Local Government Better Practice Guide Performance Statement 2014-15
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Local Government
Better Practice Guide
2014-15
Performance
Statement
Local Government Victoria Department of Transport, Planning and Local Infrastructure 1 Spring Street Melbourne Victoria 3000 T: 03 9208 3631 www.dtpli.vic.gov.au/localgovernment ISBN 978-1-922250-39-1 Authorised and published by the Victorian Government 1 Treasury Place, Melbourne Unless otherwise indicated, this work is made available under the terms of the Creative Commons Attribution 3.0 Australian licence. To view a copy of this licence, visit http:// creativecommons.org/licenses/by/3.0/au/ It is a condition of this Creative Commons Attribution 3.0 Licence that you must give credit to the original author who is the State of Victoria. Disclaimer The materials presented in this booklet are for information purposes only. Information is provided solely on the basis that readers will be responsible for making their own assessment of the matters discussed and are advised to verify all relevant representations, statements and information and obtain independent advice before acting on any information contained in or in connection with this booklet. While every effort has been made to ensure that the information is accurate, the Department of Transport, Planning and Local Infrastructure will not accept any liability for any loss or damage which may be incurred by any person acting in reliance upon the information. ACCESSIBILITY If you would like to receive this publication in an accessible format, such as large print or audio, telephone (03) 9208 3631 or email local.government@dtpli.vic.gov.au This publication is also published in PDF and Word formats at www.dtpli.vic.gov.au/localgovernment
Contents 1. Introduction 1 2. Planning and Accountability Framework 3 3. Performance Statement (Overview) 4 4. Performance Statement (Guidance) 9 5. Performance Statement (2014/15 Model) 17 6. Performance Statement (Full Model) 29 Appendix A – Example Workplan and Timetable 43 Appendix B – Materiality Guidelines 45 Glossary 49 References 51 End Notes 52 Abbreviations AAS Australian Accounting Standards CEO Chief Executive Officer EMT Executive Management Team LGV Local Government Victoria VAGO Victorian Auditor-General’s Office VCAT Victorian Civil and Administrative Tribunal
1 Introduction
Local government in Victoria manages About this guide
approximately $73 billion of community
Councils are required to prepare an annual report
assets and infrastructure and spends in respect of each financial year consisting of
around $7.12 billion on the provision of three parts:
services annually.i Local government,
in partnership with other levels of 1. Report of operations: information
about the operations of the council
government, is responsible for aspects of
everyday life that people care about deeply 2. Performance statement: audited
– from vibrant and safe public spaces, to results achieved against the prescribed
performance indicators and measures
accessible libraries, to strong local business
and employment opportunities. Effective 3. Financial statements: audited financial
planning and reporting by councils is statements prepared in accordance
with the Australian Accounting
essential for ensuring transparency and Standards.
accountability to the community and other
This guide has been developed to help local
levels of government as to how public
government in meeting statutory requirements
money is being spent and the quality of relating to the preparation of an audited
services delivered. performance statement. Guidance on the
preparation of the report of operations and
audited financial statements can be found at
The Local Government Act 1989 the Local Government Victoria (LGV) website
www.dtpli.vic.gov.au/localgovernment
The Local Government Act 1989 (the Act) states
the primary objective of a council is to endeavour The guide is presented in five sections.
to achieve the best outcomes for the local 1. Planning and Accountability Framework
community having regard to the long-term and provides an overview of the relationship
cumulative effects of decisions.ii between the key planning and reporting
The Act sets out local government in Victoria: documents
• is a distinct and essential tier of governmentiii 2. Performance Statement (overview) provides
• must provide governance and leadership for the an overview of the statutory requirements
local community through advocacy, decision and best practice guidance for preparing a
making and actioniv. performance statement
The Act states it is essential there is a legislative 3. Performance Statement (guidance) provides
framework that provides for councils to be detailed guidance on the preparation and
accountable to their local communities in the audit of the performance statement, including
performance of functions and the exercise of guidance for ensuring the quality and integrity
powers and the use of resources.v It is a statutory of information
requirement under the Act that councils prepare 4. Performance Statement (2014-15 model)
and report on medium and short-term plans provides a model performance statement
to discharge their duties of accountability and for inclusion in the annual report for the
transparency to their communities. 2014-15 year that complies with the Act and
Local Government (Planning and Reporting)
Regulations 2014 (the regulations)
11 Introduction
5. Performance Statement (full model) provides
a model performance statement for inclusion
in the annual report that complies with
the Act and the regulations following the
conclusion of the transitional provisions in
the Act and Regulations (i.e. the financial year
commencing on 1 July 2018)
This guide is intended for use by specialists in the
field of local government performance reporting
as well as senior officers including chief executive
officers (CEOs). It may also be instructive for
councillors. Each council retains the responsibility
for preparing its performance statement, including
the format and the disclosures made. This
guide represents the performance statement
presentation required by LGV.
The guide directs users to related information
and further guidance. Endnotes are used to
reference legislative provisions and other relevant
information. Illustrative information and examples
are provided in tables and boxed text.
2 Local Government Better Practice Guide Performance Statement2 Planning and Accountability
Framework
The planning and accountability framework is The following diagram shows the relationships
found in part 6 of the Act and in the regulations. between the key planning and reporting
The legislation requires councils to prepare the documents that make up the planning and
following documents: accountability framework for local government.
