Questions asked about financial reporting for new CBD
WHILE the Sunshine Coast Council is crowing about a clean bill of its financial health, a closer look at the auditor's report shows concerns are held about financial reporting for the new Maroochydore CBD.
Corporate strategy and finance portfolio holder, Deputy Mayor Tim Dwyer, last week praised an "outstanding” financial result, after the Queensland Audit Office confirmed the council's operating surplus of $26.1 million for the 2015-16 financial year.
But on June 9 last year auditors took issue with the capitalisation of advertising and promotional activity, totalling about $212,500, as part of the new CBD works.
The auditors argued the nature of those expenses did "not meet the criteria for recognition of assets” in relation to property, plant and equipment costs.
Auditors said the implication of capitalising the advertising and promo works were that costs not capital in nature weren't being expensed when incurred and could distort the figures by understating operating expenditure and overstating work-in-progress expenditure.
The council agreed to the auditor's recommendation to review the capitalised costs assigned to the new CBD.
The auditor's report attached to last week's council meeting agenda, showed concerns were held about a number of council systems.
Auditors found deficiencies in the monitoring of the council's IT database, noting there was an increased risk of unauthorised activities or transactions not being detected quickly.
Issue was also taken with the fact the council didn't independently monitor and review its key financial systems on security-related transactions and the processes in place to verify users' identities when requesting password resets over the phone.
A need for a review of system access was also identified to ensure access privileges were aligned with staff roles, to reduce the risk of incorrect or fraudulent transactions being processed.
The auditor's report showed the council had resolved to take action on the issues raised, with auditors to check on the progress of those actions this financial year.
The report, submitted in October, last year, was unanimously received and endorsed by the council last week, before Cr Dwyer praised the efforts of council staff to have the organisation in strong financial shape.
"Prudent financial management is very important as we shape a sustainable future for Sunshine Coast residents,” he said.
"Council's overall financial sustainability has been assessed as 'lower risk' which is the highest achievable rating.
"In addition, council's other financial sustainability indicators are better than the average for South-East Queensland councils.”
He said the 2015-16 financial statements showed the Sunshine Coast community's net assets had increased to a total of $4.63 billion.