1. Local government performance audit update
Rod Longford
Performance Audit
Audit Office of New South Wales

2. Our journey Where we have been Audits completed
Reporting on service delivery
Fraud controls
Shared services
Where we are going
Audits underway
Kerbside waste management
Development assessment: pre-lodgement and lodgement
Amalgamations: Workforce planning and management
Forward planning

3. Reporting on service delivery- findings
Most councils could do more to report on how well they are delivering services to the public.
Many councils report activity, but do not report on outcomes well
Most councils also do not report on the cost of services so efficiency is not clear
Councils are not consistently publishing targets
The Integrated Planning and Reporting Framework
silent on efficiency reporting
limited guidance on how long-term strategic documents link with annual reports
Metropolitan councils and regional towns and cities generally report better than rural councils. 

4. Reporting on service delivery- recommendations
Office of Local Government (OLG), as the regulator of councils in New South Wales should:
issue additional guidance to councils on reporting on targets, outcomes, effectiveness and efficiency and performance over time
consult with councils to develop a performance measurement framework – with associated performance indicators – to support more transparent and informative reporting
target assistance to rural councils to help them improve their reporting
work with NSW Government agencies to help streamline and consolidate local government reporting requirements.

5. Fraud controls in local government - findings
Most councils have substantial room for improvement:
Significant variation between surveyed councils in their fraud control systems.
Absence of regular reviews to ensure fraud control approach is appropriate to risks.
Lack of information and training provided to council staff.
Councils provide limited information about fraud control to the public. Councils and state entities collect extensive data on incidents of suspected fraud. Local communities have limited knowledge of complaints and outcomes.

6. Fraud controls in local councils - recommendations
Councils should:
tailor fraud control plans to circumstances and specific risks
systematically and regularly review fraud risks
effectively communicate fraud risks, obligations and how to report
comply with the Public Interest Disclosure Act 1994.
Need for commonality in how fraud complaints and incidences are defined and categorised.

7. Shared services in local government- findings
Most councils we surveyed are not efficiently and effectively engaging in shared services. Don’t always:
assess current service performance before deciding on the best delivery model
build a business case which outlines the costs, benefits and risks of the proposed shared service arrangement before entering into it. 

8. Shared services in local government- findings continued…
Most councils we surveyed are not efficiently and effectively engaging in shared services. Some governance models affect the scope, management and effectiveness of shared service operations. Not all governance models are subject to the same checks and balances applied to councils. Limited capability to establish and manage shared service arrangements. Available resources to build capability not being used and some councils not determining whether they have the capability before proceeding.

9. Shared services in local government- recommendations
OLG should improve guidance on governance models.
Councils should: 
prepare a solid business case before deciding on shared service arrangements
choose fit for purpose governance models, and ensure clear roles, responsibilities, accountability and transparency of decisions
collect baseline information, monitor and evaluate services
build the capability of councillors and staff in assessing and managing shared services.

10. Audits underway… Kerbside waste management Campbelltown and Fairfield
minimise waste and maximise recycling
collection, transportation and disposal
Development assessment: pre lodgement and lodgement
Camden and Randwick
alignment with better practice
fees and charges
Amalgamations: workforce planning and management
Inner west, Queanbeyan-Palerang and Snowy-Monaro
restructuring to realise benefits
change management and staff welfare

11. Some observations…
Common governance themes and challenges we have heard about
segregation of duties
staffing in regional areas
desire for more guidance, but not prescriptive
role and expectations of OLG
state government relationship
elected officials and staff responsibilities
Some of our challenges
sector coverage
choosing topics and councils
councils new to performance audits
information continuity in amalgamated councils
limited resources

12. Looking forward… Funded to deliver three per year 2019-20 - at present
Cross border issues for councils
Asset management
Rural water and sewerage fees and charges
Not set in concrete
annual strategic planning process
refresh the plan
Looking for suggestions and ideas for audits that could help the sector