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Glen Innes Severn Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017
“Embracing Change, Building on History”
Financial Statements 2017
page 1
Glen Innes Severn 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 forGlen Innes Severn Council.
(ii) Glen Innes Severn 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 19 December 2017.Council has the power to amend and reissue these financial statements.
Page
4
67
5
2
3
8
9
8386
Financial Statements 2017_
Glen Innes Severn Council General Purpose Financial Statements for the year ended 30 June 2017 Understanding Council’s financial statements
page 2
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.
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 4
Glen Innes Severn Council
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 purposes
Total income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationOther expensesNet losses from the disposal of assets
Total expenses from continuing operations
Operating result from continuing operations
Net operating result for the year
Net operating result attributable to Council
Net operating result for the year before grants andcontributions provided for capital purposes
Original budget as approved by Council – refer Note 16
10,695
3,719
10,311 984
10,167
776 3,009
1,023
4,847
2,679
Budget 1
3e,f
4d
4b4c
2,588
2,590
3b
4a
3e,f
966 7,251
12,136 261
28,449
5– 4e
10,338 10,279
Notes
3a
3d3c
2017
595
2017
3,165 482
4,707
5,059 7,551
225
4,847
26,686
26,995
10,569
4,113 3,300
26,199
2,250
1
2,250
2,250
1,989
Actual 2016
Actual
9,846
586 2,633
1,508
25,178
2,412
1,128 514
31,842
5,452 4,937
4,847
12,022
1,508
1,508
994
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 5
Glen Innes Severn Council
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&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 5,317
2017
507
507
Actual
20b (ii)
1,508
3,916
4,847
Notes
470
5,317 5,424
5,424
3,916
Actual 2016
3,916
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 6
Glen Innes Severn Council
Statement of Financial Position as at 30 June 2017
$ ’000
ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesNon-current assets classified as ‘held for sale’Total current assets
Non-current assetsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestment propertyOtherTotal non-current assets
TOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilities
TOTAL LIABILITIES
Net assets
EQUITYRetained earningsRevaluation reservesCouncil equity interest
Total equity
3,115 20,754
261,131
2,238
2,876
216
213
268,277
243,734
243,734
241,954
170
26,323
Notes
10
9
10
142,527
7
14
8
6a7
8
10
241,512
1,445 10 1,526 10
22
10
8
20
Actual
– 1,499
16,002
2016Actual
1,324 2,629
209
59
1,557
19,058
2,701 177
24,543
428
170
2017
–
8,143
2,296
241,390
6,831
96,360
245
242,073
15,972
59
243,734
147,374
16,400
15,384 499
15,883
22,714
238,417
238,417
95,890
238,417
20
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 7
Glen Innes Severn Council
Statement of Changes in Equity for the year ended 30 June 2017
2017
$ ’000
Opening balance (as per last year’s audited accounts)
a. Correction of prior period errorsRevised opening balance
b. Net operating result for the year
c. Other comprehensive income – Revaluations: IPP&E asset revaluation rsve – Other reserves movementsOther comprehensive income
Total comprehensive income (c&d)
Equity – balance at end of the reporting period 142,527
earnings
507
4,847
470
2016
238,417 238,417 95,890
3,916
1,508 3,916 5,424
– 3,916 3,916
5,424
– – – 3,916 3,916
1,508
3,916
1,508 – 1,508
141,019 91,974 232,993 232,993
(Refer 20b) interest equity
255,177 – (22,184) (22,184) (22,184)
255,177
Asset
Retained reserve Council Totalrevaluation
147,374 96,360 243,734 243,734
5,317 4,847 470 5,317
– 470 470 20b (ii) – (37) (37) (37) 20b (ii) – 507 507
4,847 – 4,847
142,527 95,890 238,417 20 (c) – – – –
142,527 95,890 238,417 238,417
Retained reserve Council TotalNotes earnings (Refer 20b) interest
revaluation
equity
238,417
2017 Asset
141,019 114,158
– –
Financial Statements 2017
This statement should be read in conjunction with the accompanying notes. page 8
Glen Innes Severn Council
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 infrastructure, property, plant and equipmentPayments:Purchase of infrastructure, property, plant and equipmentPurchase of real estate assetsDeferred debtors and advances madeNet 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 year
Additional Information:
plus: Investments on hand – end of year
Total cash, cash equivalents and investments
Please refer to Note 11 for information on the following:– Non-cash financing and investing activities– Financing arrangements– Net cash flow disclosures relating to any discontinued operations
(960) (8,517)
(10,057)
(759) (1,008) (6,422)
20162017
444
10,426
13,150
2,877
Actual
9,591
11,316 – 764
(3,509)
Actual
–
232 447
9,162 6,725 (2,946)
16,002
4,752
709
(160) – (5,347)
– 2,050
(8,863) (5,119)
19,384
(1,244)
(3,382)
(9,150)
(1,244)
16,002
16,002
–
(4) –
(1,341)
(7,001)
2,590
2017
2,588
– 12,642
550
10,279
Budget
–
6,813 (3,300)
11b
11a
(1,322)
–
– (8,019)
–
39
(10,569)
(966)
13,511
(2,489)
(1,322)
16,000
(7,980)
Notes
575
(10,330)
2,308
20,754
6b
20,754 –
3,138
5,806
11a
Financial Statements 2017
page 9
Glen Innes Severn Council
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
28 80
35
31
32 n/a33
40
38
39
36
Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
27
4644
2(a)
32(b)
6(b)
5
23
26
Note
22
14
10(a)10(b)
17
6(a)
4
6(c)
9(c)
11
24
Page
1
25
19
1516
20
21
43
42
37
38
18
1213
10212223
78
9(a)9(b)
29
28
32
41
55
49
82
6463
61
66
62
48
56
52
62
54
59
57
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies
page 10
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 AASB 124 Related Party Disclosures was adopted during the year, the impact of this standard had no impact on reporting financial position or performance, however note 28 has been added. AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 and AASB 11] was adopted during the year, the impact of this standard had no impact on reporting financial position or performance. (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
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 11
revenue when the Council obtains control over the assets comprising these receipts. Developer contributions may only be expended for the purposes 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 Supplies Sewerage Services Australia Day Committee Australian Standing Stones Committee Dundee Reserve Trust Committee Emmaville Historical Museum Committee Glen Innes and District Sports Council Minerama Committee Pinkett Recreation Association Stonehenge Recreation Reserve Trust Emmaville War Memorial Museum Glen Innes Beautification Committee Glen Elgin Federation Sports Club 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
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 12
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. 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. (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.
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 13
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. (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
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 14
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. 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
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 15
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. 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:
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 16
Internally valued: • Operational Land • Community Land • Buildings – specialised/non-specialised • Other structures • Roads assets including roads, bridges and
footpaths • Bulk earthworks • Stormwater drainage • Water and sewerage networks • Swimming pools • Other open space/recreational assets • Other infrastructure • Other assets
As approximated by depreciated historical cost: • Plant and equipment • Tip 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. 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 4 years - Vehicles 5 to 10 years - Heavy Plant/Road Making equip. 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 Stormwater Drainage - Drains 80 to 100 years - Culverts 50 to 80 years - Flood Control Structures 80 to 100 years Transportation Assets - Sealed Roads: Surface 80 years - Sealed Roads: Structure 80 years - Unsealed Roads 80 years - Bridge: Concrete 120 years - Bridge: Other 90 years - Road Pavements 60 years - Kerb, Gutter and Footpaths 40 years
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 17
Water and Sewer Assets - Dams and Reservoirs 80 to 100 years - Bores 20 to 40 years - Reticulation Pipes: PVC 70 to 80 years - Reticulation Pipes: Other 70 to 80 years - Pumps and Telemetry 15 to 20 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 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.
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 18
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 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.
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 19
(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 Council has not classified any assets as intangible. (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 not 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. Council’s assessment of the impact of upcoming new standards and interpretations that are likely to have an effect are set out below. AASB 15 Revenue from Contracts with Customers, and associated amending standards AASB15 introduces a five-step process for revenue recognition, with the core principle of the new standard being for entities to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services. Accounting policy changes will arise in the timing of revenue recognition, treatment of contract costs, and contracts which contain a financing element.
Financial Statements 2017_
Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)
page 20
AASB15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications), and improve guidance for multiple-element arrangements. The effective date of this standard is for the annual reporting periods beginning on or after 1 January 2019; i.e. Council’s financial statements for the year ended 30 June 2020. The changes in revenue recognition requirements in AASB15 may cause changes to the timing and amount of revenue recorded in the financial statements as well as additional disclosures. The impact of AASB15 has yet to be quantified. AASB 16 Leases AASB16 will result in most of the operating leases of an entity being brought onto the statement of financial position. There are limited exceptions relating to short-term leases and low-value assets which may remain off the balance sheet. The calculation of the lease liability will take into account appropriate discount rates, assumptions about the lease term, and increases in lease payments. A corresponding right to use assets will be recognised, which will be amortised over the term of the lease. Rent expense will no longer be shown. The profit and loss impact of leases will be through amortisation and interest charges. The effective date of this standard is for the annual reporting periods beginning on or after 1 January 2019; ie Council’s financial statements for the year ended 30 June 2020. The impact of AASB15 has yet to be quantified. (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.
Financial Statements 2017
page 21
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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.
Share of gains/(losses) in associates
continuing operations
12,325 and joint ventures (using the equity method)
Operating result from
–
Economic affairs
19,648 Total functions and activities
779
8,801
31,842 28,449 26,995 26,199 26,686
– – –
1,268 1,593
– –
–
1,022 661
16,562 26,199 26,995
10,124
19,517
261,131
– –
268,277
–
10,084
– 5,755
11,185
– 3,753
6,331 261,131
(3,086) –
268,277
5,511 – (919) 159,142
25,178
– –
25,178
–
–
–
5,430 (8,616)
1,508
321 2,067 –
– (489)
(6,551)
2,250
– –
4,847
1,580
10,124 8,801 12,325
(2,116) 183
(1,581) (1,633)
(571)
–
(41) 421
(7,478)
–
– – – 787 238
340 (340)
59 (1,035)
25 –
384 614
– –
– – 26,222
8,294 331
3,031 – – 5
(570) – (223) –
3,772 (277)
– – –
Actual2017
268,277 2016
– 64 874
358 20,036
2,457
16,964 – – 37
309
(106) (414)
– 5,430 (181)
(4,059) (392)
Actual
2,118 – –
– – 52 16,151 3,634 1,871
4,708 575
(2,082) 2,837 Transport and communication 4,667 Mining, manufacturing and construction 2,292 4,209
3,153
1,997 2,054 1,850 1,567 1,308
5,235
365 695 88
1,779
566
2,296 1,183 1,252
2,100 5,923
257 1,814 2,373
226 418
2,085
1,786 Housing and community amenities 2,151 Water supplies
Recreation and culture 233
2,142 Sewerage services 1,491
2,190 2,611 1,610
663
3,678 Community services and education 4,685 – –
4,485 3,450 1,896 1,658 1,298
(20)
– 125
4,705
207
3,619
(184) 223
– 470 5,072
Health Environment –
348 739 23 19
295 669 Public order and safety
Governance Administration
(737) (1,766) (4,235)
325
2017Actual
Originalbudget
2017Actualbudget
(321) 865 837 332
– 5 2,236
181 4,391
397 737
Operating result from continuing operations
Originalbudget
OriginalActual
2017 20162017 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
Financial Statements 2017
page 22
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 SUPPLIESIncludes provision of water services to the community.
SEWERAGE SERVICESIncludes provision of sewerage services to the community.
RECREATION AND CULTURE
MINING, MANUFACTURING AND CONSTRUCTION
TRANSPORT AND COMMUNICATION
ECONOMIC AFFAIRS
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.
Includes 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.
Financial Statements 2017
page 23
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations
$ ’000
(a) Rates and annual charges
Ordinary ratesResidentialFarmlandBusinessTotal ordinary rates
Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesWater supply servicesSewerage servicesDrainageWaste facility management leviesTotal annual chargesTOTAL RATES AND ANNUAL CHARGES
Council has used 2016 year valuations provided by the NSW Valuer General in calculating its rates.
