Central Darling Shire Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2018
“Realising quality opportunities for all in theCentral Darling Shire through Effective Leadership,
Community Involvement and Facilitation of Services”
Financial Statements 2018
Central Darling Shire Council
General Purpose Financial Statements for the year ended 30 June 2018
Contents
1. Understanding Council’s Financial Statements
2. Statement by the Administrator 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
21 Reid StreetWilcannia NSW 2836
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, andprinciples 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).
Through the use of the internet, we have ensured that our reporting is timely, complete and available at minimumcost. All press releases, financial statements and other information are publicly available on our website:www.centraldarling.nsw.gov.au.
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4
67
5
2
3
Central Darling Shire Council is constituted under the Local Government Act 1993 (NSW) and has its principal place of business at:
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9
6366
page 1
Financial Statements 2018_
Central Darling Shire Council
General Purpose Financial Statements for the year ended 30 June 2018
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 2018.
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 StatementSummarises 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 IncomePrimarily records changes in the fair value of Council's Infrastructure, Property, Plant and Equipment.
3. The Statement of Financial PositionA 30 June snapshot of Council's financial position indicating its assets, liabilities and “net wealth”.
4. The Statement of Changes in EquityThe overall change for the year (in dollars) of Council’s “net wealth”.
5. The Statement of Cash FlowsIndicates 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 statementspresent fairly the Council’s financial performanceand position, and
2. their observations on the conduct of the audit,including commentary on the Council’s financialperformance 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.
Financial Statements 2018
Central Darling Shire Council
General Purpose Financial Statements for the year ended 30 June 2018
Statement by the Administrator 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:
the Local Government Act 1993 (NSW) (as amended) and the regulations made thereunder,
the Local Government Code of Accounting Practice and Financial Reporting.
To the best of our knowledge and belief, these financial statements:
present fairly the Council’s operating result and financial position for the year,
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 18 December 2018.
Greg WrightAdministrator
Greg Hill Jacob PhilpGeneral Manager Responsible Accounting Officer
the Australian Accounting Standards and other pronouncements of the Australian AccountingStandards Board
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page 3
Financial Statements 2018
Central Darling Shire Council
Income Statement for the year ended 30 June 2018
$ ’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 assets
Total income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationOther expenses
Total expenses from continuing operations
Operating result from continuing operations
Net operating result for the year
Net operating result attributable to Council
Net operating result for the year before grants andcontributions provided for capital purposes
1,267
23,547
56
25,323
5,832
unaudited
4,072 11,992
6,047
Original
3c,d
4c4b
5,335
346
3b
4a
3c,d
–
92 4,444
3,701 7,347
4d
22,280
1,102
1,998
Notes
3a
2018
68
9,486 5,500
22,733
2018
9,539 102 570
11,826
4,475 101
5,098
1,017
49
1,267
74 10,584 3,528
830
4,338
5,832 1,267
2017
1,878
86 466
5,832
19,491
9,573
1,211 1,494
–
10,062
2,014
6,047
Actual Actual budget
6,047
547
16,686
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This statement should be read in conjunction with the accompanying notes. page 4
Financial Statements 2018
Central Darling Shire Council
Statement of Comprehensive Income for the year ended 30 June 2018
$ ’000
Net operating result for the year (as per Income Statement)
Other comprehensive income:
Amounts that will not be reclassified subsequently to the operating result
Gain (loss) on revaluation of IPP&ETotal items which will not be reclassified subsequentlyto the operating result
Amounts that will be reclassified subsequently to the operating resultwhen specific conditions are metNil
Total other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income attributable to Council
2017
6,747
2018
1,267
Notes
5,832
4,431 915 7a
915 4,431
5,698
4,431
6,747
915
5,698
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This statement should be read in conjunction with the accompanying notes. page 5
Financial Statements 2018
Central Darling Shire Council
Statement of Financial Position as at 30 June 2018
$ ’000
ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesOtherTotal current assets
Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assets
TOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesBorrowingsProvisionsTotal non-current liabilities
TOTAL LIABILITIES
Net assets
EQUITYAccumulated surplusRevaluation reserves
Total equity
3,524
175,369
25 7,449
5,011
1,028
1,818 74
623
172,279
–
59,936
4,265
1,243
Notes
5a6
166,487
64,367
166,487
2,787
98
1212
7a
173,936
3,022
169,671
2017
183
2,230 2,163 4,220
208 23
6,614
2018
169,671
111,002
737
621
109,735
175,369
622 737
75
961 102
88
8
172,279
1,128
178,893
9
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This statement should be read in conjunction with the accompanying notes. page 6
Financial Statements 2018
Central Darling Shire Council
Statement of Changes in Equity for the year ended 30 June 20182018
$ ’000
Opening balance
Net operating result for the year
Other comprehensive income – Gain (loss) on revaluation of IPP&EOther comprehensive income
Total comprehensive income (c&d)
Equity – balance at end of the reporting period
Net operating result for the year prior to correction of errors and changes in accounting policies
Accumulated Accumulated
4,431
1,267
4,431
5,698
169,671 59,936 109,735
915
5,832 915
– 915
6,747
– 915
5,832
915
5,832 – – 5,832
equity
162,924
surplus
103,903 59,021
reserverevaluation Total
IPP&E2017
111,002 64,367 175,369
– 4,431
1,267 4,431
7a – 4,431
2018
109,735 59,936 169,671
revaluation TotalNotes surplus reserve
IPP&E
equity
1,267 – 1,267 – 1,267 5,832
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This statement should be read in conjunction with the accompanying notes. page 7
Financial Statements 2018
Central Darling Shire Council
Statement of Cash Flows for the year ended 30 June 2018
$ ’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 costsOther
Net cash provided (or used in) operating activities
Cash flows from investing activitiesReceipts:Sale of infrastructure, property, plant and equipmentPayments:Purchase of infrastructure, property, plant and equipment
Net cash provided (or used in) investing activities
Cash flows from financing activitiesReceipts:NilPayments:Repayment of borrowings and advances
Net 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
54
1,692 1,872 6,642
512
2018 2017Actual
–
2018
5,228
– 14,986
68
–
(4,444)
(8,845)
(8,845)
(100)
2,746
516
(102)
2,230
(102)
10a
Notes
1,798
(62)
Original
budget unaudited
–
(8,111)
9,463
(4,542)
(64)
(39)
12,881
(4,037)
(11,131)
– 1,476
11,712
Actual
13,816
(13,636) (5,151)
(5,433)
(101) (752)
(165)
(165)
(4,037)
2,230
269
1,961
2,230
1,990
(100)
(5,384)
4,220 10a
10b 7,474
–
6,163
(1,607)
49
3
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This statement should be read in conjunction with the accompanying notes. page 8
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Contents of the notes accompanying the financial statements
Details
Basis of preparationCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsCash and cash equivalent assetsRestricted cash, cash equivalents and investments – detailsReceivablesInfrastructure, property, plant and equipmentExternally restricted infrastructure, property, plant and equipmentPayables and borrowingsProvisionsStatement of cash flows – additional informationCommitments for expenditureContingencies and other liabilities/assets not recognisedFinancial risk managementMaterial budget variationsFair value measurementRelated party transactionsFinancial result and financial position by fundStatement of performance measures – consolidated resultsStatement of performance measures – by fund
Additional council disclosures (unaudited)
Statement of performance measures – consolidated results (graphs)Council information and contact details
5818(a) 57
18(c) 60
5(a)4
5(b)
18(b)
10
1716
27
1211
Note
8
Page
12(a)
32(b)
25
30
15
9
4514
37
13
36
3841
24
101415162023
67(a)7(b)
19 62
47
55
33
54
29
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page 9
Financial Statements 2018_
Central Darling Shire Council Notes to the Financial Statements for the year ended 30 June 2018 Note 1. Basis of preparation
page 10
These financial statements were authorised for issue by Council on 28/12/2018. Council has the power to amend and reissue these financial statements. 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. 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. The financial statements are presented in Australian dollars and are rounded to the nearest thousand dollars. Full dollars have been used in Note 16 Related party disclosures in relation to the disclosure of specific related party transactions. Unless otherwise indicated, all amounts disclosed in the financial statements are actual amounts. Specific budgetary amounts have been included for comparative analysis (to actuals) in the following reports and notes: Income statement Statement of cash flows Note 14 – Material budget variations and are clearly marked. (a) New and amended standards adopted by Council There have been no new (or amended) accounting standards adopted by Council in this year’s financial statements which have had any material impact on reported financial position, performance or cash flows. (b) 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 infrastructure, property, plant and equipment and investment property. (c) 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
Financial Statements 2018_
Central Darling Shire Council Notes to the Financial Statements for the year ended 30 June 2018 Note 1. Basis of preparation (continued)
page 11
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: (i) estimated fair values of infrastructure, property, plant and equipment – refer Note 7, (ii) estimated tip remediation provisions – refer Note 9, (iii) employee benefit provisions – refer Note 9. Significant judgements in applying the Council's accounting policies (iv) Impairment of receivables Council has made a significant judgement about the impairment of a number of its receivables in Note 6. Monies and other assets received by Council (a) The Consolidated Fund In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and other assets 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 service Sewerage service (b) 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 other assets 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 other assets subject to Council’s control have been included in these reports. Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to the taxation authority is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which that are recoverable from, or payable to the taxation authority are presented as operating cash flows. New accounting standards and interpretations issued not yet effective Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and which have not been applied.
