan)
Full cost recovery, without significant cross subsidies[refer item 2 (a) in table 1 on page 22 of the Best-Practice Guidelines]
– Complying charges [item 2 (b) in table 1]
– DSP with commercial developer charges [item 2 (e) in table 1]
– If dual water supplies, complying charges [item 2 (g) in table 1]
Sound water conservation and demand management implemented
Sound drought management implemented
Complete performance reporting form (by 15 September each year)
a. Integrated water cycle management evaluation
b. Complete and implement integrated water cycle management strategy
YES
NO(v)
(vi)
YES
–
–
n/a
2017
–
–
83,610
(702,000)
8,361
–
(iv) YES
YES
NO
(ii)
YES
YES
– (234,000) (71,000)
YES
YES
– (397,000)
YES
(iv)
(iii)
(i)
(iv)
(iii)
(iii)
(i)
(ii)
(ii)
(v)
(i)
(vi)
SPFS 2017
page 12
Lachlan Shire Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 2. Water supply business best-practice management disclosure requirements (continued)
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
National Water Initiative (NWI) financial performance indicators
Total revenue (water)Total income (w13) – grants for the acquisition of assets (w11a) – interest income (w9)– Aboriginal Communities W&S Program income (w10a)
Revenue from residential usage charges (water)Income from residential usage charges (w6b) x 100 divided by the sum of[income from residential usage charges (w6a) + income from residentialaccess charges (w6b)]
Written down replacement cost of fixed assets (water)Written down current cost of system assets (w47)
Operating cost (OMA) (water)Management expenses (w1) + operational and maintenance expenses (w2)
Capital expenditure (water)Acquisition of fixed assets (w16)
Economic real rate of return (water)[total income (w13) – interest income (w9) – grants for acquisition of assets (w11a) –operating costs (NWI F11) – current cost depreciation (w3)] x 100 divided by[written down current cost of system assets (w47) + plant and equipment (w33b)]
Capital works grants (water)Grants for the acquisition of assets (w11a)
Notes: 1. References to w (e.g. w12) refer to item numbers within Special Schedules 3 and 4 ofCouncil’s Annual Financial Statements.
2. The NWI performance indicators are based upon the National Performance FrameworkHandbook for Urban Performance Reporting Indicators and Definitions.
a refer to 3.2 (2) on page 15 of the Best-Practice Management of Water Supply and Sewerage Guidelines, 2007
NWI F26 1,025 $’000
NWI F11
NWI F17 %
NWI F14 $’000
-0.71%
1,757
2,521 $’000
$’000NWI F9
2017
3,733
NWI F4 %
52,777
$’000
68.94%
NWI F1
SPFS 2017
page 13
Lachlan Shire Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 3. Sewerage business best-practice management disclosure requirements
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
1. Calculation and payment of tax-equivalents[all local government local water utilities must pay this dividend for tax equivalents]
Calculated tax equivalents
Number of assessments multiplied by $3/assessment
Amounts payable for tax equivalents [lesser of (i) and (ii)]
Amounts actually paid for tax equivalents
2. Dividend from surplus
50% of surplus before dividends[calculated in accordance with Best-Practice Management for Water Supply and Sewerage Guidelines]
Number of assessments x ($30 less tax equivalent charges per assessment)
Cumulative surplus before dividends for the 3 years to 30 June 2017, less thecumulative dividends paid for the 2 years to 30 June 2016 and 30 June 2015
2017 Surplus 2016 Surplus 2015 Surplus2016 Dividend 2015 Dividend
Maximum dividend from surplus [least of (i), (ii) and (iii) above]
Dividend actually paid from surplus [refer below for required pre-dividend payment criteria]
Are the overhead reallocation charges to the sewer business fair and reasonable? a
3. Required outcomes for 4 criteria [to be eligible for the payment of a ‘dividend from surplus’, all the criteria below need a ‘YES’]
Completion of strategic business plan (including financial plan)
Pricing with full cost-recovery, without significant cross subsidies [refer item 2 (a) in table 1 on page 22 of the Best-Practice Guidelines]
Complying charges Residential [item 2 (c) in table 1] Non-residential [item 2 (c) in table 1] Trade waste [item 2 (d) in table 1]
DSP with commercial developer charges [item 2 (e) in table 1] Liquid trade waste approvals and policy [item 2 (f) in table 1]
Complete performance reporting form (by 15 September each year)
a. Integrated water cycle management evaluation
b. Complete and implement integrated water cycle management strategy
–
6,444
YES
YES
YES
16,100
NO
YES
2017
YES
n/a
–
YES
–
–
YES
NO
(318,100)
YES
YES
(i)
(iv)
(iii)
(ii)
(iii)
32,200
(i)
(ii) 64,440
(358,000)
(iv)
(c)
(iv)
– 7,700
–
(v)
(iii)
(i)
(ii)
(a)(b)
(vi)
SPFS 2017
page 14
Lachlan Shire Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 3. Sewerage business best-practice management disclosure requirements (continued)
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
National Water Initiative (NWI) financial performance indicators
Total revenue (sewerage)Total income (s14) – grants for acquisition of assets (s12a) – interest income (s10)– Aboriginal Communities W&S Program income (w10a)
Written down replacement cost of fixed assets (sewerage)Written down current cost of system assets (s48)
