A summary of the report, which was ordered by CEO Janet Dore and carried out by auditing company Pitcher Partners, is included in the agenda for next Wednesday's ordinary council meeting.

It is highly critical of the scope and processes involved in the Gatekeepers Cottage project and the development of a new fernery. It also questioned purchasing procedures followed under the former mayor Cr Samantha McIntosh.

Both Ballarat Botanical Gardens projects lacked a properly detailed business case, the auditors found. They also criticised record-keeping processes and made a series of recommendations for improvement.

In a series of bullet points relating to the Gatekeepers Cottage, which council voted to transfer to Ballarat Botanical Gardens and refurbish in early 2017, auditors outlined flaws in the process, including how record keeping was "lacking".

"[The record-keeping] therefore cannot support the application of an appropriate acquisition process, particularly given the unique nature of this asset."

The planning process was also queried: "A full business case, commensurate with the nature and risk associated with the asset, was not produced."

In addition, the full scale of the likely costs was not considered, the report suggested. It said the transfer of the cottage to City of Ballarat ownership "appears to have been agreed based on a cost analysis that did not adequately contemplate the full extent of costs."

"There are no approved variations to the planned $300k," the report subsequently noted.

That amount was included in the council budget of 2019/20.

An initial officer report presented to council in January 2017 said the historic cottage, which used to sit on Gregory Street, would cost a maximum $100,000 to relocate and fully refurbish [see screen grab, above). The costs associated with council came to $501,546, with another $65,000 coming from the Friends of Botanical Gardens and a rotary club.

Criticisms of the fernery were muted in comparison, but investigators again criticised the scoping and business planning of the project.

"There was no relevant business case and reasoning, final scope or budget provided to support the approval," the report said.

"In the absence of a project scope, it is unclear what would constitute full completion."

Construction work for the fernery is currently underway. The project, which has cost $1.67 million so far, is running $270,000 over budget and will on completion include a Gothic fernery entrance. Storage for the ferns would be arranged in a Stage 2, which was approved by councillors in May but does not yet have any confirmed funding.

The auditors also considered broader purchasing procedures. Their report suggests former mayor Samantha McIntosh apparently directed council staff to buy items without prior approval.

Purchasing and procurement are usually clearly the responsibility of council staff, who carry out the organisation's day-to-day operations. Elected councillors are expected to guide the overall strategy but not be involved in small details. The report suggests these guidelines may not have been followed.

It notes: "Based on discussions with staff and documentation received, it appears there was involvement of the mayor in relation to a number of these purchases and activities, some of which appear to have been made without pre-approval or involvement of council officers."

This aspect of the auditor's report was specifically requested by Cr Mark Harris at a council meeting in August, in response to a detail in the highly critical Ombudsman's Report released in May.

It described how former director Terry Demeo purchased a chandelier for the town hall, a step it said was "unusual" for a director to be involved in.

Auditors said the acquisition met the relevant policy and procedural requirements. However, they also noted a "lack of the broader town hall refurbishment project scope and budget results in there being no documented support for this specific acquisition."

Cr McIntosh was approached for comment late on Friday afternoon but said she would be unable to digest the full detail of the report to respond in time for publication.

The auditors made several specific recommendations. These included making business cases with "whole of life costings, staged approval processes and verification for all projects over an identified value"; clarifying expenses for mayoral duties; ensuring purchasing follows procurement processes "through an authorised officer"; developing a policy for acquiring gifts and special assets; and giving staff training in how to keep records.

Councillors unanimously agreed to the auditor's report at the August 12 council meeting.

The Pitcher Partners report, which is part of the overall CEO report, will be discussed next Wednesday evening.

Clarification: The report is summarised in the agenda, rather than being the complete version. This story has been amended to reflect that.

You can read the council agenda here

There are several pointers to improvement from the independent review undertaken by Pitcher Partners:

1. Proper project management discipline is needed which requires a business case including whole of life costing, staged approval processes and verification for all projects over an identified value.

2. Expenses for Mayoral duties need clarification within the Councillor expenses policy.

3. Purchasing of all goods, services and materials must follow the appropriate procurement processes through an authorised officer.

