Letter to the Editor - missing money allegations false and unfounded

Published on 15 August 2019

Letter to the Editor – Tumut & Adelong Times and Tumbarumba Times

 15/8/2019

Sir,

It’s with concern and disappointment that I write to refute and set the record straight on the allegations and rumours printed in this paper of “Council’s missing millions”.   All allegations and rumours of ‘missing money’ are false and unfounded. 

Snowy Valleys Council’s priority is to instil confidence within our community that all functions and decisions of Council are undertaken with integrity, transparency and accountability.

The amalgamation of the previous Tumbarumba and Tumut Shires to form the now Snowy Valleys Council (Council) required the merging of business and financial management systems. This milestone was reached in May 2018.  From the date of amalgamation, 12 May 2016 up until this time Council worked with two separate accounting systems and budgets for each former Shire.

A review of the reserves (restricted cash) and financial position of the SVC-Tumbarumba finances in isolation at the time of the financial system merger, indicated a shortfall of -$3,104,031 dollars in unrestricted cash.

The allegations of a “missing $4 million dollars” appear to have been derived by adding the unrestricted cash balance of +$938,000  in the former Tumbarumba Shire Financial Statements at the time of amalgamation (12 May 2016), to the shortfall in unrestricted cash (-$3,104,031) in the SVC-Tumbarumba finances reported as at May 2018.  

Reserves are a restriction on cash that is set aside to fund specific projects. Unrestricted cash is used to cover the variations in the organisation’s cash flow across the year. It is important to note that the shortfall in unrestricted cash balances in the SVC-Tumbarumba financial system does not mean that Council’s overall reserve finances are cause for concern.  There was sufficient cash in the current organisation to cover these shortfalls.

Unexpected (unbudgeted) expenses impacting the SVC-Tumbarumba unrestricted cash balance include:

• Expenses incurred in the Tumbarumba Caravan Park project - Council has previously publically acknowledged the issues around planning and management of the Tumbarumba Caravan Park project. Reports were presented and approved firstly to the Administrator and then to Council regarding the transferring of reserve funds from the SVC-Tumbarumba reserves to cover shortfalls in funding for the Tumbarumba Caravan Park project (Reports dated 26 April 2017, 25 October 2017 and 11 December 2017);
• The requirement to fund project work up-front from reserves for projects where grant funds had not yet been received – this is the case for the Tumbarumba Caravan Park and the significant Clarkes Hill redevelopment project;
• A number of cost overruns on Tumbarumba based capital projects including an upgrade of depot facilities and Clarkes Hill redevelopment; and
• Significant increases in SVC-Tumbarumba staff salary and wages as per the new salary structure.

Council’s financial management practices have been comprehensively reviewed and documented on numerous occasions by independent sources including Council’s External Auditor Crowe Horwath appointed by the NSW Audit Office and in a Forensic Review by the Mead Perry Group.  These reviews were reported through Council’s Audit, Risk and Improvement Committee and Council are also aware that this matter has been reported to the Office of Local Government.

The independent Mead Perry Group Forensic Report stated – “There were no identified issues with Council’s management of reserves from a compliance perspective, however there are instances where unexpected reserve appropriations were required to fund projects that were inadequately planned and managed. While we can be critical of the Council’s planning and management of these projects, we believe that the appropriation of reserve funds to meet the unfunded costs of the projects is the correct and prudent action to take”.

Council is committed to ongoing improvement and the identification of opportunities in which we can improve our processes. We have recently adopted a Reserves Policy and strengthened our approach to project management with the establishment of a Program Management Office to ensure all projects are fully scoped, costed, planned, and managed from inception to completion prior to commencement.

 We’d like to thank those who raised questions regarding the operations of Council in the best interest of their communities and we trust this information provides clarity and clears any misconceptions.

Any further discussions on this matter should be referred to the Office of Local Government or the Ombudsman of NSW.

Yours

Matthew Hyde, General Manager and Councillors, Snowy Valleys Council

• The Mead Perry Forensic Review, Council Business Papers, Council’s audited Financial Statements and Quarterly Budget Reviews can all be accessed from Council’s website www.svc.nsw.gov.au.