Town of Bassendean: Agenda

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TOWN OF BASSENDEAN

NOTICE OF A MEETING OF THE

AUDIT AND RISK MANAGEMENT COMMITTEE

Dear Committee Member

A meeting of the Audit and Risk Management Committee of the Town of Bassendean is to be held in the Council Chamber, 48 Old Perth Road, Bassendean, on Wednesday, 25 August 2010 commencing at 12.30pm.

MR BOB JARVIS

CHIEF EXECUTIVE OFFICER

10 August 2010

A G E N D A

1.0 DECLARATION OF OPENING/ANNOUNCEMENT OF VISITORS

2.0 ELECTION OF DEPUTY PRESIDING MEMBER

At the last Committee meeting, it was noted that following Cr Pule’s appointment to Presiding Member, the position of Deputy Presiding Member is now vacant and it was agreed to elect a Deputy Presiding Member at the next meeting.

The Presiding Member will conduct the election of the Deputy Presiding Member in accordance with the Local Government Act 1995 – Schedule 2.3.

Nominations must be made in writing (nomination form attached) and a secret ballot will be conducted to decide the position.

3.0 ATTENDANCES, APOLOGIES AND APPLICATIONS FOR LEAVE OF ABSENCE

4.0 DEPUTATIONS

5.0 CONFIRMATION OF MINUTES

5.1 Minutes of the Meeting held on 19 May 2010

OFFICER RECOMMENDATION – ITEM 5.1

That the minutes of the meeting held on 19 May 2010, be confirmed as a true record.

6.0 ANNOUNCEMENTS BY THE PRESIDING PERSON WITHOUT DISCUSSION

7.0 DECLARATIONS OF INTEREST

8.0 BUSINESS DEFERRED FROM PREVIOUS MEETING

9.0 REPORTS

9.1 2009/10 Interim Audit – Macri & Partners (Ref Mike Costarella, Director Corporate Services

PURPOSE

The purpose of this report is to provide Council, through the Audit and Risk Management Committee, with the Interim Audit Report and provide management comments and information on the remedial action taken.

Declaration of Interest

The Director Corporate Services declares an impartiality interest in this item as the Auditor, Mr Anthony Marci, the Proprietor of the Audit firm, is a family acquaintance.

BACKGROUND

In May 2010, Macri & Partners Auditors reviewed:

Purchases;
Payments and creditors;
Rate receipts and Rate Debtors;
Receipts and Sundry Debtors;
Payroll;
General Accounting and Computer Environment; and
Registers(tender register and register of Financial Interest).

A copy of the report is attached for the Committee’s consideration.

The review also covered an examination of some compliance matters which are required under the Local Government Act 1995 (as amended) and the Financial Management Regulations 1996.

Interim Audit of systems and processes provides a level of assurance to auditors, the CEO, the Committee and Council in relation to the level of controls that are in place and staff adherence to those controls.

The Audit and Risk Management Committee may recommend that Council receives the Interim Audit Report and note management’s comments.

COMMENT

In each of the areas covered, the Auditors consider the controls and procedures in place are adequate, however, have raised a number of issues that can be improved.

A summary of the issues identified by the Auditor is included in the attached, as well as comments made by management.

The DCS recommends that the Internal Audit Report prepared by Marci & Partners be received and that the management’s comments be noted.

OFFICER RECOMMENDATION – ITEM 9.1

That the Audit and Risk Management Committee receives the Interim Audit Report from Macri & Partners for the year ended 30 June 2010.

10.0 MOTIONS OF WHICH PREVIOUS NOTICE HAS BEEN GIVEN

10.1 Notice of Motion – Cr Yates: Establishment of the Bassendean Future Fund Trust

Cr Yates has advised in writing that he wishes to move the following motion at this meeting:

“That the Town studies the setup, structure, management, operations and fund disbursement options for a Bassendean Future Fund Trust that can benefit the community within the boundaries known as the Town of Bassendean as per July 1 2010.

That further, the Town considers sources of input cash including but not limited to (a) a percentage of revenue from the sale of land and/or property owned by the Town of Bassendean or its successor, (b) grants, (c) bequests and other similar sources.”

BACKGROUND INFORMATION

The Town owns considerable land and other property resources. If the Town is absorbed into another local government or related entity, then a percentage of such assets is retained for the benefit of the community currently within the boundaries of the Town of Bassendean.

