Lachlan Shire Council · Lachlan Shire Council is a body politic of NSW, Australia – being...

Lachlan Shire Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017

“The Heart of NSW”

Financial Statements 2017

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Lachlan Shire Council

General Purpose Financial Statements for the year ended 30 June 2017

Contents

1. Understanding Council’s Financial Statements

2. Statement by Councillors and Management

3. Primary Financial Statements:

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

4. Notes to the Financial Statements

5. Independent Auditor’s Reports:

– On the Financial Statements (Sect 417 [2])– On the Conduct of the Audit (Sect 417 [3])

Overview

(i) These financial statements are General Purpose Financial Statements and cover the operations forLachlan Shire Council.

(ii) Lachlan Shire Council is a body politic of NSW, Australia – being constituted as a local government areaby proclamation and is duly empowered by the Local Government Act 1993 (LGA).

Council’s guiding principles are detailed in Chapter 3 of the LGA and includes:

principles applying to the exercise of functions generally by council,

principles to be applied when making decisions,

principles of community participation,

principles of sound financial management, and

principles for strategic planning relating to the development of an integrated planning and reporting framework.

A description of the nature of Council’s operations and its principal activities are provided in Note 2(b).

(iii) All figures presented in these financial statements are presented in Australian currency.

(iv) These financial statements were authorised for issue by the Council on 30 November 2017.Council has the power to amend and reissue these financial statements.

8

9

7679

Page

4

67

5

2

3

Financial Statements 2017_

Lachlan Shire Council General Purpose Financial Statements for the year ended 30 June 2017 Understanding Council’s financial statements

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Introduction Each year, individual local governments across New South Wales are required to present a set of audited financial statements to their council and community. What you will find in the statements The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 2017. The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government. About the Councillor/Management Statement The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements. About the primary financial statements The financial statements incorporate five ‘primary’ financial statements: 1. The Income Statement

Summarises Council's financial performance for the year, listing all income and expenses. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred. 2. The Statement of Comprehensive Income

Primarily records changes in the fair value of Council's Infrastructure, Property, Plant and Equipment. 3. The Statement of Financial Position

A 30 June snapshot of Council's financial position indicating its assets, liabilities and “net wealth”. 4. The Statement of Changes in Equity

The overall change for the year (in dollars) of Council’s “net wealth”.

5. The Statement of Cash Flows

Indicates where Council's cash came from and where it was spent. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.

About the Notes to the Financial Statements The Notes to the Financial Statements provide greater detail and additional information on the five primary financial statements. About the Auditor’s Reports Council’s annual financial statements are required to be audited by the NSW Audit Office. In NSW the auditor provides 2 audit reports: 1. an opinion on whether the financial statements

present fairly the Council’s financial performance and position, and

2. their observations on the conduct of the audit, including commentary on the Council’s financial performance and financial position.

Who uses the financial statements? The financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the Audit Report. The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements. Council is required to forward an audited set of financial statements to the Office of Local Government.


This statement should be read in conjunction with the accompanying notes. page 4


Income Statement for the year ended 30 June 2017

$ ’000

Income from continuing operationsRevenue:Rates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesOther income:Net gains from the disposal of assets

Total income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationImpairmentOther expensesNet losses from the disposal of assets

Total expenses from continuing operations

Operating result from continuing operations

Net operating result for the year

Net operating result attributable to Council

Net operating result for the year before grants andcontributions provided for capital purposes

Original budget as approved by Council – refer Note 16

2,954

2,954

1,947

–

3,459

21,393

Actual 2016

Actual

8,249

1,124 1,636

2,954

30,088

4,264

2,854 1,007

–

39,293

5,369 10,723

3,948

2,488

11,796

9,913 –

3,211

29,046

3,948

1

3,948 3,459

33,042

35,834

5– 4e4d

8,852 8,791

Notes

3a

3d3c

2017

1,036

2017

4,441 958 795

9,749 –

7,565

3,524

Budget 1

3e,f

4d

5

4b4c

4,136

972

3b

4a

3e,f

250

75 4,051

16,349 1,460

32,994

3,079

16,762

605

10,412

129

54 11,609

319 3,333

57

3,459




Statement of Comprehensive Income for the year ended 30 June 2017

$ ’000

Net operating result for the year (as per Income Statement)

Other comprehensive income:

Amounts which will not be reclassified subsequently to the operating result

Gain (loss) on revaluation of I,PP&EImpairment (loss) reversal relating to I,PP&ETotal items which will not be reclassified subsequentlyto the operating result

Amounts which will be reclassified subsequently to the operating resultwhen specific conditions are metNil

Total other comprehensive income for the year

Total comprehensive income for the year

Total comprehensive income attributable to Council

1,726

Actual 2016

(738) 4,680

4,680

1,726 (4,197)

Notes

20b (ii)1,726

3,459

20b (ii)

2,954

– (4,394) 197

Actual 2017

(4,197)

(738)




Statement of Financial Position as at 30 June 2017

$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherTotal current assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentIntangible assetsTotal non-current assets

TOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilities

TOTAL LIABILITIES

Net assets

EQUITYRetained earningsRevaluation reservesCouncil equity interest

Total equity

7,500

4,768

12,102

369,831

369,831

172,357

369,831

20

624

356,019

1,757

369,093

200,933

6,522

– 4,765

349,084

7,334

3

168,160

–

13,724

4,765

26,600

2017

207

7,202

2,152

– 5,640

18

138

2,205

25,914

6,000

1,594 100

299

Actual

1,979

2,064

2016Actual

339,498

96 10 115 10

10

25

20

10

7

8

6a6b7

6b

8

8

197,474

Notes

10

9

10

10

369,093

369,093

347,666

35,151

2,956

4,839

173

162

382,817

9

19,648 3,230

2,356

381,933



Statement of Changes in Equity for the year ended 30 June 2017

2017

$ ’000

Opening balance (as per last year’s audited accounts)

a. Correction of prior period errorsb. Changes in accounting policies (prior year effects)

Revised opening balance

c. Net operating result for the year

d. Other comprehensive income – Revaluations: IPP&E asset revaluation rsve – Impairment (loss) reversal relating to I,PP&EOther comprehensive income

Total comprehensive income (c&d)

e. Distributions to/(contributions from) non-controlling interestsf. Transfers between equity

Equity – balance at end of the reporting period

197

3,459

(4,197)

369,831 – 369,831 –

– – – – – – – – – –

172,357 197,474

–

1,726 –

2,954 1,726 4,680 –

– 1,726 1,726 –

4,680

– – – – – – – – 1,726 1,726 –

2,954 –

1,726

2,954 – 2,954 –

194,520 170,631 365,151 – 365,151 –

interest interest

– – – –

equity(Refer 20b)

– –

365,151 – – – – –

– –

365,151 –

earningsRetained reserve Council controlling Total

revaluation Other Non-2016

–

200,933 168,160 369,093 – 369,093

–

–

– – – –

(738) –

– –

3,459 (4,197) (738) –

– – – –

– (4,197) (4,197) – – 20b (ii) (4,394) (4,394) (4,394)

– 20b (ii) – 197 197 –

– 3,459 – 3,459 –

197,474 172,357 369,831 – – 20 (d) – – – – – 20 (c) – – – – – –

–

2017

197,474 172,357 369,831 – 369,831

Retained reserve Council controlling TotalNotes earnings (Refer 20b) interest interest

reserves(Refer 20b)

–

Other Non-

equity

369,831

Assetrevaluation

– –

reserves

194,520 170,631

Asset

(Refer 20b)





Statement of Cash Flows for the year ended 30 June 2017

$ ’000

Cash flows from operating activitiesReceipts:Rates and annual chargesUser charges and feesInvestment and interest revenue receivedGrants and contributionsBonds, deposits and retention amounts receivedOtherPayments:Employee benefits and on-costsMaterials and contractsBorrowing costsBonds, deposits and retention amounts refundedOtherNet cash provided (or used in) operating activities

Cash flows from investing activitiesReceipts:Sale of investment securitiesSale of real estate assetsSale of infrastructure, property, plant and equipmentDeferred debtors receiptsPayments:Purchase of investment securitiesPurchase of infrastructure, property, plant and equipmentPurchase of real estate assetsNet cash provided (or used in) investing activities

Cash flows from financing activitiesReceipts:Proceeds from borrowings and advancesPayments:Repayment of borrowings and advancesNet cash flow provided (used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Plus: cash and cash equivalents – beginning of year

Cash and cash equivalents – end of the yearAdditional Information:plus: Investments on hand – end of year

Total cash, cash equivalents and investments

Please refer to Note 11 for additional cash flow information

6b

36,456

34,100

3,553

2,995

11a 2,356

1,004

(9,814)

3,618

Notes

(11,796)

(72)

1,461

1,218

1,891

243

(14,487)

11a

(9)

50

1,900

(350) (14,787)

600 –

–

–

13,814 (3,211)

11b

(4,051)

972

2017

4,136

– 18,009 1,036

8,791

Budget

– (14,824)

–

27,712

2,064

25,648

(47)

521

–

1,543

(40,898)

1,900

23

(21,476)

(16,272) (16,189)

2,064

292

1,853

– (23) (13,242)

–

(3,231)

18,810 32,446 282

5,223 71

940

14,628 17,815

207

Actual

–

18,167 – 137

(4,818)

(37) (8,451)

(12,604)

(8) –

(4,467)

20162017

912

8,839

24,247

3,998

Actual

8,403


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

Contents of the notes accompanying the financial statements

Details

Summary of significant accounting policiesCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsGains or losses from the disposal of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investments – detailsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentExternally restricted infrastructure, property, plant and equipmentInfrastructure, property, plant and equipment – current year impairmentsPayables, borrowings and provisionsDescription of (and movements in) provisionsStatement of cash flows – additional informationCommitments for expenditureStatement of performance measures:13a (i) Local government industry indicators (consolidated)13a (ii) Local government industry graphs (consolidated)13b Local government industry indicators (by fund)Investment propertiesFinancial risk managementMaterial budget variationsStatement of developer contributionsContingencies and other liabilities/assets not recognisedInterests in other entities

Financial result and financial position by fund‘Held for sale’ non-current assets and disposal groupsEvents occurring after the reporting dateDiscontinued operationsIntangible assetsReinstatement, rehabilitation and restoration liabilitiesFair value measurementRelated party disclosures

Additional council disclosures

Council information and contact details

n/a – not applicable

52 n/a

60 n/a

56

64 n/a

58

62

61

75

6665

64 n/a

68

64 n/a

10222324

78

9(a)9(b)

29

29

35

45

59

52

Page

1

25

19

1516

20

21

47

46

41

42

18

1213

23

26

Note

22

14

10(a)10(b)

17

6(a)

4

6(c)

9(c)

11

24

2(a)

32(b)

6(b)

5

28 73

38

34

3536

44

42

43

39

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

27

5048


Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies

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The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Australian Accounting Interpretations, the Local Government Act 1993 (NSW) and Regulations, and the Local Government Code of Accounting Practice and Financial Reporting. Council is a not for-profit entity for the purpose of preparing these financial statements. (i) New and amended standards adopted by

Council There have been no new accounting standards adopted in this year’s financial statements which have had any material impact on reported financial position, performance or cash flows. (ii) Early adoption of standards Council has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2016. (iii) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of property, plant and equipment and investment property. (iv) Significant accounting estimates and

judgements The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Council and that

are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: (i) Estimated fair values of investment properties

(ii) Estimated fair values of infrastructure, property, plant and equipment,

(iii) Estimated tip remediation provisions. Significant judgements in applying the Council's accounting policies (i) Impairment of Receivables Council has made a significant judgement about the impairment of a number of its receivables in Note 7. (b) Revenue recognition Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Council and specific criteria have been met for each of the Council’s activities as described below. Council bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is measured at the fair value of the consideration received or receivable. Revenue is measured on major income categories as follows: (i) Rates, annual charges, grants and

contributions Rates, annual charges, grants and contributions (including developer contributions) are recognised as revenue when the Council obtains control over the assets comprising these receipts. Developer contributions may only be expended for the purposes


Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)

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for which the contributions were required, but the Council may apply contributions according to the priorities established in work schedules. Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates. Control over granted assets/contributed assets is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured, and is valued at their fair value at the date of transfer. Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner or used over a particular period and those conditions were un-discharged at reporting date, the unused grant or contribution is disclosed in Note 3(g). The note also discloses the amount of unused grant or contribution from prior years that was expended on Council’s operations during the current year. A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided at reporting date. (ii) User charges and fees User charges and fees (including parking fees and fines) are recognised as revenue when the service has been provided or when the penalty has been applied, whichever first occurs. (iii) Sale of infrastructure, property, plant and

equipment The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer. (iv) Interest Interest income is recognised using the effective interest rate at the date that interest is earned. (v) Rent Rental income is accounted for on a straight-line basis over the lease term.

(vi) Dividend income Revenue is recognised when the Council’s right to receive the payment is established, which is generally when shareholders approve the dividend. (vii) Other income Other income is recorded when the payment is due, the value of the payment is notified, or the payment is received, whichever occurs first. (c) Principles of consolidation (i) The Consolidated Fund In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund. Cash and other assets of the following entities have been included as part of the Consolidated Fund: General purpose operations Water service Sewerage service

Due to their immaterial value and nature, the following committees, entities and operations have been excluded from consolidation: • Burcher Development Management Committee • Bena Cemetery Management Committee • Condobolin Community Centre Management

Committee • Condobolin Senior Citizens Hall Management

Committee • Fifield Community Facilities Committee • Kiacatoo Hall & Recreation Ground Management

Committee • Lake Cargelligo Memorial Hall Management Committee • Lake Cargelligo Tennis Management Committee • Lake Cargelligo Tourism Management Committee • Lake Cargelligo Showground Management

Committee • Tottenham Memorial Hall Management

Committee • Tottenham Racecourse Management Committee • Tottenham Recreation Ground Management

Committee



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• Tottenham/Albert Cemetery Management Committee

• Tullibigeal Hall, Cemetery, Recreation Ground Management Committee

• Vermont Hill Hall & Recreation Ground Management Committee

(ii) The Trust Fund In accordance with the provisions of Section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the Council in trust which must be applied only for the purposes of, or in accordance with the trusts relating to those monies. Trust monies and property subject to Council’s control have been included in these reports. Trust monies and property held by Council but not subject to the control of Council have been excluded from these reports. A separate statement of monies held in the Trust Fund is available for inspection at the Council office by any person free of charge. (iii) County Councils Council is not a member of any county councils. (iv) Interests in other entities Subsidiaries Council has no interest in any subsidiaries. Joint arrangements Council has no interest in any joint arrangements. (d) Leases Leases of property, plant and equipment where Council, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is

allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that Council will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to Council as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Lease income from operating leases where Council is a lessor is recognised as income on a straight-line basis over the lease term. (e) Impairment of assets Intangible assets that have an indefinite useful life or are not yet available for use are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.



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(f) Cash and cash equivalents For Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand; deposits held at call with financial institutions; other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value; and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position. (g) Inventories (i) Raw materials and stores, work in progress

and finished goods Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour, and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. (ii) Inventory held for distribution Inventory held for distribution is held at cost, adjusted where applicable for any loss of service potential. (iii) Land held for resale/capitalisation of

borrowing costs Land held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. When development is completed

borrowing costs and other holding charges are expensed as incurred. Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses. (h) Non-current assets (or disposal groups)

held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets; assets arising from employee benefits; financial assets; and investment properties that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.



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(i) Investments and other financial assets Classification Council classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or

loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Assets in this category are classified as current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which that are classified as non-current assets. Loans and receivables are included in other receivables (note 8) and receivables (note 7) in the Statement of Financial Position. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Receivables are generally due for settlement within 30 days. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that Council’s management has the positive intention and ability to hold to maturity. If Council were to sell other than an insignificant

amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, that are classified as current assets. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Recognition and de-recognition Regular purchases and sales of financial assets are recognised on trade-date: the date on which Council commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and Council has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities. Subsequent measurement Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.



page 15

Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity. Impairment Council assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. (i) Assets carried at amortised cost For loans and receivables the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Council may measure impairment on the basis of an instrument’s fair value using an observable market price. Collectability of receivables is reviewed on an on-going basis. Debts that are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of receivables) is used when there is objective evidence that Council will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or

financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the impairment loss is recognised in the income statement within other expenses. When a receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement. Investment Policy Council has an approved investment policy complying with Section 625 of the Local Government Act 1993 (NSW) and Clause 212 of the Local Government (General) Regulation 2005 (NSW). Investments are placed and managed in accordance with that policy and having particular regard to authorised investments prescribed under the Ministerial Local Government Investment Order. Council maintains an investment policy that complies with the Act and ensures that it, or its representatives, exercise the care, diligence and skill that a prudent person would exercise in investing Council funds. Council amended its policy following revisions to the Ministerial Local Government Investment Order (the Order) arising from the Cole Inquiry recommendations. Certain investments the Council holds are no longer prescribed; however, they have been retained under grandfathering provisions of the Order. These will be disposed of when most financially advantageous to Council. (j) Fair value estimation – financial

instruments The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date.



page 16

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. Council uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments. (k) Infrastructure, property, plant and

equipment (IPPE) Council’s assets have been progressively revalued to fair value in accordance with a staged implementation advised by the Office of Local Government. At reporting date, the following classes of IPPE were stated at their fair value: Externally valued: • Operational land • Water and sewerage networks • Roads assets including roads, bridges and

footpaths • Bulk earthworks • Stormwater drainage

Internally valued: • Land improvements • Community land • Buildings – specialised/non-specialised • Other structures • Swimming pools • Other open space/recreational assets • Other infrastructure

As approximated by depreciated historical cost: • Plant and equipment • Other assets

Non-specialised assets with short useful lives are measured at depreciated historical cost as an

approximation of fair value. Council has assessed that any difference between fair value and depreciated historical cost is unlikely to be material. Water and sewerage network assets are indexed annually between full revaluations in accordance with the latest indices provided in the NSW Office of Water Rates Reference Manual. For all other asset classes, Council assesses at each reporting date whether there is any indication that a revalued asset’s carrying amount may differ materially from that which would be determined if the asset were revalued at the reporting date. If any such indication exists, Council determines the asset’s fair value and revalue the asset to that amount. Full revaluations are undertaken for all assets on a five-year cycle. Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve. To the extent that the increase reverses a decrease previously recognising profit or loss relating to that asset class, the increase is first recognised as profit or loss. Decreases that reverse previous increases of assets in the same class are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the class; all other decreases are charged to the Income Statement. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Council and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Capitalisation thresholds Items of infrastructure, property, plant and equipment are not capitalised unless their cost of acquisition exceeds the following; Land - Council land 100% capitalised - Open space 100% capitalised - Land under roads (purchases after 30/6/08) 100% capitalised



page 17

Plant and equipment Office furniture > $3,000 Office equipment > $3,000 Other plant and equipment > $3,000 Buildings and land improvements Park furniture and equipment > $3,000 Building - Construction/extensions 100% capitalised - Renovations > $3,000 Other structures > $5,000 Water and sewer assets Reticulation extensions > $5,000 Other > $5,000 Stormwater assets Drains and culverts > $5,000 Other > $5,000 Transport assets Road construction and reconstruction > $10,000 Reseal/re-sheet and major repairs > $10,000 Bridge construction and reconstruction > $10,000 Other infrastructure assets Swimming pools > $10,000 Other open space/recreational assets > $10,000 Other infrastructure > $10,000 Depreciation Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives as follows: Plant and equipment - Office equipment 5 to 10 years - Office furniture 10 to 20 years - Computer equipment 3 years - Vehicles 5 to 10 years - Heavy plant/road making equipment 5 to 10 years - Other plant and equipment 5 to 15 years

Other equipment - Playground equipment 5 to 15 years - Benches, seats etc. 10 to 20 years Buildings - Buildings: masonry 50 to 100 years - Buildings: other 20 to 40 years Water and sewer assets - Dams and reservoirs 80 to 100 years - Bores 20 to 40 years - Reticulation pipes: PVC 70-80 years - Reticulation pipes: other 25 to 75 years - Pumps and telemetry 15 to 20 years Stormwater assets - Drains 80 to 100 years - Culverts 50 to 80 years Transportation assets - Sealed roads: surface 20 years - Sealed roads: structure 60 years - Unsealed roads 30 years - Bridge: concrete 80-100 years - Road pavements 50-60 years - Kerb, gutter and footpaths 40 years Other infrastructure assets - Bulk earthworks Infinite The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. (l) Investment property Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not occupied by the Council. Investment property is carried at fair value, which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, Council uses alternative valuation



page 18

methods such as recent prices in less active markets, or discounted cash flow projections. Changes in fair values are recorded in the income statement as part of other income. Properties that are under construction for future use as investment properties are regarded as investment properties. These are also carried at fair value unless the fair value cannot yet be reliably determined. Where that is the case, the property will be accounted for at cost until either the fair value becomes reliably determinable or construction is complete. (m) Payables These amounts represent liabilities for goods and services provided to the Council prior to the end of financial year that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (n) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or finance cost.

