Agenda of Audit and Risk Committee

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.

Review risk management reports identifying new and / or emerging risks, and any subsequent changes to the ERM “Top Risk” register.

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)

Review and monitor management’s responsiveness to the findings and recommendations – enquiring into the reasons that any recommendation is not acted upon.

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.

Review reports from the Risk, Internal Audit, Integrity and Investigations, external audit and management related to whistle blower, ethics, bribery and fraud related incidents.

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

significant adjustments resulting from the audit.

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.

Where required, the chair may ask a senior representative of the Office of the Auditor General to attend the committee meetings to discuss the office’s plans, findings and other matters of mutual interest.

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.

1 Apologies

An apology from Deputy Mayor BC Cashmore 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 Monday, 12 February 2018, 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

26 February 2018

Risk and Insurance Quarterly Update

File No.: CP2018/00261

Te take mō te pūrongo / Purpose of the report

1. To update the committee on risk management and insurance activities at Auckland Council.

Whakarāpopototanga matua / Executive summary

2. The annual review of council top risks commenced in February 2018 and is expected to be completed by March 2018. The final top risks register will be presented at the Executive Leadership Team meeting in April 2018 and to the Audit and Risk Committee in May 2018. Following this the top risk register will be presented to the Governing Body.

3. The objectives of the annual top risks review are:

· distill insights and provide clarity on key material risks shaping council's performance and objectives

· identify key strategic and operational risks that pose a legitimate threat to the achievement of council’s strategic objectives in the next 12 months

· ensure council’s material risks together with related controls are well documented, to enable proper risk oversight by management, Audit and Risk Committee and Governing Body

· raise awareness of the Enterprise Risk Strategy and discuss the plan/approach to execute.

4. The Enterprise Risk Management strategy for 2018-2020 was endorsed by the Audit and Risk Committee in December 2017. A risk team planning workshop was held in February 2018 to identify key activities required to implement and embed our strategy which will lift the risk culture, capability and maturity of council to support good decision-making and maximising opportunities. Attachment A outlines the programme of work required to effectively implement and embed the strategy. Detailed work programme for each of these are being put together and will be presented to the Audit and Risk Committee in May 2018.

5. A risk maturity survey is planned for Quarter one FY2018/2019 to establish a baseline for our current risk maturity. Options for the survey tool are being considered.

6. The Quality Advice Programme team have rolled out the new report template that will be used for all future reports to council committees and local board in January 2018. The guidance notes, ‘Risk Based Decision Making’ has been developed to support the new report template to assist the authors and authorisers to incorporate quality risk and opportunity analysis of proposals.

7. The risk team completed a process assurance review of the Consultation Document over the period December 2017 - February 2018 to ensure that key risks have been identified and controls are in place to mitigate them. The results of the review were reported to the Audit Risk Committee on 7 February 2018. The risk review has concluded that:

· an appropriate and adequate risk process has been undertaken by the project team, including identification of key risks, controls and risk analysis

· key controls are in place and an adequate process has been followed to ensure the reasonableness and accuracy of the significant forecasting assumptions.

8. The Rawene Reserve Carpark Birkenhead landslip issue is being actively managed. A briefing from the chief engineer and project manager is being arranged for the Audit and Risk Committee on this event including the risk management and mitigation and control measures in place as part of the council’s management and response. The Legal and Risk teams are supporting the project team with the risk management, insurance and claims related matters.

9. The insurance premium cost to the council group is expected to increase due to a number of factors including increase in reinsurance costs for natural catastrophe globally and increase to insured values of council assets. In anticipation of this increase we propose the following insurance renewal strategy for 2018-2019:

· review integrity of property data and valuations to ensure the integrity of information relied on for insurance placements and cover

· complete underwriting reports for key sites to meet insurer risk profiling requirements. benchmark insurance valuation figures for selected properties and applying across council asset categories

· review council group risk appetites and investigate new deductibles and limits and how these might impact on reduction of premiums

· review existing policies against claims and other data to assess requirement and values for cover for future purchase

· optimal portfolio diversification for the upcoming renewal to ensure where practical, the spread is maintained. We anticipate taking the renewal programme to market in April 2018 for indicative pricing, followed by negotiation.