It also shows that there are opportunities for
• a council plan within the period of six months
community and stakeholder input and feedback
after each general election or by 30 June,
at each stage of the planning and reporting cycle.
whichever is latervi
This is important to ensure accountability to
• a strategic resource plan for a period of at least residents and ratepayers.
four years and include this in the council planvii
• a budget for each financial yearviii
• an annual report in respect of each financial
year.ix
Figure 1 - Planning and Accountability Framework
Time horizon Planning Reporting Timing
Medium term Jan – Jun
Council plan Stakeholder
and
> Strategic objectives
community
> Strategies
engagement
> Strategic indicators
Feb – Jun
Strategic resource plan
> Financial statements
> Statements of non-
financial resources
Mar – Jun
Budget
> Services and initiatives
> Service outcome
indicators
> Major initiatives
> Financial statements
Jul – Sep
Annual report
> Report of operations
Short term
> Financial statements
> Performance statement
33 Performance Statement
(Overview)
Statutory requirements Better practice guidance
The performance statement contains information
“The Act requires a council’s annual report to
about the performance of the council for the
contain an audited performance statement”
financial year and is a key section of the annual
report whereby council makes itself accountable
Sections 131, 132 and 133 of the Act state that: to the community.
• the performance statement must contain the In 2012, the then Victorian Auditor-General
prescribed indicators and measures of service recommended that all councils should critically
performance outcome, financial performance review the performance information in their
and sustainable capacity and the results for annual reports to ensure it is relevant, balanced,
each indicatorx appropriate and clearly aligned with their council
• the performance statement must be submitted plan strategic objectives to ensure performance
to the auditor as soon as possible after the end reporting is meaningful to the community.xiv In
of the financial year and certified in its final response, the Victorian Government introduced
form by two councillors, the CEO and principal a mandatory system of performance reporting
accounting officerxi for councils which prescribes performance
information to be included in councils’ annual
• the auditor must prepare a report on the
reports.
performance statement to be included in the
annual reportxii The performance reporting framework is set out
in the Act and regulations with further guidance
• the annual report must be submitted to the
found in the Local Government Performance
Minister for Local Government within three
Reporting Framework Indicator Workbook to
months of the end of each financial year (30
support councils reporting against the prescribed
September).xiii
performance indicators and measures.
In addition to sections 131, 132 and 133 of the
Councils must describe the prescribed indicators
Act, councils should review part four of the
and measures in the performance statement so it
regulations for further information required in the
is clear to the audience what is being measured.
performance statement.
In addition, the performance statement must
include the results achieved in relation to the
prescribed service performance outcome,
Checklist financial performance and sustainable capacity
for the financial year and three preceding
years.xv For the financial performance indicators
The performance statement must include: and measures, the performance statement must
also include the forecast results for four years
the indicators, measures and results of the
based on the financial statements included in
prescribed service performance outcome
the strategic resource plan.xvi Reporting trend
indicators
information helps the reader understand changes
the indicators, measures and results of the in council performance over time and acts as
prescribed financial performance indicators a point of reference for results. The regulations
require that councils must also provide an
the indicators, measures and results of the
explanation of any material variations in the
prescribed sustainable capacity indicators
results between the current year and other
any other information required by the years disclosed, to enable the reader to form an
regulations. understanding of the reason for the variation.xvii
4 Local Government Better Practice Guide Performance StatementTo provide context to the performance results, This performance information in the report of
the regulations also require the performance operations along with that in the performance
statement to contain a description of the statement should form part of a performance
municipal district, including its size, location and reporting framework with quarterly reporting
population. of performance results to senior management,
the audit committee and councillors. Taking an
Additional performance indicators can be included
integrated approach to performance reporting
by councils in the performance statement noting
can help councils understand how well they
that they will be subject to audit by the Victorian
are performing in meeting the needs of their
Auditor-General’s Office (VAGO) and must pass
communities as well as achieving the strategic
the test of relevance and appropriateness as
objectives in their council plan.
defined by VAGO.
In addition to the performance information
required to be disclosed in the performance
statement, councils are also required to disclose
other performance-related information in
the report of operations in the annual report
including:
• a governance and management checklistxvii
• the prescribed indicators and measures of
service performance, results achieved and an
explanation of material variancesxix
• a statement that reviews the performance of
the council against the council plan including
results achieved in relation to the strategic
indicators included in the council plan.xx
For further information refer to:
• Department of Transport, Planning and Local Infrastructure (2014), Local Government Performance
Reporting Framework Indicator Workbook, State of Victoria
• Department of Transport, Planning and Local Infrastructure (2014), Local Government Report of
Operations Better Practice Guide, State of Victoria
• Department of Transport, Planning and Local Infrastructure (2014), Local Government Model
Financial Report, State of Victoria
54 Performance Statement
(Guidance)
Quality and integrity of information Councillors take ultimate responsibility for the
performance of a council and are accountable to
Internal control environment the ratepayers and community of the municipality.
