walcha council annual report 2016 - 2017 general purpose … · 2017. 11. 27. · investment...

Walcha Council 2016 – 2017 Annual Report – Appendix B

Walcha Council Annual Report 2016 - 2017

General Purpose Financial Statements

For the Year Ended

30 June 2017

2016-2017 Annual Report - App B - Page 77

Walcha Council

General Purpose Financial Statements for the year ended 30 June 2017

Contents

1. Statement by Councillors and Management

2. Primary Financial Statements:

– Income Statement– Statement of Comprehensive Income– Statement of Financial Position– Statement of Changes in Equity– Statement of Cash Flows

3. Notes to the Financial Statements

4. 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 forWalcha Council.

(ii) Walcha 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).

(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 27 October 2017.Council has the power to amend and reissue these financial statements.

7

8

7881

Page

3

56

4

2


Walcha Council

Income Statement for the year ended 30 June 2017

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 amortisationOther 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

3,391

3,391

2,158

–

5,387

5,517

Actual$'0002016

Actual$'000

4,253

178 1,615

3,391

12,812

4,526

3,044 1,233

13

17,233

4,704 2,296

3,100

1,346

4,208

2,607 966

12,130

3,100

1

3,100 5,387

16,203

11,846

5– 4e

4,377 4,097

Notes

3a

3d3c

2017

115

2017

3,717 217 361

2,324 3,626

21

Orig Budget$'000 1

3e,f

4d

5

4b4c

4,025

34

3b

4a

3e,f

55

66 4,283

5,151 1,754

15,230

1,065

4,385

2,343

4,690 58

4,610

– 1,207

57

5,387


Walcha Council

Statement of Comprehensive Income for the year ended 30 June 2017

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&E

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

Actual$'0002016

9,386 4,331

4,331

940 3,999

Notes

940

5,387

20b (ii)

3,391

3,999

Actual$'0002017

9,386


Walcha Council

Statement of Financial Position as at 30 June 2017

ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesTotal current assets

Non-current assetsInvestmentsReceivablesInfrastructure, property, plant and equipmentTotal non-current assets

TOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilities

TOTAL LIABILITIES

Net assets

EQUITYRetained earningsRevaluation reserves

Total equity

3,121

1,622

3,819

425,616

285,138

425,616

20

421,975

555

435,002

145,865

1,628

533 1,081

419,517

2,197

8

289,137

7

4,402

1,066

2017

2,774

954

66 1,623

–

1,991

7,460

2,458

465 43

Actual$'000

526

4,943

2016

Actual$'000

426,819

78 10 58 10

10

20

10

7

8

6a7

6b

140,478

Notes

10

9

10

10

435,002

430,032

9,372 827

1,684

92

439,404

2,483 6,062

429,435


Walcha 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. Net operating result for the year

b. Other comprehensive income – Revaluations: IPP&E asset revaluation rsveOther comprehensive income

Total comprehensive income (c&d)

Closing Balance

2017 Asset

137,087 284,198

revaluation

equity

140,478 285,138 425,616

Retained reserve TotalNotes earnings (Refer 20b)

5,387 –

20b (ii) – 3,999 – 3,999

9,386 5,387 3,999

145,865 289,137 435,002

Asset

Retained reserve Totalrevaluation

(Refer 20b) equity

421,285

3,391 –

– 940

3,391

940 940

3,391 940

– 940

4,331

425,616 285,138 140,478

earnings

3,999

5,387

3,999

2016


Walcha Council

Statement of Cash Flows for the year ended 30 June 2017

Cash flows from operating activitiesReceipts:Rates and annual chargesUser charges and feesInvestment revenue and interestGrants and contributionsOtherPayments:Employee benefits and on-costsMaterials and contractsBorrowing costsOtherNet cash from (or used in) operating activities

Cash flows from investing activitiesReceipts:Sale of investment securitiesSale of real estate assetsSale of infrastructure, property, plant and equipmentPayments:Purchase of investment securitiesPurchase of infrastructure, property, plant and equipmentNet cash from (or used in) investing activities

Cash flows from financing activitiesReceipts:Borrowings and advancesPayments:Borrowings and advancesNet cash flow from (used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents – beginning of year

Cash and cash equivalents – end of the year

3,872

417

11a 6,062

202

(4,635)

1,713

Notes

(4,208)

(66)

848

848

(67)

–

(4,737)

11a

(67)

–

–

(4,842)

105

–

5,652 (966)

11b

(4,283)

34

2017

4,025

6,905 115

4,097

Orig Budget $'000

– (3,073)

(63)

4,943

(66)

5,532

(63)

(589)

(663)

100

(2,458)

(5,273) (6,311)

4,943

1,119

34

(5,822)

–

(1,497)

12 – –

174 28

218

7,396 4,747

Actual$'000

5,838

(971) (33)

(4,689) (4,598)

(37) (6,036)

20162017

204

4,383

8,812

4,918

Actual$'000

4,281

2016-2017 Annual Report - App B - 4

Walcha Council

Notes to the Financial Statements for the year ended 30 June 2017

Contents of the Notes to the Financial Statements

Details

Summary of significant accounting policiesFunctions or activitiesComponents of functions or activitiesIncome from continuing operationsExpenses from continuing operationsGains or losses from the disposal of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investmentsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentRestricted infrastructure, property, plant and equipmentPayables, borrowings and provisionsDescription of movements in provisionsReconciliation of operating result to net cash movement from operating activitiesCommitmentsStatement of performance measures - consolidated resultsStatement of perfomance measures by fundInvestment propertiesFinancial risk managementMaterial budget variationsStatement of developer contributionsContingenciesInterests in other entities

Results by fundNon-current assets classified as held for saleEvents occurring after Statement of Financial Position dateDiscontinued operationsIntangible assetsReinstatement, rehabilitation and restoration liabilitiesFair value measurementRelated party disclosures

n/a – not applicable

45 n/a

54

49

59 n/a

51

57

56

6059 n/a

59 n/a

62

59 n/a

9192021

78

9(a)9(b)

26

30

38

52

40

45

Page

1

25

19

1516

20

21

39

34

18

1213(a)

23

26

Note

22

14

10(a)10(b)

17

6(a)

4

6(c)

13(b)

11

24

2(a)

32(b)

6(b)

5

28 76

32

29

3031

37

3536

33

Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors

27

43


The principal accounting policies adopted in thepreparation of these consolidated financial statementsare set out below. These policies have been consistentlyapplied to all the years presented, unless otherwisestated.

(a) Basis of preparationThese general purpose financial statements have beenprepared in accordance with Australian AccountingStandards and Australian Accounting Interpretations,the Local Government Act 1993 (NSW) andRegulations, and the Local Government Code ofAccounting Practice and Financial Reporting. Council isa not for-profit entity for the purpose of preparing thesefinancial statements.

During the current year, Council adopted all of the newand revised Standards and Interpretations issued by theAustralian Accounting Standards Board (AASB) that arerelevant to its operations and effective for the currentreporting period.

This included the first time application during the yearof AASB 124 Related Party Disclosures. As a resultCouncil has disclosed information about related partiesand transactions with those related parties. Thisinformation is presented in Note 28.

The adoption of the new and revised Standards andInterpretations has not resulted in any material changesto Council's accounting policies, financial position,financial performance or cash flows.

(i) New and amended standards adopted byCouncil

Council has not elected to apply any pronouncementsbefore their operative date in the annual reporting periodbeginning 1 July 2016.

(ii) Early adoption of standards

These financial statements have been prepared underthe historical cost convention, as modified by therevaluation of certain financial assets and liabilities andcertain classes of property, plant and equipment andinvestment property.

(iii) Historical cost convention

The preparation of financial statements requires the useof certain critical accounting estimates. It also requiresmanagement to exercise its judgement in the processof applying the Council's accounting policies.

(iv) Significant accounting estimates andjudgements

Estimates and judgements are continually evaluatedand are based on historical experience and otherfactors, including expectations of future events that mayhave a financial impact on the Council and that arebelieved to be reasonable under the circumstances.

Council makes estimates and assumptions concerningthe future. The resulting accounting estimates will, bydefinition, seldom equal the related actual results. Theestimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amountsof assets and liabilities within the next financial yearinclude:

(i) Estimated fair values of infrastructure, property, plantand equipment,

(ii) Estimated remediation provisions.

Critical accounting estimates and assumptions

(i) Impairment of Receivables

Council has made a significant judgement about theimpairment of a number of its receivables in Note 7.

Significant judgements in applying the Council's accounting policies

(b) Revenue recognitionCouncil recognises revenue when the amount ofrevenue can be reliably measured, it is probable thatfuture economic benefits will flow to the Council andspecific criteria have been met for each of the Council’sactivities as described below.

Council bases its estimates on historical results, takinginto consideration the type of customer, the type oftransaction and the specifics of each arrangement.

Revenue is measured at the fair value of theconsideration received or receivable. Revenue ismeasured on major income categories as follows:

Rates, annual charges, grants and contributions(including developer contributions) are recognised asrevenue when the Council obtains control over theassets comprising these receipts. Developercontributions may only be expended for the purposes forwhich the contributions were required, but the Councilmay apply contributions according to the prioritiesestablished in work schedules.

(i) Rates, annual charges, grants andcontributions

Walcha Council

Notes to the Financial Statementsfor the year ended 30 June 2017

Note 1. Summary of significant accounting policies


Control over assets acquired from rates and annualcharges is obtained at the commencement of the ratingyear as it is an enforceable debt linked to the rateableproperty or, where earlier, upon receipt of the rates.

Control over granted assets/contributed assets isnormally obtained upon their receipt (or acquittal) orupon 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 revenuesduring the financial year were obtained on condition thatthey be expended in a particular manner or used overa particular period and those conditions were un-discharged at reporting date, the unused grant orcontribution is disclosed in Note 3(g). The note alsodiscloses the amount of unused grant or contributionfrom prior years that was expended on Council’soperations during the current year.

A liability is recognised in respect of revenue that isreciprocal in nature to the extent that the requisiteservice has not been provided at reporting date.

User charges and fees (including parking fees and fines)are recognised as revenue when the service has beenprovided or when the penalty has been applied,whichever first occurs.

(ii) User charges and fees

The profit or loss on sale of an asset is determined whencontrol of the asset has irrevocably passed to the buyer.

(iii) Sale of infrastructure, property, plant andequipment

Interest income is recognised using the effective interestrate at the date that interest is earned.

(iv) Interest

Rental income is accounted for on a straight-line basisover the lease term.

(v) Rent

Revenue is recognised when the Council’s right toreceive the payment is established, which is generallywhen shareholders approve the dividend.

(vi) Dividend income

Other income is recorded when the payment is due, thevalue of the payment is notified, or the payment isreceived, whichever occurs first.

(vii) Other income

(c) Principles of consolidation

In accordance with the provisions of Section 409(1) ofthe Local Government Act 1993 (NSW), all money andproperty received by Council is held in the Council’sConsolidated Fund unless it is required to be held in theCouncil’s Trust Fund.

Cash and other assets of the following entities havebeen included as part of the Consolidated Fund:

◾ General Purpose Pperations◾ Water Service◾ Sewerage Service◾ Private Works Activity◾ Concrete Batching Plant

(i) The Consolidated Fund

In accordance with the provisions of Section 411 of theLocal Government Act 1993 (NSW) (as amended), aseparate and distinct Trust Fund is maintained toaccount for all money and property received by theCouncil in trust which must be applied only for thepurposes of, or in accordance with the trusts relating tothose monies. Trust monies and property subject toCouncil’s control have been included in these reports.

Trust monies and property held by Council but notsubject to the control of Council have been excludedfrom these reports. A separate statement of monies heldin the Trust Fund is available for inspection at theCouncil office by any person free of charge.

(ii) The Trust Fund

Council is a member of the following county councils(which are bodies incorporated under the LocalGovernment Act):

• New England Weeds Authority County CouncilRegional Weed Control (8 constituent councils)

The governing body of each county council isresponsible for managing its own affairs.

Council is of the opinion that it neither controls norsignificantly influences the above county council andaccordingly these entities have not been consolidatedor otherwise included within these financial statements.

(iii) County Councils

Walcha Council




Council has no interest in any subsidiaries.

Subsidiaries

Council has no interest in any joint arrangements.

Joint arrangements

Council has no interest in any joint operations.

