Agenda - Coordination Committee Meeting - 17 November 2015 · AGENDA Coordination Committee Meeting ... The Corso at North Lakes, ... Portal for ArcGIS Level 4 250 n/a

AGENDA

Coordination Committee Meeting

Tuesday 17 November 2015 commencing at 10.30am

Strathpine Chambers 220 Gympie Road, Strathpine

COUNCILLOR: NOTICE IS HEREBY GIVEN, that a meeting of the Coordination Committee will be held on Tuesday 17 November 2015 commencing at 10.30am in Strathpine Chambers, 220 Gympie Road, Strathpine to give consideration to the matters listed on this agenda. Daryl Hitzman Chief Executive Officer 12 November 2015 Membership = 13 Quorum = 7 Mayor and all Councillors

Agenda for public distribution.

Moreton Bay Regional Council

LIST OF ITEMS 1 GOVERNANCE SESSION (Cr Allan Sutherland, Mayor)

ITEM 1.1 4 ADOPTION OF THE 2014/15 ANNUAL REPORT - REGIONAL

REPORT DETAIL SUPPORTING INFORMATION

#1 2014/15 Annual Report

2 PLANNING & DEVELOPMENT SESSION (Cr Mick Gillam)

3 CORPORATE SERVICES SESSION (Cr Bob Millar)

ITEM 3.1 9 MBRC ENTERPRISE LICENCE FOR GIS SOFTWARE - REGIONAL

REPORT DETAIL

ITEM 3.2 13 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL

REPORT DETAIL

SUPPORTING INFORMATION

#1 Monthly Financial Reporting Package - October 2015

ITEM 3.3 29 AUDITOR-GENERAL’S OBSERVATION REPORT 2014/15 - REGIONAL

REPORT DETAIL

SUPPORTING INFORMATION

#1 Letter - Final Management Report for Moreton Bay Regional Council

4 ASSET CONSTRUCTION & MAINTENANCE SESSION (Cr Peter Flannery)

ITEM 4.1 42 LAWNTON - FRANCIS ROAD - ROAD REHABILITATION - DIVISION 8

REPORT DETAIL

SUPPORTING INFORMATION Confidential #1 Tender Assessment Worksheet

5 PARKS, RECREATION & SPORT SESSION (Cr Gary Parsons)

6 LIFESTYLE & AMENITY SESSION (Cr Julie Greer)

7 ECONOMIC DEVELOPMENT & TOURISM SESSION (Cr Brian Battersby)

8 GENERAL BUSINESS

COORDINATION COMMITTEE MEETING 17 November 2015

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ATTENDANCE & APOLOGIES Attendance: Committee Members: Cr Allan Sutherland (Mayor) (Chairperson) Officers: Apologies: The Mayor is the Chairperson of the Coordination Committee. Coordination Committee meetings comprise of Sessions chaired by Council’s nominated Spokesperson for that portfolio, as follows: Session Session Chair / Portfolio Spokesperson 1 Governance Cr Allan Sutherland (Mayor) 2 Planning & Development Cr Mick Gillam 3 Corporate Services Cr Bob Millar 4 Asset Construction & Maintenance Cr Peter Flannery 5 Parks, Recreation & Sport Cr Gary Parsons 6 Lifestyle & Amenity Cr Julie Greer 7 Economic Development & Tourism Cr Brian Battersby


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1 GOVERNANCE SESSION (Cr Allan Sutherland, Mayor) ITEM 1.1 ADOPTION OF THE 2014/15 ANNUAL REPORT - REGIONAL Meeting / Session: 1 GOVERNANCE Reference: A10149737 : 10 November 2015 - Refer Supporting Information (to be

tabled at meeting) Responsible Officer: AM, Director Economic Development & Executive Services (EDES Directorate) Executive Summary This report seeks adoption of the 2014/15 Moreton Bay Regional Council Annual Report. OFFICER’S RECOMMENDATION That the Moreton Bay Regional Council 2014/15 Annual Report, as tabled, be adopted.


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Moreton Bay Regional Council ITEM 1.1 ADOPTION OF THE 2014/15 ANNUAL REPORT - REGIONAL - A10149737 (Cont.)

REPORT DETAIL 1. Background The Annual Report has been prepared in accordance with the provisions contained in the Local Government Act 2009 and its accompanying Local Government Regulation 2012, which were effective during the reporting period. This legislation stipulates how a council is required to measure its performance in its annual report against its Operational Plan for 2014/15 and the objectives of its five-year Corporate Plan. In accordance with section 182 of the Local Government Regulation 2012, a local government must adopt its Annual Report within one month after the day the auditor-general gives the auditor-general’s audit report about the local government’s financial statements for the financial year to the local government. 2. Explanation of Item The 2014/15 Annual Report for Moreton Bay Regional Council details council’s activities and financial performance for the reporting period. The report presents a record of council’s operations to residents, ratepayers, customers and other interested parties. The document highlights major community, economic development and infrastructure projects including the Moreton Bay Rail Link, The Corso at North Lakes, Brown Street Bridge and the Old Redcliffe Fire Station Community Arts and Volunteer Hub. It also contains financial highlights, operational activities and achievements, information related to corporate governance requirements and the Community Financial Report. Moreton Bay Regional Council’s 2014/15 Annual Report will be available to residents online via council’s website www.moretonbay.qld.gov.au A copy of the Annual Report will be tabled at the meeting. 3. Strategic Implications 3.1 Legislative/Legal Implications

The preparation and adoption of an Annual Report is a requirement of the Local Government Regulation 2012. The Annual Report must contain specific detail as required by the Local Government Act 2009.

3.2 Corporate Plan / Operational Plan Strengthening Communities: Office of the CEO - overall leadership and coordination of council activities.

3.3 Policy Implications N/A

3.4 Risk Management Implications N/A

3.5 Delegated Authority Implications N/A

3.6 Financial Implications The cost of the preparation, printing and distribution has been provided in the 2015/16 budget.

3.7 Economic Benefit N/A


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http://www.moretonbay.qld.gov.au/

Moreton Bay Regional Council ITEM 1.1 ADOPTION OF THE 2014/15 ANNUAL REPORT - REGIONAL - A10149737 (Cont.)

3.8 Environmental Implications

N/A 3.9 Social Implications

Informs the community on Council’s operations for the financial year.

3.10 Consultation / Communication The compilation of the Annual Report has required extensive consultation across the organisation and has relied on input from Officers at all levels.


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SUPPORTING INFORMATION The following list of supporting information is provided for: ITEM 1.1 ADOPTION OF THE 2014/15 ANNUAL REPORT - REGIONAL #1 2014/15 Annual Report (to be tabled at the Meeting)


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2 PLANNING & DEVELOPMENT SESSION (Cr Mick Gillam) No items for consideration.


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3 CORPORATE SERVICES SESSION (Cr Bob Millar) ITEM 3.1 MBRC ENTERPRISE LICENCE FOR GIS SOFTWARE - REGIONAL Meeting / Session: 3 CORPORATE SERVICES Reference: A12417429 : 10 November 2015 Responsible Officer: SA, Coordinator Geographic Information Services (CEO Information &

Communication Technology) Executive Summary Council has a significant investment in software licensing for Geographic Information Software (GIS). There is a continuing potential to apply GIS technology in many operational and technical areas within Council. For this reason Council greatly benefits from its Enterprise License Agreement (ELA) with ESRI (Councils GIS solution provider). An ELA provides Council with numerous benefits including: • A lower cost per unit for licensed software • Substantially reduced administrative and procurement expenses • Maintenance on all ESRI software deployed under this agreement which Includes:

o Unlimited access to technical support for key personnel o Latest releases of software from ESRI for products included in this offer o Discounted training o ESRI Inc.’s International User Conference Entry

• Complete flexibility to deploy software products when and where needed Due to Council’s continually expanding use of GIS it is considered an appropriate investment in this software. The three-year time frame secures the price, and it is not envisaged that Council will make any move to replace its GIS systems within this timeframe. OFFICER’S RECOMMENDATION 1. That Council is satisfied ESRI Australia is the only supplier of an enterprise licensing agreement for

Council’s GIS system reasonably available to it. 2. That Council authorise the Chief Executive Officer to negotiate terms and enter into a contract with

ESRI Australia for the Enterprise Licensing Agreement as outlined within this report.


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Moreton Bay Regional Council ITEM 3.1 MBRC ENTERPRISE LICENCE FOR GIS SOFTWARE - REGIONAL - A12417429 (Cont.)

