Glen Innes Severn Council · 2017-12-19 · Equipment. 3. The Statement of ... Plus: cash and cash...

Glen Innes Severn Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017

“Embracing Change, Building on History”

Financial Statements 2017

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Glen Innes Severn Council

General Purpose Financial Statements for the year ended 30 June 2017

Contents

1. Understanding Council’s Financial Statements

2. Statement by Councillors and Management

3. Primary Financial Statements:

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

4. Notes to the Financial Statements

5. Independent Auditor’s Reports:

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

Overview

(i) These financial statements are General Purpose Financial Statements and cover the operations forGlen Innes Severn Council.

(ii) Glen Innes Severn Council is a body politic of NSW, Australia – being constituted as a local government areaby proclamation and is duly empowered by the Local Government Act 1993 (LGA).

Council’s guiding principles are detailed in Chapter 3 of the LGA and includes:

principles applying to the exercise of functions generally by council,

principles to be applied when making decisions,

principles of community participation,

principles of sound financial management, and

principles for strategic planning relating to the development of an integrated planning and reporting framework.

A description of the nature of Council’s operations and its principal activities are provided in Note 2(b).

(iii) All figures presented in these financial statements are presented in Australian currency.

(iv) These financial statements were authorised for issue by the Council on 19 December 2017.Council has the power to amend and reissue these financial statements.

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Financial Statements 2017_

Glen Innes Severn Council General Purpose Financial Statements for the year ended 30 June 2017 Understanding Council’s financial statements

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Introduction Each year, individual local governments across New South Wales are required to present a set of audited financial statements to their council and community. What you will find in the statements The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 2017. The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government. About the Councillor/Management Statement The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements. About the primary financial statements The financial statements incorporate five ‘primary’ financial statements: 1. The Income Statement

Summarises Council's financial performance for the year, listing all income and expenses. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred. 2. The Statement of Comprehensive Income

Primarily records changes in the fair value of Council's Infrastructure, Property, Plant and Equipment. 3. The Statement of Financial Position

A 30 June snapshot of Council's financial position indicating its assets, liabilities and “net wealth”. 4. The Statement of Changes in Equity

The overall change for the year (in dollars) of Council’s “net wealth”.

5. The Statement of Cash Flows

Indicates where Council's cash came from and where it was spent. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.

About the Notes to the Financial Statements The Notes to the Financial Statements provide greater detail and additional information on the five primary financial statements. About the Auditor’s Reports Council’s annual financial statements are required to be audited by the NSW Audit Office. In NSW the auditor provides 2 audit reports: 1. an opinion on whether the financial statements

present fairly the Council’s financial performance and position, and

2. their observations on the conduct of the audit, including commentary on the Council’s financial performance and financial position.

Who uses the financial statements? The financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the Audit Report. The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements. Council is required to forward an audited set of financial statements to the Office of Local Government.


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


Income Statement for the year ended 30 June 2017

$ ’000

Income from continuing operationsRevenue:Rates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposes

Total income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationOther expensesNet losses from the disposal of assets

Total expenses from continuing operations

Operating result from continuing operations

Net operating result for the year

Net operating result attributable to Council

Net operating result for the year before grants andcontributions provided for capital purposes

Original budget as approved by Council – refer Note 16

10,695

3,719

10,311 984

10,167

776 3,009

1,023

4,847

2,679

Budget 1

3e,f

4d

4b4c

2,588

2,590

3b

4a

3e,f

966 7,251

12,136 261

28,449

5– 4e

10,338 10,279

Notes

3a

3d3c

2017

595

2017

3,165 482

4,707

5,059 7,551

225

4,847

26,686

26,995

10,569

4,113 3,300

26,199

2,250

1

2,250

2,250

1,989

Actual 2016

Actual

9,846

586 2,633

1,508

25,178

2,412

1,128 514

31,842

5,452 4,937

4,847

12,022

1,508

1,508

994




Statement of Comprehensive Income for the year ended 30 June 2017

$ ’000

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

Other comprehensive income:

Amounts which will not be reclassified subsequently to the operating result

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

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

Total other comprehensive income for the year

Total comprehensive income for the year

Total comprehensive income attributable to Council 5,317

2017

507

507

Actual

20b (ii)

1,508

3,916

4,847

Notes

470

5,317 5,424

5,424

3,916

Actual 2016

3,916




Statement of Financial Position as at 30 June 2017

$ ’000

ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesNon-current assets classified as ‘held for sale’Total current assets

Non-current assetsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestment propertyOtherTotal non-current assets

TOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilities

TOTAL LIABILITIES

Net assets

EQUITYRetained earningsRevaluation reservesCouncil equity interest

Total equity

3,115 20,754

261,131

2,238

2,876

216

213

268,277

243,734

243,734

241,954

170

26,323

Notes

10

9

10

142,527

7

14

8

6a7

8

10

241,512

1,445 10 1,526 10

22

10

8

20

Actual

– 1,499

16,002

2016Actual

1,324 2,629

209

59

1,557

19,058

2,701 177

24,543

428

170

2017

–

8,143

2,296

241,390

6,831

96,360

245

242,073

15,972

59

243,734

147,374

16,400

15,384 499

15,883

22,714

238,417

238,417

95,890

238,417

20




Statement of Changes in Equity for the year ended 30 June 2017

2017

$ ’000

Opening balance (as per last year’s audited accounts)

a. Correction of prior period errorsRevised opening balance

b. Net operating result for the year

c. Other comprehensive income – Revaluations: IPP&E asset revaluation rsve – Other reserves movementsOther comprehensive income

Total comprehensive income (c&d)

Equity – balance at end of the reporting period 142,527

earnings

507

4,847

470

2016

238,417 238,417 95,890

3,916

1,508 3,916 5,424

– 3,916 3,916

5,424

– – – 3,916 3,916

1,508

3,916

1,508 – 1,508

141,019 91,974 232,993 232,993

(Refer 20b) interest equity

255,177 – (22,184) (22,184) (22,184)

255,177

Asset

Retained reserve Council Totalrevaluation

147,374 96,360 243,734 243,734

5,317 4,847 470 5,317

– 470 470 20b (ii) – (37) (37) (37) 20b (ii) – 507 507

4,847 – 4,847

142,527 95,890 238,417 20 (c) – – – –

142,527 95,890 238,417 238,417

Retained reserve Council TotalNotes earnings (Refer 20b) interest

revaluation

equity

238,417

2017 Asset

141,019 114,158

– –




Statement of Cash Flows for the year ended 30 June 2017

$ ’000

Cash flows from operating activitiesReceipts:Rates and annual chargesUser charges and feesInvestment and interest revenue receivedGrants and contributionsBonds, deposits and retention amounts receivedOtherPayments:Employee benefits and on-costsMaterials and contractsBorrowing costsBonds, deposits and retention amounts refundedOtherNet cash provided (or used in) operating activities

Cash flows from investing activitiesReceipts:Sale of infrastructure, property, plant and equipmentPayments:Purchase of infrastructure, property, plant and equipmentPurchase of real estate assetsDeferred debtors and advances madeNet cash provided (or used in) investing activities

Cash flows from financing activitiesReceipts:Proceeds from borrowings and advancesPayments:Repayment of borrowings and advancesNet cash flow provided (used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Plus: cash and cash equivalents – beginning of year

Cash and cash equivalents – end of the year

Additional Information:

plus: Investments on hand – end of year

Total cash, cash equivalents and investments

Please refer to Note 11 for information on the following:– Non-cash financing and investing activities– Financing arrangements– Net cash flow disclosures relating to any discontinued operations

(960) (8,517)

(10,057)

(759) (1,008) (6,422)

20162017

444

10,426

13,150

2,877

Actual

9,591

11,316 – 764

(3,509)

Actual

–

232 447

9,162 6,725 (2,946)

16,002

4,752

709

(160) – (5,347)

– 2,050

(8,863) (5,119)

19,384

(1,244)

(3,382)

(9,150)

(1,244)

16,002

16,002

–

(4) –

(1,341)

(7,001)

2,590

2017

2,588

– 12,642

550

10,279

Budget

–

6,813 (3,300)

11b

11a

(1,322)

–

– (8,019)

–

39

(10,569)

(966)

13,511

(2,489)

(1,322)

16,000

(7,980)

Notes

575

(10,330)

2,308

20,754

6b

20,754 –

3,138

5,806

11a


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Notes to the Financial Statements for the year ended 30 June 2017

Contents of the notes accompanying the financial statements

Details

Summary of significant accounting policiesCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsGains or losses from the disposal of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investments – detailsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentExternally restricted infrastructure, property, plant and equipmentInfrastructure, property, plant and equipment – current year impairmentsPayables, borrowings and provisionsDescription of (and movements in) provisionsStatement of cash flows – additional informationCommitments for expenditureStatement of performance measures:13a (i) Local government industry indicators (consolidated)13a (ii) Local government industry graphs (consolidated)13b Local government industry indicators (by fund)Investment propertiesFinancial risk managementMaterial budget variationsStatement of developer contributionsContingencies and other liabilities/assets not recognisedInterests in other entities

Financial result and financial position by fund‘Held for sale’ non-current assets and disposal groupsEvents occurring after the reporting dateDiscontinued operationsIntangible assetsReinstatement, rehabilitation and restoration liabilitiesFair value measurementRelated party disclosures

Additional council disclosures

Council information and contact details

n/a – not applicable

28 80

35

31

32 n/a33

40

38

39

36

Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors

27

4644

2(a)

32(b)

6(b)

5

23

26

Note

22

14

10(a)10(b)

17

6(a)

4

6(c)

9(c)

11

24

Page

1

25

19

1516

20

21

43

42

37

38

18

1213

10212223

78

9(a)9(b)

29

28

32

41

55

49

82

6463

61

66

62

48

56

52

62

54

59

57


Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies

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The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Australian Accounting Interpretations, the Local Government Act 1993 (NSW) and Regulations, and the Local Government Code of Accounting Practice and Financial Reporting. Council is a not for-profit entity for the purpose of preparing these financial statements. (i) New and amended standards adopted by

Council AASB 124 Related Party Disclosures was adopted during the year, the impact of this standard had no impact on reporting financial position or performance, however note 28 has been added. AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 and AASB 11] was adopted during the year, the impact of this standard had no impact on reporting financial position or performance. (ii) Early adoption of standards Council has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2016. (iii) Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of property, plant and equipment and investment property. (iv) Significant accounting estimates and

judgements The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council's accounting policies.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Council and that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: (i) Estimated fair values of investment properties,

(ii) Estimated fair values of infrastructure, property, plant and equipment,

(iii) Estimated tip remediation provisions. Significant judgements in applying the Council's accounting policies (i) Impairment of Receivables. Council has made a significant judgement about the impairment of a number of its receivables in Note 7. (b) Revenue recognition Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Council and specific criteria have been met for each of the Council’s activities as described below. Council bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is measured at the fair value of the consideration received or receivable. Revenue is measured on major income categories as follows: (i) Rates, annual charges, grants and

contributions Rates, annual charges, grants and contributions (including developer contributions) are recognised as


Glen Innes Severn Council Notes to the Financial Statements for the year ended 30 June 2017 Note 1. Summary of significant accounting policies (continued)

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revenue when the Council obtains control over the assets comprising these receipts. Developer contributions may only be expended for the purposes for which the contributions were required, but the Council may apply contributions according to the priorities established in work schedules. Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates. Control over granted assets/contributed assets is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured, and is valued at their fair value at the date of transfer. Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner or used over a particular period and those conditions were un-discharged at reporting date, the unused grant or contribution is disclosed in Note 3(g). The note also discloses the amount of unused grant or contribution from prior years that was expended on Council’s operations during the current year. A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided at reporting date. (ii) User charges and fees User charges and fees (including parking fees and fines) are recognised as revenue when the service has been provided or when the penalty has been applied, whichever first occurs. (iii) Sale of infrastructure, property, plant and

equipment The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer. (iv) Interest Interest income is recognised using the effective interest rate at the date that interest is earned.

(v) Rent Rental income is accounted for on a straight-line basis over the lease term. (vi) Dividend income Revenue is recognised when the Council’s right to receive the payment is established, which is generally when shareholders approve the dividend. (vii) Other income Other income is recorded when the payment is due, the value of the payment is notified, or the payment is received, whichever occurs first. (c) Principles of consolidation (i) The Consolidated Fund In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund. Cash and other assets of the following entities have been included as part of the Consolidated Fund: General Purpose Operations Water Supplies Sewerage Services Australia Day Committee Australian Standing Stones Committee Dundee Reserve Trust Committee Emmaville Historical Museum Committee Glen Innes and District Sports Council Minerama Committee Pinkett Recreation Association Stonehenge Recreation Reserve Trust Emmaville War Memorial Museum Glen Innes Beautification Committee Glen Elgin Federation Sports Club Committee (ii) The Trust Fund In accordance with the provisions of Section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the Council in trust which must be applied only for the purposes of, or in accordance



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with the trusts relating to those monies. Trust monies and property subject to Council’s control have been included in these reports. Trust monies and property held by Council but not subject to the control of Council have been excluded from these reports. A separate statement of monies held in the Trust Fund is available for inspection at the Council office by any person free of charge. (iii) County Councils Council is not a member of any county councils. Joint arrangements Council has no interest in any joint arrangements. (d) Leases Leases of property, plant and equipment where Council, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that Council will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to Council as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Lease income from operating leases where Council is a lessor is recognised as income on a straight-line basis over the lease term. (e) Impairment of assets Intangible assets that have an indefinite useful life or are not yet available for use are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested 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. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. (f) Cash and cash equivalents For Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand; deposits held at call with financial institutions; other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value; and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position. (g) Inventories (i) Raw materials and stores, work in progress

and finished goods Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable value.



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Cost comprises direct materials, direct labour, and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. (ii) Inventory held for distribution Inventory held for distribution is held at cost, adjusted where applicable for any loss of service potential. (iii) Land held for resale/capitalisation of

borrowing costs Land held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. When development is completed borrowing costs and other holding charges are expensed as incurred. Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses. (h) Non-current assets (or disposal groups)

held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets; assets arising from employee benefits; financial assets; and

investment properties that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition. Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. (i) Investments and other financial assets Classification Council classifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or

loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Assets in this category are classified as current assets. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities



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greater than 12 months after the reporting date which that are classified as non-current assets. Loans and receivables are included in other receivables (note 8) and receivables (note 7) in the Statement of Financial Position. Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Receivables are generally due for settlement within 30 days. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that Council’s management has the positive intention and ability to hold to maturity. If Council were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, that are classified as current assets. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Recognition and de-recognition Regular purchases and sales of financial assets are recognised on trade-date: the date on which Council commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried

at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and Council has transferred substantially all the risks and rewards of ownership. When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the income statement as gains and losses from investment securities. Subsequent measurement Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity. Impairment Council assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired. (i) Assets carried at amortised cost For loans and receivables the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that



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have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Council may measure impairment on the basis of an instrument’s fair value using an observable market price. Collectability of receivables is reviewed on an on-going basis. Debts that are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of receivables) is used when there is objective evidence that Council will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the impairment loss is recognised in the income statement within other expenses. When a receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement. Investment Policy Council has an approved investment policy complying with Section 625 of the Local Government Act 1993 (NSW) and Clause 212 of the Local Government (General) Regulation 2005 (NSW). Investments are placed and managed in accordance with that policy and having particular regard to authorised investments prescribed under the Ministerial Local Government Investment Order. Council maintains an investment policy that complies with the Act and ensures that it, or its

representatives, exercise the care, diligence and skill that a prudent person would exercise in investing Council funds. Council amended its policy following revisions to the Ministerial Local Government Investment Order (the Order) arising from the Cole Inquiry recommendations. Certain investments the Council holds are no longer prescribed; however, they have been retained under grandfathering provisions of the Order. These will be disposed of when most financially advantageous to Council. (j) Fair value estimation – financial

instruments The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. Council uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments. (k) Infrastructure, property, plant and

equipment (IPPE) Council’s assets have been progressively revalued to fair value in accordance with a staged implementation advised by the Office of Local Government. At reporting date, the following classes of IPPE were stated at their fair value:



page 16

Internally valued: • Operational Land • Community Land • Buildings – specialised/non-specialised • Other structures • Roads assets including roads, bridges and

footpaths • Bulk earthworks • Stormwater drainage • Water and sewerage networks • Swimming pools • Other open space/recreational assets • Other infrastructure • Other assets

As approximated by depreciated historical cost: • Plant and equipment • Tip Assets

Non-specialised assets with short useful lives are measured at depreciated historical cost as an approximation of fair value. Council has assessed that any difference between fair value and depreciated historical cost is unlikely to be material. Water and sewerage network assets are indexed annually between full revaluations in accordance with the latest indices provided in the NSW Office of Water Rates Reference Manual. For all other asset classes, Council assesses at each reporting date whether there is any indication that a revalued asset’s carrying amount may differ materially from that which would be determined if the asset were revalued at the reporting date. If any such indication exists, Council determines the asset’s fair value and revalue the asset to that amount. Full revaluations are undertaken for all assets on a five-year cycle. Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve. To the extent that the increase reverses a decrease previously recognising profit or loss relating to that asset class, the increase is first recognised as profit or loss. Decreases that reverse previous increases of assets in the same class are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the class; all

other decreases are charged to the Income Statement. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Council and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their cost, net of their residual values, over their estimated useful lives as follows: Plant and Equipment - Office Equipment 5 to 10 years - Office Furniture 10 to 20 years - Computer Equipment 4 years - Vehicles 5 to 10 years - Heavy Plant/Road Making equip. 5 to 10 years - Other Plant and Equipment 5 to 15 years Other Equipment - Playground Equipment 5 to 15 years - Benches, Seats etc. 10 to 20 years Buildings - Buildings: Masonry 50 to 100 years - Buildings: Other 20 to 40 years Stormwater Drainage - Drains 80 to 100 years - Culverts 50 to 80 years - Flood Control Structures 80 to 100 years Transportation Assets - Sealed Roads: Surface 80 years - Sealed Roads: Structure 80 years - Unsealed Roads 80 years - Bridge: Concrete 120 years - Bridge: Other 90 years - Road Pavements 60 years - Kerb, Gutter and Footpaths 40 years



page 17

Water and Sewer Assets - Dams and Reservoirs 80 to 100 years - Bores 20 to 40 years - Reticulation Pipes: PVC 70 to 80 years - Reticulation Pipes: Other 70 to 80 years - Pumps and Telemetry 15 to 20 years Other Infrastructure Assets - Bulk Earthworks Infinite The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. (l) Investment property Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not occupied by the Council. Investment property is carried at fair value, which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, Council uses alternative valuation methods such as recent prices in less active markets, or discounted cash flow projections. Changes in fair values are recorded in the income statement as part of other income. Properties that are under construction for future use as investment properties are regarded as investment properties. These are also carried at fair value unless the fair value cannot yet be reliably determined. Where that is the case, the property will be accounted for at cost until either the fair value becomes reliably determinable or construction is complete. (m) Payables These amounts represent liabilities for goods and services provided to the Council prior to the end of financial year that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(n) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings 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. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are removed from the Statement of Financial Position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or finance cost. Borrowings are classified as current liabilities unless Council has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (o) Borrowing costs Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed. (p) Provisions Provisions are recognised when Council has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.



page 18

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. (q) Employee benefits (i) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be wholly settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Other long-term employee benefit obligations The liability for long service leave and annual leave that is not expected to be wholly settled within 12 months after the end of the period in which the employees render the related service is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the end of the

reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. The obligations are presented as current liabilities in the Statement of Financial Position if the Council does not have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless of when the actual settlement is expected to occur. (iii) Retirement benefit obligations All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees. Defined Benefit Plans A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised in the Statement of Financial Position, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments that arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. However, when this information is not reliably available, Council accounts for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans, i.e. as an expense when it becomes payable. Defined Contribution Plans Contributions to defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.



page 19

(r) Land under roads Land under roads is land under roadways and road reserves including land under footpaths, nature strips and median strips. Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051 Land Under Roads. Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 Property, Plant and Equipment. (s) Self-insurance Council does not self-insure. (t) Intangible assets Council has not classified any assets as intangible. (u) Crown reserves Crown Reserves under Council’s care and control are recognised as assets of the Council. While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated. Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating to the reserves are recognised within Council’s Income Statement. (v) Rural fire service assets Under section 119 of the Rural Fire Services Act 1997 (NSW), “all fire fighting equipment purchased or constructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or on behalf of which the fire fighting equipment has been purchased or constructed”. Until such time as discussions on this matter have concluded and the legislation changed, Council will not recognise rural fire service assets including land, buildings, plant and vehicles.

(w) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to the taxation authority is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which that are recoverable from, or payable to the taxation authority are presented as operating cash flows. (x) New accounting standards and

interpretations issued not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and which have not been applied. Council’s assessment of the impact of upcoming new standards and interpretations that are likely to have an effect are set out below. AASB 15 Revenue from Contracts with Customers, and associated amending standards AASB15 introduces a five-step process for revenue recognition, with the core principle of the new standard being for entities to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services. Accounting policy changes will arise in the timing of revenue recognition, treatment of contract costs, and contracts which contain a financing element.



page 20

AASB15 will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications), and improve guidance for multiple-element arrangements. The effective date of this standard is for the annual reporting periods beginning on or after 1 January 2019; i.e. Council’s financial statements for the year ended 30 June 2020. The changes in revenue recognition requirements in AASB15 may cause changes to the timing and amount of revenue recorded in the financial statements as well as additional disclosures. The impact of AASB15 has yet to be quantified. AASB 16 Leases AASB16 will result in most of the operating leases of an entity being brought onto the statement of financial position. There are limited exceptions relating to short-term leases and low-value assets which may remain off the balance sheet. The calculation of the lease liability will take into account appropriate discount rates, assumptions about the lease term, and increases in lease payments. A corresponding right to use assets will be recognised, which will be amortised over the term of the lease. Rent expense will no longer be shown. The profit and loss impact of leases will be through amortisation and interest charges. The effective date of this standard is for the annual reporting periods beginning on or after 1 January 2019; ie Council’s financial statements for the year ended 30 June 2020. The impact of AASB15 has yet to be quantified. (y) Rounding of amounts Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars.

