Pp lg 2011 workshop

INSERT PHOTO HERE

Carl Millington Brendan Jones John Ross Partner Partner Partner

Business Advisory & Assurance Private Clients Tax Consulting Group

Monday, 6 June 2011

Local Government Workshop

Agenda

Introduction - current issues in Local Government

Code 19 Update

Issues that interest the DLG

Land under roads and other asset issues

Cost Advantage Program – Demonstration

Non-cash Sec 94 Contributions

Tax issues - FBT & MV‟s, GST on Developer

Contributions

Accounting for interest free loans

Year-end efficiencies and preparing for the audit

The trouble with accounting…..

http://www.youtube.com/watch?v=wM-

ZRLSjr6g&feature=related

SUMMARY OF DLG

CIRCULARS

Current Issues in Local Government


DLG Circulars

10-16 Amendment to the local government 1993 -

partial rate exemptions for religious bodies, charities

and public benevolent institutions

10-17 Integrated planning and reporting self-

assessment checklist

10-18 Maximum amount of minimum rates 2010/11

10-19 Strategic tasks guide 2010/11

10-20 Snapshot of NSW councils - comparative

information on NSW local government councils 2008/09


DLG Circulars

10-21 Annual reporting and state of the environment

reporting requirements of local councils

10-22 Revised internal audit guidelines

10-25 Draft quarterly budget review statement and long

term financial plan guidelines

10-29 Guidelines for the preparation of a special rate

variation application and guidelines for the preparation

of an application to exceed the minimum rate statutory

limit -2011/12


DLG Circulars

10-32 Quarterly budget review statement

10-34 Capital expenditure guidelines

11-01 Revised ministerial investment order

11-03 Long service leave – amending regulation

11-05 Information about rating for 2011/12

11-06 Boarding house tariffs for residential rating for

2011/12

11-08 Collaborative arrangements between councils -

survey report

SUMMARY OF CHANGES

Code 19 Update

19 Update

Code

C:/Users/cmillington/Desktop/Local Government Code of Accounting Practice and Financial Reporting - Guidelines - UPDATE 19.pdf

Code 19 Update

The draft code was issued on 11/04/11 for review and

comment by interested parties.

The final code was recently issued without any

significant changes to the draft.

This was not unexpected given the insignificant

changes that have occurred for 2010/2011 reporting

year. A nice change from what has ensued in the last

few years!

Code 19 Update

Most changes outlined in the Code involve “tweaking” of

the presentation requirements of the GPFR statements.

These changes included:

The Statement of Changes in Equity now

disclosing the „net operating result‟ and „other

comprehensive income‟ separately;

Note 2, GPFR (Functions or Activities) and Special

Schedules re the split of the „Administration‟

category into „Governance‟ and „Administration‟;

Code 19 Update

Note 9 (I,P,P&E) re commentary required to clarify the

methodology used to value „Land under Roads‟ [which

will be discussed in detail in the next session]; and

Notes 13 (Statement of Performance Measures) and

Note 21 (Results by Fund) require splits into funds –

„Consolidated‟, „Water‟, and „Sewer‟. [Applicable for

those councils (outside the Sydney metro area and

Kiama) where such services are provided].

Code 19 Update

Accounting Policy Changes:

Accounting policy changes noted are not related to any

accounting standards changes but rather DLG

interpretation of accounting policies.

The Code does refer to AASB 117 (finance versus

operating lease classifications) and AASB 5 (accounting

for non-current „held-for-sale‟ assets) where future year

changes have been flagged, however these are not

mandatory for 2010/2011.

Code 19 Update

The most significant changes for 2010/2011 are:

The I,P,P&E asset categories including:

recognition of land under roads – the Code allows 3

options to value. The 3rd of these, - the „Englobo‟

value was noted by the DLG at the LGFP conference

as favourably recognised by NSW Treasury.

Fair valuation of the existing asset categories of

„Community Land‟, „Land Improvements‟, „Other

Structures‟ and Other Assets‟.

Code 19 Update

the treatment of grant and contribution revenues

which are now to be recognised based on the basis in

which they are received, not the basis on how they are

spent.

Accordingly, all grants and contribution revenue should

be recognised per the GPFRs as being „operating‟ in

nature unless specifically received for capital purposes.

This change in policy requires the comparatives in

the 2010/2011 GPFR’s to be restated to reflect the

definition used now.

Code 19 Update

Notes on the Fair Valuation of Community Land, Land

Improvements, Other Structures and Other Assets:

Community Land – to be valued, per land parcel,

based on NSW Valuer-General valuations, unless

acquired at market value previously.

