Pent up excitement released along with council audit

NOTHING gets the blood pumping quite like a yearly audit and Clarence Valley Council have just opened their books.

Kevin Franey from TNR Chartered Accountants gave councillors a run down of the financial lay of the land at Tuesday's council meeting and the outlook could be better than some may expect.

 

Key figures

Income was up on last year by nearly $10 million to sit at $132.6 million, with expenses increasing by just over $1m to $91.8m.

The net operating result was a $4.4m profit which was down on the 2018 financial year by almost exactly $1 million.

"Operating result is fairly consistent, it illustrates that council is heading in the right direction," Mr Franey said.

"It is very important that we continue to generate profit so that we can replace our assets as they are needed and purchase new assets."

"As you would expect rates and annual charges have increased in line with budgeted rate increases."

 

Performance ratios

On the operating performance ratio which Mr Franey characterised as "generating enough profit to actually fund our depreciation" he said council were below the industry benchmark.

Mr Franey said council had been below the benchmark for the last few years but had been improving and the report showed there was almost a five per cent improvement from 2018.

He added that while the sewer and water fund were profitable, the general fund "was still yet to get there."

"I think with your rate variations coming through this year, next year and the following year, that is designed to rectify that situation," he said.

In the auditors report under the own source operating revenue ratio - measuring how reliant council was on external revenue sources - Clarence Valley was exceeding the benchmark.

For the unrestricted current ratio measuring the amount of liquid assets for every liability, council have $4.42 for every $1 of current liabilities.

Mr Franey said the ratio was "very healthy" and the report showed council was well ahead of the industry benchmark of 1.5.

On the rates and annual charges outstanding percentage, council were below the benchmark, however Mr Franey explained this was not unusual for local councils.

"Six per cent is pretty good, most councils are around that five to six per cent, there are very few who are up around the tens now," he said.

In what was one of the best performing areas, council were well above the benchmark for cash expense cover ratio which measures "how much unrestricted cash we have on hand to fund our operations if we had an event that would prevent us from operating."

"We have about 12 months unrestricted cash there on hand to meet our demands if things happened and general fund is 11 months," he said.

"So we are in a good position in that's space as well."

While Mr Franey made it clear both the sewer fund and water fund were making up for the performance of the general fund, the final cost of the Maclean, Townsend and Ilarwill STP sites could change that. 

The clean up at those sites came in $2.1 million over budget and even though there is still some land to be sold at the site, the final figure will have an affect on the sewer fund. 



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