Issues with former Gosford Council finances referred to ICAC, NSW Auditor General

TENS of millions of dollars missing from the former Gosford Council has been referred to the state’s corruption watchdog for investigation after an independent auditor’s report.

The former Gosford Council’s finances have been referred to external agencies for further examination.

AN EPIC financial mess left behind by the former Gosford Council has been referred to the state’s corruption watchdog for investigation after independent auditors were unable to find tens of millions of dollars in “alarming” mismanagement stretching more than a decade.

A long-awaited report on Gosford’s finances for 2015/16 shows an overvaluation of assets led to a massive writedown of $1.39 billion — believed to be the largest ever for a council in Australia — as well as $74 million of land assets not found, $14 million missing from a library fund, and spending on roads, maintenance and services well short of what was allocated.

The shock findings — compiled over several months by PricewaterhouseCoopers at a cost to ratepayers of $147,000 — prompted Central Coast Council to immediately refer the matters to external agencies, including the NSW Auditor General and the Independent Commission Against Corruption (ICAC), for further investigation.

Premier Gladys Berejiklian today said ratepayers had every right to be angry over the revelations.

Premier Gladys Berejiklian says council officials need to be accountable if any wrongdoing is proven by external agencies.

“I say throw the book at anyone who has done anything illegal or wrong,” Ms Berejiklian said.

Parliamentary Secretary for the Central Coast Scot MacDonald, who has an internal auditor background, said the “large-scale mess” was “unprecedented in NSW”.

“Ratepayers have got every right to be furious about this,” he said today.

“But the community can take comfort in the fact their rates are not going to go through the roof.

“Legislation is going through Parliament right now to put in place a rates freeze over the next three years.

Parliamentary Secretary for the Central Coast Scot MacDonald has hit out at the former auditors for Gosford Council, saying they should have picked up deficiencies in council’s financial systems.

“The auditors (PwC) found significant system failures … and we need to find out if they’ve been at the human or IT level. We’ve got to get to the bottom of it.”

Mr MacDonald said serious questions need to be asked of the former Gosford Council’s auditors, UHY Haines Norton.

“I’m very angry at the previous auditors, because they should have picked up these deficiencies in the checks and balances years ago,” he said.

“There’s a really big question mark now on the rigour and validity of the audits which were done. I don’t think this would have come to light if it wasn’t for amalgamation­.”

Forensic auditors found the former Gosford Council’s maintenance spend for the financial year to May 12, when Gosford and Wyong councils merged, was $26 million, some $10 million short of the required $36 million, meaning assets went backwards.

And Gosford spent a hefty $42 million on contractors and consultants, compared to Wyong’s $16 million.

Central Coast Council chief executive Rob Noble said he was “alarmed” by the findings, which were tabled at an extraordinary meeting tonight.

However, Mr Noble said in a leaked memo: “There is no reason at this time to believe that there has been any intentional wrongdoing of staff.

Central Coast CEO Rob Noble has assured ratepayers that services will not suffer as a result of the “alarming” report on Gosford’s finances.

“What the report does say is (the current) council is financially and structurally stable and sustainable. We can and will continue to deliver services.”

Minister for Local Government Gabrielle Upton said the council’s referral of matters to ICAC was “significant­”.

“A review of the former Gosford City Council’s finances by Central Coast Council found two major problems,” Ms Upton said.

“Firstly, a lack of proper internal financial controls for more than a decade. Secondly, the valuation and existence of assets that did not give a true picture of the former council’s affairs.”

WHITE HOUSE DEFENDS TRUMP’S TRUTHFULNESS

FINDINGS SNAPSHOT

■ $1.39b writedown after overvaluation of assets

■ Double counting of assets

■ $74m worth of land assets not found

■ Gosford received $3.2m for regional roads but only spent $2.5m

■ $14m missing from library fund

■ Maintenance spend of $26m, $10m short of required $36m

■ $42m spent on contractors and consultants, compared to Wyong Council’s $16m

■ Surplus of $33.3m

■ Asset infrastructure backlog estimated at $98m

■ Assets not capitalised for over two years

■ No monthly reconciliation of accounts

■ “Significant weaknesses” in fundamental IT and other internal controls identified

■ Reconciliation issues between the general ledger and supporting sub-ledgers

■ Existence of non-recoverable debts

■ The findings follow a forensic audit of Gosford Council finances by PricewaterhouseCooper’s which cost ratepayers $147,000