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

Apologies from Deputy Chairperson BC Cashmore have been received.

2 Declaration of Interest

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

3 Confirmation of Minutes

That the Audit and Risk Committee:

a) confirm the ordinary minutes of its meetings, held on Wednesday, 5 December 2018 and the extraordinary minutes of its meeting, held on Friday, 1 February 2019, including the confidential sections, as true and correct records.

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.

5.1 Public Input - Chris Joel - Atkinson Park, Titirangi

Te take mō te pūrongo

Purpose of the report

1. To enable Chris Joel to address the committee regarding Atkinson Park, Titirangi.

Whakarāpopototanga matua

Executive summary

2. Chris Joel has provided the following summary:

“In 1913 ACC induced and received a gift of 4 acres of prime forest park known as "Atkinson Park" (in Titirangi). ACC promised to "jealously guard" this "jewel in the crown of Auckland" for perpetuity. A Deed of Gift from the gift's Trustees specified actions that Council agreed to. Council is in breach of the Deed of Gift and has been in breach of the Deed for the last 34 years. One item in the Deed was protection against fires. It is this fire risk (to private homes in the path of a forest fire and to their insurance companies) that constitute the $1 Billion contingent liability that should be showing on council audits and balance sheets. Alternatively, there are low cost options open to ACC to heal the breach, mitigate this risk and no longer have a contingent liability of $1 Billion.”

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) receive the presentation from Chris Joel regarding Atkinson Park, Titirangi and thank him for his attendance.

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.”

No.	Title	Page
a ⇩	Forward Work Programme	15

No.	Title	Page
a ⇩	Letter from Auditor-General	23

Audit and Risk Committee

26 February 2019

Risk and Insurance Update - February 2019

File No.: CP2019/00185

Te take mō te pūrongo

Purpose of the report

1. To update the committee on risk management and insurance activities at Auckland Council for the quarter to February 2019.

Whakarāpopototanga matua

Executive summary

2. The annual review of council top risks was completed in February 2019 and approved by the council’s Executive Leadership Team on 8 February 2018. The top risk register has eleven top risks, of which there are six ‘high’ and five ‘moderate’ rated risks.

3. For the 36th America’s Cup (AC36) programme, the council risk team provides reporting of the all of programme risks to the Joint Chief Executive Steering Group and continues to work with workstream leads to update risk registers, identify new or emerging risks, and review and challenge the reasonableness of risk ratings and mitigations. As at 21 January 2019, there are five ‘high’ and four ‘moderate’ rated risks that management are actively reviewing and monitoring to ensure controls are in place and remedial activities are progressing with urgency.

4. The risk maturity review for council was completed in November 2018. The Enterprise Risk team is working with the Executive Leadership Team to agree and prioritise initiatives that need to be progressed in the short, medium and long-term to address the identified areas of improvement.

5. The council group insurance programme is due for renewal on 30 June 2019. Council staff are working with Aon New Zealand in preparation for the renewal, and some potential changes are proposed to the programme in line with the council group insurance strategy.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) note the update on enterprise risk management and insurance

b) note the update on the 36^th America’s Cup Programme.

Horopaki

Context

6. This report provides an update on risk and insurance activities for Auckland Council to enable the Audit and Risk Committee to fulfil their governance and oversight role in relation to effective enterprise risk management.

Tātaritanga me ngā tohutohu

Analysis and advice

The Top Risks Register

7. Councils top risks are reviewed on an annual and quarterly basis with the executive leadership team and subject matter experts across council to continually validate and update the risk descriptions, causes, mitigations and risk assessments.

8. The objectives of the annual top risks review for 2019 were to:

· obtain insights on key material risks shaping council's performance and objectives

· identify any new or emerging 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

9. The last quarterly review of council top risks (completed in November 2018) had resulted in a number of changes to the risk descriptions, causes, controls and rationales. No additional changes have been made to the council’s top risk register as a result of the review completed in February 2019.

10. The top risk register has eleven top risks, of which there are six ‘high’ and five ‘moderate’ rated risks. The council’s top risk register has been included within this report as Attachment A and a residual risk heat map is included in Attachment B.

