Council’s journey from surplus, to deficit, but profit
HOW does an $873,000 budget surplus turn into a deficit of $2.3 million?
The questions came in a flurry last week at Clarence Valley Council's committee meeting in what provided an interesting lead-in to today's full council meeting, which will consider the council's interim financial results for the year.
Last week, a report tabled to the committee meeting showed a breakdown of budget to actuals, and Cr Karen Toms extensively questioned general manager Ashley Lindsay over how the figures had changed from what she referred to as "happy days" in a June report.
Mr Lindsay said the report in June showing a surplus had included projected efficiency savings of $2.25m, and said the change in the figure in the current report was to highlight the savings hadn't been made, and to give a better perspective of the budget without the savings.
"We didn't achieve the savings of $2.25m," Mr Lindsay said. "If you take that out, the actual budget deficit projected was $1.3m, and council's actual deficit was $2.3m.
"It's purely for this report. We will continue to try and achieve those efficiency savings over the coming twelve months."
Mr Lindsay said he had explained at a workshop last week the June report should've identified council wasn't achieving the efficiency savings, and the $873,000 was misleading the actual project result.
"So in that budget surplus of $873,000, in there was efficiency savings of $2.25m which we hadn't achieved … and we should've identified that and separated it out and made it clear."
The council report said the actual deficit had come about through various expenditure related to bushfire and other unexpected disaster responses.
Cr Peter Ellem asked whether the events of early in the year were being reported in real time, or only being picked up now.
Mr Lindsay said there were a few contributing factors, including funds not being reconciled until June 30, an incorrect budget, and a failure to recognise that budget wouldn't be met on planning income earlier in the year.
He said while as an accountant he could recognise the budget shortfalls, staff may not have had the visibility within the corporate system to identify the issue earlier.
"That is something we are trying to improve with changes to the corporate system," Mr Lindsay said.
"We have been trying to improve visibility. but it's clearly not working. But with the upgrade we're putting in I think we'll get access to better financial information."
Mr Lindsay said despite the budget deficit, the actual council result subject to the audit to be presented at the full meeting would be around $1.1m.
Cr Richie Williamson ascertained from the figures of the all funds result that council had, on an all funds basis, started the financial year at $129m and finished at $140m.
Mr Lindsay said a contributing factor to the result was the water fund.
Council will consider the financial results for the year at today's council meeting at 2pm in the Grafton chambers.