As councillors are not involved in the day-to-
All performance information reported by a day operations of the council, they rely on the
council to the community, ratepayers and other organisation’s policies, procedures and quality
stakeholders should be subjected to a robust assurance protocols to provide assurance about
review to ensure the factual accuracy and integrity the information reported to them and in turn
of the information signed off by the CEO and reported to the community and other stakeholders.
councillors.
Performance reporting by a council in the annual
Internal control environment in this context report, whether it is in the report of operations or
refers to: the performance statement, can often be more
a council’s tone and attitude towards readily understood by members of the community
performance reporting than the financial reports. While councils have
an extensive and mature environment in place to
the level of commitment to high quality
provide assurance around financial performance
internal and external reporting
information, the environment for reporting non-
the policies, procedures and quality assurance financial performance information about services
protocols implemented to provide reasonable and outcomes has not historically been as
assurance regarding the accuracy of developed.
performance measures reported
the level of oversight by a council’s executive
management team (EMT), audit committee
and the councillors themselves.
In plain language, what the organisation does
to provide councillors with assurance about the
performance information the council reports to the
community.
6 Local Government Better Practice Guide Performance StatementPolicy
To support the need to have a strong internal
control environment around performance
reporting, a council should adopt a performance
reporting policy providing an overview of a
council’s attitude and commitment to performance
reporting. Suggested content for a performance
reporting policy is outlined below.
A performance reporting policy should include:
Box
1
the council’s objectives in reporting performance (i.e. is it a compliance exercise, or
does council seek internal focus and motivation from performance reporting?)
identification of the council’s stakeholders (i.e. does compliance with the regulations
through the annual report disclosures meet stakeholders’ information requirements?)
the protocols for the dissemination of performance information by the council in
circumstances other than formal published performance reports (i.e. are performance
measures reported to the audit committee and councillors throughout the year and
how rigorous is the process of verifying the performance measures reported?)
whether the council considers the prescribed indicators of service performance,
financial performance and sustainable capacity to be a relevant, appropriate
and comprehensive set of indicators of the council’s performance against its
stated strategic objectives (i.e. has council identified a need to provide additional
information, indicators and measures to communicate performance?)
the level of assurance that the CEO and principal accounting officer require to enable
them to certify the performance statement (i.e. is the assurance provided by a direct
review of the supporting evidence by the CEO and principal accounting officer or is
assurance provided by the responsible directors for each relevant service area?)
the role of the audit committee in advising the council of the adequacy of the
council’s performance reporting to external stakeholders
the level of assurance the councillors require to enable adoption of the performance
statement.4 Performance Statement (Guidance)
Procedures is prepared infrequently throughout the year or
in circumstances of staff transition. Standardised
The council should also document the procedures procedures for performance reporting can also
involved in preparing performance reporting enhance consistency of the information reporting,
information to build and retain the organisation’s particularly where the measures are reported
knowledge. Formalised procedures can provide across a time span of several years. Suggested
efficiency and enhance planning to ensure content for performance reporting procedures is
timeframes are met where performance reporting outlined below.
Performance reporting procedures should include:
Box
2
specific sources of data for each indicator (i.e. software, report name, report fields
selected, any filters applied and supported with screen captures or hard copy
examples)
contact details for relevant personnel both internally and where data is provided to
the council by third parties (e.g. Department of Health or operators of outsourced
services)
nomination of officers responsible for the collation and verification of data collected
the frequency at which data needs to be collected (i.e. daily, weekly, monthly,
quarterly or annually) and the lead time on collecting the data
identification of other controls that may exist in the collection and verification of
indicator data to ensure it is complete and accurate (e.g. is the data monitored on a
regular basis to identify unusual or unexplained variances?)
nomination of the council officer responsible for ensuring performance reporting data
is centrally collated in time for:
• internal reporting
• preparation of the performance statement
• audit of the performance statement
the timing and frequency with which performance indicators and measures are
reviewed by the EMT
the actions to be taken by the audit committee when reviewing the draft performance
statement
the format of any formal statements provided by responsible officers to the CEO,
principal accounting officer and councillors.
8 Local Government Better Practice Guide Performance StatementThird party information It is not uncommon for a council to outsource
the operation of some service areas such as the
Some of the prescribed indicators require the operation of swimming pools or the kerbside
collection of supporting data from sources external garbage and recycling collections. While a council
to the council. These include: can outsource some day-to-day operational
• annual community satisfaction survey results activities, it still retains responsibility for the
from LGV oversight of the provision of the service to the
community and ultimate risk in the management
• municipal population and socio-economic of facilities and operations.
disadvantage data from the Australian Bureau of
Statistics Councils may need to review and revise service
level agreements with contracted service providers
• home and community care municipal target to ensure the data required for performance
population from the Department of Health reporting is provided within the council’s required
• notice of decisions from VCAT hearings. timeframe.
The planning process for the preparation of
performance reporting should separately identify
data required from external sources, and the
reporting timetable and data format requirements
should be communicated to the third party data
providers to ensure the council receives the
correct data at the required time.
The format and content of the data received from
third parties should be sufficiently robust to support
the level of assurance required by councillors,
the CEO and the principal accounting officer in
certifying the performance statement. As a number
of the indicators will be subject to audit, council
officers should request supporting evidence at a
level that enables a critical review and assessment
of the reliability of the data provided. For example,
an email advising a numeric input for a measure’s
numerator or denominator does not provide the
same level of assurance as a copy of the source
report from that third party’s operational software.
