MISSION AND VALUES OF COUNCIL

 

"A Sustainable Community that is inclusive, attractive, healthy and pleasant to live in, that uses our land so as to preserve our history and environment, respects the rights and equality of our citizens and manages our future growth wisely."

 

AGENDA

 

 

 

FOR THE

 

Audit Committee Meeting

 

25 August 2015

 


OUR VISION

 

"A thriving and friendly community that recognises our history and embraces cultural diversity and economic opportunity, whilst nurturing our unique natural and built environment."

 

OUR MISSION

 

“To deliver affordable and quality Local Government services.”

 

CORE VALUES OF THE SHIRE

 

The core values that underpin the achievement of the

 mission will be based on a strong customer service

focus and a positive attitude:

 

Communication

 

Integrity

 

Respect

 

Innovation

 

Transparency

 

Courtesy

 

DISCLAIMER

The purpose of Council Meetings is to discuss, and where possible, make resolutions about items appearing on the agenda.  Whilst Council has the power to resolve such items and may in fact, appear to have done so at the meeting, no person should rely on or act on the basis of such decision or on any advice or information provided by a Member or Officer, or on the content of any discussion occurring, during the course of the meeting.

 

Persons should be aware that the provisions of the Local Government Act 1995 (Section 5.25 (e)) establish procedures for revocation or rescission of a Council decision.  No person should rely on the decisions made by Council until formal advice of the Council decision is received by that person.  The Shire of Broome expressly disclaims liability for any loss or damage suffered by any person as a result of relying on or acting on the basis of any resolution of Council, or any advice or information provided by a Member or Officer, or the content of any discussion occurring, during the course of the Council meeting.

  


AgendaAudit Committee Meeting 25 August 2015                                                                                        Page 3 of 3

 

SHIRE OF BROOME

Audit Committee Meeting

Tuesday 25 August 2015

INDEX – Agenda

 

1.               Official Opening.. 5

2.               Attendance And Apologies. 5

3.               Declarations Of Financial Interest / Impartiality. 5

4.               Confirmation Of Minutes. 5

5.               Report of Officers. 6

5.1      APPOINTMENT OF AUDITOR. 6

5.2      KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS. 13

6.               Meeting Closure. 40

 


AgendaAudit Committee Meeting 25 August 2015                                                                                        Page 4 of 5

 

 

NOTICE OF MEETING

 

 

 

Dear Council Member,

 

 

The next Audit Committee of the Shire of Broome will be held on Tuesday, 25 August 2015 in the Council Chambers, Corner Weld and Haas Streets, Broome, commencing at 3:00pm.

 

 

 

Regards

 

 

 

 

K R DONOHOE

Chief Executive Officer

 

18/08/2015

 


AgendaAudit Committee Meeting 25 August 2015                                                                                        Page 5 of 6

 

1.         Official Opening

 

2.         Attendance And Apologies 

 

3.         Declarations Of Financial Interest / Impartiality

 

4.         Confirmation Of Minutes

 

Recommendation:

That the Minutes of the Audit Committee held on 12 May 2015 be confirmed as a true and accurate record of that meeting.

 

 

 


AgendaAudit Committee Meeting 25 August 2015                                                                                        Page 6 of 7

 

5.         Report of Officers

 

5.1         APPOINTMENT OF AUDITOR

LOCATION/ADDRESS:                            Nil

APPLICANT:                                              Nil

FILE:                                                           ADM 03

AUTHOR:                                                   Manager Financial Services 

CONTRIBUTOR/S:                                    Nil

RESPONSIBLE OFFICER:                          Director Corporate Services

DISCLOSURE OF INTEREST:                     Nil

DATE OF REPORT:                                    10 August 2015

 

SUMMARY:         RSM Bird Cameron has advised of the retirement of the Shire of Broome’s current appointed auditor, Mr Simon Cubitt. In accordance with Section 7.3 of the Local Government Act 1995 (LGA) the Audit Committee is require to recommend to Council the appointment of Mr David Wall who has assumed responsibility for Mr Cubitt’s client base until the current audit contract ends on completion of the final audit of the 2014/2015 financial year.

 

BACKGROUND

 

Previous Considerations

 

The Audit Committee previously considered the recommendation to appoint an auditor at the meeting held 29 July 2014.

 

COMMENT

 

As attached, RSM Bird Cameron provided notice of the retirement of Mr Simon Cubitt, the appointed auditor for the Shire of Broome. Mr David Wall has assumed responsibility for Mr Cubitt’s client base. As per Section 7.3 of the LGA, a local government is required to appoint a person who is either a registered company auditor or an approved auditor.

 

The Audit Committee is required to recommend to Council the appointment of Mr David Wall as the Shire of Broome’s auditor for the remainder of the contract with RSM Bird Cameron until the finalisation of the 2014/2015 external audit.

 

CONSULTATION

 

RSM Bird Cameron

 

STATUTORY ENVIRONMENT

 

7.3        Appointment of Auditors

 

1)          A local government is to, from time to time whenever such an appointment is necessary or expedient, appoint a person, on the recommendation of the audit committee, to be its auditor

 

2)          The local government may appoint one or more persons as its auditor

 

3)          The local government’s auditor is to be a person who is –

             (a) a registered company auditor; or

             (b) an approved auditor

 

POLICY IMPLICATIONS

 

Nil

 

FINANCIAL IMPLICATIONS

 

Nil

 

RISK

 

The risk of not appointing an auditor represents a non-compliance risk. This is assessed as possible with an impact of extreme, representing the non achievement of key objectives. To mitigate this risk, RSM Bird Cameron has provided advice and communication of the change in auditor. Officers have implemented a process to ensure that this compliance item is met when appointing future auditors under new contracts.

