DUE DILIGENCE
The due diligence deliverables and key area tables are a guide to assisting General Managers with the development of a due diligence report. The due diligence report should be prepared ideally in readiness for Proclamation with the next iteration of due diligence reporting due in readiness forthe commencement of the new entity (if at a different time to Proclamation).
Why undertake due diligence?
To minimise exposure to risk and interruption to service delivery, critical analysis of the operations of the amalgamating councils needs to be undertaken. Merging councils is not dissimilar to corporate mergers and acquisition in the private sector and requires a minimum level of examination.
This examination process will ensure that key risks from each organisation and their assessing processes are identified in addition to the potential risks created as a result of the merger/amalgamation.
The due diligence process can also support the identification and documentation of costs/benefits realised as a result of the reform process and will assist with future cost recovery if applicable.
TheKey Deliverables outlined below represent the base-line data required by the GM/Council initially and the Interim GM/Council orAdministratorsecondly. This information is essential to the decision-making process for changeover and the establishment of the new entity.
The Due Diligence Key Areas outlined below represent key elements of due diligence that require examination (refer to corresponding Function headings in the Toolkit for further information on how to address the key areas).The Key Areas will provide a body of work that informs the Key Deliverables. This information will guide future decision making in regard to the interim organisation and staffing structure, Operational Plan, capital works and infrastructure, interim service delivery model, risk and business planning.
KEY DELIVERABLES
Due Diligence Summary Report for the [insert name of Council].
Task / Requirements / Actioned / Cost of ActivityRisk Management Plan / Development of an overarching risk management plan that outlines key strategic, operational, financial and project risks for the new entity.
Assets and Liabilities / A summary of the distribution ofassets and asset liabilities from the previous councils.
Strategic Direction / A consolidated summary plan that outlines strategic directions including place management issues.
Interim Corporate Business Plan / Development of a consolidated Interim Corporate Business Plan including a financial overview with consideration of complex variables such as asset management, major projects and major contractual arrangements (current or proposed).
Operational Plan
2016/17 / Development of a consolidated operational plan for the new entity including revised forward capital works schedule and Long Term Financial Plan.
Services Plan / An interim services plan to ensure service provision is maintained to existing / agreed levels of service.
Interim Service Delivery Model / An interim service delivery model developed to support the operational plan. Includes variations to delivery modes (i.e. centralised / decentralised / outsourced) and revised systems and processes.
Interim Organisational and Staffing Structure / An interim organisational and staffing structure to support the operational plan and service delivery methodology.
Interim Staffing structure to include:
Distribution of employees from previous entity
Positions within the structure
Positions in excess of establishment
Pay scales
Name of incumbent to be placed into position (if known)
Employment status (i.e. permanent full/time or permanent part/time, contract, casual or temporary)
Industrial Relations Plan / An industrial relations plan which outlines key risks and actions required in line with the Workplace Code of Practice and Guidelines and the Local Government Act. Outlines the proposed industrial framework and the status of the Enterprise Agreement negotiations.
Policy and Delegations Register / Preparation of the interim policy and delegations manuals and authorisations for adoption.
Business Enterprise requirements / Inventory of business entity requirements i.e. registered trading name, ABN, registration for GST, FBT and other tax requirements.
Operational Plan
2015/16 including Financial Statements / Preparatory work for the development of the existing entities Annual Report and supporting material and all End Of Year requirements for 2015/16.
DUE DILIGENCE KEY AREAS:
CHANGE MANAGEMENT AND COMMUNICATIONS / ActionChange Management Plan including employee engagement strategies
Internal Communications Plan
External Communications Plan including Media and Social Media
Community Consultation Strategy
People and Culture Summary Report
CORPORATE GOVERNANCE / Action
Inventory of existing (and impending) leases, licences, agreements, occupancy contracts (excluding employee contracts) with expiry dates,parties to agreement and value of agreement.
Inventory of all current and pending legal proceedings and contingent liabilities
Risk Strategy including Business Continuity Plan
Audit Plan (Internal and External)
Inventory and details of major tenders, goods and services contracts
Ownership or interest in corporate entities such as not for profits
Lists of all controlled entities, joint ventures etc
Advisory committees and all existing council forums
Community functions organised/sponsored by Council
Complaints management processes
Policies and Delegation: inventory outlining any significant differences
‘Sister City’ partnerships and supporting strategies
INTEGRATED PLANNING AND REPORTING / Action
Community Strategic Plan – consolidated Plan / process developed to commence consolidation and Integrated Planning and Reporting process for the new entity
Interim Corporate Business Plan - consolidated plan to support interim structure, delivery model and service provision
Informing Plans – inventory and review of plans
Town Planning – Inventory of plans and an interim policy to accommodate the transitional period until Schemes and Plans are reviewed and consolidated
FINANCIAL MANAGEMENT / Action
Preparation of consolidated Annual Budget and revenue statement
Loans and debt schedule
Summary of Trust Funds, Investments and Reserve Accounts
Performance Report – results against financial and asset ratios
Fees and Charges
Rating Strategy
Salary Sacrifice arrangements with the ATO
FBT arrangements with the ATO
ASSET AND INFRASTRUCTURE / Action
Inventory of Assets (all classes)
Review of Asset Management Plans
Report on Asset Management practices and any key differences i.e. depreciation rates, policy, systems
Funding strategy for renewal
Proposed inventory of surplus/redundant assets/infrastructure
DUE DILIGENCE KEY AREAS:
SERVICE DELIVERY / ActionInventory of Capital Works and Maintenance Program
List of council facilities (buildings, plant, waste management facilities etc.)
Major Services and delivery model (such as aged care, child care, facilities and centres)
Funding structures for services
Risk Mitigation Strategies
REGULATIONS AND ENFORCEMENT / Action
Town Planning – inventory of plans and an interim policy to accommodate the transitional period until Schemes and Plans are reviewed and consolidated
Report on progress of major projects and infrastructure projects
Inventory of existing and partly completed or received development applications
Current appeals and legal action (Development)
HUMAN RESOUCE MANAGEMENT AND INDUSTRIAL RELATIONS / Action
Employee Induction process
WHS Strategy
Consolidation of existing Agreements / Awards
Systems integration and risks i.e. payroll
Equal Employment Opportunity (EEO)Plans
Inventory of existing contractual arrangements, expiry date, position etc.
Review of workforce plans in readiness for amalgamation
Voluntary redundancy options
Current industrial matters in dispute
Current industrial matters in Commission/Court
Workers compensation matters
Identification of accruals including Annual Leave, Long Service Leave etc.
BUSINESS SYSTEMS / Action
Inventory of Information technology systems, integration capability and risks
Communication networks
Software and hardware licences and support
Key policies
Service Agreements and Major Contracts
Records Management Integration Plan and GIPA (including vital records)
Task Action
COMMUNITY ENGAGEMENT / ActionCommunity / stakeholder engagement strategy
Inventory of historical artefacts
Inventory of current complaints
Inventory of community events (including funding or part funding)
No. of key population areas and demographic
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