YE 1617 GPFS - Oberon Council

Oberon Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017

Financial Statements 2017

Oberon 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 forOberon Council.

(ii) Oberon 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 21 September 2017.Council has the power to amend and reissue these financial statements.

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Financial Statements 2017_

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

page 2

Introduction Each year, individual local governments across New South Wales are required to present a set of audited financial statements to their council and community. What you will find in the statements The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 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.


Oberon Council

General Purpose Financial Statements for the year ended 30 June 2017

Statement by Councillors and Managementmade pursuant to Section 413(2)(c) of the Local Government Act 1993 (NSW) (as amended)

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

i the Local Government Act 1993 (NSW) (as amended) and the regulations made thereunder,

i the Australian Accounting Standards and professional pronouncements, and

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

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

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

i accord with Council’s accounting and other records.

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

Signed in accordance with a resolution of Council made on 17 October 2017.

Kathy Sajowitz Ian DoneyMayor Councillor

Gary Wallace Lynette SafranekGeneral manager Responsible accounting officer

page 3


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

Oberon Council

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 purposesOther income:Net gains from the disposal of assetsNet share of interests in joint ventures andassociates using the equity method

Total income from continuing operations

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

Total expenses from continuing operations

Operating result from continuing operations

Discontinued operations

Net profit/(loss) from discontinued operations

Net operating result for the year

Net operating result attributable to CouncilNet operating result attributable to non-controlling interests

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

Original budget as approved by Council – refer Note 16

3,985

3,985

3,751

–

43

4,435

6,594

–

Actual 2016

Actual

4,856

370 455

3,985

13,594

– –

5,070

434 234

235

19,454

3,119 3,174

3,798 –

3,364

5,836

3,218 –

2,327

14,891

3,798

1

3,798 4,435

17,579

15,018

–

4e4d

5,090 4,910

Notes

3a

3d3c

2017

376

2017

6,014 416 863

3,333 –

3,507

Budget 1

3e,f

4d

5

4b

–

4c

5,065

458

3b

19

4a

3e,f

1,219

207 3,303

6,227 434

18,689

24–

1,936

6,358

–

4,002

5,152

–

191 5,591

2,396

213

4,435



Oberon Council

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 CouncilTotal comprehensive income attributable to non-controlling interests

64

Actual 2016

2,925 4,049

4,049 –

64

–

(1,510)

Notes

64

4,435

20b (ii)

3,985

(1,510)

Actual 2017

(1,510)

2,925



Oberon Council

Statement of Financial Position as at 30 June 2017

$ ’000

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

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using the equity methodInvestment propertyIntangible assetsTotal non-current assets

TOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilities

TOTAL LIABILITIES

Net assets

EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interests

Total equity

–

–

4,481

7,046

1 –

284,856

284,856

156,926

284,856

20

271

278,122

–

3,756

287,781

132,365

4,086

4,201 275

277,851

2,565

5

155,416

1

6,789

329

–

11,800

2017

169

2,703

767

427 1,402

13

–

1,065

13,780

–

644 92

–

Actual

–

588

114

2016Actual

279,180

445 10 84 10

22

10

25

20

10

7

1419

8

6a6b7

6b

8

8

–

127,930

Notes

10

9

10

10

20287,781

287,781 – –

279,349

–

15,220

781

1,407

–

–

–

–

294,570

7

12,000 975

1,657

291,902


Oberon Council

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 errorsb. Changes in accounting policies (prior year effects)

Revised opening balance

c. Net operating result for the year

d. Other comprehensive income – Revaluations: IPP&E asset revaluation rsveOther comprehensive income

Total comprehensive income (c&d)

e. Distributions to/(contributions from) non-controlling interestsf. Transfers between equity

Equity – balance at end of the reporting period

(1,510)

4,435

(1,510)

284,856 – 284,856

– – – – –– – – – –

156,926127,930

64

3,985 64 4,049 –

– 64 64 –

4,049

– 64 64 –

3,985

64

3,985 – 3,985 –

123,945 156,862 280,807 – 280,807

interest interest

– – – –

equity

–

280,807– – – – –

280,807 –

earningsRetained reserve Council controlling Total

revaluation Non-2016

–

132,365 155,416 287,781 – 287,781

–

–

– – – –

2,925–

– –

4,435 (1,510) 2,925 –

– – ––

– (1,510) (1,510) –––20b (ii) – (1,510) (1,510) –

–4,435 – 4,435 –

127,930 156,926 284,856 ––20 (d) – – – – –20 (c) – – – – ––

–

2017

127,930 156,926 284,856 – 284,856

Retained reserve Council controlling TotalNotes earnings (Refer 20b) interest interest

reserves(Refer 20b)

–

Other Non-

equity

284,856

Assetrevaluation

123,945 156,862

Asset

(Refer 20b)



Oberon Council

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 costsOtherNet cash provided (or used in) operating activities

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

Cash flows from financing activitiesReceipts: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

6b

13,458

11,800

6,263

1,761

11a 1,658

345

(5,778)

2,048

Notes

(5,836)

(207)

2,894

2,894

(427)

–

(2,499)

11a

(427)

1,127

–

–(3,626)

–

–

5,821(2,304)

11b

(3,303)

458

2017

5,065

–6,661

376

4,910

Budget

–(7,019)

(340)

12,114

114

12,000

(427)

281

3,060

(167)

(12,600)

–

(12,000)

(10,217)(6,011)

114

1,544

(427)

–(168)(6,328)

3,400

(2,335)

8,20012,800160124

297305

7,983 6,990

Actual

6,5938 34

(2,661)(184)

(4,186)(5,531)

(205)(3,740)

20162017

407

5,078

7,028

5,189

Actual

4,839



Oberon Council

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 disclosuresCouncil information and contact details

n/a – not applicable

48 n/a

58 n/a

52

62 n/a

54

60

59

76

6362 n/a

62 n/a

64

62 n/a

10202122

78

9(a)9(b)

30

27

32

41

57

48

Page

1

25

19

1516

20

21

43

42

38

39 n/a

18

1213

23

26

Note

22

14

10(a)10(b)

17

6(a)

4

6(c)

9(c)

11

24

2(a)

32(b)

6(b)

5

28 75

35

31

3233

41

39

40

36

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

27

4644

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Oberon 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 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 There have been no new accounting standards adopted in this year’s financial statements which have had any material impact on reported financial position, performance or cash flows. (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 revenue when the Council obtains control over the assets comprising these receipts. Developer contributions may only be expended for the purposes


Oberon 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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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 supply Sewerage service (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 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 Upper Macquarie County Council

Upper Macquarie County Council is a single purpose local government authority, established by the Governor under Section 387 of the Local Government Act



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1993, as the control authority for noxious weeds in the areas of Bathurst Regional Council, Lithgow City Council, Oberon Council and Blayney Shire Council.

(iv) Interests in other entities Subsidiaries Council has no interest in any subsidiaries. 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



page 15

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

Externally valued: • Water and sewerage networks

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 3 to 10 years - Office furniture 3 to 10 years - Vehicles 1 to 5 years - Heavy Plant/Road Making equip. 5 to 15 years Buildings - Buildings: Council Offices 15 to 100 years - Buildings: Other 15 to 100 years - Structures 6 to 100 years Stormwater Drainage - Drains 90 years Transportation Assets - Roads Surface 40 years - Roads Pavement [Sealed] 100 years - Roads Pavement [Unsealed] 36 years - Bridges 100 years - Footpaths 100 years - Kerb & Gutter 100 years - Street Furniture 20 to 100 years Water and Sewer Assets - Water Infrastructure 15 to 150 years - Sewer Infrastructure 10 to 150 years - Sewer - Rising Mains 80 to100 years - Water - Reticulation Mains 60 to100 years - Sewer - Reticulation – Pipe 60 to100 years - Sewer - Reticulation – Conduit 150 years - Swimming Pools 30 to 40 years - Other Open Space/ Recreational Assets 5 to 75 years 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.



page 17

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. 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.



page 18

(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. (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 to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051. 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.


Oberon Council

Notes to the Financial Statementsfor the year ended 30 June 2017

Note 1. Summary of significant accounting policies (continued)

page 19

(t) Intangible assets

Council has not classified any assets as intangible.

(u) Crown reserves

Crown Reserves under Council’s care and controlare recognised as assets of the Council. Whileownership of the reserves remains with the Crown,Council retains operational control of the reservesand is responsible for their maintenance and use inaccordance with the specific purposes to which thereserves are dedicated.

Improvements on Crown Reserves are alsorecorded as assets, while maintenance costsincurred by Council and revenues relating to thereserves are recognised within Council’s IncomeStatement.

(v) Rural fire service assets

Under section 119 of the Rural Fire Services Act1997 (NSW), “all fire fighting equipment purchasedor constructed wholly or from money to the credit ofthe Fund is to be vested in the council of the area foror on behalf of which the fire fighting equipment hasbeen purchased or constructed”.

Until such time as discussions on this matter haveconcluded and the legislation changed, Council willrecognise rural fire service assets including land,buildings, plant and vehicles.

(w) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised netof the amount of associated GST, unless the GSTincurred is not recoverable from the taxationauthority. In this case it is recognised as part of thecost of acquisition of the asset or as part of theexpense.

Receivables and payables are stated inclusive of theamount of GST receivable or payable. The netamount of GST recoverable from, or payable to thetaxation authority is included with other receivablesor payables in the Statement of Financial Position.

Cash flows are presented on a gross basis. The GSTcomponents of cash flows arising from investing orfinancing activities which that are recoverable from,or payable to the taxation authority are presented asoperating cash flows.

(x) New accounting standards andinterpretations issued not yet effective

Certain new accounting standards andinterpretations have been published that are notmandatory for the current reporting period and whichhave not been applied.

Council does not consider that these standards arelikely to have a material impact on the Council'sfuture financial statements, financial position,financial performance or cash flows.

(y) Rounding of amounts

Unless otherwise indicated, amounts in the financialstatements have been rounded off to the nearestthousand dollars.

(z) Comparative figures

To ensure comparability with the current reportingperiod’s figures, some comparative period line itemsand amounts may have been reclassified orindividually reported for the first time within thesefinancial statements and/or the notes. Two examplesof these would be Employee benefits and on-costs,Council has reclassified the employee on-costsincluded in Employee leave Entitlements [ELE] to thevalue of $635K between Note 4a and Note 4c for2016 to ensure the correct comparison between thetwo financial years.As well as adjustments to the 2015-16 Cash FlowStatements which have been grossed up to includeGST, in accordance with Note 1w.

(aa) Disclaimer

Nothing contained within these statements may betaken to be an admission of any liability to anyperson under any circumstance.


page 20

Oberon Council


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.

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

Operating result from continuing operations

Originalbudget

OriginalActual

2017 20162017(450)

307 (180) 340

2017Actual

Originalbudget

2017Actualbudget

(457) 711 682 652

– – 639 454

646 450 450 –

946 862

Health Environment 613

264 945 5 1

209 721 Public order and safety

Governance Administration

(340) 953 244 121

599 927 1,078 (76)

5 4

134

1

167

4 –

294 240

773

1,262 Housing and community amenities 287 Water supplies

Recreation and culture 107

1,633 Sewerage services 1,282

1,493 1,766 1,063

127

52 Community services and education 58

1,416 1,571 1,564 1,067 1,232

6,625

(975) 1,041 62

127

1,298

1,099 652 628

96 6,212

124 1,022 868

Transport and communication 5,066 Mining, manufacturing and construction 3 17

6,936 24 48

6,248 (7)

310 6,171 580 585

180,318

22,805 – – 22,599

Actual2017

3,347 2016

– – 4,202

435 12,830

1,612

20,044 12,947 20,227 16

12

(4) (605)

5 1,585 (454)

6 (450)

Actual

5 2,698

415 350

11 11

3,311 25,717 25,485

12,361 –

5,849 1,626 – –

(502) – 5 –

– (801)

– – – 5,902

4,240 –

12,473 (305) (328)

(71) (1,004)

(115) (123)

(744) 50

(915) (971)

(139)

–

(1,182) (46)

(2,921)

13,594

– –

13,594

–

–

–

1,736 (1,851)

3,985

(31) 134 124

– 1,097

(3,407)

3,798

– –

4,435

303

5,836 7,205 7,356

2,865 291,902

(41) –

294,570

4,344 4,383 96 178,685

291,902

– –

294,570

–

5,280

– 3,711

5,447

– 2,415

15,018 14,891 17,579

– – –

387 489

– –

–

350 399

11,743 14,891 15,018

5,836

12,097 Share of gains/(losses) in associates

continuing operations

7,356 and joint ventures (using the equity method)

Operating result from

–

Economic affairs

11,483 Total functions and activities

1,484

7,205

19,454 18,689


page 21

Oberon Council


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 SUPPLIESSEWERAGE SERVICES

RECREATION AND CULTURE

MINING, MANUFACTURING AND CONSTRUCTION

TRANSPORT AND COMMUNICATION

ECONOMIC AFFAIRSIncludes 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.

