Agenda of Audit and Risk Sub-committee Meeting

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

8.1 Health and Safety Quarterly Reports: 1 January 2020 - 30 March 2020; and 1 April 2020 - 30 June 2020

Author: Dianne Andrew, Organisational Development Manager

Authoriser: Wayne Maxwell, Chief Executive

Purpose of Report

1 This report presents Health and Safety reports for the periods 1 January 2020 – 31 March 2020 and 1 April 2020 – 30 June 2020.

Delegation

2 The Audit and Risk Sub Committee has delegated authority to consider this report under the following delegation in the Governance Structure, Section C.1:

· Ensuring that the Council has in place a current and comprehensive risk management framework and making recommendations to the Council on risk mitigation;

· Assisting elected members in the discharge of their responsibilities by ensuring compliance procedures are in place for all statutory requirements relating to their role;

· Governance role in regards to the Health and Safety Leadership Charter and Health and Safety Plan.

Background

3 The quarterly Health & Safety Performance Report is intended to provide the Council with insight into initiatives and activities, and their progress, as part of our organisations commitment to providing a safe and healthy place to work. The contents and any subsequent discussions arising from this report can support Council officers to meet their due diligence obligations under the Health & Safety at Work Act (HSWA) 2015.

4 Between July and September 2017 the Simpson Grierson Health and Safety team were engaged to review how the Council was progressing with changes and planned initiatives following the introduction of the Health and Safety at Work Act (HSWA) 2015. The findings were presented back to the Audit and Risk Committee in November 2017. This review identified areas for improvement, in particular where we can improve some current processes to further strengthen our ability to more effectively monitor and verify.

5 A draft Health and Safety Plan 2018 – 2020 was provided to the Committee at the meeting 13 September 2018 and has since been adopted by the Senior Leadership Team.

6 Progress on the 2018 – 2020 Health and Safety Plan has been incorporated into quarterly reports going forward.

7 Two reports are presented at this time due to the business interruptions as a result of the Covid19 pandemic impact on ‘business as usual’.

Issues and Options

Issues

8 Progress on the Health and Safety 2018-2020 Plan initiatives is progressing however the alert level 4 and alert level 3 restrictions severely disrupted planned health and safety related initiatives and training. Several time lines may be extended and this will be updated through the reporting cycle.

Considerations

Policy considerations

9 There are no Policy considerations.

Legal considerations

10 There are no legal considerations.

Financial considerations

11 Budget has been provided for implementation of the action plan initiatives as part of the 2018-38 Long Term Plan.

Tāngata whenua considerations

12 There are no Tāngata whenua considerations.

Significance and Engagement

Significance policy

13 This report does not trigger the Council’s Significance and Engagement Policy.

Publicity

14 There are no publicity considerations.

Recommendations

15 That the Audit and Risk Sub Committee notes the two Health and Safety Quarterly Reports for the periods: 1 January 2020 – 31 March 2020; and 1 April 2020 – 30 July 2020 attached as Appendix One and Appendix Two to this Report.

Appendices

1. Appendix One - H&S Quarterly Report Jan-March 2020 ⇩

2. Appendix Two - H&S Quarterly Report April-June 2020 ⇩

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

8.2 Update on key 2018-19 Audit Findings

Author: Anelise Horn, Manager Financial Accounting

Authoriser: Mark de Haast, Group Manager Corporate Services

Purpose of Report

1 This report provides the Audit and Risk Subcommittee with a progress update regards Ernst & Young’s Report on Control Findings for the year ended 30 June 2019.

Delegation

2 The Audit and Risk Subcommittee has delegated authority to consider this report under the following delegation in the Governance Structure, Section C.1.

· Reviewing and maintaining the internal control framework.

Obtaining from external auditors any information relevant to the Council’s financial statements and assessing whether appropriate action has been taken by management in response to the above.Background

3 In accordance with New Zealand Auditing Standards, Ernst & Young (Audit) performed a review of the design and operating effectiveness of the Council’s significant financial reporting processes as part of their audit for the year ended 30 June 2019.

4 Control risk matters and/or issues are classified as high, moderate or low. Control risk definitions are as follows:

· High Risk – matters and/or issues are considered to be fundamental to the mitigation of material risk, maintenance of internal control or good corporate governance. Action should be taken either immediately or within three months.

· Moderate Risk – matters and/or issues are considered to be of major importance to maintenance of internal control, good corporate governance or best practice for processes. Action should normally be taken within six months.

· Low Risk – A weakness which does not seriously detract from the internal control framework. If required, action should be taken within 6 -12 months.

5 Audit identified eight control risk issues for the year ended 30 June 2019, ranging from low to moderate risk rankings. The table at the end of the report, details the year to date progress against these control findings.

6 Unfortunately, some of the planned work programmes to fully address Audit’s 2018/19 control findings have been delayed due to the Covid-19 restrictions.

7 As part of their audit for the year ended 30 June 2020, Audit will consider this progress update and in doing so, Audit will assess whether any existing control findings can be formally closed-out.

Considerations

Policy considerations

8 There are no policy implications arising from this report.

Legal considerations

9 There are no legal considerations arising from this report.

Financial considerations

10 Financial issues have been covered as part of this report.

Tāngata whenua considerations

11 There are no direct tāngata whenua considerations arising from this report.

Significance and Engagement

Significance policy

12 This matter has a low level of significance under the Council’s Significance and Engagement Policy.

Publicity

13 There are no publicity considerations.

Recommendations

14 That the Audit and Risk Subcommittee notes the progress update in regards to Ernst & Young’s Report on Control findings for the year ended 30 June 2019 and that Ernst & Young will re-assess these as part of their audit for the year ended 30 June 2020.

