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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Tuesday, 24
May 2016
1.30pm
Meeting 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 Bill Cashmore
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Deputy Chairperson
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Mr Paul Conder, CA
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Members
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Cr Cameron Brewer
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Cr Ross Clow
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Cr Linda Cooper, JP
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Cr Sharon Stewart, QSM
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Mr Roy Tiffin, FCA
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Cr Sir John Walker, KNZM, CBE
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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 5 members)
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Mike Giddey
Democracy Advisor
17 May 2016
Contact Telephone: (09) 890 8143
Email: mike.giddey@aucklandcouncil.govt.nz
Website: www.aucklandcouncil.govt.nz
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Responsibilities
The Audit and Risk Committee will be responsible for:
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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.
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Audit and Risk
Committee
24 May 2016
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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 8
8 Notices of Motion 8
9 Review of Forward Work Programme 9
10 Health, Safety and Wellbeing May 2016 Update 13
11 Office of the Auditor-General and Audit New Zealand briefing 41
12 Review Engagement Management Report for the six months to 31
December 2015 45
13 Update on status of outstanding items with Audit New Zealand 67
14 Targeted rates/reserves update 71
15 Update on enterprise risk management and insurance activities 75
16 Consideration of Extraordinary Items
PUBLIC EXCLUDED
17 Procedural Motion to Exclude the Public 97
C1 Update on internal audit activity 97
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
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That the Audit and Risk Committee:
a)
confirm the ordinary minutes of its meeting
held on Tuesday, 8 March 2016 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
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) day’s 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.
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Audit and Risk
Committee
24 May 2016
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Review of
Forward Work Programme
File No.: CP2016/09510
Purpose
1. To review and update the
committee’s 2016 forward work programme.
Executive
Summary
2. The committee approved its
forward work programme for 2016 at the December 2015 meeting. It is good
practice to review the forward work programme at each committee meeting, to
ensure that it can be adapted quickly if council’s risk profile changes and
that it remains relevant to the needs of the committee.
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Recommendation/s
That the Audit and Risk
Committee:
a) re-confirm the approved
2016 forward work programme, which will include the following amendments as
standing items from July 2016:
· report
from Legal Services
· progress
on recladding of 135 Albert Street.
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Comments
3. The Audit and Risk
Committee’s forward work programme for 2016 was approved at the December 2015
meeting of the committee.
4. The forward work programme
reflects:
· governance,
risk management and internal control matters as contained in council’s
Enterprise Risk Management “Top Risk” register relevant to the committee’s
Terms of Reference
· areas
of focus of the Internal Audit programme
· the
annual cycle with respect to the audit of the annual report, Risk, Internal
Audit and Integrity and Investigations functions.
5. It is good practice that the
committee, as a standing item at each meeting, review and confirm its forward
work programme. This is to ensure that the work programme is flexible, can be
adapted quickly if council’s risk profile changes, and remains relevant to the
needs of the committee.
6. For example, it would be
appropriate for the committee to consider a change to the approved forward work
programme in the event there has been a significant change in the risk profile
of council as reflected in the “top risk” register. Similarly a significant
event occurring either within council, or in the wider operating environment
could result in a change in the work programme of the committee.
7. No such a change in
council’s risk profile, or significant event, has occurred since the last
meeting of this committee.
8. However, from July 2016 we
will be adding two standing information items to the Committee’s work programme
as both matters could potentially impact on Council’s risk profile:
· a
report from Legal Services on issues Legal Services are dealing with across the
council
· a
progress report on135 Albert Street recladding.
9. The updated 2016 work programme,
which reflects the amendments referred to in paragraph 8 above, is attached at
Attachment A to this report.
Consideration
Local
Board views and implications
10. Not applicable.
Māori
impact statement
11. Not applicable.
Implementation
12. Not applicable.
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 and Risk Committee Forward Work Programme
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11
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Signatories
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Author
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Mark Maloney - Head of Internal Audit
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Authoriser
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Marguerite Delbet – Acting Governance Director
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Audit and Risk
Committee
24 May 2016
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Audit and Risk
Committee
24 May 2016
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Health, Safety and Wellbeing May 2016 Update
File No.: CP2016/08975
Purpose
1. To provide a summary of
health, safety and wellbeing performance as at 30 April 2016, information to
support the committee’s due diligence responsibilities and an update on
priority actions since the March 2016 Audit and Risk Committee meeting.
Executive
Summary
2. Auckland Council is
committed to being a high performance council, where our elected and appointed
members, employees, contractors, volunteers and the people who use our council
facilities and services are safe and all major risks are reduced and managed
effectively.
3. Auckland Council’s
current health and safety policy statement outlines the vision Health and
Safety starts with me – Ka timata te hauora me te aria hauata ki a au. This
vision reinforces a key principle of the Health and Safety at Work Act 2015:
that we all have a responsibility to ensure workers (including volunteers and
contractors) and other persons are given the highest level of protection
against harm to their health, safety and welfare.
4. This report provides
a summary of council’s current health and safety performance and an update on
the key milestones and deliverables for implementing a strong health, safety
and wellbeing culture to ensure council effectively meets its responsibilities
as a PCBU (person or organisation conducting a business or undertaking). A key
performance issue highlighted in this report is an increase to the Lost Time
Injury Frequency Rate (LTIFR) since February 2016.
5. The indicative LTIFR
rate for April is 3.86 versus the organisational target of <2.25. LTIFR
measures injuries which have resulted in a person needing time away from work.
An increase to the LTIFR over the last three months is not ideal, however the
current LTIFR provides a more accurate reflection of employee injuries. This is
because following an audit of reported incidents against ACC data we now have
the full view of lost time injuries versus only those reported as a lost time
injury in VAULT.
6. Further detail is
provided in the body of this report to explain the LTIFR audit and the ongoing
focus on reporting to ensure those who are injured are known, attended to
quickly, and provided the support they need to establish a return to work programme
as soon as practical. Critically, the risks or hazards associated with any lost
time injury can also then be addressed in a timely way to mitigate any future
incident.
7. Improved reporting
remains a key priority for council. To support this, a revised incident
management and notifiable event management system will be introduced in May to
provide guidance across the organisation. The system will improve council’s
response to, and reporting of, incidents and notifiable events and build
consistent practice across all business units. Increased near-miss reporting is
also a key focus to reduce the likelihood of incidents and injuries occurring.