Borrowings are classified as current liabilities unless Council has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (o) Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. (p) Provisions Provisions are recognised when Council has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. (q) Employee benefits (i) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be wholly settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the



page 19

reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Other long-term employee benefit obligations The liability for long service leave and annual leave that is not expected to be wholly settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the Statement of Financial Position if the Council does not have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is expected to occur. (iii) Retirement benefit obligations All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees. Defined Benefit Plans A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised in the Statement of Financial Position, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost.

The present value of the defined benefit obligation is based on expected future payments that arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. However, when this information is not reliably available, Council accounts for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans, i.e. as an expense when it becomes payable. Defined Contribution Plans Contributions to defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (r) Land under roads Land under roads is land under roadways and road reserves including land under footpaths, nature strips and median strips. Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051 Land Under Roads. Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 Property, Plant and Equipment. (s) Self-insurance Council does not self-insure. (t) Intangible assets IT development and software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials



page 20

and service, direct payroll, and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight line basis over periods generally ranging from three to five years. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility, and where Council has an intention and ability to use the asset. (u) Crown reserves Crown Reserves under Council’s care and control are recognised as assets of the Council. While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated. Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating to the reserves are recognised within Council’s Income Statement. (v) Rural fire service assets Under section 119 of the Rural Fire Services Act 1997 (NSW), “all fire fighting equipment purchased or constructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or on behalf of which the fire fighting equipment has been purchased or constructed”. Until such time as discussions on this matter have concluded and the legislation changed, Council will recognise rural fire service assets including land, buildings, plant and vehicles. (w) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to the taxation authority is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which that are recoverable from, or payable to the taxation authority are presented as operating cash flows. (x) New accounting standards and

interpretations issued not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and which have not been applied. As at the date of authorisation of the financial statements, the standards and interpretations listed below were in issue but not yet effective. Effective for annual reporting periods beginning on or after 1 January 2017

AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15

AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15

AASB 2016-1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112]

AASB 2016-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107

AASB 2016-4 Amendments to Australian Accounting Standards – Recoverable Amount of Non-Cash-Generating Specialised Assets of Not-for-Profit Entities

AASB 2016-7 Amendments to Australian Accounting Standards - Deferral of AASB 15 for Not-for-Profit Entities



page 21

Effective for annual reporting periods beginning on or after 13 February 2017 AASB 2017-2 Amendments to Australian Accounting Standards - Further Annual Improvements 2014- 16 Cycle Effective for annual reporting periods beginning on or after 13 December 2017 AASB 2017-1 Amendments to Australian Accounting Standards - Transfers of Investment Property, Annual Improvements 2014-2016 Cycle and Other Amendments Effective for annual reporting periods beginning on or after 1 January 2018 AASB 9 Financial Instruments (December 2009)

AASB 15 Revenue from Contracts with Customers

AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)

AASB 2014-1 Amendments to Australian Accounting Standards (Part E)

AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014) AASB 1057 Application of Australian Accounting Standards

AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15

AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement of Share-based Payment Transactions

AASB 2016-6 Amendments to Australian Accounting Standards - Applying AASB 9 Financial Instruments with AASB 4 Insurance Contracts Effective for annual reporting periods beginning on or after 1 January 2019 AASB 16 Leases

AASB 16 Leases (Appendix D)

AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Nor-for-Profit Entities

AASB 1058 Income of Not-for-Profit Entities

AASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities The full impact of these standards has yet to be ascertained or quantified but will range from additional and/or revised disclosures to changes in how certain transactions and balances are accounted for. (y) Rounding of amounts Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars. (z) Comparative figures To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes. (aa) Disclaimer Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.


page 22



Note 2(a). Council functions/activities – financial information

General purpose income 1

1. Includes: rates and annual charges (incl. ex-gratia), untied general purpose grants and unrestricted interest and investment income.

2017Actual

2016Actual

2016 2017

$ ’000 Income, expenses and assets have been directly attributed to the following functions/activities.Details of these functions/activities are provided in Note 2(b).

Income from continuing operations

Expenses from continuing operations

Total assets held (current and non-current)

Functions/activities

20172016Actual Actual Actual

Grants included in income from continuing operations

Operating result from continuing operations

Originalbudget

OriginalActual

2017 20162017(453)

(3,316) (3,614) 206

2017Actual

Originalbudget

2017Actualbudget

60 844 875 474

1 2 4,691

350 4,189

406 454 1 1,375 4,489

Health Environment 1,115

888 1,005 123 187

279 828 Public order and safety

Governance Administration

(368) 1,483 1,637 977

1,127 1,685 2,098 (753)

40 899

1,801

780

5,845

(657) 810

143 402

1,212

976 Housing and community amenities 257 Water supplies

Recreation and culture 216

3,916 Sewerage services 1,518

5,052 4,214 1,829

976

1,196 Community services and education 1,048

4,076 4,068 4,244 1,536 1,616

9,700

(719) 1,463 (152)

88

692

3,613 1,525 1,567

59 8,142

522 3,098 3,557

Transport and communication 7,259 Mining, manufacturing and construction 71 78

8,145 141 93

8,132 (63)

(1,555) 8,193 – –

194,581

18,255 806 65 19,195

Actual2017

95 2016

211 253 1,928

262 57,530 13,305

27,830 63,896 27,808 18

233

(712) (799)

294 – (349)

(3,715) (404)

Actual

25 –

11 138

245 1,044

1,208 51,028 40,097

5,605 2,189

8,600 12,990 43 93

(565) – (770) –

746 (1,061)

30 79 717 1,264

1,775 2,282 2,815 (886) (558)

808 (549)

(4,649) (660)

(3,035) (98)

(2,882) (2,637)

(240)

–

(873) (22)

(15,139)

30,088

– –

30,088

–

–

–

7,877 (10,746)

2,954

(29) 4,100 4,469

18 (139)

(10,670)

3,948

– –

3,459

1,220

13,700 14,618 18,598

5,640 381,245

51 28

382,271

5,795 5,482 (603) 197,963

381,933

– 688

382,817

546

13,754

– 12,706

20,583

– 8,114

35,834 29,046 33,042

– – –

1,228 1,435

– –

–

1,195 617

19,342 29,046 35,834

13,700

20,695 Share of gains/(losses) in associates

continuing operations

18,598 and joint ventures (using the equity method)

Operating result from

–

Economic affairs

18,376 Total functions and activities

1,089

14,618

39,293 32,994


page 23



Note 2(b). Council functions/activities – component descriptions

Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:

GOVERNANCE

ADMINISTRATION

PUBLIC ORDER AND SAFETY

HEALTH

ENVIRONMENT

COMMUNITY SERVICES AND EDUCATION

HOUSING AND COMMUNITY AMENITIES

WATER SUPPLIESSEWERAGE SERVICES

RECREATION AND CULTURE

MINING, MANUFACTURING AND CONSTRUCTION

TRANSPORT AND COMMUNICATION

ECONOMIC AFFAIRSIncludes camping areas and caravan parks; tourism and area promotion; industrial development promotion; saleyards and markets; real estate development; commercial nurseries; and other business undertakings.

Includes administration and education; social protection (welfare); migrant, Aboriginal and other communityservices and administration (excluding accommodation – as it is covered under ‘housing and communityamenities’); youth services; aged and disabled persons services; children’s’ services, including family day care;child care; and other family and children services.

Includes public cemeteries; public conveniences; street lighting; town planning; other community amenities,including housing development and accommodation for families and children, aged persons, disabled persons,migrants and Indigenous persons.

Includes public libraries; museums; art galleries; community centres and halls, including public halls andperforming arts venues; sporting grounds and venues; swimming pools; parks; gardens; lakes; and othersporting, recreational and cultural services.

Includes building control, quarries and pits, mineral resources, and abattoirs.

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

Includes noxious plants and insect/vermin control; other environmental protection; solid waste management,including domestic waste; other waste management; other sanitation; and garbage, street cleaning, drainageand stormwater management.

Includes costs relating to Council’s role as a component of democratic government, including elections,members’ fees and expenses, subscriptions to local authority associations, meetings of Council and policy-making committees, public disclosure (e.g. GIPA), and legislative compliance.

Includes corporate support and other support services, engineering works, and any Council policy compliance.

Includes Council’s fire and emergency services levy, fire protection, emergency services, beach control,enforcement of regulations and animal control.

Includes immunisation, food control, health centres etc.


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Note 3. Income from continuing operations

$ ’000

(a) Rates and annual charges

Ordinary ratesResidentialFarmlandMiningBusinessTotal ordinary rates

Special ratesNil

Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesStormwater management servicesWater supply servicesSewerage servicesWaste management services (non-domestic)Total annual charges

TOTAL RATES AND ANNUAL CHARGES

Council has used 2014 year valuations provided by the NSW Valuer General in calculating its rates.

53

3,452

8,852

557 52

Notes

1,059

50 3,807

1,198

5,400

581

30

975

236

20162017

8,249

Actual

1,023

280

4,048

Actual

5,048

1,194 1,273 347

3,201 339


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Note 3. Income from continuing operations (continued)

$ ’000

(b) User charges and fees

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

Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Private works – section 67Regulatory/ statutory feesSection 149 certificates (EPA Act)Section 603 certificatesTotal fees and charges – statutory/regulatory

(ii) Fees and charges – other (incl. general user charges (per s.608))AerodromeCaravan parkCemeteriesChild careMeals on Wheels & Community CareLease rentalsLeaseback fees – Council vehiclesLibrary and art galleryPark rentsRMS (formerly RTA) charges (state roads not controlled by Council)SaleyardsSports stadiumsWaste disposal tipping feesHall HireOtherTotal fees and charges – other

TOTAL USER CHARGES AND FEES

– 66

325

119

1,508

2

Notes

184 7

3 –

4,441

1,471

57

18

4,264

12

99

1

59

19

Actual

116

13

2,559

Actual

165

89

2,628

229

2016

2,559

2017

44

2,628

374

17 12

180

461 33

117

20 448

135

4

25

4

315 59

4 4

218


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$ ’000

(c) Interest and investment revenue (including losses)

Interest – Interest on overdue rates and annual charges (incl. special purpose rates) – Interest earned on investments (interest and coupon payment income) – Interest on deferred debtorsTOTAL INTEREST AND INVESTMENT REVENUE

Interest revenue is attributable to:Unrestricted investments/financial assets:Overdue rates and annual charges (general fund)General Council cash and investmentsRestricted investments/funds – external:Water fund operationsSewerage fund operationsDomestic waste management operationsOther externally restricted assetsTotal interest and investment revenue recognised

(d) Other revenues

Legal fees recovery – rates and charges (extra charges)Legal fees recovery – otherCommissions and agency feesDiesel rebateInsurance claim recoveriesReimbursement – CBA CDOReimbursements – OtherSales – generalOtherTOTAL OTHER REVENUE

1 1

290

958 1,124

23

413

221

1

465

1

29

8

165 156

67

21 119 108

39

958

221

1,124

55 29 463

273

Notes

1,063

24

481

898

43 795

– 626

21

1,636 151

60 55

6 –

2016Actual

2017Actual


page 27




$ ’000

(e) Grants

General purpose (untied)Financial assistance – general componentFinancial assistance – local roads componentFinancial Assistance Grant received in advanceFinancial assistance – general componentFinancial assistance – local roads componentPensioners’ rates subsidies – general componentTotal general purpose

Specific purposePensioners’ rates subsidies: – Water – Sewerage – Domestic waste managementWater suppliesSewerage servicesAnimal ControlBushfire and emergency servicesChild careCommunity careEconomic developmentEmployment and training programsEnvironmental protectionFootpathsLibraryLibrary – per capitaNoxious weedsPublic hallsRecreation and cultureStreet lightingTown planningTransport (roads to recovery)Transport (other roads and bridges funding)Transport (flood damage)TourismYouthWaste managementAerodromesTotal specific purposeTotal grantsGrant revenue is attributable to:– Commonwealth funding– State funding– Other funding

2,693 – – – 1,617 – – –

– 40 5

2,300 – – 15

1 – –

46

– –

86

–

–

–

–

471 100

21 7 – –

– – 4 5 – 2

–

– –

2016

208 5

40

20

20

–

35

5,417

–

–

227

1,773 –

13,531

725 12,762

–

16,160

15 –

435 562

4,060

40

–

35

–

2,035

165

18 13

18,195

18,195

5,489 13,531

44

–

50

25

18

43

37

3,150

36

–

–

340

2,971 5,107

–

– –

1,024

–

2017

–

2017

–

12,706

2016Operating

–

–

25 –

238

–

–

–

–

5,210

–

20

68

8,114

Operating

–

Capital

–

–

13

– 30

–

–

200

Capital

–

–

–

–

341 2,027

2,388

–

–

–

18 25

–

– –

310

2,388 –

–

–

–

223

–

–

223

15

301

–

–

2,388

–

–

223

223

–


page 28




$ ’000

(f) Contributions

Developer contributions:(s93 & s94 – EP&A Act, s64 of the LGA):S 94A – fixed development consent leviesTotal developer contributions

Other contributions:Business developmentCaravan ParksCemeteriesParks gardens and reservesRecreation and cultureRoads and bridgesRMS contributions (regional roads, block grant)FESL Admin SubsidyOtherTotal other contributionsTotal contributions

TOTAL GRANTS AND CONTRIBUTIONS

$ ’000

(g) Unspent grants and contributions

Certain grants and contributions are obtained by Council on conditionthat they be spent in a specified manner:

Unexpended at the close of the previous reporting period

Add: grants and contributions recognised in the current period but not yet spent:

Less: grants and contributions recognised in a previous reporting period now spent:

Net increase (decrease) in restricted assets during the period

Unexpended and held as restricted assets

Comprising: – Specific purpose unexpended grants – Developer contributions – Other contributions

3,231

Actual

7

2016

466

– – 7 7 94 –

39

–

2017

–

Capital

–

3,231

2,854

672

16,762

36

Actual

400

581

876

2017

3,033

–

61 3,089

3,198

21,393

–

–

11

8 – –

– 17

23

45

Operating Operating

3,198

295

2016

–

497 295

20

446 – –

20 16

–

–

52

1,007

Capital 2017 2016

295

63

(20)

16

784

–

828

12

–

–

768

268

876

(202)

29

21

(231)

–

601

12 –

12 15


page 29



Note 4. Expenses from continuing operations

$ ’000

(a) Employee benefits and on-costs

Salaries and wagesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)Protective clothingOtherTotal employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSED

Number of ‘full-time equivalent’ employees (FTE) at year endNumber of ‘full-time equivalent’ employees (FTE) at year end (incl. vacancies)

(b) Borrowing costs

(i) Interest bearing liability costsInterest on loansTotal interest bearing liability costs expensed

(ii) Other borrowing costsDiscount adjustments relating to movements in provisions (other than ELE) – Remediation liabilitiesTotal other borrowing costsTOTAL BORROWING COSTS EXPENSED

54

26 57 –

–

1,309

75

606

(1,089)

Notes 2017

–

590

–

129

– –

54

9,283

120

218

54

135

Actual

11,931

54

10,412

896 997

12,698 128

197

135

(1,519)

2016

57 57

125

Actual

11,609

1,605

140

8,406

–


page 30



Note 4. Expenses from continuing operations (continued)

$ ’000

(c) Materials and contracts

Raw materials and consumablesContractor and consultancy costs – Aerodromes – Aged and Disabled – Animal Control – Buildings Dwellings – Caravan Parks – Cemeteries – Children's Services – Corporate Services – Engineering Office & Operations – Flood Works – Halls & Community Centres – Health – Home & Community Care – Libraries – Medical Health Centres – Noxious Weeds – Other Community Services & Amenties – Other Economic Affairs – Parks & Reserves – Pits & Quarries – Private Works – Public Amenities – Roads Infrastructure – Rural Fire Service & SES – Sewerage – Sports Grounds & Recreation Facilities – Street Cleaning – Swimming Pools – Tourism – Town Planning Office – Waste – Water – Works Depots/Workshops/PlantAuditors remuneration (1)

Legal expenses: – Legal expenses: debt recovery – Legal expenses: otherOperating leases: – Operating lease rentals: minimum lease payments (2)

Total materials and contractsLess: capitalised costsTOTAL MATERIALS AND CONTRACTS

–

8 65

8

620

435

–

6,810 –

18

104

11

13 115

24

36

1,103

203

5,369 (10,087)

12

87

89

710

83

31

7 7

105 17,652

614

2016Actual

9,447

1,075

248

128

33

47

–

221

7

1,527 987 57 38

95

22 57

2,797

69

9 2

677

369 196

2,934

72

22

17

8

291

358

69

10

12

Notes

129

18

51

266

2017Actual

62

424 8 7

14

13

276

54

(11,730)

65 65 40

7,565

17,099

40


page 31




$ ’000

(c) Materials and contracts (continued)

1. Auditor remunerationa. During the year, the following fees were incurred for services provided by the Auditor-General:

(i) Audit and other assurance services – Audit and review of financial statements: Auditor-GeneralRemuneration for audit and other assurance services

Total Auditor-General remuneration

b. During the year, the following fees were incurred for services provided by the other Council’s Auditors:

(i) Audit and other assurance services – Audit and review of financial statements: Council’s Auditor – Other audit and assurance services – Internal AuditsRemuneration for audit and other assurance services

Total remuneration of other Council's Auditors

Total Auditor remuneration

2. Operating lease payments are attributable to:Other

Actual Actual Notes

40

2017 2016

35

69

35 –

34

105 105 104

34 40

– 34

–

35 –

40

40

104

–


page 32




$ ’000

(d) Depreciation, amortisation and impairment

Plant and equipmentOffice equipmentFurniture and fittingsLand improvements (depreciable)Infrastructure: – Buildings – non-specialised – Buildings – specialised – Other structures – Roads – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage networkOther assets – Library booksAsset reinstatement costsIntangible assetsTotal gross depreciation and amortisation costsLess: capitalised costsTotal depreciation and amortisation costs

