Investigation into South Australian council’s credit card spending by Auditor General

THE credit card spending of all 68 of SA’s councils will be investigated by the chief financial watchdog, who has launched an unprecedented inquiry amid rising public frustration.

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THE state’s chief financial watchdog is investigating council corporate credit card spending amid mounting public scrutiny on ratepayer-funded expenditure.

The Advertiser has learned the Auditor General’s Department has launched a wideranging inquiry, examining official outlays by all of South Australia’s 68 local authorities.

Local government sources say the inquiry is unprecedented in scope.

State Government auditors have requested “high level” information on spending, management and procurement of plastic as well as details of any fraudulent activity.

Depending on what the statewide survey uncovers, a more detailed forensic investigation will be undertaken on specific councils.

Any suspected cases of fraud could prompt criminal investigations.

While it remains unclear what prompted the spending watchdog to launch the inquiry it comes amid a public backlash over some councils’ spending and calls for greater transparency.

Details of the probe comes as an Advertiser analysis reveals the use of local government credit card use is on the rise and a wide gulf in the number of cards issued between councils.

Officials say credit cards is an “efficient” way to spend public money, especially large sums and high volume of goods, cuts paperwork and red tape while also providing better accountability.

Onkaparinga Mayor Lorraine Rosenberg arriving at the Onkaparinga council offices last year. The council has come under fire for its credit card purchases. Picture: Matt Loxton

In recent weeks, one of the state’s biggest councils throughout Adelaide’s south, Onkaparinga, has come under fire over its spending and staff credit card bills.

Assistant Auditor General, Andrew Corrigan, wrote to councils last month requesting information.

Documents show the inquiry’s scope includes details on total expenditure, transaction costs, number of cards, banks used, limits, copies of internal, and external, council reviews, as well as information on fraud or misuse.

“We are planning to examine credit card arrangements within the South Australian Local Government sector,” he wrote.

“To assist our planning process, we are gathering some high level general credit card information across the local government sector.

“Provision of this initial information will also assist in the selection of a sample of council where will conduct more detailed testing. We will notify the selected councils and provide further details of the examination in due course.”

Under state law, the Auditor General has the power to “examine the efficiency and economy” of any publicly-funded body and compel officials to co-operate.

Councils’ financial statements, however, are audited privately.

Last year a Local Government Association industry report suggested involving the Auditor-General in council financial audits should be “considered as a serious alternative”.

In his letter, dated January 17, Mr Corrigan, states that any information and documentation will remain confidential during the examination process.

But he adds: “Any specific mention of your council in a report will be subjected to a natural justice prior to finalisation.”

The Advertiser last week asked all 19 metropolitan councils for the number of credit cards issued to staff each year over the past five years and which staff cards are issued to.

Details provided by most shows the number of “active” credit cards varies greatly. A majority of those who responded revealed a rise in the number of cards issued each year.

While all chief executives, their personal assistants, and senior management are issued corporate cards, the survey revealed other staff with obscure job titles also can access credit.

More than 500 are in circulation. Adelaide City, Gawler, Tea Tree Gully and Unley councils did not respond by deadline.

Norwood, Payneham & St Peters Council, which serves an estimated 36,443 residents and expenditure of more than $62.1 million, has the fewest with six active credit cards.

Salisbury Council, which is responsible for an estimated 139,529 residents and has an proposed $117.5 budget, has the most active credit cards with 101.

Charles Sturt, with its estimated 115,000 population and $125.6 million budget this financial year, has 91 pieces of plastic while Onkaparinga, which has 169,073 residents and a $160 million budget, has 80 cards.

Amid ongoing pressure and anger at its credit card expenditure, Onkaparinga has slashed the number of cards by nearly half from 152.

The council is reviewing guidelines after documents released under Freedom of Information laws showed staff spent thousands of dollars on items including flowers, an Apple watch for its chief executive Mark Dowd and an Adelaide Oval rooftop climb.

Onkaparinga CEO Mark Dowd on a private golfing trip in 2015.

A Salisbury spokesman said cards were used by staff in various roles to buy work-related items and materials inside council guidelines.

“Purchase cards are used as the preferred method as this offers the lowest transaction cost for procuring goods and services,” he said.

“(We) have led the way across local government by promoting transparency through the publishing of executive purchase cards use online.”

LGA public affairs executive director Lisa Teburea, said the lobby group, which acts for councils, said it was “not aware” of the inquiry.

She said councils are subject to “considerable financial oversight”, from their own internal audit committees, external auditors and the State Government through the Auditor-General.

“We are generally supportive of reviews that will further improve transparency and accountability within the sector,” she said.

An Auditor General’s spokeswoman was unavailable for comment. Its report will be tabled to State Parliament later.