I hereby give notice that an ordinary meeting of the Audit and Risk Committee will be held on:

 

Date:

Time:

Meeting Room:

Venue:

 

Wednesday, 5 June 2019

12:15pm

Room 1, Level 26
135 Albert Street
Auckland

 

Komiti Tātari me te Mātai Raru Tūpono /

Audit and Risk Committee

 

OPEN AGENDA

 

 

 

 

MEMBERSHIP

 

Chairperson

Sue Sheldon, CNZM

 

Deputy Chairperson

Deputy Mayor Cr Bill Cashmore

 

Members

Cr Ross Clow

 

 

Paul Conder

 

 

Cr Richard Hills

 

 

Bruce Robertson

 

 

 

 

Ex-officio

Mayor Hon Phil Goff, CNZM, JP

 

 

IMSB Chair David Taipari

 

 

(Quorum 3 members)

 

Quorum must include two Governing Body members

 

Mike Giddey

Governance Advisor

 

29 May 2019

 

Contact Telephone: (09) 890 8143

Email: mike.giddey@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 



Terms of Reference

 

Purpose

 

The purpose of the Audit and Risk Committee is to assist and advise the Governing Body in discharging its responsibility and ownership of governance, risk management, and internal control.

 

The committee will review the effectiveness of the following aspects of governance, risk management and internal control:

 

·    enterprise risk management (ERM) across the Auckland Council group

·    internal and external audit and assurance

·    integrity and investigations

·    monitoring of compliance with laws and regulations

·    significant projects and programmes of work focussing on the appropriate management of risk

·    oversight of preparation of the LTP, Annual Report, and other external financial reports required by statute.

 

The scope of the committee includes the oversight of risk management and assurance across council’s CCOs with respect to risk that is significant to the Auckland Council group.

 

To perform his or her role effectively, each committee member must develop and maintain his or her skills and knowledge, including an understanding of the committee’s responsibilities, and of the council’s business, operations and risks.

 

Decision-Making Powers

 

The committee has no decision making powers. 

The committee may request expert advice through the chief executive where necessary.

The committee may make recommendations to the Governing Body and / or chief executive.

 

Tenure

 

External members will be appointed for an initial period not exceeding three years, after which they will be eligible for extension or re-appointment, after a formal review of their performance, and have not already served two terms on the committee. Councillors appointed to the committee will automatically cease to hold office at the time of the local authority triennial elections. They may be eligible for re-appointment post those elections if they are returned to office and have not already served two terms on the committee.

 

The chief executive, and the senior management team members will not be members of the committee.

 

The members, taken collectively, will have a broad range of skills and experience relevant to the operations of the council. At least one member of the committee should have accounting or related financial management experience, with an understanding of accounting and auditing standards in a public sector environment.


 

Committee’s responsibilities

 

The committee’s responsibilities are detailed below.

 

Forward Work Programme

 

The committee will agree and approve annually a forward work programme – which will consist of in depth briefings and reviews of specific significant risks and assurance strategies, as contained in the ERM “Top Risks” or Auckland Council’s work plan.

 

Risk management

 

·         Review, approve and monitor the implementation of the ERM policy, framework and strategy (including risks pertaining to CCOs that are significant to the Auckland Council group).

·         Review and approve the council’s “risk appetite” statement.

·         Review the effectiveness of risk management and internal control systems including all material financial, operational, compliance and other material controls. This includes legislative compliance (including Health and Safety), significant projects and programmes of work, and significant procurement.

 

Internal Audit

 

·         Review annually the Internal Audit Charter – which confirms the authority, independence and scope of the function.

·         Review and approve annually and monitor the implementation of the 3 year Internal Audit Strategy and 12 month detailed Internal Audit Plan.

·         Review the co-ordination between the risk and internal audit functions – including the integration of the council’s ERM risk profile with the Internal Audit programme. This includes assurance over all material financial, operational, compliance and other material controls. This includes legislative compliance (including Health and Safety), significant projects and programmes of work, and significant procurement.

·         Review the reports of the Internal Audit functions dealing with findings, conclusions and recommendations (including assurance over risks pertaining to CCOs that are significant to the Auckland Council group)

 

Fraud and Integrity

 

·         Review and approve annually, and monitor the implementation of, the Fraud and Integrity Strategy, including detailed work programme.

·         Review annually the whistleblowing procedures and ensure that arrangements are in place by which staff, may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters, and that there is proportionate and independent investigation of such matters and appropriate follow-up action.

·         Review the procedures in relation to the prevention, detection, reporting and investigation of bribery and fraud.

·         Review and monitor policy and process to manage conflicts of interest amongst elected members, local board members, management, staff, consultants and contractors.

 

Statutory Reporting

 

Review and monitor the integrity of the interim and annual report including statutory financial statements and any other formal announcements relating to the council’s financial performance, focussing particularly on:

 

·         compliance with, and the appropriate application of, relevant accounting policies, practices and accounting standards

·         compliance with applicable legal requirements relevant to statutory reporting

·         the consistency of application of accounting policies, across reporting periods, and the Auckland Council group

·         changes to accounting policies and practices that may affect the way that accounts are presented

·         any decisions involving significant judgement, estimation or uncertainty

·         the extent to which financial statements are affected by any unusual transactions and the manner in which they are disclosed

·         the disclosure of contingent liabilities and contingent assets

·         the clarity of disclosures generally

·         the basis for the adoption of the going concern assumption

 

External Audit

 

·         Discuss with the external auditor before the audit commences:

·         the nature and scope of the external audit

·         areas of audit focus

·         error and materiality levels.

·         Review with the external auditors representations required by elected members and senior management, including representations as to the fraud and integrity control environment.

·         Review the external auditors management letter and management responses, and inquire into reasons for any recommendations not acted upon.

 


 

 

Interaction with Council Controlled Organisations

 

Other committees dealing with CCO matters may refer matters to the Audit and Risk Committee for review and advice.

 

This committee will enquire to ensure adequate processes at a governance level exist to identify and manage risks within a CCO.  Where an identified risk may impact on Auckland Council or the wider group, the committee will also ensure that all affected entities are aware of and appropriately managing the risk.

 

The Head of Risk and Head of Internal Audit are responsible for the provision of quality risk, assurance, insurance and ethics and integrity services for all CCOs except Auckland Transport and Watercare (with the exception of insurance services which are provided to Auckland Transport).  Auckland Transport and Watercare have their own risk and assurance functions. The Head of Risk and Head of Internal Audit are responsible for monitoring CCO risk and internal audit strategies with respect to risks that are significant to the Auckland Council group.

 

Annual Report on the work of the committee

The chair of the committee will submit a written review of the performance of the committee to the chief executive on an annual basis. The review will summarise the activities of the committee and how it has contributed to the council’s governance and strategic objectives. The chief executive will place the report on the next available agenda of the governing body.


Exclusion of the public – who needs to leave the meeting

 

Members of the public

 

All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.

 

Those who are not members of the public

 

General principles

 

·         Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.

·         Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.

·         Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.

·         In any case of doubt, the ruling of the chairperson is final.

 

Members of the meeting

 

·         The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).

·         However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.

·         All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.

 

Independent Māori Statutory Board

 

·         Members of the Independent Māori Statutory Board who are appointed members of the committee remain.

·         Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.

 

Staff

 

·         All staff supporting the meeting (administrative, senior management) remain.

·         Other staff who need to because of their role may remain.

 

Local Board members

 

·         Local Board members who need to hear the matter being discussed in order to perform their role may remain.  This will usually be if the matter affects, or is relevant to, a particular Local Board area.

 

Council Controlled Organisations

 

·         Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.

