Council's cash figures not adding up for councillors

Council's cash figures not adding up for councillors

Council's finances have been called into question again after an apparent mismatch between two sets of figures both purporting to be figures at June 30, 2019.

The cash reserve figures vary considerably between the audited accounts of June 30, 2019 and the "actual June 30 2019" cash reserves listed in the March 2020 quarterly budget review statement.

Although the sum of the three cash reserves - restricted external, restricted internal and unrestricted cash - is the same in both documents, the amounts in each reserve vary, in one case by $13m.

The "actual June 30 2019" figure for the March quarter is the starting point for the year 19/20 and should reflect the audited accounts of June 30, 2019.

But in the quarterly review of March 2020, while the overall total remains the same at almost $83m, the figures in each cash reserve are very different.

The mismatch prompted Cr Mitchell Nadin to ask a question without notice of council's general manager, Leanne Barnes at the general meeting on Wednesday, June 24.

What questions were asked

"On page 18 of council's recently adopted March quarterly budget review, it states council started this current financial year on July 1, 2019 with a cash position of $82,887,000 broken into three areas: $57,850,632 in externally restricted funds, $12,033,596 in internally restricted funds, and $13,002,772 in unrestricted cash," Cr Nadin questioned.

"However, these figures from the QBR (quarterly budget review) are apparently at odds with the 2019 financial statements (adopted in April), which on page 27 states that as of June 30, 2019 council had the same gross cash amount of $82,887,000, but reported $79,644,000 in externally restricted cash, $3,243,000 in internally restricted cash, and zero unrestricted cash.

"General manager, can you explain this apparent discrepancy and confirm which of these figures is correct?" he asked.

Why does it matter

Cr Nadin also asked whether any externally restricted cash has been transferred into council's internally restricted or unrestricted cash holdings. Councils are not permitted to transfer cash from externally or internally restricted reserves into their unrestricted reserve.

In a separate response to questions about the Long Term Financial Plan, Ms Barnes told the News Weekly that council can't and wouldn't do that.

Cr Bain asks where $12m has gone

Cr Robyn Bain also had a question relating to the cash reserves shown in the March quarterly review.

"The March quarterly budget review forecast will have $552,702 in its unrestricted cash reserve by next Tuesday (June 30 financial year end). That means council will have spent more than $12m from the $13,002,772, council reportedly had, in its unrestricted reserve at the beginning of this financial year. Can you please provide detail or a statement on all income and expenditure from council's unrestricted cash reserve," Cr Bain asked.

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Ms Barnes said council would provide a report to councillors.

"I would quite like the breakdown of what we spent that $12m on," Cr Bain said in response to Ms Barnes.

Externally restricted funds include money set aside for particular funds such as water and sewer and also capital grants for particular named projects.

Internally restricted funds include sums of money that councillors have allocated through a resolution of council, for a particular purpose such as $40,000 to be set aside for festivals and events in the shire. Unrestricted funds can be used as council sees fit.

More ways than one to slice the cash reserves pie

On June 30, 2019 the audited cash reserves figures were shown as:

Externally restricted cash was $79,644,000

Internally restricted cash was $3,243,000

Unrestricted cash was ZERO

In the quarterly budget review March 31 2020, the cash reserves for June 30, 2019 were shown as:

Externally restricted cash was $57,850,632

Internally restricted cash was $12,033,596

Unrestricted cash was $13,002,772

This story Council's cash figures not adding up for councillors first appeared on Merimbula News Weekly.