forbes shire council

Forbes Shire Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2019

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Financial Statements 2019

Forbes Shire Council

General Purpose Financial Statements for the year ended 30 June 2019

Contents

Understanding Council’s Financial Statements

Statement by Councillors and Management

Primary Financial Statements:

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

Notes to the Financial Statements

Independent Auditor’s Reports:

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

Overview

2 Court StreetForbes NSW 2871

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, andprinciples 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).

Through the use of the internet, we have ensured that our reporting is timely, complete and available at minimumcost. All press releases, financial statements and other information are publicly available on our website:www.forbes.nsw.gov.au.

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5

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Forbes Shire Council is constituted under the Local Government Act 1993 (NSW) and has its principal place of business at:

8

9

8386

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Financial Statements 2019_

Forbes Shire Council General Purpose Financial Statements for the year ended 30 June 2019 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 2019. 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 201 9


General Purpose Financial Statementsfor the year ended 30 June 2019

Statement by Councillors and Managementmade pursuant to Section aß(2)(c) of the Local Government Act 1993 (NSW) (as amended)

The attached General Purpose Financial Statements have been prepared in accordance with

' the Local Government Act 1993 (NSVW (as amended) and the regulations made thereunder,

o the Australian Accounting Standards and other pronouncements of the Australian AccountingStandards Board

a the Local Government Code of Accounting Practice and Financial Reporting

To the best of our knowledge and belief, these financial statements:

' present fairly the Council's operating result and financial position for the year,

. accord with Council's accounting and other records.

We are not aware of any matter that would render these statements false or misleading in any way

Signed in accordance with a resolution of Council made on 15 August 2019

Phyllis Miller OAMMayor16 August 2019

LoaneGeneral Manager16 August 2019

JennyCou16 August 2019

tan Pìor- /ì -

Responsible Accounting Officer16 August 2019

page 3



Income Statement for the year ended 30 June 2019

1

$ ’000

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

Total income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationOther expenses

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

1 The Council has not restated comparatives when initially applying AASB 9. The comparative information has beenprepared under AASB 139 Financial Instruments: Recognition and Measurement

815

4,047

4e

659

8,306

43,656

(873)

47,503

8,271 3,139 9,132

3,772

8,874

659

1,786 10,536

9,044 14,522

4d

39,609

4,047

4,501

13,841

1,148

142

12,337

3d3c

5

4b4c

11,397

1,542

3b

4a

3e,f

–

Original

3e,f

unaudited

8,591 4,536

39,629

2019

12,395 1,263 1,035

9,924

12,167

Notes

3a

2019

820

12,555

8,874 4,047

2018

11,997

1,143 2,136

8,874

38,629

14,081

4,920 8,059

163

11,564

1,858 15,373

Actual Actual budget

659

(489)

38,970

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



Statement of Comprehensive Income for the year ended 30 June 2019

$ ’000 1

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

Other comprehensive income:

Amounts that will not be reclassified subsequently to the operating result

Gain (loss) on revaluation of IPP&ETotal items which will not be reclassified subsequentlyto the operating result

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

Total other comprehensive income for the year

Total comprehensive income for the year

Total comprehensive income attributable to Council

1 The Council has not restated comparatives when initially applying AASB 9. The comparative information has beenprepared under AASB 139 Financial Instruments: Recognition and Measurement

3,588

2018

12,462 4,976

929

3,588 929

9a

2019Notes

4,047 8,874

929 3,588

12,462 4,976

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Statement of Financial Position as at 30 June 2019

$ ’000 1

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesTotal current assets

Non-current assetsReceivablesInfrastructure, property, plant and equipmentTotal non-current assets

TOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilities

TOTAL LIABILITIES

Net assets

EQUITYAccumulated surplusRevaluation reserves

Total equity1 The Council has not restated comparatives when initially applying AASB 9. The comparative information has been

prepared under AASB 139 Financial Instruments: Recognition and Measurement

4,204

2019

8

25,445

2,656 452

1,419

276,892

2,692

7

51,481

9 269,361

2,079

19,753

3,983

2,091

2,156 49,780

41,550

1,247

1110

1212

23,739

89,207

Notes

6a6b7

322,089

7,083

288,921

2018

9,316

288,921

203,761

24,723

25,157

199,714

293,897

928 984

90,136

1,264

270,608

33,168

26,085

34,039

10

278,156

4,621

327,936

11 2,702 1,283

574

293,897

1010

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Statement of Changes in Equity for the year ended 30 June 2019

2019 1

$ ’000

Opening balance

Net operating result for the year

Other comprehensive income – Gain (loss) on revaluation of IPP&EOther comprehensive income

Total comprehensive income (c&d)

Equity – balance at end of the reporting period

1 The Council has not restated comparatives when initially applying AASB 9. The comparative information has been prepared under AASB 139 Financial Instruments: Recognition and Measurement

4,976

– 929

–

288,921 89,207 199,714

3,588

8,874 3,588

– 3,588

12,462

3,588 – 3,588

equity

276,459

surplus

190,840 85,619

reserverevaluation Total

IPP&E

203,761 90,136 293,897

4,047 929

929

Accumulated

929

4,047

929

TotalNotes surplus reserve

Accumulated

199,714 89,207 288,921

IPP&E

equity

2019revaluation

9a –

8,874

Net operating result for the year prior to correction of errors and changes in accounting policies

4,047 – 4,047 – 4,047 – 8,874 8,874

8,874

2018

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Statement of Cash Flows for the year ended 30 June 2019

$ ’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 costsOtherNet cash provided (or used in) operating activities

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

Cash flows from financing activitiesReceipts:NilPayments:Repayment of borrowings and advancesRepayment of finance lease liabilitiesNet 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

(1,786)

Original

budget unaudited

1,157

11,901

Actual

–

1,440

2019

11,349

– 13,653

882

2,907

–

(9,772) –

(19,605) (16,672)

(10,533)

(4,501)

Notes

12,139

(1,948)

(1,283) (439)

14,087

(844)

12,144

– 630

(13,541)

9,203

9,107

2018

1,154

(1,896)

17,212

(17,262)

1,261

(8,333)

– 517

Actual

13,372

15,175

851

2019

(12,169)

371

14,771

(1,143) (341)

9,195

(802)

(11,809)

43,641

(30,098)

19,753

25,445

18,578

1,175

(14,321) (55)

(844)

12,364

175

(5,352)

17,176

13b

45,198

2,091

6b

13a

41,550

19,753

(17,662)

(1,282) (438)

(31,555)

13a

3,953

13,993

16,639 (6,122)

(14,359) (9,182)

(3,083)

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Notes to the Financial Statements for the year ended 30 June 2019

Contents of the notes accompanying the financial statements

Details

Basis of preparationCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsGain or loss from the disposal, replacement and de-recognition of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investments – detailsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentExternally restricted infrastructure, property, plant and equipmentPayables and borrowingsProvisions

Statement of cash flows – additional informationInterests in other entitiesCommitmentsContingencies and other liabilities/assets not recognisedFinancial risk managementMaterial budget variationsFair value measurementRelated party transactionsStatement of developer contributionsFinancial result and financial position by fundStatement of performance measures – consolidated resultsStatement of performance measures – by fund

Additional council disclosures (unaudited)

Statement of performance measures – consolidated results (graphs)Financial review and commentaryCouncil information and contact details

7723(a)

24

21

76

23(c) 79

6(a)

4

6(c)

23(b)

13

22

20

37

1615

Note

10

Page

12(a)

32(b)

6(b)

5

33

41

Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors

19

11

6018

5014

17

12

48

5155

28

2931

35

1015161724

28

78

9(a)9(b)

25 8281

62

7374

48

44

49

72

40

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Forbes Shire Council Notes to the Financial Statements for the year ended 30 June 2019 Note 1. Basis of preparation

page 10

These financial statements were authorised for issue by Council on 15/08/2019. Council has the power to amend and reissue these financial statements. 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. 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. The financial statements are presented in Australian dollars and are rounded to the nearest thousand dollars. Unless otherwise indicated, all amounts disclosed in the financial statements are actual amounts. Specific budgetary amounts have been included for comparative analysis (to actuals) in the following reports and notes: Income statement Statement of cash flows Note 18 – Material budget variations and are clearly marked . (a) New and amended standards adopted by Council During the year, Council adopted all standards which were mandatorily effective for the first time at 30 June 2019. Those newly adopted standards which had an impact on reported position, performance and/or disclosures have been discussed in Note 12. (b) 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 infrastructure, property, plant and equipment and investment property. (c) 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.


Forbes Shire Council Notes to the Financial Statements for the year ended 30 June 2019 Note 1. Basis of preparation (continued)

page 11

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 infrastructure, property, plant and equipment – refer Note 9, (ii) estimated tip remediation provisions – refer Note 11, (iii) employee benefit provisions – refer Note 11. Monies and other assets received by Council (a) The Consolidated Fund In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund. Cash and other assets of the following entities have been included as part of the Consolidated Fund: General purpose operations

Water service Sewerage service (b) The Trust Fund In accordance with the provisions of Section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the Council in trust which must be applied only for the purposes of, or in accordance with the trusts relating to those monies. Trust monies and property subject to Council’s control have been included in these reports. 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. New accounting standards and interpretations issued not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2019 reporting periods (and which have not been early adopted by Council).



page 12

As at the date of authorisation of these financial statements, Council assessment of these new standards and interpretations is that they are not likely to have a material impact on the Council's future financial statements, financial position, financial performance or cash flows. Council has not elected to apply any pronouncements before their operative date in these financial statements. AASB 16 Leases AASB 16 will result (for YE 19/20 and beyond) in almost all operating leases being recognised on the balance sheet by Council (alongside existing finance leases) with the distinction between operating and finance leases removed. Under the new standard, a financial liability (ie. a lease liability) and an asset (ie. a right to use the leased item) will be recognised for nearly all arrangements where Council commits itself to paying a rental fee for the use of a specific asset. The only exceptions are short-term and low-value leases which are exempt from the accounting (but not disclosure) requirements of AASB 16 - Leases. Council staff have reviewed all of Council’s leasing arrangements over the last 12 months taking into consideration the new lease accounting rules in AASB 16 (applicable from 1/7/19). AASB 16 will (on the whole) affect Council's accounting for existing operating lease agreements that are in place as at 30/6/19. At the end of this reporting period, Council has non-cancellable operating lease commitments of $203,000 refer Note 15. Of these commitments, approximately $95,000 relate to short-term leases and all leases are considered low value leases. Both these lease types and amounts will continue to be accounted for as they currently are (being expensed on a straight-line basis within the Income Statement). Council staff are in the process of reviewing all contracts to assess whether any are captured by the broader definition of leases within AASB16. 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 contracts costs and contracts which contain a financing element. Councils should assess each revenue stream but particular impact is expected for grant income and rates which are paid before the commencement of the rating period. 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.



page 13

The impact of AASB15 is expected to have little if any impact on Council’s current practices. AASB 1058 Income of NFP Entities AASB 1058 supersedes all the income recognition requirements relating to councils, previously in AASB 1004 Contributions. Under AASB 1058 the future timing of income recognition will depend on whether the transaction gives rise to a liability or other performance obligation (a promise to transfer a good or service) related to an asset (such as cash or another asset) received by an entity. AASB 1058 also applies when a council receives volunteer services or enters into other transactions in which the consideration to acquire an asset is significantly less than the fair value of the asset, and where the council’s objective is principally to enable the asset to further the council’s objectives. Upon initial recognition of the asset, this standard requires council to consider whether any other financial statement elements (called ‘related amounts’) should be recognised in accordance with the applicable accounting standard, such as: (a) contributions by owners (b) revenue, or a contract liability arising from a contract with a customer (c) a lease liability (d) a financial instrument, or (e) a provision. If the transaction is a transfer of a financial asset to enable council to acquire or construct a recognisable non-financial asset to be controlled by council (i.e. an in-substance acquisition of a non-financial asset), the council recognises a liability for the excess of the fair value of the transfer over any related amounts recognised. Council will then recognise income as it satisfies its obligations under the transfer similarly to income recognition in relation to performance obligations under AASB 15. If the transaction does not enable council to acquire or construct a recognisable non-financial asset to be controlled by council, then any excess of the initial carrying amount of the recognised asset over the related amounts is recognised as income. Grant agreements are currently being reviewed by Council staff to determine the impact of AASB 1058 AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities This Standard provides a temporary option for not-for-profit entities to not apply the fair value initial measurement requirements for right-of-use assets arising under leases with significantly below market terms and conditions, principally to enable the entity to further its objectives (for example, concessionary or peppercorn leases). The Standard requires an entity that elects to apply the option (i.e. measures a class or classes of such right-of-use assets at cost rather than fair value) to include additional disclosures in the financial statements to ensure users understand the effects on the financial position, financial performance and cash flows of the entity arising from these leases As per a NSW Office of Local Government recommendation, Council has elected to measure right-of-use assets (under a concessionary or peppercorn lease) at cost. The standard requires additional disclosures be provided in relation to below market-value leases measured at cost.



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The specific impacts of AASB2018-8 is expected to have little if any impact on Council’s current practices. Council has not applied any pronouncements before its operative date in the annual reporting period beginning 1 July 2018. Apart from those standards listed above, there are no other released standards (with future effective dates) that are expected to have a material impact on Council.




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

Total functions and activities 47,503 39,609 43,656 322,089 327,936

452

4,047

– –

38,629 14,878 8,874 16,418

2,126 5,425

69,454 10,438

136,048 48,795 179 30

113 23,260

29,023 47,989

29,515 34 533 123 – –

116

7,330 5,099

22,072 14,224 13,591

516 599

–

(627) 7,529 215

(2,374) 2019 2018

7,995 5,501 208,712

11,494 908 5 847 (3,043) 317

(6,986) (2,197)

(636) (1,010) 157

7,880 Our Infrastructure (General Fund)

2,184 2,344 3,899 4,111

Our EnvironmentOur Leadership and Governance

7,651 2,572

7,744 Our Economic Development

Other

Our Society and Places

–

13,615 16,286 4,288

2,374 3,199

14,463 4,710 4,015

18,512

Our Infrastructure - Water SupplyOur Infrastructure - Sewer Supply 2,860

510 3,126

–

752

2,717

7,477

–

3,553

–

7,015

15,812 2,695 3,384

Income from continuing operations

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

Expenses from continuing operations

Operating result from continuing operations

$ ’000

Total assets held (current and non-

current) Functions/activities

2018

Grants included in income from continuing

operations

201820192019 2018 2019 2019 2018

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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:

Our Society and Places

Our Economic Development

Our Environment

Our Leadership and Governance

Our Infrastructure (General Fund)

Our Infrastructure - Water Supply

Our Infrastructure - Sewer Supply

Infrastructure comprises the public and private assets that support the Forbes Shire Community and ForbesShire Enterprises. Includes Local and Regional sealed and unsealed roads, bridges, footpaths, aerodromes aswell as Cemeteries and Council's Plant Fleet.

Includes costs relating to the community, cultural and social and learning needs of the Forbes Sire Councilcommunity. Among these are the areas of Age, Youth and Community Services; Public Order, Health andSafety; Pools, Parks and Reserves, Public Amenities, Library and Cultural Facilities.

Includes the costs of Forbes Shire Enterprises which comprise the diversity of business, agricultural andeconomic life within the Forbes Shire. Among these are costs relating to Caravan Park, Pits and Quarries,Central West Livestock Exchange, Homemaker Centre, Economic Development and Tourism and Promotion.

Forbes Shire Natural Environment is the natural resources and environment within and surrounding the ForbesShire. Includes noxious plants and insect/vermin control; other environmental protection; solid wastemanagement including domestic waste; Town Planning, Building and Regulatory Control as well as expensesrelating to Councils Heritage.

Leading an effective and authentic Council requires a transparent accountable decision making process toencourage participation and support community engagement. Includes costs for Governance and Administrationincluding Corporate Support and other support services; Engineering works and Council policy compliance.

Costs involved in the operation and maintenance of Forbes Water Supply and the non potable water supply atOotha Village.

Costs involved in the operation and maintenance of Forbes Sewerage Supply system.