Operating cost (sewerage)Management expenses (s1) + operational and maintenance expenses (s2)
Capital expenditure (sewerage)Acquisition of fixed assets (s17)
Economic real rate of return (sewerage)[total income (s14) – interest income (s10) – grants for acquisition of assets (s12a)– operating cost (NWI F12) – current cost depreciation (s3)] x 100 divided by[written down current cost (i.e. WDCC) of system assets (s48) + plant and equipment (s34b)]
Capital works grants (sewerage)Grants for the acquisition of assets (12a)
National Water Initiative (NWI) financial performance indicatorsWater and sewer (combined)
Total income (water and sewerage)Total income (w13 + s14) + gain/loss on disposal of assets (w14 + s15)minus grants for acquisition of assets (w11a + s12a) – interest income (w9 + s10)
Revenue from community service obligations (water and sewerage)Community service obligations (NWI F25) x 100 divided by total income (NWI F3)
Capital expenditure (water and sewerage)Acquisition of fixed assets (w16 + s17)
Economic real rate of return (water and sewerage)[total income (w13 + s14) – interest income (w9 + s10) – grants for acquisition of assets(w11a + s12a) – operating cost (NWI F11 + NWI F12) – current cost depreciation (w3 + s3)] x 100divided by [written down replacement cost of fixed assets (NWI F9 + NWI F10)+ plant and equipment (w33b + s34b)]
Dividend (water and sewerage)Dividend paid from surplus (2 (v) of Note 2 + 2 (v) of Note 3)
Dividend payout ratio (water and sewerage)Dividend (NWI F20) x 100 divided by net profit after tax (NWI F24)
$’000
227
20,085
1,382
-0.65%
982
485
2017
NWI F3 $’000 5,115
NWI F8 % 0.74%
NWI F19
NWI F21
NWI F20
%
%
– $’000
0.00%
-0.69%
2,242 NWI F16 $’000
NWI F27
NWI F18
NWI F15 $’000
%
$’000
NWI F2
NWI F10
NWI F12
$’000
$’000
SPFS 2017
page 15
Lachlan Shire Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 3. Sewerage business best-practice management disclosure requirements (continued)
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
National Water Initiative (NWI) financial performance indicatorsWater and sewer (combined)
Net debt to equity (water and sewerage)Overdraft (w36 + s37) + borrowings (w38 + s39) – cash and investments (w30 + s31)x 100 divided by [total assets (w35 + s36) – total liabilities (w40 + s41)]
Interest cover (water and sewerage)Earnings before interest and tax (EBIT) divided by net interest
Earnings before interest and tax (EBIT):Operating result (w15a + s16a) + interest expense (w4a + s4a) – interest income (w9 + s10)– gain/loss on disposal of assets (w14 + s15) + miscellaneous expenses (w4b + w4c + s4b + s4c)
Net interest:Interest expense (w4a + s4a) – interest income (w9 + s10)
Net profit after tax (water and sewerage)Surplus before dividends (w15a + s16a) – tax equivalents paid (Note 2-1 (iv) + Note 3-1 (iv))
Community service obligations (water and sewerage)Grants for pensioner rebates (w11b + s12b)
Notes: 1. References to w (eg. s12) refer to item numbers within Special Schedules 5 and 6 ofCouncil’s Annual Financial Statements.
2. The NWI performance indicators are based upon the National Performance Framework Handbookfor Urban Performance Reporting Indicators and Definitions.
a refer to 3.2 (2) on page 15 of the Best-Practice Management of Water Supply and Sewerage Guidelines, 2007
NWI F25 $’000
NWI F24
NWI F23
NWI F22 %
535-
38
-
(253)
442-
$’000
-14.48%
2017
INDEPENDENT AUDITOR’S REPORT
Report on the special purpose financial statements
Lachlan Shire Council
To the Councillors of the Lachlan Shire Council
OpinionI have audited the accompanying special purpose financial statements (the financial statements) ofLachlan Shire Council’s (the Council) Declared Business Activities, which comprise the statement offinancial position of each Declared Business Activity as at 30 June 2017, the income statement ofeach Declared Business Activity for the year then ended, notes comprising a summary of significantaccounting policies and other explanatory information for the Business Activities declared by Council,and the Statement by Councillors and Management.
The Declared Business Activities of the Council are:
• Water Supply• Sewerage.In my opinion, the financial statements present fairly, in all material respects, the financial position ofthe Council’s declared Business Activities as at 30 June 2017, and their financial performance for theyear then ended, in accordance with the Australian Accounting Standards described in Note 1 and theLocal Government Code of Accounting Practice and Financial Reporting (LG Code).
My opinion should be read in conjunction with the rest of this report and in particular, the Emphasis ofMatter referring to the basis of accounting.
Basis for OpinionI conducted my audit in accordance with Australian Auditing Standards. My responsibilities under thestandards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’
section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for
Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of NewSouth Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove anAuditor-General
• mandating the Auditor-General as the auditor of councils• precluding the Auditor-General from providing non-audit services.
