It is important that we first establish the credentials of the extract we are about to cite. It comes from Page 19 of a document entitled “Best Practice Guidelines Local Government Entity Audit Committees & Internal Audit” (June 2000). These guidelines were prepared by “the Auditing & Assurance Standards Board of the Australian Accounting Research Foundation, with the support of The Institute of Internal Auditors – Australia and the Australian Institute of Company Directors for the Department of Infrastructure (DoI) and endorsed by the Municipal Association of Victoria (MAV) and Local Government Professionals (LGPro).”
The extract which primarily concerns us, is:
“Appointments of external persons shall be made by Council by way of a public advertisement and be for a maximum term of three years. The terms of the appointment should be arranged to ensure an orderly rotation and continuity of membership despite changes to Council’s elected representatives.” (page 19)
Of the 8 authors listed one name stands out – MR. DAVID GIBBS – the Chair of Glen Eira’s Audit Committee!
What we have here is a highly respected ‘authority’ producing guidelines for local government, yet NOT ADHERING TO HIS OWN GUIDELINES. Mr Gibbs and Mr. MacLean have both been with Glen Eira since at least 1998. Both their names are continually mentioned in the 2005 Whelan Report, as well as in the 1998 Walsh Report. That means that for at least the past 13 years the external members of the Glen Eira audit committee have NOT CHANGED.
The ratepayers of Glen Eira need and demand answers to the following questions:
- Why have both Gibbs and McLean been given such lengthy and uninterrupted tenure on Council’s Audit Committee?
- Why has Mr. Gibbs failed to adhere to his own guidelines and not resigned from the Council Audit Committee?
- Why is Mr. Gibbs said to be consulting with Andrew Newton on a ‘staffing’ matter as outlined in the Whelan Report, when officer staffing is the exclusive domain of the administration?
- How does Council respond to the growing perception, and hence alarm, within the community that all is, and has not been, 100% “kosher” with its Audit Committee?
Glen Eira Debates 
March 14, 2011 at 10:55 PM
The past few posts question, and I think rightly, the longevity of various individuals and their roles on the Audit committee. Longevity breeds familiarity, and sometimes laxness. This is not what any organisation needs, in particular one that is responsible for countless millions of dollars. Change Management is not only a hip phrase, but it is a core tenet of successful organisations. No single individual should be allowed to rest on their laurels and remain in the same position for this length of time. All of the individuals named (Lipshutz; Gibbs, McLean) should be replaced with new blood that can bring new ideas and different insight into organisations as well as establish new working relationships. As Glen Eira has written, Audit committees should never be allowed to become too cosy and set. In my humble view, this is a recipe for disaster.
March 15, 2011 at 9:40 AM
Curiosity got the better of me and I’ve just had a look at the VATC/MRC Annual Report for 2010. The auditors are Price-Waterhouse,Coopers and Deloitte’s. Exactly the same people that Glen Eira employs and pays big money to. Coincidence? Maybe, and then again, maybe not?
March 15, 2011 at 10:44 AM
If the Council wants to reappoint external members to the Audit Committee then that is Councils right. Ask anyone in the Local Government Industry about the Financial Management of our Council and you will hear that Glen Eira is the Leader in the Industry due to many obvious reasons including the success of the Audit Committee. Stop politicising something that doesn’t need fixing.
March 15, 2011 at 10:59 AM
How very, very sad that you should be so blinkered Anonymous. A decade of investigations should alert you to the truth that there’s plenty in this council that needs fixing and a good start would be the audit committee. Answer me this if you will. How many times in the past ten or so years has the auditor general or his reps had to make an appearance in Newton’s office? Name me one other council that has had the same two independent members on their audit committee for at least 13 years straight. Since you’re in the know, answering these questions shouldn’t be a real problem for you Anon. Remember now – put away your rose coloured glasses and tell us the truth for a change!
March 15, 2011 at 11:22 AM
We’ve taken up Smart Aleck’s question and done a very quick search of two neighbouring council’s Annual Reports, looking for independent audit committee members. The results tell us that neither of these two councils HAVE MAINTAINED THEIR INDEPENDENT AUDIT COMMITTEE MEMBERS FOR AN EXTENDED PERIOD OF TIME. Here’s what we found –
Port Phillip in 2001/2 had Dale Neilson an accounting firm. In 2009/10, they have employed Ray Ligget and Gaye Mason.
Kingston in 2003 (their online reports don’t go back as far as Port Phillip’s) employed the firm of Wernli Okane. In 2009/10 they employed Hugh Parkes and Ray Ligget.
So, once again Glen Eira is ‘the odd man out’. Strange, how this always seems to happen isn’t it?
March 15, 2011 at 3:00 PM
It was remarked in an earlier post that Gibbs and McLean were handsomely remunerated. As there is some risk I would expect some re-imbursement of expenses but considering there are only four meetings a year, I would have thought this remuneration to total no more than $1k each. Hardly sheep stations.
March 15, 2011 at 4:10 PM
The following is taken verbatim from Council Minutes of 26th September, 2005.
Item 8.5
AUDIT COMMITTEE MEMBERS’ REMUNERATION
Enquiries: Peter Swabey Chief Financial Officer
1. Purpose -To adopt rates of payment for Independent Members of Council’s Audit Committee.
2. Corporate Goal
Objective 3: Advance the public interest by good governance and responsible management of community assets, finances and risks.
3. Background – External members of Glen Eira Council’s Audit Committee receive a fee for participating as Independent Audit Committee members. The amounts currently being paid are:
Chairman – $5,500 p.a. (excl GST)
Independent Member – $4,500 p.a. (excl GST)
The fee paid to external members was originally set in April 1996 and revised in November 1997. Since 1997 the fee has not been altered. It is important that Council’s fee to external members reflect a level that will attract and retain suitably qualified candidates. A survey of 9 other Victorian Councils showed that fees paid to Independent members of Audit Committees ranged from $4,500 p.a. to $6,000 p.a.
4. Recommendation
That the fees for the Independent Members be set at:
Chairman – $6,000 p.a. (excl GST);
Independent Member – $5,000 p.a. (excl GST).
DECLARATIONS OF INTEREST
Mr Lester declared an Interest in this item as he is a member of the Audit Committees of the City of Manningham and the Shire of Yarra Ranges.
RECOMMENDATION
The recommendation as printed was ADOPTED by Council.
COMMENT: We ask two simple questions. Council had been sacked by this time, Lester was in charge. By declaring a conflict of interest, and as THE COUNCIL, how could this resolution be ‘adopted’ by Council? Does it have any legal standing?
Finally, the current Annual Report reveals these figures –
“Auditor’s Remuneration – $233,000; Accounting Services; $178,000.” This is then further broken down into these figures: “Internal Audit Fees – Price Waterhouse & Coopers – $183,000; audit fee to conduct external audit – Victorian Auditor General – $47,000; Fees for other audit services provided – $3,000”.