4. A policy for acquisition of gifts and special assets should be developed.

5. Training for staff in record keeping requirements should be implemented. Ordinary Council Meeting Agenda 16 September 2020 8

Gatekeepers Cottage Conclusions

Record keeping regarding this special acquisition is lacking and therefore cannot support the application of an appropriate acquisition process, particularly given the unique nature of this asset.

A full business case, commensurate with the nature and risk associated with the asset was not produced.

The asset acceptance appears to have been agreed based on a cost analysis that did not adequately contemplate the full extent of costs. There are no approved variations to the planned $300k.

The acceptance of the asset does not seem to have received explicit council approval. There was no policy or procedure in place, to specifically address this type of asset, which possibly should have required additional steps to be undertaken, such as the involvement of restoration specialists to provide their process and costs estimates etc.

While there is no specific supporting information, it appears that this asset was incorporated into the normal capital development process associated with the fernery re-development. In the absence of any policy guidance with regards to gifted and special assets this may be considered, without the benefit of hindsight, to have been an appropriate approach at the time.

Fernery Conclusions

Council had clear line of site of this project and the general reasoning for it being undertaken. The process was conducted over several years with various assessment steps being undertaken. There was no relevant business case and reasoning, final scope or budget provided to support the approval.

Costs have exceeded the approved budget and subsequent variations were approved by the Contracts Approval Special Committee. It is unclear from the way in which the delegations are phrased if the Contracts Approval Special Committee had the ability to approve the larger variations.

In the absence of a project scope, it is unclear what would constitute full completion.

Chandelier Conclusions

The acquisition met the relevant policy and procedural requirements. It is unusual for capital acquisitions to be paid for by credit card, but understandable given the circumstance. It is unclear why staff coded the cost of the item to the Councillor expense code.

The lack of the broader town hall refurbishment project scope and budget, results in there being no documented support for this specific acquisition. The absence of a gifted assets and special acquisitions policy makes it difficult to determine if the acquisition would be considered unnecessary or have required a special procedure of approval or acquisition.

The expenditure was incurred for Council purpose and the item is on display in the town hall. Recommendations Resulting from this work we offer the following recommendations for management to consider: Development of full scope, business case and budget before approval of acquisition.

Recording and retention of relevant approvals and considerations.

Appropriate gatekeeper steps through larger projects and acquisitions, to ensure appropriate approvals and consideration of changes and next steps.

Development of a policy and procedure with regards to gifted and special assets.

Clarifying the delegations with respect to the financial value of variations that can be approved by delegated positions. Other transactions Conclusions In relation to the additional transactions, based on discussions with staff and documentation received, it appears that there was involvement from the Mayor in relation to a number of these purchases and activities some of which appear to have been made without pre-approval or involvement of Council officers.

Within the purchasing policy and procedures, it would be expected that all intended purchases and commitments made by Councillors on behalf of Council would be requested through, approved by and procured by council officers.

In addition, greater guidance with regards to the extent of involvement by Councillors in directing Council officers to procure items and services of behalf of City of Ballarat would be helpful.

Recommendations

Assess and where possible strengthen various policies that relate to Councillor activities and expenditures as well as addressing the procurement policy and procedure followed by management when dealing with Councillor requests and expenditures.

May 14 The report is tabled

May 16

May 18, 2020: Resignation and sacking

May 19: Mayor talks about Justine Linley's sacking

May 21: Price fixing links of acting CEO confirmed

May 24: Fresh doubts published over recruitment processes/ Fall out continues over decision to terminate Justine Linley's CEO contract

May 28: Push for new interim CEO

June 10: New CEO announced

June 12: First day of new interim CEO, Janet Dore

June 18: Directors jobs to be re-advertised

June 29: Director of business services resigns

July 7: Director Cameron Cahill resigns

City of Ballarat exodus of directors continues

July 23: Changes to procurement

July 28: Another director goes

August 2: 'More than half way there'

August 11: Last director resigns

August 27:CEO recruitment begins

September 2: New director appointed

City of Ballarat appoints corporate services director and people and culture manager

September 10: Another new director appointment

September 11: Final director roles filled

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