Financial Statements 2018_
Central Darling Shire Council Notes to the Financial Statements for the year ended 30 June 2018 Note 1. Basis of preparation (continued)
page 12
As at the date of authorisation of these financial statements, Council considers that the standards and interpretations listed below will have an impact upon future published financial statements ranging from additional and / or revised disclosures to actual changes as to how certain transactions and balances are accounted for. Effective for annual reporting periods beginning on or after 1 July 2018 • AASB 9 Financial Instruments This replaces AASB 139 Financial Instruments: Recognition and Measurement, and addresses the classification, measurement and disclosure of financial assets and liabilities. The standard introduces a new impairment model that requires impairment provisions to be based on expected credit losses, rather than incurred credit losses.
Based on assessments to date, Council expects a small increase to impairment losses however the standard is not expected to have a material impact overall.
Effective for annual reporting periods beginning on or after 1 July 2019
• AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities and
AASB 2016-8 Amendments to Australian Accounting Standards - Australian Implementation Guidance for Not-for-Profit Entities
AASB 15 will replace AASB 118 Revenue, AASB 111 Construction Contracts and a number of Interpretations. AASB 2016-8 provides Australian requirements and guidance for not-for-profit entities in applying AASB 9 and AASB 15, and AASB 1058 will replace AASB 1004 Contributions. Together they contain a comprehensive and robust framework for the recognition, measurement and disclosure of income including revenue from contracts with customers. While Council is still reviewing the way that income is measured and recognised to identify whether there will be any material impact arising from these standards, these standards may affect the timing of the recognition of some grants and donations. • AASB 16 Leases Council is currently a party to leases that are not recognised in the Statement of Financial Position. It is likely that some of these leases will need to be included in the Statement of Financial Position when this standard comes into effect.
A lease liability will initially be measured at the present value of the lease payments to be made over the lease term. A corresponding right-of-use asset will also be recognised over the lease term. Council has not elected to apply any pronouncements before their operative date in these financial statements.
Financial Statements 2018_
Central Darling Shire Council Notes to the Financial Statements for the year ended 30 June 2018 Note 1. Basis of preparation (continued)
page 13
Going concern Council has been under administration since 23 December 2013 due to its poor financial position. Since that time Council has operated on an altered business model by reducing staff and contractors and tightly controlling expenditure. The financial statements for the 2018 financial year have been prepared on a going concern basis. However, Council acknowledges the weak cash position as at 30 June 2018, creates a material uncertainty regarding continuation as a going concern. Management believe Council is a going concern as it forecasts positive net cash inflows for future years in its Long Term Financial Plan. Council has previously used restricted funds for operational purposes without Ministerial approval. This constituted a breach of section 409(3) and 410(3) of the Local Government Act 1993. Central Darling Shire Council has sought ministerial approval under Section 410 of the Local Government Act 1993, to allow council to continue utilizing restricted cash reserves to cover operational expenses, due to ongoing financial challenges faced by Council. Ministerial approval under Section 410 of the Local Government Act 1993 was granted on the 22nd of June 2018.
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 2(a). Council functions/activities – financial information
Total functions and activities 25,323 22,280 23,547 173,936 178,893
–
1,267
8,359 6,163
19,491
– –
8,574 5,832
(207)
10,885
783 2,243
– 551
1,298 444
– 5 49
100 11,357
3,405 283
27,312 – – 1,343
– 888 (76)
178,893 5,311 7,528
– 303 52
– 38
4,463 11,998
2,657 –
1,762 –
112,825
(173)
–
12,865 –
(139) (729)
11
– 677
(124) (245)
143 –
(446)
(208)
(440)
4,646 (3,688) (125)
2018 2017
3 –
– – – – (133) –
(424) (354)
(3,695) (167) 155
10
Transport and communications 12,844 Economic affairs 334 25
Environment
92 140 2,320
244
481
268
10,622
474 1,432 1,514
274
171 –
Public order and safety5,790
148 958 Administration
General purpose income
Governance
6,163
132 157 356
558 23 71
Recreation and culture
Community services and educationHousing and community amenities
Sewerage servicesWater supplies
16
– 125
8,359
–
16
237
134
310 729
309 12,061
–
133
–
2,095
486 324
1,068 485
Income from continuing operations
Income, expenses and assets have been directly attributed to the following functions/activities.Details of these functions/activities are provided in Note 2(b).
Expenses from continuing operations
Operating result from continuing operations
$ ’000
Total assets held (current and non-
current) Functions/activities
2017
Grants included in income from continuing
operations
201720182018 2017 2018 2018 2017
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page 14
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
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 supplies
Sewerage services
Recreation and culture
Transport and communications
Economic affairs
General purpose income
Includes noxious plan and insect/vermin control; other environmental protection; solid wast 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,subscriptions to local authority associations, meetings of Council and policy-making committees, publicdisclosures (e.g. GIPA) and legislative compliance.
Includes corporate support, executive services, shire services and any other Council policy compliance.
Includes Council's fire and emergency services levy, fire protection, emergency services, enforcement ofregulations and animal control.
Includes immunisations, food control and health clinics.
Includes grant funding not directly attributable to the above categories.
Includes administration and education; social protection (welfare); migrant, Aboriginal and other communityservices and administration, youth services; aged and disabled services and children's services.
Includes public cemeteries; public conveniences; street lighting; town planning; and other community amenities
Includes community centres and halls, sporting grounds, venues, swimming pools, parks and gardens, andother sporting, recreational and cultural services.
Includes camping areas and caravan parks, tourism and area promotion, and other business undertakings.
Includes sealed and unsealed roads, bridges, footpaths, parking areas, and aerodromes.
Supply of water services to Wilcannia, Menindee, White Cliffs and Ivanhoe.
Supply of sewerage services to Wilcannia.
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page 15
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations
$ ’000
(a) Rates and annual charges
Ordinary ratesResidentialFarmlandBusinessTotal ordinary rates
Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesWater supply servicesSewerage servicesTotal annual charges
TOTAL RATES AND ANNUAL CHARGES
Council has used 2017 year valuations provided by the NSW Valuer General in calculating its rates.
Accounting policy for rates and annual chargesRates, annual charges, grants and contributions (including developer contributions) are recognised as revenuewhen the Council obtains control over the assets comprising these receipts. Developer contributions may onlybe expended for the purposes for which the contributions were required, but the Council may apply contributionsaccording to the priorities established in work schedules.
Control over assets acquired from rates and annual charges is obtained at the commencement of the ratingyear as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates.
461
1,219 1,093 161
2,014
533 471
1,878
322
44 429
795
20172018
182
304
41 440
785
504
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X8A16T
page 16
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(b) User charges and fees
Specific user charges (per s.502 – specific ‘actual use’ charges)Domestic waste management servicesWater supply servicesSewerage servicesTotal specific user charges
Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Planning and building regulationPrivate works – section 67Total fees and charges – statutory/regulatory
(ii) Fees and charges – other (incl. general user charges (per s.608))Caravan parkCemeteriesLeaseback fees – Council vehiclesRent and hire of council propertyRMS (formerly RTA) charges (state roads not controlled by Council)Swimming centresWaste disposal tipping feesOtherTotal fees and charges – other
TOTAL USER CHARGES AND FEES
Accounting policy for user charges and feesUser charges and fees are recognised as revenue when the service has been provided.
3
553
392
2017
–
12 541
440
445 5
1
2018
–
5
8,535
9,573
4
21 7
3
69
393
597
23
4
19 8,493
611
10
8,366
14
12
39
9,539
8,575
32
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page 17
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(c) Grants
General purpose (untied)Current year allocationFinancial assistance – general componentFinancial assistance – local roads componentOtherPensioners’ rates subsidies – general componentTotal general purpose
Specific purposeAirportBushfire and emergency servicesCommunity careEnvironmental protectionHeritage and culturalTransport (roads to recovery)Transport (other roads and bridges funding)YouthWater and sewerTotal specific purposeTotal grants
Grant revenue is attributable to:– Commonwealth funding– State funding
3
900 – 1,592
100 41
7,806 5,771
1,211 7,363 1,494
1,494
–
–
–
–
1,494
–
–
–
–
2017Capital
– –
–
120
–
2018
–
2,052
1,211 1,592
19
–
– 10
303
2018
155
–
51 1,585
1
Operating
–
5 – 100
–
Capital
1,571
–
3,721
5,311 –
5,265
1,211
9,391
1
9,391
1,585
7,363
19
71
65
2017
–
2,244
Operating
–
1,374
7,528
–
–
1,211
1,494
1,863 143
–
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page 18
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(d) Contributions
Other contributions:Cash contributionsRMS contributions (regional roads, block grant)Total other contributions – cashTotal other contributionsTotal contributions
TOTAL GRANTS AND CONTRIBUTIONS
Accounting policy for contributionsControl over grants and contributions is normally obtained upon their receipt (or acquittal) and is valued at thefair value of the granted or contributed asset at the date of transfer.
