Local Government: 2015–16 Audit Snapshot

Tabled: 24 November 2016

1 Context

1.1 The local government sector

Victoria's constitution recognises local government as the third tier of government. It comprises 79 councils, 11 regional library corporations and 14 associated entities. In this report, the local government sector refers to the 79 councils.

We have classified councils into five cohorts based broadly on size, demographics and funding. These cohorts are consistent with the classification that Local Government Victoria (LGV) uses. Figure 1A provides details of the cohorts used.

Figure 1A
Council cohorts



Number of councils


A metropolitan council is predominantly urban in character and located within Melbourne's densely populated urban core and its surrounding less populated territories.



An interface council is one of the nine municipalities that form a ring around metropolitan Melbourne.


Regional city

A regional city council is a council that is partly urban and partly rural in character.


Large shire

A large shire is defined as a municipality with more than 16 000 inhabitants that is predominantly rural in character.


Small shire

A small shire council is defined as a municipality with less than 16 000 inhabitants that is predominantly rural in character.



Source: VAGO.

Appendix B lists the councils included in each cohort.

1.2 What we cover in this report

In this report, we detail the outcomes of the 2015–16 financial audits of Victoria's local government sector. We identify and discuss the key matters arising from our audits, and provide an analysis of information included in councils' financial reports.

Figure 1B outlines the structure of this report.

Figure 1B
Report structure



2: Results of audits

Provides commentary on the results of the financial and performance report audits and the financial outcomes of the 79 councils for 2015–16. Discusses our findings from our review of internal control and/or financial reporting matters identified during the 2015–16 financial audits and previous audits.

3: Financial sustainability

Provides an insight into the local government sector's financial sustainability risks, based on financial sustainability risk indicators analysed over the preceding five financial years, and provides forecasts for the next three years.

4: Asset valuations

Provides commentary on the asset valuation frameworks in place across the 79 councils.

The financial audits of the 104 entities included in this report were undertaken in accordance with section 15 of the Audit Act 1994 and Australian Auditing and Assurance Standards. The total cost of preparing this report was $210 000, which is funded by Parliament.

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