Beyond Beauty: Why Your Council Needs an Art Collection Audit

A Significant Asset

Art isn't just about aesthetics; it's a significant asset for councils. From sculptures gracing public squares to paintings adorning council buildings, these pieces enrich our spaces, reflect the community's character, and offer a window into our history, diversity, and local identity.

Many councils are fortunate to hold collections encompassing colonial pieces, contemporary creations, Indigenous works, photographs and other objects – a treasure trove entrusted to their care.

Often, these collections find a home in council-run art galleries, expertly managed by curators who stage captivating exhibitions.  But amidst day-to-day operations, a crucial aspect can sometimes be overlooked: the proper management and custody of the art itself.

Why an Art Collection Internal Audit Matters

An internal audit of your council's art collection is an invaluable tool for ensuring Council’s art collections are adequately protected and well-maintained.

The benefits of an internal audit extend beyond compliance and risk management.  An art collection internal audit focuses on the transparency and accountability of public assets; recordkeeping; provenance and safeguarding the integrity of the collection; security; and the overall preservation of the works, whether on or off display.

An art collection internal audit goes beyond just protecting assets. It demonstrates transparency and accountability to the community you serve. It showcases your council's commitment to responsible stewardship of valuable cultural heritage.

A Success Story: How an Internal Audit Benefited a Council

Centium's recent internal audit of a large council art gallery's collection serves as a real-world example.  The audit included an assessment of:

• The completeness of records across the collection lifecycle
• The systems and processes in place to track collection movements
• Provenance (i.e. the origin and ownership history of each piece in the collection)
• Preservation Measures, including the systems in place for storage, light control, humidity, etc.
• Fraud risk mitigation.

While generally a good news story for Council and its community, we made recommendations to strengthen controls to ensure that the collection is preserved for future generations.  The audit was met with great appreciation from both council management and the Audit, Risk & Improvement Committee.

Our client found immense value in the assurance and helpful recommendations for improvement that the audit provided regarding the safeguarding of their unique collection.

Taking the next step

If your council possesses a valuable art collection, consider partnering with a reputable auditing firm experienced in art collection management.

Centium possesses the expertise and experience to conduct comprehensive art collection audits. Our team understands the unique challenges associated with managing valuable artworks and can tailor an audit to meet your council's specific needs.

Contact us today to discuss how we can help you protect your artistic legacy.

The NSW Audit Office 2019 audit report on the NSW local government sector contains unqualified audit opinions on the 2018–19 financial statements of 134 councils and 11 joint organisations.

The opinion for one council was disclaimed and three audits are yet to be completed.

What did the audit examine?

In addition to forming an opinion on councils’ financial statements, the audits examined the following risk areas:

• Credit card management
• Fraud controls
• Gifts and benefits
• Cyber security
• Landfill rehabilitation

What did the audit find?

The report notes “pleasing indicators of the gradual strengthening of governance and financial oversight of the sector” but recommends improvements in the following areas:

• preparing for new accounting standards
• strengthening controls over information technology and cyber security management
• asset management practices

What can we learn?

Irrespective of whether you’re in local government, state government, the private or not-for-profit sector, see how your own organisation stacks up against the Audit Office’s recommendations:

Strengthen the quality and timeliness of financial reporting

• Allocate sufficient time and resources to the financial reporting process
• Have appropriate systems, processes and resources to implement the new accounting standards

Improve governance and internal controls

• Ensure audit recommendations are addressed in a timely manner. High risk issues need to be prioritised and repeat issues from prior years resolved
• Have an audit, risk and improvement committee
• Have an internal audit function to support a risk and compliance culture
• Have a legislative compliance framework to capture and monitor compliance with key laws and regulations
• Continue improving fraud control systems
• Have adequate processes and controls to ensure compliance with a gifts and benefits policy and Code of Conduct

Strengthen IT controls and cyber security management

• Ensure key IT policies are formalised and regularly reviewed to ensure emerging risks are considered and policies are reflective of changes to the IT environment
• Ensure IT risks are identified and appropriately managed
• Improve user access management processes to ensure that information systems are secure and that there are adequate controls for making changes to information systems
• Implement at least the basic governance and internal controls to manage risks associated with cyber security

Improve asset management practices

• Regularly update asset registers, reconcile asset registers with asset management systems and have suitable controls in place to ensure the integrity of manual spreadsheets
• Start the asset valuation process earlier and ensure there is a clear plan to ensure valuations are managed and documented appropriately
• Periodically reconcile asset registers to the Crown Land Information Database (CLID) and investigate any discrepancies in a timely manner
• Review the methodology and assumptions in how they account for landfill sites

A copy of the full report can be found here.