REPORT DETAIL 1. Background In 2013 Council entered into an Enterprise Licence Arrangement (ELA) with ESRI Australia for its GIS software provision and maintenance. At this time Council resolved that ESRI was the only supplier that could offer this type of arrangement for its GIS system. The following resolution appears on Minute Page 13/677 of the General Meeting of Council held 7 May 2013: Ex. Coordination Committee Meeting held 7 May 2013 (MP. 13/704): COMMITTEE RECOMMENDATION 1. That Council resolves that it is satisfied that ESRI is the only supplier of an enterprise licensing

agreement for its GIS system. 2. That Council authorise the Chief Executive Officer to enter into a contract with ESRI for the

Enterprise Licensing Agreement as outlined within this report. The ELA established in 2013 was for a period of three years and is about to expire. It is proposed that Council agrees to a similar arrangement with ESRI Australia for the next three years to maintain and improve its GIS system. 2. Explanation of Item The ESRI Local Government Enterprise License Agreement (ELA) is a three-year agreement that will grant Council access to, maintenance of, and vendor support on the nominated ESRI software for the term of the agreement. The ELA will be effective from the date executed and will require a firm, three-year commitment. ESRI Australia is the exclusive distributor for ESRI software within Australasia. As such, ESRI Australia is the only company that can offer this type of agreement for the software of Council’s GIS system. The ELA includes unlimited access for to the ESRI Enterprise Software listed below. Licenses are valid under the terms of the applicable 3-year Local Government Enterprise Agreement.

Enterprise License Software—Unlimited Quantities

Product Name Included Total Qty./Seats to Be Deployed

ArcGIS for Desktop Software (Single & Concurrent Use) Advanced (ArcInfo) unlimited Standard (Arc Editor) unlimited Basic (ArcView) unlimited ArcGIS for Desktop Extensions (Single & Concurrent Use) ArcGIS 3D Analyst unlimited ArcGIS Spatial Analyst unlimited ArcGIS Geostatistical Analyst unlimited ArcGIS Publisher unlimited ArcGIS Network Analyst unlimited ArcGIS Schematics unlimited ArcGIS Workflow Manager unlimited ArcGIS Data Reviewer unlimited


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Product Name Included Total Qty./Seats to Be Deployed

ArcGIS for Server Enterprise - Advanced unlimited Enterprise - Standard unlimited Enterprise - Basic unlimited Workgroup - Advanced unlimited Workgroup - Standard unlimited Workgroup - Basic unlimited ArcGIS for Server Extensions ArcGIS Geoevent Extension Unlimited ArcGIS 3D Analyst unlimited ArcGIS Network Analyst unlimited ArcGIS Spatial Analyst unlimited ArcGIS Workflow Manager unlimited ArcGIS Geostatistical Analyst unlimited ArcGIS Schematics unlimited ArcGIS Image unlimited ***Windows Mobile –(receives access through Server products )

unlimited

ArcGIS Runtime unlimited ArcGIS Runtime Extensions (Single Use) ArcGIS 3D Analyst unlimited ArcGIS Spatial Analyst unlimited ArcGIS Network Analyst unlimited Esri Production Mapping Desktop Extension – (Single & Concurrent Use)

uncapped

The following software items are included in the ELA as limited quantities:

Enterprise License Software —Limited Quantities

Item Level (if applicable)

Concurrent or Single Use

(if applicable)

Existing Qty. (if applicable)

Qty./Seats to Be

Deployed

Total

CityEngine Advanced n/a CU 1 0 1

Product Level Named Users Annual Credits

Portal for ArcGIS Level 4 250 n/a Payment terms for the ELA are as follows:

Year 1 Year 2 Year 3 Total ELA Fee ELA Fee Payments ($AUD Ex. GST)

$365,000 $373,200 $381,600 $1,119,800


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All current Council departments, employees, and in-house contractors will be eligible to use the software and services listed above. 3. Strategic Implications 3.1 Legislative/Legal Implications

Pursuant to the Local Government Regulation 2012 (‘Regulation’), Council is obliged to seek tenders prior to entering into a contract for the supply of goods or services involving a cost of more than $200,000. An exception to this general requirement is contained in s. 235 of the Regulation which allows Council to contract directly with a supplier without first inviting tenders if the Council resolves that it is satisfied that there is only one supplier of the product reasonably available to it. As ESRI is the owner and supplier of Council’s GIS systems, Council is only able to license its product with this company. As such, Council will need to resolve that it is satisfied that ESRI is the only supplier of these products and services reasonably available to it in order to avail itself of the exception available at s. 235 of the Regulation.

3.2 Corporate Plan / Operational Plan Enabling Services: Information technology - information and communication technology systems and infrastructure service and support.

3.3 Policy Implications Nil

3.4 Risk Management Implications Nil

3.5 Delegated Authority Implications Council authorise the Chief Executive Office to enter into a contract with ESRI to finalise the licensing consolidation and ongoing annual software maintenance for the ESRI GIS system.

3.6 Financial Implications Council’s 2015/16 budget for ESRI GIS software is $396,000 (Project 20095 – ICT Corporate Systems). The proposed annual ELA cost falls within council’s budget for this software.

3.7 Economic Benefit N/A


N/A 3.9 Social Implications

N/A

3.10 Consultation / Communication The following staff were consulted in the preparation of this report: Manager Financial and Project Services Manager Legal Services Information and Communication Technology Manager Senior Legal Officer Senior Contracts Officer


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ITEM 3.2 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL Meeting / Session: 3 CORPORATE SERVICES Reference: A12791691 : 11 November 2015 - Refer Supporting Information A12793082 Responsible Officer: AP, Senior Management Accountant (CEO Accounting Services) Executive Summary That the Financial Reporting Package for the year to date period ending 31 October 2015 be received. OFFICER’S RECOMMENDATION That the Financial Reporting Package for the year to date period ending 31 October 2015 be received.


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Moreton Bay Regional Council ITEM 3.2 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL - A12791691 (Cont.)

REPORT DETAIL 1. Background The Financial Reporting Package for the month ending 31 October 2015 is contained within the supporting information to this report. This package contains a number of financial statements with relevant commentary to provide a breakdown of key financial data and includes. Financial Statements

o Statement of Comprehensive Income shows all income and expenditure as at the end of the October period along with the revised budget and comparative figures for 2014/15.

o The Statement of Financial Position highlights Council’s position at the end of October and itemises assets, liabilities and community equity.

o Statement of Cash Flows which represents the cash inflows and outflows during the month. One Page Statement by Fund

o A one page statement that shows the financial performance (including budget), capital expenditure and source of capital funds for the Council, General Fund and Waste Fund year to date.

Treasury Report

o The Treasury Report highlights key areas of performance and compliance relating to Council’s investments, borrowings and reserves.

2. Explanation of Item The financial results for the month of October are complete. A commentary is provided on significant matters that occurred during the month. 3. Strategic Implications 3.1 Legislative/Legal Implications

Part 9, section 204 of the Local Government Regulation 2012, (regulation) states the following: (1) The local government must prepare a financial report. (2) The chief executive officer must present the financial report—

(a) if the local government meets less frequently than monthly—at each meeting of the

local government; or (b) otherwise—at a meeting of the local government once a month.

(3) The financial report must state the progress that has been made in relation to the local government’s budget for the period of the financial year up to a day as near as practicable to the end of the month before the meeting is held.

3.2 Corporate Plan / Operational Plan

Enabling Services: Financial services - accounting and financial operations, corporate policy and performance activities.

3.3 Policy Implications Compliance to the Council’s Investment Policy is confirmed for the month of October.

3.4 Risk Management Implications The Council is subject to numerous risks associated with revenue and expenses that can impact upon Councils financial performance and position. The quarterly operational plan and budget reporting process assists in minimising the financial risks.


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Moreton Bay Regional Council ITEM 3.2 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL - A12791691 (Cont.)

3.5 Delegated Authority Implications

Nil

3.6 Financial Implications As at the end of October 2015 Council’s operating surplus is $75.38 million and the capital expenditure incurred to date is $100.22 million.

3.7 Economic Benefit Nil


Nil 3.9 Social Implications

Nil

3.10 Consultation / Communication Chief Executive Officer, Manager Financial and Project Services, Accounting Services Manager.


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SUPPORTING INFORMATION Ref: A12793082 The following list of supporting information is provided for: ITEM 3.2 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL #1 Monthly Financial Reporting Package - October 2015


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Financial Statements 1 to 3

One Page Statement - Council 4

Commentary on Financial Results and Graphs 5 to 8

One Page Statement - General 9

One Page Statement - Waste 10

Treasury Report 11

#1 Monthly Financial Reporting PackageITEM 3.2 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL - A12791691 (Cont.)


