AGENDA

Late Reports

 

Council Briefing

 

21 May 2019

 

Time:

6pm

Location:

Administration and Civic Centre

244 Vincent Street, Leederville

 

 

 

David MacLennan

Chief Executive Officer

 


Council Briefing Agenda                                                                                             21 May 2019

Order Of Business

 

7          Corporate Services. 4

7.4             Financial Statements as at 30 April 2019. 4

7.10           Adoption of Council Election Period Policy. 91

 

 

 


Council Briefing Agenda                                                                                             21 May 2019

7             Corporate Services

7.4          Financial Statements as at 30 April 2019

TRIM Ref:                  D19/72210

Author:                     Nirav Shah, Coordinator Financial Services

Authoriser:                Michael Quirk, Executive Director Community Engagement

Attachments:             1.       Financial statements as at 30 April 2019  

 

Recommendation:

That Council RECEIVES the financial statements for the month ended 30 April 2019 as shown in Attachment 1.

 

Purpose of Report:

To present the statement of financial activity for the period ended 30 April 2019.

Background:

Regulation 34 (1) of the Local Government (Financial Management) Regulations 1996 requires a local government to prepare each month a statement of financial activity including the sources and applications of funds, and as compared to the budget.

Details:

The following documents, included as Attachment 1, comprise the statement of financial activity for the period ending 30 April 2019:

 

Note

Description

Page

 

 

 

1.

Statement of Financial Activity by Program Report and Graph

1-3

2.

Statement of Comprehensive Income by Nature or Type Report

4

3.

Net Current Funding Position

5

4.

Summary of Income and Expenditure by Service Areas

6-64

5.

Capital Expenditure and Funding and Capital Works Schedule

65-77

6.

Cash Backed Reserves

78

7.

Rating Information and Graph

79-80

8.

Debtors Report

81

9.

Beatty Park Leisure Centre Financial Position

82

 

Comments on the Statement of Financial Activity (as at Attachment 1):

 

Operating revenue is reported separately by ‘Program’ and ‘Nature or Type’ respectively. The significant difference between the two reports is that operating revenue by ‘Program’ includes ‘Profit on sale of assets’ and the report for Nature or Type’ includes ‘Rates revenue’.

 

Revenue by Program is tracking higher than the year to date budgeted revenue by $690,430 (4%). The following material items relating to Community Amenities contributed to this position:

 

-      Recognition of monies transferred from trust for contributions relating to Percent of Art -  $200,000;  and

-      Recognition of additional income due to unclaimed monies that have been held in trust for greater than 10 years - $321,248. This is in accordance with s.6.9 (4) of the Local Government Act 1996.

 

Revenue by Nature or Type is tracking higher than the budgeted revenue by $516,103. The following items materially contributed to this position:

 

·       A budget to actual surplus of $379,504 in ‘Operating grants, subsidies and contributions’ that is materially contributed from the receipt of monies from percentage of art contributions ($200,000);

·       A budget to actual surplus of $148,633 in ‘Other revenue’ that is materially contributed from the recognition of unclaimed monies from the trust fund ($321,248). However, this increase is offset by $153,910 from recoups for ongoing variable outgoings not being finalised as yet;

·       A budget to actual surplus of $164,440 due to an increase in ‘Interest earnings’ from investments; and

·       A budget to actual deficit in revenue from interim rates by $100,742 due to a decline in new development for the current financial year.

 

Expenditure by Program reflects an under-spend of $1,256,745 (3%) compared to the year to date budget.

Majority of the programs reflect an under-spend, however ‘Transport’ reflects an over-spend of $112,434 largely contributed by the budget phasing of depreciation expenditure relating to roads.

 

Expenditure by Nature or Type reflects an under-spend of $1,083,263 (2%) compared to the year to date budget. The following items materially contributed to this position:

 

·       Materials and contracts reflects an under-spend of $1,739,004. This variance is largely contributed by timing of on-going works and operating projects that have not commenced as yet resulting in the works being carried forward to 2019/20;

·       Other expenditure reflects an under-spend of $414,861 largely contributed to operating projects not having commenced and will be carried forward to 2019/20;

·       Employee costs reflects an over-spend of $591,680 largely contributed to budget phasing due to April having 3 payroll payment runs and a one-off redundancy payments;

·       Depreciation on non-current assets reflects an over-spend of $433,315 largely due to budget phasing for depreciation relating to roads. The overall impact of depreciation will be on par with the budgeted amount at the end of the financial year.

 

Opening Surplus Bought Forward – 2018/19

 

The opening net surplus position brought forward for 2018/19 was $5,524,405 as stated in the 2017/2018 audited financial statements.

 

As at 30 April 2019, the surplus amount is $13,511,705 compared to the year to date budgeted amount of $8,771,056. This variance is largely comprised of a reduction in expenditure for works relating to capital works. The table in Note 5 provides a summarised breakdown of the expenditure activity in each asset category.

 

Content of Statement of Financial Activity

 

An explanation of each report in the Statement of Financial Activity (Attachment 1), along with some commentary, is below:

 

1.         Statement of Financial Activity by Program Report (Note 1 Page 1)

 

This statement of financial activity shows operating revenue and expenditure classified by Program.