I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for myaudit opinion.
page 16
Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to Note (1) to the financial statements which describes the basis of accounting. The financial statements have been prepared for the purpose of fulfilling Council’s financial reporting responsibilities under the LG Code. As a result, the financial statements may not be suitable for another purpose.
Other Matter The financial statements of the Council for the year ended 30 June 2016 were audited by another auditor who expressed an unmodified opinion on that financial statement on 25 November 2016.
The Councillors’ Responsibility for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements and for determining that the accounting policies, described in Note 1 to the financial statements, are appropriate to meet the requirements in the LG Code. The Councillors’ responsibility also includes
such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Councillors must assess the Council’s ability to continue as a going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting, as it affects the Council’s Declared Business Activities.
Auditor’s Responsibility for the Audit of the Financial Statements My objectives are to:
• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error
• issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.
A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf.
The description forms part of my auditor’s report.
My opinion does not provide assurance:
• that the Council carried out its activities effectively, efficiently and economically • on the best practice management disclosures in Notes 2 and 3 of the financial statements • about the security and controls over the electronic publication of the audited financial
statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.
Karen Taylor Director, Financial Audit Services
30 November 2017 SYDNEY
page 17
Lachlan Shire Council SPECIAL SCHEDULES for the year ended 30 June 2017
“The Heart of NSW”
Special Schedules 2017
page 1
Lachlan Shire Council
Special Schedules for the year ended 30 June 2017
Contents
Special Schedules1
Net Cost of Services
Statement of Long Term Debt (all purposes)Statement of Internal Loans (Sect. 410(3) LGA 1993)
Water Supply Operations – incl. Income StatementWater Supply – Statement of Financial Position
Sewerage Service Operations – incl. Income StatementSewerage Service – Statement of Financial Position
Notes to Special Schedules 3 and 5
Report on Infrastructure Assets
Permissible Income Calculation
1 Special Schedules are not audited (with the exception of Special Schedule 8).
Background
These Special Schedules have been designed to meet the requirements of special purpose users such as;
the NSW Grants Commissionthe Australian Bureau of Statistics (ABS),the NSW Office of Water (NOW), andthe Office of Local Government (OLG).
The financial data is collected for various uses including;
the allocation of Financial Assistance Grants,the incorporation of Local Government financial figures in national statistics,the monitoring of loan approvals,the allocation of borrowing rights, andthe monitoring of the financial activities of specific services.
Special Schedule 5 9
Page
2
4
5
Special Schedule 1
Special Schedule 2(a)n/a
Special Schedule 4
Special Schedule 2(b)
Special Schedule 38
14Special Schedule 7
13
12
(ii)
(i)
Special Schedule 8 19
Special Schedule 6
Special Schedules 2017
page 2
Lachlan Shire Council
Special Schedule 1 – Net Cost of Services for the year ended 30 June 2017
$’000
Governance
Administration
Public order and safety
Beach controlEnforcement of local government regulationsAnimal controlOtherTotal public order and safety
Health
EnvironmentNoxious plants and insect/vermin controlOther environmental protectionSolid waste managementStreet cleaningDrainageStormwater managementTotal environment
Community services and educationAdministration and educationSocial protection (welfare)Aged persons and disabledChildren’s servicesTotal community services and education
Housing and community amenitiesPublic cemeteriesPublic conveniencesStreet lightingTown planningOther community amenitiesTotal housing and community amenities
Water supplies
Sewerage services
(135)
(396) –
–
– (3)
(268)
–
262
(116) –
–
(4,497)
6
808
(549)
(4,649)
– 122
1
268 –
1,508
2,098 137
–
4,936
5,845
208
439 –
1,097
1 –
692
135
Net cost.of services.
– –
(592)
–
(886) (84)
406 2 – (404)
(207) – –
(3,715)
–
29
182
Function or activity
–
Fire service levy, fire protection, emergency services
–
787
188 159
4,189
769
474
– – (799)
– (712)
–
899
236 –
1,005 –
–
177
–
39
142
3,955
227
–
(2)
(95) (208)
(99) (145)
(36) –
–
–
–
–
– 2
–
60
1,196 751
4,244
43
1,602 1,567
–
– –
Expenses from. continuing. operations. Non-capital.
–
–
53 –
Capital.
Income fromcontinuing operations
–
187
– 47
1,112
206
1,212
3
Special Schedules 2017
page 3
Lachlan Shire Council
Special Schedule 1 – Net Cost of Services (continued) for the year ended 30 June 2017
$’000
Recreation and culturePublic librariesMuseumsArt galleriesCommunity centres and hallsPerforming arts venuesOther performing artsOther cultural servicesSporting grounds and venuesSwimming poolsParks and gardens (lakes)Other sport and recreationTotal recreation and culture
Fuel and energy
Agriculture
Mining, manufacturing and constructionBuilding controlOther mining, manufacturing and constructionTotal mining, manufacturing and const.
