Focus on Finance - June 2014

Welcome

Welcome to the June 2014 Focus on Finance eNewsletter that is more condensed in size but will be sent more regularly on a quarterly basis. This change has been made to keep members better informed of the current financial issues affecting local government.


President's Message

Annette

Hopefully everyone is finally nearing the end of the Budget process for 2014/15, just in time to catch their breath and start working on the 2013/14 financial year end.  For metro councils, it will also be the first time they get an opinion on the effectiveness of their internal controls.

I remind you to review the LGA circular 23.5 and Guidance Paper on AASB13 Fair Value Measurement. The model accounts for June 2014 are close to being released and will also provide guidance on AASB13.

Now that a costing methodology for full cost recovery has been established, the FMG working party for fees and charges is now targeting specific legislated fees for review including food inspection, Section 7 and planning fees. Over the next few months, data will be collected from selected councils to allow determination of a “representative” fee that aims for full cost recovery and which will go some way to offsetting the real cost of these services provided and thereby reducing the burden on rates.

Save the date of 22 August, 2014 for our breakfast AGM at Pavilion on the Park where Michael Pascoe, who is one of Australia’s most experienced and thoughtful finance and economics commentators, will be our guest speaker.

The 4th and 5th of December, 2014 are locked in for our December conference and workshop at the Wine Centre and we are already putting together a great line-up of speakers which will include political commentator Annabel Crabb. Make sure you put these dates in your calendar to ensure you don’t miss out on these events which provide an excellent opportunity for networking and providing insight on topics relevant to our sector. It’s also a great day to reward yourself after a long and busy year and I look forward to seeing you all there.

Sadly, in the last week we heard that our friend and colleague, Allen Bolaffi, tragically lost his life, far too soon. Allen was the Managing Partner at UHY Haines Norton, one of the FMG sponsors and for many of us a member of Council’s Audit Committee. Allen was a highly respected member of our community and was well regarded for his experience and professionalism. Our thoughts are with his family, friends and colleagues at UHY Haines Norton over this difficult time.

Kind regards
Annette Martin

 

President's Message proudly sponsored by
Local Government Finance Authority

lgfa  


Key Dates

Early August 2014
Grants Commission returns released for completion and return by end of November.

22 August 2014
SALGFMG breakfast AGM at Pavilion on the Park.  Guest speaker Michael Pascoe.

29 August 2014 (Local Government Elections)
Last date for submission of ordinary return by all Council Members.

Last date for submission of ordinary return by the CEO (to the principal member of the Council) and by prescribed officers to the CEO.

30 August 2014
Last day for adoption of Annual Business Plan and Budget.

31 August 2014
Last date for declaring a general rate.

1 September 2014 (Local Government Elections)
Earliest date that CEO may write (by registered mail) to any member who has not submitted an ordinary return.

2 September 2014
Remuneration Tribunal will determine the fees for Council Members.

12 September 2014
Last day financial statements, notes and other financial material must be prepared by Council.

CEO and Presiding member of Council Audit Committee to provide Certificates of Independence with the Financial Statements.

30 September 2014 (Local Government Elections)
Casual vacancy arises as a consequence of failure by a Council Member to submit an ordinary return.

30 September – 31 May
At least twice, a council/council subsidiary/regional subsidiary must consider a report showing a revised forecast of its operating and capital investment activities for the relevant financial year compared with the estimates for those activities set out in the budget presented in a manner consistent with the note in the Model Financial Statements entitled Uniform Presentation of Finances.

November 2014 (Local Government Elections)
Local Government elections.

4 & 5 December 2014
SALGFMG Conference and Workshop.

 

 

Key Dates proudly sponsored by
APV Valuers and Asset Management

apv  

 


Hints & Tips

Financial Management Group Website Update

As mentioned in our last newsletter we would like to keep members informed of the recent changes that have occurred on our website (www.salgfmg.com.au). The Home page “Latest News” of the FMG web site has a comprehensive list of all updates that have occurred in the last six months.

In particular, it is worthwhile to draw everyone's attention to the new paper "AASB13 Fair Value Measurement”. The intention of this paper is to provide a simple and general overview of the key implications for councils from the introduction of new Australian Accounting Standard AASB 13 - Fair Value Measurement.  The introduction of AASB 13 has led to some uncertainty within Local Government. In particular, there were questions raised about whether and to what extent additional professional valuations might be required to comply with the new AASB 13.  The overall effect of this paper is that there can be general agreement within the South Australian Local Government sector, and with Local Government auditors, about the proper approach to the valuation of assets.