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Note 3. Income from continuing operations

$ ’000

(a) Rates and annual charges

Ordinary ratesResidentialFarmlandBusinessLess: pensioner rebates (mandatory)Rates levied to ratepayersPensioner rate subsidies receivedTotal ordinary rates

Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesStormwater management servicesWater supply servicesSewerage servicesWaste management services (non-domestic)Waste recycling annual chargeLess: pensioner rebates (mandatory)Annual charges leviedPensioners’ subsidies: – Water – SewerageTotal annual charges

TOTAL RATES AND ANNUAL CHARGES

Council has used 2016 year valuations provided by the NSW Valuer General in calculating its rates.

Accounting policy for rates and annual chargesRates and annual charges are recognised as revenue when the Council obtains control over the assetscomprising these receipts.

Pensioner rebates relate to reductions in rates and certain annual charges for eligible pensioners’ place ofresidence in the local government council area that are not subsidised by the NSW Government.

Pensioner rate subsidies are received from the NSW Government to provide a contribution towards thepensioner rebates.

Control over assets acquired from rates and annual charges is obtained at the commencement of the ratingyear as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates.

2,659

1,199 3,381

7,239

2,619

1,172

1,144

7,115

20182019

3,324

(103)

711 630

107 103 7,132

74

7,012

34

1,167 74

(107)

(65)

1,044 1,956

70 2,006

11,997

33 34 31

5,098 4,882

(64) 5,033 4,818

12,337

31

1,070

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page 17




Note 3. Income from continuing operations (continued)

$ ’000

(b) User charges and fees

Specific user charges (per s.502 – specific ‘actual use’ charges)Water supply servicesSewerage servicesTotal specific 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 feesSection 10.7 certificates (EP&A Act)Section 603 certificatesTotal fees and charges – statutory/regulatory

(ii) Fees and charges – other (incl. general user charges (per s.608))AerodromeCaravan parkCemeteriesGravel pitsHome makers centreLease rentalsLeaseback fees – Council vehiclesMedical centreMultipurpose centre - town hallPark rentsRMS (formerly RTA) charges (state roads not controlled by Council)SaleyardsSundry salesSwimming centresTourismWaste disposal tipping feesWater connection feesOtherTotal fees and charges – other

TOTAL USER CHARGES AND FEES

Accounting policy for user charges and feesUser charges and fees are recognised as revenue when the service has been provided.

3,444

4,509

38

12,395

10,555

3,874

34

5

14,081

97 23

23

395

48

3,118

19

2019

593

541

2018

49

408

229

10

38

400

2,903 514

2,604

15 3

131

192 130

21

573

99

448

80

2,042

82

– 18

175

8,551

700

– 16

4,383 5

26

407

66 56

15

4

165

27 32

19

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page 18





$ ’000

(c) Interest and investment revenue (including losses)

Interest on financial assets measured at amortised cost – Overdue rates and annual charges (incl. special purpose rates) – Cash and investmentsTOTAL 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 7.11Water fund operationsSewerage fund operationsTotal interest and investment revenue recognised

Accounting policy for interest and investment revenueInterest income is recognised using the effective interest rate at the date that interest is earned.

Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of partof the cost of the investment.

51

658

1,143

4

2018

1,088

1,263 1,143

287 139

55

2019

1,212

5

55 51 741

1,263

301 165

X8A7T

page 19





$ ’000

(d) Other revenues

Rental income – other council propertiesFinesLegal fees recovery – rates and charges (extra charges)Centroc financial assistance fundingDiesel rebateDiscounts on provision unwindingEmployee reimbursementsFESL Levy reimbursementHACC centre feesInsurance claims recoveriesInsurance rebatesRFS reimbursementsYouth activitiesVanfestOtherTOTAL OTHER REVENUE

Accounting policy for other revenueCouncil recognises revenue when the amount of revenue can be reliably measured, it is probable that futureeconomic benefits will flow to the Council and specific criteria have been met for each of the Council’s activitiesas described below. Council bases its estimates on historical results, taking into consideration the type ofcustomer, the type of transaction and the specifics of each arrangement.

Parking fees and fines are recognised as revenue when the service has been provided, or when the penalty hasbeen applied, whichever occurs first.

Rental income is accounted for on a straight-line basis over the lease term.

Miscellaneous sales are recognised when physical possession has transferred to the customer which isdeemed to be the point of transfer of risks and rewards.

Other income is recorded when the payment is due, the value of the payment is notified, or the payment isreceived, whichever occurs first.

– 37

137 120

29 33 14

65

51

96 51 62

226

51

74

48

58 3

2018

63

17

2,136

1,189

–

–

7

93

171

218

89

Notes

109

1,035

2019

60

X8A8T

page 20





$ ’000

(e) Grants

General purpose (untied)Current year allocationFinancial assistance – general componentFinancial assistance – local roads componentPayment in advance – future year allocationFinancial assistance – general componentFinancial assistance – local roads componentTotal general purpose

Specific purposeWater suppliesBushfire and emergency servicesCommunity centresHeritage and culturalLibrary – per capitaLibrary – special projectsNoxious weedsNSW rural fire servicesPublic hallsRecreation and cultureStorm/flood damageStreet lightingTransport (roads to recovery)Transport (other roads and bridges funding)Other auspiced community grantsYouth activitiesFloodplain studyOLG InnovationWaste servicesCWLEDrought FundingAgriculture Strategic PlanOtherTotal specific purposeTotal grants

Grant revenue is attributable to:– Commonwealth funding– State funding– Other funding

969 969 – –

–

8,059 8,059

107

Capital

–

–

–

–

4,920

–

–

50

8,359

–

–

–

–

–

– –

–

–

–

–

–

–

– 2,109

2019 2018

–

–

–

–

–

– –

5,793

– –

–

2,266

–

8,059

–

–

4,404

1,202 5,793

–

–

4,920

9

908

516

69 13

4,403

8,823

254

7,752 769

–

–

9,958

143

3,194

5 278

– 7

8,359

–

353

900

9,958 366

21 62

7

42

5

44 167

42

337

1,738

–

80

– –

523

319 2,368

97 34

1,005

1,823

2019

–

–

–

41

2,587

–

–

5,555

–

–

–

–

38

1,758

179

–

51

– 33

–

–

7

1,604

1,647

104

–

–

Operating Operating

–

2018Capital

945 –

4,920

–

–

57

5,165

–

X8A17T

page 21





$ ’000

(f) Contributions

Developer contributions:(s7.4 & s7.11 – EP&A Act, s64 of the LGA):

Cash contributionsS 7.11 – contributions towards amenities/servicesTotal developer contributions – cashTotal developer contributions

Other contributions:Cash contributionsRMS contributions (regional roads, block grant)Sewerage (excl. section 64 contributions)TourismWater supplies (excl. section 64 contributions)Maternity releifJemalong Retirement Village AssnOtherTotal other contributions – cashTotal other contributionsTotal contributions

TOTAL GRANTS AND CONTRIBUTIONS

Accounting policy for grants and contributionsControl over grants and contributions is normally obtained upon their receipt (or acquittal) and is valued at thefair value of the granted or contributed asset at the date of transfer.

Where grants or contributions recognised as revenues during the financial year were obtained on condition thatthey be expended in a particular manner or used over a particular period and those conditions wereun-discharged at reporting date, the unused grant or contribution is disclosed below.

Council has obligations to provide facilities from contribution revenues levied on developers under the provisionsof sections 7.4, 7.11 and 7.12 of the Environmental Planning and Assessment Act 1979.

While Council generally incorporates these amounts as part of a Development Consents Order, suchdeveloper contributions are only recognised as income upon receipt by Council, due to the possibility thatindividual development consents may not be acted upon by the applicant and, accordingly, would not bepayable to Council.

Developer contributions may only be expended for the purposes for which the contributions were required, butthe Council may apply contributions according to the priorities established in work schedules.

A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite servicehas not been provided at reporting date.

1,543 1,543

92

–

–

– –

21

146

1,056 –

–

63

1,077

1,606 –

– –

4,920

–

9,924

–

–

8,059

–

Capital 2018

– –

–

Capital

–

–

–

– 1,559 1,559

–

–

132

–

69

– –

– 19 32

63

57

63

2018

317 5 100

6

6

Notes

–

Operating 2019

11,564

1,565 –

2019

6

Operating

X8A9T

page 22





$ ’000

(g) Unspent grants and contributions

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

Operating grantsUnexpended at the close of the previous reporting period

Add: operating grants recognised as income in the current period but not yet spent

Less: operating grants recognised in a previous reporting period now spent

Unexpended and held as restricted assets (operating grants)

ContributionsAdd: contributions recognised as income in the current period but not yet spent

Unexpended and held as restricted assets (contributions)

347 143

(57)

2019 2018

662

–

748 347

748

–

(748)

251

251

page 23




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)Payroll taxTraining costs (other than salaries and wages)Protective clothingStaff recruitmentOtherTotal employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSEDNumber of ‘full-time equivalent’ employees (FTE) at year end

Accounting policy for employee benefits and on-costsEmployee benefit expenses are recorded when the service has been provided by the employee.

Retirement benefit obligationsAll employees of the Council are entitled to benefits on retirement, disability or death. Council contributes tovarious defined benefit plans and defined contribution plans on behalf of its employees.

Superannuation plansContributions to defined contribution plans are recognised as an expense as they become payable. Prepaidcontributions are recognised as an asset to the extent that a cash refund or a reduction in the future paymentsis available.

Council participates in a Defined Benefit Plan under the Local Government Superannuation Scheme, however,when sufficient information to account for the plan as a defined benefit is not available and therefore Councilaccounts for its obligations to defined benefit plans on the same basis as its obligations to defined contributionplans, i.e. as an expense when it becomes payable – refer to Note 16 for more information.

(b) Borrowing costs

(i) Interest bearing liability costsInterest on loansCharges relating to finance leasesOther debtsTotal interest bearing liability costs expensed

TOTAL BORROWING COSTS EXPENSED

Accounting policy for borrowing costsBorrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time thatis required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

553

1,341

1,404

9,132

14 9,906

109

1,858

20

422

123

3,139

2019

2019

33

46

93

11,149 (1,635)

89

19

2018

9

2018

361

6,858

(2,017)

1,573

1,272 –

1,858

141

970

3,139

526

11 178

1,305

–

7,814

8,271

852

167 13

X8A11T

X8A12T

X8A19T

page 24




Note 4. Expenses from continuing operations (continued)

$ ’000

(c) Materials and contracts

Raw materials and consumablesContractor and consultancy costsChemicals purchasesWater purchasesAuditors remuneration (2)

Legal expenses: – Legal expenses: debt recovery – Legal expenses: otherOperating leases: – Operating lease rentals: minimum lease payments (1)

TOTAL MATERIALS AND CONTRACTS

Operating leasesLeases in which a significant portion of the risks and rewards of ownership arenot transferred to Council as lessee are classified as operating leases. Paymentsmade under operating leases (net of any incentives received from the lessor) arecharged to the income statement on a straight-line basis over the period of the lease.

1. Operating lease payments are attributable to:Computers

2. Auditor remunerationDuring the year the following fees were paid or payable for services provided by theauditor of Council, related practices and non-related audit firms

Auditors of the Council – NSW Auditor-General:

(i) Audit and other assurance servicesAudit and review of financial statementsRemuneration for audit and other assurance servicesTotal Auditor-General remuneration

Non NSW Auditor-General audit firms:

(i) Audit and other assurance servicesOther audit and assurance services - Audit CommitteeRemuneration for audit and other assurance servicesTotal remuneration of non NSW Auditor-General audit firms

Total Auditor remuneration

65

18

65

6 6

47 47

53

53

5,498

18

65

6

47

142

69 14,522 15,373

43

68

5,668

53

9,466

2018

53

24

63

153

79

50 50 50

2019

8,398

69

68

69

18

X8A13T

page 25





$ ’000

(d) Depreciation, amortisation and impairment of intangible assets and IPP&E

Depreciation and amortisationPlant and equipmentFurniture and fittingsLand improvements (depreciable)Infrastructure: – Buildings – non-specialised – Buildings – specialised – Other structures – Roads – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage network – Swimming poolsOther assets: – OtherReinstatement, rehabilitation and restoration assets: – Asset reinstatement costsTotal depreciation and amortisation costs

TOTAL DEPRECIATION, AMORTISATION AND IMPAIRMENT /REVALUATION DECREMENT FOR INTANGIBLES AND IPP&E

Accounting policy for depreciation, amortisation and impairment expenses of intangibles and IPP&E

Depreciation and amortisationDepreciation and amortisation are calculated using the straight line method to allocate their cost, net of theirresidual values, over their estimated useful lives. Useful lives are included in Note 9 for IPPE assets.Depreciation is capitalised where in-house assets have contributed to new assets.

Impairment of non-financial assetsCouncil assets held at fair value that are not held primarily for their ability to generate net cash flow, and thatare deemed to be specialised, are no longer required to be tested for impairment under AASB 136. This isbecause these assets are assessed on an annual basis to ensure that the carrying amount is not materiallydifferent from fair value and therefore an impairment loss would be captured during this assessment.Other assets that do not meet the criteria above are tested for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised forthe amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount isthe 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 areseparately identifiable cash inflows that are largely independent of the cash inflows from other assets or groupsof assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possiblereversal of the impairment at each reporting date.Impairment losses for revalued assets are firstly offset against the amount in the revaluation surplus for theclass of asset, with only the excess to be recognised in the Income Statement.

205 61

731

35

–

20182019

282

385

15

853

53

56

8,591 9,044

227

130 1,082

9,044

848

8,591

32

542 4,214

Notes

544

294

136

40

4,496

9 & 11

130

35

81

757

1,112

228

31

X8A14T

X8A15T

page 26





$ ’000

(e) Other expenses

AdvertisingBank 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 – NSW Shires Assn – 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) – Donations, contributions and assistance (Regional Library)Electricity and heatingInsuranceMotor Vehicle RegistrationPostagePrinting and stationerySoftware LicensesStreet lightingSundry ExpensesSubscriptions and publicationsTelephone and communicationsValuation feesWrite-down of inventories held for sale or distributionVanfestYouth ServicesOtherTOTAL OTHER EXPENSES

Accounting policy for other expensesOther expenses are recorded on an accruals basis as the Council receives the goods or services.

18 –

34

2019

13

64

2018

102

25

268 18

108

274

35 269

30

103 52

42

31

21

–

–

111

1,690

107 – 3

839 729 260

24

295

4

70 50 75

– 19

62 62

567 –

– 218

112 58

3,772

–

40 –

45

Notes

648

250

103

47 4,536

37

276 –

X8A16T

page 27




Note 5. Gain or loss from the disposal, replacement and de-recognition of assets

$ ’000

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

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

InvestmentsProceeds from disposal/redemptions/maturities – investmentsLess: carrying amount of investments sold/redeemed/maturedNet gain/(loss) on disposal

NET GAIN/(LOSS) ON DISPOSAL OF ASSETS

Accounting policy for disposal of assetsGains and losses on disposals are determined by comparing proceeds with carrying amount. These areincluded in the Income Statement.

The gain or loss on sale of an asset is determined when control of the asset has irrevocably passed to thebuyer and the asset is de-recognised.

Note 6(a). Cash and cash equivalent assets

$ ’000

Cash and cash equivalentsCash on hand and at bankCash-equivalent assets – Short-term depositsTotal cash and cash equivalents

Accounting policy for cash and cash equivalentsFor Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand; depositsheld at call with financial institutions; other short-term, highly liquid investments with original maturities of threemonths or less that are readily convertible to known amounts of cash and which are subject to an insignificantrisk of changes in value; and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilitieson the Statement of Financial Position.

517

163

2018

50

Notes 2019

163

2,091

142

2019

3,145 2,091

2018

16,608 19,753

–

– (9,195)

(801)

13,993

–

9,195

(279)

9

8

–

–

6b

(13,993)

92 (354)

–

851

371

X8A0T

X8A10T

page 28




Note 6(b). Investments

$ ’000

Investments‘Loans and receivables’Total investments

TOTAL CASH ASSETS, CASHEQUIVALENTS AND INVESTMENTS

Loans and receivablesLong term depositsTotal

No strategic investments were disposed of during 2019, and there were no transfers of any cumulativegain or loss within equity relating to these investments.

