For some time, a theory has been doing the rounds that millions of dollars from the former Tumbarumba Council’s cash reserves had gone missing after the forced merger with Tumut.
An independent financial review of Snowy Valleys Council – which also looked at the books of the former Tumut and Tumbarumba Councils – addresses the issue of a $3.1m shortfall in cash, without explaining how the shortfall happened.
Consultants Mead Perry Group were hired at a cost of almost $95,000 to pour over the books of the current and former councils.
It followed sustained criticism of Snowy Valleys Council’s financial management from the Tumbarumba Chamber of Commerce and Save Tumbarumba Shire Groups.
Mead Perry found that more than $3.1 million was indeed unaccounted for – but stated it happened before Snowy Valleys Council merged its financial systems in May of 2018.
The merger of the financial systems came some two years after the merger of the councils took place – and after the council administration period ended – with separate accounting packages used for Tumut and Tumbarumba prior to that.
The consultants found that the Tumbarumba accounts had $3.104 million less cash in the bank than what was claimed on the financial statements.
Tumbarumba’s books stated there was $8.8m in cash reserves at the time the financial systems were merged, when there was actually 35 per cent less than that, according to the report’s findings.
How that $3.1m shortfall came to pass and when it happened – whether during the period of council administration, prior to it, or after that – was not explained in the Mead Perry report.
A meeting of Snowy Valleys Council last week was told that the balance written in the Tumbarumba accounts was not backed up by dollars and cents in the bank.
As far as councillors were concerned, the report cleared up the community’s concerns.
“I know that in the community people have been concerned there was a discrepancy,” Cr Julia Ham said. “This shows there is no missing money; rather, that the recording of the movement of cash did not happen.”
However, the Times has been told that Tumbarumba had more than a million dollars in unrestricted cash at the time of the merger – and therefore, it’s actually more than $4m that’s unaccounted for.
Snowy Valleys Council did take more than $1.5m from the former Tumbarumba council’s reserves last October, to help pay for the troubled Tumbarumba Caravan Park project, which was over budget, and no longer eligible for federal government funding the council thought it had secured.
The cost of the forensic financial review was paid for by the state government as part of the merger.
Councillors said the report had proven invaluable.
The consultants gave Snowy Valleys Council’s financial management a general tick.
While the council had recorded two operating deficits, that was to be expected through an initial period of significant change, the Mead Perry Gropu found.
Operating deficits are set to continue, but will reduce gradually.
“We are aware that Council is reviewing its operational costs and overheads with the view to ensuring that financial sustainability is maintained,” MP Group found.
“The organisation appears to be well resourced with competent staff and has established or is developing systems to deliver compliance and good business practice.
“A significant challenge for Council and management from this point on will be to continue to work on building a united, positive culture in the organisation. The reality of a forced merger is that it will take time and effort to bring staff through such significant and challenging change.”
The consultants found no significant issues with the way the current council, nor the former councils, managed financial reserves, assets, grant funding and financial sustainability, but noted there was room for improvement in several areas.
Councillors were pleased with the findings.
“It clears a lot of things up for me,” said Cr Bruce Wright.”
“It’s important we know as a council how we’re performing, and it looks to me like we’re not going too bad at all.
“We can’t get tied up in ‘Tumut or Tumbarumba’ and just have to keep on with the good work we’re doing as a combined council.”
Cr Margaret Isselman, who put forward a recommendation that the council formulate a reserve management policy, said the report helped the councillors when it came to future direction.
“It wasn’t done from a witch hunt point of view, it was done so we had a comprehensive awareness, from an independent auditor, that allows us to understand what our direction will be,” she said.
Deputy mayor John Larter noted the auditor had found areas where both Tumut and Tumbarumba could have done things better.
“In this new council we’ve strengthened governance and financial management and that’s been recognised independently,” he said.
“This combined council is working well, and that’s due to the efforts of the staff and governing body.”