Meeting Notice
The Ordinary Council Meeting
of Central Coast Council
will be held in the Central Coast Council Chambers,
2 Hely Street, Wyong
on Tuesday 29 October 2024 at 6.30pm,
for the transaction of the business listed below:
The Public Forum
will commence at 6.00pm, subject to any registered speaker/s to items listed on
this agenda.
Further
information and details on registration process: www.centralcoast.nsw.gov.au/council/meetings-and-minutes/council-meetings
Oath or Affirmation of Office
Councillors are reminded of their Oath or Affirmation of Office to undertake their duties in the best interests of the people of the Central Coast and Council and to faithfully and impartially carry out the functions, powers, authorities, and discretions vested in them under the Local Government Act 1993, or any other Act to the best of their ability and judgement. Councillors are also reminded of their obligations under the Code of Conduct to disclose and appropriately manage conflicts of interest.
Disclosures of Interest
Councillors are reminded of their obligation under Council’s Code of Conduct to declare any conflict of interest in a matter considered by Council.
Recording
In accordance with the NSW Privacy and Personal Information Protection Act 1998, you are advised that all discussion held during the Open Council meeting is recorded for the purpose of livestreaming the public meeting and verifying the minutes. This will include any public discussion involving a councillor, staff member or a member of the public.
2 Reports
2.1 Presentation of 2023-24 Financial Statements and related Auditor's Reports for Central Coast Council and Central Coast Council Water Supply Authority........................................................ 5
David Farmer
Chief Executive Officer
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Item No: 2.1 |
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Title: Presentation of 2023-24 Financial Statements and related Auditor's Reports for Central Coast Council and Central Coast Council Water Supply Authority |
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Department: Corporate Services |
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29 October 2024 Ordinary Council Meeting |
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Reference: F2023/00021 - D16441414
Author: Michelle Best, Section Manager Financial Accounting and Assets
Manager: Emma Galea, Chief Financial Officer
Executive: Marissa Racomelara, Director Corporate Services
That Council:
1 Notes the 2023-24 Central Coast Council audited Financial Statements including the auditor’s reports as presented to Council, in accordance with s.419(1) of the Local Government Act 1993 (LG Act).
2 Adopts the 2023-24 Central Coast Council audited Financial Statements as presented in accordance with ss.413(2)(c) and 377(1)(k) of the LG Act, and cl.215(1)(a) of the Local Government (General) Regulation 2021.
3 Adopts the 2023-24 Central Coast Council Water Supply Authority audited Financial Statements as presented in accordance with s.45 of the Water Management Act, Australian Accounting Standards and other pronouncements of the Australian Accounting Standards Board.
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Report purpose
To present the final 2023-24 audited Financial Statements for Central Coast Council and Central Coast Council Water Supply Authority.
This report summarises the amendments made to the Financial Statements after the 2023-24 Draft Financial Statements were presented to Council on 27 August 2024.
Executive Summary
The 2023-24 Draft Financial Statements were presented to Council on 27 August 2024, and were referred to audit in accordance with Council’s resolution. The NSW Audit Office have now finalised their audit and provided audit clearance on Friday 18 October 2024, resulting in an unmodified opinion being issued. |
Background
The 2023-24 Draft Financial Statements for Central Coast Council and Central Coast Council Water Supply Authority were presented to Council at its meeting held on 27 August 2024 and Council resolved, in part, as follows:
310/24 Resolves for the purposes of s. 413(1) of the LG Act, to refer the 2023-24 Draft Financial Statements for Central Coast Council and the 2023-24 Draft Financial Statements for Central Coast Council Water Supply Authority for the year ended 30 June 2024 to the Audit Office of New South Wales, for external audit.
312/24 Delegates to the Chief Executive Officer to set the date for the meeting to present the audited 2023-2024 financial reports, together with the auditor's reports, to the public in accordance with s418(1)(a), (b) of the LG Act.
Report
Central Coast Council
The 2023-24 Central Coast Council Financial Statements include the General Purpose Financial Statements, Special Purpose Financial Statements and Special Schedules, which include all of Council’s activities. The 2023-24 Central Coast Council Financial Statements are included as (Attachment 1) to this report.
The Central Coast Council Financial Statements have been prepared in accordance with the requirements of the Local Government Act 1993 (LG Act), the Local Government (General) Regulation 2021 (LG Reg), and the relevant accounting and reporting requirements of the Office of Local Government prescribed Code of Accounting Practice and Financial Reporting 2023-24 and Australian Accounting Standards.
In accordance with s. 413(1) of the LG Act, Council must prepare financial statements for each year, and must refer them for audit as soon as practicable after the end of that year.
The Audit, Risk and Improvement Committee met on 22 August 2024 and reviewed the draft 2023-24 Central Coast Council Financial Statements. The Committee recommended that Council refer the 2023-24 Draft Central Coast Council Financial Statements to audit.
Pursuant to resolution 310/24 of 27 August 2024, the 2023-24 Draft Financial Statements were referred to Council’s external auditor, The Audit Office of New South Wales.
The audit reports from The Audit Office of New South Wales, pursuant to s. 419(1) of the LG Act, will be presented to this meeting of Council.
It is proposed that Council now formally adopt the 2023-24 Central Coast Council Financial Statements. The Financial Statements must be lodged with the Office of Local Government no later than 31 October 2024. Adherence to this deadline is imperative to ensure legislative compliance as well as to maintain Council’s reputation within the community.
The audited Financial Statements will also subsequently be included in Council’s Annual Report for 2023-24.
Central Coast Council Water Supply Authority
The 2023-24 Central Coast Council Water Supply Authority Financial Statements have been prepared in accordance with the Water Management Act and Australian Accounting Standards. The 2023-24 Central Coast Council Water Supply Authority Financial Statements are included as (Attachment 2) to this report.
The Audit, Risk and Improvement Committee met on 22 August 2024 and reviewed the 2023-24 Central Coast Council Water Supply Authority Financial Statements. The Committee recommended that Council refer the 2023-24 Draft Central Coast Council Water Supply Authority Financial Statements to audit.
Pursuant to resolution 310/24 of 27 August 2024, the 2023-24 Draft Financial Statements of Central Coast Council Water Supply Authority were referred to Council’s external auditor, The Audit Office of New South Wales.
It is proposed that Council now formally adopt the 2023-24 Central Coast Council Water Supply Authority Financial Statements.
Amendments to the draft 2023-24 Financial Reports referred to audit
During the conduct of the audit of the 2023-24 Draft Financial Statements, a number of audit adjustments have arisen and have been made to the final Financial Statements. The changes have not impacted the Operating Result or the overall Balance Sheet as referred to audit.
The tabled amendments impact some Notes to the Financial Reports in the General Purpose Financial Statements, Water Supply Authority Financial Statements and Special Purpose Financial Statements.
Changes are mainly disclosure, classification or presentation matters. In addition to rounding changes, other changes include correction of minor typographical errors, and updates to wording to improve clarity of the Notes.
The key disclosure changes that have been made include the following items which are reflected in the audited Financial Statements attached to this report:
· Updated the split between current and non-current Contract Liabilities
· Updated Statement of Financial Position, Statement of Cash Flows and related notes to reflect advance receipt of 2024-25 Financial Assistance Grant as cash received rather than receivables
· Updated Water Supply Authority Income Statement to include internal revenue in annual charges instead of netting off against internal expenses
· Amended the restricted cash note to increase the restriction for Domestic Waste Management and equally reduce unrestricted cash
A summary of audit adjustments to amounts in the primary Financial Statements within the Central Coast Council Financial Statements referred to audit is provided below:
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Income Statement |
As reported on 27
August 2024 |
As per the Audited
Financial Statements |
Movement Increase/(Decrease) $'000 |
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Income from operations |
716,456 |
716,456 |
0 |
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Expenditure from operations |
677,856 |
677,856 |
0 |
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Net Operating Result for the year |
38,600 |
38,600 |
0 |
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Income from Capital Grants and Contributions |
107,166 |
107,166 |
0 |
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Statement of Financial Position |
As reported on 27
August 2024 |
As per the Audited
Financial Statements |
Movement Increase/(Decrease) $'000 |
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Current Assets |
496,370 |
496,370 |
0 |
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Non-Current Assets |
9,363,866 |
9,363,866 |
0 |
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Total Assets |
9,860,236 |
9,860,236 |
0 |
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Current Liabilities |
224,874 |
220,368 |
(4,506) |
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Non-Current Liabilities |
268,589 |
273,095 |
4,506 |
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Total Liabilities |
493,463 |
493,463 |
0 |
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Net Assets |
9,366,773 |
9,366,773 |
0 |
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Equity |
9,366,773 |
9,366,773 |
0 |
Comparison of 2023–24 financial results to prior financial year
The comparison of the financial performance for Council in the 2023-24 Financial Statements (1 July 2023 to 30 June 2024) is to the 2022-23 financial year (1 July 2022 to 30 June 2023).
