State audit raises concerns about North Burnett, Bundaberg councils

The Qld Audit Office’s latest review of council books revealed one Wide Bay Burnett council to be in breach of the law while flagging problems with another. This is what they found

The financial management and health of the Wide Bay Burnett councils (CEOs pictured from left: South Burnett Regional Council's Mark Pitt, Fraser Coast Regional Council's Ken Diehm, North Burnett Regional Council's Margot Stork, Gympie Regional Council's Robert Jennings, and Bundaberg Regional Council's Steve Johnston) has been laid bare in the state auditor’s latest report.

Questions about the long term financial stability and management of several Wide Bay and Burnett councils continue, with the state auditor’s latest report revealing one of the five is in breach of the law.

The Queensland Audit Office’s latest review of councils’ 2021-22 books revealed a significant number of local government bodies did not have the ability to manage ratepayers’ money effectively.

The North Burnett Regional Council was one of 14 across the state listed by the watchdog as being in breach of the law by not having an internal audit function.

These functions help councils’ financial reporting and governance practices.

The North Burnett council’s financial management has been under the microscope for several years,

In 2022, it was forced to backflip on a 2020 decision to axe its internal audit and risk committee after recording a $17.2 million deficit in that time.

A North Burnett Council spokesman said the organisation was not classified as “large” and therefore was not required to have an audit committee under legislation.

However it did “acknowledge the contribution that an audit committee would make” and said it was now “in the final stages of formalising the appointment of three external audit committee members” to start in the new financial year.

The Queensland Audit Office said the North Burnett Regional Council (CEO Margot Stork pictured) was in breach of legislation by not having an effective internal audit function in place.

The council’s long-term financial health remained a concern with the QAO rating it once again a “higher” risk of problems “in the short to medium term”.

It was not the only council with questions about its financial situation.

Bundaberg Regional Council’s risk level was shifted from “lower” to “medium” amid ongoing concerns on whether it was effectively replacing assets when they reached the end of their lifespans.

This was driven by the council’s asset sustainability ratio (which measures this) slipping from “moderate” risk in 2022 report to “higher” risk in 2023 after it dropped below 50 per cent.

This left ratepayers at risk of reduced service levels and increased financial burden in the future.

Bundaberg council CEO Steve Johnston defended the council’s position saying its ratio “reflects the condition of assets rather than any backlog of needed renewal expenditure”.

Bundaberg Regional Council CEO Steve Johnston defended the council’s financial management, saying the council’s renewal of its assets was robust and was planned to return back above the QAO’s minimum threshold in the coming years.

“(The) council invested heavily in renewal of assets in the recovery from the 2011 and 2013 Bundaberg floods,” Mr Johnston said.

“Accordingly, council believes its asset management processes are robust,” Mr Johnston said.

“It’s worth noting that Brisbane City and Gold Coast Councils are also classified as moderate – I don’t see any suggestion that those large councils are at financial risk.”

An interim audit report from the QAO found a “deficiency” around the council’s handling of its rates masterfile, saying it lacked a “review control” of the rates masterfile.

This “increases the potential for fraud to occur within the rating process”.

Gympie Regional Council (CEO Robert Jennings pictured) remained at “moderate” risk of short term financial problems as the impact of several consecutive operating losses continues to linger for the organisation.

The council said in its response all changes were documented and reviewed, but it proposed using an internal audit to assess and review the issue.

Gympie Regional Council remained at “moderate” risk of trouble in the short term three years after the audit office first raised concerns, driven by repeated financial deficits.

In April, it was revealed the audit office flagged multiple “deficiencies” within the Gympie council’s financial processes.

These included a financial payout to a senior executive “in addition” to their normal termination payment, understatements of its land and building assets and more than $18 million of capital works not yet put on its register.

South Burnett Council remained a “lower” risk despite some concerns about its ability to replace and renew assets.

Fraser Coast Council was the healthiest of the five, with nothing to suggest it was at risk of running into problems any time soon.