Accounting policy for investments

Accounting policy under AASB 9 – applicable from 1 July 2018Financial instruments are recognised initially on the date that the Council becomes party to the contractualprovisions of the instrument. On initial recognition, all financial instruments are measured at fair value plustransaction costs (except for instruments measured at fair value through profit or loss where transaction costsare expensed as incurred).

Financial AssetsAll recognised financial assets are subsequently measured in their entirety at either amortised cost or fairvalue, depending on the classification of the financial assets.

ClassificationOn initial recognition, Council classifies its financial assets into the following categories – those measured at:– amortised cost– fair value through profit and loss– fair value through other comprehensive income – equity instrument

Financial assets are not reclassified subsequent to their initial recognition.

Amortised costAssets measured at amortised cost are financial assets where:– the business model is to hold assets to collect contractual cash flows, and– the contractual terms give rise on specified dates to cash flows that are solely payments of principal andinterest on the principal amount outstanding.

Council’s financial assets measured at amortised cost comprise trade and other receivables and cash andcash equivalents in the Statement of Financial Position.

Subsequent to initial recognition, these assets are carried at amortised cost using the effective interest ratemethod less provision for impairment.

Interest income, impairment and gains or loss on de-recognition are recognised in profit or loss.

41,550

41,550 41,550

Non-current

25,445

2019 2018

41,550 –

–

45,198

– 25,445

43,641

Current

– 25,445

Non-current Current 2018

– 25,445 –

– –

– –

2019

X8A1T

page 29




Note 6(b). Investments (continued)

Accounting policy for investments (continued)

Accounting policy under AASB 9 – applicable from 1 July 2018Fair value through other comprehensive income – equity instrumentsCouncil has a number of strategic investments in entities over which they do not have significant influencenor control. Council has made an irrevocable election to classify these equity investments as fair value throughother comprehensive income as they are not held for trading purposes.These investments are carried at fair value with changes in fair value recognised in other comprehensiveincome (financial asset reserve). On disposal any balance in the financial asset reserve is transferred toaccumulated surplus and is not reclassified to profit or loss.Other net gains and losses excluding dividends are recognised in Other Comprehensive Income Statement.Financial assets through profit or lossAll financial assets not classified as measured at amortised cost or fair value through other comprehensiveincome as described above are measured at fair value through profit or loss.Net gains or losses, including any interest or dividend income, are recognised in profit or loss.Council’s financial assets measured at fair value through profit or loss comprise investments in FRNs andNCDs in the Statement of Financial Position.

Accounting policy under AASB 139 – applicable for 2018 comparatives onlyClassificationCouncil classifies its financial assets in the following categories: financial assets at fair value through profit orloss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Theclassification depends on the purpose for which the investments were acquired. Management determines theclassification 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.Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for those with maturities greaterthan 12 months after the reporting date which are classified as non-current assets. Loans and receivablesare 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 theeffective interest method, less provision for impairment. Receivables are generally due for settlementwithin 30 days.Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Recognition and de-recognition Regular purchases and sales of financial assets are recognised on trade date: the date on which Councilcommits to purchase or sell the asset. Investments are initially recognised at fair value plus transactioncosts for all financial assets not carried at fair value through profit or loss. Financial assets carried at fairvalue through profit or loss are initially recognised at fair value and transaction costs are expensed in theIncome Statement. Investments are derecognised when the rights to receive cash flows from the financialassets have expired or have been transferred and Council has transferred substantially all the risks andrewards of ownership.When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognisedin equity are included in the Income Statement as gains and losses from investment securities.

Impairment of financial assetsCouncil assesses at the end of each reporting period whether there is objective evidence that a financial assetor group of financial assets is impaired. A financial asset or a group of financial assets is impaired andimpairment losses are incurred only if there is objective evidence of impairment as a result of one or moreevents that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) hasan impact on the estimated future cash flows of the financial asset or group of financial assets that can bereliably estimated.

2019 2019 2018 2018

page 30




Note 6(c). 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 – otherDeveloper contributions – generalRMS contributionsSpecific purpose unexpended grantsWater suppliesSewerage servicesDomestic waste managementCatholic Health (JRV)OtherExternal restrictions – otherTotal external restrictions

14,392

2018

24,913

43,641

2,978

15

4,336

13,162

43,641

–

– –

23,192

Current

1,250

12,084

15

2019 2019

24,913

23,192

Non-current

2,371

45,198

Notes

347

6,724

–

45,198

–

1,250

– –

3,287 6,120

24,913 23,192

–

2018

251 179

2019

481

–

–

569

Current

2018

–

19,028

Non-current

X8A20T

page 31




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

$ ’000

Internal restrictionsPlant and vehicle replacementInfrastructure replacementEmployees leave entitlementCarry over worksDeposits, retentions and bondsAerodromeCorporate developmentDesilt lake forbesDog pound buildingsDrainage corridor land purchasesEconomic developmentForbes LEPGolf club plant fundGravel pit rehabilitationIndustrial incentivesInformation technologyLand developmentLibrary capital improvementsMedical sinking fundNetball courtsNoxious weedsRisk management and OH and SRTA worksSaleyardsSeptic Safe ProgramStormwater managementStreet lighting improvementsTown hall capital improvementsUnion street polluted siteVisitor information centreWalk in – walk out medical centreWaste disposal depotWH&S ActivitiesWorks depot improvementsOtherTotal internal restrictions

TOTAL RESTRICTIONS

Notes

327

301

129

300

2018

1,661

279 366

65 65 111

135

70 18

95

1,791

49

385

172

91

217

1,245 1,925

762 901 453

91

1,243

140 120

19,028

2,456

29

358

67

385

–

508

618

–

–

239

172

6 19

98 128 96

961

69 26

327

–

66

961

16

–

650

2,056

1,838

2019

10

1,972

790

300

516

39,305

256

43

700

90

42,220

2,558

400

129

14,392

page 32




Note 7. Receivables

$ ’000

PurposeRates and annual chargesInterest and extra chargesUser charges and feesPrivate worksAccrued revenues – Interest on investments – Other income accrualsDeferred debtorsGovernment grants and subsidiesLoans to non-profit organisationsNet GST receivableTotal

Less: provision for impairmentOther debtorsTotal provision for impairment – receivables

TOTAL NET RECEIVABLES

Externally restricted receivablesWater supply – Rates and availability charges – OtherSewerage services – Rates and availability charges – OtherTotal external restrictionsUnrestricted receivablesTOTAL NET RECEIVABLES

Movement in provision for impairment of receivablesBalance at the beginning of the year (calculated in accordance with AASB 139)– previous impairment losses reversedBalance at the end of the year

Accounting policy for receivables

Recognition and measurementReceivables are included in current assets, except for those with maturities greater than 12 months after thereporting date which are classified as non-current assets.Receivables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method, less provision for impairment. Receivables are generally due for settlement within30 days.

Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

–

Current 2018

283 341

Notes

–

383

–

–

–

564

1,264

–

–

266

(5)

4,204

457

3,983

(263)

157

–

– 89

204

–

64 190

3,558

2019

1,264 3,983

336

1,545

–

126 181 144

– 4,209

1,000

–

–

3,988

–

465

652

792

Current

–

Non-current

–

–

(263)

–

102

–

–

(298)

545

–

527 –

344

1,000

–

– 1,004

– 301 –

1,247

(298)

1,075

1,527

–

Non-current

819

(5)

1,247

268

425 3,746

4,204

–

1,247 – 458

1,264

(5)

77

(33)

2018

303 (35) 303

2019

(5)

X8A2T

page 33




Note 7. Receivables (continued)

Impairment

Accounting policy under AASB 9 applicable from 1 July 2018Impairment of financial assets measured at amortised cost is recognised on an expected credit loss (ECL)basis.

When determining whether the credit risk of a financial asset has increased significantly since initialrecognition, and when estimating expected credit loss (ECL), the Council considers reasonable and supportableinformation that is relevant and available without undue cost or effort. This includes both quantitative andqualitative information and analysis based on Council’s historical experience and informed credit assessment,and including forward-looking information.

When considering the expected credit loss (ECL) for rates debtors, Council takes into account that unpaidrates represent a charge against the rateable property that will be recovered when the property is next sold.

For non-rates debtors, Council uses the presumption that an asset which is more than 30 days past due hasseen a significant increase in credit risk.

The Council uses the presentation that a financial asset is in default when:– the other party is unlikely to pay its credit obligations to the Council in full, without recourse by the Councilto actions such as realising security (if any is held) or– the financial assets (for non-rates debtors) are more than 90 days past due.

Credit losses are measured as the present value of the difference between the cash flows due to the entityin accordance with the contract, and the cash flows expected to be received. This is applied using a probabilityweighted approach.

On initial recognition of the asset, an estimate of the expected credit losses for the next 12 months isrecognised. Where the asset has experienced significant increase in credit risk then the lifetime losses areestimated and recognised.

There has been no change in the estimation techniques or significant assumptions made during the currentreporting period.

The Council writes off a trade receivable when there is information indicating that the debtor is in severefinancial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed underliquidation or has entered into bankruptcy proceedings, or when the receivables are over xx years past due,whichever occurs first.None of the receivables that have been written off are subject to enforcement activity.

Where the Council renegotiates the terms of receivables due from certain customers, the new expected cashflows are discounted at the original effective interest rate and any resulting difference to the carrying value isrecognised in profit or loss.

2019 2018

page 34




Note 7. Receivables (continued)

Accounting policy under AASB 139 – applicable for 2018 comparatives onlyFor loans and receivables the amount of the loss is measured as the difference between the asset’s carryingamount and the present value of estimated future cash flows (excluding future credit losses that have not beenincurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset isreduced and the amount of the loss is recognised in profit or loss.

Collectability of receivables is reviewed on an on-going basis. Debts that are known to be uncollectable arewritten off by reducing the carrying amount directly. An allowance account (provision for impairment ofreceivables) is used when there is objective evidence that Council will not be able to collect all amounts dueaccording to the original terms of the receivables.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financialreorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicatorsthat the receivable is impaired. When a receivable for which an impairment allowance had been recognisedbecomes uncollectable in a subsequent period it is written off against the allowance account. Subsequentrecoveries of amounts previously written off are credited against other expenses in the Income statement.

Rates and annual charges outstanding are secured against the property.

Note 8. Inventories and other assets

$ ’000

(a) Inventories

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

TOTAL INVENTORIES

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

Notes

2,079

231

–

530

– 2,156

Current 2019

–

2,156

Non-current 2018

1,395 1,395

468 2,079

–

– – –

216

–

Non-current

–

2019 2018

–

Current

X8A3T

page 35




Note 8. Inventories and other assets (continued)

$ ’000

(i) Other disclosures

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

Represented by:Acquisition costsDevelopment costsTotal costsTotal real estate for resale

Movements:Real estate assets at beginning of the year – Purchases and other costsTotal real estate for resale

(b) Current assets not anticipated to be settled within the next 12 monthsThe following inventories and other assets, even though classifiedas current are not expected to be recovered in the next 12 months;

Real estate for resale

Accounting policy

Raw materials and stores, work in progress and finished goodsRaw materials and stores, work in progress and finished goods are stated at the lower of cost and netrealisable value. Costs are assigned to individual items of inventory on the basis of weighted average costs.Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value isthe estimated selling price in the ordinary course of business less the estimated costs of completion and theestimated costs necessary to make the sale.

Land held for resale/capitalisation of borrowing costsLand held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specificidentification 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 theexpenditure on the acquisition and development of the land had not been made. Borrowing costs incurred whileactive development is interrupted for extended periods are recognised as expenses.

931

Current Non-current Current

– 42

464

1,177

1,395

1,395

1,395

–

55 –

1,395

– –

1,177

2018

– 1,395

1,395

– –

464

Non-current

1,340

2019

1,395

– –

1,395 –

– –

–

2018

1,353

2019

–

42

1,395

Notes

1,395

1,395

–

–

–

–

– –

1,353

931

page 36




Note 9(a). Infrastructure, property, plant and equipment

Asset class

$ ’000

Plant and equipment 8,646 4,744 3,902 1,456 – (279) (731) – 9,414 5,067 4,347 Office equipment 37 37 – – – – – – 38 38 – Furniture and fittings 958 595 363 182 – – (31) – 1,139 626 513 Land: – Operational land 4,664 – 4,664 – 180 (630) – – 4,213 – 4,213 – Community land 3,042 – 3,042 – 176 – – – 3,218 1 3,217 – Land under roads (post 30/6/08) 28 – 28 – – – – – 28 – 28 Land improvements – depreciable 1,761 239 1,522 15 18 – (35) – 1,796 274 1,522 Infrastructure: – Buildings – non-specialised 32,039 15,702 16,337 948 142 (171) (294) – 31,396 14,435 16,961 – Buildings – specialised 20,315 3,921 16,394 – – – (228) – 20,314 4,148 16,166 – Other structures 31,140 9,261 21,879 646 3,956 – (544) – 35,742 9,805 25,937 – Roads 323,784 208,240 115,544 4,441 – – (4,496) – 328,225 212,735 115,490 – Bridges 23,360 10,638 12,722 – – – (282) – 23,360 10,920 12,440 – Footpaths 4,076 1,910 2,166 179 – – (81) – 4,256 1,992 2,264 – Stormwater drainage 13,564 3,914 9,650 1,144 – – (130) – 14,707 4,044 10,663 – Water supply network 72,411 36,979 35,432 708 44 – (1,112) 561 74,334 38,700 35,634 – Sewerage network 45,120 23,088 22,032 1,581 261 – (848) 368 47,713 24,318 23,395 – Swimming pools 2,839 961 1,878 – – – (40) – 2,840 1,002 1,838 Other assets: – Other 2,609 1,060 1,549 94 501 – (136) – 3,204 1,197 2,007 Reinstatement, rehabilitation and restoration assets (refer Note 11): – Tip assets 532 275 257 – – – – – 532 275 257 TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.

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

11,394 (1,080) 5,278 (8,988) 590,925 321,564 269,361 276,892 929 606,469 329,577

as at 30/6/2019

Net carrying amount

Asset movements during the reporting period

Accumulated depreciation

as at 30/6/2018

Additionsnew assets

Additionsrenewals

Carrying value

of disposals

Revaluation incrementsto equity (ARR)

Net carrying amount


Gross carrying amount


Depreciation expense

X9A0T

X9A1T

page 37




Note 9(a). Infrastructure, property, plant and equipment

Asset class

$ ’000

Plant and equipment 8,095 4,510 3,585 1,428 – (354) (757) – – 8,646 4,744 3,902 Office equipment 37 37 – – – – – – – 37 37 – Furniture and fittings 958 580 378 – – – (15) – – 958 595 363 Land: – Operational land 2,422 – 2,422 – 289 – – – 1,953 4,664 – 4,664 – Community land 3,042 – 3,042 – – – – – – 3,042 – 3,042 – Land under roads (post 30/6/08) 28 – 28 – – – – – – 28 – 28 Land improvements – depreciable 1,740 204 1,536 21 – – (35) – – 1,761 239 1,522 Infrastructure: – Buildings – non-specialised 30,505 15,845 14,660 228 546 – (227) – 1,130 32,039 15,702 16,337 – Buildings – specialised 21,450 3,994 17,456 – – – (385) (677) – 20,315 3,921 16,394 – Other structures 31,032 8,876 22,156 238 27 – (542) – – 31,140 9,261 21,879 – Roads 316,231 204,025 112,206 7,552 – – (4,214) – – 323,784 208,240 115,544 – Bridges 23,360 10,433 12,927 – – – (205) – – 23,360 10,638 12,722 – Footpaths 3,891 1,850 2,041 186 – – (61) – – 4,076 1,910 2,166 – Stormwater drainage 13,539 3,783 9,756 24 – – (130) – – 13,564 3,914 9,650 – Water supply network 70,083 35,137 34,946 516 323 – (1,082) – 729 72,411 36,979 35,432 – Sewerage network 44,036 21,760 22,276 91 65 – (853) – 453 45,120 23,088 22,032 – Swimming pools 2,683 773 1,910 – – – (32) – 2,839 961 1,878 Other assets: – Other 2,334 1,007 1,327 264 11 – (53) – – 2,609 1,060 1,549 Reinstatement, rehabilitation and restoration assets (refer Note 11): – Tip assets 532 275 257 – – – – – – 532 275 257 TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.