(b) User charges and fees
Specific user charges (per s.502 – specific ‘actual use’ charges)Water supply servicesSewerage servicesWaste management services (non-domestic)OtherTotal user charges
Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Planning and building regulationPrivate works – section 67Regulatory/ statutory feesTown planningTotal fees and charges – statutory/regulatory
(ii) Fees and charges – other (incl. general user charges (per s.608))Aged careCemeteriesChild careLeaseback fees – Council vehiclesQuarries and gravel pitsSaleyardsSwimming centresTrade waste feesOtherTotal fees and charges – otherTOTAL USER CHARGES AND FEES
177 74
–
130 100
72
47
2,653
531
Notes
288
3,941
102
1,071
– 127
9,846
87
1,221
23 31
78
74 302
20162017Actual
2,754
570 2,861
Actual
5,905
2,694
558 6,185
334
1,074 933
328
71
1,318 979
1,383
1,314
295
160 6
1,117
4,153 10,338
101
322 77
1,162
62
3,165 869 13
2,412
227 124 251
123
530 99
57 55 9
1,320
Financial Statements 2017
page 24
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’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)TOTAL INTEREST AND INVESTMENT REVENUE
Interest revenue is attributable to:Unrestricted investments/financial assets:Overdue rates and annual charges (general fund)General Council cash and investmentsRestricted investments/funds – external:Development contributions – Section 94 – Section 64Water fund operationsSewerage fund operationsTotal interest and investment revenue recognised
(d) Other revenues
Rental income – investment propertiesRental income – other council propertiesFinesFines – otherLegal fees recovery – rates and charges (extra charges)Legal fees recovery – otherAged and DisabledCommissions and agency feesDiesel rebateFestivals and committee activitiesInsurance claim recoveriesInsurance rebates and incentivesQuarry RoyaltiesRecycling income (non-domestic)Sales – generalSales – quarries and gravel pitsTourism salesOtherTOTAL OTHER REVENUE
2016Actual
2017Actual
42
14
544
Notes
436
79
339
9
46
436
586
46
9
7
30
482
102
–
482
9
586
2
–
3,295
19
62
79 79
183
17
89
119
38
19
1,884
4,707
17
224
26
–
111
191
9
–
69
63
9
– 14
11 68
–
19 –
200 191 18
215
2
2,633
Financial Statements 2017
page 25
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’000
(e) Grants
General purpose (untied)Financial assistance – general componentFinancial assistance – local roads componentPensioners’ rates subsidies – general componentTotal general purpose
Specific purposePensioners’ rates subsidies: – Water – Sewerage – Domestic waste managementWater suppliesSewerage servicesAboriginal servicesAged careChild careHealth AdministrationLibraryLIRS subsidyNSW rural fire servicesSporting GroundsStreet lightingTourism & Area PromotionTown planningTransportTransport (other roads and bridges funding)Urban stormwater drainageYouth servicesWaste/landfillTotal specific purposeTotal grants
Grant revenue is attributable to:– Commonwealth funding– State funding– Other funding
–
654 10,531 9,728
– 26 356
– –
–
–
356
– –
571 –
9,728
3,029 6,699
25
–
356 356
–
654
2017 2017 2016
–
– –
654
654
– 1,945
2,727
37
–
–
–
52
– –
20
–
– 109
38
40
236
–
6
–
–
– 41 40 – –
39
–
–
25
37
Capital Operating
109
–
Operating
–
37 39
– 3,753
–
38
– –
–
2,016
10,531
1,279 2,365 3,701
– 27
1,465
–
235
– –
–
8,515
1,734
52
36
4,776
–
37 5
5,975
–
– 6 5
–
26
5,755
5
2016
219
– 270
–
–
19
–
– –
3,493 33
–
–
–
–
–
–
Capital
–
20
–
–
Financial Statements 2017
page 26
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’000
(f) Contributions
Developer contributions:(s93 & s94 – EP&A Act, s64 of the LGA):S 94 – contributions towards amenities/servicesS 94A – fixed development consent leviesS 64 – water supply contributionsS 64 – sewerage service contributionsTotal developer contributions
Other contributions:Aged and disabledBushfire servicesChild careLibrary/learning centreFire ProtectionPublic HallsRoads and bridgesRMS contributions (regional roads, block grant)Section 355 committeesSewerage (excl. section 64 contributions)Street lightingTourismWater supplies (excl. section 64 contributions)QuarryTotal other contributionsTotal contributions
TOTAL GRANTS AND CONTRIBUTIONS
17
347
4 32
112
35
–
–
–
–
8
–
–
158
143
1
119 –
–
363
–
–
– – 137
55 – –
2016
– – 2 5
– –
– –
290
2017
7 1
Capital Capital
4
10
–
121
8 10 –
–
Notes Operating Operating
– –
2017
171 –
–
3
–
–
2
1,128
– –
–
221
967 1,491 –
–
542
–
–
474
–
–
570
5 3
21 331 1,491
–
514
–
12,022
2016
– – –
10,695
28
11
967
–
Financial Statements 2017
page 27
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 3. Income from continuing operations (continued)
$ ’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
2017
1,372
253
288
640
1,279
(206)
1,010
2016
1,948
Add: grants and contributions received for the provision of goods and services in a future period
(639)
2,382
1,084
1,372
2,382
732 1,372
Actual
–
434
963
Actual
Financial Statements 2017
page 28
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations
$ ’000
(a) Employee benefits and on-costs
Salaries and wagesTravel expensesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)OtherTotal employee costsLess: capitalised costs TOTAL EMPLOYEE COSTS EXPENSED
(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
(c) Materials and contracts
Raw materials and consumablesContractor and consultancy costsAuditors remuneration (1)
Legal expenses: – Legal expenses: planning and development – Legal expenses: debt recovery – Legal expenses: otherOperating leases: – Operating lease rentals: contingent rentals (2)
Section 355 committeesSecurity servicesValuation feesTOTAL MATERIALS AND CONTRACTS(continued on the next page...)
10 41
2017
34
8,170
881
2016
158 153 1,195
Actual Actual
11,251
116
(940)
7,792
19
–
1,004
Notes
26
(729)
51 40
76
12 11
20
114
443
229
–
1,004
271
4,646
10,311 10,167
19 19
1,016
195
15
965 965
7,041 34
8 65
49
1,023
19
31
7,551
5
170
10,896 177
5,452
1,191
195
495
984
Financial Statements 2017
page 29
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations (continued)
$ ’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-GeneralTotal 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 servicesTotal Auditor remuneration
2. Operating lease payments are attributable to:BuildingsComputersMotor vehicles and plant
(d) Depreciation, amortisation and impairment
Depreciation and amortisationPlant and equipmentOffice equipmentFurniture and fittingsInfrastructure: – Buildings – Other structures – Roads (General) – Roads (Causeways) – Roads (Carparks) – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage network – Swimming pools – Other open space/recreational assets – Kerb and Gutter – Major Street Furniture – Footpaths (Non Road Related)Other assets – Library booksAsset reinstatement costsTOTAL DEPRECIATION ANDIMPAIRMENT COSTS EXPENSED
814
146
4,937
4
10
–
Notes
543 30
37
12
49
195
Actual
40
815
24
40
617 54 6
40 9 & 26
153
4 4
1,398 80
322
15
32
11
451
21
146 29
531
29
229
38
34
31
538
–
166
2017 2016
– 30
Actual
454
148
3 195
1,400
17
– 49
49
–
269
5,059
324 32
269
82
Financial Statements 2017
page 30
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 4. Expenses from continuing operations (continued)
$ ’000
(e) Other expenses
AdvertisingAnnual rates and chargesBank chargesCleaningComputer software chargesContributions/levies to other levels of government – Emergency services levy (includes FRNSW, SES, and RFS levies) – NSW fire brigade levy – NSW rural fire service levy – Other contributions/leviesCouncillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Donations, contributions and assistance to other organisations (Section 356)Election expensesElectricity and heatingFreight and cartageInsuranceLease fees and rentalsPhotocopyingPostagePrinting and stationeryPromotions and trade fairsStreet lightingSubscriptions and publicationsTelephone and communicationsOtherTOTAL OTHER EXPENSES
418
51
109
22
399
173
13
16
70
69
62
132
45
4
377
68
33
53
17 134
36 99
104
313
Actual
73
–
2016
207
2017Notes
54 254
– 20
314
Actual
91 –
41
97 349
–
60
127
1
59
107
96
399
3,009 117
2,679
–
50
78
69
143
59
6 –
Financial Statements 2017
page 31
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 saleLess: carrying amount of real estate assets sold/written offNet gain/(loss) on disposal
Other StructuresLess: carrying amount of Other Structures assets sold/written offNet gain/(loss) on disposal
BuildingsProceeds from disposal – BuildingsLess: carrying amount of Buildings assets sold/written offNet gain/(loss) on disposal
LibraryLess: carrying amount of Library assets sold/written offNet gain/(loss) on disposal
NET GAIN/(LOSS) ON DISPOSAL OF ASSETS
–
62
(160)
(82)
175
2017
–
(43)
56
176
–
–
Notes 2016
(833) 272
– (2)
(48)
(82) (278)
(2)
–
(160)
(776)
(99)
(102)
(35) (35)
(113)
Actual
(225)
(561)
(48)
(30) (30)
Actual
Financial Statements 2017
page 32
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 equivalentsTOTAL 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’ 16,002
– 16,002
–
– –
–
–
– 15,000
20,754
Notes
2017Actual
Current
2016
Non-current Current Non-current
16,002
Actual
– 1,002 4,754
20,754
20,754
16,000 –
–
2017Actual Actual
2016
Financial Statements 2017
page 33
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 liabilitiesSpecific purpose unexpended loans – general (A)Library Infrastructure Grant (B)Life choices funds held on behalf of clients (C)External restrictions – included in liabilities
External restrictions – otherDeveloper contributions – general (D)Specific purpose unexpended grants (B)Water supplies (E)Sewerage services (E)External restrictions – otherTotal external restrictions
A Loan moneys which must be applied for the purposes for which the loans were raised. B Grants which are not yet expended for the purposes for which the grants were obtained.C Funds held on behalf of Life Choices Clients.D Development contributions which are not yet expended for the provision of services and amenities in accordance
with contributions plans (refer Note 17). E 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.
Current
2017
Actual
Closing Transfers from
– 8,641
16,002
–
1,258
Opening
6,654 8,090
–
20,754 –
–
(635) 1,481 4,452 4,123
(433)
2016
16,002
Non-current
balance
764
8,090
–
Actual
919
–
2,291
288
2017
–
864
1,411 3,967 2,375
2,967 5,370 (8) 9,822
Actual
Transfers to
–
45
restrictions
434
2,926
21
restrictions
964
1,084
–
2,595 –
3,359
–
154
2016
–
20,754
Actual
45
9,822
Non-current
balance
(202)
372
(8)
2017
Current
–
–
(643)
–
– 21
1,948
Financial Statements 2017
page 34
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 6c. Restricted cash, cash equivalents and investments – details (continued)
$ ’000
Internal restrictionsPlant and vehicle replacementInfrastructure replacementEmployees leave entitlementCarry over worksDeposits, retentions and bondsCouncil committeesSpecial projectsWaste facility managementLife ChoicesAsset RemediationRFS Funds Repaid – Fire Control CentreDrainage – OperationalDrainage – CapitalInfrastructure – OtherInfrastructure – ContingencyLandfill – New BinsLandfill – Purchase 15HA LandCBD Signage UpgradeCAFS ExtensionRoadsEconomicParksTotal internal restrictions
TOTAL RESTRICTIONS
2017
31
–
–
Opening
487
528 – 3,248
7
–
balance
–
154
– 511
–
250
217
683
144 – 33
–
737 – –
–
575
– 210 –
14,744
9,863
–
–
835
271
–
33
balance
–
–
–
–
–
737
683 –
225 154
–
– 217
– 1,875
330
(8,519)
(7,876) 6,654
144
18,463
34
575
–
–
330
1,729
11 40
346
12,238
(3,077)
– –
restrictions
2,647
– –
40
7
1,085
528
–
346
31
210 8,641
271
–
Transfers from
3,111
Closing
–
(957) (83)
(511)
487
–
restrictions Transfers to
–
–
(3,248)
11
Financial Statements 2017
page 35
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 7. Receivables
$ ’000
PurposeRates and annual chargesInterest and extra chargesUser charges and feesAccrued revenues – Interest on investments – Other income accrualsDeferred debtorsNet GST receivableTotal
Less: provision for impairmentRates and annual chargesUser charges and feesTotal provision for impairment – receivables
TOTAL NET RECEIVABLES
Externally restricted receivablesWater supply – Rates and availability charges – OtherSewerage services – Rates and availability charges – OtherTotal external restrictionsInternally restricted receivablesNilUnrestricted receivablesTOTAL NET RECEIVABLES
Notes on debtors above:(i) Rates and annual charges outstanding are secured against the property.
(ii) Doubtful rates debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.
(iii) Interest was charged on overdue rates and charges at 8.50% (2016 8.50%).Generally all other receivables are non-interest bearing.
(iv) Please refer to Note 15 for issues concerning credit risk and fair value disclosures.
Notes
41 – 509
–
209
– (31)
–
–
–
2016
2,044
–
213
213
–
–
3,115
3,198
Non-current
(52)
51
109 –
3,115 1,557 2,666 209 213
2017
468
–
406
–
– 209
Non-current
– 1,640
–
Current
– –
213
41
147
213
334
–
–
–
–
115
(52) (83)
449 – –
31
(31)
(83)
209
–
–
1,557
323 –
268
78
209
– – 36
1,089
–
– 625
597
Current
–
– –
Financial Statements 2017
page 36
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 8. Inventories and other assets
$ ’000
(a) Inventories
(i) Inventories at cost Stores and materialsTrading stockTotal inventories at cost
TOTAL INVENTORIES
(b) Other assets
PrepaymentsTOTAL OTHER ASSETS
Total unrestricted assetsTOTAL INVENTORIES AND OTHER ASSETS
(i) Other disclosures
(a) Inventories recognised as an expense for the year included:– Stores and materials– Trading stock
Refer to Note 27. Fair value measurement for information regarding the fair value of other assets held.
2017
– 246
Non-current
2,238
Current
–
Notes2016
245
59
217
245
– –
59 59 59 –
2,238 1,499
59 1,499 59
2,238 2,238
304 304
1,499
3,003 1,182 757 1,066
2017 2016
–
–
Current
1,499
Non-current
245 1,992 – 1,282
–
Financial Statements 2017
page 37
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 9a. Infrastructure, property, plant and equipment
Asset class
$ ’000
Capital work in progress 892 – 892 639 – – – (535) – – – 996 – 996 Plant and equipment 10,532 6,545 3,987 – 429 (99) (617) – – – – 10,686 6,986 3,700 Office equipment 1,826 1,569 257 – 101 – (54) – – – – 1,927 1,623 304 Furniture and fittings 517 479 38 – – – (6) – – – – 517 485 32 Land: – Operational land 7,748 – 7,748 – 415 (30) – – (152) – – 7,981 – 7,981 – Community land 5,252 – 5,252 – – – – – – – – 5,252 – 5,252 Infrastructure: – Buildings 35,698 20,038 15,660 180 – (278) (815) – 152 – – 35,385 20,486 14,899 – Other structures 11,818 6,285 5,533 198 – (48) (269) 18 – – – 11,947 6,515 5,432 – Roads (General) 117,365 30,308 87,057 1,973 – – (1,400) – – – 942 119,453 30,881 88,572 – Roads (Causeways) 6,652 3,619 3,033 – – – (82) – – – 31 6,718 3,736 2,982 – Roads (Carparks) 1,001 229 772 – – – (15) – – – 170 1,210 283 927 – Bridges 54,716 20,444 34,272 410 550 – (543) 311 (260) (248) – 55,260 20,768 34,492 – Footpaths (Road Related) 2,361 991 1,370 – – – (30) – – – 56 2,417 1,021 1,396 – Bulk earthworks (non-depreciable) 22,464 – 22,464 – – – – – – – 382 22,846 – 22,846 – Stormwater drainage 13,092 4,800 8,292 – – – (146) – 2 – 74 13,168 4,946 8,222 – Water supply network 36,478 17,329 19,149 352 – – (454) – – (418) – 36,703 18,074 18,629 – Sewerage network 21,024 7,429 13,595 – – – (324) – – (770) – 21,135 8,634 12,501 – Swimming pools 2,735 1,140 1,595 – 70 – (32) 206 – – – 3,011 1,172 1,839 – Other open space/recreational assets (General) 2,149 635 1,514 62 – – (24) – (43) – – 2,168 659 1,509 – Other Open Space Recreational Assets (Footpaths – Non Road Related) 326 65 261 – – – (4) – – – 4 330 69 261 – Other infrastructure (Kerb and Gutter) 12,013 5,405 6,608 – – – (153) – – – 201 12,214 5,558 6,656 – Other infrastructure (Major Street Furniture) 1,673 136 1,537 – – – (40) – – – 83 1,757 177 1,580 Other assets: – Library books 808 316 492 – 53 (2) (40) – – – – 854 351 503 Reinstatement, rehabilitation and restoration assets (refer Note 26): – Tip assets 163 151 12 – – – (11) – – – – 162 161 1 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.
