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Mid Murray Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2019
Mid Murray Council
General Purpose Financial Statements for the year ended 30 June 2019
Contents
1. Council Certificate
2. Primary Financial Statements:
- Statement of Comprehensive Income- Statement of Financial Position- Statement of Changes in Equity- Statement of Cash Flows
3. Notes to the Financial Statements
4. Independent Auditor's Report - Financial Statements
5. Independent Auditor's Report - Internal Controls
6. Certificates of Audit Independence
- Council Certificate of Audit Independence- Audit Certificate of Audit Independence 49
Page
45
3
6
7
48
2
44
46
page 1
Mid Murray Council
Statement of Comprehensive Income for the year ended 30 June 2019
$ '000
IncomeRates RevenuesStatutory ChargesUser ChargesGrants, Subsidies and ContributionsInvestment IncomeReimbursementsOther Income
Total Income
ExpensesEmployee CostsMaterials, Contracts & Other ExpensesDepreciation, Amortisation & ImpairmentFinance Costs
Total Expenses
Operating Surplus / (Deficit)
Asset Disposal & Fair Value AdjustmentsAmounts Received Specifically for New or Upgraded Assets
Net Surplus / (Deficit) 1
Other Comprehensive IncomeAmounts which will not be reclassified subsequently to operating resultChanges in Revaluation Surplus - I,PP&E
Total Other Comprehensive Income
Total Comprehensive Income
1 Transferred to Statement of Changes in Equity
2g 1,304
Notes
2a2b2c2g
2f
2019
3c
2e
3a9,910 3b
2d
404 1,095
6,931
6,354
2018
14,798 14,114
8,211 7,567
1,096
382
- 4,135
356
6,573
(420)
4,135
2,341
9a -
24,962
(420)
4
437
(159) (128)
25,153
583
22,391
(2,762)
488
582
554
23,397
9,881
961
8 17
(1,565)
3d
5,697
(1,794)
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The above statement should be read in conjunction with the accompanying Notes and Significant Accounting Policies. page 3
Mid Murray Council
Statement of Financial Position as at 30 June 2019
$ '000
ASSETSCurrent AssetsCash and Cash EquivalentsTrade & Other ReceivablesInventoriesTotal Current Assets
Non-Current AssetsFinancial AssetsInfrastructure, Property, Plant & EquipmentTotal Non-Current Assets
TOTAL ASSETS
LIABILITIESCurrent LiabilitiesTrade & Other PayablesBorrowingsProvisionsTotal Current Liabilities
Non-Current LiabilitiesTrade & Other PayablesBorrowingsProvisionsTotal Non-Current Liabilities
TOTAL LIABILITIESNet Assets
EQUITYAccumulated SurplusAsset Revaluation ReservesOther Reserves
Total Council Equity
856 8a8b
189,372
5c
5a
189,422
192,766
3,344
175,841 1,693
2,169
4,905
188,616
192,693
188,737
9a
-
5,275 8c 1,836
8a
936 1,800
154,901
609 11,311
27
11,947
16,852 175,841
19,247
2019
3,956
121
2018
6a 50
3,043 413
500
264 2,822 5b
258
Notes
2,583
11,208
175,421
17,345
19,427
862 12,070
9b 1,093 154,901
175,421
7a
8b8c
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The above statement should be read in conjunction with the accompanying Notes and Significant Accounting Policies. page 4
Mid Murray Council
Statement of Changes in Equity for the year ended 30 June 2019
AssetAccumulated Revaluation Other Total
$ '000 Notes Surplus Reserve Reserves Equity
2019Balance at the end of previous reporting period 19,247 154,901 1,693 175,841
a. Net Surplus / (Deficit) for Year (420) - - (420)
b. Transfers between Reserves 600 - (600) - Balance at the end of period 19,427 154,901 1,093 175,421
2018Balance at the end of previous reporting period 21,269 150,766 1,465 173,500
a. Net Surplus / (Deficit) for Year (1,794) - - (1,794)
b. Other Comprehensive Income- Gain (Loss) on Revaluation of I,PP&E 7a - 4,135 - 4,135 Other Comprehensive Income - 4,135 - 4,135
Total Comprehensive Income (1,794) 4,135 - 2,341
c. Transfers between Reserves (228) - 228 - Balance at the end of period 19,247 154,901 1,693 175,841
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The above statement should be read in conjunction with the accompanying Notes and Significant Accounting Policies. page 5
Mid Murray Council
Statement of Cash Flows for the year ended 30 June 2019
$ '000
Cash Flows from Operating ActivitiesReceiptsOperating ReceiptsInvestment ReceiptsPaymentsOperating Payments to Suppliers and EmployeesFinance Payments
Net Cash provided by (or used in) Operating Activities
Cash Flows from Investing ActivitiesReceiptsAmounts Received Specifically for New/Upgraded AssetsSale of Replaced AssetsSale of Surplus AssetsRepayments of Loans by Community GroupsPaymentsExpenditure on Renewal/Replacement of AssetsExpenditure on New/Upgraded Assets
Net Cash provided by (or used in) Investing Activities
Cash Flows from Financing ActivitiesReceiptsProceeds from BorrowingsPaymentsRepayments of BorrowingsRepayment of Bonds & Deposits
Net Cash provided by (or used in) Financing Activities
Net Increase (Decrease) in Cash Held
plus: Cash & Cash Equivalents at beginning of period
Total Cash, Cash Equivalents & Investments
Notes 2019 2018
25,049 25,105 8 17
(18,026) (20,669)
1,304 1,096 38 223
(547) (465)
11b 6,484 3,988
61 444
(2,603) (3,882) (5,342) (4,996)
21 39
(6,521) (7,076)
753 3,850
(936) (884) (22) -
258 500
(205) 2,966
(242) (122)
11 500 622
X5A0T
The above statement should be read in conjunction with the accompanying Notes and Significant Accounting Policies. page 6
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Contents of the Notes accompanying the Financial Statements
Details
Significant Accounting PoliciesIncomeExpensesAsset Disposal & Fair Value AdjustmentsCurrent AssetsCash & Cash EquivalentsTrade & Other ReceivablesInventoriesNon-Current AssetsFinancial AssetsFixed AssetsInfrastructure, Property, Plant & EquipmentValuation of Infrastructure, Property, Plant & EquipmentLiabilitiesTrade & Other PayablesBorrowingsProvisionsReservesAsset Revaluation ReserveOther ReservesAssets Subject to RestrictionsReconciliation to Statement of CashflowsFunctionsComponents of FunctionsFinancial InstrumentsCommitments for ExpenditureFinancial IndicatorsUniform Presentation of FinancesOperating LeasesSuperannuationContingencies & Assets/Liabilities Not Recognised in the Balance SheetRelated Party Transactions
4119
Page
1
Note
7a
43
20
21
22
5a
8
6a
2 1619
21
1639
29
38
33
12a
1514
17
1312b
18
37
31
39
40
268c
8a
1011
26
269b 269a
2728
20 42
5b 215c 21
7b 23
258b
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page 7
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies
page 8
The principal accounting policies adopted by Council 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.
1 Basis of Preparation
1.1 Compliance with Australian Accounting Standards
This general purpose financial report has been prepared on a going concern basis using the historical cost convention in accordance with Australian Accounting Standards as they apply to not-for-profit entities, other authoritative pronouncements of the Australian Accounting Standards Board, Interpretations and relevant South Australian legislation.
The financial report was authorised for issue by certificate under regulation 14 of the Local Government (Financial Management) Regulations 2011 dated 26th November 2019.
1.2 Historical Cost Convention
Except as stated below, these financial statements have been prepared in accordance with the historical cost convention.
1.3 Critical Accounting Estimates
The preparation of financial statements in conformity with Australian Accounting Standards requires the use of certain critical accounting estimates and requires management to exercise its judgement in applying Council’s accounting policies.
Particular areas involving a high degree of judgement or complexity include the estimation of future payments and timing in relation to tip restoration. Further information in relation to the estimation of these liabilities are given in the relevant sections of these Notes.
1.4 Rounding
All amounts in the financial statements have been rounded to the nearest thousand dollars ($’000).
2 The Local Government Reporting Entity
Mid Murray Council is incorporated under the South Australian Local Government Act 1999 and has its principal place of business at 49 Adelaide Road, Mannum SA. These financial statements include the Council’s direct operations and all entities through which Council controls resources to carry on its functions. In the process of reporting on the Council as a single unit, all transactions and balances between activity areas and controlled entities have been eliminated.
3 Income Recognition
Income is measured at the fair value of the consideration received or receivable. Income is recognised when the Council obtains control over the assets comprising the income, or when the amount due constitutes an enforceable debt, whichever first occurs.
Where grants, contributions and donations recognised as incomes during the reporting period were obtained on the condition that they be expended in a particular manner or used over a particular period, and those conditions were undischarged as at the reporting date, the amounts subject to those undischarged conditions are disclosed in these notes. Also disclosed is the amount of grants, contributions and receivables recognised as incomes in a previous reporting period which were obtained in respect of the Council's operations for the current reporting period.