11. The council’s top risk register and a risk heat map are reported to the Governing Body as endorsed by this committee. The top risks will be presented to the Governing Body on 28 February 2019.

12. Top risks are subject to ‘deep dives’ on a rotational basis (as reflected in this committee’s forward work programme) to provide assurance to council’s Executive Leadership Team and the Audit and Risk Committee that the risks are being effectively managed and controls are operating as intended.

The 36^th America’s Cup (AC36) - Programme Risk Management

13. The AC36 programme risk workstream is being led by Auckland Council risk team in conjunction with council’s Programme Management office to provide leadership, guidance and oversight for the risk management activities across the programme.

14. This committee has been included within the AC36 Programme Risk Management Framework as playing a role from a governance and oversight perspective to provide advice to the Governing Body that Auckland Council’s risks as project investor have been appropriately identified and managed.

15. All AC36 workstreams are required to maintain workstream risk registers, which are consolidated into an all-of-programme AC36 risk register. Monthly, the risk lead team works with workstream leads to update risk registers and identify any new or emerging risks, review and challenge the reasonableness of risk ratings, effectiveness of mitigations and follow-up on progress against actions underway to further mitigate risks.

16. Monthly, high and extreme risks (at minimum), post treatment and mitigation and any other topical risks, are reported to Joint Chief Executive Steering Group (comprising of Auckland Council Group, Ministry of Business, Innovation and Employment on behalf of crown, America’s Cup Event Ltd and Mana Whenua).

17. Overall, the AC36 risk profile remains stable. The all-of-programme risk register as at 21 January 2019, has 39 risks, of which five are rated ‘high’, 28 ‘moderate’ and six ‘low’. A summary Residual Risk Heat Map, including ‘high’, ‘extreme’ and any other risks escalated by the Programme Management office are included in Attachment C. All risks continue to be actively managed by the workstream owners.

Risk Maturity Action Plan

18. The risk maturity review for council was completed in November 2018, the results of which were presented to this committee in December 2018. The Enterprise Risk team is working with the council’s Executive Leadership Team to prioritise and approve initiatives that are required to be progressed in the short, medium and long term. An update will be provided to this committee at the next scheduled meeting in June 2019.

Insurance Renewal Programme update

19. The council group’s insurance renewal programme is due for renewal on 30 June 2019.

20. The group’s insurance strategy requires council group to understand our risk appetite, develop financial risk tolerances to align retention of risk with group’s financial capacity and purchase insurance cover at competitive rates, both locally and globally.

21. Aon New Zealand (council’s broker) held workshops with council and council-controlled organisations (September – December 2018) to better understand their respective financial risk tolerances. As expected, there was a variety of different views on financial risk tolerances, largely related to the size of the council-controlled organisation.

22. Council will look to move towards purchasing policies in line with the group risk appetite and providing internal ‘buy-down’ cover in situations where council-controlled organisations have a lower risk appetite. This means that council will only insure for significant risk exposures (such as above ground property and liability), while retaining low risk exposures for the other policies.

23. Council group have also been reviewing the existing insurance programme and understanding the global insurance market to assess the need to change policy limits and deductibles, to enable appropriate transfer of risk and to maintain an optimal balance between external and self insurance.

24. For the last two years, the council group purchased policies at competitive premium rates. However, an increase in natural disasters globally has meant that the insurers are now more risk-averse, which could result in significant premium increases in the medium to longer term.

25. It is not expected that there will be significant changes to the insurance placement for 2019-2020 with the exception of reviewing deductibles, limits and other policies like Motor Vehicles, Statutory and Employer’s Liability. The final placement will be reported at the next scheduled committee meeting in June 2019.

26. Over the next 12-18 months staff will continue to refine council’s insurance strategy with goal of moving toward a more strategic risk-based approach to insurance rather than the current largely transactional approach. This will involve considerations around self-insurance levels and self-insurance mechanisms, the role of the global insurance market, insurance limits and broader balance sheet considerations.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

27. The views from representatives of the Auckland Council Group have been incorporated and they support the advice provided in this report.

28. Risk and control owners across council have been consulted to complete the risk registers including validation of risk descriptions, causes and mitigations.

