Adelaide Hills Council (AHC) has revealed it is $4.863m in deficit after expecting a surplus of $559,000.
Acting Mayor Melanie Selwood said council has self-reported to state’s Auditor-General a “significant adjustment” to its preliminary operating result for the 2023-24 financial year, asserting earlier predictions were a result of financial assumptions and accounting practices employed by the previous administration.
The first error was that council incorrectly calculated depreciation in relation to construction costs, contributing $860,000 to the deficit.
Next, project management costs were incorrectly assigned to wages and salary budget lines, accounting $1.2m of the deficit.
And “inappropriate” assignment of works-in-progress to the capital works budget line resulted in a further $752,000 to the deficit.
Additionally, council expected to win $1.71m in federal grants and local roads grants during 2023 which were not received until the 2024/25 financial year.
Acting Mayor Melanie Selwood has released the information in the interest of transparency.
“Clearly, this update as reported in our operating results is not council’s preferred outcome,” Acting Mayor Selwood said in a press release yesterday afternoon.
“Nonetheless council’s long-term financial plan remains viable and we do not anticipate that our service delivery to residents will be affected.”
The operating deficit was discovered by CEO Greg Georgopoulos, who joined AHC last year and Gary Lewis, the director responsible for financial reporting when preparing the finalised 2023-24 accounts.