Transport and communicationUrban roads (UR) – localUrban roads – regionalSealed rural roads (SRR) – localSealed rural roads (SRR) – regionalUnsealed rural roads (URR) – localUnsealed rural roads (URR) – regionalBridges on UR – localBridges on SRR – localBridges on URR – localBridges on regional roadsParking areasFootpathsAerodromesOther transport and communicationTotal transport and communication
Economic affairsCamping areas and caravan parksOther economic affairsTotal economic affairs
Totals – functionsGeneral purpose revenues (1)
NET OPERATING RESULT (2)
(1) Includes: rates and annual charges (including ex gratia, excluding water and sewer), non-capital general purpose (2) As reported in the Income Statement
grants, interest on investments (excluding externally restricted assets) and interest on overdue rates and annual charges
Share of interests – joint ventures and associates using the equity method
336
–
–
(63)
(772)
156
–
Net cost.of services.
–
(22)
894
(41)
1
2,068
–
43 (968)
18,598
300 –
–
(60) –
2,854
1,828 (6,101)
192 (284)
3,459
–
(15,139) (240)
(352)
(1,555) 98
112
–
(8)
(100)
22
– (143)
(1,036)
– –
–
(2,637)
58 18
–
Capital.
200
471
50
1,168
– – 295
2,630 6,396
– –
440 441
802
78
7
–
1,360
141
100
38 231 – 2,068
–
–
Non-capital.
–
Expenses from. continuing. operations.
1,044
801 1,132
–
21
– –
–
–
–
–
–
–
–
41
– –
–
801 3,613 – 43
175
– –
Function or activity
78
701
–
–
–
– –
–
–
22
– 22
2,854
–
–
–
– 62
–
– 352
8
254 162 148 5
–
284
– –
706
35,834
–
9,700 7,439
1,435 568
36,439
1,173
493 867
18,598 35,834
680
–
17,841
46
40
–
Income fromcontinuing operations
– – –
Special Schedules 2017
page 4
Lachlan Shire Council
Special Schedule 2(a) – Statement of Long Term Debt (all purpose) for the year ended 30 June 2017
$’000
Spe
pag
Notes: excludes (i) internal loans and (ii) principal inflows/outflows relating to loan re-financing. This schedule is prepared using the face value of debt obligations, rather than fair value (which are reported in the GPFS).
Loans (by source)Commonwealth Government
Current
– – –
Transfers to sinking
funds
Principal outstandingInterest
applicable for year TotalNon-
current
at the end of the year
– –
Principal outstanding New loans raised during
the year
at beginning of the year
Classification of debtCurrent Non-
current Total
– –
– –
–
–
– –
1,853
–
1,853
–
– –
Debt redemption during the year
From revenue
Sinking funds
96 –
54
54
1,757
96 1,757 – – –
Other State Government – – – –
NSW Treasury Corporation
Public subscription – –
– – –
Financial institutions – – – – 1,900
– 1,900
–
– 47
47
– – Total loans– –
Other
Other long term debtRatepayers advances – – –
– Government advances – Finance leases –
– – –
–
96
–
1,853
– – –
1,757
–
54 –
–
–
– Deferred payments
– –
–
–
–
– Total long term debt – –
Total debt
–
–
–
1,900 47
Special Schedules 2017
page 5
Lachlan Shire Council
Special Schedule 3 – Water Supply Income Statement Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017
$’000
A Expenses and incomeExpenses
1. Management expensesa. Administrationb. Engineering and supervision
2. Operation and maintenance expenses– dams and weirsa. Operation expensesb. Maintenance expenses
– Mainsc. Operation expensesd. Maintenance expenses
– Reservoirse. Operation expensesf. Maintenance expenses
– Pumping stationsg. Operation expenses (excluding energy costs)h. Energy costsi. Maintenance expenses
– Treatmentj. Operation expenses (excluding chemical costs)k. Chemical costsl. Maintenance expenses
– Otherm. Operation expensesn. Maintenance expenseso. Purchase of water
3. Depreciation expensesa. System assetsb. Plant and equipment
4. Miscellaneous expensesa. Interest expensesb. Revaluation decrementsc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)
5. Total expenses
–
– – 111
– –
–
1,523
95 –
– –
–
–
–
197 139
205
– –
189 111 84
624
64
– – 295
106
–
334
–
573
29
– –
– –
– –
80
–
412 377
2017
–
270
–
1,613
263 311 315
Actuals 2016
–
4,245 4,075
Actuals
Special Schedules 2017
page 6
Lachlan Shire Council
Special Schedule 3 – Water Supply Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017
$’000
Income
6. Residential chargesa. Access (including rates)b. Usage charges
7. Non-residential chargesa. Access (including rates)b. Usage charges
8. Extra charges
9. Interest income
10. Other income10a. Aboriginal Communities Water and Sewerage Program
11. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants
12. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions
13. Total income
14. Gain (or loss) on disposal of assets
15. Operating result
15a. Operating result (less grants for acquisition of assets)
140
– –
2
208 20 21
–
1,025
– –
– 5
222 292
1,059
–
2,628
2017Actuals Actuals
(290)
–
1
735
–
–
4,980
–
–
(68)
–
2,559 1,153
–
–
2016
4,215
–
–
Special Schedules 2017
page 7
Lachlan Shire Council
Special Schedule 3 – Water Supply Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017
$’000
B Capital transactionsNon-operating expenditures
16. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment
17. Repayment of debt
18. Totals
Non-operating funds employed
19. Proceeds from disposal of assets
20. Borrowing utilised
21. Totals
C Rates and charges
22. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)
23. Number of ETs for which developer charges were received
24. Total amount of pensioner rebates (actual dollars)
2017
1,574
– –
119 119 2,011
131
Actuals
2,010
–
–
–
898
52
1,757
–
2016
–
– –
461
Actuals
–
437 –
585 79
585 73
– ET– ET
37,368$ 36,009$
Special Schedules 2017
page 8
Lachlan Shire Council