Joint operations

Council has no interest in any joint ventures/associates.

Joint ventures/associates

(d) LeasesLeases of property, plant and equipment where Council,as lessee, has substantially all the risks and rewards ofownership are classified as finance leases.

Finance leases are capitalised at the lease’s inceptionat the fair value of the leased property or, if lower, thepresent value of the minimum lease payments. Thecorresponding rental obligations, net of finance charges,are included in other short-term and long-term payables.Each lease payment is allocated between the liabilityand finance cost. The finance cost is charged to theincome statement over the lease period so as toproduce a constant periodic rate of interest on theremaining balance of the liability for each period.

The property, plant and equipment acquired underfinance leases is depreciated over the asset's useful lifeor over the shorter of the asset’s useful life and the leaseterm if there is no reasonable certainty that Council willobtain ownership at the end of the lease term.

Leases in which a significant portion of the risks andrewards of ownership are not transferred to Council aslessee are classified as operating leases. Paymentsmade under operating leases (net of any incentivesreceived from the lessor) are charged to the incomestatement on a straight-line basis over the period of thelease.

Lease income from operating leases where Council is alessor is recognised as income on a straight-line basisover the lease term.

(e) Impairment of assetsIntangible assets that have an indefinite useful life, orare not yet available for use, are not subject toamortisation and are tested annually for impairment, ormore frequently if events or changes in circumstancesindicate that they might be impaired.

Other assets are tested for impairment whenever eventsor changes in circumstances indicate that the carryingamount may not be recoverable. An impairment loss isrecognised for the amount by which the asset’s carryingamount exceeds its recoverable amount. Therecoverable amount is the higher of an asset’s fair valueless costs to sell and value in use.

For the purposes of assessing impairment, assets aregrouped at the lowest levels for which there areseparately identifiable cash inflows that are largelyindependent of the cash inflows from other assets orgroups of assets (cash-generating units). Non-financialassets that suffered an impairment are reviewed forpossible reversal of the impairment at each reportingdate.

(f) Cash and cash equivalentsFor Statement of Cash Flow presentation purposes,cash and cash equivalents includes cash on hand;deposits held at call with financial institutions; othershort-term, highly liquid investments with originalmaturities of three months or less that are readilyconvertible to known amounts of cash and which aresubject to an insignificant risk of changes in value.

(g) Inventories

Raw materials and stores are stated at the lower of costand net realisable value.

Cost comprises direct materials. Costs are assigned toindividual items of inventory on basis of weightedaverage costs. Costs of purchased inventory aredetermined after deducting rebates and discounts.

(i) Raw materials and stores, work inprogress and finished goods

Inventory held for distribution is held at cost, adjustedwhere applicable for any loss of service potential.

(ii) Inventory held for distribution

Council does not hold any land held for resale.

(iii) Land held for resale/capitalisation ofborrowing costs

Walcha Council




(h) Non-current assets (or disposalgroups) held for sale anddiscontinued operations

Council does not hold any non-current assets (ordisposal groups) held for sale nor does it have anydiscontinued operations.

(i) Investments and other financialassets

Council classifies its financial assets in the followingcategories: financial assets at fair value through profitor loss; loans and receivables; held-to-maturityinvestments; and available-for-sale financial assets.

The classification depends on the purpose for which theinvestments were acquired. Management determinesthe classification of its investments at initial recognitionand, in the case of assets classified as held-to-maturity,re-evaluates this designation at each reporting date.

Classification

Loans and receivables are non-derivative financialassets with fixed or determinable payments that are notquoted in an active market. They are included in currentassets, except for those with maturities greater than 12months after the reporting date which that are classifiedas non-current assets.

Loans and receivables are included in other receivables(note 8) and receivables (note 7) in the Statement ofFinancial Position.

Receivables are recognised initially at fair value andsubsequently measured at amortised cost using theeffective interest method, less provision for impairment.Receivables are generally due for settlement within 30days.

Cash flows relating to short-term receivables are notdiscounted if the effect of discounting is immaterial.

(ii) Loans and receivables

Held-to-maturity investments are non-derivativefinancial assets with fixed or determinable paymentsand fixed maturities that Council’s management has thepositive intention and ability to hold to maturity. IfCouncil were to sell other than an insignificant amountof held-to-maturity financial assets, the whole categorywould 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

(iii) Held-to-maturity investments

12 months from the reporting date, that are classified ascurrent assets.

Available-for-sale financial assets are non-derivativesthat are either designated in this category or notclassified in any of the other categories. They areincluded in non-current assets unless managementintends to dispose of the investment within 12 monthsof the reporting date.

Investments are designated as available-for-sale if theydo not have fixed maturities and fixed or determinablepayments and management intends to hold them for themedium to long term.

(iv) Available-for-sale financial assets

Regular purchases and sales of financial assets arerecognised on trade-date: the date on which Councilcommits to purchase or sell the asset.

Investments are initially recognised at fair value plustransaction costs for all financial assets not carried atfair value through profit or loss. Financial assets carriedat fair value through profit or loss are initially recognisedat fair value and transaction costs are expensed in theincome statement.

Financial assets are derecognised when the rights toreceive cash flows from the financial assets haveexpired or have been transferred and Council hastransferred substantially all the risks and rewards ofownership.

When securities classified as available-for-sale are sold,the accumulated fair value adjustments recognised inequity are included in the income statement as gainsand losses from investment securities.

Recognition and de-recognition

Loans and receivables and held-to-maturityinvestments are carried at amortised cost using theeffective interest method.

Subsequent measurement

Council assesses at the end of each reporting periodwhether there is objective evidence that a financial assetor group of financial assets is impaired.

A financial asset or a group of financial assets isimpaired and impairment losses are incurred only ifthere is objective evidence of impairment as a result ofone or more events that occurred after the initialrecognition of the asset (a ‘loss event’) and that loss

Impairment

Walcha Council




event (or events) has an impact on the estimated futurecash flows of the financial asset or group of financialassets that can be reliably estimated.

For loans and receivables the amount of the loss ismeasured as the difference between the asset’scarrying amount and the present value of estimatedfuture cash flows (excluding future credit losses thathave not been incurred) discounted at the financialasset’s original effective interest rate.

The carrying amount of the asset is reduced and theamount of the loss is recognised in profit or loss. If a loanor held-to-maturity investment has a variable interestrate, the discount rate for measuring any impairmentloss is the current effective interest rate determinedunder the contract. As a practical expedient, the Councilmay measure impairment on the basis of aninstrument’s fair value using an observable marketprice.

Collectability of receivables is reviewed on an on-goingbasis. Debts that are known to be uncollectible arewritten off by reducing the carrying amount directly. Anallowance account (provision for impairment ofreceivables) is used when there is objective evidencethat Council will not be able to collect all amounts dueaccording to the original terms of the receivables.

Significant financial difficulties of the debtor, probabilitythat the debtor will enter bankruptcy or financialreorganisation, and default or delinquency in payments(more than 30 days overdue) are considered indicatorsthat the receivable is impaired. The amount of theimpairment allowance is the difference between theasset’s carrying amount and the present value ofestimated future cash flows, discounted at the originaleffective interest rate.

The amount of the impairment loss is recognised in theincome statement within other expenses. When areceivable for which an impairment allowance had beenrecognised becomes uncollectible in a subsequentperiod it is written off against the allowance account.Subsequent recoveries of amounts previously written offare credited against other expenses in the incomestatement.

(i) Assets carried at amortised cost

Council has an approved investment policy complyingwith Section 625 of the Local Government Act 1993(NSW) and Clause 212 of the Local Government(General) Regulation 2005 (NSW).

Investment Policy

Investments are placed and managed in accordancewith that policy and having particular regard toauthorised investments prescribed under the MinisterialLocal Government Investment Order. Council maintainsan investment policy that complies with the Act andensures that it, or its representatives, exercise the care,diligence and skill that a prudent person would exercisein investing Council funds.

Council amended its policy following revisions to theMinisterial Local Government Investment Order (theOrder) arising from the Cole Inquiry recommendations.Certain investments the Council holds are no longerprescribed; however, they have been retained undergrandfathering provisions of the Order. These will bedisposed of when most financially advantageous toCouncil.

(j) Fair value estimation – financialinstruments

The fair value of financial assets and financial liabilitiesmust be estimated for recognition and measurement orfor disclosure purposes.

The nominal value less estimated credit adjustments oftrade receivables and payables are assumed toapproximate their fair values. The fair value of financialliabilities for disclosure purposes is estimated bydiscounting the future contractual cash flows at thecurrent market interest rate that is available to theCouncil for similar financial instruments.

(k) Infrastructure, property, plant andequipment (IPPE)

Council’s assets have been progressively revalued tofair value in accordance with a staged implementationadvised by the Office of Local Government. At reportingdate, the following classes of IPPE were stated at theirfair value:

Externally valued:

• Operational land• Community land• Buildings – specialised/non-specialised• Water and Sewerage major assets

Internally valued:

◾ Roads assets including roads, bridges andfootpaths

◾ Bulk earthworks◾ Stormwater drainage

Walcha Council




◾ Water and sewerage networks

As approximated by depreciated historical cost:

◾ Plant and equipment◾ Other assets

Non-specialised assets with short useful lives aremeasured at depreciated historical cost as anapproximation of fair value. Council has assessed thatany difference between fair value and depreciatedhistorical cost is unlikely to be material.

Water and Sewerage network assets are indexedannually between full revaluations in accordance withthe latest indices provided in the NSW Office of WaterRates Reference Manual.

For all other asset classes, Council assesses at eachreporting date whether there is any indication that arevalued asset’s carrying amount may differ materiallyfrom that which would be determined if the asset wererevalued at the reporting date. If any such indicationexists, Council determines the asset’s fair value andrevalue the asset to that amount. Full revaluations areundertaken for all assets on a five-year cycle.

Increases in the carrying amounts arising on revaluationare credited to the asset revaluation reserve. To theextent that the increase reverses a decrease previouslyrecognising profit or loss relating to that asset class, theincrease is first recognised as profit or loss.

Decreases that reverse previous increases of assets inthe same class are first charged against revaluationreserves directly in equity to the extent of the remainingreserve attributable to the class; all other decreases arecharged to the Income Statement.

Subsequent costs are included in the asset’s carryingamount or recognised as a separate asset, asappropriate, only when it is probable that futureeconomic benefits associated with the item will flow toCouncil and the cost of the item can be measuredreliably. All other repairs and maintenance are chargedto the income statement during the financial period inwhich they are incurred.

Land is not depreciated.

Depreciation on other assets is calculated using thestraight line method to allocate their cost, net of theirresidual values, over their estimated useful lives asfollows:

Depreciation

Plant and equipmentOffice equipment 5 to 10 yearsComputer equipment 4 yearsVehicles 3 to 5 yearsHeavy plant/road makingequipment 5 to 10 years

Other plant and equipment 20 to 50 yearsSmall plant and equipment 1 to 5 years

Other equipmentPlayground equipment 10 to 20 yearsBenches, seats etc. 10 to 20 years

BuildingsBuildings: masonry 50 to 100 yearsBuildings: other 20 to 40 years

Water and Sewer assetsDams and reservoirs 100 yearsBores 20 to 40 years

Reticulation pipes: PVC 70 to 80 yearsReticulation pipes: other 75 yearsPumps and telemetry 15 to 30 yearsWater Meters 10 years

Stormwater assetsDrains 80 to 100 yearsCulverts 50 to 80 years

Transportation assetsSealed roads: surface (seal) 15 to 70 yearsSealed roads: structure 50 to 120 yearsUnsealed roads 20 to 50 yearsBridge: concrete 100 yearsBridge: timber 60 years

Kerb, gutter and footpaths 100 years

Other infrastructure assetsBulk earthworks Infinite

The assets' residual values and useful lives arereviewed, and adjusted if appropriate, at eachreporting date.

Gains and losses on disposals are determined bycomparing proceeds with carrying amounts. These areincluded in the Income Statement.

Walcha Council




(l) Investment propertyCouncil did not hold any Investment property during thefinancial reporting period.

(m) PayablesThese amounts represent liabilities for goods andservices provided to the Council prior to the end offinancial year that are unpaid. The amounts areunsecured and are usually paid within 30 days ofrecognition.