94 Performance Statement (Guidance)
Operational control Audit committee
In some instances a council that has outsourced The audit committee is an advisory committee
the provision of services or transferred the to the council and its membership is usually a
functional operation of facilities through formalised combination of councillors and independent
contracts, leases or funding agreements may advisors. This provides a balance between in-depth
believe that it no longer has operational control
understanding of the council’s strategic objectives
of the service. If a council does not believe it
and operations and the independence required to
has operational control of one of the prescribed
services and does not collect data to facilitate challenge the information presented to the council
performance reporting, it will need to obtain and for consideration. The draft performance statement
document an understanding of the background of should be reviewed by the audit committee as
the original outsourcing decision and why it does part of the internal control environment to provide
not believe it can influence the outcome of the an informed basis for a recommendation to the
service delivered. council for adoption. The audit committee’s
review should include an assessment of the
materiality thresholds applied for each indicator
To help councils determine
Box and the resulting explanations of material variations
whether they have operational
3 to ensure the explanations are adequate and
control of a funded service, the consistent with their understanding of the council’s
following tests should be applied: performance.
The audit committee’s assessment of the quality
of the assurance provided to support the draft
1. If the service is asset dependent such as performance statement will be enhanced if
in the case of a pool then the first test the audit committee receives reports on the
will be whether all the risks and rewards performance indicators at least on a quarterly
associated with owning the asset have basis throughout the year enabling the members
been transferred away from the council to establish a level of normalised and expected
(e.g. this could be done through a lease results. The audit committee’s charter should
agreement) include its roles and responsibilities in regard to the
2. The second test relates to whether the council’s reporting of performance as part of an
council has significant influence over the overall performance reporting framework.
service outcomes – i.e. does the council Events after year end
have the capacity (ability or power) to
Occasionally an event will occur after the end
substantially affect the outcomes of the
of the reporting year that could impact on the
service. For example, this might be the
manner in which the performance indicators and
case if, despite the council making a
measures are reported or interpreted. For example
financial contribution, decisions over the
a particular service provided by the council could
service outcomes rest with the funding
cease after 30 June.
agency.
The format of the certification of the performance
statement specified in the regulations includes a
In many instances a council retains a sufficient representation that:
level of responsibility and obligation under the
At the date of signing, we are not aware of
formal agreement that would suggest the service is
any circumstances that would render any
still ultimately under the control of council.
particulars in the performance statement to
be misleading or inaccurate.
10 Local Government Better Practice Guide Performance StatementThe council’s framework for performance reporting Roles and responsibilities
should include procedures to ensure any events
that occur after year end that could impact on the In order to meet the reporting timelines for
results are identified and brought to the attention preparation and audit of the performance
of the council, CEO and principal accounting statement a council should formally allocate
officer prior to certification of the performance roles and responsibilities across the council.
statement. The following table provides a summary of the
responsibilities for each of the key parties in the
A mechanism for this procedure could be to seek
performance statement reporting process.
a formal certification from each of the responsible
directors dated as close as possible to the date of
certification.
Roles and Responsibilities
Box
Role Responsibilities
4
Responsible service • extract /collate data to calculate results
area officer • request and obtain data from third parties (if applicable)
• critically review data to ensure the data is accurate and complete
• provide supporting evidence in preparation for management review
Service area • review results
manager/director • review the supporting source data to verify the calculation of the results
• investigate unusual or unexpected results
• monitor negative or unanticipated trends and recommend options for an
appropriate response
• provide explanations for material variances
• provide assurance representations to EMT as to the accuracy and completeness
of the results and the adequacy of the supporting source data
• engage with team members for planning achievement of future performance
objectives
Performance • prepare the performance reporting workplan and timetable1
reporting team • communicate requirements to responsible service areas
• collate quarterly and final results to be reported
• provide quarterly performance reports to the EMT, audit committee and Council
• prepare the draft performance statement and supporting data evidence for audit
Executive • receive and consider quarterly performance reports
Management Team • consider recommendations for intervention where unfavourable or
(EMT) unanticipated trends are identified
• review the draft performance statement and consider the results in the context
of the quarterly reports received throughout the year
• identify material variations at the council level for explanation (i.e. in the context
of the council’s priorities)