Accumulateddepreciation
and impairment
Gross carrying amount
Gross carrying amount
Accumulateddepreciation
and impairment
369,303 127,913 241,390 3,814 (457) (5,059) 1,618
as at 30/6/2016Asset movements during the reporting period
WIPtransfers
Adjustmentsand transfers
Additionsnew assets
Additionsrenewals
Carrying value
of disposals
Depreciation expense
Revaluation decrements
to equity (ARR)
Revaluation increments
to equity (ARR)
Netcarrying amount
241,512 (1,436) 1,943 374,097 132,585 – (301)
as at 30/6/2017
Netcarrying amount
Financial Statements 2017
page 38
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 9b. Externally restricted infrastructure, property, plant and equipment
Note 9c. Infrastructure, property, plant and equipment – current year impairments
Council has recognised no impairment losses during the reporting period nor reversed any prior period losses.
21,970 8,635 13,335
59,658 26,833 32,825
21,135 8,635 12,500
37,688 18,198 19,490
175 – 175
18,074 –
Accumulated depn. and
impairment
Net carrying amount
138
847 36,247
456
124
–
14
847 18,173
Actual2016
456
Gross carrying amount
Accumulated depn. and
impairment
Net carrying amount
138 120 18
Gross carrying amount
847
Actual Actual
$ ’000
Total sewerage services
Class of asset
Water supply
Infrastructure – Operational land
Plant and equipment Land
– Operational land
Total water supply
WIP
Other assets
Infrastructure
Sewerage services
Actual2017
Land660 – 660
TOTAL RESTRICTED I,PP&E
37,462 17,449 20,013
– – –
36,021 – 847
660 – 660
17,329 18,692 456 – 456
21,024 7,429 13,595 21,684 7,429 14,255
59,146 24,878 34,268
Financial Statements 2017
page 39
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 10a. Payables, borrowings and provisions
$ ’000
PayablesGoods and services – operating expenditureAccrued expenses: – Borrowings – Other expenditure accrualsSecurity bonds, deposits and retentionsOtherTotal payables
Income received in advancePayments received in advanceTotal income received in advance
BorrowingsLoans – secured 1
Total borrowings
ProvisionsEmployee benefits:Annual leaveLong service leaveOther leaveSub-total – aggregate employee benefitsAsset remediation/restoration (future works)
Total provisions
(i) Liabilities relating to restricted assets
Externally restricted assetsWaterSewerLife ChoicesLocal infrastructure renewal scheme loanLiabilities relating to externally restricted assets
Total liabilities relating to restricted assetsTotal liabilities relating to unrestricted assets
1. Loans are secured over the general rating income of Council Disclosures on liability interest rate risk exposures, fair value disclosures and security can be found in Note 15.
2,116
253
2,629
728
TOTAL PAYABLES, BORROWINGS AND PROVISIONS
6,267
Non-current
–
8,143
–
– 78
2,629
–
– 1,009
177
1,445
163
–
2,876 82 (14) 9
1,526
1,011
1,526
(4)
150
9,104
–
7,296
327
16,400
2,928
15,384 15,972 1,324
TOTAL PAYABLES, BORROWINGS AND PROVISIONS
Non-current 2016
15,883
499
6,831
2,876 26
15,972 1,324
2,701 (19)
2,296 – –
–
–
1,870
Current 2017
Non-current
97
1,869
1,481 891
–
–
Non-current
92
766 – –
(3)
2,148
(8)
2016
–
177
2017
1,649 1,939
15,883
2,163
428
5,804 5,803
9,104 2,116 4,715
6,831
Notes
9,616
4
1,362 –
474
Current
172 346
1,445
1,634
–
–
Current
8,143
9,616
15,384
–
7
–
Current
47
–
16,400
5,215 2,928
303 764
Financial Statements 2017
page 40
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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. Self insurance provisions represent both (i) claims incurred but not reported and (ii) claims reported and estimatedas a result of Council’s being a self insurer up to certain levels of excess.
c. 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.
2016
2,126
–
–
–
892
Openingbalance
as at 1/7/16
19
Long service leave1,009
TOTAL–
–
2017
19 346
Closingbalance
as at 30/6/17
Remeasurement effects due to
discounting
Actual
Additional provisions
(5) Asset remediation
(99) 249 – Annual leave
8 – – Other leave
635 1,797
3,128 327
Decrease due to payments
Unused amounts reversed
Class of provision
–
(735) –
2,126
1,011
1,924
3,304
1,947
2016
(633)
(3)
2017
–
Actual
1,924
Financial Statements 2017
page 41
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 assets – OtherUnwinding of discount rates on reinstatement provisions
+/- Movement in operating assets and liabilities and other cash items:Decrease/(increase) in receivablesIncrease/(decrease) in provision for doubtful debtsDecrease/(increase) in inventoriesIncrease/(decrease) in payablesIncrease/(decrease) in accrued interest payableIncrease/(decrease) in other accrued expenses payableIncrease/(decrease) in other liabilitiesIncrease/(decrease) in employee leave entitlementsNet cash provided from/(used in)operating activities from the Statement of Cash Flows
(c) Non-cash investing and financing activities
Nil
(d) Financing arrangements
(i) Unrestricted access was available at balance date to the following lines of credit:
Bank overdraft facilities (1)
Credit cards/purchase cardsTotal financing arrangements
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.
(4)
4,937 225
5,059
97
22
Notes
4,847
16,002
55
22
297
Actual
–
(37)
(494)
–
96
16,002
6a
20,754 10
45
(19)
(120)
606 531
(1,015)
–
115
19
5
19
6,725
278
(29)
315
157
776
(1,558)
2017
20,754
1,508
Actual 2016
–
200
9,162
24 24
200
Financial Statements 2017
page 42
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 12. Commitments for expenditure
$ ’000
(a) Capital commitments (exclusive of GST)
Capital expenditure committed for at the reporting date but notrecognised in the financial statements as liabilities:
Property, plant and equipmentBridgesOperational LandWater InfrastructureSewer InfrastructureRoadsWasteStreet LightingUrban StormwaterTotal commitments
These expenditures are payable as follows:Within the next yearTotal payable
Sources for funding of capital commitments:Unrestricted general fundsFuture grants and contributionsExternally restricted reservesInternally restricted reservesUnexpended loansTotal sources of funding
Details of capital commitmentsCapital commitments relate to a range of capital items where purchase ordershave been raised but invoices not received as at 30 June.
(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
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.
(d) Investment property commitments
Nil
Actual
67
2016
–
1,674
323 364
362
–
198
109 68
112
67
1,674
39 401 765
44 –
–
1,674
2017
1,330
1,674
121
198
18
198
– 131
67
346 – 3
44
9
198
67
60
Actual
–
1,081
–
Notes
Financial Statements 2017
page 43
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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).
58.70%
3.70%
Benchmark
>0.00%6.76%
9,987
3,944
10,991
5.20x
2,095 > 3 mths
31,842
3,089 16,052
20,754
>1.5x
58.00%
2,325
5.91%
12.84%
2015
2.74%
4.72%
8.75 mths
18,692
Amounts
30,714
>2x
< 5% Metro<10% Rural
519
>60.00%
4.30x 3.41x 3.86x
2017
x12
2016
11.4 mths
Prior periods
3.36x
56.36%
3.07x
9.91 mths
Indicator2017
Financial Statements 2017
page 44
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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
Purpose of own source operating
revenue ratio
Commentary on 2016/17 result
Council has a strong level of working capital.
2016/17 ratio 58.70%
Commentary on 2016/17 result
To assess the adequacy of working capital and its ability to satisfy obligations in the short term for
the unrestricted activities of Council.
2016/17 ratio 5.20x
This ratio measures fiscal flexibility. It is
the degree of reliance on external funding
sources such as operating grants and
contributions.
Purpose of unrestricted current
ratio
This ratio measures Council’s
achievement of containing operating expenditure within operating revenue.
Council has once again met this benchmark although it is significantly higher than 2015-16 due to Council
receiving half of the Financial Assistance Grant funding for 2016-17 in advance. This
advance has been restricted, but under accounting standards was required to be
shown as income in the 2016-17 Financial Year. If this advance payment had not been
included, this ratio would be 7.02%
Commentary on 2016/17 result
2016/17 ratio 12.84%
Council improved upon this ratio again in 2016/17. It should be noted that Council
meets the rural version of this ratio (which includes Financial Assistance Grants).
Purpose of operating
performance ratio
3% 7%
13%
-4%
-8%
-3%
2%
7%
12%
2014 2015 2016 2017
Rat
io %
1. Operating performance ratio
57% 56% 58% 59%
0%10%20%30%40%50%60%70%80%90%
100%
2014 2015 2016 2017
Rat
io %
2. Own source operating revenue ratio
4.1 3.1 3.4
5.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2014 2015 2016 2017
Rat
io (x
)
3. Unrestricted current ratio
Financial Statements 2017
page 45
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 13a(ii). Local government industry indicators – graphs (consolidated)
Benchmark: ――― Minimum >=2.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside Benchmark
Benchmark: ――― Minimum >=3.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark
Commentary on 2016/17 result
2016/17 ratio 9.91 mths
To assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of
recovery efforts.
This ratio measures the availability of operating cash to
service debt including interest, principal and
lease payments
Commentary on 2016/17 result
Council continues to perform well against this benchmark despite taking out an aditional loan of $2.050 million for the
purchase of Wattle Vale and the new Rural Fire Service (RFS) Control Centre in
Lambeth Street (the cost of the buildings is being refunded by the RFS to Council).
Purpose of debt service cover ratio 2016/17 ratio 4.30x
Council continues to maintain its strong liquidity position.
2016/17 ratio 4.72%
This is well within the acceptable range for Rural Councils and is an improvement on
2015/16.
Purpose of cash expense cover ratio
Purpose of rates and annual charges
outstanding ratio
Commentary on 2016/17 result
This liquidity ratio indicates the number of months a Council can continue paying
for its immediate expenses without
additional cash inflow.
3.2 3.9
3.4 4.3
0.00.51.01.52.02.53.03.54.04.55.0
2014 2015 2016 2017
Rat
io (x
)
4. Debt service cover ratio
3.78% 3.70% 5.91%
4.72%
0%
2%
4%
6%
8%
10%
12%
2014 2015 2016 2017
Rat
io %
5. Rates, annual charges, interest and extra charges outstanding percentage
9.2 11.4
8.8 9.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2014 2015 2016 2017
Rat
io (m
ths)
6. Cash expense cover ratio
Financial Statements 2017
page 46
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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.
52.47% 96.30% 86.25% 96.40% 96.47%
3.36x 0.76x
2016Water indicators Sewer indicatorsGeneral indicators 5 Benchmark
>60.00%
>0.00%
53.60%
5.20x
11.72% 5.95% 17.97% 3.01% 24.81% 23.61%
2017 2017 20172016 2016
1.40x 0.75x 10.17x >1.5x
Financial Statements 2017
page 47
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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.
>2x
> 3 months
2.57% 33.84% 34.40%
3.67x 5.58x 2.15x 7.05x 3.08x
0.00 months
4.04x
0.81%
2016
8.29% 5.90% < 5% Metro<10% Rural
General indicators 5 Water indicators Sewer indicators
x12
Benchmark2017 2016 2017 2016
months months monthsmonths8.48 0.00 0.00 7.33 0.00
months
2017
Financial Statements 2017
page 48
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 14. Investment properties
$ ’000
(a) Investment properties at fair value
Investment properties on hand
(b) Valuation basis
The basis of valuation of investment properties is fair value, being the amounts for which the properties couldbe exchanged between willing parties in arms length transaction, based on current prices in an active marketfor similar properties in the same location and condition and subject to similar leases.
The 2017 revaluations were based on independent assessments made in 2015 by:M J Williams API, FREAV, Registered Valuer 619, Certified Practising Valuer.
(c) Contractual obligations at reporting date
Refer to Note 12 for disclosures relating to any capital and service obligations that have been contracted.
(d) Leasing arrangements – Council as lessor
Details of leased investment properties are as follows;
Future minimum lease payments receivable under non-cancellableinvestment property operating leases not recognised in thefinancial statements are receivable as follows:Within 1 yearTotal minimum lease payments receivable
The lease by Jamsies Fuel and Fix on Council property commenced on 1/10/2013and expires on 30/09/2018. Monthly rental is currently $1,457.76.
(e) Investment property income and expenditure – summary
Rental income from investment properties:– Minimum lease paymentsNet revenue contribution from investment propertiesplus:Fair value movement for yearTotal income attributable to investment properties
Refer to Note 27. Fair value measurement for information regarding the fair value of investment properties held.