In recent years the payment of untied financial assistance grants has varied from the annual allocation as shown in the table below:
Financial Assistance Grants Cash
Payment Received
Annual Allocation Difference
2016/17 $5,968,000 $3,714,000 +$2,254,000 2017/18 $3,378,801 $3,684,000 -$305,199 2018/19 $3,959,604 $3,829,002 +$114,598
Supplementary Local Roads Grants Cash
Payment Received
Annual Allocation Difference
2018/19 $982,389 $327,466 +$654,923
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 9
Because these grants are untied, the Australian Accounting Standards require that payments be recognised upon receipt. Accordingly, the operating results of these periods have been distorted compared to those that would have been reported had the grants been paid in the year to which they were allocated.
The Operating Surplus Ratio disclosed in Note 15 has also been calculated after adjusting for the distortions resulting from the differences between the actual grants received and the grants entitlements allocated.
4 Cash, Cash Equivalents and other Financial Instruments
Cash Assets include all amounts readily convertible to cash on hand at Council’s option with an insignificant risk of changes in value with a maturity of three months or less from the date of acquisition.
Receivables for rates and annual charges are secured over the subject land, and bear interest at rates determined in accordance with the Local Government Act 1999. Other receivables are generally unsecured and do not bear interest.
All receivables are reviewed as at the reporting date and adequate allowance made for amounts the receipt of which is considered doubtful.
All financial instruments are recognised at fair value at the date of recognition. A detailed statement of the accounting policies applied to financial instruments forms part of Note 13.
5 Inventories
Inventories held in respect of stores have been valued by using the weighted average cost on a continual basis, after adjustment for loss of service potential. Inventories held in respect of business undertakings have been valued at the lower of cost and net realisable value.
5.1 Real Estate Assets Developments
Real Estate Assets developments have been classified as Inventory in accordance with AASB 102 and are valued at the lower of cost or net realisable value. Cost includes the costs of acquisition, development, borrowing and other costs incurred on
financing of that acquisition and up to the time of sale. Any amount by which cost exceeds the net realisable value has been recognised as an expense.
Revenues arising from the sale of property are recognised in the operating statement when settlement is completed.
Properties not acquired for development, but which Council has decided to sell as surplus to requirements, are recognised at the carrying value at the time of that decision.
5.2 Other Real Estate Held for Resale
Properties not acquired for development, but which Council has decided to sell as surplus to requirements, are recognised at the carrying value at the time of that decision.
Certain properties, auctioned for non-payment of rates in accordance with the Local Government Act but which failed to meet the reserve set by Council and are available for sale by private treaty, are recorded at the lower of the unpaid rates and charges at the time of auction or the reserve set by Council. Holding costs in relation to these properties are recognised as an expense when incurred.
6 Infrastructure, Property, Plant & Equipment
6.1 Initial Recognition
All assets are initially recognised at cost. For assets acquired at no cost or for nominal consideration, cost is determined as fair value at the date of acquisition.
All non-current assets purchased or constructed are capitalised as the expenditure is incurred and depreciated as soon as the asset is held “ready for use”. Cost is determined as the fair value of the assets given as consideration plus costs incidental to the acquisition, including architects' fees and engineering design fees and all other costs incurred. The cost of non-current assets constructed by the Council includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overhead.
_
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 10
6.2 Materiality
Assets with an economic life in excess of one year are only capitalised where the cost of acquisition exceeds materiality thresholds established by Council for each type of asset. In determining (and in annually reviewing) such thresholds, regard is had to the nature of the asset and its estimated service life. Examples of capitalisation thresholds applied during the year are given below. No capitalisation threshold is applied to the acquisition of land or interests in land.
Buildings & Structures $15,000 Infrastructure $10,000 Major Plant & Equipment $15,000 Minor Plant $5,000 IT Equipment $3,000 Furniture & Fittings $5,000 Heritage Tourism Assets $10,000
6.3 Subsequent Recognition
All material asset classes are revalued on a regular basis such that the carrying values are not materially different from fair value. Significant uncertainties exist in the estimation of fair value of a number of asset classes including land, buildings and associated structures and infrastructure. Further detail of these uncertainties, and of existing valuations, methods and valuers are provided at Note 7.
6.4 Depreciation of Non-Current Assets
Other than land, all infrastructure, property, plant and equipment assets recognised are systematically depreciated over their useful lives on a straight-line basis which, in the opinion of Council, best reflects the consumption of the service potential embodied in those assets.
Depreciation methods, useful lives and residual values of classes of assets are reviewed annually.
Major depreciation periods for each class of asset are listed below. Depreciation periods for infrastructure assets have been estimated based on the best information available to Council, but appropriate records covering the entire life cycle of these assets are not available, and extreme care should be used in interpreting financial information based on these estimates.
Infrastructure Bridges & Major Culverts 50 to 66 years Landfill Cells 10 years Effluent Drainage 5 to 100 years Footpaths 26 to 87 years Kerbs 67 to 70 years Recreation Open Space 5 to 100 years Roads 18 to 75 years Roads Earthworks 500 years Stormwater Drainage 50 to 88 years Street Furniture 5 to 30 years Water Supply 5 to 100 years Plant & Equipment Major Plant & Equipment 5 to 25 years Minor Plant 2 to 15 years IT Equipment 2 to 15 years
Buildings & Structures 15 to100 years Furniture & Fittings 2 to 20 years Heritage Tourism Assets 50 years
6.5 Impairment
Assets whose future economic benefits are not dependent on the ability to generate cash flows, and where the future economic benefits would be replaced if Council were deprived thereof, are not subject to impairment testing.
Other assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount (which is the higher of the present value of future cash inflows or value in use).
Where an asset that has been revalued is subsequently impaired, the impairment is first offset against such amount as stands to the credit of that class of assets in Asset Revaluation Reserve, any excess being recognised as an expense.
6.6 Borrowing Costs
Borrowing costs in relation to qualifying assets (net of offsetting investment revenue) have been capitalised in accordance with AASB 123 “Borrowing Costs”. The amounts of borrowing costs recognised as an expense or as part of the carrying amount of qualifying assets are disclosed in Note 3, and the amount (if any) of interest revenue offset against borrowing costs in Note 2.
_
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 11
7 Investment property
Council does not currently have any Investment property.
8 Payables
8.1 Goods & Services
Creditors are amounts due to external parties for the supply of goods and services and are recognised as liabilities when the goods and services are received. Creditors are normally paid 30 days after the month of invoice. No interest is payable on these amounts.
8.2 Payments Received in Advance & Deposits
Amounts other than grants received from external parties in advance of service delivery, and security deposits held against possible damage to Council assets, are recognised as liabilities until the service is delivered or damage reinstated, or the amount is refunded as the case may be.
9 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred and are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method.
Borrowings are carried at their principal amounts which represent the present value of future cash flows associated with servicing the debt. Interest is accrued over the period to which it relates, and is recorded as part of “Payables”.
10 Employee Benefits
10.1 Salaries, Wages & Compensated Absences
Liabilities for employees’ entitlements to salaries, wages and compensated absences expected to be paid or settled within 12 months of reporting date are accrued at nominal amounts (including payroll based oncosts) measured in accordance with AASB 119.
Liabilities for employee benefits not expected to be paid or settled within 12 months are measured as the present value of the estimated future cash outflows
(including payroll based oncosts) to be made in respect of services provided by employees up to the reporting date. Present values are calculated using government guaranteed securities rates with similar maturity terms.
No accrual is made for sick leave as Council experience indicates that, on average, sick leave taken in each reporting period is less than the entitlement accruing in that period, and this experience is expected to recur in future reporting periods. Council does not make payment for untaken sick leave.
10.2 Superannuation
The Council makes employer superannuation contributions in respect of its employees to various funds under the “choice of fund” legislation. The majority of employees are members of the Statewide Superannuation Scheme. This Scheme has two types of membership, each of which is funded differently.
No changes in accounting policy have occurred during either the current or previous reporting periods. Details of the accounting policies applied and Council’s involvement with the schemes are reported in Note 18.
11 Provisions for Reinstatement, Restoration and Rehabilitation
Close down and restoration costs include the dismantling and demolition of infrastructure and the removal of residual materials and remediation and rehabilitation of disturbed areas. Estimated close down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs and are carried at the net present value of estimated future costs.
Although estimated future costs are based on a closure plan, such plans are based on current environmental requirements which may change. Council’s policy to maximise recycling is extending the operational life of these facilities, and significant uncertainty exists in the estimation of the future closure date.
_
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 12
12 Leases
Lease arrangements have been accounted for in accordance with Australian Accounting Standard AASB 117.
In respect of finance leases, where Council substantially carries all of the risks incident to ownership, the leased items are initially recognised as assets and liabilities equal in amount to the present value of the minimum lease payments. The assets are disclosed within the appropriate asset class and are amortised to expense over the period during which the Council is expected to benefit from the use of the leased assets. Lease payments are allocated between interest expense and reduction of the lease liability, according to the interest rate implicit in the lease.
In respect of operating leases, where the lessor substantially retains all of the risks and benefits incident to ownership of the leased items, lease payments are charged to expense over the lease term.
13 Construction Contracts
Construction works undertaken by Council for third parties are generally on an agency basis where the third party reimburses Council for actual costs incurred, and usually do not extend beyond the reporting period. As there is no profit component, such works are treated as 100% completed. Reimbursements not received are recognised as receivables and reimbursements received in advance are recognised as “payments received in advance”.
For works undertaken on a fixed price contract basis, revenues and expenses are recognised on a percentage of completion basis. Costs incurred in advance of a future claimed entitlement are classified as work in progress in inventory. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
14 Equity Accounted Council Businesses
Council currently do not have cooperative arrangements with other Councils for the provision of services and facilities.