Below is a list of the recent alterations that have occurred within the website:

12/06/14
Resource library > Service Provision > Costing
New – “Methodologies of Cost Recovery for Local Government”

10/06/14
Resource Library > Service Provisions > Asset Management
Local Government Financial Sustainability Guidance Paper – AASB13 Fair Value Measurement

07/03/14

Resource Library > Funding > Treasury Management

New – “Debt is not a Dirty Word”

LG Price Index
The LG Price Index continues to be updated by the South Australian Centre for Economic Studies each quarter, with the 12 months ending March 2014 showing an increase of 2.5% split between the expenditure components as 2.3% recurrent and 3.0% Capital.

To visit the South Australian Centre for Economic Studies and view the complete LG Price Index data, click Here

 

 

Hints & Tips proudly sponsored by
LG Solutions

LGsolutions  

 


De-Amalgamated Council Saves Money

Noosa Council has become the first customer to take the full TechnologyOne OneCouncil solution running on the TechnologyOne Cloud. Despite starting with zero IT infrastructure or staff, the new Council and TechnologyOne implemented the solution in four months, to become fully operational in January 2014.

TechnologyOne was chosen over six providers because the combination of the preconfigured OneCouncil solution and cloud offering provided Noosa Council with the necessary hardware, software and proven business processes.

The enterprise software as a service deal is worth approximately $1.2 million in initial licensing and services, and $1 million per annum thereafter, saving the new council millions of dollars in capital expenditure, depreciation and in-house IT staffing costs. Initial estimates guided by a KPMG cost analysis conducted on behalf of the Queensland Treasury Corporation, put the capital expenditure on this sort of IT set-up to be approximately $5 million with an annual operating cost of $3.6 million.

“By having our own systems on day one, we have already saved money that would have otherwise been spent on temporary solutions,” Noosa Council CEO, Brett de Chastel said.

TechnologyOne developed OneCouncil in collaboration with 250 councils as a single platform solution with proven practice and embedded business processes, integrating all operations from land and property management, finance and regulatory functions through to payroll and human resource management. As a preconfigured solution, OneCouncil streamlines implementation and reduces time, cost and risk.

“This total solution and embedded business processes mean we have removed a huge amount of complexity from the transfer process, prepared ourselves for the future and saved millions of dollars,” Mr de Chastel said.

technologyoneFor further information please contact Peter Fulton, Regional Manager on 8383 8520 or visit www.TechnologyOneCorp.com/LocalGovernment.

 


Members Profile - Ray Barnwell

Ray Barnwell  city-of-marion-logo1 

Ray’s career began in Dublin, Ireland with Grant Thornton Chartered Accountants. He worked there for ten years managing a diverse client portfolio.  He then decided to move out of Public Practice into Industry to broaden his skill set and experience.  Over the course of the next twelve years, he was employed with a software development company followed by a construction company.  He began in the role of Financial Controller and quickly moved into the role of Commercial Manager overseeing companies in Ireland and the UK.

Always keen to pursue new challenges and opportunities, Ray emigrated to Australia with his wife and three children in 2006.  Choosing to settle in Adelaide, he continued his career employed as a Financial Controller within the automotive industry. He stayed working there until 2013, when the position of Manager Finance with the City of Marion Council became available. He successfully applied for this role and feels very fortunate and privileged to have secured a position with this particular council.  The City of Marion Council is renowned for its equitable culture which has community wellbeing, thriving economy and environment as its guiding principles.  Ray enjoys working with this council due to the expansive and varied range of tasks that need to be undertaken on a daily basis.  No two days are ever the same, as one can be involved in large scale construction projects at one moment and then find oneself involved in supporting staff to deal with customers on a personal level the next moment. It is precisely this dynamic diversity of tasks that provides Ray with both the stimulation and challenge that he craves and responds well to. This, coupled with the friendship, support and work ethic of his colleagues, ensures that Ray intends to continue working with the City of Marion for many years to come.