Actual
17 17
170 170
17
17
Actual 2017
13
17
–
17
2016Notes
17
13
–
17
Financial Statements 2017
page 49
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 15. Financial risk management
$ ’000
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 Risk Management section in conjucntion with theFinance section, under policies approved by the Council.
The fair value of Council’s financial assets and financial liabilities approximates their carrying amount.
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 independent advisors.
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 tabledbefore 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.
(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
Profit Increase of values/rates
154
200
(154)
(200) (20)
200 20
154
20
(15) 15 (15) (154)
Profit Equity
(20)
Equity (200)
Decrease of values/rates
15
Financial Statements 2017
page 50
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 15. Financial risk management (continued)
$ ’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– amounts already provided for and written off this yearBalance at the end of the year
56
annual
90%
– 509
2017
–
2016
303 597
346
2017
(120)
100%
83
2,902
2017
2,568 211
receivables annual
51 118
(1)
Rates and
–
Rates and
charges receivables charges receivables
100%
Other
0%100%100%
251 403
1,252
106
–
37 –
100%
560
83
203
–
Rates and
annual
10%
Other
Rates and
127
charges charges Other
31%69%
receivables
83
2016
100%
annual Other
2016
124
0%
Financial Statements 2017
page 51
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 15. Financial risk management (continued)
$ ’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 payablesLoans and advancesTotal 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. All of Council's loans are taking out at fixed interestrates, which gives certaintly for cash flow purposes and also negates the risk of interest rate rises.
The following interest rates were applicableto Council’s borrowings at balance date:
Trade/other payablesLoans and advances – fixed interest rate
12,191 –
payable in:
2016
2017– 7
2,305
4-5 Yrs
–
5.66% 16,708
1,579
2,296 0.00%value
1,469
Average
2,701 1,508 9,423
–
interest rateCarrying
2017
19,713
interest rate
19,409
9,423
2,701 0.00%
1,405
1,405
2,357
19,409
2,490
17,417 5.59%
value
2016CarryingAverage
1,508 19,409
19,713 26,327 12,191
– – 2,701 1,579 16,708
3,259
– 1,469
2,296 2,317 17,417
valuescash
16,708
24,031 2,490 – 2,296 –
outflows> 5 Yrs2-3 YrscarryingActualTotal
7
to no3-4 Yrs
Subject
2,371
1-2 Yrs
4,660
–
maturity
2,317
2,289 2,357
2,305
766 – 1,324
– 1,935
766
≤ 1 Year
Financial Statements 2017
page 52
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 16. Material budget variations
$ ’000
Council’s original financial budget for 16/17 was adopted by the Council on 22 June 2017.
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 feesAdditional income was received for Quarry Delivery Charges due to the increased sale of products associated with the wind farm activity in the region and additional private works income.
Interest and investment revenueInterest rates declined over the course of the 2016-17 financial year. Budget for interest and investment revenue isto be adjusted downwards in 2017-18.
Other revenuesThis variance is accounted for predominately by additional income from Glen Innes Aggregates in 2016/17 as a result of increased activity due to additional sales attribtable to the wind farms in the region.
Operating grants and contributions
Capital grants and contributionsA number of additional Capital related Grants and Contributions were received in 2016/17, the largest of which was$552K for Glen Innes Severn Council taking over the Wytaliba Bridge from Roads and Maritime Services.
867
595
(114)
2,590
10,338
22%
332%1,128
12,022
3,165
Actual
261
12,136
2,117
577
(1%)
F
482
82%
U
4,707
1%
F
59
2017
F
F
(113) (19%)
10,279
2,588
U
Budget20172017
---------- Variance* ----------
Financial Statements 2017
page 53
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 16. Material budget variations (continued)
$ ’000
EXPENSESEmployee benefits and on-costs
Borrowing costs
Materials and contractsThis variation is predominately due to additional processing and production costs associated with Glen Innes Aggregates. This is more than offset by additional revenue generated by Glen Innes Aggregates in 2016/17.
Depreciation and amortisationDepreciation costs of $5.059M are on par with the 2015/16 actuals of $4.937M. It had been anticipated that themethodology for calcuating depreciation would be reviewed in 2016/17 resulting in lower depreciation costs.However this will be reviewedin 2017/18 in conjunction with transferring asset data to a new asset register.
Other expenses
Net losses from disposal of assetsSome assets were identified that needed to be removed from Council's asset register and it was thereforenecessary to write off these amounts. The amount required to be written off was significantly less than in 2015/16.
Budget variations relating to Council’s Cash Flow Statement include:
Cash flows from operating activitiesThis variation is predominately due to a Federal Government decision to provide Councils with an advance payment in June of half of the 2017/18 Financial Assistance Grant.
Cash flows from investing activitiesA number of Bridge projects were included in the original budget and subsequently removed throughout the year viaCouncil resolution.
Cash flows from financing activitiesThis variation is as a result of additional loans taken out in 2015-16.
7,251
3,300 3,009
2017
(4%)
U225
7,551
4,113 U5,059
U
F
(23%)(946)
---------- Variance* ----------
4%
(18) U984
2017
966
(153.6%)
(35.9%)
709
(7,980) 2,861
291
6,813 9,162
F(1,322)
F(5,119)
2,031
–
2,349
9%
F34.5%
Budget
10,569
2017
F
(300)
402 10,167
Actual
(2%)
0%(225)
Financial Statements 2017
page 54
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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
S94A LEVIES – UNDER A PLANCONTRIBUTION PLAN NUMBER 1 - Community facilities
Other
S94 CONTRIBUTIONS – NOT UNDER A PLAN
Roads
Cumulative internal
borrowings due/(payable)
– –
Cumulative internal
borrowings due/(payable)
– –
Cumulative internal
borrowings due/(payable)
– – –
–
in year(8) 228 –
Cash Non-cashreceived during the year
balance121
Contributions Held asrestricted
Internalborrowingduring
yearOpening earned
349 –
asset(to)/from349
–
8 8
–
Interest Expenditure
– –
35 – 1
1 4
(8)
– –
35 yearin year
Contributions
Cash
Interest
Total 228 – 121
Total
balancePURPOSE
Non-cash
4
Opening
4
2
received during the year
PURPOSE
–
– –
4 S94A levies – under a planNon-cash
1
Total contributions
PURPOSE Openingbalance
earnedContributions
received during the yearInterest
yearCash
288
228 25 18
8 35
(8) –
assetin year
45
– 1
11
40 349
434
–
– – –
Held as
–
InternalExpenditureborrowing restricted(to)/from
during
Expenditureduringearned
InternalrestrictedHeld as
asset
40 40
(to)/fromborrowing
S94 not under plansS64 contributions
Total S94 revenue under plans35
– – 143
121
40 –
(8)
Financial Statements 2017
page 55
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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.
Financial Statements 2017
page 56
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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.
Financial Statements 2017
page 57
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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– Correction of prior period errors– Other movements– 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.
96,360 95,890
142,527
Actual
96,360 95,890
2017
20(c) –
4,847
Notes
3,916
Actual
141,019 1,508
(22,184)
2016
114,158 507
147,374
9(a)
(37)
142,527
– 95,890
95,890
96,360
95,890 96,360
Financial Statements 2017
page 58
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 20. Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
$ ’000
(c) Correction of error/s relating to a previous reporting period
Correction of errors as disclosed in last year’s financial statements:
Council identified that Road Infrastructure was reported incorrectly inthe 2014/15 Financial Statements as a result of Bulk Earthworks being incorporated into the Road Infrastructure Asset as well as its ownBulk Earthworks category.
This affected both the Transport Infrastructure Asset account and
As a result, Council has adjusted:– Transport Infrastructure Fair Value– Revaluation Reserve
In accordance with AASB 108 – Accounting Policies, Changes inAccounting Estimates and Errors, the above prior period errorshave been recognised retrospectively.
These amounted to the following equity adjustments:
– Adjustments to opening equity – 1/7/15 (relating to adjustments for the 30/6/15 reporting year end and prior periods)– Adjustments to closing equity – 30/6/16 (relating to adjustments for the 30/6/16 year end)
Total prior period adjustments – prior period errors
(d) Voluntary changes in accounting policies
Council made no voluntary changes in any accounting policies during the year.
(e) Changes in accounting estimates
Council made no changes in accounting estimates during the year.
– (22,184) – (22,184)
2017
–
Notes
–
(22,184)
–
–
Actual Actual 2016
(22,184)
Financial Statements 2017
page 59
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 amortisationDebt GuaranteeOther expensesNet losses from the disposal of assetsTotal expenses from continuing operationsOperating result from continuing operations
Net operating result for the year
Net operating result attributable to each council fund
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.
65 49 –
–
114 92
337 298
358
1
Actual
11,946 4,705 1
General1Sewer
358
9,242
1,610
4,278
–
340 358
4,149 1,252 1,850 23,893
340
111
4,149
4,149
457
–
–
260
–
–
Actual
37 39
783
3,084
702
1,956
2017
1,383
2017
21 1,065
79
–
340
–
Water
Actual
534
2,190 42
6,757
28,042
225 2,689
142
324
171
9
7,976
Actual
979 89
394 1,120
2017 2017
Financial Statements 2017
page 60
Glen Innes Severn Council
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 equivalentsReceivablesInventoriesTotal current assets
Non-current assetsReceivablesInfrastructure, property, plant and equipmentInvestment propertyOtherTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets
EQUITYRetained earningsRevaluation reservesCouncil equity interestTotal 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.
–
2017
Water
211,329 211,329 – 17,653 14,752
17,653 –
–
29
–
– –
19,490 59
139 2,876 7,847
– 13,335
– –
–
2,238
–
141
1,665 –
11,901
2,192
1,510
14,752
4,343
12,839 1,510
89,166
16,417
– 112
2,851
1,194
12,411
170 – –
232,015
2,251 16
13,310
211,329 14,752
2,051
1,526
20,686
19,845
– 155
209,129
208,687
– 13,335
21
213
355
334
3,082 22,886
2,666
20172017
115 2,967
Actual
–
–
Actual
Sewer
428
122,163
–
17,653
– 2,051
General1
17,766
Actual
19,490 –
2017Actual
Financial Statements 2017
page 61
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 22. ‘Held for sale’ non-current assets and disposal groups
$ ’000
(i) Non-current assets and disposal group assets
Non-current assets ‘held for sale’BuildingsTotal non-current assets ‘held for sale’
Disposal group assets ‘held for sale’None
TOTAL NON-CURRENT ASSETSCLASSIFIED AS ‘HELD FOR SALE’
(ii) Details of assets and disposal groupsRural Fire Service Buldings held for resale.
$ ’000
(iii) Reconciliation of non-current assets ‘held for sale’ and disposal groups – i.e. discontinued operations
Opening balanceBalance still unsold after 12 months:Less: assets no longer classified as ‘held for sale’Plus new transfers in:– Assets ‘held for sale’
Closing balance of ‘held for sale’non-current assets and operations
Refer to Note 27. Fair value measurement for fair value measurement information.
– –
– 216 – –
82
(82)
2016
–
216
82
Assets ‘held for sale’2016
–
– –
–
2017
Non-current
–
2017
2016
216
–
– – –
Non-current2017 2017 2016
– –
– –
Current
Disposal groups
216 216
Current
– –
–
Financial Statements 2017
page 62
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 23. Events occurring after the reporting date
$ ’000
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 19/12/17.
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 aware of the following ‘non-adjusting events’ that merit disclosure:
Land Purchase:
i) Settlement for the purchase of land at 598 Blue Hills Road for future landfill development occurred in July 2017.ii) The purchase price of the land was $160,000. A $16,000 deposit was paid in the 2016/17 Financial Year.
Note 24. Discontinued operations
Council has not classified any of its operations as ‘discontinued’.
Financial Statements 2017
page 63
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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
– Gross book value written off– Accumulated amortisation charges written off– Accumulated impairment charges written off
Closing values:Gross book value (30/6)Accumulated amortisation (30/6)Accumulated impairment (30/6)
TOTAL INTANGIBLE ASSETS – NET BOOK VALUE 1
–
–
–
316 (316)
–
– –
–
– –
2016
316
316
(316)
Actual Actual 2017
–
–
(316) 316
–
– –
(316)
Financial Statements 2017
page 64
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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
Rogers road waste facilityBalance at end of the reporting period
Under AASB 116 – Property, Plant and Equipment, where the use of an asset results in the obligationto dismantle or remove the asset and restore the site on which the asset stands, an estimate of suchcosts is required 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 yearAmortisation of discount (expensed to borrowing costs)Total – reinstatement, rehabilitation and restoration provision
Notes
Estimated
2016restoration
327
346 327
year of
2036
19
2017
327 346 346
308
327 10(a)
NPV of provision
19
Financial Statements 2017
page 65
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 26. Reinstatement, rehabilitation and restoration liabilities
$ ’000
Provisions for close down and restoration and for environmental clean up costs – tips.
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 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,for example 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.