Community land parcels „found‟ or „lost‟ are to be

treated as correction of errors with the related

adjustments made to Retained Earnings before

revaluation.

Code 19 Update

Should a reclassification between Operational and

Community Land occur then an adjustment to the Asset

Revaluation reserve is required to reflect the revaluation

of Operational Land in the 2008 year.

Land Improvements, Other Structures & Other

Assets – the Code allows valuation of these

categories at depreciated historical costs, as done for

Plant & Equipment in 2008. Therefore the description

of the basis of valuation will change however the

calculation of the value will not.

Code 19 Update

Comment on I,P,P& E valuation basis and values:

All asset categories except for Construction/WIP per

Note 9 in 2010/2011 should be „at valuation‟.

The revaluation cycle for all asset categories is 5 years

however Councils are still required to review the

contents of each annually. Such a review should be

documented as part of the year-end documentation and

signed off by appropriate line management personnel.

If there has been a significant shift in fair value [such as

a boom or bust in land values] this should be reflected

in the valuations per the GPFRs.

Code 19 Update

Note 1 – Summary of Significant Accounting Policies

The DLG in presenting at the LGFP conference made

specific reference to the contents in Note 1.

The point was made that the standard wording for Note

1 as presented in the Code and as provided by the

various financial statement software packages used (i.e.

LG Solutions, Coalface etc.) should be scrutinised by

Council management.

Note 1 in each Council‟s GPFRs should be specific to

that Council.

Code 19 Update

I,P,P&E - Note 9 and Special Schedule 7:

Special Schedule 7 „Condition of Public Works‟ refers

to Note 9 and should equal Note 9.

This has not always been the case and management

should ensure that reconciliation of the 2 occurs and

if applicable explanations for differences

documented.

Code 19 Update

Note 6(b) – Externally Restricted Assets held:

Reminder - Unlike in years prior to 2009 the requirement

to classify cash/investment assets as Current/Non-

current depending on the timing/nature of the restriction

no longer applies.

Assets are to be classified as Current or Non-Current

based on the characteristics of the Cash and/or

Investments held.

KPI’S AND RATIOS

Issues of Interest to DLG

Issues of Interest to the DLG

2009/10 statistics of interest to DLG (NSW averages)

Revenue

‒ Rates – 33%

‒ Annual charges - 13%

‒ User charges & fees – 17%

‒ Operating grants – 14%

‒ Capital grants – 12%

Reasonably stable

over last 5 years


Expenses

‒ Depreciation & impairment – 20%

‒ Employee – 39%

‒ Materials & contracts – 25%

Unrestricted cash – 9% had NIL

UCR

‒ < 1.5 = 16 councils

‒ 1.5 – 2 = 26 councils

‒ 2 – 3 = 42 councils

‒ 3 – 5 = 47 councils

‒ > 5 = 35 councils


Outstanding rates benchmarks

‒ Metropolitan councils = < 5%

‒ Rural councils = 5 – 10%

Employee Costs/Rates & Annual Charges

‒ 15 councils = 150% or greater

‒ 34 councils = 100% - 150%

Infrastructure assets benchmark – WDV better than

40%

DLG expected asset renewal ratio - 1:1

Value of Road Assets - $44B (total assets $120B)


DLG monitoring Councils‟ financial health:-

‒ Operating result

‒ Balance sheet stability

‒ Levels of unrestricted cash

‒ KPI‟s (Note 13)

‒ % of employee costs to rates & annual charges

‒ WDV of infrastructure assets

‒ Asset renewal ratio


DLG stages in monitoring Councils health

‒ Informal discussions

‒ “Please explain” letters

‒ On-site visits and focussed reviews

‒ Formal quarterly monitoring program

‒ Formal investigation (under the LG Act)

‒ Public enquiry

VALUATIONS ETC.

Land Under Roads & Other Asset Issues

What we will cover in this session

Circular 09-09 (amended the revaluation timetables set out

in Circulars 06-43 and 08-07) – requirement to value

assets at fair value

Land Under Roads

Land Improvements

Community Land

Other Structures

Other Assets

Land under roads

The provisions contained in Circular 09-09 have been revised by

Circular 09-25, as follows, extracted from Code 19:

The Division has now determined that in accordance with AASB

1051 Land Under Roads, a council may elect to recognise or not

to recognise as an asset land under roads acquired before

1 July 2008. Land under roads acquired after that date is

accounted for under AASB 116.

