I hereby give notice that an ordinary meeting of the Audit and Risk Committee will be held on:
Date: Time: Meeting Room: Venue:
|
Monday, 29 May 2017 11.15am Room 1, Level
26 |
Audit and Risk Committee
OPEN AGENDA
|
MEMBERSHIP
Chairperson |
Sue Sheldon, CNZM |
|
Deputy Chairperson |
Cr Greg Sayers |
|
Members |
Deputy Mayor Bill Cashmore |
|
|
Paul Conder |
|
|
Cr Richard Hills |
|
|
Bruce Robertson |
|
|
|
|
Ex-officio |
Mayor Hon Phil Goff, CNZM, JP |
|
|
IMSB Chair David Taipari |
|
(Quorum 3 members)
Quorum must include two Governing Body members |
|
Mike Giddey Senior Governance Advisor
23 May 2017
Contact Telephone: (09) 890 8143 Email: mike.giddey@aucklandcouncil.govt.nz Website: www.aucklandcouncil.govt.nz
|
TERMS OF REFERENCE
Purpose
The purpose of the Audit and Risk Committee is to assist and advise the Governing Body in discharging its responsibility and ownership of governance, risk management, and internal control.
The committee will review the effectiveness of the following aspects of governance, risk management and internal control:
· enterprise risk management (ERM) across the Auckland Council group
· internal and external audit and assurance
· integrity and investigations
· monitoring of compliance with laws and regulations
· significant projects and programmes of work focussing on the appropriate management of risk
· oversight of preparation of the LTP, Annual Report, and other external financial reports required by statute.
The scope of the committee includes the oversight of risk management and assurance across council’s CCOs with respect to risk that is significant to the Auckland Council group.
To perform his or her role effectively, each committee member must develop and maintain his or her skills and knowledge, including an understanding of the committee’s responsibilities, and of the council’s business, operations and risks.
Decision-Making Powers
The committee has no decision making powers.
The committee may request expert advice through the chief executive where necessary.
The committee may make recommendations to the Governing Body and / or chief executive.
Tenure
External members will be appointed for an initial period not exceeding three years, after which they will be eligible for extension or re-appointment, after a formal review of their performance, and have not already served two terms on the committee. Councillors appointed to the committee will automatically cease to hold office at the time of the local authority triennial elections. They may be eligible for re-appointment post those elections if they are returned to office and have not already served two terms on the committee.
The chief executive, and the senior management team members will not be members of the committee.
The members, taken collectively, will have a broad range of skills and experience relevant to the operations of the council. At least one member of the committee should have accounting or related financial management experience, with an understanding of accounting and auditing standards in a public sector environment.
Committee’s responsibilities
The committee’s responsibilities are detailed below.
Forward Work Programme
The committee will agree and approve annually a forward work programme – which will consist of in depth briefings and reviews of specific significant risks and assurance strategies, as contained in the ERM “Top Risks” or Auckland Council’s work plan.
Risk management
· Review, approve and monitor the implementation of the ERM policy, framework and strategy (including risks pertaining to CCOs that are significant to the Auckland Council group).
· Review and approve the council’s “risk appetite” statement.
· Review the effectiveness of risk management and internal control systems including all material financial, operational, compliance and other material controls. This includes legislative compliance (including Health and Safety), significant projects and programmes of work, and significant procurement.
Internal Audit
· Review annually the Internal Audit Charter – which confirms the authority, independence and scope of the function.
· Review and approve annually and monitor the implementation of the 3 year Internal Audit Strategy and 12 month detailed Internal Audit Plan.
· Review the co-ordination between the risk and internal audit functions – including the integration of the council’s ERM risk profile with the Internal Audit programme. This includes assurance over all material financial, operational, compliance and other material controls. This includes legislative compliance (including Health and Safety), significant projects and programmes of work, and significant procurement.
· Review the reports of the Internal Audit functions dealing with findings, conclusions and recommendations (including assurance over risks pertaining to CCOs that are significant to the Auckland Council group)
Fraud and Integrity
· Review and approve annually, and monitor the implementation of, the Fraud and Integrity Strategy, including detailed work programme.
· Review annually the whistleblowing procedures and ensure that arrangements are in place by which staff, may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters, and that there is proportionate and independent investigation of such matters and appropriate follow-up action.