Financial Statements 2017
page 66
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement
$ ’000
The Council measures the following asset and liability classes at fair value on a recurring basis:– Infrastructure, property, plant and equipment – Investment propertyThe 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,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
Investment propertiesJamesies Fuel and FixTotal investment propertiesInfrastructure, property, plant and equipment Capital work in progress Plant and equipment Office equipment Furniture and fittings Land: – Operational land – Community land Buildings Other structures Infrastructure: – Roads (General) – Roads (Causeways) – Roads (Car Parks) – Bridges – Footpaths (Road Related) – Bulk earthworks (non-depreciable) – Stormwater drainage – Water supply network – Sewerage network – Swimming pools
– Other infrastructure (Kerb and Gutter) – Other infrastructure (Major Street Furniture)Other assets: – Library books
Total infrastructure, property, plant and equipment
30/06/16 –
– Other open space/recreational assets (Footpaths non Road Related)
– Other open space/recreational assets (General)
927
30/06/16 – – 1,509 1,509
30/06/16 – 6,656 6,656
8,222 8,222 30/06/17 – – 18,629
30/06/16 – – 1,396 1,396
– 1,839 1,839
261 261
Reinstatement, rehabilitation and restoration assets (refer Note 26) – – 1 1
18,629
30/06/16 –
– 30/06/16
– 12,501
–
30/06/16 – – 1,580 1,580
– – 304
30/06/17 –
–
30/06/16
30/06/17 –
30/06/16 – –
30/06/15
30/06/16 – 3,700
– 22,846 22,846
– 170 – 170
30/06/12 304
– 996 996
– 170 170
SignificantDate Quoted
valuation active mktsof latest unobservableprices in observable
Significant
inputs
Level 3 TotalFair value measurement hierarchy
Level 1 Level 2
inputs
– 3,700
12,501
30/06/16 – – 5,252 5,252
30/06/16 – – 5,432 5,432
– – 32 32 –
30/06/16 – – 7,981 7,981
30/06/12
14,899 14,899
–
34,492
30/06/16 – – 88,572 88,572
30/06/16 – – 34,492
30/06/13 – –
30/06/16 – – 2,982 2,982 30/06/16 – – 927
– – 241,512 241,512
30/06/16 –
– – 503 503
30/06/17
Financial Statements 2017
page 67
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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):
2017
Non-recurring fair value measurements
Non-current assets classified as ‘held for sale’Rural Fire Service Building on Council LandTotal NCA’s classified as ‘held for sale’
2016Recurring fair value measurements
Investment propertiesJamesies Fuel and FixTotal investment properties
Infrastructure, property, plant and equipment Capital work in progress Plant and equipment Office equipment Furniture and fittings Land: – Operational land – Community land Buildings Other structures Infrastructure: – Roads (General) – Roads (Causeways) – Roads (Car Parks) – Bridges – Footpaths (Road Related) – Bulk earthworks (non-depreciable) – Stormwater drainage – Water supply network – Sewerage network – Swimming pools
– Other infrastructure (Kerb and Gutter) – Other infrastructure (Major Street Furniture)Other assets: – Library books
Total infrastructure, property, plant and equipment
– –
261 261
1,595
– – 6,608
– 241,390
30/06/16
– – 1,514 1,514
30/06/16
Reinstatement, rehabilitation and restoration assets (refer Note 26)
– Other open space/recreational assets (General) – Other open space/recreational assets (Footpaths Non Road Related)
Fair value measurement hierarchyLevel 1 Level 2 Level 3 Total
Date Quoted
3,987 3,987
–
3,033
30/06/16
30/06/16 –
–
– 5,252 5,252
– – 892 892 30/06/16 –
Significantof latest prices in
30/06/12 – – 12
30/06/16 – – 492 492 –
38 38
34,272 34,272
– 3,033 30/06/16 – – 87,057 87,057
30/06/16
12
30/06/16 – – 1,537 1,537
– 22,464 22,464
30/06/16 –
–
30/06/16 – – 772 772
–
30/06/1630/06/16
19,149
30/06/16 – – 7,748 7,748 30/06/16
30/06/1230/06/12 –
–
241,390
–
30/06/13 – – 15,660 15,660 30/06/16 –
– – 257 257
– 8,292 8,292 –
170
unobservableinputs
observable unobservablevaluation
– – 170 – 170
–
216
13,595 13,595
–
– –
– 170
inputs
– –
6,608
1,595
– 5,533 5,533
– –
216
30/06/15
30/06/1630/06/16
30/06/16
216 –
Level 3 Total
–
inputs inputs
Significant
active mkts
30/06/17 – – 216
Level 1 Level 2of latest prices in observable
–
valuation active mkts
19,149
1,370 1,370
–
Financial Statements 2017
page 68
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(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.
Council’s policy for determining transfers between fair value hierarchies is:
– at the end of the reporting period.
(3) Valuation techniques used to derive level 2 and level 3 fair values
Where Council is unable to derive fair valuations using quoted market prices of identical assets(ie. level 1 inputs) Council instead utilises a spread of both observable inputs (level 2 inputs) andunobservable inputs (level 3 inputs).
The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows:
Investment properties
Glen Innes Severn Council currently holds one investment property (known as Jamesies Fuel and Fix).Council obtains an independent valuation of its investment property on a regular basis and at the end of each reporting period the financial statements reflects the latest valuation.
The best evidence of Fair Value is the current price in an active market for similar assets. The following information is used where necessary;- Current prices in an active market for different types of properties or similar properties in a less active market.- Expected future rental income generated from the property based on a discounted cash flow.The investment property held by Council has been valued the valuer using valuation techniques that are appropriate and for which sufficient data was available to measure fair value, maximising the use of observable inputs and minimising unobservable inputs (namely level 3 inputs).The property was valued by Mike Williams Valuations (Glen Innes Valuation Services) AAPI, FREAV, Registered Valuer 619, Certified Practising Valuer.
There are no valuation changes from prior years.
Infrastructure, property, plant and equipment (IPP&E)
Plant and equipment, office equipment and furniture and fittings:Plant and Equipment, Office Equipment and Furniture & 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. Examples of assets within these classes are as follows:
• Plant and Equipment - Graders, trucks, rollers, tractors and motor vehicles.
• Office Equipment - Computers, photocopiers, calculators etc.
• Furniture & Fittings - Chairs, desks and display boards.
There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 69
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Infrastructure – roads
Infrastructure – bridges
This asset class comprises the Road Carriageway, Bus Shelters, Car parks, Guardrails, Kerb and Guttering, Retaining walls, Suburb Markers, and Traffic Facilities.
The road carriageway is defined as the trafficable portion of a road, between but not including the kerb and gutter, and would include any paved markers parking places along roadside.
Council’s pavement Asset Management System contains detailed dimensions and specification for all Council roads. Valuations for the road carriageway, comprising surface, pavement and formation were based on calculations carried out in 2010 utilising the in house NAMS PLUS Asset management system for detailed pavement information residing in Council’s Pavement Management System -Council fair values, road infrastructure assets using, Level 3 inputs at a component level.
The ‘Cost Approach’ is used to value roads by componentising the assets into significant parts and then rolling up these component values to provide and overall road valuation ( for each road segment) within Council’s Asset System.
The level of componentisation adopted by Council is in accordance with AASB 116, OLG Circular 09-09 and the Institute if Public Work Engineers International Infrastructure Management Manual (IIMM).The unobservable Level 3 inputs used include:
• Pattern of Consumption• Useful life and residual value• Asset Condition• Remaining Life of Carriageway• Gross replacement cost.
The ‘Cost Approach’ is used to value roads assets. There were no changes in valuation technique from prior year.
Bridges were valued in-house, bridges were physically inspected and unit rates based on square metres were 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.
Council fair values Bridges using Level 3 inputs.
The unobservable Level 3 inputs used include:
• Pattern of Consumption• Residual value• Asset Condition• Remaining useful life• Gross replacement cost.
There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 70
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Infrastructure – footpaths
Infrastructure –kerb and guttering
A footpath is defined as all footways (including those shared with a cycleway) sealed or non-sealed.Council Pavement Management Systems (PMS) contains detailed dimensions and specifications for all Council footpaths.
Council fair values footpaths using Level 3 inputs.
The unobservable Level 3 inputs used include:• Pattern of Consumption• Residual value• Asset Condition• Remaining useful life• Gross replacement cost.
The ‘Cost Approach’ is used to value footpaths. There were no changes in valuation technique from the prior year.
Kerb & Guttering (non-componentised) using Level 3 inputs.
The unobservable Level 3 inputs used include:
• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost• Remaining useful life.
The ‘Cost Approach’ is used to value kerb and guttering. The cost approach was utilised and while the unit rates based on square metres, linear metres or similar could 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 impacted significantly on the final determination of fair value. Additionally due to limitations in the historical records of very long lived assets there some uncertainty regarding the Council fair values.
There were no changes in valuation technique from prior year.
Financial Statements 2017
page 71
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Infrastructure – car parks
Infrastructure – other infrastructure
Council Car Parks (non-componentised) using Level 3 inputs.
The unobservable Level 3 inputs used include:
• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost• Remaining useful life.
The ‘Cost Approach’ is used to value car park. The cost approach was utilised and while the unit rates based on square metres, linear metres or similar could 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 impacted significantly on the final determination of fair value.
There were no changes in valuation technique from prior year.
Other infrastructure comprises: Traffic islands, Refuge Islands, Bus Shelters etc.
Council other infrastructure (non-componentised) using Level 3 inputs.
The unobservable Level 3 inputs used include:• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost• Remaining useful life.
The ‘Cost Approach’ is used to value other infrastructure assets. The cost approach was utilised and while the unit rates based on square metres, linear metres or similar could 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 impacted significantly on the final determination of fair value.
There were no changes in valuation technique from prior year.
Financial Statements 2017
page 72
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Infrastructure – stormwater drainage
Property: – operational land
Council’s Drainage Assets comprises pits, pipes, culverts, open channels, headwalls and various type of water quality device used to collect, store and remove stormwater.
Council carries fair values drainages assets (non-componentised) using Level 3 inputs.
The unobservable Level 3 inputs used include:
• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost.
The ‘Cost Approach’ is used to value drainage assets.
There were no changes in valuation technique from prior year.
Council’s “Operational” land by definition has no special restriction other than those that may apply to any piece of land.
Council obtains its fair values for operational land from an external valuer every 5 years (last valuation being 2012) using Level 3 inputs.
Generally, fair value is the most advantageous price reasonably obtainable by the seller and the most advantageous price reasonably obtained by the buyer. This is not necessarily the market selling price of the asset rather, it is regarded as the maximum value that Council would rationally pay to acquire the asset if it did not hold it, taking into account quoted market price in an active and liquid market, the current market price of the same or similar asset, the cost of replacing the asset, if management intend to replace the asset, the remaining useful life and condition of the asset and cash flows from the future use and disposal.
The unobservable Level 3 inputs used include:
• Rate per square Metre• Description of Land.
The ‘Market Approach’ is used to value Operational Land. There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 73
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Property – community land:
Property– buildings (specialised and non–specialised)
Council’s “Community” land (including owned by Council, the Crown and various other Government Agencies that is managed by Council) by definition is land intended for public access and use or where other restrictions applying to the land create some obligation to maintain public access (such as a trust deed, dedication under section 94 of the Environment Planning and Assessment Act 1979).
This gives rise to the restrictions in the Act, intended to preserve the qualities of the land.
Community Land:• Cannot be sold• Cannot be leased, licensed, or any other estate granted over the land for more than 21 years and• Must have a plan of management for it.
In relation to Community Land the Division of Local Government has reviewed its positions on the use of the Valuer General’s Valuations of community land and in association with the Local Government Accounting Advisory Group; the Division has determined that community land may be valued as follows.
• The NSW Valuer General’s valuations may be used under the revaluation model to represent fair value for the revaluation of community land under clause 31 of AASB 116.
Council fair values community land using unbearable Level 3 inputs based on inputs on either the UCV( Unimproved Capital Value) provided by the valuer General or an average unit rate based on the UCV and allocated by Council against those properties where the Valuer General did not provide a UCV.
The ‘Market Approach’ is used to value Community land. There has been no change to the valuation process during the reporting period.
Council Buildings incorporates Libraries, Public Amenities, Sporting Club Houses, Kiosks and Amenities, Depot Buildings and workshops, Community Centres, Rural Fire Service Buildings and the Council Tourist Caravan Park.
Council carries fair values building using level 3 inputs. Valuations are generally carried out by an external valuer, Scott Fullarton using the cost approach. This approach estimates the replacement cost for each building by componentising the building (for complex structures) into significant parts with different useful life and taking in to account a range of factors. Buildings are physically inspected and unit although rates based on square meters could be supported from the market evidence, extensive professional judgement, and condition and consumption rates etc. impact significantly on the final value determination of fair value.
As such these assets are classified as having being valued using Level 3 inputs.
The unobservable Level 3 inputs used include:
• Consumption rate• Future Economic Benefits• Condition• Useful Life of an asset.
The ‘Cost Approach’ is used to value specialised buildings. There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 74
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Other structures:
Other assets:
Council’s other structures incorporates the following classes of assets;
• Significant single assets such as playgrounds, tennis courts, tennis shelters etc. and• Aggregated lower value assets such as recreational / park infrastructures (picnic tables, seats, bollards, fences BBQs etc.)
Council carries fair value of other structures assets (non-componentised) using Level 3 inputs. Such valuations are under taken by Council Staff or by an external valuer depending on the structure.
The unobservable Level 3 inputs used include:
• Pattern of Consumption• Asset Condition• Residual value.
The “Cost Approach’ is used to value other structures. There has been no change to the valuation process during the reporting period.
Council’s Other Assets comprises bush reserves, solar panel systems, irrigation systems, accessible shelters signage etc.
Council carries fair values of other assets using level 3 inputs.
The unobservable Level 3 inputs used include:• Pattern of consumption• Asset Condition• Residual value• Useful life.
The Cost Approach is used to value other assets. There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 75
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Water supply network:
Sewerage network:
Non-current assets classified as ‘held for sale’Non-current assets held for sale were valued at cost as at 30 June 2017 and this approximates fair value for this level 3 asset.
Assets within this class comprise treatment works, pumping stations and, sewerage mains.
The 'Cost Approach' estimated the replacement cost for each asset by componentising the assets into significant parts with different useful lives and taking into account a range of factors. 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 impacted 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.
Council carries fair values of Sewer Infrastructure using level 3 inputs. The unobservable Level 3 inputs used include:• Pattern of consumption• Asset Condition• Residual value• Useful life.These assets are indexed each year in line with the NSW Reference Rates Manual as publish by the Office of Water.
There has been no change to the valuation process during the reporting period.
Assets within this class comprise reservoirs, pumping stations and, water pipelines.
The 'Cost Approach' estimated the replacement cost for each asset by componentising the assets into significant parts with different useful lives and taking into account a range of factors.
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 impacted 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.
Council carries fair values of Water Supply Infrastructure using level 3 inputs. The unobservable Level 3 inputs used include:• Pattern of consumption• Asset Condition• Residual value• Useful life.These assets are indexed each year in line with the NSW Reference Rates Manual as publish by the Office of Water.
