New South Wales’ 128 councils will be required to set up a risk-management framework and internal audit function under new draft guidelines released this week.
The draft guidelines give the local government sector a strong framework for minimising financial risk and preventing fraud and corruption, according to local government minister Shelley Hancock.
“These measures will help councils make better decisions and use of their resources, and improve the delivery of infrastructure, facilities and services communities need and expect,” she said on Tuesday.
“The framework is based on the worldwide ‘three lines of defence’ model where independent experts provide advice, management takes action to properly manage risk, and staff work every day to identify and address risks.”
In addition to mandating a risk management framework and internal audit function, the draft guidelines require NSW councils to appoint an audit, risk and improvement committee of independent experts by June 2022. The size and composition of these committees will be determined by a tiered model to reflect the different needs of metropolitan, regional and rural councils.
While 70% of NSW councils currently conduct some form of risk management — and 103 councils have an internal audit function — the guidelines have been developed to ‘ensure consistency across the state in accordance with international standards and NSW government practice’, Hancock said.
The NSW government has invited councils, members of existing audit, risk and improvement committees and internal audit practitioners to make a submission on the draft guidelines by November 26.
The guidelines were developed following consultation with the local government sector, government agencies and other experts. They aim to help councils comply with their statutory requirements under the Local Government Act and local government regulation.