29. Support on risk matters and embedding of risk management framework is provided to the council-controlled organisations as required. Council-controlled organisations have provided separate risk update reports under the confidential agenda.

30. The Auckland Council Insurance Leadership Group, which comprises of the representatives from the council-controlled organisations, meet regularly and have been consulted for the council group’s insurance renewal programme.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

31. 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.

Tauākī whakaaweawe Māori

Māori impact statement

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

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

34. 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

35. The next quarterly update report to the Audit and Risk Committee will be in June 2019.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Council's Top Risks Register - February 2019	29
b ⇩	Council's Top Risks - Residual Risks Heat Map February 2019	39
c ⇩	AC36 Escalated Risks - Residual Risks Heat Map January 2019	41

Ngā kaihaina

Signatories

Author

Shivali Kukreja - Principal Advisor Risk

Authorisers

Cecilia Tse – Chief Risk Officer

Dani Gardiner - General Counsel (Acting)

Phil Wilson - Governance Director

Audit and Risk Committee

26 February 2019

Monitoring of theTreaty of Waitangi Audit Recommendations

File No.: CP2019/00723

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. The report sets out:

· a summary of the work performed in monitoring the implementation of audit recommendations contained in Te Tiriti o Waitangi Audit Report 2018.

· progress in finalising and implementing Māori Responsiveness Plans across the council group.

· progress made in finalising the Māori Outcomes Performance Framework.

Whakarāpopototanga matua

Executive summary

2. The focus of the work of the Waharoa Group in quarter two of 2018 has been on enhancing its treaty audit oversight mechanisms in response to the findings of the Te Tiriti o Waitangi Audit Report 2018.

3. Since September 2018 a further five Māori Responsiveness Plans have been finalised and implemented, including plans for Watercare Services and Regional Facilities Auckland. Māori Responsiveness Plans are now in place for all Council Controlled Organisations.

4. One of the Chief Executive’s performance objectives is the development of the Māori Outcomes Performance Management Framework. The development of a performance management framework has also been a recommendation in the previous Treaty Audits.

5. While outcomes and priorities have been established there is still work to do in progressing and finalising detailed performance indicators with respect to each of the four priority areas - Marae, Economic Development, Te Reo Māori, and Water.

6. A programme of work is being proposed to the Māori Outcomes Steering Group on 6 March to progress and finalise the detailed performance measures by 30 June 2019 with respect to each of the four priority areas - Marae, Economic Development, Te Reo Māori, and Water. This programme of work is subject to the approval of that steering group.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) receive the Monitoring of the Treaty of Waitangi Audit Recommendations report.

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

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

Horopaki

Context

7. 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.

8. The third Te Tiriti o Waitangi Audit has been completed. It was received by the Finance and Performance Committee in July 2018, and by this committee in September 2018.

9. In total there are 13 new recommendations in Te Tiriti o Waitangi Audit Report 2018. These recommendations will strengthen accountability mechanisms. All recommendations have been accepted and are being actioned as described in the council group’s Draft Treaty Audit Response Programme. Outstanding recommendations from the 2012 and 2015 audits have been included in the Audit Response Programme.

10. Te Tiriti o Waitangi Audit Report 2018 noted that council had made a considerable effort over the previous 12 months to address a number of outstanding recommendations from the previous two audits. It also recognised that progress has been made in the development of Māori Responsiveness Plans.

11. Te Tiriti o Waitangi Audit Report 2018 report recommends that the Internal Audit department continue monitoring and reporting to the Audit and Risk Committee and that the council’s ‘follow-up’ framework is used by the Waharoa Group.

12. The Audit Response Programme is the basis for Internal Audit’s monitoring and reporting to this committee.

13. This committee resolved at its September 2018 meeting that Internal Audit specifically report on progress against finalising the performance framework as required by action 24 of the Te Tiriti o Waitangi Audit Report 2015 (Resolution AUD/2018/59).

Tātaritanga me ngā tohutohu

Analysis and advice

The Waharoa Group

14. 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.

