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

 

Date:

Time:

Meeting Room:

Venue:

 

Tuesday, 18 May 2021

10.00am

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

Cr Daniel Newman, JP

 

Members

Deputy Mayor Cr Bill Cashmore

 

 

Paul Conder

 

 

Cr Shane Henderson

 

 

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

Kaitohutohu Mana Whakahaere / Governance Advisor

 

12 May 2021

 

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

·         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.

 

 


Audit and Risk Committee

18 May 2021

 

ITEM   TABLE OF CONTENTS                                                                                         PAGE

1          Apologies                                                                                                                        9

2          Declaration of Interest                                                                                                   9

3          Confirmation of Minutes                                                                                               9

4          Petitions                                                                                                                          9  

5          Public Input                                                                                                                    9

6          Local Board Input                                                                                                          9

7          Extraordinary Business                                                                                              10

8          Forward Work Programme                                                                                         11

9          Auckland Council's health, safety and wellbeing (HSW) performance                 17

10        Auckland Council Hauora / Wellbeing Review (Covering report)                          29

11        Enterprise Risk Quarterly Update                                                                              31

12        Audit Management Report on the Audit of the Long-Term Plan Consultation Document 2021-2031                                                                                                   53

13        City Rail Link six-monthly risk update (Covering report)                                       79

14        Assurance process for the 2021 Green Bond Annual Report                                81

15        The Auditor-General's report to management for the six months ended 31 December 2020                                                                                                           119

16        Auckland Council Group's 30 June 2021 year end reporting and audit considerations                                                                                                           139

17        Consideration of Extraordinary Items

PUBLIC EXCLUDED

18        Procedural Motion to Exclude the Public                                                               149

C1       CONFIDENTIAL: Council-controlled organisations' quarterly risk update - May 2021                                                                                                                                     149

C2       CONFIDENTIAL: Insurance Report                                                                          149

C3       CONFIDENTIAL: Legal Risk update                                                                         150

C4       CONFIDENTIAL: Auckland Council Group's 30 June 2021 year end reporting and audit considerations                                                                                                  150

C5       CONFIDENTIAL: Office of the Auditor-General and Audit New Zealand Briefing 150

 


1          Apologies

 

At the close of the agenda no apologies had been received.

 

 

2          Declaration of Interest

 

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

 

 

3          Confirmation of Minutes

 

That the Audit and Risk Committee:

a)         confirm the ordinary minutes of its meeting, held on Monday, 22 February 2021, 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

18 May 2021

 

Forward Work Programme

File No.: CP2021/04881

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To review and approve remaining elements of the Audit and Risk Committee’s (ARC) three-year forward work programme (Attachment A).

Whakarāpopototanga matua

Executive summary

2.       In accordance with good practice, the committee reviews the forward work programme at each meeting to ensure it can be adapted to council’s risk profile changes and that it remains relevant to the needs of the committee.

3.       There are no changes from the last update.

4.       It is intended to incorporate regular reporting on Enterprise Risk Management for Ports of Auckland Limited in the forward work programme. To start that process, a workshop has been held with the committee before today’s meeting. In the future we propose:

·    the first full report to the committee in August 2021

·    agreeing the reporting rhythm and content and incorporation into the committee’s forward work programme by the end of the year.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)         approve the forward work programme, noting the first full report on Ports of Auckland Limited to the Committee will be in August 2021, and the plan to include reporting from Ports of Auckland Limited into the committees work programme

b)      note there will be a workshop on climate change in August 2021.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Forward Work Programme

13

      

Ngā kaihaina

Signatories

Author

Gemma Wensor - Risk Advisor

Authorisers

Mark Maloney - General Manager Risk and Assurance

Phil Wilson – Director, Governance and CCO Partnerships

 



Audit and Risk Committee

18 May 2021

 

 

 

 

 

Komiti Tātari me te Mātai Raru Tūpono / Audit and Risk Committee
Forward Work Programme 2020-2022

This committee assists and advises the Governing Body in discharging its responsibility and ownership of governance, risk management and internal control across Auckland Council group. 

Responsibilities include reviewing the effectiveness of enterprise risk management, internal and external audit assurance, health safety and wellbeing, business continuity and resilience, integrity and investigations.  The Committee monitors compliance, risk management in significant projects and programmes of work and procurements and has oversight of risk management and assurance of CCOs, the preparation of the LTP, Annual Report and other statutory financial reports.
Full terms of reference can be found
here.

 

 

 

 

 

Area of work and lead

 

Expected reporting 2021

22 Feb

18 May

22 June (extraordinary meeting)

23 Aug

13 Sep

7 Dec

Audit and Risk Committee

GM Risk and Assurance

Work programme

Link to decision

Work programme

 

Work programme

Work programme

Committee’s Annual performance report

Work programme

 

Assurance

GM Risk and Assurance

Assurance Services Strategy and activities update (fraud and integrity, elected members, internal audits and reviews, speak up)

Audit Programme reporting – updated plan and audits completed

Link to decision - confidential

 

 

Assurance Services Strategy and activities update (fraud and integrity, elected members, internal audits and reviews, speak up)

Audit Programme reporting – updated plan and audits completed

 

 

Assurance Services Strategy and activities update (fraud and integrity, elected members, internal audits and reviews, speak up)

Audit Programme reporting – updated plan and audits completed

 

Independent Maori Statutory Board - Treaty Audit

GM Risk and Assurance

Treaty Audit Monitoring update

Link to decision

Preparations for Independent Maori Statutory Board upcoming 2022 Te Tiriti o Waitangi audit.

 

 

Treaty Audit Monitoring update

 

Preparations for Independent Maori Statutory Board upcoming 2022 Te Tiriti o Waitangi Audit

Enterprise Risk

Risk Services

Enterprise Risk Update

Link to decision

Enterprise Risk Update

 

 

Enterprise Risk Update

 

CCO Risk management

Facilitated by Risk Services

CCO quarterly risk report

Attendance by Auckland Transport

Link to decision - confidential

CCO quarterly risk report

Attendance by Panuku

 

CCO quarterly risk report

Attendance by Auckland Unlimited

CCO annual reports on risk (matters raised through annual audit process and summary of any significant findings raised by auditors)

Attendance by Watercare, Auckland Transport, Auckland Unlimited Panuku

CCO quarterly risk report

Attendance by Watercare

Auckland Council partner/ shareholder risk management

Director Infrastructure and Environmental Services & CCO/ External Partnerships Dept

 

America’s Cup 36 (included in Enterprise Risk Update)

City Rail Link

 

 

City Rail Link

 

Health, Safety and Wellbeing

Head of Health, Safety and Wellbeing

 

Health, safety and wellbeing update

Link to decision

Health, safety and wellbeing update

 

Health, safety and wellbeing update

 

Health, safety and wellbeing update

Legal Risk

General Counsel

 

Legal Risk report

 

 

Legal Risk report

 

Insurance

Manager Insurance - Risk and Insurance Dept

Update on insurance activities

Insurance Strategy 2021-23

Link to decision

Indicative Insurance Renewal Report

 

Update to Committee post placement of Insurance Programme

 

 

 

Interim Report

Group Financial Controller

 

31 December 2020 Interim Report and NZX Announcement clearance

Link to decision - confidential

Audit New Zealand Review engagement management report 31 December 2020

 

 

 

Review arrangements 31 December 2021

31 December 2021 Interim Financial Statements & NZX announcement Update

Proforma interim financial statements and accounting policies 31 December 2021

Annual Report

Group Financial Controller

30 June 2021 Arrangements (extended audit plan)

Link to decision

Audit New Zealand final audit management report 30 June 2020

Link to decision

NZX Announcement 30 June 2021 / Annual Report 30 June 2022 update for committee

Proforma Annual Report 30 June 2021 (financial statements and accounting policies)

 

 

NZX Announcement 2021/ Annual Report 30 June 2021 update for committee

Audit New Zealand Interim audit management report 30 June 2021

 

30 June 2021 Annual Report

 

30 June 2022 Arrangements (extended audit plan)

Audit New Zealand final audit management report 30 June 2021

 

Annual Green Bond Report

 

Process for Annual Green Bond Report 30 June 2021.

 

 

 

. Annual Green Bonds Report 30 June 2021

 

Long Term Plan 2021/2031

Annual Plan

GM Financial Strategy and Planning

Consultation Document and supporting information – key controls and risks

Link to decision

 

 

LTP Key controls and risks

 

 

2021-2031 LTP (draft)

External Audit

Office of Auditor-General (OAG)

Briefing paper provided

Link to decision - confidential

Briefing paper provided

 

Briefing paper provided

Briefing paper provided

Briefing paper provided

 

Workshops

The Audit and Risk Committee holds workshops on matters where a background briefing/ more informal discussion and opportunity for questions from the committee is necessary to perform its role and responsibilities.

Workshops are not used to make decisions - that is for formal committee or Governing Body Meetings. Workshop material will be appended to a summary of information items in the next committee meeting, unless it has been clearly marked as confidential.

The following topics have been identified as proposed workshops necessary to discharge the Committee’s duties.  Workshops will be scheduled over the three-year programme based on strategic priorities, risk and time available.  Additional topics may be added if circumstances change or require a topic to be the subject of a workshop.

The workshop schedule is currently under review due to the “Top Risk” refresh.


Komiti Tātari me te Mātai Raru Tūpono / Audit and Risk Committee
Forward Work Programme 2021-2022

This committee assists and advises the Governing Body in discharging its responsibility and ownership of governance, risk management and internal control across Auckland Council group. 