8. In addition to
current performance metrics, this report also provides an overview of action to
deliver against agreed health, safety and wellbeing objectives. Now that the
transition to the new legislation is well underway the other main priority is
preparation for the ACC Worksafe Safety Management Practices audit, which will
take place in October this year. The pre-audit assessment programme began in
the second week of May. The outcomes of this programme will inform work needed
to meet this year’s audit objectives and provide guidance and recommendations
to establish an ongoing health and safety audit and continuous improvement
framework.
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Recommendation/s
That the Audit and Risk
Committee:
a) receive the update report
on Health, Safety and Wellbeing.
b) refer this report to the
Finance and Performance Committee for its consideration.
c) note that this report will
also be provided to all Local Boards for their information.
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Comments
9. As outlined in the Health,
Safety and Wellbeing report to this committee in March 2016, the overall
objectives for 2016 are to:
·
have the basics right across the organisation (with business-focused solutions)
in line with legislative and audit requirements
·
share good practice and lessons learned
·
effectively educate, upskill and engage our staff and elected members to build
a positive and proactive health, safety and wellbeing culture.
10. Since the March report the
strategic goals and key deliverables for health, safety and wellbeing in 2016
have been revised slightly, as a result of further work on the organisational
strategy and a health and safety strategic planning day with the Executive
Leadership team.
11. The key changes are as
follows:
a) The strategic goals for
reporting are now split into incident management (reactive reporting) and
proactive actions, i.e.:
i. reactive: incident
management is executed correctly, with quick responses and reporting and
effective corrective actions (and where there is an injury support is provided
asap and if it is a notifiable event[1]
it is reported to WorkSafe and investigated).
ii. proactive: lead indicators
are separately identified and prioritised such as near-miss reporting, site
visits and safety conversations to mitigate the likelihood of incidents/injury
occurring in the first place.
b) The wellbeing goals have also
been revised and there are now two areas of focus. Overall health and wellbeing
will continue to be a priority with increased emphasis on stress, fatigue and
mental health and wellbeing. Leadership action on workload, business priorities
and flexible work practices is now an additional and stand alone area of focus.
c) Under projects and deliverables,
there is an additional action focused on staff and visitor safety, which
involves reviewing protocols for customer-facing roles, facilities- based staff
and lone workers to address personal safety risks and the sharing of
information when threats occur. Some initial work has begun on this already,
including reviewing the lessons learned from the shooting at the Ashburton
offices of the Ministry of Social Development and reviewing protocols and
training already in place in various areas of council and CCOs.
Performance report
12. Key
performance metrics as at 30 April 2016 are attached in attachment 1. In
summary:
a) Council’s
Lost Time Injury Frequency Rate (LTIFR) has increased over the last
three months since February 2016. As at 30 April 2016 the LTIFR was 3.86
(indicative) against a target of <2.25. This is a result of increased and
more accurate number of injuries resulting in a person not being able to work
for a period of time.
b) A total of 20
health and safety monitoring and inspections were reported into VAULT (these
were contractor inspections done by Infrastructure and Environmental Services).
A total of 60 corrective actions (arising from investigations) were issued in
VAULT.
c) Near-miss
reporting has decreased in April, reversing the previous upward trend over the
past three months. The Health, Safety and Wellbeing team, in partnership with
the executive and senior leadership teams, will maintain their attention on
reporting and continue to promote a proactive reporting culture. The amount of
near-miss reporting is low in an organisation the scale of council.
d) Auckland
Council’s Employee Assistance Programme (EAP) bi-monthly dashboard is
displaying generally healthy indicators when considering the various change
programmes and restructures occurring. The top three work issues staff are
accessing the service for are career, relationship with manager and
relationship with co-worker. Council is currently above the
national average for these three issues, which reinforces the organisation’s
focus on addressing workplace stress and fatigue.
e) Manager suggested use of EAP has increased to just below the
national average (15.6% vs 16.7%). In 2015 manager referrals to EAP were low
and this change is a positive indicator of managers encouraging staff to access
support if they need it. Self-referral to EAP continues to be the highest
engagement indicator; currently council is slightly higher than the national
average at 82% versus 80%. Further information on the wellbeing portfolio is
included in the attached performance report (Appendix 1) and included in the
key initiatives update on page 8 of this report.
Lost Time Injury Frequency Rate
13. The
increase in Council’s overall LTIFR provides a more accurate reflection of
incidents. An audit of reported lost time injuries in council’s reporting
management system (VAULT) versus ACC data has occurred during February, March
and April. The audit has identified additional lost time injuries during March
and April. In March there were five additional lost time injuries identified
and in April there were four additional lost time injuries identified (over and
above those reported in VAULT). These incidents had been reported, however they
had not been reported as injuries which resulted in the person needing time off
work and therefore potentially needing rehabilitation support and/or a return
to work or alternative duties plan.
14. The
table below shows the current rolling 12-month lost time injury frequency rate
trend and the data beneath the table summarises LTIFR, first aid and medical
injuries.
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Current LTIFR target <2.25
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April 2016
Indicative LTIFR 3.86
The
HSW audit of reported medical incidents has uncovered 4 extra LTIs for April
and 5 for March. This has increased the LTIFR. The audit will continue and
once the final worked hours are known for April this may alter the actual
LTIFR for the month.
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April 2016
· First aid reported injuries vs 12 month average 74/56.7
· Medical reported injuries vs 12 month average 20/22.3
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March 2016 LTIFR indicative vs actual 3.53/3.78
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February 2016
LTIFR indicative vs actual 2.98/3.94
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15. An
increased LTIFR is not ideal, however the audit has provided improved data
accuracy on the number of injuries occurring that result in staff needing time
off work and therefore increases council’s ability to support staff who have
been injured and work with them and their managers to establish an effective
return to work programme.
16. The
audit has also reinforced the critical importance of improving health and
safety reporting at council and the accuracy of reporting across the
organisation.
17. In
response to this, Council, together with ATEED and Panuku, are reviewing
reporting management systems and service specifications to determine which
supplier can best meet council requirements. Currently council uses the VAULT
system. An improved reporting tool will assist people to report more easily and
if Council and a number of CCOs have the same system it will become easier for
staff and contractors to report into a similar system.
