The draft consolidated accounts for the merged Central Coast Council (business papers, December 7 extraordinary meeting) leave a number of old questions unanswered and raise new ones for rate payers and their Councillors.
The new accounts combine the finances of the former Wyong and Gosford Councils and it is acknowledged that the two differing accounting platforms and policies presented a formidable challenge to consolidate and reconcile.
Nonetheless, before Council staff can declare the financial merger successful and complete, the aspect of the doubtful Financial Year 2015-16 accounts of the former Gosford Council needs to be closed out positively.
This closing-out should include obtaining an unqualified independent audit report to validate that the financial affairs of the former Gosford Council contain no material impairments and liabilities that could affect the bona fide accuracy of the new Council’s finances.
We should be mindful here that under the Reynolds-administered Central Coast Council, the extraordinary meeting of June 19 resolved to note caveats to the financial statements and a further referral to Price Waterhouse Coopers (PWC) as external auditors, and that PWC had requested more time for testing in order to form an opinion.
The enclosed Statement from Management (Noble / Naven) to that Extraordinary Meeting’s business papers remains a source of considerable uncertainty and therefore concern.
These refer to the absence of evident controls and trackability of adjustments and changes made to account ledgers, including externally restricted cash balances (read: trust accounts and statutory funds held by Council).
Accordingly, Caroline Mara, representing PWC as the nominated auditors, provided a statement that included a blanket disclaimer, a refusal to form an opinion on the accounts and the inability to comment on the operating result, cash position, working capital, financial position, performance indicators or books of accounts or records for the 2015-16 consolidated financial reports of the former Gosford Council.
We should also note that Central Coast Council now does not make any claim that these issues have been resolved, nor that PWC have been able to provide a positive audit report, but that, all the same, it now appears that in order to proceed with the presentation of 2016-17 consolidated financial statements for a new combined Council entity, albeit issued in draft format, the figures have been accepted as a fait accopli.
The significant impairment risks inherited by the unreconciled Gosford finances are simply swept under the carpet of fresh reporting.
The 2016-17 draft financial reports make no provision for the significant uncertainties arising from the Gosford accounts; there are no itemised contingencies to cover any resultant risk and potential liabilities.
Sir Humphrey Appleby (Yes Minister) would have thought highly of Council staff and their courage to bring their reporting to an Extraordinary Meeting on December 7, considering the much-publicised accounting inconsistencies that they were incorporating and asking Mayor and Councillors to endorse.
It remains to be seen if the NSW Audit Office will be taken in by their legerdemain.
Meanwhile, our Central Coast Councillors would be well-advised to spare their quills lest they be held accountable later for any lack of due diligence and inquiry.
Email, Dec 11
Wolfgang Koerner, Point Clare