Cooma-Monaro Shire Council is in a good financial position despite reporting an operating deficit of $4.39 million for the last financial year, according to auditor Graham Bradley.
Mr Bradley of Auswild and Co presented his audit report of the 2011-2012 financial statements to Cooma-Monaro Shire Council on Monday.
He attributed the deficit of the operating result before capital grants to increasing depreciation of roads, footpaths and bridges, which came into effect in 2010-2011.
"I think your results have been absolutely blown out of the water by depreciation," Mr Bradley told councillors.
"Financially this council has got no issues. It's going to survive for many, many more years.
"There are no lights flashing, no bells ringing but I think in the long term you do have to address that deficit position."
Mr Bradley said many councils across NSW that he dealt with were in a similar position.
The figures were slightly up from 2010-2011 when council reported a deficit of $5.2 million.
However, Mr Bradley said compared to other councils he audits, Cooma-Monaro Shire was slightly below average.
"It is a problem. It is a problem for this council. You've got to start addressing it," he said.
"I would like to see that [figure] reducing, even taking into account roads' depreciation."
Mr Bradley said while the figures showed an improvement on the previous year's'statements, an extra installment of the federal government financial assistance grant (FAG) last year meant the figures were slightly distorted the real figures.
Cooma-Monaro Shire Council received a grant of $908,000.
"My overall summation is there probably is not a lot of difference," he said.
"It [the deficit] would have been higher if it wasn't for the $908,000 from the FAG grant."
"I would say this year is marginally below the previous year."