The City of Melbourne is required to prepare and include audited Standard Statements within its Annual Report. Under the Local Government Act 1989 (Vic), four statements (and explanatory notes) are required:

• a standard statement of income
• a standard statement of balance sheet
• a standard statement of cash flow
• a standard statement of Council works.

These statements and supporting notes form a special-purpose Financial Report prepared to meet the requirements of the Local Government Act and the Local Government (Finance and Reporting) Regulations 2004.

The Standard Statements have been prepared on accounting bases consistent with those used for the financial reports and the budget. The results reported in these statements are consistent with those reported in the Financial Report. They are not a substitute for the financial reports, and have not been prepared in accordance with all Australian Accounting Standards or other authoritative professional pronouncements.

The Standard Statements compare the Melbourne City Council's financial plan, expressed through its annual budget, with actual performance. The Local Government Act requires explanation of any material variances. Melbourne City Council has adopted a materiality threshold of 10 per cent. Explanations have not been provided for variations below the materiality threshold unless the variance is considered to be material because of its nature.

The budget figures included in the Standard Statements are those adopted by the Melbourne City Council on 24 June 2008. The budget was based on assumptions that were relevant at the time of adoption of the budget. The Melbourne City Council set guidelines and parameters for revenue and expense targets in this budget in order to meet Melbourne City Council's business plan and financial performance targets for both the short and long term.

The budget did not reflect any changes to equity resulting from asset revaluations, as their impacts were not considered predictable. Detailed information on the actual financial results is contained in the financial reports. The detailed budget can be obtained by consulting the City of Melbourne's website www.melbourne.vic.gov.au or phoning the City of Melbourne on (03) 9658 9658.

The Standard Statements must be read with reference to these documents.