 

STRATEGIC IMPLICATIONS  

 

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

 

Effective communication

 

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

 

An organisational culture that strives for service excellence

 

Improved systems, processes and compliance

 

 

VOTING REQUIREMENTS

Absolute Majority

 

REPORT RECOMMENDATION:

That the Audit Committee recommends that Council:

 

1.   Appoints Mr David Wall (Registered Company Auditor Number: 16200) as the Shire of Broome’s auditor in accordance with Section 7.3 of the Local Government Act 1995: and

 

2.   Thanks Mr Simon Cubitt for his service to the Shire of Broome and congratulates him on 40 years of service at RSM Bird Cameron.

 

(Absolute Majority Required)

 

Attachments

1.

LETTER - CHANGE OF AUDITOR RSM BIRD CAMERON

2.

AUDITOR PROFILE - DAVID WALL

  


Item 5.1 - APPOINTMENT OF AUDITOR

LETTER - CHANGE OF AUDITOR RSM BIRD CAMERON

 

 


 


 


Item 5.1 - APPOINTMENT OF AUDITOR

AUDITOR PROFILE - DAVID WALL

 

 


AgendaAudit Committee Meeting 25 August 2015                                                                                    Page 13 of 14

 

 

5.2         KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS

LOCATION/ADDRESS:                            Nil

APPLICANT:                                              Nil

FILE:                                                           ADM 03

AUTHOR:                                                   Manager Financial Services 

CONTRIBUTOR/S:                                    Nil

RESPONSIBLE OFFICER:                          Director Corporate Services

DISCLOSURE OF INTEREST:                     Nil

DATE OF REPORT:                                    13 August 2015

 

SUMMARY:         The current individual Audit engagements for the Shire of Broome, Shire of Derby West Kimberley and Shire of Halls Creek will expire at the completion of the final external audits for the financial year ending 30 June 2015. The Kimberley Zone of the Western Australia Local Government Association (WALGA) and Regional Collaborative Group at its meeting held 3 May 2015 resolved to jointly seek tenders for external audit services to achieve efficiencies and cost savings through a competitive tender process. The Audit Committee is requested to consider the proposed procurement plan and audit specifications for recommendation to Council.

 

BACKGROUND

 

Previous Considerations

 

The Audit Committee previously considered Tender 14/11 at the Audit Committee meetings held 24 April 2014 and 29 July 2014. The Audit Committee resolved to recommend to Council to award the current two year audit engagement to RSM Bird Cameron and appoint Mr Simon Cubitt as the registered company auditor at each respective meeting. The tender was conducted jointly with the Shire of Derby. The current engagement expires on completion of the final audit for the financial year ending 30 June 2015.

 

The Kimberley Zone of WALGA and Regional Collaborative Group at its meeting held 3 May 2015 resolved to jointly seek tenders for external audit services to achieve efficiencies and cost savings through a competitive regional tender process. At this meeting, the Shire of Wyndham East Kimberley advised that they had already commenced procurement processes for external audit services and will continue separately from the other three Shires. The concept of a regional audit tender was conceived at the Kimberley Zone Chief Executive Officer (CEO) Group Meeting on the 25 November 2013. Members discussed the potential of a collective tender process and agreed to investigate it further. At that stage, both the Shires of Broome and Derby West Kimberley had contracts with UHY Haines Norton expiring 30 June 2013 and the Shire of Halls Creek and Shire of Wyndham East Kimberley had contracts with UHY Haines Norton expiring 30 June 2015. The Shire of Derby, Shire of Broome and Shire of Halls Creek are collaborating on the joint tender process and are required to present the proposed procurement plan and specifications to their respective Audit Committees for recommendation to their Councils.

 

The functions of Audit Committees are prescribed as per Regulation 16 of the Local Government (Audit) Regulations 1996 (AR). Specifically, one of the functions is to provide guidance and assistance to the local government as to the development of a process to be used to select and appoint a person to be an auditor. This report presents to the Audit Committee the proposed procurement plan and audit specifications for consideration and recommendation to Council to commence the tender process.

 

COMMENT

 

A teleconference meeting was held 12 August 2015 to consult with the Shire of Derby West Kimberley and Shire of Halls Creek in the drafting of the procurement plan and audit specifications. The meeting was attended by:

 

Sam Mastrolembo     Director Corporate Services Shire of Broome

Theresa Bengtson      Manager Financial Services Shire of Broome

Rebecca Herbert      Project Manager Kimberley Regional Group Shire of Broome

Teresa Foster               Financial Services Manager Shire of Halls Creek

Paul Bates                             Manager of Finance Shire of Derby West Kimberley

 

The final proposed procurement plan and audit specifications are now attached to this report for consideration by the Audit Committee for recommendation to Council. The tender will be referred to as the ‘Kimberley Councils Audit Tender 2015’. Specific points regarding the procurement plan and audit specification for the Audit Committee to consider are detailed as follows.

 

The Audit Specification is based on the template supplied by the Department of Local Government and Communities (DLGC) as per the Model Minimum Standard Audit Specification as part of the DLGC’s Local Government Operational Guidelines Number 09 – Audit in Local Government The appointment, function and responsibilities of Audit Committees Revised September 2013. The template was originally used for the 2013 audit tender. The Finance Managers of each participating Council have reviewed the 2015 version and made minor changes.

 

The changes include the requirement to supply estimations for turn around times and fees for separate audits such as grant acquittals. These additional audits are required to acquit funding from various areas such as Roads to Recovery, Department of Regional Development Country Local Government Fund, the Kimberley Zone Secretariat, and for property outgoings for leased properties charged on an estimated basis, rather than on a basis of immediate recoup. Depending on the scope these can cost Councils between $500 to $2,000 per acquittal, which can make up a material amount of a Council’s audit budget.