 

2.         Statement of Comprehensive Income by Nature or Type Report (Note 2 Page 4)

 

This statement of financial activity shows operating revenue and expenditure classified by Nature or Type.

 

3.         Net Current Funding Position (Note 3 Page 5)

‘Net current assets’ is the difference between the current assets and current liabilities; less committed assets and restricted assets.

 

4.         Summary of Income and Expenditure by Service Areas (Note 4 Page 6 – 64)

 

This statement shows a summary of operating revenue and expenditure by service unit including variance commentary.


 

5.         Capital Expenditure and Funding Summary (Note 5 Page 65 - 77)

 

The Table below summarises the ‘2018/2019 capital expenditure budget by program’ as at 30 April 2019. The full capital works program is listed in detail in Note 5 of Attachment 1.

 

 

Current Budget

YTD

Budget

YTD

Actual

Remaining Budget

 

$

$

$

%

Land and Buildings

2,535,542

1,880,595

1,107,051

56.3%

Infrastructure Assets

7,474,682

6,927,400

3,898,516

47.8%

Plant and Equipment

2,972,882

2,018,351

856,429

71.2%

Furniture and Equipment

969,870

848,414

99,056

89.8%

Total

13,952,976

11,674,760

5,961,052

57.3%

FUNDING

Current Budget

YTD

Budget

YTD

Actual

Remaining Budget

 

$

$

$

%

Own Source Funding - Municipal

9,603,667

7,811,808

4,232,458

55.9%

Cash Backed Reserves

1,996,478

1,542,121

356,625

82.1%

Capital Grant and Contribution

1,872,868

1,872,868

1,089,780

41.8%

Other (Disposals/Trade In)

479,963

447,963

282,189

41.2%

Total

13,952,976

11,674,760

5,961,052

57.3%

 

Note:         Detailed analysis is included on page 65 - 77 of Attachment 1.

 

6.         Cash Backed Reserves (Note 6 Page 78)

 

The cash backed reserves schedule provides a detailed summary of the movements in the reserves portfolio, including transfers to and from the reserve. The balance as at 30 April 2019 is $13,153,249.

 

7.         Rating Information (Note 7 Page 79 – 80)

 

The notices for rates and charges levied for 2018/19 were issued on 26 July 2018.

 

The Local Government Act 1995 provides for ratepayers to pay rates by four instalments. The due dates for each instalment are:

 

First Instalment

31 August 2018

 

 

Second Instalment

31 October 2018

Third Instalment

04 January 2019

Fourth Instalment

04 March 2019

 

Total rates collected, as at 30 April 2019 is $34,739,356. Furthermore, the outstanding rates debtors balance is $1,169,721 including deferred rates ($95,513).

 

Final instalment notices have been issued to ratepayers that have defaulted on their instalment payments. Thereafter the debt will be handed over for further debt collection.

 

8.         Receivables (Note 8 Page 81)

 

Trade receivables outstanding as at 30 April 2019 is $2,495,126, of which $1,484,200 has been outstanding for over 90 days. Administration has been regularly following up all outstanding items by issuing reminders when they are overdue, subsequently initiating a formal debt collection process for when payments remain outstanding for long periods of time.

 

Below is a summary of the items that have been outstanding for over 90 days:

 

·        $1,326,087 (89.3%) relates to unpaid infringements (plus costs) over 90 days. Infringements that remain unpaid for more than two months are sent to the Fines Enforcement Registry (FER), which then collects the outstanding balance on behalf of the City for a fee. The debtor balance has improved by 2.5% ($186,705) compared to last month.

 

Due to the aged nature of some of the unpaid infringements, the provision for doubtful debts has been increased this year and an amount of $1,066,403 has been transferred to long term infringement debtors (non-current portion); and

 

·        $181,140 (12.2%) relates to cash in lieu of car parking debtors. Administration has entered into special payment arrangements with cash in lieu parking debtors that prefer to pay over a fixed term of five years.

 

9.         Beatty Park Leisure Centre – Financial Position report (Note 9 Page 82)

 

As at 30 April 2019, the operating deficit for the centre is $1,521,906 compared to the year to date budgeted amount of $1,450,905.

 

10.       Explanation of Material Variances (Note 4 Page 6 – 64)

 

The materiality thresholds used for reporting variances are 10% and/or $20,000 respectively. This means that variances will be analysed and separately reported when they are more than 10% (+/-) of the year to date budget or where that variance exceeds $20,000 (+/-). This threshold was adopted by Council as part of the budget adoption for 2018/19 and is used in the preparation of the statements of financial activity when highlighting material variance in accordance with Financial Management Regulation 34(1) (d).

 

In accordance to the above, all material variances as at 30 April 2019 have been detailed in the variance comments report in Attachment 1.

 

11.       Treatment of Assets Less Than $5,000

 

The following amendment has been made to s6.10 Regs.17 (A) (5) of the Local Government Act:

 

An asset is to be excluded from the assets of a local government if the fair value of the asset as at the date of acquisition by the local government is under $5,000.

