Forecast Review and Sustainability Ratios

What it is

Most Queensland councils have a long-term financial forecast. Far fewer have one that reconciles to the asset management plan and produces sustainability measures that survive the audit. This service tests yours before the auditor does: the nine measures, the asset renewal funding ratio, and in the full review every assumption and link in the model, with a written list of what to fix.

How we do it

We take your forecast model (not a PDF), the adopted budget, the asset management plan and the last two years' statements.

We calculate all nine Financial Management (Sustainability) Guideline measures for every year of the forecast, on the council and consolidated basis, and write the narrative for each against your tier's target, in the guideline's format.

We build the asset renewal funding ratio: ten years of planned renewal spend against the renewal requirement in the asset management plan, and show where the two documents disagree.

In the full review we then go through the model line by line: every assumption against history and policy, every link from the asset plan, the debt policy and the capital program, every hard-coded number, and the way grants and depreciation are treated.

You get a written findings list in priority order, in the form your audit committee expects, and a walkthrough with the finance team.

Is this for you?

Clients usually call us for this when:

• The auditor has commented on the forecast, the asset plan or the sustainability statements.
• Your tier's first year for the asset renewal funding ratio is this year or next.
• A new CFO or finance manager wants an independent read before the budget.
• The forecast exists but nobody has tested it since it was built.

What you receive, and what each gives you

• All nine sustainability measures for the forecast period on the council and consolidated basis, in the guideline's format, each with a narrative against the council's tier targetThe nine measures and narratives, ready to lift into the statements and the budget papers.
• Asset renewal funding ratio: ten years of planned renewal capital expenditure against the asset management plan's renewal requirement, with the reconciliation between the two documentsThe asset renewal funding ratio with its reconciliation.
• Current-year and long-term sustainability statement figures pre-calculated for certificationThe sustainability statement figures pre-calculated for certification.
• Full review only: assumptions register (rates, grants, depreciation, indexation, borrowing) with each tested against history and policyFull review: an assumptions register and a logic check of the model.
• Full review only: model logic check, including the links from the asset management plan, debt policy and capital works program, and a list of every hard-coded numberA prioritised fix list the audit committee can track.
• Written findings with a fix list in priority order, in a form the finance manager can put to the audit committeeEvery hard-coded number in the model listed, so none hides in the forecast.
• 60-minute walkthrough with the finance teamA 60-minute walkthrough.

What changes for you

• Statements certified by 31 October without a last-minute rebuild.
• The asset plan and the forecast telling the same story.
• Audit findings on the forecast answered before they are written.

The questions it answers

• Will we meet our tier targets across the forecast, and if not, from which year?
• Does the asset management plan's renewal requirement match what the forecast funds?
• Which assumptions is the forecast most sensitive to?
• What should we fix first?

Words we use, explained

Sustainability measures

The nine ratios in Queensland's 2024 guideline, six of them audited: operating surplus, operating cash, unrestricted cash expense cover, asset sustainability, asset consumption, leverage, plus three contextual measures.

Asset renewal funding ratio

Ten years of planned renewal capital expenditure divided by the renewal requirement in the asset management plan, phased in by council tier from 2023-24 to 2027-28.

Tier

One of eight groups of Queensland councils with their own targets, reviewed every three years; the next review is 2026.

What we’ll need from you

A one-page checklist comes with the engagement letter, with a private page to upload everything. The main items:

• Current long-term financial forecast (the model, not a PDF) and the adopted budget
• Last two years' audited financial statements and sustainability statements
• Current asset management plan with the renewal requirement by asset class
• Debt policy, revenue policy and revenue statement
• Capital works program for the forecast period
• The council's tier under the sustainability guideline, and the targets it reports against
• Latest QAO interim management letter and closing report

Not included

• Building a new forecast model (see Long Term Financial Planning).
• Engineering assessment of asset condition or useful lives.
• The audit, or certifying the statements.
• Treasury advice on borrowing, which sits with QTC.

The technical detail

For councils that have a long-term financial forecast but want it tested: every one of the nine Financial Management (Sustainability) Guideline measures calculated and narrated against the council's tier targets, the asset renewal funding ratio built from the asset management plan, and (in the full review) the forecast's logic, assumptions and links to the asset plan checked line by line, with a written list of what to fix before the budget is adopted.

Often paired with

Long Term Financial Planning: Long Term Financial Planning when the review finds the model needs rebuilding rather than fixing.

Financial Health Check: The Financial Health Check as the shorter, benchmark-led version for a council that wants its position rather than its model tested.

Common questions