 

Another requirement was inserted to request that the timing of the interim audits occur no later than the last week of February and final audit visits to occur no later than the third week of September each year. This allows adequate time for each Council to address any issues identified in the interim audit prior to June each year and to prepare the Annual Financial statements with the view to holding the Annual Electors Meetings prior to Christmas. This provides the Audit Committee certainty as to the timing of any informal briefing meetings post-audit visit should this be a practice at each Council.

 

Section 7.6 of the LGA prescribes the maximum term of office of an auditor at not more than five financial years. It should be noted that the proposed engagement term in the specifications will be for the 3 financial years commencing 1 July 2015 and ending 30 June 2018. However, this does not exclude any currently engaged auditor from being eligible for re-appointment. The procurement plan and specifications outline the performance criteria which each tenderer will be assessed against.

 

The specifications require each tenderer to submit details of an audit plan, quotation of fees and hourly rates, estimation of hours and resources required to fulfil the audit engagement and specific examples of similar sized engagements. It is a requirement that tenders be submitted for the provision of external audit services either jointly for all Councils or severally. This provides flexibility for each Council to choose from the available tenders submitted.

 

The total combined audit budget for the three Councils amounts to between $90K to $120K per annum. The significance of this value has resulted in the need to undertake a tender process pursuant to Part 4 of the Local Government (Functions and General) Regulations 1996 (FGR) which sets out the process that must be complied with in regard to tenders for the provision of goods and services where the consideration is, or is expected to be worth more than $100,000. A tender process provides a high level of probity in the procurement process and mitigates any potential risks through the clear articulation of the evaluation process, specifications and requirements as detailed in the attachments.

 

The plan identifies the membership of the Evaluation Panel which will be comprised of the Finance Managers from each participating Shire and the Evaluation Meeting will be conducted via teleconference. The membership was determined on the basis that each Finance manager would be the direct relationship manager for the audit engagement over the term of appointment and would be best placed to make an objective assessment as the respective representative for each participating Council. The combined finance industry experience of the evaluation panel members is in excess of 49 years. All members possess relevant tertiary qualifications and are full members of the Institute of Certified Practicing Accountants Australia (CPA Australia).

 

The participants of the teleconference held 12 August 2015 agreed on the tender evaluation methodology and weighting. These have remained unchanged since the 2013 Specification document. The evaluation methodology outlines the criteria and associated weighting which will be applied to the assessment of each tender submitted and detailed as follows:

 

EVALUATION METHODOLOGY

Criteria

Weighting

Lead Partners/Audit Managers experience and performance

25%

Depth of understanding of Local Government and the region

20%

Audit resources allocated

25%

Detailed and well-articulated audit plan

15%

Fees and control of fees

15%

 

To ensure the tender process attracts a sizable and quality pool of tenderers, the procurement plan identifies a possible list of candidates obtained from the WALGA Preferred Supplier panel list under Audit Services that could be invited to tender. The procurement plan outlines the timeframes which aim to complete the tender process by the end of October 2015. These documents are now presented to each Council’s Audit Committees for recommendation to each full Council respectively.

CONSULTATION

 

Shire Derby West Kimberley

Shire Halls Creek

 

STATUTORY ENVIRONMENT

 

Local Government Act 1995

 

Section 1.8 Statewide public notice

 

Where under this Act Statewide public notice of a matter is required to be given, section 1.7 applies except that the newspaper referred to in section 1.7(1)(a) is required to circulate generally throughout the State.

 

Section 3.57 Tenders for providing goods or services

 

(1)         A local government is required to invite tenders before it enters into a contract of a prescribed kind under which another person is to supply good or services.

(2)         Regulations may make provision about tenders

 

Division 2 — Appointment of auditors

 

7.2.    Audit

 

The accounts and annual financial report of a local government for each financial year are required to be audited by an auditor appointed by the local government.

 

7.3.    Appointment of auditors

 

(1)     A local government is to, from time to time whenever such an appointment is necessary or expedient, appoint* a person, on the recommendation of the audit committee, to be its auditor.

* Absolute majority required.

(2)     The local government may appoint one or more persons as its auditor.

(3)     The local government’s auditor is to be a person who is —

(a)        a registered company auditor; or

(b)        an approved auditor.

[Section 7.3 amended by No. 49 of 2004 s. 6.]

 

7.4.    Disqualified person not to be auditor

 

(1)     A person may not be appointed as a local government’s auditor if that person is a disqualified person.

(2)     In this section —

disqualified person means a person who —

(a)        is a councillor or an employee of the local government; or

(b)        is a person who is in debt for more than the prescribed amount to the local government for a period of more than 35 days after —

(i)      in the case of that part of the debt which is for a rate or service charge under Part 6, the date the rate notice was issued; or

(ii)     in the case of that part of the debt which is not for a rate or service charge, the date an account was rendered to the person by the local government;

         or

(c)        is an employee of, or a member of the governing body of, an entity of a kind prescribed for the purposes of this paragraph; or

(d)        is a member of a class of persons prescribed for the purposes of this subsection.

 

7.6.    Term of office of auditor

 

(1)     The appointment of a local government’s auditor is to have effect in respect of the audit of the accounts and annual financial report of the local government for a term of not more than 5 financial years, but an auditor is eligible for re‑appointment.

(2)     The appointment of an auditor of a local government ceases to have effect if — 

(a)        his or her registration as a registered company auditor is cancelled; or

(b)        his or her approval as an approved auditor is withdrawn; or

(c)        he or she dies; or

(d)        the auditor ceases to be qualified to hold office as auditor or becomes a disqualified person; or

(e)        the auditor resigns by notice in writing addressed to the local government; or

(f)          the appointment is terminated by the local government by notice in writing.

