Former Gosford Council’s books get the all clear

Almost two years after the dismissal of Gosford Council, and one year after holes were found in its financial management systems, the NSW Auditor General’s Office, and Price Waterhouse Coopers, have reported that they could only find “minor errors”, and no evidence of fraud in the former Gosford Council’s financial transactions.

One year earlier, the CEO, Administrator and Chief Financial Officer, had signed off Gosford’s 2015-16 financial reports with caveats. Price Waterhouse Coopers took the unusual step of refusing to express an opinion about those financial statements based on their audit. Control issues had been identified during the preparation of Gosford Council’s financial reports that prevented management from providing the auditor with adequate proof that all transactions had been recorded and were reflected accurately. At the time, Central Coast Council CEO, Mr Rob Noble, said the anomalies meant that he could neither rule out nor confi rm whether the former Council’s fi nancial transactions had been recorded accurately. A year later, the NSW Audit Office and PWC have issued a clean audit report.

At the March 26 ordinary meeting of Central Coast Council, Mr James Sugarman, from the NSW Audit Office, said: “In relation to former Councils, the Gosford finance system had a number of asset control deficiencies. “A suite of additional audit work has been done over those results to assure a clean result could be attained,” Mr Sugarman said. Clr Doug Vincent asked Mr Sugarman and Ms Caroline Mara from Price Waterhouse Cooper to explain how they drilled down into the Gosford system “to see if they could find any impropriety or misconduct by Gosford Council staff”. “We did identify the risk of errors and the potential for fraud due to a lack of access controls to the finance system for Gosford Council,” he said.

“The risk was identified and we escalated the level of audit required…we increased the amount of sample testing and validation by other means, including external sources. “The number of samples increased significantly, and we worked with management to identify transactions and track down the details on those transactions. “We did identify minor misclassification or minor errors, but they were not material at all, overall there was nothing to report,” he said. Mr Sugarman said he was the auditor delegated by the NSW Auditor-General responsible for conducting the audit of Central Coast Council’s accounts under the new mandate given under the NSW Local Government Act for the Auditor General to audit all councils. He said he was able to issue a clean audit report and that Central Coast Council’s financial statements complied with relevant accounting standards. An outspoken critic of the former Gosford Council’s financial affairs, Clr Greg Best, moved the motion to adopt the audited financial statements.

“This has been an extraordinary financial journey this council has gone on from the day of infamy on May 12, 2016,” Clr Best said. “The auditor has given a clean slate to all the actions of both councils…there was nothing illegal or inappropriate,” Clr Best acknowledged. Seconding the motion, Clr Vincent said “When I understood the drilling down, and the recognition of no impropriety, I rested a lot easier,” he said. “We still have to pay for this amalgamation, which will be between $120 and $150m, and the ratepayers are still concerned about that and still questioning whether it is the best use of their money. “PWC and the audit office have gone to extensive lengths to ensure things are right and correct and to the best of my knowledge, they are,” Clr Vincent said. Clr Vincent, who is a member of Council’s Risk and Audit Committee, said “I went there with a healthy scepticism and I was asking a lot of blunt pointy questions.

“Normally, if you have a finance system, it locks out the bulk of the people and only allows a small number of senior people and key finance people to enter the system. “When the Gosford system was implemented, it didn’t have its full lockout application and more people than you would prefer had access. “I think they did over 16,000 samples with Gosford staff, PWC and the audit office. “They have put their own reputation on the line here, they have said they could not find any malpractice, misconduct or anything that was untoward. “Over time, the openness with which they were discussing the process and the frankness that they didn’t feel anyone was blocking them from trying to check things. “Halfway through the process they said they wanted more time to double check, which they were given, and at the end of the day they were happy to sign off,” Clr Vincent said.

Source: Agenda item 4.6, Mar 26 Meeting notes, Mar 26 Central Coast Council ordinary meeting Interview, Mar 27 Doug Vincent, Central Coast Council Jackie Pearson, journalist