Special Schedule 4 – Water Supply Statement of Financial Position Includes internal transactions, i.e. prepared on a gross basis as at 30 June 2017
$’000
ASSETS25. Cash and investments
a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other
26. Receivablesa. Specific purpose grantsb. Rates and availability chargesc. User chargesd. Other
27. Inventories
28. Property, plant and equipmenta. System assetsb. Plant and equipment
29. Other assets
30. Total assets
LIABILITIES31. Bank overdraft32. Creditors
33. Borrowings
34. Provisionsa. Tax equivalentsb. Dividendc. Other
35. Total liabilities
36. NET ASSETS COMMITTED
EQUITY37. Accumulated surplus38. Asset revaluation reserve39. Other reserves
40. TOTAL EQUITY
Note to system assets:41. Current replacement cost of system assets42. Accumulated current cost depreciation of system assets43. Written down current cost of system assets
– –
–
3,921
– –
3,921
–
– –
–
–
– – –
–
–
– –
– –
–
– –
40,418
52,777
90,066 (37,289)
24,005
64,423
64,423
–
–
–
129
–
225
64,423
–
58,003 6,420
– –
–
–
–
129
–
–
5,040 1,305
1,026
58,003
–
– –
–
6,420
52,777
Actuals Current
– –
Actuals
– –
225
– –
–
Actuals Total
–
– –
52,777
6,345
1,026 –
Non-current
–
–
Special Schedules 2017
page 9
Lachlan Shire Council
Special Schedule 5 – Sewerage Service Income Statement Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017
$’000
A Expenses and incomeExpenses
1. Management expensesa. Administrationb. Engineering and supervision
2. Operation and maintenance expenses– mainsa. Operation expensesb. Maintenance expenses
– Pumping stationsc. Operation expenses (excluding energy costs)
d. Energy costse. Maintenance expenses
– Treatmentf. Operation expenses (excl. chemical, energy, effluent and biosolids management costs)
g. Chemical costsh. Energy costsi. Effluent managementj. Biosolids managementk. Maintenance expenses
– Otherl. Operation expensesm. Maintenance expenses
3. Depreciation expensesa. System assetsb. Plant and equipment
4. Miscellaneous expensesa. Interest expensesb. Revaluation decrementsc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)
5. Total expenses
Actuals 2017
Actuals 2016
–
534
166 167 101 99
101
76 – –
114
72
1,565 1,526
41 – –
– –
–
49
– –
– –
–
–
– – –
9 11
– – –
–
69
– –
–
525 –
–
70 –
446
–
–
441
–
Special Schedules 2017
page 10
Lachlan Shire Council
Special Schedule 5 – Sewerage Service Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017
$’000
Income
6. Residential charges (including rates)
7. Non-residential chargesa. Access (including rates)b. Usage charges
8. Trade waste chargesa. Annual feesb. Usage chargesc. Excess mass chargesd. Re-inspection fees
9. Extra charges
10. Interest income
11. Other income11a. Aboriginal Communities Water and Sewerage Program
12. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants
13. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions
14. Total income
15. Gain (or loss) on disposal of assets
16. Operating result
16a. Operating result (less grants for acquisition of assets)
220 290
– –
– –
– – – –
–
–
–
264 10
37
– –
18 18 227 –
1,829 1,536
–
10
– –
– 2 – –
– –
–
91 – –
–
32
1,194
Actuals
1,273
Actuals 20162017
Special Schedules 2017
page 11
Lachlan Shire Council
Special Schedule 5 – Sewerage Service Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017
$’000
B Capital transactionsNon-operating expenditures
17. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment
18. Repayment of debt
19. Totals
Non-operating funds employed
20. Proceeds from disposal of assets
21. Borrowing utilised
22. Totals
C Rates and charges
23. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)
24. Number of ETs for which developer charges were received
25. Total amount of pensioner rebates (actual dollars)
183 485
– 225 156 223
–
–
–
–
– ET
33,299$
–
37 27
Actuals Actuals 2017 2016
–
–
– 318
1,817
–
–
–
32,137$
–
315 –
–
– ET
1,833
Special Schedules 2017
page 12
Lachlan Shire Council
Special Schedule 6 – Sewerage Service Statement of Financial Position Includes internal transactions, i.e. prepared on a gross basis as at 30 June 2017
$’000
ASSETS26. Cash and investments
a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other
27. Receivablesa. Specific purpose grantsb. Rates and availability chargesc. User chargesd. Other
28. Inventories
29. Property, plant and equipmenta. System assetsb. Plant and equipment
30. Other assets
31. Total assets
LIABILITIES32. Bank overdraft33. Creditors
34. Borrowings
35. Provisionsa. Tax equivalentsb. Dividendc. Other
36. Total liabilities
37. NET ASSETS COMMITTED
EQUITY38. Accumulated surplus39. Asset revaluation reserve40. Other reserves
41. TOTAL EQUITY
Note to system assets:42. Current replacement cost of system assets43. Accumulated current cost depreciation of system assets44. Written down current cost of system assets
Actuals
7,013
178
Actuals
– – –
– –
Non-current Current
5,568 1,445 –
–
–
Total Actuals
– –
– –
533
– – –
–
–
–
–
178
–
– –
–
–
– –
– – 533
20,085
5,746
–
–
27,809
20,085
22,063
–
–
–
–
– –
–
10,913
20,085
35,568 (15,483)
16,896
27,809
22,063
–
–
5,746
–
–
– –
– –
–
– –
–
– –
27,809
–
– – –
Special Schedules 2017
page 13
Lachlan Shire Council
Notes to Special Schedules 3 and 5 for the year ended 30 June 2017
Administration (1) Engineering and supervision (1)
(item 1a of Special Schedules 3 and 5) comprises the following: (item 1b of Special Schedules 3 and 5) comprises the following:
• Administration staff: • Engineering staff:− Salaries and allowance − Salaries and allowance− Travelling expenses − Travelling expenses− Accrual of leave entitlements − Accrual of leave entitlements− Employment overheads. − Employment overheads.