 

 

 


Audit and Risk Committee

05 June 2019

 

ITEM   TABLE OF CONTENTS                                                                                         PAGE

1          Apologies                                                                                                                      11

2          Declaration of Interest                                                                                                 11

3          Confirmation of Minutes                                                                                             11

4          Petitions                                                                                                                        11  

5          Public Input                                                                                                                  11

6          Local Board Input                                                                                                        11

7          Extraordinary Business                                                                                              12

8          Audit and Risk Committee Work Programme                                                          13

9          Review engagement management report for the six months to 31 December 2018                                                                                                                                       21

10        Health & Safety Performance Report - Quarter Three Financial Year 2018/19     41

11        Risk Update - June 2019                                                                                             49

12        Climate Change Risk Deep Dive - May 2019                                                             71

13        Crown Reforms - Housing and Urban Growth Risk Deep Dive                              93

14        Update on the Holidays Act project                                                                         109  

15        Consideration of Extraordinary Items 

PUBLIC EXCLUDED

16        Procedural Motion to Exclude the Public                                                               115

C1       Council-controlled Organisations - Quarterly Risk Update June 2019               115

C2       Update on key controls and risks related to the amendment to the 10-year Budget 2018-2028                                                                                                                    116

C3       Auckland Council group 30 June 2019 year end reporting and audit requirements                                                                                                                                     116

C4       Approval of Auckland Council group pro forma financial statements for the year ending 30 June 2019                                                                                                  117

C5       Update on the audit of building consent and non-notified resource consent processing times                                                                                                       117

C6       Office of the Auditor-General and Audit New Zealand briefing                           117

C7       Insurance Renewal - Indicative Council Group Programme for 2019-20 period 118

C8       Assurance Services Update                                                                                     118  

 


1          Apologies

 

An apology for absence has been received from Mayor Hon Phil Goff.

 

 

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 Tuesday, 26 February 2019, 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.”


Audit and Risk Committee

05 June 2019

 

Audit and Risk Committee Work Programme

File No.: CP2019/08238

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To review and update the Audit and Risk Committee’s three-year forward work programme.

Whakarāpopototanga matua

Executive summary

2.       The committee approved its three-year forward work programme at its 29 May 2017 meeting.  It is good practice to review the forward work programme at each committee meeting, to ensure that it can be adapted quickly if council’s risk profile changes and that it remains relevant to the needs of the committee.

3.       There are no substantive changes recommended to the forward work programme (Attachment A) that arise from a change in the risk profile of council.

4.       There have been changes, as annotated on the attached work programme in the timing of certain specific items:

·    the “Climate Change” deep dive has been moved forward to today’s meeting. A deep dive on “Significant Disruptions” has been scheduled to for the September 2019 meeting

·    an update on Auckland Council’s progress in addressing the Audit New Zealand recommendations on project management has been included in today’s meeting

·    the legal risk report scheduled for today’s meeting has been deferred to August due to pending legislative changes. The Legal Services department is currently assessing the impacts of these changes.  That work will be more advanced and ready for reporting to this committee in August 2019

·    the Assurance Services department year in review, refreshed strategic plan, and 2020 assurance plan has been moved to the August 2019 meeting – to be aligned to the business planning and reporting cycle

·    the refreshed risk framework, and update on risk maturity has been moved to the August 2019 meeting.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      adopt the revised forward work programme.

 

 


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Audit and Risk Committee Forward Work Programme

15

      

Ngā kaihaina

Signatories

Author

Mark Maloney - Head of Assurance Services

Authoriser

Phil Wilson - Governance Director

 


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05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

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Audit and Risk Committee

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Audit and Risk Committee

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Audit and Risk Committee

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Audit and Risk Committee

05 June 2019

 

Review engagement management report for the six months to 31 December 2018

File No.: CP2019/08237

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To summarise the issues identified by the auditors during the review engagement for the six months ended 31 December 2018 and outline how Auckland Council is addressing the issues raised.

Whakarāpopototanga matua

Executive summary

2.       Audit New Zealand is Auckland Council and Auckland Council group’s external auditor, appointed by the Auditor-General to conduct the audit on his behalf. Audit New Zealand works with Auckland Council throughout the year reviewing our internal controls, half year report and disclosures to both the New Zealand and overseas stock exchanges and auditing our annual report. Audit New Zealand issues reports to Auckland Council throughout the year with recommendations on how Auckland Council can enhance and improve our processes, procedures and disclosures.

3.       As the Auckland Council group is an issuer of bonds, the Auditor-General issued a review report on the financial results to 31 December 2018. This is required prior to the release of the financial results to the New Zealand Stock Exchange at the end of February each year.

4.       Following the completion of the review engagement, a report is issued which outlines any issues identified and recommends significant items which may need to be addressed in the preparation of the annual report. The report is attached (Attachment A).

5.       The recommendations made were:

·   consider accounting disclosures for the Crown Infrastructure Partners arrangements

·   ensuring the accuracy of payments received from NZTA in respect to the Regional Fuel Tax

·   consider the accounting disclosures for the early adoption of PBE IFRS 9 Financial Instruments

6.       Auckland Council accepts the recommendations made and has provided a response outlining actions being taken to address the issues raised. Work is well underway to address these matters.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the issues identified by the auditors and Auckland Council’s responses to the matters raised in the review engagement report for the six months ended 31 December 2018.

 

Horopaki

Context

7.       This report summarises the issues identified by Audit New Zealand during their review engagement and outlines how Auckland Council is addressing the issues raised.

Tātaritanga me ngā tohutohu

Analysis and advice

8.       A review engagement is performed on the interim financial statements at 31 December by the Office of the Auditor-General. It provides a moderate level of assurance so that they are able to state that nothing has come to their attention that causes them to believe that the interim financial statements do not fairly reflect the Auckland Council group’s financial position, performance and cash flows for the six-month period. This moderate level of negative assurance (as it is known) is at a lower level than that of an audit. As the Auckland Council group is an issuer of bonds, the review engagement is performed prior to the release of the six-month financial results to the New Zealand Stock Exchange at the end of February each year.

9.       Following the review engagement, the Office of the Auditor-General issues a report to management of any issues or recommendations which have arisen. The management report confirms that the review went smoothly with the timely delivery of the information required.

10.     The auditors have recommended that Auckland Council considers how three new significant accounting disclosures are made in the annual report this financial year. The items are:

·   Crown Infrastructure Partners arrangement. Auckland Council has entered into several agreements with Crown Infrastructure Partners and its subsidiaries, and Fulton Hogan to fund $91 million of bulk infrastructure to support the building of 9,000 homes at Wainui.  Auckland Council has completed an assessment of the accounting and disclosure implications and concluded this is an agency agreement and therefore the revenue collected on behalf of, and paid to Crown Infrastructure Partners will not be included as revenue or expenditure of Auckland Council. We have prepared a workpaper with our analysis and intended disclosure and have provided this to the auditors.

·   Regional Fuel Tax. The Auckland Regional Fuel Tax became collectable on 1 July 2018. The New Zealand Transport Agency collects this tax, administers reimbursements and passes the net tax amount onto Auckland Council. The auditors have recommended that Auckland Council should consider how we will gain assurance that the revenue received is accurate. Auckland Council is in contact with the New Zealand Transport Agency to obtain reports from their system to support the revenue received. In addition, we are preparing our estimate of the amounts we should receive based on fuel volumes from other sources.

·   Early adoption of accounting standard PBE IFRS 9 Financial Instruments. The accounting standard which details how organisations should measure and record financial instruments has been amended. Due to the makeup of the Auckland Council group, a decision was made that we would apply the requirements early. We have considered the disclosure implications and incorporated these into the proforma financial statements which have been reviewed by the auditors and are tabled in a separate agenda item at this meeting.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

11.     There are no items covered by this agenda item that impact the Auckland Council group so the views of group entities have not been sought.

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

Local impacts and local board views

12.     There are no issues relating to reporting at a local board level. Accordingly, the views of local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

13.     The report does not affect the achievement or reporting on Auckland Council’s or the Auckland Council group’s contributions towards Māori outcomes. Auckland Council’s contributions to Māori outcomes are reported in the annual report.

Ngā ritenga ā-pūtea

Financial implications

14.     There are no financial implications directly arising from the information contained in this report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

15.     Auckland Council is actively addressing the issues raised, and we have assessed the matters will not impact on the audit opinion of the Auckland Council group’s annual report.

Ngā koringa ā-muri

Next steps

16.     Auckland Council will continue to work with the auditors to ensure they are satisfied with the intended annual report disclosures.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Signed Review Engagement Management Report 31 December 2018

25

     

Ngā kaihaina

Signatories

Author

Morna Macfarlane - Financial Compliance Manager

Authorisers

Francis Caetano - Group Financial Controller

Kevin Ramsay - General Manager Corporate Finance and Property

Matthew Walker - Group Chief Financial Officer

Phil Wilson - Governance Director

 


Audit and Risk Committee

05 June 2019

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Audit and Risk Committee

05 June 2019

 

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

File No.: CP2019/08262

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To update the committee on Auckland Council’s health and safety performance for quarter three.