ImpairmentInfrastructure: – RoadsTotal gross impairment costs

Impairment of investments – OtherTotal gross impairment costs (investments)

Less: IPP&E impairments (to)/from equityTotal impairment costs

TOTAL DEPRECIATION ANDIMPAIRMENT COSTS EXPENSED

Notes

(4,394)

9 & 26

–

107 1,465

524

90 835

25

– 9a

4,394

129

87 1,100

188 4,700

287 67

10,852

239 4,251

271

Actual Actual

69

129

17

2017

–

514

1,870 1,667 42

9,749

74

35

1,435

–

45

88

10,723

21

88 22

–

2016

171 35

68

9,749

129 –

–

– 10,723

4,394 –

9,749


page 33




$ ’000

(e) Other expenses

AdvertisingBad and doubtful debtsBank chargesCleaningComputer software chargesContributions/levies to other levels of government – Emergency services levy (includes FRNSW, SES, and RFS levies) – Lower Lachlan community services – NSW fire brigade levy – NSW rural fire service levy – Western plans regional developmentCouncillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Donations, contributions and assistance to other organisations (Section 356)Electricity and heatingInsuranceInvestment advisory servicePostagePrinting and stationeryStreet lightingTelephone and communicationsValuation feesInternal Audit and Risk CommitteeTOTAL OTHER EXPENSES

12

3,333

–

83

212

46

86

313

13

114

47

32

252

12

39 4

123

35

Actual Notes

63

722 755 749

32

24

2017

–

50

87

109

43

31

–

32 142

57

2016Actual

212

38

115

24

–

106

86

3,079

696 12

173 178

308

3 32

110


page 34



Note 5. Gains or losses from the disposal of assets

$ ’000

Property (excl. investment property)Proceeds from disposal – propertyLess: carrying amount of property assets sold/written offNet gain/(loss) on disposal

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

Real estate assets held for saleProceeds from disposal – real estate assetsLess: carrying amount of real estate assets sold/written offNet gain/(loss) on disposal

Financial assets*Proceeds from disposal/redemptions/maturities – financial assetsLess: carrying amount of financial assets sold/redeemed/maturedNet gain/(loss) on disposal

NET GAIN/(LOSS) ON DISPOSAL OF ASSETS

(3,970)

3,390

– (18,810)

Notes

437

1,833

2017

9

(7,360)

(1,396)

282

Actual

(3,524)

32,446

(32)

(204)

203

2016

(407)

(319)

(103) 71

(820)

(273)

(83)

737

Actual

18,810

– (32,446)


page 35



Note 6a. – Cash assets and Note 6b. – investments

$ ’000

Cash and cash equivalents (Note 6a)Cash on hand and at bankCash-equivalent assets 1

– Deposits at callTotal cash and cash equivalents

Investments (Note 6b) – Long term depositsTotal investmentsTOTAL CASH ASSETS, CASHEQUIVALENTS AND INVESTMENTS

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

Cash, cash equivalents and investments wereclassified at year end in accordance withAASB 139 as follows:

Cash and cash equivalentsa. ‘At fair value through the profit and loss’

Investmentsa. ‘Held to maturity’Investments

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

(77)

7,500

Non-current

7,500 6,000

21,712 6,000

–

7,500

2,141 –

7,500

2,064 – 2,578

Notes

2017Actual

Current

2017Actual

(222)

Actual 2016

Current

26,600

26,600 26,600

2,356

– –

6,000

Non-current

–

Actual 2016

–

6,000

7,500

19,648

–

2,064

19,648

6,000 19,648

28,956

26,600

2,356

19,648


page 36



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

$ ’000

Total cash, cash equivalentsand investments

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

$ ’000

Details of restrictions

External restrictions – included in liabilitiesNil

External restrictions – otherDeveloper contributions – general (D)RMS (formerly RTA) contributions (E)Specific purpose unexpended grants (F)Water supplies (G)Sewerage services (G)Domestic waste management (G)Stormwater management (G)Lachlan aged and community servicesMeals on wheelsExternal restrictions – otherTotal external restrictions

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

E RMS contributions which are not yet expended for the provision of services and amenities in accordance withthose contributions.

F Grants which are not yet expended for the purposes for which the grants were obtained. (refer Note 1 (b)) G Water, sewerage, domestic waste management (DWM) and other special rates/levies/charges are externally

restricted assets and must be applied for the purposes for which they were raised.

25 29 –

337

2016

balance

70

6,345 (1)

21

restrictions

25 – –

276

–

2017

–

828 – – 12

29

(206)

(293) 14,692

7,010

36

14,692 (293)

631

–

71

1,009

(71)

(15)

13,976 13,976

1,009

Non-current

12

7,500

15

restrictions

281

Current

balance

– 318

7,500

7,500

6,724 6,346

268

286 –

–

10,997 7,976

6,000

28,956 6,000

28,956 21,712

Transfers to

7,192

–

2017 Closing Transfers from

– 21,446

21,712

6,000

2,739

Opening

Non-current

–

2017 2016Actual Actual

Current Actual Actual


page 37



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

$ ’000

Internal restrictionsPlant and vehicle replacementCapital ImprovementsEmployees leave entitlementCarry over worksDepot replacementAerodromesChambers / computer equipmentCondobolin main street improvementsEmergency servicesGravel pit restorationGumbend LakeHousing/land developmentInsuranceCondobolin medical centreSelf care unitsSRA grounds hallSwimming poolsTimber bridgesTip restorationTottenham swimming pool amenitiesTown planningWaste managementCondobolin CemeteryCondobolin District Retirement VillageFinancial Assistance Grant - Gen ComponentTotal internal restrictions

TOTAL RESTRICTIONS

Opening restrictions

Transfers to

2,502

Closing

(323)

balance Transfers from

(5,164) 1,167 –

(14) 4,808

(399)

2,026

(4,011)

169

–

368

124

1,094

360

31 (53) (83)

61

2,693

(37) 83

48

21,446

1,447 69

414 84

(12,125)

115

36,138

(58)

357

(12,418)

25

–

–

–

118

(545)

207

3,065 11

3,610 –

23,583

(350)

–

restrictions

(32)

52

– 26

2,350 (998)

35

100

–

95

2,825

1,094

– 39

–

50 318

–

24,973

10,997

141

11 –

173

26 27

173

–

(57) –

(1)

84

69

– 48

22,574

180

–

–

–

2,693

241

–

2,764

1,267

balance

92

5,923 837

577

330

6,055

133

225 68

–

115

343 248 134

2017


page 38



Note 7. Receivables

$ ’000

PurposeRates and annual chargesInterest and extra chargesUser charges and feesAccrued revenues – Interest on investmentsDeferred debtorsNet GST receivableOther debtorsTotal

Less: provision for impairmentRates and annual chargesUser charges and feesTotal provision for impairment – receivables

TOTAL NET RECEIVABLES

Externally restricted receivablesWater supply – Specific purpose grants – Rates and availability charges – OtherSewerage services – Rates and availability charges – OtherDomestic waste managementStormwater managementTotal external restrictionsInternally restricted receivablesNilUnrestricted receivablesTOTAL NET RECEIVABLES

Notes on debtors above:(i) Rates and annual charges outstanding are secured against the property.(ii) Doubtful rates debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.(iii) Interest was charged on overdue rates and charges at 8.00% (2016 8.50%).

Generally all other receivables are non-interest bearing.(iv) Please refer to Note 15 for issues concerning credit risk and fair value disclosures.

–

146

Non-current

–

Current 2016

307

351

–

–

1,093 –

(7)

155 –

131 2

524

196

– (169)

–

(51)

309 6 –

–

–

–

3

(199)

2,256

225

–

– –

138

–

672

–

– 129

2,205 3,230

1,048

1,592 138

–

1,157 162 162

1,638 8

135 – 178

– – 110

– –

(111)

113

(51)

– –

(199)

162

(169)

138

72 –

3,230

(7)

(111)

361

1,026

18

–

3,341 3

–

2,205

292

Current

227 97

Non-current

– – 2,056

486

2017Notes

202


page 39



Note 8. Inventories and other assets

$ ’000

(a) Inventories

(i) Inventories at costReal estate for resale (refer below)Stores and materialsTotal inventories at cost

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

TOTAL INVENTORIES

(b) Other assets

PrepaymentsTOTAL OTHER ASSETS

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

Total unrestricted assetsTOTAL INVENTORIES AND OTHER ASSETS

– 830

207

Current

624

624 1,149

1,997 207 207 2,965 1,997

–

2,965 624 624

–

– 207

1,959

– 9

624

207

–

997

18 18

1,979

9

2,956

2017

2,956

2016

1,979

Non-current Non-current Current Notes


page 40



Note 8. Inventories and other assets (continued)

$ ’000

Other disclosures

(a) Details for real estate developmentResidentialIndustrial/commercialTotal real estate for resale(Valued at the lower of cost and net realisable value)

Represented by:Acquisition costsTotal costsTotal real estate for resale

Movements:Real estate assets at beginning of the year – Purchases and other costs – WDV of sales (expense)Total real estate for resale

(b) Inventory write downsThere were no amounts recognised as an expense relating to the write down of inventory balances held during the year.

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

624

207

440

(440)

184

624 830

933

646

207

997 624

207 830

207

–

624

830

167 (103) – 830

– – 23

997 624 624

830 207

997

624 830

997

5

97

997

521 184 110 476

2016Non-current

2017Non-current Current Current




Note 9a. Infrastructure, property, plant and equipment

Asset class

$ ’000

Plant and equipment 25,103 15,023 10,080 2,591 592 (1,262) (1,667) – (42) – – 27,024 16,732 10,292 Office equipment 1,262 967 295 – – (9) (42) – 42 – – 1,253 967 286 Furniture and fittings 2,311 1,903 408 75 37 (125) (45) – – – – 2,299 1,949 350 Land: – Operational land 3,842 – 3,842 – 116 (8) – – (11) (908) 3,031 – 3,031 – Community land 3,294 – 3,294 – – – – – – – 84 3,378 – 3,378 Land improvements – non-depreciable 464 – 464 – – – – – – – – 464 – 464 Land improvements – depreciable 4,345 2,750 1,595 161 371 – (88) – – – – 4,877 2,838 2,039 Infrastructure: – Buildings – non-specialised 13,340 5,523 7,817 – 9 (212) (90) – – – – 13,137 5,613 7,524 – Buildings – specialised 72,666 33,769 38,897 235 1,396 (7,127) (835) – 4 – – 67,045 34,475 32,570 – Other structures 6,709 1,239 5,470 – 200 (13) (239) – – – – 6,895 1,477 5,418 – Roads 246,568 74,387 172,181 4,496 717 – (4,251) (4,394) – – 251,645 82,896 168,749 – Bridges 27,154 4,490 22,664 57 – – (271) – – – – 27,211 4,761 22,450 – Footpaths 3,647 541 3,106 – 11 – (69) – – – – 3,658 610 3,048 – Stormwater drainage 8,448 3,550 4,898 – 82 – (107) – – – – 8,530 3,657 4,873 – Water supply network 100,065 48,986 51,079 124 1,547 – (1,465) – – – 1,492 90,066 37,289 52,777 – Sewerage network 37,828 17,011 20,817 225 37 – (524) – – – (471) 35,568 15,484 20,084 Other assets: – Library books 1,097 921 176 – 13 – (21) – (4) – – 1,106 942 164 Reinstatement, rehabilitation and restoration assets (refer Note 26): – Tip assets 2,380 379 2,001 – – – – – – – – 2,380 379 2,001

TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.

Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).

Refer to Note 27. Fair value measurement for information regarding the fair value of other infrastructure, property, plant and equipment.

Revaluation increments

to equity (ARR)

Net carrying amount

560,523 211,439 349,084 7,964 (8,756) (9,714) (4,394) 5,128 339,498 (908) 1,105 549,567 210,069 (11)

as at 30/6/2017

Impairment loss

(recognisedin equity)

Net carrying amount

Asset movements during the reporting period

Accumulated depreciation

and impairment

Gross carrying amount


Accumulated depreciation and

impairment

as at 30/6/2016

Adjustmentsand transfers

Additionsnew assets

Additionsrenewals

Carrying value

of disposals

Depreciation expense

Revaluation decrements

to equity (ARR)

page 41


page 42



Note 9b. Externally restricted infrastructure, property, plant and equipment

Note 9c. Infrastructure, property, plant and equipment – current year impairments

(i) Impairment losses recognised in the Income Statement: – Condobolin SRA HallTotal impairment losses

IMPAIRMENT OF ASSETS – GAINS/(LOSSES) in P/L

(ii) Impairment losses recognised direct to equity (ARR): – Regional and Local Roads - FloodingTotal impairment losses

IMPAIRMENT OF ASSETS – DIRECT to EQUITY (ARR)

145,675 68,850 76,825

Actual

(129)

–

(129)

Actual

(4,394) 20 (ii)

(4,394)

–

6 16 192 1 191 345 109 236 697 170 527

102,325

– 178 178

53,339 106,553

241

48,986

28 – 28

3,260 1,802 1,458

$ ’000

Total sewerage services

Class of asset

Water supply

22

(129)

–

Actual2017

Other structures

Land

Buildings

– Operational land

Domestic waste management

52,777

Buildings15,484

38,425

110

Infrastructure382

Plant and equipment

42

Infrastructure


Plant and equipment Land


Total water supply

Buildings

Sewerage services Plant and equipment

68 123 321

507

54 56

191

15 4 192 11 148 48

77,699

17,310 21,115

110 61 49

–

132,946

37,828 35,567

– Improvements – depreciable

Land

TOTAL RESTRICTED I,PP&E Total DWM

(4,394)

165 – 165


Accumulated depn. and

impairment

Net carrying amount

790 582 208

20,083 17,011 20,817

51,370 55,183

231 10

61

36,402 15,784 20,618

1,466

55,247 124 383

Actual2016

–

–

–

4(d)

3,423

42

–

265

233

37,289

–

39,339

241


Accumulated depn. and

impairment

Net carrying amount

849

233 4,889

90,066

584

96,037

212 212

56,698

11 181 100

239 2


page 43



Note 10a. Payables, borrowings and provisions

$ ’000

PayablesGoods and servicesAccrued expenses: – Borrowings – Salaries and wages – Other expenditure accrualsSecurity bonds, deposits and retentionsTotal payables

Income received in advancePayments received in advanceTotal income received in advance

BorrowingsLoans – secured 1

Total borrowings

ProvisionsEmployee benefits:Annual leaveSick leaveLong service leaveGratuitiesOther leaveSub-total – aggregate employee benefitsAsset remediation/restoration (future works)Rebate on real estate for resaleTotal provisions

(i) Liabilities relating to restricted assetsThere are no restricted assets (external or internal) applicable to the above liabilities.

1. Loans are secured over the general rating income of Council Disclosures on liability interest rate risk exposures, fair value disclosures and security can be found in Note 15.

–

–

– 170

– 100

Non-current

262

948

4,839

4,839

1,632

4,759

–

–

810

1,757

3

244 –

–

– 162

–

–

Current 2017

Non-current

17

– 1,757 96

2,152

2016

1,509

Notes

–

–

– –

–

Current

115

1,594

3 –

220 –

100

– –

– 6 – 6

– 1,009

4,759 26

–

1,628

421

–

–

2,417

406 274

1,534

210

5,640 4,765

4,768 TOTAL PAYABLES, BORROWINGS AND PROVISIONS

–

7,334

115 – –

–

352

–

7,202

–

–

–

5,640

6,522

4,765

96


page 44



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

$ ’000

(ii) Current liabilities not anticipated to be settled within the next twelve months

The following liabilities, even though classified as current, are not expectedto be settled in the next 12 months.

Provisions – employees benefits

Note 10b. Description of and movements in provisions

a. Employees leave entitlements and on-costs represents those benefits accrued and payable and an estimate of those that will become payable in the future as a result of past service.

b. Asset remediation, reinstatement and restoration provisions represent the present value estimate of future costs Council will incur in order to remove, restore and remediate assets and/or activities as a result of past operations.

2,247

Actual

1,628

2016

210 274

Asset remediation–

– 98 –

Annual leave

406 4,759

Decrease due to payments

– – Sick leave

Openingbalance

as at 1/7/16

–

Long service leave

1,009

– –

Additional provisions

Gratuities

TOTAL

– 15

–

2017

421 –

Class of provision

Other 6

2016

(789)

– Other leave

–

2,417 (61)

1,534

948

10,405 (801)

Unused amounts reversed

Remeasurement effects due to

discounting

–

–

–

– 9,604

1,632

4,759

2,247

Closingbalance

as at 30/6/17

1,443

–

1,443

– 6

– – –

–

– (64) – –

Actual2017


page 45



Note 11. Statement of cash flows – additional information

$ ’000

(a) Reconciliation of cash assets

Total cash and cash equivalent assetsLess bank overdraftBalance as per the Statement of Cash Flows

(b) Reconciliation of net operating result to cash provided from operating activities

Net operating result from Income StatementAdjust for non-cash items:Depreciation and amortisationNet losses/(gains) on disposal of assetsImpairment losses recognition – I,PP&ELosses/(gains) recognised on fair value re-measurements through the P&L:Unwinding of discount rates on reinstatement provisions

+/- Movement in operating assets and liabilities and other cash items:Decrease/(increase) in receivablesIncrease/(decrease) in provision for doubtful debtsDecrease/(increase) in inventoriesDecrease/(increase) in other assetsIncrease/(decrease) in payablesIncrease/(decrease) in accrued interest payableIncrease/(decrease) in other accrued expenses payableIncrease/(decrease) in other liabilitiesIncrease/(decrease) in employee leave entitlementsIncrease/(decrease) in other provisionsNet cash provided from/(used in)operating activities from the Statement of Cash Flows

(810)

2,954

57

42

2017

–

9

–

2016

7

3,459

14,628

(801)

–

17 290

339

612

17,815

3,524

Notes

90

699

1,663 297

(9)

275 124

10

2,356

2,356 –

9,749

– (153)

319 129

2,064

6a

Actual

2,064

–

(1,162)

Actual

10,723


page 46



Note 11. Statement of cash flows – additional information (continued)

$ ’000

(c) Non-cash investing and financing activitiesNil

(d) Financing arrangements

(i) Unrestricted access was available at balance date to the following lines of credit:

Bank overdraft facilities (1)

Credit cards/purchase cardsTotal financing arrangements

Amounts utilised as at balance date:– Credit cards/purchase cardsTotal financing arrangements utilised

1. The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. Interest rates on overdrafts are interest rates on loans and other payables are disclosed in Note 15.

(ii) Secured loan liabilitiesLoans are secured by a mortgage over future years rate revenue only.

Note 12. Commitments for expenditure

(a) Capital commitments (exclusive of GST)Nil

(b) Finance lease commitmentsNil

(c) Operating lease commitments (non-cancellable)

a. Commitments under non-cancellable operating leases at the reporting date, but not recognised as liabilities are payable:

Within the next yearLater than one year and not later than 5 yearsTotal non-cancellable operating lease commitments

b. Non-cancellable operating leases include the following assets:PhotocopiersContingent rentals may be payable depending on the condition of items or usage during the lease term.

Conditions relating to operating leases:– All operating lease agreements are secured only against the leased asset.– No lease agreements impose any financial restrictions on Council regarding future debt etc.