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

269,361 (677) 4,265 590,925 321,564 (8,591)

Net carrying amount

575,998 313,089 262,909 10,548 1,261 (354)

Revaluation increments

to equity (ARR)



Net carrying amount



Revaluation decrements

to equity (ARR)

Depreciation expense

as at 30/6/2017Asset movements during the period 1 July 2017 to 30 June 2018

as at 30/6/2018

Additionsrenewals

Additionsnew assets

Carrying value

of disposals

page 38




Note 9(a). Infrastructure, property, plant and equipment (continued)

Accounting policy for infrastructure, property, plant and equipment

Infrastructure, property, plant and equipment are held at fair value. Independent comprehensive valuations areperformed at least every five years, however the carrying amount of assets is assessed by Council at eachreporting date to confirm that it is not materially different from current fair value.

Water and sewerage network assets are indexed at each reporting period in accordance with the RatesReference Manual issued by Department of Industry (DoI) – Water.

Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve. To theextent that the increase reverses a decrease previously recognising profit or loss relating to that asset class, theincrease is first recognised as profit or loss. Decreases that reverse previous increases of assets in the sameclass are first charged against revaluation reserves directly in equity to the extent of the remaining reserveattributable 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 costof the item can be measured reliably. All other repairs and maintenance are charged to the Income Statementduring the financial period in which they are incurred.

When infrastructure, property, plant and equipment are acquired by Council for nil or nominal consideration,the assets are initially recognised at their fair value at acquisition date.

Land is not depreciated. The property, plant and equipment acquired under finance leases is depreciated overthe asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonablecertainty that the Council will obtain ownership at the end of the lease term. Depreciation on other assets iscalculated using the straight line method to allocate their cost, net of their residual values, over theirestimated useful lives as follows:

Plant and equipment Years Other equipment YearsOffice equipment 5 to 10 Playground equipment 5 to 15 Office furniture 10 to 20 Benches, seats etc. 10 to 20 Computer equipment 4Vehicles 5 to 8 BuildingsHeavy plant/road making equipment 5 to 8 Buildings: masonry 50 to 100 Other plant and equipment 5 to 15 Buildings: other 20 to 40

Water and sewer assets Stormwater assetsDams and reservoirs 80 to 100 Drains 80 to 100 Bores 20 to 40 Culverts 50 to 80 Reticulation pipes: PVC 70 to 80 Flood control structures 80 to 100 Reticulation pipes: other 25 to 75 Pumps and telemetry 15 to 20

Transportation assets Other infrastructure assetsSealed roads: surface 20 Swimming pools 50Sealed roads: structure 50 Unsealed roads 20Unsealed roads 20 Other open space/recreational assets 20Bridge: concrete 100 Other infrastructure 20Bridge: other 50Road pavements 60Kerb, gutter and footpaths 40

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

page 39




Note 9(a). Infrastructure, property, plant and equipment (continued)

Accounting policy for infrastructure, property, plant and equipment (continued)

Land under roadsLand under roads is land under roadways and road reserves including land under footpaths, nature strips andmedian strips.

Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance withAASB 1051 Land Under Roads.

Crown reservesCrown Reserves under Council’s care and control are recognised as assets of the Council. While ownership ofthe reserves remains with the Crown, Council retains operational control of the reserves and is responsible fortheir 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 Counciland revenues relating to the reserves are recognised within Council’s Income Statement.

Rural Fire Service assetsUnder section 119 of the Rural Fire Services Act 1997 (NSW) , “all fire fighting equipment purchased orconstructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or onbehalf of which the fire fighting equipment has been purchased or constructed”.

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

118,190 122,705 63,398 TOTAL RESTRICTED IPP&E

72,411 36,979

2018Gross

carrying amount

Accumulated depn. and

impairment

Net carrying amount

377

60,444

23,088 22,032

380 37,356

45,120

73,070

23,088 22,032 45,120

47,713 24,318

659

$ ’000

Total sewerage services

Class of asset

Plant and equipment

Total water supply Buildings

2019

74,333 Water supply

Sewerage services

74,992 39,080

23,395 Plant and equipment

35,432 279 282

35,714

35,633 659

35,912

38,700

23,395 47,713 24,318


Accumulated depn. and

impairment

Net carrying amount

59,307 57,746

X11A10T

page 40




Note 10. Payables and borrowings

$ ’000

PayablesGoods and services – operating expenditureAccrued expenses: – Other expenditure accrualsSecurity bonds, deposits and retentionsTotal payables

Income received in advanceRates and chargesUser chargesPrivate worksTotal income received in advance

BorrowingsLoans – secured 1

Finance lease liabilitiesTotal borrowings

TOTAL PAYABLES AND BORROWINGS

(a) Payables and borrowings relating to restricted assets

Externally restricted assetsWaterSewer

TOTAL PAYABLES AND BORROWINGS

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 17.

544

1,555

374

12,650

2,558 –

2019

57

–

Payables and borrowings relating to externally restricted assets

Total payables and borrowings relating to restricted assets

143

4,621

103

1,419

333

–

11,963

–

875 11,089 13,194

–

Non-current

23,739

82

Current

–

Current

699

829

6,401 4,267

829

829

23,739

438

– –

1,730

–

–

23,040

699

213

845

699

124

–

4,391

124

–

–

60

Non-current

– 54 –

2018

Current

–

–

25,157

4,391

6,614

2,656

Non-current

452 –

2018

998

Current

338

Non-current

–

6,614 23,739

574

25,157

124

25,157

213

131

24,328

1,283

2019

Total payables and borrowings relating to unrestricted assets

X11A1T

X11A2T

page 41




Note 10. Payables and borrowings (continued)

$ ’000

(b) Current payables and borrowings not anticipated to be settled within the next twelve months

The following payables and borrowings, even though classified as current, are notexpected to be settled in the next 12 months.

Payables – security bonds, deposits and retentions

(c) Changes in liabilities arising from financing activities

(d) Financing arrangements

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

Credit cards/purchase cardsTotal financing arrangements

Drawn facilities as at balance date:– Credit cards/purchase cardsTotal drawn financing arrangements

Undrawn facilities as at balance date:– Credit cards/purchase cardsTotal undrawn financing arrangements

1. The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice.

13,632 (438)

2019 2018

Cash flowsOpeningbalance

as at 1/7/18

–

2018

– Loans – secured 12,808 Finance lease liabilities

Loans – secured

13,194

2019

11,964

2018

1,265 1,265

11

Othernon-cash

movements

13,632

36 65

Closingbalance

as at 30/6/19

Non-cash changes

–

– –

11

25,158

2019

Fair value changes

1,270

AcquisitionOther

non-cash movements

1,270

Cash flows

12,808

– –

54

–

Non-cash changes 2018

11

36

–

65

Closingbalance

as at 30/6/18

25 54

(1,282)

26,440

Acquisition Fair value changes

Finance lease liabilities 13,973 (341) –

Class of borrowings

(844)

TOTAL 26,440

TOTAL 27,583

13,610

–

2017

Class of borrowings

Openingbalance

as at 1/7/17

(802) – – –

– – (1,143) – –

11

25

page 42




Note 10. Payables and borrowings (continued)

Breaches and defaultsDuring the current and prior year, there were no defaults or breaches on any of the loans

Security over loansLeased liabilities are secured by the underlying leased assets.

Accounting policy for payables and borrowings

Council measures all financial liabilities initially at fair value less transaction costs, subsequently financialliabilities are measured at amortised cost using the effective interest rate method.

The financial liabilities of the Council comprise trade payables, bank and other loans and finance lease liabilities.

PayablesThese amounts represent liabilities for goods and services provided to the Council prior to the end of financialyear that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any difference between the proceeds (net of transaction costs) and theredemption amount is recognised in the Income Statement over the period of the borrowings using the effectiveinterest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of theloan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee isdeferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of thefacility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over theperiod of the facility to which it relates.

Borrowings are removed from the Statement of Financial Position when the obligation specified in the contractis discharged, cancelled or expired. The difference between the carrying amount of a financial liability that hasbeen extinguished or transferred to another party and the consideration paid, including any non-cash assetstransferred 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 ofthe liability for at least 12 months after the reporting date.

Finance leasesLeases of property, plant and equipment where Council, as lessee, has substantially all the risks and rewardsof ownership, are classified as finance leases. Finance leases are capitalised at the lease’s inception at thefair value of the leased property or, if lower, the present value of the minimum lease payments. Thecorresponding rental obligations, net of finance charges, are included in other short-term and long-termpayables. Each lease payment is allocated between the liability and finance cost. The finance cost is chargedto the Income Statement over the lease period so as to produce a constant periodic rate of interest on theremaining balance of the liability for each period.

page 43




Note 11. Provisions

$ ’000

ProvisionsEmployee benefits:Annual leaveLong service leave

Asset remediation/restoration:Asset remediation/restoration (future works)

Sub-total – asset remediation/restoration

TOTAL PROVISIONS

(a) Provisions relating to restricted assets

Externally restricted assetsWater

TOTAL PROVISIONS

$ ’000

(b) Current provisions not anticipated to be settled within the next twelve months

The following provisions, even though classified as current, are notexpected to be settled in the next 12 months.

Provisions – employees benefits

22

2018

2019

843

–

Total provisions relating to unrestricted assets

Non-current

–

2019

2019

–

897

984

22

928

2,680

Non-current

2,019

–

2,692

– Total provisions relating to restricted assets

2018

1,892

906

22

928 906

–

906

2018Current

Current Non-current

2,692

962 –

1,849 22

– –

–

–

Current Non-current

1,805

22 Provisions relating to externally restricted assets

22 22

2,019

22

Current

962

984

–

2,702 2,692

1,892

984

2,702

X11A3T

page 44




Note 11. Provisions (continued)

$ ’000

(c) Description of and movements in provisions

At beginning of yearChanges to provision:Unwinding of discount

At beginning of yearChanges to provision:Unwinding of discount

Nature and purpose of non-employee benefit provisions

Asset remediationThe asset remediation provision represents the present value estimate of future costs Council will incurto restore, rehabilitate and reinstate the tip and quarry as a result of past operations.

906

56

– –

–

Self-insurance

– –

Other (enter details here...)

Self-insurance

–


–

–

56

– 906

Asset remediation


Total

906


Other provisions

962

Other provisions

Asset remediation

2019 Other (enter details here...)


–

Total

944 944

Total other provisions at end of year – 962

2018

–

906

Total other provisions at end of year

(38) (38)

page 45





Accounting policy for provisionsProvisions 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 beenreliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihoodof 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 tosettle the present obligation at the reporting date. The discount rate used to determine the present valuereflects current market assessments of the time value of money and the risks specific to the liability. Theincrease in the provision due to the passage of time is recognised as interest expense.

Employee benefits

Short-term obligationsLiabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leaveexpected to be wholly settled within 12 months after the end of the period in which the employees render therelated service are recognised in respect of employees' services up to the end of the reporting period and aremeasured at the amounts expected to be paid when the liabilities are settled. The liability for annual leaveand accumulating sick leave is recognised in the provision for employee benefits. All other short-termemployee benefit obligations are presented as payables.

Other long-term employee benefit obligationsThe liability for long service leave and annual leave that is not expected to be wholly settled within 12 monthsafter the end of the period in which the employees render the related service is recognised in the provision foremployee benefits and measured as the present value of expected future payments to be made in respect ofservices 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, andperiods of service. Expected future payments are discounted using market yields at the end of the reportingperiod on national government bonds with terms to maturity and currency that match, as closely as possible,the estimated future cash outflows.

On-costsThe employee benefit provisions include the aggregate on-cost liabilities that will arise when payment ofcurrent employee benefits is made in future periods.

These amounts include superannuation, payroll tax and workers compensation expenses which will be payableupon the future payment of certain leave liabilities which employees are entitled to at the reporting period.

The obligations are presented as current liabilities in the Statement of Financial Position if the Council doesnot have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless ofwhen the actual settlement is expected to occur.

page 46





Provisions for close-down and restoration, and environmental clean-up costs – tips and quarries

RestorationClose down and restoration costs include the dismantling and demolition of infrastructure and the removal ofresidual materials and remediation of disturbed areas. Estimated close down and restoration costs are providedfor in the accounting period when the obligation arising from the related disturbance occurs, whether this occursduring the development or during the operation phase, based on the net present value of estimated future costs.

Provisions for close down and restoration costs do not include any additional obligations which are expected toarise from future disturbance. The costs are estimated on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments, eg updated cost estimatesand revisions to the estimated lives of operations, and are subject to formal review at regular intervals.

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 environmentalclean-up provisions are presented as an operating cost, except for the unwinding of the discount which isshown as a borrowing cost.

Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques.

As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary inresponse to many factors including changes to the relevant legal requirements, the emergence of newrestoration techniques or experience at other locations. The expected timing of expenditure can also change, forexample in response to changes in quarry reserves or production rates. As a result there could be significantadjustments to the provision for close down and restoration and environmental clean up, which would affectfuture financial results.

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 infrastructure, property, plant and equipment. These costs are then depreciatedover the lives of the assets to which they relate.

Close-down and restoration costs are a normal consequence of tip and quarry operations, and the majority ofclose-down and restoration expenditure is incurred at the end of the life of the operations. Although the ultimatecost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineeringstudies using current restoration standards and techniques.

page 47




Note 12. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors

Nature and purpose of reserves

Infrastructure, property, plant and equipment revaluation reserveThe infrastructure, property, plant and equipment revaluation reserve is used to record increments anddecrements in the revaluation of non-current assets.

Changes in accounting policy due to adoption of new Accounting StandardsCouncil has adopted AASB 9 Financial Instruments for the first time in the current year with a date of initial adoptio of 1 July 2017. The implications of the change have no material impact on Council statements.

Note 13. 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 assetsUnwinding of discount rates on reinstatement provisions

+/- Movement in operating assets and liabilities and other cash items:Decrease/(increase) in receivablesIncrease/(decrease) in provision for impairment of receivablesDecrease/(increase) in inventoriesIncrease/(decrease) in payablesIncrease/(decrease) in other accrued expenses payableIncrease/(decrease) in other liabilitiesIncrease/(decrease) in provision for employee benefitsIncrease/(decrease) in other provisionsNet cash provided from/(used in)operating activities from the Statement of Cash Flows

(211) 1,560 (141)

(142) 9,044

(1,402)

56

– 10

(163)

(77)

–

4,047

(33)

–

1,283 (92)

185

297

16,639

2018

2,091

2,091

– (29)

19,753

(35)

6a

Notes

230

8,591

(38)

15,175

8,874

2019

19,753 13

X11A4T

X11A5T

X11A6T

X11A9T

X11A11T

page 48




Note 14. Interests in other entities

Subsidiaries, joint arrangements and associates not recognised

The following subsidiaries, joint arrangements and associates have not been recognised in this financial report.

Name of entity/operation Principal activity/type of entity

1. CENTROC Regional organisation of Councils

Reasons for non-recognitionCouncil does not derive any dividends or direct cash income from being a member of this organisation.

Net assets2019

Net profit2019

X11A0T

X11A8T

page 49




Note 15. Commitments (continued)

$ ’000

(a) Finance lease commitments

(i) Commitments under finance leases at the reporting date are payable as follows:

Within the next yearLater than one year and not later than 5 yearsLater than 5 yearsTotal minimum lease paymentsAmount recognised as a liability

(ii) Finance lease liability recognised represent;

Current liabilitiesNon-current liabilitiesTotal finance lease liabilities disclosed

(iii) General details

Council leases the following property, plant and equipment underfinance leases:

purchaseOther equipment/assetsTotal carrying value at year end

Additional detailsFinancing of Stage 2 of central livestock exchange - sheep selling complex

(b) Operating lease commitments (non-cancellable)

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

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

b. Non-cancellable operating leases include the following assets:Computers, IT Equipment and Photocopiers.

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

13,632

8,205

2018

15 Y(years)

Contingent

13,194

438 6,362

13,631

91

13,194

203

95

6,288

Termrent clauses

544

4,988

2019

Option to

108 171

13,194

544

N

13,194

13,194

12,650 438

13,631

13,194 13,632 13,632

262

X11A12T

page 50




Note 16. Contingencies and other liabilities/assets not recognised

The following assets and liabilities do not qualify for recognition in the Statement of Financial Position, but their knowledge and disclosure is considered relevant to the users of Council’s financial report.