Maori Responsiveness Plans

15. In September 2018 we reported that 16 Māori Responsiveness Plans had been approved and were being implemented.

16. Since August 2018 five further Māori Responsiveness Plans have been approved and are being implemented. These are Watercare Services Limited, Regional Facilities Auckland, Local Board Services, and the Regulatory and People and Performance divisions of council.

17. The Community Services and Community Facilities Māori Responsiveness Plan is in the final stages of review prior to approval and implementation.

18. As such there are now Māori Responsiveness Plans in place for all council- controlled organisations.

Treaty Audit Response Work Programme

19. Council officers have worked with the Independent Māori Statutory Board secretariat and PricewaterhouseCoopers (PwC) to develop a programme of work to implement the treaty audit findings.

20. In quarter two of 2018 the Waharoa has focussed its work in enhancing the approach to monitoring implementation of treaty audit recommendations. This has included developing project plans for each recommendation, in conjunction with the business owner of the recommendations. The project plans detail agreed sponsors, action owners, agreed closure criteria and evidence requirements, agreed milestones and due dates, and risk assessments.

21. At its Waharoa meeting on 21 February progress will be reviewed with respect to treaty audit recommendations relating to the Maori Information Portal, Relationship Agreements and the Performance Framework.

Performance Framework

22. The purpose of the performance management framework is to monitor and report how the council family is delivering on māori outcomes in a comprehensive and more specific way. It forms a key component of council family’s collaborative approach to delivering māori outcomes.

23. In June 2018, the Auckland Plan 2050 was adopted by council’s governing body. This plan outlined specific Maori outcomes, directions and focus areas. High-level māori outcomes and strategic priorities were also included in the adopted LTP 2018-2028. These outcomes and priorities were presented to the Executive Leadership Group in March 2018.

24. One of the Chief Executive’s performance objectives is the development of a Māori Outcomes Performance Management Framework. The development of a performance management framework has also been a recommendation in the previous Treaty Audits.

25. While outcomes and priorities have been established there is still work to do in progressing and finalising detailed performance indicators with respect to each of the four priority areas - Marae, Economic Development, Te Reo Māori, and Water and then more broadly.

26. Te Waka Angamua will be reporting to the Māori Outcomes Steering Group on March 6th a proposal to deliver a council-whānau Māori Outcomes Report together with an outline of proposed work to develop and finalise the Māori Outcomes Performance Measurement Framework by 30 June 2019. This includes the work required to develop the detailed key performance indicators. working with the council-whānau and Te Toa Takitini program. They will be seeking the input, endorsement and continuing overview of this work by the Māori Outcomes Steering Group and the Te Toa Takitini Executive. The proposed work is subject to the oversight and direction of that steering group.

27. The Waharoa is of the view that the Māori Outcomes Steering Group is the appropriate forum for governance and oversight of the development of the performance indicators.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

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

Tauākī whakaaweawe Māori

Māori impact statement

30. 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

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

32. 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

33. The Internal Audit department will continue to monitor the Treaty Audit response programme in accordance with its approved work programme, and the committee’s forward work programme.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

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

Audit and Risk Committee

26 February 2019

City Rail Link update

File No.: CP2019/01032

Te take mō te pūrongo

Purpose of the report

1. To update the committee on development of the investor risk profile for the City Rail Link project.

Whakarāpopototanga matua

Executive summary

2. With the assistance of the Sponsors’ Assurance Manager, staff from Auckland Council and the Crown have undertaking a number of workshops to develop an investor risk profile (or register) for the City Rail Link project. The risk profile is based on the New Zealand Transport Agency (NZTA) risk framework and includes current mitigations and proposed treatment actions.

3. A range of risks have been identified as being at high or critical level, based on likelihood and impact. In all cases, this risk level is reached primarily due to the severity of the consequences should the risks eventuate, rather than the likelihood.

4. These risks include a failure to deliver the project (and broader programme) of work on time and on budget, inability to fund the full scope of proposed works, failure to perform adequate oversight of City Rail Link Limited, sponsor actions or decision-making delay impacting on the integrity and timing of the procurement processes, and reputational risks arising from any project failures.

5. A range of mitigations are already in place and planned. These include ensuring adequate resource from within council (and Crown) is directed at fulfilling sponsor obligations, ensuring close engagement between Auckland Transport and Kiwirail as critical operational delivery partners, and working in an integrated fashion with City Rail Link Limited itself as it progresses through its procurement processes.

