Referral of draft Financial Reports 2020-2021 to audit

The draft Consolidated Financial Reports for Central Coast Council and the Financial Reports for Central Coast Council Water Supply Authority for the period from 1 July 2020 to 30 June 2021 were referred to the Audit Office of New South Wales, for external audit.

Notes extract from the Council Report:

Operating Result

The operating deficit before capital grants and contributions for the 2020-2021 financial year is ($91.5M). The operating deficit including capital grants and contributions for the 2020-2021 financial year is ($7.8M).

Adjustments after presentation to 2021 Audit, Risk and Improvement Committee

The 2020-2021 operating result was adversely impacted by two matters subsequent to presentation to Audit, Risk and Improvement Committee on 14 September 2021; including a revaluation decrement in sewerage assets of $29.0M (which is a non-cash journal) and the expensing of $1.5M software as a service (SaaS) costs that were previously capitalised and recognised as intangible assets (as a result of an International Financial Reporting Standards Interpretations Committee decision made in April 2021, which was not reflected in the most recent Accounting Code).

Operating Result Prior to These Two Adjustments

If the revaluation decrement and the expensing of intangible cloud based computing arrangements were excluded, the operating result for the 2020-2021 financial year before capital grants and contributions would have been $61.1M deficit and the operating result for the 2020-2021 financial year including capital grants and contributions would have been $22.6M surplus as presented to ARIC at its meeting of 14 September 2021.  

Income Statement Analysis

The variance between the actual net operating result (excluding capital grants and contributions) of $91.5M deficit and the original budgeted net operating result (excluding capital grants and contributions) of $13.4M deficit is the $29.0M revaluation decrement in sewerage assets, organisational restructure costs of $15.9M, increased depreciations expense $12.5M, unbudgeted net loss on the disposal of assets $7.1M, reduced interest on investment income $4.4M and additional borrowing costs of $1.7M.

ENDS

Editor’s note:

The draft Consolidated Financial Reports for Central Coast Council and the Financial Reports for Central Coast Council Water Supply Authority can be viewed as part of tonight’s Ordinary Council Meeting documentation:
•    Agenda of Ordinary Council Meeting for Tuesday 12 October 
•    Attachments of Ordinary Council Meeting for Tuesday 12 October