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2015/16Revised Budget

2015/16YTD

Actuals

2014/15Revised Budget

Full Year

2014/15Actuals

Full Year

Income Revenue

Operating RevenueRates and utility charges $257,686,815 $127,854,943 $248,868,046 $250,521,337Fees and charges $33,124,855 $15,611,094 $34,083,107 $35,618,777Rental income $6,959,352 $2,452,499 $6,674,048 $6,209,930Grants, subsidies and contributions $19,634,857 $10,342,428 $22,255,285 $22,179,536Interest revenue $44,189,933 $14,780,332 $45,978,760 $46,340,565Sales revenue $5,166,095 $1,897,946 $4,403,059 $4,049,302Other revenue $17,498,331 $5,556,172 $17,268,240 $21,435,464Share of profit of associate $38,191,000 $12,730,333 $37,830,000 $70,061,881

$422,451,238 $191,225,747 $417,360,545 $456,416,792 Capital Revenue

Grants, subsidies and contributions $79,987,010 $20,571,085 $81,962,311 $100,816,653

Total Revenue $502,438,248 $211,796,832 $499,322,856 $557,233,445

Capital Income $126,745 $0 $19,040,499 $3,275,554

Total Income $502,564,993 $211,796,832 $518,363,355 $560,508,999

ExpensesOperating ExpensesEmployee benefits ($130,046,576) ($40,131,491) ($128,369,624) ($124,271,484)Materials and services ($143,033,825) ($38,056,748) ($140,301,203) ($134,821,407)Depreciation and amortisation ($77,988,149) ($26,143,543) ($90,654,130) ($79,728,587)Finance costs ($24,124,719) ($8,371,767) ($24,774,909) ($24,545,355)

($375,193,269) ($112,703,549) ($384,099,866) ($363,366,833)

Capital Expenses $0 ($2,434,529) $0 ($365,907,817)

Total Expenses ($375,193,269) ($115,138,078) ($384,099,866) ($729,274,650)

NET RESULT $127,371,724 $96,658,754 $134,263,489 ($168,765,651)

Other Comprehensive IncomeItems that will not be reclassified to net result

Decrease in asset revaluation surplus $0 $0 $0 ($227,548,000)Total other comprehensive income for the year $0 $0 $0 ($227,548,000)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR $127,371,724 $96,658,754 $134,263,489 ($396,313,651)

Moreton Bay Regional CouncilSTATEMENT OF COMPREHENSIVE INCOME

For the period ended 31 October 2015

ITEM 3.2 MONTHLY REPORTING PACKAGE - OCTOBER 2015 - REGIONAL - A12791691 (Cont.)


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2015/16Assets

Current AssetsCash and cash equivalents $222,051,528Trade and other receivables $54,714,262Inventories $1,176,228Total Current Assets $277,942,018

Non-Current AssetsTrade and other receivables $721,813,569Investments $15,000Investment property $42,355,000Investment in associate $944,786,564Property, plant and equipment $3,658,189,471Intangible assets $2,457,571Total Non-Current Assets $5,369,617,175

Total Assets $5,647,559,193

Liabilities

Current LiabilitiesTrade and other payables $21,970,560Borrowings $16,553,961Provisions $13,970,766Other $188,556Total Current Liabilities $52,683,843

Non-Current LiabilitiesTrade and other payables $604,847Borrowings $372,769,921Provisions $24,013,351Total Non-Current Liabilities $397,388,119

Total Liabilities $450,071,962

NET COMMUNITY ASSETS $5,197,487,231

Community EquityRetained surplus $4,896,249,409Asset revaluation surplus $301,237,822

TOTAL COMMUNITY EQUITY $5,197,487,231

Moreton Bay Regional CouncilSTATEMENT OF FINANCIAL POSITION

As at 31 October 2015



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2015/16Cash flows from operating activitiesReceipts from customers $128,012,032Payments to suppliers and employees ($111,887,789)Interest received $21,035,399Rental income $2,452,499Non capital grants and contributions $10,342,428Tax equivalent received $4,377,158Borrowing costs ($7,987,482)Net cash inflow/(outflow) from operating activities $46,344,245

Cash flows from investing activitiesPayments for property, plant and equipment ($100,206,666)Payments for intangible assets $0Payments for investment property $0Proceeds from sale of property, plant and equipment $633,009Net movement in loans to community organisations $0Net movement in loans to Unitywater $1,226,202Dividends received from associate $13,670,826Other dividends received $0Grants, subsidies, contributions and donations $13,723,548Net cash inflow/(outflow) from investing activities ($70,953,081)

Cash flows from financing activitiesProceeds from borrowings $0Repayment of borrowings ($5,627,058)Net cash inflow/(outflow) from financing activities ($5,627,058)

Net increase/(decrease) in cash held ($30,235,894)

Cash and cash equivalents at the beginning of the financial year $252,287,422

Cash and cash equivalents at the end of the financial year $222,051,528

STATEMENT OF CASH FLOWSFor the period ended 31 October 2015




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Moreton Bay Regional CouncilOne Page Statement - Whole of Council

Year to date result as at: 31 October 2015

2015/16 2015/16 2015/16 2015/16

1 Operating Summary2 Operating Revenues3 Rates and Utility Charges $257,686,815 $257,686,815 $127,854,942 49.62%4 User Fees and Charges $33,112,855 $33,124,855 $15,611,094 47.13%5 Interest Revenue $47,089,933 $44,189,933 $14,780,332 33.45%6 Operating Grants and Subsidies $18,674,951 $19,061,607 $9,817,510 51.50%7 Other Revenues $29,376,897 $30,197,028 $10,431,535 34.54%8 Share of Profit of Associate - Operating $28,761,000 $28,761,000 $9,587,000 33.33%9 Community Service Obligations $0 $0 $0 No Budget10 Total Operating Revenue $414,702,451 $413,021,238 $188,082,413 45.54%11 Operating Expenses12 Employee Expenses $133,808,998 $131,807,886 $40,693,436 30.87%13 Materials and Services $139,755,605 $141,272,515 $37,494,803 26.54%14 Finance Costs $1,095,342 $1,095,342 $431,101 39.36%15 Interest Expense on Loans $23,029,377 $23,029,377 $7,940,666 34.48%16 Depreciation and Amortisation $77,988,149 $77,988,149 $26,143,544 33.52%17 Competitive Neutrality Adjustments $0 $0 $0 No Budget18 Total Operating Expenses $375,677,471 $375,193,269 $112,703,550 30.04%19 Operating Surplus/(Deficit) $39,024,980 $37,827,969 $75,378,863 199.27%20 Capital Revenues and Expenses21 Infrastructure Cash Contributions $20,000,000 $20,000,000 $10,363,088 51.82%22 Contributed Assets & assets not previously recognised $40,227,000 $40,227,000 $6,847,538 17.02%23 Grants,Subsidies and Other Contributions $12,311,578 $19,760,010 $3,360,460 17.01%24 Share of Profit of Associate - Capital $9,430,000 $9,430,000 $3,143,333 33.33%25 Investment Property Revaluations $0 $0 $0 No Budget26 Property, Plant and Equipment Revaluations $0 $0 $0 No Budget27 The Gain or (loss) on infrastructure offsets $0 $0 ($1,149,643) No Budget28 The Gain or (loss) on sale of assets $0 $126,745 ($1,284,887) -1013.76%29 Total Capital Revenues and Expenses $81,968,578 $89,543,755 $21,279,889 23.76%30 Increase/(Decrease) in operating capability $120,993,558 $127,371,724 $96,658,752 75.89%31 Appropriations32 Transfer capital revenues to capital account ($61,968,578) ($69,543,755) ($10,916,801) 15.70%33 Transfers (to) reserves ($20,055,422) ($20,055,422) ($10,363,088) 51.67%34 Transfers from reserves for operating purposes $937,190 $937,190 $400,175 42.70%35 General Revenue used for capital purposes ($40,970,679) ($55,213,034) ($13,985,513) 25.33%36 Total Appropriations ($122,057,489) ($143,875,021) ($34,865,227) 24.23%37 Unappropriated Surplus/(Deficit) for the year ($1,063,931) ($16,503,297) $61,793,525 -374.43%38 Unappropriated Surplus/(Deficit) from the previous year $1,063,931 $16,503,297 $16,503,297 100.00%39 Unappropriated Surplus/(Deficit) Position $0 $0 $78,296,822 No Budget40 Capital Funding Sources41 Capital Funding Balance Brought Forward $0 $10,025,865 $10,025,865 100.00%42 General Revenue used for Capital Purposes $40,970,679 $55,213,034 $13,985,513 25.33%43 Capital Grants and Subsidies received $12,311,578 $19,760,010 $3,360,460 17.01%44 Contributed Assets and assets not previously recognised $40,227,000 $40,227,000 $6,847,538 17.02%45 Loans received $19,027,769 $19,027,769 $0 0.00%46 Funds received from Asset sales $2,073,000 $2,199,745 $633,009 28.78%47 Transfers from Reserves for capital purposes $22,314,000 $71,005,992 $52,161,750 73.46%48 Depreciation and Amortisation funded in the year $77,988,149 $77,988,149 $26,143,544 33.52%49 Transfer of land sales revenue to reserve $0 ($126,745) ($126,914) 100.13%50 (Capital funding balance carried forward) $0 $0 ($333,002) No Budget51 Total Capital Funding Sources $214,912,175 $295,320,819 $112,697,763 38.16%52 Capital Funding Applications53 Capital Expenditure $151,675,051 $232,083,695 $100,223,167 43.18%54 Contributed Assets and assets not previously recognised $40,227,000 $40,227,000 $6,847,538 17.02%55 Loan Redemption $23,010,124 $23,010,124 $5,627,058 24.45%56 Total Capital Funding Applications $214,912,175 $295,320,819 $112,697,763 38.16%

33% of the year elapsed

Line No.