15 GST Implications
In accordance with UIG Abstract 1031 “Accounting for the Goods & Services Tax”
Receivables and Creditors include GSTreceivable and payable.
Except in relation to input taxed activities,revenues and operating expenditures excludeGST receivable and payable.
Non-current assets and capital expendituresinclude GST net of any recoupment.
Amounts included in the Statement of CashFlows are disclosed on a gross basis.
16 New accounting standards and UIG interpretations
In the current year, Council adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for the current reporting period. The adoption of the new and revised Standards and Interpretations has not resulted in any material changes to Council's accounting policies.
Mid Murray Council has not applied any Australian Accounting Standards and Interpretations that have been issued but are not yet effective.
AASB 7 Financial Instruments - Disclosures and AASB 9 Financial Instruments commenced from 1 July 2018 and have the effect that non-contractual receivables (e.g. rates & charges) are now treated as financial instruments. Although the disclosures made in Note 13 Financial Instruments have changed, there are no changes to the amounts disclosed.
AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-for-Profit Entities, which will commence from 1 July 2019, affect the timing with which revenues, particularly special purpose grants, are recognised. Amounts received in relation to contracts with sufficiently specific performance obligations will in future only be recognised as these obligations are fulfilled. In these Statements, the sum of $982,000 has been recognised as revenue, in accordance with the current Standards, but would in future be recorded
_
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 13
as a liability "Amounts in Advance" until the performance obligations have been fulfilled.
AASB 16 Leases, which will commence from 1 July 2019, requires that the right of use conveyed by leasing contracts - except leases with a maximum term of 12 months and leases for non-material amounts - be recognised as a form of Infrastructure, Property, Plant and Equipment, and that the lease liability be disclosed as a liability.
As a result of the new accounting procedure, the following changes will be made to balance sheet amounts as at 1 July 2019:
Note Line Item Change
IPP&E Right-of-Use Asset + $50,755 Lease Liability + $50,755
The effect on profit and loss in future years will be non-material.
Some Australian Accounting Standards and Interpretations have been issued but are not yet effective. Those standards have not been applied in these financial statements. Council will implement them when they are effective.
The standards that are expected to have a material impact upon Council's future financial statements are:
Effective for annual reporting periods beginning on or after 1 July 2019
AASB 15 Revenue from Contracts withCustomers, AASB 1058 Income of Not-for-ProfitEntities and AASB 2016-8 Amendments toAustralian Accounting Standards - AustralianImplementation Guidance for Not-for-ProfitEntities.
AASB 1058 clarifies and simplifies the incomerecognition requirements that apply to not-to-profit (NFP) entities, in conjunction with AASB15, and AASB 2016-8. These Standardssupersede the majority of income recognitionrequirements relating to public sector NFPentities, previously in AASB 1004 Contributions.
Identifiable impacts at the date of this report are:
Some grants received by the Council will be recognised as a liability, and subsequently recognised progressively as revenue as the Council satisfies its performance obligations under the grant. At present, such grants are recognised as revenue upfront.
Grants that are not enforceable and/or not sufficiently specific will not qualify for deferral, and continue to be recognised as revenue as soon as they are controlled. Council receives several grants from the Federal Government and State Government for which there are no sufficiently specific performance obligations these are expected to continue being recognised as revenue upfront assuming no change to the current grant arrangements.
Depending on the respective contractual terms, the new requirements of AASB 15 may potentially result in a change to the timing of revenue from sales of the Council's goods and services such that some revenue may need to be deferred to a later reporting period to the extent that the Council has received payment but has not met its associated performance obligations (such amounts would be reported as a liability in the meantime).
Prepaid rates will not be recognised as revenue until the relevant rating period starts. Until that time these receipts will be recognised as a liability (unearned revenue). There will be no impact upon the recognition of other fees and charges.
Based on Councils assessment, if Council had adopted the new standards in the current financial year it would have had the following impacts:
- Revenue decrease of $982,000 due to deferral of grant funding, pre-paid rates, and other sales related revenue (based on the facts available to Council at the date of assessment).
- There would be an equal reduction in the reported equity as the reduced revenue will require an increase in recognition of contract liabilities, and statutory receivables.
- Net result would be lower on initial application as a result of decreased revenue. A range of
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 14
new disclosures will also be required by the new standards in respect of the council's revenue.
Transition method
The Council intends to apply AASB 15, AASB 1058 and AASB 2016-8 initially on 1 July 2019, using the modified retrospective approach.
The Council intends to apply the practical expedients available for the full retrospective method. Where revenue has been recognised in full under AASB 1004, prior to 1 July 2019, but where AASB 1058 would have required income to be recognised beyond that date, no adjustment is required. Further, Council is not required to restate income for completed contracts that start and complete within a financial year. This means where income under AASB 1004 was recognised in the comparative financial year (i.e. 2018/19), these also do not require restatement.
The following list identifies all the new and amended Australian Accounting Standards, and Interpretation, that were issued but not yet effective at the time of compiling these illustrative statements.
The standards are expected to have a material impact upon Council's future financial statements are:
Effective for annual reporting periods beginning on or after 1 January 2019
AASB 15 Revenue from Contracts withCustomers
AASB 1058 Income of Not-for-Profit Entities
AASB 1058 Income of Not-for-Profit EntitiesAppendix D)
The standards are not expected to have a material impact upon Council's future financial statements are:
Effective for annual reporting periods beginning on or after 1 January 2019
AASB 16 Leases
AASB 16 Leases (Appendix D)
AASB 1059 Service Concession Arrangements:Grantors
AASB 1059 Service Concession Arrangements:Grantors (Appendix D)
AASB 2016-8 Amendments to AustralianAccounting Standards - AustralianImplementation Guidance for Not-for-ProfitEntities
AASB 2017-1 Amendments to AustralianAccounting Standards - Transfers of InvestmentProperty, Annual Improvements 2014-2016Cycle and Other Amendments
AASB 2017-4 Amendments to AustralianAccounting Standards – Uncertainty over IncomeTax Treatments
AASB 2017-6 Amendments to AustralianAccounting Standards – Prepayment Featureswith Negative Compensation
AASB 2017-7 Amendments to AustralianAccounting Standards – Long-term Interests inAssociates and Joint Ventures
AASB 2018-1 Amendments to AustralianAccounting Standards – Annual Improvements2015–2017 Cycle
AASB 2018-2 Amendments to AustralianAccounting Standards – Plan Amendment,Curtailment or Settlement
AASB 2018-3 Amendments to AustralianAccounting Standards – Reduced DisclosureRequirements
AASB 2018-4 Amendments to AustralianAccounting Standards – AustralianImplementation Guidance for Not-for-ProfitPublic Sector Licensors
AASB 2018-5 Amendments to AustralianAccounting Standards - Deferral of AASB 1059
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 1. Summary of Significant Accounting Policies (continued)
page 15
Effective for annual reporting periods beginning on or after 1 January 2021
AASB 17 Insurance Contracts
AASB 17 Insurance Contracts (Appendix D)
17 Comparative Figures
To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes.
18 Disclaimer
Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 2. Income
$ '000
(a). Rates Revenues
General RatesGeneral RatesLess: Mandatory RebatesLess: Discretionary Rebates, Remissions & Write OffsTotal General Rates
Other Rates (Including Service Charges)Natural Resource Management LevyWater SupplyCommunity Wastewater Management SystemsSeparate & Special RatesTV TransmissionWaste RecyclingTotal Other Rates
Other ChargesPenalties for Late PaymentLegal & Other Costs RecoveredTotal Other ChargesTotal Rates Revenues
(b). Statutory Charges
Building FeesTown Planning FeesHealth & Septic Tank Inspection FeesAnimal Registration Fees & FinesOther Licences, Fees & FinesTotal Statutory Charges
(c). User Charges
Cemetery FeesHall & Equipment HireProperty LeaseSundryCaravan Park RevenueMannum Dock & Morgan MuseumMannum Leisure CentreWaste Management FeesOtherTotal User Charges
171 27
37 37 97
1,095 961
143
15 7
(65)
12,550
404
14,114
183 81
105
16 71
437
31
226 221
2018Notes
(156) (163)
12,332
540
13,265
2019
(62)
57 55 755 798
135
1,647
1 134
14 20 19
13,037
544
145 14,798
1,616
141 4
72
14
23 71
28 39
33
360 299 45 56
242 285
275
48
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page 16
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 2. Income (continued)
$ '000
(d). Investment Income
Interest on Investments - Local Government Finance Authority - Banks & OtherTotal Investment Income
(e). Reimbursements
Private WorksExpense PaymentsTotal Reimbursements
(f). Other Income
Insurance & Other RecoupmentsRebates & Bonus ReceivedDonationsOtherTotal Other Income
(g). Grants, Subsidies, Contributions
Amounts Received Specifically for New or Upgraded AssetsTotal Amounts Received Specifically for New or Upgraded AssetsOther Grants, Subsidies and ContributionsUntied - Financial Assistance GrantRoads to RecoveryLibrary and CommunicationsTotal Other Grants, Subsidies and ContributionsTotal Grants, Subsidies, ContributionsThe functions to which these grants relate are shown in Note 12.