Ray became a new member of the FMG in January 2013 and joined the executive committee in August of the same year. The FMG provides the ability to network with other councils in order to help support each other in a way that is positive and progressive.  He has found it personally beneficial as a newcomer to the area of local government due to the wealth of knowledge and experience that is available through the other members.  He appreciates the open forum and sharing of these thoughts to help ensure the best possible outcomes for all concerned.

For work-life balance Ray enjoys all things Irish such as traditional music sessions, supporting his girls in their Irish dancing endeavours and of course partaking in the occasional pint of Guinness or two.


The Challenges of Costing

What did that road cost to rebuild? How much is Council subsidising the operation of sporting facilities? Of two alternatives, which provides the greatest benefits to the community? To answer such questions requires an understanding of the principles of costing. To effectively communicate the answer requires an understanding of what question is being asked. When it is a question about cost it is important to understand which cost is being talked about – full cost? operating cost? direct cost? marginal cost? or some other aspect of cost. It is also important when communicating an answer to ensure that the understanding about which cost is being discussed has been clearly and simply communicated.

Take, for example, the situation where Council is considering whether to outsource a particular function. Is it simply a question of looking at the full cost to Council of the operation compared to the price tendered by a potential supplier? Well, yes and no! First, what do we mean by 'full cost'? Full cost is the sum of the direct and indirect costs of the operation including the cost of capital. If the tendered price is higher than the full cost then, from the costing perspective, the analysis is at an end as it is obviously more cost-effective to continue with the current method of service provision. Where the tendered price is less than the full cost of the Council operation the consideration of cost is more complex. The initial question to ask is whether all of the full costs of operation will be avoided and, generally, the answer will be no. For instance, some of the costs associated with overheads are likely to be reallocated to other functions rather than avoided. Additionally, it may be some time before all the fixed costs associated with the function are avoided, e.g. accommodation, leased equipment and the like. Further, there may be additional costs to be incurred such as redundancy payments, retraining costs, losses on sale of equipment. All these aspects bring into play the timeframe over which costs are being considered. It may be the case that, considered over the time of an initial contract term, the tendered price, while lower than the full cost of operation is not sufficiently low enough to cover all of Council's exit costs from the operation. Consideration then needs to be given to extending the analysis over an appropriate time frame and this leads to the consideration of whether the tendered price is an entry price, likely to rise significantly in a second contract round.

The above example demonstrates that there is a range of considerations to make in determining the cost of an operation, just as there is a variety of costs to consider. It is important that in providing information about the costs of an operation or answering questions about costs that the following are carefully considered:

  • What purpose is the costing information to be provided for?
  • Which costs are under consideration?
  • What time frame is appropriate in the analysis?
  • How should the costing information be presented to facilitate effective decision making?

The Financial Management Group and the Local Government Association have commissioned and funded advisory material for Councils on costing. Two recent publications have been made available on the Local Government Association's website:

  1. Costing Principles for Local Government – December 2013 Click here
  2. Methodologies of Cost Recovery for Local Government – January 2014 Click here

Upcoming Events

FMG BREAKFAST/AGM will be held on Friday 22 August 2014 - This Event is FREE to Members or $99 for Non-Members.

Venue: Pavilion on the Park, South Terrace.

Time: 7.30 am for 8.00am start – 10.00 am finish.

Special Guest Speaker: Michael Pascoe presenting on " Is the Age of Entitlement over – or just the Age of Titles beginning? What's really happening with the economy and what's driving it."

Conference & Workshop will be held on Thursday 4 and Friday 5 December 2014.

Venue: National Wine Centre of Australia, Hackney Road, Adelaide.

A great line-up of speakers which will include political commentator Annabel Crabb.


 

A suggested Year End Accounts 'Plan of Attack'

With Year End Financial Reporting right around the corner, LG Solutions has put together a suggested 'Plan of Attack' in compiling your Council's physical Financial Statements for Year End 2013/14.

There are (we would suggest) many variations to our suggested "Steps to Completion" – but what is important is to have a "Road Map" to completion when you start your Accounts Preparation!

  1. We recommend you start with the Comprehensive Income Notes first, ie Notes 2-4.

    When complete, you should compare the Comprehensive Income "bottom line" to your GL Balance before moving on!! If they are different – determine what is missing in the Statements & fix.

    We are BIG believers in Councils entering in the $ for each primary Financial Statement separately & balancing it (to their GL) before they move on – ie know the answer before you start!!

