I hereby give notice that an ordinary meeting of the Audit and Risk Committee will be held on:
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Date:
Time:
Meeting Room:
Venue:
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Wednesday, 20
May 2015
1.30pm
Room 1, Level
26
135 Albert Street
Auckland
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Audit and Risk Committee
OPEN AGENDA
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MEMBERSHIP
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Chairperson
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Cr Sir John Walker, KNZM, CBE
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Deputy Chairperson
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Cr Dr Cathy Casey
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Members
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Cr Cameron Brewer
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Cr Bill Cashmore
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Mr Paul Conder, CA
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Cr Sharon Stewart, QSM
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Mr Roy Tiffin, FCA
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Cr Penny Webster
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Ex-officio
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Mayor Len Brown, JP
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Deputy Mayor Penny Hulse
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(Quorum 4 members)
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Mike Giddey
Democracy Advisor
14 May 2015
Contact Telephone: (09) 890 8143
Email: mike.giddey@aucklandcouncil.govt.nz
Website: www.aucklandcouncil.govt.nz
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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.
Staff
·
All staff supporting the meeting (administrative, senior
management) remain.
·
Only 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.
IMSB
·
Members of the IMSB who are appointed members of the meeting
remain.
·
Other IMSB members and IMSB staff remain if this is necessary in
order for them to perform their role.
CCOs
Representatives of a CCO can remain only if
required to for discussion of a matter relevant to the CCO.
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Audit and Risk
Committee
20 May 2015
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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 Draft Audit Arrangements letter for the year to 30 June 2015 75
11 Review Engagement Management Report for the six months to 31
December 2014 99
12 Targeted rates/reserves update 119
13 Purchasing Cards 123
14 Update on Enterprise Risk Management activities 127
15 Health and Safety 151
16 Consideration of Extraordinary Items
PUBLIC EXCLUDED
17 Procedural Motion to Exclude the Public 153
C1 Update on Parks Contract Management 153
C2 Update on Internal Audit Activities 153
C3 Update on Integrity and Investigation Activities 154
Apologies from
Cr WB Cashmore, 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
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That the Audit and Risk Committee:
a)
confirm the ordinary minutes of its meeting,
held on Wednesday, 18 February 2015, including the
confidential section, as a true and correct record.
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4 Petitions
At the close of
the agenda no requests to present petitions had been received.
5 Public Input
Standing Order
3.21 provides for Public Input. Applications to speak must be made to the
Committee Secretary, in writing, no later than two (2) working days
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
3.22 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 two (2) 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 3.9.14 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.
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Audit and Risk
Committee
20 May 2015
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Office of the
Auditor-General and Audit New Zealand briefing
File No.: CP2015/08920
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. Audit New Zealand will brief the
committee on the activities of Audit during the last six months.
3. The Auditor-General’s review of
the Mayoral Office Expenditure has been completed and the report is attached.
4. A representative of the
Auditor-General will address the committee on the findings of the Review of
Service Performance around building consents and the current status of other
reviews.
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Recommendations
That the Audit and Risk
Committee:
a) receive the report and the
verbal update provided by Audit New Zealand.
b) receive the report from the
Auditor-General on the follow up review of Mayoral Office expenses.
c) receive the report from the
Auditor-General on Building Consents.
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Attachments
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No.
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Title
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Page
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aView
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Audit New Zealand briefing paper to Audit and Risk
Committee
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11
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bView
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Letter to Stephen Town - Follow-up review of Mayoral
Office expenses 10 April 2015
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13
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cView
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Auditor-General Building Consent report
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19
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Signatories
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Authors
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Francis Caetano - Group Financial Controller
Mark Maloney - Head of Internal Audit
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Authorisers
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Kevin Ramsay - General Manager Finance
Grant Taylor - Governance Director
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Audit and Risk
Committee
20 May 2015
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Audit and Risk
Committee
20 May 2015
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Audit and Risk
Committee
20 May 2015
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Audit and Risk
Committee
20 May 2015
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Draft Audit Arrangements letter for the year to 30
June 2015
File No.: CP2015/01207
Purpose
1. The draft Audit
Arrangements letter from Audit New Zealand has been received and reviewed. We
are required to advise Audit New Zealand to issue the final letter and then the
letter is to be signed by the Mayor and Chief Executive.