Appendices

Nil

Summary of Control Findings for the year ended 30 June 2019

1. Service requests - Accuracy of response and resolution times (Moderate)
Target date for completion and current status	31/03/2020 Complete
Ernst & Young Audit Observation	In completing our testing of performance reporting information we identified multiple instances where the response and resolution times used as a basis for calculating measures were inconsistent with the times indicated on job sheets that were completed for those jobs by the staff attending to the request. One particular issue we observed that occurred for multiple items tested was requests being marked as responded to or resolved too early. This was observed for both water supply and waste water when measuring response or resolution times to urgent and non-urgent requests. This is primarily the result of the first action logged in response to the request being treated as either KCDC having responded to, or resolved, the matter when in actual fact the action was a step towards either responding to, or resolving, the matter. Since a number of performance measures require reporting of response or resolution times discrepancies in the time recorded will lead to incorrect outcomes being reported. Whilst this has implications for Council’s non-financial performance reporting it also impacts management’s ability to understand the team’s responsiveness to ratepayer requests and any resourcing or process issues that may need to be remedied to allow timely responses to requests.
EY Audit Recommendation	Requests logged in Council’s system should be reviewed on a periodic basis to ensure the time to respond to, or resolve, matters is being accurately reflected in the system.
Action Plan	We agree with the observation. The MagiQ system allows multiple actions to be recorded against a service request. In some cases, the final response time is recorded on the second or later action. Our analysis found that, although the correct response time is being entered in the system, the automatic reports used to calculate the response time measures only capture the time that the first action is completed. This has meant that in cases when the final response time is not when the first action is completed, the calculations of median response time are being made incorrectly. The issues have been documented and several solution options will be investigated further: · Re-design the service request system and data capture process, to allow for reports to accurately calculate the correct median response time. This is the most robust and long-term solution, but would be the most complex to implement. · Adopt a workaround whereby staff ensure that only the first action can be used for the resolving action, allowing existing reports to calculate the median response time accurately. · Continue the current practice of cleaning the report data manually to ensure that the measure is reported accurately, but undertake this on a more regular basis throughout the year as recommended above. This is a short-term solution that does not fix the root cause of the problem. However, in advance of a more sustainable solution being implemented, a review and cleaning of the first two months of data for FY19/20 is already underway. Responsibility: Manager Corporate Planning and Reporting and Chief Information Officer
Progress Update	In March 2020, we activated new fields on the Service Request form to capture service restored date and time which the Operations team are now using. The median response time reports have been rewritten so they now calculate the resolution KPI measures using the time elapsed from the date and time of receipt to the date and time of service restored. This avoids the previous risk of errors when calculating the resolution time by excluding the action completed times from any calculation. The new field is included on hard copy SR forms and in the MagiQ system. We have retrospectively completed this field for SRs from July 2019 to March 2020 to ensure the data is consistent for the full 2019/20 year. The new report also excludes the following requests: · private site requests (coded as ‘Not Council issue’). · requests where no fault was found (coded as ‘Not Council issue’). · requests generated by staff (coded as internal requests) per control finding 3 below.

2. Service requests - Monitoring of roading requests for service (Moderate)
Target date for completion and current status	31/03/2020 Proposed solution in operation, testing in progress.
Ernst & Young Audit Observation	For the access and transport measure relating to the Council’s response time to requests for service for roads and footpaths, Council were unable to accurately determine if requests for service had been responded to within the target timeframes. The information for this measure is sourced from two separate systems, MagiQ which holds the details of requests, and RAMM, which holds the details of work and actions undertaken. The primary issue is that there is insufficient clarity of how some requests in MagiQ can be linked to actions taken recorded in RAMM. Because requests for service in MagiQ are unable to be fully mapped to work undertaken and recorded in RAMM, Council is unable to report an outturn for the year against this target. The issue also limits Council’s ability to measure responsiveness from the perspective of managing operations and considering performance on a regular basis and how resource should be allocated.
EY Audit Recommendation	We recommend that work is completed to improve the interfacing or flow of data between these two systems. Alternatively work completed could be recorded in MagiQ against each of the relevant requests for service.
Action Plan	Investigative work will be needed to determine the best way forward to accurately measure response time to service requests for road and footpath work. The ideal would be an automated flow of data between MagiQ and RAMM where the interface is seamless and error-free. However, if that proves unattainable we will have to look at establishing systems to achieve manual updates of service request response time information from RAMM to MagiQ at the same time that completion times are entered into MagiQ from RAMM. This may require additional consistency checks between the two databases to ensure that request types and priority assignments are the same in the two systems so that response time targets are equivalent. At first glance this appears to be a substantial piece of work and will probably exceed the recommended six-month timeframe. Responsibility: Chief Information Officer and Manager Corporate Planning and Reporting
Progress Update	Council’s road maintenance contractor Higgins has identified a solution to automate service requests data from Council’s MagiQ system into RAMM to ensure the data is consistent across both systems. Currently this is a one-way data transfer, and solutions to enable two-way data transfer are being investigated. A new process whereby Higgins update MagiQ directly using their remote access has been documented and is now in place. Test Reports need to be run to check whether there is a need for any improvements in data quality.

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

3. Service requests – Duplicate requests for services (Low)
Target date for completion and current status	30/06/2020 Complete
Ernst & Young Audit Observation	When reviewing requests for service data for the water supply and wastewater management activities we identified duplicate requests for service for the same matter. In some instances, requests for service were closed with zero response times if they were confirmed as duplicates. This has an impact on median response times through reducing this measure incorrectly. We also noted instances where Council initiated requests for service for planned work and these were included in the calculation of median response times. The request for service based metrics are primarily intended to measure response times to ratepayer requests as opposed to Council’s internal work program. Duplicate requests included in the system impact the reported results especially in instances where duplicates have a response time set to zero and have been included in the calculation of the median. The inclusion of requests for service from Council employees means the measures become less focused on Council’s responsiveness to ratepayer requests.
EY Audit Recommendation	We recommend implementing controls that prevent duplicate requests for service being recorded in the system. Alternatively, a periodic review of requests within the system could be undertaken to identify and remove duplicate requests. The same review could ensure Council generated requests are clearly labelled as such and excluded from the calculation of the measure.
Action Plan	We agree with the observation. Several solution options will be investigated further in conjunction with the response in 2.1.1: 1. Re-design the service request system and data capture process, to ensure that duplicate requests, internal requests, planned work, and other non-applicable requests can be excluded from the calculation of the performance measure. 2. Continue the current practice of cleaning the report data manually to ensure that the measures are reported accurately, but undertake this on a more regular basis throughout the year as recommended above. As noted in 2.1.1, we have already begun a review and cleaning of the report data for FY19/20. As well as correcting the response times, this task also includes removing duplicates and non-applicable service requests from the calculated median response times. Responsibility: Manager Corporate Planning and Reporting, and Chief Information Officer
Progress Update	The process for managing duplicate requests within MagiQ was updated in March 2020. Staff are now using the system’s ability to add multiple callers to one request (rather than raising multiple requests for the same issue). Process documentation for dealing with multiple callers & duplicate requests has also been developed. A report to identify all duplicate requests (more than one request for a single issue) is now being circulated to the business activity areas at month end for review, so that these can be rectified prior to month-end reporting. Records that are duplicated in error are being deleted from the system to ensure accuracy of the median response time determinations. A few key staff have been selected to be given access to do this. This work is ongoing, however, all duplicates for 2019/20 service requests have been removed. Requests that are raised internally (between departments) are flagged as INTERNAL within the system and the DIA report has been amended to exclude these.

