Red flags up over controls
THE annual report of Palm Island Aboriginal Shire Council shows an organisation with a healthy balance sheet but there are some warning signs about its internal financial controls in the latest Queensland Audit Office review.
The council achieved green light ratings from the audit office’s 2017-18 financial review for its net financial liabilities and average asset sustainability ratios and an unmodified opinion for its financial statements.
This opinion means the financial statements accorded with legislative requirements and accounting standards.
But the council received two red lights for internal controls. These red lights were for Control Activities and Control Environment.
On Control Activities, the audit office report says reviewing the information recorded in councils’ systems is vital in ensuring that reliable information is produced for internal and external reporting purposes, and for preventing fraud and error.
On Control Environment, a red light is given to councils with significantly outdated, unfinalised, or non-existent asset management plans.
The audit office says it assesses internal controls in councils to ensure they are suitably designed to prevent, or detect and correct, material misstatements in the financial report, achieve compliance with legislative requirements and use public resources effectively.
The council’s 2017-18 annual report says they had an improved financial outlook and an improving end-ofyear cash position compared with previous years.
It says the council has been “extremely successful” in sourcing funding to build homes to reduce crowding in the community, and that funding was received to upgrade the foreshore, establish walkways and include traditional design in construction.
In 2017-18 the total value of assets held by the council was $238 million. The council reported an operating surplus of $1.25 million compared with a $5.99 million deficit the previous year.
Its total liabilities were $2.4 million, down from $2.95 million in the previous year.