Definition – “Land under roadways, and road reserves, including

land under footpaths, nature strips and median strips”

Land under roads

Two components:

1. Acquired pre 1 July 2008?

‒ Elect not to recognise (then need to derecognise any previously

recognised against opening balance of accumulated

surplus/deficit)

‒ Elect to recognise

2. Acquired from 1 July 2008 onwards

Land under roads

Council Considerations before valuing – Acquired pre 1 July 2008 and elected

to recognise:

Determine if land under road meets the definition of an asset

Determine if the asset can be reliably measured.

Disclose accounting policy in financial reports in each reporting period that

the standard applies to.

Measure at cost or fair value as at that date. (If land under roads obtained

at no or nominal cost AASB 116 states that Not For Profit entities must

record at fair value).

Recognise any land under roads acquired before 1 July 2008 against

opening balance of accumulated surplus/deficit.

Disclosure nature and net amount of each adjustment made.

Report to council any budget implications.

Land under roads

Council Considerations before valuing – Acquired post 1 July 2008:

Determine if land under road meets the definition of an asset

Determine if the asset can be reliably measured.

Account for land under roads acquired in accordance with AASB

116 – Property, Plant and Equipment.

Councils should recognise land under roads acquired at its cost,

where the cost represents fair value.

Any land under roads acquired at no or nominal value should be

measured at its fair value.

Land under roads

Fair value valuation method - acquired pre 1 July 2008:

Valuation of the entity‟s total land under roads at the average unit

value of the land contained within the entity‟s area of control.

valuation of road segments at the average unit value of properties

adjoining the relevant road segment

valuation on the „Englobo‟ basis (see Code 19 for method).

Valuation methods - acquired post 1 July 2008:

In accordance with AASB116 – at cost, or where no cost or nominal

value, then at fair value (see above).

Valuation methods between pre and post 1 July 2008 should be

consistent.

Land under roads

Useful guidance to assist in this valuation process:

Code 19;

AASB1051 – Land under roads

AASB116 – Property, plant and equipment;

Australian Infrastructure Financial Management

Guidelines;

Comparison with other Councils;

Community Land

Valuation methods:

The NSW Valuer General‟s valuations may be used to initially recognise community

land acquired at no cost or nominal cost. It is considered that the valuations

represent the fair value of such land in lieu of actual cost.

Community land acquired at market price fulfils the requirement of recognition as an

asset under clause 7 of AASB 116. Such land should be recorded initially at cost as

per clause 15 of AASB 116. Therefore, the Valuer General‟s valuations for the initial

recognition of the land acquired at market price should not be used.

The NSW Valuer General‟s valuations may be used under the revaluation model to

represent fair value for the revaluation of community land under Clause 31 of AASB

116.

In the case where community land has not been valued by the Valuer General,

council may request a valuation under section 20 of the Valuation of Lands Act

1916.

Community Land

Issues to consider:

Opportunity to ensure land is correctly classified as operational or community and

correct where relevant;

Land improvements, other structures &

assets

Councils may use depreciated historical cost or insurance

values as a representation of fair value as long as Council

has undertaken a high level review to determine if there

has been any impairment of these assets.

Council may wish to calculate unit rates etc. where

applicable.

Summary

Ensure methodology for valuation complies with the requirements to

AASB1051, AAS116 and Code 19;

Ensure all assets are captured;

Recommend to prepare a brief methodology document covering the

valuation of land under roads, community land, land improvements, other

structures and other assets. Have documentation in place to support any

calculations or assumptions used – be able to support your valuation and

logic come audit time – please send to us prior to the year end audit, when

available;

Try not to leave the process to the late minute;

If unsure contact other Councils with regard to their treatment or your

Auditors;

We have to do it all again in 5 years!

DEMONSTRATION

Cost Advantage Program

What is Cost Advantage?

Budgeting Process

Financial

Budget

Revenue

- Sales

- Pricing

Expenses

- Cost Reduction

- Cost Efficiency

Relevance to Local Government?

Local Government Planning and Reporting framework

Annual Operational Plan/Budget

Long Term Financial Plan must include:

‒ Projected income and expenditure, balance sheet and cash flow

‒ Planning assumptions used to develop the Plan

‒ Sensitivity analysis - highlights factors/assumptions most likely

to affect the Plan

‒ Financial modelling for different scenarios

e.g. planned/optimistic/conservative

‒ Methods of monitoring financial performance.

Today‟s Objectives

Not to provide you with all the answers………….