• review the assurance representations provided by service area managers/
directors
• provide a recommendation to the CEO and principal accounting officer
1 Appendix A to this guide contains a sample workplan and timetable for performance reporting.
11Roles and Responsibilities
Box
Role Responsibilities
4
Principal accounting • review the materiality levels adopted in identifying the variations requiring
officer explanations in the performance statement
• review and approve the draft explanations for material variances in the
performance statement
• review the recommendation provided by EMT for certification of the
performance statement
• once satisfied with the quality of reporting, certify the performance statement in
the required format
Chief Executive • review the materiality levels adopted in identifying the variations requiring
Officer (CEO) explanations in the performance statement
• review and approve the draft explanations for material variations in the
performance statement
• review the recommendation provided by EMT for certification of the
performance statement
• provide a recommendation to the audit committee
• provide a recommendation to the council
• certify the performance statement in the required format following completion
of the audit
Audit committee • receive and consider quarterly performance reports
• review the draft performance statement and consider the results in the context
of the quarterly reports received throughout the year challenging any unusual or
unexpected results
• enquire as to the internal control framework and level of assurance received
around the accuracy and completeness of the information reported
• discuss the results of the audit of the performance statement with the external
auditor
• provide a recommendation to the council
Council • receive and consider quarterly performance reports
• review the draft performance statement and consider the results in the context
of the reports received throughout the year challenging any unusual or
unexpected results
• review the recommendations received from the CEO, principal accounting
officer and audit committee
• adopt the performance statement in principle
• have two councillors certify the performance statement in the required format
following completion of the audit
• adopt the annual report
• submit the annual report to the Minister
Each of the parties in the above table also has • a statement that reviews the performance of
similar responsibilities in regard to performance the council against the council plan including
information disclosed in the report of operations in results achieved in relation to the strategic
the annual report including: indicators included in the council plan.xxiii
• the governance and management checklistxxi Refer to the Department of Transport, Planning
and Local Infrastructure (2014), Local Government
• the prescribed indicators and measures of
Report of Operations Better Practice Guide for
service performance and the results achievedxxii
more information.
12 Local Government Better Practice Guide Performance StatementPreparation of the performance
statement
Form and content
The Act requires a council to include in its annual
report an audited performance statement. While
the format of the performance statement is not
prescribed, the Act and regulations require the
performance statement to contain:
• a description of the municipal district, including Materiality
its size, location and population
The regulations require the performance statement
• the results of the prescribed indicators and
to contain an explanation of any material variations in
measures for:
the results contained in the performance statement.
- service performancexxiv Materiality, in the context of performance reporting,
- financial performancexxv is the threshold at which omission or misstatement
- sustainable capacity performancexxvi of information could influence the decisions made
and expectations formed by reference to the data
• for the prescribed indicators and measures, the reported. For example:
results for:
• a significant change in a service performance
- the current financial year result that does not have an explanation could
- the three preceding years (following a give the reader the impression that the service is
transition period)xxvii not important to the council
- results forecast by the strategic resource • a significant misstatement in a sustainable capacity
plan (financial performance only) result could result in incorrect strategic planning
• explanations of any material variations in decisions being made by the council in the future.
the results By contrast, the provision of explanations for all results
• certification in the prescribed format by will not identify to the reader the important messages
two councillors, the CEO, and the principal about the council’s performance as the key messages
accounting officer may be lost in the volume of information.
• a copy of the auditor’s report on the The decision about what is material has both
performance statement. qualitative and quantitative factors. The qualitative
factors include:
Basis of preparation • the council’s overall strategic objectives and
priorities as identified in the council plan
The primary purpose of the performance statement
is to communicate the council’s performance • the relative importance of the service to the
to the community in the context of prior council in the context of its whole operations
performance and for the financial performance
• what is important to the stakeholders and
indicators, forecast performance. To help the
readers of the performance statement
reader understand the objective and purpose of the
performance statement and provide a context, the • the relevance and appropriateness of the
council should explain the performance reporting indicator in accurately reporting performance
framework and key estimates and judgements used • the drivers underlying the calculation of the
in preparing the performance statement. measure.
134 Performance Statement (Guidance)
An indicator that is more important to a council or Certification
its stakeholders will be more sensitive and therefore
will have a lower materiality threshold and require The regulations prescribe the format and content
more expansive explanations. Conversely a less of the performance statement certification and
sensitive indicator can bear a higher materiality require that it be certified by two councillors, the
threshold and will require less or no explanation of CEO and principal accounting officer. The content
variances. of the certification should include:
Quantitative factors are easier to define as • an opinion as to the fair presentation of the
indications of materiality, however councils should council’s performance presented in accordance
be aware that even though a variance may not with the Act and regulations
be significantly different when quantified the • confirmation that the performance statement
variance may be important and warrant explanation contains the relevant performance indicators,
when assessed against the qualitative materiality measures and results in relation to service
factors. The results of the prescribed indicators performance, financial performance and
and measures consist of absolute numbers, sustainable capacity
percentages, ratios and dollars and accordingly the
materiality threshold decision will be different for • confirmation that at the date of signing,
each indicator. the persons signing are not aware of any
circumstances that would render any particulars
Appendix B to this guide contains quantitative in the performance statement to be misleading
materiality guidance for explaining material or inaccurate
variations in the results of the prescribed
performance indicators and measures in the • confirmation that the persons signing have
performance statement for the following been authorised by the council to certify the
comparisons: performance statement in its final form.
• current year versus the prior year results The council, the CEO and principal accounting
officer need to obtain sufficient assurance about
• current year versus the three preceding year the quality of performance reporting and the ex-
results planation of variations to enable them to certify the
performance statement.
• current year versus the results forecast by
the strategic resource plan (for financial
Audit of the performance statement
performance indicators only).
Each council will need to make its own assessment The Act requires the annual report to include an
of the appropriate materiality threshold taking audited performance statement. The purpose
account of both qualitative and quantitative of an audit is to enhance the credibility of the
factors and circumstances specific to that council. information reported through the provision of an
Councils should also be cognisant when preparing independent opinion on the report. The opinion
explanations of material variations that they provided is in addition to the certification of the
will be subject to audit and must be capable of performance statement by the relevant officers and
substantiation and supported by adequate source councillors. The audit opinion does not take the
documentation. place of this certification.