(i) Sources of GrantsCommonwealth GovernmentState GovernmentOtherTotal
5,697
989 23 20
6,354
427 4,942 3,379
1,304 1,096
8 17
6 -
Notes 2019 2018
5
- 14
2 3
7,658 6,793
583
7,658
195 59
202 58
285
1,760 1,477 5,703 5,257
962
1,304
6,793
7
39 186
375 577
1,096
356
382 582
37 57 75
1,309
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 2. Income (continued)
$ '000
(h). Conditions over Grants & Contributions
Grants and contributions which were obtained on the condition that theybe expended for specified purposes or in a future period, but which arenot yet expended in accordance with those conditions, are as follows:
Unexpended at the close of the previous reporting period
Less:Expended during the current period from revenuesrecognised in previous reporting periodsRoads InfrastructureFederal Infrastructure ProjectsState Infrastructure ProjectsHeritage & Cultural ServicesHealthy CommunitiesSubtotal
Plus:Amounts recognised as revenues in this reportingperiod but not yet expended in accordance with the conditionsRoads InfrastructureFederal Infrastructure ProjectsState Infrastructure ProjectsOtherSubtotal
Unexpended at the close of this reporting period
Net increase (decrease) in assets subject to conditionsin the current reporting period
79
(61) (42)
771
(4)
982 1,087
(840) (122)
386 -
735 438
(105) 316
- 52
218 345
Notes 2019 2018
(225) -
(80)
1,087
93
(280) - (270) -
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 3. Expenses
$ '000
(a). Employee Costs
Salaries and WagesEmployee Leave ExpenseSuperannuation - Defined Contribution Plan ContributionsSuperannuation - Defined Benefit Plan ContributionsWorkers' Compensation InsuranceLess: Capitalised and Distributed CostsTotal Operating Employee Costs
Total Number of Employees (full time equivalent at end of reporting period)
(b). Materials, Contracts and Other Expenses
(i) Prescribed ExpensesAuditor's Remuneration - Auditing the Financial ReportsBad and Doubtful DebtsElected Members' ExpensesSubtotal - Prescribed Expenses
(ii) Other Materials, Contracts and ExpensesContractorsEnergyMaintenanceLegal ExpensesNatural Resources Levy (NRM)Other Government LeviesParts, Accessories & Other MaterialsProfessional ServicesSundryFuel & OilsInsurancesRubbish Collection ContractorTelephoneVehicle Registration & TPIWater & SewerDonations & ContributionsWaste ServicesFreightComputer Hardware, Software & SupportLess: Capitalised and Distributed CostsSubtotal - Other Material, Contracts & Expenses
Total Materials, Contracts and Other Expenses 9,910
854 601 200 207 136
789 357
536
108 120
324 265
18
(7,361) (8,482)
(393) (385)
695 798
210
6,753 8,266
170 545
426 396
426
552
91 224
243 282
256
2,430
9,616 9,586
37 141
3,909
790 63
14
7,567
18
694 365
209 330
132
309 253
667 694
390
8 7 (2)
7,047
532 537 64
9,881
8,211
102
179 541
94
Notes 2019 2018
403 7,206
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 3. Expenses (continued)
$ '000
(c). Depreciation, Amortisation and Impairment
(i) Depreciation and AmortisationBuildings & Other StructuresInfrastructure- Roads- Road Earthworks- Bridges- Footpaths- Kerbing- Stormwater Drainage- Open Space Parks & Gardens- Water Licences & Supply- Effluent Drainage- Capping and ReinstatementPlant & EquipmentFurniture & FittingsHeritage Tourism AssetsTotal Depreciation, Amortisation and Impairment
(d). Finance Costs
Interest on Overdraft and Short-Term DrawdownInterest on LoansTotal Finance Costs
Note 4. Asset Disposal & Fair Value Adjustments
Infrastructure, Property, Plant & Equipment
(i) Assets Renewed or Directly ReplacedProceeds from DisposalLess: Carrying Amount of Assets SoldGain (Loss) on Disposal
(ii) Assets Surplus to RequirementsProceeds from DisposalLess: Carrying Amount of Assets SoldGain (Loss) on Disposal
Net Gain (Loss) on Disposal or Revaluation of Assets
6,931 8
419
(154) (84)
8
(267)
223 38
249
6,573
554 239 554 488
-
97 -
734 835
444 (105) (711)
(116) 139
61
(44)
285 298
1,114 1,041
86 86
413 98 410
8 8
80
250 250 122
(159) (128)
Notes 2019 2018
3,250 3,260
71 68 81
124
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 5. Current Assets
$ '000
(a). Cash & Cash Equivalents
Cash on Hand at BankDeposits at CallTotal Cash & Cash Equivalents
(b). Trade & Other Receivables
Rates - General & OtherAccrued RevenuesDebtors - GeneralOther Levels of GovernmentGST RecoupmentPrepaymentsLoans to Community OrganisationsSubtotal
Less: Allowance for Doubtful DebtsTotal Trade & Other Receivables
(c). Inventories
Stores & MaterialsTrading StockTotal Inventories
Note 6. Non-Current Assets
(a). Financial Assets
ReceivablesLoans to Community OrganisationsOther DebtorsTotal ReceivablesTotal Financial Assets
Notes 2019 2018
(9) 110
258 500
5 1
267 390
2,039 1,977
221 192 145 182
428 518 - 179
2,822 3,043
2,863 3,082 25 33
(41) (39)
225 376 39 37
- 58
264 413
50
50 63
50 121 121
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 7a. Infrastructure, Property, Plant & Equipment
Fair Value At At Carrying At At Carrying
$ '000 Level Fair Value Cost Dep'n Value Fair Value Cost Dep'n Value
Capital Work in Progress 3 - 4,433 - 4,433 - - - - (710) - - - 3,723 - 3,723 Land 2 6,201 348 122 6,427 42 - (104) - - (185) - 6,097 83 - 6,180 Land 3 18,334 - - 18,334 - - - - - - - 18,334 - - 18,334 Buildings & Other Structures 2 5,215 35 4,722 528 1,233 862 - (91) 322 1 - 5,427 2,247 4,819 2,855 Buildings & Other Structures 3 42,618 2,374 21,782 23,210 458 - - (1,023) - (1) - 43,076 2,373 22,805 22,644 Infrastructure - Roads 3 85,208 4,895 42,435 47,668 1,460 1,333 (140) (3,250) 1,170 2 - 84,405 8,345 44,507 48,243 - Road Earthworks 3 48,593 32 - 48,625 - - - (97) - (1) - 48,593 31 97 48,527 - Bridges 3 5,162 - 2,610 2,552 292 - - (86) (292) - - 5,162 - 2,696 2,466 - Footpaths 3 2,126 591 929 1,788 219 - - (71) - 1 - 2,126 810 999 1,937 - Kerbing 3 5,390 297 2,978 2,709 - - - (81) - - - 5,390 297 3,059 2,628 - Stormwater Drainage 3 10,239 354 4,162 6,431 52 - - (124) - (1) - 10,239 405 4,286 6,358 - Structures 3 6 - 6 - - - - - - - - - - - - - Open Space Parks & Gardens 3 8,927 198 3,960 5,165 383 - - (250) (160) 1 - 8,927 422 4,210 5,139 - Water Licences & Supply 3 345 - 80 265 - - - (8) - - - 345 - 88 257 - Effluent Drainage 3 19,863 15 6,353 13,525 - - - (410) - (1) - 19,863 15 6,764 13,114 - Capping and Reinstatement 3 996 - 502 494 587 - - (413) 190 185 - 2,079 - 1,036 1,043 Plant & Equipment 3 - 10,843 5,739 5,104 70 281 (14) (734) - - - - 11,041 6,334 4,707 Furniture & Fittings 3 - 3,736 2,744 992 512 - - (285) (411) (2) - - 3,837 3,031 806 Heritage Tourism Assets 3 - 383 17 366 34 128 - (8) (109) - - - 436 25 411 Total Infrastructure, Property,Plant & Equipment
Comparatives 253,934 22,360 93,925 182,369 4,996 3,886 (795) (6,573) - 599 4,135 259,223 28,534 99,141 188,616
189,372 104,756 34,065 259,223 28,534 260,063 (6,931) - (1)
New / Upgrade Renewals
-
Asset Movements during the Reporting Periodas at 30/6/2019
Depreciation Expense (Note
3c)
WDVof Asset
Disposals
WIPTransfers
Adjustments& Transfers
99,141
Revaluation Incrementsto Equity (ARR)
(Note 9)Acc.Acc.
as at 30/6/2018
188,616 5,342 (258) 2,604
Asset Additions
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 7b. Valuation of Infrastructure, Property, Plant & Equipment &Investment Property
$ '000
Valuation of Assets
The fair value of assets and liabilities must be estimated in accordance with various Accounting Standards for eitherrecognition 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).
Refer to Note 7a for the disclosure of the Fair Value Levels of Infrastructure, Property, Plant and Equipment Assets.
Information on ValuationsCertain land, and the buildings and structures thereon, are shown above as being based on fair value hierarchylevel 2 valuation inputs. They are based on prices for similar assets in an active market, with directly or indirectlyobservable adjustments for specific advantages or disadvantages attaching to the particular asset.
Valuations of Crown land, community land and land subject to other restrictions on use or disposal, shown above as being based on fair value hierarchy level 3 valuation inputs, are based on prices for similar assets in an active market, but include adjustments for specific advantages or disadvantages attaching to the particular asset that are not directly or indirectly observable in that market, or the number and / or amount of observable adjustments of which are so great that the valuation is more fairly described as being based on level 3 valuation inputs.
