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Background

The Auditor-General Act 2009 (A-G Act) prescribes that the Auditor-General must, for each financial year, audit the State's public finances and all public sector entities.

The definition of a public sector entity includes a controlled entity. An entity is a controlled entity if it is subject to the control of one or more local governments, or another entity that is subject to the control of one or more local governments.

For the purposes of the A-G Act, control means the capacity of an entity to dominate decision making, directly or indirectly, in relation to the financial and operating policies of another entity so as to enable the other entity to operate with it in pursuing the objectives of the controlling entity.

Control over an entity is presumed to exist when one entity has direct or indirect ownership of more than half the voting power of the other entity. However control can be gained in a variety of ways, including acquiring the assets of another entity or controlling the management of the entity.

Whether or not control exists can be subjective. Determination of the existence of control may require professional judgement.

Establishing or abolishing a controlled entity

Section 33 of the A-G Act requires the Minister for Local Government to advise the Treasurer and the Auditor-General of a notifiable event, that is:

  1. when a public sector entity is established or abolished; or
  2. an entity becomes a public sector entity or ceases to be a public sector entity.

Please note that before a local government creates a controlled entity, the Treasurer's approval may first be required under section 60A of the Statutory Bodies Financial Arrangements Act 1982 (SBFA Act). This section deals with type 1 financial arrangements including:

  • entering into a joint venture, partnership or trust;
  • forming, or participating in forming, a corporation; and
  • acquiring or disposing shares in a corporation.

SBFA Act implications and control must be considered as part of a local government's due diligence process and determined prior to the establishment of an entity.

The Auditor-General’s most recent report to Parliament on the results of financial audits of local government entities lists the current controlled entities.

View the Auditor-General’s reports

For further guidance on establishing a corporation, please refer to Bulletin 08/13 Approvals required for the establishment of a company.

Notification process

Local governments can provide the required notification by completing the Notification of Local Government Controlled Entities form.

Where there are several local governments jointly controlling an entity, for example, a regional organisation of councils or local government association, determination should also be made as to which local government has the responsibility of informing the Minister.

Further information

Any further enquiries on this matter should be addressed to:

Finance and Funding
PO Box 15009
City East QLD 4002
(07) 3452 6720
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