For the second time in as many weeks, a Moira Shire calculation error has been uncovered that will significantly impact council’s bottom line.FIONA BLICK September 2, 2014 3:04pm
CEO Mark Henderson confirmed to the Yarrawonga Chronicle that staff have been calculating the depreciation on roads within the shire on a life cycle double what it should be, the net effect being a loss of around $750,000 at the end of this financial year.
“A fundamental review of the shire’s roads was undertaken in 2008 and the consultants hired to perform this review estimated the life span of the roads to be 160 years,” Mr Henderson told the Chronicle.
“Around four weeks ago our management team revisited this figure as it seemed to be unrealistic.
“It turns out a life span of 80 years is more realistic, therefore the roads are depreciating at a faster rate than we believed.”
Mr Henderson said when the mathematical calculations were performed the “per square metre price on the roads is now overpriced”.
“Therefore at the end of the financial year there will be a higher than expected depreciation expense and operating deficit of approximately $750,000,” he said.
Adding the two latest calculation errors together, the incorrect rates notices will cost the shire at least $15,000, which takes into account postage ($10,000), reissuing of notices (Mr Henderson gave a valuation of $2,000), staffing costs plus the loss of revenue interest and now the $750,000 operating deficit shortfall - Moira Shire will be upwards of $1 million behind at the end of the financial year.
“Last week really disappointed me as a CEO,” Mr Henderson said.
“In hindsight we certainly need a better control process.
“My first priority is putting a competent management team in place so these errors will not happen again.”
According to Mr Henderson the freeze on Federal Government Financial Assistance Grants have added to the monetary hardship and with the road and rate errors “some drastic financial measures” may be required to keep the shire viable.
Mr Henderson said these errors have, in part, come to light because “staff were feeling comfortable to raise difficult issues with management”.
He denied an independent probity audit would have picked up on either issue, as it would be more concerned with “financial viability”.
The first instance of financial error occurred earlier this year when details of an internal audit report, issued to council in May and identifying 42 potential breaches of the Local Government Act, were leaked to media outlets in June.
The breaches included payments of more than $150,000 that were not subject to the required tender process.
Mr Henderson said he believed the issues were of a sufficient seriousness to refer them to the Independent Broad-Based Anticorruption Commission (IBAC).
“The independence of this commission is also important given the history of what has happened within our shire over the past 12 months,” he said.
“IBAC have determined what they would be recommending and I have briefed the councillors on this, however, I can’t disclose this information publically as it is a legal matter,” he said.
“But the simple fact of the matter is this issue is still unresolved.
“If a third party doesn’t pick up this issue then Moira Shire will do a full forensic audit and we will see what’s there.”
These financial blunders come at a time when council voted not to call for an independent probity audit, despite receiving a petition signed by 1,140 people calling for one and despite council previously voting unanimously to call for tenders for an independent auditor.
A rate payer asked Mayor Peter Mansfield at the last ordinary meeting what confidence can the community have in council with “all the shilly-shallying and all the back flips from councillors on this issue”.
Cr Mansfield replied that “councillors are here to represent the shire and we have two years of our term left and then rate payers get to decide again”.
“If certain councillors, because of the decisions they have made, get the flick then so be it.”
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