LIABILITIES NOT RECOGNISED:

1. Guarantees

(i) Defined benefit plans

Council is party to an Industry Defined Benefit Plan under the Local Government Superannuation Scheme,named The Local Government Superannuation Scheme – Pool B (the Scheme) which is a defined benefitplan that has been deemed to be a ‘multi-employer fund’ for purposes of AASB119 Employee Benefits forthe following reasons:

– Assets are not segregated within the sub-group according to the employees of each sponsoring employer.

– The contribution rates have been the same for all sponsoring employers. That is, contribution rates have not varied for each sponsoring employer according to the experience relating to the employees of that sponsoring employer.

– Benefits for employees of all sponsoring employers are determined according to the same formulae and without regard to the sponsoring employer.

– The same actuarial assumptions are currently used in respect of the employees of each sponsoring employer.

Given the factors above, each sponsoring employer is exposed to the actuarial risks associated with currentand former employees of other sponsoring employers, and hence shares in the associated gains and losses(to the extent that they are not borne by members).

Description of the funding arrangements Pooled employers are required to pay standard employer contributions and additional lump sum contributionsto the fund.

The standard employer contributions were determined using the new entrant rate method under which acontribution rate sufficient to fund the total benefits over the working lifetime of a typical new entrant iscalculated. The current standard employer contribution rates are:

Division B 1.9 times employee contributionsDivision C 2.5% salariesDivision D 1.64 times employee contributions

The additional lump sum contribution for each pooled employer is a share of the total additional contributionsof $40.0 million per annum from 1 July 2018 to 30 June 2021, apportioned according to each employer’s share of theaccrued liabilities as at 30 June 2018. These lump sum contributions are used to fund the deficit of assets toaccrued liabilities as at 30 June 2018.

The adequacy of contributions is assessed at each triennial actuarial investigation and monitored annuallybetween triennials.

X11A15T

page 51




Note 16. Contingencies and other liabilities/assets not recognised (continued)

LIABILITIES NOT RECOGNISED (continued):

1. Guarantees (continued)

(i) Defined benefit plans (continued)

Description of the extent to which Council can be liable to the plan for other Council’s obligations under theterms and conditions of the multi-employer plan.

As stated above, each sponsoring employer (Council) is exposed to the actuarial risks associated with currentand former employees of other sponsoring employers and hence shares in the associated gains and losses.

However, there is no relief under the fund’s trust deed for employers to walk away from their defined benefitobligations. Under limited circumstances, an employer may withdraw from the plan when there are no activemembers, on full payment of outstanding additional contributions. There is no provision for allocation of anysurplus which may be present at the date of withdrawal of the Council.

There are no specific provisions under the fund’s trust deed dealing with deficits or surplus on wind-up.

The amount of employer contributions to the defined benefit section of the Scheme and recognised as anexpense for the year ending 30 June 2019 was $123,000. The last valuation of the Scheme was performed byMr Richard Boyfield, FIAA on 31/12/2018, and covers the year ended 30 June 2019.

The amount of additional contributions included in the total employer contribution advised above is $109,000Council’s expected contribution to the plan for the next annual reporting period is $181,024

The estimated employer reserves financial position for the pooled employees at 30 June 2019 is:

Employer reserves only * $ millions Asset CoverageAssets 1,798.7Past Service Liabilities 1,784.2 100.8%Vested Benefits 1,792.0 100.4%

* excluding member accounts and reserves in both assets and liabilites.

The share of this deficit that is broadly attributed to Council is estimated to be in the order of $252,000 asat 30 June 2019.

Council’s share of that deficiency cannot be accurately calculated as the Scheme is a mutual arrangementwhere assets and liabilities are pooled together for all member councils. For this reason, no liability for thedeficiency has been recognised in Council’s accounts. Council has a possible obligation that may ariseshould the Scheme require immediate payment to correct the deficiency.

The key economic long-term assumptions used to calculated the present value of accrued benefits are:

Investment return 5.75% per annumSalary inflation * 3.5% per annumIncrease in CPI 2.5% per annum* Plus promotional increases

The contribution requirements may vary from the current rates if the overall sub-group experience is not in linewith the actuarial assumptions in determining the funding program; however, any adjustment to the fundingprogram would be the same for all sponsoring employers in the pooled employers.

page 52





LIABILITIES NOT RECOGNISED (continued):

1. Guarantees (continued)

(ii) Statewide Limited

Council is a member of Statewide Mutual, a mutual pool scheme providing liability insurance to local government.

Membership includes the potential to share in either the net assets or liabilities of the fund depending on its pastperformance. Council’s share of the net assets or liabilities reflects Council’s contributions to the pool and the resultof insurance claims within each of the fund years.

The future realisation and finalisation of claims incurred but not reported to 30/6 this year may result in futureliabilities or benefits as a result of past events that Council will be required to fund or share in respectively.

(iii) StateCover Limited

Council is a member of StateCover Mutual Limited and holds a partly paid share in the entity.

StateCover is a company providing workers compensation insurance cover to the NSW local government industryand specifically Council.

Council has a contingent liability to contribute further equity in the event of the erosion of the company’s capitalbase as a result of the company’s past performance and/or claims experience or as a result of any increasedprudential requirements from APRA.

These future equity contributions would be required to maintain the company’s minimum level of net assets inaccordance with its licence requirements.

(iv) Other guarantees

Council has provided no other guarantees other than those listed above.

2. Other liabilities

(i) Third party claims

The Council is involved from time to time in various claims incidental to the ordinary course of business includingclaims for damages relating to its services.

Council believes that it is appropriately covered for all claims through its insurance coverage and does not expectany material liabilities to eventuate.

(ii) Potential land acquisitions due to planning restrictions imposed by Council Council has classified a number of privately owned land parcels as local open space or bushland.

As a result, where notified in writing by the various owners, Council will be required to purchase these land parcels.

At reporting date, reliable estimates as to the value of any potential liability (and subsequent land asset) from suchpotential acquisitions has not been possible.

page 53





ASSETS NOT RECOGNISED:

(i) Land under roads

As permitted under AASB 1051, Council has elected not to bring to account land under roads that it owned orcontrolled up to and including 30/6/08.

(ii) Infringement notices/fines

Fines and penalty income, the result of Council issuing infringement notices is followed up and collected bythe Infringement Processing Bureau.

Council’s revenue recognition policy for such income is to account for it as revenue on receipt.

Accordingly, at year end, there is a potential asset due to Council representing issued but unpaid infringementnotices.

Due to the limited information available on the status, value and duration of outstanding notices, Council isunable to determine the value of outstanding income.

page 54




Note 17. 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 finance section under policies approved by the Council.

The fair value of Council’s financial assets and financial liabilities approximates their carrying amount.

X11A13T

page 55




Note 17. Financial risk management (continued)

$ ’000

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

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

Council has an investment policy which complies with the Local Government Act 1993 and MinisterialInvestment Order 625. This policy is regularly reviewed by Council and its staff and a monthly Investment reportis provided to Council setting out the make-up and performance of the portfolio as required by LocalGovernment regulations.

The risks associated with the instruments 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.

– Liquidity risk – the risk that Council will not be able to pay its debts as and when they fall due

– 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 impact on result for the year and equity of a reasonably possible movement in the price of investmentsheld and interest rates is shown below. The reasonably possible movements were determined based onhistorical movements and economic conditions in place at the reporting date.

2019Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

2018Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

(4,200) 420

Increase of values/rates

(420)

436

420 4,200

4,360

(420)

Equity

436

Profit

(436) (436)

(4,200)

Equity 4,360

Profit (4,360)

Decrease of values/rates

4,200

4,360

page 56





$ ’000

(b) Credit risk

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

Council manages the credit risk associated with these receivables by monitoring outstanding debt andemploying stringent debt recovery procedures. Council also encourages ratepayers to pay their rates bythe due date through incentives.

The credit risk for liquid funds and other short-term financial assets is considered negligible, since thecounterparties are reputable banks with high quality external credit ratings.

There are no significant concentrations of credit risk, other than Council has significant credit risk exposuresin its local area given the nature of the business.

The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance. The balances of receivables that remain within initial trade terms(as detailed in the table) are considered to be of high credit quality.

The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivablein the financial statements.

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.

Credit risk profile

Receivables – rates and annual chargesCredit 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.

$ ’000



Not yet overdue

< 1 year overdue

1 – 2 years overdue

2 – 5 years overdue

> 5 years overdue Total

22 258

792

819 338

508

190

34

2018

201995

11

65 90

page 57





$ ’000

(b) Credit risk (continued)

Receivables – non-rates and annual chargesCouncil applies the simplified approach for non-rates and annual charges debtors to provide for expectedcredit losses prescribed by AASB 9, which permits the use of the lifetime expected loss provision. Tomeasure the expected credit losses, non-rates and annual charges debtors have been grouped based onshared credit risk characteristics and the days past due.

The loss allowance provision as at 30 June 2019 is determined as follows. The expected credit lossesincorporate forward-looking information.

$ ’000

Gross carrying amountExpected loss rate (%)ECL provision


16.20% 5.68%

Not yet overdue

0 – 30 days overdue



> 91 days overdue Total

0.00%

2019

2018

1,022 0.00%

1,306

94

307

1,526

1,420 116 1,786

4,723 0.00%

– – 268 268

1,655

– –

426

4,935

0.00%

page 58





$ ’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.

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 diversification ofborrowing types, maturities and interest rate structures. The finance team regularly reviews interest ratemovements to determine if it would be advantageous to refinance or renegotiate part or all of the loan portfolio.

The timing of cash flows presented in the table below to settle financial liabilities reflects the earliestcontractual settlement dates. The timing of expected outflows is not expected to be materially different fromcontracted cashflows.

The amounts disclosed in the table are the undiscounted contracted cash flows and therefore the balances inthe table may not equal the balances in the statement of financial position due to the effect of discounting.

$ ’000

Trade/other payablesLoans and advancesLease liabilitiesTotal financial liabilities

Trade/other payablesLoans and advancesLease liabilitiesTotal financial liabilities

2019

2018

11,964 4,621

interest rateaverage

13,632

> 5 Yearsto no

Subject

- -

1,730 11,964

7.00%6.80%

340

0.00% 2,656

29,779

values

305

1,730 -

12,808 13,632 29,096

1,250

2,434

844

27,995

maturity

12,808

- 814 439

1,253 13,633

- 973

Total Actualcash

Weighted

1,555

outflows

10,804 - 13,194 3,384 -

14,188 7.00%

0.00%6.80%

payable in:1 – 5 Years

27,327

- 346

9,810 10,156 1,730

≤ 1 Yearcarrying

305 10,794 11,767

- 10,991

13,489 2,498

page 59




Note 18. Material budget variations

$ ’000

While the Income Statement included in this General Purpose Financial Statements 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.

Material variations represent those variances between the original budget figure and the actual result thatamount to 10% or more.Variation Key: F = Favourable budget variation, U = Unfavourable budget variation

$ ’000

REVENUESInterest and investment revenueCouncil was conservative when setting budgets due to interest rates remaining low under the current economicconditions. Council cash position has, however remained strong leading to interest income being greater thenexpected.

Other revenuesCouncil budgeted for the running of the Vanfest event, which changed to a lease argreement after budget werefinalised.

Capital grants and contributionsCouncil received over $1.5M in capital grants for successful grant project applications, that was not known at timeof budgeting process.

Net gains from disposal of assetsCouncil has not budgeted for gains on asset disposals as they are usually immaterial.

Council’s original financial budget for 18/19 was adopted by the Council on 21 June 2018 and is not required to be audited.

2019

1,542

Actual

3,772

(33%)(507)

1,148

1,263 54%

F

1,035

F443 820

4,920

142

329%

142 0%

F

–

Budget ---------- Variance* ----------2019 2019

U

X11A14T

page 60




Note 18. Material budget variations (continued)

$ ’000

EXPENSESEmployee benefits and on-costsCouncil continues to have difficulty in recruiting some senior and technical staff positions. This under staffing haslead to salaries being less than budget.

Borrowing costsIncrease in borrowing costs due to council restructuring its loan portfolio durring the financial year.

Other expensesLower than budgeted due to change in funding arrangements of Vanfest event.

(76%)

1,404

Actual

10,536

2019

1,786

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

13%

(1,353)

2019

9,132

3,139

Budget2019

U

729

F

16%4,501 F3,772

page 61




Note 19. 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 – Financial assets and liabilities

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

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

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

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

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

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

2019

Recurring fair value measurements

Financial assetsInvestments

Total financial assets

Infrastructure, property, plant and equipmentTip remediationPlant and equipmentFurniture and fittingsOperational landCommunity landBuildings – non-specialisedBuildings – specialisedOther structuresRoadsBridgesFootpathsStormwater drainageWater supply networkSewerage networkSwimming poolsOther assetsLand under roadsDepreciable land improvementsTotal infrastructure, property, plant and equipment

dd/mm/yy

257 257 – – 4,347

276,891

dd/mm/yy –

– – 3,217 3,217

–

–

unobservableQuotedDate

– 43,641 – 43,641 dd/mm/yy –

inputs

Total

prices in observable

– – 4,213 4,213 dd/mm/yy

– 4,347 dd/mm/yy513 513

dd/mm/yydd/mm/yy –

inputsactive mkts

43,641

1,522

dd/mm/yy

12,440

– –

dd/mm/yy27

dd/mm/yy –

dd/mm/yy – dd/mm/yy – – 35,634

dd/mm/yy

dd/mm/yy

25,937 – 115,490

16,961 16,961

115,490

– –

– 276,891

of latest

–

dd/mm/yy – – 1,838

–

10,663 2,264

– –

25,937

10,663

2,007 2,007 1,838

1,522 27 – –

–

–

– ‘Financial assets at fair value through profit and loss’

– – 12,440

–

dd/mm/yy

Significant

Fair value measurement hierarchyLevel 1 Level 2

SignificantLevel 3

valuation

dd/mm/yy

dd/mm/yydd/mm/yy – 2,264

– 23,395 23,395 35,634

– – 16,166 16,166

43,641

X11A7T

X11A17T

page 62




Note 19. Fair value measurement (continued)

$ ’000

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

2018

Recurring fair value measurements

Financial assets– ‘Cash and short term deposits’– ‘Loans and receivables’Total financial assets

Infrastructure, property, plant and equipmentTip remediationPlant and equipmentFurniture and fittingsOperational landCommunity landBuildings – non-specialisedBuildings – specialisedOther structuresRoadsBridgesFootpathsStormwater drainageWater supply networkSewerage networkSwimming poolsOther assetsLand under roadsDepreciable land improvementsTotal infrastructure, property, plant and equipment

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

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

12,722

363 – 363

–

9,650 35,432 dd/mm/yy

dd/mm/yy –

–

2,166

22,032 22,032

– 9,650

–

– –

12,722

269,362 –

–

dd/mm/yy – –

dd/mm/yy

–

– –

valuation active mkts

DateLevel 2

Significant

dd/mm/yy

dd/mm/yy – 16,337

3,902

unobservableinputs

35,432

257 257

16,394 16,394

dd/mm/yy – – 4,664 4,664

– 21,879 21,879

–

16,337

19,753

3,042 3,042

dd/mm/yy

dd/mm/yy

Significant

inputs

45,198

dd/mm/yy – – dd/mm/yy 115,544 115,544

dd/mm/yy – –

dd/mm/yy –

Total

observable

45,198

– –

–

–

2,166

dd/mm/yy –

25,445

dd/mm/yy – –

– 25,445 –

Level 3

– 269,361

Fair value measurement hierarchy

QuotedLevel 1

19,753

of latest prices in

dd/mm/yy

–

3,902

dd/mm/yy – – 1,522 1,522 dd/mm/yy – – 28 28 dd/mm/yy – – 1,549 1,549 dd/mm/yy – – 1,879 1,878

page 63





(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:

Infrastructure, property, plant and equipment (IPP&E)

Plant & Equipment, Office Equipment and Furniture & Fittings

Plant & Equipment, Office Equipment and Furniture & Fittings are valued at cost but are disclosed at fairvalue in the notes. The carrying amount of these assets is assumed to approximate fair value due to thenature of the items. Examples of assets within these classes are as follows:

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

Operational & Community Land

Community Land is based on either the Land Value provided by the Valuer-General or anaverage unit rate based on the Land Value for similar properties where the Valuer-General did not provide aLand Value having regard to the highest and best use for the land. Operational Land has been valuedexternally by Australis Asset Advisory Group based on the actual market values in the Forbes Shire LGA in 2018.