Responsibilities include reviewing the effectiveness of enterprise risk management, internal and external audit assurance, health safety and wellbeing, business continuity and resilience, integrity and investigations.  The Committee monitors compliance, risk management in significant projects and programmes of work and procurements and has oversight of risk management and assurance of CCOs, the preparation of the LTP, Annual Report and other statutory financial reports.
Full terms of reference can be found
here.

 

 

 

Area of work and lead

Expected reporting 2022 (dates TBC)

Feb

May

Aug

Sep

Dec 7

Audit and Risk Committee

Head of Assurance Services

Work programme

Work programme

Work programme

Work programme

Committee’s Annual performance report

Work programme

 

Assurance

GM Risk and Assurance

 

Assurance Services Strategy and activities update (fraud and integrity, elected members, internal audits and reviews, speak up)

Audit Programme reporting – updated plan and audits completed

 

 

Assurance Services Strategy and activities update (fraud and integrity, elected members, internal audits and reviews, speak up)

Audit Programme reporting – updated plan and audits completed

 

 

Independent Maori Statutory Board - Treaty Audit

GM Risk and Assurance

Treaty Audit Monitoring update

 

Treaty Audit Monitoring update

 

Preparations for Independent Maori Statutory Board upcoming 2022 Te Tiriti o Waitangi Audit

Enterprise Risk

Risk Services

Enterprise Risk Update

 

 

Enterprise Risk Update

 

 

Enterprise Risk Update

 

CCO Risk management

Risk Services

CCO quarterly risk report

Attendance by Auckland Transport

CCO quarterly risk report

Attendance by Panuku

CCO quarterly risk report

Attendance by Auckland Unlimited

CCO annual reports on risk (matters raised through annual audit process and summary of any significant findings raised by auditors)

Attendance by Watercare, Auckland Transport, Auckland Unlimited

CCO quarterly risk report

Attendance by Watercare

Auckland Council partner/ shareholder risk management

Director Infrastructure and Environmental Services & CCO/ External Partnerships Dept

 

City Rail Link

 

City Rail Link

 

Health, Safety and Wellbeing

Head of Health, Safety and Wellbeing

 

Health, safety and wellbeing update

Health, safety and wellbeing update

Health, safety and wellbeing update

 

Health, safety and wellbeing update

Legal Risk

General Counsel

 

Legal Risk report

 

Legal Risk report

 

Insurance

Manager Insurance - Risk and Insurance Dept

Update on insurance activities

Indicative Insurance Renewal Report

Update to Committee post placement of Insurance Programme

 

 

 

Interim Report

Group Financial Controller

 

31 December 2021 Interim Report NZX Announcement clearance

Audit New Zealand Review engagement management report 31 December 2021

 

 

Review arrangements 31 December 2022

31 December 2022 Interim Financial Statements & NZX Announcement Update

Proforma interim financial statements and accounting policies 31 December 2022

 

Annual Report

Group Financial Controller

 

NZX Announcement 30 June 2022 / Annual Report 30 June 2022 update for committee

Proforma Annual Report 30 June 2022 (financial statements and accounting policies)

NZX Announcement 2022/ Annual Report 30 June 2022 update for committee

Audit New Zealand Interim audit management report 30 June 2022

 

30 June 2022 Annual Report

Audit New Zealand Audit Engagement and Audit Proposal letters for 2023, 2024 and 2025

30 June 2023 Arrangements (extended audit plan)

Audit New Zealand final audit management report 30 June 2022

Proforma interim financial statements and accounting policies 31 December 2022

Annual Green Bond Report

 

Process for Annual Green Bond Report 30 June 2022.

 

 

Annual Green Bonds Report 30 June 2022.

 

Long Term Plan 2021/2031

Annual Plan

GM Financial Strategy and Planning

 

Audit New Zealand final 2021 LTP amendment management report

 

 

2023/24 Annual Plan (draft)

External Audit

Office of Auditor-General (OAG)

Briefing paper provided

Briefing paper provided

Briefing paper provided

Briefing paper provided

Briefing paper provided

 

 

 

 

 

 

 

 


Audit and Risk Committee

18 May 2021

 

Auckland Council's health, safety and wellbeing (HSW) performance

File No.: CP2021/05566

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To update the committee on Auckland Council’s health, safety and wellbeing (HSW) performance.

Whakarāpopototanga matua

Executive summary

2.       Health, safety and wellbeing performance continues to be a focus and priority for the Auckland Council organisation.

3.       Reflecting that increased focus on health safety and wellbeing the Corporate Health, Safety and Wellbeing Committee is meeting monthly. That committee is composed of the Chief Executive, the Executive Lead Team, the General Manager Health, Safety and Wellbeing, General Manager People and Culture and representatives of the Public Service Association (PSA) and Auckland Norther Amalgamated Workers Union (AWUNZ).

4.       Auckland Council is maintaining its capacity to respond to changes in COVID-19 Alert Levels. At this time no roles have been identified within the council where staff will be required to be vaccinated against COVID-19.  We will review areas where our staff or contractors provide onsite services to other agencies and where they may have policies requiring vaccination (for example Auckland International Airport Ltd and Ports of Auckland Ltd).

5.       Over the past four months, Ngā Mātārae has trialled a wellbeing programme based on Te Maramataka (the Māori calendar). Two wellbeing workshops have been organized with Māori staff and have been facilitated by Matua Rereata Makiha, a renowned expert in Te Maramataka.

6.       In terms of corporate health and safety indicators:

·    during the period February – April 2021, four out of six serious events were notified to Worksafe

·    the 12-month rolling Lost Time Injury Frequency Rate to employees has reduced over the last 12 months

·    the injury severity rate (days lost / number of injury incidents) is impacted by a small number of incidents associated with long periods when the person has not been available to work.

7.       To reflect their role as officers under the Health and Safety at Work Act 2015, a program of work is underway to enable elected representatives to more effectively exercise their due diligence duty.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the information provided and refer this report to the Governing Body along with any commentary the committee thinks appropriate

b)      forward the report to local boards for their information.

 

Horopaki

Context

8.       This report provides information to enable the committee to provide objective advice and recommendations to the Governing Body on the adequacy and functioning of the council’s health safety and wellbeing risk management system.

Tātaritanga me ngā tohutohu

Analysis and advice

Organisation health, safety and wellbeing matters

 

9.       The Corporate Health, Safety and Wellbeing Committee is meeting monthly. That committee is composed of the Chief Executive, the Executive Lead Team, the General Manager Health, Safety and Wellbeing, General Manager People and Culture and representatives of the PSA and AWUNZ (the two unions whose members are among council staff).

10.     In the meetings during the period February to April 2021 the Committee has focused on:

·    agreeing critical risks (please see Attachment A) and progressively reviewing controls to mitigate those risks

·    reviewing serious incidents and lessons learnt

·    reviewing performance indicators

·    means to promote more effective worker participation in health and safety management.

11.     The Hauora (Wellbeing) Review has been completed and is reported separately on this committee agenda. This review involved:

·    discussion with staff and staff networks (for example Rainbow, Manawa, Moana Pasifika)

·    analysis of the preceding years staff engagement and wellbeing surveys

·    literature review

·    peer review and advisory support from subject matter professionals

·    case studies and reviews undertaken within a range of New Zealand organisations.

12.     Council is a member of the ACC accredited employer program. A requirement of continued membership is an annual audit of council’s health and safety policies and practices, and processes to manage injuries. The 2020 audit was delayed due to the impact of COVID-19 and took place in February 2021.

13.     In March 2021 the council was advised that it had passed the audit and therefore Auckland Council is an ACC Accredited Employer at the Primary level for the period to 31 March 2022.

14.     Key recommendations arising from the audit include:

·   enhancing worker representation on committees concerned with health, safety and wellbeing,

·   improvements in the communication with workers who have been injured at work.

15.     Audit recommendations are being actioned. The 2021 Audit is scheduled for October 2021.

16.     Employee communications with staff at all levels across the council continues to highlight the significance and importance of health, safety and wellbeing for us all, as well as promoting the availability of support services, speak up channels, resources and tools and training and development for all staff and people leaders.

17.     A strategic assessment concerning the council’s incident recording and risk management system has been completed. A detailed business case for the system’s enhancement is currently being undertaken and will be reported to a future meeting of the Corporate Health Safety and Wellbeing Committee in July 2021.

COVID-19

18.     During the period February-April 2021 the council supported the Ministry of Health in their management of COVID-19 within the Auckland community. This included land and facilities being made available for pop up testing sites.

19.     Auckland Council is maintaining its focus as part of the ongoing ‘all of government’ response to COVID-19 on ensuring hygiene requirements, staff remaining home when sick, encouraging staff to be tested when they have symptoms or who have been identified as “close contacts” and enabling track and tracing in council buildings for both staff and customers.

20.     Procedures for appropriate closing and deep cleaning are in place and subject to regular drills should a staff member or customer test positive for COVID-19.

21.     The roll out of the national COVID-19 vaccination program has commenced. As a good employer Auckland Council has established procedures reflecting Ministry of Health guidelines to encourage staff to be vaccinated.

22.     A number of staff who have been prioritised under the national COVID-19 vaccination program have been offered and completed vaccination.

23.     At this time, it is not proposed that the council require current or new staff to be vaccinated in order to undertake a particular role. This position would only be reconsidered if central government also changed their requirements and the general situation of COVID-19 in the community changed such a change was considered reasonable following an analysis that involves a range of stakeholders including unions.

24.     We will review areas where our staff or contractors provide onsite services to other agencies and where they may have policies requiring vaccination (for example Auckland International Airport Ltd and Ports of Auckland Ltd).