There has been no change to the valuation process during the reporting period.
Financial Statements 2017
page 76
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3)
a. The following tables present the changes in level 3 fair value asset classes.
Opening balance – 1/7/15
Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairment
Closing balance – 30/6/16
Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairment
Closing balance – 30/6/17
Opening balance – 1/7/15
Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairmentFV gains – other comprehensive income
Closing balance – 30/6/16
Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairment
Closing balance – 30/6/17
5,032
4,929
(738) 340
(531) (38) (17) (586) –
Operational
land Structures
(320) –
Community Buildings
1,275
7,748
(618) (86)
–
152
(269)
–
385 (269)
782
34,193
Plant
progress equipment
1,358 3,973 146 58 5,535
– 1,079
work in and equipment andCapital Office Furniture
fittings
49 19 –
(113) – (3) (116) 609
(806) 130
–
(99)
(535) – – – 639 429 101
32
(99) – – (617)
33,197 6,790 4,858
– –
Total
271 449 732
(54)
3 9
16,620
Otherland
892 5,174
(6) (677)
3,987
(535)
257
–
(30)
5,252
(1,084)
415 – 180 198 18 (152) 18
– –
1,169 –
7,981
(815)
33,564
113 1,589 (1,024)
(48) (356)
15,660
(1,083)
201
(278)
(814) – 397
38
5,533
14,899 5,432
–
–
5,252
793
996 3,700 304
Total
–
Financial Statements 2017
page 77
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3) (continued)
a. The following tables present the changes in level 3 fair value asset classes. (continued)
Opening balance – 1/7/15
Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeFV gains – Income Statement
Closing balance – 30/6/16
Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeRecognition of asset given to CouncilRevaluaiton decrements to Equity
Closing balance – 30/6/17
Opening balance – 1/7/15
Purchases (GBV)Depreciation and impairmentFV gains – other comprehensive income
Closing balance – 30/6/16
Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeCorrect rounding issue from PYRevaluation decrement to Equity
Closing balance – 30/6/17
1,143 – –
45 –
85,852
8,398 19,743 13,887 881
(260)
–
(1,497) (543) (30) –
TotalRoads earthworks
22,184
Bridges Footpaths
–
1,973
– –
– –
(1,490)
6
– (248)
56
(29)
(260)
3,960
3,659
–
495
34,272 1,370 22,464 90,862
(2,070)
531
3,411
–
– 25
–
(538)
2,933
148,968
(2,057) 3,083
– –
Totalnetwork
6
255
Bulk
29
42,909
311
1,396
382
311 960 –
–
97
(248)
151,215
–
92,481 34,492
1,581
22,846
143,145
672 431 920 2,120
255
1,325
–
33,784
Stormwater Water Sewerage Swimmingdrainage supply network pools
(451) (322) (32) (951) (57) (816) (400) (174) (1,447)
(146)
8,292 19,148 13,596 1,595 42,631
– – – 206 206 – 352 – 70 422
(146) (454) (324) (32) (956) 74 – – – 74 2 – – – 2 – (417) (770) – (1,187)
8,222 18,629 12,502 1,839 41,192
Financial Statements 2017
page 78
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3) (continued)
a. The following tables present the changes in level 3 fair value asset classes. (continued)
Opening balance – 1/7/15
Purchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeFV gains – Income Statement
Closing balance – 30/6/16
Purchases (GBV)Disposals (WDV)Depreciation and impairmentFV gains – other comprehensive incomeFV gains – Income Statement
Closing balance – 30/6/17
b. Information relating to the transfers into and out of the level 3 fair valuation hierarchy (as disclosed in the table above) includes:Nil
c. The valuation process for level 3 fair value measurements
Fair value Hierarchy
Fair Value - Valuation techniquesThe valuation techniques prescribed by AASB 13 can be summarised as:
–
(43) –
–
1,775
(2) –
– –
– – 260
362 52 – 151
44
288
492 12
(43)
565 (10) (25) (260)
10,423
260 –
(185) (40)
8,145
(193)
1,770
(40) (11)
7,924
structure asets Total
Tip Other open
503 1
(2)
AASB 13 Fair Value Measurement requires disclosure of fair value measurement by level of input, using the following hierarchy: - Level 1 - Quoted prices (unadjusted) 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 - Unobservable inputs for asset or liability.
Cost Approach: A valuation technique that reflects the amount what would be required to replace the service capacity of an asset (current replacement cost).
8,236
(28) (272) –
363 – –
books assets space rec
10,509
117
Library
9,451
62 115 –
284 – – 4
Other
22 1,389
infra-
407
53
Financial Statements 2017
page 79
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 27. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3) (continued)
c. The valuation process for level 3 fair value measurements (continued)
Valuation techniques used to derive Level 2 and Level 3 Fair Values:
The Fair Valuation techniques Council has employed while utilising Level 2 and Level 3 inputs are as follows:
- Quoted prices for similar asset in active markets- Current replacement cost concept- Purchase price- Useful life
- Pattern of consumption- Residual Value- Asset Condition- Unit rates- Useful life
(5). Highest and best use
All of Council’s non-financial assets are considered as being utilised for their highest and best use.
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).
Level 2 valuation process for some asset classes where the basis was Cost Approach under level 2 input which were determined based on, whereby maximising 'observable inputs and minimising unobservable inputs as below:
Income Approach: Valuation technique that converts future amounts (cash flows inflows/outflows) to signal the current (i.e. discounted) amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about these future amounts.Market Approach: A valuation technique that uses prices and other relevant information, generated by market transactions involving identical or comparable (similar) assets, liabilities or a group of assets and liabilities such as a business.
Level 3 valuation process for some asset classes where the basis was Cost Approach. The inputs used
Financial Statements 2017
page 80
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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 benefits
Total 1,190
Actual2017
973 78
139
$'000
Financial Statements 2017
page 81
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
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
PlumbingBuilding and ConstructionDelivery and Freight
c. Other related party transactions
Nature of the transaction
Payments to staff related to Key Management Personnel # 96 – Standard Terms – – Note $'000 $'000 $'000 $'000
during year (incl. loans and debts expensecommitments) outstanding recognised
Provisions Doubtfultransactions balance for doubtful debts
Value of Outstanding Terms and conditions
# 6 – Standard Terms – – # 74 – Standard Terms – – # 28 – Standard Terms – –
Note $'000 $'000 $'000 $'000
during year (incl. loans and debts expensecommitments) outstanding recognised
Terms and conditions Provisions Doubtfultransactions balance for doubtful debts
Value of Outstanding
Financial Statements 2017
page 82
Glen Innes Severn Council
Notes to the Financial Statements for the year ended 30 June 2017
Note 29. Council information and contact details
Principal place of business:265 Grey StreetGLEN INNES NSW 2370
Contact detailsMailing address: Opening hours:PO Box 61 8.30 am - 4.30 pmGLEN INNES NSW 2370 Monday - Friday
Telephone: (02) 6730-2300 Internet: www.gisc.nsw.gov.auFacsimile: (02) 6732-3764 Email: [email protected]
Officers Elected membersGENERAL MANAGER MAYORHendrik Frederik BASSON Steve TOMS
RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSPaul Joseph DELLA Deputy Mayor Carol SPARKS
Councillor Glenn FRENDONPUBLIC OFFICER Councillor Dianne NEWMANAnna WATT Councillor Andrew PARSONS
Councillor Colin PRICEAUDITORS Councillor Jeff SMITHThe Audit Office of New South WalesLevel 15. 1 Margaret Street,SYDNEY NSW 2000
Other informationABN: 81 365 002 718
INDEPENDENT AUDITOR’S REPORT Report on the general purpose financial statements
Glen Innes Severn Council
To the Councillors of Glen Innes Severn Council
Opinion I have audited the accompanying financial statements of Glen Innes Severn 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 83
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 30 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 84
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.
Chris Clayton Executive Director, Quality and Innovation 19 December 2017 SYDNEY
page 85
1
Councillor Steve Toms Mayor Glen Innes Severn Council PO Box 61 GLEN INNES NSW 2370
19 December 2017
Dear Mayor
Report on the Conduct of the Audit for the year ended 30 June 2017
Glen Innes Severn Council We have audited the general purpose financial statements of Glen Innes Severn Council (the Council) for the year ended 30 June 2017 as required by section 415 of the Local Government Act 1993 (the Act).
We expressed an unmodified opinion on the Council’s general purpose financial statements.
This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2017 is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my audit opinion on the general purpose financial statements issued under section 417(2) of the Act.
INCOME STATEMENT Operating result
2017 2016 Variance
$’000 $’000 %
Rates and annual charges revenue
10,338 9,846 5.0
Grants and contributions revenue
13,150 11,209 17.3
Operating result for the year
4,847 1,508 221.4
Net operating result before capital amounts
3,719 994 274.1
Contact: Chris Clayton
Phone no: 02 9275 7248
Our ref: D1731043/1730
page 86
Our insights inform and challenge government to improve outcomes for citizens
2
Council’s operating surplus for the year increased to $4.8 million in 2016-17 ($1.5 million in 2015-16). The $3.3 million increase was largely driven by the advanced receipt of 2017-18 financial assistance grant instalments in 2016-17, and increase in quarry sales and royalties ($1.6 million).
The advanced receipts of the 2017-18 financial assistance grant instalments from the Commonwealth Government in 2016-17 was the main factor grants and contributions revenue ($12.0 million) increased ($1.3 million or 12.4 per cent) in the year.
Rates and annual charges ($10.3 million) revenue increased by $492,000 (5.0 per cent). The increase in rate income is in line with the permissible rate increase granted by the Minister for Local Government and movements in rateable properties in the local government area.
STATEMENT OF CASH FLOWS Council has generated positive operating cash flows in two of the past three years. At 30 June 2017, it held $20.8 million in cash and cash equivalents ($16.0 million at 30 June 2016). In 2016-17, Council spent $5.3 million on infrastructure, property, plant and equipment ($9.2 million in 2015-16).
FINANCIAL POSITION Cash and Investments
Restricted Cash and Investments
2017 2016 Commentary
$’000 $’000
External restrictions 9,822 8,090 Externally restricted cash and investments are restricted in their use by externally imposed requirements. The movement in externally restricted cash balances includes the increase of $372,000 in Sewerage services and $864,000 in specific purposes unexpended grants. Internally restricted cash and investments have been restricted in their use by resolution or policy of Council to reflect identified programs of works and any forward plans identified by Council. The increase was due to more money being held for waste facilities management ($772,000 increase in amount held at 30 June 2016), plant and vehicle replacement ($528,000) and roads maintenance ($575,000).
Internal restrictions 8,641 6,654
Unrestricted 2,291 1,258
Cash and investments 20,754 16,002
-10
0
10
20
30
2015 2016 2017
$milli
on
Year ended 30 June
Statement of Cash Flows
Net cash flow Cash and cash equivalents
page 87
Our insights inform and challenge government to improve outcomes for citizens
3
PERFORMANCE RATIOS Operating performance ratio
Council’s operating performance ratio
exceeded the industry benchmark over the past three years. Council’s 2016-17 ratio reflects the advanced receipt of 2017-18 financial assistance grant instalments from the Commonwealth Government in 2016-17. The ‘operating performance ratio’
measures how well Council contained operating expenditure within operating revenue (excluding capital grants and contributions, fair value adjustments, and reversal of revaluation decrements). The benchmark set by the Office of Local Government (OLG) is greater than zero per cent.
Own source operating revenue ratio Council’s own source operating revenue ratio has been below the industry benchmark for the past three years. Council’s ratio increased to 58.7 per cent
in 2016-17, and was higher than the previous two years. 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. This indicates Council has sufficient liquidity to meet its current liabilities as and when they fall due. The ‘unrestricted current ratio’ is specific
to local government and represents Council’s ability to meet its short term obligations as they fall due. The benchmark set by OLG is greater than 1.5 times.
02468
101214
2015 2016 2017
Ratio%
Year ended 30 June
Operating performance ratio
Operating performance ratio Industry benchmark > 0%
5455565758596061
2015 2016 2017
Ratio%
Year ended 30 June
Own source operating revenue ratio
Own source operating revenue ratio Industry benchmark > 60%
0
1
2
3
4
5
6
2015 2016 2017
Ratiox
Year ended 30 June
Unrestricted current ratio
Unrestricted current ratio Industry benchmark > 1.5x
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Our insights inform and challenge government to improve outcomes for citizens
4
Debt service cover ratio Council’s debt service cover ratio
exceeded the industry benchmark over the past three years. The ratio indicates Council has adequate revenue to cover the principal repayments and borrowing costs of its debt. This result has been impacted by the improved operating result for the 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 outstanding rates and annual charges percentage has improved slightly and remains below the benchmark for rural councils which is a reflection of sound debt recovery procedures at the Council. 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 At 30 June 2017, Council had the capacity to cover 9.9 months of cash expenditure without additional cash inflows. Council’s high levels of liquidity means its
cash expense cover ratio far exceeded the industry benchmark 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.
0
1
2
3
4
5
2015 2016 2017
Ratiox
Year ended 30 June
Debt service cover ratio
Debt service cover ratio Industry benchmark > 2x
0
2
4
6
8
10
12
2015 2016 2017
Ratio%
Year ended 30 June
Rates and annual charges outstanding ratio
Rates and annual charges outstanding ratio
Industry benchmark < 10% (rural Council)
0
2
4
6
8
10
12
2015 2016 2017
Ratiomths
Year ended 30 June
Cash expense cover ratio
Cash expense cover ratio Industry benchmark > 3 mths
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Our insights inform and challenge government to improve outcomes for citizens
5
Building and Infrastructure renewals ratio Council did not met the building and infrastructure renewals ratio benchmark for the year ended 30 June 2017. This ratio needs to be considered in conjunction with other financial indicators in determining Council’s financial position
and sustainability. It should not be viewed in isolation. A long-term view should be taken, as capital expenditure fluctuates from year to year and can distort this ratio. The ‘building and infrastructure renewals
ratio assesses the rate at which these assets are being renewed against the rate at which they are depreciating. The benchmark set by OLG is greater than 100 per cent. This ratio is sourced from information contained in Council’s Special Schedule 7
which has not been audited.