Provide you with framework to help identify, analyse

& critically assess the different layers of costs in your

organisation and look to find increased operational

efficiency.

Pitcher Partners 9-Step Cost Advantage

Program

1. Identify Costs

2. Assign Responsibility

3. Set Targets

4. Analyse

5. Options

6. Recommendations & Approvals

7. Implementation

8. Communication

9. Measure, Monitor & Report

Step 1 – Identify Costs

Analytical review of actual costs in current and prior

years

(identify variances $ and %)

Systematic review of each and every class of purchase

Costs should be categorised into:

Essential; (business critical - hard to change)

Necessary;

Discretionary; (should be easiest to reduce)

Avoidable/Inefficient; (should be focus of analysis).

Step 2&3 - Assign Responsibility/Set

Target

Determine who will carry out the review?

Who is the appropriate person who has control

over/knowledge of each category of expense?

How much cost $ are we looking to reduce?

Attainable & sustainable!

What is motivation that drives the target – cashflow,

KPIs, strategic, deliver financial plan?

To be completed by when?

Step 4 - Analyse

Involves checking existing policies & processes

Looking at trends in spending

Benchmark each major cost category with industry

averages

Looking at cost drivers to gain thorough understanding

Make observations and comments

Step 5 - Options

Prepare a plan on how cost savings can be achieved.

General Cost Advantage Strategies

Consider lower cost options

Renegotiate terms with suppliers

Test the market

Take advantage of discounts/favourable payment terms

Step 5 – Options (continued)

Specific Cost Advantage Strategies

Advertising/Marketing Computer Expenses

Financing/Interest Insurances

Freight/Postage Office Supplies

Light & Power Rent

Motor Vehicle/Transport Staff/Recruitment

Telecommunications Travel/Entertainment

Step 6 – Recommendation & Approvals

Evaluate and consider options

Determine preferred action plan to achieve cost

reduction objectives

Put forward recommendations for relevant approval

Step 7 & 8 – Implementation &

Communication

Project plan including timeframe and key project

deliverables

Assign project leader and team leaders

Define process, allocate tasks/responsibilities and

reporting framework

Important to communicate implementation with

employees

Communication is essential between project team

Step 9 – Measure, Monitor & Report

Schedule quarterly meetings for project team to meet

with senior management to review whether targeted

savings are being achieved and/or whether further

action is required

Measure results and monitor – ongoing

Report progress to relevant stakeholders

Some Examples

Specific Cost Advantage Strategies

Cost of Labour Program Checklist

Cost of Sales Program Checklist

TIMING AND MEASUREMENT

Non-Cash Section 94 Contributions


Section 94 of the EP&A Act allows Council to impose a

condition on a development consent where that

development is “likely to require the provision of or

increase the demand for public amenities and public

services” within the local government area.

Contributions can be

‒ Monetary contributions - (Sec 94(1)(a))

‒ Dedication of land free of cost – (Sec 94(1)(b)

‒ The provision of a material public benefit – (Sec

95(5)(b))


AASB 1004 requires contributions to be measured at

the Fair Value of the contributions received or

receivable.

Fair Value is defined in the Australian Accounting

Standards as the amount for which an asset could be

exchanged between knowledgeable, willing parties in an

arm‟s length transaction.


Example:-

‒ Council A enters into agreements with developers in

accordance with Sec 95(5)(b).

‒ These agreements are evidenced by a “Works in

Kind” (WIK) agreement and are backed by a bank

guarantee in case on non-performance.

‒ The WIK Agreement provides

• “For the purposes of this Agreement, the Parties

acknowledge that the Contribution Value in relation to the

works is the value of the Works specified by, or determined

in accordance with, in the Contributions Plan or as otherwise

agreed between the Parties.”


Example (cont.)

‒ On 31 May 2011, building to the value of $1M to be

provided.

‒ How is this transaction handled at 30 June 2011?

‒ On 31 March 2012 the building is completed and title

transferred to Council A

‒ Council‟s engineers assess the building and

determine that it‟s value is $750,000

‒ How is this transaction handled at 30 June 2012?


Where the Contribution Value is not expressed in

monetary terms (ie where an area of land is prescribed

rather than a dollar amount) it will be necessary to

determine the Fair Value as follows:

‒ If the land is classified as operational land – by

reference to recent valuations of similar land in the

local government area

‒ If the land is classified as community land – by

reference to the latest Valuer General‟s valuation of

the land.