(z) 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.


page 21



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

General purpose income 1

1. Includes: rates and annual charges (incl. ex-gratia), untied general purpose grants and unrestricted interest and investment income.

Share of gains/(losses) in associates

continuing operations

12,325 and joint ventures (using the equity method)

Operating result from

–

Economic affairs

19,648 Total functions and activities

779

8,801

31,842 28,449 26,995 26,199 26,686

– – –

1,268 1,593

– –

–

1,022 661

16,562 26,199 26,995

10,124

19,517

261,131

– –

268,277

–

10,084

– 5,755

11,185

– 3,753

6,331 261,131

(3,086) –

268,277

5,511 – (919) 159,142

25,178

– –

25,178

–

–

–

5,430 (8,616)

1,508

321 2,067 –

– (489)

(6,551)

2,250

– –

4,847

1,580

10,124 8,801 12,325

(2,116) 183

(1,581) (1,633)

(571)

–

(41) 421

(7,478)

–

– – – 787 238

340 (340)

59 (1,035)

25 –

384 614

– –

– – 26,222

8,294 331

3,031 – – 5

(570) – (223) –

3,772 (277)

– – –

Actual2017

268,277 2016

– 64 874

358 20,036

2,457

16,964 – – 37

309

(106) (414)

– 5,430 (181)

(4,059) (392)

Actual

2,118 – –

– – 52 16,151 3,634 1,871

4,708 575

(2,082) 2,837 Transport and communication 4,667 Mining, manufacturing and construction 2,292 4,209

3,153

1,997 2,054 1,850 1,567 1,308

5,235

365 695 88

1,779

566

2,296 1,183 1,252

2,100 5,923

257 1,814 2,373

226 418

2,085

1,786 Housing and community amenities 2,151 Water supplies

Recreation and culture 233

2,142 Sewerage services 1,491

2,190 2,611 1,610

663

3,678 Community services and education 4,685 – –

4,485 3,450 1,896 1,658 1,298

(20)

– 125

4,705

207

3,619

(184) 223

– 470 5,072

Health Environment –

348 739 23 19

295 669 Public order and safety

Governance Administration

(737) (1,766) (4,235)

325

2017Actual

Originalbudget

2017Actualbudget

(321) 865 837 332

– 5 2,236

181 4,391

397 737

Operating result from continuing operations

Originalbudget

OriginalActual

2017 20162017 2017Actual

2016Actual

2016 2017

$ ’000 Income, expenses and assets have been directly attributed to the following functions/activities.Details of these functions/activities are provided in Note 2(b).

Income from continuing operations

Expenses from continuing operations

Total assets held (current and non-

current) Functions/activities

20172016Actual Actual Actual

Grants included in income from continuing operations


page 22



Note 2(b). Council functions/activities – component descriptions

Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:

GOVERNANCE

ADMINISTRATION

PUBLIC ORDER AND SAFETY

HEALTH

ENVIRONMENT

COMMUNITY SERVICES AND EDUCATION

HOUSING AND COMMUNITY AMENITIES

WATER SUPPLIESIncludes provision of water services to the community.

SEWERAGE SERVICESIncludes provision of sewerage services to the community.

RECREATION AND CULTURE

MINING, MANUFACTURING AND CONSTRUCTION

TRANSPORT AND COMMUNICATION

ECONOMIC AFFAIRS

Includes noxious plants and insect/vermin control; other environmental protection; solid waste management,including domestic waste; other waste management; other sanitation; and garbage, street cleaning, drainageand stormwater management.

Includes costs relating to Council’s role as a component of democratic government, including elections,members’ fees and expenses, subscriptions to local authority associations, meetings of Council and policy-making committees, public disclosure (e.g. GIPA), and legislative compliance.

Includes corporate support and other support services, engineering works, and any Council policy compliance.

Includes Council’s fire and emergency services levy, fire protection, emergency services, beach control,enforcement of regulations and animal control.

Includes immunisation, food control, health centres etc.

Includes camping areas and caravan parks; tourism and area promotion; industrial development promotion; saleyards and markets; real estate development; commercial nurseries; and other business undertakings.

Includes administration and education; social protection (welfare); migrant, Aboriginal and other communityservices and administration (excluding accommodation – as it is covered under ‘housing and communityamenities’); youth services; aged and disabled persons services; children’s’ services, including family day care;child care; and other family and children services.

Includes public cemeteries; public conveniences; street lighting; town planning; other community amenities,including housing development and accommodation for families and children, aged persons, disabled persons,migrants and Indigenous persons.

Includes public libraries; museums; art galleries; community centres and halls, including public halls andperforming arts venues; sporting grounds and venues; swimming pools; parks; gardens; lakes; and othersporting, recreational and cultural services.

Includes building control, quarries and pits, mineral resources, and abattoirs.

Urban local, urban regional, includes sealed and unsealed roads, bridges, footpaths, parking areas, andaerodromes.


page 23



Note 3. Income from continuing operations

$ ’000

(a) Rates and annual charges

Ordinary ratesResidentialFarmlandBusinessTotal ordinary rates

Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesWater supply servicesSewerage servicesDrainageWaste facility management leviesTotal annual chargesTOTAL RATES AND ANNUAL CHARGES

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

(b) User charges and fees

Specific user charges (per s.502 – specific ‘actual use’ charges)Water supply servicesSewerage servicesWaste management services (non-domestic)OtherTotal user charges

Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Planning and building regulationPrivate works – section 67Regulatory/ statutory feesTown planningTotal fees and charges – statutory/regulatory

(ii) Fees and charges – other (incl. general user charges (per s.608))Aged careCemeteriesChild careLeaseback fees – Council vehiclesQuarries and gravel pitsSaleyardsSwimming centresTrade waste feesOtherTotal fees and charges – otherTOTAL USER CHARGES AND FEES

177 74

–

130 100

72

47

2,653

531

Notes

288

3,941

102

1,071

– 127

9,846

87

1,221

23 31

78

74 302

20162017Actual

2,754

570 2,861

Actual

5,905

2,694

558 6,185

334

1,074 933

328

71

1,318 979

1,383

1,314

295

160 6

1,117

4,153 10,338

101

322 77

1,162

62

3,165 869 13

2,412

227 124 251

123

530 99

57 55 9

1,320


page 24



Note 3. Income from continuing operations (continued)

$ ’000

(c) Interest and investment revenue (including losses) Interest – Interest on overdue rates and annual charges (incl. special purpose rates) – Interest earned on investments (interest and coupon payment income)TOTAL INTEREST AND INVESTMENT REVENUE

Interest revenue is attributable to:Unrestricted investments/financial assets:Overdue rates and annual charges (general fund)General Council cash and investmentsRestricted investments/funds – external:Development contributions – Section 94 – Section 64Water fund operationsSewerage fund operationsTotal interest and investment revenue recognised

(d) Other revenues

Rental income – investment propertiesRental income – other council propertiesFinesFines – otherLegal fees recovery – rates and charges (extra charges)Legal fees recovery – otherAged and DisabledCommissions and agency feesDiesel rebateFestivals and committee activitiesInsurance claim recoveriesInsurance rebates and incentivesQuarry RoyaltiesRecycling income (non-domestic)Sales – generalSales – quarries and gravel pitsTourism salesOtherTOTAL OTHER REVENUE

2016Actual

2017Actual

42

14

544

Notes

436

79

339

9

46

436

586

46

9

7

30

482

102

–

482

9

586

2

–

3,295

19

62

79 79

183

17

89

119

38

19

1,884

4,707

17

224

26

–

111

191

9

–

69

63

9

– 14

11 68

–

19 –

200 191 18

215

2

2,633


page 25




$ ’000

(e) Grants

General purpose (untied)Financial assistance – general componentFinancial assistance – local roads componentPensioners’ rates subsidies – general componentTotal general purpose

Specific purposePensioners’ rates subsidies: – Water – Sewerage – Domestic waste managementWater suppliesSewerage servicesAboriginal servicesAged careChild careHealth AdministrationLibraryLIRS subsidyNSW rural fire servicesSporting GroundsStreet lightingTourism & Area PromotionTown planningTransportTransport (other roads and bridges funding)Urban stormwater drainageYouth servicesWaste/landfillTotal specific purposeTotal grants

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

–

654 10,531 9,728

– 26 356

– –

–

–

356

– –

571 –

9,728

3,029 6,699

25

–

356 356

–

654

2017 2017 2016

–

– –

654

654

– 1,945

2,727

37

–

–

–

52

– –

20

–

– 109

38

40

236

–

6

–

–

– 41 40 – –

39

–

–

25

37

Capital Operating

109

–

Operating

–

37 39

– 3,753

–

38

– –

–

2,016

10,531

1,279 2,365 3,701

– 27

1,465

–

235

– –

–

8,515

1,734

52

36

4,776

–

37 5

5,975

–

– 6 5

–

26

5,755

5

2016

219

– 270

–

–

19

–

– –

3,493 33

–

–

–

–

–

–

Capital

–

20

–

–


page 26




$ ’000

(f) Contributions

Developer contributions:(s93 & s94 – EP&A Act, s64 of the LGA):S 94 – contributions towards amenities/servicesS 94A – fixed development consent leviesS 64 – water supply contributionsS 64 – sewerage service contributionsTotal developer contributions

Other contributions:Aged and disabledBushfire servicesChild careLibrary/learning centreFire ProtectionPublic HallsRoads and bridgesRMS contributions (regional roads, block grant)Section 355 committeesSewerage (excl. section 64 contributions)Street lightingTourismWater supplies (excl. section 64 contributions)QuarryTotal other contributionsTotal contributions

TOTAL GRANTS AND CONTRIBUTIONS

17

347

4 32

112

35

–

–

–

–

8

–

–

158

143

1

119 –

–

363

–

–

– – 137

55 – –

2016

– – 2 5

– –

– –

290

2017

7 1

Capital Capital

4

10

–

121

8 10 –

–

Notes Operating Operating

– –

2017

171 –

–

3

–

–

2

1,128

– –

–

221

967 1,491 –

–

542

–

–

474

–

–

570

5 3

21 331 1,491

–

514

–

12,022

2016

– – –

10,695

28

11

967

–


page 27




$ ’000

(g) Unspent grants and contributions

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

Unexpended at the close of the previous reporting period

Add: grants and contributions recognised in the current period but not yet spent:

Less: grants and contributions recognised in a previous reporting period now spent:

Net increase (decrease) in restricted assets during the period

Unexpended and held as restricted assets

Comprising: – Specific purpose unexpended grants – Developer contributions

2017

1,372

253

288

640

1,279

(206)

1,010

2016

1,948

Add: grants and contributions received for the provision of goods and services in a future period

(639)

2,382

1,084

1,372

2,382

732 1,372

Actual

–

434

963

Actual


page 28



Note 4. Expenses from continuing operations

$ ’000

(a) Employee benefits and on-costs

Salaries and wagesTravel expensesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)OtherTotal employee costsLess: capitalised costs TOTAL EMPLOYEE COSTS EXPENSED

(b) Borrowing costs

(i) Interest bearing liability costsInterest on loansTotal interest bearing liability costs expensed

(ii) Other borrowing costsDiscount adjustments relating to movements in provisions (other than ELE) – Remediation liabilitiesTotal other borrowing costsTOTAL BORROWING COSTS EXPENSED

(c) Materials and contracts

Raw materials and consumablesContractor and consultancy costsAuditors remuneration (1)

Legal expenses: – Legal expenses: planning and development – Legal expenses: debt recovery – Legal expenses: otherOperating leases: – Operating lease rentals: contingent rentals (2)

Section 355 committeesSecurity servicesValuation feesTOTAL MATERIALS AND CONTRACTS(continued on the next page...)

10 41

2017

34

8,170

881

2016

158 153 1,195

Actual Actual

11,251

116

(940)

7,792

19

–

1,004

Notes

26

(729)

51 40

76

12 11

20

114

443

229

–

1,004

271

4,646

10,311 10,167

19 19

1,016

195

15

965 965

7,041 34

8 65

49

1,023

19

31

7,551

5

170

10,896 177

5,452

1,191

195

495

984


page 29



Note 4. Expenses from continuing operations (continued)

$ ’000

(c) Materials and contracts (continued)

1. Auditor remunerationa. During the year, the following fees were incurred for services provided by the Auditor-General:

(i) Audit and other assurance services – Audit and review of financial statements: Auditor-GeneralTotal Auditor-General remuneration

b. During the year, the following fees were incurred for services provided by the other Council’s Auditors:

(i) Audit and other assurance services – Audit and review of financial statements: Council’s Auditor – Other audit and assurance servicesTotal Auditor remuneration

2. Operating lease payments are attributable to:BuildingsComputersMotor vehicles and plant

(d) Depreciation, amortisation and impairment

Depreciation and amortisationPlant and equipmentOffice equipmentFurniture and fittingsInfrastructure: – Buildings – Other structures – Roads (General) – Roads (Causeways) – Roads (Carparks) – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage network – Swimming pools – Other open space/recreational assets – Kerb and Gutter – Major Street Furniture – Footpaths (Non Road Related)Other assets – Library booksAsset reinstatement costsTOTAL DEPRECIATION ANDIMPAIRMENT COSTS EXPENSED

814

146

4,937

4

10

–

Notes

543 30

37

12

49

195

Actual

40

815

24

40

617 54 6

40 9 & 26

153

4 4

1,398 80

322

15

32

11

451

21

146 29

531

29

229

38

34

31

538

–

166

2017 2016

– 30

Actual

454

148

3 195

1,400

17

– 49

49

–

269

5,059

324 32

269

82


page 30



Note 4. Expenses from continuing operations (continued)

$ ’000

(e) Other expenses

AdvertisingAnnual rates and chargesBank chargesCleaningComputer software chargesContributions/levies to other levels of government – Emergency services levy (includes FRNSW, SES, and RFS levies) – NSW fire brigade levy – NSW rural fire service levy – Other contributions/leviesCouncillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Donations, contributions and assistance to other organisations (Section 356)Election expensesElectricity and heatingFreight and cartageInsuranceLease fees and rentalsPhotocopyingPostagePrinting and stationeryPromotions and trade fairsStreet lightingSubscriptions and publicationsTelephone and communicationsOtherTOTAL OTHER EXPENSES

418

51

109

22

399

173

13

16

70

69

62

132

45

4

377

68

33

53

17 134

36 99

104

313

Actual

73

–

2016

207

2017Notes

54 254

– 20

314

Actual

91 –

41

97 349

–

60

127

1

59

107

96

399

3,009 117

2,679

–

50

78

69

143

59

6 –


page 31



Note 5. Gains or losses from the disposal of assets

$ ’000

Property (excl. investment property)Proceeds from disposal – propertyLess: carrying amount of property assets sold/written offNet gain/(loss) on disposal

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

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

Other StructuresLess: carrying amount of Other Structures assets sold/written offNet gain/(loss) on disposal

BuildingsProceeds from disposal – BuildingsLess: carrying amount of Buildings assets sold/written offNet gain/(loss) on disposal

LibraryLess: carrying amount of Library assets sold/written offNet gain/(loss) on disposal

NET GAIN/(LOSS) ON DISPOSAL OF ASSETS

–

62

(160)

(82)

175

2017

–

(43)

56

176

–

–

Notes 2016

(833) 272

– (2)

(48)

(82) (278)

(2)

–

(160)

(776)

(99)

(102)

(35) (35)

(113)

Actual

(225)

(561)

(48)

(30) (30)

Actual


page 32



Note 6a. – Cash assets and Note 6b. – investments

$ ’000

Cash and cash equivalents (Note 6a)Cash on hand and at bankCash-equivalent assets 1

– Deposits at callTotal cash and cash equivalentsTOTAL CASH ASSETS, CASHEQUIVALENTS AND INVESTMENTS

1 Those investments where time to maturity (from date of purchase) is < 3 mths.

Cash, cash equivalents and investments wereclassified at year end in accordance withAASB 139 as follows:

Cash and cash equivalentsa. ‘At fair value through the profit and loss’ 16,002

– 16,002

–

– –

–

–

– 15,000

20,754

Notes

2017Actual

Current

2016

Non-current Current Non-current

16,002

Actual

– 1,002 4,754

20,754

20,754

16,000 –

–

2017Actual Actual

2016


page 33



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

$ ’000

Total cash, cash equivalentsand investments

attributable to:External restrictions (refer below)Internal restrictions (refer below)Unrestricted

$ ’000

Details of restrictions

External restrictions – included in liabilitiesSpecific purpose unexpended loans – general (A)Library Infrastructure Grant (B)Life choices funds held on behalf of clients (C)External restrictions – included in liabilities

External restrictions – otherDeveloper contributions – general (D)Specific purpose unexpended grants (B)Water supplies (E)Sewerage services (E)External restrictions – otherTotal external restrictions

A Loan moneys which must be applied for the purposes for which the loans were raised. B Grants which are not yet expended for the purposes for which the grants were obtained.C Funds held on behalf of Life Choices Clients.D Development contributions which are not yet expended for the provision of services and amenities in accordance

with contributions plans (refer Note 17). E Water, sewerage, domestic waste management (DWM) and other special rates/levies/charges are externally

restricted assets and must be applied for the purposes for which they were raised.

Current

2017

Actual

Closing Transfers from

– 8,641

16,002

–

1,258

Opening

6,654 8,090

–

20,754 –

–

(635) 1,481 4,452 4,123

(433)

2016

16,002

Non-current

balance

764

8,090

–

Actual

919

–

2,291

288

2017

–

864

1,411 3,967 2,375

2,967 5,370 (8) 9,822

Actual

Transfers to

–

45

restrictions

434

2,926

21

restrictions

964

1,084

–

2,595 –

3,359

–

154

2016

–

20,754

Actual

45

9,822

Non-current

balance

(202)

372

(8)

2017

Current

–

–

(643)

–

– 21

1,948


page 34



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

$ ’000

Internal restrictionsPlant and vehicle replacementInfrastructure replacementEmployees leave entitlementCarry over worksDeposits, retentions and bondsCouncil committeesSpecial projectsWaste facility managementLife ChoicesAsset RemediationRFS Funds Repaid – Fire Control CentreDrainage – OperationalDrainage – CapitalInfrastructure – OtherInfrastructure – ContingencyLandfill – New BinsLandfill – Purchase 15HA LandCBD Signage UpgradeCAFS ExtensionRoadsEconomicParksTotal internal restrictions

TOTAL RESTRICTIONS

2017

31

–

–

Opening

487

528 – 3,248

7

–

balance

–

154

– 511

–

250

217

683

144 – 33

–

737 – –

–

575

– 210 –

14,744

9,863

–

–

835

271

–

33

balance

–

–

–

–

–

737

683 –

225 154

–

– 217

– 1,875

330

(8,519)

(7,876) 6,654

144

18,463

34

575

–

–

330

1,729

11 40

346

12,238

(3,077)

– –

restrictions

2,647

– –

40

7

1,085

528

–

346

31

210 8,641

271

–

Transfers from

3,111

Closing

–

(957) (83)

(511)

487

–

restrictions Transfers to

–

–

(3,248)

11


page 35



Note 7. Receivables

$ ’000

PurposeRates and annual chargesInterest and extra chargesUser charges and feesAccrued revenues – Interest on investments – Other income accrualsDeferred debtorsNet GST receivableTotal

Less: provision for impairmentRates and annual chargesUser charges and feesTotal provision for impairment – receivables

TOTAL NET RECEIVABLES

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

Notes on debtors above:(i) Rates and annual charges outstanding are secured against the property.

(ii) Doubtful rates debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.

(iii) Interest was charged on overdue rates and charges at 8.50% (2016 8.50%).Generally all other receivables are non-interest bearing.

(iv) Please refer to Note 15 for issues concerning credit risk and fair value disclosures.

Notes

41 – 509

–

209

– (31)

–

–

–

2016

2,044

–

213

213

–

–

3,115

3,198

Non-current

(52)

51

109 –

3,115 1,557 2,666 209 213

2017

468

–

406

–

– 209

Non-current

– 1,640

–

Current

– –

213

41

147

213

334

–

–

–

–

115

(52) (83)

449 – –

31

(31)

(83)

209

–

–

1,557

323 –

268

78

209

– – 36

1,089

–

– 625

597

Current

–

– –


page 36



Note 8. Inventories and other assets

$ ’000

(a) Inventories

(i) Inventories at cost Stores and materialsTrading stockTotal inventories at cost

TOTAL INVENTORIES

(b) Other assets

PrepaymentsTOTAL OTHER ASSETS

Total unrestricted assetsTOTAL INVENTORIES AND OTHER ASSETS

(i) Other disclosures

(a) Inventories recognised as an expense for the year included:– Stores and materials– Trading stock

Refer to Note 27. Fair value measurement for information regarding the fair value of other assets held.