Elected representatives duty of due diligence support

25.     Elected representatives (both councillors and local board members) must exercise due diligence as ‘officers’ pursuant to the Health and Safety at Work Act 2015.

26.     At this committee’s meeting in February 2021, the committee resolved (AUD/2021/9) as follows: “note that the committee is pleased to see renewed focus on health, safety and wellbeing performance and requests that the Governing Body increase focus on quarterly reporting and due diligence responsibilities”.

27.     A programme of work is underway over the next 12-18 months that will result in the progressive deployment of initiatives that will enable elected representatives to more effectively exercise their due diligence duty.

28.     For councillors this will include:

·    quick reference guides available from the last quarter of 2021 outlining practical means by which councillors may discharge their duty

·    an annual workshop commencing in 2022

·    improved visibility of health, safety and wellbeing in quality advice via an update to our standard report template so report writers include any relevant implications concerning health, safety and wellbeing where decisions are being sought (to commence in 2022 to allow for the deployment of staff training)

·    continuation of quarterly reports referred to the Governing Body by the Audit and Risk Committee.

29.     For local board members this will include:

·    quick reference guides available from the last quarter of 2021 outlining practical means by which local board members may discharge their duty

·    a programme of annual workshops for each local board undertaken over a period of three months commencing in 2022

·    improved visibility of health, safety and wellbeing in quality advice via a change to our standard report template so report writers include any relevant implications concerning health safety and wellbeing where decisions are being sought (to commence in 2022 to allow for the deployment of staff training)

·    inclusion of a specific health, safety and wellbeing section in existing Community Facilities quarterly reports about delivery in local board areas by 2022 (noting that the current initiative to replace the council’s risk management and incident recording system will result in a system capable of generating information concerning local board areas).

30.     In addition, an enhanced induction program focused on health safety and wellbeing will be deployed for elected members following the 2022 elections.

Serious incidents

31.     A serious incident is one where, as a result of council business, someone’s health or safety is seriously endangered or threatened or in worst cases someone is killed.

32.     The following serious incidents have occurred during March and April 2021.

 

Incident Description

Location

Status

1.     A member of the public was found deceased in a fenced and gated storm water pond.

Albany

Under Police Investigation

2.     AIMS staff member driving a street cleaner which rolled over resulting in a broken rib.

Kingsland

Notified to WorkSafe

3.     AIMS staff member was operating a chainsaw up a tree, the chainsaw kicked back resulting in a broken bone.

Three Kings

Notified to WorkSafe

4.     A staff member of NZ Facilities (a subcontractor to Ventia whom is a contractor to Community Facilities / Council) was knocked unconscious by a falling lid of a large box structure built around a water tank associated with a kauri dieback station.

Le Roys Bush Manukau

Notified to WorkSafe

5.     A Parks, Sports and Leisure lifeguard required 6 stitches after the handle of window being closed snapped and sliced finger.

Westwave

Notified to Worksafe

6.   A near miss where an AIMS staff member was driving a mower at night which slipped down a steep slope coming to rest on a muddy bank.

Auckland Airport

TBC

 


 

33.     The photos below show the AIMS street cleaner which rolled over resulting in a broken rib.

 


 

AIMS road sweeper roll over

 

34.     The roll-over of the road sweeper is the second such incident in the last six months, following the roll-over of a mower at Chamberlain Park in December 2020. These and the near miss with the mower at Auckland Airport are examples of the critical risks associated with the operation of mobile plant and equipment.

35.     The Corporate Health, Safety and Wellbeing Committee has commissioned a review of the nature of controls deployed to manage risks associated with the operation of mobile plant and equipment, with a report back to the committee by July 2021 (this forms part of the review of critical risks and controls).

36.     A sudden death of a staff member in late 2020 remains under investigation by Worksafe and council has cooperated fully with all requests for information.

37.     While not a serious incident, in terms of our definition, Auckland City Central Library was closed for some 10 days from early April in response to fumes associated with works to enhance water proofing of the roof and walls with bitumen. Two sets of air testing were completed with the environment proven to be safe. 

Corporate health and safety indicators

38.     Corporate health and safety performance indicators as at March 2021 are shown in Attachment B.


 

39.     Key measures include:

a)   The 12-month rolling lost time injury frequency rate has improved to 6.3 in February 2021 (from 7.2 previously). This however remains below target levels consistent with the risk profile of activities undertaken by the council.

b)   The injury severity rate (days lost / number of injury incidents) is impacted by a small number of incidents associated with long periods when the person has not been available to work. Initiatives are underway to reduce the severity rate by enhanced management of the injury and communication from the Corporate Health, Safety and Wellbeing team with the employee.

c)   The top three incident risk categories shown in the health and safety performance indicators as at March 2021 are:

·    slips, trips and falls

·    hazardous substances

·    being in, on or over water, reflecting in particular rescues at public swimming pools.

d)   Initiatives are underway in response to concerns regarding:

·    the relatively small number of near misses and hazards recorded compared to expectations given the size and risk profile of the council

·    speed of response to resolve corrective actions

·    participation in health and safety training of managers and staff.

40.     From 1 July 2021 the Corporate Health Safety and Wellbeing monthly performance indicators will be regularly published on the council’s internal website ‘Kotahi”’ as well as being reported to the Corporate Health Safety and Wellbeing Committee.

Tauākī whakaaweawe āhuarangi

Climate impact statement

41.     The Council WorkSmart Programme is still targeting a reduced carbon footprint through its hub and spoke model and property consolidation. Even though more staff are now returning to our workplace, we are able to relocate staff from Bledisloe House to Te Wharau o Tāmaki - Auckland House through some staff working a couple days at home a week. Alongside the climate benefit of staff not having to commute, this will reduce our overall corporate property energy consumption.

42.     The most recent staff engagement survey indicates that staff are interested to understand how they contribute daily to achieving climate actions. A programme to raise awareness of our current contribution and planned initiatives will be rolled out through Kotahi. 

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

43.     The Auckland Council organisation is (under to the Health and Safety at Work Act 2015) a person conducting business or an undertaking (PCBU). Accordingly, this report is based on council activities only and does not provide a group-wide view.

44.     Health and safety teams across the Auckland Council group have been discussing the CHASNZ “Ports of Auckland Independent Health and Safety Review” report into health and safety at the Ports of Auckland and whether there are any learnings that can be applied across the group. Learnings and improvements resulting from the report will be provided back to the Corporate Health, Safety and Wellbeing Committee.

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

Local impacts and local board views

45.     Local board members are officers under the Health and Safety at Work Act 2015. This report will be distributed to Local Boards.

46.     As outlined in paragraphs 28 and 29, a programme to progressively deploy a range of initiatives that enables elected representatives to more effectively exercise their due diligence duty will be commenced.

Tauākī whakaaweawe Māori

Māori impact statement

47.     Māori representation in the council’s Corporate Health, Safety and Wellbeing Committee is included through the General Manager Ngā Mātārae role (as part of the Executive Leadership Team). 

48.     The quarterly organisational engagement survey provides a separate report on the wellbeing of Māori staff. Organisation wide and directorate data is available to each Māori Outcome Lead, and is used to address Health, Safety and Wellbeing concerns of Māori staff in their relative directorates.

49.     Over the past four months, Ngā Mātārae has trialled a wellbeing programme based on Te Maramataka (the Māori calendar). Two wellbeing workshops have been organized with Māori staff and have been facilitated by Matua Rereata Makiha, a renowned expert in Te Maramataka.

50.     These workshops aimed to support Māori staff to manage and lift their oranga (wellbeing) by offering tools and knowledge based on a Māori world view. The workshops were held at Auckland Central and Manukau offices to support accessibility. Feedback is being sought from attendees through evaluation surveys to inform and ensure continuous improvement of future initiatives and offerings.

Ngā ritenga ā-pūtea

Financial implications

51.     There are no additional financial implications in this report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

52.     Health, safety and wellbeing remains a top risk managed through the enterprise top risk register.  This risk has been reviewed and assessed this quarter and remains at a ‘high’ residual rating.  This reflects both external demand pressures, the current environment, and the incidents and indicator data and information outlined in this report.  

53.     The Top Risk summary report for the Health Safety and Wellbeing Top Risk has been reported separately to the Audit and Risk Committee in Attachment A page 7 of the Enterprise Risk Quarterly Update 18 May 2021.

54.     There are a range of systems, processes, training and culture initiatives outlined in this report that are being implemented to strengthen the mitigations and reduce the risks (particularly the significant and critical risks) of harm to staff, elected members, contractors, volunteers and the community.

55.     A risk action plan for the Health, Safety and Wellbeing Top Risk is being developed to support the coordination and monitoring of initiatives and address any areas for improvement in the control environment that may be identified.

Ngā koringa ā-muri

Next steps

56.     Ongoing monitoring of the council’s health safety and wellbeing performance with information provided to elected members.

 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Auckland Council critical risks

25

b

Corporate health and safety performance indicators as at March 2021

27

     

Ngā kaihaina

Signatories

Author

Ian Maxwell – General Manager, Health, Safety and Wellbeing

Authorisers

Patricia Reade – Deputy Chief Executive

Jim Stabback - Chief Executive

Phil Wilson – Director, Governance and CCO Partnerships

 


Audit and Risk Committee

18 May 2021

 

PDF Creator

PDF Creator


Audit and Risk Committee

18 May 2021

 

PDF Creator


Audit and Risk Committee

18 May 2021

 

Auckland Council Hauora / Wellbeing Review (Covering report)

File No.: CP2021/06032

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To inform the members of the Audit and Risk Committee of the Auckland Council Hauora (Wellbeing) Review key findings.