6. The risk profile still requires further development. An additional staff workshop in March 2019 will finalise the profile. Approval of the investor risk profile will be sought from the City Rail Link Sponsors’ Forum (committee of senior Crown and Council officials for resolving key policy questions related to the project). This includes developing measures for assessing the effectiveness of the treatment actions. It is intended that the Sponsors’ Forum review and approve the risk profile on a quarterly basis, with reports to the Audit and Risk Committee following each review.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) note the work done so far on the sponsors’ investor risk profile for City Rail Link, the intended process for adopting it, and updating it over time to reflect changed risk profiles

b) note that staff will next bring the updated risk profile to the committee at its 5 June 2019 meeting.

Horopaki

Context

7. City Rail Link is being jointly funded on an equal basis between the Crown and Auckland Council (project sponsors).

8. City Rail Link Limited (CRLL; a Crown company), which was established on 1 July 2017, has the full governance, operational and financial responsibility for City Rail Link, with delivery targets and performance expectations. The Crown and Auckland Council, through their equal funding of the project, are joint sponsors and shareholders of City Rail Link Limited.

9. As part of the project architecture established by the Project Delivery Agreement (between sponsors and City Rail Link Limited), sponsors have appointed an ‘assurance manager’ to assist with detailed monitoring of technical, financial, and procurement activities of the company.

10. One element of the assurance manager role has been to prepare an investor risk profile, or risk register, for the joint sponsors of the project. This sets out key investor risks and mitigating strategies.

11. A report to the 13 September 2018 meeting of the Audit and Risk Committee noted that to discharge the committee’s responsibility:

· the committee should review the CRL investor risk profile, make appropriate enquiries, and if satisfied with the responses and information provided endorse that investor risk assessment

· the investor risk assessment should be regularly updated and reported to the committee

· if the committee identifies concerns with either the completeness of risks identified, or the way these risks are being managed they can make recommendations to the chief executive, and /or the Governing Body.

12. The committee endorsed this approach at its 13 September 2018 meeting.

13. This report is the initial report back following that meeting. It provides an overview of the process which has been followed to develop the investor risk profile, the key risks identified, and the mitigation strategies and treatment actions. It also outlines how the profile will be maintained and updated.

14. A more detailed discussion of the risk profile will be provided to the committee in the confidential workshop section of the meeting due to the nature of the risks.

Tātaritanga me ngā tohutohu

Analysis and advice

15. Staff from Auckland Council and central government (Ministry of Transport and New Zealand Treasury) have undertaken a series of workshops to develop the register. This process was guided by the ‘Sponsor Assurance Manager’ for the project.

16. The process has used the New Zealand Transport Agency risk framework as a guide.

17. The workshops initially focused on how the sponsors’ perspective differs from that of City Rail Link Limited and the delivery partners (Auckland Transport and Kiwirail), who each have their own risk registers reflecting their roles in the project. A key element which defines the sponsor perspective is the need to take a broad overview which ensures the operational delivery of the benefits of the City Rail Link project, and not just delivering a piece of infrastructure. In other words, it is about delivering a successfully functioning railway which is integrated into the networks of the city.

18. Later workshops agreed the risk matrix, key risks, and both current and required treatment actions. Risks were assigned a level, of either critical, high, medium or low, based on likelihood, severity of impact, and current risk mitigation treatments.

19. Twelve risks were identified at either a critical or high level. In all cases, this risk level is reached primarily due to the severity of the consequences should the risks eventuate, rather than the likelihood. These can be categorised broadly as:

· programme risks: failure to deliver project on time; not delivering full benefits; delayed benefits due to lack of operational readiness; health and safety issues

· funding and financial: inability to deliver benefits due to not being able to fund full scope

· governance: inability or failure to exercise adequate oversight of the delivery company and delivery partners; sponsor delay in decision-making on scope, funding or ownership issues; change in priorities by sponsors

· reputational risks: arising from delays, change of priorities, increased costs impacting on delivery of full scope, release of confidential information impacting procurement processes.