4. Service requests – Manual reorganisation of requests for services (Low)
Target date for completion and current status	30/06/2020 Solution development in progress but delayed due to COVID-19. Expect new process to be in place from August 2020.
Ernst & Young Audit Observation	To calculate outcomes for some measures, data was extracted from the system and put through a further manual process to determine the category of the request. This involved adjusting the category of the request per the system and then calculating the measure to be reported based on the excel spreadsheet with updated categorisations. We identified instances where information extracted from the system was subjected to further manual categorisation and was incorrectly categorised, affecting the reported results. For example, requests for service that did not relate to the particular activity or urgency categorisation were included in calculating the outcome for that measure. We also identified instances where subsequent to information being extracted from the system, changes were made to the information in the system and the associated spreadsheet wasn’t updated to reflect these changes. Because the measures are calculated based on the data in the spreadsheet this results in information relevant to the request for service being excluded. Incorrect categorisation of data could lead to measures being incorrectly calculated.
EY Audit Recommendation	We recommend that processes be updated to allow for correct classification of requests for service at the point the requests are received. If this is impractical we would suggest that requests for service be reviewed on a periodic basis and reclassified within the system when a reclassification is required.
Action Plan	The points above appear to refer to the current system for assessing and reporting on Stormwater and Coastal service requests. We agree that this system should be amenable to significant improvement. However, following our own analysis we have further characterised the issue: Firstly, our understanding is that ‘instances where information extracted from the system subjected to further manual categorisation was incorrectly categorised affecting the reported results’ relates to two separate matters; i) Where instances of service requests related to stormwater outlets were included in calculations of the Coastal measure for ‘Urgent requests to repair sea walls or rock revetments’ when they should only be accounted for in the Coastal measure for ‘Stormwater beach outlets are kept clear’. This has been fixed in the current reporting and is a straightforward fix even in the existing ‘manual’ spreadsheet method of reporting on Coastal KPI measures. ii) There were three instances of stormwater service requests (out of 89) which were classified as urgent in error. This error rate is unlikely to be improved by adopting the suggestion that ‘processes be updated to allow for correct classification of request for service at the point requests are received’. Requests are received at the call centre for the most part and staff often either a) do not have sufficient or accurate enough information from the caller to correctly classify the request, or b) do not have the experience to be able to do so. This is why we rely on a subsequent, secondary, classification process by our stormwater team, who occasionally make errors. Secondly, it was identified that ‘instances where subsequent to information being extracted from the system changes were made to the information in the system and the associated spreadsheet wasn’t updated to reflect these change’. It isn’t clear how many instances of this were found but to our knowledge there weren’t many and we expect they would be largely immaterial to the measures being reported on or the response time calculations. Many of the changes made to request types subsequent to data being extracted from the system do not have any material bearing on the secondary categorisation made by the stormwater team and to revisit MagiQ on a regular basis to update these would be both time-consuming and probably not very productive. A full improvement solution to MagiQ to enable it to generate more stream-lined and efficient Coastal and Stormwater service request reporting will take significant investigation and discussion with both MagiQ, regarding the system’s capabilities, and the Coastal and Stormwater team, regarding their requirements. We envisage the following: i) introducing a pro-forma report that doesn’t require manual set-up each week and only needs date ranges entered to provide the appropriately filtered list of service requests each week. ii) ideally, we would then like to see enhancements to the system so that there are a range of drop-down or pick-list categories that the Coastal and Stormwater team can use for providing secondary and tertiary categorisations to each service request (so that this is done in MagiQ rather than on a separate spreadsheet). This categorisation process would include categorisations as to which service requests are Coastal or Stormwater requests, and further to that, which are urgent/non-urgent, council/private issues, affect buildings/or don’t etc. iii) if such improvements are feasible then when that secondary categorisation process is complete each week, a report should be able to be generated from MagiQ which generates the equivalent of the current Stormwater and Coastal service request spreadsheets. This approach would significantly improve the efficiency of the current process and improve the audit trail. It would not remove the human judgement factor behind the categorisation process as that is how the categorisations are currently made in MagiQ in any case. We would need to investigate whether there is an efficient process for checking whether subsequent changes to categorisations of service requests not initially identified as relevant for Coastal or Stormwater reporting purposes have, as a result of a re-categorisation in MagiQ, become relevant for those purposes. This will be a significant piece of work and will need to be undertaken in concert with the planned upgrade to MagiQ and other proposed improvements recommended to improve reporting of actual resolution times and avoidance of counting duplicate service requests in those calculations. Responsibility: Manager Corporate Planning and Reporting, and Chief Information Officer
Progress Update	The management of Coastal & Stormwater service requests and manual data manipulation was reviewed as part of a previous KPI project. The BI team and Coastal & Stormwater team reviewed the proposed changes from that project and agreed the following: • amend SR request “types” to align with KPI reporting requirements • update Kbase instructions for Customer Engagement staff • create new reports in MagiQ to align with KPI reporting requirements Due to key resources being allocated to the EOC to assist with Covid-19 response, this work has been delayed. For the 2019/20 audit the current manual categorisation and quality checking will remain. The above changes are planned to be implemented in August 2020.

5. Corporate policies due for review (Low)
Target date for completion and current status	30/12/2020 On-track but progress delayed by COVID-19
Ernst & Young Audit Observation	We observed various employee manuals and policy documents were last updated over 3 years ago. Specifically, we noted the below policies are currently overdue for review and update: a. Receipt of gifts and hospitality b. Rewards and recognition policy c. Mitigation of fraud d. Employee code of conduct e. Elected member code of conduct Policies and other guidance documents should be updated on a regular basis to ensure any changes in circumstances that require additional guidance are incorporated on a timely basis.
EY Audit Recommendation	We recommend that corporate policies be monitored and updated on a regular basis.
Action Plan	We accept the findings and recommendation from audit. The register of corporate policies, including review dates, will be updated and monitored by Corporate Services going forward as part of the wider policy programme. Responsibility: Manager Research and Policy, Corporate Services
Progress Update	The Research and Policy team are currently developing a programme of work to review, update and maintain all corporate policies. This includes prioritising the review of the policies identified above. This programme has been delayed by COVID-19 restrictions, however, work has now resumed on this programme.

6. Timeliness of purchase order initiation (Low)
Target date for completion and current status	30 September 2020 Delayed but on-track
Ernst & Young Audit Observation	During our testing of the expenditure and payments process we observed that some purchase orders were generated subsequent to the receipt of invoices. Without adequate controls for processing and reconciling purchase orders, invoices and the receipt of goods and services, there is an increased risk that inappropriate or erroneous expenditure is incurred or reported. A purchase order system works most effectively when purchase orders are approved prior to goods or services being purchased. After the transaction has occurred there may be less opportunity to change the agreement that has been entered into.
EY Audit Recommendation	We recommend purchase orders are raised and appropriately approved prior to placing orders with suppliers.
Action Plan	Management accepts the recommendation and is currently working on a programme for induction and increased training for staff to ensure there is a consistent high standard of compliance with the Procurement Policy across all areas of the Council. The Finance team worked with the suppliers during the 2018/19 year to highlight the importance of requesting an EPO number from Council before beginning any work. Responsibility: Chief Financial Officer/ Manager, Financial Accounting
Progress Update	Finance is implementing an Accounts Payable Automation function across the Council and engaged CSG technologies Limited in February 2020 to implement a Scanning and Optic character recognition (SOCR) solution to streamline our supplier payment process. Council is currently testing the solution functionality and its integration with our current Financial Management Information System (MagiQ). The delivery of the project was delayed by the COVID-19 restrictions and full implementation has been delayed to the end of August 2020. As part of this project, EPO training will be rolled out to all EPO users within Council. Automation will strengthen the discipline of initiating an EPO when the goods or services are ordered as the EPO number will be a key field on the supplier invoice required by the payment solution. Council suppliers will be informed, before the “go-live” date, of the changes to our systems and the importance of the EPO reference on their invoices to ensure prompt payment. Council-wide procurement training continues.

