I hereby give notice that an ordinary meeting of the Audit and Risk Committee will be held on:

 

Date:                      

Time:

Meeting Room:

Venue:

 

Wednesday, 29 July 2015

1.30pm

Room 1, Level 26
135 Albert Street
Auckland

 

Audit and Risk Committee

 

OPEN AGENDA

 

 

MEMBERSHIP

 

Chairperson

Cr Sir John Walker, KNZM, CBE

 

Deputy Chairperson

Cr Dr Cathy Casey

 

Members

Cr Cameron Brewer

 

 

Cr Bill Cashmore

 

 

Mr Paul Conder, CA

 

 

Cr Sharon Stewart, QSM

 

 

Mr Roy Tiffin, FCA

 

 

Cr Penny Webster

 

Ex-officio

Mayor Len Brown, JP

 

 

Deputy Mayor Penny Hulse

 

 

(Quorum 4 members)

 

 

 

Mike Giddey

Democracy Advisor

 

23 July 2015

 

Contact Telephone: (09) 890 8143

Email: mike.giddey@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 

Please note: Any attachments listed within this agenda as “Under Separate Cover” can be found at the Auckland Council website http://infocouncil.aucklandcouncil.govt.nz/ or can be provided on request.

 

 



TERMS OF REFERENCE

 

Responsibilities

 

The Audit and Risk Committee will be responsible for:

 

·         Providing objective advice and recommendations to the Governing Body regarding the sufficiency, quality and results of assurance on the adequacy and functioning of the council’s risk management, control and governance frameworks and processes.

·         Exercising active oversight of all areas of Auckland Council control and accountability (including Council Controlled Organisations), in an integrated and systematic way, such that the results of risk and assurance reviews and external audits may be incorporated in the priority-setting and strategic planning processes.

·         Liaison with Audit NZ and, where necessary, the audit committees of CCOs to ensure robust financial audits and reviews of the Auckland Council group

 


Exclusion of the public – who needs to leave the meeting

 

Members of the public

 

All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.

 

Those who are not members of the public

 

General principles

 

·           Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.

·           Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.

·           Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.

·           In any case of doubt, the ruling of the chairperson is final.

 

Members of the meeting

 

·           The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).

·           However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.

·           All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.

 

Independent Māori Statutory Board

 

·           Members of the Independent Māori Statutory Board who are appointed members of the committee remain.

·           Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.

 

Staff

 

·           All staff supporting the meeting (administrative, senior management) remain.

·           Other staff who need to because of their role may remain.

 

Local Board members

 

·           Local Board members who need to hear the matter being discussed in order to perform their role may remain.  This will usually be if the matter affects, or is relevant to, a particular Local Board area.

 

Council Controlled Organisations

 

·           Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.

 

 

 

 


Audit and Risk Committee

29 July 2015

 

ITEM   TABLE OF CONTENTS                                                                                        PAGE

1          Apologies                                                                                                                        7

2          Declaration of Interest                                                                                                   7

3          Confirmation of Minutes                                                                                               7

4          Petitions                                                                                                                          7

5          Public Input                                                                                                                    7

6          Local Board Input                                                                                                          7

7          Extraordinary Business                                                                                                7

8          Notices of Motion                                                                                                          8

9          Office of the Auditor-General and Audit New Zealand briefing                               9

10        Audit New Zealand report on LTP consultation document                                    13

11        Management Report Interim Audit 2015                                                                   35

12        2015 Pro forma Group Financial Statements                                                           49

13        Update on Targeted rates / reserves                                                                         51

14        Compliance (Do it Right) Programme                                                                       53

15        Update on Enterprise Risk Management and Insurance Activities                       67

16        Council Controlled Organisation's Risk Report                                                      71

17        Consideration of Extraordinary Items 

PUBLIC EXCLUDED

18        Procedural Motion to Exclude the Public                                                                 79

C1       Council-Controlled Organisations Risk Management Information                       79

C2       Update on Integrity and  Investigation  Activity                                                       79

C3       Update on Internal Audit Activities                                                                           80

 


1          Apologies

 

Apologies from Mayor LCM Brown and Deputy Mayor PA Hulse have been received.

 

2          Declaration of Interest

 

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

 

3          Confirmation of Minutes

 

That the Audit and Risk Committee:

a)         confirm the ordinary minutes of its meeting, held on Wednesday, 20 May 2015, including the confidential section, as a true and correct record.