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.       LTIs have increased by .35 since the last quarter. The measure remains marginally above the ELT set corporate target.

4.       No movement on Auckland Councils aggregated Safe365 (Health & Safety capability) score which remains at 52%, target of 60% by the end of June. 

 

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 Health & Safety Capability Indicator (Lead)

·   Lost Time Injury Frequency Rate (known as LTIFR- Lag, inc.LTI Severity Rate)

·   Total Recordable Injuries Frequency rate (known as TRIFR- Lag)

·   Near Misses (Lead)

·   Unsafe conditions (Lead)

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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 52 per cent.  Sixty per cent is deemed as being in overall compliance. 

Chart 1 – Safe365 Starburst – Auckland Council Aggregate

Safe 365 Key:  1. Director Knowledge, 2. Management Knowledge, 3. Worker / Contractor Knowledge, 4. Health & Safety Management System, 5. Verification & Audit Activities, 6. Emergency Preparedness, 7. Health & Safety Data Collection, 8. Management Reporting, 9. Worker/Contractor Engagement, 10. Culture & Behaviours

8.       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 most of 2018 we have seen an increase above our set target.  This remained static for the last quarter at 2.68.  This was due to four incidents in the last quarter. Two in April and two in March.  The 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. 

9.       The LTI Severity Rate, which further indicates how severe injuries resulting in lost time are. This metric has also seen a small increase.

10.     No immediate action is required. Staff are working to ensure people leaders and staff are focused on their controls, investigations are carried out and lessons learnt implemented. 

Table 1: Summary of injury trends

Near misses and unsafe condition

·   There was an increase of 27% (53) in the number of reported unsafe conditions compared to previous quarter.

·   There was an increase of 22% (35) in the number of reported near misses compared to previous quarter.

Table 2: Critical risks – quarterly movement in reports made on Risk Manager

 

Chart 2: Security incidents (current quarter)

·   The top three security incidents for this quarter were theft/dishonesty, threatening or abusive communication, and anti-social behaviour of our customers towards our staff members.

·   64 of 94 threatening or abusive communication incidents involve our customer facing staff members.  Many of these incidents occur at libraries, leisure centres and at service centres.

·   Our staff members were involved in 13 assault/violence cases this quarter.  These incidents occurred at libraries, service centres and council office.

Injury Management – Third Party Administrator

11.       Injury management and rehabilitation is the process by which we look after our people, get them well and working as soon as practical.  For this to happen we all play our part from the People Leader of the injured person, to payroll and us in the Corporate HSW team.

12.     Together with potential improvements to our injury management processes and caring for our people, is the savings in injury management costs that could be saved by managing injuries and rehabilitation internally rather than through ACC.  This cost reduction is estimated by ACC as being between 50% and 90% of the current ACC invoice; the other major benefits are in terms of building trust and engagement with our people.

13.     We have identified a partner organisation through a recent procurement exercise, WellNZ.  This last quarter we have identified and confirmed a project group which includes people from across the organisations operations as well as corporate departments.  This group has now met and started to design what any future injury management process might look like.  A business case is planned to be submitted to ELT in September for a final decision on whether council takes this critical next step on its health and safety maturity journey.


 

Due diligence duties

14.     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.  Planning is now taking place for the upcoming elections and the upcoming induction training for any new members.

The Kura Kawana (elected member development) programme is now refocussing on more practical skills for its members and will be including a tour of facilities.

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.

Third Party Administrator

The Corporate HSW team is making good progress on joining the implementation of the Third Party Administrator programme.  A procurement process has selected WellNZ as the potential partner.  Various workshops have been held with the business to design the service and an upcoming ACC audit will dictate our readiness to enter the programme.  ELT will make decision whether we join the programme following the business case to them in September 2019.

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.

Triage

The Corporate team have now successfully completed its first quarter with a triage process step.  This assures the quality of the data and furthermore tasks ‘reasonably expected’ actions to people leaders in the business as incidents arise in Risk Manager.  This helps safeguard the organisation further to ensure incidents are not closed without knowledgeable oversight and that any serious incidents involving critical risk are appropriately investigated either by the local health and safety specialist or by the Corporate team.

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. This will be re-signed following the elections.

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 continue to be carried out across the operations division. This has externally verified capability of departments and allowed council to see gaps at the departmental and council divisional levels.  The programme is moving slowly as budget allows. A request was made to the operations divisions by the Head of HSW to encourage an external verification audit by the end of the financial year which to date only I&ES has done. 

Assurance framework

Staff are developing an assurance framework for use within the council working alongside Internal Audit department.  This process is hoped to be completed by end of Q1 19/20

 

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 in this report.

20.     As reflected in the Corporate Risk Register non-compliance with Health and Safety Legislation and poor performance in this area can carry substantial fines and impacts to operational costs through incidents and or poor productivity.

21.     As per paragraph 12 on Injury management we have seen clearly how a focus on Health and Safety can add value to the business, data analysed as part of the project has found that since 2016 and our tighter focus on health and safety as a central business focus we have seen our claims profile fall from 408 claims in 2016 to 212 to date in 2019.  This reflects in our claims costs from $545,196 in 2016 to $229,919 to date in 2019, a reduction of $315,277 over last 3 years.  This data does not necessarily mean we are a safer organisation, it is however a good indicator that we are moving in a positive direction.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

22.     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

23.     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

05 June 2019

 

Risk Update - June 2019

File No.: CP2019/08236

 

  

 

Te take mō te pūrongo

Purpose of the report

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

Whakarāpopototanga matua

Executive summary

2.       The quarterly review of the Council’s top risks register was completed in May 2019 and approved by the Executive Leadership Team on 24 May 2019.  The top risk register has eleven top risks, of which there are seven ‘high’ and four ‘moderate’ rated risks. 

3.       The ‘Crown Reform’ deep dive was completed in May 2019.  The review did not result in a change to the residual risk rating; however, the risk description, causes, controls and rationale has been updated.  Detailed results of the review are included in a separate paper under the open agenda.

4.       The ‘Climate Change Readiness and Response’ deep dive review was completed in May 2019.  Following the review, it is proposed to raise the climate change residual rating from moderate to high.  The climate change risk rating will be tabled at the workshop with the Environment and Community committee in early July 2019. Any changes will be reported at the next meeting of Audit and Risk committee.

5.       For the 36th America’s Cup (AC36) programme, the council risk team provides risk guidance and leadership for the effective management and reporting on the AC36 programme and project risks to the Joint Chief Executive Steering Group.  The overall AC36 Programme risk profile is stable and rated as ‘Green’.  The project interdependencies continue to be identified, with a view to improve clarity and certainty in the development of effective risk mitigations.  As at 19 May 2019, there are three ‘high’ and 11 ‘moderate’ rated risks that council management staff are actively reviewing and monitoring to ensure controls are in place and remedial activities are progressing with urgency. 

6.       The implementation of Our Charter is complete with ongoing embedding and continuous improvement activities underway.  A staff survey was completed in February 2019 to understand employee awareness and perceptions of Our Charter.  The results, together with the online e-learning module completion rates indicate good levels of awareness.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the update on enterprise risk management.

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

 

 

Horopaki

Context

7.       This report provides an update on risk 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

8.       Council’s 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. 

9.       The objectives of the quarterly top risks review are to:

·    confirm current risks identified, assessments and ownership

·    identify any new/emerging 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 council management staff, Audit and Risk Committee and Governing Body

10.     The top risk register has 11 top risks, of which there are six ‘high’ and five ‘moderate’ rated risks.  However, following the deep dive of the Climate Change Readiness and Response deep dive (as explained in paragraph 13) it is proposed to raise the climate change residual rating from moderate to high.  The climate change risk rating will be tabled at the workshop with the Environment and Community committee in early July 2019. Any changes will be reported at the next meeting of Audit and Risk committee.

11.     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. 

12.     The quarterly top risks review did not result in any new risks being added.  However, a number of changes were made to the the risk description, risk ownership, causes, controls and rationales to better articulate the risk descriptions and controls and to provide additional context around the risks and mitigations. 

13.     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 ‘Climate Change and Readiness’ and ‘Crown Reforms’ deep dives were completed in May 2019.  The results of the reviews are being reported to this committee (preceded by two workshops to the committee), with business risk owners. 

14.     The council’s top risk register and a risk heat map are reported to the Governing Body as endorsed by this committee.  It is intended that the top risks will be presented to the Governing Body on 25 July 2019.

