Financial Management

Published on 12 September 2018

Burnside changed the course of financial management for all councils in SA

The State Government did not intervene or ‘demand that Burnside address the issues raised by the auditor Cory McGowan’ as reported recently by The Advertiser and on AdelaideNow. 

This claim is simply wrong and is a gross distortion of the facts.

The facts are that Local Government Minister Geoff Brock wrote to Council and simply sought an explanation from Council on a qualification received in relation to internal financial controls and how they are measured.   Council responded, via letter, on how it intended to address the matter.

In 2009, new requirements for an external auditor to provide an opinion on the effectiveness of a council’s financial internal controls were included in the Local Government Act 1999. At that time there was no accepted and consistent framework to perform the assessment. In addition, there were no clear guidelines from the external auditors around what the expectations were and what constituted a qualification.  The Better Practice Model was developed for local governments as an agreed framework to measure financial internal controls - consisting of over 400 controls. 

The 2013/14 financial year was the first time that auditors were required to provide two audit opinions for all local governments - an opinion on the financial report and, for the first time, on Council’s internal controls.

The City of Burnside, like most other councils, adopted the Better Practice Model methodology and tested controls on a regular basis. However, the auditors concluded that the testing methodology was not definitive enough and provided a ‘qualified’ opinion to the City of Burnside, who were the only metropolitan council to receive a qualification for the first year.

The City of Burnside did not receive a qualification on its financial reports, which was all in order.

Being the only metropolitan Council audited by HLB Mann Judd and having received a qualification,  the City of Burnside undertook a large body of work that drew upon best practice models within all tiers of Government, both here in SA and interstate, and developed a renewed internal control framework. The revised methodology focused on key controls and resulted in the reduction of controls from 400+ to just 82 key controls.

In Sept 2015, the external auditors expressed their appreciation on the amount of work done and commended the City of Burnside for adopting a well-structured approach. As a result, the City of Burnside received an unqualified report for the 2014/2015 financial year and for all subsequent years.

For its sector-changing work the City of Burnside won the 2016 LG Professionals Award for Leadership in Financial Management for the work performed in strengthening its internal control environment. The City of Burnside has since also presented at the South Australia Local Government Financial Management Group Conference and provided a snapshot of its journey and guidance to other Councils.

The City of Burnside continues to be committed to fostering a strong internal control culture and implementing best practice methodologies across the organisation.