A NSW council is preparing a report for the state government after the unexplained disappearance of $4 million from its coffers following amalgamation, a parliamentary committee has heard.
Snowy Valleys Council, which in May 2016 resulted from the merger of Tumbarumba and Tumut Councils, has for almost 12 months been unable to account for about $4 million “missing from its reserves”, a NSW budget estimates committee heard.
Local Government Minister Shelley Hancock said she was aware of the situation and was expecting a report from Council.
Greens MP David Shoebridge said there were concerns that the new Snowy Valleys Council had lost funds held by Tumbarumba, one of the most financially viable councils in the state.
“I am certainly aware of those concerns and I am aware that Snowy Valleys Council is examining this issue,” Ms Hancock said.
“That is a matter for council and it will report to me and we will have further discussion about that so-called ‘lost’ money.”
Budget passed without review
The committee also heard that Snowy Valleys had delegated financial statements to the general manager and failed to review its annual budget before passing it.
Ms Hancock said Snowy Valleys Council would also report back on those “serious allegations”.
Mr Shoebridge said the minister should intervene with a performance audit of the council.
“Where there is a council that has, on the face of it, lost $4 million and failed to do the most basic due diligence, which is review its annual budget before passing it, surely that is a warning bell that you should intervene and have some separate integrity in the process,” he said.
In a statement Snowy Valleys General Manager Matthew Hyde said allegations of missing money were “false and unfounded”.
He said a $3,104,000 shortfall in unrestricted cash was discovered after the two councils’ financial management systems were merged in May 2018.
Unbudgeted expenses had contributed to the shortfall, Mr Hyde said
He said Council’s financial management practices had been reviewed and documented on numerous occasions, including one which found “there are instances where unexpected reserve appropriations were required to fund projects that were inadequately planned and managed” but that “the appropriation of reserve funds to meet the unfunded costs of the projects is the correct and prudent action to take”.
Mr Hyde said Council has recently adopted a reserves policy and strengthened its approach to project management with the establishment of a Program Management Office to ensure all projects were fully scoped, costed, planned and managed, he said.
Since the 2016 merger local residents have been campaigning to reverse the amalgamation, and Monday’s hearing also heard that the Office of Local Government is currently considering an application for Council to de-merge.
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