Whakarāpopototanga matua

Executive summary

2.       This is a late covering report for the above item. The comprehensive agenda report was not available when the agenda went to print and will be provided prior to the 18 May 2021 Audit and Risk Committee meeting.

Ngā tūtohunga

Recommendation/s

The recommendations will be provided in the comprehensive agenda report.


Audit and Risk Committee

18 May 2021

 

Enterprise Risk Quarterly Update

File No.: CP2021/03756

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To update the Audit and Risk Committee on:

a)   The risk reset process and the Auckland Council top risks assessed and evaluated in the period February – April 2021.

b)   Key risk management priorities for the Risk and Assurance department for the fourth quarter including the Delegated Financial Authorities project, Long Term Plan, and implementation of online system for enterprise top risk monitoring and reporting.

Whakarāpopototanga matua

Executive summary

2.       The Auckland Council top risks were reviewed and reset in accordance with the council’s Risk Management Framework in the second quarter 2020/2021.  Further work has been completed to assess and evaluate the following seven top risks:

·     Service Delivery

·     Decision Making

·     Data and Information

·     Health, Safety and Wellbeing

·     Financial Management

·     Fraud and Corruption

·     Māori Outcomes.

3.       The assessment of the remaining four top risks will be completed in the next quarter, those being:

·    Performance

·    Adaptability

·    Strategic Relationships

·    Resilience.

4.       The council’s top risk profile remains stable. While all top risks are important and continue to be reviewed and managed, the following four top risks have been identified as priority risks this quarter for the executive leadership team (ELT) focus: 

·     Service Delivery/ project management (Attachment A, page 4)

·     Decision Making (Attachment A, page 5)

·     Data and Information (Attachment A, page 6)

·     Health, Safety and Wellbeing. (Attachment A, page 7).

5.       The Service Delivery risk and the Health, Safety and Wellbeing risk have both been assessed as remaining a ‘high’ and trending up this quarter.  The likelihood of the Health, Safety and Wellbeing and the Service Delivery top risks has been elevated from “possible” to “likely” to reflect external demand pressures and the current environment (refer risk summaries in Attachment A for detailed rationale for the risk ratings).

6.       Decision Making risk and Data and Information risk are newly assessed and the ELT have given particular focus to these risks to ensure common understanding and agreement on the risk descriptions and ratings.

7.       The Risk and Assurance department, supported by the Public Law and Finance departments, is leading a project to review and improve the financial and non-financial delegations’ processes and controls. An update on this project will be provided in September 2021.

8.       The Risk and Assurance department continues to support and advise the 10-year budget 2021-2031 (Long-term plan) programme. Risks and issues are being actively worked through and escalated as appropriate.  Overall risks are trending down, and the process remains on track.

9.       From June 2021, the risk team will start to use the existing Auckland Council performance reporting system called Opal3 to monitor and report top risks.   This will support defining accountabilities for risks, controls and treatment actions and provide a holistic view across the enterprise with the ability to access detail as required.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the Auckland Council Top Risk Quarterly Update

b)      refer the Auckland Council Top Risk Quarterly Update report to the Governing Body for information.

 

Horopaki

Context

10.     This report provides an update on the Auckland Council top risks and risk activities for the quarter ending April 2021.

11.     The report provides information to enable the Audit and Risk Committee to fulfil the committee’s governance and oversight role of the effectiveness of risk management within Auckland Council, and for reviewing emerging risks and changes to Auckland Council top risks.

Tātaritanga me ngā tohutohu

Analysis and advice

Top Risk Quarterly Update

Top Risk Reset Process

12.     The process to assess the Auckland Council top risks is being completed in phases. Assessments, using the risk bow-tie methodology, have been completed for seven of the 11 top risks. The remaining four top risks will be completed in the next quarter.

13.     The assessments are being undertaken to align with and leverage the operating model review programme and ensure the top risks are completed in time to inform the 2021/2022 financial year business planning.

14.     The process has resulted in a deeper and more mature understanding of the top risks that builds on the work completed in the last three years.  The collaboration by departments and experts across the council has provided a more comprehensive and sophisticated understanding of the interdependencies, priority risks and drivers for the organisation.  We are also improving the coordination and integration of risk management and actions at the right level to manage risks more effectively.

15.     We have expanded the engagements and inputs to include available risk and audit data and insights, information from risk champions and subject experts.  The Health, Safety and Wellbeing Risk assessment has also been discussed with the New Zealand Public Service Association (PSA) and the Amalgamated Workers Union New Zealand (AWUNZ) representatives.  We have also reviewed external data and information and benchmarked with local authorities and private and international entities, independent and elected members from this committee.

16.     The risks managed on the Top Risk Registers in 2019 and 2020 have been reviewed and mapped to the existing top risks to ensure all known risks are appropriately incorporated in the current top risks and continue to be managed.

17.     The reset/review process and next steps are summarised in Attachment A on page 12. 

Top Risks Review and Evaluation (Quarter Three 2021)

18.     The following seven Top Risks have been assessed this quarter:

·   service delivery

·   decision making

·   data and information

·   health, safety and wellbeing

·   financial management

·   fraud and corruption

·   Māori outcomes.

19.     A summary risk report for each top risk is in Attachment A pages 4-10.

20.     The council’s top risk profile remains stable with no increase in overall residual ratings to any of the top risks. 

21.     No new findings or significant risks have emerged to require the addition of any new risks.

22.     While all top risks are important and continue to be reviewed and managed, the following four top risks have been identified as priority risks this quarter for ELT focus: 

·   service delivery/ project management (Attachment A, page 4)

·   decision making (Attachment A, page 5)

·   data and information (Attachment A, page 6)

·   health, safety and wellbeing. (Attachment A, page 7).

23.     The service delivery risk and the health, safety and wellbeing risk have been assessed as having a “high” residual rating and are trending up this quarter.  The likelihood of the health, safety and wellbeing and the service delivery top risks being realised, has been elevated from “possible” to “likely” to reflect external demand pressures and the current environment. (refer risk summaries in Attachment A for detailed rationale for the risk ratings).

24.     decision making risk and data and information risk are newly assessed and the ELT have given particular focus to these risks to ensure common understanding and agreement on the risk descriptions and ratings. Both risks impact and drive the other top risks and so are key to successful management of the overall top risk profile.

25.     The enterprise risk team is engaging with the departments who are developing options and strategies regarding workforce drivers.  This work is expected to be reported to ELT in May 2021.  The decisions made by ELT on any recommended actions to mitigate the risks will be included in the risk management action plans for people resilience, health, safety and wellbeing, performance, and adaptability top risks.

26.     The risk team have identified nine common drivers shown in Attachment A, page 3. 

27.     The top four drivers that impact five or more of the top risks are:

·    workforce planning and culture

·    customer and community expectations and growing demand

·    ineffective systems, tools, and data management

·    central government statutory reform programme.

28.     Risk actions and enterprise initiatives to treat, eliminate or reduce the likelihood of these drivers will therefore have the biggest overall impact on council’s top risks. This information will inform the prioritisation of the risk actions to address gaps in mitigations.

Top Risk assessments to be completed

29.     The remaining top risks:

·    strategic relationships

·    organisational performance

·    adaptability

·    resilience

will be assessed and reported to this committee in September 2021 (refer Attachment A, page 11).

30.     The risk assessments will be completed using the bow tie methodology and the risk assessment matrix of the council.

Other Emerging Risks and Opportunities

Workforce risks

31.     Like many business and public sector organisations, council is experiencing workforce challenges in key areas related to workforce planning, retention, recruitment and service/projects and programme delivery.  These are key drivers for council’s top risks. Without qualified and capable staff in critical roles (particularly specialist and technical roles) there is an increased risk of non-delivery of services and increased stress on the workforce.

32.     The enterprise risk team is engaging with Group Services and Finance divisions who are developing options and strategies regarding workforce drivers.  The decisions made by ELT on recommended actions to mitigate the risks will form part of the risk management action plans for the people resilience, and performance and adaptability top risks.

Government legislative reforms

33.     Central government is progressing several new bills and reviews in its legislative change and reform programme.  Reforms concerning local government, resource management, climate change, three waters and whistleblowing legislation will potentially have significant impacts on council’s activities. Council is monitoring and engaging with all the reforms to ensure we are sufficiently engaged and ready to manage and mitigate the change risks.

Climate change risk

34.     Auckland Council has identified climate change as one of the top risks under ‘resilience’. 

35.     The Auckland Council Group began publicly disclosing on its climate-related financial risks in 2019-2020 Interim Report in recognition of the material risks presented by climate change. The Auckland Council Group’s second climate-related financial risk disclosure was reported in the Auckland Council Group’s Annual Report 2020.  As part of this disclosure, the group committed to ‘disclose our climate-related financial risks under the Taskforce on Climate-related Financial Disclosures (TCFD) framework’.

36.     On 12 April 2021, central government introduced the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill 2021.

37.     The bill will amend the Financial Markets Conduct Act 2013, the Financial Reporting Act 2013, and the Public Audit Act 2001 to require and support climate-related disclosures by certain entities for the financial year commencing in 2022. 

38.     It is anticipated that this bill may be passed by the end of 2021 and create compliance requirements and standards including directors’ liabilities for disclosure.