13

Actual

16

500

16

500 52

Actual

20162017Actual

102 –

552

13

68 136

34

52 552

Notes

68

Actual


page 47



Note 13a(i). Statement of performance measurement – indicators (consolidated)

$ ’000

Local government industry indicators – consolidated

1. Operating performance ratioTotal continuing operating revenue (1) excluding capitalgrants and contributions less operating expensesTotal continuing operating revenue (1) excluding capitalgrants and contributions

2. Own source operating revenue ratioTotal continuing operating revenue (1)

excluding all grants and contributionsTotal continuing operating revenue (1)

3. Unrestricted current ratioCurrent assets less all external restrictions (2)

Current liabilities less specific purpose liabilities (3, 4)

4. Debt service cover ratioOperating result (1) before capital excluding interestand depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows)plus borrowing costs (Income Statement)

5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible

6. Cash expense cover ratioCurrent year’s cash and cash equivalentsplus all term depositsPayments from cash flow of operating andfinancing activities

Notes

(1) Excludes fair value adjustments and reversal of revaluation decrements, net gain/(loss) on sale of assets and the net share of interests in joint ventures and associates.(2) Refer Notes 6-8 inclusive. Also excludes any real estate and land for resale not expected to be sold in the next 12 months.(3) Refer to Note 10(a).(4) Refer to Note 10(a)(ii) – excludes all payables and provisions not expected to be paid in the next 12 months (incl. ELE).

x12 16.85 mths

137.94x 0.00x >2x

< 5% Metro<10% Rural

0.00x

13.8 mths

15,046

Amounts

38.29%

4,129

9,549

3.32x

6.56%

5,759

>0.00%

>60.00%

Prior periods

8.73%

46.22%

>1.5x3.06x

101

20172017Indicator

2016

716

36,439

Benchmark

13,932

2,164 36,456

45.26%39,293

26,321

7.50%

> 3 mths19.0 mths

7.07%11.33%

4.57x

2015

-10.59%


page 48



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

Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

This ratio measures Council’s

achievement of containing operating expenditure within operating revenue.

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

the unrestricted activities of Council.

This ratio reflects Council's ability to contain operating expenditure within its operating revenue. Council's long term financial plan provides for this ratio to

remain above benchmark in the future.

2016/17 ratio 11.33%

Purpose of own source operating

revenue ratio

Long term financial plans, including the special rate variation has led to

improvements in this ratio.

Commentary on 2016/17 result

Purpose of unrestricted current

ratio 2016/17 ratio 4.57x


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.


This reflects the increased grant funding received during the year.

2016/17 ratio 38.29%

7% 11%

-28% -11%

-35%-30%-25%-20%-15%-10%-5%0%5%

10%15%

2014 2015 2016 2017

Rat

io %

1. Operating performance ratio

44% 45% 46% 38%

0%

10%

20%

30%

40%

50%

60%

70%

2014 2015 2016 2017

Rat

io %

2. Own source operating revenue ratio

2.5 3.1 3.3

4.6

0.00.51.01.52.02.53.03.54.04.55.0

2014 2015 2016 2017

Rat

io (x

)

3. Unrestricted current ratio


page 49



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 remains within the current benchmark (10%)

This ratio reflects Council's capacity to fund its operations. The long term financial plan provides that the benchmark will continue

to be exceeded in the future.

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

recovery efforts.

2016/17 ratio 7.50%

This ratio measures the availability of operating cash to

service debt including interest, principal and

lease payments

Purpose of cash expense cover ratio


2016/17 ratio 16.85 mths

2016/17 ratio 137.94x


Council incurred external debt this year to fund the construction of the Condobolin

SRA Hall. Repayments are on a quarterly basis.

Commentary on 2016/17 resultPurpose of rates and annual charges

outstanding ratio

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

for its immediate expenses without

additional cash inflow.

Purpose of debt service cover ratio

137.9

0.0 0.0 0.0 0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

2014 2015 2016 2017

Rat

io (x

)

4. Debt service cover ratio

7.76% 8.73% 6.56% 7.50%

0%

2%

4%

6%

8%

10%

12%

2014 2015 2016 2017

Rat

io %

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

9.4

13.8

19.0 16.8

0.02.04.06.08.0

10.012.014.016.018.020.0

2014 2015 2016 2017

Rat

io (m

ths)

6. Cash expense cover ratio


page 50



Note 13b. Statement of performance measurement – indicators (by fund)

$ ’000

Local government industry indicators – by fund

1. Operating performance ratioTotal continuing operating revenue (1) excluding capital grants and contributions less operating expensesTotal continuing operating revenue (1) excluding capital grants and contributions

2. Own source operating revenue ratioTotal continuing operating revenue (1) excluding capital grants and contributions Total continuing operating revenue (1)

3. Unrestricted current ratioCurrent assets less all external restrictions (2)

Current liabilities less specific purpose liabilities (3, 4)

Notes

(1) - (4) Refer to Notes at Note 13a(i) above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

Water indicators Sewer indicatorsGeneral indicators 5 Benchmark

>60.00%

>0.00%

29.33%

4.57x

13.98% 8.78% -5.94% -1.77% 2.87% 0.72%

2017 2017 20172016 2016

No liabilities

No liabilities

No liabilities >1.5x

35.81% 79.01% 94.47% 86.61% 98.83%

2.46x No liabilities

2016


page 51



Note 13b. Statement of performance measurement – indicators (by fund) (continued)

$ ’000

Local government industry indicators – by fund (continued)

4. Debt service cover ratioOperating result (1) before capital excluding interest and depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows) plus borrowing costs (IncomeStatement)

5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible

6. Cash expense cover ratioCurrent year’s cash and cash equivalents plus all term depositsPayments from cash flow of operating and financing activities

Notes

(1) Refer to Notes at Note 13a(i) above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

2017

x12

Benchmark2017 2016 2017 2016

months months monthsmonths15.79 0.00 0.00 17.03 0.00

months

General indicators 5 Water indicators Sewer indicators

>2x

> 3 months

5.09% 11.19% 9.19%

0.00x 0.00x 0.00x 0.00x 0.00x

0.00 months

118.55x

5.74%

2016

13.98% 11.19% < 5% Metro<10% Rural


page 52



Note 14. Investment properties

$ ’000

Council has not classified any land or buildings as ‘investment properties’.

Note 15. Financial risk management

Risk management

Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.

The Council’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.

Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.

Financial risk management is carried out by Council’s finance section under policies approved by the Council.

A comparison by category of the carrying amounts and fair values of Council’s financial assets and financialliabilities recognised in the financial statements is presented below.

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

Financial liabilitiesPayablesLoans/advancesTotal financial liabilities

Fair value is determined as follows:

– Cash and cash equivalents, receivables, payables – are estimated to be the carrying value that approximates market value.

– Borrowings and held-to-maturity investments – are based upon estimated future cash flows discounted by the current mkt interest rates applicable to assets and liabilities with similar risk profiles, unless quoted market prices are available.

– Financial assets classified (i) ‘at fair value through profit and loss’ or (ii) ‘available-for-sale’ – are based upon quoted market prices (in active markets for identical investments) at the reporting date or independent valuation.

Refer to Note 27. Fair value measurement for information regarding the fair value of financial assets and liabilities.

1,433

2016

2016

2,092

3,444 3,392

2,392

2016

30,073

3,893

30,055

1,597 2,152 1,853

39,848

1,597 1,801

1,433 – –

2,354

Actual

6,064

NotesActual

40,983

2,356

21,655 35,147 25,648

Carrying value

34,100

2017Fair value

2017

4,005

2,064

2,343

2017


page 53



Note 15. Financial risk management (continued)

$ ’000

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

Council’s finance area manages the cash and Investments portfolio with the assistance of independentadvisors.

Council has an investment policy which complies with the Local Government Act 1993 and Minister’sinvestment order. This policy is regularly reviewed by Council and it’s staff and an investment report is tabled before Council on a monthly basis setting out the portfolio breakup and its performance.

The risks associated with the investments held are:

– Price risk – the risk that the capital value of Investments may fluctuate due to changes in market prices, whether there changes are caused by factors specific to individual financial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.

– Interest rate risk – the risk that movements in interest rates could affect returns and income.

– Credit risk – the risk that the investment counterparty will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council – be it of a capital or income nature.

Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasinginvestments with high credit ratings or capital guarantees.

Council also seeks advice from independent advisers before placing any funds in cash equivalents andinvestments.

(a) Market risk – price risk and interest rate risk

The following represents a summary of the sensitivity of Council’s Income Statement and accumulated surplus(for the reporting period) due to a change in either the price of a financial asset or the interest rates applicable.

It is assumed that the change in interest rates would have been constant throughout the reporting period.

2017Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

2016Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

(31)

Equity

28

(306) (31)

Profit

31

277

(306) 31

Decrease of values/rates

(28) 28 (28) (277) (277)

306 Equity Profit

277

306

Increase of values/rates


page 54




$ ’000

(b) Credit risk

Council’s major receivables comprise (i) rates and annual charges and (ii) user charges and fees.

The major risk associated with these receivables is credit risk – the risk that debts due and payable to Councilmay not be repaid in full.

Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.

Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates and annual charges at higher than market rates which further encourages the payment of debt.

There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.

The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.

Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.

There are no material receivables that have been subjected to a re-negotiation of repayment terms.

A profile of Council’s receivables credit risk at balance date follows:

(i) Ageing of receivables – %Current (not yet overdue)Overdue

(ii) Ageing of receivables – valueRates and annual charges Other receivablesCurrent Current< 1 year overdue 0 – 30 days overdue1 – 2 years overdue 31 – 60 days overdue2 – 5 years overdue 61 – 90 days overdue> 5 years overdue > 91 days overdue

(iii) Movement in provision for impairment of receivablesBalance at the beginning of the year+ new provisions recognised during the yearBalance at the end of the year

68%

5 814

100%34%

annual

annual

2016

Other

Rates and

receivables

Rates and

100% 100%

annual

10%

2017 2017

charges receivables

220

4

90

41 34

Rates and

40

2016

92

42

670

37 35

1,893

310

178

713

annual Other

2016

524 1,705

44 50

1,902

Rates and

486

78%

100%

charges receivables

22%

charges Other

66%

Other

220

2,989 112

17

2017

62 55 206

receivables charges

32%90%


page 55




$ ’000

(c) Liquidity risk

Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on handto meet payment obligations as and when they fall due.

Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.

Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.

The contractual undiscounted cash outflows (ie. principal and interest) of Council’s payables and borrowingsare set out in the maturity table below:

$ ’000

Trade/other payablesLoans and advancesTotal financial liabilities

Trade/other payablesTotal financial liabilities

Borrowings are also subject to interest rate risk – the risk that movements in interest rates could adverselyaffect funding costs and debt servicing requirements. Council manages this risk through the diversification ofborrowing types, maturities and interest rate structures.

The following interest rates were applicableto Council’s borrowings at balance date:

Trade/other payablesLoans and advances – fixed interest rate

Loan agreement breachesN/A

170

≤ 1 Year

2,160

–

170 – 1,427

maturity > 5 Yrs

162

to no3-4 Yrs

Subject

170

1-2 Yrs

– 170

4-5 Yrs

170 170 170

170 1,853

valuescash

2-3 Yrspayable in:

interest rateCarrying

– –

4,005

170 – 2,152

carryingActualTotal

2,152

1,427

1,597

– 1,597

–

–

4,444 1,442

– 2016

2017– 162

170

1,990 170

1,597 4.05%

–

1,597

2,292

value

outflows

n/a

2017

1,597

1,597 0.00%

2016Carrying

4,005 –

2,152

Average

1,853

interest rate

1,442 – –

–

n/avalue

–

Average


page 56



Note 16. Material budget variations

$ ’000

Council’s original financial budget for 16/17 was adopted by the Council on 29 June 2016.

While the Income Statement included in this General Purpose Financial Report must disclose the originalbudget adopted by Council, the Local Government Act 1993 requires Council to review its financial budgeton a quarterly basis, so that it is able to manage the various variations between actuals versus budget thatinvariably occur throughout the year.

This note sets out the details of material variations between Council’s original budget and its actualresults for the year as per the Income Statement – even though such variations may have been adjusted forduring each quarterly budget review.

Note that for variations* of budget to actual :Material variations represent those variances that amount to 10% or more of the original budgeted figure.F = Favourable budget variation, U = Unfavourable budget variation

$ ’000

REVENUESRates and annual charges

User charges and fees

Interest and investment revenue

Other revenuesAnticipated proceeds from sale of assets was overestimated

Operating grants and contributionsCouncil received grant funding related to the flood event which was not budgeted for.Also two quarters of the 2018 Financial Assistance Grant was paid in advance.

Capital grants and contributionsWater and sewer grants of $1.026M and $300K respectively, were not in the original budget.

Net gains from disposal of assetsBudgeted net gains were not realised as sale of land and property (not budgeted) resulted in a net loss fromdisposal of assets.

20172017

F

U

2017

(78) (8%)

F

(250) (100%)

795

1%

F

61

21,393

1,460

250

16,349 31%

(18%)

U

Budget

8,791

4,136

U

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

1,394

1,036

972

5,044

8,852

7%4,441

Actual

(177)

305

958

F

–

95%2,854


page 57



Note 16. Material budget variations (continued)

$ ’000

EXPENSESEmployee benefits and on-costs

Borrowing costsLoan for the SRA Hall was drawn down later than anticipated. Interest repayments are on a quarterly basis.

Materials and contractsVariation to original budget can be principally attributed to unbudgeted flood maintenance, state road maintenance,additional waste collection service contract costs and water supply projects.

Depreciation and amortisation

Impairment expenses

Other expenses

Net losses from disposal of assetsA net loss was incurred from the sale of the Condobolin District Retirement Village, as the fair value exceedednet proceeds from the sale.

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

Cash flows from operating activities

Cash flows from investing activitiesBudget did not initially consider the impact of continuing low interest rates.

Cash flows from financing activities

–

0%(3,524)

54

2017

(3,514)

(2.0%)

11.7%

1,853

(14,487) (1,702)

F

(122)

13,814 14,628

U1,891

U(16,189)

(38)

–

–

814

(4%)

F

3,333

11,609

Actual

28%75

–

2017

(87%)

U3,524

7,565

0%

5.9%

3,211

9,913 F9,749

U

U

2%164

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

2%

21 F

4,051

Budget

11,796 187

2017

F


page 58



Note 17. Statement of developer contributions

$ ’000

Council recovers contributions, raises levies and enters into planning agreements on development works that are subject to a development consent issued by Council.All contributions must be spent/utilised for the specific purpose they were levied and any interest applicable to unspent funds must be attributed to remaining funds.

The following tables detail the receipt, interest and use of the above contributions and levies and the value of all remaining funds which are ‘restricted’ in their future use.

SUMMARY OF CONTRIBUTIONS AND LEVIES

Community facilities

S94 CONTRIBUTIONS – UNDER A PLAN

Community facilities36

assetrestricted

Internal Held as

– – – –

– 15

Total S94 revenue under plans

–

Non-cashCash

21

– 21

– 21 15 21

Total

Held as

– 36

36

InternalExpenditureborrowing

year

restricted(to)/from

during

during

–

– –

Interest

in year

–

36

36

36

–

–

– asset

borrowing

in year

–

Expenditure

(to)/from

15 Cash

15

– –

15

–

Opening received during the year

earnedContributions

received during the yearInterest

year

earned

Non-cash

– – 15

Total contributions

S94 contributions – under a plan

PURPOSE

PURPOSE Openingbalance

21

Contributions

balance

–

–

21

–

–

– –

–

–

Cumulative internal

borrowings due/(payable)

Cumulative internal

borrowings due/(payable)


page 59



Note 18. Contingencies and other assets/liabilities not recognised

$ ’000

The following assets and liabilities do not qualify for (ii) Statewide Limitedrecognition in the Statement of Financial Position, buttheir knowledge and disclosure is considered relevant Council is a member of Statewide Mutual, a mutualto the users of Council’s financial report. pool scheme providing liability insurance to local

government.

LIABILITIES NOT RECOGNISED: Membership includes the potential to share in eitherthe net assets or liabilities of the fund depending on

1. Guarantees its past performance. Council’s share of the netassets or liabilities reflects Council’s contributions to

(i) Defined benefit superannuation the pool and the result of insurance claims within contribution plans each of the fund years.

Council participates in an employer-sponsored The future realisation and finalisation of claimsdefined benefit superannuation scheme, and makes incurred but not reported to 30/6 this year may resultcontributions as determined by the superannuation in future liabilities or benefits as a result of pastscheme’s trustees. events that Council will be required to fund or share

in respectively.Member councils bear responsibility of ensuring thereare sufficient funds available to pay out the required (iii) StateCover Limitedbenefits as they fall due.

Council is a member of StateCover Mutual LimitedThe schemes most recent full actuarial review and holds a partly paid share in the entity.indicated that the net assets of the scheme werenot sufficient to meet the accrued benefits of the StateCover is a company providing workersschemes defined benefit member category with compensation insurance cover to the NSW localmember councils required to make significantly government industry and specifically Council.higher contributions in future years.

Council has a contingent liability to contribute furtherThe Local Government Superannuation Scheme equity in the event of the erosion of the company’showever is unable to provide Council with an accurate capital base as a result of the company’s pastestimate of its share of the net deficit and accordingly performance and/or claims experience or as a resultCouncil has not recorded any net liability from it’s of any increased prudential requirements from APRA.defined benefit scheme obligations in accordancewith AASB 119. These future equity contributions would be required

to maintain the company’s minimum level of netFuture contributions made to the defined benefit assets in accordance with its licence requirements.scheme to rectify the net deficit position will berecognised as an expense when they become (iv) Other guaranteespayable – similar to the accounting for definedcontributions plans. Council has provided no other guarantees other than

those listed above.


page 60



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

$ ’000

LIABILITIES NOT RECOGNISED (continued): (iii) Potential land acquisitions due to planning restrictions imposed by Council (continued)

2. Other liabilitiesAs a result, where notified in writing by the various

(i) Third party claims owners, Council will be required to purchase theseland parcels.

The Council is involved from time to time in variousclaims incidental to the ordinary course of business At reporting date, reliable estimates as to the valueincluding claims for damages relating to its services. of any potential liability (and subsequent land asset)

from such potential acquisitions has not beenCouncil believes that it is appropriately covered possible.for all claims through its insurance coverage anddoes not expect any material liabilities to eventuate. ASSETS NOT RECOGNISED:

(ii) S94 plans (i) Land under roads

Council levies section 94/94A contributions upon As permitted under AASB 1051, Council has electedvarious development across the Council area through not to bring to account land under roads that itthe required contributions plans. owned or controlled up to and including 30/6/08.

As part of these plans, Council has received funds (ii) Infringement notices/finesfor which it will be required to expend the monies inaccordance with those plans. Fines and penalty income, the result of Council

issuing infringement notices is followed up and As well, these plans indicate proposed future collected by the Infringement Processing Bureau.expenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in Council’s revenue recognition policy for suchfuture years or where a shortfall exists by the use of income is to account for it as revenue on receipt.Council’s general funds.

Accordingly, at year end, there is a potential assetThese future expenses do not yet qualify as liabilities due to Council representing issued but unpaidas of the reporting date, but represent Council’s infringement notices. intention to spend funds in the manner and timingset out in those plans. Due to the limited information available on the status,

value and duration of outstanding notices, Council is(iii) Potential land acquisitions due to planning unable to determine the value of outstanding income.

restrictions imposed by Council

Council has classified a number of privately ownedland parcels as local open space or bushland.