Executive
Summary
2. Audit New
Zealand has provided the Audit Arrangements letter for the audit of the year
ending 30 June 2015. The letter has been provided in draft, and the letter is
required to be finalised by Audit New Zealand then signed by the Mayor and
Chief Executive. The content of the letter has been reviewed and we consider
that it is appropriate for the committee to recommend that the letter be
signed.
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Recommendation/s
That the Audit and Risk
Committee:
a) receive the draft Audit
Arrangements letter from Audit New Zealand.
b) advise Audit New Zealand to
issue the final letter.
c) recommend that the Mayor and
Chief Executive sign the finalised letter.
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Discussion
3. The draft Audit Arrangements
letter has been received.
The Audit Arrangements letter provides extensive details of
the audit for the financial year ending 30 June 2015, including issues and
risks identified, changes to accounting standards and logistics for the audit.
We consider the issues, risks and logistics are reasonable.
The proposed number of hours (5,290) and the proposed audit
fee is outlined. The total proposed audit fee excluding disbursements for the
2015 financial year is $1,101,600 compared to $1,081,000 in 2014 an increase
due to movements in the CPI. We consider the proposed number of hours and fee
to be reasonable given the size and complexity of the audit, and experience on
previous audits.
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.
General
6. None.
Implementation
Issues
7. None.
Attachments
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No.
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Title
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Page
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aView
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Draft Audit Arrangements letter for the year to 30
June 2015 including cover letter 060515
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77
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Signatories
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Author
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Francis Caetano - Group Financial Controller
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Authorisers
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Kevin Ramsay - General Manager Finance
Grant Taylor - Governance Director
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Audit and Risk
Committee
20 May 2015
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Audit and Risk
Committee
20 May 2015
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Review Engagement Management Report for the six months
to 31 December 2014
File No.: CP2015/06472
Purpose
1. To present Audit New Zealand’s
management report on the review of Auckland Council and group’s interim financial
statements for the six months to 31 December 2014.
Executive
Summary
2. Audit New Zealand completed a
review of the Auckland Council and group’s interim financial statements for the
six months to 31 December 2014 prior to their release to the NZX on 27 February
2015.
3. Audit New Zealand has now issued
a report outlining their findings from the review and drawing attention to
areas which the council needs to consider in the future. No significant issues
were identified.
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Recommendation/s
That the Audit and Risk
Committee:
a) receive the final management
report from Audit New Zealand on the audit of Auckland Council for the six
months to 31 December 2014.
b) note the recommendations made
by Audit New Zealand for improvements and council’s responses as per
Attachment A of the agenda report.
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Comments
4. The attached
report issued by Audit New Zealand covers their findings from their review of
the Auckland Council and group’s interim financial statements for the six
months ended 31 December 2014 which were released to the NZX on 27 February
2015.
There were no significant issues identified by Audit New
Zealand. The interim financial statements for the six month period ended 31
December 2014 was the first period for which the council had prepared financial
statements to comply with the new Public Benefit Entity International Public
Sector Accounting Standards (PBE IPSAS).
Audit New Zealand assessed that the council
had assessed and reported on the changes required by the new accounting
standards and highlighted additional areas which need to be considered for the
Annual Report for the full year to 30 June 2015. We are confident that we have
assessed and planned for the impact and the changes required.
Consideration
Local
Board views and implications
5. Local boards have not been
consulted because the report deals primarily with internal management issues.
Māori
impact statement
6. The report does not have any
particular benefit or adverse effects on Māori.
Implementation
7. There are no financial or
resourcing issues arising from the adoption of this report.
Attachments
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No.
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Title
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Page
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aView
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Review engagement management report for the six months
to 31 December 2014
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101
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Signatories
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Author
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Francis Caetano - Group Financial Controller
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Authorisers
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Kevin Ramsay - General Manager Finance
Grant Taylor - Governance Director
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Audit and Risk
Committee
20 May 2015
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Audit and Risk
Committee
20 May 2015
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Targeted rates/reserves update
File No.: CP2015/05152
Purpose
1. To provide feedback to Audit and
Risk Committee as to the status of the following targeted rate and reserve
accounts :
· Harbourview
Orangihina Targeted Rate (Harbourview)
· Waitakere
Quarry Aftercare Fund – Reserve Account (WQAF)
· Hillary
Commission – Reserve Account (Hillary)
· Retrofit
Your Home financial assistance programme (RYH).
Executive
Summary
2. The Audit and Risk
Committee requested an update as to four targeted rate / reserve funds. They
are the Harbourview, the WQAF, Hillary and RYH.