Original Budget

Revised Budget YTD Actuals

Actuals to Revised Budget



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Synopsis

* 33% of the financial year is complete.

*

*

Operating Revenue

*

*

*

Operating Expenditure

*

*

Capital Revenue

**

*

Capital Expenditure

*

Adjusted Capital Expenditure

*

The Performance at a Glanceas at 31 October 2015

Employee Expenses, and Materials and Services are tracking under budget at this point in the year while Finance Costs are tracking over budget.

User Fees and Charges are tracking significantly above budget while all other revenue streams are aligning closely to budget.

Operating Grants and Subsidies are tracking significantly over budget asCouncil has received a majority of the Financial Assistance Grant.

The first quarter budget amendments are reflected in this report.

The operating surplus is $75.38 million.

All other expenditure is on track for this stage of the financial year.

Rates and Utility Charges are on track to budget following the second quarterly rates levy.

Infrastructure Cash Contributions are tracking significantly above budget.

To date $100.22 million has been spent on capital works, (which represents 43.18% of the capital program). The majority of this expenditure relates to the purchase of the Petrie Mill Site.

With the exclusion of the Moreton Bay Rail Link project and the Petrie Millland acquisition, capital expenditure to date is represented as 25.36% complete.

Contributed Assets are tracking under budget however recognition will now escalate.

Grants, Subsidies and Other Contributions are tracking below budget.



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Moreton Bay Regional CouncilComparative Table 2013/14 and 2014/15 to 2015/16*


2015/16 2015/16 2015/16 2014/15 2013/14$'000 $'000 % % %

Operating Revenue

Rates & Utility Charges $257,687 $127,855 50% 49% 49%

User Fees & Charges $33,125 $15,611 47% 44% 44%

Interest Revenue $44,190 $14,780 33% 34% 34%

Operating Expenses

Employee Expenses & Material and Services $273,080 $78,188 29% 29% 30%

External Loan Interest Expense $23,029 $7,941 34% 34% 34%

Capital Revenues

Infrastructure Cash Contributions $20,000 $10,363 52% 35% 20%

Contributed Assets $40,227 $6,848 17% 0% 36%

Grants & Subsidies $19,760 $3,360 17% 23% 22%

Capital Expenditure

Total Capital Expenditure $232,084 $100,223 43% 19% 16%

Adjusted Capital Expenditure $157,308 $39,888 25% 21% n/a

The table focuses on key items of revenue and expenses across the comparative period and is useful guide in understanding what may have changed with regard to revenue and expense streams across the three financial years.

Revenue is on target after the second quarter rates levy.

Revenue is tracking over budget and is up on the previous year.

The % for 2015/16 is tracking to budget and isconsistent with previous years.

Expenditure is tracking below budget but iscomparable to the previous years.

Expenditure is tracking to budget and iscomparable to previous years.

Infrastructure cash contributions are tracking significantly over budget and exceed the previous years.

All contributed assets have been recognised to date.

The % of grants and subsidies received istracking below budget and is lower thanthe previous years.

Capital expenditure is tracking above budget asa result of the budget for the purchase of the Petrie Mill site being fully spent.

Capital expenditure is below budget with theexclusion of the Moreton Bay Rail Link projectand the Petrie Mill land acquisition. This is slightlyhigher than last year

* The data presented reflects the position of Council as at 31 October 2015 compared to the position of Council as at 31 October 2014 and 31 October 2013.





Actuals to Revised Budget Comments



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T

Annual Revised Budget $'000

Actuals to October

$'000Actuals to

Budget % spent

2014/15 $ 269,914 $ 79,342 29.40%

2015/16 $ 273,080 $ 78,188 28.63%

Operating ExpenditureThis graph compares the major components of operating expenditure (being employee expenses plus materials and services) on a percentage expended basis for the 2015/16 and 2014/15 years. The graph includes continuing service delivery expenses and operating initiative expenses.

The budgeted expenditure trend is set at 8.33% for each month. The cumulative actual expenditure trend for each month is graphed alongside the budget expenditure.

7.23%

13.95%

20.54%

29.40%

36.71%

46.18%

53.28%

60.13%

68.29%

75.22%

83.28%

96.44%

8.33%

16.67%

25.00%

33.33%

41.67%

50.00%

58.33%

66.67%

75.00%

83.33%

91.67%

100.00%

0

6.73%

12.92%

20.13%

28.63%

0%

8%

17%

25%

33%

42%

50%

58%

67%

75%

83%

92%

100%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

% o

f E

xpen

dit

ure

14/15 Actuals

15/16 Budget

15/16 Actuals



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Annual Revised Budget $'000

Actuals to October

$'000Actuals to

Budget % spent

2014/15 $ 170,451 $ 31,962 18.75%2015/16 $ 232,084 $ 100,223 43.18%

Capital Expenditure

This graph compares the capital percentage expended for the 2015/16 and 2014/15 years.

The budgeted expenditure trend is set at 8.33% for each month. The cumulative actual expenditure trend for each month is graphed alongside the budget expenditure.