39.     The Auckland Council Group are working towards a fully compliant disclosure. Several focus areas have been identified to further improve the Auckland Council Group’s climate change risk disclosures in the future, specifically to:

·   improve the governance of climate-related risks including governance at a managerial level within the organisation

·   identify and integrate processes for identifying, assessing, and managing climate-related risks into Auckland Council’s overall risk management framework

·   identify climate-related financial risks and opportunities to the Auckland Council Group to address the scenario analysis requirements of the TCFD.

·   identify three emissions that are material to Auckland Council and include within the targets and metrics in the disclosure statement

·   improve the consistency of climate-related financial risk disclosures across the Auckland Council Group.

40.     An update on council’s climate change risk management, the legislative change impacts and the progress of these focus areas will be provided to the Audit and Risk Committee in August 2021.

Monitoring and Reporting top risks – Opal3 system implementation

41.     Auckland Council continues to focus on enabling and growing risk maturity across the enterprise.  From June 2021, the risk team will start to use the existing council performance reporting system called Opal3 to monitor and report top risks.   This will support defining accountabilities for risks, controls and treatment actions and provide a holistic view across the enterprise with the ability to access detail as required. There will be clearer visibility of how risk metrics align with strategic objectives and performance metrics. 

42.     Panuku Development Auckland and Auckland Unlimited are engaged and will consider adopting this approach once the process has been embedded in Auckland Council.

Delegated Financial Authorities project update (DFA)

43.     Auckland Council uses an empowering model of delegation whereby the Governing Body and Local Boards have generally delegated all powers, duties, and functions to the chief executive (subject to certain limits).  The chief executive sub-delegates these to council staff. The delegations to staff are general in nature but subject to the restrictions set out in the Chief Executive’s Delegation Register (DFA register).

44.     The restrictions on delegations to staff need to be carefully managed to ensure staff can perform their roles effectively and only undertake decisions that would be appropriate for their position.  The post COVID–19 environment and financial management risks have highlighted the importance of effective monitoring and policy, process, and system controls.

45.     The Risk and Assurance department, supported by the Public Law and Finance departments, is leading a project to:

·    review the current approach to financial and non-financial delegations to staff

·    improve and simplify how we manage staff delegation and management controls

·    make it easier for staff to understand and comply with delegation restrictions and management controls and keep delegates up to date

·    improve appropriate management controls in place and ascertain compliance levels

·    ensure alignment and integration between delegations register, management controls and council’s SAP and procurement systems. 

46.     Terms of reference and governance for the project are being finalised with internal business stakeholders, legal and finance experts. The project plan is also being refined to align and integrate this project with the recent operating model review, to ensure any that improvements for delegations incorporate operational and organisational structural changes and improvements going forward.

47.     Included in the scope is an internal audit workstream to audit current state compliance with delegated financial authority register.  Audit New Zealand has identified instances of inconsistencies in council’s SAP system and the delegations register.  The project is investigating this issue to resolve the root causes of any inconsistencies or issues.

10-year Budget 2021-2031 (Long-term plan)

48.     The Risk and Assurance department continue to support and advise the 10-year budget 2021-2031 (Long-term plan) programme. Risks and issues are being actively worked through and escalated as appropriate.  Overall, risks are trending down and the process remains on track.

49.     At the Audit and Risk Committee extraordinary meeting on 22 June 2021, the committee will be asked to review the effectiveness of governance over risks and the operation of internal controls for the preparation of the Auckland Council’s 10-year Budget 2021-2031.

50.     The Risk and Assurance department will continue to support the 10-year budget 2021-2031 programme until its adoption on 29 June 2021. 

Tauākī whakaaweawe āhuarangi

Climate impact statement

51.     Climate change and its impacts remain as a top risk for Auckland Council. The risks, mitigations and legislative changes associated with this are discussed in the body of this report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

52.     The Risk and Assurance department works alongside key risk staff at council-controlled organisations (CCOs) to align our approach to group risk management.

53.     Staff are working with CCOs to improve monitoring and reporting on risks and risk mitigation measures following the recent CCO review. There is an action that council reviews the way it requires CCOs to monitor and report on risks and risk mitigation measures.  Group risk managers met in April 2021 to discuss the observations concerning risk and will be reporting to the chief executives’ oversight group on recommended focus areas for review and improvements.

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

Local impacts and local board views

54.     The 10-year Budget 2021-2031 and the top risks impact local boards indirectly as they represent impacts to Auckland Council.

Tauākī whakaaweawe Māori

Māori impact statement

55.     The delivery of Māori outcomes is a key strategic priority for Auckland Council. A summary of this top risk is in Attachment A page 10.

 

56.     The risk of not achieving Māori Outcomes was elevated to the top risk register in August 2020 following COVID-19 events and the potential impacts on Māori as a vulnerable community.  It has been reassessed as part of the top risk reset. The risk has been defined in three related parts - the risk of:

·    not delivering on our commitments to man whenua, iwi, mataawaka, Māori communities and customers

·    not honouring te Tiriti o Waitangi principles and not maintaining council’s treaty-based partnerships with Māori

·    Māori reporting distrust and no confidence in council.

57.     Risk mitigations are in place and operating, but further improvements to, and embedding of the design and operating effectiveness of controls are ongoing. Process and control improvement plans are being developed with the risk lead.

Ngā ritenga ā-pūtea

Financial implications

58.     There are no financial costs associated with the committee receiving this report on enterprise risk management activities for the period February-April 2021.  Financial management continues to be a top risk for the enterprise and the drivers and impacts continue to be closely monitored.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

59.     The top risks and mitigations are discussed in the body of this report.

60.     The Risk and Assurance department regularly review the external and internal environment to identify emerging or heightening of risks.

Ngā koringa ā-muri

Next steps

61.     The Risk and Assurance department will work with the executive sponsors to assess the remaining top risks. A summary of the top risk review process and next steps is shown in Attachment A, page 12.

62.     The top risks will be reviewed by the ELT in July 2021 and reported to the Audit and Risk Committee in September 2021.

63.     The top risks and the controls and actions will be recorded in Opal3 for monitoring and reporting.

64.     The integration of risk management into business processes is central to improving the risk maturity of council.  The diagram in Attachment A, page 3 shows how we ensure alignment and integration of top risks and process.

 


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Auckland Council Top Risks Summary May 2021

39

Ngā kaihaina

Signatories

Authors

Emma Mosely - Strategic Lead Risk and Assurance

Andre de Wet - Senior Risk Advisor

Ann Brown - Senior Risk Advisor

Matthew Kerly - Risk Advisor

Authorisers

Mark Maloney - General Manager Risk and Assurance

Phil Wilson – Director, Governance and CCO Partnerships

 


Audit and Risk Committee

18 May 2021

 

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Audit and Risk Committee

18 May 2021

 

Audit Management Report on the Audit of the Long-Term Plan Consultation Document 2021-2031

File No.: CP2021/05230

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       This report summarises the matters identified by the Office of the Auditor-General (the OAG) during the recent audit of the 10-year Budget 2021-2031 (our long-term plan or LTP) Consultation Document (the consultation document or CD) and outlines how Auckland Council is addressing the matters raised.

Whakarāpopototanga matua

Executive summary

2.       The OAG issued an unmodified audit opinion on the consultation document on 18 February 2021.

3.       They have issued a management report that summarises the matters identified during the audit that should be addressed by council prior to the adoption of the 10-year Budget.

4.       The key matters reported are

·    the need to reassess all assumptions

·    improvements to the Infrastructure Strategy and Asset Management Plans

·    considering how the LTP might incorporate meaningful, and measurable climate change performance information

·    reassessing the reasonableness of the ‘doability’ of the council group capital work programme, based on updated information at the time of preparing the final LTP and consider whether assumptions and delivery forecasts remain appropriate

·    consider whether the performance framework includes sufficient measures to enable its performance to be assessed in response to the key issues that Auckland faces, and whether any additional performance measures and targets need to be included in the LTP.

5.       We agree with the recommendations made and have provided a response outlining actions being taken to address each matter raised. These responses are contained in the relevant parts of the management report (Attachment A).

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the matters identified by the Office of the Auditor-General and the council’s responses to the matters raised in the audit for the 10-year Budget 2021-2031 Consultation Document.

Horopaki

Context

6.       This report summarises the matters identified by the OAG during their audit, that should be addressed by council prior to the adoption of the 10-year Budget 2021-2031, and it outlines how the council is addressing the matters raised.

Tātaritanga me ngā tohutohu

Analysis and advice

7.       The OAG issued an unmodified audit opinion on the consultation document on 18 February 2021. This meant they were satisfied the consultation document met the statutory purpose, as set out in the Local Government Act 2002, and provided an effective basis for public participation in the council’s decisions about the proposed content of the 10-year Budget 2021-2031. In other words, they considered it was fit for purpose.

8.       They found the underlying information and assumptions used to prepare the consultation document provided a reasonable and supportable basis for the preparation of the LTP.

9.       In forming their opinion, they included ‘emphasis of matter paragraphs’ in the audit report highlighting the uncertainties relating to significant assumptions. The emphasis of matter paragraphs draws the reader’s attention to the disclosures made in relation to the relevant significant assumptions. The assumptions that they considered significant due to their potential impact on the financial forecasts and their uncertainty include:

·    uncertainty over three waters reforms

·    uncertainty over forecast funding

·    uncertainty over the ownership of City Rail Link assets.

10.     The OAG also issued a report with recommendations on how the council can enhance and improve our processes for current and future planning.

11.     They have commented in their report that Auckland Council had planned the CD project well, noting that the council worked well with them to ensure that they were able to review key documents and processes as early as possible and met with them throughout the process.

12.     They have reported that the council’s control environment was effective for the purpose of preparing the CD and the underlying information.