2017

– 246

Non-current

2,238

Current

–

Notes2016

245

59

217

245

– –

59 59 59 –

2,238 1,499

59 1,499 59

2,238 2,238

304 304

1,499

3,003 1,182 757 1,066

2017 2016

–

–

Current

1,499

Non-current

245 1,992 – 1,282

–


page 37



Note 9a. Infrastructure, property, plant and equipment

Asset class

$ ’000

Capital work in progress 892 – 892 639 – – – (535) – – – 996 – 996 Plant and equipment 10,532 6,545 3,987 – 429 (99) (617) – – – – 10,686 6,986 3,700 Office equipment 1,826 1,569 257 – 101 – (54) – – – – 1,927 1,623 304 Furniture and fittings 517 479 38 – – – (6) – – – – 517 485 32 Land: – Operational land 7,748 – 7,748 – 415 (30) – – (152) – – 7,981 – 7,981 – Community land 5,252 – 5,252 – – – – – – – – 5,252 – 5,252 Infrastructure: – Buildings 35,698 20,038 15,660 180 – (278) (815) – 152 – – 35,385 20,486 14,899 – Other structures 11,818 6,285 5,533 198 – (48) (269) 18 – – – 11,947 6,515 5,432 – Roads (General) 117,365 30,308 87,057 1,973 – – (1,400) – – – 942 119,453 30,881 88,572 – Roads (Causeways) 6,652 3,619 3,033 – – – (82) – – – 31 6,718 3,736 2,982 – Roads (Carparks) 1,001 229 772 – – – (15) – – – 170 1,210 283 927 – Bridges 54,716 20,444 34,272 410 550 – (543) 311 (260) (248) – 55,260 20,768 34,492 – Footpaths (Road Related) 2,361 991 1,370 – – – (30) – – – 56 2,417 1,021 1,396 – Bulk earthworks (non-depreciable) 22,464 – 22,464 – – – – – – – 382 22,846 – 22,846 – Stormwater drainage 13,092 4,800 8,292 – – – (146) – 2 – 74 13,168 4,946 8,222 – Water supply network 36,478 17,329 19,149 352 – – (454) – – (418) – 36,703 18,074 18,629 – Sewerage network 21,024 7,429 13,595 – – – (324) – – (770) – 21,135 8,634 12,501 – Swimming pools 2,735 1,140 1,595 – 70 – (32) 206 – – – 3,011 1,172 1,839 – Other open space/recreational assets (General) 2,149 635 1,514 62 – – (24) – (43) – – 2,168 659 1,509 – Other Open Space Recreational Assets (Footpaths – Non Road Related) 326 65 261 – – – (4) – – – 4 330 69 261 – Other infrastructure (Kerb and Gutter) 12,013 5,405 6,608 – – – (153) – – – 201 12,214 5,558 6,656 – Other infrastructure (Major Street Furniture) 1,673 136 1,537 – – – (40) – – – 83 1,757 177 1,580 Other assets: – Library books 808 316 492 – 53 (2) (40) – – – – 854 351 503 Reinstatement, rehabilitation and restoration assets (refer Note 26): – Tip assets 163 151 12 – – – (11) – – – – 162 161 1 TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.

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

Refer to Note 27. Fair value measurement for information regarding the fair value of other infrastructure, property, plant and equipment.

Accumulateddepreciation

and impairment

Gross carrying amount


Accumulateddepreciation

and impairment

369,303 127,913 241,390 3,814 (457) (5,059) 1,618

as at 30/6/2016Asset movements during the reporting period

WIPtransfers

Adjustmentsand transfers

Additionsnew assets

Additionsrenewals

Carrying value

of disposals

Depreciation expense

Revaluation decrements

to equity (ARR)

Revaluation increments

to equity (ARR)

Netcarrying amount

241,512 (1,436) 1,943 374,097 132,585 – (301)

as at 30/6/2017

Netcarrying amount


page 38



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

Note 9c. Infrastructure, property, plant and equipment – current year impairments

Council has recognised no impairment losses during the reporting period nor reversed any prior period losses.

21,970 8,635 13,335

59,658 26,833 32,825

21,135 8,635 12,500

37,688 18,198 19,490

175 – 175

18,074 –

Accumulated depn. and

impairment

Net carrying amount

138

847 36,247

456

124

–

14

847 18,173

Actual2016

456


Accumulated depn. and

impairment

Net carrying amount

138 120 18


847

Actual Actual

$ ’000

Total sewerage services

Class of asset

Water supply

Infrastructure – Operational land

Plant and equipment Land

– Operational land

Total water supply

WIP

Other assets

Infrastructure

Sewerage services

Actual2017

Land660 – 660

TOTAL RESTRICTED I,PP&E

37,462 17,449 20,013

– – –

36,021 – 847

660 – 660

17,329 18,692 456 – 456

21,024 7,429 13,595 21,684 7,429 14,255

59,146 24,878 34,268


page 39



Note 10a. Payables, borrowings and provisions

$ ’000

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

Income received in advancePayments received in advanceTotal income received in advance

BorrowingsLoans – secured 1

Total borrowings

ProvisionsEmployee benefits:Annual leaveLong service leaveOther leaveSub-total – aggregate employee benefitsAsset remediation/restoration (future works)

Total provisions

(i) Liabilities relating to restricted assets

Externally restricted assetsWaterSewerLife ChoicesLocal infrastructure renewal scheme loanLiabilities relating to externally restricted assets

Total liabilities relating to restricted assetsTotal liabilities relating to unrestricted assets

1. Loans are secured over the general rating income of Council Disclosures on liability interest rate risk exposures, fair value disclosures and security can be found in Note 15.

2,116

253

2,629

728

TOTAL PAYABLES, BORROWINGS AND PROVISIONS

6,267

Non-current

–

8,143

–

– 78

2,629

–

– 1,009

177

1,445

163

–

2,876 82 (14) 9

1,526

1,011

1,526

(4)

150

9,104

–

7,296

327

16,400

2,928

15,384 15,972 1,324

TOTAL PAYABLES, BORROWINGS AND PROVISIONS

Non-current 2016

15,883

499

6,831

2,876 26

15,972 1,324

2,701 (19)

2,296 – –

–

–

1,870

Current 2017

Non-current

97

1,869

1,481 891

–

–

Non-current

92

766 – –

(3)

2,148

(8)

2016

–

177

2017

1,649 1,939

15,883

2,163

428

5,804 5,803

9,104 2,116 4,715

6,831

Notes

9,616

4

1,362 –

474

Current

172 346

1,445

1,634

–

–

Current

8,143

9,616

15,384

–

7

–

Current

47

–

16,400

5,215 2,928

303 764


page 40



Note 10a. Payables, borrowings and provisions (continued)

$ ’000

(ii) Current liabilities not anticipated to be settled within the next twelve months

The following liabilities, even though classified as current, are not expectedto be settled in the next 12 months.

Provisions – employees benefits

Note 10b. Description of and movements in provisions

a. Employees leave entitlements and on-costs represents those benefits accrued and payable and an estimate of those that will become payable in the future as a result of past service.

b. Self insurance provisions represent both (i) claims incurred but not reported and (ii) claims reported and estimatedas a result of Council’s being a self insurer up to certain levels of excess.

c. Asset remediation, reinstatement and restoration provisions represent the present value estimate of future costs Council will incur in order to remove, restore and remediate assets and/or activities as a result of past operations.

2016

2,126

–

–

–

892

Openingbalance

as at 1/7/16

19

Long service leave1,009

TOTAL–

–

2017

19 346

Closingbalance

as at 30/6/17

Remeasurement effects due to

discounting

Actual

Additional provisions

(5) Asset remediation

(99) 249 – Annual leave

8 – – Other leave

635 1,797

3,128 327

Decrease due to payments

Unused amounts reversed

Class of provision

–

(735) –

2,126

1,011

1,924

3,304

1,947

2016

(633)

(3)

2017

–

Actual

1,924


page 41



Note 11. Statement of cash flows – additional information

$ ’000

(a) Reconciliation of cash assets

Total cash and cash equivalent assetsLess bank overdraftBalance as per the Statement of Cash Flows

(b) Reconciliation of net operating result to cash provided from operating activities

Net operating result from Income StatementAdjust for non-cash items:Depreciation and amortisationNet losses/(gains) on disposal of assets – OtherUnwinding of discount rates on reinstatement provisions

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

(c) Non-cash investing and financing activities

Nil

(d) Financing arrangements

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

Bank overdraft facilities (1)

Credit cards/purchase cardsTotal financing arrangements

Amounts utilised as at balance date:– Credit cards/purchase cardsTotal financing arrangements utilised

1. The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. Interest rates on overdrafts are interest rates on loans and other payables are disclosed in Note 15.

(ii) Secured loan liabilitiesLoans are secured by a mortgage over future years rate revenue only.

(4)

4,937 225

5,059

97

22

Notes

4,847

16,002

55

22

297

Actual

–

(37)

(494)

–

96

16,002

6a

20,754 10

45

(19)

(120)

606 531

(1,015)

–

115

19

5

19

6,725

278

(29)

315

157

776

(1,558)

2017

20,754

1,508

Actual 2016

–

200

9,162

24 24

200


page 42



Note 12. Commitments for expenditure

$ ’000

(a) Capital commitments (exclusive of GST)

Capital expenditure committed for at the reporting date but notrecognised in the financial statements as liabilities:

Property, plant and equipmentBridgesOperational LandWater InfrastructureSewer InfrastructureRoadsWasteStreet LightingUrban StormwaterTotal commitments

These expenditures are payable as follows:Within the next yearTotal payable

Sources for funding of capital commitments:Unrestricted general fundsFuture grants and contributionsExternally restricted reservesInternally restricted reservesUnexpended loansTotal sources of funding

Details of capital commitmentsCapital commitments relate to a range of capital items where purchase ordershave been raised but invoices not received as at 30 June.

(b) Finance lease commitmentsNil

(c) Operating lease commitments (non-cancellable)

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

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

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

(d) Investment property commitments

Nil

Actual

67

2016

–

1,674

323 364

362

–

198

109 68

112

67

1,674

39 401 765

44 –

–

1,674

2017

1,330

1,674

121

198

18

198

– 131

67

346 – 3

44

9

198

67

60

Actual

–

1,081

–

Notes


page 43



Note 13a(i). Statement of performance measurement – indicators (consolidated)

$ ’000

Local government industry indicators – consolidated

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

2. Own source operating revenue ratioTotal continuing operating revenue (1)

excluding all grants and contributionsTotal continuing operating revenue (1)

3. Unrestricted current ratioCurrent assets less all external restrictions (2)

Current liabilities less specific purpose liabilities (3, 4)

4. Debt service cover ratioOperating result (1) before capital excluding interestand depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows)plus borrowing costs (Income Statement)

5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible

6. Cash expense cover ratioCurrent year’s cash and cash equivalentsplus all term depositsPayments from cash flow of operating andfinancing activities

Notes

(1) Excludes fair value adjustments and reversal of revaluation decrements, net gain/(loss) on sale of assets and the net share of interests in joint ventures and associates.(2) Refer Notes 6-8 inclusive. Also excludes any real estate and land for resale not expected to be sold in the next 12 months.(3) Refer to Note 10(a).(4) Refer to Note 10(a)(ii) – excludes all payables and provisions not expected to be paid in the next 12 months (incl. ELE).

58.70%

3.70%

Benchmark

>0.00%6.76%

9,987

3,944

10,991

5.20x

2,095 > 3 mths

31,842

3,089 16,052

20,754

>1.5x

58.00%

2,325

5.91%

12.84%

2015

2.74%

4.72%

8.75 mths

18,692

Amounts

30,714

>2x

< 5% Metro<10% Rural

519

>60.00%

4.30x 3.41x 3.86x

2017

x12

2016

11.4 mths

Prior periods

3.36x

56.36%

3.07x

9.91 mths

Indicator2017


page 44



Note 13a(ii). Local government industry indicators – graphs (consolidated)

Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Purpose of own source operating

revenue ratio

Commentary on 2016/17 result

Council has a strong level of working capital.

2016/17 ratio 58.70%


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

the unrestricted activities of Council.

2016/17 ratio 5.20x

This ratio measures fiscal flexibility. It is

the degree of reliance on external funding

sources such as operating grants and

contributions.

Purpose of unrestricted current

ratio

This ratio measures Council’s

achievement of containing operating expenditure within operating revenue.

Council has once again met this benchmark although it is significantly higher than 2015-16 due to Council

receiving half of the Financial Assistance Grant funding for 2016-17 in advance. This

advance has been restricted, but under accounting standards was required to be

shown as income in the 2016-17 Financial Year. If this advance payment had not been

included, this ratio would be 7.02%


2016/17 ratio 12.84%

Council improved upon this ratio again in 2016/17. It should be noted that Council

meets the rural version of this ratio (which includes Financial Assistance Grants).

Purpose of operating

performance ratio

3% 7%

13%

-4%

-8%

-3%

2%

7%

12%

2014 2015 2016 2017

Rat

io %

1. Operating performance ratio

57% 56% 58% 59%

0%10%20%30%40%50%60%70%80%90%

100%

2014 2015 2016 2017

Rat

io %

2. Own source operating revenue ratio

4.1 3.1 3.4

5.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2014 2015 2016 2017

Rat

io (x

)

3. Unrestricted current ratio


page 45



Note 13a(ii). Local government industry indicators – graphs (consolidated)


Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside Benchmark



2016/17 ratio 9.91 mths

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

recovery efforts.

This ratio measures the availability of operating cash to

service debt including interest, principal and

lease payments


Council continues to perform well against this benchmark despite taking out an aditional loan of $2.050 million for the

purchase of Wattle Vale and the new Rural Fire Service (RFS) Control Centre in

Lambeth Street (the cost of the buildings is being refunded by the RFS to Council).

Purpose of debt service cover ratio 2016/17 ratio 4.30x

Council continues to maintain its strong liquidity position.

2016/17 ratio 4.72%

This is well within the acceptable range for Rural Councils and is an improvement on

2015/16.

Purpose of cash expense cover ratio

Purpose of rates and annual charges

outstanding ratio


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

for its immediate expenses without

additional cash inflow.

3.2 3.9

3.4 4.3

0.00.51.01.52.02.53.03.54.04.55.0

2014 2015 2016 2017

Rat

io (x

)

4. Debt service cover ratio

3.78% 3.70% 5.91%

4.72%

0%

2%

4%

6%

8%

10%

12%

2014 2015 2016 2017

Rat

io %

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

9.2 11.4

8.8 9.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2014 2015 2016 2017

Rat

io (m

ths)

6. Cash expense cover ratio


page 46



Note 13b. Statement of performance measurement – indicators (by fund)

$ ’000

Local government industry indicators – by fund

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

2. Own source operating revenue ratioTotal continuing operating revenue (1) excluding capital grants and contributions Total continuing operating revenue (1)

3. Unrestricted current ratioCurrent assets less all external restrictions (2)

Current liabilities less specific purpose liabilities (3, 4)

Notes

(1) - (4) Refer to Notes at Note 13a(i) above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

52.47% 96.30% 86.25% 96.40% 96.47%

3.36x 0.76x

2016Water indicators Sewer indicatorsGeneral indicators 5 Benchmark

>60.00%

>0.00%

53.60%

5.20x

11.72% 5.95% 17.97% 3.01% 24.81% 23.61%

2017 2017 20172016 2016

1.40x 0.75x 10.17x >1.5x


page 47



Note 13b. Statement of performance measurement – indicators (by fund) (continued)

$ ’000

Local government industry indicators – by fund (continued)

4. Debt service cover ratioOperating result (1) before capital excluding interest and depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows) plus borrowing costs (IncomeStatement)

5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible

6. Cash expense cover ratioCurrent year’s cash and cash equivalents plus all term depositsPayments from cash flow of operating and financing activities

Notes

(1) Refer to Notes at Note 13a(i) above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

>2x

> 3 months

2.57% 33.84% 34.40%

3.67x 5.58x 2.15x 7.05x 3.08x

0.00 months

4.04x

0.81%

2016

8.29% 5.90% < 5% Metro<10% Rural

General indicators 5 Water indicators Sewer indicators

x12

Benchmark2017 2016 2017 2016

months months monthsmonths8.48 0.00 0.00 7.33 0.00

months

2017


page 48



Note 14. Investment properties

$ ’000

(a) Investment properties at fair value

Investment properties on hand

(b) Valuation basis

The basis of valuation of investment properties is fair value, being the amounts for which the properties couldbe exchanged between willing parties in arms length transaction, based on current prices in an active marketfor similar properties in the same location and condition and subject to similar leases.

The 2017 revaluations were based on independent assessments made in 2015 by:M J Williams API, FREAV, Registered Valuer 619, Certified Practising Valuer.

(c) Contractual obligations at reporting date

Refer to Note 12 for disclosures relating to any capital and service obligations that have been contracted.

(d) Leasing arrangements – Council as lessor

Details of leased investment properties are as follows;

Future minimum lease payments receivable under non-cancellableinvestment property operating leases not recognised in thefinancial statements are receivable as follows:Within 1 yearTotal minimum lease payments receivable

The lease by Jamsies Fuel and Fix on Council property commenced on 1/10/2013and expires on 30/09/2018. Monthly rental is currently $1,457.76.

(e) Investment property income and expenditure – summary

Rental income from investment properties:– Minimum lease paymentsNet revenue contribution from investment propertiesplus:Fair value movement for yearTotal income attributable to investment properties

Refer to Note 27. Fair value measurement for information regarding the fair value of investment properties held.

Actual

17 17

170 170

17

17

Actual 2017

13

17

–

17

2016Notes

17

13

–

17


page 49



Note 15. Financial risk management

$ ’000

Risk management

Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.

The Council’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.

Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.

Financial risk management is carried out by Council’s Risk Management section in conjucntion with theFinance section, under policies approved by the Council.

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

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

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

Council has an investment policy which complies with the Local Government Act 1993 and Minister’sinvestment order. This policy is regularly reviewed by Council and it’s staff and an investment report is tabledbefore Council on a monthly basis setting out the portfolio breakup and its performance.

The risks associated with the investments held are:

– Price risk – the risk that the capital value of Investments may fluctuate due to changes in market prices, whether there changes are caused by factors specific to individual financial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.

– Interest rate risk – the risk that movements in interest rates could affect returns and income.

– Credit risk – the risk that the investment counterparty will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council – be it of a capital or income nature.

Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasinginvestments with high credit ratings or capital guarantees.

(a) Market risk – price risk and interest rate risk

The following represents a summary of the sensitivity of Council’s Income Statement and accumulated surplus(for the reporting period) due to a change in either the price of a financial asset or the interest rates applicable.

It is assumed that the change in interest rates would have been constant throughout the reporting period.

2017Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

2016Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates

Profit Increase of values/rates

154

200

(154)

(200) (20)

200 20

154

20

(15) 15 (15) (154)

Profit Equity

(20)

Equity (200)

Decrease of values/rates

15


page 50



Note 15. Financial risk management (continued)

$ ’000

(b) Credit risk

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

The major risk associated with these receivables is credit risk – the risk that debts due and payable to Councilmay not be repaid in full.

Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.

Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates and annual charges at higher than market rates which further encourages the payment of debt.

There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.

The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.

Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.

There are no material receivables that have been subjected to a re-negotiation of repayment terms.

A profile of Council’s receivables credit risk at balance date follows:

(i) Ageing of receivables – %Current (not yet overdue)Overdue

(ii) Ageing of receivables – valueRates and annual charges Other receivablesCurrent Current< 1 year overdue 0 – 30 days overdue1 – 2 years overdue 31 – 60 days overdue2 – 5 years overdue 61 – 90 days overdue> 5 years overdue > 91 days overdue

(iii) Movement in provision for impairment of receivablesBalance at the beginning of the year– amounts already provided for and written off this yearBalance at the end of the year

56

annual

90%

– 509

2017

–

2016

303 597

346

2017

(120)

100%

83

2,902

2017

2,568 211

receivables annual

51 118

(1)

Rates and

–

Rates and

charges receivables charges receivables

100%

Other

0%100%100%

251 403

1,252

106

–

37 –

100%

560

83

203

–

Rates and

annual

10%

Other

Rates and

127

charges charges Other

31%69%

receivables

83

2016

100%

annual Other

2016

124

0%


page 51



Note 15. Financial risk management (continued)

$ ’000

(c) Liquidity risk

Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on handto meet payment obligations as and when they fall due.

Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.

Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.

The contractual undiscounted cash outflows (ie. principal and interest) of Council’s payables and borrowingsare set out in the maturity table below:

$ ’000

Trade/other payablesLoans and advancesTotal financial liabilities

Trade/other payablesLoans and advancesTotal financial liabilities

Borrowings are also subject to interest rate risk – the risk that movements in interest rates could adverselyaffect funding costs and debt servicing requirements. Council manages this risk through the diversification ofborrowing types, maturities and interest rate structures. All of Council's loans are taking out at fixed interestrates, which gives certaintly for cash flow purposes and also negates the risk of interest rate rises.

The following interest rates were applicableto Council’s borrowings at balance date:

Trade/other payablesLoans and advances – fixed interest rate

12,191 –

payable in:

2016

2017– 7

2,305

4-5 Yrs

–

5.66% 16,708

1,579

2,296 0.00%value

1,469

Average

2,701 1,508 9,423

–

interest rateCarrying

2017

19,713

interest rate

19,409

9,423

2,701 0.00%

1,405

1,405

2,357

19,409

2,490

17,417 5.59%

value

2016CarryingAverage

1,508 19,409

19,713 26,327 12,191

– – 2,701 1,579 16,708

3,259

– 1,469

2,296 2,317 17,417

valuescash

16,708

24,031 2,490 – 2,296 –

outflows> 5 Yrs2-3 YrscarryingActualTotal

7

to no3-4 Yrs

Subject

2,371

1-2 Yrs

4,660

–

maturity

2,317

2,289 2,357

2,305

766 – 1,324

– 1,935

766

≤ 1 Year


page 52



Note 16. Material budget variations

$ ’000

Council’s original financial budget for 16/17 was adopted by the Council on 22 June 2017.

While the Income Statement included in this General Purpose Financial Report must disclose the originalbudget adopted by Council, the Local Government Act 1993 requires Council to review its financial budgeton a quarterly basis, so that it is able to manage the various variations between actuals versus budget thatinvariably occur throughout the year.

This note sets out the details of material variations between Council’s original budget and its actualresults for the year as per the Income Statement – even though such variations may have been adjusted forduring each quarterly budget review.