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

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

16.     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.

17.     AC36 programme and project leads are required to maintain programme and project risk registers.  Monthly, the risk lead team works with the project leads to update risk registers and review and challenge the reasonableness of risks assessments and effectiveness of mitigations. 


 

18.     High and extreme risks, post treatment and any other escalated 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).

19.     The overall AC36 programme risk profile is stable and rated as ‘Green’.  The programme status improved in early May 2019 following the finalisation of the Host Venue Agreement, supporting agreements and reconvening of the Event Project Steering Group.  The project interdependencies continue to be identified, with a view to improve clarity and certainty in the development of effective risk mitigations.   

20.     The programme risk register at 19 May 2019, comprises of 14 programme level risks, of which, three are currently rated ‘high’ and 11 ‘medium’.   All risks continue to be actively managed by the project owners.  A summary Residual Risk Heat Map, including ‘high’, ‘extreme’ and any other risks escalated by the Programme Management office are included in Attachment C. 

21.      The Risk Management Framework outlines the requirement to develop a risk appetite statement in relation to the risk categories defined within the framework.  A risk appetite workshop took place on 27 May 2019 with the objective of assisting JCEG to set the level of programme risk that it is prepared to accept in pursuit of the AC36 Programme objectives.  The output of the session will be a set of qualitative risk appetite statements which will:

·    express JCEG’s attitude to risk to promote a risk aware culture

·    empower staff to take more risk and limit staff from taking excessive risk

·    provide boundaries for making business/risk-based decisions

·    enable effective escalation, monitoring and oversight of risk by JCEG.

Our Charter Performance and Status

22.     The implementation of Our Charter is complete with ongoing embedding and continuous improvement activities underway, including:

·    internal communications to maintain visibility and awareness through integration of Our Charter into relevant communications 

·    strengthening Speak Up and improving the employee experience

·    supporting principle owners to deliver on-going awareness and training for each foundation principle.

23.     A survey of 2,000 staff was completed in February 2019 to understand employee awareness and perceptions of Our Charter.  The results, together with the on-learning module completion rates indicate good levels of Our Charter with:

·    seven out of ten employees confirming they knew about Our Charter.

·    eight out of ten agreed that Our Charter is simple to understand and easy to use in every day work situations. 

·    two out of three employees have used one of the Speak Up options and most have done this in the last 12 months.

·    two out of three employees feel empowered, encouraged and comfortable speaking up.

24.     The Our Charter dashboard, developed to report performance measures of Our Charter to the executive leadership team is attached as Attachment D. 

25.     The council group is in the final stages of consultation with the council-controlled organisations to develop a group policy for Our Charter principles and guidelines by August 2019.  The group has already agreed and adopted the ‘money and assets/sensitive expenditure’ principles and standard. 

 

 

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

26.     The views from representatives of the council group have been incorporated and they support the advice provided in this report.

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

28.     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.

29.     There is ongoing consultation with the council-controlled organisations to develop a group policy for Our Charter principles and guidelines.

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

Local impacts and local board views

30.     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

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

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

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

Ngā koringa ā-muri

Next steps

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

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Auckland Council Top Risks Register - May 2019

55

b

AC Top Risks Register - Residual Risk Heat Map - May 2019

65

c

AC36 (Programme) Residual Risks Heat Map - May 2019

67

d

Our Charter Performance Dashboard - April 2019

69

     

Ngā kaihaina

Signatories

Author

Shivali Kukreja - Principal Advisor Risk

Authorisers

Cecilia Tse – Chief Risk Officer

Dani Gardiner - General Counsel

Phil Wilson - Governance Director

 



Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 



Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 

Climate Change Risk Deep Dive - May 2019

File No.: CP2019/08239

 

  

Te take mō te pūrongo

Purpose of the report

1.       To update the committee on the outcomes of the deep dive on council’s top risk relating to climate change.

Whakarāpopototanga matua

Executive summary

2.       A deep dive on the climate change risks facing council was completed by the risk team in May 2019.

3.       Following the climate change risk deep dive process, it is proposed to raise the residual rating from moderate to high.

4.       The deep dive process examined how Auckland Council is mitigating and adapting to climate change risks to meet the Auckland Plan’s Environment and Cultural Heritage focus area.

5.       There were four main components to the deep dive process, which include council’s:

·    commitments to mitigate and adapt for climate change (e.g. C40 cities, Climate Leaders Coalition)

·    climate change framework (council’s statutory responsibilities and work programs)

·    climate change risks and potential impacts (increasing temperatures, sea level rise, changing rainfall patterns and increase in extreme weather)

·    facilitation and drafting of the Auckland Climate Action Plan.

6.       Council has various statutory responsibilities, which have provisions to respond to climate change, and is directed by national guidance where available.

7.       The Climate Change Response (Zero Carbon) Amendment bill, which was introduced to Parliament in early May 2019, proposes to commit New Zealand to zero carbon by 2050 and establish a new independent Climate Change Commission. The outcomes of the bill may impact the council’s framework to respond to climate change.

8.       Five observations and recommendations to improve council’s commitment to mitigate and adapt to climate change risks are:

·    strong leadership for climate change action

·    improving governance, monitoring and reporting functions

·    supporting staff with training and development and providing expert advice to improve risk-based decision-making

·    improving communication to internal and external stakeholders and to support effective decision-making

·    supporting initiatives to improve data integrity, accessibility and ensure fit for purpose information systems.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the process, observations and recommendations from the climate change risk deep dive

b)      note that following the climate change deep dive review it is proposed to raise the residual risk rating from moderate to high.

 

Horopaki

Context

9.       At the last quarterly risk register update (February 2019) the climate change risk was assessed as inherently high and given a moderate residual risk rating. The climate change readiness and response risk is described on the top risk register as:

Preparedness and risk mitigation activities may not be adequate to respond, absorb and/or reduce impacts of climate change (including severe weather events) which may result in environmental, economic (disruption to private businesses), loss of life/injury, financial and reputation loss.

10.     At Governing Body on 28 February 2019, a resolution (GB/2019/9) was made to endorse plans to review the climate change risk with urgency and report back in the next quarterly risk report. To complete the review the risk team bought forward the scheduled climate change risk deep dive to report back to Governing Body on 25 July 2019.

11.     The objective of the climate change risk deep dive is to provide assurance to the council’s executive leadership team and the Audit and Risk Committee that the risk is being effectively managed, controls have been identified and the risk rating assigned is appropriate.

12.     On 3 April 2019 the executive leadership team approved the terms of reference (see Attachment A) for the deep dive, which has been split into three parts. Table 1 provides details of the three parts to the deep dive review.

Table 1: Climate change deep dive process

Part 1: Review council’s climate change risk (THIS REPORT)

Part 2: CCO analysis of climate change

Part 3: Auckland Council Group review summary

·    Identify, discuss and confirm current and anticipated climate change risks

·    High level review of information to assess mitigation and adaptation activities against our climate change objectives

·    Provide assurance to management and governance about climate change

Work with our CCO’s to assess their specific programs relating to managing climate change risks. This will enable us to leverage the shared work across the group.

The final stage of the deep dive process will be informed by the outcomes of parts one and two. We expect to review the overall Auckland Council Group’s shared commitments to achieving climate change objectives to mitigate and adapt for climate change.

13.        Following the review work we will give recommendations in a final report to inform further work across the Group.

ü     Completed May 2019

To be completed by April 2020

To be completed by June 2020

Tātaritanga me ngā tohutohu

Analysis and advice

13.     Part one of the climate change deep dive process has been completed and included:

·   reviewing strategies, plans, policies and commitments

·   reviewing national and international best practice guidance

·   meetings with over 30 staff from various business units that have a responsibility for delivering council’s business with respect to potential climate change impacts.

14.     The objective of the deep dive was to examine how Auckland Council is mitigating and adapting to climate change risks to meet the Auckland Plan’s ‘Environment and Cultural Heritage’ focus area.

 

15.     The deep dive identified four components that guide how council is mitigating and adapting to climate change:

·   climate change commitments

·   council’s climate change framework

·   identified climate change risks and potential impacts

·   Auckland Climate Action Plan.

Auckland Council commitments to climate change

16.     Auckland Council and central government have signed various climate change agreements to work collaboratively with our national and international communities to meet climate change obligations. An information sheet on what these commitments are, and what council is obliged to do is included in Attachment B.