 

 

4          Petitions

 

At the close of the agenda no requests to present petitions had been received.

 

5          Public Input

 

Standing Order 7.7 provides for Public Input.  Applications to speak must be made to the Democracy Advisor, in writing, no later than one (1) clear working day prior to the meeting and must include the subject matter.  The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.  A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

 

At the close of the agenda no requests for public input had been received.

 

 

6          Local Board Input

 

Standing Order 6.2 provides for Local Board Input.  The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time.  The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give one (1) days notice of their wish to speak.  The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

 

This right is in addition to the right under Standing Order 6.1 to speak to matters on the agenda.

 

At the close of the agenda no requests for local board input had been received.

 

7          Extraordinary Business

 

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

 

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

 

(a)        The local  authority by resolution so decides; and

 

(b)        The presiding member explains at the meeting, at a time when it is open to the public,-

 

(i)         The reason why the item is not on the agenda; and

 

(ii)        The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

 

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

 

“Where an item is not on the agenda for a meeting,-

 

(a)        That item may be discussed at that meeting if-

 

(i)         That item is a minor matter relating to the general business of the local authority; and

 

(ii)        the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

 

(b)        no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

 

8          Notices of Motion

 

At the close of the agenda no requests for notices of motion had been received.

 


Audit and Risk Committee

29 July 2015

 

Office of the Auditor-General and Audit New Zealand briefing

 

File No.: CP2015/14525

 

  

 

 

Purpose

1.       To provide an opportunity for representatives from the Office of the Auditor-General and Audit New Zealand to address the committee.

Executive Summary

2.       Sarah Lineham – Sector Manager Local Government from the Office of the Auditor-General and Jo Smaill – Audit Director from Audit NZ will be in attendance.

3.       A briefing paper from Audit New Zealand providing an audit status update is attached.

 

Recommendation

That the Audit and Risk Committee:

a)      receive the verbal update from Sarah Lineham – Sector Manager Local Government from the Office of the Auditor-General and Jo Smaill – Audit Director from Audit NZ.

 

 

Attachments

No.

Title

Page

aView

Audit Status Update to the Audit and Risk Committee

11

      

Signatories

Author

Mike Giddey - Democracy Advisor

Authoriser

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 


Audit and Risk Committee

29 July 2015

 

Audit New Zealand report on LTP consultation document

 

File No.: CP2015/14743

 

  

 

 

Purpose

1.       This report sets out Audit New Zealand’s findings from the audit of the Auckland Council’s Consultation Document for the 2015-2025 Long–term Plan (LTP).

Executive Summary

2.       Audit New Zealand’s report on the audit of Auckland Council’s Consultation Document for the 2015-2025 Long–term Plan (LTP) is included as attachment A.  This report sets out Audit New Zealand’s findings from this audit and draws attention to areas where the council is doing well or where they have made recommendations for improvement.

3.       Audit New Zealand found that the council’s process for developing the consultation document included effective control processes and worked well in terms of creating strong buy-in from all parts of the council group and providing a clear focus on a small number of strategic issues.

4.       Audit New Zealand’s report did not identify any areas that needed urgent attention but did make a total of nine recommendations for improvement. Of these recommendations:

·   three relate to learnings for future LTPs

·   four relate to ongoing improvement work

·   two relate to specific actions to be progressed in the near future.

5.       In addition, a number of their recommendations were addressed as the final LTP document was prepared.

6.       The two specific actions relate to the establishment, monitoring and reporting of formal budget holder and Treasury sign-off processes as part of the council’s standard budgeting processes. The Financial Planning team will work with the Internal Audit team to implement these two actions.

 

 

Recommendation

That the Audit and Risk Committee:

a)      receive the Audit New Zealand report on the audit of Auckland Council’s Consultation Document for the 2015-2025 Long–term Plan.

 

 

Comments

7.       Audit New Zealand’s report on the audit of Auckland Council’s Consultation Document for the 2015-2025 Long–term Plan (LTP) is included as attachment A.  This report sets out Audit New Zealand’s findings from this audit and draws attention to areas where the council is doing well or where they have made recommendations for improvement.

 


Areas where the council is doing well

 

8.       Audit New Zealand found that the council’s process for developing the consultation document worked well in a number of areas including:

·   creating strong buy in and commitment from all parts of the council group including, staff, CCOs and elected members

·   providing a clear focus on a small number of key strategic issues as intended by the new legislation

·   good coordination, strong budget controls and effective risk management, all of which contributed to a smooth audit process

·   good progress in areas such as asset management planning, and a good response to new legislative requirements such as the requirement for a 30-year infrastructure strategy.