Buildings - Non-Specialised & Specialised

Non-Specialised & Specialised Buildings were valued externally by Australis Asset Advisory Group in 2018

Their approach estimated the replacement cost for each building by componentising the building into significantparts. While all buildings were physically inspected and the unit rates based on square metres from Construction Guide's no market based evidence (Level 2) could be established. As such these assets were classified ashaving been valued as Level 3 valuation inputs.

While the costs were current and the impact of depreciation negligible, the building has been classified asLevel 3 as they are immaterial in relation to the overall value of the asset type.

Other Structures

Other Structures comprise of Saleyard structures, machinery sheds, bus shelters etc. The cost approach has been utilised whereby replacement cost was estimated for each asset by taking into account arange of factors. No market based evidence (Level 2) could be supported as such these assets were allclassified as having been valued using Level 3 valuation inputs.


Roads

Roads comprise road carriageway, roadside shoulders & kerb & gutter. The Cost Approach using Level 3inputs was used to value this asset class. Valuations for this asset class were undertaken in-house based onactual costs and assumptions from Council's Engineering Department. No market based evidence (Level 2)inputs are available therefore Level 3 valuation inputs were used for this asset class.


page 64





(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)

Bridges

Bridges were valued in-house using Engineering Department assumptions in June 2015.While all bridges were physically inspected and unit rates based on square metres were used there wasno 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 determinationof fair value.


Footpaths

Footpaths were valued in-house by Council's Engineering Department in June 2015 and were based on actualcost per square metre of works carried out during the year. Footpaths are inspected annually and conditionassessed.


Drainage Infrastructure

Assets within this class comprise pits and pipes.The 'Cost Approach' estimated the replacement cost for each asset by componentising the assets intosignificant parts with different useful lives and taking into account a range of factors. While the unit ratesbased on linear metres of certain diameter pipes and prices per pit or similar could be supported from marketevidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset conditionand useful life) required extensive professional judgement and impacted significantly on the finaldetermination of fair value. Additionally due to limitations in the historical records of very long lived assetsthere is uncertainty regarding the actual design, specifications and dimensions of some assets.


Water Supply Network

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 intosignificant parts with different useful lives and taking into account a range of factors. While the unit ratesbased on linear metres of certain diameter pipes and prices per pit or similar may be supported from marketevidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset conditionand useful life) required extensive professional judgement and impacted significantly on the finaldetermination of fair value. Additionally due to limitations in the historical records of very long lived assetsthere is uncertainty regarding the actual design, specifications and dimensions of some assets. These assetsare indexed each year in line with the NSW Reference Rates Manual as published by the Office of Water.


page 65





(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)

Sewerage Network

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 intosignificant parts with different useful lives and taking into account a range of factors. While the unit ratesbased on linear metres of certain diameter pipes and prices per pit or similar may be supported from marketevidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset conditionand useful life) required extensive professional judgement and impacted significantly on the finaldetermination of fair value. Additionally due to limitations in the historical records of very long lived assetsthere is uncertainty regarding the actual design, specifications and dimensions of some assets. These assetsare indexed each year in line with the NSW Reference Rates Manual as published by the Office of Water.


Swimming Pools

Assets within this class comprise Council's outdoor swimming pool and toddlers wading pool. The swimming pool was valued in-house by experienced staff and was also based on the actual replacement cost of both poolswithin the pool complex in 2007/08.

While some elements of gross replacement values may be supported from market evidence (Level 2 input)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.


Other Assets

Other Assets comprise fencing, cricket pitches, irrigation systems etc. The Cost Approach using Level 3inputs was used to value this asset class. Valuations for this asset class were undertaken in-house based onactual costs and assumptions from Council's Engineering Department. No market based evidence (Level 2)inputs are available therefore Level 3 valuation inputs were used for this asset class.


Land Under Roads

Land under roads is land under roadways and road reserves. Council only recognises land under roads acquired after 1 July 2008 in accordance with AASB 1051. The Cost Approach using Level 3 inputs was used to value thisasset class.Valuations for this asset class were undertaken in-house based on actual costs and assumptions fromCouncil's Engineering Department. No market based evidence (Level 2) inputs are available therefore Level 3valuation inputs were used for this asset class.


Depreciable Land Improvements

This asset class is comprised of land improvements to Council parks, saleyards site, cemetery, industrial parks etc.The Cost Approach using Level 3 inputs was used to value this asset. Valuations for this asset class wereundertaken in-house based on actual costs and assumptions from Council's Engineering Department. No marketbased evidence (Level 2) inputs are available therefore Level 3 valuation inputs were used for this asset class.


page 66





$ ’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 – 1/7/17

Purchases (GBV)Disposals (WDV)Depreciation and impairmentRevaluation Increments to Equity

Closing balance – 30/6/18

Purchases (GBV)Disposals (WDV)Depreciation and impairment



Purchases (GBV)Depreciation and impairmentRevaluation Increments to EquityRevaluation Decrements to Equity


Purchases (GBV)Disposals (WDV)Depreciation and impairment


–

4,664 8,929

1,953 – 1,953

–

1,456

(354) –

and fittingsTotal

(772) –

(15)

289 1,717

4,214

–

(910)

3,902 363

–

265 1,039

1,818 180 – 182

– (31) (630)

– (762)

9,075

–

–

specialised

(171)

(1,154)

–

(280)

62,283

57,652

(731)

(1,066) (228)

Other

(544)

17,456

–

Buildings

5,868 176

16,337

(385)

22,156

Buildings

3,218

–

Total

3,042

(677) – – 1,130

16,394

(677) 1,130

4,602 –

1,090 (171)

21,879

16,166 25,937

–

non–

16,962

–

structures

774

(294)

57,314 3,042 14,660

land

– (542)

(757)

1,428

–

– 378 2,422

Community

Operational

–

– 514

specialised

4,347

–

– (227)

6,385

–

land

– – – (354) –

Office

3,585

equipment equipmentPlant and Furniture

page 67





$ ’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)


Purchases (GBV)Depreciation and impairment





Purchases (GBV)Depreciation and impairmentRevaluation Increments to Equity


Purchases (GBV)Depreciation and impairmentRevaluation Increments to Equity







1,549

453 –

839 156

SewerageWater

22,276 34,946

– – 28 1,522 1,550

(1,112)

Land under

–

22,032

(2,136)

1,182 (2,020) 1,270

1,878

752

275

1,842

–

–

land imp.

–

– – 28

(848) (40) 929

23,394 1,838

21

28 1,536

–

561 368

– –

Totalroads

–

(136)

– – – –

(32)

network

1,327

Depreciable

1,564

Total

– (53)

network

60,459

–

2,264 10,664 140,858 115,490 12,440

1,910

Swimming

179

12,722 2,166

pools

140,082

(81)

Othersupply

(130)

(205) –

9,650

5,764 4,441 – (282)

115,544

assets

Bridges Footpaths

24

1,144

(4,214)

(4,495)

186 (61)

7,552

(4,988)

(130)

112,206

drainage

9,756 12,927 2,041

Total

StormwaterRoads

595 3,189

729

7,762

60,891

(1,082) (853)

35,432

136,930

62,873 2,008 35,633

21 (35) (35)

(4,610)

– – – 35 35 (35) (35) – –

1,522 1,550

page 68





$ ’000


b. Significant unobservable valuation inputs used (for level 3 asset classes) and their relationship to fair value.

The following table summarises the quantitative information relating to the significant unobservable inputs used inderiving the various level 3 asset class fair values.

IPP&E

Plant and equipment

Office equipment

Furniture and fittings

Operational land

Communtiy land

Buildings – specialised

Other Structures

Roads

Bridges

See Note 19 (3) * Land Value (price per square metre)

See Note 19 (3) * Land Value (price per square metre)

See Note 19 (3)

* Gross Replacement Cost* Asset Condition* Remaining Useful Life* Residual Value

See Note 19 (3)


4,213

3,217

16,961

16,166

ClassFair

value(30/6/19)

$’000

See Note 19 (3)* Depreciated Historical Cost* Remaining Useful Life* Residual Value



115,490 See Note 19 (3)

* Gross Replacement Cost* Asset Condition* Remaining Useful Life

See Note 19 (3)

25,937 See Note 19 (3)


513

4,347

Buildings – non-specialised


0

Unobservableinputs

Valuationtechnique/s

12,440

page 69





$ ’000


b. Significant unobservable valuation inputs used (for level 3 asset classes) and their relationship to fair value.

IPP&E (continued)

Footpaths

Stormwater drainage

Water supply network

Sewerage network

Swimming pools

Other assets

Land under roads

Tip Remediation


257 See Note 19 (3)* Gross Rehabiltation Cost * Remaining Useful Life

1,522 See Note 19 (3)


28 See Note 19 (3) * Land Value (price per square metre)

2,007 See Note 19 (3)


1,838

See Note 19 (3)

Depreciable land improvements


2,264 See Note 19 (3)

See Note 19 (3)


23,395


35,634 See Note 19 (3)


10,663 See Note 19 (3)

ClassFair

value(30/6/19)

$’000

Valuationtechnique/s

Unobservableinputs

page 70






c. The valuation process for level 3 fair value measurements

Council adopts the current replacement cost approach for valuation of its assets. The replacement costsbased on unit rates (where appropriate), useful lifes, condition and service levels are determined bytechnical information provided by Council's Asset Engineer and the professional judgement of Councilssenior engineering staff.Where possible, infrastructure items are also broken down into components that have materially differinguseful lives.

Valuations provided by the Valuer General for rating purposes, are used as a guide for valuations of land.

Further analysis of the of the level three valuations is undertaken by Councils Director of Engineering &Technical 'Services after completion of the valuation process.

(5). Highest and best use

All of Council’s non-financial assets are considered as being utilised for their highest and best use.

X11A16T

page 71




Note 20. Related party transactions

$ ’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 benefitsTotal

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

2019Event Sponsorship (Clr G. Clifton - Son is event Manager)

- - Vanfest Music Festival - - 300,000 - Council sponsors annual - -

during year (incl. loans andcommitments) outstanding

of receivables

2018766 41

807 958

Value of Outstanding

2019906 52

Terms and conditions Provisions

impairmenttransactions balance for impairment

of receivables

Expenserecognised for

X12A0T

page 72




Note 21. Statement of developer contributions

$ ’000

Under the Environmental Planning and Assessment Act 1979 , Council has significant obligations to provide Section 7.11 (contributions towards provision orimprovement of amenities or services) infrastructure in new release areas.

It is possible that the funds contributed may be less than the cost of this infrastructure, requiring Council to borrow or use general revenue to fund the difference.

SUMMARY OF CONTRIBUTIONS AND LEVIES

Open space

S7.11 CONTRIBUTIONS – UNDER A PLAN

CONTRIBUTION PLAN NUMBER 1

Open space

Cumulative internal

borrowings due/(payable)

Cumulative internal

borrowings due/(payable)

–

– –

–

–

–

(4)

4

1

–

Contributions

balance

–

Non-cash

– 5 179

Total contributions

S7.11 contributions – under a plan

PURPOSE

PURPOSE Openingbalance

179 4

earnedContributions

received during the yearInterest

year

–

earned

–

(to)/from

Cash

179

179

(4)

4

Opening received during the yearExpenditure

asset

borrowing

–

in year184

–

67

(4) 5

184

–

Interest

in year

6

184

184

251

–

–

(4)

Held asInternal

(4) 5

Expenditureborrowing

year

restricted(to)/from

during

during

– –

179 Total

Total S7.11 and S7.12 revenue under plans

–

Non-cash179

Cash

4

S7.4 planning agreements

– 70

66

4 5

(4) 5 184

assetrestricted

Internal Held as

– –

X13A0T

page 73




Note 22. 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 purposesOther incomeNet gains from disposal of assetsTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationOther expensesTotal expenses from continuing operationsOperating result from continuing operations

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. All amounts disclosed above are gross – that is, they include internal charges and recoveries made between the funds.

36,086

4,111

516

420 –

516

1,040

2,932 599

–

4,710 –

–

–

516

– 599

2,344 –

– 33,154

– 4,741

3,380

– 142

11,617

179

392

2,932

(1,809)

739 3,078 7,998

61

1,023 6 6

395

848

2,860

7,081 1,865

11,286

1,115

132 146

2019 2019

301

9,245 541

797 3,002 8,852

2019

2,016

2019

165

General1SewerWater

1,076

X14A1T

page 74



Notes to the Financial Statements as at 30 June 2019

Note 22. Financial result and financial position by fund (continued)

Statement of Financial Position by fund$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesTotal current assets

Non-current assetsReceivablesInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets

EQUITYAccumulated surplusRevaluation reservesTotal equity1 General fund refers to all Council’s activities other than water and sewer. All amounts disclosed above are gross – that is, they include internal receivables and payables between the funds. Assets and liabilities shown in the water and sewer columns are restricted for use for these activities.

984

167,643 17,561

2019

0

48,173

9,081

18,557

215,816

–

–

–

6,120 13,162

Sewer

–

2019

– 157

41,550 3,558

General1

(17,191)

2019

Water

268

30,073

35,912 23,396

13,319 –

–

2019

6,388 – 2,156

217,584 1,264 –

4,621

23,396 218,848

–

35,912

23,040

– 22 – 1,288

492

– 49,127

24,024 33,105

49,127 –

49,231

–

28,954

248,921

104 131 2,680

11,393

699

131

699

28,954 215,816

–

29,784 –

–

104 –

–

–

82

–

–

830

30,570

page 75




Note 23(a). Statement of performance measures – consolidated results

$ ’000

Local government industry indicators – consolidated

1. Operating performance ratioTotal continuing operating revenue (1) excluding capitalgrants and contributions less operating expenses (2)

Total 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 restrictionsCurrent liabilities less specific purpose liabilities

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 depositsMonthly payments from cash flow of operatingand financing activities

Notes

(1) Excludes fair value adjustments, reversal of revaluation decrements, net gain on sale of assets and the net gain on share of interests in joint ventures and associates.(2) Excludes impairment/revaluation decrements, net loss on sale of assets and the net loss on share of interests in joint ventures and associates.

8.76%

2.53x

2,772 43,641

13,469

15.75 mths

1,075

15.6 mths > 3 mths

61.66%

7.44x > 1.5x

3.70x > 2x

10%

3.42x

15.4 mths

10.29%

43,514

Indicator

(1,015)

26,858

Amounts

38,594

2019 20172019

3.89x

-0.46%1.66%-2.63%

4,421

Benchmark

> 0.00%

> 60.00%

7.98%

61.72%

Prior periods

5,919 23,047

11,168

2018

7.25x

68.29%

X14A0T

page 76




Note 23(b). Statement of performance measures – by fund

$ ’000

Local government industry indicators – by fund

1. Operating performance ratioTotal continuing operating revenue (1) excluding capital grants and contributions less operating expenses (2)

Total 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 restrictionsCurrent liabilities less specific purpose liabilities

Notes

(1) - (2) Refer to Notes at Note 23a above.(3) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

Benchmark

> 60.00%

> 0.00%

54.93%

3.89x

-6.25% 0.01% 9.27% 2.89% 18.04% 19.62%

2019 2019 20192018 2018

93.10% 97.73% 95.38% 95.51%

7.25x 56.38x48.76x

2018Water indicators Sewer indicatorsGeneral indicators 3

557.95x128.07x > 1.5x

55.83%

X15A0T

page 77




Note 23(b). Statement of performance measures – 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 depositsMonthly payments from cash flow of operating and financing activities

Notes

(1) Refer to Notes at Note 23a above.(3) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

1.88x

10.36%

2.88x 0.00x 0.00x 23.36x

0.00 months

2018

0.00% 9.81%0.00% 8.77%

21.09x

General indicators 3 Water indicators Sewer indicators Benchmark2019 2018 2019 2018

months months monthsmonths8.79 0.00 0.00 9.11 0.00

months

> 2x

> 3 months

8.57%

END OF AUDITED FINANCIAL STATEMENTS

2019

< 10% regional &

rural

page 78




Note 23(c). Statement of performance measures – consolidated results (graphs)

Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #27 Ratio is outside benchmark

Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #27 Ratio is outside benchmark

Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #27 Ratio is outside benchmark

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

the unrestricted activities of Council.