Note that for variations* of budget to actual :Material variations represent those variances that amount to 10% or more of the original budgeted figure.F = Favourable budget variation, U = Unfavourable budget variation

$ ’000

REVENUESRates and annual charges

User charges and feesAdditional income was received for Quarry Delivery Charges due to the increased sale of products associated with the wind farm activity in the region and additional private works income.

Interest and investment revenueInterest rates declined over the course of the 2016-17 financial year. Budget for interest and investment revenue isto be adjusted downwards in 2017-18.

Other revenuesThis variance is accounted for predominately by additional income from Glen Innes Aggregates in 2016/17 as a result of increased activity due to additional sales attribtable to the wind farms in the region.

Operating grants and contributions

Capital grants and contributionsA number of additional Capital related Grants and Contributions were received in 2016/17, the largest of which was$552K for Glen Innes Severn Council taking over the Wytaliba Bridge from Roads and Maritime Services.

867

595

(114)

2,590

10,338

22%

332%1,128

12,022

3,165

Actual

261

12,136

2,117

577

(1%)

F

482

82%

U

4,707

1%

F

59

2017

F

F

(113) (19%)

10,279

2,588

U

Budget20172017

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


page 53



Note 16. Material budget variations (continued)

$ ’000

EXPENSESEmployee benefits and on-costs

Borrowing costs

Materials and contractsThis variation is predominately due to additional processing and production costs associated with Glen Innes Aggregates. This is more than offset by additional revenue generated by Glen Innes Aggregates in 2016/17.

Depreciation and amortisationDepreciation costs of $5.059M are on par with the 2015/16 actuals of $4.937M. It had been anticipated that themethodology for calcuating depreciation would be reviewed in 2016/17 resulting in lower depreciation costs.However this will be reviewedin 2017/18 in conjunction with transferring asset data to a new asset register.

Other expenses

Net losses from disposal of assetsSome assets were identified that needed to be removed from Council's asset register and it was thereforenecessary to write off these amounts. The amount required to be written off was significantly less than in 2015/16.

Budget variations relating to Council’s Cash Flow Statement include:

Cash flows from operating activitiesThis variation is predominately due to a Federal Government decision to provide Councils with an advance payment in June of half of the 2017/18 Financial Assistance Grant.

Cash flows from investing activitiesA number of Bridge projects were included in the original budget and subsequently removed throughout the year viaCouncil resolution.

Cash flows from financing activitiesThis variation is as a result of additional loans taken out in 2015-16.

7,251

3,300 3,009

2017

(4%)

U225

7,551

4,113 U5,059

U

F

(23%)(946)

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

4%

(18) U984

2017

966

(153.6%)

(35.9%)

709

(7,980) 2,861

291

6,813 9,162

F(1,322)

F(5,119)

2,031

–

2,349

9%

F34.5%

Budget

10,569

2017

F

(300)

402 10,167

Actual

(2%)

0%(225)


page 54



Note 17. Statement of developer contributions

$ ’000

Council recovers contributions, raises levies and enters into planning agreements on development works that are subject to a development consent issued by Council.All contributions must be spent/utilised for the specific purpose they were levied and any interest applicable to unspent funds must be attributed to remaining funds.

The following tables detail the receipt, interest and use of the above contributions and levies and the value of all remaining funds which are ‘restricted’ in their future use.

SUMMARY OF CONTRIBUTIONS AND LEVIES

S94A LEVIES – UNDER A PLANCONTRIBUTION PLAN NUMBER 1 - Community facilities

Other

S94 CONTRIBUTIONS – NOT UNDER A PLAN

Roads

Cumulative internal

borrowings due/(payable)

– –

Cumulative internal


– –

Cumulative internal


– – –

–

in year(8) 228 –

Cash Non-cashreceived during the year

balance121

Contributions Held asrestricted

Internalborrowingduring

yearOpening earned

349 –

asset(to)/from349

–

8 8

–

Interest Expenditure

– –

35 – 1

1 4

(8)

– –

35 yearin year

Contributions

Cash

Interest

Total 228 – 121

Total

balancePURPOSE

Non-cash

4

Opening

4

2

received during the year

PURPOSE

–

– –

4 S94A levies – under a planNon-cash

1

Total contributions

PURPOSE Openingbalance

earnedContributions

received during the yearInterest

yearCash

288

228 25 18

8 35

(8) –

assetin year

45

– 1

11

40 349

434

–

– – –

Held as

–

InternalExpenditureborrowing restricted(to)/from

during

Expenditureduringearned

InternalrestrictedHeld as

asset

40 40

(to)/fromborrowing

S94 not under plansS64 contributions

Total S94 revenue under plans35

– – 143

121

40 –

(8)


page 55



Note 18. Contingencies and other assets/liabilities not recognised

$ ’000

The following assets and liabilities do not qualify for (ii) Statewide Limitedrecognition in the Statement of Financial Position, buttheir knowledge and disclosure is considered relevant Council is a member of Statewide Mutual, a mutualto the users of Council’s financial report. pool scheme providing liability insurance to local

government.

LIABILITIES NOT RECOGNISED: Membership includes the potential to share in eitherthe net assets or liabilities of the fund depending on

1. Guarantees its past performance. Council’s share of the netassets or liabilities reflects Council’s contributions to

(i) Defined benefit superannuation the pool and the result of insurance claims within contribution plans each of the fund years.

Council participates in an employer-sponsored The future realisation and finalisation of claimsdefined benefit superannuation scheme, and makes incurred but not reported to 30/6 this year may resultcontributions as determined by the superannuation in future liabilities or benefits as a result of pastscheme’s trustees. events that Council will be required to fund or share

in respectively.Member councils bear responsibility of ensuring thereare sufficient funds available to pay out the required (iii) StateCover Limitedbenefits as they fall due.

Council is a member of StateCover Mutual LimitedThe schemes most recent full actuarial review and holds a partly paid share in the entity.indicated that the net assets of the scheme werenot sufficient to meet the accrued benefits of the StateCover is a company providing workersschemes defined benefit member category with compensation insurance cover to the NSW localmember councils required to make significantly government industry and specifically Council.higher contributions in future years.

Council has a contingent liability to contribute furtherThe Local Government Superannuation Scheme equity in the event of the erosion of the company’showever is unable to provide Council with an accurate capital base as a result of the company’s pastestimate of its share of the net deficit and accordingly performance and/or claims experience or as a resultCouncil has not recorded any net liability from it’s of any increased prudential requirements from APRA.defined benefit scheme obligations in accordancewith AASB 119. These future equity contributions would be required

to maintain the company’s minimum level of netFuture contributions made to the defined benefit assets in accordance with its licence requirements.scheme to rectify the net deficit position will berecognised as an expense when they become (iv) Other guaranteespayable – similar to the accounting for definedcontributions plans. Council has provided no other guarantees other than

those listed above.


page 56



Note 18. Contingencies and other assets/liabilities not recognised (continued)

$ ’000

LIABILITIES NOT RECOGNISED (continued): (iii) Potential land acquisitions due to planning restrictions imposed by Council (continued)

2. Other liabilitiesAs a result, where notified in writing by the various

(i) Third party claims owners, Council will be required to purchase theseland parcels.

The Council is involved from time to time in variousclaims incidental to the ordinary course of business At reporting date, reliable estimates as to the valueincluding claims for damages relating to its services. of any potential liability (and subsequent land asset)

from such potential acquisitions has not beenCouncil believes that it is appropriately covered possible.for all claims through its insurance coverage anddoes not expect any material liabilities to eventuate. ASSETS NOT RECOGNISED:

(ii) S94 plans (i) Land under roads

Council levies section 94/94A contributions upon As permitted under AASB 1051, Council has electedvarious development across the Council area through not to bring to account land under roads that itthe required contributions plans. owned or controlled up to and including 30/6/08.

As part of these plans, Council has received funds (ii) Infringement notices/finesfor which it will be required to expend the monies inaccordance with those plans. Fines and penalty income, the result of Council

issuing infringement notices is followed up and As well, these plans indicate proposed future collected by the Infringement Processing Bureau.expenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in Council’s revenue recognition policy for suchfuture years or where a shortfall exists by the use of income is to account for it as revenue on receipt.Council’s general funds.

Accordingly, at year end, there is a potential assetThese future expenses do not yet qualify as liabilities due to Council representing issued but unpaidas of the reporting date, but represent Council’s infringement notices. intention to spend funds in the manner and timingset out in those plans. Due to the limited information available on the status,

value and duration of outstanding notices, Council is(iii) Potential land acquisitions due to planning unable to determine the value of outstanding income.

restrictions imposed by Council

Council has classified a number of privately ownedland parcels as local open space or bushland.

Note 19. Interests in other entities

Council has no interest in any controlled entities, joint arrangements or associates.


page 57



Note 20. Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors

$ ’000

(a) Retained earnings

Movements in retained earnings were as follows:Balance at beginning of year (from previous years audited accounts)a. Net operating result for the yearBalance at end of the reporting period

(b) Revaluation reserves

(i) Reserves are represented by:

– Infrastructure, property, plant and equipment revaluation reserveTotal

(ii) Reconciliation of movements in reserves:

Infrastructure, property, plant and equipment revaluation reserve– Opening balance– Revaluations for the year– Correction of prior period errors– Other movements– Balance at end of year

TOTAL VALUE OF RESERVES

(iii) Nature and purpose of reserves

Infrastructure, property, plant and equipment revaluation reserve– The infrastructure, property, plant and equipment revaluation reserve is used to record increments/decrements of non-current asset values due to their revaluation.

96,360 95,890

142,527

Actual

96,360 95,890

2017

20(c) –

4,847

Notes

3,916

Actual

141,019 1,508

(22,184)

2016

114,158 507

147,374

9(a)

(37)

142,527

– 95,890

95,890

96,360

95,890 96,360


page 58



Note 20. Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)

$ ’000

(c) Correction of error/s relating to a previous reporting period

Correction of errors as disclosed in last year’s financial statements:

Council identified that Road Infrastructure was reported incorrectly inthe 2014/15 Financial Statements as a result of Bulk Earthworks being incorporated into the Road Infrastructure Asset as well as its ownBulk Earthworks category.

This affected both the Transport Infrastructure Asset account and

As a result, Council has adjusted:– Transport Infrastructure Fair Value– Revaluation Reserve

In accordance with AASB 108 – Accounting Policies, Changes inAccounting Estimates and Errors, the above prior period errorshave been recognised retrospectively.

These amounted to the following equity adjustments:

– Adjustments to opening equity – 1/7/15 (relating to adjustments for the 30/6/15 reporting year end and prior periods)– Adjustments to closing equity – 30/6/16 (relating to adjustments for the 30/6/16 year end)

Total prior period adjustments – prior period errors

(d) Voluntary changes in accounting policies

Council made no voluntary changes in any accounting policies during the year.

(e) Changes in accounting estimates

Council made no changes in accounting estimates during the year.

– (22,184) – (22,184)

2017

–

Notes

–

(22,184)

–

–

Actual Actual 2016

(22,184)


page 59



Note 21. Financial result and financial position by fund

Income Statement by fund$ ’000

Continuing operationsIncome from continuing operationsRates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationDebt GuaranteeOther expensesNet losses from the disposal of assetsTotal expenses from continuing operationsOperating result from continuing operations

Net operating result for the year

Net operating result attributable to each council fund

Net operating result for the year before grants and contr and contributions provided for capital purposes

1 General fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal charges and recoveries made between the funds.

65 49 –

–

114 92

337 298

358

1

Actual

11,946 4,705 1

General1Sewer

358

9,242

1,610

4,278

–

340 358

4,149 1,252 1,850 23,893

340

111

4,149

4,149

457

–

–

260

–

–

Actual

37 39

783

3,084

702

1,956

2017

1,383

2017

21 1,065

79

–

340

–

Water

Actual

534

2,190 42

6,757

28,042

225 2,689

142

324

171

9

7,976

Actual

979 89

394 1,120

2017 2017


page 60


Notes to the Financial Statements as at 30 June 2017

Note 21. Financial result and financial position by fund (continued)

Statement of Financial Position by fund$ ’000

ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesTotal current assets

Non-current assetsReceivablesInfrastructure, property, plant and equipmentInvestment propertyOtherTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets

EQUITYRetained earningsRevaluation reservesCouncil equity interestTotal equity1 General Fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal receivables and payables between the funds.

–

2017

Water

211,329 211,329 – 17,653 14,752

17,653 –

–

29

–

– –

19,490 59

139 2,876 7,847

– 13,335

– –

–

2,238

–

141

1,665 –

11,901

2,192

1,510

14,752

4,343

12,839 1,510

89,166

16,417

– 112

2,851

1,194

12,411

170 – –

232,015

2,251 16

13,310

211,329 14,752

2,051

1,526

20,686

19,845

– 155

209,129

208,687

– 13,335

21

213

355

334

3,082 22,886

2,666

20172017

115 2,967

Actual

–

–

Actual

Sewer

428

122,163

–

17,653

– 2,051

General1

17,766

Actual

19,490 –

2017Actual


page 61



Note 22. ‘Held for sale’ non-current assets and disposal groups

$ ’000

(i) Non-current assets and disposal group assets

Non-current assets ‘held for sale’BuildingsTotal non-current assets ‘held for sale’

Disposal group assets ‘held for sale’None

TOTAL NON-CURRENT ASSETSCLASSIFIED AS ‘HELD FOR SALE’

(ii) Details of assets and disposal groupsRural Fire Service Buldings held for resale.

$ ’000

(iii) Reconciliation of non-current assets ‘held for sale’ and disposal groups – i.e. discontinued operations

Opening balanceBalance still unsold after 12 months:Less: assets no longer classified as ‘held for sale’Plus new transfers in:– Assets ‘held for sale’

Closing balance of ‘held for sale’non-current assets and operations

Refer to Note 27. Fair value measurement for fair value measurement information.

– –

– 216 – –

82

(82)

2016

–

216

82

Assets ‘held for sale’2016

–

– –

–

2017

Non-current

–

2017

2016

216

–

– – –

Non-current2017 2017 2016

– –

– –

Current

Disposal groups

216 216

Current

– –

–


page 62



Note 23. Events occurring after the reporting date

$ ’000

Events that occur between the end of the reporting period (30 June 2017) and the date when the financialstatements are ‘authorised for issue’ have been taken into account in preparing these statements.

Council has adopted the date of receipt of the Auditors’ Report as the applicable ‘authorised for issue’ daterelating to these General Purpose Financial Statements.

Accordingly, the ‘authorised for issue’ date is 19/12/17.

Events that occur after the reporting period represent one of two types:

(i) Events that provide evidence of conditions that existed at the reporting period

These financial statements (and the figures therein) incorporate all ‘adjusting events’ that provided evidence ofconditions that existed at 30 June 2017.

(ii) Events that provide evidence of conditions that arose after the reporting period

These financial statements (and figures therein) do not incorporate any ‘non-adjusting events’ that have occurredafter 30 June 2017 and which are only indicative of conditions that arose after 30 June 2017.

Council is aware of the following ‘non-adjusting events’ that merit disclosure:

Land Purchase:

i) Settlement for the purchase of land at 598 Blue Hills Road for future landfill development occurred in July 2017.ii) The purchase price of the land was $160,000. A $16,000 deposit was paid in the 2016/17 Financial Year.

Note 24. Discontinued operations

Council has not classified any of its operations as ‘discontinued’.


page 63



Note 25. Intangible assets

$ ’000

Intangible assets represent identifiable non-monetary assets without physical substance.

Intangible assets are as follows:

Opening values:Gross book value (1/7)Accumulated amortisation (1/7)Accumulated impairment (1/7)Net book value – opening balance

Movements for the year

– Gross book value written off– Accumulated amortisation charges written off– Accumulated impairment charges written off

Closing values:Gross book value (30/6)Accumulated amortisation (30/6)Accumulated impairment (30/6)

TOTAL INTANGIBLE ASSETS – NET BOOK VALUE 1

–

–

–

316 (316)

–

– –

–

– –

2016

316

316

(316)

Actual Actual 2017

–

–

(316) 316

–

– –

(316)


page 64



Note 26. Reinstatement, rehabilitation and restoration liabilities

$ ’000

Council has legal/public obligations to make restore, rehabilitate and reinstate the following assets/operations:

Asset/operation

Rogers road waste facilityBalance at end of the reporting period

Under AASB 116 – Property, Plant and Equipment, where the use of an asset results in the obligationto dismantle or remove the asset and restore the site on which the asset stands, an estimate of suchcosts is required to be included in the cost of the asset.

An equivalent liability must be recognised under AASB 137 – Provisions, Contingent Liabilities and ContingentAssets.

The provision has been calculated by determining the present value of the future expenditures expected to beincurred. The discount rate used is the risk free borrowing rate applicable to Council.

Reconciliation of movement in provision for year:

Balance at beginning of yearAmortisation of discount (expensed to borrowing costs)Total – reinstatement, rehabilitation and restoration provision

Notes

Estimated

2016restoration

327

346 327

year of

2036

19

2017

327 346 346

308

327 10(a)

NPV of provision

19


page 65



Note 26. Reinstatement, rehabilitation and restoration liabilities

$ ’000

Provisions for close down and restoration and for environmental clean up costs – tips.

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

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

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

Other movements in the provisions for close down and restoration costs, including those resulting from newdisturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discountrates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of theassets to which they relate.

RehabilitationWhere rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure,provision is made for the estimated outstanding continuous rehabilitation work at each reporting date and thecost is charged to the Income Statement.

Provision is made for the estimated present value of the costs of environmental clean up obligations outstandingat the reporting date. These costs are charged to the Income Statement. Movements in the environmental cleanup provisions are presented as an operating cost, except for the unwinding of the discount which is shown as a borrowing cost.

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

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


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Note 27. Fair value measurement

$ ’000

The Council measures the following asset and liability classes at fair value on a recurring basis:– Infrastructure, property, plant and equipment – Investment propertyThe fair value of assets and liabilities must be estimated in accordance with various accounting standards foreither recognition and measurement requirements or for disclosure purposes.AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a‘level’ in the fair value hierarchy as follows:Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability,Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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

2017

Recurring fair value measurements

Investment propertiesJamesies Fuel and FixTotal investment propertiesInfrastructure, property, plant and equipment Capital work in progress Plant and equipment Office equipment Furniture and fittings Land: – Operational land – Community land Buildings Other structures Infrastructure: – Roads (General) – Roads (Causeways) – Roads (Car Parks) – Bridges – Footpaths (Road Related) – Bulk earthworks (non-depreciable) – Stormwater drainage – Water supply network – Sewerage network – Swimming pools

– Other infrastructure (Kerb and Gutter) – Other infrastructure (Major Street Furniture)Other assets: – Library books

Total infrastructure, property, plant and equipment

30/06/16 –

– Other open space/recreational assets (Footpaths non Road Related)

– Other open space/recreational assets (General)

927

30/06/16 – – 1,509 1,509

30/06/16 – 6,656 6,656

8,222 8,222 30/06/17 – – 18,629

30/06/16 – – 1,396 1,396

– 1,839 1,839

261 261

Reinstatement, rehabilitation and restoration assets (refer Note 26) – – 1 1

18,629

30/06/16 –

– 30/06/16

– 12,501

–

30/06/16 – – 1,580 1,580

– – 304

30/06/17 –

–

30/06/16

30/06/17 –

30/06/16 – –

30/06/15

30/06/16 – 3,700

– 22,846 22,846

– 170 – 170

30/06/12 304

– 996 996

– 170 170

SignificantDate Quoted

valuation active mktsof latest unobservableprices in observable

Significant

inputs

Level 3 TotalFair value measurement hierarchy

Level 1 Level 2

inputs

– 3,700

12,501

30/06/16 – – 5,252 5,252

30/06/16 – – 5,432 5,432

– – 32 32 –

30/06/16 – – 7,981 7,981

30/06/12

14,899 14,899

–

34,492

30/06/16 – – 88,572 88,572

30/06/16 – – 34,492

30/06/13 – –

30/06/16 – – 2,982 2,982 30/06/16 – – 927

– – 241,512 241,512

30/06/16 –

– – 503 503

30/06/17


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Note 27. Fair value measurement (continued)

$ ’000

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

2017

Non-recurring fair value measurements

Non-current assets classified as ‘held for sale’Rural Fire Service Building on Council LandTotal NCA’s classified as ‘held for sale’

2016Recurring fair value measurements

Investment propertiesJamesies Fuel and FixTotal investment properties

Infrastructure, property, plant and equipment Capital work in progress Plant and equipment Office equipment Furniture and fittings Land: – Operational land – Community land Buildings Other structures Infrastructure: – Roads (General) – Roads (Causeways) – Roads (Car Parks) – Bridges – Footpaths (Road Related) – Bulk earthworks (non-depreciable) – Stormwater drainage – Water supply network – Sewerage network – Swimming pools

– Other infrastructure (Kerb and Gutter) – Other infrastructure (Major Street Furniture)Other assets: – Library books

Total infrastructure, property, plant and equipment

– –

261 261

1,595

– – 6,608

– 241,390

30/06/16

– – 1,514 1,514

30/06/16

Reinstatement, rehabilitation and restoration assets (refer Note 26)

– Other open space/recreational assets (General) – Other open space/recreational assets (Footpaths Non Road Related)

Fair value measurement hierarchyLevel 1 Level 2 Level 3 Total

Date Quoted

3,987 3,987

–

3,033

30/06/16

30/06/16 –

–

– 5,252 5,252

– – 892 892 30/06/16 –

Significantof latest prices in

30/06/12 – – 12

30/06/16 – – 492 492 –

38 38

34,272 34,272

– 3,033 30/06/16 – – 87,057 87,057

30/06/16

12

30/06/16 – – 1,537 1,537

– 22,464 22,464

30/06/16 –

–

30/06/16 – – 772 772

–

30/06/1630/06/16

19,149

30/06/16 – – 7,748 7,748 30/06/16

30/06/1230/06/12 –

–

241,390

–

30/06/13 – – 15,660 15,660 30/06/16 –

– – 257 257

– 8,292 8,292 –

170

unobservableinputs

observable unobservablevaluation

– – 170 – 170

–

216

13,595 13,595

–

– –

– 170

inputs

– –

6,608

1,595

– 5,533 5,533

– –

216

30/06/15

30/06/1630/06/16

30/06/16

216 –

Level 3 Total

–

inputs inputs

Significant

active mkts

30/06/17 – – 216

Level 1 Level 2of latest prices in observable

–

valuation active mkts

19,149

1,370 1,370

–


page 68




$ ’000

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

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

Council’s policy for determining transfers between fair value hierarchies is:

– at the end of the reporting period.

