Transcript A National Financial Management and Asset Management Framework for Local Government Ian Mann Jeff Roorda Representing the Project Development Team.

A National Financial Management
and
Asset Management Framework
for Local Government
Ian Mann
Jeff Roorda
Representing the Project
Development Team
1
Prime Minister’s address to ACLG
 “Councils that plan & manage their assets effectively
are councils that can deliver value for money to
communities“
 “We need to know what we’ve got, what condition it is
in, whether it needs to be repaired and how much it
costs to maintain. This is the most basic level of
information”.
 “The Commonwealth will also consider making its
future infrastructure investments linked to the
implementation of nationally consistent asset
management systems”
2
National Sustainability Frameworks
3
National Sustainability Framework Genesis
May 2006 – LGPMC meeting determined the a series of nationally consistent
Frameworks on financial sustainability measures for Local Government would
be developed
Three Frameworks were subsequently developed
1.
Assessing local government financial sustainability;
2.
Asset Planning and Management
3.
Financial Planning and Reporting.
October 2006 – Consultation with Local Government and other relevant bodies
March 2007 – LGPMC endorsed the national consistent frameworks
May 2009 – LGPMC agreed to enhance the nationally consistent framework on
Local Government asset and financial management frameworks and
committed to an accelerated implementation.

4
Refer: www.lgpmc.gov.au
Enhanced National Sustainability Frameworks
1. Enhanced Asset Planning and
Management
2. Enhanced Financial Planning and
Reporting.
3. Criteria for assessing financial
sustainability of local councils

Refer: www.lgpmc.gov.au

5
National Approach to AM –
1. Enhanced Asset Planning & Management
The 7 elements of the Enhanced National Framework
on Asset Planning and Management are:
1. Development of an asset management policy
2. Strategy and planning
3. Governance and management arrangements
4. Defining levels of service
5. Data and systems
6. Skills and processes
7. Evaluation
6
National Approach to Financial Management
2. Enhanced Financial Planning & Reporting
CAPITAL WORKS STATEMENT
1. Strategic longer term plan
7,000,000
6,000,000
5,000,000
4,000,000
Renewal investment
Upgrade investment
3,000,000
New investment
2,000,000
2. Annual budget, and
1,000,000
0
3. Annual report
Project Manager
ASSET DESCRIPTION
Responsible
Budget Officer
2007/08 2008/09 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
DK
JR
AB
AB
AB
DK
Int
Ext
Int
Int
Ext
Ext
TOTAL
$
RENEWAL
(Same LOS Essential)
"Non
Discretionary"
$
%
UPGRADE
(Higher LOS)
"Discretionary"
$
%
NEW
(New Service)
"Discretionary"
$
%
~ Annual
Mtce
Impact
~ Oper'l
Impact
$
$
LAND & BUILDINGS
Country Football Boost Ground
Community Phase 2
Replace Carpets
Replace Heating Plant
Disabled Access to Buildings
Clubrooms
Sub-Total - Land & Buildings
25,000
440,000
10,000
75,000
20,000
361,740
931,740
25,000 100%
88,000 20%
10,000 100%
52,500 70%
72,348
222,848
20%
24%
352,000
80%
22,500 30%
20,000 100%
72,348 20%
466,848 50%
4,000
217,044
242,044
60%
26%
-1,000
10,000
14,000
27,000
100,000
20%
500
250
12,000
-9,500
2,750
INFRASTRUCTURE
Local Roads Resealing
Final Seals - GPS Program
Asphalt Overlays
Local Rds Improvements (R2R)
Local Roads Improvements
Gravel Resheeting - Local Roads
Footpath
Open Space Implementation
Streetscape Community Hub
Sports Ground Enhancement
Replacement of Bridge
Local Arterial Rd
Sub-Total - Infrastructure
9
FN
FN
FN
MO
MO
JB
OV
GH
LK
OV
MO
MO
Int
Int
Int
Int
Ext
Int
Int
Ext
Ext
Int
Int
Int
500,000
47,000
350,000
525,000
250,000
230,000
229,450
127,500
1,258,000