Ngā tūtohunga / Recommendation/s

That the Audit and Risk Committee:

a) note the update on Enterprise Risk Management.

b) note the update on Insurance activities.

c) endorse the proposed indicative Insurance Renewal Strategy.

Horopaki / Context

10. This report provides update on risk management activities, risk strategy implementation, insurance matters and key projects.

Tātaritanga me ngā tohutohu / Analysis and advice

Top Risks

11. The annual review of council top risks commenced in February 2018 and is expected to be completed by March 2018.

12. Key focus areas of the top risks review are:

· definition of risks: ensuring risks are defined in a meaningful manner and tells a risk story in terms of the risk event, causes and impact

· identification of controls: ensuring controls are clearly documented in terms of control objectives, frequency and ownership to ensure it clearly demonstrates how it can effectively mitigate the risk identified. Clearly defined controls will also assist in ensuring reasonable accurate risk assessments

· risk assessments (i.e. risk ratings): ensuring risk assessments are completed before and after consideration of controls to determine the inherent risk and residual risk ratings

· risk ownership: ensuring that the right risk owners are identified and agreed by the Executive Leadership Team.

Updates on key projects and other significant matters previously reported to Audit and Risk Committee

13. There are two items (Update on long-term plan and refurbishment work on 135 Albert Street) included within this report as Attachment C. These items relate to matters previously reported to this committee and for which regular updates are provided for the committee’s information.

Implementation of the Enterprise Risk Strategy

14. The Enterprise Risk Management Strategy for 2018-2020 was endorsed by the Audit and Risk Committee in December 2017. A risk team planning workshop was held in February 2018 to identify key activities required to implement and embed our strategy. To lift the risk culture, capability and maturity of council to support good decision-making and maximising opportunities, the following streams of work have been identified:

· risk management framework and policy

· risk management training programme

· risk management system

· annual top risk review

· top risk deep dives

· risk champions forum

· risk culture review

· reward and recognition

· engagement with council-controlled organisations

· business Partnership Model

Further details on the above can be found in Attachment A. Detailed work programme for each of the above are being put together and will be presented to the Audit and Risk Committee in May 2018.

Risk Maturity Survey

15. A risk maturity survey is planned for next quarter to measure against the perception survey undertaken in March 2016 and to establish a baseline measure for the Enterprise Risk Management Strategy. Options for the survey tool are being considered.

Quarterly Risk and Compliance Champions Forum

16. The Quarterly Risk and Compliance Champions Forum is scheduled for 23 March 2018. The key objective of this session is to raise awareness of the risk strategy, discuss the role of the business units and risk champions in execution of the strategy, to understand current risks and challenges and seek input on topics of interest to include in upcoming forums.

Our Charter - corporate policy - ‘Do the Right Thing’ project

17. The ‘Do the Right Thing’ project led by the risk team is in its final stages and is progressing well towards roll out in April 2018. ‘Our Charter’ has six principles that applies across the council group including, money and assets, health safety and wellbeing, Treaty of Waitangi, information, staff experience, and the people we serve (customer).

18. Our Charter, including the foundation principles and standards will be presented to the Governing Body at a workshop on 12 March 2018 for consultation and feedback, with the final money and assets group principles and standard presented on 22 March 2018 for endorsement.

Quality Advice Programme – council report template - mandatory risk section

19. The guidance notes, ‘risk based decision-making’ has been developed to support the new report template to assist the authors and authorisers to incorporate quality risk and opportunity analysis of proposals.

Elected member governance and risk workshops

20. Governance and risk workshops, run as part of the Kura Kawana Elected Member Development programme commenced in November 2017.

21. The risk and audit teams ran two workshop sessions with local boards. The purpose of the workshop was to provide local board members with support on understanding of risk and governance. Scenarios were used and members were asked to work in groups to provide feedback and ask questions. The feedback from the sessions were positive, particularly the second session where there was a larger number of attendees with high engagement levels. The risk team is planning for a similar workshop with councillors post 30 June 2018 with a focus on receiving members views on top risks for the council.

