Riverina and Murray Joint Organisation (RAMJO) councils - which includes Edward RIver and Murray RIver - are incensed, but not surprised, after receiving qualified audit opinions from the NSW Audit Office for refusing to account for Rural Fire Services (RFS) mobile assets, or the ‘red fleet’, in their annual financial statements.
RAMJO has called it the “most blatant attempt at cost shifting onto local government ever recorded” and is not alone in its stance.
Many of the 68 councils across NSW listed in the Auditor General’s 2020/21 Local Government Report to Parliament for not accounting for the red fleet remain resolute in the stand-off against Macquarie Street.
Individual councils and organisations such as RAMJO are calling out what they call “the heavy-handed and inappropriate actions of the New South Wales Audit Office”.
The Audit Office stands accused of appearing to be being directed by Treasury to ensure mobile assets estimated at more than $2 billion does not find its way onto the state government’s financial statements.
It is a move the Audit Office claims has an immaterial impact on rate payers.
According to RAMJO, immateriality is based on the size of the red fleet when compared with the amount of council assets.
But accounting for them on council’s financial accounts means the state government is trying to hide the assets and their value from the very people who use them and who rely on them for their safety.
Currently, neither councils nor the state government account for or depreciate the red fleet, a situation the NSW Audit Office is trying to remedy by forcing the responsibility onto councils.
RAMJO chair and Berrigan Shire Mayor Matt Hannan said councils were disappointed the NSW Government and Audit Office were ignoring basic accounting principles.
RAMJO argues that ‘control’ is the basis for including assets in council financial statements.
“The fact of the matter is that councils play no part in the planning or procuring of red fleet,” Cr Hannan said.
“We have no say in deployment decisions and certainly don’t ever get consulted about their disposal.
“We don’t even insure them, so it beggars belief that Treasury and the Audit Office expect local councils to account for these assets and take the hit on our financial bottom lines.
“Next thing, they’ll be holding us liable if there is equipment failure. This has got to stop.”
Cr Hannan and his fellow RAMJO mayors dismiss outright the Audit Office’s contention that because RFS assets are “vested” in councils under the RFS Act they must be accounted for as council assets.
“Bullying councils into putting these assets on their books is reprehensible,” Cr Hannan said.
“As a sector, we account in accordance with the Local Government Code of Accounting Practice, and the Australian Accounting Standards.
“The Audit Office cannot keep ignoring us, nor the opinions of accounting experts such as Colin Parker of GAAP Consulting and BDO, both of whom support the view that councils should not be accounting for RFS assets.”
Cr Hannan said that RAMJO now called on the NSW Audit Office to immediately amend its qualified opinions on member council financial statements to reflect the conclusions and recommendation of the independent expert report commissioned by the Office of Local Government.
“We seek urgent legislative amendments to sensibly resolve the government’s unjustifiable position that councils own and control the red fleet and we won’t stop until its done.”
Cr Hannan said that like police, education and health, the RFS assets are a state government responsibility, “not ours”.
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