300,000
60,000
1,699,000
5,575,950
400,000 80%
47,000 100%
175,000 50%
157,500 30%
125,000 50%
230,000 100%
91,780 40%
19,125 15%
62,900
5%
210,000 70%
60,000 100%
849,500 50%
2,427,805 44%
175,000
367,500
125,000
50%
70%
50%
754,800
90,000
60%
30%
849,500
2,361,800
50%
42%
875
1,838
625
137,670
108,375
440,300
60%
85%
35%
786,345
14%
688
542
5,976
450
4,248
15,741
5,000
500
15,000
5,000
25,500
How it might work
10
General Principles
 One common set of assessment criteria
 Each State may adjust criteria to suit their needs however should be
able to apply consistency to core criteria
 Councils could use assessment criteria to help prepare Asset
Management Improvement Plans
 Councils would determine priority of improvements
 Recognise that different Councils be at different stages of development
11
Federal Government
Local Government Planning
Ministers Council
State
Government
3 National
Frameworks
$ Funding
(AM Dependent)
State
Assoc
&
IPWEA
State Legislation
Report
National
Assessment
Framework
State
Association
Councils
12
National Assessment Framework
13
Working Group
MAV
MAV
John Hennessy
CT Management Group
CT Management Group
Ian Mann
Bruce Lorimer
AECOM
AECOM
Gary Rykers
IPWEA
IPWEA
Peter Way
Chris Champion
Jeff Roorda & Associates
Jeff Roorda & Associates
Jeff Roorda
John Howard
14
Maturity Assessment of a Council
• Built around the asset management journey of a Council
• Assesses where Council is on the Asset Management maturity curve
• Two benchmark levels of Maturity – Core and Advanced
(Advanced is not Best Practice)
Asset Management Maturity Curve
High
Asset Management Capability
Best Practice
Advanced Asset
Management
Core
Asset
Management
Low
Time
15
National Asset Management and Financial Planning Assessment Framework
Financial Sustainability
Step 1 –
Assessment of
Maturity
National Assessment based on Detailed Assessment Criteria
 Built around a set of common questions
 Focused on best appropriate practice
 Each State may add additional questions to align with their own “good practice” guidelines
 Must be linked to and based upon the National Sustainability Framework
 Core and Advanced maturity grading
Step 2 –
Audit or
Assessment
Assessor/Auditor Opinion
One of three possible statements for each framework element plus an overall assessment
• Unqualified ;
• Qualified – reflects good practice except for ……….. (qualifications); or
• Adverse
Industry
Support
16
Asset Management Sustainability
State based Local Government Asset Management Capacity Building Programs
 Each State and/or Local Government Association develops their own Local Government
asset management capacity building program linked to the elements of the National
Sustainability Framework (to suite each State’s circumstances)
 In Victoria this is the MAV STEP program
Step 1 – Assessment of Maturity
 Two part questionnaire linked to National Framework
 Undertaken as a self assessment by the organisation
 Possible answer to each question
 “Compete”, “Partially Complete” and “Not Started”
 Independently overviewed
17
Maturity Level
Total No of Questions
Part 1
Core
76
Part 2
Advanced
145 (including the 76 Core – 67 additional)
Complete
Partially Complete
Not Started
Status
QUESTIONS
2
3
0
2
2
0
Strategic Long Term Plan
Council has a Strategic Longer Term Plan (planning horizon of at least 5 years) that incorporates a Complete
vision, strategic outcomes, mission, values and service outcomes that Council wants to achieve.
The development of the Strategic Longer Term Plan included community consultation and reflects Partially
community needs.
Complete
The Strategic Longer Term Plan incorporates priorities and performance measures and indicates
how they will be monitored and measured.
