For each of the 7 councils, the Inspectorate audited a sample of expense reimbursement claims for compliance with the council’s expenses policy and discussed relevant matters with council representatives.
As part of the audit exercise, the following matters were considered:
1. Councillor expenses reimbursement claim forms.
2. Councillor expenses policy.
3. Councillor expenses procedure.
4. Oversight of councillor expenses, including audits.
During the audit exercise, various risks were identified, which ranged in severity from issues that could lead to fraudulent activity or the wrong amount being reimbursed (both very high risk) to claims being submitted outside of the required time period (lower risk) (see Figure 12).
While these specific issues have been pursued with the relevant council and rectified where possible, they are shown here as examples of common issues seen across councillor expense reimbursement audits.
| Council | Classification | Planning region |
|---|---|---|
| Hepburn | Small shire | Central Highlands |
| Strathbogie | Small shire | Hume |
| Campaspe | Large shire | Loddon Mallee North |
| MItchell | Large shire | Hume |
| Yarra | Metro | Greater Melbourne |
| Hobsons Bay | Metro | Greater Melbourne |
| Bendigo | Regional | Loddon Campaspe |
What are the key issues or challenges?
Councillor expenses policies and procedures vary greatly across councils.
There is no uniform level of evidence required to support claims for reimbursement.
Council oversight of expenses, including checks on legitimacy and sign-off on claims, is also varied and is a potential financial or integrity risk.
| Issues found in council audits | Risk rating32 |
|---|---|
| Claims submitted outside of the required time period |
Low |
| Inconsistent application of the practice of rounding of kilometres travelled to the nearest whole number for private vehicle use |
Low |
| No evidence required in support of private vehicle use kilometres travelled |
Moderate |
| Descriptions of the expenses incurred lack detail | Moderate |
| Administrative error in failing to accurately document the basis of calculating a reimbursement |
Moderate |
| Claims for car mileage expenses for council meeting attendance do not include the locations of the meetings attended |
Moderate |
| Policy refers to an outdated claim form | Moderate |
| Claims not applied for in writing but petty cash form used instead |
High |
| Claims not clear on how the expenses were incurred while performing duties as a councillor |
High |
| Claim forms include space for signature of authorising officer, but do not include space for their name or position |
High |
| CEO’s corporate credit card used for purchases by the Mayor |
Very high |
| Incorrect rate for kilometre reimbursement for private vehicle use applied |
Very high |
Best practices observed in the course of the audit, which may assist in reducing the risks of inappropriate or fraudulent expenses claims, include:
- expense claims are authorised by more than one senior council employee with the appropriate financial delegation, thereby providing additional oversight
- instead of using phrases like ‘reasonable costs’ or ‘appropriate costs’ will be reimbursed, monetary ranges or caps for food/beverage and accommodation costs are specified
- claims for private vehicle use are required to be supported by logbook entries or records of odometer readings at the start and end of the journey, rather than just a single figure for kilometres travelled
- councillors are required to submit a written report following attendance at training and professional development courses in order to justify their attendance and to share their learnings with council
- councillors are not permitted to cover the costs of meals or refreshments for anyone other than themselves, where these items relate to the duties of councillor.
Recommendations
- LGV should consider a more detailed model councillor expenses policy and claim form, which councils can adopt to suit their individual circumstances.
- Councils must publish their current Council Expenses Policy on their website.
- Councils must train councillors on the Council Expenses Policy during their induction training and provide refresher training on the policy mid-term.
- Councillor expenses must be authorised by council employees with the appropriate financial delegation, not the mayor.
32. Risk ratings determined by Inspectorate risk criteria
Case studies
Updated