(3)     Where — 

(a)        the registration of a local government’s auditor as a registered company auditor is suspended; or

(b)        a local government’s auditor becomes unable or unwilling to carry out all or part of his or her duties,

the local government is to appoint* a person to conduct the audit or to complete that part of the audit which remains to be conducted, as the case requires.

* Absolute majority required.

 

Local Government (Audit) Regulations 1996

 

16.     Audit committee, functions of

An audit committee —

(a)     is to provide guidance and assistance to the local government —

(i)      as to the carrying out of its functions in relation to audits carried out under Part 7 of the Act; and

(ii)     as to the development of a process to be used to select and appoint a person to be an auditor;

and

(b)     may provide guidance and assistance to the local government as to —

(i)      matters to be audited; and

(ii)     the scope of audits; and

(iii)     its functions under Part 6 of the Act; and

(iv)    the carrying out of its functions relating to other audits and other matters related to financial management; and

(c)     is to review a report given to it by the CEO under regulation 17(3) (the CEO’s report) and is to —

(i)      report to the council the results of that review; and

(ii)     give a copy of the CEO’s report to the council.

 

Local Government (Functions and General) Regulations 1996

 

Section 5 R14 Requirements for publicly inviting tenders

(1)         When regulation 11(1), 12 or 13 requires tenders to be publicly invited, Statewide public notice of the invitation is to be given.

 

(2)         If the CEO has, under regulation 23(4), prepared a list of acceptable tenderers, instead of giving Statewide public notice the CEO is required to give notice of the invitation to each acceptable tenderer listed.

 

(2a)      If a local government —

(a)        is required to invite a tender; or

(b)        not being required to invite a tender, decides to invite a tender, the local government must, before tenders are publicly invited, determine in writing the criteria for deciding which tender should be accepted.

 

(3)         The notice, whether under subregulation (1) or (2), is required to include —

(a)        a brief description of the goods or services required;

(b)        particulars identifying a person from whom more detailed information as to may be obtained;

(c)        information as to where and how tenders may be submitted; and

(d)        the date and time after which tenders cannot be submitted.

 

(4)     In subregulation (3)(b) a reference to detailed information includes a reference to —

(a)        such information as the local government decides should be disclosed to those interested in submitting a tender;

(b)        detailed specifications of the goods or services required;

(c)        the criteria for deciding which tender should be accepted;

(d)        whether or not the local government has decided to submit a tender; and

(e)        whether or not the CEO has decided to allow tenders to be submittedby facsimile or other electronic means, and if so, how tenders may so be submitted.

 

After a notice has been given under subregulation (1) or (2), a local government may vary the information referred to in subregulation (3) by taking reasonable steps to give each person who has sought copies of the tender documents or each acceptable tenderer, as the case may be, notice of the variation.

 

[Regulation 14 amended in Gazette 29 Jun 2001 p. 3130.]

 

Section 5 R15 Minimum time to be allowed for submitting tenders

 

(1)     If the notice is published in the newspaper as part of giving Statewide public notice,  the time specified in the notice as the time after which tenders cannot be submitted  has to be at least 14 days after the notice is first published in the newspaper as part of   giving Statewide public notice.

 

(2)     If the notice is given to a person listed as an acceptable tenderer, the time specified in  the notice as the time after which tenders cannot be submitted has to be at least 14 days after the notice is given.

 

Clause 2.4 The Local Government (Functions and General) Regulations 1996, Part 4, Division 2, regulation 18, paragraph (2)

 

(1)     A tender that is submitted at a place, and within the time, specified in the invitation for tenders but that fails to comply with any other requirement specified in the invitation may be rejected without considering the merits of the tender.

 

POLICY IMPLICATIONS

 

Policy 2.3.7 Purchasing

Policy 1.2.9 Local Regional Price Reference

 

FINANCIAL IMPLICATIONS

 

The Council’s combined budgeted expenditure proposed for the 2015/2016 financial year for external audit services ranges between $90K to $120K per annum. The Shire of Broome has a total expenditure budget for all audit related expenses including external audit services and separate audits allocated to general ledger account code 22200 Audit Fees Op Exp - Other Governance of $45K for 2015/2016.

 

RISK

 

The Kimberley Councils Audit Tender 2015 is a strategic outcome identified by the Kimberley Zone of WALGA Regional Collaborative Group. Its aim is to facilitate an increased level of collaboration between the member Councils of the Zone and achieve resource efficiencies. Should the recommendation of this report not be adopted, the risk of not achieving the above objective has been assessed at a high level, resulting in the Kimberley Zone and each member Council experiencing a possible likelihood of significant delays in achieving the deliverables. Additionally it is a matter of legislative compliance for the Audit Committee to review the process of appointment of an auditor and to guide Council in this process in providing a recommendation.

 

To mitigate this risk officers of the three Councils have ensured the specifications meet all the requirements for each Council which have been sourced from the model audit specifications from the DLGC Guidelines. Additionally, the procurement plan is based on the WALGA procurement templates. Officers have collaborated to ensure all views from each Council are represented in a fair and equitable manner. Council should be aware that any changes to the procurement process will have to be done in consultation with the other Councils.

 

STRATEGIC IMPLICATIONS  

 

Our People Goal – Foster a community environment that is accessible, affordable, inclusive, healthy and safe:

 

Effective communication

 

Affordable services and initiatives to satisfy community need

 

Our Prosperity Goal – Create the means to enable local jobs creation and lifestyle affordability for the current and future population:

 

Affordable and equitable services and infrastructure

 

Key economic development strategies for the Shire which are aligned to regional outcomes working through recognised planning and development groups/committees

 

Our Organisation Goal – Continually enhance the Shire’s organisational capacity to service the needs of a growing community:

 

An organisational culture that strives for service excellence

 

Sustainable and integrated strategic and operational plans

 

Responsible resource allocation

 

Improved systems, processes and compliance

 

 

VOTING REQUIREMENTS

Simple Majority

 

REPORT RECOMMENDATION:

That the Audit Committee in accordance with regulation 16(a)(ii) of the Local Government (Audit) Regulations 1996 recommends Council accepts the attached Audit Specifications and the Procurement Plan as the tender process to be used to select and appoint a person to be an auditor for the Kimberley Councils jointly and/or severally with the Shires of Derby West Kimberley and Halls Creek for the financial years commencing 1 July 2015 to 30 June 2018.