OTHER MATTERS Council entities Council has interests in the following ‘council entities’: Statewide Limited StateCover Limited.
I have obtained sufficient audit evidence to be satisfied Council’s general purpose financial statements materially reflect Council’s interest in the entities. New accounting standards implemented
AASB 124 ‘Related Party Disclosures’
Effective for annual reporting periods beginning on or 1 July 2016
AASB 2015-6 extended the scope of AASB 124 to include not-for-profit public sector entities. As a result, Council’s financial
statements disclosed the: compensation paid to their key management personnel nature of their related party relationships amount and nature of their related party transactions,
outstanding balances and commitments and outstanding balances (including commitments).
0
50
100
150
2015 2016 2017
Ratio%
Year ended 30 June
Building and infrastructure renewals ratio
Building and infrastructure renewals ratioIndustry benchmark > 100%
page 90
Our insights inform and challenge government to improve outcomes for citizens
6
Legislative compliance My audit procedures did not identify any instances of non-compliance with legislative requirements or a material deficiency in the Council’s accounting records or financial reports. The Council’s:
accounting records were maintained in a manner and form to allow the general purpose financial statements to be prepared and effectively audited
staff provided all accounting records and information relevant to the audit.
Chris Clayton Executive Director, Quality and Innovation
cc: Mr Hein Basson, General Manager Mr Tim Hurst, Acting Chief Executive of the Office of Local Government
page 91
Glen Innes Severn Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017
“Embracing Change, Building on History”
SPFS 2017
page 1
Glen Innes Severn Council
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)
9
87
(i)
(ii)
18
(iii)
6
Page
345
2
SPFS 2017
page 3
Glen Innes Severn Council
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 assetsShare of profit from equity accounted investmentOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentWater purchase chargesLoss on sale of assetsCalculated 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 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
932 1,053
20 9
39 –
– 2,053
787 179 413 456
– – –
–
71 161
2,067 (14)
282 268
– 268
–
268
12,631
– 71
–
– –
12,970
0.8%233
268 (275)
– –
Actual 2016
979 1,100
20 9
39 –
1 2,148
783 171 260 457
– – –
65 114
1,850
– –
298
42 340
– 340 (89)
217 108
Actual 2017
89
– –
13,310
2.4%–
251
12,970
251 (34)
–
SPFS 2017
page 4
Glen Innes Severn Council
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 assetsShare of profit from equity accounted investmentOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentLoss on sale of assetsCalculated 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 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
– –
(11) 246
49 92
1,252 337
1,542
–
–
– 11,901
3.4%–
257
– –
101
–
123
– –
– 358
(101)
1,589
–
3
156 128 498 325
–
234 (8)
226 113
257
11,543
Actual 2017
– 102 37
1,383 33 55 1
79
49 77
1,233
21 358
37 –
1
1,318 25
Actual 2016
57
309
18 327
3.1%–
– 327 (93)
234
11,167
11,543
142 111 534 324
49 93
– –
SPFS 2017
page 5
Glen Innes Severn Council
Income Statement of Council's Other Business Activities 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 assetsShare of profit from equity accounted investmentOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentLoss on sale of assetsCalculated 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 adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentAdd:– Subsidy paid/contribution to operationsLess:– TER dividend paid– Dividend paidClosing retained profits
Return on capital %Subsidy from Council
– –
0 Category 1
25.2%
1,975
35.7%–
1,292
–
683 (115) (205)
–
205 – –
273
– –
26 115
–
– –
–
878 1,292
478
4,133
978
388
352
–
61
21
94
–
2,710 11
–
Actual 20162017
–
–
65
– –
–
1,884 3,596 2,017
–
–
– 26 64
379
2 –
Glen Innes Aggregates
Actual
133
–
1,633 195 127
388
3,450
–
683 4
535
683 384
–
SPFS 2017
page 6
Glen Innes Severn Council
Statement of Financial Position – Council's Water Supply Business Activity as at 30 June 2017
$ ’000
ASSETSCurrent assetsCash and cash equivalentsReceivablesTotal current assets
Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesBank overdraftPayablesBorrowingsTotal current liabilities
Non-current liabilitiesBorrowingsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYRetained earningsRevaluation reservesCouncil equity interestTOTAL EQUITY
– 332
17,653 17,653
4,760 12,970
2,164 2,051
13,310
2,164
21 –
19,490 20,013 19,490
334 354 355 354
17,730
Actual 2016
Actual 2017
19,845
29
20,013
20,367
29 112
473 141 112
2,192
2,051
17,730 2,637
17,730
4,343
17,653
SPFS 2017
page 7
Glen Innes Severn Council
Statement of Financial Position – Council's Sewerage Business Activity as at 30 June 2017
$ ’000
ASSETSCurrent assetsCash and cash equivalentsReceivablesTotal current assets
Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesBorrowingsTotal current liabilities
Non-current liabilitiesBorrowingsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYRetained earningsRevaluation reservesCouncil equity interestTOTAL EQUITY
13,335 14,255
11,901
1,650
2,851 3,622 14,752
1,510
15,165 15,165
1,799 1,510 1,650
11,543
14,752
14,752
2,967
2017Actual Actual
2,595
1,665
139 132 155 149
3,082 2,709
16,417
115 114
2016
13,335 14,255
15,165
17 16
16,964
SPFS 2017
page 8
Glen Innes Severn Council
Statement of Financial Position – Council's Other Business Activities as at 30 June 2017
$ ’000
ASSETSCurrent assetsReceivablesInventoriesTotal Current assets
Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesBank overdraftPayablesBorrowingsTotal current liabilities
Non-current liabilitiesBorrowingsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYRetained earningsRevaluation reservesCouncil equity interestTOTAL EQUITY 1,166
(126)
1,849
1,292 1,975
8
2,048
1,147
2,048
2016
1,397
Actual
1,166
5,044
1,849
1,051
2,178
1,849
(126)
Glen Innes Aggregates
Category 1
2017Actual
88 5
1,768
394
1,496
1,768
1,750
2,178
2,866
2,351 1,167
808 808
1,543
3,518
42
3,195
1,469 1,356
SPFS 2017
page 9
Glen Innes Severn Council
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 153
Note Page
1
2
10
13
SPFS 2017
Glen Innes Severn Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies
page 10
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) Glen Innes Aggregates is a Category 1 business of Council. Category 2 (where gross operating turnover is less than $2 million) a. Glen Innes Severn Council Water Supply
A provision for augmented water supplies to the communities of Deepwater and Glen Innes, and, surrounding residential and farmland holdings.
b. Glen Innes Severn Council Sewerage Services
A provision for sewerage services to the communities of Deepwater and Glen Innes, and, surrounding residential and farmland holdings.
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
Glen Innes Severn Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)
page 11
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
Glen Innes Severn Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)
page 12
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 13
Glen Innes Severn Council
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
YES(v)
(vi)
YES
65,000
–
93,879
2017
–
108,300
93,879
215,600
10,431
10,431
(iv) YES
YES
YES
(ii)
YES
YES
– 216,600 (7,000)
YES
YES
– 6,000
YES
(iv)
(iii)
(i)
(iv)
(iii)
(iii)
(i)
(ii)
(ii)
(v)
(i)
(vi)
SPFS 2017
page 14
Glen Innes Severn Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 2. Water Supply Business Best-practice Management disclosure requirements (continued)
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
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 6 $’000
NWI F11
NWI F17 %
NWI F14 $’000
3.06%
352
1,169 $’000
$’000NWI F9
2017
2,183
NWI F4 %
18,172
$’000
52.91%
NWI F1
SPFS 2017
page 15
Glen Innes Severn Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 3. Sewerage 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 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
49,000
8,772
YES
YES
YES
122,950
YES
YES
2017
YES
78,948
–
YES
8,772
–
YES
YES
605,200
YES
YES
(i)
(iv)
(iii)
(ii)
(iii)
245,900
(i)
(ii) 78,948
133,000
(iv)
(c)
(iv)
– 226,300
–
(v)
(iii)
(i)
(ii)
(a)(b)
(vi)
SPFS 2017
page 16
Glen Innes Severn Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 3. Sewerage Business Best-practice Management disclosure requirements (continued)
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
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
–
12,675
1,536
3.13%
815
–
2017
NWI F3 $’000 3,719
NWI F8 % 2.04%
NWI F19
NWI F21
NWI F20
%
%
– $’000
0.00%
3.09%
352 NWI F16 $’000
NWI F27
NWI F18
NWI F15 $’000
%
$’000
NWI F2
NWI F10
NWI F12
$’000
$’000
SPFS 2017
page 17
Glen Innes Severn Council
Notes to the Special Purpose Financial Statements for the year ended 30 June 2017
Note 3. Sewerage Business Best-practice Management disclosure requirements (continued)
Dollars amounts shown below are in whole dollars (unless otherwise indicated)
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 %
953
76
5
692
207
$’000
2.54%
2017
INDEPENDENT AUDITOR’S REPORT
Report on the special purpose financial statement
Glen Innes Severn Council
To the Councillors of Glen Innes Severn Council
OpinionI have audited the accompanying special purpose financial statements (the financial statements) ofGlen Innes Severn Council’s (the Council) Declared Business Activities, which comprise the statementof financial 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• Glen Innes Aggregates.
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.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for
Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of 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.
page 18
I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
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 30 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
• 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: http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf.
The description forms part of my auditor’s report.
page 19
My opinion does not provide assurance:
• 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.
Chris Clayton Executive Director, Quality and Innovation
19 December 2017 SYDNEY
page 20
Glen Innes Severn Council SPECIAL SCHEDULES for the year ended 30 June 2017
“Embracing Change, Building on History”
Special Schedules 2017
page 1
Glen Innes Severn Council
Special Schedules for the year ended 30 June 2017
Contents
Special Schedules1
Net Cost of Services
Statement of Long Term Debt (all purposes)
Water Supply Operations – incl. Income StatementWater Supply – Statement of Financial Position
Sewerage Service Operations – incl. Income StatemeSewerage 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.
14Special Schedule 7
13
12
(ii)
(i)
Special Schedule 8 21
Special Schedule 6Special Schedule 5 9
Page
2
4
5
Special Schedule 1
Special Schedule 2(a)
Special Schedule 4Special Schedule 3
8
Special Schedules 2017
page 2
Glen Innes Severn Council
Special Schedule 1 – Net Cost of Services for the year ended 30 June 2017
$’000
Governance
Administration
Public order and safety
Enforcement of local government regulationsAnimal controlTotal 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
–
– –
Expenses from. continuing. operations. Non-capital.
61
–
– 331
Capital.
Income fromcontinuing operations
9
19
– 2
1,752
325
2,085
77
–
–
–
– 2
–
85
3,645 487
1,850
37
1,589 1,252 21
–
(2)
(33) (96)
(147) (62)
132 33
–
–
100
222
2,148
4,391
567
332
(414)
– (106)
–
125
111 739
–
284
Function or activity
Fire service levy, fire protection, emergency services
388
99 236
Net cost.of services.
(52) (283)
143
787 –
397 5 – (392)
(79) – –
(4,059)
32
94
3,175
3,619
96
3,130 33
42
4 –
566
133
– 188
939
1,298 –
4
– –
(45)
28
340
(340)
59
– 56
–
358
(28)
(92)
813 –
–
– (77)
–
–
Special Schedules 2017
page 3
Glen Innes Severn Council
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
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 (including externally restricted assets) and interest on overdue rates and annual charges.
Income fromcontinuing operations
– – –
124
79
–
26,995
5,235 2,172
1,593 1,582
30,714
1,022
– 11
12,325 26,995
1,022
18,389 –
– –
1,128
–
–
9
7 122
–
– 1,465
2
473 157
45 –
69
523
– –
981
Function or activity
4,209
–
–
–
4,133 – –
25
–
–
–
–
–
–
3,466
– 841
47 2,296 84 24
616
–
3,634
168
– – 925 8
–
–
Non-capital.
–
Expenses from. continuing. operations.
481
199 606
22
382
– –
570 1,912
– –
727 –
402
76
–
121
(38)
(482)
– (22)
–
(1,633)
– 7
–
Capital.
22
–
–
–
10 – –
1,128
178 (1,912)
– 318
4,847
(7,478) (571)
(11)
(2,082) 1,001
(560)
–
(2)
(35)
–
–
12,325 –
535 25
–
(434) (25)
344
(69)
–
575
(174)
38
Net cost.of services.
–
(92)
–
667
(727)
(796)
(60) (474)
Special Schedules 2017
page 4
Glen Innes Severn Council
Special Schedule 2(a) – Statement of Long Term Debt (all purposes) 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).