0%

8%

17%

25%

33%

42%

50%

58%

67%

75%

83%

92%

100%

0

% o

f E

xpen

dit

ure

09/10 Actuals 10/11 Actuals 09/10 & 10/11 Budget

3.15%

7.51%

13.50%

18.75%

24.17%

35.57%

40.25%

49.23%

56.13%

66.57%

74.17%

88.83%

8.33%

16.66%

25.00%

33.33%

41.66%

50.00%

58.33%

66.66%

75.00%

83.33%

91.66%

100.00%

35.54%

41.99%

48.93%

43.18%

0%

8%

17%

25%

33%

42%

50%

58%

67%

75%

83%

92%

100%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

% o

f E

xpen

dit

ure

14/15 Actuals

15/16 Budget

15/16 Actuals



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PAGE 25 Agenda

Moreton Bay Regional CouncilOne Page Statement - General


2015/16 2015/16 2015/16 2015/16

1 Operating Summary2 Operating Revenues3 Rates and Utility Charges $220,424,550 $220,424,550 $109,215,214 49.55%4 User Fees and Charges $29,589,355 $29,601,355 $14,510,759 49.02%5 Interest Revenue $46,929,933 $44,029,933 $14,741,220 33.48%6 Operating Grants and Subsidies $18,674,951 $19,061,607 $9,817,510 51.50%7 Other Revenues $25,979,997 $26,800,128 $9,459,672 35.30%8 Share of Profit of Associate - Operating $28,761,000 $28,761,000 $9,587,000 33.33%9 Community Service Obligations ($933,388) ($933,388) ($311,129) 33.33%10 Total Operating Revenue $369,426,398 $367,745,185 $167,020,246 45.42%11 Operating Expenses12 Employee Expenses $128,187,662 $126,266,278 $39,162,196 31.02%13 Materials and Services $117,797,695 $119,380,325 $31,837,156 26.67%14 Finance Costs $690,679 $690,679 $308,109 44.61%15 Interest Expense on Loans $23,029,377 $23,029,377 $7,940,666 34.48%16 Depreciation and Amortisation $75,703,135 $75,703,135 $25,403,552 33.56%17 Competitive Neutrality Adjustments ($13,697,875) ($12,216,872) ($4,565,958) 37.37%18 Total Operating Expenses $331,710,673 $332,852,922 $100,085,721 30.07%19 Operating Surplus/(Deficit) $37,715,725 $34,892,263 $66,934,525 191.83%20 Capital Revenues and Expenses21 Infrastructure Cash Contributions $20,000,000 $20,000,000 $10,363,088 51.82%22 Contributed Assets & assets not previously recognised $40,227,000 $40,227,000 $6,847,538 17.02%23 Grants,Subsidies and Other Contributions $12,311,578 $19,760,010 $3,360,460 17.01%24 Share of Profit of Associate - Capital $9,430,000 $9,430,000 $3,143,333 33.33%25 Investment Property Revaluations $0 $0 $0 No Budget26 Property, Plant and Equipment Revaluations $0 $0 $0 No Budget27 The Gain or (loss) on infrastructure offsets $0 $0 ($1,149,643) No Budget28 The Gain or (loss) on sale of assets $0 $126,745 ($1,284,887) -1013.76%29 Total Capital Revenues and Expenses $81,968,578 $89,543,755 $21,279,889 23.76%30 Increase/(Decrease) in operating capability $119,684,303 $124,436,018 $88,214,414 70.89%31 Appropriations32 Transfer capital revenues to capital account ($61,968,578) ($69,543,755) ($10,916,801) 15.70%33 Transfers (to) reserves ($20,055,422) ($20,055,422) ($10,363,088) 51.67%34 Transfers from reserves for operating purposes $937,190 $937,190 $400,175 42.70%35 General Revenue used for capital purposes ($38,900,693) ($52,277,328) ($13,985,513) 26.75%36 Total Appropriations ($119,987,503) ($140,939,315) ($34,865,227) 24.74%37 Unappropriated Surplus/(Deficit) for the year ($303,200) ($16,503,297) $53,349,187 -323.26%38 Unappropriated Surplus/(Deficit) from the previous year $303,200 $16,503,297 $16,503,297 100.00%39 Unappropriated Surplus/(Deficit) Position $0 $0 $69,852,484 No Budget40 Capital Funding Sources41 Capital Funding Balance Brought Forward $0 $9,477,068 $9,477,068 100.00%42 General Revenue used for Capital Purposes $38,900,693 $52,277,328 $13,985,513 26.75%43 Capital Grants and Subsidies received $12,311,578 $19,760,010 $3,360,460 17.01%44 Contributed Assets and assets not previously recognised $40,227,000 $40,227,000 $6,847,538 17.02%45 Loans received $19,027,769 $19,027,769 $0 0.00%46 Funds received from Asset sales $2,073,000 $2,199,745 $633,009 28.78%47 Transfers from Reserves for capital purposes $22,314,000 $71,005,992 $52,161,750 73.46%48 Depreciation and Amortisation funded in the year $75,703,135 $75,703,135 $25,403,552 33.56%49 Transfer of land sales revenue to reserve $0 ($126,745) ($126,914) 100.13%50 (Capital funding balance carried forward) $0 $0 $0 No Budget51 Total Capital Funding Sources $210,557,175 $289,551,302 $111,741,976 38.59%52 Capital Funding Applications53 Capital Expenditure $147,320,051 $226,314,178 $99,267,380 43.86%54 Contributed Assets and assets not previously recognised $40,227,000 $40,227,000 $6,847,538 17.02%55 Loan Redemption $23,010,124 $23,010,124 $5,627,058 24.45%56 Total Capital Funding Applications $210,557,175 $289,551,302 $111,741,976 38.59%

Line No.


Original Budget





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Moreton Bay Regional CouncilOne Page Statement - Waste


2015/16 2015/16 2015/16 2015/16

1 Operating Summary2 Operating Revenues3 Rates and Utility Charges $37,262,265 $37,262,265 $18,639,728 50.02%4 User Fees and Charges $3,523,500 $3,523,500 $1,100,335 31.23%5 Interest Revenue $160,000 $160,000 $39,112 24.45%6 Operating Grants and Subsidies $0 $0 $0 No Budget7 Other Revenues $3,396,900 $3,396,900 $971,863 28.61%8 Share of Profit of Associate - Operating $0 $0 $0 No Budget9 Community Service Obligations $933,388 $933,388 $311,129 33.33%10 Total Operating Revenue $45,276,053 $45,276,053 $21,062,167 46.52%11 Operating Expenses12 Employee Expenses $5,621,336 $5,541,608 $1,531,240 27.63%13 Materials and Services $21,957,910 $21,892,190 $5,657,647 25.84%14 Finance Costs $404,663 $404,663 $122,992 30.39%15 Interest Expense on Loans $0 $0 $0 No Budget16 Depreciation and Amortisation $2,285,014 $2,285,014 $739,992 32.38%17 Competitive Neutrality Adjustments $13,697,875 $12,216,872 $4,565,958 37.37%18 Total Operating Expenses $43,966,798 $42,340,347 $12,617,829 29.80%19 Operating Surplus/(Deficit) $1,309,255 $2,935,706 $8,444,338 287.64%20 Capital Revenues and Expenses21 Infrastructure Cash Contributions $0 $0 $0 No Budget22 Contributed Assets & assets not previously recognised $0 $0 $0 No Budget23 Grants,Subsidies and Other Contributions $0 $0 $0 No Budget24 Share of Profit of Associate - Capital $0 $0 $0 No Budget25 Investment Property Revaluations $0 $0 $0 No Budget26 Property, Plant and Equipment Revaluations $0 $0 $0 No Budget27 The Gain or (loss) on infrastructure offsets $0 $0 $0 No Budget28 The Gain or (loss) on sale of assets $0 $0 $0 No Budget29 Total Capital Revenues and Expenses $0 $0 $0 No Budget30 Increase/(Decrease) in operating capability $1,309,255 $2,935,706 $8,444,338 287.64%31 Appropriations32 Transfer capital revenues to capital account $0 $0 $0 No Budget33 Transfers (to) reserves $0 $0 $0 No Budget34 Transfers from reserves for operating purposes $0 $0 $0 No Budget35 General Revenue used for capital purposes ($2,069,986) ($2,935,706) $0 0.00%36 Total Appropriations ($2,069,986) ($2,935,706) $0 0.00%37 Unappropriated Surplus/(Deficit) for the year ($760,731) $0 $8,444,338 No Budget38 Unappropriated Surplus/(Deficit) from the previous year $760,731 $0 $0 No Budget39 Unappropriated Surplus/(Deficit) Position $0 $0 $8,444,338 No Budget40 Capital Funding Sources41 Capital Funding Balance Brought Forward $0 $548,797 $548,797 100.00%42 General Revenue used for Capital Purposes $2,069,986 $2,935,706 $0 0.00%43 Capital Grants and Subsidies received $0 $0 $0 No Budget44 Contributed Assets and assets not previously recognised $0 $0 $0 No Budget45 Loans received $0 $0 $0 No Budget46 Funds received from Asset sales $0 $0 $0 No Budget47 Transfers from Reserves for capital purposes $0 $0 $0 No Budget48 Depreciation and Amortisation funded in the year $2,285,014 $2,285,014 $739,992 32.38%49 Transfer of land sales revenue to reserve $0 $0 $0 No Budget50 (Capital funding balance carried forward) $0 $0 ($333,002) No Budget51 Total Capital Funding Sources $4,355,000 $5,769,517 $955,787 16.57%52 Capital Funding Applications53 Capital Expenditure $4,355,000 $5,769,517 $955,787 16.57%54 Contributed Assets and assets not previously recognised $0 $0 $0 No Budget55 Loan Redemption $0 $0 $0 No Budget56 Total Capital Funding Applications $4,355,000 $5,769,517 $955,787 16.57%


Line No.

Original Budget





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TREASURY REPORT

Investments

Investment Portfolio - Summary of Cash and Investments Held

Short Term Rating

Cash and Investment

balance as at 31 October

2015Interest earned

YTDA1+ 84,271,551 924,065A1+ ANZ 23,175,224 190,689A1+ 18,876,261 218,303A1+ ANZ 39,999,996 296,082A1+ 40,000,000 299,932A1 20,000,000 202,370A2 200,000 2,224A2 Margate Community Bank 200,000 2,022A2 IMB 795

Petrie Paper Mill Site Funds 238,986Operating Cash 14,839Trust Investments 42,649

226,723,032 2,432,956

* The QTC rate presented is the annualised interest rate for the month as provided by the Queensland Treasury Corporation.

Council has achieved a weighted average interest rate on all cash held of 2.73% pa in 2015/16, and has earned anadditional $44,523.77 from investing funds with financial institutions outside QTC.

Performance to Budget - Year to Date (YTD) Summary 33% of the year has elapsed

Original Budget

Revised Budget

Actual YTD

Actual % Achieved

$'000 $'000 $'000 $'000Interest Revenue on Investments 9,728 6,828 2,433 36%Interest on Debt held in Unitywater 36,342 36,342 12,096 33%Total Investment Income 46,070 43,170 14,529 34%

Borrowings Reserves

Debt Position $ '000 Reserves Position $ '000Debt held as at 1 July 2015 394,951 Reserves held as at 1 July 2015 209,000New borrowings 0 Funds added 10,490Borrowings repaid (5,627) Funds utilised (52,562)Debt held as at 31 October 2015 389,324 Reserves held as at 31 October 2015 166,928

Reserves compriseConstrained Reserves 108,605Other Reserves 58,324

166,928

The Treasury Report highlights key areas of performance and compliance relating to Council's cash, investments and borrowings.