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.


page 22

Oberon Council


Note 3. Income from continuing operations

$ ’000

(a) Rates and annual charges

Ordinary ratesResidentialFarmlandBusinessTotal ordinary rates

Special ratesTown improvementTotal special rates

Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesWater supply servicesSewerage servicesWaste management services (non-domestic)Total annual charges

TOTAL RATES AND ANNUAL CHARGES

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

222

1,410

5,090

672 438 695 55

214

436 436

420

1,186

180 3,233

447

2017Actual

1,267

191 1,776

Actual

3,058

Notes

1,362 55

4,856

447

2016

1,691


page 23

Oberon Council


Note 3. Income from continuing operations (continued)

$ ’000

(b) User charges and fees

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

Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Building controlInspection servicesPlanning and building regulationPrivate works – section 67Regulatory/ statutory feesRegistration feesSection 149 certificates (EPA Act)Section 603 certificatesTown planningOtherTotal fees and charges – statutory/regulatory

(ii) Fees and charges – other (incl. general user charges (per s.608))CemeteriesCommunity centresCommunity technology centreGravel pitsLeaseback fees – Council vehiclesLibraryRMS (formerly RTA) charges (state roads not controlled by Council)Swimming poolTourismWaste disposal tipping feesWater connection feesOther – septic tank disposalTotal fees and charges – other

TOTAL USER CHARGES AND FEES

Notes

13

10

3,902

–

41 15

2,693

114

6

119

6,014

2,853

3

5,070

9

1

Actual

–

10

48

15

39

1,008

5

39

0

Actual

38 28

1,791

2017 2016

31 1

60

1,249

47

16

1,900

344 304

–

63 75

6

38

321

16

–

21 5

20

18 –

49 3,742

439 261

– 23

– 3

317

–


Oberon Council



$ ’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 64Domestic waste management operationsTotal interest and investment revenue recognised

(d) Other revenues

Rental income – other council propertiesFines - Animals ControlLegal fees recovery – rates and charges (extra charges)Legal fees recovery – otherDiesel rebateDiscounts and rebatesInsurance claim recoveriesRental income – aged units rentsSales – generalCommunity transportInvestment recoveryMisc revenueYouth councilHeritageFESLWorkers CompCTCTOTAL OTHER REVENUE

5 –

74 72

121 –

–

2016Actual

2017Actual

31

3

2

–

60

4

65

3

42–

455

64

40

54

22

9863

18

34

33383 339

Notes

370

33131

1

416

3

29

–5

33

19

169

416

1030

370

10

380

2

38

273

64

–

–

page 24


Oberon Council



$ ’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 managementCommunity centresCommunity infrastructureEmployment and training programsEnvironmental protectionHeritage and culturalLibraryLIRS subsidyRestart NSW - Fixing Country RoadsRecreation and cultureStreet lightingTransport – Roads to RecoveryTransport – Flood DamageYouth weekTotal specific purposeTotal grants

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

69 10 – –

119 682 – –

1 1 – –

––

5

27

9

–

–

–

–

–

21

21–

––

–

–

–

–

–

21

–

21

–

–

–

1,183

27

3,711

Operating

944837

21

–

3

–

18

405

–

Capital

––

2016

–

Capital

–

8

––

–

1111

–

–2,415

–

2017

134

461,466

11

–

2017

––

8741,497

–––

5,259

71

2,844

77

4,609761

5,447

5,447

1,736

–

4

44

––

–

2,199

5,259

9594,229

0

119

–

38

2016

–

–

3

Operating

–

page 25


page 26

Oberon Council



$ ’000

(f) Contributions

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

Other contributions:Bushfire servicesRMS contributions - Traffic FacilitiesRMS contributions (regional roads, block grant)TourismTotal other contributionsTotal contributions

TOTAL GRANTS AND CONTRIBUTIONS

$ ’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

6,358

1,702

2016

–

1,482 1,802

770

Actual

134 1,099

Actual

1,447 1,482

1,147

6,594

782

100

1,802

180

22

930

–

61

–

Capital

1,010

137

2

169

–

137

2017

17

–

Operating

– –

Operating

169

2017 2016

–

– –

146

1,262

434

– –

33

220

320

(157)

1,482

180

213

16

Capital

300

33

2017 2016

261 12

134

234 434

152

35

455

(420)

17

477


Oberon Council


Note 4. Expenses from continuing operations

$ ’000

(a) Employee benefits and on-costs

Salaries and wagesEmployee termination costsTravel expensesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)Protective clothingOtherTotal employee costsLess: capitalised costsTOTAL 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

5,604

2131918

–

205

2016

10

59

Actual Actual

32120

7

–

5,591

184

40 40151

5,152

675

6,597

561

184

26

62

61

–

205

8

(1,445)

Notes 2017

23

538

5,609

54

3

106

(957)

7

6,548

page 27


Oberon Council


Note 4. Expenses from continuing operations (continued)

$ ’000

(c) Materials and contracts

Raw materials and consumablesContractor and consultancy costs – Animal control – Asset mgt – Building contractors – Cleaning – Development control – Garbage contract – Ground maintenance – Integrated planning – Other contractors – Plant – RFS – Road maintenance contractors – Sewer infrastructure – Water infrastructureAuditors remuneration (1)

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

Internal auditingTotal materials and contractsLess: capitalised costsTOTAL MATERIALS AND CONTRACTS

1. Auditor remuneration

Audit and other assurance services – Audit and review of financial statements: Council’s Auditor – Audit and review of financial statements: Auditor GeneralRemuneration for audit and other assurance services

Total Auditor remuneration

2. Operating lease payments are attributable to:Other

10 8

23 59

40

46

1,410

9 8144 78

283

11 –

21 10

53 5756 75

35

14

(3,768)

18

(5,051)

262

33

Actual

6

2016

6,887

29

131

146

2017

35

17

3,119

2917

45

29

35

35

–

–

–

4,612

19

8,558

220

Actual

5,744–

7

45

17

3,507

86

Notes

13

1,539

68

45

3510

page 28


page 29

Oberon Council



$ ’000

(d) Depreciation, amortisation and impairment

Plant and equipmentOffice equipmentFurniture and fittingsLand improvements (depreciable)Infrastructure: – Buildings – non-specialised – Buildings – specialised – Other structures – Roads – Bridges – Footpaths – Stormwater drainage – Water supply network – Sewerage network – Swimming pools – Other open space/recreational assetsOther assets – Library books – OtherAsset reinstatement costsTotal depreciation and amortisation costs

ImpairmentNil

TOTAL DEPRECIATION ANDIMPAIRMENT COSTS EXPENSED

Notes

9 & 26

3,174

21 1,722

107 22

117 177 121 39

3

720 5 6

2 173

59

Actual 2017

Actual 2016

172

5

29

5

3,333

5

57

3 175

2

31

3,333

572 9 8

120 29

16

21 1,713

103 20

118

3,174


Oberon Council



$ ’000

(e) Other expenses

AdvertisingBank chargesComputer 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 – Upper Macquarie County CouncilCouncillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Donations, contributions and assistance to other organisations (Section 356)Electricity and heatingInsuranceOffice expenses (including computer expenses)PostagePrinting and stationeryStreet lightingSubscriptions and publicationsTelephone and communicationsVehicle registrationEngineering/finance/developmentHeritageFESLHardware expensedRates and chargesOtherTOTAL OTHER EXPENSES

109 97

–

23

–

34

52

281

39

22

74

1,936

–

2

22

24

103

23

74

88 66

8

322

15

68446

–

–

425

55–

219

23

2016

35

87

Actual

16

2017

–8

39

51

28

44

244

25

ActualNotes

77

391

15

25

89

12

2,396

61

–

79

16

274

page 30


Oberon Council


Note 5. Gains or losses from the disposal of assets

$ ’000

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

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

Financial assets*Proceeds from disposal/redemptions/maturities – financial assetsLess: carrying amount of financial assets sold/redeemed/maturedNet gain/(loss) on disposal

Other Old Plant W/OffLess: carrying amount of Other Old Plant W/Off assets sold/written offNet gain/(loss) on disposal

NET GAIN/(LOSS) ON DISPOSAL OF ASSETS 235

Actual

(86)

(31)

124

20162017

(12,800)

(139)

–

158

–

297

–

12,800

–

8,200

77(228)

(8,200)

305

75

(156)

160

Actual

–

Notes

–

43

page 31


page 32

Oberon Council


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 equivalents

Investments (Note 6b) – Long term deposits – Other long term financial assetsTotal investmentsTOTAL 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’

Investmentsa. ‘Held to maturity’Investments

954

Actual 2016

– 12,000 11,800

Non-current

2017Actual

Current

2017Actual

–

1,657 703

11,800

13,457

12,000

–

–

Notes

11,800

700 – 11,100

1,657

–

–

700 –

– 114

12,114

–

–

–

–

11,300

114

12,000 –

–

–

–

–

–

Current

(131)

245

Actual 2016

–

Non-current


page 33

Oberon Council


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 liabilitiesNil

External restrictions – otherDeveloper contributions – general (D)Specific purpose unexpended grants (F)Water supplies (G)Sewerage services (G)Domestic waste management (G)Town improvementsOther LIRS loanExternal restrictions – otherTotal external restrictions

D Development contributions which are not yet expended for the provision of services and amenities in accordancewith contributions plans (refer Note 17).

F Grants which are not yet expended for the purposes for which the grants were obtained. (refer Note 1 (b)) G 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.

–

– 219

–

–

99 (157)

–

balance

(1,944) 1,205

– 259

929 – –

440

6,701

370 2,651

692

206

(1,944) 6,701

523

restrictions

1,702

–

2016Actual

7,440 2,716

1,205

Actual

6,701

259

716

–

2,128 164

Non-current

restrictions

1,262

(1,787)

Current

balance

–

7,440

37

4,533 7,440

–

13,457

–

Transfers to

692

2017 Closing Transfers from

– 6,041

12,114

–

141

Opening

2017

Current Actual

2016

–

Actual

13,457 12,114

Non-current

–

2017

–


page 34

Oberon Council


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

$ ’000

Internal restrictionsPlant and vehicle replacementEmployees leave entitlementCemetery plaquesCommunity centreCommunity technology centreElectionEngineering instrumentsGarbage depotGravel pitsLand developmentFinanceLibraryOffice equipmentRail crossings updateResidential dwellingsRoad constructionSelf care unitsSwimming poolCommunity GrantsTourismFAG - 50% 2017-18Total internal restrictions

TOTAL RESTRICTIONS

Opening restrictions

Transfers to

1,047 –

balance

(2,500)

–

Transfers from

10

restrictions Closing

–

411

12,742

–

11,973

6,041 (556)

3,269

4,533 2,064

400 647 411

balance 2017

49 – – 49

27 – – 27

8 – – 8 10 –

745 – – 745

– 7 – 7

26 – – 26

– 1,247 – 1,247

257 – (200) 57 109 – – 109

15 – – 15 252 27 (239) 40 907 80 (85) 902

– 255 – 255

38 – – 38 37 –

11 – – 11

102 48 – 150 882 – (32) 850

– 37


page 35

Oberon Council


Note 7. Receivables

$ ’000

PurposeRates and annual chargesInterest and extra chargesUser charges and feesPrivate worksAccrued revenues – Interest on investments – Other income accrualsNet GST receivableOther debtorsTotal

Less: provision for impairmentUser 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.