7. Approval of expenditure (Low)
Target date for completion and current status	30/06/2020 On-going
Ernst & Young Audit Observation	KCDC’s General Expenses policy states “one-up” authorisation must be given to the person who will benefit or might be perceived to benefit from the expenditure.” We noted two instances where an expense claim was either authorised by a person who was not one up from the individual that incurred the cost or was not one up from the most senior individual that benefited or might be perceived to have benefited from the expenditure. In both instances we are satisfied that the expenditure was appropriate but have recommendations regarding the execution of the relevant controls. This may increase the risk that inappropriate expenditure goes undetected. This policy also serves to safeguard staff in that in instances where they may have been perceived to have benefited from Council expenditure an independent member of staff has concurred with their judgement that the costs are appropriate.
EY Audit Recommendation	We recommend that expenses incurred are approved in a manner that is in line with KCDC’s policies
Action Plan	Management accepts the findings and recommendation from Audit. Corporate Services will seek to increase Council-wide access to and awareness of all corporate policies Responsibility: Chief Financial Officer / Manager, Financial Accounting
Progress Update	The Accounts Payable team are manually reviewing each expense claim submitted for payment to ensure that it has been approved in accordance with the General Expenses policy. If not, the claim is returned to the relevant staff members to be corrected. The General Expense policy is included in the programme of work being developed by the Research and Policy team to review, update and maintain Corporate Policies, as noted in control finding No. 5 above.

8. Review of useful life of landfill asset (Low)
Target date for completion and current status	30/06/2020 Completed
Ernst & Young Audit Observation	The useful life of the Otaihanga landfill asset has not been thoroughly re-assessed recently. The asset is nearing the end of its capacity and is only able to accept clean-fill going forwards. There is currently an asset recorded on balance sheet for the Otaihanga landfill that has a residual useful life spanning a number of years. If the landfill is near to the end of its useful life and the asset has limited remaining value the residual useful life used for accounting purposes may need to be reduced or the value attributed to the asset may need to be decreased.
EY Audit Recommendation	The current useful life of the landfill suggests that benefit will continue to be derived from the landfill over a number of years going forward. We recommend that Council consider the nature and timing of the expected benefits from the landfill and use this as context for evaluating if the current useful life is still appropriate and if Council is likely to receive future benefit from the landfill that broadly equates to the current carrying value of the landfill asset.
Action Plan	Management accepts the findings and will assess the economic life of the asset during the 2019/20 year. Responsibility: Chief Financial Officer /Manager, Financial Accounting
Progress Update	Council reviewed the current useful life and future benefit/service potential of the Otaihanga landfill asset during June 2020. The capping of the landfill has progressed faster than initially anticipated. Therefore, the final closure date of the landfill has been brought forward from the resource consent closure date of June 2026 to June 2022. While the landfill will be in-use for another 2 years, it has been determined that the future income generated from accepting clean-fill is negligible. In accordance with IPSAS (International Public Sector Accounting Standards) an asset should be held at its recoverable service amount. As negligible service value will be delivered by the asset, the full value of this asset at year-end ($2,998,259) has been impaired to the statement of comprehensive revenue and expense.

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

8.3 Quarterly Treasury Compliance Report

Author: Anelise Horn, Manager Financial Accounting

Authoriser: Mark de Haast, Group Manager Corporate Services

Purpose of Report

1 This report provides confirmation to the Audit and Risk Subcommittee of the Council’s compliance with its Treasury Management Policy (Policy) for the six months ended 30 June 2020.

Delegation

2 The Audit and Risk Subcommittee has delegated authority to consider this report under the following delegation in the Governance Structure, Section C.1.

Ensuring that the Council has in place a current and comprehensive risk management framework and making recommendations to the Council on risk mitigation.

Background

3 The Policy sets out a framework for the Council to manage its borrowing and investment activities in accordance with the Council’s objectives and incorporates legislative requirements.

4 The Policy mandates regular treasury reporting to management and the Strategy and Operations Committee, as well as quarterly compliance reporting to the Audit and Risk Subcommittee.

5 In order to assess the effectiveness of the Council’s treasury management activities and compliance to the Policy, certain performance measures and parameters have been prescribed. These are:

· cash/debt position;

· liquidity/funding control limits;

· interest rate risk control limits;

· counterparty credit risk;

· specific borrowing limits; and

· risk management performance.

6 Due to the cancellation of the Audit and Risk Subcommittee meeting on 24 May 2020 due to COVID-19, this report covers the compliance reporting for both the third quarter (January to March) and the fourth quarter (April to June) of the 2019/2020 financial year.

discussion

Cash/Debt Position

7 Table 1 below shows the Council’s net debt position as at 30 June 2020 against the 2019/20 full year budget and the prior year closing balance.

8 During the past six months, the Council has issued $20 million of new debt.

9 $15 million was issued to pre-fund the May 2021 and October 2021 debt maturities. As part of the Council’s prefunding programme, all prefunding is placed on term deposit, at the most favourable market rates available at that time.

10 $5 million was issued to part fund the 2019/20 planned capex work programme.

11 During the same period, $25 million of long term debt matured during April 2020. This was fully funded through the Council’s prefunding programme and was repaid from term deposits maturing on the day.

12 The table below shows (a) the movement in the Council’s external debt balance and (b) the movement in the Council’s pre-funding programme by debt maturity, for the year ended 30 June 2020.

13 As at 30 June 2020, the Council had $54.3 million of cash, borrower notes and term deposits on hand, relating mainly to the Council’s debt pre-funding programme. This is broken down as follows:

14 For the six months ended 30 June 2020, the Council has not breached its net debt upper limit, as shown in the chart below:

15 The Council is however targeting ,through its financial strategy, to keep net borrowings below 200% of total operating income. At 30 June 2020, the Council’s net borrowings are 184.8% of total operating income.

Liquidity/Funding control limits

16 Liquidity and funding management focuses on reducing the concentration of risk at any point so that the overall borrowings cost is not increased unnecessarily and/or the desired maturity profile is not compromised due to market conditions. This risk is managed by spreading and smoothing debt maturities and establishing maturity compliance buckets.

17 Since October 2015 the Council’s treasury strategy has included a debt pre-funding programme. The Policy allows pre-funding of the Council debt maturities up to 18 months in advance, including re-financing. Market conditions have been favourable for this approach, where the Council draws down debt early and is able to invest the funds on term deposit for a positive net return.

18 The strength of the Council’s debt pre-funding programme was again highlighted by the Council’s independent Credit Rating Agency, Standard & Poor’s (S&P), during their July 2020 review. This has resulted in the Council’s credit rating remaining at AA with a stable outlook for the following year. S&P noted that the Council’s liquidity coverage remains exceptional.

19 The following chart presents the Council’s debt maturity dates in relation to the financial year in which the debt was issued. This demonstrates that since 2016/17, the Council has actively reduced risk concentration by spreading debt maturity dates and debt maturity values.

