Navigating the Shift: Embracing independent oversight in WA’s Local Government Audit, Risk and Improvement Committees

As part of the recent tranche of reforms to WA Local Governments, Councillors will shortly lose the ability to chair their own Local Government’s Audit Committees.

Following amendments to the Local Government Act, Councils are now required to appoint an independent presiding member and deputy to chair the Committee. As part of these reforms, Audit Committees will be revised as Audit, Risk and Improvement Committees (ARICs).

The updates are a result of the Local Government Amendment Bill 2024, which passed through State Parliament late last year and is intended to improve oversight and transparency – particularly around financial reporting and risk management in Local Governments. 

Having chaired a Local Government Audit Committee for over six years, I realise this new requirement may not be an easy adjustment for everyone. It’s likely there will be some teething problems for both Councillors and independent members, at least initially.

To help fast-track this adjustment period and offer some useful insight, I’ve put together three challenges I foresee, along with solutions to help Councillors and incoming independent members overcome them quickly.

Challenge # 1: Misunderstanding and misalignment

Most independent members, with risk and financial management expertise in State Government authorities and agencies as well as in the private sector are used to operating in environments where their role is well understood by their peers and the management of the organisation.

The Local Government environment can be very different. In addition to its unique characteristics, independent members will find that Councillors on the ARIC generally come from highly diverse backgrounds and, in many cases, are everyday members of the community. While Councillors may be skilled in their own fields, they often have limited expertise in risk and financial management—areas in which independent members typically excel.

This could lead to some frustration for the independent member, particularly the presiding member. They may find their new gig more time consuming than expected, with the ARIC members requiring more guidance.

It could also be frustrating for Councillors on the ARIC and the Local Government’s Administration, who may be put off by the level of detail requested by the independent members, and question whether it’s really necessary or even in their purview to ask for it. 

Solution: Take the time to properly onboard and integrate your new independent members. Have respect for their time and experience, and consider what information they will need to do their job well. 

For new independent members, particularly the presiding member, be prepared for a different environment than you’re used to. Be willing to adapt to the unique protocols and rules of committee meetings, such as standing orders and stay mindful of the unique environment you're entering and bring patience for navigating these dynamics. 

Challenge # 2: Underwhelming renumeration

Another challenge Local Governments may face is attracting the right calibre of independent members who are willing to take on the role for the relatively low remuneration. This could result in Local Governments struggling to secure finance and risk management professionals with a strong breadth and depth of experience—potentially missing out on valuable skill sets such as:

• astute financial management
• practical risk management guidance
• a robust perspective on governance matters

Solution: Seek out experienced finance and risk management professionals who are more motivated by community service than remuneration. Use their time wisely and absorb as much as you can.

For the new independent presiding member, keep in mind that the commitment will set you back between five and 10 hours a quarter (depending on the size and scale of the Local Government). This isn’t a lot in the grand scheme of things, yet can turn out to be a very rewarding experience.  

Challenge # 3: Keeping meetings open to the public

Another aspect of the Local Government Amendment Bill 2024 was to “improve rules for closing part of a Council or Committee meeting to the public, to ensure greater transparency and that these meetings are held openly wherever possible.”

While this rule was already in place, the Department of Local Government, Industry Regulation and Safety (LGIRS) is actively reinforcing and providing new guidance around it. 

Audit Committees may previously (though rarely) have used closed meetings as a way to promote honest and deep discussion, in a space where sound bites couldn’t be used by journalists or hijacked by the public. 
An inability to close even part of an ARIC meeting, especially when members are still adapting to having an independent presiding member, could make the situation more challenging.  

Solution: Don’t let transparency stifle productive discussions. If an ARIC meeting is not the time or place to dive deep into certain matters, a briefing session before the ARIC meeting may create the right environment to engage in a less formal manner with Administration, Internal and External Auditors and Advisors and the independent members surrounding finance, risk, and governance matters.

Change and opportunity

The recent reforms present not only challenges but also valuable opportunities for Local Governments. As Noelene Jennings, Director Corporate Strategy & Performance at the City of Wanneroo, aptly puts it:

“The change of focus of the Committee with the inclusion of improvement to its intent, plus the addition of independent members, gives Local Governments the opportunity to bring a more positive aspect to audit and to learn from the experience of all involved to make ongoing improvements to risk management, financial and governance processes.”

As long as the role of the independent members is completely clear and understood among Councillors and Administration, the independent members can use their experience to make a meaningful contribution to the community, and the Local Government can access skills that may not have been available before.

From a community perspective, a productive relationship between independent members and the Councillors on the ARIC means more confidence in Council operations, better governance, and added assurance around financial performance. 

If your local government would benefit from expert guidance in any area of audit or assurance, contact our specialist Local Government Services team. With extensive experience working with large councils through to small shires, we’re here to help with any challenge you’re facing. 

FOR MORE INFORMATION

If you would like to arrange a confidential discussion, please contact our Local Government Services team.