The audit will be conducted by the VAGO or
appointed contractors in accordance with the
Audit Act 1994, Australian auditing standards and
professional and ethical requirements. This audit
14 Local Government Better Practice Guide Performance StatementChecklist for certification
Box
5
The checklist for certification must include:
the results of the prescribed indicators and measures are supported by sufficient and
appropriate documentation
the explanations for material variations are consistent with the adopted materiality thresholds
and include explanation for unusual or unexpected results
appropriate enquiries have been made up to, including and post the date of certification
about the existence of any circumstances that may have arisen that would render the
performance statement misleading or inaccurate
the performance statement includes all the indicators, measures, results and other
information prescribed by the Act and regulations
the certification is in the format prescribed by the regulations
the EMT has reviewed the results of the prescribed indicators and measures, materiality
thresholds and explanations provided for material variations and provided a recommendation
that the performance statement be certified by the CEO and principal accounting officer
the audit committee have reviewed the performance statement and explanations for
material variations and have recommended the performance statement be adopted in
principle by the council and certified
the council has adopted the performance statement in principle and authorised the relevant
officers and councillors to certify the performance statement once audit clearance has been
obtained
all issues raised by the auditor have been resolved and VAGO has provided clearance to
certify the performance statement.
framework provides a methodology for auditors • to have the audit conducted in an efficient and
to plan an audit, gather sufficient appropriate effective manner with as little disruption to the
audit evidence and conclude on results of testing organisation’s operations as possible.
to form an audit opinion on the performance
A council will have the best chance of achieving
statement. The opinion provided is not a guarantee
these objectives through the creation of a strong
that the information is 100 per cent correct; rather
internal control environment, planning and
it is an opinion providing reasonable, but not
coordinating the year-end performance statement
absolute, assurance.
preparation and anticipating the amount and
The major objectives of the audit process from a persuasiveness of the supporting data required to
council’s point of view are: be presented for audit.
• to provide sufficient supporting documentation During the audit, the council’s officers will be
for the results of the prescribed indicators required to make a number of representations
and measures and explanations of material to the auditors about the completeness and
variations in the results to obtain a ‘clear’ audit accuracy of the performance reporting data
opinion to co-ordinate the preparation for and and about the occurrence of any events after
conduct of the audit to meet the performance year end that could impact on the performance
statement reporting milestones statement. The Australian auditing standards
15require the auditor to obtain confirmation of
such representations in writing in the form of
a management representation letter signed by
the CEO and principal accounting officer. This is
usually requested at the end of the audit prior to
certification of the performance statement.
Checklist for audit
Box
6
Before the audit, the council must ensure:
the performance statement has been drafted and includes all the indicators, measures,
results and other information prescribed by the Act and regulations
the results of each indicator and measure is supported by copies of documentation
identifying the data source of the numerator and denominator and has been collated
centrally
information provided as source data by third parties is robust, the source of the data is
evident and the calculation of the measures is supported by copies of documents
the explanation of material variations in the results is capable of substantiation, is supported
by adequate source documentation and the basis for identifying the materiality threshold for
each indicator and measure has been documented
the draft performance statement including the results, explanation of material variations and
supporting documentation has been reviewed by the relevant service area director
the draft performance statement including the results and explanation of material variations
has been reviewed by the principal accounting officer, CEO and EMT
staff in each service area are aware that the audit is being conducted and additional
information may be requested (the auditor has authorisation to request access to
confidential file data)
third party data providers are aware that the audit is being conducted, that their information is
subject to audit and they will respond to any additional information requests from the auditor
the basis for a decision to not report the results of the indicators and measures for a funded
service in the performance statement, is documented and is available for review by the
auditor.
16 Local Government Better Practice Guide Performance Statement5 Performance Statement
(2014-15 Model)
Victorian City Council
Performance Statement
For the year ended 30 June 2015
175 Performance Statement (2014-15 Model)
Performance Statement
For the year ended 30 June 2015
Ref
Reg
17(1) Description of municipality
The Victorian City Council (the council) is situated on the south-eastern fringe of the Melbourne
metropolitan area and has a significant rural and horticultural hinterland. It includes more than 30
communities stretching from the foothills of the Dandenong ranges in the north to the shores
of Western Port Bay in the south. The council is at the ‘front’ of Melbourne’s south east growth
corridor which stretches in a narrow band along the Princes Highway. The main industries include
food manufacturing, agriculture, meat and meat product manufacturing, motor vehicle and part
manufacturing. The council covers an area of 1281 square kilometres and has a population of 77,000
which is expected to grow to 142,000 over the next 20 years.
During the financial year council experienced significant rainfall resulting in wide areas of flooding across
the municipality. Extensive works were required to rectify flood damaged infrastructure.