There is no known market for buildings, infrastructure and other assets. These assets are valued at depreciatedcurrent replacement cost. This method involves:
- The determination of the cost to construct the asset (or its modern engineering equivalent) using current prices for materials and labour, the quantities of each being estimated based on recent experience of this or similar Councils, or on industry construction guides where these are more appropriate.
- The calculation of the depreciation that would have accumulated since original construction using current estimates of residual value and useful life under the prime cost depreciation method adopted by Council.
This method has significant inherent uncertainties, relying on estimates of quantities of materials and labour, residual values and useful lives, and the possibility of changes in prices for materials and labour, and the potential for development of more efficient construction techniques.
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 7b. Valuation of Infrastructure, Property, Plant & Equipment &Investment Property (continued)
$ '000
Valuation of Assets (continued)
Other InformationAt 1 July 2004 upon the transition to AIFRS, Council elected pursuant to AASB 1.D5 to retain a previously establisheddeemed cost under GAAP as its deemed cost. With subsequent addition at cost, this remains as the basis ofrecognition of non-material asset classes.
Upon revaluation, the current new replacement cost and accumulated depreciation are re
‐
stated such that the difference represents the fair value of the asset determined in accordance with AASB 13 Fair Value Measurement: accumulated depreciation is taken to be the difference between current new replacement cost and fair value. In the case of land, current replacement cost is taken to be the fair value.
Highest and best useAll of Council's non financial assets are considered as being utilised for their highest and best use.
Transition to AASB 13 - Fair Value MeasurementThe requirements of AASB 13 Fair Value Measurement have been applied to all valuations undertaken since 1 July 2013 as shown by the valuation dates by individual asset classes below.
Land - Basis of valuation: Fair Value / Market Value - Date of valuation: 30 June 2015 - Valuer: Maloney Field Services Pty Ltd
Land Improvements - Basis of valuation: Recognised at Cost
Buildings & Other Structuress - Basis of valuation: Fair Value / Market Value - Date of valuation: 30 June 2015 - Valuer: Maloney Field Services Pty Ltd
Mid Murray Council have identified assets which are required to be valued under a market approach, in accordance with AASB 13 - Fair Value Measurement. The assets were subsequently valued by Maloney Field Services as at 30 June 2015. The balance of the assets were valued at Depreciated Replacement Cost.
InfrastructureRoads - Basis of valuation: Replacement Cost. Additons at cost. - Date of valuation: 1 July 2016. - Valuer: Council valuation using unit rates
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 7b. Valuation of Infrastructure, Property, Plant & Equipment &Investment Property (continued)
$ '000
Valuation of Assets (continued)
Infrastructure (continued)Effluent Drainage - Basis of valuation: Written Down Replacement Cost. Additons at cost. - Date of valuation: 1 July 2017. - Valuer: Gayler Professional Engineering
Stormwater Drainage - Basis of valuation: Written Down Replacement Cost. Additons at cost. - Date of valuation: 30 June 2011 - Valuer: Maloney Field Services Pty Ltd
Bridges and Major Culverts - Basis of valuation: Written Down Replacement Cost. Additons at cost. - Date of valuation: 1 July 2017. - Valuer: Tonkins Consultancy
Council plans to undertake a full revaluation that will include condition based assessments and review of unit rates of of its assets on a five-yearly rolling program according to the following schedule in consultation with its external assetmanagement consultants.Stormwater 2019/20Land,Buildings & Assoc Structures 2019/20Footpaths & Kerbing 2020/21CWMS & Water Supply 2022/23Bridges & Major Culverts 2022/23Roads 2021/22
Note 8. Liabilities
$ '000
(a). Trade and Other Payables
Goods & ServicesAccrued Expenses - Employee EntitlementsAccrued Expenses - Finance CostsDeposits, Retentions & BondsTotal Trade and Other Payables
20182018Non CurrentCurrent Current
1,644 -
- 2,169
Non Current
27
Notes2019
-
2019
2,583
410 2,027
5 - - 141 - -
391 - -
134 27
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 8. Liabilities (continued)
$ '000
(b). Borrowings
LoansTotal BorrowingsAll interest bearing liabilities are secured over the future revenues of the Council
(c). Provisions
Employee Entitlements (including oncosts)Future Reinstatement / Restoration, etcTotal Provisions
Note 9. Reserves
$ '000
(a). Asset Revaluation Reserve
LandLand - OtherBuildings & Other StructuresInfrastructure- Roads- Road Earthworks- Bridges- Stormwater Drainage- Effluent Drainage- Capping and ReinstatementTotal Asset Revaluation ReserveComparatives
$ '000
(b). Other Reserves
Building & Infrastructure ReserveEffluent Drainage ReserveProjects ReserveTotal Other ReservesComparatives
-
792 301 - - 1,093
577
7,615 - - 11,566 -
-
-
11,566
Transfers Impairments
48,593
- 6,895
-
Notes
154,901 150,766
- -
-
54,423 - -
- 6,895 4,365 - -
-
429 - - - 429
7,615
54,423
-
20,438
577 - -
4,135
37 (37)
864 (864)
1/7/2018 Tfrs from Reserve
Other Movements 30/6/2019
1,465 1,693
- (600) 1,093
Tfrs to Reserve
1,693
20,438 - -
- -
-
2018Current Non Current
22 1,836 1,800 862
856 936 11,208
2019 2019 2018Notes Current Non Current
123 1,762 78 739
11,311 856
1,814
11,208
609 531 38
30/6/2019
-
11,311 936
1/7/2018 Increments (Decrements)
228 - - - - -
-
-
-
-
154,901 154,901
Notes
-
4,365
48,593 - -
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 9. Reserves (continued)
$ '000
PURPOSES OF RESERVESAsset Revaluation ReservesThe asset revaluation reserve is used to record increments and decrements arising from changes in fair value ofnon current assets (less any subsequent impairment losses, where applicable).
Note 10. Assets Subject to Restrictions
$ '000
The uses of the following assets are restricted, wholly or partially, by legislation or other externally imposed requirements. The assets are required to be utilised for the purposes for which control was transferred to Council, or for which the revenues were originally obtained.
Cash & Financial AssetsUnexpended amounts received from Federal GovernmentOpen Space Contributions - FederalRoads To Recovery - FederalSmart Cities & Suburbs Program - FederalWomen of the River Exhibition Grant - FederalDrought Funding - FederalMurray Coorong Trail - State Open Space Contributions - StateSpecial Local Road Grant (Murraylands Road) - StateOther - StateOther - Non GovernmentTotal Cash & Financial Assets
122 63 -
1,087
1 386
- 224
42
2018Notes
52 -
2019
-
982
- 189
120 34 83
198 330 - 225
1/7/2018 Increments (Decrements) Transfers Impairments 30/6/2019
Notes
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 11. Reconciliation to Statement of Cash Flows
$ '000
(a). Reconciliation of Cash
Cash Assets comprise highly liquid investments with short periods tomaturity subject to insignificant risk of changes of value. Cash at theend of the reporting period as shown in the Statement of Cash Flowsis reconciled to the related items in the Balance Sheet as follows:
Total Cash & Equivalent AssetsBalances per Statement of Cash Flows
(b). Reconciliation of Change in Net Assets to Cash from Operating Activities
Net Surplus/(Deficit)Non-Cash Items in Income Statements Depreciation, Amortisation & Impairment Grants for Capital Acquisitions (Treated as Investing Activity Receipts) Net (Gain) Loss on Disposals
Add (Less): Changes in Net Current Assets Net (Increase)/Decrease in Receivables Change in Allowances for Under-Recovery of Receivables Net (Increase)/Decrease in Inventories Net (Increase)/Decrease in Other Current Assets Net Increase/(Decrease) in Trade & Other Payables Net Increase/(Decrease) in Unpaid Employee Benefits Net Increase/(Decrease) in Other ProvisionsNet Cash provided by (or used in) operations
(c). Financing Arrangements
Unrestricted access was available at balance date to the following lines of credit:Corporate Credit CardsLGFA Cash Advance Debenture Facility 15,829 16,582
192
55
97 42
724
258
(420) (1,794)
6,573
258 500
6,931
3,988
5
Notes
409 (465)
159 128 5,366 3,811
211
149 (220)
38 33
39 6,484
2019 2018
500
(1,304) (1,096)
(2) 2
62
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 12a. Functions
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual$ '000 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
CEO - 11 788 1,144 (788) (1,133) - - 6,992 - People & Culture 3 554 - (551) - - 3 - - Corporate Services 3,399 3,388 494 1,077 2,905 2,311 3,255 3,007 210 33,814 Financial Services 48 48 1,490 1,318 (1,442) (1,270) 5 5 - - Funding 13,731 13,012 630 619 13,101 12,393 - - - - Information Management 8 11 1,455 1,482 (1,447) (1,471) 5 5 679 820 Libraries 24 21 171 237 (147) (216) 23 20 - - Community Care 70 76 1,115 805 (1,045) (729) 1 58 113 120 Community Transport 10 166 12 162 (2) 4 10 166 - - Cultural Services 97 41 172 157 (75) (116) 54 - - - Tourism and Development 467 325 1,282 1,095 (815) (770) 75 - 897 917 Council Properties 610 317 1,787 1,683 (1,177) (1,366) 227 - 17,954 18,642 Regulatory Services 114 144 464 495 (350) (351) - - 36 37 Health Services 36 48 211 222 (175) (174) - - - - Environment Services 93 285 103 324 (10) (39) 11 - - - Development Services 251 324 1,101 1,463 (850) (1,139) - 10 - - Waste Management 476 513 2,682 2,166 (2,206) (1,653) - - 3,002 2,000 Marine Facilities - - 40 58 (40) (58) - - 722 735 Sport and Recreation 340 73 704 496 (364) (423) 268 - 27,215 2,661 Open Space 206 44 1,178 1,198 (972) (1,154) 206 44 6,507 4,413 Footpaths and Cycle Tracks - 21 104 159 (104) (138) - 21 1,936 1,788 (continued on next page)
Details of these Functions/Activities are provided in Note 12(b).