20 Debt maturities must fall within maturity compliance buckets. These maturity buckets are as follows:

Maturity Period	Minimum	Maximum
0 to 3 years	10%	70%
3 to 5 years	10%	60%
5 to 10 years	10%	50%
10 years plus	0%	20%

21
For the six months ended 30 June 2020, the Council has been fully compliant with its debt maturity limits, as shown by the chart below. The upper limits, as shown by dashed lines, relate to the bars of the same colour. For example, the 0 to 3 year upper limit of 70% is in blue. Actual maturities in the 03 year bucket are represented by the blue bars. The Council has no long term debt maturing in ten years’ time or beyond.

Interest rate risk control limits

22 The Council issues all debt on a floating rate basis, as lower interest rates are realised this way, and uses fixed interest rate swaps (hedges) to minimise exposure at any one time to interest rate fluctuations. This ensures more certainty of interest rate costs when setting our Annual Plan and Long Term Plan budgets.

23 Without such hedging, the Council would have difficulty absorbing adverse interest rate movements. A 1% increase in interest rates on $210 million of external debt would equate to additional interest expense of $2.1 million per annum. Conversely, fixing interest rates does however reduce the Council’s ability to benefit from falling and/or more favourable interest rate movements.

24 The objectives of any treasury strategy are therefore to smooth out the effects of interest rate movements, while being aware of the direction of the market, and to be able to respond accordingly.

25 The Policy sets out the following interest rate limits:

Major control limit where the total notional amount of all interest rate risk management instruments (i.e. interest rate swaps) must not exceed the Council’s total actual debt, and;

Fixed/Floating Risk Control limit, that specifies that at least 55% of the Council’s borrowings must be fixed, up to a maximum of 100%.

26 The Council has been fully compliant for the six months ended 30 June 2020, as shown by the table below.

27 Similar to debt maturities, hedging instrument maturities must also fall within maturity compliance buckets. These maturity compliance buckets are as follows:

Period	Minimum	Maximum
1 to 3 years	15%	60%
3 to 5 years	15%	60%
5 to 10 years	15%	60%
10 years plus	0%	20%

28 The Council has been fully compliant for the six months ended 30 June 2020, as shown by the following chart. Note that maturities falling within 1 year are not included.

Counterparty Credit Risk

29 The policy sets maximum limits on transactions with counterparties. The purpose of this is to ensure the Council does not concentrate its investments or risk management instruments with a single party.

30 The policy sets the gross counterparty limits as follows:

Counterparty/Issuer	Minimum Standard and Poor’s long term	Investments maximum per counterparty	Risk management instruments maximum per counterparty	Borrowing maximum per counterparty
NZ Government	N/A	Unlimited	None	Unlimited
LGFA	AA-/A-1	$20m	None	Unlimited
NZ Registered Bank	A+/A-1	60% of total investments or $25m; whichever is greater	50% of total instruments or $80m; whichever is greater	$50m

31 The Council was in full compliance with all counterparty credit limits for the six months ended 30 June 2020. The tables below show the Council’s investments and risk management instruments holdings per counterparty for this period.

Term deposits

*Policy Limit: 60% of total investments or $25 million; whichever is greater

Interest rate swaps

*Policy Limit: 50% of total instruments or $80 million; whichever is greater

Specific Borrowing Limits

32 In managing debt, the Council is required to adhere to the limits below. The Council fully complied with these limits for the 6 months ended 30 June 2020 (or a period as otherwise specified) and the results are shown below:

Risk Management Performance

33 The following table shows the Council’s interest income and expense for the year ended 30 June 2020, together with the weighted average cost of borrowing (WACB)

34 The Council’s net interest cost for the year is $412,000 favourable to budget. This is mainly due to less external borrowings at the start of the 2019/20 financial year than planned and delays to the Council’s capital works programme due to Covid-19 restrictions.

35 The Council has been effective in its treasury management with its weighted average cost of funds being 0.65% lower than planned as at the 30 June 2020.

36 The following graph shows the cost of borrowing each month.

Considerations

Policy considerations

37 There are no policy considerations in addition to those already noted in this report.

Legal considerations

38 There are no legal considerations arising from this report.

Financial considerations

39 There are no financial considerations in addition to those already noted in this report.

Tāngata whenua considerations

40 There are no tāngata whenua considerations arising directly from this report.

Significance and Engagement

Significance policy

41 This matter has a low level of significance under the Council’s Significance and Engagement Policy.

Publicity

42 There are no publicity considerations arising from this report.

Recommendations

43 That the Audit and Risk Subcommittee notes the Council’s full compliance with its Treasury Management Policy for the six months ended 30 June 2020.

Appendices

Nil

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

8.4 Risk Management - Business Assurance Update

Author: Sharon Foss, Business Improvement Manager

Authoriser: Mark de Haast, Group Manager Corporate Services

Purpose of Report

1 This report primarily updates the Audit and Risk Subcommittee on the on-going implementation of the Enterprise Risk Management (ERM) framework.

Delegation

2 The Audit and Risk Subcommittee has delegated authority to consider this report under the following delegation in the Governance Structure, Section C.1.

Ensuring that Council has in place a current and comprehensive risk management framework and making recommendations to the Council on risk mitigation.

Background

3 The key elements of the Enterprise Risk Management Framework include:

· Risk Management;

· Business Continuity Management;

· Business Assurance; and

· Procurement Improvement Programme.

4 The key work streams within this area are:

· Regularly discuss risks with the Council’s business groups and Senior Leadership Team and embed the day-to-day management of risks in the more routine activities;

· develop a risk communication/reporting process at, and between, the following levels:

− Council/Committees;

− Senior Leadership Team (SLT);

− Business Units/Groups; and

− Projects, Asset Management.

· develop a Business Continuity Management System for effective response to a range of potential business disruptions;

· provide fraud awareness training;

· provide business assurance oversight and complete business assurance work; and

· improve the understanding and tools to support good procurement practices.

5 As previously reported, the intended outcomes from performing this programme well will include:

· stakeholders, external auditors, Council and management achieve high levels of assurance that the real risks are being identified and managed effectively;

· better decision making throughout the business through greater awareness of the real risks (threats and opportunities); and

· clarification and socialisation of the Council’s risk appetite and tolerance.

Enterprise Risk Management Progress Update

6 Guidance for the risk management, procurement and assurance work has been established through a collaborative process with Council staff.

7 The work has focussed primarily on tangible outputs, as discussed separately below.

Corporate Risk Profile – Status Update

8 As part of Enterprise Risk Management (ERM) a risk profile, comprising a risk register and risk treatment plan, was established. This is subject to approximately quarterly updates by management and is then reported to the Subcommittee. The focus is on identifying, managing and communicating the very highest strategic and operational risks that the Council faces.

9 Engagement on the risk profile now routinely includes conversation with activity managers as well as Group Managers. The overall risk management culture and practice is improving and risk conversations are widening.

10 The concept of risk acceptance is being further embedded across the organisation, i.e. certain moderate level risks may be overtly tolerated by the business in the context of the costs or impracticalities to further mitigate the risk.

11 The risk profile has been reviewed and updated by the Group Managers and the relevant Activity Managers. The Corporate Risk Register is attached as Appendix 1 to this report.