349

– 52

352

–

–

85 (10)

–

2016

–

762

–

– –

–

288

– –

–

–

111

624 –

–

–

–

–

67

141

(2)

1,067 –

41

976

68

–

–

– 37

975

–

–

1,065 –

213

–

975

– –

–

(2)

1,065

(2)

42

(2)

–

109

441

–

–

252 46

63

Current

– –

134

–

Non-current

– –

– 41 –

–

364

Current

–

2017Notes

65

Non-current


Oberon Council


Note 8. Inventories and other assets

$ ’000

(a) Inventories

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

(ii) Inventories at net realisable value (NRV)Nil

TOTAL INVENTORIES

(b) Other assets

PrepaymentsTOTAL OTHER ASSETS

Externally restricted assets

There are no restrictions applicable to the above assets.

20162017Current

566

7

458

458

1313

7

Notes

13

Non-current

–

293

Current

–

169279

492 286 293267

293492

49210 –

–– –

––

566

Non-current

page 36


Oberon Council


Note 8. Inventories and other assets (continued)

$ ’000

(i) Other disclosures

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

Represented by:Acquisition costsDevelopment costsTotal costsTotal real estate for resale

Movements:Real estate assets at beginning of the year – Purchases and other costs – WDV of sales (expense)Total real estate for resale

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

Real estate for resale

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

(d) Inventory write downsThere were no amounts recognised as an expense relating to the write down of inventory balancesheld during the year.

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

2017Non-currentCurrent Current

–

Non-current

169

2016

169–

135492

432

5

286

293286

169

492– 268

293

286

2017

(86) (139) –286

169

286

169

492 286

492

–

–

(31)

13518

286

293

2016

492

492293293158

(139)139199

169

–

492

293

– –

492

293

158

376 318

page 37


page 38

Oberon Council


Note 9a. Infrastructure, property, plant and equipment

Asset class

$ ’000

Capital work in progress 383 – 383 – 240 – – (249) – (132) – – 240 – 240 Plant and equipment 12,362 6,140 6,222 350 42 (156) (720) – – – – – 11,275 5,537 5,738 Office equipment 266 259 7 45 – – (5) – – – – – 312 264 48 Furniture and fittings 248 222 26 – – – (6) – – – – – 248 228 20 Land: – Operational land 5,274 – 5,274 – – – – – – – – – 5,274 – 5,274 – Community land 8,476 – 8,476 – – – – – – – – – 8,476 – 8,476 – Land under roads (post 30/6/08) 8,363 – 8,363 – – – – – – – – – 8,363 – 8,363 Land improvements – non-depreciable 49 – 49 31 – – – – – – – – 80 – 80 Land improvements – depreciable 1,044 701 343 – – – (59) – (25) – – – 1,019 760 259 Infrastructure: – Buildings – non-specialised 243 73 170 – – – (2) – – – – – 243 75 168 – Buildings – specialised 18,411 2,401 16,010 – – – (173) – – – – – 18,411 2,574 15,837 – Other structures 637 215 422 283 – – (21) – – – – – 920 236 684 – Roads 189,470 30,233 159,237 5,321 – – (1,722) – – – – – 194,791 31,955 162,836 – Bridges 10,747 567 10,180 – – – (107) – – – – – 10,747 674 10,073 – Footpaths 3,341 467 2,874 46 – – (22) 28 – – – – 3,415 489 2,926 – Bulk earthworks (non-depreciable) 31,627 – 31,627 – – – – – – – – – 31,627 – 31,627 – Stormwater drainage 10,533 3,165 7,368 – – – (117) 86 – – – – 10,619 3,282 7,337 – Water supply network 12,103 4,577 7,526 37 53 – (177) 30 – – – 871 12,916 4,576 8,340 – Sewerage network 18,834 7,178 11,656 – 6 – (121) – – – (2,381) – 20,232 11,072 9,160 – Swimming pools 1,568 648 920 – – – (39) – – – – – 1,568 687 881 – Other open space/recreational assets 864 225 639 – – – (29) 105 – – – – 968 254 714 Other assets: – Library books 330 304 26 8 – – (5) – – – – – 338 309 29 – Other 66 52 14 – – – (5) – – – – – 66 57 9 Reinstatement, rehabilitation and restoration assets (refer Note 26): – Tip assets 28 9 19 – – – (1) – – – – – 28 10 18 – Quarry assets 32 12 20 – – – (2) – 25 – – – 57 14 43 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.

Accumulated depreciation

and impairment

Gross carrying amount

Gross carrying amount

Accumulated depreciation

and impairment

as at 30/6/2016

WIPtransfers

Adjustmentsand transfers

Additionsnew assets

Additionsrenewals

Carrying value

of disposals

Depreciation expense

Revaluation decrements

to equity (ARR)

as at 30/6/2017

Net carrying amount

Asset movements during the reporting period

Tfrs from/(to) ‘held for

sale’ category

– (132) – 279,180 (2,381) 871 342,233 63,053

Revaluation increments

to equity (ARR)

Net carrying amount

335,299 57,448 277,851 6,121 (156) (3,333) 341


Oberon Council


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

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

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

35,416 16,062 19,354

20,966 11,338 9,628

219 26 19320,245 11,072 9,173

52 10 4230 9 21

8,34013,334 4,649 8,684

4,576

502 240 262

969 – 969

Grosscarryingamount

Accumulateddepn. and

impairment

Net carryingamount

754

33912,916

414

28

34–

Actual2016

311

Grosscarryingamount

Accumulateddepn. and

impairment

Net carryingamount

67 36 314 3 1

4,577

Actual

– Improvements – depreciable

Other assets

Land

– –75 1,041

Actual

$ ’000

Total sewerage services

Class of asset

Water supply

Furniture and fittings

Infrastructure

Plant and equipment

Total water supply

Buildings

Buildings Infrastructure

Sewerage services

Actual2017

Other structures

– Operational land

Domestic waste management

Plant and equipment

Total DWM–

1,116

TOTAL RESTRICTED I,PP&E

7,52512,512 4,641 7,871

468 224 244

339 25 31412,102

219 23 19618,833 7,178 11,65519,520 7,425 12,095

969 – 96952 9 4330 9 21

52 9 431,168 78 1,090

Mobile garbage bins 65 56 9 65 51 14

33,200 12,144 21,056

page 39


page 40

Oberon Council


Note 10a. Payables, borrowings and provisions

$ ’000

PayablesGoods and services – operating expenditureAccrued expenses: – Interest – Salaries and wages – Salary RDO accruals – Workers Compensation on ELE's – Other expenditure accrualsSecurity bonds, deposits and retentionsSuperannuation RFSTotal payables

Income received in advancePayments received in advanceTotal income received in advance

BorrowingsLoans – secured 1

Total borrowings

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

Total provisions

(i) Liabilities relating to restricted assets

Externally restricted assetsWaterSewerLiabilities 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.

TOTAL PAYABLES, BORROWINGS AND PROVISIONS

–

445

854

–

–

– 5

Current

546

–

Notes

–

55 67

–

–

–

4,201

24

2,565

–

427

– –

31

Current

–

209

–

2016

344

–

Non-current

231

Current 2017

Non-current

44

31

– 113

47

–

9

–

–

–

–

644 767 –

799

427

92 84

TOTAL PAYABLES, BORROWINGS AND PROVISIONS

Non-current 2016

4,481

275

2,565

3,756 4,201 3,756

84

1,407 26 258 251

Current

329

4,086

2,703

–

4,086

2,640 62

4,481

31 –

1

2017

– 480

92

445

24

–

1,407 72

–

–

83

–

Non-current

–

2,703

–

– 67

1,402

4,086

62 30

4,481

– 61 2,504

61

31

1,402

69 – 51 –

62 4 67 –

35 1 23 5


Oberon Council


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 11. Statement of cash flows – additional information

(a) Reconciliation of cash assets

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

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

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

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

(c) Non-cash investing and financing activitiesNil

7,983

916

Actual

3,333

4,435

91

053

5(9)

3,985

(70)1

111

7 8

6,990

(291)1136

(0)

(235)(43)

29130

175

(28)(55)

2016Actual

114

6a 114

1,65710 –

(112)

2017

9161,0071,007

–

Actual Actual

1,657

3,174

page 41


page 42

Oberon Council


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 equipmentOther – Replacement RollersTotal commitments

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

Sources for funding of capital commitments:Unrestricted general fundsTotal sources of funding

(b) Finance lease commitments

Nil

(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 yearsLater than 5 yearsTotal non-cancellable operating lease commitments

b. Non-cancellable operating leases include the following assets:Contingent rentals may be payable depending on the condition of items or usage during the lease term.

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

Notes

– 245

Actual

– 245

245

245

–

–

–

–

245

– 4

Actual

– 13 –

245

2017

4 9

4

2016


Oberon Council


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).

20.86%

7.68%

63.79%

7.48%5,581

4.59x

2015

-0.27%20.55%

Benchmark

>0.00%

>60.00%12,382

1,08212,757 11.0 mths

1,6347,491

429

2017

7,482

3,958

Amounts

18,977

Prior periods

19,41061.99%

> 3 mths

618

7.88%

x12

2016

11.79mths

12.10x 12.48x >2x24.06x

3.43x

63.99%

3.86x

9.2 mths

>1.5x

Indicator2017

page 43


Oberon Council


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

For the second year in a row Council hascontinued to achieve a positive operationalperformance ratio due to the Special Rates

Variation and increased RMS PrivateWorks

Commentary on 2016/17 result

This ratio measuresfiscal flexibility. It is

the degree of relianceon external funding

sources such asoperating grants and

contributions.

2016/17 ratio 4.59x

Purpose ofoperating

performance ratio

To assess theadequacy of workingcapital and its abilityto satisfy obligationsin the short term for

the unrestrictedactivities of Council.

2016/17 ratio 20.86%


Purpose of ownsource operating

revenue ratio

Once again, Council's unrestricted ratioremains above the benchmark, indicating ithas sufficient liquidity to cover short term

obligations.


As a result of increased RMS PrivateWorks and Special Rates Variation Council

continues to achieve the requiredbenchmark of 60% and above

Purpose ofunrestricted current

ratio

This ratio measuresCouncil’s

achievement ofcontaining operatingexpenditure withinoperating revenue.

2016/17 ratio 63.79%

0.89%

20.55% 20.86%

0%

-5%

0%

5%

10%

15%

20%

25%

2014 2015 2016 2017

Rat

io%

1. Operating performance ratio

72% 64% 62% 64%

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

100%

2014 2015 2016 2017

Rat

io%

2. Own source operating revenue ratio

5.5

3.9 3.44.6

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2014 2015 2016 2017

Rat

io(x

)

3. Unrestricted current ratio

page 44


Oberon Council


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


Purpose of cashexpense cover ratio


2016/17 ratio 11.79 mths

Purpose of ratesand annual charges

outstanding ratio

Purpose of debtservice cover ratio

2016/17 ratio 7.68%


Councils debt service cover ratio remainsconsistant and above the benchmark.


2016/17 ratio 12.10x

This liquidity ratioindicates the numberof months a Councilcan continue paying

for its immediateexpenses without

additional cash inflow.

To assess the impactof uncollected ratesand annual chargeson Council’s liquidityand the adequacy of

recovery efforts.

Due to diligent investment processescouncil continues to ensure sufficient cash

for immediate expenses

Council continues to remain within therequired benchmark, with an improved

result for 2016-17.

This ratio measuresthe availability ofoperating cash to

service debt includinginterest, principal and

lease payments

27.824.1

12.5 12.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2014 2015 2016 2017

Rat

io(x

)

4. Debt service cover ratio

6.98% 7.48% 7.88% 7.68%

0%

2%

4%

6%

8%

10%

12%

2014 2015 2016 2017

Rat

io%

5. Rates, annual charges, interest andextra charges outstanding percentage

7.49.2

11.0 11.8

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 45


Oberon Council


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 contributionsless 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 contributionsTotal 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.