18. Highlighting
and encouraging the importance of near-miss reporting is also an area being
addressed by the Health, Safety and Wellbeing team and departmental managers.
Thorough near-miss reporting allows council to minimise likely incidents. Key
information and messages on near-miss reporting were provided across the region
during the recent Chief Operating Officer roadshows.
Rehabilitation
19. The
rehabilitation and wellbeing team have been meeting with business units across
council to focus on return to work programmes and to help managers get an
injured person back to work, on alternate duties if necessary to assist with
their recovery.
Information on the six aspects of the due diligence
duty
20. Officers of
Council (i.e. those in a governance role including elected members, the Chief
Executive and potentially other members of the executive leadership team) must
exercise a duty of due diligence. There are six aspects to that duty, listed
and discussed below. All
officers have equal and personal responsibility.
21. To assist
elected members in their role as officers the Head of Health, Safety and
Wellbeing, the Director of Legal and Risk and the governance division lead team
are working together to establish systems that will enable councillors and
local board members to have access to relevant information to fulfill their due
diligence responsibilities. This includes developing new quality advice
guidance to assist staff preparing advice on projects where a health and safety
assessment is necessary for decision-making, quarterly performance reporting to
the Audit and Risk Committee, Finance and Performance Committee and local
boards and information to be included in the elected member induction programme
after the 2016 local government election.
22. Staff are
also working with the Independent Māori Statutory Board and council’s co-governance entities such as the
Maunga Authority, the Parakai Recreation Reserve Board and the Ngāti Whātua Ōrākei Reserves
Board to ensure they have information and support to
assist them with complying with their PCBU duties (as a Board) and their
officer duties (as individual members).
Up to date (1): Acquire and keep up to date with H&S knowledge
and H&S matters
23. To comply
with the officer’s due diligence duty, it is critical that council’s elected
members, chief executive and executive leadership team understand the key
elements of the new legislation and regulations.
24. Prior to
the Health and Safety at Work Act 2015 coming into force on 4 April 2016 there
were three briefings provided for elected members to outline the key elements
of the legislation, particularly the role of ‘officers’.
25. The
executive leadership team have also been provided with a variety of
information, including an initial briefing in the last quarter of 2015,
consideration and inclusion of a health and safety business case in the
development of the organisational strategy, and a strategic planning day at the
end of March.
26. To ensure
elected members and senior management are well informed and up to date on
health and safety matters further workshops are being planned for May and June.
Governing Body and local board workshops will build on the information sessions
to date and focus on putting the legislation into practice, including meeting
personal obligations as an officer, what is required for day to day decision
making and implications for community groups and volunteers.
27. Future
reporting to elected members and senior management will include information to
help officers keep up to date with their health and safety knowledge. Officers
may also undertake their own personal actions to keep their health and safety
knowledge up to date.
Understand (2): Understand Council’s operations and the associated
hazards and risks
28. Council
officers will already have a working visibility of Council business. To ensure
that officers have a sufficient visibility of the breadth and variety of
Council operations to comply with their due diligence duties, highlighting key
activity on council’s operations related to health and safety will be part of
regular reporting.
29. It will take
time for Council to transition from the previous hazard
assessment approach to the more proactive risk-based approach provided for in
the new Act. Work is underway across the organisation on reviewing hazard registers,
developing business unit/activity risk assessments and then delivering safety
risk control plans. Some parts of the organisation have begun risk assessments
e.g. City Parks Services and Events. As this work develops, more detailed
information will be reported.
30. In the interim an overview of reported hazards and risks is provided
in the attached performance report (appendix 1).
31. The Chief
Executive and the wider executive leadership team have undertaken some recent
site visits both with office-based staff and at council facilities across the
region. A health and safety site visit plan for both the Chief Executive (and
ELT members) and elected members will be developed over the coming months to
provide ongoing opportunities for Council’s officers to experience and better
understand Council operations and the health and safety risks in the various
parts of the business.
Resources
and processes (3): Ensure Council has appropriate resourcing and processes to eliminate
or minimise risks to health and safety
32. As part of the organisational strategy a business case for health
and safety was developed. It highlighted the need for Council to transition from
the previous hazard assessment approach to the more proactive risk-based
approach. The business case also considered the level of resourcing for health
and safety within the organisation.
33. As noted above, specific work is underway across the organisation to
eliminate or minimise risks to health and safety through risk assessments. A
key focus is to build capability within the organisation and prioritise those
business areas that need particular training and support.
34. In addition, health and safety is an integral part of FY16/17
business planning. Guidance on health and safety objectives has been provided
as part of the business planning packs for departments. The operations
division, for example, has an objective for all departments in the division to
undertake risk assessments and develop a plan of action in response during the
2016-2017 financial year.
Reporting and investigation (4): Ensure Council has appropriate
processes for receiving and considering information regarding incidents,
hazards and risks and for responding in a timely way to that information
35. Health,
safety and wellbeing performance reporting has been improved to assist officers
and senior management receive and consider information on incidents, hazards
and risks. The current approach has been developed with and approved by the
executive leadership team. This includes the structure of the report, and the
content including lead and lag indicators.
36. The April
2016 organisation-wide performance report is attached as Appendix 1. From now
on department/business unit reports will also be delivered to senior managers
to assist their understanding of key metrics for their departments and business
areas. This will improve the ability of the organisation to address the
specific risks or opportunities in each area i.e. the health, safety and
wellbeing priorities in Parks, Sport and Recreation will differ from those in
Democracy Services, Libraries and Animal Management.
37. The Health,
Safety and Wellbeing and Legal Services teams have reviewed and revised the
incident management and notifiable event management plans to ensure Council has
processes in place to respond to incidents, hazards and risks. The plans
provide clear, step by step guidance on what staff need to do in various
situations, including an emergency situation. The plans also specifically
include guidance on advising elected members of incidents in their ward/local
board area.
38. An
executive/senior leadership Health and Safety Committee has now been
established. Part of its role will be to review Council-wide critical risks and
issues, including investigations of incidents that involve notifiable events
and WorkSafe or Police investigations.
39. A fit for
purpose safety management system and timely reporting will also be crucial to
enable Council to receive and consider information on incidents, hazards and
risks. As discussed above, a review of the current system (VAULT) and other
suppliers is underway.
