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By Catherine Watson
THE Victorian Auditor-General says an accountant councillor’s concerns about Bass Coast Council’s accounting practices are based on a misunderstanding of the nature and purpose of parts of the balance sheet.
THE Victorian Auditor-General says an accountant councillor’s concerns about Bass Coast Council’s accounting practices are based on a misunderstanding of the nature and purpose of parts of the balance sheet.
A Certified Practising Accountant, Cr Les Larke was elected to the council in 2016 on a platform of reforming the council’s finances. He has long claimed that Bass Coast is in a perilous financial situation, contrary to the picture of improving finances in the council’s past two annual reports.
Following the release of the 2016-17 annual report, Cr Larke contacted the Auditor-General, Andrew Greaves, to investigate his concerns about $35 million listed under “Other Reserves”, which includes long service leave provision of $4.662 million, $1.5 million for the Wonthaggi highball development, $3.538 million for strategic works and an unallocated reserve of $4.679 million.
Mr Greaves responded that Cr Larke appeared to have misunderstood the nature and purpose of components of the balance sheet: the reserves were backed by the council’s net assets, which could be converted to cash or borrowing as required. “In this regard it is not an accounting requirement that reserves are presently 'cash-backed', especially as a number of the reserves will not require cash funding in the next twelve month period.”
The Auditor General stated that he was satisfied that the council's financial statements had been properly prepared.
Cr Larke has frequently claimed that as a Certified Practising Accountant he is the only one of his council colleagues with a proper understanding of the financial reports.
The Post asked him whether he proposed to release the Auditor-General’s response and whether his concerns on the council’s finances had been allayed.
He responded that he proposed to “discuss further with council as a first step in due time”.
While Cr Larke had the support of his fellow councillors immediately after the election, he soon lost it with repeated claims of financial mismanagement and a series of bizarre notices of motion relating to financial reporting.
In response to his concerns about accounting practices, the council last year invited the Victorian Auditor General to send a representative to meet with council. The auditor advised that the council accounts had received an unqualified sign-off.
Last July Cr Larke proposed the council should cut 46 jobs – 15 per cent of the council’s workforce – over the next three years. Most recently he has sought to allocate funds from the long service leave reserve for council employees for other purposes. Neither proposal won support from his fellow councillors.
Following the release of the 2016-17 annual report, Cr Larke contacted the Auditor-General, Andrew Greaves, to investigate his concerns about $35 million listed under “Other Reserves”, which includes long service leave provision of $4.662 million, $1.5 million for the Wonthaggi highball development, $3.538 million for strategic works and an unallocated reserve of $4.679 million.
Mr Greaves responded that Cr Larke appeared to have misunderstood the nature and purpose of components of the balance sheet: the reserves were backed by the council’s net assets, which could be converted to cash or borrowing as required. “In this regard it is not an accounting requirement that reserves are presently 'cash-backed', especially as a number of the reserves will not require cash funding in the next twelve month period.”
The Auditor General stated that he was satisfied that the council's financial statements had been properly prepared.
Cr Larke has frequently claimed that as a Certified Practising Accountant he is the only one of his council colleagues with a proper understanding of the financial reports.
The Post asked him whether he proposed to release the Auditor-General’s response and whether his concerns on the council’s finances had been allayed.
He responded that he proposed to “discuss further with council as a first step in due time”.
While Cr Larke had the support of his fellow councillors immediately after the election, he soon lost it with repeated claims of financial mismanagement and a series of bizarre notices of motion relating to financial reporting.
In response to his concerns about accounting practices, the council last year invited the Victorian Auditor General to send a representative to meet with council. The auditor advised that the council accounts had received an unqualified sign-off.
Last July Cr Larke proposed the council should cut 46 jobs – 15 per cent of the council’s workforce – over the next three years. Most recently he has sought to allocate funds from the long service leave reserve for council employees for other purposes. Neither proposal won support from his fellow councillors.
Councillor Les Larke has misled the people of the Bass Coast over the state of the Bass Coast’s finances and he has caused a great deal of damage to the Shire by stopping infrastructure development and calling for extreme cost saving measures which are not warranted. Councillor Larke should consider his options, including resignation.
The Council should include as part of its financial decision making process a twelve month rolling cashflow that includes information about revenue, expenditure and borrowing capacity. While this kind of statement is used more commercially it is a valuable tool in managing finances.
Cheers
You and Cr Les Larke set great store by qualifications.
Do you doubt the Victorian Auditor General’s credentials to comment on the state of the Bass Coast Finances?
John, debate is useful but should not be destructive. We all need to be positive and contribute what we can to achieve great outcomes for the Bass Coast.
Cheers
He does raise an interesting point. How do we tell the deluded lone voice from the brilliant lone voice? There are times when the one is right and the millions are wrong.
It's probably worth looking at the calibre of the one lone voice. I would put Kevin Rudd and Tony Abbott firmly in the camp of the self-deluded. Perhaps Cr Larke belongs there too. Ego is the key.
Thank you for the heads up. I took John's words at face value and responded accordingly. The questions I raised still need to be answered.
Cheers
Once, many, many years ago when I became a Board member of Bass Coast Community Health Service, someone said to me "leave your ego out of the door." AND that is precisely what Cr. Les Larke and other Councillors should do. They were voted by the community to represent us, not be self-serving or self- deluded.
I always thought of "reserves" as a pot of money sitting there to cover contingencies but it seems I am wrong.
As I now u nderstand it a "reserve" is in fact a debt owing for which cash will have to be raised by selling assets borrowing or increasing rates as happened with the demand for more cash to cover old super schemes.
This all appears smoke and mirrors to me as I have never used creative accounting methods. Think I will stick with the CPA councillor. This sort of creative nonsense is what destroyed Victoria under the Cain Kirner governments. A debt is a debt not a "reserve"