Emerging Risks

22. The Americas Cup event, including issues reported in the media relating to the location of the cup village and funding implications in the 2018-2028 Long-term Plan, is a high profile matter involving a number of departments across the council group. It has been identified as a significant matter requiring risk team oversight. The Risk team will be working with the AC36 project team to receive information and provide oversight over the management of project risks. An update will be provided at the next Audit and Risk Committee meeting.

Insurance Update and indicative Insurance Renewal Strategy

23. The insurance premium cost to the council group is expected to increase due to a number of factors including increase in reinsurance costs for natural catastrophe globally and increase to insured values of council assets. The baseline premium increase is expected to be around 5 per cent, in addition to the 3.5 per cent increase expected due to a rise in average property valuations. In anticipation of this increase we propose the following insurance renewal strategy for 2018-2019:

Indicative Insurance Renewal Strategy	Work in Progress
Review integrity of property data and valuations to ensure the integrity of information relied on for insurance placements and cover.	A post renewal exercise was undertaken to validate the insurance values recorded in the insurer schedules. As some of the variances were in excess of the top up allowance of the insurer, the insurer had agreed to apply an average inflation to the 2017 insurance values at existing premium rates for the purposes of calculating additional premium and the values agreed to be paid in the event of a claim have been agreed. An adjustment to the premiums has been made for the balance of the insurance year and apportioned between council and Auckland Transport (owners of the affected properties). To improve the integrity of data going forward, a valuation benchmarking process has been agreed. This will enable a more accurate valuation of assets for insurance purposes. In terms of valuation, the following actions are or will be undertaken: - Insurance valuations on selective properties will be pulled forward to early 2018 rather than waiting for the valuation exercise to be completed in June - The rate of inflation applied to these properties will be used to adjust the 2018 insurance values across the various categories of assets - These values will be further adjusted post the 30 June 2018 renewal once the full insurance valuation process is completed.
Complete underwriting reports for key sites to meet insurer risk profiling requirements.	Site surveys of selective locations are underway with reports expected late February 2018. The reports will identify any risk and improvements for action with council and council-controlled organisations
Review council group risk appetites and investigate new deductibles and limits and how these might impact on reduction of premiums.	Consideration is given to reducing limits for material damage natural disaster cover and increasing deductibles in a number of policies including material damage and below ground infrastructure. Key inputs in this assessment will be required from council treasurer, representatives from council-controlled organisations, claims and insurance team and AON New Zealand.
Review existing policies against claims and other data to assess requirement and values for cover for future purchase.	The necessity for policies are being reviewed against risk assessments, claims data and the premiums payable. There has been a number of post placement workshops held with the key insurer, for example on Cyber and environmental cover. The purpose of the workshops was to enable engagement between council group key staff, Aon New Zealand (council’s broker) and the insurer to assess and validate cover requirements for future placements.
Optimal portfolio diversification	The groups insurance portfolio is spread across a number of insurers locally and offshore. All these markets will be approached for the upcoming renewal to ensure where practical, the spread is maintained. We anticipate taking the renewal programme to market in April 2018 for indicative pricing, followed by negotiation.

24. Representatives from the council-controlled organisations, council staff and Aon New Zealand meet monthly to complete the actions needed to prepare for the renewal placement due to commence in mid-April 2018. Following the roadshows and responses from the insurers both domestic and international, staff will bring a report back to the May 2018 meeting of the Audit and Risk committee for endorsement and recommendation to the Finance and Performance Committee meeting in June 2018 in advance of the 30 June 2018 renewal date.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

25. 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.

26. The risk team engaged with the risk and compliance champions from Local Board Services, to assist them in the completion and maintenance of a risk register.

Tauākī whakaaweawe Māori / Māori impact statement

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

28. Māori outcomes and, in particular, council obligations to meet established legal and other responsibilities to Māori and satisfy all reasonable expectations of responsiveness is included and managed through the Enterprise Risk Framework - Top Risks register.

29. Meeting outcomes for Māori has been identified as a strategic risk to council. The risk and treatment plan will be reviewed as part of the top risk annual review process.