Monitor (5): Ensure Council has, and implements, processes for
complying with any duty or obligation
40. A crucial
aspect of ensuring that council has systems in place for complying with its
obligations is the setting of high level policy and strategic direction. The
Chief Executive and executive leadership team attended a strategic planning day
at the end of March. This included a review of council’s strategic direction
for health and safety and confirmation of the current policy position of Health
and Safety starts with me – Ka timata te hauora me te aria hauata ki a au.
41. Part of the
strategic planning day was also discussion of complying with council’s obligations
as a PCBU.[2]
42. Council’s
health and safety policy statement, manual and all documents and procedures
connected to these are under review against the new legislation and
regulations.
43. Staff awareness of health and safety obligations will contribute to
compliance. Health and Safety at Work Act overview seminars have been
offered to all staff at seven locations across Council. A total of 384 staff
attended the sessions with another 80+ looking to undertake the next round of
training offered. Business units with specific risks, e.g. working with
asbestos, are ensuring staff will have relevant training aligned to the new
regulations and the Chief Engineer and her team have been delivering safety in
design training.
44. Council’s Do
it Right legislative compliance programme is currently working with some
pilot business units to develop legislative compliance business unit plans.
Work is underway to incorporate health and safety objectives into these plans.
45. To build the internal capability to support business units with
complying with health and safety obligations, members of the Health, Safety and
Wellbeing team have recently undertaken Incident Causation Analysis Methodology
(ICAM) investigation training and lead auditor training.
46. Effective
and supported health and safety representatives also contribute to council
complying with its health and safety obligations. A health and safety
representative training plan is being developed, which will include roadshows
and a representative handbook. Other work includes a review of health and
safety committee structure and a toolkit for managers.
Verify (6): Take reasonable steps to verify the provision and use of
resources and processes through reviews and audits
47. At regular
intervals the Audit & Risk Committee will consider Council’s compliance
with its PCBU obligations and Council officers’ compliance with their due
diligence duty. That feedback is made by way of recommendation to the Finance
and Performance Committee. All officers of Council need to continue to ensure
that they keep thorough records of their compliance with their individual due
diligence duty.
48. Council will
be audited via an ACC Worksafe Safety Management
Practices (WSMP) audit in October 2016. This audit will
assess council’s compliance against ACC accreditation criteria. Tertiary is the
highest level of accreditation. Council currently has secondary level
accreditation.
49. Pre-audit
assessments will begin across the organisation in May and will be undertaken by
an external auditor. The priority for pre-audit are business areas identified
in the last audit as needing to improve or areas of high risk activity, such as
City Parks Services, Parks, Sport and Recreation, Community Facilities,
Licensing and Compliance and Infrastructure and Environmental Services.
50. The
pre-audit assessment will provide council with a clear view of current state
and direction on where action is needed to meet tertiary accreditation
standards. Both the Head of Health, Safety and Wellbeing and the Head of
Internal Audit will oversee the ACC WSMP audit programme.
Health, Safety and Wellbeing work programme: delivery to date and
priority actions May – June 2016
51. Key initiatives delivered
since the last presentation to the March 2016 Audit and Risk Committee include:
a) Good practice (and
compliance). Transition to the new legislation. As noted above Health and
Safety at Work Act overview seminars for all staff were conducted at seven
locations across Council. A total of 384 staff attended the sessions with
further sessions to occur. Preparation for the ACC pre-audit assessment.
b) Engagement and due diligence.
Continual improvements are being made to the reporting framework for the
executive leadership team and elected members. The communications programme is
progressing to raise employee engagement and participation, including a review
and update on the current health and safety intranet page.
c) Monitoring and reporting.
A final draft of incident management and notifiable event management and reporting
processes (including notification to WorkSafe NZ of notifiable events) is
complete and will be distributed in May. Investigations on an improved or
alternative reporting management system are coming to an end with
recommendations to follow in May.
d) Wellbeing. A pilot
session for psychological health and wellbeing facilitated by EAP was
undertaken with a target group in late April. An alternative session
facilitated by the Mental Health Foundation took place the first week of May.
Further sessions targeting managers will be trialled in May across selected
parts of the Council. The goal is to have a number of programme options that
address the varying needs of people and business units. The Wellbeing 360
survey began 27 April.
52. The focus for the remainder
of this financial year and the start of FY 16/17 will be:
a) pre-audit assessments, starting
with City Parks Services and Community Facilities
b) Ongoing staff and elected member
training. This training will build on previous training sessions (including the
introduction to the legislation sessions for elected members and staff and the
safety in design training for staff in relevant parts of the organisation), and
focus in more detail on putting the legislation into practice in day to day Council
business and decision-making.
c) Contractor management: under the
new Act Council owes the same duty to employees of contractors and
subcontractors as it does its own employees, because they are all workers
pursuant to the Act. Where there are overlapping duties between council and its
contractors, all parties must also consult, co-operate and co-ordinate
together. New contract terms have already been developed to support council
complying with its obligations, and guidance for staff on contractor management
is being developed. The council-wide contract management strategy includes a
health and safety workstream.
Consideration
Local
Board views and implications
53. Briefings for elected member,
including local boards were provided in preparation for the legislation change
on 4 April. Further workshops are planned for later in May and June.
54. This report will be provided
to all local boards and a briefing on this report and will take place at the
May 2016 local board chairs forum.
Māori
impact statement
55. The health,
safety and wellbeing of Māori
staff, elected and appointed members, volunteers and members of the public is a
priority as are the Māori
wellbeing priorities identified in Council’ Māori responsiveness framework, Te Toa Takitini work programmes, and
other relevant documents.
56. Staff are
working with the Independent Māori Statutory Board and Council’s co-governance entities, such as
the Maunga Authority, Parakai Recreation Reserve Board and the Ngāti Whātua Ōrākei Reserves
Board to ensure they have information and support to
comply with their PCBU duties (as a Board) and their officer duties (as
individual members).
