Startling financial figures have come to light which reveal council's true financial position to be much worse than previously stated.
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The now public figures are revealed in the council's business paper for the extraordinary meeting to be held on Monday,July 13.
In the business paper the director of business and governance Iliada Bolton admits that there was an "administrative error" in the figures for council's cash reserves published in May.
The problem started at the end of the 2018/19 financial year when the unrestricted cash reserve (the most flexible of three cash reserves, in terms of how money can be used) was shown as having zero cash. But in reality there was a deficit of $8.79m.
The difference arose after the auditor, on finding the deficit of $8.79m, directed staff to "reduce its internal restrictions by an equivalent amount of cash" as it is not possible to have an unrestricted negative cash deficit. Staff used the internally restricted cash reserve to produce a zero account for the unrestricted cash account.
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That is not a problem if at the same time councillors are informed and pass a resolution choosing to balance the books in that way.
No such resolution has been passed and councillors may not have been aware of the deficit in the unrestricted cash account.
However the problem has been compounded and at June 30, 2020 the end of the financial year, the unrestricted cash reserve has a further predicted deficit of $12.2 creating a total cash deficit of $21m which may well mean the budgets and operational plans for 20/21 have been predicated on incorrect figures .
But for the end of financial year statement for 2019/20 it will not be possible to simply get councillors' agreement to use the internally restricted cash reserve to balance the books. At June 30, 2020 the internally restricted cash account sat at $13.45m, insufficient to cover the deficit.
At June 30, 2020 in the revised March quarterly budget statement there is $73.21m sitting in the externally restricted cash reserve but this cannot be moved. It contains unexpended grants and specific contributions to the tune of nearly $20m which cannot be spent on anything other than the purpose for which the money was given. It also contains the water reserve of $18.86m and the sewer reserve of $20.25m, neither of which can be used except for water and sewer projects.
How the sets of figures varied
On June 30, 2019 the audited cash reserves figures were:
Externally restricted cash $79,644,000
Internally restricted cash $3,243,000
Unrestricted cash ZERO
Total in cash reserves = $82,887,000
In the quarterly budget review March 31 2020, the cash reserves for June 30, 2019 were:
Externally restricted cash $57,850,632
Internally restricted cash $12,033,596
Unrestricted cash $13,002,772
Total in cash reserves = $82,887,000
In the updated budget review March 31 2020, with the "administrative error" corrected, the cash reserves for June 30, 2019 are:
Externally restricted cash $79,645,007
Internally restricted cash $12,033,596
Unrestricted cash/deficit ($8,791,603)
Total in cash reserves = $82,887,000
In the updated budget review March 31 2020, with the "administrative error" corrected, the cash reserves for June 30, 2020 are:
Externally restricted cash $73,213,284
Internally restricted cash $13,453,172
Unrestricted cash/deficit ($20,974,247)
Total in cash reserves = $65,692,209
(The total cash does not meet the required funds of the externally restricted cash reserve)