12 The intention is for the Subcommittee to first familiarise themselves with the Corporate Risk Register and thereafter, to nominate any risk/s for “deep dive” discussions at future Subcommittee meetings. Risk “deep dives” provide an opportunity for Subcommittee members to engage and gain a deeper insight on a specific risk/s.

13 Whilst there is no specific “deep dive” included in this report, it is appropriate to provide the Subcommittee with an overview of the Council’s response to date to the challenges brought about by Covid-19.

14 On 11 March 2020, the World Health Organization declared the outbreak of a coronavirus (Covid-19) pandemic and two weeks later, the New Zealand Government declared a State of National Emergency. From this, the country went into Alert Level 4 lockdown. As a result, the Council implemented its pandemic plan and responded in line with government Alert Level guidelines.

15 The Council moved quickly to open the Emergency Operations Centre and comply with the Health Order. Services deemed essential continued and non-essential services ceased and/or were delivered in accordance with the Health Order and the appropriate Alert Level. Examples of some key changes to service delivery made at Alert Levels 4 and 3 are shown in the table below:

Example of changes made to Service Levels	Alert Level 4 - 25 March 2020	Alert Level 3 - 27 April 2020
Council Offices	Closed. Staff working remotely	Closed. Staff working remotely
Transfer / recycling stations and kerbside recycling	Closed. No kerbside collection.	Open for rubbish drop off only. Kerbside recycling collection resumed.
Sewer/water/stormwater maintenance	Emergency repairs and maintenance as required.	Emergency repairs and maintenance as required.
Reserves, playgrounds and sportsgrounds	Closed. No mowing or planned maintenance undertaken.	Closed. High priority mowing and maintenance undertaken.
Roads and coastal infrastructure	Emergency repairs and maintenance as required.	Emergency repairs and maintenance as required. Planning and higher priority work undertaken.
Resource and building consents	Processing continued but no building inspections undertaken.	Processing continued. Building and subdivision site inspections undertaken. Virtual hearings for resource consents.
Noise control	Very limited service.	Excessive noise complaints investigated.
Libraries	Closed. Virtual services available.	Closed. Virtual services available.
Pools, Halls, Public Toilets	Closed.	Closed.

16 A considerable amount of effort went into establishing working from home arrangements for staff where possible. This included using technology for remote communication and meetings. Covid-19 necessitated $115,000 of critical IT expenditure planned for 2020/21 to be brought forward to March 2020 in order to fully support staff during the lockdown. Travel was reduced to an absolute minimum.

17 Services for ratepayers and businesses were provided remotely, therefore the impact on customers was largely limited to changing meetings from in-person to virtual meetings, and from walk-ins to phone calls or emails. A point to note is that our customers were also subject to lockdown rules.

18 The Council offices and facilities including service centres, libraries, aquatic facilities, community centre, halls and venues started reopening at Alert Level 2 on 13 May 2020 with contact tracing and appropriate Covid-19 safety measures in place. Up to 50% of our office-based staff continued to work remotely from home to enable us to maintain physical distancing requirements.

19 For Alert Level 1, staff began the transition back into the office from 9 June 2020.

Corporate Business Continuity Management System (BCMS) – Status Update

20 Business Disruptions are currently assessed as a “moderate” level risk (with a target risk level of “Low”), on the Corporate Risk Register, attached as Appendix 1 to this report.

21 To address this risk, the Council is actively progressing its BCMS development programme. The objective of the programme is to ensure that following a disruptive incident, the Council has the systems and capability to continue the delivery of its critical activities and services within acceptable, predefined levels and timeframes.

22 We intend to review all aspects of the Council’s Covid-19 lockdown experience. The aim is to identify the key learnings from the impacts of, and the Council’s response to the Covid-19 pandemic on our business, our staff and our customers and stakeholders and make all necessary improvements where needed. Some examples of what we are already planning / doing are listed below:

i. We are currently developing an Emergency Preparedness framework to support our Emergency Preparedness Policy. Covid-19 is highlighting the need for better clarity around both the alignment and separation of the Pandemic Plan, CDEM/EOC requirements, BCPs, staff resourcing, Infection Prevention and Control Policy etc.

ii. We are currently refreshing our Pandemic Plan and we will retrospectively review how well we are positioned against the requirements of the updated Pandemic Plan. This retrospective comparison will provide a good baseline around our pandemic readiness and related resourcing and training needs etc.

iii. An independent technical review of Infrastructure Service’s preparedness, readiness and security of supply of essential infrastructure services, (water, wastewater and stormwater), following localised natural disasters and pandemic events, is currently underway to identify any service delivery risks that need to be further mitigated.

Procurement Improvement Programme – Status Update

23 A procurement improvement programme commenced in 2017. Significant improvements have been made to date. The Council established its own procurement framework in 2018, modelled on the latest public sector procurement materials, customised for the local government environment. This framework comprises a procurement policy containing key principles and rules, a procurement manual setting out procurement procedures, along with a set of templates, forms and guides to support good procurement practice.

24 However, further progress on the framework has been constrained by limited staff capacity and resources and variable quality of data and information. As previously reported to the Council, progress on the framework was particularly delayed when the Procurement Specialist was reassigned in the previous triennium to advise and lead the procurement process required by the Independent Organisational Review.

25 However, progress toward better procurement maturity has recommenced now and further work is planned to meet the improvement targets, addressing the barriers to progress, and adjusting the sequencing of work.

Business Assurance – Status Update

26 The Council has contracted PricewaterhouseCoopers (PwC) to complete a PAYE tax compliance review. Originally this was planned in March 2020 but has been delayed due to Covid-19 restrictions. Officers are working with PwC to finalise a new review date and a report back will be provided to the Subcommittee once the review has been completed.

27 In addition, Officers are planning to recruit a dedicated Risk and Assurance Manager on a two year fixed term contract to develop and implement a risk assurance and monitoring programme. This position will work with the Business Units, as well as Finance, Legal, Business Improvement and IT, to identify any internal control risks and implement all steps necessary to satisfactorily mitigate those risks. Report backs will be provided to the Subcommittee when internal assurance reviews have been completed.

Considerations

Policy considerations

28 There are no further policy implications arising from this report.

Legal considerations

29 There are no further legal considerations arising from this report.

Financial considerations

30 The work described above is planned to be funded from the 2020/21 Annual Plan budget by way of prioritised spending.

Tāngata whenua considerations

31 There has been no direct engagement with tāngata whenua regarding this report.

Strategic considerations

32 This enterprise risk management framework contributes to ensuring that the Council is continuing to improve its financial position against financial constraints.

Significance and Engagement

33 This matter has a low level of significance under the Council Policy.

Recommendations

34 That the Audit and Risk Subcommittee receives and notes this report, including Appendix 1 to this report.

Appendices

1. Corporate-wide Risk Register 2020/21 ⇩

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

8.5 Waka Kotahi NZ Transport Agency Procedural Investment Audit Report

Author: Glen O'Connor, Access and Transport Manager

Authoriser: Sean Mallon, Group Manager Infrastructure Services

PURPOSE OF REPORT

1. To present the findings of the Waka Kotahi NZ Transport Agency (Waka Kotahi) Procedural Investment Audit undertaken in February 2020.