(n) BorrowingsBorrowings are initially recognised at fair value, net oftransaction costs incurred. Borrowings aresubsequently measured at amortised cost. Anydifference between the proceeds (net of transactioncosts) and the redemption amount is recognised in theincome statement over the period of the borrowingsusing the effective interest method.

Fees paid on the establishment of loan facilities arerecognised as transaction costs of the loan to the extentthat it is probable that some or all of the facility will bedrawn down. In this case, the fee is deferred until thedraw down occurs. To the extent there is no evidencethat it is probable that some or all of the facility will bedrawn down, the fee is capitalised as a prepayment forliquidity services and amortised over the period of thefacility to which it relates.

Borrowings are removed from the Statement ofFinancial Position when the obligation specified in thecontract is discharged, cancelled or expired. Thedifference between the carrying amount of a financialliability that has been extinguished or transferred toanother party and the consideration paid, including anynon-cash assets transferred or liabilities assumed, isrecognised in other income or finance cost.

Borrowings are classified as current liabilities unlessCouncil has an unconditional right to defer settlementof the liability for at least 12 months after the reportingdate.

(o) Borrowing costsBorrowing costs are expensed as incurred.

(p) ProvisionsProvisions are recognised when Council has a presentlegal 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 reliablyestimated.

Where there are a number of similar obligations, thelikelihood that an outflow will be required in settlementis determined by considering the class of obligations asa whole. A provision is recognised even if the likelihoodof an outflow with respect to any one item included inthe same class of obligations may be small.

Provisions are measured at the present value ofmanagement’s best estimate of the expenditurerequired to settle the present obligation at the reportingdate. The discount rate used to determine the presentvalue reflects current market assessments of the timevalue of money and the risks specific to the liability. Theincrease in the provision due to the passage of time isrecognised as interest expense.

(q) Employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sickleave expected to be wholly settled within 12 monthsafter the end of the period in which the employeesrender the related service are recognised in respect ofemployees' services up to the end of the reportingperiod and are measured at the amounts expected tobe paid when the liabilities are settled.

The liability for annual leave and accumulating sickleave is recognised in the provision for employeebenefits. All other short-term employee benefitobligations are presented as payables.

(i) Short-term obligations

The liability for long service leave and annual leave thatis not expected to be wholly settled within 12 monthsafter the end of the period in which the employeesrender the related service is recognised in the provisionfor employee benefits and measured as the presentvalue of expected future payments to be made inrespect of services provided by employees up to the endof the reporting period using the projected unit creditmethod.

Consideration is given to expected future wage andsalary levels, experience of employee departures, andperiods of service. Expected future payments arediscounted using market yields at the end of thereporting period on national government bonds withterms to maturity and currency that match, as closely aspossible, the estimated future cash outflows.

(ii) Other long-term employee benefitobligations

Walcha Council




The obligations are presented as current liabilities in theStatement of Financial Position if the Council does nothave an unconditional right to defer settlement for atleast 12 months after the reporting date, regardless ofwhen the actual settlement is expected to occur.

All employees of the Council are entitled to benefits onretirement, disability or death. Council contributes tovarious defined benefit plans and defined contributionplans on behalf of its employees.

(iii) Retirement benefit obligations

A liability or asset in respect of defined benefitsuperannuation plans would ordinarily be recognised inthe Statement of Financial Position, and measured asthe present value of the defined benefit obligation at thereporting date plus unrecognised actuarial gains (lessunrecognised actuarial losses) less the fair value of thesuperannuation fund’s assets at that date and anyunrecognised past service cost.

The present value of the defined benefit obligation isbased on expected future payments that arise frommembership of the fund to the reporting date, calculatedannually by independent actuaries using the projectedunit credit method.

Consideration is given to expected future wage andsalary levels, experience of employee departures, andperiods of service. However, when this information is notreliably available, Council accounts for its obligations todefined benefit plans on the same basis as itsobligations to defined contribution plans, i.e. as anexpense when it becomes payable.

Defined Benefit Plans

Contributions to defined contribution plans arerecognised as an expense as they become payable.Prepaid contributions are recognised as an asset to theextent that a cash refund or a reduction in the futurepayments is available.

Defined Contribution Plans

(r) Land under roads

Land under roads is land under roadways and roadreserves including land under footpaths, nature stripsand median strips.

Council has elected not to recognise land under roadsacquired before 1 July 2008 in accordance with AASB1051 Land Under Roads.

Land under roads acquired after 1 July 2008 isrecognised in accordance with AASB 116 Property,Plant and Equipment.

(s) Self-insuranceCouncil does not self insure.

(t) Intangible assetsCouncil did not have any assets classified as intangibleat the end of the financial reporting period.

(u) Crown reservesCrown Reserves under Council’s care and control arerecognised as assets of the Council. While ownershipof the reserves remains with the Crown, Council retainsoperational control of the reserves and is responsiblefor their maintenance and use in accordance with thespecific purposes to which the reserves are dedicated.

Improvements on Crown Reserves are also recorded asassets, while maintenance costs incurred by Counciland revenues relating to the reserves are recognisedwithin Council’s Income Statement.

(v) Rural fire service assetsUnder section 119 of the Rural Fire Services Act 1997(NSW), “all fire fighting equipment purchased orconstructed wholly or from money to the credit of theFund is to be vested in the council of the area for oron behalf of which the fire fighting equipment has beenpurchased or constructed”.

Until such time as discussions on this matter haveconcluded and the legislation changed, Council willrecognise rural fire service assets including land,buildings, plant and vehicles.

(w) Goods and Services Tax (GST)Revenues, expenses and assets are recognised net ofthe amount of associated GST, unless the GST incurredis not recoverable from the taxation authority. In thiscase it is recognised as part of the cost of acquisition ofthe asset or as part of the expense.

Receivables and payables are stated inclusive of theamount of GST receivable or payable. The net amountof GST recoverable from, or payable to the taxationauthority is included with other receivables or payablesin the Statement of Financial Position.

Cash flows are presented on a gross basis. The GSTcomponents of cash flows arising from investing or

Walcha Council




financing activities which that are recoverable from, orpayable to the taxation authority are presented asoperating cash flows.

(x) New accounting standards andinterpretations issued not yeteffective

Certain new accounting standards and interpretationshave been published that are not mandatory for thecurrent reporting period and which have not beenapplied.

As at the date of authorisation of the financialstatements, the standards and interpretations listedbelow were in issue but not yet effective.

Effective for annual reporting periods beginning onor after 1 January 2017

• AASB 2014-5 Amendments to AustralianAccounting Standards arising from AASB 15

• AASB 2015-8 Amendments to AustralianAccounting Standards – Effective Date of AASB15

• AASB 2016-1 Amendments to AustralianAccounting Standards – Recognition of DeferredTax Assets for Unrealised Losses [AASB 112]

• AASB 2016-2 Amendments to AustralianAccounting Standards – Disclosure Initiative:Amendments to AASB 107

• AASB 2016-4 Amendments to AustralianAccounting Standards – Recoverable Amount ofNon-Cash-Generating Specialised Assets of Not-for-Profit Entities

• AASB 2016-7 Amendments to AustralianAccounting Standards - Deferral of AASB 15 forNot-for-Profit Entities

Effective for annual reporting periods beginning onor after 13 February 2017

• AASB 2017-2 Amendments to AustralianAccounting Standards - Further AnnualImprovements 2014- 16 Cycle

Effective for annual reporting periods beginning onor after 13 December 2017

• AASB 2017-1 Amendments to AustralianAccounting Standards - Transfers of InvestmentProperty, Annual Improvements 2014-2016 Cycleand Other Amendments


• AASB 9 Financial Instruments (December 2009)• AASB 15Revenue fromContracts with Customers• AASB 2010-7 Amendments to AustralianAccounting Standards arising from AASB 9(December 2010)

• AASB 2014-1 Amendments to AustralianAccounting Standards (Part E)

• AASB 2014-7 Amendments to AustralianAccounting Standards arising from AASB 9(December 2014)AASB 1057 Application ofAustralian Accounting Standards

• AASB 2016-3 Amendments to AustralianAccounting Standards – Clarifications to AASB 15

• AASB 2016-5 Amendments to AustralianAccounting Standards – Classification andMeasurement of Share-based PaymentTransactions

• AASB 2016-6 Amendments to AustralianAccounting Standards - Applying AASB 9Financial Instruments with AASB 4 InsuranceContracts


• AASB 16 Leases• AASB 16 Leases (Appendix D)• AASB 2016-8 Amendments to AustralianAccounting Standards – AustralianImplementation Guidance for Nor-for-ProfitEntities

• AASB 1058 Income of Not-for-Profit Entities• AASB 2016-8 Amendments to AustralianAccounting Standards - AustralianImplementation Guidance for Not-for-ProfitEntities

The full impact of these standards has yet to beascertained or quantified but will range from additionaland/or revised disclosures to changes in how certaintransactions and balances are accounted for.

(y) Rounding of amountsUnless otherwise indicated, amounts in the financialstatements have been rounded off to the nearestthousand dollars.

(z) Comparative figuresTo ensure comparability with the current reportingperiod’s figures, some comparative period line items

Walcha Council




and amounts may have been reclassified or individuallyreported for the first time within these financialstatements and/or the notes.

(aa) DisclaimerNothing contained within these statements may betaken to be an admission of any liability to any personunder any circumstance.

Walcha Council




Walcha Council


Note 2(a). Functions or activities

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 or activities.Details of these functions or 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–

519 (1,583) 4

2017 Actual

Originalbudget

2017 Actualbudget

(132) 140 105 197

– – 990 169

499 230 – –

1,509 1,688

Health Environment 753

1 197 5 1

20 134 Public order and safety

Governance Administration

(39) 793 862 827

724 930 1,014 (10)

5 94

830

85

861

(79) 83

66 71

689

310 Housing and community amenities 57 Water supplies

Recreation and culture 102

691 Sewerage services 1,105

1,174 809 441

79

960 Community services and education 820

852 691 838 439 454

6,063

(253) 255 0

115

240

736 392 516

10 6,874

70 664 672

Transport and communication 5,969 Mining, manufacturing and construction 9 7

6,689 (93) 24

6,063 100 626 6,099

102 96 381,518

4,949 – – 5,005

Actual2017

12,584 2016

– – 227

(75) 16,080

915

4,493 16,644

8,504 – –

(93) (193)

– 30 (169)

(302) (230)

Actual

– 2,792

47 (43)

– 424

2,456 3,191 10,571

9,808 –

586 911 – –

(120) – (78) –

– (184)

53 – 788 578

223 –

9,859 (325) (206)

336 (174)

99 (35)

(602) 652

(562) (657)

(283) (94) (15)

(1,171)

12,812

– 12,812

– –

3,835 (1,889)

3,391

(105) – 2,540

– (144)

(2,259)

3,100 5,387

478

5,280 5,360 6,558 2,792 429,435

(775) –

439,404

361 347 (138) 378,831

429,435

–

439,404

–

4,773

3,123

6,958

1,981

11,846 12,130 16,203

–

394 651

–

368 340

10,923 12,130 11,846 5,280

10,675

Operating result for the year

6,558

Economic affairs

9,870 Total functions and activities

250

5,360

17,233 15,230


Walcha Council


Note 2(b). Components of functions or activities

Details relating to the Council’s functions or 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; realestate development; private works; 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.

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, other.

Urban local, urban regional, includes sealed and unsealed roads, bridges, footpaths, parking areas, andaerodromes RMS works, other.

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, enforcement ofregulations and animal control.

Includes immunisation, food control, health centres etc.


Walcha Council


Note 3. Income from continuing operations

(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 servicesWater supply servicesSewerage servicesWaste management services (non-domestic)Total annual charges

TOTAL RATES AND ANNUAL CHARGES

Council has used 2016 year valuations provided by the NSW Valuer General in calculating its rates.