 

 

Attachments

1.

KIMBERLEY COUNCILS AUDIT TENDER 2015

2.

AUDIT SPECIFICATIONS 2015

  


Item 5.2 - KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS

KIMBERLEY COUNCILS AUDIT TENDER 2015

 

 

HC-Shire-logologoSOB-logobl-cmykC

 

 

 

 

 

 

 

 

Procurement Plan

Kimberley Councils Audit Tender 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepared by:            Theresa Bengtson

Manager Financial Services

Shire of Broome

Date:              10 August 2015


 



PROJECT OWNER / REQUESTOR DETAILS

Requestor:

Theresa Bengtson

Position:

Manager Financial Services

Local Government:

Shire of Broome

Department:

Financial Services

Phone:

08 9191 3445

Mobile:

0428 819 888

Email:

Theresa.bengtson@broome.wa.gov.au

On behalf of and jointly with:

Shire of Derby West Kimberley

Shire of Halls Creek

 

PROJECT OVERVIEW

Project Title:

Kimberley Councils Audit Tender 2015

Project Number:

TBC

Project Budget:

$90,000 - $120,000 per annum

Project Funding Source:

Municipal Funds

Project Duration (indicative):

Three Financial Years – 2015/2016 to 2017/2018

Project Status:

  New                 Continuation of Service             Phased

Project Category:

  Goods                    Services           Minor Works           Construction

 

  Construction         Lease               Consultancy          

 

  Other (Please List): _______________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

STAKEHOLDERS

(How customer expectations are going to be fulfilled, user requirements,

Consultation with community, industry, benchmarks….)

 

Stakeholder

Support Type

C.O.N.S.

Role

D.I.F.G.

Possible Objections

Shire of Broome

Manage closely

Decision maker

Tender quote amounts

Tenderer quality /qualifications

Shire of Derby West Kimberly

As above

As above

As above

Shire of Halls Creek

As above

As above

As above

 

 

 

 

 

 

 

SCOPE OF REQUIREMENTS

(Describe, in specific terms, what items will be procured and under what conditions) Type of specification used

 

Specification document supplied under separate cover

 

 

 

 


 

 

POTENTIAL RISKS & MITIGATION PLAN (Probity, limited competition, etc.)

Risk Description 

Likelihood

Impact

Actions

Responsibility

Tender quotes are higher than budget

Likely

Medium

Provision for quotes to be provided jointly or severally

Councils

Poor quality of tenderers

Possible

Medium

Articulate criteria in specifications

Ensure tender is advertised

Councils/Shire of Broome

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

POTENTIAL CONFLICTS OF INTEREST

1)         Tenderers – provision of other services to Council. Assess independence.

2)         Councils – ensure process of declaration of conflicts of interest by parties involved.

 

 

Procurement Planning (Supply Positioning, procurement goals)

The provision of external audit services to the Shire of Broome, Shire of Derby West Kimberley and Shire of Halls Creek for a period of three (3) financial years commencing 2015/2016 and ending 2017/2018.

 

 

 

 

 

 

 

 

 

 

 


 

PROCUREMENT METHODOLOGY

  Expressions of Interest (EOI)

 

     Request for Tender (RFT)

 

  Request for Proposal (RFP)

 

  Tender Exempt
(i.e. WALGA Preferred Supply, State Gov. CUA

 

     Request for Quotation (RFQ)

 

Reason for Selected Methodology:

The total value of external audit services for the three Councils combined has the potential to be in excess of $100,000. Additionally, the tender process provides for a high level of probity in procurement.

 

SOURCING PROFILE

  Minor Works

 

  Major Works (Construction)

 

  Goods

 

  Procurement of IT Equipment

 

  Consultancy Services

 

  Lease

 

  Services

 

  Procurement of IT Software

 

Reason for Selected Sourcing Profile:

The nature of the provision of external audit services.

 


 

 

SUPPLIER PROFILE (Supplier Preferencing)

  Single Supplier

 

  Dual Suppliers

 

  Goods

 

  Multiple Suppliers (i.e. Panel)

 

   Cross Supply

 

  Goods and Services

 

 

Potential suppliers are any audit firms or auditor that meets the specification criteria for the provision of local government external audit services. Council’s may choose to award the tender on a joint or separate basis. The combining of three Councils represents a sizable business opportunity to potential auditors with the attraction of achieving economies of scale through coordination of travel, timing and similar local government financial profiles.

 

 

Reason for Selected Supplier Profile:

Councils may choose to appoint one auditor for all three Councils or select a separate auditor individually.

Early Tender Advice Required?   Yes    No

Suggested Tenderers:

Company Name:

Contact Person:

Phone/Email:

RSM Bird Cameron

Travis Bate

08 9920 7400 travis.bate@rsmi.com.au

Moore Stephens

David Tomasi

08 9444 3400 dtomasi@uhyhn.com.au

AMD Chartered Accountants

Tim Partridge

08 9780 7555 tim.partridge@amdonline.com.au

Deloitte Touche Tohmatsu

Andrew Baldwin

08 9365 7236 abaldwin@deloitte.com.au

Grant Thornton

Michael Hillgrove

08 9480 2000 michael.hillgrove@au.gt.com

Butler Settineri (Audit) Pty Ltd

Marius van der Merwe

08 6389 5222 mvdm@butlersettineri.com.au

 


 

PRICING METHODOLOGY (Link to type of specification)

  Fixed Price (Lump Sum)

 

  Bill of Quantities

 

  Cost reimbursable

 

  Unit Price (Schedule of Rates)

 

   Scaled percentage fee

 

   Reimbursable-with-incentive (Cost Plus)

 

Reason for Selected Pricing Method:

·        Quotes are required for hourly rates per employee level of the audit firm

·        Total estimated hours to complete the audit is required

·        Total lump sum cost is required to provide for future budgeting and assessment of financial implications and cost comparison to previous financial years.