Central Coast Council Financial Statements
Operating
Result
The operating surplus before capital grants and contributions for the 2023-24 financial year is $38.6M. This result is an improvement on the prior year result which was a surplus of $34.8M. The operating result including capital grants and contributions is a surplus of $145.8M. This is $16.8M less than the result in the prior year, however, still represents a good result.
The below table compares the operating result for the 2023-24 financial to the 2022-2023 financial year.
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2023-24 |
2022-23 |
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Income from operations |
716,456 |
665,617 |
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Expenditure from operations |
677,856 |
630,816 |
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Operating result for continuing operations (excluding capital grants and contributions) |
38,600 |
34,801 |
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Income from capital grants and contributions |
107,166 |
127,726 |
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Net operating result (including capital grants and contributions) |
145,766 |
162,527 |
Statement of Financial Position
The Statement of Financial Position details the value of what Council owns (“assets”) and what Council owes (“liabilities”). Within these headings, “Current” means an amount that is due to be realised within the next 12 months whilst “Non-current” indicates an asset or liability that is longer term in nature.
For the movement between financial years, a positive movement means that the values have increased from 30 June 2023 to 30 June 2024.
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Statement of Financial Position |
30 June 2024 |
30 June 2023 |
Movement |
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Assets |
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Current Assets |
496,370 |
446,102 |
50,268 |
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Non-Current Assets |
9,363,866 |
9,020,130 |
343,736 |
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Total Assets |
9,860,236 |
9,466,232 |
394,004 |
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Liabilities |
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Current Liabilities |
220,368 |
290,669 |
(70,301) |
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Non-Current Liabilities |
273,095 |
279,758 |
(6,663) |
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Total Liabilities |
493,463 |
570,427 |
(76,964) |
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Net Equity |
9,366,773 |
8,895,805 |
470,968 |
Current assets
Current assets increased by $50.3M mainly due to an $8.4M increase in current investments, and an increase of $43.4M in cash and cash equivalents.
Non-current assets
Non-current assets increased by $343.7M mainly attributable to an increase in Infrastructure, Plant, Property and Equipment of $360.7M. This has been offset by a decrease of $12.7M in non-current investments.
Current Liabilities
Current liabilities decreased by $70.3M mainly attributable to an $84.0M decrease in current borrowings (mostly attributable to the early repayment of a significant loan in December 2023, that was shown as a current liability in the prior financial year) offset by a $9.5M increase in payables.
Non-Current Liabilities
Non-current liabilities decreased by $6.7M mainly due to reduction in non-current borrowings of $10.2M, offset by an increase in non-current contract liabilities of $2.2M.
Financial Performance Benchmarks
Note G6 - Statement of Performance Measures, within the General Purpose Financial Statements includes various indicators mandated by the Office of Local Government (OLG) and the applicable benchmark for all councils to assess their performance against.