18 Local Government Better Practice Guide Performance StatementSustainable Capacity Indicators
For the year ended 30 June 2015
Ref Results
Reg Indicator/measure 2015 Material Variations
15(3) Own-source revenue
Sch3 Own-source revenue per head of $990 No material variations
municipal population
16(1) [Own-source revenue / Municipal
17(2) population]
Recurrent grants
Recurrent grants per head of $198 The Financial Assistance Grants increased in the
municipal population current year following a period of strong population
[Recurrent grants / Municipal growth
population]
Population
Expenses per head of municipal $1,190 No material variations
population
[Total expenses / Municipal
population]
Infrastructure per head of municipal $6,390 No material variations
population
[Value of infrastructure / Municipal
population]
Population density per length of road 180 No material variations
[Municipal population / Kilometres of
local roads]
Disadvantage
Relative socio-economic disadvantage 8 No material variations
[Index of Relative Socio-economic
Disadvantage by decile]
Definitions “population” means the resident population estimated by
council
“adjusted underlying revenue” means total income other
than — “own-source revenue” means adjusted underlying
revenue other than revenue that is not under the control
(a) non-recurrent grants used to fund capital of council (including government grants)
expenditure; and
“relative socio-economic disadvantage”, in relation to
(b) non-monetary asset contributions; and a municipality, means the relative socio-economic
(c) contributions to fund capital expenditure from disadvantage, expressed as a decile for the relevant
sources other than those referred to in paragraphs financial year, of the area in which the municipality
(a) and (b) is located according to the Index of Relative Socio-
“infrastructure” means non-current property, plant and Economic Disadvantage (Catalogue Number
equipment excluding land 2033.0.55.001) of SEIFA
“local road” means a sealed or unsealed road for which “SEIFA” means the Socio-Economic Indexes for Areas
the council is the responsible road authority under the published from time to time by the Australian Bureau of
Road Management Act 2004 Statistics on its Internet website
“unrestricted cash” means all cash and cash equivalents
other than restricted cash.
195 Performance Statement (2014-15 Model)
Service Performance Indicators
For the year ended 30 June 2015
Ref Results
Reg Service/indicator/measure 2015 Material Variations
15(1) Governance
Sch3 Satisfaction
16(1) Satisfaction with council decisions 60 The council introduced an Engagement Policy and
Guidelines in 2013 which has a strong focus on
17(2) [Community satisfaction rating out of consulting with the community over major decisions
100 with how council has performed
in making decisions in the interest of
the community]
Statutory Planning
Decision making
Council planning decisions upheld at 100% The council introduced a number of new land use
VCAT planning policies during 2013 and 2014 including
height restrictions and heritage overlays
[Number of VCAT decisions that did
not set aside council’s decision in
relation to a planning application /
Number of VCAT decisions in relation
to planning applications] x100
Economic Development
Economic activity
Change in number of businesses 10% A major industrial estate was opened in the north of
the municipality in early 2014 increasing the number
[Number of businesses with an ABN of businesses in the current year
in the municipality at the end of the
financial year less the number of
businesses at the start of the financial
year / Number of businesses with an
ABN in the municipality at the start of
the financial year] x100
Roads
Satisfaction
Satisfaction with sealed local roads 51 The council experienced significant rainfall and
subsequent flooding of major local roads during
[Community satisfaction rating out of the current year which resulted in a long period of
100 with how council has performed detours during the reconstruction
on the condition of sealed local roads]
Libraries
Participation
Active library members 15% No material variations
[Number of active library members /
Municipal population] x100
20 Local Government Better Practice Guide Performance StatementRef Results
Reg Service/indicator/measure 2015 Material Variations
Waste Collection
Waste diversion
Kerbside collection waste diverted 82% No material variations
from landfill
[Weight of recyclables and green
organics collected from kerbside
bins / Weight of garbage, recyclables
and green organics collected from
kerbside bins] x100
Aquatic facilities
Utilisation
Utilisation of aquatic facilities 12 The council constructed a new indoor aquatic facility
[Number of visits to aquatic facilities / in 2013 to service the population growth being
Municipal population] experienced in the west of the municipality
Animal management
Health and safety
Animal management prosecutions 16 The council’s policy was changed in 2013 in relation
to dog attacks from legal action to mediation
[Number of successful animal
management prosecutions]
Food safety
Heath and safety
Critical and major non-compliance 100% No material variations
notifications
[Number of critical non-compliance
notifications and major non-
compliance notifications about a food
premises followed up / Number of
critical non-compliance notifications
and major non-compliance
notifications about food premises]
x100
Home and community care
Participation
Participation in HACC service 30% No material variations
[Number of people that received
a HACC service / Municipal target
population for HACC services] x100
Participation
Participation in HACC service by CALD 24% No material variations
people
[Number of CALD people who receive
a HACC service / Municipal target
population in relation to CALD people
for HACC services] x100
215 Performance Statement (2014-15 Model)
Ref Results
Reg Service/indicator/measure 2015 Material Variations
Maternal and child health
Participation
Participation in the MCH service 81% No material variations
[Number of children who attend the
MCH service at least once (in the year)
/ Number of children enrolled in the
MCH service] x100
Participation