337

1,120

4,377

229 308

244 309 230

3,257

326

1

2017

Actual$'000

403

109

2,743

Actual$'000

3,165

390

106

Notes

1,088 225

4,253

2016

2 2,668


Walcha Council


Note 3. Income from continuing operations (continued)

(b) User charges and fees

Specific user charges (per s.502 – specific ‘actual use’ charges)

Water supply servicesSewerage servicesWaste management services (non-domestic)Total user charges

Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)AdministrationAnimal controlInspection servicesPlanning and building regulationPrivate works – section 67Section 149 certificates (EPA Act)Section 603 certificatesTotal fees and charges – statutory/regulatory

(ii) Fees and charges – other (incl. general user charges (per s.608))AerodromeAged careCemeteriesChild careFire and emergency services levy (FESL) implementationLease rentalsLibrary and art galleryRMS (formerly RTA) charges (state roads not controlled by Council)Swimming centresOtherTotal fees and charges – other

TOTAL USER CHARGES AND FEES

3,465

3 2,903

26 28 2,565

Notes

7

59

3,717

3,750 –

4,526

5

Actual$'000

35

13

10

427

54

1

2

37

2016

5

Actual$'000

26 1

529

2017

239

384

4 476

88 92

23 238

21

285

3 –

4 18

4

–

300

1

145

52 8

150

–


Walcha Council



(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)TOTAL 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 operationsTotal interest and investment revenue recognised

(d) Other revenues

Rental income – other council propertiesAdministrationCommissions and agency feesDiesel rebateInsurance claim recoveriesOther – staff FBT contributionRecycling income (non-domestic)Sales – generalSettlement of legal actionsOtherTOTAL OTHER REVENUE

51 55

10

165

10

9

19

217

10

178

6

122

31

11

9 16

217

13

8

178

12

34

Notes

204 166 12

51

26 361

47

1,615

61

14

69 69

41

1,365 37

13

2016

Actual$'0002017

Actual$'000


Walcha Council



(e) Grants

General purpose (untied)Financial assistanceFinancial assistance – Early PaymentPensioners’ rates subsidies – general componentTotal general purpose

Specific purpose (tied)Pensioners’ rates subsidies: – Water – Sewerage – Domestic waste managementWater suppliesAnimal controlCommunity careEmployment and training programsEnvironmental protectionLibrary – per capitaLIRS subsidyPreschoolStreet lightingTransport (roads to recovery)Transport (other roads and bridges funding)WCCC (formerly HACC)WasteTotal specific purposeTotal grants

Comprising:– Commonwealth funding– State funding

–

– 21

2016

424

Operating$'000

176

9 14

–

–

–

2016

355

–

3,668 737

2,931 604 1,569 2,174

– 13

1,055

488

271

1,687

4,065 719

4,784

4,784

1,661

261

10

19

16 5

3,668

1,981

2017

15

19

2,049

9

37

1,962

2017

–

2

– –

– –

–

33

–

9 10

26

– –

–

14 –

– –

Capital$'000

Capital$'000

–

– –

7

756

3,123

Operating$'000

764 180

–

2

–

–

21

–

–

–

– –

– –

793

2,174 1,105

313 1,105

–

–

793

–

136

– 1,750

–

–

–

1,105 2,174

–

–


Walcha Council



(f) Contributions

Developer contributions:Nil

Other contributions:RMS contributions (regional roads, block grant)Total other contributionsTotal contributions

TOTAL GRANTS AND CONTRIBUTIONS

(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

4,385

21

2016

128

323 274

733

Actual$'000

733

5,517

717

253

274

717 870

(50)

128

326

1,233

323

Capital$'000

733

2017Operating

$'000Operating

$'000

2017 2016

21

717

Actual$'000

323

3,044

870 128

Capital$'000

2017 2016

(140)

302

106

870

(156)

(3)

137


Walcha Council


Note 4. Expenses from continuing operations

(a) Employee benefits and on-costs

Salaries and wagesEmployee leave entitlements (ELE)Superannuation – defined contribution plansSuperannuation – defined benefit plansWorkers’ compensation insuranceFringe benefit tax (FBT)

Training costs (other than salaries and wages)OtherTotal employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSED

Number of ‘full-time equivalent’ employees (FTE) at year end

(b) Borrowing costs

Interest on loansDiscount adjustments relating to movements in provisions (other than ELE) – Remediation liabilitiesTOTAL BORROWING COSTS EXPENSED

(c) Materials and contracts

Raw materials and consumablesContractor and consultancy costsAuditors remuneration (1)

Legal expenses: – Legal expenses: otherTotal materials and contractsLess: capitalised costsTOTAL MATERIALS AND CONTRACTS(continued on the next page...)

25 58

3,173 3,788

29

3,626

807

7

79

(824)

2,182

69

3,492

7,013

32

Notes 2017

3,882

4,704

73

–

(583)

20

5,434 5

26

6,303

351

597

87

37

4,690

65

5,273

Actual$'000

4,610

33

28 25

208 90

23

57

(3,387)

2016

386 149

(1,599)

3,627

–

911

Actual$'000


Walcha Council


Note 4. Expenses from continuing operations (continued)

(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 servicesTotal 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 servicesRemuneration for audit and other assurance servicesTotal remuneration of other Council's Auditors

Total Auditor remuneration

(d) Depreciation, amortisation and impairment

Depreciation and amortisationPlant and equipmentOffice equipmentFurniture and fittingsInfrastructure: – Buildings – specialised – Other structures – Roads – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage networkOther assets – Heritage collections – OtherAsset reinstatement costsTotal depreciation and amortisation costs

ImpairmentNil

TOTAL DEPRECIATION AND IMPAIRMENT

11 –

18

18

11

–

–

32

32

18 32

11 –

29

2,296

60 228 73

11 9 & 26

70

33 54 1

22

1

330 3 5

54

10

46 1,275

164 20

208

2,324

2,324 2,296

335 5 4

23

Actual$'000

Actual$'000

Notes 2017 2016

52 28

1,304 153 20 60


Walcha Council


Note 4. Expenses from continuing operations (continued)

(e) Other expenses

Bad and doubtful debtsBank chargesContributions/levies to other levels of government – Emergency services levy (includes FRNSW, SES, and RFS levies)

– Library – NSW fire brigade levy – NSW rural fire service levy – SundryCouncillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Election expensesElectricity and heatingFire and emergency services levy (FESL) implementation costsInsuranceNoxious weedsPostagePrinting and stationeryRates and chargesStreet lightingTelephone and communicationsValuation feesTOTAL OTHER EXPENSES

13

1,207

16 –

36

– 9

20

17

Actual$'000

Notes

275

140

21 85

9

81

2016

103 –

81

Actual$'000

13

2017

18

33

50

3

53

6

57

5

11

131

19

74

9

119

24

59

75

17

64

258

28

42

– 6

60

1,065

132


Walcha Council


Note 5. Gains or losses from the disposal of assets

Plant and equipmentProceeds from disposal – plant and equipmentLess: carrying amount of plant and equipment assets sold/written offNet gain/(loss) on disposal

InfrastructureLess: carrying amount of infrastructure 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 (21)

(34)

–

Notes

–

(161)

–

Actual$'000

218

(12)

(213)

–

5

8

28

–

–

12

(20)

13

(34)

Actual$'000

–

13

174

20162017

–

–


Walcha Council


Note 6a. Cash and cash equivalents

Cash on hand and at bankCash-equivalent assets 1

– Short-term depositsTotal cash and cash equivalents

1 Those investments where time to maturity (from date of purchase) is < 3 mths.

Note 6b. Investments

– Long term depositsTotal investments

Investmentsa. ‘Held to maturity’Investments

Refer to Note 27. Fair value measurement for information regarding the fair value of investments held.

2,657

Actual 2016

2,458 – –

Non-current$'000Notes

2017Actual

Current$'000

2017Actual

–

3,121 3,121

6,062

–

– –

3,405

–

–

–

3,121

4,943 3,634

3,121

–

2,458 – –

2,458

2,458

Current$'000

1,309

Actual 2016

–

–

Non-current$'000


Walcha Council


Note 6c. Restricted cash, cash equivalents and investments – details

Total cash, cash equivalentsand investments

attributable to:External restrictions (refer below)Internal restrictions (refer below)Unrestricted

Details of restrictions

External restrictions – included in liabilitiesNil

External restrictions – otherDeveloper contributions – general (D)Specific purpose unexpended grants (F)Water supplies (G)Sewerage services (G)External restrictions – otherTotal external restrictions

Internal restrictionsPlant and vehicle replacementInfrastructure replacementEmployees leave entitlementCommunity recycling centreLandfills upgrade (Woolbrook and Nowendoc)Mirani bus committeePreschoolQuarries remediationTip site remediationTotal internal restrictions

TOTAL RESTRICTIONS

D Development contributions which are not yet expended for the provision of services and amenities in accordancewith contributions plans (refer Note 17).

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.

2017

– 302

(49) 253 (49)

(183)

(281)

balance$'000

(281)

855 –

–

–

(1,255)

44

607

26

22

180

–

–

114

1,539

704

1,085

4,317

1,539

–

–

– –

236

6 –

652

337

restrictions$'000

(408) (553)

21

2,458

2016Actual

4,136 2,779 (974)

(12)

– 40

1,436 2,316 1,436

12

550

331

858

4

8

50

14

–

–

557

26

122

1,820

1,518

4,544

3,121

1,268 229

Non-current$'000

restrictions$'000

–

356

21

Current$'000

balance$'000

321

Actual

1,820

–

523 1,799

2,458

6,062

21

Transfers to Closing Transfers from

1,793 –

4,943

21

2,621

Opening

2017

Current$'000

Actual 2016

644

Actual

6,062 4,943

Non-current$'000

2,779

2017

3,121


Walcha Council


Note 7. Receivables

$ '000

PurposeRates and annual chargesInterest and extra chargesUser charges and feesAccrued revenues – Other income accrualsInternal Loans (GF to WF)Net GST receivableGeneral debtorsPrepaymentsTotal

Less: provision for impairmentOther debtorsTotal provision for impairment – receivables

TOTAL NET RECEIVABLES

Externally restricted receivablesWater supply – Rates and availability charges – OtherSewerage services – Rates and availability charges – OtherTotal 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 8.50% (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.

6

24 599 54

–

– –

–

2016

22 –

132

– –

–

–

–

– (1)

– 1,670

–

92

1,164

(1)

– 92

–

–

21

92

1,992 –

2,488

9

92

– 4

1,943

557

– 7

2,483

8

– 2,418

–

(5)

–

2,483

– –

1,991 92

65

–

–

1,991

(5)

23

(1)

– 28

11

48

–

75

13

Current$'000

– – –

Non-current$'000

– – 15

126 (i)

Current$'000

–

2017

Notes

(ii) (iii) 26

Non-current$'000


Walcha Council


Note 8. Inventories and other assets

$ '000

(a) Inventories

(i) Inventories at costStores and materialsTrading stockTotal inventories at cost

(ii) Inventories at net realisable value (NRV)Nil

TOTAL INVENTORIES

(b) Other assetsNil

Externally restricted assetsThere are no restrictions applicable to the above assets.

Refer to Note 27. Fair value measurement for information regarding the fair value of other assets held.

