Governance Bulletin - September 2016 edition
Issue 12
Welcome from the Director General
Welcome to the second issue of the Department of Local Government and Communities (DLGC) Governance Bulletin for 2016. This issue includes information about the need for local governments to develop a purchasing and procurement policy. There are also articles about the use of corporate credit cards and complaints management.
I hope you find the articles of benefit and continue to be a part of our readership.
To provide suggestions or add/update your email address, contact us at or by telephone on 6551 8700.
Jennifer Mathews
Director General
Contents
Governance Bulletin - August 2016 edition 1
Welcome from the Director General 1
Governance case study: Purchasing and procurement policy 3
Background 3
The allegation 3
The finding 3
Record keeping practices 4
Use of corporate credit card 4
Proper identification and verification of credit card expenses 4
Complaints management 5
Legislation Update: Graffiti Vandalism Act 2016 7
Upcoming elected member training 7
Key compliance dates 8
This publication was prepared by:
Department of Local Government and Communities
Gordon Stephenson House, 140 William Street, PERTH WA 6000
GPO Box R1250, PERTH WA 6844
Telephone: (08) 6551 8700
Fax: (08) 6552 1555
Freecall (Country Only): 1800 620 511
Email:
Web: www.dlgc.wa.gov.au
This publication has been produced with accessibility in mind and is available in PDF and Word formats on the department’s website. All or part of this document may be copied. Due recognition of the source would be appreciated. For translating and interpreting assistance, please contact Translating and Interpreting Service (TIS) on telephone 13 14 50.
Governance case study: Purchasing and procurement policy
Local government purchasing policies set out the minimum number of oral and/or written quotations that must be obtained in accordance with regulation 11A of the Local Government (Functions and General) Regulations 1996. All quotations should be recorded by the person making the purchase. Policies are only effective if applied correctly, as demonstrated in the following case study.
Background
1) Consultant
An officer engaged a consultant via email to undertake a project of almost $9,000 value. Over an 18 month period the consultant was paid more than $140,000 in total.
2) Equipment leasing
The same officer entered into a number of arrangements for leasing equipment on behalf of the local government, totalling nearly $700,000. However, the delegation to the officer for acceptance of tenders was limited to $250,000. It was argued that the provider was a preferred Western Australian Local Government Association (WALGA) supplier in accordance with regulation 11(2)(b) of the Local Government (Functions & General) Regulations 1996. A further exemption was suggested on the basis that the provider was a unique supplier of a product in accordance with regulation 11(2)(f). This would exempt the local government from having to invite tenders for the contract.
The allegation
1) Consultant
The local government did not comply with its own purchasing policy or regulation 11A in engaging the consultant.
2) Equipment leasing
Although the provider was a WALGA preferred supplier, Council did not provide approval for procurement. There was also insufficient evidence to support the claim of a sole supplier for the leased equipment.
The finding
1) Consultant
No record was found of any verbal or written quotes for the consultant. No contract was found for these services and no tender was invited by the local government. Therefore the officer breached the purchasing policy and regulation 11A.
2) Equipment leasing
The local government must use its best endeavours to determine if the sole source of supply is genuine by exploring any alternative sources. Once determined, the justification must be endorsed by the local government either in line with the relevant delegation or by Council decision. No evidence was found that this process was followed, nor was there any formal Council approval to exempt the lease from tender provisions on the basis of being a WALGA preferred supplier.
Record keeping practices
A local government must keep records relating to all procurement activities in accordance with:
· the State Records Act 2000 (WA)
· the local government’s record keeping process
· associated procurement procedures.
Use of corporate credit card
Credit cards provide a convenient way to purchase goods or services for the local government and are now a modern business practice. Most local governments have corporate credit cards either in the form of one card for use by all authorised employees or for each senior employee including the CEO. However, a credit card should not be issued to a Mayor or President.
Credit cards issued to individuals require additional policies and procedures to ensure the proper use of the cards when making purchases: for example, a corporate credit card policy, an agreement for use of credit cards and/or a reference to credit card allocation and usage in an employee’s terms of employment as part of their contract.
Proper identification and verification of credit card expenses
DLGC examined a case where there was a failure to properly identify and verify errors and personal expenses charged to an employee’s credit card.
Duplicates and reimbursements were recorded, but no reimbursements or credits appeared to have been transacted back to the local government. However, some reimbursements had been made back to the cardholder.
There were also instances where it appeared that the employee had charged personal expenses to their corporate credit card. These expenses were either not reimbursed by the credit cardholder or there was a considerable length of time before the expenses were reimbursed back to the local government.