• Meter reading • Other technical and supervision staff:− Salaries and allowance
• Bad and doubtful debts − Travelling expenses− Accrual of leave entitlements
• Other administrative/corporate support services − Employment overheads.
Operational expenses (item 2 of Special Schedules 3 and 5) comprise the day to day operational expensesexcluding maintenance expenses.
Maintenance expenses (item 2 of Special Schedules 3 and 5) comprise the day to day repair and maintenanceexpenses. (Refer to Section 5 of the Local Government Asset Accounting Manual regarding capitalisationprinciples and the distinction between capital and maintenance expenditure).
Other expenses (item 4c of Special Schedules 3 and 5) includes all expenses not recorded elsewhere.
Revaluation decrements (item 4b of Special Schedules 3 and 5) is to be used when I,PP&E decreases in FV.
Impairment losses (item 4d and 4e of Special Schedules 3 and 5) are to be used when the carrying amount ofan asset exceeds its recoverable amount (refer to page D-31).
Aboriginal Communities Water and Sewerage Program (item 4f of Special Schedules 3 and 5) is to beused when operation and maintenance work has been undertaken on behalf of the Aboriginal CommunitiesWater and Sewerage Program. Similarly, income for item 11a of Special Schedule 3 and item 12a of SpecialSchedule 5 are for services provided to the Aboriginal Communities Water and Sewerage Program and is notpart of Council’s water supply and sewerage revenue.
Residential charges
(2) (items 6a, 6b and item 6 of Special Schedules 3 and 5 respectively) include all incomefrom residential charges. Item 6 of Schedule 3 should be separated into 6a access charges (including rates ifapplicable) and 6b usage charges.
Non-residential charges
(2) (items 7a, 7b of Special Schedules 3 and 5) include all income from non-residentialcharges separated into 7a access charges (including rates if applicable) and 7b usage charges.
Trade waste charges (item 8 of Special Schedule 5) include all income from trade waste charges separatedinto 8a annual fees, 8b usage charges and 8c excess mass charges and 8d re-inspection fees.
Other income (items 10 and 11 of Special Schedules 3 and 5 respectively) include all income not recordedelsewhere.
Other contributions (items 12c and 13c of Special Schedules 3 and 5 respectively) including capital contributionsfor water supply or sewerage services received by Council under Section 565 of the Local Government Act .
Notes:(1) Administration and engineering costs for the development of capital works projects should be reported as part of the capital cost of the project and not as part of the recurrent expenditure (ie. in item 16 for water supply and item 17 for sewerage, and not in items 1a and 1b).
(2) To enable accurate reporting of residential revenue from usage charges, it is essential for councils to accurately separate their residential (item 6) charges and non-residential (item 7) charges.
Special Schedules 2017
page 14
Lachlan Shire Council
Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 as at 30 June 2017
$’000
41%2% 26%
Assets in condition as a percentage of gross replacement cost
Net carryingamount
40,398
78% 0%3,658 27,209
36.0%
0%
5
550 702 35.7%
– 194,247 35.4% 14.8%
– 26%127
28.8%11%
Bridges
– 5,418
13,859 154,890 22,450 3,048
–
structures
10%18%
30.2%
36%12%
63%
44%
40,094
5,418
Unsealed roads
25%
–
1,420 1,507
91
Buildings
8% 51% 36%6,579
21
1%
0.0%
13%0%
–
Sealed roads
Other structuresSub-total
Asset class
Buildings
to bring assetsEstimated cost
2016/17to bring to the 2016/17 Gross
standard maintenanceAsset categoryRequired Actual replacement
cost (GRC)maintenanceato satisfactory
Estimated cost
agreed level ofservice set by
Council
550 1.4%
53%
0%
Roads
Other
Sub-total36%
4
17%30%76,765
53
15.4%550 1%702 744 15%550
– –
147
119
1%
91 1,507
20,667 230,978
869 18% 13%
1%
Other road assets79
47
119 600 47
3,784
Footpaths
Sub-total
600
76,765 17.3%
23%22%
51.0%–
744
5
44 13
87 Other3,990 3,784 3,746
5%8.0%
1,420
218
2,511
158
0%
10.3%
6,579 5.0%
3%60%282,512
–
1,303 2,180
10.7%
Special Schedules 2017
page 15
Lachlan Shire Council
Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 (continued) as at 30 June 2017
$’000
Notes:a Required maintenance is the amount identified in Council’s asset management plans.