Ngā ritenga ā-pūtea / Financial implications

30. There are no financial implications directly arising from this information report.

Ngā raru tūpono / Risks

31. This report addresses the key risk and insurance activities. Risk management activities relating to all matters in this report have been summarised above.

Ngā koringa ā-muri / Next steps

32. The next quarterly update report to the Audit and Risk Committee will be on 28 May 2018.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Risk Strategy Implementation - list of workprogramme	25
b ⇩	Key projects and significant risk matters update	27

Ngā kaihaina / Signatories

Author

Shivali Kukreja - Senior Risk Advisor

Authorisers

Cecilia Tse - Head of Risk

James Hassall - Director Legal and Risk (Acting)

Phil Wilson - Governance Director

Audit and Risk Committee

26 February 2018

Monitoring of Treaty Audit Response Work Programme

File No.: CP2018/01231

Te take mō te pūrongo / Purpose of the report

1. This report updates the committee on the monitoring work performed by the Internal Audit department on council’s Treaty Audit Response Work Programme.

Whakarāpopototanga matua / Executive summary

2. By February 2018, fourteen of 24 action groups of the Treaty Audit had been assessed and categorised as ‘closed’.

3. A further three actions groups are ready to be considered by the Waharoa for closure in February and March 2018, while a further two are ‘in substance’ complete but can’t be formally closed off until the adoption of the Auckland Plan and Long-term Plan 2018-2028 in June 2018.

4. Five action groups encompassing Mana Whenua participation in resource consents, protection of sensitive information and the development of the Māori Communication Strategy will be partially progressed by June 2018. Support is being given to action-group owners on progressing these areas by June 2018.

5. Māori Responsiveness Plans are on course to be in place for all council-controlled organisations by June 2018. Plans are currently in place and being implemented for Auckland Transport, Auckland Tourism, Events and Economic Development, and Panuku Development Auckland.

Ngā tūtohunga / Recommendation/s

That the Audit and Risk Committee:

a) receive the Monitoring of Treaty Audit Response Work Programme report

b) note the monitoring work that has been performed to date by the Internal Audit department

c) note that the Internal Audit department will report on a six-monthly basis to this committee in accordance with the approved Internal Audit work plan.

Horopaki / Context

6. The Independent Māori Statutory Board’s Treaty of Waitangi Audit process sets out a framework for assessing council’s performance against statutory responsibilities and requirements relating to Te Tiriti o Waitangi and to Māori.

7. Te Tiriti o Waitangi Audit Report 2015 includes a “Summary of Recommended Actions”, in which 24 action groups are contained. These are linked to the 67 specific recommendations of the audit report.

8. Recommendation 66 advised that:

“the responsibility for monitoring the work programme completion should move from Te Waka Angamua to Internal Audit, an independent function comprising risk and controls experts, well versed in how to undertake substantive follow up activity and with a direct reporting line to the Audit and Risk Committee, a body charged with oversight of risk, control and compliance matters”.

9. The forward work programme of this committee requires the Internal Audit department to report to this committee on a six-monthly basis, on its monitoring work on council’s response to the recommendations contained in Te Tiriti o Waitangi Audit Report 2015.

Tātaritanga me ngā tohutohu / Analysis and adviceThe Waharoa Group

10. The Waharoa Group is comprised of representatives from the department, Te Waka Angamua and the Independent Māori Statutory Board Secretariat. Its role is to monitor progress and apply criteria for closure of actions and each related Treaty Audit recommendation

Status of Treaty Audit Recommendations

11. Each of the actions recommended in Te Tiriti o Waitangi Audit Report 2015 has a set of agreed closure criteria. When these are met, the Waharoa Group agrees to close the action (and the linked Treaty Audit recommendation). When all actions within a group are complete, the action group can be closed.

12. In September 2017, staff reported 12 of 24 action groups of the Treaty Audit had been assessed and categorised as ‘closed’. At that time of the 12 outstanding action groups that were yet to be closed, three were substantially progressed and nine were partially progressed.

13. The following action groups have been closed subsequent to the September meeting of this committee:

· action groups 21 and 22 (Nga Kete Akoranga).