Participation in the MCH service by 64% The Commonwealth Government funded a 4
Aboriginal children year campaign commencing in 2012 focusing on
[Number of Aboriginal children who engagement with Aboriginal mothers
attend the MCH service at least once
(in the year) / Number of Aboriginal
children enrolled in the MCH service]
x100
Definitions “HACC service” means home help, personal care or
community respite provided under the HACC program
“Aboriginal child” means a child who is an Aboriginal
person “local road” means a sealed or unsealed road for which
the council is the responsible road authority under the
“Aboriginal person” has the same meaning as in the Road Management Act 2004
Aboriginal Heritage Act 2006
“major non-compliance outcome notification” means a
“active library member” means a member of a library who notification received by a council under section 19N(3)
has borrowed a book from the library or (4) of the Food Act 1984, or advice given to council
“annual report” means an annual report prepared by a by an authorized officer under that Act, of a deficiency
council under sections 131, 132 and 133 of the Act that does not pose an immediate serious threat to public
“class 1 food premises” means food premises, within the health but may do so if no remedial action is taken
meaning of the Food Act 1984, that have been declared “MCH” means the Maternal and Child Health Service
as class 1 food premises under section 19C of that Act provided by a council to support the health and
“class 2 food premises” means food premises, within the development of children within the municipality from
meaning of the Food Act 1984 , that have been declared birth until school age
as class 2 food premises under section 19C of that Act “population” means the resident population estimated by
“Community Care Common Standards “means the council
Community Care Common Standards for the delivery “target population” has the same meaning as in the
of HACC services, published from time to time by the Agreement entered into for the purposes of the Home
Commonwealth and Community Care Act 1985 of the Commonwealth
“critical non-compliance outcome notification” means a “WorkSafe reportable aquatic facility safety incident”
notification received by council under section 19N(3) or
means an incident relating to a council aquatic facility
(4) of the Food Act 1984 , or advice given to council by
an authorized officer under that Act, of a deficiency that that is required to be notified to the Victorian WorkCover
poses an immediate serious threat to public health Authority under Part 5 of the Occupational Health and
“food premises” has the same meaning as in the Food Act Safety Act 2004.
1984
“HACC program” means the Home and Community Care
program established under the Agreement entered into
for the purpose of the Home and Community Care Act
1985 of the Commonwealth
22 Local Government Better Practice Guide Performance StatementFinancial Performance Indicators
For the year ended 30 June 2015
Ref Results Forecasts
Reg Dimension/indicator/measure 2015 2016 2017 2018 2019 Material Variations
15(2) Operating position
Sch3 Adjusted underlying result
16(1) Adjusted underlying surplus (or deficit) 2% 5% 8% 12% 15% The result for this measure is expected to increase by 13
16(2) [Adjusted underlying surplus (deficit)/ percentage points over the 4 year period to 2019. The
Adjusted underlying revenue] x100 improving trend from over the 4 year forecast period is due to
17(2) the introduction of cost containment measures in 2015 and rate
increases above CPI to address council’s renewal gap
17(3)
Liquidity
Working capital
Current assets compared to current 225% 185% 187% 184% 190% The result for this measure is expected to decrease by 40
liabilities percentage points in 2016. The significant decrease in 2016 is
due to unspent flood emergency grants being on hand at the
[Current assets / Current liabilities]
end of the 2015 financial year
x100
Unrestricted cash
Unrestricted cash compared to 55% 45% 47% 44% 60% No material variations
current liabilities
[Unrestricted cash / Current liabilities]
x100
Obligations
Loans and borrowings
Loans and borrowings compared to 61% 55% 49% 43% 37% The result for this measure is expected to decrease by
rates 24 percentage points over the 4 year period to 2019. The
[Interest bearing loans and borrowings decreasing forecast trend reflects the scheduled repayment of
/ Rate revenue] x100 debt over the four period
Loans and borrowings repayments 8% 7% 6% 5% 4% The result for this measure is expected to decrease by
compared to rates 4 percentage points over the 4 year period to 2019. The
[Interest and principal repayments on decreasing forecast trend reflects the scheduled repayment of
interest bearing loans and borrowings debt over the four period
/ Rate revenue] x100
2324
Ref Results Forecasts
Reg Dimension/indicator/measure 2015 2016 2017 2018 2019 Material Variations
Indebtedness
Non-current liabilities compared to 56% 57% 57% 58% 58% No material variations
own source revenue
[Non-current liabilities / Own source
revenue] x100
Asset renewal
Asset renewal compared to 82% 94% 100% 100% 100% The result for this measure is expected to increase by 18
depreciation percentage points by 2017. The increasing trend reflects
measures taken since 2014 to address the asset renewal gap
[Asset renewal expenses / Asset
through rate increases above CPI
depreciation] x100
Local Government Better Practice Guide Performance Statement
Stability
Rates concentration
Rates compared to adjusted 60% 61% 61% 62% 62% No material variations
underlying revenue
[Rate revenue / Adjusted underlying
revenue] x100
Rates effort
Rates compared to property values 0.4% 0.4% 0.4% 0.4% 0.4% No material variations
[Rate revenue / Capital improved
value of rateable properties in the
municipality ] x100
Efficiency
Expenditure level
Expenses per property assessment $2,830 $2,870 $2,950 $3,005 $3,012 The result for this measure is expected to increase by $182 per
assessment by 2019. The slowing upward trend reflects cost
[Total expenses / Number of property
containment measures taken by council since 2014 resulting in
assessments]
forecast increases in expenses below CPIYou can also read