Infrastructure asset condition assessment ‘key’
Excellent No work required (normal maintenance) Condition Description here…Good Only minor maintenance work required Condition Description here…Average Maintenance work required Condition Description here…Poor Renewal required Condition Description here…Very poor Urgent renewal/upgrading required Condition Description here…
4321 6
10987
317,493 TOTAL – ALL ASSETS 20,495
Assets in condition as a percentage of gross replacement cost
6,703 6,265 500,020 19.3% 23.5% 35.9% 14.8% 6.5%20,495
14,191 1,590
52,777
1.0%
Net carryingamount
Stormwater drainage
4
Sub-total
31.0% 6.0%24.0%30 1.0%41 38%41 30 1%
10.0%20,084
6%
35,568
4,873
1,606 8.0%
333 8%333
70%1,606
drainage 8,530 Sub-total 38.0%4,873 364
439 1,606 70.0%
24%364 364 8,530
52,777
20,084
Asset category
1,348 14,191
Sewerage network
Sub-total
1,606 35,568 439 10% 11%
Asset class
2016/17Estimated costto bring to the
service set byCouncil
replacement5
networkWater supply network
1,348 14,191
to satisfactorystandard
to bring assets
1,590
maintenanceaActualRequired
2016/17agreed level of
GrossEstimated cost
17.0%16.0% 1.0%30.0%36.0%90,066
1cost (GRC)maintenance
36%90,066 30% 17%
2
16% 1%
3
1%
5
364
network
Stormwater
Water supply 14,191
Sewerage 11.0%
31%
Special Schedules 2017
page 16
Lachlan Shire Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017
$ ’000
Infrastructure asset performance indicators * consolidated
1. Infrastructure renewals ratioAsset renewals (1)
Depreciation, amortisation and impairment
2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets
3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance
4. Cost to bring assets to agreed service level
Gross replacement cost
Notes
* All asset performance indicators are calculated using the asset classes identified in the previous table.
(1) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.
> 1.00
20,495
6,265
4.10% 0.00%
Benchmark
>= 100%
< 2%
0.93 0.79 0.436,703
500,020
Estimated cost to bring assets toan agreed service level set by Council
Indicator Prior periods
20,495 6.41% 6.12% 48.04%319,532
2017 2017 2016 2015
5,137 41.95% 99.76% 57.95%12,245
Amounts
Special Schedules 2017
page 17
Lachlan Shire Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017
Benchmark: ――― 100.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Benchmark: ――― 2.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Benchmark: ――― 1.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Purpose of agreed service level ratio 2016/17 Ratio 4.10%
This ratio provides a snapshot of the
proportion of outstanding renewal works compared to the total value of
assets under Council's care and
stewardship.
Purpose of asset renewals ratio 2016/17 Ratio 41.95%
Compares actual vs. required annual asset maintenance. A ratio above 1.0 indicates Council is investing
enough funds to stop the infrastructure backlog growing.
This ratio showswhat proportion the backlog is against
the total valueof a Council’s infrastructure.
2016/17 Ratio 6.41%
2016/17 Ratio 0.93 x
To assess the rate at which these assets are being renewed
relative to the rate at which they are depreciating.
Purpose of infrastructure backlog ratio
Purpose of asset maintenance ratio
56% 58%
100%
42%
0%
20%
40%
60%
80%
100%
120%
2014 2015 2016 2017
Rat
io %
1. Infrastructure renewals ratio
84.5%
48.0% 6.1% 6.4%
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
2014 2015 2016 2017
Rat
io %
2. Infrastructure backlog ratio
0.43 0.43
0.79 0.93
0.00
0.20
0.40
0.60
0.80
1.00
1.20
2014 2015 2016 2017
Rat
io (x
)
3. Asset maintenance ratio
0.00%
4.10%
0%1%1%2%2%3%3%4%4%5%
2016 2017
Rat
io %
4. Cost to bring assets to agreed service level
Special Schedules 2017
page 18
Lachlan Shire Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017
$ ’000
Infrastructure asset performance indicatorsby fund
1. Infrastructure renewals ratioAsset renewals (2)
Depreciation, amortisation and impairment
2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets
3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance
4. Cost to bring assets to agreed service level
Gross replacement cost
Notes
(1) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.
(2) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.