Note 19. Interests in other entities

Council has no interest in any controlled entities, joint arrangements or associates.


page 61



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

$ ’000

(a) Retained earnings

Movements in retained earnings were as follows:Balance at beginning of year (from previous years audited accounts)a. Net operating result for the yearBalance at end of the reporting period

(b) Revaluation reserves

(i) Reserves are represented by:

– Infrastructure, property, plant and equipment revaluation reserveTotal

(ii) Reconciliation of movements in reserves:

Infrastructure, property, plant and equipment revaluation reserve– Opening balance– Revaluations for the year– (Impairment of revalued assets)/impairment reversals– Balance at end of year

TOTAL VALUE OF RESERVES

(iii) Nature and purpose of reserves

Infrastructure, property, plant and equipment revaluation reserve– The infrastructure, property, plant and equipment revaluation reserve is used to record increments/decrements of non-current asset values due to their revaluation.

(c) Correction of error/s relating to a previous reporting period

Council made no correction of errors during the current reporting period.

(d) Voluntary changes in accounting policies

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

168,160 172,357

172,357

172,357

(4,394) 168,160

197,474 2,954

2016

170,631 197

200,933

9(a) 1,726

Actual

194,520 3,459

9(a),(c)

Notes 2017

172,357 168,160 172,357

197,474

Actual

168,160

–


page 62



Note 21. Financial result and financial position by fund

Income Statement by fund$ ’000

Continuing operationsIncome from continuing operationsRates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationImpairmentOther expensesNet losses from the disposal of assetsTotal expenses from continuing operationsOperating result from continuing operations

Discontinued operations

Net profit/(loss) from discontinued operationsNet operating result for the year

Net operating result attributable to each council fundNet operating result attributable to non-controlling interests

Net operating result for the year before grants and contr and contributions provided for capital purposes

1 General fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal charges and recoveries made between the funds.

221

6,426

Actual

1,153 88

516 2,560

2017 2017

–

790

–

476

4,979 1,024

5,652

32,484

–

3,524 2,623

355

534

–

–

–

2,396

–

–

Actual

18 20

621

793

54

1,793

2017

1,273

2017

227 1,603

221

–

4,189

–

–

273

1,437 1,613

– –

273

10,633

1,830

7,602

–

– 790 273

2,396 1,557

Water

Actual

General1Sewer

791 1 21,355

3

Actual

30,088 790

–

–

2,396

–

518 192

46

–

(234) –


page 63


Notes to the Financial Statements as at 30 June 2017

Note 21. Financial result and financial position by fund (continued)

Statement of Financial Position by fund$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as ‘held for sale’Total current assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using the equity methodIntangible assetsTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets

EQUITYRetained earningsRevaluation reservesTotal equity1 General Fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal receivables and payables between the funds.

General1

64

Actual

64,423 –

10,913

–

– –

27,809

– – –

27,809

– –

64,423

–

–

–

– – 115

13,724

– –

–

4,765

149,602

–

–

–

–

Actual

Sewer

6,522 –

40,418

276,861

–

–

–

–

1,672

20172017

178

9

22,985 –

–

–

–

1,203

1,445

267,600

262,182

– 22,063

1,089 18,284

–

162 –

6,420

3,951 1,380

5,746

207

–

4,365

– 20,618

–

Actual

2,956

0

Actual

1,305

– 56,698

– 4,750

2017

–

2017

Water

–

–

16,896

96

1,757

299 –

290,585

2,152 –

24,005

– 4,839 7,202

58,003

127,259 64,423 27,809 276,861 –


page 64



Note 22. ‘Held for sale’ non-current assets and disposal groups

$ ’000

Council did not classify any non-current assets or disposal groups as ‘held for sale’.

Note 23. Events occurring after the reporting date

Events that occur between the end of the reporting period (30 June 2017) and the date when the financialstatements are ‘authorised for issue’ have been taken into account in preparing these statements.

Council has adopted the date of receipt of the Auditors’ Report as the applicable ‘authorised for issue’ daterelating to these General Purpose Financial Statements.

Accordingly, the ‘authorised for issue’ date is 30/11/17.

Events that occur after the reporting period represent one of two types:

(i) Events that provide evidence of conditions that existed at the reporting period

These financial statements (and the figures therein) incorporate all ‘adjusting events’ that provided evidence ofconditions that existed at 30 June 2017.

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

These financial statements (and figures therein) do not incorporate any ‘non-adjusting events’ that have occurredafter 30 June 2017 and which are only indicative of conditions that arose after 30 June 2017.

Council is unaware of any material or significant ‘non-adjusting events’ that should be disclosed.

Note 24. Discontinued operations

Council has not classified any of its operations as ‘discontinued’.


page 65



Note 25. Intangible assets

$ ’000

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

Intangible assets are as follows:

Opening values:Gross book value (1/7)Accumulated amortisation (1/7)Accumulated impairment (1/7)Net book value – opening balance

Movements for the year– Purchases– Amortisation charges

Closing values:Gross book value (30/6)Accumulated amortisation (30/6)Accumulated impairment (30/6)

TOTAL INTANGIBLE ASSETS – NET BOOK VALUE 1

1. The net book value of intangible assets represent:

– Software

2016

382

(209)

(35)

(244)

161

– – 173

(209)

173

Actual Actual 2017

173 299

–

209

(174)

(35)

383

299

543

–

382

–

299 173


page 66



Note 26. Reinstatement, rehabilitation and restoration liabilities

$ ’000

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

Asset/operation

Garbage Tip RestorationBalance at end of the reporting period

Under AASB 116 – Property, Plant and Equipment, where the use of an asset results in the obligation todismantle or remove the asset and restore the site on which the asset stands, an estimate of such costs isrequired to be included in the cost of the asset.

An equivalent liability must be recognised under AASB 137 – Provisions, Contingent Liabilities and ContingentAssets.

The provision has been calculated by determining the present value of the future expenditures expected to beincurred. The discount rate used is the risk free borrowing rate applicable to Council.

Reconciliation of movement in provision for year:

Balance at beginning of yearAmounts capitalised to new or existing assets:Effect of a change in discount rates used in PV calculationsAmortisation of discount (expensed to borrowing costs)Total – reinstatement, rehabilitation and restoration provision

Amount of expected reimbursements

Of the above provisions for reinstatement, rehabilitation and restoration works, those applicable to garbageservices and waste management are able to be funded through future charges incorporated within Council’sannual domestic waste management charge.

–

NPV of provision

4,759

4,759 10(a) 4,759 4,759

4,759 4,759

3,039

year of

2035 to 2045

Estimated

2016restoration

– 1,663

4,759

57

2017


page 67



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.


page 68



Note 27. Fair value measurement

$ ’000

The Council measures the following asset and liability classes at fair value on a recurring basis:

– Infrastructure, property, plant and equipment

The fair value of assets and liabilities must be estimated in accordance with various accounting standards foreither recognition and measurement requirements or for disclosure purposes.

AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a‘level’ in the fair value hierarchy as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(1) The following table presents all assets and liabilities that have been measured and recognised at fair values:

2017

Recurring fair value measurements

Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and FittingsOperational landCommunity LandLand Improvements - non depreciableLand Improvements - depreciableBuildings - Non SpecialisedBuildings SpecialisedOther StructuresRoadsBridgesFootpathsWater Supply networkSewer Supply NetworkLibrary BooksTip restoration assetsStormwater DrainageTotal infrastructure, property, plant and equipment

Fair value measurement hierarchyLevel 1 Level 2

Significant

– 3,378 3,378 30/06/15 – – 464 464 30/06/15 – – 2,039 2,039 30/06/12 – – 7,524 7,524

30/06/17 – –

– – 339,498 339,498

30/06/17 – – 20,084 20,084 30/06/15 – – 164 164 30/06/16 – – 2,001 2,001 30/06/15 – – 4,873 4,873

30/06/15 – – 5,418 5,418 30/06/16 – – 168,749 168,749 30/06/15 – – 22,450 22,450 30/06/15 – – 3,048 3,048

30/06/12 – – 32,570 32,570

30/06/12 – – 350 350 30/06/17 – – 3,031 3,031 30/06/16 –

inputs

52,777

prices in observable

52,777

– 286

inputs

Level 3 TotalDate Quoted Significant

valuation active mktsof latest unobservable

30/06/15 – – 10,292 10,292 30/06/12 – 286


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Note 27. Fair value measurement (continued)

$ ’000

(1) The following table presents all assets and liabilities that have been measured and recognised at fair values: (continued)

2016

Recurring fair value measurements

Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and FittingsOperational landCommunity LandLand Improvements - non depreciableLand Improvements - depreciableBuildings - Non SpecialisedBuildings SpecialisedOther StructuresRoadsBridgesFootpathsWater Supply networkSewer Supply NetworkLibrary BooksTip restoration assetsStormwater DrainageTotal infrastructure, property, plant and equipment

(2) Transfers between level 1 and level 2 fair value hierarchies

During the year, there were no transfers between level 1 and level 2 fair value hierarchies for recurring fairvalue measurements.

– 3,294 3,294 30/06/15 – – 464 464 30/06/15 – – 1,595 1,595

valuation active mkts

Level 1 Level 2Significant Significant

of latest prices in observableDate Quoted

Level 3 TotalFair value measurement hierarchy

–

inputsunobservable

inputs

30/06/15 – – 10,080 10,080 30/06/12 – – 295 295

30/06/12 – – 7,817 7,817 30/06/12 – – 38,897 38,897

30/06/12 – – 408 408 30/06/15 – – 3,842 3,842 30/06/15 –

30/06/15 – – 3,210 3,210 30/06/15 – – 172,181 172,181 30/06/15 – – 22,664 22,664 30/06/15 – – 3,106 3,106 30/06/16 – – 53,339 53,339 30/06/16 – – 20,817 20,817 30/06/15 – – 176 176 30/06/16 – – 2,001 2,001 30/06/15 – – 4,898 4,898

– 349,084 349,084


Lachlan Shire Council Notes to the Financial Statements for the year ended 30 June 2017 Note 27. Fair value measurement (continued)

page 70

(3) Valuation techniques used to derive level 2 and level 3 fair values Where Council is unable to derive fair valuations using quoted market prices of identical assets (i.e. level 1 inputs), Council instead utilises a spread of both observable inputs (level 2 inputs) and unobservable inputs (level 3 inputs). The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows: Financial assets Held to Maturity Valuation technique: ‘Cost approach’ Inputs Used (Level 2) Original investment value Loans and Receivables Valuation technique: ‘Cost approach’ Inputs Used (Level 2) Original investment value Financial liabilities Payables – Outstanding Creditor payments Valuation technique: ‘Cost approach’ Inputs used (Level 2) Cost of product or service Infrastructure, property, plant and equipment Plant & Equipment, Office Equipment and Furniture & Fittings

Plant & Equipment, Office Equipment and Furniture and Fittings are valued at cost but are disclosed at fair value in the notes. The carrying amount of these assets is assumed to approximate fair value due to the nature of the items. There has been no change to the valuation process during the reporting period. Operational & Community Land

Operational land was revalued as at 30 June 2017, by Scott Fullarton Valuations Pty Ltd. Level 2 inputs were used to value land held in freehold title and those with special use, which are restricted under the zoning objectives. Sale prices of comparable land parcels in close proximity were adjusted for differences in key attributes such as size and configuration. The most significant inputs into this valuation approach are price per square metre. Parks, reserves and other special use parcels where there was no observable market evidence. This land was valued utilising Level 3 inputs, with the valuer using professional judgement to adjust the rate per square metre from the sales evidence available. Buildings – Non Specialised and Specialised

Non-specialised and Specialised Buildings are valued using the cost approach. The approach estimated the replacement cost for each building by componentising the building into significant parts. While all buildings were physically inspected and the unit rates based on square metres from Construction Guides no market



page 71

based evidence ( Level 2) could be established. As such these assets were classified as having been valued as Level 3 valuation inputs. While the costs were current and the impact of depreciation negligible, the building has been classified as Level 3 as they are immaterial in relation to the overall value of the asset type. There has been no change to the valuation process during the reporting period. Roads

Roads comprise road carriageway, roadside shoulders & kerb & gutter. The cost approach using level 3 inputs was used to value this asset class. Valuations for this asset class were undertaken in-house based on actual cost and assumptions from Councils engineering department. No market value based evidence (level 2) inputs are available therefore Level 3 valuation inputs were used for this asset class. There has been no change to the valuation process during the reporting period. Bridges

Bridges were valued in-house using Engineering Department Assumptions. While all bridges were physically inspected and unit rate based on square meters was used there was no reliable market evidence (Level 2) as other inputs (such as estimates of residual value and pattern of consumption) require extensive professional judgement that impacts significantly on the final determination of fair value. There has been no change to the valuation process during the reporting period. Footpaths

Footpaths were valued in-house by Council’s engineering department and were based on actual cost per square metre. Footpaths are inspected annually and condition assessed.

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

Assets within this asset class comprise reservoirs, pumping stations and water pipelines.

The Water Supply network was revalued as at 30 June 2017, by Australis Asset Advisory Group.

The ‘cost approach’ (level 3) estimated the replacement cost for each asset by componentising the asset into significant parts with different useful lives and taking into account a range of factors. While the unit rates based on linear metres of certain diameter pipes and prices per pit or similar may be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impact significantly on the final determination of fair value. Additionally due to limitations in the historical records of very long lived assets there is uncertainty regarding the actual design, specifications and dimensions of some assets. These assets are indexed each year in line with the NSW Reference Rates Manual as published by the Office of Water. Sewer Network

Assets within this asset class comprise reservoirs, pumping stations and water pipelines.

The Water Supply network was revalued as at 30 June 2017, by Australis Asset Advisory Group.

The ‘cost approach’ (level 3) estimated the replacement cost for each asset by componentising the asset into significant parts with different useful lives and taking into account a range of factors. While the unit rates based on linear metres of certain diameter pipes and prices per pit or similar may be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impact significantly on the final determination of fair value.



page 72

Additionally due to limitations in the historical records of very long lived assets there is uncertainty regarding the actual design, specifications and dimensions of some assets. These assets are indexed each year in line with the NSW Reference Rates Manual as published by the Office of Water. Tip Assets

Assets in this class represent the expected cost of reinstatement, rehabilitation and restoration of Tip Sites within the Shire.

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


page 73



Note 28. Related party disclosures

$ ’000

a. Key management personnel

Key management personnel (KMP) of the council are those persons having the authority and responsibility for planning, directing and controlling the activities of thecouncil, directly or indirectly.

The aggregate amount of KMP compensation included in the Income Statement is:

Compensation:Short-term benefitsPost-employment benefitsOther long-term benefitsTermination benefits

Total

67

987

Actual2017810 79 31


page 74



Note 28. Related party disclosures (continued)

$ ’000

b. Other transactions with KMP and their related parties

Council has determined that transactions at arm’s length between KMP and Council as part of Council delivering a public service objective (e.g. access to libraryor Council swimming pool by KMP) will not be disclosed.

Nature of the transaction

Fuel Supply for Rural Fire Service VehiclesNewspaper AdvertisingGravel Extraction and CrushingSupply of HardwareErection of Buildings & StructuresGravel RoyaltyVehicle Safety Inspection Reports, Windscreens ReplacementProperty Rental Income

Purchase of fuel from close relative of KMPKMP's are employed by local newspapers in which Council advertisesCouncil engages gravel extraction contractor which employs a close relative of a KMPCouncil purchases hardware from a KMP-owned businessCouncil engages a KMP to erect buildings in accordance with its Procurement & Disposal PolicyCouncil pays gravel royalty to a KMPCouncil engages a KMP to provide automotive servicesCouncil receives rental income from a KMP

Value of Outstanding

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

Terms and conditions Provisions Doubtfultransactions balance for doubtful debts

1 2 – 30-day terms on invoice – – Note $'000 $'000 $'000 $'000

3 1,771 – Weekly contract payments – – 2 29 2 30-day terms on invoice – –

5 23 – 30-day terms on invoice – – 4 1 – 30-day terms on invoice – –

7 7 – 30-day terms on invoice – – 6 1 – Annual payment – –

8 13 – Monthly lease – –

12345678


page 75



Note 29. Council information and contact details

Principal place of business:58 - 64 Molong StreetCondobolin NSW 2877

Contact detailsMailing address: Opening hours:PO Box 216 Mon - Fri. 8.30am to 4.30pmCondobolin NSW 2877

Telephone: 02 6895 1900 Internet:Facsimile: 02 6895 3478 Email:

Officers Elected membersGENERAL MANAGER MAYORRobert Hunt Arthur J Medcalf

RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSJohn Chapman

P PhillipsPUBLIC OFFICER B NelsonJohn Chapman M Blewitt

M ReesAUDITORS D CarterAudit Office of New South Wales P HarrisGPO Box 12 M FrankelSYDNEY NSW 2001 J Ridley

M Hall

Other informationABN: 82 815 250 829

http://[email protected]

http://www.lachlan.nsw.gov.au/

mailto:[email protected]

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


To the Councillors of the Lachlan Shire Council

Opinion I have audited the accompanying financial statements of Lachlan Shire Council (the Council), which comprise the statement of financial position as at 30 June 2017, the income statement, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Statement by Councillors and Management.

In my opinion,

• the Council’s accounting records have been kept in accordance with the requirements of the Local Government Act 1993, Chapter 13, Part 3, Division 2 (the Division)

• the financial statements: - have been presented, in all material respects, in accordance with the requirements of this

Division - are consistent with the Council’s accounting records - present fairly, in all material respects, the financial position of the Council as at

30 June 2017, and of its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards

• all information relevant to the conduct of the audit has been obtained • no material deficiencies in the accounting records or financial statements have come to light

during the audit.

My opinion should be read in conjunction with the rest of this report.

Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’ section of my report.

I am independent of the Council in accordance with the requirements of the:

• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for

Professional Accountants’ (APES 110).

page 76

I have fulfilled my other ethical responsibilities in accordance with APES 110.

Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove an Auditor-General

• mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.

I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Other Matter The financial statements of the Council for the year ended 30 June 2016 were audited by another auditor who expressed an unmodified opinion on that financial statement on 25 November 2016.

The Councillors’ Responsibility for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the Local Government Act 1993, and for such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Councillors must assess the Council’s ability to continue as a going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting.

Auditor’s Responsibility for the Audit of the Financial Statements My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error

• issue an Independent Auditor’s Report including my opinion.

Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar3.pdf. The description forms part of my auditor’s report.

page 77

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.

Karen Taylor Director, Financial Audit Services 30 November 2017 SYDNEY

page 78

Councillor John Medcalf Mayor Lachlan Shire Council PO Box 216 CONDOBOLIN NSW 2877

30 November 2017

Dear Mr Mayor

Report on the Conduct of the Audit for the year ended 30 June 2017


I have audited the general purpose financial statements of the Lachlan Shire Council (the Council) for the year ended 30 June 2017 as required by s415 of the Local Government Act 1993 (the Act).

I expressed an unmodified opinion on the Council’s general purpose financial statements.

This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2017 is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my audit opinion on the general purpose financial statements issued under section 417(2) of the Act.

Contact: Karen Taylor

Phone no: 02 9275 7311

Our ref: D1731254/1750

page 79

Our insights inform and challenge government to improve outcomes for citizens

3

INCOME STATEMENT Operating result

2017 2016 Variance

$m $m %

Rates and annual charges revenue 8.9 8.2 7.3

Grants and contributions revenue 24.2 17.8 36.5

Employee benefits and on-costs 11.6 10.4 11.5

Materials and Contract expenses 7.6 5.4 40.9

Net Losses from the disposal of assets 3.5 0.3 1115.0

Operating result for the year 3.5 3.0 17.1

Net operating result before capital amounts 0.6 1.9 68.9

Note: variances are based on actual financials not rounded figures.