Where grants or contributions recognised as revenues during the financial year were obtained on condition thatthey be expended in a particular manner or used over a particular period and those conditions wereun-discharged at reporting date, the unused grant or contribution is disclosed above.
A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite servicehas not been provided at reporting date.
– 2,699 2,435 – –
2,435
2018Operating
2018Notes Operating
2017
2,699
1,494
–
11,826
–
1,211
2,699 2,435
–
2,699 –
10,062
2,435
Capital
–
Capital 2017
X8A7T
page 19
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations
$ ’000
(a) Employee benefits and on-costs
Salaries and wagesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)Total employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSEDNumber of ‘full-time equivalent’ employees (FTE) at year end
Accounting policy for employee benefits and on-costsEmployee benefit expenses are recorded when the service has been provided by the employee.
Retirement benefit obligationsAll employees of the Council are entitled to benefits on retirement, disability or death. Council contributes tovarious defined benefit plans and defined contribution plans on behalf of its employees.
Superannuation plansContributions to defined contribution plans are recognised as an expense as they become payable. Prepaidcontributions are recognised as an asset to the extent that a cash refund or a reduction in the future paymentsis available.
Council participates in a Defined Benefit Plan under the Local Government Superannuation Scheme, however,when sufficient information to account for the plan as a defined benefit is not available and therefore Councilaccounts for its obligations to defined benefit plans on the same basis as its obligations to defined contributionplans, i.e. as an expense when it becomes payable – refer to Note 12 for more information.
60
5,199 (101)
4,475
241
128
77
4,708
42
(233)
3,790
264
5,098
2017
412 507
58
42
4,248
2018
64
58
X8A9T
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page 20
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations (continued)
$ ’000
(b) Materials and contracts
Raw materials and consumablesContractor and consultancy costs – Contractor costsAuditors remuneration (2)
Legal expenses: – Legal expenses: debt recovery – Legal expenses: otherOperating leases: – Operating lease rentals: minimum lease payments (1)
TOTAL MATERIALS AND CONTRACTS
Operating leasesLeases in which a significant portion of the risks and rewards of ownership arenot transferred to Council as lessee are classified as operating leases. Paymentsmade under operating leases (net of any incentives received from the lessor) arecharged to the income statement on a straight-line basis over the period of the lease.
1. Operating lease payments are attributable to:ComputersMotor vehiclesOther
2. Auditor remunerationDuring the year the following fees were paid or payable for services provided by theauditor of Council, related practices and non-related audit firms
Auditors of the Council – NSW Auditor-General:
(i) Audit and other assurance servicesAudit and review of financial statementsRemuneration for audit and other assurance services
Total Auditor-General remuneration
Total Auditor remuneration
355
64
88
3
2017
–
52 52
52
104
21
11,414
11,992
–
–
10,584
52 52
10,134
2018
18
– 28 263
52 52
355
52
334
52
52
309
309
1
X8A10T
X8A11T
page 21
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations (continued)
$ ’000
(c) Depreciation, amortisation and impairment
Depreciation and amortisationPlant and equipmentInfrastructure: – Buildings – non-specialised – Other structures – Roads – Stormwater drainage – Water supply network – Sewerage networkReinstatement, rehabilitation and restoration assets: – Tip assetsTotal depreciation and amortisation costs
TOTAL DEPRECIATION, AMORTISATION AND IMPAIRMENT /REVALUATION DECREMENT COSTS EXPENSED
Accounting policy for depreciation, amortisation and impairment expenses
Depreciation and amortisationDepreciation and amortisation are calculated using the straight line method to allocate their cost, net of theirresidual values, over their estimated useful lives. Useful lives are included in Note 7 for IPPE assets.
Impairment of non-financial assetsOther assets are tested for impairment whenever events or changes in circumstances indicate that the carryingamount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carryingamount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value lesscosts to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there areseparately identifiable cash inflows that are largely independent of the cash inflows from other assets or groupsof assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possiblereversal of the impairment at each reporting date.
Impairment losses for revalued assets are firstly offset against the amount in the revaluation surplus for theclass of asset, with only the excess to be recognised in the Income Statement.
Impairment of financial assetsCouncil assesses at the end of each reporting period whether there is objective evidence that a financial asset orgroup of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairmentlosses are incurred only if there is objective evidence of impairment as a result of one or more events thatoccurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact onthe estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
2017
275
4,072
628
3,528 43
3,528 4,072
17 16
756 843
78 86
142
43
627
186
Notes
2,077 236
1,547
2018
7 & 9
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X8A13T
page 22
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations (continued)
$ ’000
(d) Other expenses
AdvertisingBad and doubtful debtsBank chargesDonations, contributions and assistance to other organisations (Section 356)Electricity and heatingInsurancePrinting and stationeryStreet lightingSubscriptions and publicationsTelephone and communicationsValuation feesTOTAL OTHER EXPENSES
Accounting policy for other expensesOther expenses are recorded on an accruals basis as the Council receives the goods or services.
Note 5(a). Cash and cash equivalent assets
$ ’000
Cash and cash equivalentsCash on hand and at bankTotal cash and cash equivalents
Accounting policy for cash and cash equivalentsFor Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand; depositsheld at call with financial institutions.
9
2017
62
94
136 46
(96) 6
201
37
16 1,017 830
309
17
350 199
2018
187 103
33
21
108
5
4
4,220 4,220
Notes
–
2018
2,230
2017
2,230
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X8A14T
page 23
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 5(b). 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 – otherSpecific purpose unexpended grantsWater suppliesSewerage servicesExternal restrictions – otherTotal external restrictions
Internal restrictionsFinancial assistance grantsTotal internal restrictions
TOTAL RESTRICTIONS
Central Darling Shire Council had sought ministerial approval under Section 410 of the Local Government Act 1993, for council to continue utilizing restricted cash reserves to cover operational expenses, due to ongoing financial challenges faced by Council.
The use of these funds represents an internal loan between the Central Darling Shire Council's General Fund andthe Central Darling Shire Council's Water and Sewerage Services Funds.Ministerial approval under Section 410 of The Local Government Act 1993 was granted on the 22nd of June 2018and the loan was raised as at 30th June 2018.The term of the loan is 2 years, with a Date of Maturity of 30th June 2020.The Rate of Interest for this Loan is 0%.
– 4,220
–
–
Current
4,220
2018Non-current Current
403
–
1,712
366
1,864
–
366 – –
1,864 1,712
1,206 342
4,220 –
1,001
2017
2017
–
2018
–
2,230
Non-current
2,230
Notes 2018
–
–
366
2017
– –
103
1,712
1,864
521
–
2,230
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page 24
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 6. Receivables
$ ’000
PurposeRates and annual chargesInterest and extra chargesUser charges and feesGovernment grants and subsidiesNet GST receivableTotal
Less: provision for impairmentRates and annual chargesInterest and extra chargesUser charges and feesTotal provision for impairment – receivables
TOTAL NET RECEIVABLES
Externally restricted receivablesWater supply – Rates and availability chargesSewerage services – Rates and availability chargesTotal external restrictionsUnrestricted receivablesTOTAL NET RECEIVABLES
Movement in provision for impairment of receivablesBalance at the beginning of the year– previous impairment losses reversedBalance at the end of the year
Current 2017
Non-current
– 472 556
1,000
Notes
– 424 858
(270) –
(270) –
–
(110)
–
–
2,643
(100)
5,011
105
– 859 869
–
–
–
480 (96)
–
–
–
1,170
2018576
–
439 615
–
–
(110) –
–
(480) (100)
–
– –
–
–
–
– 5,491
– 3,770
Current
–
Non-current
2,163
–
(480)
5,011
2,163
993 4,037
–
–
134
480
– – 974
–
2018
2017
480 –
X8A2T
page 25
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 6. Receivables (continued)
Accounting policy for receivables
Recognition and measurementLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market. They are included in current assets, except for those with maturities greater than 12 monthsafter the reporting date which are classified as non-current assets. Loans and receivables are included inReceivables (Note 6) in the Statement of Financial Position. Receivables arerecognised initially at fair value and subsequently measured at amortised cost using the effective interestmethod, 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.
