Snowy Valleys Council’s management of the Tumbarumba Caravan Park project has been dealt another blow with a forensic financial report finding hundreds of thousands of dollars was paid out by the council to a contractor before it had formally accepted a tender for the work.
The council has been embarking on a major upgrade of the park to expand accommodation and amenities, but the project budget has blown out by some $1.8 million to $4m.
The council recently hired consultants MP Group to carry out a forensic financial review of the Snowy Valleys – and the former Tumut and Tumbarumba councils – at a cost of almost $95,000.
Among a range of findings covering the councils’ financial management, the report found “significant issues” with the payment of funds surrounding a contract the council entered into for the Tumbarumba Caravan Park upgrade.
The Local Government Act sets out requirements councils must follow in respect to tenders for projects.
MP Group found the council had not followed due and proper process.
“At face value, in the dealings around a contract in relation to the Tumbarumba Caravan Park redevelopment, proper process has not been followed in that invoices were received, orders processed, and a payment made prior to formal acceptance of the tender,” the report found.
“It is noted that this activity occurred while the council was under administration.”
The council formally resolved to accept the tender to build accommodation buildings at the caravan park, at a cost of $607,000, on February 23, 2017.
But a week earlier, the council had already processed a purchase order for that amount.
A payment of $66,770 was subsequently made on February 15 of that year; another $272,727.27 on February 21 – still two days before the council was to accept the tender – and another $273,572.73 was then processed on March 3.
A separate independent review of the park project, presented last December, had already found that it was not adequately scoped, priced or resourced prior to the council’s commitment to significant funding.
It found the project was rushed.
The council has since been forced to find more than $2.5 million to fund unexpected costs from the project.
In its report, MP Group found the council’s decision to reduce its reserves to pay for the work was sound.
“While we can be critical of the council’s planning and management of these projects, we believe that the appropriation of reserve funds to meet the unfunded costs of the projects is the correct and prudent action to take,” the forensic financial report found.
“The re-instatement of some of these reserve accounts may still have to be resolved if anticipated funding is received and the consolidation of balances may well be considered should a reserve policy or procedure be considered for the future.”
Following the forced merger of Tumbarumba and Tumut Councils in 2016, Snowy Valleys Council was under the administration of the state government-appointed Paul Sullivan for 15 months, prior to the current council being elected in September 2017.
Snowy Valleys mayor James Hayes said the park project was a lesson learnt for the council.
“We now make sure that any large projects are properly planned and checked and we follow our protocols,” Cr Hayes said.