The growth in rates and annual charges was consistent with the IPART approved special rate variation allowing an increase of 7.4 per cent including the rate-pegging limit of 1.5 per cent.

Operating grants were higher following the advance receipt of the 2017-18 financial assistance grant in 2016-17 of $4.3 million. Capital grants were also higher with the receipt of $1.0 million for the Condobolin bore project.

Growth in employee costs was consistent with the growth in staff numbers. Materials and contract costs were higher due to a greater level of maintenance work than 2016. The substantial increase in the loss on disposal of assets was due to the sale of the Condobolin District Retirement Village.

The net operating result was generated across all funds. Note 21 reported surpluses in the general fund of $2.5 million, water fund $0.7 million and the sewer Fund of $0.3 million.

page 80


4

STATEMENT OF CASH FLOWS 2016-17 saw a net cash inflow of $0.3 million, Council grew its cash, cash equivalents and investments balance over the past three years. Over this period, Council has generated operating cash flow surpluses allowing it to maintain and renew community infrastructure.

FINANCIAL POSITION Cash and Investments

2017 2016 Commentary

$m $m

External restrictions 14.7 14.0 Externally restricted balances include unexpended loans, grants, developer contributions water, sewer and domestic waste management charges. Balances are internally restricted due to Council policy or decisions for forward plans including works program. Unrestricted balances provide liquidity for day-to-day operations.

Internal restrictions 21.4 11.0

Unrestricted 0.3 2.7

Cash and investments 36.5 27.7

Debt At 30 June 2017, Council had external borrowings of $1.9 million ($Nil at 30 June 2016) and access to a $0.5 million ($0.5 million at 30 June 2016) bank overdraft facility. This facility was unused at year-end.

-10

0

10

20

30

40

2015 2016 2017

$m

Year ended 30 June

Statement of Cash Flows

Net cash flow Cash, cash equivalents and investments

page 81


5

PERFORMANCE RATIOS The definition of each ratio analysed below (except for the ‘building and infrastructure renewals ratio’)

is included in Note 13 of the Council’s audited general purpose financial statements. The ‘building and

infrastructure renewals ratio’ is defined in Council’s unaudited Special Schedule 7.

Operating performance ratio Council’s operating performance ratio

exceeded the industry benchmark over the past two years. Advance receipt of the 2017-18 financial assistance grant contributed to the further improvement in this year’s

result. The ‘operating performances ratio’

measures how well council contained operating expenditure within operating revenue (excluding capital grants and contributions, fair value adjustments, and reversal of revaluation decrements). The benchmark set by the Office of Local Government (OLG) is greater than zero per cent.

Own source operating revenue ratio The increased level of grants and contributions, particularly from the advance receipt of the financial assistance grant, decreases Council’s

own source operating revenue ratio. The result is below the benchmark. The ‘own source operating revenue

ratio’ measures council’s fiscal

flexibility and the degree to which it relies on external funding sources such as operating grants and contributions. The benchmark set by OLG is greater than 60 per cent.

Unrestricted current ratio Council’s unrestricted current ratio exceeded the industry benchmark over the past three years. The ‘unrestricted current ratio’ is

specific to local government and represents council’s ability to meet its

short-term obligations as they fall due. The benchmark set by OLG is greater than 1.5 times.

-15-10

-505

1015

2015 2016 2017

Ratio%

Year ended 30 June

Operating performance ratio

Operating performance ratio Industry benchmark > 0%

0

20

40

60

80

100

2015 2016 2017

Ratio%

Year ended 30 June

Own source operating revenue ratio

Own source operating revenue ratioIndustry benchmark > 60%

0

1

2

3

4

5

2015 2016 2017

Ratiox

Year ended 30 June

Unrestricted current ratio

Unrestricted current ratio Industry benchmark > 1.5x

page 82


6

Debt service cover ratio The result of this ratio is skewed by council drawing down a $1.9 million loan in October 2016 and accordingly the debt service costs were not for a complete year. The ‘debt service cover ratio’

measures the operating cash to service debt including interest, principal and lease payments. The benchmark set by OLG is greater than two times.

Rates and annual charges outstanding ratio

Council’s rates and annual charges

outstanding ratio is better than the benchmark for rural councils over the past three years. The ratio reflects Council’s sustained effort to effectively manage rates and charges recovery. The ‘rates and annual charges

outstanding ratio’ assesses the impact of uncollected rates and annual charges on council’s liquidity and the

adequacy of debt recovery efforts. The benchmark set by OLG is less than 10 per cent for rural councils.

Cash expense cover ratio Council’s high levels of liquidity results in it being well over the benchmark for the cash expense cover ratio over the past three years. This liquidity ratio indicates the number of months the council can continue paying for its immediate expenses without additional cash inflow. The benchmark set by OLG is greater than three months.

020406080

100120140160

2015 2016 2017

Ratiox

Year ended 30 June

Debt service cover ratio

Debt service cover ratio Industry benchmark > 2x

02468

1012

2015 2016 2017

Ratio%

Year ended 30 June

Rates and annual charges outstanding ratio

Rates and annual charges outsatanding ratioIndustry benchmark < 10%

0

5

10

15

20

2015 2016 2017

Rat

io(m

onth

s)

Year ended 30 June

Cash expense cover ratio

Cash expense cover ratioIndustry benchmark > 3 months

page 83


7

Building and infrastructure renewals ratio

Council has not met the building and infrastructure renewals ratio benchmark over the past three years. Council will continue to focus on renewing its assets to maintain a standard acceptable to the community. The ‘building and infrastructure renewals ratio assesses the rate at which these assets are being renewed against the rate at which they are depreciating. The benchmark set by OLG is greater than 100 per cent. This ratio is sourced from council’s

Special Schedule 7 which has not been audited.

OTHER MATTERS New accounting standards implemented

AASB 124 ‘Related Party Disclosures’

Effective for annual reporting periods beginning on or 1 July 2016

AASB 2015-6 extended the scope of AASB 124 to include not-for-profit public sector entities. As a result, Council’s financial

statements disclosed the: compensation paid to key management personnel nature of related party relationships amount and nature of related party transactions,

outstanding balances and commitments and outstanding balances (including commitments).

Legislative compliance My audit procedures did not identify any instances of non-compliance with legislative requirements or a material deficiency in the Council’s accounting records or financial reports. The Council’s:

accounting records were maintained in a manner and form to allow the general purpose financial statements to be prepared and effectively audited

staff provided all accounting records and information relevant to the audit.

Karen Taylor Director, Financial Audit Services

020406080

100120

2015 2016 2017

Ratio%

Year ended 30 June

Building and infrastructure renewals ratio

Building and infrastructure renewals ratioIndustry benchmark > 100%

page 84

Lachlan Shire Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017


SPFS 2017

page 1


Special Purpose Financial Statements for the year ended 30 June 2017

Contents

1. Statement by Councillors and Management

2. Special Purpose Financial Statements:

Income Statement – Water Supply Business ActivityIncome Statement – Sewerage Business ActivityIncome Statement – Other Business Activities

Statement of Financial Position – Water Supply Business ActivityStatement of Financial Position – Sewerage Business ActivityStatement of Financial Position – Other Business Activities

3. Notes to the Special Purpose Financial Statements

4. Auditor’s Report

Background

These Special Purpose Financial Statements have been prepared for the use by both Council and the Office ofLocal Government in fulfilling their requirements under National Competition Policy.

The principle of competitive neutrality is based on the concept of a ‘level playing field’ between persons/entitiescompeting in a market place, particularly between private and public sector competitors.

Essentially, the principle is that government businesses, whether Commonwealth, state or local, should operatewithout net competitive advantages over other businesses as a result of their public ownership.

For Council, the principle of competitive neutrality and public reporting applies only to declared business activities.

These include (a) those activities classified by the Australian Bureau of Statistics as business activities beingwater supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnoverof more than $2 million that Council has formally declared as a business activity (defined as Category 1 activities).

In preparing these financial statements for Council’s self-classified Category 1 businesses and ABS-definedactivities, councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax-equivalentregime payments and debt guarantee fees (where the business benefits from Council's borrowing position bycomparison with commercial rates).

(iv)

7

n/a6

(i)

(ii)

16

(iii)

5

Page

34

n/a

2

SPFS 2017

page 3


Income Statement of Council's Water Supply Business Activity for the year ended 30 June 2017

$ ’000

Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentWater purchase chargesCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts

Grants and contributions provided for capital purposesSurplus (deficit) from continuing operations after capital amounts

Surplus (deficit) from discontinued operationsSurplus (deficit) from all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]

SURPLUS (DEFICIT) AFTER TAX

Plus opening retained profitsPlus/less: prior period adjustmentsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentLess:– Tax equivalent dividend paid– Surplus dividend paidClosing retained profits

Return on capital %Subsidy from Council

Calculation of dividend payable:Surplus (deficit) after taxLess: capital grants and contributions (excluding developer contributions)Surplus for dividend calculation purposesPotential dividend calculated from surplus

1,078 2,628

– 273 25 – 2

4,006

614 –

1,487 1,523

34 – –

419 4,077

(71)

208 137

– 137

–

137

39,490 –

– – –

– –

39,627

-0.1%1,169

137 (208)

– –

Actual 2016

1,153 2,560

– 221 20 – 1

3,955

621 –

1,437 1,613

60 – –

458 4,189

– –

(234)

1,024 790

– 790

–

– –

Actual 2017

–

– –

40,417

-0.4%1,583

790

39,627 –

790 (1,024)

SPFS 2017

page 4


Income Statement of Council's Sewerage Business Activity for the year ended 30 June 2017

$ ’000

Income from continuing operationsAccess chargesUser chargesLiquid trade waste chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts

Grants and contributions provided for capital purposesSurplus (deficit) from continuing operations after capital amounts

Surplus (deficit) from discontinued operationsSurplus (deficit) from all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]

SURPLUS (DEFICIT) AFTER TAX

Plus opening retained profitsPlus/less: prior period adjustmentsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentLess:– Tax equivalent dividend paid– Surplus dividend paidClosing retained profits

Return on capital %Subsidy from Council

Calculation of dividend payable:Surplus (deficit) after taxLess: capital grants and contributions (excluding developer contributions)Surplus for dividend calculation purposesPotential dividend calculated from surplus

(227) 32

– 192

1,557 46

1,536

–

–

– 10,917

0.2%445

259

–

– –

14

–

16

–

– 273 (14)

1,603

– 2

369 –

521 525

8 – 8 4

259

10,644

Actual 2017

– 290 18

1,273 88 – –

221

– 110

1,525

227 273

18 – 3

1,194 32

Actual 2016

–

11

– 11

0.1%409

– 11 (3)

8

10,633 –

10,644

355 –

476 534

– 3

– –

SPFS 2017

page 5


Statement of Financial Position – Council's Water Supply Business Activity as at 30 June 2017

$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal current assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesBank overdraftPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

– –

– –

– –

64,423 –

64,423

22,688 39,628

–

–

–

40,418

–

–

1,089 1,388

– – – –

– –

58,003 56,557

–

56,698

3,951 3,582 1,380 789

6,420

1,375

– – 5,759

1,305 – –

–

62,316

Actual 2016

Actual 2017

64,423

–

– 55,182

62,316

–

–

– –

– – –

– –

–

–

– –

62,316 –

– –

62,316

24,005

64,423

SPFS 2017

page 6


Statement of Financial Position – Council's Sewerage Business Activity as at 30 June 2017

$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal current Assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesBank overdraftPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

– –

– –

– –

20,618 21,115 –

10,913

–

– –

16,896 17,352

27,809

–

27,992

27,992

–

– – –

10,640

27,809

27,809

1,203

2017

–

Actual Actual

1,471

–

–

–

–

– –

–

– – –

3,796

5,746 5,420

– –

27,809

– – –

178 153 4,365

2016

– –

22,063 22,572

–

1,457 1,445

27,992

– –

– – –

–

–

27,992

–

SPFS 2017

page 7


Special Purpose Financial Statements for the year ended 30 June 2017

Contents of the notes accompanying the financial statements

Details

Summary of significant accounting policies

Water Supply Business Best-Practice Management disclosure requirements

Sewerage Business Best-Practice Management disclosure requirements 133

Note Page

1

2

8

11

SPFS 2017

Lachlan Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies

page 8

A statement summarising the supplemental accounting policies adopted in the preparation of the Special Purpose Financial Statements (SPFS) for National Competition Policy (NCP) reporting purposes follows. These financial statements are SPFS prepared for use by Council and the Office of Local Government. For the purposes of these statements, the Council is a non-reporting not-for-profit entity. The figures presented in these Special Purpose Financial Statements have been prepared in accordance with the recognition and measurement criteria of relevant Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Australian Accounting Interpretations. The disclosures in these Special Purpose Financial Statements have been prepared in accordance with the Local Government Act 1993 (NSW), the Local Government (General) Regulation, and the Local Government Code of Accounting Practice and Financial Reporting. The statements are prepared on an accruals basis. They are based on historic costs and do not take into account changing money values or, except where specifically stated, current values of non-current assets. Certain taxes and other costs, appropriately described, have been imputed for the purposes of the National Competition Policy. National Competition Policy Council has adopted the principle of ‘competitive neutrality’ in its business activities as part of the National Competition Policy which is being applied throughout Australia at all levels of government. The framework for its application is set out in the June 1996 NSW government policy statement titled 'Application of National Competition Policy to Local Government'. The Pricing and Costing for Council Businesses, A Guide to Competitive Neutrality issued by the Office of Local Government in July 1997 has also been adopted. The pricing and costing guidelines outline the process for identifying and allocating costs to

activities and provide a standard for disclosure requirements. These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents, Council subsidies, return on investments (rate of return), and dividends paid. Declared business activities In accordance with Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities: Category 1 (where gross operating turnover is over $2 million) Water Supplies

Comprising the whole of the operations and assets of the water supply systems servicing the towns of Condobolin, Lake Cargelligo, Tottenham, Tullibigeal, Burcher and Fifield. Category 2 (where gross operating turnover is less than $2 million) Sewerage Services

Comprising the whole of the operations and assets of the sewerage reticulation and treatment system servicing the towns of Condobolin, Lake Cargelligo and Tottenham. Monetary amounts Amounts shown in the financial statements are in Australian currency and rounded to the nearest thousand dollars, except for Note 2 (Water Supply Best-Practice Management Disclosures) and Note 3 (Sewerage Best-Practice Management Disclosures). As required by the NSW Office of Water (Department of Primary Industries) the amounts shown in Note 2 and Note 3 are disclosed in whole dollars. (i) Taxation-equivalent charges Council is liable to pay various taxes and financial duties. Where this is the case, they are disclosed as a cost of operations just like all other costs.

SPFS 20177

Lachlan Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)

page 9

However, where Council does not pay some taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all Council-nominated business activities and are reflected in Special Purpose Financial Statements. For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities): Notional rate applied (%) Corporate income tax rate – 30% Land tax – the first $549,000 of combined land values attracts 0%. For the combined land values in excess of $549,001 up to $3,357,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $3,357,000 a premium marginal rate of 2.0% applies. Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $750,000. In accordance with the Department of Primary Industries Water (DPIW), a payment for the amount calculated as the annual tax equivalent charges (excluding income tax) must be paid from water supply and sewerage business activities. The payment of taxation equivalent charges, referred to in the NSW Office of Water Guidelines to as a ‘dividend for taxation equivalent’, may be applied for any purpose allowed under the Local Government Act, 1993. Achievement of substantial compliance to the NSW Office of Water Guidelines is not a prerequisite for the payment of the tax equivalent charges, however the payment must not exceed $3 per assessment. Income tax An income tax equivalent has been applied on the profits of the business activities. Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account in terms of assessing the rate of return required on capital invested.

Accordingly, the return on capital invested is set at a pre-tax level - gain/(loss) from ordinary activities before capital amounts, as would be applied by a private sector competitor. That is, it should include a provision equivalent to the corporate income tax rate, currently 30%. Income tax is only applied where a gain/ (loss) from ordinary activities before capital amounts has been achieved. Since the taxation equivalent is notional – that is, it is payable to Council as the ‘owner’ of business operations - it represents an internal payment and has no effect on the operations of the Council. Accordingly, there is no need for disclosure of internal charges in the SPFS. The rate applied of 30% is the equivalent company tax rate prevalent at reporting date. No adjustments have been made for variations that have occurred during the year. Local government rates and charges A calculation of the equivalent rates and charges payable on all category 1 businesses has been applied to all land assets owned or exclusively used by the business activity. Loan and debt guarantee fees The debt guarantee fee is designed to ensure that council business activities face ‘true’ commercial borrowing costs in line with private sector competitors. In order to calculate a debt guarantee fee, Council has determined what the differential borrowing rate would have been between the commercial rate and Council’s borrowing rate for its business activities. (ii) Subsidies Government policy requires that subsidies provided to customers, and the funding of those subsidies, must be explicitly disclosed. Subsidies occur when Council provides services on a less-than-cost-recovery basis. This option is exercised on a range of services in order for Council to meet its community service obligations.

SPFS 20177

Lachlan Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)

page 10

Accordingly, ‘subsidies disclosed’ (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by Council in any given financial year. The overall effect of subsidies is contained within the Income Statement of each reported business activity. (iii) Return on investments (rate of return) The NCP policy statement requires that councils with Category 1 businesses ‘would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field’. Such funds are subsequently available for meeting commitments or financing future investment strategies. The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement. The rate of return is calculated as follows: Operating result before capital income + interest expense

Written down value of I,PP&E as at 30 June As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 2.38% at 30/6/17. (iv) Dividends Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities. Local government water supply and sewerage businesses are permitted to pay an annual dividend from its water supply or sewerage business surplus. Each dividend must be calculated and approved in accordance with the DPIW guidelines and must not exceed:

(i) 50% of this surplus in any one year, or (ii) the number of water supply or sewerage

assessments at 30 June 2017 multiplied by $30

(less the payment for tax equivalent charges, not exceeding $3 per assessment).

In accordance with the DPIW guidelines a Dividend Payment form, Statement of Compliance, Unqualified Independent Financial Audit Report and Compliance Audit Report are required to be submitted to the DPIW.