Council’s framework for climate change

17.     Important to the completion of the review was understanding the climate change framework in which the council operates.  Council is directed by various statutory responsibilities, which have provisions to respond to climate change and national guidance where available.  An outline of local government’s statutory roles and responsibilities that are affected by climate change are included in Attachment C.

18.     The Climate Change Response (Zero Carbon) Amendment bill, which was introduced to Parliament in early May 2019, proposes to commit New Zealand to zero carbon by 2050The outcomes of the bill may impact the council’s framework to respond to climate change.

19.     The deep dive has identified council’s work programs that incorporate climate change activities. A more comprehensive table of council’s climate change activities and progress updates are provided in Attachment D, and a summary is provided in Table 2 below.

Table 2: Council’s current state of climate change mitigation and adaptation actions

Department/Business Unit

Mitigation or Adaptation?

What are they doing about climate change – key controls?

Implemented or in development?

Chief Sustainability Office (part of the Chief Planning Office)

Mitigation & Adaptation

Auckland Climate Action Plan (ACAP)

P In development

Chief Planning Office

Mitigation & Adaptation

Auckland Plan

Unitary Plan

Regional Policy Statements

Infrastructure Strategy

ü Implemented

Community Services

Adaptation

Strategic Asset Management Plans (SAMP)

Measuring Asset Performance (MAP)

P In development

Community Facilities

Adaptation

Landslide remediation fund

P In development

Spatial dimension community asset risk profiling (flooding)

P In development

Mitigation & Adaptation

Waste minimisation and recycling

Energy and water efficiency plans

ü Implemented

Auckland Emergency Management

Adaptation

 

Natural Hazards Risk Management Action Plan

P In development

Civil Defence and Emergency Management Plan

ü Implemented

Regulatory Services

Mitigation & Adaptation

Resource Management Act

Building Act

Land Information Memorandum (LIM)

ü Implemented

Infrastructure & Environmental Services

Adaptation

Natural Hazards Research Plan

P In development

Coastal Management Framework 2017

New Zealand Coastal Policy Statement 2010

ü Implemented

Coastal Compartment Management Plans

P In development

Water Strategy (50-100-year outlook)

P In development

Resilient Communities, Catchments and Coastlines, RC3 project

P In development

Healthy Waters Floodplain Assessments

ü Implemented

Regional Pest Management Plan

ü Implemented

Mitigation

 

Live Lightly

ü Implemented

Waste Management & Minimisation Plan

ü Implemented

Sustainability Initiatives

ü Implemented

 

 

 

 

 

 

 

 

 

 

Climate change related risks and potential impacts that council faces

20.     An important part of the deep dive process was to identify the climate change risks that council and our communities face. These have been captured comprehensively in eight technical reports - Climate Change Risk Assessments (CCRA) prepared by council’s research and evaluation unit, RIMU, in accordance with the methodology of the Intergovernmental Panel on Climate Change.

21.     For the purposes of the deep dive, we identified the four most relevant climate change risks that are currently being mitigated and adapted by council’s actions (as described in Diagram 1). The full list of climate change projections, risks and impacts is included in Attachment E.

Diagram 1: Climate Change Risk Cluster for Aucklanders

22.     In the context of climate change discussions, the distinction between natural hazard and climate change risks is important.  Auckland is already exposed and suffers from weather related natural hazard risks, which are identified and managed in various ways, such as asset management planning, coastal management and natural hazard risk management frameworks.  Extreme weather events will be exacerbated by climate change impacts, which will increase both the frequency and the severity of these natural hazard risks.

 

23.     To tackle the impacts of climate change risks, council should have effective climate change mitigation and adaptation strategies to ensure that we can meet the current and future needs of our communities.

Auckland Climate Action Plan

24.     The deep dive has identified that the Auckland Climate Action Plan (when completed) will be a key control to delivering Auckland’s integrated climate change actions.  The regional plan is still in draft and council is leading this work in conjunction with the public, private and voluntary sectors.  The plan is expected to be out for public consultation in July 2019, with a final plan in late 2019.

25.     The Auckland Climate Action Plan is intended to capture the risks and actions identified in the CCRA reports.  However, not all actions are the responsibility of the council and will be delivered by partner organisations and community groups throughout the region.

Climate change observations and recommendations

26.     Climate change projections and impacts to council is a complex picture.  Table 3 below outlines the five high level observations made from the deep dive review and recommendations.  Specific initiatives to respond to these have not been developed in any further detail with the business units due to the time constraints of the deep dive process.  However, the Chief Sustainability Office has indicated that these observations and recommendations will be addressed, at least in part, in the Auckland Climate Action Plan.

Table 3: Observations and recommendations

Observations

Recommendations

1.     Strong leadership to drive climate change action

Management and governance leadership and support to ensure council actively leads the regional response to climate change.

2.     Improve monitoring and reporting to enable effective oversight and assurance

Integrate and coordinate council’s climate change framework. Ensure initiatives are developed, implemented and embedded.

3.     Upskilling staff to improve our approach to climate thinking

Support staff training and development, particularly for those staff responsible to lead climate change actions and initiatives.

Provide expert advice to improve risk-based decision-making.

4.     Improve communication to support decision-making

Communications plan developed to support planning, reporting, project management and community engagement.

5.     Improve the integrity, availability and consistency of data

Commitment to support initiatives to improve accessibility of information and ensure information systems are fit for purpose.

Overall risk assessment and rating

27.     The risk rating is assessed based on a likelihood and consequences matrix.  The likelihood assesses the probability of the risk occurring.  The consequence is assessed based on the impact of the risk on council’s objectives.

28.     The likelihood of climate change impacts (such as increasing temperatures, sea level rise, changing rainfall patterns and an increase in extreme weather) has been assessed as almost certain, as can be verified by the various research and regional assessments for Auckland.

 

29.     Council is committed to reducing emissions and managing climate change risks as demonstrated through both mitigation and adaptation activities.  Based on existing information to date, the consequences of climate change on the council’s objectives have been assessed as moderate.  The impact is assessed as localised (reversible or irreversible) on land, improvements and infrastructure, water and ecosystem.

30.     Following the climate change risk deep dive process, it is proposed to raise the climate change residual rating from moderate to high.

31.     The climate change risk deep dive will be tabled at the workshop with the Environment and Community committee in early July 2019.  Any changes will be reported at the next Audit and Risk committee meeting.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

32.     The scope of the deep dive process did not include inputs from our council-controlled organisations.  Part two of the deep dive will include a review of their activities relating to climate change.

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

Local impacts and local board views

33.     There are no specific local impacts from this risk deep dive process.  Accordingly, the views of local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

34.     The impacts of a changing climate change are of concern and relevance to mana whenua, iwi, hapu and whanau. This is reflected by:

·   Advice from the Mana Whenua Kaitiaki Forum and feedback from multiple hui held with mana whenua, mataawaka and elected members (March – April 2019) has incorporated important te ao Māori principles into the water strategy framework.  This includes putting te māuri o te wai at the centre of the strategy and recognising water is a treasured taonga

·   the Mana Whenua Kaitiaki Forum and development of the Auckland Climate Action Plan

·   the Conscious Climate Mana Rangatahi Summit (held led council in partnership with Parakore ki Tāmaki and Te Ohu Mana Rangatahi) on 30 April 2019 with 100 rangatahi who explored climate change from a te ao Māori perspective.

Ngā ritenga ā-pūtea

Financial implications

35.     There are no direct financial implications arising from the deep dive.

36.     The funding mechanisms required to deliver council’s objectives as part of the ACAP are yet to be developed. It is anticipated that future budgets will be developed in preparation for the next Long-term Plan.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

37.     Risks are covered in the main sections of this report.  The completion of part one of the deep dive has supported and enabled improved awareness and understanding of the climate risks that may impact on delivering council’s objectives.

Ngā koringa ā-muri

Next steps

38.     The climate change risk deep dive will be tabled at a workshop with the Environment and Community committee in early July 2019.

39.     Table 1 gives more detail about the second and third parts of the deep dive process to be completed by June 2020.

