Leeton Shire Council along with other local government entities stand their ground on RFS fleet

This came after council effectively defied a NSW Audit Office directive that all councils include Rural Fire Service mobile or "red fleet" assets in its financial statements.

An audit opinion is a statement independent auditors provide after auditing a company's financial statements. It is legislated that all councils in NSW are audited by the NSW Audit Office.

In a move aimed at forcing councils to include RFS assets in their financial statements, the NSW Auditor General directed auditors to issue a qualified audit opinion - the opinion given if financial statements are considered to be limited in scope or to contain "misstatements" regarding specific financial statement items - to councils that did not include RFS assets in its financial statements.

A qualified audit opinion is not the same as an "adverse opinion", which is the audit opinion that auditors give when financial statements do not "present fairly" or do not give a true and fair view.

External auditor Brad Bohun, of Crowe, who presented the annual financial statements and audit opinion at the November council meeting, said the audit opinion was qualified only because the RFS plant and equipment had not been included the financial statements.

"Everything else in the statements is compliant with accounting standards and I'd like to express my appreciation to council's finance team who, from an audit perspective, presented a pleasing set of financial statements well ahead of time and were very responsive and helpful in their engagement with us," he said.

IN OTHER NEWS:

Mayor Tony Reneker said council was aware the exclusion of the RFS red fleet assets would result in a qualified audit opinion, but had chosen, with the full support of the Audit, Risk and Improvement Committee and, in compliance with the state government's own Local Government Code of Accounting Practice and Financial Reporting, which states councils can choose whether or not to record RFS equipment on their books.

He said council did this to make a stand against the NSW government's determination that local RFS red fleet assets are the property of councils.

"We don't procure, deploy or dispose of red fleet assets, nor do we insure them, so it is farcical for NSW Treasury to say they are under our control," he said.

"Because we have no control over the RFS assets, it makes absolutely no sense for us to include them in our financial statements.

"Including the RFS assets in our financial statements would be tantamount to an acknowledgment of ownership, which would mean that council would be required to take on all the depreciation costs of that equipment and, potentially, any risks associated with that equipment, and that's not fair to our community."

Council's view is supported by many NSW councils and by the opinions independent experts including BDO Australia and Colin Parker of GAAP Consulting who, in a 2018 report commissioned by the Office of Local Government, categorically concludes that councils do not control RFS assets and should not record them in their financial statements.

To date, 21 other councils have received audit opinions with the same qualification. Fifty-eight councils are yet to receive their audit opinions and some of them may also receive the qualification.

Councillor Reneker said council hoped continued collective action by NSW councils would force the government to rescind its directive and see RFS assets accounted for in NSW government financials.

"Our continued resistance to the NSW government's directive regarding RFS assets is not a reflection of our views on local RFS brigades," he said.

"We greatly appreciate the work of the RFS and their amazing volunteers."

Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content: