Local Government Underlying Result Calculation (revised June 2020)

About this report or communique

This revision is due to COVID-19

The intent of the underlying result is to show the outcome of a council’s normal or usual day to day operations. As such, the calculation excludes extraneous factors that could create volatility and therefore make it difficult for users to understand the outcome of a council’s normal operations.

It may be prudent for councils to factor into their forecasts and budgets allowances for such extraneous factors or non-recurring events which are becoming more frequent, albeit the nature of each may differ. For example, a council may be subject to floods, fire and a pandemic in successive years. To counter the effect of such events on their finances, councils may aim to achieve small underlying surpluses rather than a breakeven underlying result.

As COVID 19 represents such an extraneous factor, many items would usually be excluded from revenue or expenditure. For more information including these exclusions please click on the communique below.