Price Escalation Required

  Yes                   No                          Basis:  add price escalation method

 

REQUEST OPEN PERIOD

Management of Clarifications:

To be directed to the Shire of Broome if the clarification is general in nature or to the specific Council if relevant. Notice to be give to other Councils of the request for clarification.

Tender Briefing Status:

Not required – standard audit specification tender. Requests for clarifications to be addressed as and when required.

Tender Briefing Location:

N/A

Tender Briefing Proposed Date:

N/A

EVALUATION METHODOLOGY

Criteria

Weighting

Lead Partners/Audit Managers experience and performance

25%

Depth of understanding of Local Government and the region

20%

Audit resources allocated

25%

Detailed and well-articulated audit plan

15%

Fees and control of fees

15%

Required Mandatory Elements:

Audit Plan

Fees and hourly rates

Estimation of hours/resources required

Specific examples of similar sized engagements

 

 

Due Diligence:

 

  External financial analysis report

Type:  Insert Type (if required)

 

 

 Referee Checks

 

Price Assessment Methodology:

 

  Cost Effectiveness Ratio

 

  Price Normalisation

 

  Price Quality Method

 

  Risk Adjusted Price Method

 

 

 

  Weighted Cost

 

  Relative Value Cost

 

  Quality Value Method

 

 

Evaluation Scale:

 

0          The Evaluation Panel is not confident that the Tenderer will be able to satisfactorily meet the   requirements

 

2          The Evaluation Panel has major reservations/concerns whether the Tenderer will be able to     satisfactorily meet the requirements

 

4          The Evaluation Panel has some reservations (minor concern) whether the Tenderer will be able to              satisfactorily meet the requirements

 

6          The Evaluation Panel is reasonably confident that the Tenderer will be able to satisfactorily meet the              requirements

 

8          The Evaluation Panel is confident that the Tenderer will be able to satisfactorily meet the requirements

 

10        The Evaluation Panel is completely confident that the Tenderer will be able to satisfactorily meet the requirements and exceeds in some aspects

 

 

KEY PERFORMANCE INDICATORS (KPI’s) Link this to scope and key deliverables

  Deliverables on time

 

  Agreed Services Provided

 

  Stakeholder Satisfaction Survey

 

  Services Completed on Budget

 

  Does the supplier show mutual commitment to the relationship and collaborate constructively with all stakeholders

 

  Ability to respond to client and/or stakeholder requirements

 

  Ability to deliver on time and on budget

 

Commentary on KPI’s:

·        KPIs and audit specification designed on standard template from the regulations and the Department of Local Government and Communities’ Local Government Operational Guidelines Number 09 – Audit in Local Government Revised September 2013.

 


 

 

EVALUATION TEAM DETAILS – Stage 1 SHORTLIST

Name

Position

Role

Phone/Email

Stage (e.g. Shortlist, Presentation)

Theresa Bengtson

Manager Financial Services – Shire of Broome

Panel Participant

08 9191 3445

Theresa.bengtson@broome.wa.gov.au

Whole of Tender process

Paul Bates

Manager of Finance – Shire of Derby West Kimberley

Panel Participant

08 9191 0999

paul.bates@sdwk.wa.gov.au

As above

Teresa Foster

Financial Services Manager – Shire of Halls Creek

Panel Participant

08 9168 9104

fsm@hcshire.wa.gov.au

As above

 

 

CONDITIONS OF CONTRACT

  General Conditions of Contract – Goods and Services

 

  General Conditions of Contract - Goods

 

  General Conditions of Contract – Minor Works

 

  AS 4000:1997 Construction Works

 

   AS 4122:2010 Consultants

 

   AS 4902:2000 Design & Construct

 

Key Commercial term considerations:

·        As per standard audit engagement contract

 

POLICY MATTERS AFFECTING THE PROCUREMENT

Local Policy:                  Yes    No                                 

Environmental Impact:         Yes    No                                 

DAIP:                              Yes    No                                 

OSH:                                         Yes    No                                 

Others (Please list):                                 

 

CONTRACT MANAGEMENT

Contract Manager:

Individually as per Council

Date of Handover:

 

Key Personnel/Responsibilities

 

KPI’s

 

Changeover requirements?

 

Key Risks

 

Proposed Contract Kick-Off Meeting:

 

 


 

PROCUREMENT TIMEFRAMES

Deliverable (add or delete as required)

Indicative Timeframe

Development and Sign off on Procurement Plan

13 August 2015

Sign off on RFT

2 September 2015

Advertise RFT

5 September 2015

Tenders Close

23 September 2015

Due Diligence (referees, clarifications, financial analysis report)

To be conducted prior to evaluation panel meeting including review of tenders against specification criteria.

