City of Nedlands councillors storm out of meeting after response to failed audit

Three City of Nedlands councillors stormed out of a special council meeting called this week to resolve the city’s failed audit, which has been described as one of the “worst things the council has ever faced in its history”. Monday’s fiery meeting came after auditors filed a disclaimer of opinion claiming the city’s financial report for the 2022-23 financial year was submitted for audit without complete and accurate underlying records. A motion at Monday night’s meeting called for the council to hire four extra accountants to play catch up on the city’s finance books at a cost of $142,000. But after more than an hour of debate, this proposal failed and three councillors stormed out. That left five elected members, including mayor Fiona Argyle, to vote instead for a watered down next step — asking independent consultants to review the auditors’ findings. That move has left senior staff at Nedlands, including acting chief executive Tony Free and corporate services director Michael Cole, concerned not just about fixing the past records but the coming 2023-24 audit as well. “A review of how the finance team functions — there is merit in that but I have grave concerns for what the outcome for the 2024 audit will be. Time is of the essence,” Mr Free said. It’s understood Nedlands’ finance manager resigned before the auditors’ findings were made public and a replacement is expected to start soon. Two more recent starters have joined the finance team, but the council is also still on the hunt for a new chief executive officer. Auditors RSM primarily put Nedlands’ audit failures down to a lack of skill and knowledge in its finance team due to turnover of key staff, migration to a new OneCouncil computing system while revenue transactions were still required to be processed in the legacy system, and the availability of some staff and their willingness to respond promptly. RSM is considered a leading agency in audit tax and consulting services and was conducting the audit on behalf of the Office of the Auditor General. “The auditors commented that while some staff were very helpful, others were not,” a report to Nedlands council said. “Other day-to-day commitments were attended to instead of 100 per cent attention to audit matters.” The auditors suggested bolstering the city’s finance team as they believed there were months of outstanding work required to address the 2022-23 books, as well as to prepare properly for the 2023-24 audit. The council was divided over the motion to hire more staff, with Cr Hengameh Amiry saying it was unfair that ratepayers should pay to hire more workers for a job that should have already been done. “I don’t agree with the ethos of this recommendation, which is effectively that we have taken ratepayers’ money that they work for, that they pay as a tax to us to run their city and we are here not being able to manage it,” she said. “We are now going to consider providing resources of up to another $142,000 for this year and perhaps more for next year. That’s more resources to go down to do a job that should’ve been done last year with a team that was fully equipped to do it.” In response to the objections, Cr Leo McManus — one of the trio who eventually walked out — said he would resign from the audit and risk committee and as its chairman if the motion did not pass. Cr Noel Youngman, who also walked out, went so far as to say the mayor should resign for the “absolute travesty”. “Normally when a company gets in this sort of absolute travesty you’d be looking at the person at the top and saying ‘put your sword on the ground and lean forward all the way’ and I would say the person that should be doing that is our mayor,” he said. Ms Argyle said she was reluctant to speak against the motion but eventually said there was a lack of answers for councillors surrounding the city’s finances. “You can never put out a fire by using the people that started it,” she said. “I have asked lots of fiscal questions but I’ve got no response or I’ve been ignored. “This is not the mayor or council’s fault. We need to get this fixed with a fresh pair of eyes and I strongly urge you to vote against this.” The motion failed, which prompted Cr McManus, Cr Fergus Bennett and Cr Youngman to leave the meeting. The five council members left voted unanimously to instead hire independent consultants to review the findings identified by auditors, provide a report to the council within three months recommending the required actions to resolve the audit issues, and implement actions for the council to review within three months.