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Title | Reserves Policy |
Policy Number | P35 |
Type | Council Policy |
Document Owner | Chief Executive Officer |
Approval Date | 21 January 2022 |
MaGiQ Document ID | 690824 |
Review Date | Once during Council term |
Council Resolution Number | OC016/2022 |
To promote the sustainable and responsible financial management of the Council through the consistent application of Reserve classifications and identification of individual Reserve funding purposes.
Council recognises that to ensure the long term sustainability of the Council, the Council needs to establish cash backed reserves to help smooth out funding requirement of major capital expenditure.
Council defines a sustainable financial strategy as one which allows for the adequate provision for its programs (including capital expenditure) and services into the future with the intention that there is a predictable trend in the overall rate burden. The aim of Council's financial strategy is to allow for an equitable distribution of the costs of establishing and maintaining council assets and services between current and future ratepayers.
Nil.
Local Government (General) Regulations 2021
Reserves that are classified as externally restricted must meet the following criteria:
Reserves that are classified as internally restricted usually have the following characteristics:
Council’s Reserves that currently meet this criteria are as follows:
Reserve Name | Purpose |
Fleet and Plant Replacement Reserve | Replacement and capital upgrades to the Council’s plant, fleet and equipment. |
Facilities Reserve | Upgrades and refurbishment of the Council’s facilities including visitor and staff accommodation and offices. |
Waste Management Reserve | Capital upgrades of waste facilities including rehabilitation of expended sites. |
Employee Leave Reserve | Financing of leave entitlements carried forward. |
Community Service Reserve | To build funds for Council community based projects. |
These reserves are required by the accounting standards and are not cash backed unlike externally and internally restricted reserves.
Reserve Name | Purpose |
Asset Revaluation | This reserve reflects the increments and decrements of Council’s fixed assets as a result of revaluations in accordance with Australian Accounting Standards. |
A reserve will be established for any value if there is a legal requirement to do so or a requirement under the accounting standards.
Generally, internally restricted reserves will not be established for future expenditure for amounts less than $100,000. Where possible, values less than this should be accommodated within the annual budget.
Establishment of new reserves must be authorised by Council resolution.
Subject to a review of the adequacy of reserves, transfers should be limited to the funding of those projects for which the reserve was specifically created for.
For financial management purposes all reserve transfers in and out of each reserve must be detailed separately with any specific constrained funds for projects identified within each reserve.
Distribution of surplus funds to internal reserves at the end of the financial year shall be undertaken under this policy such that any surplus funds allocated specifically for the purpose shall be distributed to the appropriate reserve. Distribution according this this policy do not require authorisation by Council resolution.
Internal Borrowings from Reserves
Internal borrowings may only occur from internally restricted reserves and not from externally restricted reserves. In determining whether internal borrowing should occur the criteria in Council’s Borrowing Policy should be considered including intended purpose of the funds and term of the loan.
Internal borrowings are subject to the same requirements as external borrowings including:
The Local Government (General) Regulations 2021 requires the Council to disclose all specific purpose reserves in its annual financial statement.
In addition to this reserves are reported on as follows:
Implementation
This Policy will be implemented by the Finance Manager.
Delegation Authority
All transfers from reserves including any internal borrowing must be approved by Council by adoption of the budget and budget variations.
Date | Details |
5 June 2015 | Adopted (CRN 084/2015) |
5 May 2016 | Reviewed and updated (CRN OC069/2016) |
21 January 2022 | Reviewed and updated (CRN 001/2022) |