ImpairmentFor loans and receivables the amount of the loss is measured as the difference between the asset’s carryingamount and the present value of estimated future cash flows (excluding future credit losses that have not beenincurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset isreduced and the amount of the loss is recognised in profit or loss.
Collectability of receivables is reviewed on an on-going basis. Debts that are known to be uncollectible are writtenoff by reducing the carrying amount directly. An allowance account (provision for impairment of receivables) isused when there is objective evidence that Council will not be able to collect all amounts due according to theoriginal terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financialreorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicatorsthat the receivable is impaired. When a receivable for which an impairment allowance had been recognisedbecomes uncollectable in a subsequent period it is written off against the allowance account. Subsequentrecoveries of amounts previously written off are credited against other expenses in the Income statement.
2018 2017
page 26
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 7(a). Infrastructure, property, plant and equipment
Asset class
$ ’000
Capital work in progress 1,418 – 1,418 5,128 – (2,723) – 3,823 – 3,823 Plant and equipment 2,929 2,121 808 215 (142) – – 3,144 2,263 881 Land: – Operational land 268 – 268 – – – 190 458 – 458 – Community land 523 – 523 – – – – 523 – 523 Infrastructure: – Buildings – non-specialised 31,802 22,153 9,649 9 (843) – 4,241 32,943 19,887 13,056 – Other structures 7,001 2,577 4,424 – (236) 416 – 7,417 2,813 4,604 – Roads, bridges, footpaths 119,466 24,842 94,624 – (2,077) 2,307 – 121,773 26,919 94,854 – Bulk earthworks (non-depreciable) 24,234 – 24,234 – – – – 24,234 – 24,234 – Stormwater drainage 1,294 300 994 – (17) – – 1,293 316 977 – Water supply network 43,784 18,342 25,442 – (628) – – 43,784 18,970 24,814 – Sewerage network 6,027 2,011 4,016 – (86) – – 6,027 2,097 3,930 Reinstatement, rehabilitation and restoration assets (refer Note 9): – Tip assets 393 306 87 81 (43) – – 475 350 125 TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.
Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).
– 5,433 (4,072) 239,139 72,652 166,487 172,279 4,431 245,894 73,615
as at 30/6/2018
Net carrying amount
Asset movements during the reporting period
Accumulated depreciation
and impairment
as at 30/6/2017
WIPtransfers
Additionsrenewals
Revaluation increments
to equity (ARR)
Net carrying amount
Accumulated depreciation
and impairment
Gross carrying amount
Gross carrying amount
Depreciation expense
X9A0T
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page 27
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 7(a). Infrastructure, property, plant and equipment (continued)
Accounting policy for infrastructure, property, plant and equipment
Infrastructure, property, plant and equipment are held at fair value. Independent valuations are performed atleast every five years, however the carrying amount of assets is assessed at each reporting date to confirm that it is not materially different from current fair value.
Water and sewerage network assets are indexed at each reporting period in accordance with the RatesReference Manual issued by Crown Lands and Water (CLAW).
Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve. To theextent that the increase reverses a decrease previously recognising profit or loss relating to that asset class, theincrease is first recognised as profit or loss. Decreases that reverse previous increases of assets in the sameclass are first charged against revaluation reserves directly in equity to the extent of the remaining reserveattributable 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 costof the item can be measured reliably. All other repairs and maintenance are charged to the income statementduring the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocatetheir cost, net of their residual values, over their estimated useful lives as follows:
Plant and equipment Years Other equipment YearsOffice equipment 5 to 10 Playground equipment 5 to 15 Office furniture 10 to 20 Benches, seats etc. 10 to 20 Computer equipment 4Vehicles 5 to 8 BuildingsHeavy plant/road making equipment 5 to 8 Buildings: masonry 50 to 100 Other plant and equipment 5 to 15 Buildings: other 20 to 40
Water and sewer assets Stormwater assetsDams and reservoirs 80 to 100 Drains 80 to 100 Bores 20 to 40 Culverts 50 to 80 Reticulation pipes: PVC 70 to 80 Flood control structures 80 to 100 Reticulation pipes: other 25 to 75 Pumps and telemetry 15 to 20
Transportation assets Other infrastructure assetsSealed roads: surface 20 Swimming pools 50Sealed roads: structure 50 Unsealed roads 20Unsealed roads 20 Other open space/recreational assets 20Bridge: concrete 100 Other infrastructure 20Bridge: other 50Road pavements 60Kerb, gutter and footpaths 40
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 includedin the Income statement.
page 28
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 7(a). Infrastructure, property, plant and equipment (continued)
Accounting policy for infrastructure, property, plant and equipment (continued)
Land under roadsLand under roads is land under roadways and road reserves including land under footpaths, nature strips andmedian strips.
Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance withAASB 1051 Land Under Roads.
Crown reservesCrown Reserves under Council’s care and control are recognised as assets of the Council. While ownership ofthe reserves remains with the Crown, Council retains operational control of the reserves and is responsible fortheir maintenance and use in accordance with the specific purposes to which the reserves are dedicated.Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Counciland revenues relating to the reserves are recognised within Council’s Income Statement.
Rural Fire Service assetsUnder section 119 of the Rural Fire Services Act 1997 (NSW) , “all fire fighting equipment purchased orconstructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or onbehalf of which the fire fighting equipment has been purchased or constructed”.
Note 7(b). Externally restricted infrastructure, property, plant and equipment
Council has externally restricted infrastructure, property, plant and equipment. These restrictions relate to Council providing water and sewerage services.
X10A8T
page 29
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 8. Payables and borrowings
$ ’000
PayablesAccrued expenses: – Salaries and wages – Other expenditure accrualsSecurity bonds, deposits and retentionsATO – net GST payableTotal payables
Income received in advancePayments received in advanceTotal income received in advance
BorrowingsLoans – secured 1
Total borrowings
TOTAL PAYABLES AND BORROWINGS
(a) Payables and borrowings relating to restricted assets
Externally restricted assetsWaterSewer
TOTAL PAYABLES AND BORROWINGS
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 13.
1,050 –
–
1,758
–
2018
623
1,818
–
1,128
58
–
– 75 – 75
20172018
3 –
–
1,826
Non-current
–
39
–
1,826
102
–
2017
623
–
1,826
–
–
–
102
–
Non-current
–
–
– –
621
–
75
Current
74
Current Non-current
621
–
–
74
Current
2
Non-current
–
39
– 26
Current
–
13
621 1,994 –
–
–
– –
621
Payables and borrowings relating to externally restricted assets
Total payables and borrowings relating to restricted assets
– 621
1,994 1,955
Total payables and borrowings relating to unrestricted assets
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page 30
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 8. Payables and borrowings (continued)
$ ’000
(b) Changes in liabilities arising from financing activities
$ ’000
(c) Financing arrangements
(i) Unrestricted access was available at balance date to the following lines of credit:
Credit cards/purchase cardsTotal financing arrangements
Drawn facilities as at balance date:– Credit cards/purchase cardsTotal drawn financing arrangements
Undrawn facilities as at balance date:– Credit cards/purchase cardsTotal undrawn financing arrangements
1. The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice.
Class of borrowings
TOTAL 723 (100) – 623 (100)
Openingbalance
as at 1/7/17Cash flows Acquisition Fair value
changes
Loans – secured 723
38
– – – 623
Othernon-cash
movements
Closingbalance
as at 30/6/18
2018 2017
7
38
7
31
4
–
38
34
Non-cash changes
2017
2017 2018
2018
31
4
38
34
–
page 31
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 8. Payables and borrowings (continued)
Accounting policy for payables and borrowings
PayablesThese amounts represent liabilities for goods and services provided to the Council prior to the end of financialyear that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any difference between the proceeds (net of transaction costs) and theredemption amount is recognised in the income statement over the period of the borrowings using the effectiveinterest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of theloan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee isdeferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of thefacility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over theperiod of the facility to which it relates.
Borrowings are removed from the Statement of Financial Position when the obligation specified in the contractis discharged, cancelled or expired. The difference between the carrying amount of a financial liability that hasbeen extinguished or transferred to another party and the consideration paid, including any non-cash assetstransferred 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 ofthe liability for at least 12 months after the reporting date.
page 32
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 9. Provisions
$ ’000
ProvisionsEmployee benefits:Annual leaveLong service leave
Asset remediation/restoration:Asset remediation/restoration (future works)
Sub-total – asset remediation/restoration
TOTAL PROVISIONS
(a) Provisions relating to restricted assetsThere are no restricted assets (external or internal) applicable to the above provisions
$ ’000
(b) Current provisions not anticipated to be settled within the next twelve months
The following provisions, even though classified as current, are notexpected to be settled in the next 12 months.
