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
·
health, safety and wellbeing
·
business continuity and resilience
·
integrity and investigations
·
monitoring of compliance with laws and regulations
·
significant projects, programmes of work and procurement
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 the council’s CCOs and
the council 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 other than those
in these terms of reference.
The committee may request expert advice through the chief
executive where necessary.
The committee may make recommendations to the Governing Body
and / or chief executive.
Tenure
External members will be appointed for an initial period not
exceeding three years, after which they will be eligible for extension or
re-appointment, after a formal review of their performance, and have not
already served two terms on the committee. Councillors appointed to the
committee will automatically cease to hold office at the time of the local
authority triennial elections. They may be eligible for re-appointment post
those elections if they are returned to office and have not already served two
terms on the committee.
The chief executive, and the senior management team members
will not be members of the committee.
The members, taken collectively, will have a broad range of
skills and experience relevant to the operations of the council. At least one
member of the committee should have accounting or related financial management
experience, with an understanding of accounting and auditing standards in a
public sector environment.
Committee’s responsibilities
The committee’s responsibilities are detailed below.
Forward Work Programme
The committee will agree and approve annually a forward work
programme – which will consist of in-depth briefings and reviews of
specific significant risks and assurance strategies, as contained in the ERM
“Top Risks” or Auckland Council’s work plan.
Risk management
·
Review, approve and monitor the implementation of the ERM policy,
framework and strategy (including risks pertaining to CCOs that are significant
to the Auckland Council group).
·
Review and approve the council’s “risk
appetite” statement.
·
Review the effectiveness of risk management and internal control
systems including all material financial, operational, compliance and other
material controls. This includes legislative compliance (including Health and
Safety), significant projects and programmes of work, and significant
procurement.
·
Review risk management reports identifying new and / or emerging
risks, and any subsequent changes to the ERM “Top Risk” register.
Assurance
·
Review annually the Assurance Charter – which confirms the
authority, independence and scope of the function.
·
Review and approve annually and monitor the implementation of the
three-year Assurance Strategy and 12 month detailed Internal Audit Plan.
·
Review the co-ordination between the risk and assurance 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 assurance functions dealing with
findings, conclusions and recommendations (including assurance over risks
pertaining to CCOs that are significant to the Auckland Council group)
·
Review and monitor management’s responsiveness to the
findings and recommendations – enquiring into the reasons that any
recommendation is not acted upon.
Fraud and Integrity
·
Review and approve annually, and monitor the implementation of,
the Assurance Strategy, including the fraud and integrity aspects, including a
detailed work programme.
·
Review annually the ‘Speak Up’ and whistleblowing
procedures and ensure that arrangements are in place by which staff, may, in
confidence, raise concerns about possible improprieties in matters of financial
reporting, financial control or any other matters, and that there is
proportionate and independent investigation of such matters and appropriate
follow-up action.
·
Review the procedures in relation to the prevention, detection,
reporting and investigation of bribery and fraud.
·
Review and monitor policy and process to manage conflicts of
interest amongst elected members, local board members, management, staff,
consultants and contractors.
·
Review reports from the Risk, Assurance, Integrity and
Investigations, external audit and management related to whistle blower,
ethics, bribery and fraud related incidents.
Statutory Reporting
Review and monitor the integrity of the Long-term Plan,
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 way they are disclosed
·
the disclosure of contingent liabilities and contingent assets
·
the clarity of disclosures generally
·
the basis for the adoption of the going concern assumption
·
significant adjustments resulting from the audit.
External Audit
·
Discuss with the external auditor before the audit commences:
o the
nature, scope and fees of the external audit
o areas
of audit focus
o error
and materiality levels.
·
Review with the external auditors representations required by
elected members and senior management, including representations as to the
fraud and integrity control environment.
·
Review the external auditors management letter and management
responses, and inquire into reasons for any recommendations not acted upon.
·
Where required, the chair may ask a senior representative of the
Office of the Auditor General to attend the committee meetings to discuss the
office’s plans, findings and other matters of mutual interest.
Interaction with Council Controlled Organisations
Other committees dealing with CCO matters may refer matters
to the Audit and Risk Committee for review and advice.
This committee will enquire to ensure adequate processes at
a governance level exist to identify and manage risks within a CCO. Where
an identified risk may impact on Auckland Council or the wider group, the
committee will also ensure that all affected entities are aware of and
appropriately managing the risk.
The Head of Assurance and the Chief Risk Officer are
responsible for monitoring CCO risk and internal audit strategies with respect
to risks and CCO 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.