–
– Deferred payments
– –
1,324
–
15,384
– Total long term debt – –
Total debt
–
16,708
–
2,050 1,341
–
1,445
–
17,417
– – –
15,972
–
965 –
–
Other long term debtRatepayers advances – – –
– Government advances – Finance leases –
– – –
Financial institutions 1,324 15,384 16,708 – –
– 2,050
–
– 1,341
1,305
1,324 15,384 Total loans–
16,708 Other
Other State Government – – – – 36
–
NSW Treasury Corporation
Public subscription – –
– – – 2,050
Debt redemption during the year
From revenue
Sinking funds
1,445 –
965
920
15,972
–
1,445 13,958 – –
2,014 – 45
Current Non-current Total
– –
– –
–
–
– –
17,417
–
15,403
2,014
– –
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 debt
Special Schedules 2017
page 5
Glen Innes Severn Council
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 expensesc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)
5. Total expenses
Actuals 2016
–
1,850 1,997
Actuals
57 110 511
2017
–
528
–
454
–
211 150
18
– –
– –
– –
6
–
11
– – 127
12
181
41
164
– 74 87
–
– –
– 91 84
451
68 171 179
4
–
5
– – 52
– –
–
Special Schedules 2017
page 6
Glen Innes Severn Council
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) 69
8
1,100 979
7
–
2016
2,336
–
5
Actuals
334
–
21
340
–
8
2,190
–
28
1,053
2017Actuals
1 2
932
–
339
7 –
21
270 39 39
–
6
– –
– –
Special Schedules 2017
page 7
Glen Innes Severn Council
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
$’000
B Capital transactionsNon-operating expenditures
16. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment
17. Repayment of debt
18. Totals
Non-operating funds employed
19. Proceeds from disposal of assets
20. Borrowing utilised
21. Totals
C Rates and charges
22. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)
23. Number of ETs for which developer charges were received
24. Total amount of pensioner rebates (actual dollars)
414 38
458 52
3 ET2 ET
68,260$ 70,502$
– –
–
Actuals
–
218 –
– –
93 130 2,742
352
Actuals
2,837
–
112
–
784
–
352
–
2016
454
2017
–
Special Schedules 2017
page 8
Glen Innes Severn Council
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
Actuals Current
– –
Actuals
– –
–
– –
–
Actuals Total
–
1,303 1,303
18,172
21
– –
Non-current
–
–
29
–
–
334
–
–
21 –
–
19,490
–
– –
–
355
18,172
– – – –
–
– –
13,310
18,172
36,246 (18,074)
4,343
17,653
17,653
2,192
–
–
334
–
–
19,845
–
17,551 102
–
1,939 2,163 224
1,939
–
– –
– –
–
15
– 29
15
–
– –
253
Special Schedules 2017
page 9
Glen Innes Severn Council
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
–
– 68
5
322 –
–
4 5
–
–
62
–
–
4 – –
– –
–
2
111 128
– –
–
3
– – –
11 5
– 166 163
15
1,252 1,184
– – 445 417
–
97 – –
–
60
324
Actuals 2017
Actuals 2016
19
Special Schedules 2017
page 10
Glen Innes Severn Council
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)
1,318
Actuals
1,383
Actuals 20162017
25
10 10
2 2 – –
– –
57
33 – –
55
37 37 – –
1,610 1,560
–
376
–
–
–
358 376
358
11 8
74 98
– –
5 5
– – – –
Special Schedules 2017
page 11
Glen Innes Severn Council
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
$’000
B Capital transactionsNon-operating expenditures
17. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment
18. Repayment of debt
19. Totals
Non-operating funds employed
20. Proceeds from disposal of assets
21. Borrowing utilised
22. Totals
C Rates and charges
23. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)
24. Number of ETs for which developer charges were received
25. Total amount of pensioner rebates (actual dollars)
3 ET
2,392
–
–
124 374
2,553
–
–
–
66,528$
–
371 121
40
–
– –
Actuals Actuals 2017 2016
46
3 ET
64,629$
553 –
13 – 418 –
–
–
122
Special Schedules 2017
page 12
Glen Innes Severn Council
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
2,779
660
16
– –
– –
–
303 1,362
–
– –
14,752
1,665
– – –
287
–
11,901
12,675
21,309 (8,634)
2,851
14,752
11,973
16
–
–
–
16,417
12,675
13,335
–
1,649
–
–
1,362
– – –
12,675
3,082
–
–
– – –
–
660
–
–
115
–
– –
–
–
– –
Actuals
– – –
– –
Non-current Current
2,967 – –
–
–
Total Actuals
– –
–
2,967
115
Actuals
Special Schedules 2017
page 13
Glen Innes Severn Council
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.
Special Schedules 2017
page 14
Glen Innes Severn Council
Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 as at 30 June 2017
$’000
Council Works DepotCouncil Public HallsLibraries
198 198 1 1 1,807 4,259 75% 0% 0% 25% 0%
242 24 – – 2,208 2,773 100% 0% 0% 0% 0%12%
0%6.0%11,947 0.0%
110
–
226
111
7%22%35,385 29.9%
94.0% 0.0%
5
Cultural Facilities
3
11.9%529 14,712 110
300 0%
3 3
105 105
6%
16%
0%
0%
4
32%
50%
915 2%
50%
48%
10,476
7 28%7
34%2,250
Estimated cost
agreed level ofservice set by
Council
300
178
30 303
0%Other
Sub-total25%
Asset class
Council Offices / Administration Centres
to bring assetsEstimated cost
2016/17to bring to the 2016/17 Gross
standard maintenanceAsset categoryRequired Actual replacement
cost (GRC)maintenanceato satisfactory
21
168
0.0%Other structuresSub-total
22%
0%
1,740
– 111
Other
Buildings
6% 94% 0%11,947
32%24.1%
7,046 14,899
5,432
14%
–
3.3%
– 5,432 structures 111 111
53 783 226 30.7%
Assets in condition as a percentage of gross replacement cost
Net carryingamount
2,769
825
244
Special Schedules 2017
page 15
Glen Innes Severn Council
Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 (continued) as at 30 June 2017
$’000
7.0% 19.4%
0%12%100%
–
12,672
5
2,518
– –
–
19.0%
–
101
– –
2,518
Roads – Regional Rural Sealed 767 767 132
Bridges – Regional Concrete/Steel
Sub-total
–
Bridges – Local Rural Timber 726 –
Carparks
–
Estimated cost Estimated cost
Other road assets
Causeways
Bulk earthworks
Bridges – Local Urban Timber
–
–
726 12,672
–
3,297 395 17,845
0%2,402 0%
0%
0%
100%
100%1,399
22,846
2,305
–
10%34.5%
9,483 16% 33%207,882
4,179 151,215
5
255
47% 0%
0%
–
5,161 2,982
4,160
30%
18% 11%
0%9% 0%
12%
0%
41%0% 0%0%
20.0%
0%Roads – Regional Urban Sealed 7 759 1,057 39% 41% 20% 0% 0%Roads – Other Urban Sealed 64 64
7,662
10 10 7 – 1,579 2,175 86% 7%
20 20 – – 923 1,204 53% 38%
22,848 33,695 7% 62%
–
22,846 0%Bridges – Local Rural Concrete/Steel 292 292 – –
44% 2%
101
14
255 – 6,718
49%0%
14 44 44
–
4%
42%
260 0% 0%
Bridges – Local Urban Concrete/Steel
Roads Roads – Local Rural Sealed 6,596 6,596 277 277 39,617 53,854 29% 35% 16% 9% 11%Roads – Local Rural Unsealed 484 484 1,640 1,640 14,339 19,442 7% 55% 29% 9% 0%Roads – Local Urban Sealed 3,297 395 24,155 37% 19% 17% 17% 10%Roads – Local Urban Unsealed 46 46 18 18 247 365 0% 32% 30% 29% 9%
0%
1%
132 14,186 18,404 32% 39%
1% 0%
1% 5%
88% 0%
0%0%
Assets in condition as a percentage of gross replacement costto bring assets to bring to the 2016/17 2016/17 Gross
to satisfactory agreed level of Required Actual Net carrying replacementAsset class Asset category standard service set by maintenancea maintenance amount cost (GRC) 1 2 3 4 5
Council
Special Schedules 2017
page 16
Glen Innes Severn Council
Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 (continued) as at 30 June 2017
$’000
– 66
25%
8.2%
Pumping Stations
2,045
netwok
Rising Mains
Bores
Total ReticulationNetwork
Treatment90 0%
maintenance
69
4
0%7,048 1,276
2,045
0%
47% 1%
0%
12,286 6%
89%
2
3,228 62% 0%9%
32%
ActualRequired2016/17
agreed level of
Reservoirs12
148 –
– 148 –
382 2,221
12
to satisfactorystandard
to bring assets
maintenanceaAsset class
2016/17Estimated costto bring to the
service set by
16
20%
0.3%37.2%
replacement3
2%
cost (GRC)
0%
–
–
5
– – – –
3 11% 57% 13%
0%50%
Estimated cost
153
150
0% 0%
80 69 27
6 6
85%Treatment
2,221
Pumping Stations
100%
3
Sub-total
– 16
3,879
50%191
0%100%134 204
18,629
Asset category
80 150
– 27 2,459
12,501 3,879 7.4%51.5% 32.9%85%98%
21,135
7,099 5% 0%0%
1,813 2%
10%121
– –
121
5
0%15%12,027
204 382
0%12,032 19%
0.0%9.4%53.1%36,703
0%0%
0%0%
Sub-totalRising Mains 19 19
Net carrying
726 1,437 7,055
0%
0%0%
0%
1,595
0.0%
amount
Sewerage Total Reticulation 3,860 3,860 97 97 5,578
66
5,113 1,720
Off Stream Storages
Assets in condition as a percentage of gross replacement cost
0%
0%
0%
27%
0% 0%1%79%
Water supply Dams/Weirs – – – – 749 4,751 4% 96% 0% 0% 0%
Council51
Gross
Special Schedules 2017
page 17
Glen Innes Severn Council
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…
0%
5replacement
drainage
5
733
Open space/ 4 –
to bring to theEstimated cost
617
maintenanceActualRequiredto satisfactory
standard
–
Estimated cost
7,007 Stormwater Conduits 116 116
Asset category
Inlet and Junction Pits
Net carryingamountmaintenancea
Council
Stormwater 41 41 1,215 1,921 6% 60%
agreed level ofservice set by 3cost (GRC)
Gross
73%
2016/17
1
33% 1%3%
2016/17
0%7% 17%
2 4
– 71.1%
55 1,838
733
Other Recreation – footpaths
60 recreational
51
13,168 Sub-total 6.9%
44.1% 0.9%37% 1%
0%
100%60 100%
Sub-total
0.0%
94% 4% 2%
8% 0%
0%51% 9% 2%
94.0%3,609
56 56 2,168
1.7%– – 12,213
Other
2.7%
3,010 2.3% 1.5% 0.5%
45.1% 8.1%
8,222
261 1,509
4 –
51 assets Swimming poolsOther Recreation –
to bring assets
19.3%11,247
41 41
55 116 116 5,507 1.7%
– 329 28% 39% 25%
617
– – 1,747 7
– –
Asset class
Major Street Furniture 7 6,656 8,236
396 403 assets Sub-total 403
infrastructure Kerb and Gutter 396 13,960
18.6% 7.9% 13.6%
Assets in condition as a percentage of gross replacement cost
1,580
20,746 3,515 3,515 345,687 25.6% 34.3%
4321 6
10987
222,743 TOTAL – ALL ASSETS 21,703
Special Schedules 2017
page 18
Glen Innes Severn Council
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.
345,687
Estimated cost to bring assets toan agreed service level set by Council
Indicator Prior periods
21,703 10.86% 12.08% 15.28%199,897
2017 2017 2016 2015
4,200 96.98% 144.59% 132.58%4,331
AmountsBenchmark
>= 100%
< 2.00%
1.00 1.00 1.113,515
6.00% 0.00%
> 1.00
20,746
3,515
Special Schedules 2017
page 19
Glen Innes Severn Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017
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
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
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.
Significant projects were budgeted to achieve an infrastructure ratio greater than 100% however, due to an excessively wet
year that diverted resources into maintenance, some projects being
completed under budget and also some capital projects being deferred resulted in
a ratio less than 100%.
Commentary on 2016/17 result
2016/17 Ratio 10.86%
Council improved on in this area in 2016/2017 but realistically still has a long
way to go to address the backlog.
Commentary on 2016/17 result
2016/17 Ratio 1.00 x
Commentary on 2016/17 result
2016/17 Ratio 96.98%Purpose of asset
renewals ratio
Council is maintaining its assets at an appropriate level.
133% 145%
88% 97%
0%20%40%60%80%
100%120%140%160%
2014 2015 2016 2017
Rat
io %
1. Infrastructure renewals ratio
12.1% 15.3%
12.1% 10.9%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%16.0%18.0%
2014 2015 2016 2017
Rat
io %
2. Infrastructure backlog ratio
1.11 1.00 1.00 0.94
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
Special Schedules 2017
page 20
Glen Innes Severn Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017
$ ’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
4. Cost to bring assets to agreed service level
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.
>= 100%
1.00 1.00 1.00prior period: 1.00 1.00 1.00
< 2.00%
> 1.00
77.53% 0.00% 108.30%prior period: 0.00% 0.00% 176.28%
Water Sewer General (1)
2017 2017 2017Benchmark
Estimated cost to bring assets toan agreed service level set by Council
11.92% 31.03% 9.25%
6.05% 18.35% 5.09%
prior period: 0.00% 0.00% 0.00%
prior period: 11.60% 25.66% 11.03%
Special Schedules 2017
page 21
Glen Innes Severn Council
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.
pq = o – p
rs
t = q + r – s
b
def
j = c x fi = c x e
h = d x (c – g)
c = (a + b)
lm
n = (l + m)
o = k + n
g
k = (c + g + h + i + j)
a
5 –
Calculation Calculation2016/17 2017/18
– (5)
5 5
– –
6,471 6,570
6,466 6,565
– – 4 5
342 –
4 5
– 97 – –
6,466 6,565
0.00% 0.00%
– –
5.59% 0.00%0.00% 1.50%
6,114 6,466 10 2
6,124 6,468
INDEPENDENT AUDITOR’S REPORT Special Schedule No. 8
Glen Innes Severn Council
To the Councillors of Glen Innes Severn Council
Opinion I have audited the accompanying special purpose financial statement comprising the reconciliation of total permissible general income (Special Schedule No. 8) of Glen Innes Severn Council (the Council) for the year ending 30 June 2018.
In my opinion, Special Schedule No. 8 of Glen Innes Severn Council for 30 June 2018 is prepared, in all material respects in accordance with the requirements of the Local Government Code of Accounting Practice and Financial Reporting (LG Code) issued by the Office of Local Government (OLG), and is in accordance 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 of Matter paragraph, which describes the basis of accounting.
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 Special Schedule No.8’ section of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards • ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
‘Code of Ethics for Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an Auditor-General
• mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.
page 22
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 30 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
• 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 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.
My opinion does not provide assurance:
• 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.
Chris Clayton Executive Director, Quality and Innovation
19 December 2017 SYDNEY
page 23