40.     The climate change risk will be monitored and updated as part of the quarterly top risk register review and reported to the Audit and Risk committee as required.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Terms of reference: climate change readiness and response risk deep dive 2019

79

b

Auckland council's climate change commitments

83

c

Local government roles and responsibilities that are affected by climate change

85

d

Current state of council's climate change mitigation and adaptation actions

87

e

Climate change projections for Auckland

91

     

Ngā kaihaina

Signatories

Author

Katie Kay - Senior Risk Advisor

Authorisers

Cecilia Tse – Chief Risk Officer

Dani Gardiner - General Counsel

Phil Wilson - Governance Director

 


Audit and Risk Committee

05 June 2019

 


 


 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


Audit and Risk Committee

05 June 2019

 


 


 


Audit and Risk Committee

05 June 2019

 


 


Audit and Risk Committee

05 June 2019

 

Crown Reforms - Housing and Urban Growth Risk Deep Dive

File No.: CP2019/08240

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To update the committee on the results of the ‘deep dive’ on the Crown reforms – housing and urban growth risk.

Whakarāpopototanga matua

Executive summary

2.       A deep dive on the Crown reform – urban growth and housing risks was completed by the risk team in May 2019.

3.       There is an emerging risk as the Government’s reform programme proceeds and further collaboration between the council and Crown is established.

4.       Inadequate management of this risk may adversely impact the delivery of the housing and growth outcomes in the Auckland Plan development strategy.  It may also cause greater intervention by the Crown and council may be unable to influence and implement changes needed to maintain planning, regulatory and service functions.

5.       The top risk register has been updated to reflect the deep dive.  The residual risk rating of moderate has been reassessed and has not changed.

6.       There have been positive benefits from the deep dive including facilitation of a cross-council risk assessment, planning of controls and informing the development of the joint programme workstreams.

7.       Observations and recommendations have been made to the executive leadership team concerning: 

a)      Strategic alignment between the Crown and council: A council and Crown Joint Working Programme (and its associated terms of reference) have been agreed.  This is a key control to mitigate the risk that Crown and council objectives, leadership approach and priorities concerning housing and urban growth are not aligned.  

It is recommended that the council closely monitor the effectiveness of the Joint Working Programme and review the mitigations for both strategic and programme risks regularly through the council/council-controlled organisation general manager group.

b)      Change readiness and resourcing: If the council and Crown engagement and collaboration is not effective and well-timed, there is a risk the council will not appropriately influence the reforms and be prepared and resourced for any changes.

 

It is recommended the communications strategy and governance group controls be maintained and the following mitigations be established:

·   council and Crown develop agreed methodologies, data sources and evidence of Auckland’s growth and housing needs

·   council group prioritisation process for spatial projects to manage resource demands

·   explore different models of resourcing for new crown agencies.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the process, observations and recommendations from the deep dive of Crown reforms – housing and urban growth risk

b)      note that following the deep dive, the residual risk rating remains moderate.

 

Horopaki

Context

8.       Council’s top risks are subject to risk deep dives on a rotational basis.  These deep dives are to provide assurance to the executive leadership team and the Audit and Risk Committee that the top risks are being effectively managed, controls are operating as intended and the risk ratings remain appropriate.

9.       A deep dive on the Crown reforms for housing and urban growth was completed in May 2019 to review the risks associated with the Government’s reforms. 

10.     The following ‘Crown reforms’ risk was on the top risk register February 2019:

Crown initiatives stretch council resources around strategic planning, consenting and infrastructure funding and delivery, which may result in an inability to deliver expected outcomes within timeframes, reduced trust and confidence in council and greater Crown intervention in traditional council functions.

11.     Improving housing affordability in Auckland by increasing the supply of housing is a key strategic priority of the Government’s Urban Growth Agenda and the council’s Auckland Plan 2050.

12.     The Crown programme is being led out of the Ministry of Housing and Urban Development (MHUD), in conjunction with MBIE, the Ministry for the Environment and other government entities. 

13.     The Government’s Growth Agenda poses a potential risk to the council and the council group because it involves overlapping and parallel initiatives and changes to the delivery of policy and planning in Auckland which are core functions and responsibilities of the council. 

14.     Inadequate risk management may impact the delivery of the housing and growth outcomes in the Auckland Plan development strategy and lead to greater Crown intervention in council functions.  Council may also be unable to anticipate and implement changes needed to maintain planning, regulatory and service functions.

15.     The reforms for urban growth and housing are grouped into five interconnected pillars of work:

·   infrastructure funding and financing

·   urban planning

·   spatial planning

·   transport pricing

·   legislative reform. 

16.     The Crown reforms include a wide range of initiatives including alternative funding tools for infrastructure, establishing an Urban Development Agency, increasing public housing supply and reviewing the urban land and infrastructure planning systems.  These workstreams are being developed and delivered at pace. 

Government and Auckland Council Joint Programme of Work on Auckland Housing and Urban Growth

17.     The council’s engagement with and response to the Crown initiatives is being led by the Director, Urban Growth and Housing. 

18.     The council and Crown have agreed to a formalised arrangement with an agreed programme of work overseen by a Political Governance Group.  This Group includes the:

·   mayor of Auckland Council

·   deputy mayor of Auckland Council

·   chair of council’s Planning Committee and the chair of the Environment and Community Committee

·   ministers for Housing and Urban Development and Transport (Minister Twyford)

·   minister of Local Government (Minister Mahuta)

·   minister of Building and Construction (Minister Salesa)

·   minister of the Environment (Minister Parker).

19.     The terms of reference for the Joint Working Programme between Crown and the council including the initial workstreams and projects was endorsed by the Planning Committee on 5 March 2019. [RN PLA/2019/16].

20.     On 8 May 2019, Cabinet approved the Terms of Reference for the Joint Work Programme.

21.     The Joint Working Programme contains targeted workstreams to increase the delivery of housing and development in Auckland.  The projects are in the areas of infrastructure funding and financing, urban planning, spatial planning, and legislative reform.  Most of the workstreams are not new, in that the council and/or Crown are already progressing work in these areas, and in most cases already collaborating.

22.     The arrangements have been formalised to ensure more effective and coordinated effort that is focused on areas where officials believe ‘greatest value add’ can be achieved by working collaboratively to:

·   align and prioritise objectives

·   enable effective coordination and delivery

·   improve ways of working together

·   support new/amended policies, legislation and tools. 

23.     The programme includes focus on unlocking joint priority urban development areas in the southern urban growth area, Manukau, the areas surrounding City Rail Link and the City Centre to Mangere Light Rail Transit corridor.  There is also a research and evaluation component of the programme which will test existing tools and mechanisms (including the Unitary Plan) to ensure they are delivering the desired housing and growth outcomes for Auckland, including quality intensification.

24.     The initial programme focuses on actions which can be delivered within a 12-month timeframe.  It is envisaged that workstreams and projects will change over time as actions are delivered and new initiatives are identified.

Tātaritanga me ngā tohutohu

Analysis and advice

Introduction and scope

25.     The deep dive was undertaken through meetings, risk surveys and a workshop with the Director Urban Growth and Housing, relevant council departments, Auckland Transport, Panuku Development Auckland Limited and Watercare Services Limited.  These parties are responsible for delivering the council and Crown Joint Work Programme for housing and urban growth and the Auckland Plan – housing and urban growth strategy.

26.     The deep dive was guided by the strategic objectives for the council which are to:

a)      progress implementation of the Auckland Plan Development Strategy through the delivery of a joint Crown and the council work programme and meet agreed milestones

b)      ensure adequate planning, preparation and resourcing to address changes arising from legislative reforms and shifting crown priorities and roles and responsibilities

c)      improve the working relationship between key Crown partners and the council by collaborating and coordinating on the approach and objectives in the council and Crown Joint Working Programme terms of reference.

27.     The terms of reference for the deep dive are included in Attachment A.

Controls

28.     The drivers of the identified risks and controls have been updated following the development of the Crown reform programme and better reflect the council’s understanding of the Crown reforms and the potential impacts and risks.

29.     The mitigations and controls are summarised in the top risk register included in Attachment B. These include a communications strategy and governance arrangements that are being implemented.

30.     Operational controls and mitigations for each of the joint work programmes workstreams are also being developed and included in a risk register that is owned and maintained by the general manager working group that is chaired by the Urban Growth and Housing programme manager.

Observations

31.     The Government reforms remain a Crown priority with amendment legislation expected to be introduced and passed before the end of 2019. 

32.     The risk profile is evolving and continued close monitoring and adjustments to mitigation strategies (e.g. the communications strategy and programme plans) will be needed.

33.     The existing controls, including the recent commitments made to Joint Working Programme are critical to ensure alignment and collaboration.  These arrangements are adequately mitigating the strategic risks.