· Harbourview is on hold awaiting the
outcome of an appeal on a land claim.
· The WQAF was released as the
obligations are now met by a third party operator.
· Hillary funds are awaiting the
outcome of a review into funding allocation options currently underway.
· RYH is currently under review to roll
out a tactical solution to eliminate over reliance on manual processing.
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Recommendation
That the Audit and Risk
Committee:
a) receive this targeted
rates/reserves update report.
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Comments
3. Auckland
Council has a number of reserve funds which are disclosed as a restricted
equity in the balance sheet. Within restricted equity there are two
classifications of account:
· Trusts and
Reserves
Trusts - are established
when Auckland Council has a contractual obligation for the stewardship of
money. However the term in the accounting context is broader to further
identify any balances where there is a fiduciary obligation to manage the
funds. Trust funds are cash backed, the cash managed as a separate financial
investment portfolio.
Reserves - are established
by the relevant local authority regulatory function, e.g. parking levies. These
are not cash backed as it is not considered prudent financial management to
practice “jam jar accounting”. Income or expenditure for the reserve flows
through working capital. Essentially these funds are tagged which have been
identified following council decision. Restricted reserves are a component of
equity.
In accounting terms they are
not accruals or provisions because we do not yet have a specific liability to
pay for goods or services that have been received or supplied.
The current status of the
specific reserves is as follows:
4. Harbourview
– Orangihina Targeted Rate
History / Background
In July 2001 Waitakere City
Council (WCC) agreed to a uniform annual charge of $8 + GST ($9) on all
ratepayers in Waitakere City. The charge was for a period of five years. The
purpose of the rate was to fund the preparation of the Open Space Management
Plan, design details and development of the park. Funds were not for
maintenance or renewal of assets within the park, only to be used for new
development.
The fund was used for a
number of years for the first development stages of the park, however during
the first stages of development a land claim from the original owners of the
land (Public Works Act claim) was filed against WCC. To be prudent WCC put all
major works on hold until the outcome of the land claim was known. The balance
in the general ledger as at 31 March 2015 sits at $1.3 million.
Status
Auckland Council (AC) legal
have provided the following update as to the status of the land claim.
The Court proceedings are
still in progress. AC was successful in the High Court (decision issued in May
2014), but on a solitary, technical point which the plaintiffs have appealed.
AC has also cross-appealed on some of the points on which it was unsuccessful.
The Court of Appeal has allocated a fixture for the appeal hearing on the 12
and 13 August 2015. A decision is not expected till early 2016. Therefore
keeping all major works on hold remains the prudent approach.
5. Waitakere
Quarry Aftercare Fund – Reserve Account (WQAF)
History / Background
The WQAF was established to finance the reinstatement
of the quarry back to native forest and regenerating bush.
This fund, originally set up from proceeds
from the sale of the quarry operation, was added to each year through the
annual plan process from royalties received in respect of the contract covering
the quarry operation.
Status
The restoration of the quarry after
operations are completed is an obligation placed on, and accepted by, the third
party operator (Perry). They are to prepare a concept plan for consultation
before it is finalised and approved for implementation. Perry then has an
ongoing obligation to monitor and maintain the site until certain criteria are
met, at which point the site responsibility reverts to council. Therefore the
council no longer carries aftercare responsibility.
Further investigation into the previously
discussed provision shows that a recommendation was made in 2013 as details of
the final remediation were still to be determined. However in 2014 this
provision was discontinued as it was clearly noted that all restoration
obligations rest with Perry and so there is truly no need for a reserve or
provision for the quarry.
If other works such as dog walking, tracks
and rock climbing are desired by the local board or community then this is a
separate discussion, during which the merits of the proposal needs to be
assessed, and prioritisation within the wider programme determined. Only then
would a funding source be identified and approved. Had this aftercare fund
still existed, it appears that its purpose would not permit it to be used for
these other works as they go beyond the original intention of restoration
works.
Officers are preparing further information
in response to councillor requests and are finalising a review of the
conditions around WQAF. A further update will be provided at the next Audit and
Risk Committee meeting.
6. Hillary
Commission – Reserve Account
History / Background
Hillary Commission funding was provided to
councils to support sport development in their territorial areas. When the
Hillary Commission was superseded by Sport and Recreation New Zealand (SPARC)
in June 2002, SPARC resolved to cease the annual funding of community sport
development. SPARC allowed the councils to retain the funds for the continued
purpose of developing sport in their territory. Each council was given the
autonomy to best decide how that money should be invested in community sport.