Estimated cost to bring assets toan agreed service level set by Council
26.89% 8.00% 1.90%
15.76% 4.52% 1.25%
prior period: 26.11% 7.57% 1.81%
8.46% 42.94% 46.68%prior period: 7.39% 30.35% 125.58%
Water Sewer General (1)
2017 2017 2017Benchmark
0.85 1.32 0.94prior period: 0.88 1.63 0.70
< 2%
> 1.00
>= 100%
Special Schedules 2017
page 19
Lachlan Shire Council
Special Schedule 8 – Permissible Income Calculation for the year ended 30 June 2018
$’000
Notional general income calculation (1)
Last year notional general income yieldPlus or minus adjustments (2)
Notional general income
Permissible income calculation
Special variation percentage (3)
Or rate peg percentageOr crown land adjustment (incl. rate peg percentage)
Less expiring special variation amountPlus special variation amount
Or plus rate peg amountOr plus Crown land adjustment and rate peg amount
Sub-total
Plus (or minus) last year’s carry forward totalLess valuation objections claimed in the previous yearSub-total
Total permissible income
Less notional general income yieldCatch-up or (excess) result
Plus income lost due to valuation objections claimed (4)
Less unused catch-up (5)
Carry forward to next year
Notes
(1) The notional general income will not reconcile with rate income in the financial statements in the correspondingyear. The statements are reported on an accrual accounting basis which include amounts that relate to prior years’rates income.
(2) Adjustments account for changes in the number of assessments and any increase or decrease in land value occurringduring the year. The adjustments are called ‘supplementary valuations’ as defined in the Valuation of Land Act 1916 .
(3) The ‘special variation percentage’ is inclusive of the rate peg percentage and where applicable Crown land adjustment.
(4) Valuation objections are unexpected changes in land values as a result of land owners successfully objecting to theland value issued by the Valuer-General. Councils can claim the value of the income lost due to valuation objections inany single year.
(5) Unused catch-up amounts will be deducted if they are not caught up within 2 years. Usually councils will have anominal carry forward figure. These amounts can be adjusted for in setting the rates in a future year.
(6) Carry forward amounts which are in excess (an amount that exceeds the permissible income) require ministerial approval by order published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993 . The OLG will extract these amounts from Council’s Special Schedule 8 in the financial data return (FDR) to administer this process.
– 12 5,121 5,479
5,121 5,467
6.80% 7.40%0.00% 0.00%0.00% 0.00%
– – 348 405
5 7
– – – –
5,469 5,884
– – 5 7
5,892
5,467 5,883
a
7 9
Calculation Calculation2016/17 2017/18
– –
7 9
– –
5,474
lm
n = (l + m)
o = k + n
g
k = (c + g + h + i + j)
b
def
j = c x fi = c x e
h = d x (c – g)
c = (a + b)
pq = o – p
rs
t = q + r – s
INDEPENDENT AUDITOR’S REPORT
Special Schedule No. 8
Lachlan Shire Council
To the Councillors of Lachlan Shire Council
OpinionI have audited the accompanying special purpose financial statement comprising the reconciliation oftotal permissible general income (Special Schedule No. 8) of Lachlan Shire Council (the Council) forthe year ending 30 June 2018.
In my opinion, Special Schedule No. 8 of Lachlan Shire Council for 30 June 2018 is prepared, in allmaterial respects in accordance with the requirements of the Local Government Code of AccountingPractice and Financial Reporting (LG Code) issued by the Office of Local Government (OLG), and is inaccordance with the books and records of the Council.
My opinion should be read in conjunction with the rest of this report, and in particular the Emphasis ofMatter paragraph, which describes the basis of accounting.
Basis for OpinionI conducted my audit in accordance with Australian Auditing Standards. My responsibilities under thestandards are described in the ‘Auditor’s Responsibilities for the Audit of Special Schedule No.8’
section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards• ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
‘Code of Ethics for Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of NewSouth Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove anAuditor-General
• mandating the Auditor-General as auditor of councils• precluding the Auditor-General from providing non-audit services.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for myaudit opinion.
page 20
Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to the notes and explanations in Special Schedule No. 8 that instruct councils in its preparation so it complies with OLG’s requirements as described in
the LG Code. As a result, Special Schedule No. 8 may not be suitable for another purpose.
Other Matter Special Schedule No.8 of the Council for the year ended 30 June 2017 was audited by another auditor who expressed an unmodified opinion on Special Schedule No. 8 on 25 November 2016.
Councillors’ Responsibility for Special Schedule No. 8 The Councillors of the Council are responsible for the preparation of Special Schedule No. 8 in accordance with the LG Code. The Councillors’ responsibility also includes such internal control as the Councillors determine is necessary to enable the preparation of Special Schedule No. 8 that is free from material misstatement, whether due to fraud or error.
In preparing Special Schedule No.8, the Councillors must assess the Council’s ability to continue as a
going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting.
Auditor’s Responsibility for the Audit of Special Schedule No. 8 My objectives are to:
• obtain reasonable assurance whether Special Schedule No. 8 as a whole is free from material misstatement, whether due to fraud or error
• issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on Special Schedule No.8.
A description of my responsibilities for the audit of Special Schedule No.8 is located at the Auditing and Assurance Standards Board website at http://www.auasb.gov.au/auditors_responsibilities/ar8.pdf. The description forms part of my auditor’s report.
My opinion does not provide assurance:
• that the Council carried out its activities effectively, efficiently and economically • about the security and controls over the electronic publication of the audited Special Schedule
No.8 on any website where they may be presented • about any other information which may have been hyperlinked to/from Special Schedule No 8.
Karen Taylor Director, Financial Audit Services
30 November 2017 SYDNEY
page 21