54.92% 98.12% 98.67% 96.99% 97.47%

3.43x 74.54x

2016Water indicators Sewer indicatorsGeneral indicators 5 Benchmark

>60.00%

>0.00%

58.57%

4.59x

22.13% 19.49% -5.91% 19.09% 38.94% 37.42%

2017 2017 20172016 2016

15.20x 15.89x 89.20x >1.5x

page 46


Oberon Council


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 anddepreciation/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

9.04% 9.00% 9.01%

10.62x 0.00x 0.00x 0.00x 0.00x

0.00months

11.05x

7.28%

2016

9.36% 0.00%

General indicators 5 Water indicators Sewer indicators

x12

Benchmark2017 2016 2017 2016

months months monthsmonths9.43 370.67 1,075.759.31 0.00

months

2017

page 47


Oberon Council


Note 14. Investment properties

$ ’000

Council has not classified any land or buildings as ‘investment properties’.

Note 15. Financial risk management

Risk management

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

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

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

Financial risk management is carried out by Council’s finance section under policies approved by the Council.

A comparison by category of the carrying amounts and fair values of Council’s financial assets and financialliabilities recognised in the financial statements is presented below.

Financial assetsCash and cash equivalentsInvestments – ‘Held to maturity’ReceivablesTotal financial assets

Financial liabilitiesPayablesLoans/advancesTotal financial liabilities

Fair value is determined as follows:

– Cash and cash equivalents, receivables, payables – are estimated to be the carrying value that approximatesmarket value.

– Borrowings and held-to-maturity investments – are based upon estimated future cash flows discounted by the current mkt interest rates applicable to assets and liabilities with similar risk profiles, unless quoted market prices are available.

– Financial assets classified (i) ‘at fair value through profit and loss’ or (ii) ‘available-for-sale’ – are based upon quoted market prices (in active markets for identical investments) at the reporting date or independent valuation.

Refer to Note 27. Fair value measurement for information regarding the fair value of financial assets and liabilities.

2017

2017

4,628

12,000

1141,657

Fair value2016

1,06514,432

114

Carrying value

14,432 13,179

11,8001,065975

Actual

2017

Actual

515

5,2774,969 5,1434,201

2016

11,800

4,628769

4,201

2016Notes

649

97512,000

1,657

642

4,843

13,179

page 48


page 49

Oberon Council


Note 15. Financial risk management (continued)

$ ’000

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

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

Council has an investment policy which complies with the Local Government Act 1993 and 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.

Council also seeks advice from independent advisers before placing any funds in cash equivalents andinvestments.

(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

(90) (75)

(90)

Equity

90

91

90 (90) (75) (75)

Profit Equity

75

(75) 90

Decrease of values/rates

(90)

75

Increase of values/rates

75

75 Profit


Oberon Council



$ ’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 yearBalance at the end of the year

77

annual

2%

38364

2017

10

2016

55352

9

2017

100%

2

612

2017

80–

receivableschargesannual

119

521

Rates and

21

Rates and

charges receivables charges receivables

19%

Other

81%26%

631

100%

9 7

715

1

9%100% 100%

annual Other

2016

286

Rates and

annual

–

–

268

98%

2016

receivablesOther

Rates and

chargesOther

91%

2074

74%

page 50


Oberon Council



$ ’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.

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

Trade/other payablesLoans and advances – fixed interest rate

1,760–

payable in:

2016

2017–55

4.28% 4,628

508

769 0.00%value

468

Averageinterest rate

Carrying2017

4,969

interest rate649 0.00%

1,005

4,628621

449

449

468

5,277

528508

488 5,249

4,9694,9331,760

–

4,201 4.27%

value

2016Carrying

5,277

488 2,285––

Average

2,285

649508

–468

732488 4,201

valuescash

4,628

4,201

outflows

528– 769–

1,126

–

maturitycarryingActualTotal

508

4-5 Yrs

–

47– 431

–574

488

677468

55

to no3-4 Yrs

Subject

449

1-2 Yrs

47

≤ 1 Year > 5 Yrs2-3 Yrs

page 51


page 52

Oberon Council


Note 16. Material budget variations

$ ’000

Council’s original financial budget for 16/17 was adopted by the Council on 30 June 2016.

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 feesIncreased RMS Private Works Revenue

Interest and investment revenue

Other revenuesAs with User Fees and Charges this is a result of increased funding for private works.

Operating grants and contributions

Capital grants and contributions

Net gains from disposal of assetsBudget included $500k Industrial sub-development did not evenuateBudget included $500k Hathaway Cottages Sale in July 2017

Budget2017

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

F

88%

U

F

(1,176) (96%)

863

4%

F

180

2017

F

F

2017

40 11%

4,910

5,065

458

5,090

19%

43

(0%)434

6,594

6,014

Actual

434

1,219

6,227

405

949

6%

U

416

(1)

376

367


page 53

Oberon Council


Note 16. Material budget variations (continued)

$ ’000

EXPENSESEmployee benefits and on-costsThis is a result of an increase in leave provisions due to a decrease in staff taking leave

Borrowing costsThe budget was inflated to due to the anticipated Sewer Infrastructure loan that did not materialise this financialyear

Materials and contracts

Depreciation and amortisation

Other expenses

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

Cash flows from operating activitiesFavourable operating cash flows are a result of using "invested" money as result of the LIRS Loan

Cash flows from investing activitiesUnfavourable investing acitivities a result of expenditure of the LIRS on Infastructure back log and low interest

Cash flows from financing activities

(205)

245 5,591

Actual

8%

Budget

5,836

2017

F

0.1%

140.5%

(427)

(2,499) (3,512)

(69)

5,821 7,983

U(427)

U(6,011)

(0)

2,162

(3%)

F37.1%

2,327 2,396

2017

(6%)3,507

3,218 U3,333

U

U

(4%)(115)

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

4%

16 F191

2017

207

3,303


page 54

Oberon Council


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

DrainageRoadsOpen spaceCommunity facilitiesEmergency services –

– S64 contributions

Total S94 revenue under plans

261

–

– 437

137 S94 not under plans

Held as

–

–

28

Internal

– –

–

Expenditureborrowing

–

restricted(to)/from

224

during

– 432 –

– 1

–

3

799

799

704

1,702

–

–

–

–

– –

asset89

in year

26

–

198

15

Cash

10

1,262

565

159

13 – –

79

39

2

537

–

219

–

–

earnedContributions

received during the yearInterest

– yearNon-cash

– 1 537 1

Total contributions

S94 contributions – under a plan

PURPOSE Openingbalance

– 14 12

13

– –

213

–

–

210 –

261

–

–

– (20)

– 20 – –

–

–

Cumulative internal

borrowings due/(payable)


page 55

Oberon Council


Note 17. Statement of developer contributions (continued)

$ ’000

S94 CONTRIBUTIONS – UNDER A PLAN

CONTRIBUTION PLAN NUMBER 1 – URBAN DEVELOPMENT

DrainageRoadsOpen spaceCommunity facilitiesEmergency services

CONTRIBUTION PLAN NUMBER 2 – RURAL DEVELOPMENT

RoadsOpen spaceCommunity facilitiesEmergency services

duringyear

459

–

–

assetrestricted

–

Internal Held as

–

–

–

–

borrowing

– 182

–

19

Held as

119 –

– –

1 –

–

restrictedInternal

(to)/from

– balance

9 110

21

assetearned

– –

–

–

in year

–

–

11 175

140

12

79 –

–

–

Interest

3

7

–

– 8 200

–

Non-cash

213 3

Cash

Expenditure

5

Total

–

Cash

Contributionsreceived during the year

61 100 398

Opening

–

4

Total

PURPOSE

1

8 –

–

7 105

yearduring

–

– 7

Interest

in year

–

251 89 –

–

–

borrowing

–

Expenditure

–

(to)/from

4 –

Opening

38

received during the year

Non-cash

341

–

earned

–

PURPOSE

10

Contributions

balance

– (140)

– 20

– (120)

120 – – –

120

Cumulative internal


Cumulative internal



page 56

Oberon Council


Note 17. Statement of developer contributions (continued)

$ ’000

S94 CONTRIBUTIONS – NOT UNDER A PLAN

Roads

PURPOSE

Total 565 – 137 – 2 2

–

Interest Expenditure

704 –

asset(to)/from704

balance137

Contributions Held asrestricted

Internalborrowingduring

yearOpening earned

– Cash Non-cash

received during the yearin year

– 565 –

Cumulative internal


–


page 57

Oberon Council


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 58

Oberon Council


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

2. Other liabilitiesCouncil has classified a number of privately owned

(i) Third party claims land parcels as local open space or bushland.

The Council is involved from time to time in various As a result, where notified in writing by the variousclaims incidental to the ordinary course of business owners, Council will be required to purchase theseincluding claims for damages relating to its services. land parcels.

Council believes that it is appropriately covered At reporting date, reliable estimates as to the valuefor all claims through its insurance coverage and of any potential liability (and subsequent land asset)does not expect any material liabilities to eventuate. from such potential acquisitions has not been

possible.(ii) S94 plans

Council levies section 94/94A contributions upon ASSETS NOT RECOGNISED:various development across the Council area throughthe required contributions plans. (i) Land under roads

As part of these plans, Council has received funds As permitted under AASB 1051, Council has electedfor which it will be required to expend the monies in not to bring to account land under roads that itaccordance with those plans. owned or controlled up to and including 30/6/08.

As well, these plans indicate proposed future (ii) Infringement notices/finesexpenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in Fines and penalty income, the result of Council future years or where a shortfall exists by the use of issuing infringement notices is followed up and Council’s general funds. collected by the Infringement Processing Bureau.

These future expenses do not yet qualify as liabilities Council’s revenue recognition policy for suchas of the reporting date, but represent Council’s income is to account for it as revenue on receipt.intention to spend funds in the manner and timingset out in those plans. Accordingly, at year end, there is a potential asset

due to Council representing issued but unpaidinfringement notices.

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

Note 19. Interests in other entities

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


page 59

Oberon Council


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– 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.

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

Council made no correction of errors during the current reporting period.

(d) Voluntary changes in accounting policies

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

155,416 156,926

156,926

156,926

155,416

127,930 3,985

2016

156,862 (1,510)

132,365

9(a) 64

Actual

123,945 4,435

Notes 2017

156,926 155,416 156,926

127,930

Actual

155,416


page 60

Oberon Council


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 purposesOther incomeNet gains from disposal of assetsShare of interests in joint ventures and associatesusing the equity methodTotal income from continuing operations

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

Discontinued operations

Net profit/(loss) from discontinued operationsNet operating result for the year

Net operating result attributable to each council fundNet operating result attributable to non-controlling interests

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.

8

3,919

Actual

456 304

376 1,021

2017 2017

–

(71)

–

–

152

1,514

17

3,046

16,857

– 1,388

145

139

–

–

–

4,072

–

–

–

Actual

11 11

296

3,677

191

4,689

2017

714

2017

22 395

32

–

1,585

–

–

435

310 182

– –

–

435

5,150

1,082

3,011

– (71) 435

4,072 648

Water

Actual

General1Sewer

43

–

863 – 6,572

–

Actual

12,786 (71)

–

–

4,072

– 797 211

413

–

(88) –


Oberon Council

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 equivalentsInvestmentsReceivablesInventoriesOtherTotal current assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using the equity methodIntangible assetsTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets

EQUITYRetained earningsRevaluation reservesTotal 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.

–

8,685

145,1769,132 12,353 266,296

–

2017

Water

–

6,077

445

3,756

––

273,023

767–

4,163

–1,3442,640

109

2,755

492

500

–9,629

–

Actual

458

0

Actual

–

–8,685

––

2017

–

261,359

260,867

– 9,629

37011,300

–

––

478

–104

711,664

–

–

–

2,151

4,086–

4,969

266,296

–

–

31

31

762

20172017

–

–

–

Actual

Sewer

6,727

3131

–

329

121,120

–

9,132–

6,276

31

––

12,353

1– –

12,384

31–

9,163

–

–

–

– – 84

General1

(863)

Actual

page 61


page 62

Oberon Council


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

$ ’000

Council did not classify any non-current assets or disposal groups as ‘held for sale’.