· Review the procedures in relation to the prevention, detection, reporting and investigation of bribery and fraud.
· Review and monitor policy and process to manage conflicts of interest amongst elected members, local board members, management, staff, consultants and contractors.
Statutory Reporting
Review and monitor the integrity of the interim and annual report including statutory financial statements and any other formal announcements relating to the council’s financial performance, focussing particularly on:
· compliance with, and the appropriate application of, relevant accounting policies, practices and accounting standards
· compliance with applicable legal requirements relevant to statutory reporting
· the consistency of application of accounting policies, across reporting periods, and the Auckland Council group
· changes to accounting policies and practices that may affect the way that accounts are presented
· any decisions involving significant judgement, estimation or uncertainty
· the extent to which financial statements are affected by any unusual transactions and the manner in which they are disclosed
· the disclosure of contingent liabilities and contingent assets
· the clarity of disclosures generally
· the basis for the adoption of the going concern assumption
External Audit
· Discuss with the external auditor before the audit commences:
· the nature and scope of the external audit
· areas of audit focus
· error and materiality levels.
· Review with the external auditors representations required by elected members and senior management, including representations as to the fraud and integrity control environment.
· Review the external auditors management letter and management responses, and inquire into reasons for any recommendations not acted upon.
Interaction with Council Controlled Organisations
Other committees dealing with CCO matters may refer matters to the Audit and Risk Committee for review and advice.
This committee will enquire to ensure adequate processes at a governance level exist to identify and manage risks within a CCO. Where an identified risk may impact on Auckland Council or the wider group, the committee will also ensure that all affected entities are aware of and appropriately managing the risk.
The Head of Risk and Head of Internal Audit are responsible for the provision of quality risk, assurance, insurance and ethics and integrity services for all CCOs except Auckland Transport and Watercare (with the exception of insurance services which are provided to Auckland Transport). Auckland Transport and Watercare have their own risk and assurance functions. The Head of Risk and Head of Internal Audit are responsible for monitoring CCO risk and internal audit strategies with respect to risks that are significant to the Auckland Council group.
Annual Report on the work of the committee
The chair of the committee will submit a written review of the performance of the committee to the chief executive on an annual basis. The review will summarise the activities of the committee and how it has contributed to the council’s governance and strategic objectives. The chief executive will place the report on the next available agenda of the governing body.
Exclusion of the public – who needs to leave the meeting
Members of the public
All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.
Those who are not members of the public
General principles
· Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.
· Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.
· Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.
· In any case of doubt, the ruling of the chairperson is final.
Members of the meeting
· The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).
· However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.
· All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.
Independent Māori Statutory Board
· Members of the Independent Māori Statutory Board who are appointed members of the committee remain.
· Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.
Staff
· All staff supporting the meeting (administrative, senior management) remain.
· Other staff who need to because of their role may remain.
Local Board members
· Local Board members who need to hear the matter being discussed in order to perform their role may remain. This will usually be if the matter affects, or is relevant to, a particular Local Board area.
Council Controlled Organisations
· Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.
Audit and Risk Committee 29 May 2017 |
ITEM TABLE OF CONTENTS PAGE
1 Apologies 11
2 Declaration of Interest 11
3 Confirmation of Minutes 11
4 Petitions 11
5 Public Input 11
6 Local Board Input 11
7 Extraordinary Business 12
8 Notices of Motion 12
9 Audit and Risk Committee Forward Work Programme 13
10 Consideration of Extraordinary Items
PUBLIC EXCLUDED
11 Procedural Motion to Exclude the Public 19
C1 Auckland Council and Group Financial Year End 30 June 2017 Reporting and Audit Requirements 19
C2 Office of the Auditor-General and Audit New Zealand briefing 19
C3 Insurance Renewal - Indicative Council Group Programme for 2017/2018 period 20
1 Apologies
An apology from Mayor P Goff has been received.
2 Declaration of Interest
Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.
3 Confirmation of Minutes
That the Audit and Risk Committee: a) confirm the ordinary minutes of its meeting, held on Wednesday, 1 March 2017, including the confidential section, as a true and correct record.
|
4 Petitions
At the close of the agenda no requests to present petitions had been received.
5 Public Input
Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Governance 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
There were no notices of motion.