13.     Auckland Council staff agree with the recommendations made and have provided a response outlining actions being taken to address each matter raised. These responses are contained in the relevant parts of the management report (Attachment A).

14.     The recommendations can be summarised as:

·    the need to refresh the financial forecasts with the council-controlled organisations CCOs as part of the final LTP process

·    the need to reassess all assumptions when preparing the final LTP forecasts

·    while the financial strategy is prudent, and based on reasonable assumptions, the council’s financial strategy currently incorporates a delay in fully funding depreciation until 2028. As such, prior to the adoption of the LTP, the council will need to assess its balanced budget test and may need to pass a resolution to not balance the budget and include a statement in the long‑term plan explaining the council’s reasons for that resolution. Section 100 (2) of the Local Government Act outlines the matters elected members need to consider when making an unbalanced budget resolution.

·    improvements to the Infrastructure Strategy including:

continuing to develop the group investment prioritisation framework

updating the infrastructure strategy prior to the adoption of the LTP including reflecting the Auckland Transport Alignment Project (ATAP) work

improving the readability and clarity of the infrastructure strategy by summarising key information at the beginning of the strategy from each portfolio.

 

·    improvements to asset management planning including:

updating asset management plans before the final LTP is adopted to ensure they reflect and align with decisions made by the council. This includes updates to both financial and non-financial information that support the infrastructure strategy and the final LTP

carrying out a ‘lessons learned’ exercise after this LTP in preparation for the next LTP. This should include input from the CCOs

documenting areas for improvement within asset management policies and practices

reviewing the group’s asset management approach to the combined stormwater assets managed by Auckland Transport and Healthy Waters.

·    consideration of how the LTP might incorporate meaningful, and measurable climate change performance information

·    for the changes in the delivery of community assets which have been flagged for the future, ensuring that the council complies with the Local Government Act 2002 consultation requirements if levels of service are changed significantly

·    reassessing the reasonableness of the ‘doability’ of the council group capital work programme, based on updated information at the time of preparing the final LTP and consider whether assumptions and delivery forecasts remain appropriate

·    updating the financial forecast for derivatives financial instruments prior to the adoption of the final LTP.

·    consideration of whether the performance framework includes sufficient measures to enable its performance to be assessed in response to the key issues that Auckland faces, and whether any additional performance measures and targets need to be included in the LTP.

Tauākī whakaaweawe āhuarangi

Climate impact statement

15.     The impact of climate change and the council’s proposed response is a key matter in the 10-year Budget 2021-2031. The strategic lenses workstream ensured that climate impacts were considered across all components of the 10-year budget.  

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

16.     The 10-year Budget 2021-2031 is prepared on a full group basis.

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

Local impacts and local board views

17.     The 10-year Budget 2021-2031 includes the Auckland Council group’s planning and reporting at a local board level. Local boards have the opportunity to recommend any local matters to the Governing Body to consider in the 10-year budget process as well as on the proposed regional topics following the consideration of public feedback and local board work programme prioritisation.

Tauākī whakaaweawe Māori

Māori impact statement

18.     The 10-year Budget 2021-2031 includes the Auckland Council group’s contributions towards Māori outcomes. The strategic lenses workstream ensured that Māori outcomes were considered across all components of the 10-year budget.

Ngā ritenga ā-pūtea

Financial implications

19.     The 10-year Budget 2021-2031 includes the Auckland Council group’s financial forecasts. This report does not specifically affect its achievement or reporting.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

20.     Key risks and mitigations associated with the 10-year Budget process and the preparation of the consultation document and supporting information were reported to this committee on 9 February 2021.

Ngā koringa ā-muri

Next steps

21.     The 10-year Budget 2021-2031 will be reviewed by this Committee on 22 June. It will be adopted by the Governing Body on 29 June 2021.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Management report

57

     

Ngā kaihaina

Signatories

Authors

Mark Maloney - General Manager Risk and Assurance

Ross Tucker - General Manager, Financial Strategy and Planning

Michael Burns - Manager Financial Strategy

Authorisers

Peter Gudsell - Group Chief Financial Officer

Phil Wilson – Director, Governance and CCO Partnerships

 


Audit and Risk Committee

18 May 2021

 

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Audit and Risk Committee

18 May 2021

 

City Rail Link six-monthly risk update (Covering report)

File No.: CP2021/06033

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide an update on risk management activity in relation to the City Rail Link programme.

Whakarāpopototanga matua

Executive summary

2.       This is a late covering report for the above item. The comprehensive agenda report was not available when the agenda went to print and will be provided prior to the 18 May 2021 Audit and Risk Committee meeting.

Ngā tūtohunga

Recommendation/s

The recommendations will be provided in the comprehensive agenda report.


Audit and Risk Committee

18 May 2021

 

Assurance process for the 2021 Green Bond Annual Report

File No.: CP2021/05431

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide the Audit and Risk Committee with details of Auckland Council’s assurance process for the 2021 Green Bond Annual Report.

Whakarāpopototanga matua

Executive summary

2.       A green bond is defined as a bond issued to finance or refinance projects or assets that deliver positive environmental outcomes.

3.       Auckland Council established a Green Bond Framework in early 2018 and first issued green bonds in June 2018. The Green Bond Framework was replaced with the Sustainable Finance Framework (the framework) sets out how the council issues and manages its green bond programme.

4.       Under the framework, the council is required to report annually on the use of proceeds from green bond issuance and the environmental outcomes delivered and seek assurance from an independent assurer.

5.       The council has again appointed EY to provide independent assurance for the 2021 Green Bond Annual Report (2021 report). EY has provided independent assurance for the green bond annual reports since 2019.

6.       This committee report details the assurance process to be followed in the preparation and finalisation of the 2021 report.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note that EY has been appointed as independent assurer for Auckland Council’s 2021 Green Bond Annual Report

b)      note the assurance process that EY will follow in relation to this report

c)      note that the draft 2021 Green Bond Annual Report will be presented to the Audit and Risk Committee for approval in September 2021, before it is published.

 

Horopaki

Context

7.       A green bond is defined as a bond issued to finance or refinance projects or assets that deliver positive environmental outcomes. Auckland Council established a Green Bond Framework in early 2018 and first issued green bonds in June 2018. The Green Bond Framework was replaced with the Sustainable Finance Framework (the framework) in September 2020 (Attachment A).

8.       The framework sets out how the council issues and manages its green bond programme. It addresses how the proceeds from the bond will be used, the process of evaluation and selection of projects and assets (eligible assets), the process for managing the proceeds from the bond, and reporting.

 

9.       Examples of projects and assets that can be funded via green bonds are:

·        low carbon transport assets (i.e. electric trains, public walking and cycling infrastructure)

·        sustainable water and wastewater management

·        waste management

·        low carbon and efficient buildings.

10.     To ensure robust assessment of the framework and the underlying eligible assets in any green bond issuance, the council may seek to employ one or more external review options. These include the option to seek assurance from an independent assurer and/or certification from the Climate Bonds Initiative or Climate Bond Standard

11.     Under the framework, the council is required to report annually on the use of proceeds and provide a summary of the environmental outcomes that have been delivered by the assets and/or projects.

12.     Since the establishment of the framework, the council has issued green bonds in June 2018, July 2019 and September 2020. The value of green bonds issued to date is $850 million.

13.     The proceeds from the green bonds have been used to refinance borrowings deemed to be attributed to:

·        electric trains

·        City Rail Link

·        public cycleway assets

·        green buildings

·        public transport

·        wastewater assets.

14.     The 2020 Green Bond Annual Report was published in September 2020 (Attachment B).

Tātaritanga me ngā tohutohu

Analysis and advice

15.     Last year the council increased the green bond eligible asset pool to over $2 billion. It now includes assets that qualify under Green Bond Principles and Climate Bonds Initiative such as water and wastewater assets, office buildings and public transport assets (i.e. City Rail Link).

16.     EY has been engaged to provide limited assurance on whether the green bonds issued by the council continue to meet the requirements of the Climate Bonds Standard and Green Bond Principles and relevant criteria in all material respects.

17.     The limited assurance report will cover the scope and procedures, limitations of EY’s work and their conclusion.

18.     EY’s assurance approach will be conducted in accordance with the International Standard on Assurance Engagements (New Zealand) 3000: Assurance Engagements Other than Audits or Reviews of Historical Financial Information (‘ISAE (NZ) 3000’).


 

 

19.     EY’s assurance approach will be conducted within the following timeline:

Milestone/Service

Completion Date

Document request submitted to data owners

21 June 2021

Obtain requested data from data owners

30 July 2021

Stage 1: Planning, Risk Identification & Assessment, and Strategy

9 August 2021

Stage 2: Execution

16 August 2021

Stage 3: Issue Assurance Report

27 August 2021

 

20.     The limited assurance report provided by EY will be appended to the council’s 2021 Green Bond Annual Report.

21.     The council will also seek assurance from Toitū Envirocare to review the impact assessment information disclosed in the 2021 report.

22.     The council’s Treasury department and Chief Sustainability Office will work with asset owners across the organisation to obtain the relevant information and measures to complete the 2021 report.

The 2021 report is expected to follow the same format used in the 2020 report, with advice from EY on best practice principles to make further improvements to the report.

23.     The draft 2021 report will be presented to the Audit and Risk Committee for approval in September 2021, before it is published.

Tauākī whakaaweawe āhuarangi

Climate impact statement

24.     The 2021 Green Bond Annual Report will enhance the council’s transparency around funding for climate-related activities and the associated climate outcomes. The report will include an impact assessment, disclosing relevant information pertaining to the climate and other benefits of the green bonds issued in the years prior.