  2. Second "cab off the rank" is the Statement of Financial Position Notes (Council's Assets & Liabilities). Enter all the figures relating to Notes 5-8, 19 & 20.

    When completed, you should once again ensure that the Statement of Financial Position figure for Net Assets agrees to your GL Balance for Net Assets before you move on!!

  3. Thirdly, to complete the Statement of Financial Position (ie Equity), review and complete Note 9 on the movement of Reserves across the year.

    Before moving on, another "quick check" should be done!!

    This time around the check is to determine whether the Total Equity as per the Statement of Changes in Equity agrees to the Net Assets as per the Statement of Financial Position.

    If it does balance, then in fact you are "all but there" with the Year End Accounts. Not Bad!!

    If not, then try and ascertain why Equity does not agree – by this step, you have already agreed that the Income Statement bottom line and the Net Assets as per the Statement of Financial Position agree to the G/L.

    Perhaps double check the Statement of Comprehensive Income at this stage to make sure it records ALL the movements in Equity for the year & something is not missing in the Statement line items!!

  4. Fourthly, once your Accounts balance (NET ASSETS = NET EQUITY), finalise all 'movement & reconciliation' disclosures within the already completed Notes (eg Note 8 - Provision Movements).

  5. Fifth is to complete the "stand alone" Notes (eg Note 13 - Financial Instruments).

  6. Sixth is to enter in Note 12 (Functions).

  7. Seventh is finalising the Statement of Cash Flows & Note 11 (Reconciliation of Cash Flow).

  8. The Penultimate step is to finalise any 'additional' Notes (such as Financial Indicators) – and assess the accuracy and reasonableness after all other Notes have been compiled.

  9. The Final Step is to review Note 1 and make sure it reflects your Council's current Accounting Policies!! After all...someone's got to read it!! ☺

LG Solutions provide YE Templates to assist SA Councils with their Year End Statutory Financial Statements. For more information on our "ready to go" Templates that link into your GL & arrive with Council's prior year comparatives & specific line items already included, don't hesitate to contact us...our order book for YE 13/14 is still open. Why not give your YE Statements a new look & fresh approach!

LGsolutionsJohn O'Connor
LG Solutions
Email This email address is being protected from spambots. You need JavaScript enabled to view it.
www.lgsolutions.net.au

 


Adelaide Advantage Project

adelaide advantageThe Adelaide Advantage is a new program at the University of Adelaide for students enrolled in Business, Economics Law and Architecture who are looking for unique opportunities to enhance and enrich their time at University.

Through the program, students participate in extracurricular activities to enhance their employability and self-development, and gain valuable experience outside the classroom. They receive recognition for these activities from the Executive Dean when they complete the program, and they also have access to a new Career Readiness Course which was developed in consultation with the University's industry partners.

adelaide advantage students

CPA's CEO Alex Malley at the University of Adelaide

Students have the opportunity to participate in a wide range of activities

Opportunities for student participation can be very flexible and the University likes to work with industry contacts to formulate projects, events, and other activities – to build resources and exposure for their organisation, and also to provide real-world experiences for students.

 

Some examples include:

  • Networking opportunities with industry (morning teas, meet the CEO events, attending workshop/workplace training sessions, assisting during events ...)
  • Getting to know fellow students (mentoring, morning teas, study tours, trips...)
  • Developing professional skills during workshops, trainings, mentoring sessions
  • Competitions
  • Becoming involved in the community through activities such as volunteering for charities (SCOSA, Cancer Council, Heart Kids, Leukaemia Foundation...)
  • Work experience opportunites

What are the benefits for industry partners?

  • Direct access to a unique group of students who have indicated a desire to go 'above and beyond', and are designating time outside the classroom to build their leadership, team building, and communication skills; ready to enter the workplace fully equipped.
  • Introducing future graduates to your business
  • Contributing to the professional development of future graduates
  • Developing links with the University of Adelaide
  • Providing your employees with mentoring and leadership opportunities whilst helping support our future leaders
  • Benefitting from an extra pair of hands

Interested in connecting with The Adelaide Advantage program? Please contact Anna Cosentino at This email address is being protected from spambots. You need JavaScript enabled to view it. if you would like to explore partnership options or just learn more about our program.

student thi nha vo Student Thi Nha Vo received the "Academic Excellence: Undergraduate award" at the 2013 Governor's International Student of the Year Awards.