Note 23. Events occurring after the reporting date

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 dd/mm/yy.

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:

On the 22nd June 2017 following a public auction Council exchanged contracts for the Council property known as "Hathaway Cottages" for the GST exclusive value of $708,000.

Settlement is expected to take place in the first quarter of the 2017-18 financial year.

Note 24. Discontinued operations

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

Note 25. Intangible assets

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

Council is unaware of any control over intangible assets that warrant recognition in the financial statements,including either internally generated and developed assets or purchased assets.

Actual Actual


page 63

Oberon Council


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

Hughes pitOberon tipClaytons pitBalance 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 such costs isrequired 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 yearAmounts capitalised to new or existing assets:Amortisation of discount (expensed to borrowing costs)Total – reinstatement, rehabilitation and restoration provision

2040 131 126

7

NPV of provision

68

10(a) 251 258

251

258 251

243

year of

2027

2061 56 57

71

8

2017

Estimated

2016restoration


Oberon Council


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 – Financial assets and liabilities

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

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

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

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

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

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

2017

Recurring fair value measurements

Financial assetsInvestments– ‘Held for trading’– ‘Held for maturity’ReceivablesTotal financial assets

Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and fittingsOperational landCommunity landLand improvementsBuildingsOther structuresLand under roadsBulk earth worksRoadsBridgesFootpathsStormwater drainageWater supply networkSewerage networkSwimming poolsOpen space/recreation assetsLibrary books and otherGravel pitsGarbage tipsOtherTotal infrastructure, property, plant and equipment

30/06/15 – – 5,739 5,73930/06/15 – 48

valuation active mktsof latest unobservable

SignificantLevel 3 Total

Date Quoted Significant

Fair value measurement hierarchyLevel 1 Level 2

inputs

– 48

inputsprices in observable

30/06/17 – 11,100 – 11,100

– 12,775 – 12,77530/06/17 – 975 – 975

30/06/15 – – 18 18

– – 9,160 9,16030/06/17 – – 8,337 8,33730/06/15 – –

30/06/15 – – 9 9– – 278,938 278,938

30/06/17 – 700 – 700

30/06/15 – – 42 4230/06/15 – – 29 2930/06/16 – – 714 71430/06/16 – – 881 88130/06/17

7,337 7,33730/06/15 – – 2,927 2,92730/06/15 – – 10,072 10,07230/06/15 – – 162,837 162,83730/06/15 – – 31,627 31,62730/06/16 – – 8,363 8,36330/06/16 – – 684 68430/06/16 – – 16,005 16,00530/06/16 – – 339 33930/06/16 – – 8,476 8,47630/06/16 – – 5,274 5,27430/06/15 – – 20 20

page 64


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Oberon Council


Note 27. Fair value measurement (continued)

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

2016

Recurring fair value measurements

Financial assetsInvestments– ‘Held for maturity’Other financial assetsReceivablesTotal financial assets

Financial liabilitiesLoans/advancesPayablesTotal financial liabilities

Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and fittingsOperational landCommunity landLand improvementsBuildingsOther structuresLand under roadsBulk earth worksRoadsBridgesFootpathsStreet furnitureKerb and gutterStormwater drainageWater supply networkSewerage networkSwimming poolsOpen space/recreation assetsLibrary books and otherGravel pitsGarbage tipsTotal infrastructure, property, plant and equipment

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

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

30/06/15 – – 26 26

30/06/13 – – 16,180 16,180 30/06/14 – – 775 775 30/06/11 – – 8,476 8,476 30/06/13 – – 5,274 5,274

10,180 30/06/15 – – 153,468 153,468 30/06/15 – – 31,627 31,627 30/06/14 – – 8,363 8,363 30/06/16 – – 422 422

30/06/16 – 11,300 – 11,300

30/06/12 – – 7,525 7,525 30/06/15 – – 7,368 7,368 30/06/15 – – 3,997 3,997 30/06/15 –

valuation active mkts

Level 1 Level 2

30/06/16 4,628

Significant Significantof latest prices in observable

– 4,628 –

Date Quoted

– 1,066 –

Level 3 Total

13,066 – 13,066

–

30/06/16 – –

713 –

277,851

713 5,341 – 5,341

Fair value measurement hierarchy

1,066 –

30/06/16 – 700 – 700 30/06/16

inputsunobservable

inputs

30/06/15 – – 6,222 6,222 30/06/15 – – 7 7

30/06/12 – – 11,656 11,656 30/06/13 – – 920 920

– 1,772 1,772 30/06/15 – – 2,874 2,874 30/06/15 – – 10,180

30/06/13 – – 639 639 30/06/15 – – 40 40 30/06/15 – – 20 20 30/06/15 – – 19 19

– 277,851


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$ ’000

(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 observableinputs (level 2 inputs) and unobservable inputs (level 3 inputs).

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

Financial assets

Held to Maturity – Long term asset valued at fair valueValuation Technique: ‘Cost approach’Inputs Used (Level 2): Original investment value

Loans & Receivables - Term deposits valued at fair valueValuation Technique: ‘Cost approach’Inputs Used (Level 2): Original investment value

Receivables - Valued using the cost approachValuation Technique: ‘Cost approach’Inputs Used (Level 2): Cost of product or service

Financial liabilities

Payables - Outstanding creditor payments, security bonds & depositsValuation Technique: ‘Cost approach’Inputs Used (Level 2): Cost of product or service

Loans / Advances - Valued using the cost approachValuation Technique: ‘Cost approach’Inputs Used (Level 2): Loan borrowing amount


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$ ’000

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

Infrastructure, property, plant and equipment

Plant and Equipment – Major plant (graders, loaders trucks etc.), fleet vehicles (cars, utes etc.) and minor plant (chainsaws, mowers etc.)Valuation Techniques: ‘Cost approach’Inputs Used (Level 3): Purchase price, useful lives (current replacement cost)

Office Equipment – Computers, printers etcValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Purchase price, useful lives (current replacement cost)

Furniture and Fittings – Desks, chairs, air conditioners, etcValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Purchase price, useful lives (current replacement cost)

Operational Land – Industrial land, quarries, residential aged care unitsValuation Techniques: ‘Market approach’Inputs Used (Level 3): Land area, rate per square metre, zoning restrictions, geographical location, sales of comparable land

Community Land – Parkland, sporting grounds, reserves, land under public buildings (halls & community centres)Valuation Techniques: ‘Cost approach’Inputs Used (Level 3): The NSW Valuer General’s valuations

The valuation of the freehold land has been carried out on a Market Value basis and they have been assessed on the basis of the estimated amount which the interest in each property being valued might reasonably be expected to realise on the date of valuation in an exchange between a willing vendor and a willing purchaser in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

With regard to the above, Council's Valuer APV Valuers & Asset Management analysed sales of land throughout Oberon and surrounding Council areas and adopted a rate per square metre, after taking into consideration zoning, location, area and configuration.


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$ ’000


Infrastructure, property, plant and equipment (continued)

Community Land (continued)Councils community land 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, or dedication under section 94 of the Environmental 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.

Depreciable Land Improvements Valuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, purchase price, useful lives

Buildings (Specialised/Non Specialised) – Community halls, toilet blocks, council offices, library, works depotValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life, asset condition

Council’s buildings were valued at fair value on 30th June 2013 in accordance with Compiled Accounting Standard AASB116 Property, Plant and Equipment.

In relation to the valuing of Community Land the Office of Local Government has authorised the use of the NSW Valuer General’s valuations as a sufficient basis to represent fair value for the revaluation of community land under clause 31 of AASB 116.

Councils buildings were valued by APV Valuers & Asset Management (APV). APV valuations were calculated by determining the Gross Current Replacement Cost and determining the amount of accumulated depreciation to reflect the level of service potential remaining in the asset. Assessed on the basis of replacement with a new asset having similar service potential and includes allowances for preliminaries and professional fees.


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$ ’000



Roads – Road surface, pavement, formation, major earthworksValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life/remaining life, asset condition, length

Councils roads infrastructure assets were segmented and componentised into the following categories (each representing a significant part of the overall asset):

· Road Surface· Pavement· Formation & Major Earthworks· Kerb and Gutter

Formation widths for sealed roads was assumed to be an additional 1m on each side of pavement width.

Kerb and GutterUnit rates for Kerb and Gutter are all based on average cost of previous works.

GPS logged to establish the length and extent of the network. Road terminuses (extent of Council maintenance activities) were taken as the measure of OC asset length. Seal widths (sealed roads) were taken from full condition assessment (undertaken by IMG Data and OC staff).

The pavement width of each segment was an additional 1m on each side of the Seal (e.g. Seal of 6 m was measured to have an 8m wide pavement).

Unit rates for formation, pavement and sealing were based on the Rawlinson’s; Construction Cost Guide 2015, Edition 18. These rates were verified against recent actual rates from OC road works. Unit rates are assumed to be for an undulating topography, as this represents the majority of road corridors in the Shire. The slightly steeper grades are assumed to be countered by the substantially longer corridors of flat to slightly undulating topography.


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$ ’000



BridgesValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life, asset condition, dimension and specifications (concrete/timber), bridge traffic

Councils bridge infrastructure assets were last valued on 30 June 2015.

Footpaths – Footways including cyclewaysValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life, asset condition, dimensions and specifications (concrete/bitumen)

Stormwater Drainage – includes pits, pipesValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life, asset condition, dimensions and specifications

Unit Rates for stormwater pits, pipes etc. were determined by estimates of previous work.

Condition assessment for bridges was provided by Bridge Check Australia Pty Ltd, valuation was based on observed defects, but does not include core sampling or tensile testing of any components.Bridge values were determined on the basis of a square metre (of deck) rate. This was in part because council does not possess sufficient detail on the individual components of individual bridges, or their respective conditions.

Footpaths assets were valued in-house as at 30 June 2015. Aerial imagery was used to calculate the length of Councils footpath/cycleway network combined with an extensive inspection program. In-house unit rates were developed using recent construction data providing a square metre rate which was then applied across the network. Condition data (captured through the inspection program) was then applied to each individual asset segment to provide a written down value.

A register of stormwater drainage was developed using in-house field observations and a valuation was carried out as of 30 June 2015. The level of capture is estimated to be around 85% to 95%, as by its nature Urban Stormwater drainage is difficult to locate and Oberon Council does not have complete records of drainage installed.


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$ ’000



Sewerage Network – Sewer pipes, pump stations, treatment plant, telemetry system, manholesValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life, asset condition, dimensions and specifications

Tip and Quarry Assets – Reinstatement, rehabilitation and restorationValuation Techniques: ‘Cost approach’Inputs Used (Level 3): Unit rates, useful life, asset condition, dimensions and specifications

Councils Sewer Network was valued by CPE Associates as at 30 June 2012. The valuation was based on the NSW Office of Water’s NSW Reference Rates Tables issued in July 2012, a supplement to the former Ministry of Energy and Utilities’ 2003 document NSW Reference Rates Manual: Valuation of Water Supply, Sewerage and Stormwater Assets. Valuations in the updated tables are for June 2012.

CPEa conducted a field survey, involving a physical inspection of the ground-level facility assets in the system such as treatment plants, pumping stations and effluent reuse reservoir.

The object of the survey was to uncover any evidence that will challenge the default useful life for that asset class such as corrosion (or lack of), obvious mechanical/electrical defects or structural damage. Field survey sheets were completed and a photographic record also was made.