 

Recommendations for improvement

 

9.       Audit New Zealand made a total of nine recommendations for improvement in their report, none of which were categorised as “urgent”. Of these recommendations:

·   three relate to learnings for future LTPs

·   four relate to ongoing improvement work

·   two relate to specific actions to be progressed in the near future.

 

10.     In addition, the process we used to develop the final LTP has already addressed some aspects of their recommendations that relate to legal, treasury and budget controls. The content of the final LTP document also addressed some aspects of their recommendations on the infrastructure and financial strategies.

 

Learning for future LTPs

a)   Significant assumptions

11.     Audit New Zealand recommended that the council should identify significant assumptions early in the LTP development process and ensure that there is a sufficient evidential base to support those assumptions. A key example was the assumption about the timing of central government funding for the City Rail Link.

12.     For future LTPs, we will ensure that there is a sufficient evidential base to support significant assumptions.  This approach was also applied in the development of the final LTP, where it was clear that there was insufficient evidence to support an assumption of government support for motorway tolls or increased fuel taxes at this stage.

b)   Communication

13.     Audit recommended that the consultation document is clearly and unambiguously utilised as the key document for consultation with the community. We note that for this LTP our household summary, our Have Your Say Events and our website content all requested that people read the full consultation document before making their submission. 

14.     In our view, providing all households with a summary of the key issues and questions in a widely accessible format helped to significantly boost the level of engagement compared to previous consultations.  Giving minimal information to households, and relying on people’s willingness to seek out a more detailed consultation document for substantive information, would most likely have resulted in much lower levels of engagement and ultimately fewer submissions.  In this case we received a significantly higher number of submissions (at 27,000) than for any previous Auckland Council consultation.

15.     For future LTPs we will consider how to ensure that it is always clear that consultation document is the key document. We are currently undertaking a full review of the consultation process including assessing the experience of Aucklanders. This review will give a more reliable picture of the experience of Aucklanders with both the household summary and the wider consultation process, and help inform how we consult on future LTPs.

c)   Legislation

16.     Audit New Zealand also recommended that for future consultation documents, legal review and assurance on legislative compliance is completed prior to the audit review.  We support this approach, and will implement this to the extent that timeframes permit.

 

Ongoing improvement work

a)   Asset Management

17.     While Audit New Zealand acknowledged good progress with asset management planning, they found that this was more advanced for some asset classes than others.  They therefore recommended that council facilities the sharing of best practice across the group.  We already take this approach and will continue to make these kinds of ongoing improvements with progress monitored by our Asset Management Steering Group.

b)   Infrastructure strategy

18.     Audit New Zealand made a number of recommendations for improving the council’s draft 30-year infrastructure strategy, which they note was developed when there was no precedent in the sector or elsewhere.  Their specific comments on the content of the strategy were addressed as part of preparing the revised strategy for the final LTP.  Their main recommendation looking forward was that council continue to develop the infrastructure strategy so that it reflects a coherent and joined up plan to respond to the infrastructure issues facing the region.  We agree, and have already commenced some preliminary work to support future iterations of the infrastructure strategy.

c)   Financial strategy

19.     Audit New Zealand recommended that the financial strategy more clearly show the trade-offs between spending more on maintaining existing assets to reduce the risk of asset failure and maintaining sufficient financial flexibility to deal with any unexpected asset replacements.  We made these trade-offs as clear as possible in the final LTP.  Our ability to articulate these trade-offs will improve as the improvements to asset management and our infrastructure strategy described above progress. 

d)   Performance measures

20.     In the area of performance measures, Audit New Zealand acknowledged good progress (particularly with the use of a smaller number of more effective measures in the LTP) and recommended that the council embed and build on this progress by improving how the council’s hierarchy of performance measures can support more effective management of the council’s operations.  This means working towards a system of detailed operational management-level measures that align to LTP measures that are in turn aligned to over-arching Auckland Plan outcome measures.  We will continue to work towards this, with a key opportunity for improvement being the review of the Auckland Plan outcome measures that will occur as part of the early work on the Auckland Plan refresh that is required by legislation to occur by 2018.

