DUE DILIGENCE
Checklist:
The due diligence checklist is a guide to assisting Chief Executive Officer’s (CEO’s) with the development of
a due diligence report. The due diligent report is due at the end of Stage 1 (in readiness for the Governors
Orders in stage 2) and Stage 3 (in readiness for the appointment of the Commissioner(s) and
commencement of the new entity or the adjusted Local Government).
Due diligence requirements:
Stage 1 - The due diligence report will outline the current state of Local Governments and will be a primary
document for the CEO’s and Council. Ideally, the due diligence process should commence immediately and
be finalised by the end of Stage 1 in readiness for the Governors Orders. The due diligence process is fluid
with the next iteration of due diligence reporting due June 2015 (Stage 3) in readiness for the appointment of
the interim CEO (if applicable), Commissioner(s) and the commencement of the adjusted Local Government
or new entity.
Stage 3 - It is recommended that a summary document consolidating all the merging partners’ information
be developed to provide an updated and collective overview for the interim CEO and Commissioner(s) or
existing Council and CEO.
The due diligence process can also support the identification and documentation of costs/benefits realised
as a result of the reform process and will assist with future cost recovery if applicable.
The checklist is a recommendation only and is focused on the Stage 3 requirements which are
comprehensive. The checklist can be modified to suit the more high level summary requirements for Stage
1 which aims to reflect the current status of the organisation.
Why undertake due diligence?
To minimise exposure to risk and interruption to service delivery, critical analysis of the operations of the
amalgamating or adjusting Local Governments needs to be undertaken. Merging Local Governments is not
dissimilar to corporate mergers and acquisition in the private sector and requires a minimum level of
examination.
This examination process will ensure that key risks from each organisation and their assessing processes
are identified in addition to the potential risks created as a result of the merger/amalgamation.
The Key Deliverables outlined below represent the base-line data required by the CEO and Council or the
Interim CEO and Commissioner in Stage 3 (lead period into changeover July 2015) and Stage 4
(commencement of new entity). This information is essential to the decision-making process for changeover
and the establishment of the new entity.
The Due Diligence Key Areas outlined below represent key elements of due diligence that require
examination (refer to corresponding Function headings in the Toolkit for further information on how to
address the key areas).The Key Areas will provide a body of work that informs the Key Deliverables. This
information will guide future decision making in regard to the interim organisation and staffing structure,
annual budget, capital works and infrastructure, interim service delivery model, risk and business planning.
Due Diligence Checklist | Page 1
KEY DELIVERABLES (DUE END OF STAGE 1 AND STAGE 3)
Due Diligence Summary Report for the [insert name of Council].
Task
Requirements by end of Stage 3
Actioned
Risk Management
Plan
Development of an overarching risk management plan that
outlines key strategic, operational, financial and project risks
for the new entity.
Assets and
Liabilities
Strategic Direction
A summary of the distribution of assets and asset liabilities
from the previous Local Governments.
A consolidated summary plan that outlines strategic
directions including place management issues.
Interim Corporate
Business Plan
Development of a consolidated Interim Corporate Business
Plan including a financial overview with consideration of
complex variables such as asset management, major
projects and major contractual arrangements (current or
proposed).
Annual Budget
2015/16
Development of a consolidated annual budget for the new
entity including revised forward capital works schedule and
Long Term Financial Plan.
Operational Plan
(Services Plan)
An interim operational plan to ensure service provision is
maintained to existing / agreed levels of service.
Interim Service
Delivery Model
An interim service delivery model developed to support the
operational plan. Includes variations to delivery modes (i.e.
centralised / decentralised / outsourced) and revised systems
and processes.
Interim
Organisational and
Staffing Structure
An interim organisational and staffing structure to support the
operational plan and service delivery methodology.
Interim Staffing structure to include:
 Distribution of employees from previous entity
 Positions within the structure
 Positions in excess of establishment
 Pay scales
 Name of incumbent to be placed into position (if
known)
 Employment status (i.e. permanent full/time or
permanent part/time, contract, casual or temporary)
Industrial Relations
Plan
An industrial relations plan which outlines key risks and
actions required in line with the Workplace Code of Practice
and Guidelines and the Local Government Act. Outlines the
proposed industrial framework and the status of the
Enterprise Agreement negotiations.