25.     The impact assessment will provide measurement of the impact on greenhouse gas emissions and any broader co-benefits, where applicable. The disclosure of this data will be assured by EY as part of their review process.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

26.     The 2021 report has no direct impact on the council group. Auckland Council operates a centralised treasury service on behalf of the group (excluding Ports of Auckland Limited).

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

Local impacts and local board views

27.     Green bonds are managed at a group level and have no additional impact on local boards.

Tauākī whakaaweawe Māori

Māori impact statement

28.     Green bonds are a type of borrowings and investment which enables the council to carry out its activities, including those focused on Māori outcomes.

Ngā ritenga ā-pūtea

Financial implications

29.     The assurance costs and cost of publishing the 2021 report will range from $15,000 to $20,000. These costs will be met within the interest cost budget.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

30.     The EY assurance report is confirmation that council is complying with its obligation under the Sustainable Finance Framework and bond issuance documentation.

Ngā koringa ā-muri

Next steps

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Sustainable Finance Framework 2020

85

b

2020 Green Bond Annual Report

93

     

Ngā kaihaina

Signatories

Authors

Andrew John - Treasury Funding Manager

Helen Mahoney – Sustainability and Resilience Advisor

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson – Director, Governance and CCO Partnerships

 


Audit and Risk Committee

18 May 2021

 

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Audit and Risk Committee

18 May 2021

 

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Audit and Risk Committee

18 May 2021

 

The Auditor-General's report to management for the six months ended 31 December 2020

File No.: CP2021/04493

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To summarise the matters identified by Audit New Zealand on behalf of the Deputy Auditor-General during the review engagement for the six months ended 31 December 2020 and outline how Auckland Council is addressing the matters.

Whakarāpopototanga matua

Executive summary

2.       The Deputy Auditor-General is Auckland Council and the Auckland Council Group’s external auditor, appointed by the Auditor-General to conduct the review engagement on his behalf. He uses his staff and his appointed auditor’s staff (Audit New Zealand) to review the statutory financial and performance reporting, and the internal controls on which it is reliant.

3.       On a semi-annual basis, the Deputy Auditor-General provides a report to management which outlines areas in which internal controls and disclosures can be improved. The report issued, following completion of the 31 December 2020 review engagement of the group’s interim report, is attached (Attachment A).

4.       The key recommendation was to continue to consider capital project costs related to COVID-19 on a case-by-case basis.

5.       Management accepts the recommendation and has provided a response outlining the action being taken to address it.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the matters identified in the Deputy Auditor-General’s review engagement report to management, for the six months ended 31 December 2020, and management’s responses.

 

Horopaki

Context

6.       This report summarises the matters identified by Audit New Zealand and the Deputy Auditor-General during their review engagement for the six months ended 31 December 2020 and outlines how management is addressing those matters.

Tātaritanga me ngā tohutohu

Analysis and advice

7.       Audit New Zealand and the Deputy Auditor-General, on behalf of the Auditor-General, conducted a review of the 31 December 2020 Auckland Council Group interim report. A review engagement provides a moderate level of negative assurance in which the auditor states that nothing has come to his attention that causes him to believe that the interim report does not fairly reflect the Auckland Council Group’s financial position, performance and cash flows for the six-month period. This level of assurance is at a lower level than that of an audit.

8.       Following the review engagement, the Deputy Auditor-General issued a report to management outlining internal control and disclosure matters identified during the engagement.

9.       The report confirms that the review went smoothly with the timely delivery of the information and effective communication.

10.     The report includes two uncorrected financial misstatements:

·   Hedge accounting. This misstatement first arose in the 2013/2014 financial year. It relates to the release of hedge accounting balances which should have been amortised. The misstatement will continue to arise until the amortisation period has come to an end, in approximately nine years time. Management does not consider this misstatement to be material to the financial report and accordingly, has not corrected it.

·   Lockdown construction costs incurred during COVID-19 alert level 4 for the financial year ended 30 June 2020. The group capitalised costs of $16 million related to extension of time claims issued as a result of the Level 4 lockdown. Audit New Zealand is of the opinion that these costs are not capital in nature. This error will be carried forward until the costs included within work in progress are transferred to completed assets.

11.     There was one recommendation in the report: Accounting treatment of COVID-19 costs – COVID-19 related costs should continue to be considered on a case-by-case basis.

12.     Management responded that council and the council group will continue to consider these costs on a case-by-case basis.

Tauākī whakaaweawe āhuarangi

Climate impact statement

13.     There are no items covered in this report that impact on climate change.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

14.     The Auditor-General recommended that all entities in the group consider COVID-19-related project costs on a case-by-case basis. This has been communicated to the finance teams of all group entities.

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

Local impacts and local board views

15.     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

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

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

18.     Auckland Council is actively addressing the issues raised. We have assessed that the matters will not impact on the audit opinion of the Auckland Council Group’s 2020/2021 annual report.

Ngā koringa ā-muri

Next steps

19.     Auckland Council will ensure that processes remain in place to address the matters raised in the report to management.

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Review engagement management report 31 December 2020

123

     

Ngā kaihaina

Signatories

Authors

Tracy Gers - Group Accounting & Reporting Manager

Maria Marin Godoy - Financial Accounting Manager

Francis Caetano - Group Financial Controller

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson – Director, Governance and CCO Partnerships

 


Audit and Risk Committee

18 May 2021

 

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Audit and Risk Committee

18 May 2021

 

Auckland Council Group's 30 June 2021 year end reporting and audit considerations

File No.: CP2021/04664

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide the Audit and Risk Committee with details of key aspects of the Auckland Council Group’s year end reporting and audit requirements.

2.       To provide the Audit and Risk Committee with information to enable the approval of new accounting policies and key judgements applied in the preparation of the annual report and summary annual report.

3.       To provide the committee with assurance over controls applied to ensure the year end reporting including the preliminary NZX release, annual report and summary annual report (annual reports) will contain valid, accurate and complete information.

Whakarāpopototanga matua

Executive summary

4.       The Audit and Risk Committee’s terms of reference (delegations) assign responsibility to the committee to review and monitor the integrity of the Auckland Council Group’s interim and annual reports. This includes statutory statements and any other formal announcements relating to the group’s financial performance.

5.       As part of executing this responsibility, the committee will recommend:

·   at the 23 August 2021 Audit and Risk Committee meeting, the chair and deputy chair of the Finance and Performance Committee recommend the mayor and chief executive to sign and release the council group’s preliminary announcement to the NZX

·   at the 13 September 2021 Audit and Risk Committee meeting, the annual reports for adoption by the Governing Body at its 27 September 2021 meeting.

6.       This open report provides the committee with information and insights into the preparation processes for these documents including:

·   reporting requirements

·   accounting policies adopted during the 2020/2021 financial year

·   financial year end process

·   management representation letter process

·   the committee’s oversight of the management of fraud.

7.       To encourage transparency in our committee reporting we have endeavored to discuss as much information as possible about the year-end reporting and audit requirements in this report. However, there is some information which cannot be released to the public due to disclosure requirements of the NZX. Instead, it will be presented in the confidential item on today’s committee agenda titled “CONFIDENTIAL: Auckland Council Group’s 30 June 2021 year end reporting and audit considerations”.

8.       The confidential report will provide additional insights into the preparation processes for these documents, as well as critical reporting matters and audit requirements, including:

·   the effect of changes in accounting policies on the financial statements

·   key judgements and assumptions applied in the preparation of financial reporting including:

o information on the accounting policies adopted during the 2020/2021 financial year and their effect on the financial statements

o reporting requirements

·   an outline of the impact of the COVID-19 pandemic on judgements, assumptions and disclosures within the annual reports

·   draft management representation letters as attachments

·   Audit New Zealand’s key audit matters

·   Pro forma financial statements for the year ending 30 June 2021.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the year end reporting matters information in this report and use it to supplement the information in the confidential item “CONFIDENTIAL: Auckland Council Group’s 30 June 2021 year end reporting and audit considerations”.

Horopaki

Context

Reporting requirements

9.       The Auckland Council Group has complex financial reporting requirements due to it being an issuer of debt on the New Zealand (NZX), Singapore (SGX) and Swiss (SIX) exchanges, and a local government entity.

10.     The preliminary NZX release and annual reports (year-end reporting) are based on consolidated information obtained from Auckland Council, council-controlled organisations, Ports of Auckland Limited and City Rail Link Limited’s reporting packs. Reporting packs are supported by assurances obtained in representation letters.

11.     In accordance with the NZX listing rules, the Financial Control team prepares the preliminary NZX release for lodgement within 60 days of financial year end. In addition, in conjunction with the Corporate Performance Reporting team, it prepares the annual report and summary annual report within 3 months of financial year end.

12.     The SGX has limited reporting requirements, requiring the council to provide its annual report at the same time as it is released to the NZX.

13.     The SIX requires the council to provide a URL (web address) to its annual report within four months of year end.

14.     In addition to New Zealand reporting requirements, the SIX and SGX require reporting of differences between our financial reporting framework and International Financial Reporting Standards.

15.     Further information on reporting requirements will be discussed in the confidential item “CONFIDENTIAL: Auckland Council Group’s 30 June 2021 year end reporting and audit considerations”.

Auditor responsibilities

16.     Audit New Zealand, on behalf of the Auditor-General as Auckland Council and Auckland Council Group’s auditor, issues an opinion on the group’s annual report and summary annual report.