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

Where Council is unable to derive fair valuations using quoted market prices of identical assets(ie. level 1 inputs) Council instead utilises a spread of both observable inputs (level 2 inputs) andunobservable inputs (level 3 inputs).

The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows:

Investment properties

Glen Innes Severn Council currently holds one investment property (known as Jamesies Fuel and Fix).Council obtains an independent valuation of its investment property on a regular basis and at the end of each reporting period the financial statements reflects the latest valuation.

The best evidence of Fair Value is the current price in an active market for similar assets. The following information is used where necessary;- Current prices in an active market for different types of properties or similar properties in a less active market.- Expected future rental income generated from the property based on a discounted cash flow.The investment property held by Council has been valued the valuer using valuation techniques that are appropriate and for which sufficient data was available to measure fair value, maximising the use of observable inputs and minimising unobservable inputs (namely level 3 inputs).The property was valued by Mike Williams Valuations (Glen Innes Valuation Services) AAPI, FREAV, Registered Valuer 619, Certified Practising Valuer.

There are no valuation changes from prior years.

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

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

• Plant and Equipment - Graders, trucks, rollers, tractors and motor vehicles.

• Office Equipment - Computers, photocopiers, calculators etc.

• Furniture & Fittings - Chairs, desks and display boards.

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


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$ ’000

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

Infrastructure – roads

Infrastructure – bridges

This asset class comprises the Road Carriageway, Bus Shelters, Car parks, Guardrails, Kerb and Guttering, Retaining walls, Suburb Markers, and Traffic Facilities.

The road carriageway is defined as the trafficable portion of a road, between but not including the kerb and gutter, and would include any paved markers parking places along roadside.

Council’s pavement Asset Management System contains detailed dimensions and specification for all Council roads. Valuations for the road carriageway, comprising surface, pavement and formation were based on calculations carried out in 2010 utilising the in house NAMS PLUS Asset management system for detailed pavement information residing in Council’s Pavement Management System -Council fair values, road infrastructure assets using, Level 3 inputs at a component level.

The ‘Cost Approach’ is used to value roads by componentising the assets into significant parts and then rolling up these component values to provide and overall road valuation ( for each road segment) within Council’s Asset System.

The level of componentisation adopted by Council is in accordance with AASB 116, OLG Circular 09-09 and the Institute if Public Work Engineers International Infrastructure Management Manual (IIMM).The unobservable Level 3 inputs used include:

• Pattern of Consumption• Useful life and residual value• Asset Condition• Remaining Life of Carriageway• Gross replacement cost.

The ‘Cost Approach’ is used to value roads assets. There were no changes in valuation technique from prior year.

Bridges were valued in-house, bridges were physically inspected and unit rates based on square metres were used there was no reliable market evidence (Level 2) as other inputs (such as estimates of residual value and pattern of consumption) require extensive professional judgement that impacts significantly on the final determination of fair value.

Council fair values Bridges using Level 3 inputs.

The unobservable Level 3 inputs used include:

• Pattern of Consumption• Residual value• Asset Condition• Remaining useful life• Gross replacement cost.



page 70




$ ’000


Infrastructure – footpaths

Infrastructure –kerb and guttering

A footpath is defined as all footways (including those shared with a cycleway) sealed or non-sealed.Council Pavement Management Systems (PMS) contains detailed dimensions and specifications for all Council footpaths.

Council fair values footpaths using Level 3 inputs.

The unobservable Level 3 inputs used include:• Pattern of Consumption• Residual value• Asset Condition• Remaining useful life• Gross replacement cost.

The ‘Cost Approach’ is used to value footpaths. There were no changes in valuation technique from the prior year.

Kerb & Guttering (non-componentised) using Level 3 inputs.


• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost• Remaining useful life.

The ‘Cost Approach’ is used to value kerb and guttering. The cost approach was utilised and while the unit rates based on square metres, linear metres or similar could be supported from market evidence (Level 2), other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impacted significantly on the final determination of fair value. Additionally due to limitations in the historical records of very long lived assets there some uncertainty regarding the Council fair values.

There were no changes in valuation technique from prior year.


page 71




$ ’000


Infrastructure – car parks

Infrastructure – other infrastructure

Council Car Parks (non-componentised) using Level 3 inputs.


• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost• Remaining useful life.

The ‘Cost Approach’ is used to value car park. The cost approach was utilised and while the unit rates based on square metres, linear metres or similar could be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impacted significantly on the final determination of fair value.


Other infrastructure comprises: Traffic islands, Refuge Islands, Bus Shelters etc.

Council other infrastructure (non-componentised) using Level 3 inputs.

The unobservable Level 3 inputs used include:• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost• Remaining useful life.

The ‘Cost Approach’ is used to value other infrastructure assets. The cost approach was utilised and while the unit rates based on square metres, linear metres or similar could be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impacted significantly on the final determination of fair value.



page 72




$ ’000


Infrastructure – stormwater drainage

Property: – operational land

Council’s Drainage Assets comprises pits, pipes, culverts, open channels, headwalls and various type of water quality device used to collect, store and remove stormwater.

Council carries fair values drainages assets (non-componentised) using Level 3 inputs.


• Pattern of Consumption• Residual value• Asset Condition• Gross replacement cost.

The ‘Cost Approach’ is used to value drainage assets.


Council’s “Operational” land by definition has no special restriction other than those that may apply to any piece of land.

Council obtains its fair values for operational land from an external valuer every 5 years (last valuation being 2012) using Level 3 inputs.

Generally, fair value is the most advantageous price reasonably obtainable by the seller and the most advantageous price reasonably obtained by the buyer. This is not necessarily the market selling price of the asset rather, it is regarded as the maximum value that Council would rationally pay to acquire the asset if it did not hold it, taking into account quoted market price in an active and liquid market, the current market price of the same or similar asset, the cost of replacing the asset, if management intend to replace the asset, the remaining useful life and condition of the asset and cash flows from the future use and disposal.


• Rate per square Metre• Description of Land.

The ‘Market Approach’ is used to value Operational Land. There has been no change to the valuation process during the reporting period.


page 73




$ ’000


Property – community land:

Property– buildings (specialised and non–specialised)

Council’s “Community” land (including owned by Council, the Crown and various other Government Agencies that is managed by Council) by definition is land intended for public access and use or where other restrictions applying to the land create some obligation to maintain public access (such as a trust deed, dedication under section 94 of the Environment Planning and Assessment Act 1979).

This gives rise to the restrictions in the Act, intended to preserve the qualities of the land.

Community Land:• Cannot be sold• Cannot be leased, licensed, or any other estate granted over the land for more than 21 years and• Must have a plan of management for it.

In relation to Community Land the Division of Local Government has reviewed its positions on the use of the Valuer General’s Valuations of community land and in association with the Local Government Accounting Advisory Group; the Division has determined that community land may be valued as follows.

• The NSW Valuer General’s valuations may be used under the revaluation model to represent fair value for the revaluation of community land under clause 31 of AASB 116.

Council fair values community land using unbearable Level 3 inputs based on inputs on either the UCV( Unimproved Capital Value) provided by the valuer General or an average unit rate based on the UCV and allocated by Council against those properties where the Valuer General did not provide a UCV.

The ‘Market Approach’ is used to value Community land. There has been no change to the valuation process during the reporting period.

Council Buildings incorporates Libraries, Public Amenities, Sporting Club Houses, Kiosks and Amenities, Depot Buildings and workshops, Community Centres, Rural Fire Service Buildings and the Council Tourist Caravan Park.

Council carries fair values building using level 3 inputs. Valuations are generally carried out by an external valuer, Scott Fullarton using the cost approach. This approach estimates the replacement cost for each building by componentising the building (for complex structures) into significant parts with different useful life and taking in to account a range of factors. Buildings are physically inspected and unit although rates based on square meters could be supported from the market evidence, extensive professional judgement, and condition and consumption rates etc. impact significantly on the final value determination of fair value.

As such these assets are classified as having being valued using Level 3 inputs.


• Consumption rate• Future Economic Benefits• Condition• Useful Life of an asset.

The ‘Cost Approach’ is used to value specialised buildings. There has been no change to the valuation process during the reporting period.


page 74




$ ’000


Other structures:

Other assets:

Council’s other structures incorporates the following classes of assets;

• Significant single assets such as playgrounds, tennis courts, tennis shelters etc. and• Aggregated lower value assets such as recreational / park infrastructures (picnic tables, seats, bollards, fences BBQs etc.)

Council carries fair value of other structures assets (non-componentised) using Level 3 inputs. Such valuations are under taken by Council Staff or by an external valuer depending on the structure.


• Pattern of Consumption• Asset Condition• Residual value.

The “Cost Approach’ is used to value other structures. There has been no change to the valuation process during the reporting period.

Council’s Other Assets comprises bush reserves, solar panel systems, irrigation systems, accessible shelters signage etc.

Council carries fair values of other assets using level 3 inputs.

The unobservable Level 3 inputs used include:• Pattern of consumption• Asset Condition• Residual value• Useful life.

The Cost Approach is used to value other assets. There has been no change to the valuation process during the reporting period.


page 75




$ ’000


Water supply network:

Sewerage network:

Non-current assets classified as ‘held for sale’Non-current assets held for sale were valued at cost as at 30 June 2017 and this approximates fair value for this level 3 asset.

Assets within this class comprise treatment works, pumping stations and, sewerage mains.

The 'Cost Approach' estimated the replacement cost for each asset by componentising the assets into significant parts with different useful lives and taking into account a range of factors. While the unit rates based on linear metres of certain diameter pipes and prices per pit or similar may be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impacted significantly on the final determination of fair value. Additionally due to limitations in the historical records of very long lived assets there is uncertainty regarding the actual design, specifications and dimensions of some assets.

Council carries fair values of Sewer Infrastructure using level 3 inputs. The unobservable Level 3 inputs used include:• Pattern of consumption• Asset Condition• Residual value• Useful life.These assets are indexed each year in line with the NSW Reference Rates Manual as publish by the Office of Water.


Assets within this class comprise reservoirs, pumping stations and, water pipelines.

The 'Cost Approach' estimated the replacement cost for each asset by componentising the assets into significant parts with different useful lives and taking into account a range of factors.

While the unit rates based on linear metres of certain diameter pipes and prices per pit or similar may be supported from market evidence (Level 2) other inputs (such as estimates of pattern of consumption, residual value, asset condition and useful life) required extensive professional judgement and impacted significantly on the final determination of fair value. Additionally due to limitations in the historical records of very long lived assets there is uncertainty regarding the actual design, specifications and dimensions of some assets.

Council carries fair values of Water Supply Infrastructure using level 3 inputs. The unobservable Level 3 inputs used include:• Pattern of consumption• Asset Condition• Residual value• Useful life.These assets are indexed each year in line with the NSW Reference Rates Manual as publish by the Office of Water.



page 76




$ ’000

(4). Fair value measurements using significant unobservable inputs (level 3)

a. The following tables present the changes in level 3 fair value asset classes.

Opening balance – 1/7/15

Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairment

Closing balance – 30/6/16




Transfers from/(to) another asset classPurchases (GBV)Disposals (WDV)Depreciation and impairmentFV gains – other comprehensive income




5,032

4,929

(738) 340

(531) (38) (17) (586) –

Operational

land Structures

(320) –

Community Buildings

1,275

7,748

(618) (86)

–

152

(269)

–

385 (269)

782

34,193

Plant

progress equipment

1,358 3,973 146 58 5,535

– 1,079

work in and equipment andCapital Office Furniture

fittings

49 19 –

(113) – (3) (116) 609

(806) 130

–

(99)

(535) – – – 639 429 101

32

(99) – – (617)

33,197 6,790 4,858

– –

Total

271 449 732

(54)

3 9

16,620

Otherland

892 5,174

(6) (677)

3,987

(535)

257

–

(30)

5,252

(1,084)

415 – 180 198 18 (152) 18

– –

1,169 –

7,981

(815)

33,564

113 1,589 (1,024)

(48) (356)

15,660

(1,083)

201

(278)

(814) – 397

38

5,533

14,899 5,432

–

–

5,252

793

996 3,700 304

Total

–


page 77




$ ’000

(4). Fair value measurements using significant unobservable inputs (level 3) (continued)

a. The following tables present the changes in level 3 fair value asset classes. (continued)


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeFV gains – Income Statement


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeRecognition of asset given to CouncilRevaluaiton decrements to Equity



Purchases (GBV)Depreciation and impairmentFV gains – other comprehensive income


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeCorrect rounding issue from PYRevaluation decrement to Equity


1,143 – –

45 –

85,852

8,398 19,743 13,887 881

(260)

–

(1,497) (543) (30) –

TotalRoads earthworks

22,184

Bridges Footpaths

–

1,973

– –

– –

(1,490)

6

– (248)

56

(29)

(260)

3,960

3,659

–

495

34,272 1,370 22,464 90,862

(2,070)

531

3,411

–

– 25

–

(538)

2,933

148,968

(2,057) 3,083

– –

Totalnetwork

6

255

Bulk

29

42,909

311

1,396

382

311 960 –

–

97

(248)

151,215

–

92,481 34,492

1,581

22,846

143,145

672 431 920 2,120

255

1,325

–

33,784

Stormwater Water Sewerage Swimmingdrainage supply network pools

(451) (322) (32) (951) (57) (816) (400) (174) (1,447)

(146)

8,292 19,148 13,596 1,595 42,631

– – – 206 206 – 352 – 70 422

(146) (454) (324) (32) (956) 74 – – – 74 2 – – – 2 – (417) (770) – (1,187)

8,222 18,629 12,502 1,839 41,192


page 78




$ ’000


a. The following tables present the changes in level 3 fair value asset classes. (continued)


Purchases (GBV)Depreciation and impairmentFV gains – other comprehensive incomeFV gains – Income Statement


Purchases (GBV)Disposals (WDV)Depreciation and impairmentFV gains – other comprehensive incomeFV gains – Income Statement


b. Information relating to the transfers into and out of the level 3 fair valuation hierarchy (as disclosed in the table above) includes:Nil

c. The valuation process for level 3 fair value measurements

Fair value Hierarchy

Fair Value - Valuation techniquesThe valuation techniques prescribed by AASB 13 can be summarised as:

–

(43) –

–

1,775

(2) –

– –

– – 260

362 52 – 151

44

288

492 12

(43)

565 (10) (25) (260)

10,423

260 –

(185) (40)

8,145

(193)

1,770

(40) (11)

7,924

structure asets Total

Tip Other open

503 1

(2)

AASB 13 Fair Value Measurement requires disclosure of fair value measurement by level of input, using the following hierarchy: - Level 1 - Quoted prices (unadjusted) 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 - Unobservable inputs for asset or liability.

Cost Approach: A valuation technique that reflects the amount what would be required to replace the service capacity of an asset (current replacement cost).

8,236

(28) (272) –

363 – –

books assets space rec

10,509

117

Library

9,451

62 115 –

284 – – 4

Other

22 1,389

infra-

407

53


page 79




$ ’000


c. The valuation process for level 3 fair value measurements (continued)

Valuation techniques used to derive Level 2 and Level 3 Fair Values:

The Fair Valuation techniques Council has employed while utilising Level 2 and Level 3 inputs are as follows:

- Quoted prices for similar asset in active markets- Current replacement cost concept- Purchase price- Useful life

- Pattern of consumption- Residual Value- Asset Condition- Unit rates- Useful life

(5). Highest and best use

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

Where Council is unable to derive Fair Valuations using quoted market prices of identical assets (i.e. Level 1 inputs), Council instead utilises a spread of both observable inputs (Level 2 inputs) and unobservable inputs (Level 3 inputs).

Level 2 valuation process for some asset classes where the basis was Cost Approach under level 2 input which were determined based on, whereby maximising 'observable inputs and minimising unobservable inputs as below:

Income Approach: Valuation technique that converts future amounts (cash flows inflows/outflows) to signal the current (i.e. discounted) amount. The fair value measurement is determined on the basis of the value indicated by current market expectations about these future amounts.Market Approach: A valuation technique that uses prices and other relevant information, generated by market transactions involving identical or comparable (similar) assets, liabilities or a group of assets and liabilities such as a business.

Level 3 valuation process for some asset classes where the basis was Cost Approach. The inputs used


page 80



Note 28. Related party disclosures

$ ’000

a. Key management personnel

Key management personnel (KMP) of the council are those persons having the authority and responsibility for planning, directing and controlling the activities of thecouncil, directly or indirectly.

The aggregate amount of KMP compensation included in the Income Statement is:

Compensation:

Short-term benefitsPost-employment benefitsOther long-term benefits

Total 1,190

Actual2017

973 78

139

$'000


page 81



Note 28. Related party disclosures (continued)

$ ’000

b. Other transactions with KMP and their related parties

Council has determined that transactions at arm’s length between KMP and Council as part of Council delivering a public service objective (e.g. access to libraryor Council swimming pool by KMP) will not be disclosed.

Nature of the transaction

PlumbingBuilding and ConstructionDelivery and Freight

c. Other related party transactions

Nature of the transaction

Payments to staff related to Key Management Personnel # 96 – Standard Terms – – Note $'000 $'000 $'000 $'000

during year (incl. loans and debts expensecommitments) outstanding recognised

Provisions Doubtfultransactions balance for doubtful debts

Value of Outstanding Terms and conditions

# 6 – Standard Terms – – # 74 – Standard Terms – – # 28 – Standard Terms – –

Note $'000 $'000 $'000 $'000

during year (incl. loans and debts expensecommitments) outstanding recognised

Terms and conditions Provisions Doubtfultransactions balance for doubtful debts

Value of Outstanding


page 82



Note 29. Council information and contact details

Principal place of business:265 Grey StreetGLEN INNES NSW 2370

Contact detailsMailing address: Opening hours:PO Box 61 8.30 am - 4.30 pmGLEN INNES NSW 2370 Monday - Friday

Telephone: (02) 6730-2300 Internet: www.gisc.nsw.gov.auFacsimile: (02) 6732-3764 Email: [email protected]

Officers Elected membersGENERAL MANAGER MAYORHendrik Frederik BASSON Steve TOMS

RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSPaul Joseph DELLA Deputy Mayor Carol SPARKS

Councillor Glenn FRENDONPUBLIC OFFICER Councillor Dianne NEWMANAnna WATT Councillor Andrew PARSONS

Councillor Colin PRICEAUDITORS Councillor Jeff SMITHThe Audit Office of New South WalesLevel 15. 1 Margaret Street,SYDNEY NSW 2000

Other informationABN: 81 365 002 718

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

mailto:[email protected]

INDEPENDENT AUDITOR’S REPORT Report on the general purpose financial statements


To the Councillors of Glen Innes Severn Council

Opinion I have audited the accompanying financial statements of Glen Innes Severn Council (the Council), which comprise the statement of financial position as at 30 June 2017, the income statement, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the Statement by Councillors and Management.

In my opinion,

• the Council’s accounting records have been kept in accordance with the requirements of the Local Government Act 1993, Chapter 13, Part 3, Division 2 (the Division)

• the financial statements: - have been presented, in all material respects, in accordance with the requirements of this

Division - are consistent with the Council’s accounting records - present fairly, in all material respects, the financial position of the Council as at 30 June

2017, and of its financial performance and its cash flows for the year then ended in accordance with Australian Accounting Standards

• all information relevant to the conduct of the audit has been obtained • no material deficiencies in the accounting records or financial statements have come to light

during the audit.

My opinion should be read in conjunction with the rest of this report.

Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’ section of my report.

I am independent of the Council in accordance with the requirements of the:

• Australian Auditing Standards • Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for

Professional Accountants’ (APES 110).

page 83

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

Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove an Auditor-General

• mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.

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

Other Matter The financial statements of the Council for the year ended 30 June 2016 were audited by another auditor who expressed an unmodified opinion on that financial statement on 30 November 2016.

The Councillors’ Responsibility for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements in accordance with Australian Accounting Standards and the Local Government Act 1993, and for such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Councillors must assess the Council’s ability to continue as a going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting.

Auditor’s Responsibility for the Audit of the Financial Statements My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error

• issue an Independent Auditor’s Report including my opinion.

Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar3.pdf. The description forms part of my auditor’s report.

page 84

http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf

My opinion does not provide assurance:

• that the Council carried out its activities effectively, efficiently and economically • on the Original Budget information included in the Income Statement, Statement of Cash Flows,

Note 2(a) and Note 16 budget variation explanations • on the attached Special Schedules • about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.

Chris Clayton Executive Director, Quality and Innovation 19 December 2017 SYDNEY

page 85

1

Councillor Steve Toms Mayor Glen Innes Severn Council PO Box 61 GLEN INNES NSW 2370

19 December 2017

Dear Mayor

Report on the Conduct of the Audit for the year ended 30 June 2017

Glen Innes Severn Council We have audited the general purpose financial statements of Glen Innes Severn Council (the Council) for the year ended 30 June 2017 as required by section 415 of the Local Government Act 1993 (the Act).

We expressed an unmodified opinion on the Council’s general purpose financial statements.