 

Specific actions

a)   Budget control

21.     Audit New Zealand found that strong budget controls were developed for the LTP process, including a formal sign-off process by CCOs and budget holders within the Auckland Council organisation.  They recommend that these controls be formally embedded into standard council processes.  We will implement this formal budget sign-off process for each annual plan budget refresh cycle, with our Internal Audit team monitoring and reporting on the operation of this control.  

b)   Treasury management

22.     Audit New Zealand were pleased to note improved and formalised linkages between the council’s Financial Planning and Treasury teams, particularly given the important role that budget information plays in informing financial markets. They recommend that these linkages are formally established and regularly monitored. We will implement a formal Treasury sign-off process for each annual plan budget refresh cycle, with our Internal Audit team monitoring and reporting on the operation of this control.

  

Consideration

Local Board views and implications

23.     There are no specific implications for local boards.

Māori impact statement

24.     There are no specific implications for Māori outcomes.

Implementation

25.     The Financial Planning team will work with the internal audit team to implement the monitoring and reporting of the two specific actions identified in this report.

 

Attachments

No.

Title

Page

aView

Report to Council on the audit of the Consultation Document

17

     

Signatories

Author

Ross Tucker - Manager Financial Policy & Strategy

Authorisers

Matthew Walker - General Manager Financial Plan Policy & Budgeting

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 



















Audit and Risk Committee

29 July 2015

 

Management Report Interim Audit 2015

 

File No.: CP2015/10530

 

  

 

 

Purpose

1.       This report summarises the issues identified by Audit New Zealand during their planning and first interim audit visits.

Executive Summary

2.       Audit New Zealand has issued a letter detailing the findings arising from their interim audit visit.  Overall, Audit New Zealand has assessed that Auckland Council has an effective management control environment.  This assessment of the management control environment is used by Audit New Zealand to plan the most effective and efficient audit approach.

The other key areas identified where Audit New Zealand believe the control environment can be improved are the authorisation and supporting documentation for credit notes, refunds and expenditure on purchasing cards, and a recommendation to regularly review and reinforce council’s sensitive expenditure policies.

 

Recommendations

That the Audit and Risk Committee:

a)      receive the interim management report from Audit New Zealand on the findings arising from their planning and first interim audit visits of Auckland Council for the year ended 30 June 2015.

b)      note the responses to the issues identified by Audit New Zealand.

 

Comments

3.       Audit New Zealand uses the interim visits to assess the Auckland Council’s control environment and follow up on issues raised in prior year’s management reports.

It was noted by Audit New Zealand that there has been positive progress made by council on the collation and reporting of non-financial information.  However, further improvements to support the results reported in a few areas is required.

The other key areas identified where Audit New Zealand believe the control environment can be improved are the authorisation and supporting documentation for credit notes, refunds and expenditure on purchasing cards, and a recommendation to regularly review and reinforce council’s sensitive expenditure policies.

Management responses are included in the letter which indicates the specific actions management are taking to address the matters identified by Audit New Zealand.

We are confident that improved processes are in place to address the issues identified with many of the enhancements already in progress by Auckland Council.

We are working closely with Audit New Zealand to ensure none of the identified issues will impact on the audit opinion.  Financial Control is working with the business to ensure processes are robust, particularly in relation to non-financial information, to mitigate business risk.

Consideration

Local Board views and implications

4.       Local boards have not been consulted because the report deals primarily with internal management issues.

Māori impact statement

5.       The report does not have any particular benefit or adverse effects on Māori.

Implementation

6.       No issues.

 

Attachments

No.

Title

Page

aView

Management Report on the interim audit of Auckland Council for the year ending 30 June 2015

37

     

Signatories

Author

Francis  Caetano - Group Financial Controller

Authorisers

Kevin Ramsay - General Manager Finance

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 













Audit and Risk Committee

29 July 2015

 

2015 Pro forma Group Financial Statements

 

File No.: CP2015/14479

 

  

 

 

Purpose

1.       To present the 2015 pro forma group financial statements for approval.

Executive Summary

2.       The 2015 group financial statements are the first set of annual financial statements presented in accordance with the new Public Sector Public Benefit Entities accounting standards (PBE accounting standards). The changes resulting from the adoption of the PBE accounting standards predominately affect disclosures, which have been reflected in the 2015 pro forma group financial statements.  There have been no changes to the financial performance and financial position of the Auckland Council Group (the Group) as a result of the adoption. 