Partially
Complete
Council has a sustainable Long Term Financial Plan covering the period of the Strategic Longer
Complete
Term Plan (at least 5 year) supporting the implementation of its Long Term Plan.
The Long Term Financial Plan has been prepared based on the resource requirements and strategic Partially
objectives detailed in Council’s Long Term Plan and Asset Management Plans.
Complete
Strategic Long Term Status Summary
Annual Budget
The Annual Budget contains estimates of revenue and expenditure with an explanation of the
assumptions and methodologies underpinning the estimates, an explanation of the financial
performance and position of the Council and has been prepared based on the resource
requirements and strategic objectives detailed in Council’s Strategic Longer Term Plan, Asset
Management Plans and Long Term Financial Plan.
The Annual Budget reflects the Council's strategic objectives and contains a statement of how
Council will meet the goals and objectives of its Strategic Longer Term Plan.
Complete
Partially
Complete
The Annual Budget aligns with Year 1 of the Long Term Financial Plan, and was adopted following Partially
Complete
community consultation
Council’s Annual Budget includes resources to implement Strategic Longer Term Plan strategies.
Complete
Annual Budget Status Summary
18
Assessment
Opinion
Core Maturity Assessment Questions
Core Maturity Assessment Results
Total Items
Items
Complete
Items
Partially
Complete
5
0
3
2
Annual Budget
4
0
2
2
Annual Report
5
0
2
3
Asset Management Policy
5
0
1
4
Asset Strategy
3
0
1
2
Asset Plans
22
0
6
16
Governance and Management
7
1
5
1
Levels of Service
4
2
2
0
Data & Systems
8
2
5
1
Skills & Processes
10
5
5
0
Evaluation
3
1
2
0
Total
76
11
34
31
Framework Element
Strategic Planning
19
Items
Not
Started
Part 2 – Assessment/Audit Opinion
National Frameworks Assessment and Reporting
 To be based on the audit opinion concept of a ‘true and fair’ view of the
financial report.
 An audit opinion is expressed on audited statements.
“When reporting, the auditor is required to express an opinion as to whether the
financial report ‘gives a true and fair view’ or ‘presents fairly’, in all material
respects, in accordance with an applicable financial reporting framework.”
 For the National Frameworks Assessment, a similar audit/assessment
approach would entail an internal or external auditor/assessor forming
an opinion that each LGPMC Sustainability Framework Element had
been followed
20
Assessment/Audit Opinion
Assessment
opinion
Core Maturity
(Unqualified)
Intermediate
(Qualified)
Low Maturity
(Not reached Core
Maturity)
21
Opinion
Requirement
That the council’s asset
management and financial
practices meet the requirements
of the LGPMC National
Sustainability Frameworks
All the elements within the National
Assessment Framework have been met
at a ‘core’ level, OR all except a small
number of ‘core’ element items have
been met and the assessor has reached
the opinion that these omissions have a
immaterial effect on and low risk of not
achieving the LGPMC National
Sustainability Framework’s desired
outcomes
The majority of the ‘core’ element items
within the National Assessment
Framework have been met with a
number of omissions having a material
effect on and high risk of not achieving
the LGPMC National Sustainability
Framework’s desired outcomes
The majority of the ‘core’ element items
within the National Assessment
Framework have not been met
That the council’s asset
management and financial
practices meet the requirements
of the LGPMC National
Sustainability Frameworks
except for certain material and
high risk exceptions
That the council’s asset
management and financial
practices do not meet the
requirements of the LGPMC
National Sustainability
Frameworks
Core Maturity Assessment Opinion
Not Started
Assessment
Opinion
The Strategic Longer Term Plan incorporates priorities and performance measures and
indicates how they will be monitored and measured.
Partially Complete
Strategic Long Term Plan
Council has a Strategic Longer Term Plan (planning horizon of at least 5 years) that
incorporates a vision, strategic outcomes, mission, values and service outcomes that Council
wants to achieve.