With the exception of Waitakere City Council and Auckland City Council all
other legacy councils spent their respective funds on various sports projects.
Waitakere and Auckland City Councils –
Elected to utilise funds to fund low interest loans to sports clubs and to
utilize the interest on principal to provide contestable grants to local clubs
and groups.
Status
Waitakere City Council fund was brought over on
amalgamation. As at 31 March 2015 the balance sits at $1 million.
Auckland City Council fund was brought over on
amalgamation. As at 31 March 2015 the balance sits at $1.4 million.
All loans that were outstanding under both schemes are
now repaid or have been transferred to Community Loans.
Any
decisions on future allocation were pending the Sport and Recreation Strategic
Action Plan being completed (that is now in place) and the outcome of the
Community Grants Policy review - reported in December 2014. Parks, Sports and
Recreation are looking at options to submit for consideration as to the
allocation of these funds. A paper is expected prior to end of July 2015.
7. Retrofit
Your Home – Financial Assistance Programme
History / Background
The RYH scheme
(the scheme), provides financial assistance for the installation of clean heat
or insulation in houses. The financial assistance, including interest, is repaid by way of a targeted rate assessed
on the land concerned over a nine year period. Under the scheme, ratepayers of qualifying homes can apply to the
council for up to $5,000 financial assistance.
The scheme was started through Waitakere City Council.
It was picked up at the council transition and rolled out as a region-wide
programme in 2011.
Status
There are approximately 13,000 loans in place equating
to circa $23 million on Auckland Council’s balance sheet.
As the volume of transactions
increases this product is placing increasing burden on manual processes.
Options are currently being investigated to implement an automated software
solution to remove the reliance of spreadsheets and potential for human error.
Consideration
Local
Board views and implications
8. Each
targeted rate or reserve account will require engagement with relevant local
boards, particularly as to how funds are allocated.
Māori
impact statement
9. There
is widespread uptake of the RYH programme across the region, however no data is
available (or collected) on the programme’s specific impacts on Māori.
10. Home
insulation is included in the Independent Māori Statutory Board’s
Māori Plan for Tāmaki Makaurau. Some Auckland iwi are also involved
in delivering local board programmes focused on improving the energy efficiency
of homes used by local iwi.
Implementation
11. None.
Attachments
There are no attachments for
this report.
Signatories
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Author
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Francis Caetano - Group Financial Controller
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Authorisers
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Kevin Ramsay - General Manager Finance
Grant Taylor - Governance Director
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Audit and Risk
Committee
20 May 2015
|
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Purchasing Cards
File No.: CP2015/00223
Purpose
1. This report summarises the actions
taken to strengthen controls following the recommendations contained in the
2013 Internal Audit report on Purchase Card (P-card) expenditure and controls.
Executive
Summary
2. P-cards provide a convenient,
efficient and cost effective alternative to traditional purchasing methods.
Council uses the Flexipurchase programme to report, approve and monitor P-card
transactions to ensure compliance with policies. Expenditure incurred using
P-cards can increase the risk to Council of inappropriate expenditure. The
Council has implemented a range of measures to address and mitigate the issues
identified in the 2013 Internal Audit review.
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Recommendation/s
That the Audit and Risk
Committee:
a) receive the purchasing cards
report.
b) endorse the actions taken by
management.
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Discussion
3. The Internal Audit Department
issued a report in 2013 which reviewed the use of the Purchase Card System
(P-cards). The review resulted in a number of recommendations to strengthen
controls and reduce the risk to Council of inappropriate expenditure.
Auckland Council's P-card programme was established to
provide a convenient means to support the business's purchasing requirements.
It provides a low cost and efficient alternative to traditional purchasing
methods including reimbursement of expenditure. Where there is an identified
business requirement P-cards have been issued to Auckland Council staff for
expenditure. This is particularly appropriate where other procurement
processes, such as raising a purchase order, are not practical. It is an
additional payment channel for typically low value or one off operational
expenditure.
P-cards have supported Council’s project to reduce
procurement costs and improve efficiency by reducing the number of suppliers
and invoices processed through SAP each year.
The programme utilises Flexipurchase to provide an effective
and transparent tool for reporting, approving and monitoring P-card
transactions and compliance with Auckland Council's policies.
At Auckland Council the average spend per month using P
Cards is $163,500, with the average number of monthly transactions at 1,481 and
an average spend per transaction of $110.