FBT & GST

Taxation Issues

Taxation Issues

6 June 2011

John Ross

Tax Director

Pitcher Partners Sydney

Fringe benefits tax – employer cost

Employees

„Salary & wages‟

Excluded exempt benefits

- „otherwise deductible‟ rule

- laptops primarily for business usage

- mobile phones principally for business usage

- LAFHA

Excludes – Superannuation

Meal entertainment – actual usage v 50% / 50%

Motor vehicles concessionally taxed

Motor vehicles

„Car‟ – carry less than one tonne / < 9 passengers

- not motor cycles

„Held‟ – made available to a person

Provided in respect of employment of employee

Private use – used for private purposes

‒ home to work is private use

‒ taken to be available for private use

‒ car garaged by employee

‒ in employee‟s custody or control

- annual leave/interstate trips– take control of keys

Work related travel in commercial vehicles utes/panel vans <1

tonne exempt where private use is minor in frequent, irregular

Value of car fringe benefits

Statutory formula

0 -14,999 km 26%

15,000 – 24,999 km 20%

25,000 – 40,000 km 11%

40,000 km plus 7%

Cost price - reduced by employee trade-in or cash contribution

- excludes rego, tax on rego/transfer

- includes dealer delivery costs

- new car warranty (not extended warranty)

- GST inclusive price, if any

- fleet discount and manfacturer‟s rebate reduce cost

2 / 3 rd‟s - More than 4 years old

Budget 2011/12 Statutory rate changes cars

Distance travelled

during the FBT year

(1 April – 31 March)

Statutory rate (multiplied by the cost of the car to

determine a person's car fringe benefit)

Existing

contracts

New contracts entered into after 7:30pm (AEST) on 10

May 2011

From 10 May

2011

From 1 April

2012

From 1 April

2013

From 1 April

2014

0 – 15,000 km 0.26 0.20 0.20 0.20 0.20

15,000 – 25,000 km 0.20 0.20 0.20 0.20 0.20

25,000 – 40,000 km 0.11 0.14 0.17 0.20 0.20

More than 40,000 km 0.07 0.10 0.13 0.17 0.20

Budget 2011/12 FBT car benefit calculation

Removes incentive to drive further to > tax conc.

Phase out of concessional FBT rate for increased kilometres travelled

Applies for new contracts entered into after 7:30 pm 10 May 2011

‒ Increases the tax concession for cars <15,000 km

‒ Maintain conc. 15,000 – 25,000

‒ Decreases tax concession cars travel > 25,000 km

Henry Review recommendation

Car industry support continues; May be benefit for exec‟s to upgrade

Employee contribution

Reduces taxable value

97% of taxpayers earn < $180,000

FBT 46.5% penalty on grossed up value

Marginal tax rate 31.5%

37.5%

Bonus payment, subject to PAYG, contributed to

employer, can reduce taxable value to nil eliminating

FBT at less cost to council than FBT

Goods and Services Tax (Exempt Taxes, Fees & Charges) Determination 2010 (No.2)

Listing Australian taxes, fees and charges the payment of which will not constitute the provision of consideration for a supply [Part 2 – NSW]

‒ Local government rates

‒ Building application and planning /zoning fees

‒ Compulsory charges for domestic waste removal

‒ FOI charges

Until gazetted not free from GST

18 month process

ATO to introduce principles based approach

2 years to implement

Goods and Services Tax – taxable charges

Taxable charges

‒ Inspection and testing fees, for example building

inspections

‒ Swimming pool and leisure centre fees

‒ Fees for use of public land

‒ Fees for attendance by officers at events

‒ Cemetery, burial and cremation fees

Land developer contributions –‟in kind‟

Supply of contribution and supply of approval are not

treated as consideration for supply [s.82-5;82-10]

GST

Grants

If a payment is for no service – no GST

If recipient required to do something – GST

GSTR 2000/11

Credits for input tax

Limitation where council have exempt financial supplies on

investments

May 2010 Budget increased threshold from $50,000 to

$150,000

REVIEW ACCOUNTING

Interest Free Loans

What we will cover in this session

We will consider how the lender and the borrower should

account for interest free loans. Interest free loans are

often provided to not-for-profit entities or related parties

within a group, for example, subsidiaries;

When accounting for interest free loans the following

two issues should be considered:

‒ measurement (that is, what is the fair value of the

interest free loan);

‒ recognition (that is, what is the reason(s) for the loan

and who are the parties involved).

Issues to consider

When accounting for interest free loans the following two

issues should be considered:

Measurement (that is, what is the fair value of the

interest free loan);

Recognition (that is, what is the reason(s) for the loan

and who are the parties involved).