At 31 October 2015 all of Council's investments are in accordance with the approved Investment Policy. As at this date Council held 62.83% of funds outside of the Queensland Treasury Corporation (QTC). Term Deposit rates have increased slightly in recent times, providing better returns. More cash has been moved to longer term funds following the purchase of the Petrie Mill site from Orora.

Institution Return Term

National Australia Bank 2.9% 133 to 182 days

Qld Treasury Corp* 2.79% Short Term (45 days)At Call

National Australia Bank At Call2.86% to 2.95% 181 to 366 days

2.47%2.5%

Suncorp 2.9% to 2.95% 182 daysBrendale Community Bank 3.3% 364 days

3%

interest rate of all Council debt is 5.90%

366 days

CommentsTracking as per revised BudgetTracking as per Budget

As at 31 October 2015 the weighted average



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ITEM 3.3 AUDITOR-GENERAL’S OBSERVATION REPORT 2014/15 - REGIONAL Meeting / Session: 3 CORPORATE SERVICES Reference: A12678782 : 19 October 2015 - Refer Supporting Information A12777315 Responsible Officer: DC, Accounting Services Manager (CEO Accounting Services) Executive Summary The purpose of this report is to present the Auditor-General’s observation report relating to the audit of Council’s Financial Statements for 2014/15. OFFICER’S RECOMMENDATION That the Auditor-General’s observation report relating to the audit of Council’s 2014/15 Financial Statements be received.


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Moreton Bay Regional Council ITEM 3.3 AUDITOR-GENERAL’S OBSERVATION REPORT 2014/15 - REGIONAL - A12678782 (Cont.)

REPORT DETAIL 1. Background The Auditor-General must prepare an observation report about the audit of a local government’s financial statements in accordance with section 54 of the Auditor-General Act 2009. In accordance with the Local Government Regulation 2012 the Mayor must present the Auditor-General’s observation report about the audit of the Council. 2. Explanation of Item The Council’s 2014/15 Financial Statements were signed by the Auditor-General on 21 October 2015. The signed audited Financial Statements were subsequently presented to Council at the General Meeting held 4 November 2015 (Page 15/1872). In accordance with section 213(3) of the Local Government Regulation 2012 the Mayor must present the Auditor-General’s observation report at the next ordinary meeting of the local government. The observation report includes observations and suggestions made by the Auditor-General about anything arising out of the audit for 2014/15. Observations are categorised according to a risk severity as outlined below; • material deficiency (highest risk) • significant deficiency • deficiency • other matter (lowest risk) In order of risk severity, ‘material deficiency’ is the highest risk category and indicates an immediate action plan is required by management to address the deficiency while ‘other matter’ is the lowest risk category where an implementation plan is at the discretion of management. Council was categorised with three deficiency observations and four other matter observations. Full details of the observations, implications, recommendations and management comments are provided in the supporting information. The observation report will be presented to the next Audit Committee meeting to be held on 18 November 2015. 3. Strategic Implications 3.1 Legislative/Legal Implications

The observation report is a report prepared by the Auditor-General in accordance with section 54 of the Auditor-General Act 2009. In accordance with section 213(3) of the Local Government Regulation 2012, the Mayor must present the Auditor-General’s observation report at the next ordinary meeting of the local government.

3.2 Corporate Plan / Operational Plan Enabling Services: Financial services - accounting and financial operations, corporate policy and performance activities.

3.3 Policy Implications Nil


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Moreton Bay Regional Council ITEM 3.3 AUDITOR-GENERAL’S OBSERVATION REPORT 2014/15 - REGIONAL - A12678782 (Cont.)

3.4 Risk Management Implications

The Auditor-General’s Observation Report assesses the risks and possible implications associated with matters observed during the course of the audit of the financial statements. Matters identified reflect strategic or operational risks that need to be addressed by management. Management provide responses to recommendations suggested in the observation report with a view to reducing or eliminating the risk associated with the matter raised.

3.5 Delegated Authority Implications Nil

3.6 Financial Implications Nil

3.7 Economic Benefit Nil


Nil 3.9 Social Implications

The Auditor-General’s observation report informs the community of observations and suggestions arising from the audit of the Councils Financial Statements.

3.10 Consultation / Communication Chief Executive Officer, Manager Financial and Project Services.


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SUPPORTING INFORMATION Ref: A12777315 The following list of supporting information is provided for: ITEM 3.3 AUDITOR-GENERAL’S OBSERVATION REPORT 2014/15 - REGIONAL #1 Letter - Final Management Report for Moreton Bay Regional Council


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4 November 2015

Cr Allan Sutherland The Mayor Moreton Bay Regional Council PO Box 159 Caboolture QLD 4510

Dear Councillor Sutherland

Final Management Report for Moreton Bay Regional Council

The 2014-15 audit for Moreton Bay Regional Council has been completed.

QAO issued an unmodified audit opinion on Council’s financial statements. An unmodified opinion was also issued on the current year financial sustainability statement. However, an emphasis of matter was included in that auditor’s report to highlight the use the special purpose basis of accounting for the sustainability statement.

The purpose of this letter is to provide Council with details of significant audit matters and other important information relating to the audited financial statements.

The Closing Report was presented to the Audit Committee in draft for discussion on 13 October 2015 and provided the status of the audit as at 9 October 2015. Since the presentation of the Closing Report there have been no significant matters that have come to our attention.

Appendix A provides Council with the detail of management letter points raised with management during the final audit. Appendix B provides Council with an update on management letter points open from the Interim Management Letter presented to the audit committee on 27 May 2015.

Each year the QAO reports the results of all financial audits and significant issues to Parliament. If the QAO intend to include any significant matters for Moreton Bay Regional Council in a report to Parliament, you and the chief executive officer will be given an opportunity to comment and those comments will be reflected in the report.

We would like to thank you and your staff for the assistance provided to us during the audit.

Please contact me should you wish to discuss these issues or any issues regarding the audit process.

Yours sincerely

Stephen Tarling Partner (As delegate of the Auditor-General)

cc. Cr Bob Millar Chair of the Audit Committee, Moreton Bay Regional Council

cc. Daryl HitzmanCEO, Moreton Bay Regional Council

ITEM 3.3 AUDITOR-GENERALS OBSERVATION REPORT 2014/15 - REGIONAL - A12678782 (Cont.)#1 Letter - Final Management Report for Moreton Bay Regional Council


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Moreton Bay Regional Council 2014-15 Final Management Report

Executive SummaryProgress on Findings

Our strategy places high priority on management addressing and resolving matters raised as part of the external audit process. We have completed our audit procedures for the year ended 30 June 2015 including our assessment of the outstanding audit issues.

A summary of the issues raised during the final audit by category is included below for your information:

Ref No Issue Cycle Status Management response

New Issues raised in the final audit visit

1.1 Revaluation process Property Plant and Equipment

Unresolved Refer to 1.1 in Appendix A

1.2 Expenditure approval process

Expenditure / procurement Unresolved Refer to 1.2 in Appendix A

1.3 Subsequent events review procedures

Financial reporting Unresolved Refer to 1.3 in Appendix A

1.4 Compliance with revised Roads to Recovery guidelines


1.5 Financial sustainability reporting

Property Plant and Equipment


1.6 Compliance with non-current asset policy

Property Plant and Equipment


1.7 Recognition of contributed assets


ummary of the issues raised during the final audit by category is included below for your information:

ITEM 3.3 AUDITOR-GENERALS OBSERVATION REPORT 2014/15 - REGIONAL - A12678782 (Cont.)


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Ref No Issue Cycle Status Management response

Update on Interim Management Letter points

2.1 Employee expense Payroll / Employee provisions

Open Refer to 2.1 within Appendix B

2.2 IT Security Information systems –Security

Open Refer to 2.2 within Appendix B

The following matters raised in our interim management letter have now been adequately resolved and closed:

Issue Cycle Status

Instances of controls not implemented Payroll, Revenue, Control activities, Monitoring

Closed

Process of identifying accruals Expenditure Closed

Ratings definitions and remedial action plan The rating of audit issues in this report reflects our assessment of both the likelihood and consequence of each identified issue in terms of its impacts on:

• the reliability, accuracy and timeliness of financial reporting; and

• the effectiveness and efficiency of operations, including probity, propriety and compliance with applicable laws.

Without anticipating the Auditor-General’s final decision on what may be referenced in an Auditor-General’s Report to Parliament, each of the issues included in this report has been assessed and categorised against the following risk categories:

Category Client impact Prioritisation of remedial action

Material deficiency A significant deficiency that will lead to a material misstatement of the financial report and will result in qualification if not corrected.