 

keven scarce His Excellency Rear Admiral Kevin Scarce - Government House Event celebrating the Student Experience at the Faculty of the Professions.

 

workshop Adelaide Advantage Stand Up, Speak & Persuade - Workshop

Faculty of the Professions Internship program

  • Are you interested in gaining access to our best and brightest students at no cost?
  • Could you use some assistance coming into Tax Time? Or in the areas of business analysis, financial reporting, marketing, cost benefit analysis, international trade legislation or economic modelling? Maybe even finance, accounting or general administration?
  • Would you like the opportunity to grow your business and your team?

Did you answer yes to any of these questions? Perhaps our Internship Program is just what your organisation needs!

We are currently seeking projects from industry for students to undertake in Semester 2, 2014 and beyond...

  • Internships run 2 days a week over 10 weeks / 4 weeks full time equivalent
  • And we undertake a recruitment process for you, shortlisting candidates, monitoring students throughout, and covering them for insurance purposes.

Here's what our past host organisations are saying:

lifeplan"Richard simply got things done with very little guidance and asked for help when needed, hence he made my life very easy. A valuable program for our business and the student, The University of Adelaide have been impressive in their support, setting up the program, with continued support provided over the length of the program."

Adnan Glinac, Product Manager, Lifeplan Funds Management

pwc"Aiden was an exceptionally enthusiastic person and his deep appreciation of the opportunity to work with PwC was clear. He was focussed and stayed on task at all times. The benefit to the firm was clear and the opportunity to assist in the development of young professionals highly valued."

Nicole Duance, Marketing Manager, PwC

Please do not hesitate to contact us if you would like to take advantage of this opportunity.

E: This email address is being protected from spambots. You need JavaScript enabled to view it. | W: http://www.adelaide.edu.au/professions/internships/


"Getting Better all the Time" - Conference Review

Another successful SALGFMG Conference 'Getting Better All The Time' was held on Friday 14 March 2014 at the Semaphore Palais, Semaphore. The Conference Committee organised another great day with a line-up of speakers covering various topics which were both enlightening and entertaining.

The Financial Management Group would like to thank our sponsors again for their continued support of the conferences as they have enabled us to have such a high quality of speakers. A number of speakers have been generous in allowing their presentation to be available to our members. Click Here (Membership login to the Web site is first required for the link to function).

From the paradise of dissent to the paradise of diversity: what does the global economic outlook mean for South Australia?
A great start to the day, Tim Harcourt, The Airport Economist, spoke about the trends, risks and opportunities in the global economy and what it means for Australian and South Australian business and government agencies.

Tim Harcourt, The Airport Economist

Burning Tax Issues for 2014

Kevin presented a summary of the main issues that councils will face in the 2014 tax year with specific references to changes in GST and FBT.

Kevin Smith, Founding Director, TaxEd and Australian Tax College (presentation available)

Getting performance right with right information to the right people at the right time
Warren presented on the implementation of Logan City Council's 'New Reporting Model'. A change from reporting large amounts of information to Councillors to a streamlined process of reporting the right information, to the right people, at the right time.

Warren van Wyk, CEO Office Manager Logan Council, QLD (presentation available)

Probity and continuous improvement (case study City of Marion)
Councils are reviewed from all angles including external audits, internal audits and business reviews. How compliance and service reviews are combined to achieve assurance as well as identifying opportunities for improvement were discussed using City of Marion as the case study. Kyffin Thompson, Partner Advisory, BDO (presentation available)
Vincent Mifsud, City of Marion

Can we have too much of a good thing?
Penny spoke about the constant demand for new infrastructure and how it should be linked to Service Levels and Community Engagement. She questioned whether we can get better outcomes by focusing on Service Levels directly and how changing the way we engage with the community could strengthen these outcomes.

Penny Burns, Managing Director, AMQ International

Australia's Underbelly
In a captivating and enlightening close to the day, John Silvester, provided insight into the crime story that fascinated Australia. From suburban pizza shop owner, mystery property developer, massive punter, multi-millionaire drug trafficker to international fugitive, Tony Mokbel always wanted to travel first class. Which is why he bought an ocean going yacht to escape and why police leased a Lear jet to bring him back.

John Silvester, Author, Crime Reporter

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