All credit card policies should contain a provision restricting use such as:
Restrictions on use
Corporate credit cards are not to be used for personal expenses under any circumstances.
Policies should also indicate that transactions are to be acquitted and reconciled on a monthly basis. This allows any reimbursements for expenses that are restricted, such as personal expenditure, to be dealt with in a reasonable timeframe.
Restrictions on credit card use may also be addressed with the following provisions:
· Each cardholder will be issued with a monthly statement listing all their transactions. It is the responsibility of the cardholder to match their supporting documentation to the monthly statement.
· When the monthly statement is received, the cardholder is required to check all purchases are supported by a tax invoice.
· Monthly statements must be reconciled and returned to the finance section within seven days of receiving the statement.
Local governments should have processes in place to not only identify breaches in a timely manner, but also to enforce the provisions of the policy should any breaches occur.
Corporate credit cards, like any other purchase or procurement, are a form of payment for goods or services made by a local government. The details of payments for all expenses (details of payments to all creditors) are to be presented to Council on a monthly basis in accordance with the local government financial management regulations.
Complaints management
Effective complaints management allows a public authority to simultaneously provide satisfactory customer service and monitor its own performance. Not everyone will agree with the decisions Council may make. While it is realistic that people will raise complaints and issues regardless of merit, local governments are expected to fulfil their obligations as regulatory authorities ensuring that legitimate complaints are addressed.
Occasionally DLGC is asked whether a local government can ‘declare’ a person a ‘vexatious complainant’ and the answer is always no.
A local government (and any other public authority of the State or Commonwealth) cannot legally make such a declaration. A decision of this nature could be potentially defamatory and actionable by the person affected.
The WA Ombudsman, in conjunction with other State and Territory Ombudsman offices and the Commonwealth Ombudsman office, recognise that some complainant behaviour can be unreasonable and disrupts administrative operations. The WA Ombudsman published the guidelines below:
http://www.ombudsman.wa.gov.au/Publications/Documents/guidelines/Binder-Complaint-Handling.pdf
http://www.ombudsman.wa.gov.au/Publications/Documents/guidelines/Unreasonable_Complainant_Conduct_Manual.pdf
The guidelines are a valuable resource for public authorities dealing with unreasonable complainant behaviour and contain steps to follow before a decision is made to restrict a person’s access to a Council service.
Rather than denying a person’s right or ability to make complaints; the process provides guidance on how a local government can respond to unreasonable complainant behaviour.
In short, a decision by a Council to restrict a person’s avenue for complaint should be taken only as a measure of last resort and should not be used to avoid dealing with legitimate concerns.
Important to note:
DLGC has established three new email inboxes to respond to queries more efficiently.
For all matters relating to minor breach complaints, whether it is an initial complaint, additional information or response from an individual should be sent to
All requests for elected members to participate in a meeting after declaring an interest should be sent to
Matters relating to serious complaints, responses to Investigator requests, and requests for updates should be sent to
Legislation Update: Graffiti Vandalism Act 2016
The Graffiti Vandalism Act 2016 (GV Act) comes into effect on 7 October 2016, enabling police, public transit officers and the local government sector to deal with graffiti offences. The relevant powers of these agencies have been transferred from various Acts into the GV Act.
Of note, objections to notices issued under the GV Act are to be treated as though they were objections to the decision of a local government under Part 9 of the LG Act.
This means that objections must be lodged in the approved form, with approval being by the local government. The existing Form 4 in Schedule 1 to the Local Government (Functions and General) Regulations 1996 can be used, provided section 22 of the GV Act is included at the top and the form is approved by a Council resolution.
For further information, please refer to the Department’s Circular No. 18-2016.
Upcoming elected member training*
Seminar date / Topic / Location17 September 2016 / Meeting Procedures and Debating (Dowerin)
29 September 2016 / Understanding Financial Reports and Budgets (Geraldton)
30 September 2016 / Sustainable Asset (infrastructure) Management (Geraldton)
*For further information, please contact Ms Jacqui Dodd, Training Services Manager at WALGA on 9213 2000
Key compliance dates
Compliance date / Requirement to be metWithin 30 days of adopting budget (and no later than 30 September) / Local government to submit a copy of Annual Budget to the Director General of the Department of Local Government and Communities.
In the financial report for the year ended 30 June / Local government must show the fair value of all assets that are:
· Plant and equipment, and either
· Land and buildings or
· Infrastructure
If you require further information related to the topics covered in this bulletin, you are welcome to call or email the Local Government Advisory Hotline on 1300 762 511 or
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