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Oberon Council



$ ’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

Purchases (GBV)Disposals (WDV)Depreciation and impairment

Closing balance – 30/6/16

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


Plant and equipment

Office equipment

Furniture and fittings

Operational land

Community land

Land improveme

nts BuildingsOther

structures

339 36,583 8,476 5,274 16,005 684

– 283

– (21) – (59) (175)

751

47

(156) – – (156) – – –

45 31 –

– –

(720) (5) (6) – (986)

1,456 (228) – –

422

457

6,222 26 5,274 36,999 8,476 7 392

Total

5,566 16 34 5,274 36,878 449

– – – – (572) (9) – –

8,476 16,606

16,180

– –

– (228) 1,456 – – – – – – –

(8) (57) (426) (35) (1,107)

– – (25)

20 5,738

– – (25) – 392 –


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Oberon Council



$ ’000

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

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


Purchases (GBV)Depreciation and impairment


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


Land under roads

Bulk earthworks Roads Bridges Footpaths

Street furniture

Kerb and gutter

Stormwater drainage

31,627 8,363 163,022 10,073 2,927 3,692 1,730 7,337 228,770

– 46 – – – 5,367 – – (1,545) (107) (21) (155) (21) (117) (1,966)

225,255

– – 4,860 – – – – – 4,860 –

8,363 31,627 155,928 10,283

Total

2,894 3,998 1,770 7,486 222,349

8,363 159,246 10,180 2,874 3,847 1,751 31,627

– (1,541) (103) (20) (152) (20) (118) (1,953)

– – – – 28 – – 86 114 – – 5,321

7,368


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Oberon Council



$ ’000

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

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


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


Transfers from/(to) another asset classPurchases (GBV)Depreciation and impairmentOther movement


(5). Highest and best use

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

Water supply

Sewerage network

Swimming pool

Open space / recreation

assetsOther

assets Tip Quarry

19,192

(1,514) 871 – (2,385) – – – – – – (121) (39) (29) (10) (1) (2)

– 8,339 714 38 18 9,159 881 43

(379) (177)

159 – 9 – – 8 – – 107 – – – 104 – –

90 30 25

– 11,558 512 660 52 20 21 20,350 7,527

Total

– 57 44 398 10 9 – – 518

– 113 174 39 – – – – 326 – (172) (120) (29) (31) (21) (1) (1) (375)

920 639 40 19 20 20,819 – 7,525 11,656


Oberon Council


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 benefitsOther long-term benefitsTermination benefits

Total

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

Oberon ConcreteOberon Earthmoving 511 – At arms length market value – –

50 – At arms length market value – –$'000 $'000 $'000 $'000

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

Terms and conditions Provisions Doubtfultransactions balance for doubtful debts

41

1,374

Value of Outstanding

Actual2017

1,034299

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Oberon Council


Note 30. Council information and contact details

Principal place of business:137-139 Oberon StreetOBERON NSW 2787

Contact detailsMailing address: Opening hours:PO Box 84 8.30am to 4.30pmOBERON NSW 2787 Monday to Friday

Telephone: 02 6329 8100 Internet: [email protected]: 026329 8142 Email: [email protected]

Officers Elected membersGENERAL MANAGER MAYORGary Wallace Kathy Sajowitz

RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSLynette Safranek Mick MacKechnie

Kerry GibbonsPUBLIC OFFICER Clive McCarthyLynette Safranek Mark Kellam

Andrew McKibbinAUDITORS Don CapelCrowe Horwath Brenda Lyon157 George Street Ian DoneyBATHURST NSW 2795

Other informationABN: 13 632 416 736

Page 76

Mr Gary Wallace

General Manager

Oberon Council

PO Box 84

OBERON NSW 2787

12 October 2017

Dear Mr Wallace

Client Service Report

for the year ended 30 June 2017

Oberon Council

We have audited the Oberon Council (the Council’s):

general purpose financial statements (GPFS)

special purpose financial statements (SPFS) for the council’s:

- Declared Business Activities

- Special Schedule No.8 ‘Permissible Income Calculation (the Schedule).

This Client Service Report (the Report) informs the General Manager and the Mayor of audit findings

relevant to them in their role as one of those charged with governance. It gives you and the Mayor the

opportunity to assess the audit findings, before signing the representation letter and the Statements by

Council and Management required for the GPFS and SPFS under section 413 (2)(c) of the Local

Government Act 1993 (the Act). We will inform you if significant new matters are found while finalising

the audit.

An audit is designed to obtain reasonable assurance the financial statements are free from material

misstatement. It is not designed to identify all matters of governance interest, nor is it conducted to

express an opinion on the effectiveness of internal control. Matters of governance interest identified

during the audit are included in the Report.

AUDIT OUTCOME AND REPORTS

Audit result

We are likely to express an unmodified opinion on the GPFS and the SPFS for Declared Business

Activities and the Schedule. The Independent Auditor’s Reports will be signed after the signed

financial statements and management representation letter are received.

Contact: Chris Clayton

Phone no: 9275 7248

Our ref: D1726096/1773

Our insights inform and challenge government to improve outcomes for citizens

2

Report on the Conduct of the Audit

We will issue the Report on the Conduct of the Audit required by section 417(3) of Act at the same

time as the Independent Auditor’s Report. The Report on the Conduct of the Audit will incorporate

comments we consider appropriate, based on the audit of the Council’s financial statement.

Auditor-General’s Report to Parliament

The 2018 Auditor-General’s Report to Parliament will incorporate the results of the audit.

Management Letter

I issued an Interim Management Letter in August 2017 detailing matters identified during my interim

audit. These matters are not significant to be included in this report.

A Final Management Letter will be send to you in November 2017 detailing matters identified during

the final phase of my audit.

AUDIT FINDINGS

Matter of Governance Interest

Privileged User Access – Civica Authority

Australian Auditing Standards require the audit team to gain an understanding of Council’s information

systems, specifically those supporting business processes relevant to financial reporting. An effective

IT control environment helps support the continued reliability of system based information used in our

audit.

We identified privileged user access control observations in relation to Civica Authority, which will be

reported in our management letter.

Key issues and audit risks

The Client Service Plan, sent on 27 April 2017, identified key issues affecting the Council and how the

audit team planned to respond to them. The results of the audit work are detailed below.

Factors Affecting Business/

Description of Risk Audit Result

Revaluation of water and

sewerage assets

Council revalued its water and sewer assets and recorded a $1.5 million

decrement to its revaluation reserves. As part of our audit we reviewed:

the revaluation results and satisfied ourselves that the valuation

assumptions are reasonable

management’s reassessment of the remaining useful lives

confirmed the valuation complies with the requirements of Australian

Accounting Standards

reviewed the adjustments made to Council’s fixed assets records and

general ledger

confirmed Council made all the necessary disclosures in its financial

statements

Our testing did not identify any exceptions.

Assessing the fair value of the

Council’s assets

We reviewed management’s procedures for assessing fair value at

reporting date. We considered externally available information to be

satisfied the carrying amount materially reflects fair value.


3

Factors Affecting Business/

Description of Risk Audit Result

Extending Related Party

Disclosures to not-for-profit

public sector entities

The financial statements included related party disclosures. The audit team

reviewed the adequacy and accuracy of disclosures and did not note

reportable misstatements.

Capital expenditure For a sample of projects, the audit team:

reviewed the Council’s dissection between recurrent and capital costs

reviewed the Council’s componentisation of the project costs into

separate assets

examined the timeliness of asset additions to the fixed asset register

ensured replaced assets are removed from the asset register.

Our testing did not identify any exceptions.

Borrowings for sewer upgrade Council did not obtain any additional borrowings during 2016-17.

Misstatements

Auditing Standards require matters of governance interest and significant misstatements, identified

during the audit, to be brought to your attention.

General Purpose Financial Statements (GPFS)

The GPFS contained misstatements. The Appendix lists and explains the nature and impact of these

misstatements on the GPFS.

Table One reports uncorrected misstatements.

Special Purpose Financial Statements (SPFS)

Declared Business Activities

The SPFS for Declared Business Activities did not contain misstatements.

Special Schedule No 8 ‘Permissible Income Calculation’ (the Schedule)

The Schedule did not contain misstatements.

Compliance with legislative requirements

The Client Service Plan and Terms of Engagement explain that audit procedures are targeted

specifically towards forming an opinion on the Council’s financial statements. This includes testing

whether the Council has complied with legislative requirements that may materially impact the

financial statements. The matters below are reported in this context.

Audit procedures did not identify reportable findings on the Council’s compliance with legislative

requirements.


4

THE AUDIT PROCESS

Management co-operation

The audit team appreciated the co-operation and help received from the Council’s staff, in particular

the finance team including Lynette Safranek and Theresa Boyd.

Next year’s audit

We welcome your comments on the audit process.

Yours sincerely

Chris Clayton

Director, Financial Audit Services

cc: Ms Kathy Sajowitz, Mayor


5

APPENDIX ONE – GENERAL PURPOSE FINANCIAL STATEMENTS

Table One: uncorrected disclosure deficiencies

Uncorrected disclosure deficiencies

The following uncorrected disclosure deficiencies were identified and discussed with management.

Management believes the effect of not correcting these deficiencies is immaterial to the financial

statements taken as a whole. The audit team agrees with management’s determination and does not

consider the uncorrected deficiencies significant enough to modify the opinion in the Independent

Auditor’s Report. However, management must attach these uncorrected misstatements to the

Representation Letter. These misstatements were discussed with Ms Lynette Safranek on

11 October 2017.

AASB reference Disclosure title Description of disclosure deficiency

AASB 128 Joint ventures and

associates

Council has not disclosed its investment in the Upper

Macquarie County Council. Given its voting power

(25 per cent), Council has significant influence and it should

be disclosed in the financial statements. The Audit Office

acknowledges there has previously been inconsistent

treatments between the four constituent councils.

INDEPENDENT AUDITOR’S REPORT

Report on the general purpose financial statements

Oberon Council

To the Councillors of Oberon Council

Opinion

I have audited the accompanying financial statements of Oberon 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).

DRAFT

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 10 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.

DRAFT

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


[Date]

SYDNEY

DRAFT

Councillor Kathy Sajowitz Mayor Oberon Council PO Box 84 OBERON NSW 2787

[Date]

Dear Mayor

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

Oberon Council

I have audited the general purpose financial statements of Oberon Council (the Council) for the year ended 30 June 2017 as required by s415 of the Local Government Act 1993 (the Act).

I 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

$m $m %

Rates and annual charges revenue

5.1 4.9 4.1

Grants and

contributions revenue 6.6 6.4 3.1

Operating result

for the year 4.4 4.0 10.0

Net operating result

before capital amounts 4.0 3.8 5.3

Contact: Chris Clayton

Phone no: 9275 7248

Our ref: D1726510/1773

DRAFT


2

Council’s operating result for the year ($4.4 million) was $0.4 million more than the previous financial year. Commentary on the council’s operating result:

Rates and annual charges slightly increased by $0.2 million (4.1 per cent) to $5.1 million. The increase is mainly due to:

the pegging rate increase (1.8 per cent)

the special rate increasing from 6.5 per cent to 6.9 per cent (0.4 per cent)

additional rateable properties (1.1 per cent).

Grants and contributions revenue increased mainly due to receipt of 2017-18 financial assistance grant instalments from the Commonwealth Government in 2016-17.

STATEMENT OF CASH FLOWS

Council’s net cash flows from operating activities has steadily increased over the past three years.

Council’s cash and cash equivalent balance reflects the ongoing investment of operating cash flow surpluses into infrastructure asset renewals.

In addition to cash and cash equivalents, Council had $11.8 million longer-term investments held at 30 June 2017 ($12.0 million at 30 June 2016).

FINANCIAL POSITION

Cash and Investments

Restricted Cash and Investments

2017 2016 Commentary

$m $m

External restrictions 6.7 7.4 Externally restricted cash and investments are restricted in their use by externally imposed requirements. The decrease of external restrictions is due to the use of the Local Infrastructure Renewal Scheme (LIRS) loan.

Internally restricted cash and investments have been restricted in the use by resolution or policy of Council to reflect identified programs of works and any forward plans identified by Council. The internal restrictions have significantly increased due to the receipt of 2017-18 financial assistance grant instalments ($1.2 million) in 2016-17 and a boost to ELE funding to support 75 per cent of the provision.

Internal restrictions 6.0 4.5

Unrestricted 0.7 0.1

Cash and investments 13.5 12.1

Debt

At 30 June 2017, Council recognised $4.2 million in loans (30 June 2016: $4.6 million). Council’s loans are secured over the general rating income of Council.