There are currently 515 P-cards at Auckland Council of which
approximately half of these cards are held by staff in three departments with
80 cards held by the Libraries, 117 by Parks and 52 at Leisure centres. The
concentration of cards in these areas is largely due to the nature of the low
value items these areas often purchase and the fact that staff are often
located outside the CBD across the region.
Credit limits on P-cards are kept at a minimum level
normally between $500 and $2,500. In some areas such as the Regional Collection
team at the Libraries who make overseas purchases of books the limits are set
at higher levels. All P-cardholders and associated credit limits are approved
by a Tier 3 manager or higher. Council P-cards are not issued to non-employees,
contractors, casuals and councillors. Of the current 515 P-card issued, 279
have a credit limit of $1000 or less
Following the 2013 Internal Audit review the following
actions were taken to address risks identified. These included:
· The
P-card policy was reviewed and updated and Cardholder and Approvers
responsibilities were clearly documented.
· The
Flexipurchase approver user guide was updated and distributed.
· The
process for applying for, and approving the issuing of P Cards was amended and
tightened.
· All
cards have been set up to prevent any cash withdrawals.
· Credit
limits on individual cards have been reviewed and reduced where appropriate.
· The
P Card system has been reconfigured and it is now mandatory to attach images of
scanned GST receipts to P-card expense claims.
· Fortnightly
file is obtained and uploaded which contains the SAP information of staff
movements including leaving, transferring etc., so cards are cancelled and
appropriate approving manager assigned.
· Implementation
of a “3 Strike” policy to ensure that P-cardholders and approvers meet their
obligations and responsibilities. Failure, on three separate occasions, to
adhere to the P-card coding and approving processes results in the cancellation
the P-card. Strikes are issued for not completing the coding and/or approving
in Flexipurchase within the agreed timeframes (last working day of current
month). Strict enforcement of this policy has resulted in virtually 100 per
cent of coding and approvals being performed well before the last day of the
month.
· Quarterly
reviews are performed to identify cards held without recent transactions with a
view to cancelling unnecessary cards.
· The
Financial Compliance Manager now performs monthly monitoring. There is
follow-up of P-card transactions when discrepancies are identified.
For your information the transactions for March 2015 (which
is a typical month) were as follows:
For Auckland Council there were 1651 purchases with a total
spend of $158,530.
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Number of transactions
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Value of transaction
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Examples of Purchases
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970
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Less than $50
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Parking (189), Milk (88)
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299
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Between $50 and $100
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Top ups for AT Hop cards,
Hardware and materials
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327
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Between $100 and $500
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Books, licences, subscriptions
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55
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Greater than $500
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Books, training and
conferences, membership fees and subscriptions
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Consideration
Local
Board Views and Implications
4. Local Boards have not been
consulted because the report primarily deals with internal management issues.
Maori
Impact Statement
5. This report does not have any
particular benefit or adverse effect on Maori.
General
6. None.
Implementation
Issues
7. None.
Attachments
There are no attachments for
this report.
Signatories
|
Author
|
Francis Caetano - Group Financial Controller
|
|
Authorisers
|
Kevin Ramsay - General Manager Finance
Grant Taylor - Governance Director
|
|
Audit and Risk
Committee
20 May 2015
|
|
Update on Enterprise Risk Management activities
File No.: CP2015/01493
Purpose
1. To update the Audit and Risk
Committee on Enterprise Risk Management (ERM) activities at Auckland Council.
Executive
Summary
2. The Risk team
reviewed the Enterprise Risk Management Strategic Plan, with a renewed focus on
implementation of the ERM Framework. The Strategic Plan for 2015-17 has been
approved by the Executive Leadership Team (ELT) with the aim of achieving
advanced level of risk maturity by 2017.
3. The
implementation plan has been divided into three phases to enable key outcomes
to be achieved in the next 18 months starting with the first phase by building
a strong foundation which includes a risk register gap analysis and
organisation-wide learning plan for risk workshops. Phase two and three will
continue through increased engagement and improved reporting capability.