– 526

Non-current$'000

– 644 –

–

–

156

–

–

Current$'000

183

Notes

370

Non-current$'000

–

827

827

Current$'000

526

20162017


Walcha Council


Note 9a. Infrastructure, property, plant and equipment

Asset class

Gross carrying amount

Accumulated depreciation

and impairment

Net carrying amount

Additionsrenewals

Additionsnew assets

Carrying value

of disposals

Depreciation and

impairment expense

Transfers

Revaluation increments

(/decrements)


Accumulated depreciation

and impairment

Net carrying amount

$ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000

Capital work in progress 1,470 – 1,470 – 2,503 – – (893) – 3,080 – 3,080 Plant and equipment 5,865 3,227 2,638 – 573 (161) (330) – – 6,017 3,297 2,720 Office equipment 122 116 6 – – – (3) – – 122 119 3 Furniture and fittings 95 68 27 – – – (5) – – 95 73 22 Land: – Operational land 2,184 – 2,184 – – – – – – 2,184 – 2,184 – Community land 1,368 – 1,368 – – – – – – 1,368 – 1,368 Infrastructure: – Buildings – specialised 8,701 5,317 3,384 – – – (54) 135 – 8,836 5,371 3,465 – Other structures 2,286 1,031 1,255 14 0 – (46) 22 – 2,321 1,077 1,244 – Roads 158,960 29,323 129,637 1,321 275 (34) (1,275) 199 – 160,650 30,528 130,122 – Bridges 35,299 2,817 32,482 134 0 – (164) 235 – 35,667 2,981 32,686 – Footpaths and other road assets 5,494 1,796 3,698 132 89 – (20) 2 – 5,743 1,841 3,902 – Bulk earthworks (non-depreciable) 210,622 – 210,622 – 0 – – – – 210,622 – 210,622 – Stormwater drainage 11,315 1,956 9,359 – 24 – (60) – – 11,339 2,016 9,323 – Water supply network 17,777 2,227 15,550 701 0 – (228) 216 94 21,117 4,783 16,334 – Sewerage network 5,347 1,160 4,187 34 0 – (73) 84 3,904 10,334 2,197 8,137 Other assets: – Heritage collections 141 50 91 – – – (1) – – 141 51 90 – Other 2,525 1,094 1,431 – 23 – (54) – – 2,548 1,148 1,400 – Tip assets 214 188 26 – – – (4) – – 214 192 22 – Quarry assets 417 315 102 – – – (7) – – 417 322 95 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.

as at 30/6/2016 as at 30/6/2017

0 426,819 3,999 482,815 55,996 2,336 (195) (2,324) 3,487

Movements during the reporting period

470,202 50,685 419,517


Walcha Council


Note 9b. Restricted infrastructure, property, plant and equipment

35,840 5,641 30,199

11,315 1,956 9,359

412 146 266

11,315 1,956 9,359

269 71 198 113 45 68

– – –

5,659 1,165 4,494

30 30 –

18 5 13 5,347 1,160 4,187

158 – 158

15,551 18,454 2,374 16,080

136 – 136

302 147 155 17,778

– 158

TOTAL RESTRICTED I,PP&E

Total DWM

Total other restrictions

23 575

13,676

Actual2017

Other structures

Land

Buildings

Domestic waste management Plant and equipment

158 – 158

$ '000

Total sewerage services

Class of asset

Water supply WIP

Infrastructure

– Operational land

Land

– Operational land

Total water supply

Buildings

WIP

Buildings Infrastructure

Sewerage services

Other assets

Stormwater drainage

– 23 120 455

Other restricted assets

2,227


Accumulated depn. and

impairment

Net carrying amount

216 – 216

158

Actual2016

152


Accumulated depn. and

impairment

Net carrying amount

–

158

302

21,118

–

–

151

–

158

16,335 21,578 4,934 16,644

199 – 199

4,783

18 7 11 10,333 2,197 8,136 10,709 2,204 8,504

– – – 404 75 329 148 45 103

2,607 13,676 2,607 11,069

46,537 9,864 36,673

11,069


Walcha Council


Note 10a. Payables, borrowings and provisions

$ '000

PayablesGoods and services – operating expenditureAccrued expenses: – Other expenditure accrualsTotal payables

Income received in advancePayments received in advanceTotal income received in advance

BorrowingsLoans – secured 1

Loans – unsecuredTotal borrowings

ProvisionsEmployee benefits:Annual leaveLong service leaveTime in lieuRostered day offAsset remediation/restoration (future works)

Total provisions

(i) Liabilities relating to restricted assets

Externally restricted assetsWater

Total liabilities relating to restricted assetsTotal liabilities relating to unrestricted assets

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.

70

1,115

–

– 8

Current$'000Notes

–

396

7

533

–

2,197

92

43 58

78 2

–

–

Current$'000

488

166

2016

558

–

Non-current$'000

299

Current$'000

2017Non-current

$'000

465 954

1,112

92 8 – 66

66

58 –

TOTAL PAYABLES, BORROWINGS AND PROVISIONS

Non-current$'000

2016

1,622

1,081

2,197

–

–

Current$'000

463 533

555

1,684 26 982 958

6 69

1,628

2,774

–

1,628

2,766 8

1,622

7

2017

– 437

43

78

123

–

–

1,066

8

Non-current$'000

–

2,774

–

– 84

–

1,536

8

1,622

92 – 2,197

TOTAL PAYABLES, BORROWINGS AND PROVISIONS

1,623


Walcha Council


Note 10a. Payables, borrowings and provisions (continued)

(ii) Current liabilities not expected 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

The movement in each class of provision (excluding those relating to employee benefits) is presented in the tablebelow.

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.

975

2,750

1,196 488

Actual$'000

(367)

(2)

(454)

84

Decrease due to payments

$'000

2016

– Rostered day off

408 1,238

–

Additional provisions

$'000

71 Asset remediation

(86) 23 21 Annual leave

958 2,704 494

Openingbalance

as at 1/7/16$'000

(25)

Long service leave437

TOTAL49

10

2017

Class of provision

– 15

2016

Actual$'000

Unused amounts reversed

$'000

Remeasurement effects due to

discounting$'000

–

–

2017

982

975 1,048

–

1,048

Closingbalance

as at 30/6/17$'000

6

–


Walcha Council


Note 11. Reconciliation of operating result to net cash movement from operating activities

(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 assetsUnwinding 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 inventoriesIncrease/(decrease) in payablesIncrease/(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

(c) Non-cash investing and financing activities

Nil

(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

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.

(e) Bank guarantees / loan guarantees

Nil

7,396

200

(1)

20162017

3,391

Notes

5,387

(588)

200

2,324

248

22

(301)

25 20

4,747

(1,135) 258 108

(201)

4

21

48

24

231

(38) 65

(1)

15

(13)

4,943

6a 4,943

6,062 10

230

– –

Actual$'000

Actual$'000

6,062

2,296

30 230


Walcha Council


Note 12. Commitments

(a) Capital commitments (exclusive of GST)

Capital expenditure committed for at the reporting date but notrecognised in the financial statements as liabilities:

Property, plant and equipmentBuildingsPlant and equipmentOther StructuresRoadsBridgesOther AssetsWater ServicesSewer ServicesTotal commitments

These expenditures are payable as follows:Within the next yearLater than one year and not later than 5 yearsTotal payable

Sources for funding of capital commitments:Unrestricted general fundsFuture grants and contributionsExternally restricted reservesInternally restricted reservesTotal sources of funding

Details of capital commitmentsTo fund capital Works in Progress as at 30 June 2017 and to purchase a bus for Walcha Community Services.

(b) Finance lease commitments

Nil

(c) Operating lease commitments (non-cancellable)

Nil

(d) Repairs and Maintenance : Investment property

Nil

$ '000

39

253

437

1,346

Notes

612

1,759

806 5,563

172

5,310

1,630

5,563

2,574

5,563

4,671

– 419

708

4,241

3,121

12

1,498

2017

78

4,241

92 38

287

– –

Actual$'000

3,436

92

4,241

Actual$'000

–

26

2016


Walcha Council


Note 13a. Statement of performance measures – consolidated results

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).

Indicator2017

69.40%

2.59x

7.1 mths

>1.5x

2016

10.64 mths

38.28x 37.48x >2x

<10% Rural

23.87x

4.59x

124

3.25%

x12

Prior periods

17,233

1,718 7,789

8,672

Amounts$'000

14,189

65.30%

152

2017

4,746

2,364

863 9,183 7.2 mths > 3 mths

4,535

4.54x

2015

6.04%14.34%

Benchmark

>0.00%

>60.00%

16.66%

3.35%

50.32%

4.33%


Walcha Council


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

Commentary on 2016/17 result

2016/17 4.54x

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.

To assess the adequacy of working capital and its ability to satisfy obligations in the short term for

the unrestricted activities of Council.

2016/17 16.66%


Council continues to contain operating expenses through increased efficiencies and improved practices while maintaining an acceptable standard of service for the community. This is a very pleasing result.

Purpose of own source operating

revenue ratio

Council has sufficient working funds to cover its delivery program.


This ratio has slipped below the benchmark due to an increase in capital funding of

$1,8m. Additionally the early payment of the Financial Assistance Grant ($1.0m) has

a detrimental effect on the ratio. Without these additional payments Council would

have a ratio of 60.6%

Purpose of unrestricted current

ratio

This ratio measures Council’s

achievement of containing operating expenditure within operating revenue.

2016/17 50.32%

6%

14%17%

-5%

-10%

-5%

0%

5%

10%

15%

20%

2014 2015 2016 2017

Rat

io %

1. Operating performance ratio

65% 69% 65%

50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2014 2015 2016 2017

Rat

io %

2. Own source operating revenue ratio

2.6 2.6

4.6 4.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2014 2015 2016 2017

Rat

io (

x)

3. Unrestricted current ratio


Walcha Council


Note 13a(ii). Local government industry indicators – graphs (consolidated)


Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside Benchmark


This ratio measures the availability of operating cash to

service debt including interest, principal and

lease payments

2016/17 38.28x

This liquidity ratio indicates the number of months a Council can continue paying

for its immediate expenses without

additional cash inflow.

To assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of

recovery efforts.

Council has cash on hand to pay expeneses for 10 months. Council could

place more funds into longer term deposits and increase interest earnings.

Council's debt collection policies continue to be effective.


Council is well placed to take on new borrowings to fund infrastructure projects if

it was deemed necessary.

Commentary on 2016/17 resultPurpose of rates

and annual charges outstanding ratio

Purpose of debt service cover ratio

2016/17 3.35%

Purpose of cash expense cover ratio


2016/17 10.64 mths

25.6 23.9

37.5 38.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2014 2015 2016 2017

Rat

io (

x)

4. Debt service cover ratio

10%

4%3% 3%

0%

2%

4%

6%

8%

10%

12%

2014 2015 2016 2017

Rat

io %

5. Rates, annual charges, interest and extra charges outstanding percentage

4.1

7.1 7.2

10.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2014 2015 2016 2017

Rat

io (

mth

s)

6. Cash expense cover ratio


Walcha Council


Note 13b. Statement of performance measures – 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%

48.02%

4.54x

19.45% 16.67% -11.87% -34.17% -17.01% 10.91%

2017 2017 20172016 2016

27.13x No liabilities

No liabilities >1.5x

63.70% 63.12% 77.07% 97.96% 97.95%

4.59x No liabilities

2016


Walcha Council


Note 13b. Statement of performance measurement – 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 monthsmonths10.21 7.12 58.91 6.26 4.32

months

General indicators 5 Water indicators Sewer indicators

>2x

> 3 months

2.55% 11.48% 10.00%

36.56x 0.00x 0.00x 0.00x 0.00x

47.11 months

37.14x

2.59%

2016

6.80% 7.12% <10% Rural


Walcha Council


Note 14. Investment properties

$ ’000

Council does not have any 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.

Council held the following financial instruments at reporting date:

Financial assetsCash and cash equivalentsInvestments – ‘Held to maturity’ReceivablesTotal financial assets

Financial liabilitiesPayablesBorrowingsTotal financial liabilities

$'000 $'000 $'000$'000

2,458

6,062

961 473

1,594

9,392

2016Notes

473

2,575

2016

3,121 2,575

961 633

11,758

633

9,392

1,072 599

1,072

Actual Actual

1,594

3,121 1,991

599

2017

2,458

4,943 6,062

Fair value 2016

1,991 11,758

4,943

Carrying value 2017

2017


Walcha Council


Note 15. Financial risk management (continued)

Council’s objective is to maximise its return on cash and investments whilst maintaining an adequate level ofliquidity and preserving capital.

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.

Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

* Council's investments consist only of short term deposits and are therefore not subject to market fluctuations.

61

65 –

65

Equity $'000

–

– 65

Decrease of values/rates

61 61 61 –

65

Income Statement

$'000Equity $'000

Increase of values/rates

–

–

–

–

Income Statement

$'000

2016

2017


Walcha Council



(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.

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

2016

0%

–

receivables

16%

chargesOther

84%

10 58

100% 100%

annual Other

2016

–

Rates and

annual

Rates and

charges$'000

receivables$'000

charges$'000

receivables$'000

100%

Other

Rates and

1,784

100%

– 67

1,860

26 90

2,369

Rates andOther

0%100%

–

100%

–

–

annual

0%

– 126

2017

88

– 132

44

2017

100%

2,454

– 27

receivables chargesannual

9


Walcha Council



(c) Liquidity risk

Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on hand to meetpayment 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 borrowings areset out in the maturity table below:

$ ’000

PayablesBorrowingsTotal financial liabilities

PayablesBorrowingsTotal 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 applicable to Council's borrowings at balance date:

PayablesBorrowings

$'000 interest rate $'000 interest rate

–

≤ 1 Year > 5 Yrs2-3 Yrs

–

– 66

8 413

–

to no3-4 Yrs

Subject

78

1-2 Yrs

947

–

maturity

90 98 93

869

carryingActualTotal

876

88 633 93

4-5 Yrs

–

1,594 1,509

79

193

226

– – –

Weighted

226

473 84

88

–

74

average

599

479

599

421

78

70

1,072

valuescash

– 961

5.70% 599

84

961 0.00%

value

74

Weighted

79

5.90%

value

2016Carrying

1,020

1,072

averageCarrying

0.00%

633 473

2017

–

1,594

2016

2017– –

633

outflows

83 98

payable in:

193

7


Walcha Council


Note 16. Material budget variations

Council’s original financial budget for 16/17 was adopted by the Council on 01 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 budget on aquarterly 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 revenueCouncil has additional funds on term deposits at slightly better interest rates, resulting in better than expected interest revenue.