Evaluation Panel Meeting (Teleconference)

30 September 2015

Delivery of Recommendation Report

1 October 2015

Audit Committee Meeting

TBC

Council Meeting agenda settlement

8 October 2015

Council Meeting

15 October 2015

Contract Preparation

22 October 2015

Notifications to Tenderers

29 October 2015

Contract Commencement

Financial Year Commencing 1 July 2015

 

APPROVAL AUTHORITY

Council:                  Yes    No                                 

Date of Council Meeting:  15 October 2015

CEO:                       Yes    No                                 

 

 

SIGNED BY EVALUATION TEAM

Name

Organisation

Signed

 

 

 

 

 

 

 

 

 

 

 

 

 

SIGNED BY PROJECT SPONSOR / APPROVING AUTHORITY

Name

Organisation

Signed

 

 

 

 

 


 

Lessons Learnt

What

Changes to be made

Actioned by

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

APPENDIX 1 – RISK MATRIX - POTENTIAL RISKS & MITIGATION PLAN

 

Almost Certain

H

H

E

E

E

Likely

M

H

H

E

E

Possible

L

M

H

E

E

Unlikely

L

L

M

H

E

Rare

L

L

M

H

H

Likelihood

Insignificant

Minor

Moderate

Major

Catastrophic

and Impact

Legend

Remedial Outcome

E

Extreme Risk - Immediate intervention required

H

High Risk - Director or CEO must be informed and aware

M

Medium Risk - Management responsibility to monitor 

L

Low Risk - Operationally address

Frequency

Likelihood of Incident Occurring

Almost Certain

Expected to occur in most circumstances

More than once per year

Likely

Will probably occur in most circumstances

At lease once per year

Possible

Should occur at some time

At least once in three years

Unlikely

Could occur at some time

At least once in ten years

Rare

May occur, only in exceptional circumstances

Less than once in fifteen years

 

Level

Description

Financial Impact

Health

Reputation

Operation

1

Insignificant

Less than $1,000

No injuries

Unsubstantiated, low impact, low profile or no news item

Little impact

2

Low

$1,000 to $10,000

First aid treatment

Substantiated, low impact, low media profile

Inconvenient delays

3

Medium

$10,000 to $50,000

Medical treatment

Substantiated, public embarrassment, moderate impact, moderate media profile

Significant delays to major deliverables

4

High

$50,000 to $150,000

Death or extensive injuries

Substantiated, public embarrassment, high impact media profile, third party actions

Non achievement of major deliverables.

5

Extreme

More than $150,000

Multiple deaths or severe permanent disablements

Substantiated, public embarrassment, very high multiple impacts, high widespread multiple media interactivity, third party action.

Non achievement of key objectives.

 


Item 5.2 - KIMBERLY COUNCIL AUDIT TENDER PROCUREMENT PROCESS

AUDIT SPECIFICATIONS 2015

 

 

1.0   Invitation and Overview

 

Tenders are invited from persons qualified under Section 7.3 of the Local Government Act 1995, to undertake external audits for the Shire of Halls Creek, Shire of Derby West Kimberley and Shire of Broome.

 

Auditors are required to address all of the matters outlined in the specification.

 

Auditors who submit an application may be asked to provide further information and/ or make a presentation to the relevant Audit Committees.

 

2.0   Parties to the agreement

 

Local Governments of Shire of Halls Creek, Shire of Derby West Kimberley and Shire of Broome hereinafter referred to as the “Council”.

 

Person(s) appointed as auditor by the Local Government hereinafter referred to as the “Auditor”.

 

3.0   Objectives of the Audit

 

To provide an independent audit opinion of the Accounts and Annual Financial Reports of the Councils for each financial year covered by the term of the audit appointment, and to provide professional guidance as follows:

(a)  Appropriateness of internal controls designed to safeguard the assets of the organisation and whether financial management reporting meets statutory requirements;

(b)  Other statutory compliance matters; and

(c)  General assessment of financial performance and trend analysis.

 

4.0 Scope of the Audit

 

 (1)   The Auditor is to carry out such work as is necessary to form an opinion as to whether:

              (a)     The accounts are properly kept; and

                   (b)     The Annual Financial Report:

                        (i)   Is prepared in accordance with the financial records; and

(ii) Represents fairly the results of the operations of the Local Government and the financial position of the Local Government at 30 June in accordance with:

·    Australian Accounting Standards.

·    The Local Government Act 1995 (as amended),

·    The Local Government (Financial Management) Regulations 1996 (as amended),

·    The Local Government (Administration) Regulations 1996 (as amended),

·    The Local Government (Functions and General) Regulations 1996 (as amended),

·    And other mandatory professional reporting requirements.

          (2)   The auditor is to give an opinion in his or her audit report on –

                    (a)     The financial position of the Local Government; and

                   (b)     The results of the operation of the Local Government

 

          (3)   The auditor is to include in his or her audit report –

                   (a)     Any material matters that indicate significant adverse trends in the financial position or the financial management practices of the Local Government; and

                   (b)               Any matters indicating non-compliance with financial management or control requirements of the Act, Regulations and any other written law; and

                   (c) Details of whether information and explanations were obtained by the auditor; and

                   (d)     A report on the conduct of the audit; and

                   (e)     The opinion of the auditor as to whether or not the specific financial ratios reported are supported by verifiable information and reasonable assumptions.

 

5.0   Audit Methodology and Approach

 

(a)        The Auditor is required to comply with the requirements of section 7.9 of the Local Government Act 1995 and the Local Government (Audit) Regulations 1996, except that Council will require the audit report to be supplied by 30 November of each year.

 

(b)        An audit is to be carried out in accordance with “Australian Auditing Standards” and “Auditing Guidance Statements” adopted from time to time by the Australian Society of Certified Practicing Accountants and the Institute of Chartered Accountants in Australia.

 

(c)        The Auditor is to provide Council with a general outline of his/her methodology.