This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2017 is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my audit opinion on the general purpose financial statements issued under section 417(2) of the Act.

INCOME STATEMENT Operating result

2017 2016 Variance

$’000 $’000 %

Rates and annual charges revenue

10,338 9,846 5.0

Grants and contributions revenue

13,150 11,209 17.3

Operating result for the year

4,847 1,508 221.4

Net operating result before capital amounts

3,719 994 274.1

Contact: Chris Clayton

Phone no: 02 9275 7248

Our ref: D1731043/1730

page 86

Our insights inform and challenge government to improve outcomes for citizens

2

Council’s operating surplus for the year increased to $4.8 million in 2016-17 ($1.5 million in 2015-16). The $3.3 million increase was largely driven by the advanced receipt of 2017-18 financial assistance grant instalments in 2016-17, and increase in quarry sales and royalties ($1.6 million).

The advanced receipts of the 2017-18 financial assistance grant instalments from the Commonwealth Government in 2016-17 was the main factor grants and contributions revenue ($12.0 million) increased ($1.3 million or 12.4 per cent) in the year.

Rates and annual charges ($10.3 million) revenue increased by $492,000 (5.0 per cent). The increase in rate income is in line with the permissible rate increase granted by the Minister for Local Government and movements in rateable properties in the local government area.

STATEMENT OF CASH FLOWS Council has generated positive operating cash flows in two of the past three years. At 30 June 2017, it held $20.8 million in cash and cash equivalents ($16.0 million at 30 June 2016). In 2016-17, Council spent $5.3 million on infrastructure, property, plant and equipment ($9.2 million in 2015-16).

FINANCIAL POSITION Cash and Investments

Restricted Cash and Investments

2017 2016 Commentary

$’000 $’000

External restrictions 9,822 8,090 Externally restricted cash and investments are restricted in their use by externally imposed requirements. The movement in externally restricted cash balances includes the increase of $372,000 in Sewerage services and $864,000 in specific purposes unexpended grants. Internally restricted cash and investments have been restricted in their use by resolution or policy of Council to reflect identified programs of works and any forward plans identified by Council. The increase was due to more money being held for waste facilities management ($772,000 increase in amount held at 30 June 2016), plant and vehicle replacement ($528,000) and roads maintenance ($575,000).

Internal restrictions 8,641 6,654

Unrestricted 2,291 1,258

Cash and investments 20,754 16,002

-10

0

10

20

30

2015 2016 2017

$milli

on

Year ended 30 June

Statement of Cash Flows

Net cash flow Cash and cash equivalents

page 87


3

PERFORMANCE RATIOS Operating performance ratio

Council’s operating performance ratio

exceeded the industry benchmark over the past three years. Council’s 2016-17 ratio reflects the advanced receipt of 2017-18 financial assistance grant instalments from the Commonwealth Government in 2016-17. The ‘operating performance ratio’

measures how well Council contained operating expenditure within operating revenue (excluding capital grants and contributions, fair value adjustments, and reversal of revaluation decrements). The benchmark set by the Office of Local Government (OLG) is greater than zero per cent.

Own source operating revenue ratio Council’s own source operating revenue ratio has been below the industry benchmark for the past three years. Council’s ratio increased to 58.7 per cent

in 2016-17, and was higher than the previous two years. The ‘own source operating revenue ratio’

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

Unrestricted current ratio Council’s unrestricted current ratio

exceeded the industry benchmark over the past three years. This indicates Council has sufficient liquidity to meet its current liabilities as and when they fall due. The ‘unrestricted current ratio’ is specific

to local government and represents Council’s ability to meet its short term obligations as they fall due. The benchmark set by OLG is greater than 1.5 times.

02468

101214

2015 2016 2017

Ratio%

Year ended 30 June

Operating performance ratio

Operating performance ratio Industry benchmark > 0%

5455565758596061

2015 2016 2017

Ratio%

Year ended 30 June

Own source operating revenue ratio

Own source operating revenue ratio Industry benchmark > 60%

0

1

2

3

4

5

6

2015 2016 2017

Ratiox

Year ended 30 June

Unrestricted current ratio

Unrestricted current ratio Industry benchmark > 1.5x

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4

Debt service cover ratio Council’s debt service cover ratio

exceeded the industry benchmark over the past three years. The ratio indicates Council has adequate revenue to cover the principal repayments and borrowing costs of its debt. This result has been impacted by the improved operating result for the year. The ‘debt service cover ratio’ measures the operating cash to service debt including interest, principal and lease payments. The benchmark set by OLG is greater than two times.

Rates and annual charges outstanding ratio Council’s rates and annual charges

outstanding ratio is better than the benchmark for rural councils over the past three years. The outstanding rates and annual charges percentage has improved slightly and remains below the benchmark for rural councils which is a reflection of sound debt recovery procedures at the Council. The ‘rates and annual charges

outstanding ratio’ assesses the impact of

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

debt recovery efforts. The benchmark set by OLG is less than 10 per cent for rural councils.

Cash expense cover ratio At 30 June 2017, Council had the capacity to cover 9.9 months of cash expenditure without additional cash inflows. Council’s high levels of liquidity means its

cash expense cover ratio far exceeded the industry benchmark over the past three years. This liquidity ratio indicates the number of months the Council can continue paying for its immediate expenses without additional cash inflow. The benchmark set by OLG is greater than three months.

0

1

2

3

4

5

2015 2016 2017

Ratiox

Year ended 30 June

Debt service cover ratio

Debt service cover ratio Industry benchmark > 2x

0

2

4

6

8

10

12

2015 2016 2017

Ratio%

Year ended 30 June

Rates and annual charges outstanding ratio

Rates and annual charges outstanding ratio

Industry benchmark < 10% (rural Council)

0

2

4

6

8

10

12

2015 2016 2017

Ratiomths

Year ended 30 June

Cash expense cover ratio

Cash expense cover ratio Industry benchmark > 3 mths

page 89


5

Building and Infrastructure renewals ratio Council did not met the building and infrastructure renewals ratio benchmark for the year ended 30 June 2017. This ratio needs to be considered in conjunction with other financial indicators in determining Council’s financial position

and sustainability. It should not be viewed in isolation. A long-term view should be taken, as capital expenditure fluctuates from year to year and can distort this ratio. The ‘building and infrastructure renewals

ratio assesses the rate at which these assets are being renewed against the rate at which they are depreciating. The benchmark set by OLG is greater than 100 per cent. This ratio is sourced from information contained in Council’s Special Schedule 7

which has not been audited.

OTHER MATTERS Council entities Council has interests in the following ‘council entities’: Statewide Limited StateCover Limited.

I have obtained sufficient audit evidence to be satisfied Council’s general purpose financial statements materially reflect Council’s interest in the entities. New accounting standards implemented

AASB 124 ‘Related Party Disclosures’

Effective for annual reporting periods beginning on or 1 July 2016

AASB 2015-6 extended the scope of AASB 124 to include not-for-profit public sector entities. As a result, Council’s financial

statements disclosed the: compensation paid to their key management personnel nature of their related party relationships amount and nature of their related party transactions,

outstanding balances and commitments and outstanding balances (including commitments).

0

50

100

150

2015 2016 2017

Ratio%

Year ended 30 June

Building and infrastructure renewals ratio

Building and infrastructure renewals ratioIndustry benchmark > 100%

page 90


6

Legislative compliance My audit procedures did not identify any instances of non-compliance with legislative requirements or a material deficiency in the Council’s accounting records or financial reports. The Council’s:

accounting records were maintained in a manner and form to allow the general purpose financial statements to be prepared and effectively audited

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

Chris Clayton Executive Director, Quality and Innovation

cc: Mr Hein Basson, General Manager Mr Tim Hurst, Acting Chief Executive of the Office of Local Government

page 91

Glen Innes Severn Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017


SPFS 2017

page 1


Special Purpose Financial Statements for the year ended 30 June 2017

Contents

1. Statement by Councillors and Management

2. Special Purpose Financial Statements:

Income Statement – Water Supply Business ActivityIncome Statement – Sewerage Business ActivityIncome Statement – Other Business Activities

Statement of Financial Position – Water Supply Business ActivityStatement of Financial Position – Sewerage Business ActivityStatement of Financial Position – Other Business Activities

3. Notes to the Special Purpose Financial Statements

4. Auditor’s Report

Background

These Special Purpose Financial Statements have been prepared for the use by both Council and the Office ofLocal Government in fulfilling their requirements under National Competition Policy.

The principle of competitive neutrality is based on the concept of a ‘level playing field’ between persons/entitiescompeting in a market place, particularly between private and public sector competitors.

Essentially, the principle is that government businesses, whether Commonwealth, state or local, should operatewithout net competitive advantages over other businesses as a result of their public ownership.

For Council, the principle of competitive neutrality and public reporting applies only to declared business activities.

These include (a) those activities classified by the Australian Bureau of Statistics as business activities beingwater supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnoverof more than $2 million that Council has formally declared as a business activity (defined as Category 1 activities).

In preparing these financial statements for Council’s self-classified Category 1 businesses and ABS-definedactivities, councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax-equivalentregime payments and debt guarantee fees (where the business benefits from Council's borrowing position bycomparison with commercial rates).

(iv)

9

87

(i)

(ii)

18

(iii)

6

Page

345

2

SPFS 2017

page 3


Income Statement of Council's Water Supply Business Activity for the year ended 30 June 2017

$ ’000

Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsShare of profit from equity accounted investmentOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentWater purchase chargesLoss on sale of assetsCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts

Grants and contributions provided for capital purposesSurplus (deficit) from continuing operations after capital amounts

Surplus (deficit) from discontinued operationsSurplus (deficit) from all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]

SURPLUS (DEFICIT) AFTER TAX

Plus opening retained profitsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentLess:– Tax equivalent dividend paid– Surplus dividend paidClosing retained profits

Return on capital %Subsidy from Council

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

932 1,053

20 9

39 –

– 2,053

787 179 413 456

– – –

–

71 161

2,067 (14)

282 268

– 268

–

268

12,631

– 71

–

– –

12,970

0.8%233

268 (275)

– –

Actual 2016

979 1,100

20 9

39 –

1 2,148

783 171 260 457

– – –

65 114

1,850

– –

298

42 340

– 340 (89)

217 108

Actual 2017

89

– –

13,310

2.4%–

251

12,970

251 (34)

–

SPFS 2017

page 4


Income Statement of Council's Sewerage Business Activity for the year ended 30 June 2017

$ ’000

Income from continuing operationsAccess chargesUser chargesLiquid trade waste chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsShare of profit from equity accounted investmentOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentLoss on sale of assetsCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts




Plus opening retained profitsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentLess:– Tax equivalent dividend paid– Surplus dividend paidClosing retained profits


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

– –

(11) 246

49 92

1,252 337

1,542

–

–

– 11,901

3.4%–

257

– –

101

–

123

– –

– 358

(101)

1,589

–

3

156 128 498 325

–

234 (8)

226 113

257

11,543

Actual 2017

– 102 37

1,383 33 55 1

79

49 77

1,233

21 358

37 –

1

1,318 25

Actual 2016

57

309

18 327

3.1%–

– 327 (93)

234

11,167

11,543

142 111 534 324

49 93

– –

SPFS 2017

page 5


Income Statement of Council's Other Business Activities for the year ended 30 June 2017

$ ’000

Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsShare of profit from equity accounted investmentOther incomeTotal income from continuing operations

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation, amortisation and impairmentLoss on sale of assetsCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts




Plus opening retained profitsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentAdd:– Subsidy paid/contribution to operationsLess:– TER dividend paid– Dividend paidClosing retained profits


– –

0 Category 1

25.2%

1,975

35.7%–

1,292

–

683 (115) (205)

–

205 – –

273

– –

26 115

–

– –

–

878 1,292

478

4,133

978

388

352

–

61

21

94

–

2,710 11

–

Actual 20162017

–

–

65

– –

–

1,884 3,596 2,017

–

–

– 26 64

379

2 –

Glen Innes Aggregates

Actual

133

–

1,633 195 127

388

3,450

–

683 4

535

683 384

–

SPFS 2017

page 6


Statement of Financial Position – Council's Water Supply Business Activity as at 30 June 2017

$ ’000

ASSETSCurrent assetsCash and cash equivalentsReceivablesTotal current assets

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

LIABILITIESCurrent liabilitiesBank overdraftPayablesBorrowingsTotal current liabilities

Non-current liabilitiesBorrowingsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYRetained earningsRevaluation reservesCouncil equity interestTOTAL EQUITY

– 332

17,653 17,653

4,760 12,970

2,164 2,051

13,310

2,164

21 –

19,490 20,013 19,490

334 354 355 354

17,730

Actual 2016

Actual 2017

19,845

29

20,013

20,367

29 112

473 141 112

2,192

2,051

17,730 2,637

17,730

4,343

17,653

SPFS 2017

page 7


Statement of Financial Position – Council's Sewerage Business Activity as at 30 June 2017

$ ’000

ASSETSCurrent assetsCash and cash equivalentsReceivablesTotal current assets


LIABILITIESCurrent liabilitiesPayablesBorrowingsTotal current liabilities


EQUITYRetained earningsRevaluation reservesCouncil equity interestTOTAL EQUITY

13,335 14,255

11,901

1,650

2,851 3,622 14,752

1,510

15,165 15,165

1,799 1,510 1,650

11,543

14,752

14,752

2,967

2017Actual Actual

2,595

1,665

139 132 155 149

3,082 2,709

16,417

115 114

2016

13,335 14,255

15,165

17 16

16,964

SPFS 2017

page 8


Statement of Financial Position – Council's Other Business Activities as at 30 June 2017

$ ’000

ASSETSCurrent assetsReceivablesInventoriesTotal Current assets


LIABILITIESCurrent liabilitiesBank overdraftPayablesBorrowingsTotal current liabilities


EQUITYRetained earningsRevaluation reservesCouncil equity interestTOTAL EQUITY 1,166

(126)

1,849

1,292 1,975

8

2,048

1,147

2,048

2016

1,397

Actual

1,166

5,044

1,849

1,051

2,178

1,849

(126)

Glen Innes Aggregates

Category 1

2017Actual

88 5

1,768

394

1,496

1,768

1,750

2,178

2,866

2,351 1,167

808 808

1,543

3,518

42

3,195

1,469 1,356

SPFS 2017

page 9


Special Purpose Financial Statements for the year ended 30 June 2017

Contents of the notes accompanying the financial statements

Details

Summary of significant accounting policies

Water Supply Business Best-Practice Management disclosure requirements

Sewerage Business Best-Practice Management disclosure requirements 153

Note Page

1

2

10

13

SPFS 2017

Glen Innes Severn Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies

page 10

A statement summarising the supplemental accounting policies adopted in the preparation of the Special Purpose Financial Statements (SPFS) for National Competition Policy (NCP) reporting purposes follows. These financial statements are SPFS prepared for use by Council and the Office of Local Government. For the purposes of these statements, the Council is a non-reporting not-for-profit entity. The figures presented in these Special Purpose Financial Statements have been prepared in accordance with the recognition and measurement criteria of relevant Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Australian Accounting Interpretations. The disclosures in these Special Purpose Financial Statements have been prepared in accordance with the Local Government Act 1993 (NSW), the Local Government (General) Regulation, and the Local Government Code of Accounting Practice and Financial Reporting. The statements are prepared on an accruals basis. They are based on historic costs and do not take into account changing money values or, except where specifically stated, current values of non-current assets. Certain taxes and other costs, appropriately described, have been imputed for the purposes of the National Competition Policy. National Competition Policy Council has adopted the principle of ‘competitive neutrality’ in its business activities as part of the National Competition Policy which is being applied throughout Australia at all levels of government. The framework for its application is set out in the June 1996 NSW government policy statement titled 'Application of National Competition Policy to Local Government'. The Pricing and Costing for Council Businesses, A Guide to Competitive Neutrality issued by the Office of Local Government in July 1997 has also been adopted. The pricing and costing guidelines outline the process for identifying and allocating costs to

activities and provide a standard for disclosure requirements. These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents, Council subsidies, return on investments (rate of return), and dividends paid. Declared business activities In accordance with Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities: Category 1 (where gross operating turnover is over $2 million) Glen Innes Aggregates is a Category 1 business of Council. Category 2 (where gross operating turnover is less than $2 million) a. Glen Innes Severn Council Water Supply

A provision for augmented water supplies to the communities of Deepwater and Glen Innes, and, surrounding residential and farmland holdings.

b. Glen Innes Severn Council Sewerage Services

A provision for sewerage services to the communities of Deepwater and Glen Innes, and, surrounding residential and farmland holdings.

Monetary amounts Amounts shown in the financial statements are in Australian currency and rounded to the nearest thousand dollars, except for Note 2 (Water Supply Best-Practice Management Disclosures) and Note 3 (Sewerage Best-Practice Management Disclosures). As required by the NSW Office of Water (Department of Primary Industries) the amounts shown in Note 2 and Note 3 are disclosed in whole dollars. (i) Taxation-equivalent charges Council is liable to pay various taxes and financial duties. Where this is the case, they are disclosed as a cost of operations just like all other costs.

SPFS 20177

Glen Innes Severn Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)

page 11

However, where Council does not pay some taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all Council-nominated business activities and are reflected in Special Purpose Financial Statements. For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities): Notional rate applied (%) Corporate income tax rate – 30% Land tax – the first $549,000 of combined land values attracts 0%. For the combined land values in excess of $549,001 up to $3,357,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $3,357,000 a premium marginal rate of 2.0% applies. Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $750,000. In accordance with the Department of Primary Industries Water (DPIW), a payment for the amount calculated as the annual tax equivalent charges (excluding income tax) must be paid from water supply and sewerage business activities. The payment of taxation equivalent charges, referred to in the NSW Office of Water Guidelines to as a ‘dividend for taxation equivalent’, may be applied for any purpose allowed under the Local Government Act, 1993. Achievement of substantial compliance to the NSW Office of Water Guidelines is not a prerequisite for the payment of the tax equivalent charges, however the payment must not exceed $3 per assessment. Income tax An income tax equivalent has been applied on the profits of the business activities. Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account in terms of assessing the rate of return required on capital invested.

Accordingly, the return on capital invested is set at a pre-tax level - gain/(loss) from ordinary activities before capital amounts, as would be applied by a private sector competitor. That is, it should include a provision equivalent to the corporate income tax rate, currently 30%. Income tax is only applied where a gain/ (loss) from ordinary activities before capital amounts has been achieved. Since the taxation equivalent is notional – that is, it is payable to Council as the ‘owner’ of business operations - it represents an internal payment and has no effect on the operations of the Council. Accordingly, there is no need for disclosure of internal charges in the SPFS. The rate applied of 30% is the equivalent company tax rate prevalent at reporting date. No adjustments have been made for variations that have occurred during the year. Local government rates and charges A calculation of the equivalent rates and charges payable on all category 1 businesses has been applied to all land assets owned or exclusively used by the business activity. Loan and debt guarantee fees The debt guarantee fee is designed to ensure that council business activities face ‘true’ commercial borrowing costs in line with private sector competitors. In order to calculate a debt guarantee fee, Council has determined what the differential borrowing rate would have been between the commercial rate and Council’s borrowing rate for its business activities. (ii) Subsidies Government policy requires that subsidies provided to customers, and the funding of those subsidies, must be explicitly disclosed. Subsidies occur when Council provides services on a less-than-cost-recovery basis. This option is exercised on a range of services in order for Council to meet its community service obligations.

SPFS 20177

Glen Innes Severn Council Notes to the Special Purpose Financial Statements for the year ended 30 June 2017 Note 1. Significant accounting policies (continued)

page 12

Accordingly, ‘subsidies disclosed’ (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by Council in any given financial year. The overall effect of subsidies is contained within the Income Statement of each reported business activity. (iii) Return on investments (rate of return) The NCP policy statement requires that councils with Category 1 businesses ‘would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field’. Such funds are subsequently available for meeting commitments or financing future investment strategies. The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement. The rate of return is calculated as follows: Operating result before capital income + interest expense

Written down value of I,PP&E as at 30 June As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 2.38% at 30/6/17. (iv) Dividends Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities. Local government water supply and sewerage businesses are permitted to pay an annual dividend from its water supply or sewerage business surplus. Each dividend must be calculated and approved in accordance with the DPIW guidelines and must not exceed:

(i) 50% of this surplus in any one year, or (ii) the number of water supply or sewerage

assessments at 30 June 2017 multiplied by $30

(less the payment for tax equivalent charges, not exceeding $3 per assessment).

In accordance with the DPIW guidelines a Dividend Payment form, Statement of Compliance, Unqualified Independent Financial Audit Report and Compliance Audit Report are required to be submitted to the DPIW.