14. The following action groups are ready and scheduled to be assessed for closure at the February and March 2018 meetings of the Waharoa Group:

· action group 6 (Taonga Management)

· action group 13 (Maori Capability and Employment)

· action group 10 (Maori Information Portal).

15. The following action groups remain on track to be closed by the end of June 2018

· action group 3 (Auckland Plan)

· action group 24 (Performance Framework).

16. Both action groups 3 and 24 are in substance complete. However, they can’t be formally closed off until the formal adoption of the refreshed Auckland Plan and Long-term Plan 2018-2028.

17. By the end of end of 30 June 2018, it is estimated that five action groups that relate to Mana Whenua participation in resource consents, the protection of sensitive information and the Māori communication strategy will not be fully completed. The Waharoa Group is continuing to monitor progress in these areas.

18. Attachment A provide a summary of the status of Treaty Audit action groups.

Maori Responsiveness Plans

19. In August 2017, staff reported to the committee on the approach to monitoring the progress of Māori Responsiveness Plans for council-controlled organisations. Since that time the Auckland Transport Māori Responsiveness Plan has been approved and is being implemented. The plans for Watercare Services Limited and Regional Facilities Auckland have been prioritised to be completed by June 2018. Te Waka Angamua is liaising with the respective council-controlled organisations to support them in the development of their plans.

20. In August 2017, eleven council department Māori Responsiveness Plans were approved and were being implemented. Since then a further five plans have been approved and are being implemented, those being:

· Auckland Transport,

· Transport and Infrastructure Strategy department

· Internal Audit department

· Legal and Risk department

· Infrastructure and Environmental Services department.

21. The following plans have been prioritised for completion by June 2018:

· Watercare Services Limited

· Regional Facilities Auckland

· Regulatory Services department

· Community Services (Parks, Sports and Recreation, Libraries, and the Arts, Community and Events departments)

· Local board Services department

· Democracy Services department.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

22. The views of local boards have not been sought in relation to this report.

Tauākī whakaaweawe Māori / Māori impact statement

23. The Treaty of Waitangi Audit Response Work Programme enables the council group to strengthen responsiveness to Māori through targeted actions and improvements.

Ngā ritenga ā-pūtea / Financial implications

24. The committee is not being asked to make a decision with financial implications.

Ngā raru tūpono / Risks

25. The committee is not being asked to make a decision in which they need to be informed about risk.

Ngā koringa ā-muri / Next steps

26. The Internal Audit department will continue to monitor the Treaty Audit response programme through 2018.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Status of Treaty Audit Recommendations	35

Ngā kaihaina / Signatories

Author	Mark Maloney - Head of Internal Audit
Authoriser	Phil Wilson - Governance Director

Audit and Risk Committee

26 February 2018

Quarterly Health Safety & Wellbeing performance update

File No.: CP2018/01242

Te take mō te pūrongo / Purpose of the report

1. To report on Auckland Council’s performance for health, safety and wellbeing including priority actions for the second quarter of 2017/2018.

Whakarāpopototanga matua / Executive summary

2. Auckland Council is committed to being a leading employer in its approach to health, safety and wellbeing.

3. This second quarter report:

· provides a summary of the council’s performance against four key health and safety metrics

· identifies work underway for a new council Wellbeing Strategy

· sets out elected members’ due diligence duties under the Health and Safety at Work Act 2015.

Ngā tūtohunga / Recommendation/s

That the Audit and Risk Committee:

a) receive this report on the second quarter of 2017/2018 about health, safety and wellbeing

b) refer this report to the Governing Body for its consideration

c) note that this report will also be provided to all local boards for their information.

Horopaki / Context

4. Auckland Council has a three-year Health and Safety Strategy (2017-2020) to move the organisation from being reactive to becoming a leading organisation in the protection of its people.

5. Under the Health and Safety at Work Act 2015 all elected members are deemed ‘officers’ and must exercise a duty of due diligence in relation to health and safety. This report also provides information which enables elected members to carry out that role.

