CPA Australia has advised the Queensland government to expand its review of local council finances, recommending that attention go beyond depreciation of fixed assets to encompass the wider issue of long-term financial sustainability. 

This recommendation was made as part of a submission to the Queensland Local Government Depreciation Taskforce.  

CPA Australia noted that although depreciation remains a key part of accounting for councils, it should not be used as the sole indicator when evaluating their financial stability. 

CPA Australia financial reporting lead Ram Subramanian said: “Depreciation is just one factor in the complex equation of asset management and broader financial sustainability. It reflects the consumption of assets over time, but it does not in itself directly drive decisions about asset replacement or maintenance.  

“Councils need to take a more holistic view that includes real-world asset data, service delivery needs and demographic pressures.” 

The recommendation follows increased public scrutiny after Sunshine Coast Council reported a A$30m ($19.53m) error in its depreciation calculations. 

This miscalculation played a role in the council’s A$20m budget deficit and has led to renewed examination of financial management practices across local governments in Queensland. 

Within its submission, CPA Australia called for a “strategic, state-wide approach” to asset management at the state level, improvements in financial expertise among council staff, and more reliable accounting processes.  

The submission also highlighted the importance of incorporating factors such as climate change, population increases, and rising infrastructure needs into councils’ financial planning. 

Subramanian added: “What we’re seeing is a need for stronger cross-functional collaboration between finance and other teams such as engineering, and for councils to invest in the right competencies and systems to support accurate financial reporting. Errors in depreciation can have serious consequences – not just for budgets, but for public trust.  

“That’s why we’re advocating for a centralised framework and guidelines that drive consistent practices across councils to help navigate these challenges with confidence and clarity.” 

CPA Australia identified the necessity for standardised guidelines and stronger methods for assessing asset value, breaking down asset components, and estimating useful asset life.  

The body also proposed that a centralised support system could help councils achieve consistent application of best practice procedures.