DELEGATION

2. Section C.1 of the Governance Structure and Delegations 2019-22 Triennium provides that the Audit and Risk Committee will monitor Council’s financial management and report mechanisms and framework and review the audit and risk function, ensuring the existence of sound internal systems.

BACKGROUND

3. Waka Kotahi undertake investment audits every three to six years on Local Authorities. The audits provide assurance that Waka Kotahi’s investment in land transport programmes (roading) is being well managed and is delivering value for money. Further, Waka Kotahi seek assurance that Council are appropriately managing risk associated with the Transport Agency’s investment.

4. Waka Kotahi carry out two types of audit for Local Authorities which are:

a. Investment audits; and

b. investment procedural audits.

5. The investment audit monitors investment performance and is technical in nature focusing on physical works such as road resealing, network condition and minor works programmes. Council was audited in 2019 and was rated as effective, which is the highest rating. This was reported to the Operations and Finance Committee on 15 August 2019.

6. The investment procedural audit examines the financial administration and processes associated with the funding claimed from Waka Kotahi The audit focuses on reviewing documents/ledgers, ledger transactions, procedures for claiming Waka Kotahi funds and the procurement and management of roading related works and services contracts. Waka Kotahi previously carried out a procedural audit in 2017.

7. The items covered in the February 2020 Investment Procedural Audit included:

· Previous Audit Issues – review of recommendations from the previous procedural audit.

· Financial Processes – review of financial management/controls and alignment of funds claimed with the Transport Agency’s activity classes.

· Procurement Procedures – examination of procured services/physical works and compliance with Council and Waka Kotahi procurement procedures and requirements.

· Contract Management – review of contracts with regard to contract administration, management and control procedures and processes.

· Professional Services – review of council’s approach to providing and funding professional services in accordance with Waka Kotahi requirements.

8. Waka Kotahi’s investment into our district is typically 51% of our approximately $6-8m per year (depending on the amount of works undertaken) land transport programme.

9. The investment procedural audit was undertaken at Council offices over four days and involved Waka Kotahi ‘s auditors and Councils roading and finance staff.

ISSUES AND OPTIONS

Issues

10. The key findings of the audit are as follows:

· Previous Audit Issues

There were no issues outstanding from the previous audit.

· Financial Processes

Council’s land transport disbursement account is correctly established within the general ledger and appropriate controls are in place to ensure Council is managing the Transport Agency’s investment. Qualifying expenditure was confirmed in the general ledger to support Council’s claims for financial assistance for the three years from 1 July 2016 to 30 June 2019.

· Procurement Procedures

Six physical works and four professional services contracts were reviewed for compliance with procurement procedures. Council’s procurement practices meet the Transport Agency’s procurement requirements and are consistent with their procurement strategy.

· Contract Management

Council’s contract management and administration procedures are documented, and processes are in place to ensure contracts are effectively managed. Effective procedures for managing and monitoring contracts are supported by activity and performance reporting. Recordkeeping and administration of contract files are suitably organised, which greatly assisted the audit process. Controls are in place to ensure contract variations and payment authorisations are in accordance with Council’s delegations. These processes are documented in detail.

· Professional Services

Council has documented the management structure for its in-house operations and the methodology covering how costs for in-house services, including associated overheads and administration, are determined in accordance with Transport Agency requirements. Budgeted expenditure for the business unit for the current financial year (2019/20) appear reasonable. Council’s costs for the previous three years are consistently mid-range when compared with Council’s urban peer group.

11. The overall audit rating for our Council was effective, which is the highest obtainable rating. All subject areas assessed were also rated as effective.

12. The audit identified minor issues for Council to address, and these were identified as recommendations or suggestions in the audit and are listed as follows:

· Financial Processes

Recommendation 1 - Transfer eligible expenditure between work categories within the maintenance activity class to enable activity costs exceeding any of the allocated work category funding caps to be claimed.

Recommendation 2 - Claim 30% of costs only for street cleaning activities when claiming expenditure against work category 113.

These recommendations were made so to ensure that Council claimed the allowable funding entitlements. Following this recommendation Council has implemented changes to allow the full subsidy to be claimed.

· Procurement Procedures

Suggestion - Consider expanding the policy on declaring conflicts of interest for staff involved in the procurement of suppliers, to include staff involved in the ongoing management of the contract.

This suggestion will be considered by Council.

· Contract Management

Recommendation - Confirm exemption declarations will be completed where it decides a road safety audit is unnecessary.

This recommendation will be implemented by Council.

13. The executive summary of the audit report reads:

Kapiti Coast District Council has effective financial controls and management procedures in place to ensure the Transport Agency’s investment in its land transport programme is successfully delivered.

We found Council has erred on the side of under claiming its full subsidy entitlements as a result of misinterpreting some Transport Agency rules around the funding of maintenance activities. Road safety audit procedures are being considered at appropriate project stages. However, the requirement to complete and file exemption declarations when it has decided an audit is unnecessary has been overlooked.

Procurement procedures meet Transport Agency requirements and contract management activities are appropriately documented. Administration and recordkeeping systems are effective in supporting the delivery of planned activities on the network.

CONSIDERATIONS

Policy considerations

14. There are no policy considerations from this report.

Legal considerations

15. There are no legal considerations from this report.

Financial considerations

16. Any financial considerations are accommodated under current budgets.

Tāngata whenua considerations

17. There are no Iwi considerations from this report.

Strategic considerations

18. This audit relates to infrastructure investment that supports resilience and agreed growth projections, and improved accessibility of Council services.

SIGNIFICANCE AND ENGAGEMENT

Significance policy

19. This matter has a low level of significance under Council’s Significance and Engagement Policy.

Consultation already undertaken

20. Consultation was not required for this report.

Engagement planning

21. Engagement was not required for this report.

Publicity

22. A media release will be developed around the findings of this audit.

Recommendations

That the Operations and Finance Committee notes the findings from the February 2020 Waka Kotahi Procedural Investment Audit Report.

Appendices

1. Kapiti Coast 2020 Audit ⇩

Audit and Risk Sub-committee Meeting Agenda

13 August 2020

MINUTES OF Kapiti Coast District Council
Audit and Risk Sub-committee Meeting
HELD AT THE Council Chamber, Ground Floor, 175 Rimu Road, Paraparaumu
ON Thursday, 20 February 2020 AT 9.30am

PRESENT: Cr Angela Buswell, Deputy Mayor Janet Holborow, Cr Gwynn Compton, Mr Gary Simpson, Mr Bryan Jackson

IN ATTENDANCE: Wayne Maxwell (Mr), Mark de Haast (Mr), Natasha Tod (Ms), Glen O’Connor (Mr), Janice McDougall (Mrs), Tim Power (Mr), Jacinta Straker (Ms), Anelise Horn (Ms),Tanicka Mason (Mrs), David Borrie (Mr), Grayson Rowse (Mr), Dan O’Connel (Mr), Jill Griggs (Mrs).

APOLOGIES: Mayor K Gurunathan

LEAVE OF Nil

ABSENCE:

1 Welcome

2 Council Blessing

The Chair welcomed everyone to the meeting and read the Council blessing.