 

As a result, Administration has reallocated the expenditure relating to the affected assets under this new threshold from capital to operating. The impact of this change is an increase in year to date operating expenditure by $240,642 resulting in a negative impact on the net position for the year.

 

Administration is currently reviewing the assets that have been acquired in the previous financial years and will perform a similar exercise to be fully compliant with the new legislative requirements.

Consultation/Advertising:

Not applicable.

Legal/Policy:

Section 6.4 of the Local Government Act 1995 requires a local government to prepare an annual financial report for the preceding year and other financial reports as prescribed.

 

Regulation 34 (1) of the Local Government (Financial Management) Regulations 1996 requires the local government to prepare a statement of financial activity each month, reporting on the source and application of funds as set out in the adopted annual budget.

 

A statement of financial activity and any accompanying documents are to be presented at an Ordinary Meeting of the Council within two months after the end of the month to which the statement relates.

 

Section 6.8 of the Local Government Act 1995, specifies that a local government is not to incur expenditure from its Municipal Fund for an additional purpose except where the expenditure is authorised in advance by an absolute majority decision of Council.

Risk Management Implications:

Low:    Provision of monthly financial reports to Council fulfils relevant statutory requirements and is consistent with good financial governance.

Strategic Implications:

Reporting on the City’s financial position is aligned to with the City’s Strategic Community Plan 2018-2028:

 

Innovative and Accountable

Our resources and assets are planned and managed in an efficient and sustainable manner.

Our community is aware of what we are doing and how we are meeting our goals.

Our community is satisfied with the service we provide.

We are open and accountable to an engaged community.

SUSTAINABILITY IMPLICATIONS:

Not applicable.

Financial/Budget Implications:

Not applicable.  


Council Briefing Agenda                                                                                               21 May 2019

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Council Briefing Agenda                                                                                             21 May 2019

7.10        Adoption of Council Election Period Policy

TRIM Ref:                  D19/72508

Author:                     Meluka Bancroft, Manager Governance, Property and Contracts

Authoriser:                David MacLennan, Chief Executive Officer

Attachments:             1.       Council Election Period Policy (draft)  

 

Recommendation:

That Council:

1.       RECEIVES the draft City Policy– “Council Election Period Policy”, at Attachment 1;

2.       AUTHORISES the Chief Executive Officer to provide local public notice of the new policy in Recommendation 1. above and invite public comments for a period of 21 days; and

3.       NOTES that at the conclusion of the public notice period any submissions received would be presented to Council for consideration.   

 

Purpose of Report:

To consider providing public notice of a policy to guide decision making in the lead up to local government elections – Council Election Period Policy.

Background:

During an election period the normal business of local government must continue and ordinary matters of administration still need to be addressed.

The City does not currently have a policy or established procedure to guide decision making in the lead up to and during a local government election.

 

The proposed draft policy provides guidance on decision making during the election period to protect the apolitical nature of the public sector and avoid the use of City resources in a manner that advantages a particular candidate.

The policy will ensure that during the election period the local government avoids: 

·   making major policy decisions;

·   making significant appointments; and

·   entering major contracts or undertakings.

Details:

The Council Election Period Policy will govern the following during the lead up period to a local government election:

 

(a)      Decisions made by Council;

(b)      Decisions made under delegated authority;

(c)      Decisions made administratively;

(d)      Promotional materials published by the City;

(e)      Discretionary community consultation;

(f)      Events and functions held by the City or other organisations;

(g)      Use of the City’s resources; and

(h)      Access to information held by the City.

 

The Council Election Period Policy will ensure all Elected Members are aware of their responsibilities during the lead up period to the election, which will result in a fair election process and transparent decision making during this time.

 

The proposed draft policy is in line with Federal, State and Local Government Caretaker Conventions.

Consultation/Advertising:

Pursuant to the City’s Policy No. 4.1.1 – ‘Adoption and Review of Policies’ public notice of the new policy for a period of 21 days is required. 

 

The public notice which will be provided is as follows:

 

·       Notice in the Perth Voice and Guardian Express;

·       Notice on the City’s website and social media; and

·       Notice on the notice board at the City’s Administration and Library and Local History Centre.

Legal/Policy:

·           City Policy No. 4.1.1 – Adoption and Review of Policies - prescribes the process for Council to adopt a new policy.

 

·           City Policy 4.1.5 – Community Consultation - specifies the community consultation required.

 

·           Sections 4.87, 5.93 and 5.103 of the Local Government Act 1995 set out the requirements local governments must comply with in the lead up to a local government election.

Risk Management Implications:

Low:  The proposed policy would meet the intent of the Local Government Act 1995, as it would assist in ensuring the City is efficient, effective and accountable to the community.

Strategic Implications:

1.         This is in keeping with the City’s Strategic Community Plan 2018-2028:

 

Innovative and Accountable

Our community is aware of what we are doing and how we are meeting our goals.

We are open and accountable to an engaged community.

SUSTAINABILITY IMPLICATIONS:

Nil.

Financial/Budget Implications:

Nil.

 


Council Briefing Agenda                                                                                               21 May 2019

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