Risk Management, Audit and Internal Controls
All councils operate in uncertain and changing environments. Risk is defined as the effect of this uncertainty on a council’s ability to achieve its goals and objectives, where the effect is the potential for a result that is different to what was expected or planned for.
Risk management is an essential part of a council’s management and internal control framework. It looks at what risks the council may face and the best way to address these risks. Assessment and management of risk is central to determining internal audit activities.
Internal controls are any actions taken by a council to manage both the positive and negative impact of risk on the organisation and its community. Management has primary day-to-day responsibility for the design, implementation, and operation of internal controls.
Internal audit is an essential component of a good governance framework for all councils. It is a mechanism that a council uses to receive independent assurance that its internal controls and risk management is effective and that it is performing its functions legally, effectively and efficiently and to advise on how it can improve its performance.
Internal audit has no direct involvement in day-to-day operations. A council’s internal audit function reports to an audit and risk and improvement committee which provides independent advice to the council’s governing body and general manager on the performance and governance of the council.
From 4 June 2022, all councils and joint organisations are required to have an audit risk and improvement committee. Councils and joint organisations can share audit risk and improvement committees.
From 1 July 2024, all councils and joint organisations are required to have a risk management framework and an internal audit function.
The Office of Local Government has issued comprehensive Guidelines for Risk Management and Internal Audit for Local Government in NSW to assist councils and joint organisations to implement these requirements.
Promoting Better Practice
It is timely to revisit this and we have commenced a review of the program, including opportunities to update the process to take advantage of modern technology.
Promoting better practice should help councils to identify, share and promote better practice with an emphasis on:
- strategic community planning
- efficient and effective service delivery
- quality governance and ethical conduct financial sustainability
- promote strong relationships within the sector
We will keep you informed about the review process for the promoting Better Practice Program as more information comes to hand. In the meantime, if you are interested in reading any of the previous Better Practice Program Reports please email email@example.com and request a list of available reports.
Model Code of Conduct
The Model Code of Conduct sets the minimum standards of conduct for council officials. It is prescribed by regulation to assist council officials to:
- understand and comply with the standards of conduct that are expected of them
- enable them to fulfil their statutory duty to act honestly and exercise a reasonable degree of care and diligence (section 439)
- act in a way that enhances public confidence in local government.
Model Code of Meeting Practice
The Model Code of Meeting Practice for Local Councils in NSW (the Model Meeting Code) is made under section 360 of the Local Government Act 1993 (the Act) and the Local Government (General) Regulation 2005 (the Regulation).
This code applies to all meetings of councils and committees of councils of which all the members are councillors (committees of council). Council committees whose members include persons other than councillors may adopt their own rules for meetings unless the council determines otherwise.
Councils must adopt a code of meeting practice that incorporates the mandatory provisions of the Model Meeting Code.
Councillor Induction and Professional Development
The Councillor Induction and Professional Development Guidelines have been issued under section 23A of the Local Government Act 1993 to assist general managers and council staff to develop, deliver, evaluate and report on the induction and professional development programs they are required to provide mayors and councillors under the Local Government (General) Regulation 2005. Councils are required to consider the Guidelines when undertaking these activities. These Guidelines also apply to county councils, and where relevant, joint organisations.
The Guidelines have also been developed to ensure mayors and councillors are aware of the knowledge, skills and personal attributes expected of them in their civic roles under the Act, and of the support their council should be providing to ensure they are able to effectively fulfil their roles.
Standard Contracts of Employment
These contracts represent the standard documentation that general managers must use when appointing senior staff. The requirements ensure consistency and certainty in employment relationships at the management level in local government and reflect community expectations by providing greater transparency and accountability. They also ensure appropriate flexibility by allowing certain contractual matters to be left to the parties to negotiate, namely:
- duration of the contract (within legislative limits)
- structure and level of the remuneration package and
- performance-based requirements.