Council’s surprising audit result despite costly roads issue
LISMORE CITY COUNCIL has found itself in a better than expected financial position which was revealed in its audited financial statements for 2019/20.
The council posted a $635,000 net operating loss before grants and contributions in 2019/20, according to the statement.
For conext, in the 2018/19 period, the council recorded $8,508,000 net operating loss before grants and contributions.
After a year which saw the council have to adapt to changes in operation due to COVID-19 and a fire at the waste facility, the council managed a "favourable result".
This operating result was largely due to a change in Australian Accounting Standards, which relates to the recognition of income.
As a result of this change, the council was required to recognise income which it received in 2019 for projects undertaken in 2020 and provided a $6.5 million increase into revenues.
Presenting the financial statement findings, auditor Geoff Dwyer labelled changes to the standards 'significant.'
"Previously, June 30, 2019, Council recognised capital grants as they were received … under the new requirements that income is deferred and recognised when you spend the money," he said.
The report showed that council had achieved favourably across most of its performance indicators which indicate the council's financial health over the given period.
In the last financial year, the council also managed to maintain and grow its total cash, cash equivalents and investments by $7.9 million compared to the 2018/19 period.
The council had budgeted for a cash surplus in 2019/20 of $900,000.
Including the budgeted amount, the council recieved financial assitance grants for 2020/21 of $3.4 million and there were increases in water and wasterwater funds of $1.9 million and $1.8 million respectively.
When asked by deputy Mayor Neil Marks what the major issue facing the council was, Mr Dwyer did warn the council that their backlog of roadworks could present a financial issue going forward.
"What is recorded in your special schedules as an infrastructure backlog would appear to be the big challenge," Mr Dwyer said.
"Your special schedules show that your infrastructure backlog is significant as reported it is around ten per cent and the benchmark is around two per cent."