Hobsons Bay mayor Colleen Gates has attacked an auditor-general’s report which identified the council as financially “high risk”.
She said the report had ‘‘drawn a long bow’’ and was misleading, as the auditor-general’s assessment was based on what was “one flawed measurement from the last financial year”.
The report, titled Local Government: Results of the 2013-14 Audits, states the council was assessed as a high financial risk in 2013–14 because its liquidity ratio at June 30, 2014 had fallen below 100 per cent.
The liquidity ratio is the amount of cash the council has available to finance short-term debt.
“Hobsons Bay prides itself on its good financial management and because of the financial treatment of a loan at June 30, 2014, that reputation should not be unfairly tarnished by this incomplete report and the accounting practices of the auditor-general,” Cr Gates said.
“Council’s recent mid-year budget position, as reported publicly last week, shows our finances and liquidity are very sound.”
Included in the auditor-general’s appendices was a response from council chief executive Chris Eddy which stated: “Hobsons Bay was not at ‘high risk’ and did not have short-term financial sustainability concerns.
“This temporary situation was caused by long-term debt becoming current for a brief period of time at the end of the financial year.
“This was not a concern, as council was aware of the situation and had plans for it to be resolved by transferring the debt to a long-term facility shortly after the end of the financial year.
“Continuing to name councils in these types of situations provides a misleading indication that could cause damage to a council’s reputation as well as alarm to the community.”
The auditor-general’s response to Mr Eddy acknowledged that financial sustainability indicators should be considered over time and not in isolation.
“Further, as also highlighted in our report, the financial results and sustainability risks of councils were impacted by the Commonwealth government’s decision to not part-pay its 2014-15 grants in advance during 2013-14 and the delays associated with the Local Government Funding Vehicle,” the auditor-general stated.