Other revenuesFESL reimbursement was $53,854 and we received an insurance reimbursement of $52,662 for damage to the river pump. In addition, scrap metal sales realised $17,342 and Council received a dividend from Lehmans amountingto $23,628 - none of which was budgeted. Diesel fuel rebate received was $31,327 greater than budget.

Operating grants and contributions

Capital grants and contributionsBergen Bridge widening carried over from 2015-16 was almost completed in the current year. Council received $938,642 in capital funding for the project.Water fund received $423,645 for the treatment plant upgrade, also carried over from 2015-16. Council received $739,180 Black Spot funding for 3 projects on Thunderbolts Way.These increases were offset by $650,000 funding that was in the Sewer fund budget but not received. State Government has announced $900,000 to be received in 2017-18 for the sewerage treatment upgrade.

Net gains from disposal of assetsCouncil made a net gain of $13k on sale of plant which is lower than anticipated. There were some road assets that needed to be written off following upgrade works.

Budget2017

---------- Variance* ----------

F

976%

U

F

(55) (100%)

361

7%

U

280

2017

F

F

2017

102 89%

4,097

4,025

34

4,377

(8%)

–

74%3,044

5,517

3,717

Actual

1,754

55

5,151

327

(308)

7%

F

217

1,290

115

366


Walcha Council


Note 16. Material budget variations (continued)

$ ’000

EXPENSESEmployee benefits and on-costs

Borrowing costsOverbudgeted on discounting adjustment relating to asset remediation.

Materials and contractsLarger than usual amounts of capital upgrades to roads and bridges has meant that routine maintenance workshave been deferred. Transport underspend is $410k. There have been savings to Administration costs which amount to $110k

Depreciation and amortisationMiscalculation in budget preparation for roads depreciation.

Other expensesExpenses not included in the budget are: Election costs $19,650 and ESPL costs $16,419. Councillor training costs are higher than budgeted due to Council election. Costs totalling $163,589 were incorrectly classifed as materials in the budgets.

Net losses from disposal of assetsSome road asssets were written off during the year as a result of upgrade works, WDV $34k. This is offset by small gain on sale of plant.

Budget variations relating to Council’s Cash Flow Statement include:

Cash flows from operating activitiesEarly FAGS payment as well as capital funding explains the additional cashflow from operating activties.

Cash flows from investing activitiesCouncil has received funding for a significant number of capital works with roads & bridges upgradestotalling $2.4m, including $795,295 on the Bergen Bridge project.The Water Treatment Plant upgrade was $751k out of the $917k spent on water infrastructure upgrades.Much of the work has been carried forward from the prior year, however additional Black Spot funding added extra capital works to the programme - $739,000.

Cash flows from financing activitiesInternal loan to the Water Fund to complete Water Treatment upgrade works.

657

(402) 4,610

Actual

12%

0%(21)

Budget

4,208

2017

U

(150.7%)

33.2%

34

(4,737) (1,575)

(241)

5,652 7,396

F(67)

U(6,311)

101

–

1,745

(25%)

F30.9%

966 1,207

2017

15%

U21

3,626

2,607 F2,324

F

U

11%283

---------- Variance* ----------

(10%)

8 F58

2017

66

4,283


Walcha Council


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

Roads

Total S94 revenue under plans

–

– –

Held asInternalExpenditureborrowing

–

restricted(to)/from

during

– 21

– –

–

21

21

21

–

–

assetin year

–

Cash

21

21

–

21

earnedContributions

received during the yearInterest

yearNon-cash

– – 21

Total contributions

S94 contributions – under a plan

PURPOSE Openingbalance

– – –

–

–

–

–

– –

–

Cumulative internal

borrowings due/(payable)


Walcha Council


Note 18. Contingencies and other assets/liabilities not recognised

$ ’000

The following assets and liabilities do not qualify for Council's contribution for 2017-18 is set at $189,140.recognition in the Statement of Financial Position, but Contributions are expected to continue until June 2020 their knowledge and disclosure is considered relevant with Council's share estimated to be a further $261,000.to the users of Council’s financial report.

(ii) Statewide LimitedContingent Liabities

Council is a member of Statewide Mutual, a mutual1. Guarantees pool scheme providing liability insurance to local

government.(i) Defined benefit superannuation contribution plans Membership includes the potential to share in either

the net assets or liabilities of the fund depending onCouncil participates in an employer-sponsored its past performance. Council’s share of the netdefined benefit superannuation scheme, and makes assets or liabilities reflects Council’s contributions tocontributions as determined by the superannuation the pool and the result of insurance claims withinscheme’s trustees. each of the fund years.

Member councils bear responsibility of ensuring there The future realisation and finalisation of claimsare sufficient funds available to pay out the required incurred but not reported to 30/6 this year may resultbenefits as they fall due. in future liabilities or benefits as a result of past

events that Council will be required to fund or shareThe schemes most recent full actuarial review in respectively.indicated that the net assets of the scheme werenot sufficient to meet the accrued benefits of the (iii) StateCover Limitedschemes defined benefit member category withmember councils required to make significantly Council is a member of StateCover Mutual Limitedhigher contributions in future years. and holds a partly paid share in the entity.

The Local Government Superannuation Scheme StateCover is a company providing workershowever is unable to provide Council with an accurate compensation insurance cover to the NSW localestimate of its share of the net deficit and accordingly government industry and specifically Council.Council has not recorded any net liability from it’sdefined benefit scheme obligations in accordance Council has a contingent liability to contribute furtherwith AASB 119. equity in the event of the erosion of the company’s

capital base as a result of the company’s pastFuture contributions made to the defined benefit performance and/or claims experience or as a resultscheme to rectify the net deficit position will be of any increased prudential requirements from APRA.recognised as an expense when they becomepayable – similar to the accounting for defined These future equity contributions would be requiredcontributions plans. to maintain the company’s minimum level of net

assets in accordance with its licence requirements.The last valuation of the scheme was performed by MrRichard Boyfield, FIAA on 2 December 2016 relating to (iv) Other guaranteesthe period ending 30 June 2016.

Council has provided no other guarantees other thanIn 2016-17 Council contributed $149,289 to the fund. those listed above.


Walcha Council


Note 18. Contingencies and other assets/liabilities not recognised (continued)

$ ’000

Contingent Liabilities (continued): Contingent Assets

2. Other liabilities (i) Land under roads

(i) Third party claims As permitted under AASB 1051, Council has electednot to bring to account land under roads that it

The Council is involved from time to time in various owned or controlled up to and including 30/6/08.claims incidental to the ordinary course of businessincluding claims for damages relating to its services.

Council believes that it is appropriately coveredfor all claims through its insurance coverage anddoes not expect any material liabilities to eventuate.

(ii) S94 plans

Council levies section 94/94A contributions uponvarious development across the Council area throughthe required contributions plans.

As part of these plans, Council has received fundsfor which it will be required to expend the monies inaccordance with those plans.

As well, these plans indicate proposed futureexpenditure to be undertaken by Council, which willbe funded by making levies and receipting funds infuture years or where a shortfall exists by the use ofCouncil’s general funds.

These future expenses do not yet qualify as liabilitiesas of the reporting date, but represent Council’sintention to spend funds in the manner and timingset out in those plans.


Walcha Council


Note 19. Interests in other entities

$ ’000

Council’s objectives can and in some cases are best met through the use of separate entities and operations.

These operations and entities range from 100% ownership and control through to lower levels of ownershipand control via co-operative arrangements with other councils, bodies and other outside organisations.

The accounting and reporting for these various entities, operations and arrangements varies in accordancewith accounting standards, depending on the level of council’s (i) interest and (ii) control and the type (form) ofentity/operation, as follows;

Controlled entities (subsidiaries) Note 19(a)Operational arrangements where Council’s control (but not necessarily interest) exceeds 50%.

Joint ventures and associates Note 19(b)Joint ventures are operational arrangements where the parties that have joint control haverights to the net assets of the arrangement.Associates are separate entities where Council has significant influence over the operations(but neither controls nor jointly controls them).

Joint operations Note 19(c)Operational arrangements where the parties that have joint control have rights to specificassets and obligations for specific liabilities relating to the arrangement rather than a rightto the net assets of the arrangement.

Unconsolidated structured entities Note 19(d)Unconsolidated structured entities represent “special vehicles” that Council has an interestin but which are not controlled by Council and therefore not consolidated as a subsidiary,joint arrangement or associate. Attributes of structured entities include restricted activities,a narrow and well-defined objective and insufficient equity to finance its activities withoutfinancial support.

Subsidiaries, joint arrangements and associates not recognised Note 19(e)

(a) Controlled entities (subsidiaries) – being entities and operations controlled by Council

Council has no interest in any controlled entities (subsidiaries).

(b) Joint ventures and associates

Council has no interest in any joint ventures or associates.

(c) Joint operations

Council has no interest in any joint operations.

(d) Unconsolidated structured entities

Council has no unconsolidated structured entities


Walcha Council


Note 19. Interests in other entities (continued)

$ ’000

(e) Subsidiaries, joint arrangements and associates not recognised

The following subsidiaries, joint arrangements and associates have not been recognised in this financial report.

Name of entity/operation Principal activity/type of entity

New England Weeds Authority Control of noxious weedsthroughout the New England Region

Reasons for non-recognitionWalcha contributed $82,720 to NEWA's operations in 2017, along with Uralla & Guyra Shires. Armidale Dumaresq contributed $113,300. NEWA is an autonomous organisation with its board of directors made up of councillors from each constituent council. Walcha exercises no direct control over the Authority.

Central Northern Regional Libraries Provides library services toTamworth, Narrabri,Liverpool Plains, Uralla andWalcha Councils.

Reasons for non-recognitionWalcha contributed $63,800 to CNRL in 2017. CNRL is managed by Tamworth Regional Council and WalchaCouncil has no control over the organisation.

Statewide Limited Provides insurance cover to LocalGovernment

Reasons for non-recognitionCouncil is a member but has no control over the organisation, although Walcha Council is represented on the board by its General Manager.

StateCover Limited Provides Workers Compensationto Local Government

Reasons for non-recognitionCouncil is a member of StateCover and has no control over the organisation.

Namoi Councils Joint Organisation Resolve issues of regionalimportance through Councilcollaboration

Reasons for non-recognitionWalcha paid a membership of $33,000 in 2017 and is one of 7 member and 1 associate councils. Walcha hasno control and no financial investment.

NA

Net assets

NA NA

2017

NA

Net profit2017

NA NA

NA NA

NA NA


Walcha Council


Note 20. Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors

(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– 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) Changes in accounting policies

Council made no changes in any accounting policies during the year.

(e) Changes in accounting estimates

Council made no changes in accounting estimates during the year.

289,137 285,138

285,138

285,138

289,137

140,478 3,391

2016

284,198 3,999

145,865

9(a) 940

Actual$'000

5,387

Notes 2017

137,087

289,137 285,138

140,478

Actual$'000

289,137 285,138


Financial Statements 2017

Walcha Council


Note 21. Results by fund

Income Statement by fund

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 amortisationOther 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 fund

Net operating result for the year before grants and contand 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.

(89) –

–

5,127

–

86 30

(75)

–

Actual$'000

300 61 5,499

–

Water

Actual$'000

General1Sewer

(75)

4,150

441

2,019

–

– 335 (75)

5,127 516 839 10,491

335

–

231

–

(75)

234

–

5,127

–

Actual

9 9

288

2,507

58

3,197

2017

309

2017

– 2,620

31

–

335

–

240

1,174 424

3,152

15,618

21 1,091

172

74

–

8

3,824

Actual$'000

244 92

178 428

2017 2017

page 572016-2017 Annual Report - App B - Page 134

Financial Statements 2017

Walcha Council

Notes to the Financial Statements as at 30 June 2017

Note 21. Results by fund (continued)

Statement of Financial Position by fund

ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesTotal current assets

Non-current assetsInvestmentsReceivablesInfrastructure, property, plant and equipmentTotal 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.