SPFS 2017

page 13


Notes to the Special Purpose Financial Statements for the year ended 30 June 2017

Note 2. Water Supply Business Best-practice Management disclosure requirements

Dollars amounts shown below are in whole dollars (unless otherwise indicated)

1. Calculation and payment of tax-equivalents[all local government local water utilities must pay this dividend for tax equivalents]

Calculated tax equivalents

Number of assessments multiplied by $3/assessment

Amounts payable for tax equivalents [lesser of (i) and (ii)]

Amounts actually paid for tax equivalents

2. Dividend from surplus50% of surplus before dividends[calculated in accordance with Best-Practice Management for Water Supply and Sewerage Guidelines]

Number of assessments multiplied by $30/assessment, less tax equivalentcharges/assessment

Cumulative surplus before dividends for the 3 years to 30 June 2017, less thecumulative dividends paid for the 2 years to 30 June 2016 and 30 June 2015

2017 Surplus 2016 Surplus 2015 Surplus2016 Dividend 2015 Dividend

Maximum dividend from surplus [least of (i), (ii) and (iii) above]

Dividend actually paid from surplus [refer below for required pre-dividend payment criteria]

Are the overhead reallocation charges to the water business fair and reasonable? a

3. Required outcomes for 6 criteria[to be eligible for the payment of a ‘dividend from surplus’, all the criteria below need a ‘YES’]

Completion of strategic business plan (including financial plan)

Full cost recovery, without significant cross subsidies[refer item 2 (a) in table 1 on page 22 of the Best-Practice Guidelines]

– Complying charges [item 2 (b) in table 1]

– DSP with commercial developer charges [item 2 (e) in table 1]

– If dual water supplies, complying charges [item 2 (g) in table 1]

Sound water conservation and demand management implemented

Sound drought management implemented

Complete performance reporting form (by 15 September each year)

a. Integrated water cycle management evaluation

b. Complete and implement integrated water cycle management strategy

YES

YES(v)

(vi)

YES

65,000

–

93,879

2017

–

108,300

93,879

215,600

10,431

10,431

(iv) YES

YES

YES

(ii)

YES

YES

– 216,600 (7,000)

YES

YES

– 6,000

YES

(iv)

(iii)

(i)

(iv)

(iii)

(iii)

(i)

(ii)

(ii)

(v)

(i)

(vi)

SPFS 2017

page 14



Note 2. Water Supply Business Best-practice Management disclosure requirements (continued)


National Water Initiative (NWI) financial performance indicators

Total revenue (water)Total income (w13) – grants for the acquisition of assets (w11a) – interest income (w9)– Aboriginal Communities W&S Program income (w10a)

Revenue from residential usage charges (water)Income from residential usage charges (w6b) x 100 divided by the sum of[income from residential usage charges (w6a) + income from residentialaccess charges (w6b)]

Written down replacement cost of fixed assets (water)Written down current cost of system assets (w47)

Operating cost (OMA) (water)Management expenses (w1) + operational and maintenance expenses (w2)

Capital expenditure (water)Acquisition of fixed assets (w16)

Economic real rate of return (water)[total income (w13) – interest income (w9) – grants for acquisition of assets (w11a) –operating costs (NWI F11) – current cost depreciation (w3)] x 100 divided by[written down current cost of system assets (w47) + plant and equipment (w33b)]

Capital works grants (water)Grants for the acquisition of assets (w11a)

Notes: 1. References to w (e.g. w12) refer to item numbers within Special Schedules 3 and 4 ofCouncil’s Annual Financial Statements.

2. The NWI performance indicators are based upon the National Performance FrameworkHandbook for Urban Performance Reporting Indicators and Definitions.

a refer to 3.2 (2) on page 15 of the Best-Practice Management of Water Supply and Sewerage Guidelines, 2007.

NWI F26 6 $’000

NWI F11

NWI F17 %

NWI F14 $’000

3.06%

352

1,169 $’000

$’000NWI F9

2017

2,183

NWI F4 %

18,172

$’000

52.91%

NWI F1

SPFS 2017

page 15



Note 3. Sewerage Business Best-practice Management disclosure requirements


1. Calculation and payment of tax-equivalents[all local government local water utilities must pay this dividend for tax equivalents]

Calculated tax equivalents

Number of assessments multiplied by $3/assessment

Amounts payable for tax equivalents [lesser of (i) and (ii)]

Amounts actually paid for tax equivalents

2. Dividend from surplus

50% of surplus before dividends[calculated in accordance with Best-Practice Management for Water Supply and Sewerage Guidelines]

Number of assessments x ($30 less tax equivalent charges per assessment)

Cumulative surplus before dividends for the 3 years to 30 June 2017, less thecumulative dividends paid for the 2 years to 30 June 2016 and 30 June 2015

2017 Surplus 2016 Surplus 2015 Surplus2016 Dividend 2015 Dividend

Maximum dividend from surplus [least of (i), (ii) and (iii) above]

Dividend actually paid from surplus [refer below for required pre-dividend payment criteria]

Are the overhead reallocation charges to the sewer business fair and reasonable? a

3. Required outcomes for 4 criteria [to be eligible for the payment of a ‘dividend from surplus’, all the criteria below need a ‘YES’]

Completion of strategic business plan (including financial plan)

Pricing with full cost-recovery, without significant cross subsidies [refer item 2 (a) in table 1 on page 22 of the Best-Practice Guidelines]

Complying charges Residential [item 2 (c) in table 1] Non-residential [item 2 (c) in table 1] Trade waste [item 2 (d) in table 1]

DSP with commercial developer charges [item 2 (e) in table 1] Liquid trade waste approvals and policy [item 2 (f) in table 1]

Complete performance reporting form (by 15 September each year)

a. Integrated water cycle management evaluation

b. Complete and implement integrated water cycle management strategy

49,000

8,772

YES

YES

YES

122,950

YES

YES

2017

YES

78,948

–

YES

8,772

–

YES

YES

605,200

YES

YES

(i)

(iv)

(iii)

(ii)

(iii)

245,900

(i)

(ii) 78,948

133,000

(iv)

(c)

(iv)

– 226,300

–

(v)

(iii)

(i)

(ii)

(a)(b)

(vi)

SPFS 2017

page 16



Note 3. Sewerage Business Best-practice Management disclosure requirements (continued)


National Water Initiative (NWI) financial performance indicators

Total revenue (sewerage)Total income (s14) – grants for acquisition of assets (s12a) – interest income (s10)– Aboriginal Communities W&S Program income (w10a)

Written down replacement cost of fixed assets (sewerage)Written down current cost of system assets (s48)

Operating cost (sewerage)Management expenses (s1) + operational and maintenance expenses (s2)

Capital expenditure (sewerage)Acquisition of fixed assets (s17)

Economic real rate of return (sewerage)[total income (s14) – interest income (s10) – grants for acquisition of assets (s12a)– operating cost (NWI F12) – current cost depreciation (s3)] x 100 divided by[written down current cost (i.e. WDCC) of system assets (s48) + plant and equipment (s34b)]

Capital works grants (sewerage)Grants for the acquisition of assets (12a)

National Water Initiative (NWI) financial performance indicatorsWater and sewer (combined)

Total income (water and sewerage)Total income (w13 + s14) + gain/loss on disposal of assets (w14 + s15)minus grants for acquisition of assets (w11a + s12a) – interest income (w9 + s10)

Revenue from community service obligations (water and sewerage)Community service obligations (NWI F25) x 100 divided by total income (NWI F3)

Capital expenditure (water and sewerage)Acquisition of fixed assets (w16 + s17)

Economic real rate of return (water and sewerage)[total income (w13 + s14) – interest income (w9 + s10) – grants for acquisition of assets(w11a + s12a) – operating cost (NWI F11 + NWI F12) – current cost depreciation (w3 + s3)] x 100divided by [written down replacement cost of fixed assets (NWI F9 + NWI F10)+ plant and equipment (w33b + s34b)]

Dividend (water and sewerage)Dividend paid from surplus (2 (v) of Note 2 + 2 (v) of Note 3)

Dividend payout ratio (water and sewerage)Dividend (NWI F20) x 100 divided by net profit after tax (NWI F24)

$’000

–

12,675

1,536

3.13%

815

–

2017

NWI F3 $’000 3,719

NWI F8 % 2.04%

NWI F19

NWI F21

NWI F20

%

%

– $’000

0.00%

3.09%

352 NWI F16 $’000

NWI F27

NWI F18

NWI F15 $’000

%

$’000

NWI F2

NWI F10

NWI F12

$’000

$’000

SPFS 2017

page 17



Note 3. Sewerage Business Best-practice Management disclosure requirements (continued)


National Water Initiative (NWI) financial performance indicatorsWater and sewer (combined)

Net debt to equity (water and sewerage)Overdraft (w36 + s37) + borrowings (w38 + s39) – cash and investments (w30 + s31)x 100 divided by [total assets (w35 + s36) – total liabilities (w40 + s41)]

Interest cover (water and sewerage)Earnings before interest and tax (EBIT) divided by net interest

Earnings before interest and tax (EBIT):Operating result (w15a + s16a) + interest expense (w4a + s4a) – interest income (w9 + s10)– gain/loss on disposal of assets (w14 + s15) + miscellaneous expenses (w4b + w4c + s4b + s4c)

Net interest:Interest expense (w4a + s4a) – interest income (w9 + s10)

Net profit after tax (water and sewerage)Surplus before dividends (w15a + s16a) – tax equivalents paid (Note 2-1 (iv) + Note 3-1 (iv))

Community service obligations (water and sewerage)Grants for pensioner rebates (w11b + s12b)

Notes: 1. References to w (eg. s12) refer to item numbers within Special Schedules 5 and 6 ofCouncil’s Annual Financial Statements.

2. The NWI performance indicators are based upon the National Performance Framework Handbookfor Urban Performance Reporting Indicators and Definitions.

a refer to 3.2 (2) on page 15 of the Best-Practice Management of Water Supply and Sewerage Guidelines, 2007.

NWI F25 $’000

NWI F24

NWI F23

NWI F22 %

953

76

5

692

207

$’000

2.54%

2017

INDEPENDENT AUDITOR’S REPORT

Report on the special purpose financial statement



OpinionI have audited the accompanying special purpose financial statements (the financial statements) ofGlen Innes Severn Council’s (the Council) Declared Business Activities, which comprise the statementof financial position of each Declared Business Activity as at 30 June 2017, the income statement ofeach Declared Business Activity for the year then ended, notes comprising a summary of significantaccounting policies and other explanatory information for the Business Activities declared by Council,and the Statement by Councillors and Management.

The Declared Business Activities of the Council are:

• Water Supply• Sewerage• Glen Innes Aggregates.

In my opinion, the financial statements present fairly, in all material respects, the financial position ofthe Council’s declared Business Activities as at 30 June 2017, and their financial performance for theyear then ended, in accordance with the Australian Accounting Standards described in Note 1 and theLocal Government Code of Accounting Practice and Financial Reporting (LG Code).

My opinion should be read in conjunction with the rest of this report and in particular, the Emphasis ofMatter referring to the basis of accounting.

Basis for OpinionI conducted my audit in accordance with Australian Auditing Standards. My responsibilities under thestandards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Statements’

section of my report.


• Australian Auditing Standards• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for

Professional Accountants’ (APES 110).


Parliament promotes independence by ensuring the Auditor-General and the Audit Office of NewSouth Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove anAuditor-General

• mandating the Auditor-General as the auditor of councils• precluding the Auditor-General from providing non-audit services.

page 18

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

Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to Note (1) to the financial statements which describes the basis of accounting. The financial statements have been prepared for the purpose of fulfilling Council’s financial reporting responsibilities under the LG Code. As a result, the financial statements may not be suitable for another purpose.

Other Matter The financial statements of the Council for the year ended 30 June 2016 were audited by another auditor who expressed an unmodified opinion on that financial statement on 30 November 2016.

The Councillors’ Responsibility for the Financial Statements The Councillors are responsible for the preparation and fair presentation of the financial statements and for determining that the accounting policies, described in Note 1 to the financial statements, are appropriate to meet the requirements in the LG Code. The Councillors’ responsibility also includes

such internal control as the Councillors determine is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Councillors must assess the Council’s ability to continue as a

going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting, as it affects the Council’s Declared Business Activities.

Auditor’s Responsibility for the Audit of the Financial Statements My objectives are to:

• obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error


Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf.

The description forms part of my auditor’s report.

page 19

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


• that the Council carried out its activities effectively, efficiently and economically • on the best practice management disclosures in Notes 2 and 3 of the financial statements • about the security and controls over the electronic publication of the audited financial

statements on any website where they may be presented • about any other information which may have been hyperlinked to/from the financial statements.


19 December 2017 SYDNEY

page 20

Glen Innes Severn Council SPECIAL SCHEDULES for the year ended 30 June 2017


Special Schedules 2017

page 1


Special Schedules for the year ended 30 June 2017

Contents

Special Schedules1

Net Cost of Services

Statement of Long Term Debt (all purposes)

Water Supply Operations – incl. Income StatementWater Supply – Statement of Financial Position

Sewerage Service Operations – incl. Income StatemeSewerage Service – Statement of Financial Position

Notes to Special Schedules 3 and 5

Report on Infrastructure Assets

Permissible Income Calculation

1 Special Schedules are not audited (with the exception of Special Schedule 8).

Background

These Special Schedules have been designed to meet the requirements of special purpose users such as;

the NSW Grants Commissionthe Australian Bureau of Statistics (ABS),the NSW Office of Water (NOW), andthe Office of Local Government (OLG).

The financial data is collected for various uses including;

the allocation of Financial Assistance Grants,the incorporation of Local Government financial figures in national statistics,the monitoring of loan approvals,the allocation of borrowing rights, andthe monitoring of the financial activities of specific services.

14Special Schedule 7

13

12

(ii)

(i)

Special Schedule 8 21

Special Schedule 6Special Schedule 5 9

Page

2

4

5

Special Schedule 1

Special Schedule 2(a)

Special Schedule 4Special Schedule 3

8


page 2


Special Schedule 1 – Net Cost of Services for the year ended 30 June 2017

$’000

Governance

Administration

Public order and safety

Enforcement of local government regulationsAnimal controlTotal public order and safety

Health

EnvironmentNoxious plants and insect/vermin controlOther environmental protectionSolid waste managementStreet cleaningDrainageStormwater managementTotal environment

Community services and educationAdministration and educationSocial protection (welfare)Aged persons and disabledChildren’s servicesTotal community services and education

Housing and community amenitiesPublic cemeteriesPublic conveniencesStreet lightingTown planningOther community amenitiesTotal housing and community amenities

Water supplies

Sewerage services

–

– –

Expenses from. continuing. operations. Non-capital.

61

–

– 331

Capital.

Income fromcontinuing operations

9

19

– 2

1,752

325

2,085

77

–

–

–

– 2

–

85

3,645 487

1,850

37

1,589 1,252 21

–

(2)

(33) (96)

(147) (62)

132 33

–

–

100

222

2,148

4,391

567

332

(414)

– (106)

–

125

111 739

–

284

Function or activity

Fire service levy, fire protection, emergency services

388

99 236

Net cost.of services.

(52) (283)

143

787 –

397 5 – (392)

(79) – –

(4,059)

32

94

3,175

3,619

96

3,130 33

42

4 –

566

133

– 188

939

1,298 –

4

– –

(45)

28

340

(340)

59

– 56

–

358

(28)

(92)

813 –

–

– (77)

–

–


page 3


Special Schedule 1 – Net Cost of Services (continued) for the year ended 30 June 2017

$’000

Recreation and culturePublic librariesMuseumsArt galleriesCommunity centres and hallsPerforming arts venuesOther performing artsOther cultural servicesSporting grounds and venuesSwimming poolsParks and gardens (lakes)Other sport and recreationTotal recreation and culture

Mining, manufacturing and constructionBuilding controlOther mining, manufacturing and constructionTotal mining, manufacturing and const.

Transport and communicationUrban roads (UR) – localUrban roads – regionalSealed rural roads (SRR) – localSealed rural roads (SRR) – regionalUnsealed rural roads (URR) – localUnsealed rural roads (URR) – regionalBridges on UR – localBridges on SRR – localBridges on URR – localBridges on regional roadsParking areasFootpathsAerodromesOther transport and communicationTotal transport and communication

Economic affairsCamping areas and caravan parksOther economic affairsTotal economic affairs

Totals – functionsGeneral purpose revenues (1)

NET OPERATING RESULT (2)

(1) Includes: rates and annual charges (including ex gratia, excluding water and sewer), non-capital general purpose

(2) As reported in the Income Statement - grants, Interest on Investments (including externally restricted assets) and interest on overdue rates and annual charges.

Income fromcontinuing operations

– – –

124

79

–

26,995

5,235 2,172

1,593 1,582

30,714

1,022

– 11

12,325 26,995

1,022

18,389 –

– –

1,128

–

–

9

7 122

–

– 1,465

2

473 157

45 –

69

523

– –

981

Function or activity

4,209

–

–

–

4,133 – –

25

–

–

–

–

–

–

3,466

– 841

47 2,296 84 24

616

–

3,634

168

– – 925 8

–

–

Non-capital.

–

Expenses from. continuing. operations.

481

199 606

22

382

– –

570 1,912

– –

727 –

402

76

–

121

(38)

(482)

– (22)

–

(1,633)

– 7

–

Capital.

22

–

–

–

10 – –

1,128

178 (1,912)

– 318

4,847

(7,478) (571)

(11)

(2,082) 1,001

(560)

–

(2)

(35)

–

–

12,325 –

535 25

–

(434) (25)

344

(69)

–

575

(174)

38

Net cost.of services.

–

(92)

–

667

(727)

(796)

(60) (474)


page 4


Special Schedule 2(a) – Statement of Long Term Debt (all purposes) for the year ended 30 June 2017

$’000

Spe

pag

Notes: excludes (i) internal loans and (ii) principal inflows/outflows relating to loan re-financing. This schedule is prepared using the face value of debt obligations, rather than fair value (which are reported in the GPFS).

–

– Deferred payments

– –

1,324

–

15,384

– Total long term debt – –

Total debt

–

16,708

–

2,050 1,341

–

1,445

–

17,417

– – –

15,972

–

965 –

–

Other long term debtRatepayers advances – – –

– Government advances – Finance leases –

– – –

Financial institutions 1,324 15,384 16,708 – –

– 2,050

–

– 1,341

1,305

1,324 15,384 Total loans–

16,708 Other

Other State Government – – – – 36

–

NSW Treasury Corporation

Public subscription – –

– – – 2,050

Debt redemption during the year

From revenue

Sinking funds

1,445 –

965

920

15,972

–

1,445 13,958 – –

2,014 – 45

Current Non-current Total

– –

– –

–

–

– –

17,417

–

15,403

2,014

– –

Loans (by source)Commonwealth Government

Current

– – –

Transfers to sinking

funds

Principal outstandingInterest

applicable for year TotalNon-

current

at the end of the year

– –

Principal outstanding New loans raised during

the year

at beginning of the year

Classification of debt


page 5


Special Schedule 3 – Water Supply Income Statement Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

A Expenses and incomeExpenses

1. Management expensesa. Administrationb. Engineering and supervision

2. Operation and maintenance expenses– dams and weirsa. Operation expensesb. Maintenance expenses

– Mainsc. Operation expensesd. Maintenance expenses

– Reservoirse. Operation expensesf. Maintenance expenses

– Pumping stationsg. Operation expenses (excluding energy costs)h. Energy costsi. Maintenance expenses

– Treatmentj. Operation expenses (excluding chemical costs)k. Chemical costsl. Maintenance expenses

– Otherm. Operation expensesn. Maintenance expenseso. Purchase of water

3. Depreciation expensesa. System assetsb. Plant and equipment

4. Miscellaneous expensesa. Interest expensesc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)

5. Total expenses

Actuals 2016

–

1,850 1,997

Actuals

57 110 511

2017

–

528

–

454

–

211 150

18

– –

– –

– –

6

–

11

– – 127

12

181

41

164

– 74 87

–

– –

– 91 84

451

68 171 179

4

–

5

– – 52

– –

–


page 6


Special Schedule 3 – Water Supply Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

Income

6. Residential chargesa. Access (including rates)b. Usage charges

7. Non-residential chargesa. Access (including rates)b. Usage charges

8. Extra charges

9. Interest income

10. Other income10a. Aboriginal Communities Water and Sewerage Program

11. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants

12. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions

13. Total income

14. Gain (or loss) on disposal of assets

15. Operating result

15a. Operating result (less grants for acquisition of assets) 69

8

1,100 979

7

–

2016

2,336

–

5

Actuals

334

–

21

340

–

8

2,190

–

28

1,053

2017Actuals

1 2

932

–

339

7 –

21

270 39 39

–

6

– –

– –


page 7


Special Schedule 3 – Water Supply Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

B Capital transactionsNon-operating expenditures

16. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment

17. Repayment of debt

18. Totals

Non-operating funds employed

19. Proceeds from disposal of assets

20. Borrowing utilised

21. Totals

C Rates and charges

22. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)

23. Number of ETs for which developer charges were received

24. Total amount of pensioner rebates (actual dollars)

414 38

458 52

3 ET2 ET

68,260$ 70,502$

– –

–

Actuals

–

218 –

– –

93 130 2,742

352

Actuals

2,837

–

112

–

784

–

352

–

2016

454

2017

–


page 8


Special Schedule 4 – Water Supply Statement of Financial Position Includes internal transactions, i.e. prepared on a gross basis as at 30 June 2017

$’000

ASSETS25. Cash and investments

a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other

26. Receivablesa. Specific purpose grantsb. Rates and availability chargesc. User chargesd. Other

27. Inventories

28. Property, plant and equipmenta. System assetsb. Plant and equipment

29. Other assets

30. Total assets

LIABILITIES31. Bank overdraft32. Creditors

33. Borrowings

34. Provisionsa. Tax equivalentsb. Dividendc. Other

35. Total liabilities

36. NET ASSETS COMMITTED

EQUITY37. Accumulated surplus38. Asset revaluation reserve39. Other reserves

40. TOTAL EQUITY

Note to system assets:41. Current replacement cost of system assets42. Accumulated current cost depreciation of system assets43. Written down current cost of system assets

Actuals Current

– –

Actuals

– –

–

– –

–

Actuals Total

–

1,303 1,303

18,172

21

– –

Non-current

–

–

29

–

–

334

–

–

21 –

–

19,490

–

– –

–

355

18,172

– – – –

–

– –

13,310

18,172

36,246 (18,074)

4,343

17,653

17,653

2,192

–

–

334

–

–

19,845

–

17,551 102

–

1,939 2,163 224

1,939

–

– –

– –

–

15

– 29

15

–

– –

253


page 9


Special Schedule 5 – Sewerage Service Income Statement Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