 

(d)        The Auditor is to provide Council with a proposed timetable for the audit including:

·    Timing of entrance interview;

·    Timing of interim audit visits, no later than last week of February each year;

·    Final audit visit, no later than the third week of September each year (within 30 days of being advised that the accounts and Annual Financial Report are available for audit);

·    Timing of exit interview;

·    Timing of the legislative requirement to meet with the Local Government and whether that meeting will be in person or by some other means; and

·    The method to be used to communicate with, and provide advice and information to, the Local Government; and

 

(e)        The Auditor is required to produce an audit report as required by section 7.9 of the Local Government Act 1995 and, if considered appropriate by the Auditor, a Management Report, which addresses any issues for the following areas:

 

Critical Audit Areas

(i)         Revenue

·    Rates revenue

·    Government grants

·    User pays revenue

·    Profit on sale of non-current assets

·    Other income

(ii)   Expenditure

·    Salary and wage costs and employee records

·    Depreciation

·    Materials and contract expenditure

·    Loss on sale of non-current assets

·    Insurances

·    Bad debts

·    Other expenditure

·    Corporate Credit Cards

 

(iii)  Current Assets

·    Bank and short term investments

·    Receivables and prepayments

·    Inventory

 

(iv)  Non-Current Assets

·    Property, plant, furniture and equipment

·    Infrastructure and depreciation

·    Other receivables

·    Revaluation of Non-Current Assets

 

(v)   Liabilities (Current and non-current)

·    Creditors and accruals

·    Loan borrowings including new loans raised

·    Provision for annual and long service leave entitlements

 

(vi)  Reserve Funds

 

(vii) Contingent Liabilities

 

(vii) Capital Commitments

 

(ix)  Accounting Policies and Notes to the Financial Statements

 

(x)        Cash Flow Statement

 

(xi)       The financial ratios required by the Local Government (Financial Management) Regulations 1996.

 

6.0 Term Of Contract

 

The contract will effectively cover three (3) financial years commencing 1 July 2015 through to 30 June 2018.

 

7.0 Information To Be Provided With The Tender

 

The Auditor is to provide:

·    Fees for completing the audit in accordance with this specification, excluding travel and accommodation. Fees should be shown separately for each year of the term of contract and for each Council.

·    Details (and fees if applicable) for any other value added services provided, which may include consultancy work, seminars, guidance booklets, newsletters, updates, regular feedback, support and direction.

·    Estimate of the hours to be allocated for the audit for each Council.

·    The proposed scheduling of the audit in accordance with Clause 5 (e).

·    Nominated auditor(s) and registered company audit number(s).

·    Experience of the nominated auditor(s) in completing Local Government audits and current Local Government engagements held.

·    Experience of proposed Audit staff.

·    A typical audit checklist of items reviewed and any other information consistent with Clause 5 (c).

·    Hourly rate and/or fees and expected completion time for any separate audits requested by Council in addition to the audit function as defined in Clause 4.

 

 

 

Accommodation and travel expenses are to be reimbursed at cost. Please note that travel expenses refer to airfares and the like and shall not include the hourly rates of the audit staff. The accommodation and travel expenses of all the audits will be paid equally by each of the Shire of Halls Creek, Shire of Broome and the Shire of Derby.

 

All prices shown must exclude or separately identify GST.

 

Auditors may submit alternative fees for each council. Any economies of scale that may apply must be spread evenly over the three Shires.

 

8.0   General Conditions

 

The Auditor shall not sub contract to a third party.

 

The Auditor shall not, and has no right to, assign the audit contract to third parties.

 

The Auditor confirms that he or she has, and will maintain during the duration of the audit term, professional indemnity insurance covering the legal liability arising out of any neglect, default, error, or omission. The value of the indemnity will be that required by the professional accounting bodies for the holding of a practising certificate.

 

The auditor shall not be engaged by the Council to undertake any financial consultancy with the local government that requires the preparation of financial information that will be subject of the annual audit.

 

Notices or other communication between Council and the Auditor may be given by delivery, or sent prepaid post, to each of their respective postal addresses.  Postal address may be altered by service of notice in accordance with this clause.

 

Notices or other communication sent by post shall, in the absence of proof to the contrary, be deemed to have been received by the addressee 96 hours after it was posted.

 

9.0 Termination of Appointment

 

The appointment as Auditor is terminated if:

(a)        The Auditor ceases to be a registered company Auditor;

(b)        The Auditor ceases to be an approved Auditor under Section 7.5 of the Local Government Act 1995;

(c)        The Auditor is a disqualified person under Section 7.4(2) of the Local Government Act 1995;

(d)        The Auditor resigns by notice in writing to Council;

(e)        Council serves notice in writing to the Auditor terminating the appointment.

(f)        The auditor’s registration is withdrawn or suspended.

 

10.0 Tender Submissions

 

Sealed tenders clearly labelled “Kimberley Councils Audit Tender” are to be lodged at the Shire of Broome, no later than 4pm on Friday 30 October 2015.

 

Emailed tenders to the Shire of Broome will be accepted, however it is the Auditors responsibility to confirm that tenders have been received and to supply any documentation requested.

 

Auditors should ensure that tenders address the items referred to in Clause 7.0 of this document.

 

Further information regarding this quote should be directed to Sam Mastrolembo Director Corporate Services (Shire of Broome), Lloyd Barton Corporate Services Manager (Shire of Halls Creek) or Martin Cuthbert Executive Manager Corporate Services (Shire of Derby West Kimberley).

 

11.0     Financial Data

 

The following information is supplied of the 2013/2014 financial year.

 

Council

Operating Expenditure

Operating Income

Capital Expenditure

Total Assets

Total Liabilities

Shire of Broome

$38,106,623

$38,384,532

$9,318,900

$227,849,593

$13,481,790

Shire of Derby West Kimberley

$21,388,562

$19,208,855

$10,046,785

$105,716,037

$4,730,542

Shire of Halls Creek,

$12,971,628

$ 9,979,588

$ 3,694,645

$52,885,429

$2,548,076

 

 

 


AgendaAudit Committee Meeting 25 August 2015                                                                                    Page 39 of 39

 

6.         Meeting Closure