On the advice of its Audit Risk & Improvement Committee (ARIC), Council has released its draft annual financial statements for 2020/21 as the first step in preparing to present them to the Government Audit Office.

The accounts show, without a non-cash fair value revaluation of investment properties, a net loss of $9.5 million for that year, following on from a loss of $8 million in 2019/20.

Given the audit by Deloittes is still ongoing, and long overdue, ARIC has recommended Council accept these accounts as the best that can be achieved given the circumstances. The accounts will be lodged with a joint statement by management and the Council outlining the challenges experienced and an explanation of why the audit is still ongoing.

“It is in the best interests of the Audit Office and Kiama Council to be able to draw a line under this,” says Mayor Neil Reilly.

“They will have to be qualified by a statement that reflects what we have said in the State of the Organisation Report and the Strategic Improvement Plan, and says that what we have now is as best we can do.

“It is impossible for us to get any closer to an accurate representation of Council’s financial situation than what we have at the moment.”

While the usual cost of an audit is $68,000, the audit for this year has now reached $330,000.

“That is because there are significant matters of concern and question that our auditors are going through,” says CEO Jane Stroud.

“The reality for us is we are the only council in NSW with an unaudited opinion and an audit process ongoing, and that is largely due to going concern and liquidity issues, as well as concerns about financial records and accuracy of the information reported.”

Amongst the issues found by the auditors was a doubling up of accounting for costs, which resulted in a prior year adjustment of $1.8 million.

The current liquidity issue was also highlighted in the Statement of Investments for June 2022 included in the July Meeting Business Papers, which showed a negative cash balance of $1.2 million for the month.

This urgent lack of cash is being addressed through the sale of Akuna Street and other elements of Council’s property divestment portfolio.