20. Treatment actions have been identified to mitigate these risks. The current focus areas in this regard are:

· working closely with Auckland Transport and Kiwirail to ensure they are working closely with CRLL on plans to ensure operational requirements are met in the build phase, and that operational plans (e.g. timetables, train and station staffing) are being prepared

· ensuring close alignment with CRLL on scope and cost options as the procurement phase for the major contracts (C3 – tunnels and stations, and the related C7 – systems and integration and C5 – Mt Eden/Western line) reach critical milestones through 2019

· ensuring adequate resource is dedicated to the project by both central government and Auckland Council, and that that resource is organised to both provide an effective oversight role but also efficient decision-making that allows the company to continue delivering the project on time.

21. The investor risk profile is still in development. Additional verification needs to be undertaken, and it needs to be confirmed and approved by the Sponsors Forum (senior officials from Council and Crown which meet to resolve important policy questions related to the CRL project). A process for measuring and assessing the effectiveness of treatment actions needs to be developed.

22. It is proposed that the profile will be updated on a quarterly basis and approved by the Sponsors Forum at its next meeting in late March 2019. Staff will the provide updates to the Audit and Risk Committee on a quarterly basis.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

23. Auckland Transport has an integral role in the delivery of an operationally successful rail link. To that end, it has a formal role in the project as one of the ‘delivery partners’ (along with Kiwirail) and will be included as part of the alliance board delivering the main contract for the project, which is to be awarded during 2019.

24. Auckland Transport has done considerable work internally on understanding its own risks and council staff meet with Auckland Transport weekly alongside Ministry of Transport and Kiwirail staff to ensure its involvement is being managed appropriately.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

25. Local board views were not required for this report.

Tauākī whakaaweawe Māori

Māori impact statement

26. This report does not benefit or have any particular impact on Māori.

Ngā ritenga ā-pūtea

Financial implications

27. The committee is not being asked to make decisions with financial implications.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

28. This paper is about the management of Auckland Council’s investor risk in the CRL project.

Ngā koringa ā-muri

Next steps

29. Staff propose to take the following steps in association with the Sponsors’ assurance manager:

· finalise the descriptions of investor risks and confirm appropriate treatment actions for them

· seek adoption of the investor risk profile and register by the City Rail Link Sponsors’ Forum

· the Sponsors’ Forum will adopt a schedule of quarterly reviews of the risk profile, including reporting on how successful treatment actions have been in mitigating identified risks as planned

· staff will update the Audit and Risk Committee regularly on these reviews and the reporting on treatment actions, with the next report to be brought to the committee on 5 June 2019.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

Ngā kaihaina

Signatories

Author

Edward Siddle - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Audit and Risk Committee

26 February 2019

Health & Safety Performance Report - Quarter Two Financial Year 2018/19

File No.: CP2019/01348

Te take mō te pūrongo

Purpose of the report

1. To update the committee on Auckland Council’s health and safety performance for quarter two. As part of this item, staff will also introduce the Safe365 tool as part of a workshop with committee members.

Whakarāpopototanga matua

Executive summary

2. Auckland Council’s strategic health and safety vision is ‘to become a leading organisation for health and safety by 2020’. Good progress is being made against the strategy.

3. Good progress is continuing to be made against the strategy. However, in quarter 2 we did not meet the target for Lost Time Injuries.

4. Auckland Council is preparing to roll out an Auditing Framework. Part of it is already live using the Safe365 tool.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a) refer this report to the Governing Body and draw the attention of elected members to their duties under the Health and Safety at Work Act 2015

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

Horopaki

Context

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. These quarterly reports provide information to assist elected members to carry out that role.

Tātaritanga me ngā tohutohu

Analysis and advice

6. The key metrics considered from a health and safety perspective are:

· Safe365 Indicator

· Lost Time Injury Frequency Rate (known as LTIFR), Total Recordable Injuries Frequency rate (known as TRIFR), Lost Time Injuries (LTI), LTI Severity Rate

· Near Misses

· Unsafe conditions.

7. The Safe365 Indicator provides a holistic view of performance across the council by measuring performance across the highest risk areas and then aggregating it. The council’s score currently sits at 59.5 per cent. Sixty per cent is deemed as being in overall compliance.