4. The Auckland Council Top Risk
Report has been updated for the last quarter. While there has been no material
change in the risk ratings of the top risks, there has been progress and action
taken by ELT to manage the risks through risk treatment plans.
|
Recommendation/s
That the Audit and Risk
Committee:
a) endorse the Risk Strategic Plan
2015-17.
b) receive the Update on
Enterprise Risk Management report.
|
Discussion
5. The Risk team
has reviewed and refreshed the Strategic Plan for 2015-17 (approved by ELT) and
asks that the Audit and Risk Committee to endorse this plan. The aim of this
plan is to achieve an advanced level of risk maturity by 2017. [Attachment A:
Strategic Plan for 2015-17]
6. To achieve an
advanced level of risk maturity, council needs to achieve the following by
2017:
a) Elected
member understanding of and commitment to risk management as a critical factor
for decision making and for driving value.
b) Senior
level executives (ELT) who drive and facilitate key risk management processes
and development.
c) Transparency
of risk communication.
d) A
risk culture that encourages full engagement and accountability at all levels
of the organisation.
e) Identification
of existing and emerging risks using internal and external data and
information.
f) Participation
of key stakeholders in risk management strategy development and policy setting.
g) Formal
collection and incorporation of operational risk information into decision
making and governance processes.
h) Integration
of risk management insights into people processes to drive sustainable business
performance.
i) Use
of quantification methods to understand risk and demonstrate added value
through risk management.
j) A
move from focusing on risk avoidance and mitigation to leveraging risk and risk
management options that extract value.
7. The Risk
Strategic Plan 2015-17 work programme is divided into three phases to enable
the key outcomes to be achieved in the next 18 months. These focus areas are:
i. Phase 1
(Feb-July 2015) – Foundation building of the risk platform and
strengthening of the “three lines of defence” model adopted by council in its
ERM Policy. This will enable us to create the appropriate communications
channel between the Risk department and the wider business, including ELT,
council’s wider family and the Audit and Risk Committee.
ii. Phase 2
(Aug 2015-Jan 2016) – Increased engagement and reporting and being more
customer focused with council staff using the foundation built in phase 1. The
completion of risk registers in the first phase will further enable the
reporting of operational risks in the Auckland Council Risk Report, in addition
to the strategic risks currently being reported.
iii. Phase 3
(Feb-July 2016) – Improved reporting capabilities and programme review
focusing on enhanced reporting capabilities which would allow for better
informed and risk-based decision-making. Success in the delivery of the
programme in the previous phases will result in council’s risk culture being
improved and providing greater transparency and accountability. By this stage,
ELT will also be able to clearly articulate the risk appetite statement. This
phase will allow the matching of organisational priorities based on council’s
risk profile.
8. To measure
the achievement and delivery of the work programme in the Strategic Plan
2015-17, an internal risk maturity assessment will be completed at the end of
phase 2 and an external risk maturity assessment will be completed at the end
of phase 3.
9. The Auckland
Council Risk Report (Refer: Attachment B) has been updated for the quarter
ending April 2015. Overall there were no major changes in the risk ratings
since last reported in February 2015. However, there has been progress in the
development of risk treatments that are reviewed by ELT on at least a quarterly
basis.
10. We continue to
work collaboratively with ELT and plan to fully review the top risks on an
annual basis through risk workshops. At this stage, there are no new risks to
report with the status of one risk being lowered.
11. We
also continue to engage with ELT members individually to ensure that action is
being taken to manage the level of risk at an acceptable level. In addition,
risk presentations have been made to senior leadership teams (SLT) to raise
risk awareness and use this forum to strengthen the first line of defence. The
SLT members are also identifying Risk champions during this process to form
partnerships with the Risk team. This group will be trained in risk management
to ensure a consistent approach is being taken across council.
12. There has been
increased engagement with the SLT to raise risk awareness. This forum was also
used for the identification of Risk Champions in each division. The Risk
Champions and the Risk team will further engage to form key partnerships to
enhance risk awareness in their allocated areas of responsibility.
13. A risk
register gap analysis has also been commenced for SLT led departments. Risk
data from the risk registers are being uploaded progressively into a reporting
system called Hyperion system to ensure single-point visibility.
14. The Risk
department now includes the Insurance and Claims Management team. This team
will report separately from the Risk team to the Head of Risk. The Head of
Risk and the Treasurer are also currently working on the Insurance Strategy
with council’s brokers. The proposed Insurance Strategy and any changes will
be reported to a committee of the whole of council.
Consideration
Local
Board Views and Implications
15. Local boards have not been
consulted because the report primarily deals with internal management issues.
Māori
Impact Statement
16. This report does not have any
particular benefit or adverse effects on Māori.
General
17. None
Implementation
Issues
18. None
Attachments
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No.