Functions/Activities
Income, Expenses and Assets have been directly attributed to the following Functions / Activities.
INCOME EXPENSES OPERATINGSURPLUS (DEFICIT)
TOTAL ASSETS HELD (CURRENT &
NON-CURRENT)
GRANTS INCLUDEDIN INCOME
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 12a. Functions (continued)
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual$ '000 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
Stormwater - - 163 219 (163) (219) - - 6,358 6,430 Cemeteries 48 39 86 91 (38) (52) - - 201 210 Roads 18 15 6,081 6,286 (6,063) (6,271) - - 101,865 101,212 Infrastructure Services 2,173 2,393 862 822 1,311 1,571 2,114 2,358 - - Works Overheads 126 91 132 100 (6) (9) - - - - Plant and Machinery 112 114 114 260 (2) (146) - - 4,703 5,099 Water Supply 57 55 15 16 42 39 - - 258 265 Community Wastewater Management 880 816 972 999 (92) (183) 100 - 13,118 13,530
Total Functions/Activities 23,397 22,391 24,962 25,153 (1,565) (2,762) 6,354 5,697 192,766 192,693 Revenues and expenses exclude net gain (loss) on disposal or revaluation of assets, amounts received specifically for new or upgraded assets and physical resources received free of charge.
Functions/Activities
Income, Expenses and Assets have been directly attributed to the following Functions / Activities.Details of these Functions/Activities are provided in Note 12(b).
INCOME EXPENSES OPERATINGSURPLUS (DEFICIT)
GRANTS INCLUDEDIN INCOME
TOTAL ASSETS HELD (CURRENT &
NON-CURRENT)
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 12b. Components of Functions
The activities relating to Council functions are as follows:
CEO
PEOPLE & CULTURE
CORPORATE SERVICES
FINANCIAL SERVICES
FUNDING
INFORMATION MANAGEMENT
LIBRARIES
COMMUNITY CARE
COMMUNITY TRANSPORT
CULTURAL SERVICES
TOURISM AND DEVELOPMENT
COUNCIL PROPERTIES
REGULATORY SERVICES
HEALTH SERVICES
Elected Members, Governance, Business Improvement and Human Resources.
Corporate Services and Risk Management.
Financial Services, Audit Function, Revenue Collection, Procurement, Loans and Investments.
Rates General, Rates Other and Grants Commission.
Customer Service, Information Technology and Records Management.
All Libraries including Mannum and Morgan.
Community Services including Morgan Activity Centre and Hub, Blanchetown Community Centre,Aged/Disabled/Disadvantaged Homes, Family Connections, Suicide Prevention Network and Health Centres.
Chief Executive's office.
Includes Dog and Cat Control, Parking, Camping Sites and Other General Inspection, Fire Prevention/Protection andIllegal Developments.
Environmental Health Services and Health Prevention Services.
Tourism, Economic Development and Mannum Dock.
Cultural Services including Port of Morgan Heritage Centre.
Community Transport and Community Passenger Network.
Including Admin Buildings, Public Conveniences, Mannum Caravan Park, Television Services, Licenses and Leases.
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 12b. Components of Functions (continued)
ENVIRONMENT SERVICES
DEVELOPMENT SERVICES
WASTE MANAGEMENT
MARINE FACILITIES
SPORT AND RECREATION
OPEN SPACE
FOOTPATHS AND CYCLE TRACKS
STORMWATER
CEMETERIES
ROADS
INFRASTRUCTURE SERVICES
WORKS OVERHEADS
PLANT AND MACHINERY
WATER SUPPLY
COMMUNITY WASTEWATER MANAGEMENT
Mannum Leisure Centre, Mannum and Cambrai Swimming Pools.
Includes Mary Ann, Morgan Riverfront, Pioneer Park, Graeme Claxton and other open spaces.
Footpaths and Cycle Tracks.
Includes Development General Services, Building Assessments and Planning Assessments.
Waste Collections, Disposal Facility Cambrai, Transfer Stations, Recycling and Organics Waste Management andGeneral Waste Management Services.
Mannum and Morgan Wharf Precincts and Other Marine Facilities.
Plant and Machinery Services for Capital and Operations.
Water Supply service for Bowhill.
Cemeteries services.
Sealed and Unsealed Roads, Road Reserves, Bridges, Kerbs and Gutters, Street Lighting and Traffic Control.
Infrastructure, Asset Management & GIS Services and Emergency Responses.
Works Depot and Private Works services.
Natural Resources Management and Environmental General Services.
Stormwater services.
Provision of Community Wastewater Management Schemes for various private-owned shacks and townships.
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 13. Financial Instruments
$ '000
Recognised Financial Instruments
Bank, Deposits at Call, Short Term Deposits Accounting Policy:Carried at lower of cost and net realisable value; Interest isrecognised when earned.
Terms & Conditions:Short term deposits have an average maturity of 24 hoursand an average interest rate of between 1.25% and 1.5%.(2018: 24 hours and 1.5%).
Carrying Amount:Approximates fair value due to the short term to maturity.
Receivables Accounting Policy:Rates & Associated Charges Carried at nominal values less any allowance for doubtful debts.(including legals & penalties for late payment) An allowance for doubtful debts is recognised (and re-assessed
annually) when collection in full is no longer probable.
Terms & Conditions:Secured over the subject land, arrears attract interest of 6.60%(2018: 6.75%). Council is not materially exposed to any individualdebtor, credit risk exposure is concentrated within the Council's boundaries in the State.
Carrying Amount:Approximates fair value (after deduction of any allowance).
Receivables Accounting Policy:Fees & Other Charges Carried at nominal values less any allowance for doubtful debts.
An allowance for doubtful debts is recognised (and re-assessed annually) when collection in full is no longer probable.
Terms & Conditions:Unsecured, and do not bear interest. Council is not materiallyexposed to any individual debtor, credit risk exposure isconcentrated within the Council's boundaries.
Carrying Amount:Approximates fair value (after deduction of any allowance).
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 13. Financial Instruments (continued)
$ '000
Recognised Financial Instruments
Receivables Accounting Policy:Other Levels of Government Carried at nominal value.
Terms & Conditions:Amounts due have been calculated in accordance with theterms and conditions of the respective programs followingadvice of approvals, and do not bear interest. All amountsare due by Departments and Agencies of State and FederalGovernments.
Carrying Amount:Approximates fair value.
Receivables Accounting Policy:Retirement Home Contributions Carried at nominal values less any allowance for doubtful debts.
An allowance for doubtful debts is recognised (and re-assessed annually) when collection in full is no longer probable.
Terms & Conditions:Amounts due have been calculated in accordance with the termsand conditions of the respective legislation.
Carrying Amount:Approximates fair value (after deduction of any allowance).
Liabilities Accounting Policy:Creditors and Accruals Liabilities are recognised for amounts to be paid in the future for
goods and services received, whether or not billed to the Council.
Terms & Conditions:Liabilities are normally settled on 30 day terms.
Carrying Amount:Approximates fair value.
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 13. Financial Instruments (continued)
$ '000
Recognised Financial Instruments
Liabilities Accounting Policy:Retirement Home Contributions To avoid inconvenience when complying with the separate audit
requirements imposed by the relevant legislation, amounts arecarried at nominal values.
Terms & Conditions:Pursuant to Commonwealth legislation certain intending residents are required to contribute amounts on an interest free basis. The amounts are subject to certain deductions as prescribed by the legislation, the balance being repaid ontermination of tenancy.
Carrying Amount:Approximates fair value for short tenancies; may be non-materially overstated for longer tenancies.
Liabilities Accounting Policy:Interest Bearing Borrowings Carried at the principal amounts. Interest is charged as an
expense as it accrues.
Terms & Conditions:Secured over future revenues, borrowings are repayable half yearly for fixed and periodically within the term for variable(CAD) borrowings; interest is charged at fixed (or variable) ratesbetween 3.35% and 6.7% (2018: 3.6% and 6.7%).
Carrying Amount:Approximates fair value.
Liabilities Accounting Policy:Finance Leases Accounted for in accordance with AASB 117.
page 35
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 13. Financial Instruments (continued)
$ '000
2019Financial AssetsCash & EquivalentsReceivablesTotal Financial Assets
Financial LiabilitiesPayablesCurrent BorrowingsNon-Current BorrowingsTotal Financial Liabilities
2018Financial AssetsCash & EquivalentsReceivablesTotal Financial Assets
Financial LiabilitiesPayablesCurrent BorrowingsNon-Current BorrowingsTotal Financial Liabilities
The following interest rates were applicableto Council's Borrowings at balance date:
Variable Interest RatesFixed Interest Rates
Net Fair ValueAll carrying values approximate fair value for all recognised financial instruments. There is no recognised market forthe financial assets of the Council.