0

2

4

6

8

10

2015 2016 2017

$ m

illio

n

Year ended 30 June

Statement of Cash Flows

Net cash flow Cash and cash equivalents

DRAFT


3

PERFORMANCE RATIOS

The definition of each ratio analysed below (except for the ‘building and infrastructure renewals ratio’) is included in Note 13 of the Council’s audited general purpose financial statements. The ‘building and infrastructure renewals ratio’ is defined in Council’s Special Schedule 7.

Operating performance ratio

Council’s operating performance ratio exceeded the industry benchmark over the past two years, with a marginally unfavourable result for the year ended 30 June 2015 (negative 0.3 per cent).

Council ratio reflects the special rates variation received and RMS private works performed.

The ‘operating performances 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 exceeded the industry benchmark over the past three 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.

0

5

10

15

20

25

2015 2016 2017

Ratio%

Year ended 30 June

Operating performance ratio

Operating performance ratio Industry benchmark > 0%

58

60

62

64

66

2015 2016 2017

Ratio%

Year ended 30 June

Own source operating revenue ratio

Own source operating revenue ratioIndustry benchmark > 60%

DRAFT


4

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.

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.

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.

Interest is charged on this outstanding balance and council does not consider any provision is necessary for uncollected rates and annual charges.

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.

0

1

2

3

4

5

2015 2016 2017

Ratiox

Year ended 30 June

Unrestricted current ratio

Unrestricted current ratio Industry benchmark > 1.5x

0

5

10

15

20

25

30

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 ratioIndustry benchmark < 10%

DRAFT


5

Cash expense cover ratio

As at 30 June 2017, Council had the capacity to cover 12 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.

OTHER MATTERS

Council Entities

Council’s interest in ‘council entities’ include:

Statewide Limited

StateCover Limited

Upper Macquarie County Council.

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 (KMPs).

nature of their related party relationships

amount and nature of their related party transactions, outstanding balances and commitments and outstanding balances (including commitments). Note these are where transactions are not at arms length. All related party transactions are reported as being at arms length.

0

5

10

15

2015 2016 2017

Ra

tio(m

on

ths)

Year ended 30 June

Cash expense cover ratio

Cash expense cover ratioIndustry benchmark > 3 months

DRAFT


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 Director, Financial Audit Services

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

DRAFT

Oberon Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2017

0

SPFS 2017

page 1

Oberon Council

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).

5

Page

34

n/a

2

(iv)

7

n/a6

(i)

(ii)

16

(iii)

SPFS 2017

Oberon Council


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

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

i the NSW Government Policy Statement ‘Application of National Competition Policy toLocal Government’,

i the Division of Local Government Guidelines ‘Pricing and Costing for Council Businesses –A Guide to Competitive Neutrality’,

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

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

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

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

i accord with Council’s accounting and other records.

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

Signed in accordance with a resolution of Council made on 17 October 2017.

Kathy Sajowitz Ian DoneyMayor Councillor

Gary Wallace Lynette SafranekGeneral manager Responsible accounting officer

page 2

SPFS 2017

page 3

Oberon Council

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 chargesCalculated 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/less: prior period adjustmentsPlus 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

(88)

17 (71)

– (71)

–

– –

Actual 2017

–

– –

4,969

-1.0%295

(71)

5,040 –

(71) (17)

–

Actual 2016

456 1,021

– 8

11 –

– 1,497

296 –

310 182 641

– –

156 1,585

– –

100

– –

5,040

4.3%–

247 (12) 234 117

– 202

1,419 335

12 347

– 347

(100)

247

4,693 –

– –

466 1,277

– –

11 –

– 1,754

221 –

145 176 676

–

–

SPFS 2017

page 4

Oberon Council

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 impairmentCalculated 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/less: prior period adjustmentsPlus 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

– 118

– –

394

16 410

3.3%–

– 410

(118)

291

5,432 –

5,842

145 –

152 139

676 350

Actual 2016

–

Actual 2017

– 15 11

714 304

– –

32

– 194 657

22 435

11 –

– 1,061

–

–

219 –

119 125

291 (16) 276 138

311

5,842

–

– 435

(124)

–

– –

124

–

145

1,051

–

–

– 6,276

4.3%–

311 (22) 289

– 211 648 413

– –

SPFS 2017

page 5

Oberon Council

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

$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal current assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesBank overdraftPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

– –

8,334

4,163

9,132

8,365

–

–

– –

– 31 31

31 31

–

31

– –

8,334 31

8,334

Actual 2016

Actual 2017

9,163

–

– 7,871

–

–

4,969

–

–

370 164

– – – –

– –

8,685 7,871

–

8,685

– – 109 330

478

–

– – 494

– – –

–

– –

9,132 –

9,132

3,293 5,040

–

– –

– –

SPFS 2017

page 6

Oberon Council

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

$ ’000

ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal current Assets

Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsTotal non-current assetsTOTAL ASSETS

LIABILITIESCurrent liabilitiesBank overdraftPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities

Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYRetained earningsRevaluation reservesOther reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

– – –

–

–

14,333

31

– –

14,303

– – –

104 111 500

2016

– –

9,629 12,095

–

– –

2,151

2017

–

Actual Actual

1,628

–

–

–

31

– –

–

30 31 30

500

2,755 2,239

– –

12,384

–

6,276

–

– –

6,077 8,462

12,353

–

14,303

14,303

1

31 – 1

5,841

12,353

12,353

– –

– –

9,629 12,095

– –

SPFS 2017

page 7

Oberon Council


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 133

Note Page

1

2

8

11

SPFS 2017

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

page 8

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) None Category 2 (where gross operating turnover is less than $2 million) a. Oberon Council Water Supply Comprising the whole of the water supply activities and net assets therein servicing the town of Oberon, which is established as a separate Special Rate Fund. b. Oberon Council Sewerage Service Comprising the whole of the sewerage reticulation & treatment activities and the net assets therein servicing the town of Oberon, which is established as a separate Special Rate Fund. 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.

SPFS 20177

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

page 9

(i) Taxation-equivalent charges Council is liable to pay various taxes and financial duties. Where this is the case, they are disclosed as a cost of operations just like all other costs. However, where Council does not pay some taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all Council-nominated business activities and are reflected in Special Purpose Financial Statements. For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities): Notional rate applied (%) Corporate income tax rate – 30% 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/is not 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.

SPFS 20177

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

page 10

(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. 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 11

Oberon Council

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

(iv)

(iii)

(i)

(iv)

(iii)

(iii)

(i)

(ii)

(ii)

(v)

(i)

(vi)

– (88,281) 234,366

YES

YES

– 175,700

YES

(iv) NO

NO

YES

(ii)

YES

YES

–

–

–

2017

–

–

40,470

321,785

4,047

–

YES

YES(v)

(vi)

NO

SPFS 2017

page 12

Oberon Council


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

$’000NWI F9

2017

1,506

NWI F4 %

8,650

$’000

69.12%

NWI F1

NWI F26 – $’000

NWI F11

NWI F17 %

NWI F14 $’000

-0.68%

128

1,382 $’000

SPFS 2017

page 13

Oberon Council


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

275,554 –

(v)

(iii)

(i)

(ii)

(a)(b)

(vi)

(iv)

–

(i)

(iv)

(iii)

(ii)

(iii)

289,097

(i)

(ii) 37,110

250,900

(iv)

(c)

2017

YES

37,110

NO

–

YES

YES

815,551

YES

YES

–

3,711

YES

NO

YES

144,549

NO

YES

SPFS 2017

page 14

Oberon Council


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)

NWI F16 $’000

NWI F27

NWI F18

NWI F15 $’000

%

$’000

NWI F2

NWI F10

NWI F12

$’000

$’000

1.99%

172

%

– $’000

0.00%

NWI F19

NWI F21

NWI F20

%

NWI F3 $’000 2,556

NWI F8 % 0.87%

2017

$’000

–

9,352

1,051

4.40%

489

43

SPFS 2017

page 15

Oberon Council


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

-14.06%

2017

22

> 100

364

40-

$’000

NWI F25 $’000

NWI F24

NWI F23

NWI F22 %

364


Report on the special purpose financial statement

Oberon Council


Opinion

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

Oberon Council’s (the Council) Declared Business Activities, which comprise the statement of financial

position of each Declared Business Activity as at 30 June 2017, the income statement of each

Declared Business Activity for the year then ended, notes comprising a summary of significant

accounting 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

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

the Council’s declared Business Activities as at 30 June 2017, and their financial performance for the

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

Local Government Code of Accounting Practice and Financial Reporting (LG Code).

My opinion should be read in conjunction with the rest of this report and in particular, the Emphasis of

Matter referring to the basis of accounting.

Basis for Opinion


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




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

Professional Accountants’ (APES 110).


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.

DRAFT

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 10 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



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


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

material misstatement, whether due to fraud or error




Misstatements can arise from fraud or error. Misstatements are considered material if, individually or

in aggregate, they could reasonably be expected to influence the economic decisions users take

based on the financial statements.

A description of my responsibilities for the audit of the financial statements is located at the Auditing

and Assurance Standards Board website at:

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




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

statements on any website where they may be presented

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

Chris Clayton


[Date]

SYDNEY

DRAFT


Oberon Council SPECIAL SCHEDULES for the year ended 30 June 2017

0

Special Schedules 2017

page 1

Oberon Council

Special Schedules for the year ended 30 June 2017

Contents

Special Schedules1

Net Cost of Services

Statement of Long Term Debt (all purposes)Statement of Internal Loans (Sect. 410(3) LGA 1993)

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

Sewerage Service Operations – incl. Income StatementSewerage 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 20

Special Schedule 6Special Schedule 5 9

Page

2

4

5

Special Schedule 1

Special Schedule 2(a)n/a

Special Schedule 4

Special Schedule 2(b)

Special Schedule 38


page 2

Oberon Council

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

$’000

Governance

Administration

Public order and safety

Beach controlEnforcement of local government regulationsAnimal controlOtherTotal 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

–

– –

–

–

246

52 3

1,564

–

1,063 628

Expenses from. continuing. operations. Non-capital.

–

–

– 10

Capital.

Income fromcontinuing operations

–

1

– –

763

146

773

202

194

–

–

–

–

–

–

(45) (164)

(716) (79)

(1) –

–

–

48

294

1,493

646

858

652

– – (605)

– (4)

194

4

87 –

945 –

–

135

Function or activity

–

Fire service levy, fire protection, emergency services

–

5

79 962

Net cost.of services.

– –

(529)

(112)

(305) –

450 – – (450)

(77) – –

6

–

10

109

75

167

164

45 –

–

– –

1,298

93

58 122

587

1,078 –

–

(6) –

(30)

4

(71)

(1,004)

(115)

6 81

–

435

(77)

(109)

175 –

–

– (202)

(58)

–


page 3

Oberon Council

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 areasFootpathsAerodromesRMS - State Roads not controlled by CouncilOther transport and communicationTotal transport and communication

Economic affairsCamping areas and caravan parksVisitor Information CentreOther 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 (excluding externally restricted assets) and interest on overdue rates and annual charges

2,208 3,595 – 1,387

203 14 – (189)

Income fromcontinuing operations

– – –

48

33

–

15,018

–

6,625 6,696

489 253

19,020

350

26 34

7,356 15,018

310

–

11,664

–

–

434

–

–

137

– –

–

–

471

4

2,319

– 2 –

–

15

– –

239

Function or activity

17

–

–

38

17 – –

–

–

–

–

–

–

–

24

– –

– 1,099 – –

127

–

24

–

52 – 472 1,307

–

–

Non-capital.

–

Expenses from. continuing. operations.

402

13 318

63

23

9 –

770 915

– –

211 147

426

–

–

64

(2)

(270)

– (54)

–

(971)

– 14

–

Capital.

–

–

–

–

– – 405

434

344 (509)

– (15)

4,435

–

(2,921) (139)

(7)

310 (1,711)

57

–

(4)

–

–

–

7,356

186 –

–

(153) –

116

–

–

(7)

(13)

(92)

Net cost.of services.

