Damning report reveals council’s financial failings
THE financial shortcomings of Gympie Regional Council have been laid bare in a brutal – and at times scathing – review of the organisation by a global accounting body.
The report, compiled by CPA Australia, revealed a staggering number of systemic issues inside the council when it came to financial management.
These include “the poor financial literacy of many managers; a vacuum in senior financial leadership; low confidence in the reliability of financial systems information, budgeting and reporting; the absence of performance KPIs (Key performance Indicators); lack of a financial sustainability strategy; a stretched, transactional finance function; and an executive team … widely perceived as not being unified or fully functional”.
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A “broadbased reticence to accept accountability for performance” and “a lack of visible consequences” for decisions were also highlighted.
Overall the council was ranked below average, scoring 1.7 on a scale of one to four.
The average of other councils reviewed by CPA was 2.2.
CPA offered nine recommendations on how the council could fix its issues.
Appointing a chief financial officer (the position has been vacant for almost a year), mandating a “bottom-up” budgeting process and developing a financial sustainability strategy were among the highest priorities.
“It is evident that finance capability in GRC has been perceived as of secondary importance,” the report said.
“This needs to change.”
Mayor Glen Hartwig said the report was “confronting” but gave the new council a “line in the sand” to move forward.
“It’s time to change the way we do things and think about our budget process,” Cr Hartwig said.
“The information is confronting and I want to congratulate the staff who were interviewed or took part as we know this wasn’t easy.
“They were honest about the issues that they see and the report reflects this.
“It’s obvious that staff want to see these changes made too.
“Councillors appreciate their effort to help us get back on track.
“The standards of the past are not good enough and our financial position reflects that.”
The council has come under fire in the past few years over its money management.
Critics claimed some treated the coffers like a kid in the candy store.
A $12 million operating loss last year prompted the Queensland Audit Office to rate the council as a medium risk of long-term instability.
The report validated the criticism.
The review found that “while acknowledging accountability is an espoused GRC value (among executive and frontline staff), it is not reflected in behaviours, processes and visible consequences”.
“In exploring accountability in several group interviews it was disappointing to note that a common response was derision and laughter,” the report said.
The council’s 2017-22 corporate plan came under fire, too.
CPA’s report found it “does not support an accountability culture” as every action “leads with the phrase: ‘subject to available resources’”.
An unwillingness within the council to hit the brakes was also revealed; 90 per cent of respondents, including executive team members, said the council was not prepared to stop projects “that lose sight of planned benefits”.
The revolving door leading to the chief financial officer’s desk was another problem.
Apart from the ongoing job opening, the report found “even when the previous CFO was in place, he did not have a position on the executive team”.
Other problems included a “disjointed” and “frustrating” budget process, that these budgets could be approved with no supporting operational plan initiatives (and vice versa),
A “minimal focus on the concept of ‘value for money’” in the council was revealed in the report (“there is minimal effort at ensuring and demonstrating value for money in the use of public funds”) and the council’s financial systems were taken to task.
“Notwithstanding a recent general ledger rewrite project, finance systems are generally regarded as poor,” the report said.
“It was disconcerting to note that the finance team need to undertake a daily end-of-day review to ensure all general ledger accounts remain in balance.”
Mr Hartwig said the findings outlined the hurdles ahead.
“The picture is not great, but it gives us clarity. If we don’t acknowledge the issues, we can’t address or fix them,” Mr Hartwig.
“I commend the acting CEO for this work which has given us a clear understanding, and we will make better decisions for the future of our region.
“It’s just as important that our residents have this information.
“We’ll make sure we have this document on our website for everyone to access.
“Ratepayers own this organisation and you need to be aware of its condition.
“We want openness and transparency.”
“Gympie Regional Council was once the most sustainable council in Queensland. It is time to reapply the principles and actions that had this council in such an enviable position.
“To be honest, the results in this report will not be a surprise for some who have voiced concerns in the past.
“This council has already taken steps to remedy these issues but the pathway back is long and difficult, there is no quick fix.”
Acting CEO Pauline Gordon said the council was already looking at what immediate changes could be made in light of the recommendation.
“The development of the draft 2020-21 budget is the priority for us, and implementation of the recommendations will be a requirement of the organisation as a whole,” she said.