271,890 16,761 9,617 408,624 –

6,926

70

463

412,926

954 –

10,321

– 1,684 2,766

16,644

37

1,113

8,504

–

Actual

827

0

Actual$'000

–

16,644 –

3,121

2017

–

2017

Water

–

404,884 401,671

– 8,504

180

92

217

8

–

2,418

20172017

28

8,042 –

–

1,085

–

–

Actual$'000

Sewer

4,302

– –

1,066

136,734

–

16,761 –

2,691

100

– 92

9,617

7 92 –

9,617

– 8

16,861

–

–

–

– – 58

1,536 –

6,440

408,624

–

–

General1

4,797

Actual$'000

page 582016-2017 Annual Report - App B - Page 135

Walcha Council


Note 22. Non-current assets classified as held for sale

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 27/10/17.

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

(ii) Events that provide evidence of conditions that arose after the reporting period

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’.

Note 25. Intangible assets

Intangible assets represent identifiable non-monetary assets without physical substance.

Council is unaware of any control over intangible assets that warrant recognition in the financial statements,including either internally generated and developed assets or purchased assets.

Actual Actual


Walcha Council


Note 26. Reinstatement, rehabilitation and restoration liabilities

Asset RemediationCouncil has legal/public obligations to make restore, rehabilitate and reinstate the following assets/operations:

Refuse disposal sites (3)Quarries (26)Balance 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.

Specific uncertainties relating to the final costs and the assumptions made in determining the amounts ofprovisions include:

Reconciliation of movement in provision for year:

Balance at beginning of yearAmounts capitalised to new or existing assets:Effect of a change in other calculation estimates usedAmortisation 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.

The year in which the rehabilitation is expected to be carried out is uncertain; for gravel pits assumptions have been made about the remaining production before the end of the pits life. The remaining life of the gravel pits was reassessed in June 2016 and expected restoration costs were recalculated. This is reflected in the Net Present Value (NPV) of the Future Costs to Restore the Sites, as shown below. For refuse sites the timing of rehabiliation can be affected by quantities of garbage disposed which are based on historical estimates. Many factors can affect the estimates of the garbage going into landfill including amounts recovered through recycling and increases in population and changes in building activity within the council area. The cost of rehabilitation is also uncertain as this can be affected by changes in government regulation and the cost of plant labour and materials at the time the work is predicted to be required.

25

755 203

10(a) 958 982 775

958

982 958

(38)

2016

–

207

20

2017

976

Actual$'000

Actual$'000


Walcha Council


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.


Walcha Council


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– Investment property

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 the assigned level for each asset and liability held at fair value by the Council:

Recurring fair value measurements

Infrastructure, property, plant and equipmentPlant & equipmentOffice equipmentFurniture & fittingsOperational landCommunity landBuildings specialisedOther structuresRoadsBridgesFootpaths & other road assetsBulk earth worksStormwaterWaterSewerHeritageOther assetsTip QuarryWork in progressTotal infrastructure, property, plant and equipment – – 426,819 426,819

30/06/1630/06/1630/06/16 – 30/06/16 –

30/06/14 – – 30/06/14 – – 32,686

30/06/17 – – 8,137 – –

30/06/16 – – 1,244 1,244

8,137

N/A – – 3,080 3,080

32,686 30/06/14 – – 3,902 3,902 30/06/14 – – 210,622 210,622

16,334 30/06/15 – – 9,323 9,323 30/06/17 – – 16,334

30/06/13 – – 2,184 2,184 30/06/16 – – 1,368 1,368 30/06/13 – – 3,465 3,465

N/A 3 – 22 22

inputs

Significant

– 1,400 1,400 – 22 22

2,720

– 90 90

prices in observable

130,122

N/A – – 3

– 95 95

–

130,122

inputs

Fair value measurement hierarchyLevel 1 Level 2

Date Quoted SignificantLevel 3 Total

– N/A 2,720 –

2017

valuation active mktsof latest unobservable


Walcha Council


Note 27. Fair value measurement (continued)

$ ’000

(1) The following table presents the assigned level for each asset and liability held at fair value by the Council: (continued)

Recurring fair value measurements

Infrastructure, property, plant and equipmentPlant & equipmentOffice equipmentFurniture & fittingsOperational landCommunity landBuildings specialisedOther structuresRoadsBridgesFootpaths & other road assetsBulk earth worksStormwaterWaterSewerHeritageOther assetsTip QuarryWork in progressTotal infrastructure, property, plant and equipment

(2) Transfers between levels of the hierarchy

During the year, there were no transfers between levels of fair value hierarchies.

Date Quotedof latest prices invaluation active mkts

Level 1 Level 2Significant

observableinputs

Level 3 Total

419,517

N/A – – 2,638 2,638 N/A

4,187

–

Significantunobservable

inputs

Fair value measurement hierarchy

– – 6 6 N/A – – 27 27

30/06/13 – – 2,184 2,184 30/06/16 – – 1,368 1,368 30/06/13 – – 3,384 3,384 30/06/16 – – 1,255 1,255 30/06/14 – – 129,637 129,637 30/06/14 – – 32,482 32,482 30/06/14 – – 3,698 3,698 30/06/14 – – 210,622 210,622 30/06/15 – – 9,359 9,359

– – 91 91

30/06/16 – – 15,550 15,550 30/06/16 – – 4,187 30/06/1630/06/16 – – 1,431 1,431 30/06/16 – – 26 26 30/06/16 – – 102 102

N/A – 1,470 1,470 – 419,517

–

2016


Walcha Council



$ ’000

(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 (ie. level 1 inputs), Council instead utilises a spread of both observableinputs (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:

Infrastructure, property, plant and equipment

Plant & Equipment, Office Equipment & Furniture & Fittings

These assets are valued at cost, but are disclosed at fair value in the notes; the carrying amount of these assets is assumed to be approximate Fair Value due to the nature of the assets. Examples of assets within these classes are as follows.

- Plant & equipment: Graders, Trucks, Rollers, Tractors and Motor Vehicles. - Office Equipment: Computers, Photocopiers etc. - Furniture & Fittings: Chairs, Desks etc.

There has been no change to the valuation process during the reporting period.

Operational & Community Land

Operational and Community Land are based on either the land value provided by the Valuer General or an average unit rate based on the land value for similar properties were the VG did not provide a land value, having regard to the highest and best use of the land. Operational land has been valued by external valuers, Liquid Pacific, using the principals of Fair Value as defined in Accounting Standard AASB13. As these rates were not considered to be observable market evidence they have been classified as Level 3.


Walcha Council



$ ’000

(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)

Infrastructure, property, plant and equipment (continued)

Buildings - Non Specialised

Non specialised and specialised buildings have been valued by external valuer, Scott Fullerton Valuations, using the principals of Fair Value, as defined in Accounting Standard AASB13. As these values were not considered to contain observable market evidence they have been classified as Level 3 and have been valued using the gross replacement cost method. Replacement cost has been formulated based on the substantial analysis of construction costs from over 120 councils throughout NSW. The valuer inspected the entire network of buildings. Useful life and residual value have been determined with regard to the Local Government Code of Accounting Practice & Financial Reporting. Inherent limitations in that buildings were not componentised as part of the valuation process and were valued based on the estimated replacement cost of the building as a whole.

Other Structures

Other Structures are assets that do not fit the definition of buildings. They include swimming pools, fencing and playgrounds. Other Structures have been revalued by internally by Council's Engineering Department either using unit rate calculations where the asset is easily componetised, or by applying an index rate to the valuation provided by Scott Fullarton Valuations in December 2012. As these values were not considered to contain observable market evidence they have been classifed as Level 3 and have been valued using the gross replacement cost method. Replacement cost has been formulated based upon the substantial analysis of construction costs from over 120 councils throughout NSW and based on the age of the assets as Council believes it is not materially different to condition assessment.


Walcha Council



$ ’000



Roads

Roads revaluations have been conducted internally by Council's Engineering Department. Sealed roads have been segmented into like behaving lengths of road and componentised into the base pavement and the surface seal. Unsealed roads have only the base pavement component. Replacement costs are based upon actual costs on recent projects and Rawlinsons Reference Rates where applicable. Condition assessment has been completed in two phases, through intentional physical inspection taking photographic evidence of a portion of the network for valuation. Thereby a representative sample was chosen based on the Engineering Department's experience and knowledge of the road network. Additionally limitations exist in the sporadic nature of unsealed roads condition as such council has condition assessed these roads using an aged based approach.

Useful life and residual value has been set using Council's knowledge of how the road network behaves with consideration given to the quality of inputs used including gravel and bitumen and the specific weather and traffic conditions that impact upon the Council area.

Bulk Earthworks

Bulk Earthworks consist of cuttings, fill and levelling of earth and rocks. The valuation was completed internally and based replacement cost on Rawlinsons Reference Rates. As there had been no earthwork construction since the previous revaluation in 2010, the 2014 revaluation indexed the data already available by the IPWEA indices to come up with a replacement cost.

Council has determined that bulk earthworks have infinite useful lives.


Walcha Council



$ ’000



Footpaths & Other road Assets

Footpaths and other road assets includes footpaths, kerb & guttering, roundabouts and other minor assets. They have been valued internally by Council's Engineering Department. Given the small size of the network, all footpaths, kerb & guttering and other road assets were physically inspected and photographic evidence was obtained. This formed the basis of the condition assessment. Useful lives were determined with consideration to the previous revaluation and based on Council's knowledge of the behaviour of other concrete assets. No residual has been set due to the requirement to completely remove the assets prior to replacing them.

Bridges

Bridges have been valued internally by Council's Engineering Department and have been componentised into girder, corbel, deck, headstock, pile, abutment, kerb log and hand rail.

To ensure completeness of data the Authority Asset Management software was utilised as a starting point for conducting the revaluation. Council staff physically inspected all bridges to ensure the accuracy of data that was input into the Asset Management System. Condition was determined based on these inspections. Each bridge was given a condition rating in accordance with the methodology in the IPWEA (NSW) Bridge Guide, 2009. Replacement costs were based upon recently completed bridge projects in the shire. Council determined timber bridges replacement cost based upon the cost to replace with their modern equivalent, judgementally determined to be either a concrete bridge or concrete culvert.

Useful lives for timber bridges were based on research by Peter J Yttrup (1996) contained in the IPWEA Bridge Guide. Condition ratings for concrete bridges were set based upon councils own knowledge and experience of the bridge network and in conjunction with the Local Government Assets Accounting Manual. Residual values exist for the Councils estimate of the value of the approaches and the road alignment for concrete bridges and for the cost of timber bridges which are considered to have a much longer life then the superstructure.


Walcha Council



$ ’000



Sewer Network

Sewer assets were valued internally by Council's Engineering Department. Assets in this class include treatment works, pumping stations and sewer mains. Condition assessment was undertaken in 2 distinct ways. For above ground assets a visual assessment in accordance with the Visual Assessment Manual published by New Zealand Water and Waste Association was conducted. For underground pipes, due to the inability to visually inspect them the assessment was based upon frequency of blockages, breakages and maintenance. This forms an inherent limitation on the data obtained. Replacement costs were calculated based on Rawlinsons Reference Rates. Useful life and residual values were set using a matrix calculated in 2008 by the former NESAC Group of Councils which was itself based on the knowledge and experience of the Group's Engineers in regards to the pattern of consumption.

Stormwater Drainage

Drainage assets comprise pits, culverts, open channels, headwalls and various types of quality devices used to collect store and remove stormwater. The cost approach estimated the replacement cost for each asset by componentising the assets into significant parts with different useful lives and taking into account a range of factors. First principles estimating accompanied by actual Council costs were utilised in determining the current stormwater assets value. These values were deemed to be in line with the Rawlinson Reference Rates.