 

Recommendation

That the Audit and Risk Committee:

a)      approve the 2015 pro forma group financial statements.

 

 

Comments

3.       All public sector entities are required to apply the PBE accounting standards for periods beginning on or after 1 July 2014.  The New Zealand Accounting Standards Framework defines public benefit entities as reporting entities “whose primary objective is to provide goods or services for community or social benefit and where any equity has been provided with a view to supporting that primary objective rather than for a financial return to equity holders”.  The Group is classified as a public sector PBE for financial reporting purposes, and applies New Zealand Tier 1 Public Sector PBE accounting standards. 

 

4.       This is the first set of annual group financial statements presented in accordance with the new PBE accounting standards.  The key changes arising from first time adoption are disclosed in note 29.  Major changes include:

·        Disclosure of exchange and non-exchange split for revenue and receivables – Exchange revenue arises when one entity receives assets or services and directly gives approximately equal value in exchange.  Non-exchange revenue arises from transactions without an apparent exchange of approximately equal value.  Audit NZ agreed that it is appropriate for council to apply the activity funding approach to classify revenue into exchange and non-exchange. The funding policy contained in the Long-term Plan 2012-2022 (LTP) identifies the groups of activities that are funded by rates and those that are self-funded. If an activity is funded or partially funded by rates then the associated revenue stream is classified as non-exchange. The exchange and non-exchange splits of revenue and receivables are disclosed in note two and note eight respectively.

 

·        Related party disclosures – The new standard requires public sector PBEs to disclose only those related party transactions and balances which have been entered into on terms other than at arm’s length. As a result the size of the related party note (note 27) has been substantially reduced, as most related party transactions and balances are at arm’s length. 

·        Service concession arrangements – a service concession arrangement is a binding arrangement between a grantor and an operator, in which the operator uses the service concession asset to provide a public service on behalf of the grantor for a specified period of time.  The group has identified a service concession arrangement between Watercare and Veolia Water Services (Veolia).  The agreement grants Veolia the right to use water and wastewater infrastructure assets owned by Watercare for the provision of water and wastewater services in the Papakura District.  The arrangement is disclosed in note 11.

 

As noted above, the adoption of the new PBE accounting standards had no impact on the financial performance and financial position of the Group.  The changes described above affect disclosures only. To ensure compliance these pro forma group financial statements have been reviewed against the latest Audit NZ model financial statements applicable to local authorities.

The attached pro forma group financial statements have been provided to Audit NZ for review and comment. At date of writing we are still awaiting feedback from Audit NZ.

5.       There have been no changes in local government legislation affecting financial reporting and disclosures during the year. The structure and layout of the group financial statements have remained consistent with prior year. 

Consideration

Local Board views and implications

6.       No impact.

Māori impact statement

7.       No impact.

Implementation

8.       None

 

Attachments

No.

Title

Page

a

2015 Pro forma Group Financial Statements (Under Separate Cover)

 

     

Signatories

Author

Francis  Caetano - Group Financial Controller

Authorisers

Kevin Ramsay - General Manager Finance

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 

Update on Targeted rates / reserves

 

File No.: CP2015/14058

 

  

 

 

Purpose

1.       To provide an update to the Audit and Risk Committee as to the status of the following targeted rate and reserve accounts: Harbourview - Orangihina Targeted Rate, Waitakere Quarry Aftercare Fund – Reserve Account (WQAF), Hillary Commission – Reserve Account, Retrofit Your Home - Financial Assistance Programme.

Executive Summary

2.       Since the last report in May 2015, Harbourview and the Hillary Commission await the outcome of court hearings and committee decisions respectively.  WQAF remains pending consultation and agreement with all relevant stakeholders.  The retrofit programme will remain as part of the NewCore solution as there was no perceived benefit from an interim solution.

 

Recommendation

That the Audit and Risk Committee:

a)       receive this Update on Targeted rates/reserves report.

 

 

Comments

3.       Harbourview – Orangihina Targeted Rate

Status

No further update awaiting the Court of Appeal fixture for the appeal hearing on 12 and 13 August 2015.  A decision is not expected till early 2016.

 

4.       Waitakere Quarry Aftercare Fund – Reserve Account

Status

A review is underway into the scope of the rehabilitation works to be carried out (by Perry Resources) on the quarry.  As part of this review an assessment is to be made as to whether the works meet the expectations of the community and other relevant stakeholders.