8. Staff will explain the metrics in more depth as part of this committee meeting.

9. LTIFR measures the number of lost time injuries per one million hours worked. In 2015, council set an aspirational target for the LTIFR of <2.25. Despite maintaining a successful performance during 2018 we have seen an increase over the last quarter. This was due to some incidents where the number of days off extended into multiple days for a relative straight forward injury. TRIFR measures the number of all injuries medically treated and lost time injuries over a period of 1,000,000 working hours however are seeing a downward trend. This is considered a more accurate reflection of an organisation’s injury profile and approach to injury prevention.

10. No immediate action is required. Staff are working to ensure people leaders and staff are focused on their controls and that any lost time injuries are accurately reported.

11. In the last quarter we also introduced a rolling LTI Severity Rate, which further indicates how severe injuries resulting in lost time are. This metric has also seen a small increase.

Summary table of injury trends

	Trend	Jan	Dec	Nov
Rolling LTIFR (indicative)		2.33	2.17	2.09
Rolling TRIFR		14.39	15.25	15.68
Number of Lost Time Injuries		4	5	2
Number of all injuries inclusive of first aid, medical treatment and lost time		31	36	32
Rolling LTI Severity Rate (NEW)		0.0120	0.0118	0.0115

Near misses and unsafe conditions

12. The council uses the Risk Manager System to report near misses and unsafe conditions. At the end of the last quarter:

· there was decrease of 31% (84) in the number of reported unsafe conditions compared to previous quarter.

· there was a decrease of 6% (11) in the number of reported near misses compared to the previous quarter.

Table showing our Critical risks – quarterly movement

Risk	Quarterly Trend	Current Qtr	Last Qtr
Working with Mobile Plant and Equipment		59(14%)	88(20%)
Working on or Near water		59(14%)	42(10%)
Working at height		2(0%)	8(2%)
Work Related Stress		67(16%)	78(18%)
Lone Work		3(1%)	1(0%)
Hazardous substance		57(13%)	64(15%)
Fatigue		60(14%)	38(9%)
Energy		36(8%)	44(10%)
Driving a vehicle		79(18%)	61(14%)
Confined space	-	8(2%)	8(2%)
Asbestos	-	0(0%)	1(0%)

Security incidents (Current quarter)

· The majority of the security incidents for the current quarter were anti-social behavior of our customers and theft/dishonesty.

· Of the 19 Assault/Violence incidents, 7 involved our staff members while the remaining 12 involved members of the public within the council premises.

Due diligence duties

13. As officers, elected members have the duties set out in the table below. This also shows measures underway to support those duties.

Duty	Support provided
Duty 1 - Acquire and keep up-to-date with health and safety knowledge and matters	Health and safety training for designated ‘officers’ Health and safety training has been ongoing to ensure elected members and senior management are well informed and up to date on health and safety matters, Refresher training and an update session was held with Governing Body in July 2018. Another session will be held in 2019. Council also completed training of all its Local Board officers. The Kura Kawana (elected member development) programme will now focus on more practical skills for its members. Induction A new process has been introduced for new council executives to receive a bespoke health and safety induction, covering their departmental risk profile, their critical risks and establishing expectations for our senior leaders on health and safety.
Duty 2 - Understand council’s operations and associated hazards/risks	Site visits A health and safety site visit plan for the chief executive, executive lead team members and elected members is in place. Health Safety and Wellbeing committee The executive lead team operates as the Health Safety and Wellbeing Committee which creates better visibility and understanding of council operations and the health and safety risks in their parts of the organisation. These have been taking place quarterly.
Duty 3 - Ensure the council has appropriate resourcing and processes to eliminate/minimise risks	Corporate training programme A key focus of the current strategy is to build capability within the organisation and to 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. We are currently reviewing this training with a view to add more applicable skills like Risk Assessment and Incident investigation. e-learning The corporate health and safety team have also recently provided all people leaders with a risk assessment e-learning tool and are currently preparing to launch a drive on risk assessment across the council.
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	Management framework and reporting A management framework is now in place. It is designed to ensure robust safety governance, processes, guidance and positive behaviours around health and safety. Risk Manager is also working effectively as our reporting tool for unsafe conditions, incidents and near misses.
Duty 5 - Ensure the council has, and implements, processes for complying with any duty or obligation	Policy statement The chief executive and mayor have signed the Health and Safety Policy Statement, and this has been implemented alongside the new Health and Safety Framework. Our Charter The health and safety section in Our Charter (we look after our safety and wellbeing) is being prepared for application to all council-controlled organisations. A working group has met and agreed the first draft.
Duty 6 -Take reasonable steps to verify the provision and use of resources and processes through reviews and audits	Safety audits Safe365 audits have been carried out across the operations division. This has identified capability of departments and allowed council to see gaps at the departmental and council divisional levels. Assurance framework Staff are developing an assurance framework for use within the council working alongside Internal Audit department.

