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CVC fails best practice test

Geoff Helisma |

Clarence Valley Council (CVC) staff recommended that an “item for notation” about “the best practice dividend from the water fund” in yesterday’s Corporate, Governance & Works Committee meeting agenda, should be “received and noted”.

The item will be tabled at next week’s full council meeting; yesterday’s committee meeting took place after the Independent went to press.

The council had intended to extract a ‘best practice dividend’ from its water fund (commencing in 2017/18) to be paid into its general fund, however, an audit by Forsyths Chartered Accountants has determined that CVC “did not comply with the required Best Practice criteria”.

“For Council to be able to pay such dividends the Water Fund and Sewer Fund must comply with eligibility criteria set out in the NSW Department of Industry – Crown Lands and Water,” the report to council stated.

To meet CVC’s Fit for the Future commitments, councillors last year resolved among CVC’s improvement strategies, to pay $27 per assessment (of water charges on annual rates notices) or 50 per cent of the “surplus operating result … whichever is the lesser”, from the water fund to the general fund.

“The reason for non-compliance is that the Activity Based Costing (ABC) allocations charged to the Water Fund by the General Fund for the 2016/17 financial year do not align with actual activities attributable to the Water Fund,” the report to council stated.

“Forsyths also noted that ABC allocations to [the] Water Fund decreased from $2M in 2016/17 to $1.3M in 2017/18).”

Staff, however, advised that, despite the $164,000 shortfall in 2017/18 affecting “improvement strategies Council implements to bridge the $15.343 million General Fund Budget Deficit”, as “originally stated at the 27 June 2017 Ordinary Council meeting …, the targeted amount of the final improvement strategies of $8.598 million to occur in 2020/21 will not change”.

“Alternative improvement strategies or increased dividends from [the] Water Fund are being investigated to be sourced before 30 June 2021 to achieve Council’s goal of $8.598M in savings/income from Improvement Strategies,” the report to council stated.

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