The 222-pages of draft financial statements from the former Gosford Council beg more questions than they answer, but some answers have not been forthcoming from the Central Coast Council.
Coast Community News interviewed CEO, Mr Rob Noble, about the draft accounts on March 16, but the interview was limited to 15 minutes and was not long enough to cover many of the discussion points identified from our reading of the accounts.
At the end of the interview, Mr Noble offered to answer any remaining questions via email.
Coast Community News dispatched a list of 15 further questions to Mr Noble.
For instance, Mr Noble was asked to help us identify where in the draft financial reports we could find reference to information such as the proceeds from the sale of Kibbleplex.
He was asked for further explanation of the statement “at the end of 2014-15, the restricted cash balances existing in the financial systems exceeded the actual total cash balance by $14 million”.
Coast Community News wanted to know if that meant $14 million was missing from the restricted cash balances.
Other questions were asked about the status of the restricted cash balances of the former Gosford Council including where we could find the money that had been raised over years of ratepayer levies to pay for the long-promised regional library.
Questions were also asked about why the books of the former Wyong Council were not exposed to the same forensic auditing process as the Gosford books and why the Wyong draft accounts had been prepared by its existing auditor (Price Waterhouse Coopers) when, arguably, it would have been in the best interests of the new council to select a completely independent auditor to examine the financial affairs of both former councils.
The draft financial accounts revealed an $8.9 million recovery from exotic investments, clearly a reference to the former Gosford Council’s failed investment in Collateralised Debt Obligations (CDOs).
The item referred to a settlement with LBA (understood to be Lehman Brothers Australia) but Gosford Council had not been part of the class action brought against Lehman Brothers by other local councils and not-for-profits.
Coast Community News also asked for clarification as to the decision by the CEO, Administrator and Chief Financial Officer to “sign off” the draft reports with caveats and not use the sign off prescribed in the Local Government Act.
The prescriptive sign-off in the Local Government Act is included to ensure the senior officers of any Council signing off on accounts can be held responsible for those accounts.
We considered our questions reasonably innocuous and fair, given the regular statements made by Central Coast Council Administrator, Mr Ian Reynolds, about the new council’s agenda of transparency and community engagement.
“So many questions,” Mr Noble replied, adding that he “did not have time to address them last night and we’ll be on a continuous roundabout if we deal with everything at this incredibly busy time”.
Instead of answering individual questions, Mr Noble sent the following statement: “Council has been factual and transparent in helping the community understand the former Gosford finances.
“Information relating to the former Gosford City Council finances is in the Council report publicly available on Council’s website.
“In addition, Council’s comments relating to the report have been detailed in the media release issued on Thursday, March 9 and on Monday, March 13, following the Extraordinary General Meeting,” Mr Noble’s statement said.
“Council also held a resident’s forum, listened to the concerns of the community and addressed those concerns during the meeting.
“The financial position of the Central Coast Council is very strong and our plan is fully funded.
“Even after the adjustments detailed in the financial reports, Central Coast Council has [inherited] fixed assets with a gross replacement cost of over $9.5 billion.
“The January 2017 Investment Report was presented to the February ordinary meeting of Council and it noted that Central Coast Council has $381 million in cash and investments.
“Council’s capacity to meet its obligations is strong and in no doubt.
“The Quarter 2 business review, presented to the Council in February 2017, said Central Coast Council is on track to record a surplus of over $10 million this financial year (before capital grants and contributions).
“I see these financial reports as an opportunity to draw a line on the former Councils, and focus on Central Coast Council and the opportunities it has.
“I stress again that on all metrics available, Council is in a strong financial position.
“The plan is fully funded, we are forecasting to be in the black, and we have resources to meet our obligations in the short and longer term.
“The reports have been referred for external audit and we await their advice.”
The timeframe is unknown for the completion of the external audit, which is the next step in the finalisation of the 2015-16 accounts.
“The external auditors may require more time to complete audit procedures and form their audit opinion due to the existence of issues noted in this report that have altered the risk profile of the audit,” the draft accounts said.
Mr Noble was also asked to advise if the drawn-out audit process could result in a deferral of the local election, due in September, but Council has not provided an answer to that question either.
Agenda,
Mar 13, 2017
Extraordinary meeting, Central Coast Council
Interview,
Mar 16, 2017
Rob Noble, Central Coast Council
Media statement,
Mar 17, 2017
Rob Noble, Central Coast Council
Jackie Pearson, journalist