Tātaritanga me ngā tohutohu / Analysis and advice

6. The council’s key safety indicators include four key metrics:

· lost time injury frequency rate (LTIFR) which measures the number of lost time injuries per one million hours worked

· near misses including unsafe conditions

· corrective actions

· critical risks.

7. Performance against each of those metrics is set out below.

Lost time injury frequency rate

8. In 2015 the council set an aspirational target for LTIFR of <2.25.

9. The LTIFR is tracking downward for the quarter and below the target (refer to Table 1 below).

Table 1 Summary of lost injury trends

Trend Jan 18 Dec 17 Nov 17
Rolling Lost Time Injury Frequency Rate (indicative)	2.02	2.06	1.98
Number of LTI	1	4	1
Number of all injuries inclusive of first aid, medical treatment and lost time	21	26	18

Near misses including unsafe conditions

10. For the quarter, there was:

· an increase of three per cent in the number of reported unsafe conditions

· an increase of 15 per cent in the number of reported near misses

· an overall decrease in reporting of incidents (unsafe conditions, incidents, and near misses). This was likely due to the Christmas break.

11. The Risk Manager System continues to be developed to improve support, add value and mitigate risk to the council. This includes the following developments:

· access to council’s health and safety management via mobile devices. This is a critical tool for enabling people leaders to fulfill safety leadership responsibilities. It enables them to immediately carry out and record safety observations

· introduction of tools via interactive applications on mobile devices. This further enables on-the-job risk assessments.

12. The next major developments for the system are:

· improved data analysis and dashboard reporting

· enhancement to the current contractor management module within councils health and safety management system to strengthen the council’s health and safety oversight of contractors.

Corrective actions and critical risks

13. ‘Critical risks’ are health and safety hazards that are present in the business and, if they occur, have the potential for a critical outcome. For example, fatality, permanent disability or significant loss of plant/equipment. These can now be identified through the Risk Manager System.

14. The Risk Manager System allows the council to identify and categorise critical risks and track corrective actions. This is vital to drive improvement and reduce risk.

15. The number of completed corrective actions was on a downward trend since November 2017. At the end of January 2018, completion of these actions was at its lowest at 43 percent. Completing these actions is essential to mitigate risks and learn from incidents.

16. As these significant hazards are now visible they can be assessed for risk and control measures put in place and tracked. This helps mitigate the likelihood of these risks from occurring.

17. Chart 1 below shows the critical risks that have been identified within the council through reporting.

Chart 1 Rolling critical risks

18. Work programmes are in place to address these critical risks. The highest recurring risk is violence. Between February 2017 and January 2018 this consisted of physical threats/abuse (20 per cent) and verbal abuse (80 per cent).

19. To address the critical risk of violence, council staff:

· have developed a project to review the risks to our staff who have direct engagement with the public. This included two staff workshops to identify the effectiveness of current controls and to make recommendations for improvement particularly through design

· are developing a communications campaign. The campaign aims to target external customers who interact with staff and supporting our people to report incidents of unacceptable behaviour, no matter how small.

Wellbeing Strategy

20. The council is designing a new Wellbeing Strategy in response to a recent survey of staff. The focus for 2018 is to implement an integrated wellbeing programme to improve our performance in key areas, which are mental health, stress and general wellness through exercise, nutrition and social wellbeing.

21. The overall strategy will be designed around the New Zealand Mental Health Foundation’s Five Ways to Wellbeing which include:

· connect - me whakawhanaunga

· give -tukua

· take notice - me aro tonu

· keep learning - me ako tonu

· be active - me kori tonu.

22. As part of developing the strategy, staff will also integrate several mental health programmes currently operating within the council into one programme.

Due diligence duties

23. As ‘officers’ under the Act, elected members have six due diligence duties to meet, as set out below.

Duty 1: acquire and keep up to date with health and safety knowledge and health and safety matters

To ensure elected members and senior management are well informed and up-to-date on health and safety matters, training has been ongoing. To date, 10 local board specific sessions were delivered to 61 elected members. The remaining 10 will be delivered in 2018 through the elected member development programme, Kura Kawana.

Duty 2: understand the council’s operations and the associated hazards and risks

A health and safety site visit plan for the chief executive, executive lead team members and elected members is in place.

