Money from Kiama Municipal Council coffers may have been inappropriately spent on Blue Haven, according to the just-released financial papers.
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The current council has released the 2020-2021 financial statements, which took years complete due to the tangled nature of the council finances at the time.
The Blue Haven accounts were intertwined with the result of council operations, making it hard to see the true cost of the nursing home.
Also, a changeover to a new financial accounting system meant some items were lost in the data transfer.
"These figures represent a great revelation of how the council really was performing," Kiama Mayor Neil Reilly said.
"The situation has vastly improved since then but these figures represent a learning for council as to how frightening the situation was.
"It is a journey of discovery and it's taken to this point to get the audit office to untangle accounts that have been lost in the fog of finance."
The document includes mention of $4.4 million over two years spent on Blue Haven coming from developer contributions - which are restricted funds only to be used for set purposes.
"Investigations into the developer contributions over the last five years uncovered spending with no nexus to the Developer Contributions Plans," the document stated.
Cr Reilly said that occurred because council at the time effectively had one large account, rather than a separate one for restricted funds.
As a result no-one knows just how much of that $4.4 million came from restricted funds; the current council has rectified the issue.
The corrected accounts also show that the balance of funds to repay a government TCorp loan for Blue Haven had been overstated to the tune of $955,322.
An accompanying report from the NSW Auditor-General stated that Kiama council's accounts just weren't up to scratch.
"There was an inadequate system of internal control to support accurate financial reporting and to mitigate the risk of fraud," the report stated.
"The council's accounting records were insufficient to support reliable reporting or comply with legislative obligations."
Elsewhere the report stated the council "did not maintain adequate accounting records as required by Section 412 of the [Local Government] Act".
A council report released with the financial statements show the body is still at risk of going into administration, should projects under way like the sale of Blue Haven Bonaira and the re-negotiation of the TCorp loan.
"If the council is unable to achieve successful outcomes in relation to the above matters, an uncertainty may emerge that may cast doubt as to the ability of the council to continue as a going concern," the report stated.
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Glen Humphries
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
