Why Undertake Due Diligence?

DUE DILIGENCE The due diligence deliverables and key area tables are a guide to assisting General Managers with the development of a due diligence report. The due diligence report should be prepared ideally in readiness for Proclamation with the next iteration of due diligence reporting due in readiness for the commencement of the new entity (if at a different time to Proclamation). Why undertake due diligence? To minimise exposure to risk and interruption to service delivery, critical analysis of the operations of the amalgamating councils needs to be undertaken. Merging councils is not dissimilar to corporate mergers and acquisition in the private sector and requires a minimum level of examination. This examination process will ensure that key risks from each organisation and their assessing processes are identified in addition to the potential risks created as a result of the merger/amalgamation. The due diligence process can also support the identification and documentation of costs/benefits realised as a result of the reform process and will assist with future cost recovery if applicable. The Key Deliverables outlined below represent the base-line data required by the GM/Council initially and the Interim GM/Council or Administrator secondly. This information is essential to the decision- making process for changeover and the establishment of the new entity. The Due Diligence Key Areas outlined below represent key elements of due diligence that require examination (refer to corresponding Function headings in the Toolkit for further information on how to address the key areas).The Key Areas will provide a body of work that informs the Key Deliverables. This information will guide future decision making in regard to the interim organisation and staffing structure, Operational Plan, capital works and infrastructure, interim service delivery model, risk and business planning.

1 KEY DELIVERABLES Due Diligence Summary Report for the [insert name of Council]. Task Requirements Actione Cost of d Activity Risk Management Development of an overarching risk management plan that Plan outlines key strategic, operational, financial and project risks for the new entity.

Assets and A summary of the distribution of assets and asset liabilities Liabilities from the previous councils. Strategic Direction A consolidated summary plan that outlines strategic directions including place management issues. Interim Corporate Development of a consolidated Interim Corporate Business Business Plan Plan including a financial overview with consideration of complex variables such as asset management, major projects and major contractual arrangements (current or proposed). Operational Plan Development of a consolidated operational plan for the new 2016/17 entity including revised forward capital works schedule and Long Term Financial Plan. Services Plan An interim services plan to ensure service provision is maintained to existing / agreed levels of service. Interim Service An interim service delivery model developed to support the Delivery Model operational plan. Includes variations to delivery modes (i.e. centralised / decentralised / outsourced) and revised systems and processes. Interim An interim organisational and staffing structure to support the Organisational and operational plan and service delivery methodology. Staffing Structure Interim Staffing structure to include:  Distribution of employees from previous entity  Positions within the structure  Positions in excess of establishment  Pay scales  Name of incumbent to be placed into position (if known)  Employment status (i.e. permanent full/time or permanent part/time, contract, casual or temporary)

Industrial Relations An industrial relations plan which outlines key risks and Plan actions required in line with the Workplace Code of Practice and Guidelines and the Local Government Act. Outlines the proposed industrial framework and the status of the Enterprise Agreement negotiations. Policy and Preparation of the interim policy and delegations manuals Delegations and authorisations for adoption. Register Business Inventory of business entity requirements i.e. registered Enterprise trading name, ABN, registration for GST, FBT and other tax requirements requirements.

Operational Plan Preparatory work for the development of the existing entities 2015/16 including Annual Report and supporting material and all End Of Year Financial requirements for 2015/16. Statements

DUE DILIGENCE KEY AREAS: CHANGE MANAGEMENT AND COMMUNICATIONS Action Change Management Plan including employee engagement strategies Internal Communications Plan External Communications Plan including Media and Social Media

2 Community Consultation Strategy People and Culture Summary Report

CORPORATE GOVERNANCE Action Inventory of existing (and impending) leases, licences, agreements, occupancy contracts (excluding employee contracts) with expiry dates, parties to agreement and value of agreement. Inventory of all current and pending legal proceedings and contingent liabilities Risk Strategy including Business Continuity Plan Audit Plan (Internal and External) Inventory and details of major tenders, goods and services contracts Ownership or interest in corporate entities such as not for profits Lists of all controlled entities, joint ventures etc Advisory committees and all existing council forums Community functions organised/sponsored by Council Complaints management processes Policies and Delegation: inventory outlining any significant differences ‘Sister City’ partnerships and supporting strategies

INTEGRATED PLANNING AND REPORTING Action Community Strategic Plan – consolidated Plan / process developed to commence consolidation and Integrated Planning and Reporting process for the new entity Interim Corporate Business Plan - consolidated plan to support interim structure, delivery model and service provision Informing Plans – inventory and review of plans Town Planning – Inventory of plans and an interim policy to accommodate the transitional period until Schemes and Plans are reviewed and consolidated

FINANCIAL MANAGEMENT Action Preparation of consolidated Annual Budget and revenue statement Loans and debt schedule Summary of Trust Funds, Investments and Reserve Accounts Performance Report – results against financial and asset ratios Fees and Charges Rating Strategy Salary Sacrifice arrangements with the ATO FBT arrangements with the ATO

ASSET AND INFRASTRUCTURE Action Inventory of Assets (all classes) Review of Asset Management Plans Report on Asset Management practices and any key differences i.e. depreciation rates, policy, systems Funding strategy for renewal Proposed inventory of surplus/redundant assets/infrastructure

DUE DILIGENCE KEY AREAS: SERVICE DELIVERY Action Inventory of Capital Works and Maintenance Program List of council facilities (buildings, plant, waste management facilities etc.) Major Services and delivery model (such as aged care, child care, facilities and centres) Funding structures for services Risk Mitigation Strategies

3 REGULATIONS AND ENFORCEMENT Action Town Planning – inventory of plans and an interim policy to accommodate the transitional period until Schemes and Plans are reviewed and consolidated Report on progress of major projects and infrastructure projects Inventory of existing and partly completed or received development applications Current appeals and legal action (Development)

HUMAN RESOUCE MANAGEMENT AND INDUSTRIAL RELATIONS Action Employee Induction process WHS Strategy Consolidation of existing Agreements / Awards Systems integration and risks i.e. payroll Equal Employment Opportunity (EEO) Plans Inventory of existing contractual arrangements, expiry date, position etc. Review of workforce plans in readiness for amalgamation Voluntary redundancy options Current industrial matters in dispute Current industrial matters in Commission/Court Workers compensation matters Identification of accruals including Annual Leave, Long Service Leave etc.

BUSINESS SYSTEMS Action Inventory of Information technology systems, integration capability and risks Communication networks Software and hardware licences and support Key policies Service Agreements and Major Contracts Records Management Integration Plan and GIPA (including vital records) Task Action COMMUNITY ENGAGEMENT Action Community / stakeholder engagement strategy Inventory of historical artefacts Inventory of current complaints Inventory of community events (including funding or part funding) No. of key population areas and demographic