Policy and
Delegations
Register
Business
Enterprise
requirements
Preparation of the interim policy and delegations manuals
and authorisations for adoption.
Annual Report
2014/15 including
Financial
Statements
Preparatory work for the development of the existing entities
Annual Report and supporting material and all End Of Year
requirements for 2014/15.
Cost of
Activity
Inventory of business entity requirements i.e. registered
trading name, ABN, registration for GST, FBT and other tax
requirements.
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DUE DILIGENCE KEY AREAS:
CHANGE MANAGEMENT AND COMMUNICATIONS
Change Management Plan including employee engagement strategies
Internal Communications Plan
External Communications Plan including Media and Social Media
Community Consultation Strategy
People and Culture Summary Report
Action
CORPORATE GOVERNANCE
Inventory of existing (and impending) leases, licences, agreements, occupancy
contracts (excluding employee contracts) with expiry dates, parties to agreement and
value of agreement.
Inventory of all current and pending legal proceedings and contingent liabilities
Risk Strategy including Business Continuity Plan
Audit Plan (Internal and External)
Inventory and details of major tenders, goods and services contracts
Ownership or interest in corporate entities such as not for profits
Lists of all controlled entities, joint ventures etc
Advisory committees and all existing council forums
Community functions organised/sponsored by Council
Complaints management processes
Policies and Delegation: inventory outlining any significant differences
‘Sister City’ partnerships and supporting strategies
Action
INTEGRATED PLANNING AND REPORTING
Strategic Community Plan – consolidated Plan / process developed to commence
consolidation and Integrated Planning and Reporting process for the new entity
Interim Corporate Business Plan - consolidated plan to support interim structure,
delivery model and service provision
Informing Plans – inventory and review of plans
Town Planning – Inventory of plans and an interim policy to accommodate the
transitional period until Schemes and Plans are reviewed and consolidated
Action
FINANCIAL MANAGEMENT
Preparation of consolidated Annual Budget and revenue statement
Loans and debt schedule
Summary of Trust Funds, Investments and Reserve Accounts
Performance Report – results against financial and asset ratios
Fees and Charges
Rating Strategy
Salary Sacrifice arrangements with the ATO
FBT arrangements with the ATO
Action
ASSET AND INFRASTRUCTURE
Inventory of Assets (all classes)
Review of Asset Management Plans
Report on Asset Management practices and any key differences i.e. depreciation
rates, policy, systems
Funding strategy for renewal
Proposed inventory of surplus/redundant assets/infrastructure
Action
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DUE DILIGENCE KEY AREAS:
SERVICE DELIVERY
Inventory of Capital Works and Maintenance Program
List of council facilities (buildings, plant, waste management facilities etc.)
Major Services and delivery model (such as aged care, child care, facilities and
centres)
Funding structures for services
Risk Mitigation Strategies
Action
REGULATIONS AND ENFORCEMENT
Inventory of Local Laws– inclusion of an interim policy to accommodate the transitional
period until Local Laws are reviewed and consolidated
Town Planning – inventory of plans and an interim policy to accommodate the
transitional period until Schemes and Plans are reviewed and consolidated
Report on progress of major projects and infrastructure projects
Inventory of existing and partly completed or received development applications
Current appeals and legal action (Development)
Action
HUMAN RESOUCE MANAGEMENT AND INDUSTRIAL RELATIONS
Employee Induction process
OSH Strategy
Consolidation of existing Agreements / Awards
Systems integration and risks i.e. payroll, synergy, CHRIS
EEO Plans
Inventory of existing contractual arrangements, expiry date, position etc.
Review of workforce plans in readiness for amalgamation
Voluntary redundancy options
Current industrial matters in dispute
Current industrial matters in Commission/Court
Workers compensation matters
Identification of accruals including Annual Leave, Long Service Leave etc.
Action
BUSINESS SYSTEMS
Inventory of Information technology systems, integration capability and risks
Communication networks
Software and hardware licences and support
Key policies
Service Agreements and Major Contracts
Records Management Integration Plan and FOI (including vital records)
Task Action
Action
COMMUNITY ENGAGEMENT
Community / stakeholder engagement strategy
Inventory of historical artefacts
Inventory of current complaints
Inventory of community events (including funding or part funding)
No. of key population areas and demographic
Action
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