2026/27 FINANCIAL POLICIES · Attachment 10 - Financial Securities (Bonds and Guarantees) Policy

Attachment 10 – Financial Securities (Bonds and Guarantees)

   and reporting Council’s exposure to risk in relation to financial securities

 • The Financial Services Manager will have responsibility for ensuring that any consideration of
   requests for exceptions to this policy and related guidelines are appropriately assessed and must
   ensure that the Financial Services Branch is appropriately monitoring and reporting Council’s risk
   exposure in relation to financial securities

 • Project managers will work closely with the Procurement Branch to determine the appropriate
   value of a financial security and be accountable for the accurate completion of the Acceptance
   checklist to minimise Council’s risk exposure. The necessary due diligence checks should be
   conducted throughout the delivery of a project (particularly where sub-contractors are engaged)
   to monitor and manage any emergent financial and credit risks to Council

 • The Planning and Development Assessment Branch will determine the appropriate value of a
   financial security and be accountable for the accurate completion of the Acceptance checklist to
   minimise Council’s risk exposure. The necessary due diligence checks should be conducted
   throughout the completion of the agreed works to monitor and manage any emergent financial
   and credit risks to Council

 • The Financial Services Branch will be responsible for the safe storage of the financial security
   documents

 • The Governance Branch will be responsible for providing general legal guidance to ensure all
   risks are minimised especially in relation to documentation risk

 • The CEO and Directors are responsible for ensuring compliance with this policy and ensuring
   accurate and reliable information is provided to Council for effective decision making.

 DEFINITIONS

            Term                                             Definition
 Financial Security         A bank guarantee or cash bond used to guarantee performance.
 Financial Institution     An Authorised Deposit Taking Institution such as a bank or a non-
                           authorised Deposit Taking Institution that Council considers an
                           acceptable risk.
 Authorised Deposit Taking A corporation that is authorised under the Banking Act 1995 and
 Institution (ADI)         regulated by the Australian Prudential Regulation Authority (APRA).
                           Incudes banks, building societies and credit unions.
 Bank Guarantee            Is a guarantee from an ADI promising to pay Council without reference
                           to the developer/contractor, an agreed amount upon the
                           developer/contractor failing to perform their obligations under the
                           contract.
 Insurance Bond            Is a performance bond from an authorised insurer promising to pay
                           Council without reference to the developer/contractor, an agreed
                           amount upon the developer/contractor failing to perform their obligation
                           under the contract.
 Cash Bond                 An amount paid by a developer/contractor to guarantee performance
                           that is held in Council’s Trust Account.
 Call up                   A call-up of a financial security is when Council requests a cash
                           payment from a financial institution who has issued a financial security
                           when a developer/contractor cannot perform part or all of their entire
                           obligation.




                                                                                              Page 4