Water Network

Water assets were valued internally by Council's Engineering Department. Assets in this class include reservoirs, pumping stations and water pipelines. Condition assessment was undertaken in 2 distinct ways. For above ground assets a visual assessment in accordance with the Visual Assessment Manual published by New Zealand Water and Waste Association was conducted. For underground pipes, due to the inability to visually inspect them the assessment was based upon frequency of breakages and maintenance. This forms an inherent limitation on the data obtained. Replacement costs were calculated based on Rawlinsons Reference Rates. Useful life and residual values were set using a matrix calculated in 2008 by the former NESAC Group of Councils which was itself based on the knowledge and experience of the Group's Engineers.


Walcha Council



$ ’000

(4). Fair value measurements using significant unobservable inputs (level 3)

a. The following tables present the changes in level 3 fair value asset classes.

Opening balance – 1/7/15

Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairmentRevaluations

Closing balance – 30/6/16

Purchases (GBV)Disposals (WDV)Depreciation and impairment

Closing balance – 30/6/17 3,465 141,128 1,368 2,184 1,244 130,122

1,794 (34)

(1,275) – (54) (46)

2,538 (161) – – (195)

– – –

– 135 –

35 –

(330) (3) (5) – (1,713)

– – 38 45 1,847

(213) – –

129,637

129,752

2,638 27 2,184 140,498 1,368 6 3,384

equipment fittings Total

2,528 11 31 2,268 140,523 3,253

– – – –

3

Plant Office Furniture Operationaland equipment and land

Buildingsspecial

Communityland

RoadsOtherstructures

1,397 1,283

84 145 (138)

1,255

–

– (213) 658 – – – – 38 – 1,151

– (84)

(335) (5) – – – (113) – 138 – 25

(4) – – (52) (28) (1,304) (1,728) –

22 2,720

573 –


Walcha Council



$ ’000

(4). Fair value measurements using significant unobservable inputs (level 3) continued

a. The following tables present the changes in level 3 fair value asset classes. (continued)


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentRevaluations


Purchases (GBV)Depreciation and impairmentRevaluations

Closing balance – 30/6/17 210,622 9,323 16,335 8,137 90 1,401 282,494 3,902

– – – 94 3,904 – – 3,999 –

24 918 118 – 23 1,675 (164) (20) – (60) (228) (73) (1) (54) (600)

1,432 277,420

– (38) – – 28 – – – 120 26 – 162 335

32,686

Otherand earth water

Bridges Footpaths Bulk Storm Water Sewer

32,607 3,756 210,622 9,419

Heritage

worksother Total

15,410 4,170 81 695 276,760

32,482 210,622 9,359 15,550 4,187 91 3,698

– – (7) (45) –

(153) (20) – (60) (208) (70) (1) (33) (545) – – – – 228 61 11 615 915

368 224 –


Walcha Council



$ ’000

(4). Fair value measurements using significant unobservable inputs (level 3) continued

a. The following tables present the changes in level 3 fair value asset classes. (continued)


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentRevaluations


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairment

Closing balance – 30/6/17 3,198

– – – – – (4) (7)

– – – 3,080 22 – – 95

(11) –

(893) – – – – 2,503 – – 2,503 – – – – (893) –

– – –

Asset WIP Tip QuarryclassAsset

– – – – 541 111 78

here

730

class class class classAsset Asset Asset

–

here here here here Total

– – – – – (332) – – (332) – – – – – 1,260 – – 1,260 – – – – – – (18) (5) (23) – – – – – – (67) 29 (38)

– – 1,470 26 102 1,598 – – –


Walcha Council



$ ’000

(4). Fair value measurements using significant unobservable inputs (level 3) (continued)

b. Significant unobservable valuation inputs used (for level 3 asset classes) and their relationship to fair value.

The following table summarises the quantitative information relating to the significant unobservable inputs used in deriving the various level 3 asset class fair values.

I,PP&E

Plant and equipment

Office equipment

Furniture and fittings

Operational land

Community land

2,720 Cost approach - Gross replacement cost - Remaining useful life - Residual value

3 Cost approach - Gross replacement cost - Remaining useful life - Residual value

22 Cost approach - Gross replacement cost - Remaining useful life - Residual value

2,184 Market approach - Similar local property prices - Alternative use

1,368 Market approach - Unimproved capital value from valuer general

Fairvalue(30/6/17)$’000

Valuationtechnique/s

UnobservableinputsClass


Walcha Council



$ ’000


b. Significant unobservable valuation inputs used (for level 3 asset classes) and their relationship to fair value. (continued)


I,PP&E (cont'd)

Buildings special

Other structures

Roads

Bridges

3,902 Cost approach - (depreciated replacement cost)

- Gross replacement cost - Asset condition - Remaining useful life - Residual value





Footpaths & other road assets





ClassFairvalue(30/6/17)$’000


Unobservableinputs


Walcha Council



$ ’000




I,PP&E (cont'd)

Bulk earth works

Storm water

Water

Sewer

Heritage 90 Cost approach - Gross replacement cost - Remaining useful life - Residual value

8,137 Cost approach - (replacement cost)






210,622 Cost approach - (depreciated replacement cost) - Gross replacement cost



Unobservableinputs


Walcha Council



$ ’000




I,PP&E (cont'd)

Other

Tips

Quarry

(5). Highest and best use

All of Council’s non-financial assets are considered to being utilised for their highest and best use.

Unit cost assumptions for rehab rates, discount rates, CPI and regulation changes

1,400 Cost approach - Gross replacement cost - Remaining useful life - Residual value

95 Cost approach Unit cost assumptions for rehab rates, discount rates, CPI and regulation changes

22 Cost approach



Unobservableinputs


Walcha Council


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 benefitsTermination benefitsTotal

33,488 668,327

Actual2017

566,568 68,271


Walcha Council


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

Rent for office spaceLandscaping worksEmployee expenses relating to close family members

Council pays rent to a local real estate agent for office space. The principal is a related party to a KMP. The office is owned by an interstate company.Council contracts to a local company for treelopping and other services. The company has a KMP as a director. All transactions are at arms length and major jobs are quoted on.Close family members are employed bu Council under the Local Government Award. All were employed on an arms length basis. There are two close family members currently employed by Council.

Value of Outstanding

during year (incl. loans and debts expensecommitments) outstanding recognised

Terms and conditions Provisions Doubtfultransactions balance for doubtful debts

1 11 – 7 days – –Note $'000 $'000 $'000 $'000

3 161 – 7 days – –2 24 – 7 days – –

12

3


INDEPENDENT AUDITOR’S REPORT Report on the general purpose financial statements

Walcha Council

To the Councillors of Walcha Council

Opinion I have audited the accompanying financial statements of Walcha 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 Responsibility 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 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 those financial statements on 13 October 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.


http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf

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.

James Sugumar Director, Financial Audit Services

25 October 2017 SYDNEY


Mayor Eric Noakes Walcha Council PO Box 2 WALCHA NSW 2354

25 October 2017

Dear Mayor Noakes

Report on the Conduct of the Audit

Audit for the year ended 30 June 2017

Walcha Council

I have audited the general purpose financial statements of Walcha Council (the Council) for the year ended 30 June 2017 as required by section 415 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.

INCOME STATEMENT

Operating result

2017 2016 Variation

$m $m %

Rates and annual charges revenue

4.4 4.3 2.3

Grants and

contributions revenue 8.6 5.6 53.6

Total expenses 11.8 12.8 (7.8)

Operating result

for the year 5.4 3.4 58.8

Contact: James Sugumar

Phone no: 02 9275 7100

Our ref: D1727423/1800


Our insights inform and challenge government to improve outcomes for citizens

2

The increase in Rates and Annual Charges revenue was mainly due to the 1.8 per cent rate increase for the year ended 30 June 2017.

Grants and Contributions revenue increased due to early receipt of the 2017–18 Financial Assistance Grant and Roads and Maritime Services contribution.

The drop in total expenses of $1.0 million was attributable to reduced Materials and Contracts expenditure. In comparison to the prior year, Council spent more on infrastructure projects which were capitalised.

The operating result for the year grew by $2.0 million mainly due to the increase in grants and contributions complemented by a reduction in expenses as noted above.

STATEMENT OF CASH FLOWS

Net cash flows increased by $1.7 million from the previous year in line with the growth in operating result.

FINANCIAL POSITION

Cash and Investments

Restricted Cash and Investments

2017 2016 Commentary

$m $m

External restrictions 1.5 1.8 Cash and investments increased by $1.8 million in line with the increased operating result.

The ratios of restricted and unrestricted cash and investments has remained consistent year on year.

Externally restricted funds include:

- water and sewer fund $1.3 million

- other specific purpose fund $0.2 million.

Internally restricted funds include:

- plant and infrastructure replacement fund $1.5 million

- employee leave entitlements fund $0.6 million

- quarry remediation fund $0.2 million.

Internal restrictions 2.8 2.3

Unrestricted 4.9 3.3

Total cash and investments

9.2 7.4

-2.0

0.0

2.0

4.0

6.0

8.0

2015 2016 2017

$ m

illi

on

Year ended 30 June

Statement of Cash Flows

Net cash flow Cash and cash equivalents



3

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 Special Schedule 7.

Operating performance ratio

Council exceeded the benchmark of greater than zero per cent.

This ratio increased by 2.32 per cent from previous year due to early receipt of the 2017–18 Financial Assistance Grant.

The ‘operating performance 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

Council’s own source operating revenue ratio was below the benchmark.

The ratio was unfavourably impacted by the early receipt of the 2017–18 Financial Assistance Grant.

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 exceeded the benchmark of 1.5 times.

Council has sufficient liquid assets to meet its liabilities as and when they fall due.

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.

6.04

14.3416.66

0

5

10

15

20

2015 2016 2017

Ratio%

Year ended 30 June

Operating performance ratio

Operating performance ratio Industry benchmark > 0%

69.40 65.3050.32

0

20

40

60

80

2015 2016 2017

Ratio%

Year ended 30 June

Own source operating revenue ratio

Own source operating revenue ratioIndustry benchmark > 60%

2.59

4.59 4.54

0

1

2

3

4

5

2015 2016 2017

Ratiox

Year ended 30 June

Unrestricted current ratio

Unrestricted current ratio Industry benchmark > 1.5x



4

Debt service cover ratio

Council exceeded the benchmark of greater than two times.

It continues to achieve this benchmark by large margins in the past three years.

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 continues to achieve the benchmark for outstanding rates and annual charges.

The ratio indicates that Council has been effective in collecting outstanding debts.

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 exceeded the benchmark of greater than three months.

This has increased from the prior year by 3.44 months due to decreased expenses and early cash receipt from the 2017–18 Financial Assistance Grant.

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.

23.87

37.48 38.27

0

10

20

30

40

50

2015 2016 2017

Ratiox

Year ended 30 June

Debt service cover ratio

Debt service cover ratio Industry benchmark > 2x

4.333.25 3.35

0

2

4

6

8

10

12

2015 2016 2017

Ratio%

Year ended 30 June

Rates and annual charges outstanding ratio

Rates and annual charges outstanding ratioIndustry benchmark < 10%

7.1 7.2

10.64

02468

1012

2015 2016 2017

Ra

tio

(mo

nth

s)

Cash expense cover ratio

Cash expense cover ratioIndustry benchmark > 3 months



5

Building and infrastructure renewals ratio

Council exceeded the benchmark of 100 per cent this year.

The ratio moved up significantly due to Council increasing its asset renewal expenditure by $4.6 million.

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 information contained in 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 their key management personnel

nature of their related party relationships

amount and nature of their related party transactions, and outstanding balances.

Council Entities

I did not audit the following council entities:

Central Northern Regional libraries (disclosed in Note 19 as joint arrangement)

Statewide Limited (disclosed in Note 19 as an associate)

StateCover Limited (disclosed in Note 19 as an associate)

Namoi Councils Joint Organisation (disclosed in Note 19 as a joint arrangement).

The arrangements for the audit of the above entities will be explored as part of the Audit Office’s transition strategy to deliver our new mandate.

91.34 71.93

309.16

0

100

200

300

400

2015 2016 2017

Ratio%

Year ended 30 June

Building and infrastructure renewals ratio

Building and infrastructure renewals ratioIndustry benchmark > 100%



6

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.

James Sugumar Director, Financial Audit Services

cc: Mr Jack O’Hara, General Manager Ms Rosemary Strobel, Chief Financial Officer Mr Tim Hurst, Acting Chief Executive of the Office of Local Government


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