–

–

(52)

(7)

(25)

899

– (388)

Share of interests – joint ventures and associates using the equity method


page 4

Oberon Council

Special Schedule 2(a) – Statement of Long Term Debt (all purpose) 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

– –

427

–

4,201

– Total long term debt – –

Total debt

–

4,628

–

– 426

–

446

–

4,202

– – –

3,756

–

184 –

–

Other long term debtRatepayers advances – – –

– Government advances – Finance leases –

– – –

Financial institutions 427 4,201 4,628 – –

– –

–

– 426

426

427 4,201 Total loans–

4,628 Other

Other State Government – – – –

NSW Treasury Corporation

Public subscription – –

– – –

Debt redemption during the year

From revenue

Sinking funds

446 –

184

184

3,756

446 3,756 – – –

Current Non-current Total

– –

– –

–

–

– –

4,202

–

4,202

–

– –

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

Oberon Council

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 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

Actuals 2016

–

1,585 1,419

Actuals

91 55 72

2017

–

150

–

182

–

5 –

–

– –

89 –

– –

–

234

–

– – –

–

–

–

–

273 50 57

676

– –

646 107 120

176

– –

– –

–

–

–

–

– – 20

– –

–


page 6

Oberon Council

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) 347

–

1,021 456

–

–

2016

1,766

–

–

Actuals

(71)

–

–

(71)

–

17

1,514

–

–

1,278

2017Actuals

8 –

465

–

347

12 –

–

– 11 11

–

–

– –

– –


page 7

Oberon Council

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)

– –

240 –

– ET4 ET

-$ 20,497$

– –

–

Actuals

–

57 53

– –

– 12 –

75

Actuals

1,097

–

–

–

57

–

128

–

2016

–

2017

–


page 8

Oberon Council

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

–

– –

8,650

370

68 –

Non-current

–

–

–

–

–

41

–

–

370 –

68

8,685

–

– –

–

478

8,650

– – – –

–

– –

4,969

8,650

13,258 (4,608)

4,163

9,132

9,132

31

31

–

41

–

–

9,163

–

8,685 447

–

– – –

–

31

– –

– –

–

35

– –

35

–

– –

31


page 9

Oberon Council

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

2

25 –

6

125 –

–

5 –

183

–

43

261

–

– – –

– –

24

20

– –

– –

–

–

– – –

– –

– – –

3

648 657

110 106 32 6

44

31 – –

103

37

139

Actuals 2017

Actuals 2016

–


page 10

Oberon Council

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)

580

Actuals

616

Actuals 20162017

275

22 16

– – – –

– –

–

293 98 95

–

11 11 – –

1,083 1,067

–

410

–

–

–

435 410

435

– –

32 15

10 74

– –

– – – –


page 11

Oberon Council

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)

4 ET

995

–

–

– –

–

–

–

–

19,503$

–

189 53

–

–

– –

Actuals Actuals 2017 2016

–

– ET

-$

44 43

44 34 – –

9

–

–


page 12

Oberon Council

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

2,724

–

–

– –

– –

–

31 –

31

– –

12,353

31

31 – –

–

–

6,276

9,352

20,449 (11,097)

6,077

12,353

9,629

–

–

–

–

12,384

9,367

9,629

9

–

–

–

–

– – 262

9,367

2,755

–

262

28 9 –

–

–

–

–

67

–

– –

–

–

28 –

Actuals

– – –

– –

Non-current Current

2,651 – –

–

–

Total Actuals

– –

–

2,651

67

Actuals


page 13

Oberon Council

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

Oberon Council

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

$’000

0%0%

82.5%

0%

80%

60% 0%

1,108

0%

5

0.0%

8.8%– 8.8%

32.6%

0.0%50%

0%10%

Council Works Depot 25 20 14 7 1,901 2,219 35% 35% 30% 0%

10%

0%

0%60%

4 2 598 690 60% 40% 0%

Buildings Council Offices/Admin 15 30 12 6 1,663 1,941 65% 20% 15% 0%

70%50%

25%

2,047 750 264,267 3,846

45%

152,318

2,054

Kerb & Gutter 150 – – 1 2,937

Street Furniture

500

– 3,813 1,729 10% 30%

Footpaths 5

6.2%

10%20 15

100%– – 1,100 1,100

60,121 27,061 33,379

0.0%

684

0%

207,462

10%10,072

722 0.0%

10%90%

10% 90%

15%15%5%

60%

687 20%

80%

858

3,429 30 20

0%16

– –

5

80%

Aged Care Facilities

Other BuildingsSpecialised Buildings

3

0%0%

36.3%

40%50%

4

14

Other

Sub-totalRecreational Facilities

589 –

20

80%20%

2,775 40%

2

2 Emergency Services

50

949 504

4,387

Estimated cost

agreed level ofservice set by

Council

– –

Libraries 2 735

Amenities/Toilets 10 10

Asset class

to bring assetsEstimated cost

2016/17to bring to the 2016/17 Gross

standard maintenance

30

Asset category

Cultural Facilities 3 3

Required Actual replacementcost (GRC)maintenancea

to satisfactory21

5%

0.0%

Other structures

Sub-total

25%4 10 –

8

8

10

18,683 111

5

110

– 5 – – 90 100%

60%80%2

632

2,378 2,937 3,752

16,005

599 85

– – 100

– Roads

929 Sealed Roads Structure –

929

– –

Bridges

Sealed Roads Surface

– 110,588

14

–

–

–

structures Water Tanks –

5%

Unsealed roads

2

47,982

Sub-total–

20

61.0%20

– 10

15 145 62 57.5%

0%

0%

–

5

–

10,746 3,426

0%

3,711 6.4% 0.0%

0%

Assets in condition as a percentage of gross replacement cost

Net carryingamount

588


page 15

Oberon Council

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

$’000

2

5,334 30% 0%70%

0%

0%

1cost (GRC)

0.0%9.3%66.9%12,915

20%

100%

5to satisfactory

21.8%47

0%1,315 14%14%

25%

network

3,831 6,178 70% 15% 15%

Sewerage Equipment 5,291 173 50 25

Treatment40%

–

733

100 Reservoirsnetwork

Manholes

Water supply Mains 100

–

standard maintenancea 3 4

Estimated costto bring assets

70 64 59

amount

– 29 29

ActualRequired2016/17

agreed level ofmaintenance

Net carrying replacementAsset class

2016/17

40%1,374

Gross

0.0%

298

Sub-total

6 342 74%

23.8%

969

Estimated costto bring to the

service set byCouncil

Asset category

130 65 –

265

Pumping Stations

100 88

Other Meters

96

94

3 6

– 8,340 147 300

3

1,070 13.0%

16 32

1,036 7,315 14% 20% 30% 36% 0%71% 15%1,028

6,422 Sub-totalPipes

9,160

0%758 3,722

0%61%

0%

19.8%20,228

14%12%

45.4%

122

2,122

160

0.0%10,570

1,527 8,053

–

162



page 16

Oberon Council

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

$’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…

replacement

29

Required4cost (GRC)

8,683 0%

maintenance 3

drainage

5

40

to satisfactorystandard

–

to bring to the

Inlet and Junction Pits

Net carryingamount

1,936

Estimated cost

7 7 – 1,479

7,337

1,595 Open space/

37 10,619 Sub-total 68.6%

20

maintenanceaagreed level ofservice set by

Actual

20%

2016/17

21

–

20.7%

Council

Gross

Stormwater

1,600 100.0%

5,858

0.0% 0.0% 0.0% 0.0%1,595 0%

– 37

76% 24%

Asset class

Swimming pools –

0.0%10.6%

2016/17

3 3

5

0%67% 13%

100%

Estimated cost

– 3 3

to bring assets

0.0%

1,600

Asset category

Stormwater Pipes

assets Sub-total

20

recreational

29

–

2,464 2,311 329,034 37.7% 54.1% 7.4% 0.8% 0.0%1,993


4321 6

10987

250,583 TOTAL – ALL ASSETS 9,253


Oberon Council

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/performancecapacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.increases capacity/performance.

1,993

2,311

329,034

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

Indicator Prior periods

9,253 4.22% 3.45% 3.58%219,215

2017 2017 2016 2015

5,687 224.78% 214.45% 165.91%2,530

AmountsBenchmark

>= 100%

< 2%

0.94 0.90 0.852,464

0.61% 0.00%

> 1.00

page 17


Oberon Council



Benchmark: ――― Maximum <2.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

Benchmark: ――― Minimum >1.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #25 Ratio is outside benchmark

As a result of the Special Rates Variationand the LIRS, council is on track to

improving this ratio


2016/17 Ratio 4.22%

Council continues to remain on track toimproving this ratio with the introduction of

the Special Rates Variation and LIRS.


2016/17 Ratio 0.94 xCompares actual vs.required annual assetmaintenance. A ratioabove 1.0 indicatesCouncil is investing

enough funds to stopthe infrastructurebacklog grow ing.

Purpose of assetrenewals ratio

This ratio show sw hat proportion thebacklog is against

the total valueof a Council’sinfrastructure.

To assess the rate atw hich these assetsare being renew ed

relative to the rate atw hich they aredepreciating.

Purpose ofinfrastructurebacklog ratio

Purpose of assetmaintenance ratio

Purpose of agreedservice level ratio


2016/17 Ratio 224.78%

Again Council is on track to improving thisRatio with the Special Rates Variation and

LIRS.


2016/17 Ratio 0.61%

This ratio provides asnapshot of the

proportion ofoutstanding renew alw orks compared to

the total value ofassets under

Council's care andstew ardship.

With the introduction of the Special RatesVariation and LIRS in the last couple ofyears Council is working hard to reduce

this ratio.

124%166%

214% 225%

0%

50%

100%

150%

200%

250%

2014 2015 2016 2017

Ratio

%

1. Infrastructure renewals ratio

12.2%

3.6% 3.5% 4.2%

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%

2014 2015 2016 2017

Ratio

%

2. Infrastructure backlog ratio

1.020 .85 0 .90 0 .94

0.00

0.200.400.600.801.001.20

2014 2015 2016 2017

Ratio

(x)

3. Asset maintenance ratio

0.00%

0.61%

0%

0%

0%

1%

1%

2016 2017

Ratio

%

4. Cost to bring assets to agreed servicelevel

page 18


Oberon Council


$ ’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/performancecapacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.increases capacity/performance.

0.00% 0.00% 254.79%

prior period: 0.00% 0.00% 242.75%

Water Sewer General (1)

2017 2017 2017

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

3.60% 87.92% 0.45%

2.05% 7.55% 0.07%

prior period: 1.99% 8.57% 3.21%

0.92 0.50 0.96

prior period: 1.10 0.43

Benchmark

>= 100%

< 2%

> 1.00

0.91

page 19


page 20

Oberon Council

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

(0) 4

Calculation Calculation2016/17 2017/18

– –

(0) 4

3,792 4,053

3,792 4,049

– (31) (0)

247 263

(31) (0)

– – – –

3,823 4,053

0.00% 0.00%

(15)

6.90% 6.95%1.80% 1.50%

3,594 3,792 (3) (2)

3,591 3,790


Special Schedule No. 8

Oberon Council


Opinion

I have audited the accompanying special purpose financial statement comprising the reconciliation of

total permissible general income (Special Schedule No. 8) of Oberon Council (the Council) for the year

ending 30 June 2018.

In my opinion, Special Schedule No. 8 of Oberon 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


standards are described in the ‘Auditor’s Responsibilities for the Audit of Special Schedule No.8’




• 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.

DRAFT

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 10 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



appropriateness of using the going concern basis of accounting.

Auditor’s Responsibility for the Audit of Special Schedule No. 8


• obtain reasonable assurance whether Special Schedule No. 8 as a whole is free from material

misstatement, whether due to fraud or error




Misstatements can arise from fraud or error. Misstatements are considered material if, individually or

in aggregate, they could reasonably be expected to influence the economic decisions users take

based on 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.




• 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.

Chris Clayton


[Date]

SYDNEY

DRAFT


YE 1617 GPFS - Oberon Council

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