Attachments
|
No.
|
Title
|
Page
|
|
aView
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Health, safety and wellbeing performance report
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23
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Signatories
|
Author
|
Claire Richardson – Head of Health, Safety and
Wellbeing
|
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Authorisers
|
Christine Etherington - People & Capability
Director
Marguerite Delbet - Acting Governance Director
|
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Audit and Risk
Committee
24 May 2016
|
|
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Audit and Risk
Committee
24 May 2016
|
|
Office of the Auditor-General and Audit New Zealand
briefing
File No.: CP2016/00932
Purpose
1. To provide an opportunity
for the Auditor-General and the Sector Manager Local Government, Office of the
Auditor-General to address the committee.
Executive
Summary
2. The Auditor-General and the
Sector Manager Local Government, Office of the Auditor-General will address the
meeting in relation to the briefing paper provided as Attachment A.
|
Recommendation/s
That the Audit and Risk
Committee:
a) receive the information
provided by the Auditor-General and the Sector Manager Local Government,
Office of the Auditor-General.
|
Attachments
|
No.
|
Title
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Page
|
|
aView
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Auckland Council Audit and Risk Committee Briefing 24
May 2016
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43
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Signatories
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Author
|
Francis Caetano - Group Financial Controller
|
|
Authorisers
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Kevin Ramsay - General Manager Corporate Finance and
Property
Phil Wilson - Governance Director
|
|
Audit and Risk
Committee
24 May 2016
|
|
|
Audit and Risk
Committee
24 May 2016
|
|
Review Engagement Management Report for the six months
to 31 December 2015
File No.: CP2016/00922
Purpose
1. Report to Auckland Council
on the review engagement of Auckland Council and group’s interim financial
statements for the six months ended 31 December 2015.
Executive
Summary
2. Audit New Zealand issued an
unmodified review opinion on the Auckland Council and group’s interim financial
statements for the six months to 31 December 2015 prior to their release to the
stock exchanges on 29 February 2016.
3. Audit New Zealand has
identified several issues which the council needs to address to strengthen the
controls in place. The issues identified are not significant. Council’s
responses to the issues raised are included in Audit New Zealand’s report and
these responses outline how these issues are being addressed. All planned
actions will be completed by 30 June 2016.
|
Recommendation/s
That the Audit and Risk
Committee:
a) receive the report and note
the recommendations made by Audit New Zealand and the council’s responses.
|
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 2015 which were released to the stock exchanges on 29 February 2016.
5. The areas identified are:
· improving
processes for creditor cut off. In order to comply with New Zealand Stock
Exchange (NZX) reporting deadlines, council closes its ledgers early and is
required to accrue a number of invoices received which relate to the reporting
dates of 31 December and 30 June. The processes to ensure all significant
invoices have been identified and recorded need to be reviewed and enhanced.
· billing
of development contributions. As part of the data migration process for the
NewCore implementation it was identified in the 2011 to 2013 period 15
instances occurred where Code of Compliance Certificates (CCC’s) were released
before development contributions invoices were issued and payment received. It
has been determined all instances occurred in one legacy area and amounted to
$205,116 in total. No further occurrences have occurred since 2013. Council is
investigating the possibility to recover the unbilled amounts.
· cash
handling processes. Audit New Zealand identified some inconsistences in the
application of cash handling procedures across different cash handling sites.
Council has in place ongoing training of staff and an internal audit work
programme to review cash handling.
· reviewing
balance sheet reconciliations There had been a delay in reviewing and
clearing a small number of balance sheet reconciliations. The council has an
ongoing programme to improve this process. Staff have been reminded that the
independent review of reconciliations needs to be performed on a timely basis.
Consideration
Local
Board views and implications
6. Local boards have not been
consulted because the report deals primarily with internal management issues.
Māori
impact statement
7. The report does not have any
particular benefit or adverse effects on Māori.
Implementation
8. There are no financial or
resourcing issues arising from the adoption of this report.
Attachments
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No.
|
Title
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Page
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aView
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Review Engagement Management Report 31 December 2015
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47
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Signatories
|
Author
|
Francis Caetano - Group Financial Controller
|
|
Authorisers
|
Kevin Ramsay - General Manager Corporate Finance and
Property
Phil Wilson - Governance Director
|
|
Audit and Risk
Committee
24 May 2016
|
|
|
Audit and Risk
Committee
24 May 2016
|
|
Update on status of outstanding items with Audit New
Zealand
File No.: CP2016/00925
Purpose
1. Updating the committee on
progress Council has made to clear prior years recommendations made by Audit
New Zealand.
Executive
Summary
2. At the
completion of each audit, our external auditors, Audit New Zealand make
recommendations to enhance council’s internal controls, processes and financial
statement preparation. Council responds to the items raised and indicates the
actions we will undertake to resolve each issue. Progress is monitored
throughout the year and when Council considers that the recommendation has been
addressed we supply information to Audit New Zealand for them to review and
conclude whether the item can be cleared.
3. Audit New
Zealand’s recommendations are cleared when Council can demonstrate that the
issue has been addressed and Audit New Zealand is satisfied with our response.
While some of the recommendations can be resolved relatively quickly, other
items take longer to resolve due to their complexity. As other recommendations
relate to issues which are performed only in the financial statement
preparation, clearance by Audit New Zealand may not occur until the next
external financial statement preparation in June and December.
4. At the
start of this financial year there were 40 outstanding recommendations. At this
stage 29 have been closed or substantially dealt with as follows:
· Audit New Zealand has cleared nine
items;
· Nine other items are awaiting Audit New
Zealand’s review and clearance; and
· Council expects another 11 items to be
cleared when the financial statements
are prepared for the 30 June
2016 financial year.
5. The
remaining 11 items are at varying stages of completion. Staff do not consider
that any of the items in progress will negatively impact on the audit opinion
on the 2015/16 financial statement audit. This report provides a summary of
progress on these 11 items.
|
Recommendation/s
That the Audit and Risk
Committee:
a) note the progress made to
resolve issues raised by Audit New Zealand.
|
Comments
6. Status of recommendations
raised by Audit New Zealand in earlier reports.
|
Issue raised
|
Cleared by Audit NZ
|
Awaiting Audit NZ review
|
Clearance at 2015/16 final audit
|
In progress
|
|
Prior
to the 2014/15 financial year
|
2
|
2
|
|
4
|
|
2014/15
interim audit
|
2
|
|
3
|
|
|
2014/15
final audit
|
5
|
7
|
8
|
7
|
|
Total
|
9
|
9
|
11
|
11
|
Updates
on issues in progress
Completion of seismic
assessments for Council owned assets
7. This issue was raised by
Audit New Zealand as a Local Government sector issue. Assessment of the
likelihood of severe earthquake in the region is low. While progress is being
made, including the development of a work plan, this item has a lower priority
than for other Local Authorities in other areas.