Provisions – employees benefits
(c) Description of and movements in provisions
At beginning of yearChanges to provision:
At beginning of yearChanges to provision:
713
118
Asset remediation
– 713 Total other provisions at end of year –
Current
502 483
118
643
Self-insurance
27
595
622
595
620 702
2017
702 620
–
2018Current
737 961
Non-current
1,028
526 24
713
2017
–
– – –
–
Non-current
478
713
2018
Other (enter details here...)
2018 Other (enter details here...)
Other (enter details here...)
– – – – 595 595
Total
Other provisions
Other provisions
Asset remediation
Other (enter details here...)
Other (enter details here...)
– –
– 595
643
595 – – –
Other (enter details here...)
Self-insurance
2017
(48) (48)
Total
Total other provisions at end of year
Additional provision for landfill remediation
Additional provision for landfill remediation
X10A3T
page 33
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 9. Provisions (continued)
Nature and purpose of non-employee benefit provisions
Asset remediationCouncil has a legal/public obligation to make, restore, rehabilitate and reinstate the council tip and quarry.
Accounting policy for provisionsProvisions 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 beenreliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihoodof 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 tosettle the present obligation at the reporting date. The discount rate used to determine the present valuereflects current market assessments of the time value of money and the risks specific to the liability. Theincrease in the provision due to the passage of time is recognised as interest expense.
Employee benefits
Short-term obligationsLiabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leaveexpected to be wholly settled within 12 months after the end of the period in which the employees render therelated service are recognised in respect of employees' services up to the end of the reporting period and aremeasured at the amounts expected to be paid when the liabilities are settled. The liability for annual leaveand accumulating sick leave is recognised in the provision for employee benefits. All other short-termemployee benefit obligations are presented as payables.
Other long-term employee benefit obligationsThe liability for long service leave and annual leave that is not expected to be wholly settled within 12 monthsafter the end of the period in which the employees render the related service is recognised in the provision foremployee benefits and measured as the present value of expected future payments to be made in respect ofservices 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, andperiods of service. Expected future payments are discounted using market yields at the end of the reportingperiod 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 doesnot have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless ofwhen the actual settlement is expected to occur.
page 34
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 9. Provisions (continued)
Provisions for close-down and restoration, and environmental clean-up costs – tips and quarries
RestorationClose down and restoration costs include the dismantling and demolition of infrastructure and the removal ofresidual materials and remediation of disturbed areas. Estimated close down and restoration costs are providedfor in the accounting period when the obligation arising from the related disturbance occurs, whether this occursduring the development or during the operation phase, based on the net present value of estimated future costs.
Provisions for close down and restoration costs do not include any additional obligations which are expected toarise from future disturbance. The costs are estimated on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments, eg updated cost estimatesand revisions to the estimated lives of operations, and are subject to formal review at regular intervals
RehabilitationWhere rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure,provision is made for the estimated outstanding continuous rehabilitation work at each reporting date and thecost is charged to the Income Statement.
Provision is made for the estimated present value of the costs of environmental clean up obligations outstandingat the reporting date. These costs are charged to the Income Statement. Movements in the environmental cleanup provisions are presented as an operating cost, except for the unwinding of the discount which is shown as a borrowing cost.
Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques.
As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary inresponse to many factors including changes to the relevant legal requirements, the emergence of newrestoration techniques or experience at other locations. The expected timing of expenditure can also change, forexample in response to changes in quarry reserves or production rates. As a result there could be significantadjustments to the provision for close down and restoration and environmental clean up, which would affectfuture financial results.
Other movements in the provisions for close down and restoration costs, including those resulting from newdisturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discountrates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of theassets to which they relate.
Close down and restoration costs are a normal consequence of tip and quarry operations, and the majority ofclose down and restoration expenditure is incurred at the end of the life of the operations. Although the ultimatecost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineeringstudies using current restoration standards and techniques.
page 35
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 10. Statement of cash flows – additional information
$ ’000
(a) Reconciliation of cash assets
Total cash and cash equivalent assetsBalance 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 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
(25) (7)
–
2,848
(63)
3,528 –
(3,491)
2017
118
(691)
35
2 520
(96)
(49) 4,072
(83)
5,832
(70)
7,474
–
(7) 2
6,163
Notes
4,220
2018
2,230 6a
1,267
2,230 4,220
(5)
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page 36
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 11. Commitments for expenditure
$ ’000
Operating lease commitments (non-cancellable)
a. Commitments under non-cancellable operating leases at the reporting date, but not recognised as liabilities are payable:
Within the next yearLater than one year and not later than 5 yearsTotal non-cancellable operating lease commitments
b. Non-cancellable operating leases include the following assets:Office equipment and computersMotor Vehicles (Light fleet)
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.
2018 2017
224
721
436 285 101
325
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page 37
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 12. Contingencies and other liabilities/assets not recognised
The following assets and liabilities do not qualify for recognition in the Statement of Financial Position, but their knowledge and disclosure is considered relevant to the users of Council’s financial report.
LIABILITIES NOT RECOGNISED:
1. Guarantees
(i) Defined benefit superannuation contribution plans
Council participates in an employer-sponsored defined benefit superannuation scheme and makes contributionsas determined by the superannuation scheme’s trustees.
Member councils bear responsibility of ensuring there are sufficient funds available to pay out the required benefits as they fall due.
While the scheme's most recent full actuarial review indicated that the net assets of the scheme were sufficient tomeet the accrued benefits of the scheme's defined benefit member category, member councils are required to make contributions in future years where the scheme goes into deficit (as has occurred in previous years).
The Local Government Superannuation Scheme however is unable to provide Council with an accurate estimate of any share of the net deficit and accordingly Council has not recorded any net liability from its defined benefit scheme obligations in accordance with AASB 119.
Future planned contributions being made to the defined benefit scheme to rectify past (and projected) deficitpositions will be recognised as an expense when they become payable – similar to the accounting fordefined contributions plans.
Member councils are treated as Pooled Employers for the purposes of AASB119. Pooled Employers are required to pay standard employer contributions and additional lump sum contributions to the Fund.
The standard employer contributions were determined using the new entrant rate method under which acontribution rate sufficient to fund the total benefits over the working life-time of a typical new entrant iscalculated. The current standard employer contribution rates are:
Division B 1.9 times employee contributionsDivision C 2.5% salariesDivision D 1.64 times employee contributions
The additional lump sum contribution for each Pooled Employer is a share of the total additional contributionsof $40.0 million per annum from 1 July 2017 for 4 years to 30 June 2021, apportioned according to eachemployer's share of the accrued liabilities as at 30 June 2017. These additional lump sum contributions areused to fund the deficit of assets to accrued liabilities as 30 June 2017.
The adequacy of contributions is assessed at each triennial actuarial investigation and monitored annuallybetween triennials.
As stated above, each sponsoring employer is exposed to the actuarial risks associated with current and former employees of other sponsoring employers and hence shares in the associated gains and losses.
However, there is no relief under the Fund's trust deed for employers to walk away from their defined benefitobligations. Under limited circumstances, an employer may withdraw from the plan when there are no activemembers, on full payment of outstanding additional contributions. There is no provision for allocation of any surplus which may be present at the date of withdrawal of the entity.
There are no specific provisions under the Fund's trust deed dealing with deficits or surplus on wind-up.
There is no provision for the allocation of any surplus which may be present at the date of withdrawal of anemployer.
X10A12T
page 38
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 12. Contingencies and other liabilities/assets not recognised (continued)
LIABILITIES NOT RECOGNISED (continued):
1. Guarantees (continued)
(i) Defined benefit superannuation contribution plans (continued)
The plan is a defined benefit plan. However, each sponsoring employer is exposed to the actuarial risksassociated with current and former employees of other sponsoring employers and hence shares in the associatedgains and losses (to the extent that they are not borne by members). As such, there is not sufficient reliableinformation to allow each sponsoring employer to account for its proportionate share of the defined benefitobligation, sub-group assets and costs associated with the sub-group in the same way as it would for a singleemployer sponsored defined benefit plan.
The amount of Council employer contributions to the defined benefit section of the Fund and recognised as an expense and disclosed as part of superannuation expenses at Note 4 (a) for the year ending 30 June 2018 was $ 49,945.30.
The last valuation of the Fund was by the Actuary, Mr Richard Boyfield, FIAA on 12 December 2017, relatingto the period ended 30 June 2017.
Council's expected contributions to the Fund for the next annual reporting period is $ 40,231.36.
The estimated employer reserves financial position for the Pooled Employers at 30 June 2018 is:
Employer reserves only * $ millions Asset CoverageAssets 1,817.8Past Service Liabilities 1,787.5 101.7%Vested Benefits 1,778.0 102.2%
* excluding member accounts and reserves in both assets and liabilities.
