AUGUST 2015 MONTHLY FINANCIAL REPORT

Objective Reference:	A262406

Reports and Attachments (Archives)

Attachment:	Monthly Financial Report August 2015

Authorising/ Responsible Officer:	Linnet Batz

Chief Financial Officer

Report Author:	Deborah Corbett-Hall
Service Manager Corporate Finance

PURPOSE

The purpose is to present the August 2015 Monthly Financial Performance Report to Council and explain the content and analysis of the report. Section 204(2) of the Local Government Regulation 2012 requires the Chief Executive Officer of a local government to present statements of its accounts to the local government on a monthly basis.

BACKGROUND

Council adopts an annual budget and then reports on performance against the budget on a monthly basis. This is not only a legal requirement but enables the organisation to periodically review its financial performance and position and respond to changes in community requirements, market forces or other outside influences.

The Corporate Financial Reporting Team compiled the attached document following end of month accruals, deferrals, allocation journals and reconciliations.

Issues

End of Year Accounts Finalisation

Finance officers are presently finalising the 2014-2015 annual financial statements for the Queensland Audit Office review in September. As per previous years, end of year accounts finalisation involves

• accruals;

• deferrals;

• asset revaluation finalisation;

• capitalisation of work in progress to assets; and

• provision calculations and other updates.

The August monthly financial report includes balance sheet items that will be finalised over the coming weeks: changes to the 2014-2015 closing assets and liabilities will flow through to the opening balances of 2015-2016.

2015-2016 Carryover Budget – Capital Items

Council adopted a revised 2015-2016 budget on 9 September 2015 to accommodate for capital works that straddled across the two financial years. The attached monthly financial report for August includes the carryover budget although as outlined above, movements in closing 2014-2015 balance sheet accounts will influence the opening balances in 2015-2016. Until accounts finalisation and QAO certification in October, the monthly financial report will reconcile to the financial management system (and EOY accounts finalisation process), evidencing the difference between the annual revised budget adopted at carryovers.

Strategic Implications

Council has either achieved or favourably exceeded the following Key Financial Stability and Sustainability Ratios as at the end of August 2015:

Operating surplus ratio;

Net financial liabilities;

Ability to pay our bills – current ratio;

Ability to repay our debt – debt servicing ratio;

Cash balance;

Cash balances – cash capacity in months;

Longer term financial sustainability – debt to asset ratio;

Operating Performance; and

Interest cover ratio.

The following ratios did not meet the target at the end of August:

Asset sustainability ratio; and

Level of dependence on general rate revenue.

The asset sustainability ratio was not met as at the end of August 2015 and Council continues to monitor its renewal spend and depreciation expense to improve performance against this stretch target. Council’s asset project will consider appropriate measures to evidence utilisation and replacement of assets.

The second ratio moves in line with the rating cycle. Rates were levied in July and the ratio is expected to settle within the target range at the end of each quarter.

Legislative Requirements

The August 2015 financials are presented in accordance with the legislative requirement of section 204(2) of the Local Government Regulation 2012, requiring the Chief Executive Officer to present the financial report to a monthly Council meeting.

Risk Management

August 2015 revenues and expenditures have been noted by the Executive Leadership Team and relevant officers who can provide further clarification and advice around actual to budget variances.

Financial

There are no direct financial impacts to Council resulting from this report; however it provides an indication of financial outcomes at the end of August 2015.

People

Nil impact expected as the purpose of the attached report is to provide financial information to Council based upon actual versus budgeted financial activity.

Environmental

Nil impact expected as the purpose of the attached report is to provide financial information to Council based upon actual versus budgeted financial activity.

Social

Nil impact expected as the purpose of the attached report is to provide financial information to Council based upon actual versus budgeted financial activity.

Alignment with Council's Policy and Plans

This report has a relationship with the following items of the 2015-2020 Corporate

Plan:

8.	Inclusive and Ethical Governance: Deep engagement, quality leadership at all levels, transparent and accountable democratic processes and a spirit of partnership between the community and Council will enrich residents’ participation in local decision-making to achieve the community’s Redlands 2030 vision and goals.

8.2 Council produces and delivers against sustainable financial forecasts as a result of best practice Capital and Asset Management Plans that guide project planning and service delivery across the city.

Consultation

Consultation has taken place amongst Council departmental officers, Financial Services Group Officers and the Executive Leadership Team.

OPTIONS

That Council resolves to note the End of Month Financial Reports for August 2015 and explanations as presented in the attached Monthly Financial Performance Report.

2. That Council requests additional information.

OFFICER’S RECOMMENDATION

That Council resolves to note the End of Month Financial Reports for August 2015 and explanations as presented in the attached Monthly Financial Performance Report.