 

Discussions are ongoing with all interested parties, including the local board.  It is anticipated that once agreement is reached on the accounting treatment of the WQAF, council will be in a position to conclude.

 

5.       Hillary Commission – Reserve Account

Status

A workshop was held in June 2015 with the Parks, Recreation and Sport Committee where this reserve account was discussed. Various options are to be tabled in a wider funding report now to be submitted to the Parks, Recreation and Sport Committee in late July 2015.


 

6.       Retrofit Your Home – Financial Assistance Programme

Status

Council have considered options for outsourcing or purchasing an interim automated software solution for retrofit to remove the reliance on spreadsheets and decided not to proceed with either option as the costs exceed any benefit.  The NewCore solution will be operational for NSCC/RDC/WCC legacy areas from 1 July 2016 and for other legacy council areas from 1 July 2017.

Consideration

Local Board views and implications

7.       Discussions are ongoing with the local board as the review into the WQAF rehabilitation works continue.  The resulting outcome of this review will require engagement with the relevant local board.

Māori impact statement

8.       Nil.

Implementation

9.       None.

 

Attachments

There are no attachments for this report.    

Signatories

Author

Francis  Caetano - Group Financial Controller

Authorisers

Kevin Ramsay - General Manager Finance

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 

Compliance (Do it Right) Programme

 

File No.: CP2015/14056

 

  

 

 

Purpose

1.       This report is to:

(a)  Brief the Committee on the Compliance (Do it Right) Programme

(b)  Ask that the Committee note that on 10 July 2015, the Executive Lead Team (ELT) endorsed the Compliance (Do it Right) Programme and its implementation.

Executive Summary

2.       On 18 February 2015, the Committee endorsed the high level principles and outline of a new Framework for Legislative Compliance.

3.       Since February, a cross council steering group led by Legal Services have been working to develop the detail of the framework and a compliance programme (including tools and systems).

4.       This report is to update the work that has been completed to develop the detail of the approved framework outline and commence implementation.

5.       On 10 July 2015, Executive Lead Team (ELT) received the attached power point, and endorsed the Compliance (Do it Right) Programme including the implementation roadmap, resources and investment.

6.       The programme has been developed to provide an integrated framework with activities to manage the council’s legislative obligations and applies to all council staff.  It is intended that some aspects of the programme will be extended to the CCOs in time.

7.       The following key aspects of the programme will be implemented in the next 12-18 months:

(a)  Compliance Plan Pilots in 4 groups targeting priority areas (LGOIMA, Finance, Health and Safety, Resource consents);

(b)  Establishing the monitoring and reporting pathways;

(c)  Developing and launching intranet platform (including an Obligation register);

(d)  Adopt a Corporate Policy for Legislative Compliance;

(e)  Develop an organisational and development (training) strategy.

 

 

Recommendation/s

That the Audit and Risk Committee:

a)      note that, on 10 July 2015, Executive Lead Team endorsed the Compliance (Do it Right) Programme and implementation roadmap, resources and investment.

 

 

Comments

8.       On 18 February 2015, the Committee received a presentation about the proposed Legislative Compliance Framework for Council.  The Committee endorsed the high level principles and the outline of the Framework.

9.       The project plan for this initiative included a report back to the Committee in July 2015 to update the Committee on progress with implementation of the framework outline.

10.     A programme for legislative compliance has now been developed called the Do it Right Programme for Legislative Compliance.  This programme was considered and endorsed for implementation by ELT on 10 July 2015.

11.     Key parts of the Do it Right programme include:

(a)  Developing a plan for  staff  training and development that responds to leadership, knowledge and training needs;

(b)  Creating an intranet platform/portal to house the Obligation Register, compliance information/checklists to support staff;

(c)  Compliance planning by business units (part of business planning);

(d)  Response and reporting pathways and mechanisms linking legal, risk, internal audit, ELT, Audit and Risk Committee;

(e)  A council corporate policy for legislative compliance;

(f)  Induction/on-boarding and communication strategies.

12.     Various tools and templates have also being developed to assist staff understand their legal obligations and to systematically monitor and track compliance across council.  Quarterly reporting on legislative compliance will be provided to the Audit and Risk Committee in accordance with the programme.

13.     The programme has been developed to manage the council’s legislative obligations and applies to council staff. 

14.     The programme will not immediately apply to CCOs however, the intention is to share the programme with, and potentially apply aspects of it to CCOs and discussions with the CCOs about this have started.