Council is in a healthy cash positon to satisfy obligations for its short &

unrestricted activities.

Purpose of own source operating

revenue ratio

Commentary on 2018/19 result

2018/19 ratio 61.72%

This ratio measures fiscal flexibility. It is

the degree of reliance on external funding

sources such as operating grants and

contributions.

Council continues to be above industry benchmark.

Purpose of unrestricted current

ratio


2018/19 ratio 3.89x

Purpose of operating

performance ratio


2018/19 ratio -2.63%

This ratio measures Council’s

achievement of containing operating expenditure within operating revenue.

Council has monitored budgets closely during 2018/19 which has lead to a

respectable result. Defecit is predominately due to flood damage work being classified

as operational and the funding having to be classified as as capital through the

operating statement.

2%

0%-3%

-4%

-3%

-2%

-1%

0%

1%

2%

2017 2018 2019

Rat

io %

1. Operating performance ratio

68% 62% 62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2017 2018 2019

Rat

io %

2. Own source operating revenue ratio

7.4 7.3

3.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2017 2018 2019

Rat

io (x

)

3. Unrestricted current ratio

X16A0T

page 79




Note 23(c). Statement of performance measures – consolidated results (graphs)


Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #27 Ratio is outside Benchmark


Purpose of cash expense cover ratio


2018/19 ratio 15.75 mths

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

for its immediate expenses without

additional cash inflow.

Council continues to be in a healthy cash position, with the ability to meet its

expenses beyond the immediate future.

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

recovery efforts.

Ratio continues to improve due to staffs persistant efforts to recover long term.

Purpose of debt service cover ratio


2018/19 ratio 2.53x

This ratio measures the availability of operating cash to

service debt including interest, principal and

lease payments

Indicates council remains in a postion to cover its debt obligations.

Purpose of rates and annual charges

outstanding ratio


2018/19 ratio 7.98%

3.4 3.7

2.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2017 2018 2019

Rat

io (x

)

4. Debt service cover ratio

9% 8%10%

0%

2%

4%

6%

8%

10%

12%

2017 2018 2019

Rat

io %

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

15.4 15.6 15.7

0.02.04.06.08.0

10.012.014.016.018.0

2017 2018 2019

Rat

io (m

ths)

6. Cash expense cover ratio

page 80




Note 24. Financial review and commentary

$ ’000

Key financial figures of Council over the past 5 years

Financial performance figures

Inflows:Rates and annual charges revenueUser charges revenueInterest and investment revenue (losses)Grants income – operating and capitalTotal income from continuing operations

Sale proceeds from IPP&E

Outflows:Employee benefits and on-cost expensesBorrowing costsMaterials and contracts expensesTotal expenses from continuing operations

Total cash purchases of IPP&ETotal loan repayments (incl. finance leases)

Operating surplus/(deficit) (excl. capital income)

Financial position figures

Current assetsCurrent liabilitiesNet current assets

Available working capital(Unrestricted net current assets)

Cash and investments – unrestrictedCash and investments – internal restrictionsCash and investments – total

Total borrowings outstanding(Loans, advances and finance leases)

Total value of IPP&E (excl. land and earthworksTotal accumulated depreciationIndicative remaining useful life (as a % of GBV)

Source: published audited financial statements of Council (current year and prior year)

Actual Actual Actual Actual Actual

Actual Actual Actual Actual Actual

1,882 14,522 15,373 14,710

2,333

34,536

844

634

47,503 36,783

435

33,062

16,418 1,154

14,392 19,028 43,641 45,198

25,158

14,934 36,935

28,217

39,711

2,978 4,336

2,110

40,464 44,398 9,316

51,481 7,083

2019

(785)

3,078 4,549 7,346

16 (873)

2015

5,809 6,090 41,739 49,780

4,148 4,943

2018

572,152 570,506 313,089 306,071

26,440 27,583

329,577 321,564 583,191 599,010

45% 45%

561,303

45,712 43,650

2017

18,746 17,592

2016

47%297,916

45% 47%

6,446

35,649 37,841

2,025

39,721

4,149

5,991

41,049

28,911

1,222

43,656

517

8,271

815

38,629 36,373 39,609

14,081 10,676

1,282 1,143

680

8,939 8,643

694

1,263 1,143

9,811 5,715 16,672 11,809 774

5,966 38,048 10,747

11,534 3,139 1,858 9,132

2,465

8,419

35,047 14,067

7,934

11,997

2015

11,581

1,270

2016 2019

1,183

11,169 14,128 12,754

2018 2017

12,337 12,395 11,374

14,878 9,671

page 81




Note 25. Council information and contact details

Principal place of business:2 Court StreetForbes NSW 2871

Contact detailsMailing address: Opening hours:PO Box 333 Monday - FridayForbes NSW 2871 8:30 am - 5.00 pm

Telephone: 02 6850 2300 Internet: www.forbes.nsw.gov.auFacsimile: 02 6850 2399 Email: [email protected]

Officers Elected membersGENERAL MANAGER MAYORSteve Loane Phyllis Miller OAM

RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSIan Prior Cr J. Webb

Cr S. KaraitianaCr S. ChauCr G.L. MillerCr G. Clifton

AUDITORS Cr M. HerbertAudit Office of New South Wales Cr C. Roylance GPO Box 12 Cr. J. NicholsonSYDNEY NSW 2001

Other informationABN: 86 023 614 567

X17A0T

page 82

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




















mailto:[email protected]




















INDEPENDENT AUDITOR’S REPORT

Report on the general purpose financial statements


To the Councillors of the Forbes Shire Council

Opinion

I have audited the accompanying financial statements of Forbes Shire Council (the Council), which

comprise the Income Statement and Statement of Comprehensive Income for the year ended

30 June 2019, the Statement of Financial Position as at 30 June 2019, the 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 2019, 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).

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

page 83

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 Information

The Council’s annual report for the year ended 30 June 2019 includes other information in addition to

the financial statements and my Independent Auditor’s Report thereon. The Councillors are

responsible for the other information. At the date of this Independent Auditor’s Report, the other

information I have received comprise the special purpose financial statements and Special Schedules

(the Schedules).

My opinion on the financial statements does not cover the other information. Accordingly, I do not

express any form of assurance conclusion on the other information. However, as required by the Local

Government Act 1993, I have separately expressed an opinion on the special purpose financial

statements and Special Schedule - Permissible income for general rates.

In connection with my audit of the financial statements, my responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or my knowledge obtained in the audit, or otherwise appears to be materially

misstated.

If, based on the work I have performed, I conclude there is a material misstatement of the other

information, I must report that fact.

I have nothing to report in this regard.

The Councillors’ Responsibilities 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 are responsible for assessing the Council’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting except where the Council will be dissolved or

amalgamated by an Act of Parliament, or otherwise cease operations.

Auditor’s Responsibilities 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.

page 84

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/ar4.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

• on the Original Budget information included in the Income Statement, Statement of Cash Flows,

and Note 18 Material budget variations

• on the Special Schedules. A separate opinion has been provided on Special

Schedule - Permissible income for general rates

• about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented

• about any other information which may have been hyperlinked to/from the financial statements.

Karen Taylor

Director, Financial Audit Services

Delegate of the Auditor-General for New South Wales

16 October 2019

SYDNEY

page 85

http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf

Cr Phyllis Miller OAM Mayor Forbes Shire Council PO Box 333 FORBES NSW 2871

16 October 2019

Dear Mayor

Report on the Conduct of the Audit

for the year ended 30 June 2019


I have audited the general purpose financial statements (GPFS) of Forbes Shire Council (the Council) for the year ended 30 June 2019 as required by section 415 of the Local Government Act 1993 (the Act).

I expressed an unmodified opinion on the Council’s GPFS.

This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2019 is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my audit opinion on the GPFS issued under section 417(2) of the Act.INCOME STATEMENT

Operating result

2019 2018 Variance

$m $m %

Rates and annual charges revenue 12.3 12.0

Grants and contributions revenue 16.5 18.0

Operating result for the year 4.0 8.9

Net operating result before capital grants and contributions

(0.9) 0.8

2.8

8.3

54.4

207.1

Contact: Karen Taylor

Phone no: 02 9275 7311

Our ref: D1924597/1725

page 86

2

Rates and annual charges revenue ($12.3 million) increased by $0.3 million (2.8 per cent) in 2018–2019, primarily due to approved rate pegging of 2.3. However ordinary rates only increased by 1.7 per cent with annual charges contributing to the higher overall percentage increase.

Grants and contributions revenue ($16.5 million) decreased by $1.5 million in 2018–2019 due to less ($4.6 million) flood damage funding, partially offset by drought funding ($0.9 million), a capital grant for the expansion of the Central West Livestock Exchange ($0.9 million) and a range of smaller projects supported by the Stronger Country Community's Grant.

Council’s operating result ($4.0 million including the effect of depreciation and amortisation expense of $9.0 million) was $4.9 million lower than the 2017–18 result. The main reasons for this movement were a $1.8 million decrease in RMS ordered roadworks performed on State Roads and a $1.5 million decrease in grants and contributions provided for capital purposes. Expenditure increased by $1.3 million due to cost of early termination of fixed rate facilities and an increase of $0.9 million in employee costs due to recruitment to fill staff vacancies.

The operating surplus was generated primarily from the General Fund ($2.9 million) with Water Fund ($0.6 million) and Sewer Fund ($0.5 million) also recording operating surpluses. The net operating result before capital grants and contributions ($0.9 million deficit) was $1.7 million lower than the 2017–18 result.

STATEMENT OF CASH FLOWS The decrease in cash flows over the prior year is due to converting short-term cash equivalents to longer term investments and a substantial capital works program.

FINANCIAL POSITION Cash and investments

Cash and investments 2019 2018 Commentary

$m $m

External restrictions 24.9 23.2

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

Internal restrictions 14.4 19.0

Unrestricted 4.3 3.0

Cash and investments 43.6 45.2

-35

-15

5

25

2017 2018 2019

$ m

illio

n

Year ended 30 June

Net cash flows for the year

Operating activities Investing activitiesFinancing activities

page 87

3

Debt At 30 June 2019, Council had external borrowings of $25.2 million (30 June 2018: $26.4 million). The loans are secured over Council’s general rating income. Council also had access to a $65,000 (30 June 2018: $36,000) credit card facility, with $54,000 (2018 $25,000) of this facility was unused at year end.

PERFORMANCE Operating performance ratio

Council has fallen below the benchmark during the current year. A decline in RMS revenue and the one-off cost for early termination of fixed loans were the main contributors. 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 former Office of Local Government (OLG) is greater than zero per cent.

Own source operating revenue ratio Council’s own source operating revenue ratio of 61.71 per cent has remained above the benchmark.

The ‘own source operating revenue ratio’ measures council’s fiscal flexibility and the degree to which it relies on external funding sources such as operating grants and contributions. The benchmark set by the OLG is greater than 60 per cent.

-3-2.5

-2-1.5

-1-0.5

00.5

11.5

2

2017 2018 2019

Ratio%

Year ended 30 June

Operating performance ratio

Operating performance ratio

Industry benchmark > 0%

545658606264666870

2017 2018 2019

Ratio%

Year ended 30 June

Own source operating revenue ratio

Own source operating revenue ratioIndustry benchmark > 60%

page 88

4

Unrestricted current ratio Council’s unrestricted current ratio of 3.89 times continues to exceed the industry benchmark

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 the former OLG is greater than 1.5 times.

Debt service cover ratio Council has not drawn any new borrowings during the year, so the decline in this ratio is attributable to the cost for early termination of fixed loans.

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

012345678

2017 2018 2019

Ratiox

Year ended 30 June

Unrestricted current ratio

Unrestricted current ratioIndustry benchmark > 1.5x

00.5

11.5

22.5

33.5

4

2017 2018 2019

Ratiox

Year ended 30 June

Debt service cover ratio

Debt service cover ratioIndustry benchmark > 2x

page 89

5

Rates and annual charges outstanding percentage Despite the prolonged drought, Council has continued to effectively manage its recovery of debtors, improving this ratio over the prior year.

The ‘rates and annual charges outstanding percentage’ assesses the impact of uncollected rates and annual charges on council’s liquidity and the adequacy of debt recovery efforts. The benchmark set by the former OLG is less than 10 per cent for regional and rural councils.

Cash expense cover ratio Council’s strong liquidity is reflected by this measure. Council has comfortably exceeded the benchmark and has done so for several 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 the former OLG is greater than three months.

Infrastructure, property, plant and equipment renewals Council has renewed $11.4 million of assets in the 2018–19 financial year compared to $10.6 million in the 2017–18 financial year.

The unaudited infrastructure renewals ratio was 119.8 per cent compared to 118.0 per cent in the prior year (benchmark set by OLG is 100).

0

2

4

6

8

10

12

2017 2018 2019

Ratio%

Year ended 30 June

Rates and annual charges outstanding percentage

Rates and annual charges outstanding percentage

Industry benchmark < 10%

0

5

10

15

20

2017 2018 2019

Rat

io(m

onth

s)

Year ended 30 June

Cash expense cover ratio

Cash expense cover ratioIndustry benchmark > 3 months

page 90

6

OTHER MATTERS New accounting standards implemented

Application period Overview

AASB 9 ‘Financial Instruments’ and revised AASB 7 ‘Financial Instruments: Disclosures’

For the year ended 30 June 2019 AASB 9 replaces AASB 139 ‘Financial Instruments: Recognition and Measurement’ and changes the way financial instruments are treated for financial reporting. Key changes include: • a simplified model for classifying and measuring financial

assets • a new method for calculating impairment • a new type of hedge accounting that more closely aligns

with risk management.

The revised AASB 7 includes new disclosures due to AASB 9. Council’s disclosure of the impact of adopting AASB 9 is disclosed in Note 12.

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 statements. The Council’s:

• accounting records were maintained in a manner and form to allow the GPFS to be prepared and effectively audited

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

Karen Taylor


page 91

Forbes Shire Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2019


SPFS 2019


Special Purpose Financial Statements for the year ended 30 June 2019

Contents

Statement by Councillors and Management

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

Note 1 – Significant accounting policies

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).

6

Page

345

2

(iv)

9

87

(i)

(ii)

12

(iii)

page 1

SPFS 2019


Special Purpose Financial Statementsforthe year ended 30 June 2019

Statement by Councillors and Managementmade pursuant to the Local Government Code of Accounting Practice and Financial Reporting

The attached Special Purpose Financial Statements have been prepared in accordance with:

. the NSW Government Policy Statement 'Application of National Competition Policy to

Local Government',

. the Division of Local Government Guidelines 'Pricing and Costing for CouncilBusrnesses.'A Guide to Competitive Neutrality',

. the Local Government Code of Accounting Practice and Financial Reporting,

. the NSW Office of Water Best-Practice Management of Water and Sewerage Guidelines .

To the best of our knowledge and belief, these financial statements:

. present fairly the operating result and financial position for each of Council's declared businessactivities for the year, and

. accord with Council's accounting and other records.

. present overhead reallocation charges to the water and sewerage businesses as fair and reasonable

We are not aware of any matter that would render these statements false or misleading in any way.

Signed in accordance with a resolution of Council made on 15 August 2019.