The key economic long term assumptions used to calculate the present value of accrued benefits are:
Investment return 6.0% per annumSalary inflation * 3.5% per annumIncrease in CPI 2.5% per annum* Plus promotional increases
The contribution requirements may vary from the current rates if the overall sub-group experience is not in linewith the actuarial assumptions in determining the funding program, however any adjustment to the fundingprogram would be the same for all sponsoring employers in the Pooled Employers group.
Please note that the estimated employer reserves financial position above is a preliminary calculation and onceall the relevant information has been received by the Funds Actuary, the 2018 triennial review will be completed around December 2018.
Council's additional lump sum contribution is around 0.09% of the total additional lump sum contributions forall Pooled Employers (of $40m each year from 1 July 2017 to 30 June 2021) which provides an indication of the level of participation of Council compared with other employers in the Pooled Employer sub-group.
(ii) Statewide Limited
Council is a member of Statewide Mutual, a mutual pool scheme providing liability insurance to local government.
Membership includes the potential to share in either the net assets or liabilities of the fund depending on its pastperformance. Council’s share of the net assets or liabilities reflects Council’s contributions to the pool and the resultof insurance claims within each of the fund years.
The future realisation and finalisation of claims incurred but not reported to 30/6 this year may result in futureliabilities or benefits as a result of past events that Council will be required to fund or share in respectively.
page 39
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 12. Contingencies and other liabilities/assets not recognised (continued)
LIABILITIES NOT RECOGNISED (continued):
1. Guarantees (continued)
(iii) StateCover Limited
Council is a member of StateCover Mutual Limited and holds a partly paid share in the entity.
StateCover is a company providing workers compensation insurance cover to the NSW local government industryand specifically Council.
Council has a contingent liability to contribute further equity in the event of the erosion of the company’s capitalbase as a result of the company’s past performance and/or claims experience or as a result of any increasedprudential requirements from APRA.
These future equity contributions would be required to maintain the company’s minimum level of net assets inaccordance with its licence requirements.
2. Other liabilities
(i) Third party claims
The Council is involved from time to time in various claims incidental to the ordinary course of business includingclaims for damages relating to its services.
Council believes that it is appropriately covered for all claims through its insurance coverage and does not expectany material liabilities to eventuate.
(ii) Potential land acquisitions due to planning restrictions imposed by Council
Council has classified a number of privately owned land parcels as local open space or bushland.
As a result, where notified in writing by the various owners, Council will be required to purchase these land parcels.
At reporting date, reliable estimates as to the value of any potential liability (and subsequent land asset) from suchpotential acquisitions has not been possible.
page 40
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 13. Financial risk management
$ ’000
Risk management
Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.
The Council’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.
Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.
Financial risk management is carried out by Council’s 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 equivalentsReceivablesTotal 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 approximates market 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.
7,241
2,541
2,163
2017Carrying value
623 1,751
1,128
2,541 1,921 723 723
5,011 7,241
2,322
1,818
6,542
1,298
Fair value
1,818
5,011
623
6,383
4,220
2018 2017
2,230 4,220 2,230
2018
X10A10T
page 41
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 13. 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 MinisterialInvestment Order 625. This policy is regularly reviewed by Council and its staff and a monthly Investment reportis provided to Council setting out the make-up and performance of the portfolio as required by LocalGovernment regulations.
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.
2018Possible impact of a 1% movement in interest rates
2017Possible impact of a 1% movement in interest rates
Increase of values/rates
8
(7) (7)
Decrease of values/rates
(8) 8
7
Equity
7
(8) Equity Profit Profit
page 42
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 13. Financial risk management (continued)
$ ’000
(b) Credit risk
Council’s major receivables comprise (i) rates and annual charges and (ii) user charges and fees.
The major risk associated with these receivables is credit risk – the risk that debts due and payable to Councilmay not be repaid in full.
Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.
Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates and annual charges at higher than market rates which further encourages the payment of debt.
There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.
The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.
Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.
There are no material receivables that have been subjected to a re-negotiation of repayment terms.
A profile of Council’s receivables credit risk at balance date follows:
(i) Ageing of receivables – %Current (not yet overdue)Overdue
(ii) Ageing of receivables – valueRates and annual chargesCurrent1 – 2 years overdue
Other receivablesCurrent> 91 days overdue
1,219
100%
2017
311
424
100%
charges annual
75%
2018
689
1,643
70%
receivables Other
25%
4,237 396
858
20%30%
Rates and 2018
receivables
100%
charges Other
641 1,000
80%
2018 2017
217
80%
annual
20%
2017Rates and
100%
4,633
page 43
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 13. Financial risk management (continued)
$ ’000
(c) Liquidity risk
Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on handto meet payment obligations as and when they fall due.
Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.
Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.
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 by borrowing long term andfixing the interest rate on a 4-year renewal basis. The Finance Section regularly reviews interest ratemovements to determine if it would be advantageous to refinance or renegotiate part or all of the loan portfolio.
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
interest rateaverage
Weighted
1,818
2018
1,818
– 1,748 1,751
–
to noSubject
carryingoutflows values> 5 Years
848 2,666
- 188
3
2,541
1,128 623
723
3 -
1,818
1 – 5 Years
623 - -
ActualcashTotal
1,125 623
1,818
1,751 –
660
2017
1,128
maturity ≤ 1 Yearpayable in:
-
- 188
-
- 660 6.00%
6.00%
- –
page 44
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 14. Material budget variations
$ ’000
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 feesDuring the financial year a substantial amount of unbudgeted works were received from RMS
Interest and investment revenueHigher than expected actual cash balances throughout year
Other revenuesAdditional insurance recovery received due to additional insurance claims made. Council's budget does not attemptto budget for insurance claimes. Also there was additional activity driving increased Commission and Agency Feesparticularly in the area of RTA NSW.
Operating grants and contributions
Capital grants and contributionsBudgeted grant for White Cliffs water treatment plant not received during financial year
Net gains from disposal of assetsCouncil does not budget for the disposal of assets.
(4,289)
Council’s original financial budget for 17/18 was adopted by the Council on 28 June 2017 and is not required to be audited.
2018
F
16
F
49 0%
U
576
102
2,014
49
(78%)
346
1,211
4,204
1,998
6%
79%
F
10,062
9,539
34
1%
5,500
–
9,486
Budget ---------- Variance* ----------
5,335
68
224 570
F
F65%
50%
F
2018 2018Actual
X10A11T
page 45
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 14. Material budget variations (continued)
$ ’000
EXPENSESEmployee benefits and on-costsDuring the year Council had the opportunity to take on extra works facilitated through RMS. These works required additional staff not included in Council's Annual Budget.Additionally to this there were a number of large termination payments that were also not included in the Annual Budget.
Borrowing costsBorrowing costs for the year under-estimated in the Annual Budget
Materials and contractsDuring the year Council had the opportunity to take on extra works facilitated through RMS. These additional worksthat were not included in Council's Annual Budget are the reason for the increase spend in Contractors and Materials
Depreciation and amortisation
Other expenses
Budget variations relating to Council’s Cash Flow Statement include:
Cash flows from operating activitiesAlbeit there were additional unbudgeted RMS works during the year, the main driver of this unfavourale variance is that the budgeted grant for the White cliffs water treatment plant was not received during the year.
Cash flows from investing activitiesIncluded in this category of the Budgeted Cash Flow was expenditure to be undertaken for the replacement of the White Cliffs water treatment plant, to be funded by a grant. As of 30 June 2018 only a portion of expenditure on this project had been incurred due to the fact that the budgeted grant had not been received.