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2024 |
2023 |
OLG Benchmark |
2024 Result |
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Operating Performance Ratio |
6.04% |
6.15% |
> 0.00% |
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Own Source Operating Revenue Ratio |
80.44% |
76.62% |
> 60.00% |
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Unrestricted Current Ratio |
6.54x |
2.64x |
> 1.50x |
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Debt Service Cover Ratio |
2.15x |
5.64x |
> 2.00x |
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Rates, Annual Charges, Interest Outstanding Percentage |
7.07% |
6.6% |
< 5.00% |
X |
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Cash Expense Cover Ratio |
6.39 months |
8.34 months |
> 3 months |
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Operating Performance Ratio - measures how well Council contained operating expenditure within operating revenue. Council has achieved this benchmark in 2023-24, maintaining a small operating surplus as per the previous year. This is due to the 2022-23 ratio including the current portion of the emergency loan that was subsequently paid in the 2023-24 financial year.
Own Source Operating Revenue Ratio - measures Council’s fiscal flexibility and the degree of reliance on external funding sources such as operating grants and contributions. Council’s performance is significantly above the benchmark in 2023-24, indicating that Council is not heavily reliant on grant funding.
Unrestricted Current Ratio – measures the adequacy of working capital and Council’s ability to satisfy obligations in the short term for the unrestricted activities of Council. Council has achieved this benchmark in 2023-24. The ratio has significantly improved in 2023-24 compared to the previous year. This is due to the 2022-23 ratio including the current portion of the emergency loan which was subsequently paid in the 2023-24 financial year.
Debt Service Cover Ratio - measures the availability of operating cash to service debt including interest, principal, and lease payments. Council has achieved this ratio in 2023-24 on a consolidated basis, noting that for the General Fund the benchmark was not met due to the one-off payment of one of the emergency loans. Accordingly, this ratio is expected to meet benchmark going forward.
Rate 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. Council has not achieved this ratio in 2023-24. Council actively monitors this ratio to ensure optimal management of cashflow. This ratio is impacted by the water billing cycle resulting in this ratio not being met for the Water and Sewer Funds. As at 30 June each year the amounts associated with the latest cycle are not due, therefore inflating the outstanding amounts. Council met this ratio for other outstanding rates and charges. It is noted that the approach to debt recovery includes consideration of ratepayers’ ability to pay, which during 2023-24 has been impacted by economic conditions resulting in cost-of-living challenges for many in the Central Coast local government area. It is noted that the ratio for 2023-24 does not have a significant impact on Council’s liquidity.
Cash Expense Cover Ratio - this liquidity ratio indicates the number of months a Council can continue paying for its immediate expenses without additional cash inflow. Council’s performance is above the benchmark in 2023-24.
Report on Infrastructure Assets
Council’s Special Schedules include the various indicators mandated by the OLG and the applicable benchmark for all councils to assess their performance against, regarding infrastructure assets. Council’s performance is summarised below:
Local Government Industry Indicators |
2024 |
2023 |
OLG Benchmark |
2024 Result |
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Buildings and Infrastructure Renewals Ratio |
96.55% |
99.25% |
> 100.00% |
X |
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Infrastructure Backlog Ratio |
2.06% |
2.28% |
< 2.00% |
X |
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Asset Maintenance Ratio |
53.81% |
64.91% |
> 100% |
X |
For the 2023-24 financial year Council has not met the Infrastructure Assets benchmarks. Regarding asset renewal, the performance is close to benchmark, noting that for the General Fund and the Sewer Fund Council achieved over 104% which is better than the benchmark. Renewal expenditure on water assets was at 67.22% being under the benchmark and impacting on the overall consolidated result ratio.
Regarding the backlog ratio, Council met the ratio for the General Fund but not for the Water and Sewer Funds. The positive result for the General Fund reflects a significant investment in asset renewal over recent years.
Council underperformed in the asset maintenance ratio for the General Fund and the Water Fund. For its General Fund assets Council achieved 45.15% against a benchmark of >100%, which indicates that Council needs to consider increased investment in asset maintenance. This increased investment will impact on Council’s operating result going forward and will need to be considered as part of Council’s annual update of its Long-Term Financial Plan.
Details regarding infrastructure assets ratios by Fund are included in Special Schedules included as part of Attachment 1 to this report.