Requires immediate management action.

Significant deficiency A deficiency or combination of deficiencies that may lead to a material misstatement of the financial report.

Requires prompt management action to resolve within 2 months.

Deficiency The control is not working or non-existent and, therefore, will not prevent, detect or correct misstatements in the financial report.

Requires a management action plan in this reporting period.

Other matter Matters relevant to those charged with governance not related to deficiencies in internal control.

Implementation at management’s discretion.



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Appendix A This attached Appendix outlines the observation, implication, recommendation, management comments and action plans for each audit finding.

Risk category

Account Balance / Area

Observation Implication Recommendation Management Comments and Action Plan

Deficiency Property, plant and equipment

1.1 Revaluation process

As reported to the Audit Committee the road reblocking and unit rate revaluation assessment in the current year resulted in a decline of $574mil in the transport infrastructure class in the financial statements. The decline in value was primarily driven by the change in unit rates provided by external valuers.

Our testing of the unit rate revaluation identified that:

The preferred suppliers and valuers used in 2011/12 are not the same in all cases as those used in 2014/15.Adopted rates in both periods fall within the range of rates proposed by preferred suppliers. We note however that adopted rates for 2014/15 are more conservative,positioned towards the lower end of the preferred supplier range in most cases, whereas 2011/12 adopted rates were positioned towards the higher end.

Differences in preferred suppliersand valuers inevitably introduce greater variability in the revaluation process.

Changes in the relative positioning of adopted unit rates within the range proposed by preferred suppliers can also lead to variability in revaluation outcomes.

Combined, the above may have a material impact on the fair value reported in the financial statements where the underlying nature of assets has not changed.

We recommend that management document its approach to the evaluation process of revaluations and establish a policy / guidelines for achieving greater consistency in outcomes, in particular consideration should be given to adopted unit rates.

Management note the comment. Management will look to introduce more prescriptive guidance for valuers when providing unit rates and build into its asset revaluation process a more In depth analysis and understanding as to why current unit rates and previously provided unit rates may have changed over the intervening years.


____________________________________________________________________________________________________________


____________________________________________________________________________________________________________


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Risk category



Deficiency Expenditure / procurement

1.2 Expenditure approval process

Councils’ current procurement process acknowledges that certain procurement decisions are subject to a decision of council via committee. Approvals of purchases made by the committee are therefore approved in the system by the contracts team, with reference to thecommittee approval.

For an expense tested as part of the Roads to Recovery grant we identified one expense which had been approved by the contracts team without a committee approval in place.

Notwithstanding the breakdown in the approval process, the expense was avalid expense for Roads to Recoverypurposes.

Failure to follow prescribed guidelines and policies as part of the approval process for procurement activities can lead to an increased probity risk of contracts being entered into which may not be appropriate or the best use of public funds.

We understand that the process for these approvals was amended after the instance noted in our testing. Werecommend management consider the introduction of appropriate monitoring controls for procurement approvals made by the contract team directly to ensure all procurement decisions are appropriately approvedfor the revised process.

Management note the recommendation and can confirm that appropriate monitoring controls are in place for approvals made by the contracts team.

Deficiency Financial reporting 1.3 Subsequent events review procedures

As part of our normal procedures to update our understanding of matters subsequent to balance date we were made aware that a matter disclosed as a contingent liability had been settled during September 2015.

We included an unadjusted difference of $1.8m (additional expense) on our final schedule of audit differences to reflect this.

Where open matters such as claims against the entity are not reviewed prior to the reporting date misstatement of financial information may occur.

We recommend that management put in place processes and procedures to ensure that all such adjusting events are considered for inclusion in the financial statements by ensuringtimely discussion between legal and finance teams of open items and updating this understanding prior to signing.

Management note the recommendation and will introduce a review process of subsequent events just prior to final clearance from the audit committee so that any potential adjustment that is required can be reflected in the financial statements.


____________________________________________________________________________________________________________


____________________________________________________________________________________________________________


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Risk category



Other matter Financial reporting 1.4 Compliance with revised Roads to Recovery guidelines

During testing of the Roads to Recovery grant we noted one instance where landscaping costs had been allocated to the grant. Under the revised Guidelines issued on July 2015 (for the 14/15 year) landscaping costs are "excluded costs".

As landscaping is an "excluded cost" council is not entitled to include these within acquitted funds. We note however that ownsource spending in the 14/15 year exceeded amounts attributed to the Roads to Recovery programme and are satisfied that the full value of work reflected on the acquittal statement would otherwise have been spent by council during the year.

We recommend that project managers are provided with training on the revised requirements of the Roads to Recovery grant to ensure that only eligible expenditure is claimed through the acquittal process.

Management will circulate the revised guidelines and advise project managers to be fully aware of “excluded costs” associated with the roads to recovery funding program.

Other matter Financial reporting 1.5 Financial sustainability reporting

Our testing of the financial sustainability reporting identified that the asset sustainability ratio incorrectly included renewals of non-infrastructure assets.

While considered immaterial to the ratio, the inclusion of renewals for non-infrastructure assets is not in accordance with the

We recommend that in future periods only infrastructure related renewals are included in the ratio.

Management note the recommendation and in future will include only infrastructure related assets renewals in the ratio.

Other matter Property, Plant & Equipment and Operating expenses

1.6 Compliance with non-current asset policy

The Cultural & Heritage asset class was last revalued in the 2011/12 financial year. Whilst the interval between revaluations satisfies the requirements of

, it is not in compliance with MBRC Policy Directive: 2160-011 that specifies:

The cultural & Heritage asset class is not material to the overall presentation of the financial statements, however failure to revalue assets with sufficient regularity, especially where defined by council policy could result is the value of assets being misstated.

If council believes it is appropriate for certain non-current asset classes to have a longer interval between formal valuations we recommend that the policy be updated to reflect this. If this is not the case we recommend management obtain a suitable valuation of the cultural and heritage asset class in the current year.

Management note the recommendation and will consider whether the Asset Policy Directive needs to be amended to allow for a greater time between revaluations or whether the revaluation model or cost model is appropriate for the Cultural and Heritage asset class.


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Risk category



Other matter Property, Plant & Equipment

1.7 Recognition of contributed assets relating to prior periods

As reported in prior years, , contributed assets

shall be recognised when: the entity obtains control of the contribution and asset; and the amount of the contribution / cost of asset can be reliably measured

Consistent with prior years we have obtained an understanding of the value of contributed assets recognised in incorrect periods and confirm that the value of such amounts was lower than previous years and not of a quantum that required adjustment in the statements.

We note that the changes introduced to the workflow system have reduced the number of contributed assets being recorded in the incorrect period, but note that the process could be further refined to reduce the number of assets incorrectly recognised.

We recommend all areas within council (engineering, development applications and finance etc) continue to work closely to streamline and improve the workflow system to facilitate the accurate recording of contributed assets for both accounting and maintenance purposes.

Management note the recommendation and continue to drive the departments to ensure they fully understand the importance of their obligations in the contributed asset recognition process. Significant procedural steps have been implemented to keep on top of the process and management are confident that the process is working well and the quantum of assets applicable to prior periods is decreasing.


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Appendix B This attached Appendix outlines provides an update on the management letter points that remain open from the interim management letter.

Risk Account Area Original observation and Recommendation Management Comments and Action Plan

Final Update

Deficiency Payroll / employee provisions

2.1 Employee expenses

As previously brought to the attention of the Audit Committee Council has a number of employees with large outstanding leave balances. The top five employees currently have a total of 73 weeks of annual leave accrued.

Although we acknowledge that Council has taken proactive steps in trying to reduce excessive leave balances (defined as greater than two years’ worth of entitlement for annual leave), we note that management of excessive leave balances remains an ongoing issue and area of activity for Council.

It was recommended that Council continue to monitor report and manage employees with excessive leave where possible.

Council has been placing an increased focus on encouraging employees to take annual leave which has resulted in the reduction of accrued annual leave weeks.

As at 30 June 2015, the top five employees currently have a total of 58weeks of annual leave accrued (28 Feb 2015 – 65).

Deloitte update No change in progress since raised in interim. We understand that this is under consideration by management, therefore the point to remain open.

Management Update

Management note the downward trend that is occurring over the past number of years.


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Risk Account Area Original observation and Recommendation Management Comments and Action Plan

Final Update

Other Matter IT Systems 2.2 IT Security Our review of Council’s IT security processes identified the following:

Privileged access to IT systems was not adequately restricted for the full year. We noted one instance where a Finance team member was granted super user rights to the Finance One system for a specific project and this access was not rescinded at the completion of the project. In addition, redundant accounts were identified having privileged access to the council’s IT network the Finance One database. The process for timely removal of an employee’s access to IT systems after termination is not consistently followed, resulting in employees retaining access to council’s IT systems after they leave the council. Password requirements configured for some users in IT systems are not in line with council’s IT policies.