Reconciliation between the
fixed asset register and asset management systems
8. Scoping and timeframes for
this project have been completed. Work is currently being completed by the
Community Facilities team and the Asset Team to align the two registers for
buildings. The next phase of work will include the review of land.
Timely disablement of system
access for employees who leave the council
9. An automated process has
been created. The process is being tested for deployment by 30 June 2016.
Enhancements to the processes
for IS disaster recovery of full system
10. The IS department is in the
process of setting up the core infrastructure in the second Spark Data Centre
in Takanini, this is expected to be completed by June 2016. The core infrastructure
will be installed to allow for services like our Call Centre Services to be
deployed in a geographically diverse environment. Other services like remote
access, email etc. will also be deployed to provide high availability in the
unlikely event of a disaster.
Newcore programme – review of
costs in work in progress:
11. Costs are reviewed on a
quarterly basis, prompting appropriate action to clear any incorrectly
allocated amounts. Actions will be ongoing until project completed in October
2017.
Supporting information for the
contaminated land provision
12. A draft contaminated land
strategy will be developed by 30 June 2016. The project objectives are to
identify priorities for managing this land plus stakeholder responsibilities
and accountabilities.
Supporting information for the
“make good” provision
13. Assumptions and the review
process undertaken will be documented and a paper will be completed before 30
June each financial year end.
Contract management policies,
procedures and training
14. Council is currently
developing a Centre of Excellence approach to contract management including
developing tools, procedures, policies and monitoring of contracts. Additional
activities include the provision of formal support and training and the development
of a contract management competency framework.
Improving Project Management
Quality assurance processes
15. An Independent quality
assurance system is being tested currently with six projects selected across
five business units. It is planned to roll out the refined system after
testing, in June 2016.
Project Execution Plans be
enhanced to include a description on how targets will be achieved and who is
responsible for these:
16. Amendments have been made to
the project execution plans adding a section relating to benefit
"targets" and "owner". A new suite of Business Case
templates (based on the Better Business Case principles) have also been
developed and are in the process of being rolled out across the business.
Project Management project
tolerances in relation to scope, risk, budget and time:
17. To introduce tolerances
effectively, other pre-requisites are required and these include Gating, and
raising the competencies / skills of the project management community as well
as ensuring effective sponsorship. Once these issues have been addressed then
we will focus on other areas including defining tolerance specific to each
project or project type.
Consideration
Local
Board views and implications
18. There are no specific
implications for local boards.
Māori
impact statement
19. The report does not have any
particular benefit or adverse effects on Māori.
Implementation
20. There are no implementation
issues.
Attachments
There are no attachments for
this report.
Signatories
|
Author
|
Francis Caetano - Group Financial Controller
|
|
Authorisers
|
Kevin Ramsay - General Manager Corporate Finance and
Property
Phil Wilson - Governance Director
|
|
Audit and Risk
Committee
24 May 2016
|
|
Targeted rates/reserves update
File No.: CP2016/00923
Purpose
1. To provide an update to the
Audit and Risk Committee on the following targeted rate and reserve accounts:
Harbourview – Orangihina Targeted Rate; Waitakere Quarry Aftercare Fund; and
Hillary Commission – Reserve Account.
Executive
Summary
2. Since the last report in
July 2015:
· Harbourview – Orangihina targeted rate: leave to appeal
to the Supreme Court has been declined and the Harbourview – Orangihina Park
remains in Council ownership. Staff will draw up a proposed programme of works
for the reserve based on the Harbourview - Orangihina reserve master plan and a
stakeholder and public engagement plan.
· Waitakere
Quarry Aftercare Fund: a rehabilitation agreement
has been agreed and work has commenced.
· Hillary
Commission – Reserve Account: consultation has commenced for the use of
these funds.
|
Recommendation/s
That the Audit and Risk
Committee:
a) receive the targeted
rates/reserves update report.
|
Comments
Harbourview
– Orangihina targeted rate
Background
3. 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 Harbourview – Orangihina park.
Funds were not for maintenance or renewal of assets within the park, only to be
used for new development.
4. 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. Council
was successful in the High Court and the plaintiffs appealed. To be
prudent WCC put all major works on hold until the outcome of the land claim was
known.
Status
5. Auckland Council’s legal
department has advised that the Supreme Court declined leave to appeal and both
the High Court and the Court of Appeal (for different reasons) held that the
Council did not need to offer the land back to the successors of the original
owners.
6. As a result of this decision
the park remains in Auckland Council ownership. The reserve fund is currently
at $1.4million.
7. Discussions have commenced
with the Henderson-Massey Local Board regarding the development of Harbourview
- Orangihina. Over the next few months staff will develop a proposed programme
of work based on the Harbourview - Orangihina reserve master plan, along with a
stakeholder and public engagement plan, which will be extensive. We anticipate
that the public engagement will begin in January 2017, after the elections.
Waitakere
Quarry Aftercare Fund
Background
8. The Waitakere Quarry
Aftercare Fund was established to finance the reinstatement of the quarry back
to native forest and regenerating bush.
9. 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.
10. After
operations were completed in 2015, the restoration of the quarry was an
obligation placed on, and accepted by, the third party quarry operator, Perry.
Perry was required to prepare a concept plan for consultation before it was
finalised and approved for implementation. Perry has an ongoing obligation to
monitor and maintain the site until certain criteria are met, at which point
the site responsibility reverts to council.
Status
Rehabilitation
plan and agreement
11. A
rehabilitation agreement was finalised between Auckland Council Property
Limited (now Panuku Development Auckland) and Perry in late 2015. The
agreement includes a rehabilitation plan for the quarry which was developed by
Perry, in consultation with the quarry consultative committee. The
consultative committee consists of local residents, Forest and Bird, Waitakere
Ranges protection society, ACPL, Parks staff and Waitakere Ranges Local Board
members. Although potentially less than community expectations, the plan
achieves the native restoration of the quarry areas that Perry is responsible
to plant and restore. Perry has also included some recreational walking loop
tracks in the plan as a result of feedback from the consultative committee.