15.     The programme will support and enhance the quality of decision making in council through providing good information and advice to elected members as decision makers, consistent with a high performing council.

16.     The programme will be implemented gradually starting with a pilot programme and expanding to council wide in 2016/17.

17.     The following key aspects of the programme will be implemented in the next 12-18 months:

(a)  Compliance Plan Pilots in 4 groups targeting priority areas (LGOIMA, Finance, Health and Safety, Resource consents);

(b)  Establishing the monitoring and reporting pathways;

(c)  Developing and launching intranet platform (including an Obligation register);

(d)  Adopt a Corporate Policy for Legislative Compliance;

(e)  Develop an organisational and development (training) strategy.

 

Consideration

Local Board views and implications

18.     Local boards have not been consulted because the report deals with internal management issues.  The programme is focused on council staff activities and responsibilities and therefore does not directly affect Local Board members.


 

Māori impact statement

19.     The programme will assist and support the delivery of council’s statutory obligations concerning the Treaty of Waitangi and Māori. 

 

Implementation

20.     None

 

 

Attachments

No.

Title

Page

aView

Report to ELT 10 July 2015: Legislative Compliance Programme

57

     

Signatories

Authors

Emma Mosely - Senior Solicitor

Cecilia Tse - Manager Public Law

Authorisers

Katherine Anderson - Director Legal and Risk

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 











Audit and Risk Committee

29 July 2015

 

Update on Enterprise Risk Management and Insurance Activities

 

File No.: CP2015/13413

 

  

 

 

Purpose

1.       To update the Audit and Risk Committee on Enterprise Risk Management (ERM) and insurance activities at Auckland Council.

Executive Summary

2.       The Risk team continued with the implementation of the Enterprise Risk Management Strategic Plan for 2015-17.  The team have completed the first phase of the two-year work programme earlier than planned and have commenced the second phase. 

3.       The council group (including Council-Controlled Organisations (CCOs) but excluding Watercare) insurance programme has been renewed for the 2015/16 financial year. council’s Treasurer and Head of Risk are implementing a work programme to define an insurance strategy for council over the next 12 months.

 

Recommendation

That the Audit and Risk Committee:

a)      receive the Update on Enterprise Risk Management and Insurance activities report.

 

 

Comments

4.       The Risk team continue to implement the Enterprise Risk Management Strategic Plan for 2015-17.  Due to the increased engagement and strategies used, the team were able to complete Phase 1 earlier than planned, which allowed us to continue with Phase 2.  Phase 1 of the Plan was to build the risk platform foundation and strengthen the “three lines of defence”. 

5.       Key achievements for the Phase 1 implementation of the Strategic Plan are:

i)         Risk Strategic Plan 2015-17 approved by the Executive Lead Team (ELT) and endorsed by Audit and Risk Committee in May 2015.

ii)        Top risks are identified and risks being reviewed at least on a quarterly basis by the ELT risk owners.

iii)       Consolidation of all risk source documents on risk intranet page and communicated council-wide through intranet.

iv)       Increased risk management awareness and responsibilities through a news article on the intranet highlighting the “three lines of defence” and the importance of all staff in the management of risks as the first line of defence.

v)       Regular meetings with Executive Lead Team members and presentation to the Senior Leadership Team at lead team meetings.  The importance of the completion of risk registers has been communicated to the Senior Leadership Team across all divisions within council.

vi)       Disclosure Committee has been set up.  The Disclosure Policy has been finalised and communicated to all stakeholders, including CCOs.  A Disclosure register has been implemented and is now operating.

vii)      Reports can now be generated from the Hyperion system on number of risk registers received.  Risk analysis is now being included in the Monthly Performance Report to ELT on a regular basis. 

viii)     Greater collaboration with senior leaders and partnering arrangements.  As a result, risk champions have been appointed from each division to act as partners with the risk team and build risk management awareness and capability across council.

ix)       Fortnightly meetings are being held with Financial Control, Integrity and Investigations, and Internal Audit to ensure an efficient and integrated approach across second and third lines of defence.

6.       Phase 2 of the implementation will have increased engagement and reporting.  This phase will enable the reporting of operational risks together with strategic risk that is currently being reported and risk profiling for high risk/high opportunity areas.  This phase will also include a formalised risk champions’ programme and the development of increased risk management capability at council.  To measure the progress of risk maturity across council, an internal risk maturity assessment will be completed.