8,145
688 11,311
2,668
Due> 5 years
2,173
3,070
2,451
ValuesCash FlowsDue > 1 yearDue
& ≤ 5 years
11,594 11,208
14,847
14,805 14,237
14,045
CarryingValue
1,038
258 258
3,080 2,709
11,880
Weighted Avg Weighted Avg
7,418
30 June 2019
Interest RateCarrying
Interest RateValue
30 June 2018
2,173
12,247
936
-
- 2,822
1,798
Carrying
1,169 -
3,543 27
1,771
3,211
3,080
27
258 -
8,145
- 1,169 1,798
-
-
- 500 500 27
500
< 1 year
- 3,570 3,168
7,940 6,219 5,000 6,192
-
- 3,449 856
2,822 - - -
688
-
2,173 - 1,038 -
3,043
-
3,449
12,064
3.58% 8,171 4.53% 3,893 4.68% 4,829
3.75%
Total Contractual
page 36
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 13. Financial Instruments (continued)
$ '000
Risk Exposures
Credit Risk represents the loss that would be recognised if counterparties fail to perform as contracted. The maximum credit risk on financial assets of the Council is the carrying amount, net of any allowance for doubtful debts. All Councilinvestments are made with the SA Local Government Finance Authority and are guaranteed by the SA Government.Except as detailed in Notes 5 & 6 in relation to individual classes of receivables, exposure is concentrated within theCouncil's boundaries, and there is no material exposure to any individual debtor.
Market Risk is the risk that fair values of financial assets will fluctuate as a result of changes in market prices. Allof Council's financial assets are denominated in Australian dollars and are not traded on any market, and henceneither market risk nor currency risk apply.
Liquidity Risk is the risk that Council will encounter difficulty in meeting obligations with financial liabilities. In accordance with the model Treasury Mangement Policy (LGA Information Paper 15), liabilities have a range ofmaturity dates. Council also has available a range of bank overdraft and standby borrowing facilities that it can access.
Interest Rate Risk is the risk that future cash flows will fluctuate because of changes in market interest rates.Council has a balance of both fixed and variable interest rate borrowings and investments. Cash flow fluctuations aremanaged holistically in seeking to minimise interest costs over the longer term in a risk averse manner.
Note 14. Commitments for Expenditure
$ '000
Other Expenditure Commitments
Other expenditure committed for (excluding inventories) at the reportingdate but not recognised in the financial statements as liabilities:
Audit ServicesWaste Management ServicesMaintenance ContractsBanking ServicesAdministration ServicesOther
These expenditures are payable:Not later than one yearLater than one year and not later than 5 yearsLater than 5 years -
6,535
24 5,831
30
2019 2018
810 4,247 2,780
18 -
6,535
3,590
1,280
3,590
157 163
Notes
3,184
22 66 483 147
1,008
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 15. Financial Indicators
$ '000
1. Operating Surplus RatioOperating SurplusTotal Operating Income
This ratio expresses the operating surplus as a percentage of totaloperating revenue.
2. Net Financial Liabilities RatioNet Financial LiabilitiesTotal Operating Income
Net Financial Liabilities are defined as total liabilities less financial assets
(excluding equity accounted investments in Council businesses). These are
expressed as a percentage of total operating revenue.
Adjustments to RatiosIn recent years the Federal Government has made advance payments prior
to 30th June from future year allocations of financial assistance grants, as
explained in Note 1. These Adjusted Ratios correct for the resulting distortion
in key ratios for each year and provide a more accurate basis for comparison.
Adjusted Operating Surplus Ratio
Adjusted Net Financial Liabilities Ratio
3. Asset Renewal Funding RatioNet Asset RenewalsInfrastructure & Asset Management Plan required expenditure
Net asset renewals expenditure is defined as net capital expenditure on
the renewal and replacement of existing assets, and excludes new
capital expenditure on the acquisition of additional assets.
40%23,397
2,565 82% 68% 46%3,117
(10%) (11%) (15%)
40%59%63%
(1,565) 23,397
(7%)
Amounts2019 2019 2018 2017
Indicator Prior Periods
14,215 61% 59%
These Financial Indicators have been calculated in accordance with Information paper 9 - Local Government Financial Indicators prepared as part of the LGA Financial Sustainability Program for the Local Government Association of South Australia.
(6%)(12%)
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 16. Uniform Presentation of Finances
$ '000
The following is a high level summary of both operating and capital investment activities of the Council prepared on a simplified Uniform Presentation Framework basis.All Councils in South Australia have agreed to summarise annual budgets and long-term financial plans on the same basis.The arrangements ensure that all Councils provide a common 'core' of financial information, which enables meaningful comparisons of each Council's finances.
Incomeless ExpensesOperating Surplus / (Deficit)
Net Outlays on Existing Assets Capital Expenditure on Renewal and Replacement of Existing Assets add back Depreciation, Amortisation and Impairment add back Proceeds from Sale of Replaced AssetsSubtotal
Net Outlays on New and Upgraded Assets
add back Amounts Received Specifically for New and Upgraded Assets
Subtotal
Net Lending / (Borrowing) for Financial Year
Note 17. Operating Leases
Not later than one yearLater than one year and not later than 5 yearsLater than 5 years - -
22,391 23,397 (24,962)
74
(25,153) (2,762) (1,565)
(3,977)
(2,603) (3,882)
(3,456)
61 444
6,573
2,914
(1,176)
27 51
(3,304)
38
(5,342) (4,996)
2019
Commitments under non-cancellable operating leases that have not been recognised in the financial statements are as follows:
23
223
2018
4,366
1,304 1,096
6,931
23
50
Capital Expenditure on New and Upgraded Assets (including Investment Property & Real Estate Developments)
add back Proceeds from Sale of Surplus Assets (including Investment Property, Real Estate Developments and Non-Current Assets Held for Resale)
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 18. Superannuation
$ '000
The Council makes employer superannuation contributions in respect of its employees to Statewide Super (formerly Local Government Superannuation Scheme). There are two types of membership, each of which is funded differently. Permanent and contract employees of the South Australian Local Government sector with Salarylink benefits prior to 24 November 2009 have the option to contribute to the Accumulation section and/or Salarylink. All other employees (including casuals) have all contributions allocated to the Accumulation section.
Accumulation only MembersAccumulation only members receive both employer and employee contributions on a progressive basis. Employer contributions are based on a fixed percentage of ordinary time earnings in accordance with superannuation guarantee legislation (9.50% in 2018/19; 9.50% in 2017/18). No further liability accrues to the Council as the superannuation benefits accruing to employees are represented by their share of the net assets of the Fund.
Salarylink (Defined Benefit Fund) MembersSalarylink is a defined benefit scheme where the benefit payable is based on a formula determined by the member’s contribution rate, number of years and level of contribution and final average salary. Council makes employer contributions to Salarylink as determined by the Fund’s Trustee based on advice from the appointed Actuary. The rate is currently 6.3% (6.3% in 2017/18) of “superannuation” salary.
In addition, Council makes a separate contribution of 3% of ordinary time earnings for Salarylink members to their Accumulation account. Employees also make member contributions to the Salarylink section of the Fund. As such, assets accumulate in the Salarylink section of the Fund to meet the member's benefits, as defined in the Trust Deed, as they accrue.
The Salarylink section is a multi-employer sponsored plan. As the Salarylink section's assets and liabilities are pooled and are not allocated by each employer, and employees may transfer to another employer within the local government sector and retain membership of the Fund, the Actuary is unable to allocate benefit liabilities, assets and costs between employers. As provided by AASB 119.32(b), Council does not use defined benefit accounting for these contributions.
The most recent actuarial investigation was conducted by the Fund's actuary, Louise Campbell, FIAA, of WillieTowers Watson as at 30 June 2017. The Trustee has determined that the current funding arrangements are adequate for the expected Salarylink liabilities. However, future financial and economic circumstances may require changes to Council’s contribution rates at some future time.
Contributions to Other Superannuation Schemes Council also makes contributions to other superannuation schemes selected by employees under the “choice of fund” legislation. All such schemes are of the accumulation type, where the superannuation benefits accruing to the employee are represented by their share of the net assets of the scheme, and no further liability attaches to the Council.
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 19. Contingencies & Assets/Liabilities Not Recognised in the Balance Sheet
$ '000
The following assets and liabilities do not qualify for recognition in the Balance Sheet, but knowledge is consideredrelevant to the users of the financial report in making and evaluating decisions about the allocation of scarceresources.
1. LAND UNDER ROADSAs reported in the Financial Statements, Council is of the opinion that it is not possible to attribute a value sufficiently reliably for these assets to qualify for recognition, and accordingly land under roads has not been recognised in the reports. Land acquired for road purposes during the year is initially recognised at cost, but transferred to fair value at reporting date, effectively writing off the expenditure.
At reporting date, Council controlled 3,536 km of road reserves of average width 20 metres.
2. POTENTIAL INSURANCE LOSSESCouncil is a multi-purpose organisation providing a large range of building, parks infrastructure, playgrounds and other facilities accessible to the public. At any time, it is likely that claims will have been made against Council that remain unsettled.
