Simpler and more streamlined financial reporting for Western Australia's local governments will be phased in from July 1 this year. These changes, which are based on recommendations made by the Office of the Auditor General (OAG), will make financial reports clearer and easier to understand.
Simplified reporting requirements will support ratepayers to access clear information about the financial position of their local government. This will aid community decision making about local government led services and projects.
An initial set of amendments to the Local Government (Audit) Regulations 1996 and the Local Government (Financial Management) Regulations 1996 are being implemented, as part of a phased in approach to be fully completed by the end of the 2022-23 Financial Year.
Standardised templates, referred to as model financial statements, will also be introduced to the local government sector before the end of 2022 and available for use by April 2023.
Two new templates are being established. Smaller local governments will have more streamlined standard financial statements, reflecting the generally less complex operations of these governments. There will be minor amendments and streamlining for the financial statements published by larger local governments.
Financial ratios, which are currently being reviewed, will be removed from the audited section of the report, because the underlying financial information is still contained in the audited part of the financial statements. This is based on a recommendation by the OAG.
Greater consistency will also improve the budgeting and reporting process for local governments. These changes have also been designed to reduce administrative costs, further benefiting ratepayers.
OAG audits on local government financial statements will still be carried out in accordance with Australian Auditing Standards, and will remain generally consistent with reporting for State Government agencies.
As stated by Local Government Minister John Carey:
"Clear and accurate financial management and reporting is the cornerstone of any good local government. Transparency and accountability is critical for public confidence in local government.
"These changes will make it easier for WA's local governments to prepare their financial reports and have them audited. They are based on the OAG's recommendations.
"These amendments are also designed to assist smaller local governments to complete their reporting, while also ensuring that the information that matters most to ratepayers is reported clearly and transparently.
"These changes are part of a suite of local government reforms that will deliver better outcomes for ratepayers and the wider community.
"The State Government is working closely with the sector on this important reform, with the aim of having the streamlined model financial statements fully implemented for reporting for the 2022-23 Financial Year."
