There are signs that Queensland councils are recovering from the financial losses associated with Covid-19, but more than half are still at risk of being financially unsustainable.
A report to local governments The State Audit Office says the sector’s financial stability has “slightly” improved over the past year and councils are beginning to recover.
But financial resilience remains below pre-pandemic levels, with about 60 percent still at moderate or high risk of not being financially resilient.
Despite this, 35 councils were able to make operating profits in 2020-21, which is an improvement over last year and matched the results before the pandemic.
“Councils are recovering from the financial impact of the COVID-19 pandemic,” the report said.
“For the 2020-21 financial year, 35 councils generated operating profit. As a result, fewer boards are at moderate or high risk of not being financially sustainable.
“While it’s encouraging, 45 boards are still at moderate or high risk of not being financially sustainable.”
High-risk problems are still unresolved
The report notes improved advice from councils on financial systems and processes, but says most “high-risk” issues have not yet been resolved in more than a year. A total of 47 councils had at least one significant shortcoming.
The audit identified 86 “significant deficiencies” that still needed to be addressed since the last audit, particularly with regard to asset management and valuation, and ongoing problems with risk management, procurement and contracts.
Forty-five councils did not have sufficient oversight to protect their information systems, with the most common shortcomings related to access to the system.
“Boards need to provide their employees with the right level of access to information systems to fulfill their role in the organization, but no more,” the report recommends.
Lack of internal audit systems
The report says 15 boards did not have an audit committee, and 12 violated the law regarding internal audit requirements. As of June 30, 2021, 20 councils did not have the function of an audit commission.
“As of June 30, 2021, there are 15 councils left that did not have an audit commission. In addition, two councils had audit commissions that did not meet during the year, and three councils had commissions that met only once.
“Councils that met less than twice a year did not meet the minimum requirements of the law.”
Financial statements are still lagging behind
The Control Service also found that the boards were late in approving the financial statements: only 36 boards certified their reports two weeks before the October 31 deadline.
It provides a number of recommendations, including that all boards should review their asset management plans to determine future funding needs, and should improve liquidity management by reporting unlimited cash flow ratios and unlimited cash balances in monthly financial statements. presented at board meetings.
At the time of the report, the auditor had certified all but two of the 77 state councils.
See how financial the results of your board are compared to others here.
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