Community members may also wish to make bequests to benefit the greater community. A Bassendean Future Fund Trust could accept such contributions.

OFFICER COMMENT

The DCS sent/received the following emails from Cr Yates:

“Hello Don,

In reading the notice I believe you require us to set aside funds for a future purpose.

Trust Funds are those funds that belong to other people and Council has no control.- See Section 6.9 of the local government Act.

Rather than calling it a Trust, may I suggest that we call it a Future Reserve Fund and the purpose of the funds are those included in your notice?

The Act provides that we can set aside funds for specific purposes in a Reserve Fund.- See section 6.11 of the Act.

Regards, Michael Costarella

Hello Michael,

The reason for considering how to set up a future fund is for it to be ongoing, even if the Town of Bassendean as we know it today was to disappear, yet to have the funds exclusively set aside for use within the Town of Bassendean area as known today. There are locals who would consider making bequests in their wills in favour of a future fund with that purpose. I personally have identified some $4 million that could so benefit the fund. These people would NOT like to see such funds go into a reserve account, that could be transferred to an entity that might absorb Bassendean. Similarly, when comparing the relatively small area of Guildford to the

size of Bassendean, it seem surprising that the Guildford assets are MORE than the whole of Bassendean. How can that be? Further, if some of the assets of Bassendean were realised on, then there needs to be a mechanism to quarantine such capital funds so it has a long term benefit for Bassendean and does not build 'white elephants'.

The private schools in Perth have interest generating funds that are many hundreds of millions of dollars, with the single reason to generate interest for use from conservative investments. This is the thrust of the suggested future fund. See also the Federal Funding of the previously unfunded/lowly funded federal workstaff super liabilities. About 16% of the Federally owned Telstra shareholding was transferred into the Future Fund, and CANNOT be removed. It can fund the National Broadband Network as an investment, that requires a dividend return. (The Federal super previously was going to be funded from annual budgets ... and could have left thousands of past employees exposed to very little of their entitlements).

The Federal model is the same model that I am suggesting. The same model can also be used as part of any Guildford expansion to appeal to the residents of Guildford. Ashfield and Eden Hill could also have their own such funds. All the report asked was how to do it. The Federal Future Fund is the model.

Sincerely, Don Yates

Hello Michael,

The purpose of the motion was to determine the various options, indeed, it may be more suitable to have 2 funds ... a trust fund account under the control of the Town and a second as a perpetual trust. A number of railway collections like Dorigo have a perpetual trust that owns the rail collection. A separate entity runs the collection. If there was a legal action against the membership as operators, then the collection is separate from any legal action. The arrangements need to consider:

1. There is interest in making bequests in wills to advance the Bassendean community ... and if only the earned cash is distributed, then it could be ongoing.

2. Bassendean maybe absorbed at a future time. With the substantial land assets (even though flood plains today may have restrictions), then there should be a way to ensure that such assets are retained for Bassendean residents and not disbursed over a larger shire area.

3. Guildford claims assets around $50 million, which is more than all of Bassendean's assets at $48 million which suggests that the built assets of Bassendean are undervalued. Example: stormdrain value $15 million. Cost to replace estimated at $50 million. What figure is included in the $48 million of built assets?

4. The motion about considering the 'idle land assets' can be part of the perpetual trust considerations. Bottom line, Paul Conti of CB Richard Ellis and others do suggest that Bassendean is in fact quite a wealthy inner city suburb for 10 sq km, some 7-10 kms from the CBD, with 3 railway stations that could become 5 railway station development nodes (if Guildford is included), plus the Pyrton/Eden Hill node.

As a community, we need to realise and celebrate the fact, by:

(A) doing more with the immediate cash resources on hand,

(B) making more of the immediate assets that are realised on, and

(C) embracing planning with an open mind, reflecting what Bassendean is and where it could be in the near and longer term future.

I personally do not want to get into operational matters, but when outcomes could be better and wiser, and the community wants greater value, then expect more questioning and alternative ideas for consideration.

Sincerely, Don Yates.”

11.0 ANNOUNCEMENTS OF NOTICES OF MOTION FOR THE NEXT MEETING

12.0 CONFIDENTIAL BUSINESS

13.0 CLOSURE

The next meeting is to be held on Wednesday, 24 November 2010.