12. Perry has
ceased quarry operations and has re-contoured the site according to the
rehabilitation plan. The revegetation planting commenced in the week of 2 May
2016, after which Perry will exit the site, although it will still be
responsible for the maintenance re-vegetation until at least 75 per cent canopy
closure is achieved. The plants are being sourced from eco-sourced suppliers.
Possible
Auckland Council-funded works
13. The quarry
site will not be open to the public until either Perry has completed the agreed
canopy cover requirements, or earlier with Perry's agreement (potentially three
to five years). Some work will be required further to the Perry rehabilitation
plan, such as formalising the entrance ways to the site, Auckland Council
signage and carrying out ongoing weed control in areas council have previously
planted. Funding is required to carry out a hazard assessment and risk
management review at the quarry. Funding for a master plan and concept plan is
also required as a large number of community members are interested in future
use of the quarry as a local park.
Community
involvement
14. Parks and
the local board have also met with the community to update them on progress and
identify how the quarry might be used in the future. The general consensus was
to have mostly passive recreation amongst native vegetation. The local
community may also wish to establish a Friends of the Quarry group, in which
case the group may be able to assist with further revegetation or development
of the site.
Future
management
15. The remote
location and nature of the reserve means it is more akin to being managed as a
regional park than a local purpose park, a view which the local board shares.
The local board, through the governing body, has previously allocated
management control of bush- covered local parks adjoining the Waitakere Ranges
Regional Park to our regional parks team, and has indicated a desire to do the
same with this park in future. However, at this stage the quarry is managed by
council’s local parks team as they have the technical knowledge and capacity to
manage the rehabilitation.
Hillary
Commission – Reserve Account
Background
16. 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.
17. Waitakere
and Auckland City Councils elected to utilise funds to fund low interest loans
to sports clubs and to utilise the interest on principal to provide contestable
grants to local clubs and groups.
18. All loans that were
outstanding under both schemes are now repaid or have been transferred to
Community Loans.
Status
19. At the November 2015 Parks,
Recreation and Sport Committee meeting, a resolution was approved that the
Hillary Commission – Reserve Account form the basis of separate consultation to
determine future use of the fund and be reported back to the May 2016 Parks
Recreation and Sport Committee.
20. The process of local board
consultation is now underway and a report will be provided to the July 2016
Parks, Recreation and Sport Committee meeting.
Consideration
Local
Board views and implications
21. Discussions are ongoing for
the items noted above. Relevant local boards are fully engaged around
decision-making on these issues.
Māori
impact statement
22. As per
council policy, where appropriate, Māori will be consulted for input into any decisions that arise.
Implementation
23. Not applicable.
Attachments
There are no attachments for
this report.
Signatories
|
Author
|
Francis Caetano - Group Financial Controller
|
|
Authorisers
|
Kevin Ramsay - General Manager Corporate Finance and
Property
Marguerite Delbet - Acting Governance Director
|
|
Audit and Risk
Committee
24 May 2016
|
|
Update on enterprise risk management and insurance
activities
File No.: CP2016/06299
Purpose
1. To update the Audit and Risk
Committee on Enterprise Risk Management (ERM) at Auckland Council and insurance
renewals for 2016-17.
Executive
summary
2. Council’s
top risks report has been updated with input for all Executive Leadership Team
risk owners. Health and Safety is a key focus area with the Health and
Safety Work Act 2015 coming into effect on 4 April 2016.
3. The Executive Leadership
Team has agreed a draft risk appetite statement for council. The
statement is intended to create an approach to risk management which is aligned
to the council’s strategic vision and objectives, recognising that risks are
constantly changing.
4. We
recommend that the Audit and Risk Committee have a workshop with the risk team
prior to the next meeting to review the risk appetite statement. Once
completed, the statement will be brought back to the next committee meeting for
endorsement.
5. The
risk team is finalising the revision to the Enterprise Risk Management
Framework (ERMF). This will include changes to the risk matrix and other
changes which are designed to make the ERMF easier to use and understand.
6. A
survey measuring the risk maturity of council has indicated a moderate level of
risk maturity for council as an organisation. An independent assessment
considered this fair, considering the size and complexity of Auckland
Council. This is good result which reflects the significant work that has
occurred in the 18 months since we implemented the Risk Strategy 2015-17.
7. Council’s insurance policies
have a renewal date of 30 June. All current policies for council and council
controlled organisations (CCOs), excluding Watercare, will renew on 30 June
2016. The insurance policy renewal programme will include some changes,
including further group policies including CCOs, and consider some insurance
cover for underground stormwater assets.
8. Insurance market conditions
appear favourable and should result in some premiums savings across the council
group.
|
Recommendation/s
That the Audit and Risk
Committee:
a) receive the update on enterprise
risk management activities and insurance renewal 2016-17 report.
|
Comments
Top risks
9. The Executive Leadership
Team (ELT) has reviewed Auckland Council’s top risks. Health and Safety is a
key focus area with the Health and Safety Work Act 2015 coming into effect on
04 April 2016.
10. There are only minor changes
to report on the top risks since December 2015. These include changes in
ratings for two new special focus risks and one new core activity risk.
11. The next quarterly review of
the top risks will likely see the removal of core activity risk 20, which
relates to operational effects of reshape changes that occurred in the
operations division. The changes are now well bedded in and any ongoing risks
will be captured in operational risk registers within the new departments.
12. The updated top risk report
is attached.
Risk appetite statement
13. Auckland Council has not
previously had a clearly articulated risk appetite statement. Risk
appetite is the level of risk council is prepared to tolerate or accept in the
pursuit of our strategic objectives.
14. The risk
appetite statement is intended to create an approach to risk management which
is aligned to the council’s strategic vision and objectives, recognising that
risks are constantly changing.
15. A well-defined risk appetite
statement will result in better decision-making, as decision-makers will
understand senior leaders’ risk comfort levels and priorities. It will convey
what levels of risk are acceptable and within which “boundaries” or limits of
risk they should be working. It will also identify those risks that are not
acceptable to council.
