Here is the article in markdown format:
Financial Report Highlights Unusual Practices and Uncertainties
A new report from the Western Australian Auditor General has shed light on the financial practices of several local government entities, revealing a string of unusual accounting methods and uncertainties that may have significant implications for taxpayers.
Unqualified Opinions
The report reveals that five entities - Shire of Bruce Rock, Shire of Goomalling, Shire of Ravensthorpe, Shire of Sandstone, and Shire of Wagin - received qualified opinions from auditors due to inconsistencies in their financial reporting.
Accounting Issues
- Shire of Bruce Rock: Failed to conduct a thorough valuation of its infrastructure assets, including bridges, footpaths, and drainage systems. The auditor was unable to confirm the value reported for these assets, resulting in a qualified opinion.
- Shire of Goomalling: Recognized revenue from properties owned by the shire, which is not in line with accounting standards. This practice overstated the entity’s total revenue and expenses by hundreds of thousands of dollars.
- Shire of Ravensthorpe: Has not revalued its infrastructure assets since 2015, raising concerns about the accuracy of its financial reporting. The auditor noted that the balance at June 30, 2019, may not be comparable to the previous year due to the uncertainty over the 2018 balance.
- Shire of Sandstone and Shire of Wagin: Failed to regularly revalue infrastructure assets, including roads and footpaths. The auditor was unable to determine whether these assets represented fair value.
Inconsistencies in Accounting Standards
The report highlights inconsistencies between Regulation 16 of the LG Financial Management Regulations and Australian Accounting Standards. The regulation does not allow local government entities to recognize certain categories of land as assets, which may lead to inconsistencies in financial reporting.
Additionally, the City of Cockburn was highlighted for correcting prior period errors, while the City of Karratha disclosed a contingent liability for the rehabilitation of its Seven Mile Waste Disposal site.
Material Matters of Non-Compliance
The report also identifies several material matters of non-compliance with legislation, including failure to effectively apply financial controls and regulations. The auditor noted that these findings represent significant non-compliance with important sections of the LG Financial Management Regulations.
Conclusion
Overall, the report highlights the need for local government entities to improve their financial reporting practices and ensure transparency and accountability in their operations.
Source: Western Australian Auditor General