SPFS 2017

page 11


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

Note 2. Water supply business best-practice management disclosure requirements

Dollars amounts shown below are in whole dollars (unless otherwise indicated)

1. Calculation and payment of tax-equivalents[all local government local water utilities must pay this dividend for tax equivalents]

Calculated tax equivalents

Number of assessments multiplied by $3/assessment

Amounts payable for tax equivalents [lesser of (i) and (ii)]

Amounts actually paid for tax equivalents

2. Dividend from surplus50% of surplus before dividends[calculated in accordance with Best-Practice Management for Water Supply and Sewerage Guidelines]

Number of assessments multiplied by $30/assessment, less tax equivalentcharges/assessment

Cumulative surplus before dividends for the 3 years to 30 June 2017, less thecumulative dividends paid for the 2 years to 30 June 2016 and 30 June 2015

2017 Surplus 2016 Surplus 2015 Surplus2016 Dividend 2015 Dividend

Maximum dividend from surplus [least of (i), (ii) and (iii) above]

Dividend actually paid from surplus [refer below for required pre-dividend payment criteria]

Are the overhead reallocation charges to the water business fair and reasonable? a

3. Required outcomes for 6 criteria[to be eligible for the payment of a ‘dividend from surplus’, all the criteria below need a ‘YES’]

Completion of strategic business plan (including financial plan)

Full cost recovery, without significant cross subsidies[refer item 2 (a) in table 1 on page 22 of the Best-Practice Guidelines]

– Complying charges [item 2 (b) in table 1]

– DSP with commercial developer charges [item 2 (e) in table 1]

– If dual water supplies, complying charges [item 2 (g) in table 1]

Sound water conservation and demand management implemented

Sound drought management implemented

Complete performance reporting form (by 15 September each year)

a. Integrated water cycle management evaluation

b. Complete and implement integrated water cycle management strategy

YES

NO(v)

(vi)

YES

–

–

n/a

2017

–

–

83,610

(702,000)

8,361

–

(iv) YES

YES

NO

(ii)

YES

YES

– (234,000) (71,000)

YES

YES

– (397,000)

YES

(iv)

(iii)

(i)

(iv)

(iii)

(iii)

(i)

(ii)

(ii)

(v)

(i)

(vi)

SPFS 2017

page 12



Note 2. Water supply business best-practice management disclosure requirements (continued)


National Water Initiative (NWI) financial performance indicators

Total revenue (water)Total income (w13) – grants for the acquisition of assets (w11a) – interest income (w9)– Aboriginal Communities W&S Program income (w10a)

Revenue from residential usage charges (water)Income from residential usage charges (w6b) x 100 divided by the sum of[income from residential usage charges (w6a) + income from residentialaccess charges (w6b)]

Written down replacement cost of fixed assets (water)Written down current cost of system assets (w47)

Operating cost (OMA) (water)Management expenses (w1) + operational and maintenance expenses (w2)

Capital expenditure (water)Acquisition of fixed assets (w16)

Economic real rate of return (water)[total income (w13) – interest income (w9) – grants for acquisition of assets (w11a) –operating costs (NWI F11) – current cost depreciation (w3)] x 100 divided by[written down current cost of system assets (w47) + plant and equipment (w33b)]

Capital works grants (water)Grants for the acquisition of assets (w11a)

Notes: 1. References to w (e.g. w12) refer to item numbers within Special Schedules 3 and 4 ofCouncil’s Annual Financial Statements.

2. The NWI performance indicators are based upon the National Performance FrameworkHandbook for Urban Performance Reporting Indicators and Definitions.

a refer to 3.2 (2) on page 15 of the Best-Practice Management of Water Supply and Sewerage Guidelines, 2007

NWI F26 1,025 $’000

NWI F11

NWI F17 %

NWI F14 $’000

-0.71%

1,757

2,521 $’000

$’000NWI F9

2017

3,733

NWI F4 %

52,777

$’000

68.94%

NWI F1

SPFS 2017

page 13



Note 3. Sewerage business best-practice management disclosure requirements


1. Calculation and payment of tax-equivalents[all local government local water utilities must pay this dividend for tax equivalents]

Calculated tax equivalents

Number of assessments multiplied by $3/assessment

Amounts payable for tax equivalents [lesser of (i) and (ii)]

Amounts actually paid for tax equivalents

2. Dividend from surplus

50% of surplus before dividends[calculated in accordance with Best-Practice Management for Water Supply and Sewerage Guidelines]

Number of assessments x ($30 less tax equivalent charges per assessment)

Cumulative surplus before dividends for the 3 years to 30 June 2017, less thecumulative dividends paid for the 2 years to 30 June 2016 and 30 June 2015

2017 Surplus 2016 Surplus 2015 Surplus2016 Dividend 2015 Dividend

Maximum dividend from surplus [least of (i), (ii) and (iii) above]

Dividend actually paid from surplus [refer below for required pre-dividend payment criteria]

Are the overhead reallocation charges to the sewer business fair and reasonable? a

3. Required outcomes for 4 criteria [to be eligible for the payment of a ‘dividend from surplus’, all the criteria below need a ‘YES’]

Completion of strategic business plan (including financial plan)

Pricing with full cost-recovery, without significant cross subsidies [refer item 2 (a) in table 1 on page 22 of the Best-Practice Guidelines]

Complying charges Residential [item 2 (c) in table 1] Non-residential [item 2 (c) in table 1] Trade waste [item 2 (d) in table 1]

DSP with commercial developer charges [item 2 (e) in table 1] Liquid trade waste approvals and policy [item 2 (f) in table 1]

Complete performance reporting form (by 15 September each year)

a. Integrated water cycle management evaluation

b. Complete and implement integrated water cycle management strategy

–

6,444

YES

YES

YES

16,100

NO

YES

2017

YES

n/a

–

YES

–

–

YES

NO

(318,100)

YES

YES

(i)

(iv)

(iii)

(ii)

(iii)

32,200

(i)

(ii) 64,440

(358,000)

(iv)

(c)

(iv)

– 7,700

–

(v)

(iii)

(i)

(ii)

(a)(b)

(vi)

SPFS 2017

page 14



Note 3. Sewerage business best-practice management disclosure requirements (continued)


National Water Initiative (NWI) financial performance indicators

Total revenue (sewerage)Total income (s14) – grants for acquisition of assets (s12a) – interest income (s10)– Aboriginal Communities W&S Program income (w10a)

Written down replacement cost of fixed assets (sewerage)Written down current cost of system assets (s48)

Operating cost (sewerage)Management expenses (s1) + operational and maintenance expenses (s2)

Capital expenditure (sewerage)Acquisition of fixed assets (s17)

Economic real rate of return (sewerage)[total income (s14) – interest income (s10) – grants for acquisition of assets (s12a)– operating cost (NWI F12) – current cost depreciation (s3)] x 100 divided by[written down current cost (i.e. WDCC) of system assets (s48) + plant and equipment (s34b)]

Capital works grants (sewerage)Grants for the acquisition of assets (12a)

National Water Initiative (NWI) financial performance indicatorsWater and sewer (combined)

Total income (water and sewerage)Total income (w13 + s14) + gain/loss on disposal of assets (w14 + s15)minus grants for acquisition of assets (w11a + s12a) – interest income (w9 + s10)

Revenue from community service obligations (water and sewerage)Community service obligations (NWI F25) x 100 divided by total income (NWI F3)

Capital expenditure (water and sewerage)Acquisition of fixed assets (w16 + s17)

Economic real rate of return (water and sewerage)[total income (w13 + s14) – interest income (w9 + s10) – grants for acquisition of assets(w11a + s12a) – operating cost (NWI F11 + NWI F12) – current cost depreciation (w3 + s3)] x 100divided by [written down replacement cost of fixed assets (NWI F9 + NWI F10)+ plant and equipment (w33b + s34b)]

Dividend (water and sewerage)Dividend paid from surplus (2 (v) of Note 2 + 2 (v) of Note 3)

Dividend payout ratio (water and sewerage)Dividend (NWI F20) x 100 divided by net profit after tax (NWI F24)

$’000

227

20,085

1,382

-0.65%

982

485

2017

NWI F3 $’000 5,115

NWI F8 % 0.74%

NWI F19

NWI F21

NWI F20

%

%

– $’000

0.00%

-0.69%

2,242 NWI F16 $’000

NWI F27

NWI F18

NWI F15 $’000

%

$’000

NWI F2

NWI F10

NWI F12

$’000

$’000

SPFS 2017

page 15



Note 3. Sewerage business best-practice management disclosure requirements (continued)


National Water Initiative (NWI) financial performance indicatorsWater and sewer (combined)

Net debt to equity (water and sewerage)Overdraft (w36 + s37) + borrowings (w38 + s39) – cash and investments (w30 + s31)x 100 divided by [total assets (w35 + s36) – total liabilities (w40 + s41)]

Interest cover (water and sewerage)Earnings before interest and tax (EBIT) divided by net interest

Earnings before interest and tax (EBIT):Operating result (w15a + s16a) + interest expense (w4a + s4a) – interest income (w9 + s10)– gain/loss on disposal of assets (w14 + s15) + miscellaneous expenses (w4b + w4c + s4b + s4c)

Net interest:Interest expense (w4a + s4a) – interest income (w9 + s10)

Net profit after tax (water and sewerage)Surplus before dividends (w15a + s16a) – tax equivalents paid (Note 2-1 (iv) + Note 3-1 (iv))

Community service obligations (water and sewerage)Grants for pensioner rebates (w11b + s12b)

Notes: 1. References to w (eg. s12) refer to item numbers within Special Schedules 5 and 6 ofCouncil’s Annual Financial Statements.

2. The NWI performance indicators are based upon the National Performance Framework Handbookfor Urban Performance Reporting Indicators and Definitions.

a refer to 3.2 (2) on page 15 of the Best-Practice Management of Water Supply and Sewerage Guidelines, 2007

NWI F25 $’000

NWI F24

NWI F23

NWI F22 %

535-

38

-

(253)

442-

$’000

-14.48%

2017

INDEPENDENT AUDITOR’S REPORT

Report on the special purpose financial statements


To the Councillors of the Lachlan Shire Council

OpinionI have audited the accompanying special purpose financial statements (the financial statements) ofLachlan Shire Council’s (the Council) Declared Business Activities, which comprise the statement offinancial position of each Declared Business Activity as at 30 June 2017, the income statement ofeach Declared Business Activity for the year then ended, notes comprising a summary of significantaccounting policies and other explanatory information for the Business Activities declared by Council,and the Statement by Councillors and Management.

The Declared Business Activities of the Council are:

• Water Supply• Sewerage.In my opinion, the financial statements present fairly, in all material respects, the financial position ofthe Council’s declared Business Activities as at 30 June 2017, and their financial performance for theyear then ended, in accordance with the Australian Accounting Standards described in Note 1 and theLocal Government Code of Accounting Practice and Financial Reporting (LG Code).

My opinion should be read in conjunction with the rest of this report and in particular, the Emphasis ofMatter referring to the basis of accounting.

Basis for OpinionI conducted my audit in accordance with Australian Auditing Standards. My responsibilities under thestandards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’

section of my report.


• Australian Auditing Standards• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for

Professional Accountants’ (APES 110).


Parliament promotes independence by ensuring the Auditor-General and the Audit Office of NewSouth Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove anAuditor-General

• mandating the Auditor-General as the auditor of councils• precluding the Auditor-General from providing non-audit services.

I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for myaudit opinion.

page 16

Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to Note (1) to the financial statements which describes the basis of accounting. The financial statements have been prepared for the purpose of fulfilling Council’s financial reporting responsibilities under the LG Code. As a result, the financial statements may not be suitable for another purpose.

Other Matter The financial statements of the Council for the year ended 30 June 2016 were audited by another auditor who expressed an unmodified opinion on that financial statement on 25 November 2016.

The Councillors’ Responsibility for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements and for determining that the accounting policies, described in Note 1 to the financial statements, are appropriate to meet the requirements in the LG Code. The Councillors’ responsibility also includes

such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Councillors must assess the Council’s ability to continue as a going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting, as it affects the Council’s Declared Business Activities.

Auditor’s Responsibility for the Audit of the Financial Statements My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error


Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf.

The description forms part of my auditor’s report.


• that the Council carried out its activities effectively, efficiently and economically • on the best practice management disclosures in Notes 2 and 3 of the financial statements • about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.


30 November 2017 SYDNEY

page 17


Lachlan Shire Council SPECIAL SCHEDULES for the year ended 30 June 2017


Special Schedules 2017

page 1


Special Schedules for the year ended 30 June 2017

Contents

Special Schedules1

Net Cost of Services

Statement of Long Term Debt (all purposes)Statement of Internal Loans (Sect. 410(3) LGA 1993)

Water Supply Operations – incl. Income StatementWater Supply – Statement of Financial Position

Sewerage Service Operations – incl. Income StatementSewerage Service – Statement of Financial Position

Notes to Special Schedules 3 and 5

Report on Infrastructure Assets

Permissible Income Calculation

1 Special Schedules are not audited (with the exception of Special Schedule 8).

Background

These Special Schedules have been designed to meet the requirements of special purpose users such as;

the NSW Grants Commissionthe Australian Bureau of Statistics (ABS),the NSW Office of Water (NOW), andthe Office of Local Government (OLG).

The financial data is collected for various uses including;

the allocation of Financial Assistance Grants,the incorporation of Local Government financial figures in national statistics,the monitoring of loan approvals,the allocation of borrowing rights, andthe monitoring of the financial activities of specific services.

Special Schedule 5 9

Page

2

4

5

Special Schedule 1

Special Schedule 2(a)n/a

Special Schedule 4

Special Schedule 2(b)

Special Schedule 38

14Special Schedule 7

13

12

(ii)

(i)

Special Schedule 8 19

Special Schedule 6


page 2


Special Schedule 1 – Net Cost of Services for the year ended 30 June 2017

$’000

Governance

Administration

Public order and safety

Beach controlEnforcement of local government regulationsAnimal controlOtherTotal public order and safety

Health

EnvironmentNoxious plants and insect/vermin controlOther environmental protectionSolid waste managementStreet cleaningDrainageStormwater managementTotal environment

Community services and educationAdministration and educationSocial protection (welfare)Aged persons and disabledChildren’s servicesTotal community services and education

Housing and community amenitiesPublic cemeteriesPublic conveniencesStreet lightingTown planningOther community amenitiesTotal housing and community amenities

Water supplies

Sewerage services

(135)

(396) –

–

– (3)

(268)

–

262

(116) –

–

(4,497)

6

808

(549)

(4,649)

– 122

1

268 –

1,508

2,098 137

–

4,936

5,845

208

439 –

1,097

1 –

692

135

Net cost.of services.

– –

(592)

–

(886) (84)

406 2 – (404)

(207) – –

(3,715)

–

29

182

Function or activity

–

Fire service levy, fire protection, emergency services

–

787

188 159

4,189

769

474

– – (799)

– (712)

–

899

236 –

1,005 –

–

177

–

39

142

3,955

227

–

(2)

(95) (208)

(99) (145)

(36) –

–

–

–

–

– 2

–

60

1,196 751

4,244

43

1,602 1,567

–

– –

Expenses from. continuing. operations. Non-capital.

–

–

53 –

Capital.

Income fromcontinuing operations

–

187

– 47

1,112

206

1,212

3


page 3


Special Schedule 1 – Net Cost of Services (continued) for the year ended 30 June 2017

$’000

Recreation and culturePublic librariesMuseumsArt galleriesCommunity centres and hallsPerforming arts venuesOther performing artsOther cultural servicesSporting grounds and venuesSwimming poolsParks and gardens (lakes)Other sport and recreationTotal recreation and culture

Fuel and energy

Agriculture

Mining, manufacturing and constructionBuilding controlOther mining, manufacturing and constructionTotal mining, manufacturing and const.

Transport and communicationUrban roads (UR) – localUrban roads – regionalSealed rural roads (SRR) – localSealed rural roads (SRR) – regionalUnsealed rural roads (URR) – localUnsealed rural roads (URR) – regionalBridges on UR – localBridges on SRR – localBridges on URR – localBridges on regional roadsParking areasFootpathsAerodromesOther transport and communicationTotal transport and communication

Economic affairsCamping areas and caravan parksOther economic affairsTotal economic affairs

Totals – functionsGeneral purpose revenues (1)

NET OPERATING RESULT (2)

(1) Includes: rates and annual charges (including ex gratia, excluding water and sewer), non-capital general purpose (2) As reported in the Income Statement

grants, interest on investments (excluding externally restricted assets) and interest on overdue rates and annual charges

Share of interests – joint ventures and associates using the equity method

336

–

–

(63)

(772)

156

–

Net cost.of services.

–

(22)

894

(41)

1

2,068

–

43 (968)

18,598

300 –

–

(60) –

2,854

1,828 (6,101)

192 (284)

3,459

–

(15,139) (240)

(352)

(1,555) 98

112

–

(8)

(100)

22

– (143)

(1,036)

– –

–

(2,637)

58 18

–

Capital.

200

471

50

1,168

– – 295

2,630 6,396

– –

440 441

802

78

7

–

1,360

141

100

38 231 – 2,068

–

–

Non-capital.

–

Expenses from. continuing. operations.

1,044

801 1,132

–

21

– –

–

–

–

–

–

–

–

41

– –

–

801 3,613 – 43

175

– –

Function or activity

78

701

–

–

–

– –

–

–

22

– 22

2,854

–

–

–

– 62

–

– 352

8

254 162 148 5

–

284

– –

706

35,834

–

9,700 7,439

1,435 568

36,439

1,173

493 867

18,598 35,834

680

–

17,841

46

40

–

Income fromcontinuing operations

– – –


page 4


Special Schedule 2(a) – Statement of Long Term Debt (all purpose) for the year ended 30 June 2017

$’000

Spe

pag

Notes: excludes (i) internal loans and (ii) principal inflows/outflows relating to loan re-financing. This schedule is prepared using the face value of debt obligations, rather than fair value (which are reported in the GPFS).