Measurement issues

Fair value of an interest free loan may not equal its fair

value.

Long term receivable with no stated interest - fair value

normally arrived at using discounted cash flow method;

For discounting use an interest rate for a similar

instrument or with a similar credit rating or that is issued

at the same time;

AASB139 permits short term receivables to be recorded

at face value without discounting as long as the impact

of not discounting is not material;


Repayment terms?

Need to ascertain expected repayment terms;

If none, then lender has no intention to recall the loan

(indicates in substance that this is a capital contribution)

or borrower no intention to pay.

Recognition

Accounting for interest free loans depends on the parties

involved and the reason for the loan.


Loan receivable – example

Council lends $100,000 to For-profit entity and borrower for 5 years and

classifies the financial asset under loans and receivables. The loan carries no

interest. The loan is repaid in 5 equal instalments over the next 5 years.

Assume a market related interest rate is 10% (fair value of loan when

discounted is $75,816.

Entry in Councils books when loan is made:

Dr – Loan / receivable $75,816

Dr – Grants expense $24,184

Cr – Cash $100,000

Entry at end of year 1:

Dr – Cash $20,000

Cr – Interest income $7,582

Cr – Loan receivable $12,418


Loan payable – example

Similar treatment to the previous example except the

opposite way around. With the initial entry from Councils

perspective the interest free element ($24,184) will be

treated as a contribution received and will be accounted for

in accordance with AASB1004 Contributions.


Employee loan

Assume similar terms and conditions to previous example:

Entry in Councils books when loan is made:

Dr – Loan / receivable $75,816

Dr – Employee expense $24,184

Cr – Cash $100,000

Entry at end of year 1:

Dr – Cash $20,000

Cr – Interest income $7,582

Cr – Loan receivable $12,418

Summary

Aim is to ascertain the fair value;

Need repayment terms and to use an

appropriate interest rate;

If no repayment terms then possible capital

contribution to the receiver;

Loan is recognised at the discounted value and

the difference between this and the face value is

an income or expense depending on whether

the loan is receivable or payable.

TAKING EFFECTIVE CONTROL

OF YEAR END PROCESSES

Year End Efficiencies

Preparing for Audit

Year end efficiencies

Key factors in achieving effective interaction between

finance teams and audit teams:-

Understanding respective obligations & requirements

a. Audit teams can work much more efficiently when

finance teams supply them with all the data they need

to fulfil their audit obligations

b. Finance teams are able to help the audit process by

having a better understanding of the audit process

c. A better understanding of audit team requirements will

lead to better year end processes and improved

internal controls.


Plan properly

a. As planning is critical to audit efficiency, so it is to year

end accounts preparation

b. Planning the year end accounts preparation and audit

ensures that both the finance team and the audit team

are aware of expectations, timing, suitable audit

evidence, systems and processes, business cycles,

materiality, staff availability, meeting dates, etc.


10 Steps to Year End Success

Step 1 - Assign Responsibility

Step 2 - Develop a Project Timetable

Step 3 – Determine Project Milestones

Step 4 – Identify Closing Dates & Pre Year-End Functions

Step 5 – Secure Organisational Support

Step 6 – Identify and Specify Resource Requirements

Step 7 - Work with Your Auditor

Step 8 – Train the Team

Step 9 – Match Resources with Requirements

Step 10 – Have a Contingency Plan


A smooth year-end close can be achieved by following 2

basic rules:

Predetermine KPIs for things such as the time taken to perform a

process (eg accruals, prepayments, ELE, cash and investments,

etc), the number of errors made in preparing the statements

(evidenced by the number of adjusting journal entries required) and

the utilisation of technology to speed up the process (eg the

number of automated journal entries as a percentage of total

journal entries).

Hold regular meetings of team members before the year-end close

to consider issues such as review of lessons learned from prior

years, discuss material transactions or events that may be new this

year or have a significant impact on the result for the year, the

timing of the external audit of the financial statements.


Audit Preparation Planning Tips

a. Review Client Assistance Pack and cross reference

your working papers to ensure completeness

b. Ensure that all discussions regarding management

decisions are documented and included on the working

paper file (eg impairment, provisions, valuations)

c. Consider: Is this sufficient and appropriate evidence?

d. Complete confirmation letters in a timely manner and

return to us to post

e. Working papers are providing electronically and/or set

up on an audit drive and/or saved to disk

OPEN FORUM

CONCLUSION

Documents

Pp lg 2011 workshop