34.     The council and Crown Joint Working Programme is a critical control and opportunity to achieve the council’s strategic objectives and outcomes for housing and growth and working relationships with the Crown. The programme sets the framework for effective management of risks to achieve the council’s housing and urban growth outcomes

35.     Further controls and mitigations are to be developed including planning and prioritisation of programmes, workforce planning and resourcing, stakeholder relationships and programme delivery risks.

36.     The leadership of Urban Growth and Housing Director and the council group’s general manager coordination group are critical controls that must be maintained. The planning and prioritisation of programmes and resources must also be completed.

37.     The level and maintenance of commitment to the delivery of the Joint Working Programme by the Crown and the council will be critical for the effective mitigation of the reputational and delivery risks. It is anticipated that the recent agreement by Cabinet to the Joint Work Programme will help ensure commitment at all levels of relevant Crown entities to the delivery of the programme.

38.     Effective governance is also important to ensure alignment and coordination across the council group internally and with central government entities and stakeholders to deliver the desired outcomes.  Ongoing effort will be needed to fully establish governance arrangements, commitment and relationships at all levels.

39.     A potential resourcing risk is likely to emerge as the Crown reforms progress. The impacts cannot be fully assessed until the detailed legislation and policy work and the operating model for the Crown entities is progressed over the next six to eight months.

40.     There is a risk that the reforms may create additional demand or competition for resources and require an increase in capability of council staff to support new Crown agency activities and the housing and growth-related reforms.  These risks are challenging to identify and assess currently as they are dependent on the governance structure and powers of the urban development authority and other reform details. Close engagement and monitoring of the situation is a priority.

41.     Current mitigations are focused on relationship management with key stakeholders including agreeing roles and responsibilities and the work programme.  Further mitigations are being considered to address staff retention and costs including different resourcing models for the new Crown agencies.

Recommendations

42.     It is recommended that the top risk description be updated to reflect the following two high level strategic risks to the council:

·   misalignment between the council and the Crown objectives and leadership approach to housing and urban growth due to complex and multiagency responsibilities and political decision making

·   failure of Crown and council to be closely engaged in an effective and timely manner so council can influence and be prepared and resourced for change.

43.     If the council and Crown relationships, engagement and collaboration is not sufficient, there is a risk the council will not be able to influence the reforms and be prepared and resourced for any changes.

44.     The Director Urban Growth and Housing must continue to closely monitor and support the effectiveness of the Joint Working Programme and review all mitigations for identified strategic and programme risks regularly.

45.     The council group general manager working group is using the deep dive risk assessment to update and maintain its risk register. Programme risk owners should further develop mitigation plans for risks identified during the deep dive.

46.     It has also been recommended that the work underway to develop and maintain programme risk mitigation plans and controls including a strategic workforce plan, governance terms of reference, stakeholder assessments be completed as soon as possible.

Risk Rating

47.     The inherent risk to council was previously assessed as high and the residual risk rating was moderate. 

48.     As Cabinet has agreed to relevant Ministers signing the terms of reference and to enter the Joint Working Programme, the inherent high risks to the council from the Crown Urban Growth Agenda have been reduced.  The establishment of the Joint Working Programme provides a framework to ensure alignment, clarity and commitment.     

49.     However, the likelihood of the reforms impacting council remain possible and the potential consequences (including impacts on council’s delivery of commitments, possible changes in direction and plans, reputational damage and operational capacity) remain moderate.  In addition:

a)    the implementation and execution of the Joint Working Programme is in the early stages

b)    governance, relationships, communications and detailed delivery plans are being established

c)    the impact on the council’s strategy, delivery and regulatory functions by legislative change and the formation of a Housing and Urban Development Agency (HUDA) remain uncertain. Legislation is expected to be introduced into Parliament in late 2019

d)    additional controls to address the identified risks for each workstream are being implemented

e)    the mitigations and controls are reliant on continued Crown leadership, engagement and collaboration across multiple workstreams and they continue to be developed.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

50.     A group response is required to effectively manage the Crown reform risks.  This is because the council and its council-controlled organisations (Auckland Transport, Panuku and Watercare) each have responsibilities relating to housing and urban growth and the Auckland Plan – housing and urban growth strategy.

51.     To ensure a coordinated and aligned response, representatives from Auckland Transport, Panuku and Watercare are members of the group forum referred to as the general managers group who are coordinating and overseeing the Joint Working Programme. 

52.     Representatives from the council-controlled organisations participated in the deep dive and attended the risk workshop to ensure a group view of risks and impacts were assessed.

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

Local impacts and local board views

53.     There are no specific local impacts from this risk deep dive.  Accordingly, the views of local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

54.     This report is about the risk deep dive into the council’s top risk for crown reforms on urban growth and housing.  It does not affect the achievement or reporting of the council’s contribution to Māori outcomes.

55.     There are opportunities to deliver and support Māori outcomes through the individual workstreams in the Joint Working Programme such as in the affordable housing and southern growth area and Auckland housing programmes.  These opportunities and considerations are being considered by the workstreams responsible for delivery of the initiatives.

Ngā ritenga ā-pūtea

Financial implications

56.     There are no direct financial implications arising from the deep dive.  Delivery of the Joint Work Programme and the council’s response to the Crown reforms are being undertaken within existing resources and budgets.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

57.     Risks are covered in the main sections of this report.

58.     Overall, the completion of the risk deep dive and reporting to the executive leadership team and Audit and Risk Committee has supported and enabled improved awareness, understanding and control of the risks that may impact council because of the Crown reforms.

Ngā koringa ā-muri

Next steps

59.     Updates on the progress of the Joint Working Programme will be provided to the Planning Committee quarterly.

60.     The Crown reform – housing and urban growth top risk will continue to be monitored as part of the top risk register quarterly review and the Audit and Risk Committee will be updated as required. 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Terms of Reference - Crown Reforms Housing and Urban Growth Risk Deep Dive May 2019

101

b

Top Risk Register May 2019 extract  - Crown reform housing and urban growth

107

     

Ngā kaihaina

Signatories

Author

Emma Mosely - Strategic Advisor Risk and Compliance

Authorisers

Cecilia Tse – Chief Risk Officer

Dani Gardiner - General Counsel

Phil Wilson - Governance Director

 


Audit and Risk Committee

05 June 2019

 


 


 


 


 



Audit and Risk Committee

05 June 2019

 



Audit and Risk Committee

05 June 2019

 

Update on the Holidays Act project

File No.: CP2019/00724

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To update the committee on the work being performed to ensure compliance with the Holidays Act 2003 (the Act).

Whakarāpopototanga matua

Executive summary

2.       Updates on the Holidays Act project have been previously provided to the committee.  This report provides a progress update since last reported to the committee on 28 May 2018.

3.       A working group comprising staff from the Internal Audit and Employee Relations departments have overseen all aspects of the technical design of the systems change to ensure all non-compliance issues have been addressed.  EY has independently reviewed the design to provide further comfort that all non-compliance aspects have been addressed.

4.       The rationale for the information technology system design, costings and timelines have been subject to extensive review including independent review – to ensure that the design has been simplified as much as is practical, and that the new payroll systems will be compliant with the Act – given the diversity and complexity of staff working arrangements.

5.       The first compliant pay run will occur on 14 August 2019, while the final remediation payment to current employees will occur on 9 October 2019.  The remediation process for ex-employees will commence in October 2019.

6.       Staff are continuing to communicate with the Ministry of Business, Innovation and Employment about the enforceable undertaking that is in place.  This has been extended to 30 August 2019.

7.       The Project Steering Group is meeting monthly to manage key project risks and ensure that the timelines will be achieved.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      receive this report on Auckland Council’s compliance with the Holidays Act 2003

b)      note the work that has been performed to date to identify non-compliance with the Holidays Act 2003, and to reconfigure our payroll systems

c)      note that updates will continue to be reported to the committee regularly throughout the course of this project.

 

 

Horopaki

Context

8.       On 1 March 2017 staff reported to this committee that issues had been identified with how council’s payroll system calculates leave payments in certain circumstances.  Investigations by the Ministry of Business Innovation and Employment have highlighted similar issues across a wide range of New Zealand private and public sector organisations.

9.       Staff have provided update reports to the committee in May, July and August 2017 and in February and May 2018 advising of progress being made in addressing these issues.