Council insures against all known insurable risks using a range of insurance policies, each of which is subject to deductable "insurance excesses", the amount of which varies according to the class of insurance.
Council has recognised the potential losses arising from claims known at reporting date based on average historical net cost (including insurance excess) of similar types of claims. Other potential claims not reported to Council may have existed at reporting date.
3. LEGAL MATTERSCouncil is the planning consent authority for its area under the Development Act 1993 (as amended). Pursuant to that Act, certain persons aggrieved by a planning decision of the Council may appeal. It is normal practice that parties bear their own legal costs. At the date of these reports, Council had no notice of appeals against planning decisions made prior to reporting date.
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Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 20. Related Party Transactions
$ '000
Key Management Personnel
Transactions with Key Management PersonelThe Key Management Personnel of the Council include the Mayor, Councillors, CEO and certain prescribed officers under section 112 of the Local Government Act 1999 . In all, 21 persons were paid the following total compensation:
The compensation paid to Key Management Personnel comprises:Short-Term Employee BenefitsLong-Term BenefitsTotal
Amounts paid as direct reimbursement of expenses incurred on behalf of Council have not been included above.
Receipts from Key Management Personnel comprise:Other than amounts paid as ratepayers or residents (e.g. rates, swimming pool entry fees, etc.), Council received the following amounts in total:
Outdoor PermitsReserve HireTotal
Key Management Personnel and/or close family members where committee members of the following Notfor Profit organisations that during the year received Community Grants :-Sedan Historical Enthusiasts - $1,165.00 Den Inc (Sedan Men's Shed)Cambrai Agricultural Museum Inc. - $1,000.00Lions Club of Ridley - $495.00Mannum Hospital Auxiliary $2,000Morgan Small Bore Rifle Club $2,095Cadell Community & Tourism Association $2,000
Three close family members of Key Management Personnel were employed by the Council in accordance withthe terms of the appropriate Award, and recorded in the public Register of Salaries maintained in accordancewith section 105 of the Local Government Act 1999.
- 5 5 1
836
833
1 -
11 932
3
2019 2018
921
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page 42
Mid Murray Council
Notes to and forming part of the Financial Statements for the year ended 30 June 2019
Note 20. Related Party Transactions (continued)
$ '000
Key Management Personnel and/or close family members are committee members of the following Notfor Profit organisations that had interest free Comunity Loans during the financial year :--Swan Reach Golf Club Committee was granted an additional $12,000 loan balance 30 June 2019 $13,000-Mannum Golf Club made repayments of $10,000 loan balance 30 June 2019 $35,000-Mannum Bowling Club made repayments of $4,160 loan balance as at 30 June 2019 $Nil-Mannum Netball Club made repayments of $1,250 loan balance as at 30 June 2019 $2,500-Blanchetown Kart Club made repayments of $2,500 loan balances as at 30 June 2019 $Nil
Key Management Personnel and/or close family members are committee members of the following Notfor Profit organisations that were paid the following amounts during the financial year :--Nildottie Progress Association (Toilet Cleaning) $2,600-Wall Flat Progress (Hall Hire) $100-Mid Murray Landcare (Revegetation & Consultancy) $8,917-Riverland West Chambers (Annual Contribution) $3,432-Cadell Community & Tourism Association (Annual Contribution) $48,843-Destination Riverland Inc. (Annual Contribution) $7,013-Mannum Football Club (Sponsorship) $250-Mannum Progress Association (Christmas, New Years Donation) $4,500
One close family member of two Key Management Personnel are a member of the management committee of theMannum Netball Club that hired the Mannum Leisure Centre, total amount paid during the financial year $2,697
Payments between Council and Key Management Personnel and/or close family members during the financial year :--Truck Hire $18,220-Sale of Goods $2,303-Management/Consultancy Fees $127,866
One family member of a Key Management Personnel was an elected member of Council under the LG Act.
2019 2018
page 43
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE MID MURRAY COUNCIL
Opinion
We have audited the accompanying financial report of the Mid Murray Council, which comprises thestatement of financial position as at 30 June 2019, the statement of profit or loss and othercomprehensive income, statement of changes in equity and statement of cash flows for the year thenended, and notes to the financial statements, including a summary of significant accounting policiesand the Certification of the Financial Statements.
In our opinion, the financial report gives a true and fair view of the financial position of the Mid MurrayCouncil as of 30 June 2019, and of its financial performance and its cash flows for the year thenended in accordance with Australian Accounting Standards and the Local Government Act 1999 andthe Local Government (Financial Management) Regulations 2011.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the entity in accordance with the ethicalrequirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report inAustralia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial Report
Management is responsible for the preparation of the financial report, which gives a true and fair viewin accordance with Australian Accounting Standards and the Local Government Act 1999 and theLocal Government (Financial Management) Regulations 2011, and for such internal control as thecommittee and management determines is necessary to enable the preparation of a financial reportthat gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, management is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and usingthe going concern basis of accounting unless management either intends to liquidate the entity or tocease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the entity’s financial reporting process.
page 44
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole isfree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee thatan audit conducted in accordance with the Australian Auditing Standards will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered materialif, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditingand Assurance Standards Board website at http://www.auasb.gov.au/Home.aspx. This descriptionforms part of our auditor’s report.
BENTLEYS SA AUDIT PARTNERSHIP
DAVID PAPAPARTNER
Dated at Adelaide this 28th day of November 2019
page 45
INDEPENDENT ASSURANCE REPORT ONINTERNAL CONTROLS OF MID MURRAY COUNCIL
Opinion
We have audited the compliance of Mid Murray Council (the Council) with the requirements of Section 125 of the Local Government Act 1999 in relation to the Internal Controls established by the Council to ensure thatfinancial transactions relating to the receipt, expenditure and investment of money, acquisition and disposalof property and incurring of liabilities for the period 1 July 2018 to 30 June 2019 are in accordance withlegislative provisions.
In our opinion, the Council has complied, in all material respects, with Section 125 of the Local Government Act 1999 in relation to Internal Controls, established by the Council in relation to the receipt, expenditure andinvestment of money, acquisition and disposal of property and incurring of liabilities so as to providereasonable assurance that the financial transactions of the Council have been conducted properly and inaccordance with legislative provisions for the period 1 July 2018 to 30 June 2019.
Limitation on Use
This report has been prepared for the members of the Council in accordance with Section 129 of the Local Government Act 1999 in relation to Internal Controls specified above. We disclaim any assumption ofresponsibility for any reliance on this report to any persons or users other than the members of the Council,or for any purpose other than that for which it was prepared.
Limitations of Controls
Because of the inherent limitations of any internal control structure it is possible that, even if the controls aresuitably designed and operating effectively, the control objectives may not be achieved so that fraud, error,or non-compliance with laws and regulations may occur and not be detected.
An assurance engagement on internal controls is not designed to detect all instances of controls operatingineffectively as it is not performed continuously throughout the period and the tests performed are on asample basis. Any projection of the outcome of the evaluation of controls to future periods is subject to therisk that the controls may become inadequate because of changes in conditions, or that the degree ofcompliance with them may deteriorate.
Independence
In conducting our engagement, we have complied with the independence requirements of the Australianprofessional accounting bodies.
page 46
The Council’s Responsibility for the Internal Controls
The Council is responsible for implementing and maintaining an adequate system of internal controls, inaccordance with Section 125 of the Local Government Act 1999 in relation to Internal Controls, to ensurethat the receipt, expenditure and investment of money, the acquisition and disposal of property, and incurringof liabilities are in accordance with legislative provisions.
Our Responsibility
Our responsibility is to express an opinion on the Council’s compliance with Section 125 of the Local Government Act 1999 in relation only to the Internal Controls established by the Council to ensure thatfinancial transactions relating to the receipt, expenditure and investment of money, acquisition and disposalof property and incurring of liabilities, based on our procedures. Our engagement has been conducted inaccordance with applicable Australian Standards on Assurance Engagements ASAE 3100 Compliance Engagements, issued by the Australian Auditing and Assurance Standards Board, in order to state whether,in all material respects, the Council has complied with Section 125 of the Local Government Act 1999 inrelation only to the Internal Controls specified above for the period 1 July 2018 to 30 June 2019. ASAE 3100also requires us to comply with the relevant ethical requirements of the Australian professional accountingbodies.
Our procedures included obtaining an understanding of internal controls in relation to the receipt,expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities,evaluating management’s assessment of these internal controls, assessing the risk that a material weaknessexists, and testing and evaluating the design and implementation of controls on a sample basis on theassessed risks.
BENTLEYS SA AUDIT PARTNERSHIP
DAVID PAPAPARTNER
Dated at Adelaide this 28th day of November 2019
page 47
Certification of Auditor Independence
I confirm that, for the audit of the financial statements of Mid Murray Council for the year ended 30 June 2019, I have maintained my independence in accordance with the requirements of APES 110 – Code of Ethics for Professional Accountants, Section 290, published by the Accounting Professional and Ethical Standards Board, in accordance with the Local Government Act 1999 and the Local Government (Financial Management) Regulations 2011 made under that Act.
This statement is prepared in accordance with the requirements of Regulation 22 (5) Local Government (Financial Management) Regulations 2011.
Bentleys SA Audit Partnership
David Papa Partner
Dated at Adelaide this 23rd day of October 2019
page 49