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The Minister has recently approved a first tranche of amendments Local Government (Financial Management) Regulations 1996 (Finance Regulations) and Local Government (Audit) Regulations 1996 (Audit Regulations).

These amendments will require local governments to present operating expenses and revenue in ‘nature or type’ format in their annual budget and financial statement reporting, from 1 July 2022.

The amendments will mean that all local governments must adopt a Rate Setting Statement by nature or type in their 2022-23 annual budget.

Note: A Statement of Comprehensive Income by nature and type is already adopted as part of the annual budget.

Other proposed changes to the Finance Regulations and Audit Regulations will reduce local government reporting requirements and the scope of the audit work for the 2021-22 financial statement audits, from 1 July 2022. The proposed changes are to remove the requirement for:

• local governments to include financial ratios in annual financial reports
• the auditor to attest to the Asset Consumption ratio and Asset Renewal Funding ratio
• the auditor to report on significant adverse trends under the Audit Regs
• remove the requirement for the auditor to report on non-compliance under the Audit Regs.

Note: The Auditor General is required to comply with the Australian Auditing Standards when conducting local government audits, and those standards contain comprehensive guidance in relation to reporting non-compliance with legislation and going concern matters.

When the first tranche of amendments has been gazetted, the department will advise local governments.

The department is also working on a second tranche of regulation amendments to underpin the proposed model financial statements to be implemented for the 2022‑23 financial year. The model financial statements will be introduced to the local government sector before the end of 2022 and available for use by April 2023.

If you have any queries, please email the department’s Local Government Accounting Support Line at LG.accounting@dlgsc.wa.gov.au