Ordinary Meeting of Council 21 May 2008

Page 1

5.2 FINANCIAL MANAGEMENT REPORTS

(All Wards) (Financial Services)

KEY ISSUES

• This report provides Council with the suite of financial management reports in order for Council to monitor the financial performance and position of the City.

• A summary page has been developed that includes high level financial information, commentary and graphical representation from the Income Statements, Balance Sheet, Capital Payments, Investments and Debtors.

• A Debtors Schedule has been included that lists the to 10 non-rate debtors (in value). For privacy purposes the names of the debtors are not included, however the report provides insight into the management of the aged debtors.

It is recommended that Council receive the monthly financial management reports for the period ended 30 April 2008

BACKGROUND

Monthly reporting of financial management reports is standard practice for most organisations. These reports facilitate analysis of the performance of the organisation against the target (budget). Section 6.4 of the Local Government Act requires an Annual financial report to be prepared as well as such other financial reports as prescribed. In 2005, the Local Government (Financial Management) Regulations 1996 (34) was amended to require a financial activity statement report to be prepared each month.

The financial management report for April 2008 has been included as attachments.

The financial reports are as follows:

1. Statement of Financial Activity. This includes information from both the Income Statement and the Balance Sheet, as well as displaying capital income and expenditure. The format was developed by the Department of Local Government and Regional Development and its contents are prescribed in clause 34 of Local Government (Financial Management) Regulations 1996.

2. Income Statement (previously known as a Statement of Financial Performance or Operating Statement). This summarises the operating revenues and expenses of Council. The Income Statement does not include capital and infrastructure project expenses. The principle aim to report to Council on the performance of the administration in meeting the approved financial budgets in both revenue and expenditure terms. There are two versions presented and they are by Program or alternatively nature and type.

3. Balance Sheet (previously known as a Statement of Financial Position or Balance Sheet) - This summarises the overall position of the City, focuses on the assets and liabilities and is accompanied by a statement showing the change in equity.

Ordinary Meeting of Council 21 May 2008

Page 2

4. Statement of Cashflow - This is the combination of the cash impact of the Income Statement and the Balance Sheet. The Statement provides information on where the Council collects cash and where is subsequently spends the cash. The breakdown of information is important as it illustrates the use of cash for Operating, Financing and Investing.

5. Rate Setting Statement. This statement has been used to show the amount of rates to be levied in a budget. As part of improvements in reporting to Council, the Department of Local Government has recommended this report be produced each month with the intention of providing a single and generic report (which contains information which this Council receives in the generally accepted accounting statements). This statement is unique in that it contains values of the opening funds and closing funds. Opening funds refer to net current assets less restricted funds and committed cash and amounts already reflected in the subject year budget.

6. Debtors Schedule. This statement lists the top 10 non-rate debtors, according to their value. For privacy purposes the names of the debtors are not included, however the report provide insight into the management of the aged debtors by separating the amounts into Current, >30 days, >60 days, >90 days. The largest debtors are Rates, as these debts are secured against the property, the amount outstanding is included in the Financial Management Summary.

REPORT

The April financial management reports provide insight up to the tenth month of the new financial year. As the information contained in the Statement of Financial Activity is repeated in the Income Statement and Balance Sheet, the analysis of the information is included below.

1. Income Statement

The revenue from ordinary activities for the year to date (ytd) April 2008 is $80.0m which is slightly more than the ytd budget of $78.4m, or 102% of budget. 94% of all rates and charges have been received and $2.8m interims have been levied to 30 April. Interest received on cash and investments has increased for this period by 31% from this period last year. Expenditure from ordinary activities for April 2008 is $62.8m or 8% lower than the budget of $68.0m. The Net result is favourable in comparison to the budget, currently $23.3m(profit) actual in comparison to $17.3m budget.

2. Balance Sheet

The current assets of $48.8m are significantly greater than at year end (06/07) due to the rates being raised (receivables) and received (cash). Cash still remains high at $41.8m mostly due to only 59.9% of the budgeted capital being complete. This amount is also shown on the bottom line of the cash flow statement as being the cash on hand.

Total current receivables are at $6.6m, with the main portion being the rates levied and received which significantly affects the net current assets of $37.4m compared to $17.2m at year end (06/07).

3. Cash Flows

This report indicates where the Council has collected and raised cash. Net cash of $41.8m is significantly greater than the year end (06/07) which was $24.3m due to the collection of 2007/08 rates.

Ordinary Meeting of Council 21 May 2008

Page 3

ATTACHMENTS

Financial Management Summary

Statement of Financial Activity

Rate Setting Statement

Balance Sheet

Statement of Changes in Equity

Statement of Cash Flows

Income Statement by Objects - Nature and Type View

Income Statement by Activities - Program View

Debtors Schedule

STRATEGIC IMPLICATIONS

Monitoring performance by comparison of budget and actual is an essential management tool to ensure financial performance within acceptable pre determined limits.

STATUTORY ENVIRONMENT

Action in accordance with section 6.4 of the Local Government Act and clause 34 of the Local Government (Financial Management) Regulations.

FINANCIAL IMPLICATIONS

Compares financial activity with budget as detailed in this report.

RECOMMENDATION

That the Council resolve to:

1) Receive the monthly financial statements and report for the period ended 30 April 2008.

CARRIED