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General Purpose Financial Statements and Annual Reports

Purpose

This bulletin is to remind councils of the legislative deadlines for General Purpose Financial Statements and Annual Reports. Suggestions for improving the timeliness and quality of financial statements, which were discussed at the 2013 and 2014 “Tropical” information sessions, are also presented. In addition, links to a number of useful resources have been provided.

Legislative Requirements

Under the Local Government Act 2009, Local Government Regulation 2012, City of Brisbane Act 2010 and the City of Brisbane Regulation 2012 (the Acts) all councils are required to prepare:

  • General purpose financial statements each year and give these to the Auditor-General by an agreed date. The agreed date must allow for the completion of the audit of those financial statements within four months after year end [i.e. by 31 October].
  • An annual report for each financial year and adopt this report within one month after the Auditor-General signs off on the audit of council's general purpose financial statements. The annual report must be published on the council's website within two weeks of adoption.

Extensions of time

The Minister can, in extraordinary circumstances, extend the timeframes for the preparation and audit of general purpose financial statements.

Extraordinary circumstances could include the impact of natural disasters or a significant systems failure which causes a major loss or interruption to critical data. Poor planning and/or failure to appropriately resource what is a statutory obligation should not be used as the excuse for an extension of time.

The Minister can also extend the time for adoption of the annual report.

Any application for an extension of time will need to be in writing from the Mayor and the Chief Executive Officer.

Suggestions for the timely completion of general purpose financial statements, the audit process and annual reports

The following points are a summary of the suggestions that were discussed at the “Tropical” information sessions held in both 2014 and 2013. While some councils are already following these processes, it may be helpful to revisit this list each year.

  • Start planning as early as possible in the financial year. Planning should include a review of:
    • the prior year's processes - what worked? What needs improvement?
    • upcoming issues - for example, are assets due for a comprehensive revaluation? Are there any changed accounting standard requirements that will impact council's financial statements?
    • Staffing requirements – does council have sufficient staff with competencies in all the required areas? Can extra expertise be brought in when it is needed? Does this need to be booked in ahead of time? Has succession planning and leave been considered?
    • Contentious/complex/emerging issues – aim to clear these with Queensland Audit Office (QAO) as early as possible
    • materiality levels.
  • Prepare a formal financial report preparation plan which details the proposed timelines and who is responsible for each component
  • Negotiate early with QAO the timing of the audit and work to this date
  • Consider having valuations made at a date prior to 30 June (e.g. 31 March) then making adjustments for any material changes between that date and the end of financial year
  • Ensure control over the valuation process is maintained and underlying assumptions are understood by finance staff - challenge the valuations
  • Establish regular month end processes and monthly financial reporting, so that year-end processes and reporting become quick and automatic
  • Consider early closes
  • Involve council's internal audit function in the financial statement process, where appropriate and possible.
  • Produce "shell" general purpose financial statements and make them available to audit prior to year-end. Provide these to your internal audit function/audit committee for review. “Shell” financial statements do not rely on the availability of current year figures. They involve rolling the prior year figures into the comparative columns; updating the accounting policy notes for any changes in accounting standards or council policies; and updating other key disclosure notes for known events/significant transactions.
  • Ensure that interim and final working papers are prepared for all balance sheet items and major expenditure items. All working papers should be prepared in an orderly manner, and be reviewed by appropriate officers. Working papers need to reconcile to the appropriate line items in the financial statements.
  • Assess materiality
  • Ensure rigorous analytical reviews are undertaken and appropriate action is taken if necessary
  • Ask the internal audit function or another independent person to review the financial statements and supporting work papers prior to presenting them to the audit committee
  • Present the financial statements to council's audit committee for endorsement prior to presentation for audit.
  • Ensure availability of key staff during audit
  • Run the annual report process in parallel with the financial statement process. If the audit of the general purpose financial statements is not completed until close to 31 October then the body of the annual report will be ready. In this way the Auditor-General signed general purpose financial statements and the current year sustainability statement can be simply inserted into the rest of the document.
  • Have an electronic copy of the annual report, financial statements and audit reports ready for council to adopt. This can then be placed onto the council's website (within 2 weeks) and hard copies printed at a later date.

Useful Resources - General Purpose Financial Statements

The following resources, prepared by the Department, are designed to assist councils meet the legislative requirements for general purpose financial statements.

Annual Report Content and Publication

Councils are reminded that council's annual report:

  • must be published on council's website within two weeks of adoption; and
  • must contain all things required by the legislation including:
    • the audited general purpose financial statements - with accompanying Management certificate;
    • the Auditor-General's signed certificate for the general purpose statements;
    • current year financial sustainability statement – with accompanying Certificate of accuracy;
    • the Auditor-General's signed certificate for the current year sustainability statement; and
    • Long term financial sustainability statement – with accompanying Certificate of accuracy.

Please ensure all documents are presented in the right order - i.e. signed certificate with corresponding document.

The Department has produced an annual report checklist to assist councils meet their requirements in this regard.

Legislation

The general purpose financial statements and annual report requirements are contained in:

  • Local Government Act 2009
  • Local Government Regulation 2012
  • City of Brisbane Act 2010
  • City of Brisbane Regulation 2012

Further information

Any further enquiries on this matter should be addressed to:

Ms Samantha Cieslar
Principal Project Officer
Department of Infrastructure, Local Government and Planning
PO Box 15009, City East QLD 4002
Phone: 07 3452 6721
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.