A Expenses and incomeExpenses

1. Management expensesa. Administrationb. Engineering and supervision

2. Operation and maintenance expenses– mainsa. Operation expensesb. Maintenance expenses

– Pumping stationsc. Operation expenses (excluding energy costs)

d. Energy costse. Maintenance expenses

– Treatmentf. Operation expenses (excl. chemical, energy, effluent and biosolids management costs)

g. Chemical costsh. Energy costsi. Effluent managementj. Biosolids managementk. Maintenance expenses

– Otherl. Operation expensesm. Maintenance expenses

3. Depreciation expensesa. System assetsb. Plant and equipment

4. Miscellaneous expensesa. Interest expensesb. Revaluation decrementsc. Other expensesd. Impairment – system assetse. Impairment – plant and equipmentf. Aboriginal Communities Water and Sewerage Programg. Tax equivalents dividends (actually paid)

5. Total expenses

–

– 68

5

322 –

–

4 5

–

–

62

–

–

4 – –

– –

–

2

111 128

– –

–

3

– – –

11 5

– 166 163

15

1,252 1,184

– – 445 417

–

97 – –

–

60

324

Actuals 2017

Actuals 2016

19


page 10


Special Schedule 5 – Sewerage Service Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

Income

6. Residential charges (including rates)

7. Non-residential chargesa. Access (including rates)b. Usage charges

8. Trade waste chargesa. Annual feesb. Usage chargesc. Excess mass chargesd. Re-inspection fees

9. Extra charges

10. Interest income

11. Other income11a. Aboriginal Communities Water and Sewerage Program

12. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants

13. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions

14. Total income

15. Gain (or loss) on disposal of assets

16. Operating result

16a. Operating result (less grants for acquisition of assets)

1,318

Actuals

1,383

Actuals 20162017

25

10 10

2 2 – –

– –

57

33 – –

55

37 37 – –

1,610 1,560

–

376

–

–

–

358 376

358

11 8

74 98

– –

5 5

– – – –


page 11


Special Schedule 5 – Sewerage Service Income Statement (continued) Includes all internal transactions, i.e. prepared on a gross basis for the year ended 30 June 2017

$’000

B Capital transactionsNon-operating expenditures

17. Acquisition of fixed assetsa. New assets for improved standardsb. New assets for growthc. Renewalsd. Plant and equipment

18. Repayment of debt

19. Totals

Non-operating funds employed

20. Proceeds from disposal of assets

21. Borrowing utilised

22. Totals

C Rates and charges

23. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)

24. Number of ETs for which developer charges were received

25. Total amount of pensioner rebates (actual dollars)

3 ET

2,392

–

–

124 374

2,553

–

–

–

66,528$

–

371 121

40

–

– –

Actuals Actuals 2017 2016

46

3 ET

64,629$

553 –

13 – 418 –

–

–

122


page 12


Special Schedule 6 – Sewerage Service Statement of Financial Position Includes internal transactions, i.e. prepared on a gross basis as at 30 June 2017

$’000

ASSETS26. Cash and investments

a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other

27. Receivablesa. Specific purpose grantsb. Rates and availability chargesc. User chargesd. Other

28. Inventories

29. Property, plant and equipmenta. System assetsb. Plant and equipment

30. Other assets

31. Total assets

LIABILITIES32. Bank overdraft33. Creditors

34. Borrowings

35. Provisionsa. Tax equivalentsb. Dividendc. Other

36. Total liabilities

37. NET ASSETS COMMITTED

EQUITY38. Accumulated surplus39. Asset revaluation reserve40. Other reserves

41. TOTAL EQUITY

Note to system assets:42. Current replacement cost of system assets43. Accumulated current cost depreciation of system assets44. Written down current cost of system assets

2,779

660

16

– –

– –

–

303 1,362

–

– –

14,752

1,665

– – –

287

–

11,901

12,675

21,309 (8,634)

2,851

14,752

11,973

16

–

–

–

16,417

12,675

13,335

–

1,649

–

–

1,362

– – –

12,675

3,082

–

–

– – –

–

660

–

–

115

–

– –

–

–

– –

Actuals

– – –

– –

Non-current Current

2,967 – –

–

–

Total Actuals

– –

–

2,967

115

Actuals


page 13


Notes to Special Schedules 3 and 5 for the year ended 30 June 2017

Administration (1) Engineering and supervision (1)

(item 1a of Special Schedules 3 and 5) comprises the following: (item 1b of Special Schedules 3 and 5) comprises the following:

• Administration staff: • Engineering staff:− Salaries and allowance − Salaries and allowance− Travelling expenses − Travelling expenses− Accrual of leave entitlements − Accrual of leave entitlements− Employment overheads. − Employment overheads.

• Meter reading • Other technical and supervision staff:− Salaries and allowance

• Bad and doubtful debts − Travelling expenses− Accrual of leave entitlements

• Other administrative/corporate support services − Employment overheads.

Operational expenses (item 2 of Special Schedules 3 and 5) comprise the day to day operational expensesexcluding maintenance expenses.

Maintenance expenses (item 2 of Special Schedules 3 and 5) comprise the day to day repair and maintenanceexpenses. (Refer to Section 5 of the Local Government Asset Accounting Manual regarding capitalisationprinciples and the distinction between capital and maintenance expenditure).

Other expenses (item 4c of Special Schedules 3 and 5) includes all expenses not recorded elsewhere.

Revaluation decrements (item 4b of Special Schedules 3 and 5) is to be used when I,PP&E decreases in FV.

Impairment losses (item 4d and 4e of Special Schedules 3 and 5) are to be used when the carrying amount ofan asset exceeds its recoverable amount (refer to page D-31).

Aboriginal Communities Water and Sewerage Program (item 4f of Special Schedules 3 and 5) is to beused when operation and maintenance work has been undertaken on behalf of the Aboriginal CommunitiesWater and Sewerage Program. Similarly, income for item 11a of Special Schedule 3 and item 12a of SpecialSchedule 5 are for services provided to the Aboriginal Communities Water and Sewerage Program and is notpart of Council’s water supply and sewerage revenue.

Residential charges

(2) (items 6a, 6b and item 6 of Special Schedules 3 and 5 respectively) include all incomefrom residential charges. Item 6 of Schedule 3 should be separated into 6a access charges (including rates ifapplicable) and 6b usage charges.

Non-residential charges

(2) (items 7a, 7b of Special Schedules 3 and 5) include all income from non-residentialcharges separated into 7a access charges (including rates if applicable) and 7b usage charges.

Trade waste charges (item 8 of Special Schedule 5) include all income from trade waste charges separatedinto 8a annual fees, 8b usage charges and 8c excess mass charges and 8d re-inspection fees.

Other income (items 10 and 11 of Special Schedules 3 and 5 respectively) include all income not recordedelsewhere.

Other contributions (items 12c and 13c of Special Schedules 3 and 5 respectively) including capital contributionsfor water supply or sewerage services received by Council under Section 565 of the Local Government Act .

Notes:(1) Administration and engineering costs for the development of capital works projects should be reported as part of the capital cost of the project and not as part of the recurrent expenditure (ie. in item 16 for water supply and item 17 for sewerage, and not in items 1a and 1b).

(2) To enable accurate reporting of residential revenue from usage charges, it is essential for councils to accurately separate their residential (item 6) charges and non-residential (item 7) charges.


page 14


Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 as at 30 June 2017

$’000

Council Works DepotCouncil Public HallsLibraries

198 198 1 1 1,807 4,259 75% 0% 0% 25% 0%

242 24 – – 2,208 2,773 100% 0% 0% 0% 0%12%

0%6.0%11,947 0.0%

110

–

226

111

7%22%35,385 29.9%

94.0% 0.0%

5

Cultural Facilities

3

11.9%529 14,712 110

300 0%

3 3

105 105

6%

16%

0%

0%

4

32%

50%

915 2%

50%

48%

10,476

7 28%7

34%2,250

Estimated cost

agreed level ofservice set by

Council

300

178

30 303

0%Other

Sub-total25%

Asset class

Council Offices / Administration Centres

to bring assetsEstimated cost

2016/17to bring to the 2016/17 Gross

standard maintenanceAsset categoryRequired Actual replacement

cost (GRC)maintenanceato satisfactory

21

168

0.0%Other structuresSub-total

22%

0%

1,740

– 111

Other

Buildings

6% 94% 0%11,947

32%24.1%

7,046 14,899

5,432

14%

–

3.3%

– 5,432 structures 111 111

53 783 226 30.7%

Assets in condition as a percentage of gross replacement cost

Net carryingamount

2,769

825

244


page 15


Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2017 (continued) as at 30 June 2017

$’000

7.0% 19.4%

0%12%100%

–

12,672

5

2,518

– –

–

19.0%

–

101

– –

2,518

Roads – Regional Rural Sealed 767 767 132

Bridges – Regional Concrete/Steel

Sub-total

–

Bridges – Local Rural Timber 726 –

Carparks

–

Estimated cost Estimated cost

Other road assets

Causeways

Bulk earthworks

Bridges – Local Urban Timber

–

–

726 12,672

–

3,297 395 17,845

0%2,402 0%

0%

0%

100%

100%1,399

22,846

2,305

–

10%34.5%

9,483 16% 33%207,882

4,179 151,215

5

255

47% 0%

0%

–

5,161 2,982

4,160

30%

18% 11%

0%9% 0%

12%

0%

41%0% 0%0%

20.0%

0%Roads – Regional Urban Sealed 7 759 1,057 39% 41% 20% 0% 0%Roads – Other Urban Sealed 64 64

7,662

10 10 7 – 1,579 2,175 86% 7%

20 20 – – 923 1,204 53% 38%

22,848 33,695 7% 62%

–

22,846 0%Bridges – Local Rural Concrete/Steel 292 292 – –

44% 2%

101

14

255 – 6,718

49%0%

14 44 44

–

4%

42%

260 0% 0%

Bridges – Local Urban Concrete/Steel

Roads Roads – Local Rural Sealed 6,596 6,596 277 277 39,617 53,854 29% 35% 16% 9% 11%Roads – Local Rural Unsealed 484 484 1,640 1,640 14,339 19,442 7% 55% 29% 9% 0%Roads – Local Urban Sealed 3,297 395 24,155 37% 19% 17% 17% 10%Roads – Local Urban Unsealed 46 46 18 18 247 365 0% 32% 30% 29% 9%

0%

1%

132 14,186 18,404 32% 39%

1% 0%

1% 5%

88% 0%

0%0%

Assets in condition as a percentage of gross replacement costto bring assets to bring to the 2016/17 2016/17 Gross

to satisfactory agreed level of Required Actual Net carrying replacementAsset class Asset category standard service set by maintenancea maintenance amount cost (GRC) 1 2 3 4 5

Council


page 16



$’000

– 66

25%

8.2%

Pumping Stations

2,045

netwok

Rising Mains

Bores

Total ReticulationNetwork

Treatment90 0%

maintenance

69

4

0%7,048 1,276

2,045

0%

47% 1%

0%

12,286 6%

89%

2

3,228 62% 0%9%

32%

ActualRequired2016/17

agreed level of

Reservoirs12

148 –

– 148 –

382 2,221

12

to satisfactorystandard

to bring assets

maintenanceaAsset class

2016/17Estimated costto bring to the

service set by

16

20%

0.3%37.2%

replacement3

2%

cost (GRC)

0%

–

–

5

– – – –

3 11% 57% 13%

0%50%

Estimated cost

153

150

0% 0%

80 69 27

6 6

85%Treatment

2,221

Pumping Stations

100%

3

Sub-total

– 16

3,879

50%191

0%100%134 204

18,629

Asset category

80 150

– 27 2,459

12,501 3,879 7.4%51.5% 32.9%85%98%

21,135

7,099 5% 0%0%

1,813 2%

10%121

– –

121

5

0%15%12,027

204 382

0%12,032 19%

0.0%9.4%53.1%36,703

0%0%

0%0%

Sub-totalRising Mains 19 19

Net carrying

726 1,437 7,055

0%

0%0%

0%

1,595

0.0%

amount

Sewerage Total Reticulation 3,860 3,860 97 97 5,578

66

5,113 1,720

Off Stream Storages


0%

0%

0%

27%

0% 0%1%79%

Water supply Dams/Weirs – – – – 749 4,751 4% 96% 0% 0% 0%

Council51

Gross


page 17



$’000

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

Infrastructure asset condition assessment ‘key’

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

0%

5replacement

drainage

5

733

Open space/ 4 –

to bring to theEstimated cost

617

maintenanceActualRequiredto satisfactory

standard

–

Estimated cost

7,007 Stormwater Conduits 116 116

Asset category

Inlet and Junction Pits

Net carryingamountmaintenancea

Council

Stormwater 41 41 1,215 1,921 6% 60%

agreed level ofservice set by 3cost (GRC)

Gross

73%

2016/17

1

33% 1%3%

2016/17

0%7% 17%

2 4

– 71.1%

55 1,838

733

Other Recreation – footpaths

60 recreational

51

13,168 Sub-total 6.9%

44.1% 0.9%37% 1%

0%

100%60 100%

Sub-total

0.0%

94% 4% 2%

8% 0%

0%51% 9% 2%

94.0%3,609

56 56 2,168

1.7%– – 12,213

Other

2.7%

3,010 2.3% 1.5% 0.5%

45.1% 8.1%

8,222

261 1,509

4 –

51 assets Swimming poolsOther Recreation –

to bring assets

19.3%11,247

41 41

55 116 116 5,507 1.7%

– 329 28% 39% 25%

617

– – 1,747 7

– –

Asset class

Major Street Furniture 7 6,656 8,236

396 403 assets Sub-total 403

infrastructure Kerb and Gutter 396 13,960

18.6% 7.9% 13.6%


1,580

20,746 3,515 3,515 345,687 25.6% 34.3%

4321 6

10987

222,743 TOTAL – ALL ASSETS 21,703


page 18


Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2017

$ ’000

Infrastructure asset performance indicators * consolidated

1. Infrastructure renewals ratioAsset renewals (1)

Depreciation, amortisation and impairment

2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets

3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance

4. Cost to bring assets to agreed service level

Gross replacement cost

Notes

* All asset performance indicators are calculated using the asset classes identified in the previous table.

(1) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.

345,687

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

Indicator Prior periods

21,703 10.86% 12.08% 15.28%199,897

2017 2017 2016 2015

4,200 96.98% 144.59% 132.58%4,331

AmountsBenchmark

>= 100%

< 2.00%

1.00 1.00 1.113,515

6.00% 0.00%

> 1.00

20,746

3,515


page 19



Benchmark: ――― 100.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― 2.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― 1.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

To assess the rate at which these assets are being renewed

relative to the rate at which they are depreciating.

Purpose of infrastructure backlog ratio

Purpose of asset maintenance ratio

Compares actual vs. required annual asset maintenance. A ratio above 1.0 indicates Council is investing

enough funds to stop the infrastructure backlog growing.

This ratio showswhat proportion the backlog is against

the total valueof a Council’s infrastructure.

Significant projects were budgeted to achieve an infrastructure ratio greater than 100% however, due to an excessively wet

year that diverted resources into maintenance, some projects being

completed under budget and also some capital projects being deferred resulted in

a ratio less than 100%.


2016/17 Ratio 10.86%

Council improved on in this area in 2016/2017 but realistically still has a long

way to go to address the backlog.


2016/17 Ratio 1.00 x


2016/17 Ratio 96.98%Purpose of asset

renewals ratio

Council is maintaining its assets at an appropriate level.

133% 145%

88% 97%

0%20%40%60%80%

100%120%140%160%

2014 2015 2016 2017

Rat

io %

1. Infrastructure renewals ratio

12.1% 15.3%

12.1% 10.9%

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

2014 2015 2016 2017

Rat

io %

2. Infrastructure backlog ratio

1.11 1.00 1.00 0.94

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2014 2015 2016 2017

Rat

io (x

)

3. Asset maintenance ratio


page 20



$ ’000

Infrastructure asset performance indicatorsby fund

1. Infrastructure renewals ratioAsset renewals (2)

Depreciation, amortisation and impairment

2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets

3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance

4. Cost to bring assets to agreed service level

Gross replacement cost

Notes

(1) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.

(2) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.

>= 100%

1.00 1.00 1.00prior period: 1.00 1.00 1.00

< 2.00%

> 1.00

77.53% 0.00% 108.30%prior period: 0.00% 0.00% 176.28%

Water Sewer General (1)

2017 2017 2017Benchmark

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

11.92% 31.03% 9.25%

6.05% 18.35% 5.09%

prior period: 0.00% 0.00% 0.00%

prior period: 11.60% 25.66% 11.03%


page 21


Special Schedule 8 – Permissible Income Calculation for the year ended 30 June 2018

$’000

Notional general income calculation (1)

Last year notional general income yieldPlus or minus adjustments (2)

Notional general income

Permissible income calculation

Special variation percentage (3)

Or rate peg percentageOr crown land adjustment (incl. rate peg percentage)

Less expiring special variation amountPlus special variation amount

Or plus rate peg amountOr plus Crown land adjustment and rate peg amount

Sub-total

Plus (or minus) last year’s carry forward totalLess valuation objections claimed in the previous yearSub-total

Total permissible income

Less notional general income yieldCatch-up or (excess) result

Plus income lost due to valuation objections claimed (4)

Less unused catch-up (5)

Carry forward to next year

Notes

(1) The notional general income will not reconcile with rate income in the financial statements in the correspondingyear. The statements are reported on an accrual accounting basis which include amounts that relate to prior years’rates income.

(2) Adjustments account for changes in the number of assessments and any increase or decrease in land value occurringduring the year. The adjustments are called ‘supplementary valuations’ as defined in the Valuation of Land Act 1916 .

(3) The ‘special variation percentage’ is inclusive of the rate peg percentage and where applicable Crown land adjustment.

(4) Valuation objections are unexpected changes in land values as a result of land owners successfully objecting to theland value issued by the Valuer-General. Councils can claim the value of the income lost due to valuation objections inany single year.

(5) Unused catch-up amounts will be deducted if they are not caught up within 2 years. Usually councils will have anominal carry forward figure. These amounts can be adjusted for in setting the rates in a future year.

(6) Carry forward amounts which are in excess (an amount that exceeds the permissible income) require ministerial approval by order published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993 . The OLG will extract these amounts from Council’s Special Schedule 8 in the financial data return (FDR) to administer this process.

pq = o – p

rs

t = q + r – s

b

def

j = c x fi = c x e

h = d x (c – g)

c = (a + b)

lm

n = (l + m)

o = k + n

g

k = (c + g + h + i + j)

a

5 –

Calculation Calculation2016/17 2017/18

– (5)

5 5

– –

6,471 6,570

6,466 6,565

– – 4 5

342 –

4 5

– 97 – –

6,466 6,565

0.00% 0.00%

– –

5.59% 0.00%0.00% 1.50%

6,114 6,466 10 2

6,124 6,468

INDEPENDENT AUDITOR’S REPORT Special Schedule No. 8



Opinion I have audited the accompanying special purpose financial statement comprising the reconciliation of total permissible general income (Special Schedule No. 8) of Glen Innes Severn Council (the Council) for the year ending 30 June 2018.

In my opinion, Special Schedule No. 8 of Glen Innes Severn Council for 30 June 2018 is prepared, in all material respects in accordance with the requirements of the Local Government Code of Accounting Practice and Financial Reporting (LG Code) issued by the Office of Local Government (OLG), and is in accordance with the books and records of the Council.

My opinion should be read in conjunction with the rest of this report, and in particular the Emphasis of Matter paragraph, which describes the basis of accounting.

Basis for Opinion I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the standards are described in the ‘Auditor’s Responsibilities for the Audit of Special Schedule No.8’ section of my report.


• Australian Auditing Standards • ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110

‘Code of Ethics for Professional Accountants’ (APES 110).


Parliament promotes independence by ensuring the Auditor-General and the Audit Office of New South Wales are not compromised in their roles by:

• providing that only Parliament, and not the executive government, can remove an Auditor-General

• mandating the Auditor-General as auditor of councils • precluding the Auditor-General from providing non-audit services.

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

page 22

Emphasis of Matter - Basis of Accounting Without modifying my opinion, I draw attention to the notes and explanations in Special Schedule No. 8 that instruct councils in its preparation so it complies with OLG’s requirements as described in

the LG Code. As a result, Special Schedule No. 8 may not be suitable for another purpose.

Other Matter Special Schedule No.8 of the Council for the year ended 30 June 2017 was audited by another auditor who expressed an unmodified opinion on Special Schedule No. 8 on 30 November 2016.

Councillors’ Responsibility for Special Schedule No. 8 The Councillors of the Council are responsible for the preparation of Special Schedule No. 8 in accordance with the LG Code. The Councillors’ responsibility also includes such internal control as the Councillors determine is necessary to enable the preparation of Special Schedule No. 8 that is free from material misstatement, whether due to fraud or error.

In preparing Special Schedule No.8, the Councillors must assess the Council’s ability to continue as a

going concern except where the Council will be dissolved or amalgamated by an Act of Parliament. The assessment must disclose, as applicable, matters related to going concern and the appropriateness of using the going concern basis of accounting.

Auditor’s Responsibility for the Audit of Special Schedule No. 8 My objectives are to:

• obtain reasonable assurance whether Special Schedule No. 8 as a whole is free from material misstatement, whether due to fraud or error


Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in accordance with Australian Auditing Standards will always detect material misstatements. Misstatements can arise from fraud or error. Misstatements are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions users take based on Special Schedule No.8.

A description of my responsibilities for the audit of Special Schedule No.8 is located at the Auditing and Assurance Standards Board website at http://www.auasb.gov.au/auditors_responsibilities/ar8.pdf. The description forms part of my auditor’s report.


• that the Council carried out its activities effectively, efficiently and economically • about the security and controls over the electronic publication of the audited Special Schedule

No.8 on any website where they may be presented • about any other information which may have been hyperlinked to/from Special Schedule No 8.


19 December 2017 SYDNEY

page 23

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