10.     This report updates the committee on progress made since May 2018.

Tātaritanga me ngā tohutohu

Analysis and advice

Introduction

11.     In 2014 two large public-sector entities (Ministry of Business Innovation and Employment and the New Zealand Police) acknowledged compliance issues with respect to the Act.  These issues have resulted in large scale payment errors across a number of types of pay including annual leave, sick leave, bereavement leave, allowances, and bonuses.

12.     For Auckland Council, the Holidays Act issues are confined to the following areas that are potential triggers for compliance failures:

·   complex working arrangements (shift work, on-call employees)

·   additional remuneration arrangements (bonus payments, incentive payments)

·   employees working irregular hours

·   employees receiving allowances and/or commissions.

13.     Auckland Council runs a payroll system on SAP. The payroll system was configured by SAP on the instructions of the Auckland Transition Agency upon amalgamation in 2010.  Staff believe it to be based on the configuration of the former Auckland City Council’s payroll system.

14.     Payroll is processed on the SAP system for the following Auckland Council entities:

·   Auckland Council

·   Auckland Council Investments Limited (subsequently disestablished on 1 July 2018)

·   Panuku Development Auckland Limited

·   Regional Facilities Auckland

·   Auckland Tourism, Events and Economic Development Limited.

15.     Auckland Transport and Watercare Services Limited run their own payroll systems independently of Auckland Council.

16.     Staff have previously reported to this committee that:

·   there are issues with how council’s payroll system calculates leave payments in certain circumstances

·   staff engaged EY to get an accurate picture of the situation across the council group to help identify where underpayments occurred (for current and past employees), quantify the amount of underpayments, and determine what changes need to be made to ensure our payroll system is correctly configured moving forward

·   the Ministry of Business Innovation and Employment has completed an audit of Auckland Council’s compliance with aspects of the Act.  Their report identifies some areas of non-compliance with the requirements of the Act and they have issued an enforceable undertaking to Auckland Council.  The original Enforceable Undertaking was extended to 25 May 2018 and then extended again to 14 December 2018.  Since the last report, a further extension has been given to 30 August 2019

·   the Ministry of Business, Innovation and Employment Inspector was briefed on 14 June 2017.  The Inspector was satisfied that the approach being taken is reasonable.  We have continued to keep the Ministry informed and they have consistently indicated they are comfortable with the proactive approach council is taking

·   the calculation of liability (based on a methodology developed by EY), is complete and has been provided for in the council’s financial statements

·   the methodology has been independently reviewed by Simpson Grierson.  Simpson Grierson has confirmed that it agrees with the decisions that have been made to date.  Although there are a number of assumptions which inevitably carry some level of risk, they are comfortable with the process to date.  In forming this view, they have taken into account the fact that a conservative approach (which is generally favourable to current and past employees) is being recommended (which is consistent with the council's statutory 'good employer' obligations) and that they have not identified any better approach for undertaking this recalculation and remediation

·   a decision has been made by the Project Steering Group that remediation to affected employees be made in two phases.  An interim remediation payment to affected staff who are currently employed was made on 24 May 2018.  The quantum of this first payment was approximately $5.8 million to 4,905 employees.  There was extensive communication with staff and unions in preparation for this payment

·   the first phase of the business case for reconfiguration of the payroll system was approved by the council’s Investment Group on 28 March 2018.

Work performed since the May 2018 meeting of this committee

Finalisation of detailed design work to reconfigure the payroll system

17.     The detailed design work to reconfigure the payroll system has occurred in two phases:

·   phase one was defined around a suite of SAP-centric requirements and is fundamental to either of the proposed final solution options

·   phase two detailed the two proposed options and provided a recommended final solution for assessment and approval.

18.     The detailed design covers the following aspects:

·   development of a technical solution

·   implementing business processes that support the technical solution

·   change management to embed the change.

19.     The reconfiguration of the payroll system was approved by council’s Investment Group on 28 March 2018.

20.     Included in the second phase are:

·   developing and embedding the business and process change to ensure ongoing compliance with the Act

·   ensuring all new data is captured and all employees have the correct planned work definition held in SAP

·   finalising the integration and development requirements of the timesheet and rostering systems used in parts of council where employees typically work non-standard hours

·   developing the ex-employee registration portal (to enable registration for remediation payments)

·   providing a new web-based tool for maintaining operational planned working-time changes for staff.

21.     The rationale for the design has been subject to extensive review – to ensure that the design has been simplified as much as is practical and that all non-compliance issues have been addressed – given the diversity and complexity of staff working arrangements.

22.     The SAP solution needs to be in place before the remediation payment for current and ex-employees.  The re-calculated figures are required before the final staff payment and ex-employee registration portal can be made live.

23.     The planned key project milestones are:

Proposed key milestones

Estimated timing

SAP design

Complete

SAP technical delivery

Complete

SAP build completed

31/5/19

SAP testing completed

19/7/19

SAP Solution ‘Go Live’

12/8/19

Current staff interim remediation payment

Complete

First compliant pay day

14/8/2019

Ex-employee portal design completed

Complete

Current staff final payment

9/10/19

Ex-employee payments

From 1/10/19

Enforceable Undertaking

24.     There is an Enforceable Undertaking in place with the Ministry of Business, Innovation and Employment which has been extended to 30 August 2019.  Staff have kept the Ministry informed and they have consistently indicated that they are comfortable with the proactive approach that council is taking and that they are amenable to extending this deadline.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

25.     Payroll is processed on the SAP system for the following Auckland Council entities:

·   Auckland Council

·   Panuku Development Auckland Limited

·   Regional Facilities Auckland

·   Auckland Tourism, Events and Economic Development Limited.

26.     Auckland Transport and Watercare Services run their own payroll systems.

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

Local impacts and local board views

27.     The views of local boards have not been sought for this report, as it contains matters that relate to management and at a council group scale.

Tauākī whakaaweawe Māori

Māori impact statement

28.     The matters contained in this report have no particular impact on Māori.

Ngā ritenga ā-pūtea

Financial implications

29.     No decisions are being sought from this committee which have a financial implication.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

30.     There is project delivery risk for a complex information technology project that may result in a delay to achieving compliance.

Ngā koringa ā-muri

Next steps

31.     We will continue to update the committee.

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Author

Mark Maloney - Head of Assurance Services

Authorisers

Patricia Reade - Director People and Performance

Matthew Walker - Group Chief Financial Officer

Phil Wilson - Governance Director

      

 


Audit and Risk Committee

05 June 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       Council-controlled Organisations - Quarterly Risk Update June 2019

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(c)(i) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains risk reporting and detailed top risks reported confidentially to the council-controlled organisations Board or Audit and Risk Committees.  The council-controlled organisations have provided their risk reports for council's Audit and Risk Commiittee subject to confidentiality.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 


 

 

 

C2       Update on key controls and risks related to the amendment to the 10-year Budget 2018-2028

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(c)(i) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

s7(2)(c)(ii) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

s7(2)(g) - The withholding of the information is necessary to maintain legal professional privilege.

In particular, the report contains legal advice being provided to the Committee and financial assumptions and judgements that Audit New Zealand have yet to issue their audit opinion on.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

 

C3       Auckland Council group 30 June 2019 year end reporting and audit requirements

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(j) - The withholding of the information is necessary to prevent the disclosure or use of official information for improper gain or improper advantage.

In particular, the report contains information about assumptions and judgements that will have a material impact on the financial results of the Auckland Council group for the year ending 30 June 2019.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C4       Approval of Auckland Council group pro forma financial statements for the year ending 30 June 2019

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains information that will be included in the Annual Report for the year ending 30 June 2019.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

 

C5       Update on the audit of building consent and non-notified resource consent processing times

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(c)(ii) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

In particular, the report contains financial and operational information, and details of audit activity which if released may jeopardise the effective delivery of assurance services.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

 

C6       Office of the Auditor-General and Audit New Zealand briefing

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report from Audit New Zealand contains information regarding the financial results of the Auckland Council Group as at 30 June 2019.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 


 

 

C7       Insurance Renewal - Indicative Council Group Programme for 2019-20 period

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains details of the proposed insurance strategy, policies and programme for which terms and costings are being sought from and negotiated with the insurance market.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

 

C8       Assurance Services Update

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(c)(ii) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to damage the public interest.

In particular, the report contains financial and operational information and details of activity which if released may jeopardise the effective delivery of assurance services.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.