3 Apologies

Committee Resolution 2020/1

Moved: Cr Gwynn Compton

Seconder: Mr Gary Simpson

That the apology received from Mayor K Gurunathan be accepted.

Carried

4 Declarations of Interest Relating to Items on the Agenda

Nil

5 Public Speaking Time for Items Relating to the Agenda

Nil

6 Members’ Business

(a) Public Speaking Time Responses

Nil

(b) Leave of Absence

Nil

7 Updates

Nil

8 Reports

8.1 Proposal to conduct the audit of the Council on behalf of the Auditor-General for 2020, 2021 and 2022 financial years

Anelise Horn, Finance and Accounting Manager, introduced herself and David Borrie to the sub-

Committee.

David Borrie spoke to the report and answered questions from the members.

Committee Resolution 2020/2

Moved: Cr Angela Buswell

Seconder: Deputy Mayor Janet Holborow

That the Audit and Risk Subcommittee receives and accepts Ernst & Young’s proposal to conduct the audit of Council on behalf of the Auditor-General for the 2020, 2021 and 2022 financial years.

Carried

8.2 Ernst and Young Audit Plan for the year ended 30 June 2020

Ms Horn handed over to David Borrie who spoke to the report and answered questions from the members.

Committee Resolution 2020/3

Moved: Cr Angela Buswell

Seconder: Deputy Mayor Janet Holborow

That the Audit and Risk Subcommittee receives and notes the Ernst & Young Audit Plan for the year ended 30 June 2020 attached as Appendix 1 to this report.

Carried

8.3 Timetable for the Audit Plan for the year ended 30 June 2020

Ms Horn spoke to the report, informed members of reports timelines and answered members questions.

Committee Resolution 2020/4

Moved: Cr Angela Buswell

Seconder: Cr Gwynn Compton

That the Audit and Risk Subcommittee notes the timetable for the audit of the Council’s Annual Report and the Council’s Debenture Trust Deed for the year ended 30 June 2020.

Carried

8.4 Update on key 2018-19 Audit Findings

Ms Horn spoke to the update. Members questions were answered.

Committee Resolution 2020/5

Moved: Cr Gwynn Compton

Seconder: Deputy Mayor Janet Holborow

That the Audit and Risk Subcommittee notes the progress update in regards to Ernst & Young’s Report on Control findings for the year ended 30 June 2019 and that Ernst & Young will re-assess these as part of their audit for the year ended 30 June 2020.

Carried

8.5 Quarterly Treasury Compliance Report

Ms Horn speaks to the report. She advises members that it is for six months rather than the usual 3 months.

Ms Horn and Mr de Haast, Group Manager, Corporate Services answered members questions.

Mr Simpson noted that this report is consistenly good and useful.

Committee Resolution 2020/6

Moved: Cr Angela Buswell

Seconder: Mr Gary Simpson

That the Audit and Risk Subcommittee notes the Council’s compliance with its Treasury Management Policy for the six months ended 31 December 2019.

Carried

8.6 Ombudsman Investigation into Christchurch City Council LGOIMA Practices

Tim Power, Senior Legal Counsel speaks to the report.

Questions were asked and answered.

Committee Resolution 2020/7

Moved: Cr Gwynn Compton

Seconder: Deputy Mayor Janet Holborow

That the Audit and Risk Subcommittee:

Notes the CCC Ombudsman report;

Notes the areas highlighted for improvement set out in paragraph 28 to this report.

Carried

8.7 Risk Management - Business Assurance Update

Jacinta Straker, Chief Financial Officer spoke to the report and answered members questions.

Committee Resolution 2020/8

Moved: Cr Angela Buswell

Seconder: Mr Gary Simpson

That the Audit and Risk Committee notes the progress on the Council’s Enterprise Risk Management Framework.

Carried

8.8 Health and Safety Quarterly Reports: 1 July 2019 - 30 September 2019; and 1 October 2019 - 31 December 2019

Mark de Haast, Group Manager Corporate Services talked to the report on behalf of Diane Andrews, Organisational Development Manager.

Committee Resolution 2020/9

Moved: Deputy Mayor Janet Holborow

Seconder: Cr Angela Buswell

That the Audit and Risk Sub Committee notes the two Health and Safety Quarterly Reports for the periods: 1 July 2019 – 30 September 2019; and 1 October 2019 – 31 December 2019 attached as Appendix One and Appendix Two to this Report.

That the Audit and Risk Sub Committee note the Health and Safety Leadership Charter which is attached for members’ future reference as Appendix Three to this Report.

Carried

Meeting adjourned at 10:40am

Meeting resumed at 10:50am

9 Public Excluded Reports

Resolution to Exclude the Public

Public Excluded Resolution 2020/10

Moved: Cr Gwynn Compton

Seconder: Mr Gary Simpson

That, pursuant to Section 48 of the Local Government Official Information and Meetings Act 1987, the public, with the exception of Council’s auditor and Community Board Members present now be excluded from the meeting for the reasons given below, while the following matters are considered.

The general subject matter of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Ground(s) under section 48 for the passing of this resolution

10.1 - Update on Ombudsman and Privacy Commissioner Investigations and Litigation Status Report

Section 7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons

Section 7(2)(b)(ii) - the withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information

Section 7(2)(g) - the withholding of the information is necessary to maintain legal professional privilege

Section 7(2)(h) - the withholding of the information is necessary to enable Council to carry out, without prejudice or disadvantage, commercial activities

Section 48(1)(a)(i) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7

Carried

The Audit and Risk Subcommittee meeting went into public excluded session at 10:54 am.

Committee Resolution 2020/11

Moved: Cr Angela Buswell

Seconder: Deputy Mayor Janet Holborow

That the Audit and Risk Subcommittee moves out of a public excluded meeting.

Carried

The Audit and Risk Subcommittee came out of public excluded session at 11.36 am having resolved that the following resolution and the report Update on Ombudsman and Privacy Commissioner Investigations and Litigation Status Report be released from publically excluded business.

Committee Resolution 2020/12

Moved: Cr Gwynn Compton

Seconder: Deputy Mayor Janet Holborow

That the Audit and Risk Subcommittee:

notes the current status of Ombudsman and Privacy Commissioner investigations and litigation;

agrees that this report and resolutions only be released from public excluded business; and

agrees that Appendix A and Appendix B to this report be excluded from public release.

Carried

Appendices

1 Update on Ombudsman and Privacy Commissioner investigations and litigation status report

The Audit and Risk Subcommittee meeting closed at 11.36 am.

...................................................

CHAIRPERSON


AGENDA Audit and Risk Sub-committee Meeting
I hereby give notice that a Meeting of the Audit and Risk Subcommittee will be held on:
Date:	Thursday, 13 August 2020
Time:	9.30am
Location:	Council Chamber Ground Floor, 175 Rimu Road Paraparaumu
Mark de Haast Group Manager Corporate Services

Mr Bryan Jackson	Independent Chair
Mayor K Gurunathan	Member
Cr Angela Buswell	Deputy
Deputy Mayor Janet Holborow	Member
Cr Gwynn Compton	Member
Mr Gary Simpson	Independent