Guide to Local Government Auditing Reforms

The amendments result from the transition of responsibility for oversight of local government audits to the Office of the Auditor General.

In September 2017, the Department provided advice in Circular 16-2017 regarding proposed changes to the conduct of local government audits and financial management.

Following consultation with local government in line with the State Local Government Partnership Agreement, the proposed amendments to the Local Government (Financial Management) Regulations 1996 and Local Government (Audit Regulations) 1996 were revised and gazetted on Tuesday, 26 June 2018.

The key changes affecting local government are as follows:

• From 1 July 2018, an asset is to be excluded from the assets of a local government if the fair value of the asset as at the date of acquisition is under $5,000. CEOs must take all reasonable steps to prevent the theft or loss of non-consumable portable and attractive items valued under $5,000.
• From 27 June 2018, local governments will be required to conduct a review of their audit systems and procedures, and their financial management systems no less than every three years. Previously local governments were required to conduct these reviews no less than every two years and four years respectively.
• From 27 June 2018 local governments will be required to revalue an asset whenever the local government is of the opinion that the fair value of the asset is likely to be materially different from its carrying amount; and in any event, within a period of at least 3 years but not more than 5 years after the day on which the asset was last valued or revalued.
• From 27 June 2018, the role of the audit committee has been strengthened to assist the CEO to carry out the reviews of audit systems.  The Audit Committee's responsibilities have also been extended to 'monitor and advise' the CEO in reviews conducted into financial management systems and audit systems and procedures.  The Audit Committee will also support the auditor as required and have functions to oversee the implementation of audit recommendations made by the auditor, which have been accepted by council; and accepted recommendations arising from reviews of local government systems and procedures.

The Guide to Local Government Auditing Reforms – June 2018 replaces the earlier guide released in September 2017 and is available on the department's website at www.dlgsc.wa.gov.au.  

Duncan Ord OAM
DIRECTOR GENERAL
28 June 2018