Prior Year Adjustments
As part of preparing the 2023-24 Draft Financial Statements, it was identified that a prior period adjustment was required regarding some assets. During 2023-24 Council recognised roads, drainage, bulk earthworks, footpaths, water and sewer assets that had been constructed by others and handed over to Council prior to 2023-24. The Financial Statements have been adjusted to reflect that these assets relate to periods earlier than the reporting period. These errors have been corrected by restating the balances at the beginning of the earliest period presented (1 July 2022) and taking the adjustments through to accumulated surplus at that date. Comparatives for 2022-23 have also been restated, where applicable to reflect the correction of errors. The total adjustment is $15.8M and is reflected as an increase in equity.
Water Supply Authority (WSA) Financial Statements
The 2023-24 Water Supply Authority Financial Statements are attached as (Attachment 2) to this report.
Operating Result
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2023-24 |
2022-23 |
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Income from operations |
241,532 |
201,431 |
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Expenditure from operations |
240,243 |
202,632 |
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Net operating result (excluding capital grants and contributions) |
1,289 |
(1,201) |
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Income from capital grants and contributions* |
26,833 |
49,981 |
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Net operating result (including capital grants and contributions) |
28,122 |
48,780 |
Statement of Financial Position
For the movement between financial years a positive movement means that the values have increased from 30 June 2023 to 30 June 2024.
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Statement of Financial Position |
30 June 2024 |
30 June 2023 |
Movement |
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Assets |
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Current Assets |
175,020 |
150,394 |
24,626 |
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Non-Current Assets* |
4,667,285 |
4,482,442 |
184,843 |
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Total Assets |
4,842,305 |
4,632,836 |
209,469 |
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Liabilities |
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Current Liabilities |
79,670 |
83,790 |
(4,120) |
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Non-Current Liabilities |
151,772 |
155,598 |
(3,826) |
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Total Liabilities |
231,442 |
239,388 |
(7,946) |
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Net Equity |
4,610,863 |
4,393,448 |
217,415 |
*2023 figures have been restated
Stakeholder Engagement
The 2023-24 Central Coast Council audited Financial Statements were considered by the Audit Risk and Improvement Committee on 21 October 2024. The Committee were also provided with an overview of the conduct of the audit by the NSW Audit Office and have endorsed the presentation of the audited Financial Statements to Council recommending adoption of the Financial Statements.
Financial Considerations
Financial Year (FY) Implications
The proposal has cost financial implications for the current FY only.
Budget and Long-Term Financial Plan (LTFP) Impact.
The FY adopted budget includes funding for this proposal.
The audit of Council’s Financial Statements has been undertaken by the Audit Office of NSW at an agreed engagement fee which is included in Council’s budget.
Link to Community Strategic Plan
Theme 4: Responsible
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Choose Focus Area |
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R-G3: Provide leadership that is transparent and accountable, makes decisions in the best interest of the community, ensures Council is financially sustainable and adheres to a strong audit process. |
Risk Management
The
Financial Statements are audited by the Audit Office of New South Wales who, amongst other things, form an
opinion on the Financial Statements whether:
· 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; and
that the Financial Statements:
· have been prepared, 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 2024, 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.
Options
In accordance with s.48 (2) of the LG Act, Council must present its 2023-24 audited Financial Statements and it is a legislative requirement for Councils to adopt annual Financial Statements.
Critical Dates or Timeframes
Council must lodge the audit Financial Reports with the Office of Local Government by no later than 31 October 2024.
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1⇩ |
Central Coast Council 2023-2024 Financial Statements |
Provided Under Separate Cover |
D16466409 |
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2⇩ |
Central Coast Council Water Supply Authority 2023-2024 Financial Statements |
Provided Under Separate Cover |
D16466421 |
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2.1 |
Presentation of 2023-24 Financial Statements and related Auditor's Reports for Central Coast Council and Central Coast Council Water Supply Authority |
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Attachment 1 |
Central Coast Council 2023-2024 Financial Statements |
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Presentation of 2023-24 Financial Statements and related Auditor's Reports for Central Coast Council and Central Coast Council Water Supply Authority |
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Attachment 2 |
Central Coast Council Water Supply Authority 2023-2024 Financial Statements |