Cash flows from financing activities
3,701
(1,989)
2018
(2.0%)
(39.1%)
(100)
(8,845) 3,461
85
9,463 7,474 U(21.0%)
F(102)
(5,384) F
2
8% F
(63%)
---------- Variance* ----------
(15%)
(9)
1,102 1,017
(371)
Budget
U
U4,072
U101
2018
U
(4,645)
(654) 5,098
Actual
(10%)
(10%)
4,444
2018
92
7,347 11,992
page 46
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. 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
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 access at the measurement date.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values:
2018
Recurring fair value measurements
Infrastructure, property, plant and equipmentPlant and equipmentOperational landCommunity landBuildingsOther structuresRoads, bridges and footpathsBulk earthworksStormwater drainageWater supply networkSewerage networkTip assetsTotal infrastructure, property, plant and equipment
523 523 458 – 30/06/18
30/06/09
30/06/18 –
– – 4,604 4,604
–
30/06/15
30/06/1730/06/14
24,234 977
13,056 30/06/14
881
24,814
24,234 –
– – 3,930 –
– – 24,814
30/06/18
–
14,395
Quoted Significant
Fair value measurement hierarchyLevel 1
–
– 881
168,916 –
3,930
– 13,056
95,314 95,314
125 125
– 458
observableinputsactive mkts
–
154,521
–
–
–
30/06/17 – 977
of latest
30/06/18
Level 2SignificantLevel 3 Total
prices in
30/06/15 –
inputsunobservable
Date
valuation
X10A7T
X10A14T
page 47
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. Fair value measurement (continued)
$ ’000
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values: (continued)
2017
Recurring fair value measurements
Infrastructure, property, plant and equipmentPlant and equipmentOperational landCommunity landBuildingsOther structuresRoads, bridges and footpathsBulk earthworksStormwater drainageWater supply networkSewerage networkTip assetsTotal 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.
dd/mm/yy – –
165,069 87 87
4,016
– 24,234
523
994 994
dd/mm/yy – 9,649
dd/mm/yy –
523
dd/mm/yy
4,424 4,424
dd/mm/yy – –
94,624
dd/mm/yy – – 24,234
– 4,016
dd/mm/yy– –
–
– 9,649
25,442 25,442
– – –
dd/mm/yy– 268
94,624
808
unobservableinputs
TotalLevel 2Significant
of latestDate Quoted
prices in observableinputs
Level 3Significant
valuation
Level 1
10,725 154,344
–
–
dd/mm/yy
– 808
–
active mkts
dd/mm/yy
Fair value measurement hierarchy
dd/mm/yy – 268
page 48
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. Fair value measurement (continued)
$ ’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 observable inputs (level 2 inputs) andunobservable inputs (level 3 inputs).
The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows:
Infrastructure, property, plant and equipment (IPP&E)
Stormwater drainage
The Stormwater Drainage asset class consists of Council’s pits and Culverts. APV Valuers completed the valuation of these assets in 2009. The valuation methodology adopted was based on current replacement costof the asset.
Replacement costs (unit rates) and useful lives for Stormwater Drainage assets were determined through professional judgement on behalf of APV, which incorporated standard unit rates applied to the dimensions of the asset and considered environmental factors based on asset location. Other significant inputs considered in the valuation of these assets are asset condition, remaining useful life, and pattern of consumption.
This asset class is categorised as Level 3 as some of the above-mentioned inputs used in the valuation of these assets require significant professional judgement and are therefore unobservable. Valuation techniques remainedthe same for this reporting period.
Other structure
Council’s other structure assets comprise of fences, flagpoles, monuments and the like.
Replacement costs (unit rate) and useful lives of Council's other structure assets were determined using technicalknowledge from council staff (engineers and asset management). Other significant inputsconsidered in the valuation of these assets are condition rating, remaining useful life, pattern of consumption,dimensions, and components. The valuation was completed in 2014.
This asset class is categorised as Level 3 as some of the above-mentioned inputs used in the valuation of theseassets require significant professional judgement and are therefore unobservable. Valuation techniques remainedthe same for this reporting period.
Buildings
Council engaged AssetVal Pty Ltd to value all buildings and shelters in 2018. The valuation methodology adopted was based on current replacement cost of the asset.
The valuation aspects are generally, but not limited to the location, size, condition, style and utility of the asset. Replacement cost, asset condition, remaining useful life and building components are some of the inputs used in fair value determination. Since most of these inputs require judgement and are unobservable, the asset class has been classified as Level 3. Valuation techniques remained the same for this reporting period.
page 49
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Roads, bridges, footpaths and bulk earthworks
Council’s roads & Bridges are componentised into the pavement, surface and formation and further separated intosegments for inspection and valuation.
The valuation of assets was completed by APV Valuers in June 2015.
The current replacement cost approach was adopted to value Councils assets. The replacement costs (based onunit rates), useful lives and conditions were determined by technical information provided by Council's asset planners and professional judgement on behalf of APV.
Some of the other significant inputs considered in the valuation of these assets are remaining useful life, pattern of consumption, dimensions, and components.
This asset class is categorised as Level 3 as some of the above-mentioned inputs used in the valuation of theseassets require significant professional judgement and are therefore unobservable. Valuation techniques remainedthe same for this reporting period.
Tip remediation
Council operates a landfilling operation as well as a range of waste services, including recycled and reclaimedproducts. It has been recognised that there will be significant costs associated with the closure and post closuremanagement of the landfill site.
Closure of the landfill will involve a wide range of activities including preparation of a Landfill Closure and Management Plan, final capping of the landfill waste and site re-vegetation, decommissioning and removing infrastructure and equipment that will not be required post-closure, and fencing sensitive infrastructure.
The key unobservable inputs are the discount rate, cost escalation rate, actual timing of costs and futureenvironmental management requirements. There has been no change to the valuation process during the reportingperiod.
Water supply network
This asset category includes:
Dams & Weirs, Mains, Reservoirs and treatment plants.
The valuation of assets was completed by Brearly & Hansen Valuers in June 2017.
The current replacement cost approach was adopted to value Councils assets. The replacement costs (based on unit rates), useful lives and conditions were determined by technical information provided by Council's asset planners asset planners and professional judgement on behalf of APV.
Some of the other significant inputs considered in the valuation of these assets are remaining useful life, pattern of consumption, dimensions, and components. Valuation techniques remained the same for this reporting period.
page 50
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. Fair value measurement (continued)
$ ’000
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Sewerage network
This asset category includes:
Mains, Pumping stations and sewerage ponds.
The valuation of assets was completed by Brearly & Hansen Valuers in June 2017.
The current replacement cost approach was adopted to value Councils assets. The replacement costs (based on unit rates), useful lives and conditions were determined by technical information provided by Council's asset planners and professional judgement on behalf of APV.
Some of the other significant inputs considered in the valuation of these assets are remaining useful life, pattern of consumption, dimensions, and components. Valuation techniques remained the same for this reportingperiod.
Community land
Assets within the “Community Land” class are:
- Council owned land, and- Care Control Management land [Crown] of which Council derives current and future economic benefits arising from the use of the land asset.
Council’s community land is valued on the Unimproved Capital Value (UCV), provided by the Valuer General 01/07/2018.
Currently all Council assets in this asset class are based on UCV, however, should Council have an asset in futurefor which an UCV is not provided, the replacement cost will be used. Replacement cost will be based on averageunit rates for similar properties, land use, dimensions, land size and shape, which are not considered observablebased on market evidence, therefore, placing the whole asset class in Level 3. Valuation techniques remainedthe same for this reporting period.
Operational land
Council’s operational land includes all of Council's land classified as operational land under Local Government Act1993.
Council’s community land is valued on the Unimproved Capital Value (UCV), provided by the Valuer General 01/07/2018.
Currently all Council assets in this asset class are based on a modelled market based valuation process, however, should Council have an asset in future for which this valuation process is not available, the replacement cost will be used. Replacement cost will be based on average unit rates for similar properties, land use, dimensions, land size and shape, which are not considered observable based on market evidence, therefore, placing the whole asset class in Level 3. Valuation techniques remained the same for this reporting period.
page 51
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. Fair value measurement (continued)
$ ’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 – 1/7/16
Depreciation and impairmentOther movement (WIP Transfers)Other movement (details here)
Closing balance – 30/6/17
Depreciation and impairmentOther movement (WIP Transfers)Other movement (details here)
Closing balance – 30/6/18
Opening balance – 1/7/16
Depreciation and impairmentTransferOther movement (WIP transfers)Other movement (Revaluation)
Closing balance – 30/6/17
Depreciation and impairmentOther movement (WIP transfers)
Closing balance – 30/6/18
213
Water
–
–
(764)
915 –
24,234
bridges
128,816
network
–
– 5,011 – 2,855 2,919 –
5,011
5,011
(2,848)
network
2,307
– (275)
94,624
24,234
24,234 122,708
–
earthworks Total
93,316 4,635
–
2,777
– –
Tip
25,442
664 (83) 607
(78)
– (1,853) 416
1,317
4,016
3,930 126 29,847
30,539 994
–
95,314
assets
(628)
977
126,838
24,814
26 – (81) – – (81)
(774)
(43)
–
29,862 984 25,888
– (43) (86)
82 (17)
(2,848)
82
(16) (627)
(402)
87
footpaths
2,163
Receivables
4,424
Other
(1,822) 64
(1,547)
Bulk
4,604
Stormwater Seweragesupplydrainage
– –
–
– (236)
Total
2,723 (1,617)
–
structures
Roads
523
523
LandCommunity
– – –
–
– –
523
page 52
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 15. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3) (continued)
b. Significant unobservable valuation inputs used (for level 3 asset classes) and their relationship to fair value.
The following table summarises the quantitative information relating to the significant unobservable inputs used inderiving the various level 3 asset class fair values.
IPP&E
(5). Highest and best useAll of Council’s non-financial assets are considered as being utilised for their highest and best use.