Access administration processes and IT policies are used to ensure that access to IT systems is appropriate and remains appropriate as employees change roles and/or are terminated from the organisation. Where not effectively implemented instances of inapposite access levels for users may occur. This increases the likelihood of errors or inappropriate modification to financial data.

Management note the super user access for one officer was not terminated at the conclusion of a specific project. The officer was returned to normal user access once the matter was identified.

Management note that some users accounts were not disabled upon termination but instead were set to account “lock out”. The lock out process disables access to the system but the account is still active. Management will modify its process so that the accounts of terminated employees are always set to be “expired” not “locked out”.

Management note that some users in IT systems did have passwords set to not expire. The users in question were employees on extended leave and upon their return to work their accounts were not set back to having their password to expire. This has now been rectified. It must be noted that numerous generic system accounts (for example that relate to phone handsets or devices such as scanners / printers) have their passwords always set to not expire.

Deloitte update

As this was raised as an “other matter” during the interim audit it is recommended for testing as part of the first interim audit for 2016.

Management Update

Management concur and will address finding by first interim visit of 2016.


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4 ASSET CONSTRUCTION & MAINTENANCE SESSION (Cr Peter Flannery) ITEM 4.1 LAWNTON - FRANCIS ROAD - ROAD REHABILITATION - DIVISION 8 Meeting / Session: 4 ASSET CONSTRUCTION & MAINTENANCE Reference: A12755787 : 3 November 2015 - Refer Confidential Supporting Information

A12735927 Responsible Officer: RH, Project Manager (ECM Project Management & Construction) Executive Summary Tenders were invited for the Lawnton - Francis Road - Road Rehabilitation (MBRC004850) project. The tender closed on 27 October 2015 with 10 tender responses received, nine of which were conforming. It is recommended that Council award the contract to McIlwain Civil Pty Ltd for the sum of $1,953,589 (excl. GST) as their tender was evaluated as representing the best overall value to Council. OFFICER’S RECOMMENDATION That the tender for the construction of the ‘Lawnton - Francis Road - Road Rehabilitation (MBRC004850)’ be awarded to McIlwain Civil Pty Ltd for the amount of $1,953,589 (excl. GST).


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Moreton Bay Regional Council ITEM 4.1 LAWNTON - FRANCIS ROAD - ROAD REHABILITATION - DIVISION 8 - A12755787 : (Cont.)

REPORT DETAIL 1. Background This project involves the construction of road rehabilitation works on a 1.2km section of Francis Road, between 200 Francis Road and the intersection with Nightingale Drive, Lawnton. Construction works include road rehabilitation, as well as on-road cycle facilities, road widening, drainage works, line-marking modifications, provision of pedestrian refuge facilities, improvements to kerb ramps and off-road pathway crossing facilities, connections to public transport infrastructure and landscaping. It is anticipated that construction will commence in December 2015 with construction duration of 16 weeks to complete, weather permitting.

Figure 1: Locality plan

2. Explanation of Item Public tenders for Lawnton - Francis Road - Road Rehabilitation (MBRC004850) closed on 27 October 2015, with nine conforming tenders and one non conforming alternative tender received which was not included in the assessment. The tenders were assessed by the assessment panel in accordance with Council’s Purchasing Policy and the selection criteria set out in the tender documents. The conforming tenderers and their final weightings are tabled below (ranked from highest to lowest):

RANK TENDERER EVALUATION SCORE

1 McIlWain Civil Engineering Pty Ltd 94.68

2 Doval Construction (Qld) Ltd 92.25

3 Hazell Bros (Qld) Pty Ltd 91.52

4 St Hilliers Property Pty Ltd 88.49


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RANK TENDERER EVALUATION SCORE

5 AE Group Civil & Mining Pty Ltd 85.27

6 Queensland Bridge and Civil 84.52

7 SGQ Pty Ltd 80.18

8 Moggill Constructions Pty Ltd 79.99

9 Nathan Contractors Pty Ltd 79.31

10 Hazell Bros (Qld) Pty Ltd ALTERNATIVE Non-Conforming

McIlwain Civil Engineering Pty Ltd received the highest assessment score for the combined selection criteria. Their submission was comprehensive, demonstrated a clear understanding of the project and was the lowest price. A tender clarification meeting was held on 2 November 2015 at which McIlwain Civil Engineering Pty Ltd demonstrated their past experience and understanding of this project. Doval Constructions (Qld) Ltd received the second highest assessment score for the combined selection criteria. Their experience and methodology were adequate; however there was no extra value to Council for the higher cost. Hazell Brothers (Qld) Pty Ltd received the third highest assessment score for the combined selection criteria. Their experience and methodology were adequate; however there was no extra value to Council for the higher cost. 3. Strategic Implications 3.1 Legislative/Legal Implications

Due to the value of the work being greater than $200,000, a competitive tender process was undertaken. The tender was called in accordance with the Local Government Act 2009.

3.2 Corporate Plan / Operational Plan

Valuing Lifestyle: Roads and transport - roads and other transport infrastructure across the region 3.3 Policy Implications

This project has been procured in accordance with the provisions of the following documents: • Council’s Procurement Policy 10-2150-006 • Local Government Act 2009 • Local Government Regulation 2012 Chapter 6.

3.4 Risk Management Implications

The project risk has been assessed and the following issues identified. The manner in which the possible impact of these risks are minimised is detailed below. • Financial:

a. A third party review of the financial status of McIlwain Civil Engineering Pty Ltd has been completed, and was reported as “sound”.

• Construction risks:

a. The tendered methodology has been assessed to ensure construction risks associated with the works are understood, and a management plan is in place to manage such risks.


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b. Impact on local traffic – the contractor has presented a traffic management plan and

strategy as part of their tender. During construction, vehicle movements will be reduced to one lane under traffic control. Traffic speeds will be reduced within the vicinity of the works to ensure safe passage for road users and construction activities.

c. The tender document required all tenderers to include allowance for inclement weather within their tendered construction time line. The allowance is based upon the Bureau of Meteorology Rainfall Graph for the Brisbane area.

d. Prior to construction commencing, the contractor will be required to submit to Council, for approval, work place health and safety plus pedestrian and traffic management plans associated with the work. Regular audits on contractor compliance with these approved plans will be undertaken by Council inspectors throughout construction.

3.5 Delegated Authority Implications

There are no delegated authority implications associated with this project.

3.6 Financial Implications Council has allocated a total of $1,075,000 (excl. GST) in the 2015/16 Capital Works budget for the construction of this project. A further $1.54M has been allocated from the Federal Roads to Recovery (R2R) program. This project will be debited to project number 44342. 2015/16 Road Rehabilitation budget allocation $1,075,000 Federal R2R grant revenue recognised at Quarter 1 review $1,540,000 Revised budget $2,615,000

========= Design fees $ 223,837 Tender price (Construction) $1,953,589 Contingency (10%) $ 195,358 Q Leave $ 9,280 ---------------- Total project cost $2,382,064 ========= The ongoing operational/maintenance costs are estimated at a total of $9000 per financial year for landscape maintenance. The revised budget amount for this Project is sufficient.

3.7 Economic Benefit The road rehabilitation will address surface issues and extend the life of the road pavement and reduce recurrent maintenance costs.

3.8 Environmental Implications An Environmental Management Plan will be submitted to Council for approval by the successful tenderer, detailing how the surrounding area will be protected during construction, and how sediment run-off will be managed. The existing significant trees within the roadway are being retained and will be protected during construction.

3.9 Social Implications

The works will decrease the need for disruptive road maintenance and improve rideability of the road surface for vehicles.

3.10 Consultation / Communication

Prior to any onsite works, VMS Boards will be used to notify motorists of the pending road upgrade works. Council’s practice for all construction works includes requirements for further project notification to residents and impacted parties utilising project signage and a direct project notice. The Divisional Councillor has been consulted and is supportive of this project.


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SUPPORTING INFORMATION Ref: A12735927 The following list of supporting information is provided for: ITEM 4.1 LAWNTON - FRANCIS ROAD - ROAD REHABILITATION - DIVISION 8 Confidential #1 Tender Assessment Worksheet


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5 PARKS, RECREATION & SPORT SESSION (Cr Gary Parsons) No items for consideration.

6 LIFESTYLE & AMENITY SESSION (Cr Julie Greer) No items for consideration.

7 ECONOMIC DEVELOPMENT & TOURISM SESSION (Cr Brian Battersby) No items for consideration.

8 GENERAL BUSINESS ANY OTHER BUSINESS AS PERMITTED BY THE MEETING CHAIRPERSON.


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