Loans (by source)Commonwealth Government

Current

– – –

Transfers to sinking

funds

Principal outstandingInterest

applicable for year TotalNon-

current

at the end of the year

– –

Principal outstanding New loans raised during

the year

at beginning of the year

Classification of debtCurrent Non-

current Total

– –

– –

–

–

– –

1,853

–

1,853

–

– –

Debt redemption during the year

From revenue

Sinking funds

96 –

54

54

1,757

96 1,757 – – –

Other State Government – – – –

NSW Treasury Corporation

Public subscription – –

– – –

Financial institutions – – – – 1,900

– 1,900

–

– 47

47

– – Total loans– –

Other

Other long term debtRatepayers advances – – –

– Government advances – Finance leases –

– – –

–

96

–

1,853

– – –

1,757

–

54 –

–

–

– Deferred payments

– –

–

–

–

– Total long term debt – –

Total debt

–

–

–

1,900 47


page 5


Special Schedule 3 – Water Supply Income Statement Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

A Expenses and incomeExpenses

1. Management expensesa. Administrationb. Engineering and supervision

2. Operation and maintenance expenses– dams and weirsa. Operation expensesb. Maintenance expenses

– Mainsc. Operation expensesd. Maintenance expenses

– Reservoirse. Operation expensesf. Maintenance expenses

– Pumping stationsg. Operation expenses (excluding energy costs)h. Energy costsi. Maintenance expenses

– Treatmentj. Operation expenses (excluding chemical costs)k. Chemical costsl. Maintenance expenses

– Otherm. Operation expensesn. Maintenance expenseso. Purchase of water

3. Depreciation expensesa. System assetsb. Plant and equipment

4. Miscellaneous expensesa. Interest expensesb. Revaluation decrementsc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)

5. Total expenses

–

– – 111

– –

–

1,523

95 –

– –

–

–

–

197 139

205

– –

189 111 84

624

64

– – 295

106

–

334

–

573

29

– –

– –

– –

80

–

412 377

2017

–

270

–

1,613

263 311 315

Actuals 2016

–

4,245 4,075

Actuals


page 6


Special Schedule 3 – Water Supply Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

Income

6. Residential chargesa. Access (including rates)b. Usage charges

7. Non-residential chargesa. Access (including rates)b. Usage charges

8. Extra charges

9. Interest income

10. Other income10a. Aboriginal Communities Water and Sewerage Program

11. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants

12. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions

13. Total income

14. Gain (or loss) on disposal of assets

15. Operating result

15a. Operating result (less grants for acquisition of assets)

140

– –

2

208 20 21

–

1,025

– –

– 5

222 292

1,059

–

2,628

2017Actuals Actuals

(290)

–

1

735

–

–

4,980

–

–

(68)

–

2,559 1,153

–

–

2016

4,215

–

–


page 7


Special Schedule 3 – Water Supply Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

B Capital transactionsNon-operating expenditures

16. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment

17. Repayment of debt

18. Totals

Non-operating funds employed

19. Proceeds from disposal of assets

20. Borrowing utilised

21. Totals

C Rates and charges

22. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)

23. Number of ETs for which developer charges were received

24. Total amount of pensioner rebates (actual dollars)

2017

1,574

– –

119 119 2,011

131

Actuals

2,010

–

–

–

898

52

1,757

–

2016

–

– –

461

Actuals

–

437 –

585 79

585 73

– ET– ET

37,368$ 36,009$


page 8


Special Schedule 4 – Water Supply Statement of Financial Position Includes internal transactions, i.e. prepared on a gross basis as at 30 June 2017

$’000

ASSETS25. Cash and investments

a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other

26. Receivablesa. Specific purpose grantsb. Rates and availability chargesc. User chargesd. Other

27. Inventories

28. Property, plant and equipmenta. System assetsb. Plant and equipment

29. Other assets

30. Total assets

LIABILITIES31. Bank overdraft32. Creditors

33. Borrowings

34. Provisionsa. Tax equivalentsb. Dividendc. Other

35. Total liabilities

36. NET ASSETS COMMITTED

EQUITY37. Accumulated surplus38. Asset revaluation reserve39. Other reserves

40. TOTAL EQUITY

Note to system assets:41. Current replacement cost of system assets42. Accumulated current cost depreciation of system assets43. Written down current cost of system assets

– –

–

3,921

– –

3,921

–

– –

–

–

– – –

–

–

– –

– –

–

– –

40,418

52,777

90,066 (37,289)

24,005

64,423

64,423

–

–

–

129

–

225

64,423

–

58,003 6,420

– –

–

–

–

129

–

–

5,040 1,305

1,026

58,003

–

– –

–

6,420

52,777

Actuals Current

– –

Actuals

– –

225

– –

–

Actuals Total

–

– –

52,777

6,345

1,026 –

Non-current

–

–


page 9


Special Schedule 5 – Sewerage Service Income Statement Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

A Expenses and incomeExpenses

1. Management expensesa. Administrationb. Engineering and supervision

2. Operation and maintenance expenses– mainsa. Operation expensesb. Maintenance expenses

– Pumping stationsc. Operation expenses (excluding energy costs)

d. Energy costse. Maintenance expenses

– Treatmentf. Operation expenses (excl. chemical, energy, effluent and biosolids management costs)

g. Chemical costsh. Energy costsi. Effluent managementj. Biosolids managementk. Maintenance expenses

– Otherl. Operation expensesm. Maintenance expenses

3. Depreciation expensesa. System assetsb. Plant and equipment

4. Miscellaneous expensesa. Interest expensesb. Revaluation decrementsc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)

5. Total expenses

Actuals 2017

Actuals 2016

–

534

166 167 101 99

101

76 – –

114

72

1,565 1,526

41 – –

– –

–

49

– –

– –

–

–

– – –

9 11

– – –

–

69

– –

–

525 –

–

70 –

446

–

–

441

–


page 10


Special Schedule 5 – Sewerage Service Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

Income

6. Residential charges (including rates)

7. Non-residential chargesa. Access (including rates)b. Usage charges

8. Trade waste chargesa. Annual feesb. Usage chargesc. Excess mass chargesd. Re-inspection fees

9. Extra charges

10. Interest income

11. Other income11a. Aboriginal Communities Water and Sewerage Program

12. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants

13. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions

14. Total income

15. Gain (or loss) on disposal of assets

16. Operating result

16a. Operating result (less grants for acquisition of assets)

220 290

– –

– –

– – – –

–

–

–

264 10

37

– –

18 18 227 –

1,829 1,536

–

10

– –

– 2 – –

– –

–

91 – –

–

32

1,194

Actuals

1,273

Actuals 20162017


page 11


Special Schedule 5 – Sewerage Service Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

B Capital transactionsNon-operating expenditures

17. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment

18. Repayment of debt

19. Totals

Non-operating funds employed

20. Proceeds from disposal of assets

21. Borrowing utilised

22. Totals

C Rates and charges

23. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)

24. Number of ETs for which developer charges were received

25. Total amount of pensioner rebates (actual dollars)

183 485

– 225 156 223

–

–

–

–

– ET

33,299$

–

37 27

Actuals Actuals 2017 2016

–

–

– 318

1,817

–

–

–

32,137$

–

315 –

–

– ET

1,833


page 12


Special Schedule 6 – Sewerage Service Statement of Financial Position Includes internal transactions, i.e. prepared on a gross basis as at 30 June 2017

$’000

ASSETS26. Cash and investments

a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other

27. Receivablesa. Specific purpose grantsb. Rates and availability chargesc. User chargesd. Other

28. Inventories

29. Property, plant and equipmenta. System assetsb. Plant and equipment

30. Other assets

31. Total assets

LIABILITIES32. Bank overdraft33. Creditors

34. Borrowings

35. Provisionsa. Tax equivalentsb. Dividendc. Other

36. Total liabilities

37. NET ASSETS COMMITTED

EQUITY38. Accumulated surplus39. Asset revaluation reserve40. Other reserves

41. TOTAL EQUITY

Note to system assets:42. Current replacement cost of system assets43. Accumulated current cost depreciation of system assets44. Written down current cost of system assets

Actuals

7,013

178

Actuals

– – –

– –

Non-current Current

5,568 1,445 –

–

–

Total Actuals

– –

– –

533

– – –

–

–

–

–

178

–

– –

–

–

– –

– – 533

20,085

5,746

–

–

27,809

20,085

22,063

–

–

–

–

– –

–

10,913

20,085

35,568 (15,483)

16,896

27,809

22,063

–

–

5,746

–

–

– –

– –

–

– –

–

– –

27,809

–

– – –


page 13


Notes to Special Schedules 3 and 5 for the year ended 30 June 2017

Administration (1) Engineering and supervision (1)

(item 1a of Special Schedules 3 and 5) comprises the following: (item 1b of Special Schedules 3 and 5) comprises the following:

• Administration staff: • Engineering staff:− Salaries and allowance − Salaries and allowance− Travelling expenses − Travelling expenses− Accrual of leave entitlements − Accrual of leave entitlements− Employment overheads. − Employment overheads.

• Meter reading • Other technical and supervision staff:− Salaries and allowance

• Bad and doubtful debts − Travelling expenses− Accrual of leave entitlements

• Other administrative/corporate support services − Employment overheads.

Operational expenses (item 2 of Special Schedules 3 and 5) comprise the day to day operational expensesexcluding maintenance expenses.

Maintenance expenses (item 2 of Special Schedules 3 and 5) comprise the day to day repair and maintenanceexpenses. (Refer to Section 5 of the Local Government Asset Accounting Manual regarding capitalisationprinciples and the distinction between capital and maintenance expenditure).

Other expenses (item 4c of Special Schedules 3 and 5) includes all expenses not recorded elsewhere.

Revaluation decrements (item 4b of Special Schedules 3 and 5) is to be used when I,PP&E decreases in FV.

Impairment losses (item 4d and 4e of Special Schedules 3 and 5) are to be used when the carrying amount ofan asset exceeds its recoverable amount (refer to page D-31).

Aboriginal Communities Water and Sewerage Program (item 4f of Special Schedules 3 and 5) is to beused when operation and maintenance work has been undertaken on behalf of the Aboriginal CommunitiesWater and Sewerage Program. Similarly, income for item 11a of Special Schedule 3 and item 12a of SpecialSchedule 5 are for services provided to the Aboriginal Communities Water and Sewerage Program and is notpart of Council’s water supply and sewerage revenue.

Residential charges

(2) (items 6a, 6b and item 6 of Special Schedules 3 and 5 respectively) include all incomefrom residential charges. Item 6 of Schedule 3 should be separated into 6a access charges (including rates ifapplicable) and 6b usage charges.

Non-residential charges

(2) (items 7a, 7b of Special Schedules 3 and 5) include all income from non-residentialcharges separated into 7a access charges (including rates if applicable) and 7b usage charges.

Trade waste charges (item 8 of Special Schedule 5) include all income from trade waste charges separatedinto 8a annual fees, 8b usage charges and 8c excess mass charges and 8d re-inspection fees.

Other income (items 10 and 11 of Special Schedules 3 and 5 respectively) include all income not recordedelsewhere.

Other contributions (items 12c and 13c of Special Schedules 3 and 5 respectively) including capital contributionsfor water supply or sewerage services received by Council under Section 565 of the Local Government Act .

Notes:(1) Administration and engineering costs for the development of capital works projects should be reported as part of the capital cost of the project and not as part of the recurrent expenditure (ie. in item 16 for water supply and item 17 for sewerage, and not in items 1a and 1b).

(2) To enable accurate reporting of residential revenue from usage charges, it is essential for councils to accurately separate their residential (item 6) charges and non-residential (item 7) charges.


page 14


Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 as at 30 June 2017

$’000

41%2% 26%

Assets in condition as a percentage of gross replacement cost

Net carryingamount

40,398

78% 0%3,658 27,209

36.0%

0%

5

550 702 35.7%

– 194,247 35.4% 14.8%

– 26%127

28.8%11%

Bridges

– 5,418

13,859 154,890 22,450 3,048

–

structures

10%18%

30.2%

36%12%

63%

44%

40,094

5,418

Unsealed roads

25%

–

1,420 1,507

91

Buildings

8% 51% 36%6,579

21

1%

0.0%

13%0%

–

Sealed roads

Other structuresSub-total

Asset class

Buildings

to bring assetsEstimated cost

2016/17to bring to the 2016/17 Gross

standard maintenanceAsset categoryRequired Actual replacement

cost (GRC)maintenanceato satisfactory

Estimated cost

agreed level ofservice set by

Council

550 1.4%

53%

0%

Roads

Other

Sub-total36%

4

17%30%76,765

53

15.4%550 1%702 744 15%550

– –

147

119

1%

91 1,507

20,667 230,978

869 18% 13%

1%

Other road assets79

47

119 600 47

3,784

Footpaths

Sub-total

600

76,765 17.3%

23%22%

51.0%–

744

5

44 13

87 Other3,990 3,784 3,746

5%8.0%

1,420

218

2,511

158

0%

10.3%

6,579 5.0%

3%60%282,512

–

1,303 2,180

10.7%


page 15


Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 (continued) as at 30 June 2017

$’000

Notes:a Required maintenance is the amount identified in Council’s asset management plans.

Infrastructure asset condition assessment ‘key’

Excellent No work required (normal maintenance) Condition Description here…Good Only minor maintenance work required Condition Description here…Average Maintenance work required Condition Description here…Poor Renewal required Condition Description here…Very poor Urgent renewal/upgrading required Condition Description here…

4321 6

10987

317,493 TOTAL – ALL ASSETS 20,495

Assets in condition as a percentage of gross replacement cost

6,703 6,265 500,020 19.3% 23.5% 35.9% 14.8% 6.5%20,495

14,191 1,590

52,777

1.0%

Net carryingamount

Stormwater drainage

4

Sub-total

31.0% 6.0%24.0%30 1.0%41 38%41 30 1%

10.0%20,084

6%

35,568

4,873

1,606 8.0%

333 8%333

70%1,606

drainage 8,530 Sub-total 38.0%4,873 364

439 1,606 70.0%

24%364 364 8,530

52,777

20,084

Asset category

1,348 14,191

Sewerage network

Sub-total

1,606 35,568 439 10% 11%

Asset class

2016/17Estimated costto bring to the

service set byCouncil

replacement5

networkWater supply network

1,348 14,191

to satisfactorystandard

to bring assets

1,590

maintenanceaActualRequired

2016/17agreed level of

GrossEstimated cost

17.0%16.0% 1.0%30.0%36.0%90,066

1cost (GRC)maintenance

36%90,066 30% 17%

2

16% 1%

3

1%

5

364

network

Stormwater

Water supply 14,191

Sewerage 11.0%

31%


page 16


Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017

$ ’000

Infrastructure asset performance indicators * consolidated

1. Infrastructure renewals ratioAsset renewals (1)

Depreciation, amortisation and impairment

2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets

3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance

4. Cost to bring assets to agreed service level

Gross replacement cost

Notes

* All asset performance indicators are calculated using the asset classes identified in the previous table.

(1) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.

> 1.00

20,495

6,265

4.10% 0.00%

Benchmark

>= 100%

< 2%

0.93 0.79 0.436,703

500,020

Estimated cost to bring assets toan agreed service level set by Council

Indicator Prior periods

20,495 6.41% 6.12% 48.04%319,532

2017 2017 2016 2015

5,137 41.95% 99.76% 57.95%12,245

Amounts


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Benchmark: ――― 100.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― 2.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― 1.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Purpose of agreed service level ratio 2016/17 Ratio 4.10%

This ratio provides a snapshot of the

proportion of outstanding renewal works compared to the total value of

assets under Council's care and

stewardship.

Purpose of asset renewals ratio 2016/17 Ratio 41.95%

Compares actual vs. required annual asset maintenance. A ratio above 1.0 indicates Council is investing

enough funds to stop the infrastructure backlog growing.

This ratio showswhat proportion the backlog is against

the total valueof a Council’s infrastructure.

2016/17 Ratio 6.41%

2016/17 Ratio 0.93 x

To assess the rate at which these assets are being renewed

relative to the rate at which they are depreciating.

Purpose of infrastructure backlog ratio

Purpose of asset maintenance ratio

56% 58%

100%

42%

0%

20%

40%

60%

80%

100%

120%

2014 2015 2016 2017

Rat

io %

1. Infrastructure renewals ratio

84.5%

48.0% 6.1% 6.4%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%

2014 2015 2016 2017

Rat

io %

2. Infrastructure backlog ratio

0.43 0.43

0.79 0.93

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2014 2015 2016 2017

Rat

io (x

)

3. Asset maintenance ratio

0.00%

4.10%

0%1%1%2%2%3%3%4%4%5%

2016 2017

Rat

io %



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$ ’000

Infrastructure asset performance indicatorsby fund

1. Infrastructure renewals ratioAsset renewals (2)

Depreciation, amortisation and impairment

2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets

3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance


Gross replacement cost

Notes

(1) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

(2) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.

Estimated cost to bring assets toan agreed service level set by Council

26.89% 8.00% 1.90%

15.76% 4.52% 1.25%

prior period: 26.11% 7.57% 1.81%

8.46% 42.94% 46.68%prior period: 7.39% 30.35% 125.58%

Water Sewer General (1)

2017 2017 2017Benchmark

0.85 1.32 0.94prior period: 0.88 1.63 0.70

< 2%

> 1.00

>= 100%


page 19


Special Schedule 8 – Permissible Income Calculation for the year ended 30 June 2018

$’000

Notional general income calculation (1)

Last year notional general income yieldPlus or minus adjustments (2)

Notional general income

Permissible income calculation

Special variation percentage (3)

Or rate peg percentageOr crown land adjustment (incl. rate peg percentage)

Less expiring special variation amountPlus special variation amount

Or plus rate peg amountOr plus Crown land adjustment and rate peg amount

Sub-total

Plus (or minus) last year’s carry forward totalLess valuation objections claimed in the previous yearSub-total

Total permissible income

Less notional general income yieldCatch-up or (excess) result

Plus income lost due to valuation objections claimed (4)

Less unused catch-up (5)

Carry forward to next year

Notes

(1) The notional general income will not reconcile with rate income in the financial statements in the correspondingyear. The statements are reported on an accrual accounting basis which include amounts that relate to prior years’rates income.

(2) Adjustments account for changes in the number of assessments and any increase or decrease in land value occurringduring the year. The adjustments are called ‘supplementary valuations’ as defined in the Valuation of Land Act 1916 .

(3) The ‘special variation percentage’ is inclusive of the rate peg percentage and where applicable Crown land adjustment.

(4) Valuation objections are unexpected changes in land values as a result of land owners successfully objecting to theland value issued by the Valuer-General. Councils can claim the value of the income lost due to valuation objections inany single year.

(5) Unused catch-up amounts will be deducted if they are not caught up within 2 years. Usually councils will have anominal carry forward figure. These amounts can be adjusted for in setting the rates in a future year.

(6) Carry forward amounts which are in excess (an amount that exceeds the permissible income) require ministerial approval by order published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993 . The OLG will extract these amounts from Council’s Special Schedule 8 in the financial data return (FDR) to administer this process.

– 12 5,121 5,479

5,121 5,467

6.80% 7.40%0.00% 0.00%0.00% 0.00%

– – 348 405

5 7

– – – –

5,469 5,884

– – 5 7

5,892

5,467 5,883

a

7 9

Calculation Calculation2016/17 2017/18

– –

7 9

– –

5,474

lm

n = (l + m)

o = k + n

g

k = (c + g + h + i + j)

b

def

j = c x fi = c x e

h = d x (c – g)

c = (a + b)

pq = o – p

rs

t = q + r – s

INDEPENDENT AUDITOR’S REPORT

Special Schedule No. 8


To the Councillors of Lachlan Shire Council

OpinionI have audited the accompanying special purpose financial statement comprising the reconciliation oftotal permissible general income (Special Schedule No. 8) of Lachlan Shire Council (the Council) forthe year ending 30 June 2018.

In my opinion, Special Schedule No. 8 of Lachlan Shire Council for 30 June 2018 is prepared, in allmaterial respects in accordance with the requirements of the Local Government Code of AccountingPractice and Financial Reporting (LG Code) issued by the Office of Local Government (OLG), and is inaccordance with the books and records of the Council.

My opinion should be read in conjunction with the rest of this report, and in particular the Emphasis ofMatter paragraph, which describes the basis of accounting.

Basis for OpinionI conducted my audit in accordance with Australian Auditing Standards. My responsibilities under thestandards are described in the ‘Auditor’s Responsibilities for the Audit of Special Schedule No.8’

section of my report.


• Australian Auditing Standards• ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110

‘Code of Ethics for Professional Accountants’ (APES 110).


Parliament promotes independence by ensuring the Auditor-General and the Audit Office of NewSouth Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove anAuditor-General

• mandating the Auditor-General as auditor of councils• precluding the Auditor-General from providing non-audit services.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for myaudit opinion.

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Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to the notes and explanations in Special Schedule No. 8 that instruct councils in its preparation so it complies with OLG’s requirements as described in

the LG Code. As a result, Special Schedule No. 8 may not be suitable for another purpose.

Other Matter Special Schedule No.8 of the Council for the year ended 30 June 2017 was audited by another auditor who expressed an unmodified opinion on Special Schedule No. 8 on 25 November 2016.

Councillors’ Responsibility for Special Schedule No. 8 The Councillors of the Council are responsible for the preparation of Special Schedule No. 8 in accordance with the LG Code. The Councillors’ responsibility also includes such internal control as the Councillors determine is necessary to enable the preparation of Special Schedule No. 8 that is free from material misstatement, whether due to fraud or error.

In preparing Special Schedule No.8, the Councillors must assess the Council’s ability to continue as a

going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting.

Auditor’s Responsibility for the Audit of Special Schedule No. 8 My objectives are to:

• obtain reasonable assurance whether Special Schedule No. 8 as a whole is free from material misstatement, whether due to fraud or error


Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on Special Schedule No.8.

A description of my responsibilities for the audit of Special Schedule No.8 is located at the Auditing and Assurance Standards Board website at http://www.auasb.gov.au/auditors_responsibilities/ar8.pdf. The description forms part of my auditor’s report.


• that the Council carried out its activities effectively, efficiently and economically • about the security and controls over the electronic publication of the audited Special Schedule

No.8 on any website where they may be presented • about any other information which may have been hyperlinked to/from Special Schedule No 8.


30 November 2017 SYDNEY

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