Phyllis Miller OAMMayorl6 August 2019

LoaneGeneral managerl6 August 2019

Jen

t6 2019

la

Responsible accounting16 August 2019

officer

page 2

SPFS 2019


Income Statement of Council's Water Supply Business Activity for the year ended 30 June 2019

$ ’000

Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non-capital purposesOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsMaterials and contractsDepreciation, amortisation and impairmentWater purchase chargesTotal 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 all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]

SURPLUS (DEFICIT) AFTER TAX

Plus accumulated surplusPlus adjustments for amounts unpaid:– Corporate taxation equivalentClosing accumulated surplus

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

420

179 599

599 (126)

426 213

2019

126 18,557

1.2%54

473

17,958

473 (47)

2018

1,076 2,976

26 301 146

6 4,531

739 1,865 1,115

392 4,111

35 17,958

0.3%823

81 22

103 52

3,899 116

– 116

116 (35)

81

17,842

1,015 2,599

23 287 91 –

4,015

989 1,682 1,092

136

X3A0T

page 3

SPFS 2019


Income Statement of Council's Sewerage Business Activity for the year ended 30 June 2019

$ ’000

Income from continuing operationsAccess chargesUser chargesLiquid trade waste chargesInterestGrants and contributions provided for non-capital purposesOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts

Surplus (deficit) from continuing operations after capital amounts





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

160

533

533

2.7%–

533 (160)

373

16,512

17,045

395 61

1,040 848

1,936 514

2018

–

2019

139 122

2,016 540

1 165

2,184

516

132 6

2,860 6

406 69

856 853

373 91

464 232

361

17,045

516 (155)

155

254

2,717

17,561

2.5%–

361 146 507

2,344 516

X3A1T

page 4

SPFS 2019


Income Statement of Council's Other Business Activities for the year ended 30 June 2019

$ ’000

Income from continuing operationsUser chargesFeesTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentTotal 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





4,233

645 864

4,357

3,645

864

3,740

1,553 –

562

152

CWLE (Saleyards)

20182019

4,509 152

4,385

1,069

864

641 1,487

448

1,472

908

1,252 454

194

605

259

8,484 9,348

1,360

10.6%

10,901

8.5%–

9,348

–

1,553 (259) (194)

0 Category 1

X3A2T

page 5

SPFS 2019


Statement of Financial Position – Council's Water Supply Business Activity as at 30 June 2019

$ ’000

ASSETSCurrent assetsCash and cash equivalentsReceivablesTotal current assets

Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesIncome received in advanceProvisionsTotal current liabilities

Total non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYAccumulated surplusRevaluation reservesTOTAL EQUITY

82 –

47,967 30,570

49,127

47,989

22 22 22 104

104 47,967

22

20182019

49,231

35,714

–

18,557

–

13,162 12,084

35,912 35,714 35,912

157 191 13,319 12,275

49,127 30,009 17,958

X4A0T

page 6

SPFS 2019


Statement of Financial Position – Council's Sewerage Business Activity as at 30 June 2019

$ ’000

ASSETSCurrent assetsCash and cash equivalentsReceivablesTotal current Assets

Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesBorrowingsTotal current liabilities

Non-current liabilitiesBorrowingsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYAccumulated surplusRevaluation reservesTOTAL EQUITY

29,023

28,070

268 267

2018

23,396 22,032

6,120

2019

6,724

830

131 124 131 124

6,388 6,991

29,784

17,561

829

11,393 11,025

699

28,070

953 699 829

17,045

28,954

28,954

23,396 22,032

X4A1T

page 7

SPFS 2019


Statement of Financial Position – Council's Other Business Activities as at 30 June 2019

$ ’000

ASSETSCurrent assetsCash and cash equivalentsTotal Current Assets

Non-current assetsReceivablesInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesBorrowingsTotal current liabilities

Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYAccumulated surplusTOTAL EQUITY

515

16,450 9,348

15,687 298

15,389

763

25,798

763

15,652

892

23,240 22,240

1,000

2,558

26,038

1,000 25,038

10,901

CWLE (Saleyards)

Category 1

2,558

2019

515

2018

26,553

10,901

263

9,348 10,901

14,760

892

14,497

9,348

X4A2T

page 8

SPFS 2019

Forbes Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2019 Note 1. Significant accounting policies

page 9

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 2005, 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, fair values of non-current assets. Certain taxes and other costs, appropriately described, have been imputed for the purposes of the National Competition Policy. The Statement of Financial Position includes notional assets/liabilities receivable from/payable to Council's general fund. These balances reflect a notional intra-entity funding arrangement with the declared business activities. 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 and returns 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 – Business activities with gross operating turnover more than $2 million a. Forbes Water Supply

Comprising the whole of the operations and assets of the water supply system servicing the township of Forbes.

SPFS 20197

Forbes Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2019 Note 1. Significant accounting policies (continued)

page 10

b. Forbes Sewerage Service

Comprising the whole of the operations and assets of the sewerage reticulation system servicing the township of Forbes.

c. Forbes Saleyards Central West Livestock Exchange

Comprising the whole of the operations and assets of the Central West Livestock Exchange established for the selling of livestock.

Category 2 – Business activities with gross operating turnover less than $2 million Nil Monetary amounts Amounts shown in the financial statements are in Australian currency and rounded to the nearest thousand 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. 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% Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $850,000. 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.

SPFS 20197

Forbes Shire Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2019 Note 1. Significant accounting policies (continued)

page 11

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. 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. 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 1.32% at 30/6/19. (iv) Dividends Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities.


Report on the special purpose financial statements


To the Councillors of the Forbes Shire Council

Opinion

I have audited the accompanying special purpose financial statements (the financial statements) of

Forbes Shire Council’s (the Council) declared business activities, which comprise the Income

Statement of the declared business activity for the year ended 30 June 2019, the Statement of

Financial Position of the declared business activity as at 30 June 2019, Note 1 Significant accounting

policies for the business activity declared by Council, and the Statement by Councillors and

Management.

The declared business activities of the Council are:

• Water Supply

• Sewerage

• CWLE (Saleyards).

In my opinion, the financial statements present fairly, in all material respects, the financial position of

the Council’s declared business activity as at 30 June 2019, and its financial performance for the year

then ended, in accordance with the Australian Accounting Standards described in Note 1 and the

Local Government Code of Accounting Practice and Financial Reporting – update number 27 (LG

Code).


Basis for Opinion


standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’

section of my report.









Auditor-General

• mandating the Auditor-General as the auditor of councils


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

audit opinion.

page 12

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 the

Council’s financial reporting responsibilities under the LG Code. As a result, the financial statements

may not be suitable for another purpose.

Other Information


the financial statements and my Independent Auditor’s Report thereon. The Councillors are

responsible for the other information. At the date of this Independent Auditor’s Report, the other

information I have received comprise the general purpose financial statements and Special Schedules

(the Schedules).

My opinion on the financial statements does not cover the other information. Accordingly, I do not

express any form of assurance conclusion on the other information. However, as required by the Local

Government Act 1993, I have separately expressed an opinion on the general purpose financial

statements and Special Schedule ‘Permissible income for general rates’.

In connection with my audit of the financial statements, my responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or my knowledge obtained in the audit, or otherwise appears to be materially

misstated.




The Councillors’ Responsibilities 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 are responsible for assessing the Council’s

ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting, unless it is not appropriate to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements


• obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error




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/ar4.pdf. The


page 13

http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf



• about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented

• about any other information which may have been hyperlinked to/from the financial statements.

Karen Taylor



16 October 2019

SYDNEY

page 14

Forbes Shire Council SPECIAL SCHEDULES for the year ended 30 June 2019


Special Schedules 2019


Special Schedules for the year ended 30 June 2019

Contents

Special Schedules

Permissible income for general rates

Report on Infrastructure AssetsReport on Infrastructure Assets as at 30 June 2019Infrastructure asset performance indicators (consolidated) Infrastructure asset performance indicators (by fund) 10

2

Page

69

page 1



Permissible income for general rates for the year ended 30 June 2020

$’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 (6)

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 permissible income from general rates 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

(3) 19

Calculation Calculation2018/192019/20

– –

(4) 19

1 –

7,382 7,622

7,386 7,604

(5) (1) (1) (4)

– –

4 (3)

166 200 – –

7,383 7,626

0.00%0.00%

– –

0.00%0.00%2.30%2.70%

7,218 7,386 (1) 40

7,217 7,426

X2A0T

page 2


Special Schedule - Permissible income for general rates


To the Councillors of Forbes Shire Council

Opinion

I have audited the accompanying Special Schedule – Permissible income for general rates (the

Schedule) of Forbes Shire Council (the Council) for the year ending 30 June 2020.

In my opinion, the Schedule is prepared, in all material respects in accordance with the requirements

of the Local Government Code of Accounting Practice and Financial Reporting – update number 27

(LG Code), and is in accordance with the books and records of the Council.


Basis for Opinion


standards are described in the ‘Auditor’s Responsibilities for the Audit of the Schedule’ section of my

report.









Auditor-General

• mandating the Auditor-General as auditor of councils


I believe that 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 the special purpose framework used to prepare the

Schedule. The Schedule has been prepared for the purpose of fulfilling the Council’s reporting

obligations under the LG Code. As a result, the Schedule may not be suitable for another purpose.

page 3

Other Information


the Schedule and my Independent Auditor’s Report thereon. The Councillors are responsible for the

other information. At the date of this Independent Auditor’s Report, the other information I have

received comprise the general purpose financial statements, special purpose financial statements and

Special Schedule ‘Report on infrastructure assets as at 30 June 2019’.

My opinion on the Schedule does not cover the other information. Accordingly, I do not express any

form of assurance conclusion on the other information. However, as required by the Local

Government Act 1993, I have separately expressed an opinion on the general purpose financial

statements and the special purpose financial statements.

In connection with my audit of the Schedule, my responsibility is to read the other information and, in

doing so, consider whether the other information is materially inconsistent with the Schedule or my

knowledge obtained in the audit, or otherwise appears to be materially misstated.




The Councillors’ Responsibilities for the Schedule

The Councillors are responsible for the preparation of the Schedule 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 the Schedule that is free from material misstatement, whether

due to fraud or error.

In preparing the Schedule, the Councillors are responsible for assessing the Council’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting, unless it is not appropriate to do so.

Auditor’s Responsibilities for the Audit of the Schedule


• obtain reasonable assurance whether the Schedule as a whole is free from material

misstatement, whether due to fraud or error




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 Schedule.

A description of my responsibilities for the audit of the Schedule is located at the Auditing and

Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar8.pdf. The


page 4



• about the security and controls over the electronic publication of the audited Schedule on any

website where it may be presented

• about any other information which may have been hyperlinked to/from the Schedule.

Karen Taylor



16 October 2019

SYDNEY

page 5



Report on Infrastructure Assets as at 30 June 2019

$’000

610 20,403

5%–

5.0%3,338

3

240 212,433 20,930

Other road assets197

Cycleways

4,399

30%0.0%

51,710 21.1%

1,370

33

1,542

5%10%

5%

305

51

30%

5.6%

35,742

30% 30%25%1,513 10% 40%

62,904 40% 40%

3,283

290

1,343 20%

15%

10%

15%3 30%

355,840

33 52

263

287 –

199 3,338

260 263 3

292 Culverts

35%40%5%

20.0%424

1,391

424 30.0%

0% 20% 45%35,742

1,249

420

30%236

5

Buildings – specialised

3

Buildings – non-specialised

28.0%

310 418 5%55%

4

15%20,315 5%40%

201 25%831 25%30%

21

Buildings

Roads

Other

Sub-total0%0%

290

Asset categoryRequired Actual replacement

cost (GRC)maintenanceato satisfactory

Estimated cost

agreed level ofservice set by

Council

497 894 894

31,395 497

30%

5.0%

30%30%

6,674

Sealed roads - Council

Other structuresSub-total

Asset class

to bring assetsEstimated cost

2018/19to bring to the 2018/19 Gross

standard maintenance

45.9%

Unsealed roads

25%

424

1,370 240 305

10%5 52

Footpaths23,360

33 15%20%

1,695

301 82

structures

15%10%

40%30%

33,126

25,937 5%

5%5%

5.0%

Kerb & Gutter 5%

Bridges

424 25,937

74,311 7,460

12,440 1,732 2,954

10,362 Sealed roads - regional 780 780 769

30%

5%2,742 5%

15%

19.1% 38.3% 32.1%

0%

Sub-total 130,194

1,391 511 0.0%

5%

69

292

420

40%

45.0%

532 –

Assets in condition as a percentage of gross replacement cost

Net carryingamount

16,960 16,166

25%10% 25%

25,284

X4A0T

page 6



Report on Infrastructure Assets as at 30 June 2019 (continued)

$’000

network

network

10%

807

20%

15%25%

40%2,277

5%30%

30%

Water supply

Pump Stations

Mains Reticulation

83 94

–

170

0% 5%27,008 5%

45%160

0%Mains - Trunk

13,460 25%

431

Sub-total

12,901

0.0%

10%50%

0%

2

24,330 20% 10%45%

0%

3

40%30%

22,366 45%

50%

maintenance

25%

30%

4 5

333 45% 25%

25%

0%

553 569

Estimated costto bring to the

service set byto satisfactory

41.7%

1

20%

0%

0%

Asset class standard maintenanceareplacement

2018/19ActualRequired

2018/19agreed level of

to bring assets

–

Treatment Plant

Sewerage

Reservoirs

Council

35,634

23,395 617

7,804

cost (GRC)

Gross

–

Estimated cost

28.1%21.4%

15.8%

Mains

324 716 553 231

Pump Stations

1,941

324

132 26

117 120 –

1,059 1,941 Bore Sites

74,333

Asset category

94 10,835

Treatment Plant44.5%47,713

5%

383

0%0%

20%

5%5%

113 151

30%190

551 8.9%

15%40%

24.6%

45%

Sub-total 0.0%695

Net carryingamount

9,213 11,619

15.1%

10%

11,093

695

716 309

231 231

463

1,989

592 736

117 –

431

170


6,676 6,843

732

3,632 8,928

page 7



Report on Infrastructure Assets as at 30 June 2019 (continued)

$’000

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

Infrastructure asset condition assessment ‘key’

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

5.0%30%

5

40%

Council

190 190 14,707

agreed level ofservice set by

Sub-total

5

190 Stormwater drainage

to bring to theRequiredto satisfactory

to bring assets

maintenancea

Gross

maintenanceActual replacement

Asset categoryNet carrying

amount

Open space/ 190

1

68 57

2018/19

5%

2standard

10,663 20%

2018/19

5.0%

5.0%68

40% 30%

14,707

20.0% 40.0% 30.0% 5.0%1,838

10,663

3cost (GRC)

726 726

20.0% 30.0%40.0%

5%

57

4

assets Sub-total2,840 5% 20%

Asset class

Swimming pools726 706 107

recreational 1,838

5%

726

Estimated cost

Stormwater drainage

706 107 2,840

Estimated cost

6,886 582,885 3.6% 20.0% 40.4% 29.8% 6.3%8,705


4321 6

10987

260,787 TOTAL – ALL ASSETS 8,705 8,332

page 8



Report on Infrastructure Assets (continued) for the year ended 30 June 2019

$ ’000

Infrastructure asset performance indicators * consolidated

1. Buildings and infrastructure renewals ratio (1)

Asset renewals (2)

Depreciation, amortisation and impairment

2. Infrastructure backlog ratio (1)

Estimated 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) Excludes Work In Progress (WIP)

(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.

2018 2017

9,647

8,705 3.32% 3.41% 3.65%262,310

8,055

Amounts Prior periods

82.65% 58.95% 93.99%

2019

>= 100%

< 2.00%

> 100%

BenchmarkIndicator

119.76% 117.97% 36.16%

2019

6,886

582,885

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

8,332

1.49% 1.53% 1.66%8,705

X5A0T

page 9



Report on Infrastructure Assets (continued) for the year ended 30 June 2019

$ ’000

Infrastructure asset performance indicators by fund

1. Buildings and infrastructure renewals ratio (2)

Asset renewals (3)

Depreciation, amortisation and impairment

2. Infrastructure backlog ratio (2)

Estimated 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 levelEstimated cost to bring assets to an agreed service level set by CouncilGross 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) Excludes Work In Progress (WIP)(3) 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.

2.97%

53.24%

5.45%

93.68%

General indicators (1)

2018

>= 100%

< 2.00%

> 100%

Benchmark2018

Sewer indicatorsWater indicators20182019

63.67% 186.44%120.72%

3.15%

55.75%

1.54%

2.99%

2.61% 1.46%1.32%

5.48%3.06%

75.04%35.54%

2.68%1.35%

67.03%

2019

47.69%146.88% 10.67%

2019

X6A0T

page 10

forbes shire council

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