7.       Council’s insurance programme (including CCOs but excluding Watercare) has been renewed as at 30 June 2015. Key changes to the programme for the 2015/16 financial year include:

i)    Reduction in the limit of the Material Damage and Business Interruption Policy from $1 billion down to $500 million as agreed by the Governing Body on 25 June 2015 and supported by the latest loss modelling received by council;

ii)   Placement of Public Liability and Professional Indemnity Insurance directly with London markets at existing level of cover ($200 million);

iii)   Substantial premium savings across all policies due to favourable market conditions and council’s strong risk profile.

8.       Council’s Treasurer and Head of Risk are currently completing a work programme to create a clear insurance strategy for council and to define appropriate levels of risk retention within council. This work programme is expected to take 12 months and the results will be reported through to the Audit and Risk Committee.

9.       The key areas of review for the work programme include:

a)   Review risk retention options;

b)   Investigate options with CCOs to consolidate further group based policies; and

c)   Recommendation to council on wider insurance strategy.

Consideration

Local Board views and implications

10.       Local boards have not been consulted because the report primarily deals with internal       management issues.

Māori impact statement

11.       This report does not have any particular benefit or adverse effects on Māori.

Implementation

12.       None.

 

Attachments

There are no attachments for this report.    

Signatories

Authors

Aashmita Naikar - Risk Manager

Jazz Singh - Head of Risk

Authorisers

Katherine Anderson - Director Legal and Risk

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 

Council Controlled Organisation's Risk Report

 

File No.: CP2015/13414

 

  

 

 

Purpose

1.       For the Audit and Risk Committee to receive an update on the risks reported by Auckland Council’s substantive Council-Controlled Organisations (CCOs) as part of their regular quarterly reports.

Executive Summary

2.       This report provides a summary of the key risks reported by the substantive CCOs in their third quarter reports.  The CCOs have been reporting the risks since the recommendation from the Audit and Risk Committee from the 16 December 2014 meeting.

 

Recommendation

That the Audit and Risk Committee:

a)      receive an update on the risks reported by Council-Controlled Organisations.

 

Comments

3.       The Audit and Risk Committee have requested that the CCOs provide regular reporting to the CCO Governance and Monitoring Committee on a quarterly basis providing risk information.  A summary of the risks identified is included (Attachment A).

4.       The key risk information requested from the CCOs were:

(i)         how key risks are identified, assessed and managed

(ii)        an update on the approach to risk management, internal audit and external audit

(iii)       progress on current internal and external audit issues

(iv)       any financial impacts that will affect the council group

(v)     any key risks that are of a senior management or governance level that could impact on the wellbeing or reputation of the Council-Controlled Organisation or Auckland Council.

Consideration

Local Board views and implications

5.       The matters raised in this report relate to CCO accountability and governance which is a Governing Body function.

Māori impact statement

6.       Oversight of CCO risk by the council’s Audit and Risk Committee has no specific implications for Māori wellbeing and does not raise any matters requiring iwi consultation.

Implementation

7.       None.

 

Attachments

No.

Title

Page

aView

CCO Risk Management Summary Report

73

     

Signatories

Authors

Aashmita Naikar - Risk Manager

Alastair Cameron - Principal Advisor CCO Governance and External Partnerships

Authorisers

Jazz Singh - Head of Risk

Katherine Anderson - Director Legal and Risk

Phil Wilson - Governance Director

 


Audit and Risk Committee

29 July 2015

 





     

 


Audit and Risk Committee

29 July 2015

 

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

 

That the Audit and Risk Committee:

a)      exclude the public from the following part(s) of the proceedings of this meeting.

The general subject 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 follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

 

C1       Council-Controlled Organisations Risk Management Information

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains discussions on risks that may jeopardise the business operations of the entity..

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C2       Update on Integrity and  Investigation  Activity 

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 6.

s6(a) - The making available of the information would be likely to prejudice the maintenance of the law, including the prevention, investigation, and detection of offences and the right to a fair trial.

In particular, the report contains operational information regarding investigation and other activity , which if released may compromise the effective delivery of our integrity and investigative services   .

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 6.

 


 

C3       Update on Internal Audit Activities

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(c)(ii) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

In particular, the report contains financial and operational information and details of internal audit activity, which if released may jeopardise the effective delivery or Internal Audit services..

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.