Duty

Support provided

Duty 1 - Acquire and keep up-to-date with health and safety knowledge and matters

Health and safety training for designated ‘officers’

Health and safety training has been ongoing to ensure elected members and senior management are well informed and up to date on health and safety matters, Refresher training and an update session was held with Governing Body in July 2018. Another session will be held in 2019.

Council also completed training of all its Local Board officers. The Kura Kawana (elected member development) programme will now focus on more practical skills for its members.

Induction

A new process has been introduced for new council executives to receive a bespoke health and safety induction, covering their departmental risk profile, their critical risks and establishing expectations for our senior leaders on health and safety.

Duty 2 - Understand council’s operations and associated hazards/risks

Site visits

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

Health Safety and Wellbeing committee

The executive lead team operates as the Health Safety and Wellbeing Committee which creates better visibility and understanding of council operations and the health and safety risks in their parts of the organisation. These have been taking place quarterly.

Duty 3 - Ensure the council has appropriate resourcing and processes to eliminate/minimise risks

Corporate training programme

A key focus of the current strategy is to build capability within the organisation and to 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. We are currently reviewing this training with a view to add more applicable skills like Risk Assessment and Incident investigation.

e-learning

The corporate health and safety team have also recently provided all people leaders with a risk assessment e-learning tool and are currently preparing to launch a drive on risk assessment across the council.

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

Management framework and reporting

A management framework is now in place. It is designed to ensure robust safety governance, processes, guidance and positive behaviours around health and safety. Risk Manager is also working effectively as our reporting tool for unsafe conditions, incidents and near misses.

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

Policy statement

The chief executive and mayor have signed the Health and Safety Policy Statement, and this has been implemented alongside the new Health and Safety Framework.

Our Charter

The health and safety section in Our Charter (we look after our safety and wellbeing) is being prepared for application to all council-controlled organisations. A working group has met and agreed the first draft.

Duty 6 -Take reasonable steps to verify the provision and use of resources and processes

through reviews and audits

Safety audits

Safe365 audits have been carried out across the operations division. This has identified capability of departments and allowed council to see gaps at the departmental and council divisional levels.

Assurance framework

Staff are developing an assurance framework for use within the council working alongside Internal Audit department.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

14. This report provides an update only.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

15. Briefings for elected members, including local boards, have now been completed across all areas.

16. This report will be provided to all local boards together with a briefing from staff.

Tauākī whakaaweawe Māori

Māori impact statement

17. Auckland Council staff work with the Independent Māori Statutory Board and the council’s co-governance entities, such as the Tūpuna 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 under the legislation.

18. The People and Performance department have integrated Health Safety Wellbeing plans into council’s Māori employment strategy (known as the Mahi Strategy).

Ngā ritenga ā-pūtea

Financial implications

19. There are no financial implications arising from the advice in this report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

20. The risk of non-compliance with health and safety is recorded in the council’s top risk register. As set out above, controls are in place to monitor and respond to critical risks through the Risk Manager System.

Ngā koringa ā-muri

Next steps

21. Staff will continue with the implementation of the Health and Safety Strategy, embedding the new Health and Safety Framework, which now includes our Wellbeing Strategy.

Ngā tāpirihanga

Attachments

There are no attachments for this report.

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 2019

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 Half year results announcement for the New Zealand Stock Exchange 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