16. It will allow for consistent
risk-taking across the organisation, concentrate it in areas of strategic gain
and clearly indicate what risks should be escalated to senior leaders.
17. Council’s appetite for risks
reflects the different types of risk that could impact council’s ability to
meet its statutory requirements and strategic outcomes, including likely
reputational impact and potential financial implications. The risk team has
started drafting a risk appetite statement. It has been developed by
referencing material from other local authorities internationally as well as
best practice guidance. There is no one solution for developing risk appetite
statements as they are unique to each organisation.
18. It is important to note that
most local authorities have risk appetite statements that reference acceptable
levels of risk associated with types of activities, rather than hard rules
around tolerance levels based on risk matrix analysis.
19. The acceptance of risk is
subject to ensuring that all potential benefits and risks are fully understood
and the appropriate measures to mitigate risks are established before decisions
are made.
20. We recommend that the Audit
and Risk Committee have a workshop with the risk team prior to the next meeting
to review this risk appetite statement and provide comments and feedback. Once
completed, the risk appetite statement will be brought back to the next
committee meeting for endorsement.
Enterprise Risk Management
Framework
The risk team is currently
revising the Enterprise Risk Management Framework (ERMF) to include the
following:
· risk
appetite statements
· updated
risk matrix which introduces an “extreme risk” definition
· updated
risk categories – aligned with council’s strategies and objectives
· updated
roles and responsibilities
· updated
risk management process – making it simpler and easier to use
· updated
consequences guidelines.
21. The ERMF was originally
adopted in 2014 and was intended to be reviewed and revised in 2016.
22. The ERMF revision will be
submitted to the Executive Leadership Team in June and the Audit and Risk
Committee for approval and endorsement in July 2016.
Risk survey results
23. The risk team conducted a
survey to research the risk maturity of Auckland Council. The overall research
objective was to establish a baseline for Auckland Council’s risk maturity,
which is the level of risk awareness and risk management implementation.
24. The survey was conducted with
four key groups of participants. This included the ELT, Senior Leadership Team
risk owners, Audit and Risk Committee members and the risk team.
25. Of the 75 participants, we
received 34 responses giving a 45 per cent response rate. This is considered a
good sample for research purposes.
26. The survey responses included
feedback on a comprehensive set of metrics related to different risk maturity
capabilities. These include:
· clarity
of governance structure
· establishment
of risk framework
· understanding
of risk management responsibility
· establishment
of risk management infrastructure
· performance
of oversight
· assessment
and measurement of risks
· response
to risks, including risk-related controls.
27. An independent maturity scale
that we have adopted for use in this process has a range from “1 – unaware” to
“5 – Optimised”, as reflected in the figure below:
28. The results of the survey
gave Auckland Council’s Risk Maturity a score of 2.63, placing us at the high
end of the “fragmented” maturity level. The risk team believe that the results
more accurately reflect that council is at the lower end of the “integrated”
level of the maturity scale. The complexity of the survey questions may have
resulted in some answers skewed towards the lower end of the scale. We will
address this issue when an external specialist next measures council’s risk
maturity in 12 to 18 months’ time.
29. According to the independent
assessor, this result is deemed “fair” considering the size and complexity of
Auckland Council. This is good result and reflects the significant work that
has occurred in the 18 months since we implemented the Risk Strategy 2015-17.
30. The risk team will analyse
the low scoring areas within the different risk maturity capabilities and
prepare a programme of work to address the gaps and update the risk strategy.
31. A follow up survey will be
conducted in 2017/18 to determine progress with risk maturity.
Insurance renewal 2016-17
32. Council’s insurance policies
have a renewal date of 30 June. All current policies for Council and the
council controlled organisations (CCOs), excluding Watercare, will renew on 30
June 2016.
33. Council’s broker JLT has been
working with council’s Head of Risk and Treasurer to complete all the
information required to go to the insurance markets ahead of requesting premium
indications in late May and early June.
34. All indications are that the
insurance market conditions will be favourable for council placing all its
insurances, with some potential premium savings across the council group
compared to 2015-16.
35. Some changes being considered
as part of the overall insurance strategy for 2016-17 for the council group
include consolidating all liability policies into one placement. Currently
council and each of the CCOs have separate liability policies. All material
damage and business interruption policies are placed together as a group.
36. A further change being
considered is looking at insurance for council’s underground stormwater assets.
Currently these assets are self-insured, but with the signalled changes to
central government’s civil defence and emergency management cover for three
waters and flood protection assets to 60:40, it is prudent for council to start
considering appropriate risk transfer options.
37. Council will continue working
with central government and Local Government New Zealand on the proposed
changes.
38. Council’s broker contract
with JLT has been extended with a final expiry of 31 March 2017. Council will
be going to market in November/December 2016 with a tender for insurance broker
services. This timing is seen as ideal to have the broker appointed in time for
insurance renewals for 2017-18.
Consideration
Local
board views and implications
39. Local boards are affected by
many of the top risks as they represent risks to the entire council
organisation. While no specific consultation has been done for this report,
risk management activity will have benefit for local board activities. The
risk team has engaged with the risk champions from Local Board Services, which
has resulted in the completion of a comprehensive risk register.
Māori
impact statement
40. This report identifies
changes to core risk 18 that more clearly focuses on progress with Māori
transformation shift activities and Treaty Audit response work programme. This
aligns well with the risk treatment activities being undertaken in this regard
across council.
41. The insurance renewal
programme will include insurance policies specific to co-governance entities
and will be separately reported to each co-governance entity.
Implementation
42. The details of the proposed
insurance renewal programme for 2016-17 will be submitted for approval to the
Finance and Performance Committee at its 16 June 2016 meeting.
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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Auckland Council Top Risk Report
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81
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Signatories
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Author
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Selvan Naidoo - Senior Risk Advisor
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Authorisers
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Jazz Singh - Head of Risk
Katherine Anderson - Director Legal and Risk
Marguerite Delbet - Acting Governance Director
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Audit and Risk
Committee
24 May 2016
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Audit and Risk
Committee
24 May 2016
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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 internal audit activity
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Reason for passing this resolution in relation to each
matter
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Particular interest(s) protected (where applicable)
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Ground(s) under section 48(1) for the passing of this
resolution
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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.
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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
relesed may jeopardise the effective delivery of internal audit services.
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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.
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