Stung by NSW audit

Council has been hit with a $85,500 bill for financial auditing after being forced to use the NSW Audit Office for its 2016/17 audit, an increase of more than 50 per cent on the previous year.

Legislation was introduced by the NSW government for the 2016/17 year to engage the Audit Office of NSW for all local government councils. The change meant council lost its ability to negotiate the best price with an audit provider and was instead obliged to use the Audit Office.

For the 2015/16 audit council paid RSM Australia $57,850 but the bill for the 2016/17 audit was $85,500 it was revealed in the council meeting on June 13. Despite the original quote of $67,900, there was an increase to $77,740 before a final invoice for an additional $7760 was submitted. Council officers felt “the increase could not be reasonably justified”.

The cost hike is all the more galling as council ended up with the same auditors, RSM Australia, as in the 2015/16 year because the Audit Office did not have the capacity to deal with the workload and sub-contracted the work out, mayor Kristy McBain said.

“We are constrained and given advice to make savings but we now have to go through a centralised service that does not allow us to negotiate,” Cr Kristy McBain said adding it impacted many rural councils.

“We were told by the Auditor-General that this would be better for everyone. Every rural council is struggling with rate capping and staff pay awards,” she said.

The rate peg, set by the NSW Independent Pricing and Regulatory Tribunal, was 1.8 per cent for 2016/17, 1.5 per cent for 2017/18 and will be 2.3 per cent for 2018/19 while staff costs increased by 2.8 per cent for 2016/17, 2.35 per cent in 2017/18 and will increase by 2.5 per cent on July 1, 2018.

The BDN asked the Office of Local Government what rural ratepayers were getting for their money to justify the large increase in cost and questioned why there was insufficient capacity for the Audit Office to do the work.

A spokesman for the Office of Local Government said staff would continue to “work with councils and the Audit Office to address implementation issues relating to the new requirement for the Auditor-General to have oversight of council audits”. 

“The new measure is designed to improve the consistency, reliability and quality of financial reporting and public accountability of local councils,” he said.