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Title
|
Page
|
|
aView
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Risk Strategic Plan 2015-17
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131
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bView
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Auckland Council Top Risk Report (April 2015)
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139
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Signatories
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Author
|
Aashmita Naikar - Risk Manager
|
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Authorisers
|
Jazz Singh - Head of Risk
Katherine Anderson - General Counsel
Grant Taylor - Governance Director
|
|
Audit and Risk
Committee
20 May 2015
|
|
|
Audit and Risk
Committee
20 May 2015
|
|
|
Audit and Risk
Committee
20 May 2015
|
|
Health and Safety
File No.: CP2015/08794
Purpose
1. This report
summarises the health and safety activities currently underway to improve our
health and safety performance and to prepare for the proposed health and safety
legislation that will be enacted in late 2015.
Executive
Summary
2. The health and
safety risks of our employees have been identified as one of Auckland Council’s
top risks and therefore is an area of special focus for the organisation.
Activities have been completed and more are underway to improve the practices
and culture of the organisation to meet this challenge.
|
Recommendation
That the Audit and Risk
Committee:
a) receive this
update on health and safety activities.
|
Comments
3. Health and
Safety Risk
As an organisation we
understand that many of the activities our staff undertake pose a potential
risk to their health and safety, and at times to the health and safety of
visitors to our sites. We manage those risks by using traditional health and
safety management practices such as identifying hazards and investigating
incidents.
Changes in health and
safety legislation remain a compliance risk for the organisation. The key
areas are likely to be;
· Governance – In council the executive
leadership team (ELT) will be the officers under the proposed legislation and
will have significant governance obligations and personal liability for failing
to meet those obligations.
· Contractor management – The proposed
legislation increases the responsibility of organisations to their contractor
work force. Auckland Council has good systems and procedures in place for
assessing the ability of contractors to carry out our work safely. However
some change will likely be required to meet the details of the proposed
changes.
· Volunteers – The proposed legislation
will likely place the same obligation on an organisation to its volunteer
workforce as it does to its salaried workforce. Auckland Council uses a large
number of volunteers for a wide variety of tasks and this change in legislation
may significantly increase the effort we put into engaging, directing and
supervising volunteers in their work.
· Employee Participation – The proposed
legislation makes some significant changes to how employees participate in
health and safety in the workplace (for instance the election of health and
safety representatives, and setting up Health and Safety Committees). This is
an area where Auckland Council is already well set up to meet the changes, but
it is likely to require some change to the way we work.
Council is preparing to meet these challenges in three
ways:
· There is a program of regular meetings,
training and activities to help ELT meet the officer’s due diligence
obligations
· Conducting a compliance review – a check
of our current system against the new legislation (planned for June 2015 when
the legislation will be finalised). There will be actions that come out of the
review and these will be planned and implemented before the Act is enforced in
September 2015. The timeframe will depend on the progress of the Bill.
· Changing safety performance through a
behavioural safety program for all employees. This program started in early
May and aims to change behaviour towards safety by challenging unsafe acts, and
rewarding safe behaviour. Evidence shows that the most to effective way of
lifting safety performance of an organisation is through changing the culture
of an organisation.
4. Health and
Safety performance
Council collects a wide variety of
information about health and safety performance. For this financial year
council has chosen to formalise council wide metrics and targets using a
Balanced Scorecard. The health and safety metric on the Balanced Scorecard is
the traditional measure of Lost Time Injury Frequency Rate (LTIFR), Our target
is 3.5 lost time injuries per million hours worked. Council continues to
perform very well against this metric delivering a current rate of 3.4, a
significant improvement of approximately 20 per cent over the previous year.
Consideration
Local
Board views and implications
5. Local boards
have not been consulted because the report primarily deals with internal
management issues.
Māori
impact statement
6. This report
does not have any particular benefit or adverse effects on Māori.
Implementation
7. None
Attachments
There are no attachments for
this report.
Signatories
|
Author
|
Mark Lipman - Head of Health and Safety
|
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Authorisers
|
Alan Brookbanks – People & Capability Director
Grant Taylor - Governance Director
|
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Audit and Risk
Committee
20 May 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 Update on Parks Contract Management
|
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 operational information
and details of internal audit activity which if released may jeopardise the
effective delivery of 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.
|
C2 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 of 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.
|
C3 Update on Integrity and Investigation 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 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 actvity, which if released may compromise
the effective delivery of 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.
|