Valuationtechnique/s
125
24,814
3,930
977
Current replacement cost
Replacement costAsset condition ratingRemaining useful life4,604
119,598
UnobservableinputsClass
Fairvalue
(30/6/18)$’000
Current replacement costReplacement costAsset condition ratingRemaining useful life
Replacement costAsset condition ratingRemaining useful life
Discounted future value of remediation Remediation rate
Current replacement cost
Current replacement cost
Replacement costAsset condition ratingRemaining useful life
Current replacement cost
Replacement costAsset condition ratingRemaining useful life
Community Land 523 Current replacement cost Replacement costAsset condition rating
Sewerage network
Water supply network
Tip remediation
Stormwater drainage
Roads, bridges, footpaths and bulk earthworks
Other structures
page 53
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 16. Related party transactions
$ ’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 benefitsTotal
5 695
2018640 50
2017660
– –
660
X11A0T
page 54
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 17. 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 assetsTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and amortisationOther expensesTotal expenses from continuing operationsOperating result from continuing operations
Net operating result attributable to each council fund
Net operating result for the year before grants and contr and contributions provided for capital purposes
1 General fund refers to all Council’s activities other than Water and Sewer. NB. All amounts disclosed above are gross – that is, they include internal charges and recoveries made between the funds.
21,949
1,514
17
17
(550) –
474 – (407)
–
1,107 –
–
–
388
143
17
– (407)
1,657
303 –
– 101
20,292
– 1,068
1,017
– 49
10,718
1,657
589
570 – –
–
86
491
3,358 886
9,759
628
5,098 –
– –
39
1,299 –
57 392 9,147
2018
182
2018
6
General1SewerWater
2018 2018
533
X12A1T
page 55
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements as at 30 June 2018
Note 17. Financial result and financial position by fund (continued)
Statement of Financial Position by fund$ ’000
ASSETSCurrent assetsCash and cash equivalentsReceivablesInventoriesOtherTotal current assets
Non-current assetsInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNet assets
EQUITYAccumulated surplusRevaluation 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.
737
98,156 1,706
2018
–
0
45,786
2,787
11,140
143,942
–
–
–
403 1,206
Sewer
2018
859 1,170
General1
2,611
2018
Water
134
23 4,012
24,895 3,930
– –
143,454
208
–
–
143,454
– – 623
75
961
2018
537
– –
2,065 –
–
1,128
3,930
–
–
4,467
– 737 –
3,524 26,960
4,467 143,942
26,960
–
4,467
147,466
26,960
–
–
15,820
–
– –
– –
–
24,895
2,761
–
page 56
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 18(a). Statement of performance measures – consolidated results
$ ’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 depositsMonthly payments from cash flow of operating and financing 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 Notes 8 and 9.(4) Refer to Note 8(b) and 9(b) – excludes all payables and provisions not expected to be paid in the next 12 months (incl. ELE).
35.69%
x12
20.80x
1,716 4,220
3,005
2.46 mths
1,092
201
1.6 mths > 3 mths
47.40%
0.71x > 1.5x
33.22x > 2x
10%
21.20x
0.3 mths
24.75%
23,498
Indicator
7
12,225
Amounts
22,287
2018 20162018Benchmark
> 0.00%
36.34%
52.03%
Prior periods
2,167 1,401
4,180
2017
2.02x
39.05%
0.65x
3.34%18.20%0.03%
> 60.00%
X12A0T
page 57
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 18(b). Statement of performance measures – by fund
$ ’000
Local government industry indicators – by fund
1. Operating performance ratioTotal continuing operating revenue (1) excluding capital grants and contributions less operating expensesTotal continuing operating revenue (1) excluding capital grants and contributions
2. Own source operating revenue ratioTotal continuing operating revenue (1) excluding capital grants and contributions Total continuing operating revenue (1)
3. Unrestricted current ratioCurrent assets less all external restrictions (2)
Current liabilities less specific purpose liabilities (3, 4)
Notes
(1) - (4) Refer to Notes at Note 18a above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.
Benchmark
> 60.00%
> 0.00%
50.56%
0.65x
2.59% 21.55% -57.05% -45.17% 3.46% -76.61%
2018 2018 20182017 2017
87.08% 40.70% 38.29% 100.00%
2.02x 34.38xNo liabilities
No liabilities
2017Water indicators Sewer indicatorsGeneral indicators 5
71.92x > 1.5x
47.69%
X13A0T
page 58
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 18(b). Statement of performance measures – by fund (continued)
$ ’000
Local government industry indicators – by fund (continued)
4. Debt service cover ratioOperating result (1) before capital excluding interest and depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows) plus borrowing costs (IncomeStatement)
5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible
6. Cash expense cover ratioCurrent year’s cash and cash equivalents plus all term depositsMonthly payments from cash flow of operating and financing activities
Notes
(1) Refer to Notes at Note 18a above.(5) General fund refers to all of Council’s activities except for its water and sewer activities which are listed separately.
19.90x
4.32%
32.60x 0.00x 0.00x 0.00x
0.00 months
2017
73.63% 65.22%161.16% 184.50%-3.80%
General indicators 5 Water indicators Sewer indicators
0.00x
x12
Benchmark2018 2017 2018 2017
months months monthsmonths1.52 0.00 0.00 0.64 0.00
months
> 2x
> 3 months
END OF AUDITED FINANCIAL STATEMENTS
2018
10.00%
page 59
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 18(c). Statement of performance measures – consolidated results (graphs)
Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
To assess the adequacy of working capital and its ability to satisfy obligations in the short term for
the unrestricted activities of Council.
Council has maintained a reasonably strong working capital position for the year mainly due to payments received for large projects (Eurella) and the receipt of grants
in advance in the previous year.
Purpose of own source operating
revenue ratio
Commentary on 2017/18 result
2017/18 ratio 52.03%
This ratio measures fiscal flexibility. It is
the degree of reliance on external funding
sources such as operating grants and
contributions.
Reflects the reliance Council has on grant income, and the difficulty in generating own source revenue due to geographic location
and population.
Purpose of unrestricted current
ratio
Commentary on 2017/18 result
2017/18 ratio 0.65x
Purpose of operating
performance ratio
Commentary on 2017/18 result
2017/18 ratio 0.03%
This ratio measures Council’s
achievement of containing operating expenditure within operating revenue.
This ratio has decreased in the 2018 year due to the completion of large projects (Eurella) and federeral grants not being
received in advance.3%
18%
0%
-1%-5%
0%
5%
10%
15%
20%
2015 2016 2017 2018
Rat
io %
1. Operating performance ratio
35% 39%47% 52%
0%
10%
20%
30%
40%
50%
60%
70%
2015 2016 2017 2018
Rat
io %
2. Own source operating revenue ratio
2.0
0.30.7 0.6
0.0
0.5
1.0
1.5
2.0
2.5
2015 2016 2017 2018
Rat
io (x
)
3. Unrestricted current ratio
X14A0T
page 60
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 18(c). Statement of performance measures – consolidated results (graphs)
Benchmark: ――― Minimum >=2.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside Benchmark
Benchmark: ――― Minimum >=3.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Purpose of cash expense cover ratio
Commentary on 2017/18 result
2017/18 ratio 2.46 mths
This liquidity ratio indicates the number of months a Council can continue paying
for its immediate expenses without
additional cash inflow.
The improvement in this ratio is due to the improvement in Council's cash position.
To assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of
recovery efforts.
This ration reflects the difficulty in collecting rates within the community.
Purpose of debt service cover ratio
Commentary on 2017/18 result
2017/18 ratio 20.80x
This ratio measures the availability of operating cash to
service debt including interest, principal and
lease payments
The reduction in this ratio is primarily due to Council's operating result being lower
than the 2017 year.
Purpose of rates and annual charges
outstanding ratio
Commentary on 2017/18 result
2017/18 ratio 36.34%
12.9
21.2
33.2
20.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2015 2016 2017 2018
Rat
io (x
)
4. Debt service cover ratio
25% 25%
36% 36%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2015 2016 2017 2018
Rat
io %
5. Rates, annual charges, interest and extra charges outstanding percentage
0.0 0.3
1.6
2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2015 2016 2017 2018
Rat
io (m
ths)
6. Cash expense cover ratio
page 61
Financial Statements 2018
Central Darling Shire Council
Notes to the Financial Statements for the year ended 30 June 2018
Note 19. Council information and contact details
Principal place of business:21 Reid StreetWilcannia NSW 2836
Contact detailsMailing address: Opening hours:PO BOX 165 9.00 a.m to 5.00 p.m Wilcannia NSW 2836
Telephone: 08 8083 8900 Internet: www.centraldarling.nsw.gov.auFacsimile: 08 8091 5994 Email:
Officers Elected membersGENERAL MANAGER MAYORGreg Hill Greg Wright
RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSJacob Philp
Other informationABN: 65 061 502 439
X15A0T
page 62
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