AUDIT OFFICE RECOMMENDATIONS TO BE ADOPTED BY COUNCIL
On 3 September 2020, the NSW Auditor General tabled a report in NSW Parliament on the use of credit cards in NSW Local Government after reviewing the sector. Out of 128 councils in NSW, six (6) councils were chosen as a cross-section of NSW local government activity, which included Dubbo Regional Council (DRC).
“Council acknowledges the extensive work undertaken across the sector by the Auditor General for NSW, it’s been a long and, as expected, thorough process undertaken by auditors – which has included auditing this Council. As a result, the Auditor General has made six recommendations, all of which DRC will adopt,” said Mr Dean Frost, Director Organisational Performance. “Council in its response to the report, recommended the creation of an Office of Local Government (OLG) credit card usage policy for all councils.”
It has been a longstanding NSW Government policy for the use of purchasing cards and electronic payments methods, eg. electronic funds transfers, to replace traditional purchase-to-pay process - a practice that both reduces the delay faced by merchants waiting for payment and provided agencies and government sectors with greater financial accountabilities. The credit card policy, originally developed and put in place by the then Dubbo City Council (DCC), had remained relatively unchanged until some minor operational amendments in 2019; modified again in early August 2020 to accept, and reflect, the recommendations made by the NSW Auditor General. It is opportunities like this audit process that allow councils across the local government sector to further review policies and ensure a greater process and rigor can be applied – an opportunity DRC has welcomed.
“The audit found zero instances of fraud or misuse by this Council,” said Mr Frost. “That’s not to say the audit didn’t identify opportunities to improve our procedures, documentation and record keeping. The audit also highlighted issues with the data migration in 2019 from an old system as we moved to our current system – making the retrieval of some receipts needed for the audit difficult.”
The audit of the 3 year sample (2016-2019) of transactions resulted in a number of recommendations being made by the Auditor General for Council’s consideration.
“Council unreservedly accepts the recommendations, some of which have already been addressed or implemented as part of our evolving business improvements prior to the audit,” said Mr Frost. “This includes the purchase of the Civica purchase card management system to add rigour to our approval, reconciliation and reporting processes. This has been operating effectively since July 2019, which is unfortunately outside the period covered by the Audit.”
Council recognises that tabling the findings of the report, without the accompanying proper context or evidence to support some of the credit card expenditures, would cause the ‘reasonable person’ to also question some of the charges identified among 8300 transactions sampled by auditors over a 3 year period.
“Council has written to the Auditor General to highlight our concern over tabled figures and statements made by the auditors not being reasonably explained, or supporting evidence included to avoid any misinterpretation,” said Mr Frost. “We also expressed disappointment that our change in purchase card management system in 2019 was not mentioned in the report.”
For full disclosure, please view the following document:
The published Auditor General’s report and Council’s letter of clarification to the Auditor General (included with other organisation responses) as Appendices | Click here.
Last Edited: 08 Sep 2020