The development of the Strategic Longer Term Plan included community consultation and
reflects community needs.
Complete
Status
QUESTIONS
2
3
0
Intermediate
2
2
0
Intermediate
Complete
Partially
Complete
Partially
Complete
Council has a sustainable Long Term Financial Plan covering the period of the Strategic Longer Complete
Term Plan (at least 5 year) supporting the implementation of its Long Term Plan.
The Long Term Financial Plan has been prepared based on the resource requirements and
Partially
strategic objectives detailed in Council’s Long Term Plan and Asset Management Plans.
Complete
Strategic Long Term Status Summary
Annual Budget
The Annual Budget contains estimates of revenue and expenditure with an explanation of the
assumptions and methodologies underpinning the estimates, an explanation of the financial
performance and position of the Council and has been prepared based on the resource
requirements and strategic objectives detailed in Council’s Strategic Longer Term Plan, Asset
Management Plans and Long Term Financial Plan.
The Annual Budget reflects the Council's strategic objectives and contains a statement of how
Council will meet the goals and objectives of its Strategic Longer Term Plan.
Complete
Partially
Complete
Partially
The Annual Budget aligns with Year 1 of the Long Term Financial Plan, and was adopted
Complete
following community consultation
Council’s Annual Budget includes resources to implement Strategic Longer Term Plan
Complete
strategies.
Annual Budget Status Summary
22
Council Core Maturity Assessment
23
Items
Partially
Complete
Items
Not
Started
Assessment
Opinion
Total Items
Items
Complete
Strategic Planning
5
2
3
0
Intermediate
Annual Budget
4
2
2
0
Intermediate
Annual Report
5
5
0
0
Core Maturity
Asset Management Policy
5
0
1
4
Low Maturity
Asset Strategy
3
0
1
2
Low Maturity
Asset Plans
22
0
6
16
Low Maturity
Governance and Management
7
1
5
1
Low Maturity
Levels of Service
4
4
0
0
Core Maturity
Data & Systems
8
2
5
1
Low Maturity
Skills & Processes
10
5
5
0
Low Maturity
Evaluation
3
1
2
0
Low Maturity
Total
76
11
34
31
Low Maturity
Council Results – Core Maturity
100%
90%
80%
70%
Complete
60%
50%
Partially
Complete
40%
Not Started
30%
20%
10%
0%
24
National Results
State/Territory
25
No
councils
Assessment Opinion
Management report
by councils *
Core
Maturity
Intermediate
Low
Maturity
NSW (Inc
ACT)
Qld
153
62
50
41
40 of 91 (44%)
73
40
20
13
25 of 33 (76%)
Vic
79
65
13
1
13 of 14 (93%)
SA
68
40
20
8
20 of 28 (71%)
WA
141
50
50
41
60 of 91 (66%)
Tas
29
15
10
4
8 of 14 (57%)
NT
16
5
2
9
6 of 11 (55%)
Total
559
277
165
117
172 of 282 (61%)
National Results
National Asset and Financial Managment Frameworks
Core Compentency Assessment
Core Maturity
Intermediate
Low Maturity
100%
90%
% of Councils
80%
70%
60%
50%
40%
30%
20%
10%
0%
NSW (Inc
ACT)
26
Qld
Vic
SA
WA
Tas
NT
National Improvement Measures
Assessment Opinion
(No. of Councils)
Core Maturity
Intermediate
Year
27
Low
Maturity
Improvement
Dec 2010
117
165
277
0
Dec 2011
209
170
180
Yes
Dec 2012
399
80
80
Yes
National Improvement Measures
National Asset and Financial Management Frameworks
Core Competency Assessment
Core Maturity
Intermediate
Low Maturity
100%
90%
80%
% of Councils
70%
60%
50%
40%
30%
20%
10%
0%
Dec 2010
28
Dec 2011
Dec 2012
Questions
29