WELLINGTON Shire Council has agreed to change some of its credit card and expenditure policies, including the purchase of alcohol and meals, following a raft of recommendations by the Victorian Auditor General's Office.
Released on Wednesday, the VAGA audit into fraud and corruption controls at Wellington Shire Council and three other municipalities found the controls "are not working".
The audit, which had a focus on expenditure and processes involving senior council staff and councillors, looked at whether controls across the four councils were well designed and operating as intended.
It also reviewed fraud and corruption controls and measures relating to credit card and fuel card use, reimbursements, identifying and managing conflicts of interest and responding to suspected incidents of fraud and corruption.
The other councils included in the audit were Greater Shepparton City Council, Strathbogie Shire Council and Wyndham City Council, reflecting a selection of councils of varying size and location.
\The audit found there were gaps in the fraud and corruption controls at the audited councils, and in some cases important controls were not working.
"The failure of these controls can foster a culture in which fraud and corruption can occur and go undetected and result in financial loss or reputational damage to the councils," the report stated.
While the audit did not reveal fraud or corruption in the transactions examined, it identified expenditure where it was unclear how residents and ratepayers benefited, practices that may not meet public expectations and non-compliance with legislative requirements aimed at ensuring transparency over council practices to their communities and regulators.
It also found that some individuals in positions of authority "need to take a broader view of their obligations", must appreciate that they are "accountable to ratepayers and residents", and "consider how their communities may perceive their actions".
In the area of expenditure documentation, it identified a total of nine examples of reimbursements at Shepparton and Strathbogie where documentation was either not provided or not fully supported, but none at Wellington Shire.
However, the report noted that the councils' policies varied in the requirements for supporting documentation regarding vehicle mileage, with Wellington Shire's having "no requirement to provide supporting documentation, such as an odometer reading or a tax invoice for fuel purchased".
In testing of credit card transactions, the audit identified four transactions at Wellington Shire and two at Wyndham where council officers had made purchases for the benefit of councillors without a clear business need.
This included the purchase of alcohol at Wellington for council meetings.
One dinner at Wellington between senior council staff and new councillors and their partners was also found to be "not related to travel or council meetings".
The report noted that "when councillor entitlements are outside policy boundaries and have unclear business purposes, it creates a risk that they do not meet community expectations".
However, Wellington Shire was the only council of the four that fully complied with the legislative requirement in the 2017-18 annual report, of detailing in its annual report each councillor's expenses in five categories - travel, vehicle mileage, childcare, information and communication technology, and conference and training expenses, which aims to provide transparency and enable scrutiny of councillor expenses. In Wellington Shire, Shepparton and Wyndham, the audit identified instances of non-cardholders using cards allocated to others.
A review of interest disclosures made under the Act with disclosures under the Australian Accounting Standards Board AASB 124 Related Party Disclosures (the Accounting Standard) and data from the Australian Securities and Investments Commission, showed "anomalies" across Shepparton, Wellington Shire and Wyndham that have been referred to the Local Government Inspectorate for consideration.
The audit made 12 recommendations relating to improving controls over the use of council credit and fuel cards, better transparency and oversight of expense claims and better fraud and corruption training.
In its response, Wellington Shire said, among other things, it had ceased buying alcohol for council meetings, and would revise all councillor and staff policies to "ensure clarity regarding the purchase and reimbursement of meals and alcohol".
It will also extend its annual online and face-to-face fraud and corruption awareness training to councillors.
To access the report, go to audit.vic.gov.au/report/fraud-and-corruption-control-local-government.