The Health Safety and Wellbeing Committee under the new framework has been realigned to the executive lead team. This will create better visibility and understanding of council operations and the health and safety risks in their parts of the organisation. The first meeting of this committee takes place 7 March 2018.

Duty 3: ensure the council has appropriate resourcing and processes to eliminate or

minimise risks to health and safety

A key focus of the current strategy is to build capability within the organisation and prioritise high risk business areas. A corporate training programme has now been agreed mandating all people leaders to complete a one day Managing Safely course. This course has been developed from the Institute of Occupational Safety and Health’s own Managing Safely course, a well-respected and known international standard.

The Risk Manager System continues to be developed to improve support, add value and mitigate risk to the organisation. We see through outstanding actions that some managers do not engage with the system as often as we’d like. This creates a potential risk.

Duty 4: ensure the council has appropriate processes for receiving and considering

information regarding incidents, hazards and risks and for responding in a timely way to that information

A management framework is now in place. It is designed to ensure robust safety governance, processes, guidance and positive behaviours around health and safety.

Lessons learnt are being developed and shared with the business following a sauna death at Moana Nui a Kiwa Leisure Centre on 27 August 2016. Worksafe confirmed last year council would not face further action.

Two deaths have occurred on council assets since the last report. Worksafe are not taking any of these notifications further. Community Facilities has investigated these in detail to ensure any changes that can reasonably be done, are made.

A young man was injured by a collapsing basketball hoop at Tui Park. Councils Community Facilities department immediately performed checks on all other basketball hoops across the Auckland region. Opportunity was also taken to look at other structures and asset check is currently under way.

Duty 5: ensure the council has, and implements, processes for complying with any duty or obligation

The chief executive and Mayor have recently signed the organisation’s Health and Safety Policy Statement and this has been implemented alongside the new framework. It focuses on developing the right behaviours across the whole organization, including our CCOs: in short being open, honest, working with others, embracing safety, communicating clearly and trusting your instincts

Duty 6: take reasonable steps to verify the provision and use of resources and processes through reviews and audits

Workplace Safety Management Practices audits no longer operate. Council has identified the Worksafe replacement SafePlus scheme as an appropriate replacement for external validation of its Safety Management System.

The Head of Health, Safety and Wellbeing is currently working with the Head of Audit to identify and develop an assurance framework for use within the council.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

24. Briefings for elected members, including local boards, have been provided since February 2017. To date 10 local board specific sessions were delivered to 61 elected members with the remaining 10 to be delivered in 2018 through the elected member development programme, Kura Kawana.

25. This report will be provided to all local boards together with a briefing on this report.

Tauākī whakaaweawe Māori / Māori impact statement

26. Council staff are working with the Independent Māori Statutory Board and the council’s co-governance entities, such as the Maunga Authority, Te Poari o Kaipātiki ki Kaipara, the Ngāti Whātua Ōrākei Reserves Board and Te Motu a Hiaroa (Puketutu Island) Trust to ensure they have information and support to comply with their duties either as a board or individuals.

Ngā ritenga ā-pūtea / Financial implications

27. There are no financial implications over and above those covered by current budgets arising as part of this report.

Ngā raru tūpono / Risks

28. The risk of non-compliance with health and safety is recorded in the council’s corporate top risk register.

29. Controls are in place to monitor and respond to critical risks, through the Risk Manager System. The system relies on people leaders actively applying systems, carrying out risk assessment and reporting incidents and learning to ensure management systems remain effective. A behavioural programme has been developed to address this potential risk.

Ngā koringa ā-muri / Next steps

30. Staff will continue to implement the Health and Safety Strategy and embed the new framework.

31. A Wellbeing Strategy will be developed and reported by the end of quarter four.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Quarterly health and safety report - Graphs and Charts	51

Ngā kaihaina / Signatories

Author

Oliver Sanandres - Head of Health, Safety and Wellbeing

Authorisers

Patricia Reade - Director People and Performance

Phil Wilson - Governance Director

Audit and Risk Committee

26 February 2018

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 Financial release of the Half Year New Zealand Stock Exchange Announcement and Interim Report

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