Councils have been required to have an Audit, Risk and Improvement Committee (ARIC) in place since June 2022.

ARICs provide information and independent advice to the elected councillors to improve the council’s performance and function based on review aspects of a council’s operations.

Supporting regulations are being made to formalise guidelines issued by Office of Local Government, bringing the local government sector in-line with requirements for NSW Government departments.

As a result, councillors across NSW will be better informed about how their councils are performing, giving them greater oversight of decisions being made.

The updated guidelines and regulations will give councils flexibility to tailor their ARIC to their operation and level of risk.

ARICs and internal audit will help councils achieve their objectives, plans and delivery programs in a more efficient, effective, and economical way.

ARICs and internal audit will ensure better use of public money, safeguarding public assets, increased financial stability and will reduce opportunities for fraud and corruption.

The oversight provided by ARICs will promote continuous improvements in councils, ensuring a better service delivery to communities.

Most NSW councils have already taken steps to comply with the Guidelines for Risk Management and Internal Audit for Local Government in NSW.

Under the new Guidelines and regulations, councils will be more transparent and accountable, giving the community increased confidence in the decisions they make.

The new regulations also make clear the opportunities councils have to adjust the membership and operation to reflect the size of their council.

ARICs must meet at least quarterly. The chairperson decides the procedure for calling meetings and how the meetings are to be conducted.

Under the Regulation amendments, voting members must be suitably qualified and independent of the council.

Councils may appoint a councillor (other than the mayor) as a non-voting member of the ARIC, to preserve the independence of the ARIC.

Councils may also share ARIC members, or make arrangements with neighbouring councils to have independent members.

Councils and joint organisations can reduce the costs of compliance by sharing an ARIC and internal audit.

Councils and joint organisations are permitted to appoint staff of other councils to serve as independent members of the ARIC, but not as chairperson.  This will also reduce costs.

The NSW Government has balanced the need to bring council operations in line with State Government practice, while at the same time, making it as easy as possible for councils to comply.

Councils have known about the key elements of the regulated guidelines since December 2023, and the Office of Local Government has been supporting councils to establish the new framework.

These changes will ensure councillors are better informed about how their councils are performing and have more oversight over decisions.

Councils may appoint a councillor (other than the mayor) as a non-voting member of the ARIC, to preserve the independence of the ARIC.

The role of councillors is to relay to the ARIC any concerns the governing body may have regarding the operations of the council and issues being considered by the ARIC. They would also provide insights into local issues and the strategic priorities of the council.

The mayor, general manager and internal audit coordinator should attend ARIC meetings as non-voting observers.

Councils have been required to have ARICs since 4 June 2022 however councils and joint organisations have been given time to implement the new Regulation requirements commencing 1 July 2024.

Councils and joint organisations will be required to report on their ARIC compliance in their annual reports from 2024/25.