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Institute launches benchmark reporting guide for local government- VIC
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9th June 2006 
 
In a changing regulatory environment that includes the introduction of Australian International Financial Reporting Standards (AIFRS) and the likely demise of Australian Accounting Standard AAS27 “Financial reporting by Local Government’, local governments in Victoria will be expected to revise their annual reporting standards.  
 
The Institute of Chartered Accountants, today launched its fourth definitive ‘Best practice guide for reporting local government budgets in Victoria’ to assist Councils in preparing their 2006 / 2007 budget reports.  
 
General Manager for the Institute in Victoria, Michael Nazzari said that the guide in the past focused on improving the quality of budget reports, but this year’s model has placed an emphasis on the changing regulatory requirements and developing a model that can be clearly understood by non-financial readers.  
 
”Annual budget reports are a valuable communication tool that should provide clear, simple messages for all stakeholders including those not trained in understanding financial management matters. The Guide aims to assist practitioners in developing easily comprehended budgets without jargon and complex reports,” Mr Nazzari said.  
 
Based on a fictitious council, “Victorian City Council”, the guide uses sample information from real budget reports and includes changes for the 2006 / 2007 year aimed at better meeting the needs of all readers including:  
 

  • A revised Executive Summary, with an emphasis on narrative and graphical presentation,
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  • A new Activities and Initiatives section linking the Council Plan and Annual Budget and
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  • An expanded section on financial indicators
 
This revision of the Guide also includes updates relating to the introduction of AIFRS, which will apply to financial reporting by Victorian local governments in 2006/2007.  
 
“While it is difficult to determine the full extent of the impact AIFRS on local government financial reporting, known changes have been made such as statement titles and the format of the Budgeted Income Statement, which is consistent with the 2005/2006 Model Financial Statements, released by Local Government Victoria,” Mr Nazzari said.  
 
Structured in three layers, the guide includes an overview of the budget, an analysis of the key issues embodied in the budget and links the budget to the long-term financial strategies of council. Also included is an appendix providing greater detail on important matters directly related to the budget and statutory disclosures required by the Local Government Act 1989 and the Local Government (Finance and Reporting) Regulations 2004.  
 
“The structuring of the Guide into three layers is considered best practice as it recognises the different levels of interest in the budget and therefore includes different levels of detail, that stakeholders seek when reviewing a local government budget,” Mr Nazzari said.  
 
“Previous guides have been well received by the local government sector and in fact more than 90% of local Council’s are basing their budget reports on our recommendations. The fourth edition will further enhance their reporting capabilities as its improvements are based on the comments received following the release of previous reports,” he said.  
 
The guide was developed by a working party consisting of professional accountants, local government finance professionals and a financial consultant of the Municipal Association of Victoria, who together debated many conceptual and practical issues to produce a guide that reflects the most commonly occurring events and transactions encountered by local governments.  
 
The Guide is not intended to take the place of independent professional advice with regard to the precise application of the requirements of the local government legislation, Accounting Standards and other mandatory professional accounting requirements.  
 
The Guide can be viewed on the Institute’s website charteredaccountants.com.au