Audit and Risk Committee 29 May 2017 |
Audit and Risk Committee Forward Work Programme
File No.: CP2017/09132
Purpose
1. To review and approve the Audit and Risk Committee’s three year forward work programme, which incorporates the amendments to the work programme requested at the 1 March 2017 meeting of the committee.
Executive summary
2. A draft forward work programme was presented for the committee’s review and approval at 1 March 2017. The committee approved the programme but requested amendments. Those amendments have now been incorporated into the programme.
3. The forward work programme will be reviewed at each committee meeting to ensure that it can be adapted quickly if council’s risk profile changes and so it remains relevant to the needs of the committee.
That the Audit and Risk Committee: a) approve the amended three year forward work programme.
|
Comments
4. The proposed forward work programme is attached at Appendix A. The work programme incorporates the amendments requested at the 1 March 2017 meeting of the committee:
· Fraud and corruption risk (Auckland Council and it’s council-controlled organisations) has been brought forward to the 19 July 2017 meeting
· Specific engagement with both external audit, and management that will allow the timely clearance by the committee of the interim financial statements, 2016/2017 Annual Report and NZX announcements.
5. The committee should note that an additional meeting has been included in May 2017 to allow the required engagement with external audit and management in the paragraph above. This means for 2017 there will be six meetings of the committee.
6. The 2018 and 2019 calendar years, have been to allow for the clearance of external reporting documents as discussed in the above. This will allow for five meetings of the committee in each of these years.
7. The forward work programme reflects:
· the incorporation of ‘deep dive’ reviews with respect to significant high and moderate risks relevant to the committee’s Terms of Reference, as contained in council’s Enterprise Risk Management ‘Top Risk’ register
· the next three years annual work programmes including:
o the risk and insurance functions
o the internal audit and Integrity functions
o the audits of the annual report, long-term plan and annual plan
o the review of the six month interim financial statements.
· regular progress reporting at each committee meeting about the following functions:
o internal audit and integrity
o risk
o legal risk
o health and safety.
· any other item of relevance to the committee’s Terms of Reference e.g. Auditor General reports.
8. It is recognised that for the committee to give due consideration to the specific focus areas identified for ‘deep dive’ reviews, sufficient time needs to be devoted. We believe that the most effective means of considering specific topics in a ‘full and frank’ manner is by way of workshops. These will take place immediately prior to each committee meeting.
9. The workshops do not replace the need for formal reporting to the committee.
10. 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.
11. 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 Auckland Council’s ‘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.
Consideration
Local board views and implications
12. The views of local boards have not been sought for this report.
Māori impact statement
13. This report is for information only and does not have direct impact on Māori.
Implementation
14. The forward work programme will be reviewed regularly to meet the needs of the committee.
No. |
Title |
Page |
a⇩ |
Forward Work Programme |
15 |
Signatories
Author |
Mark Maloney - Head of Internal Audit |
Authoriser |
Phil Wilson - Governance Director |
Audit and Risk Committee 29 May 2017 |
Exclusion of the Public: Local Government Official Information and Meetings Act 1987
b)
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 Auckland Council and Group Financial Year End 30 June 2017 Reporting and Audit Requirements
Reason for passing this resolution in relation to each matter |
Particular interest(s) protected (where applicable) |
Ground(s) under section 48(1) for the passing of this resolution |
The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7. |
s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities. In particular, the report contains financial assumptions and judgements that have impact on the financial results of the Auckland Council Group as at 30 June 2017. |
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 Office of the Auditor-General and Audit New Zealand briefing
Reason for passing this resolution in relation to each matter |
Particular interest(s) protected (where applicable) |
Ground(s) under section 48(1) for the passing of this resolution |
The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7. |
s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities. In particular, the report from Audit New Zealand contains information regarding the annual report and financial results of the Auckland Council Group as at 30 June 2017. |
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 Insurance Renewal - Indicative Council Group Programme for 2017/2018 period
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)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations). In particular, the report contains preliminary indications of the proposed proposed policies and indicative premuims and terms from insurers which are subject to consideration and negotiation. |
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. |
C4 Update on Compliance with the Holidays Act 2003
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)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person. In particular, the report contains financial and operational information and details of internal audit activity, which if released may jeapordise 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. |