17.     Audit New Zealand will attend the Audit and Risk Committee meeting on 13 September 2021 to enable the committee to liaise with Audit New Zealand to ensure that a robust financial audit of the group has occurred.

Committee responsibilities

18.     The Audit and Risk Committee reviews the quality of the year end reporting, the processes used to prepare the documents, and the judgements and assumptions applied to transactions, balances and disclosures.

19.     The Finance and Performance Committee review and enquire into the financial and operational performance of the group.

20.     In fulfilment of its terms of reference the Audit and Risk Committee endorse the year end reporting and recommend to the chair and deputy chair of the Finance and Performance Committee that they recommend the mayor and chief executive approve and release the year end reporting.

Tātaritanga me ngā tohutohu

Analysis and advice

21.     The accounting policies applied in the pro forma financial statements are consistent with those used at 30 June 2020 except for:

·   the early adoption of Public Benefit Entity, International Public Sector Accounting Standards 40 (PBE IPSAS 40) PBE Combinations

·   change in the allowable period between revaluations of property, plant and equipment.

22.     Both of these matters were included in the Interim Report 31 December 2020 and were approved by the committee in advance.

23.     The adoption of these new standards has not resulted in any material changes to the financial statements. However, it may affect future financial statements e.g. the planned revaluations of rolling stock and water infrastructure assets have also been deferred.

Financial reporting year end processes

24.     The group’s annual report and summary annual report are produced for the year ending 30 June 2021. The annual report includes:

·   volume one: overview and service performance

·   volume two: local boards (comprising 21 local board reports)

·   volume three: financial statements

·   volume four: climate change risk.

25.     The process to finalise the NZX preliminary announcement, annual report and summary annual report includes the following stages.

Auckland Council Group’s financial statement consolidation

26.     Auckland Council and CCO reporting packs, with auditor sign-off, are provided to the Financial Control department on 29 July 2021.

27.     The group consolidation process is completed by the Financial Control team, and the consolidation workbook and information are provided to Audit New Zealand.

28.     The consolidation forms the basis for the NZX preliminary announcement, volume three of the annual report (financial statements) and the summary annual report.


 

NZX preliminary announcement

29.     The preparatory steps for the NZX preliminary announcement are:

·   The pro forma NZX preliminary announcement (‘announcement’) which is prepared in consultation with the group chief financial officer and the Media Relations team.

·   The council’s Legal Services department, in conjunction with Mayne Wetherell, reviews the announcement and provides feedback.

30.     The internal clearance process is as follows:

·   The Legal Services department provides sign-off that the announcement complies with the NZX rules.

·   The group financial controller, group treasurer, and general manager financial strategy and planning, review and sign off the NZX preliminary announcement and media release.

·   The group financial controller and group treasurer then meet with the group chief financial officer to sign off the NZX documents, as well as documents to be provided to the mayor and chief executive to support their sign-off. Drafts, based on the prior year, are included in the confidential report under paragraph 58 as confidential attachments B-D.

31.     Final approvals:

·   On 23 August 2021, the Audit and Risk Committee will review and sign-off the NZX preliminary announcement and media release. Audit New Zealand will provide a verbal clearance at that meeting.

·   The chair and deputy chair of the Finance and Performance Committee (under delegated authority by the Financial and Performance Committee meeting in December 2019) then recommend that the mayor and chief executive sign-off the NZX preliminary announcement and media release.

·   The mayor and chief executive sign-off the NZX preliminary announcement and media release.

32.     The NZX preliminary announcement and media release are made public within 60 days of year end.

33.     The following diagram outlines the process to prepare the preliminary NZX release:

Annual report and summary annual report preparation process

34.     Volumes 1 and 2 of the annual report and the summary annual report are prepared by the council’s Corporate Performance and Reporting and Financial Control teams.

35.     Volume 3 of the annual report is prepared by the Financial Control team.

36.     Volume 4 of the annual report is prepared by the Financial Control team and the Chief Sustainability Office.

37.     The annual report and summary annual report (annual reports) follow a sign-off process, as follows:

·   The group financial controller, group treasurer and group chief financial officer review and sign off the annual reports.

·   Mayne Wetherell and the council’s Legal Services team review the annual reports for compliance with legislation and the appropriateness of disclosure of legal matters such as legal contingencies and provide a confirmation of legal compliance.

·   On 13 September 2021, an Audit and Risk Committee meeting is held for the committee to recommend the annual reports to the Governing Body for adoption.

·   On 16 September 2021, the Finance and Performance Committee meeting is held to review the financial performance of the group and recommend the annual reports to the Governing Body.

·   On 27 September 2021, the Governing Body approves the annual reports.

·   On 28 September 2021, Audit New Zealand issues their Independent Auditors’ Report, and the annual reports, accompanied by a media release, are made public via the NZX and the Auckland Council website.

38.     The following diagram outlines the process for annual report and summary annual report release:

 

Quality assurance and compliance approvals

39.     Quality assurance reviews are performed on the consolidated results and commentary and the year-end reporting. The reviews focus on accuracy, completeness and reasonableness of disclosures, legislative compliance and adherence to Auckland Council communications standards. A summary of the reviews is as follows:

Reviewer

Consolidated results and commentary

Media release

Preliminary NZX release

Annual report and summary report

Group chief financial officer

ü

ü

ü

ü

Group treasurer

ü

ü

ü

ü

General manager financial strategy and planning

ü

ü

ü

ü

Group financial controller

ü

ü

ü

ü

Manager corporate and local board performance

ü

ü

ü

ü

Manager group accounting and reporting

ü

ü

ü

ü

Manager financial strategy

 

ü

ü

ü

Senior group reporting technical accountant

ü

ü

ü

ü

Financial accounting manager

ü

 

 

ü

Senior specialist corporate communications

 

ü

 

 

Legal services

 

 

ü

ü

Mayne Wetherell

 

 

ü

ü

40.     All the technical quality assurance reviewers performing reviews from a financial perspective are qualified Chartered Accountants or have equivalent qualifications and have the appropriate technical accounting skills and knowledge.

41.     Trust lens reviews are performed on the annual reports to ensure that we are telling a fair and balanced story, that good news stories are truthful and accurate, and the poor performance stories are honest and transparent. They review the overall story for consistency through all volumes.

Management representation letters and management confirmations

42.     Audit New Zealand will require the mayor and chief executive to sign a letter providing assurance that the control environment adequately supports the validity, accuracy and completeness of financial reporting, and that the financial statements comply with applicable standards and regulations. A draft, based on last year’s letter, is attached to the confidential report as Attachment G.

43.     To support the mayor and the chief executive’s representations, the group chief financial officer, group treasurer and the group financial controller will sign back-to-back representation letters to the mayor and chief executive. Drafts, based on last year’s letters, are attached to the confidential report. Attachment D is for the preliminary release and Attachment F is for the annual report release.

CCO representation letters

44.     On a semi-annual basis the Financial Control team obtains representation letters from management of the key council-controlled organisations, Ports of Auckland Limited and City Rail Link Limited. These letters provide assurance over the financial information, including assurance that the financial information:

·   complies with generally accepted accounting practices, including the New Zealand Public Benefit Entity International Public-Sector Accounting Standards

·   fairly reflects the financial position as at 30 June 2021, financial performance and cash flows for the year ended 30 June 2021.

45.     Representation letters are obtained in short and long form.

·   Short form representation letters are received at the same time as group reporting packs and are signed by the relevant organisation’s chief financial officer. They contain summarised representations.

·   Long form representation letters are received closer to finalisation of the preliminary NZX release and are signed by the chairs of the board/audit committee and/or chief executive officers. They contain detailed representations including a summary of uncorrected misstatements.

Other matters

46.     During the year end process, should any significant risks or material judgements arise, or if there are unresolved significant disagreements between Auckland Council management and Audit New Zealand, the group financial controller will communicate these to the chair between committee meetings.

Draft representation on fraud and fraud questionnaire

47.     Audit New Zealand make formal enquiries of the Audit and Risk Committee, senior management and the Risk and Assurance department of Auckland Council in relation to fraud using a fraud questionnaire. The questionnaire covers risk assessment, monitoring controls, mitigating systems and controls, risk communication and the assessment of fraud risk.

48.     The committee formally respond to these enquiries in writing. The representations made are supported by questionnaires completed by senior management and the Risk and Assurance department.

49.     The questionnaire has not changed from prior years and will be presented in draft to the committee at the 23 August 2021 committee meeting.

Tauākī whakaaweawe āhuarangi

Climate impact statement

50.     This report relates to a financial reporting process and disclosures only and as such has no climate implications. Information relating to the Auckland Council Group’s climate impact and climate change initiatives will be included in the annual report and summary annual report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

51.     Feedback will be sought from substantive council-controlled organisations, Ports of Auckland Limited and City Rail Link Limited to ensure that any matters that apply to them have been considered in preparation for the annual report and summary annual report. All matters have been incorporated into the work plan.

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

Local impacts and local board views

52.     Local boards will assist in the preparation of the local board content in Volume 2 of the annual report and will review their performance information for accuracy and validity.

Tauākī whakaaweawe Māori

Māori impact statement

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

Ngā ritenga ā-pūtea

Financial implications

54.     There are no financial implications directly arising from the information contained in the report as no financial decision is sought.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

55.     Risks and mitigations relating to the year-end reporting and audit requirements are discussed in the confidential item “CONFIDENTIAL: Auckland Council Group’s 30 June 2021 year end reporting and audit considerations”

Ngā koringa ā-muri

Next steps

56.     The committee will review the confidential key judgements, estimates and assumptions and attachments relating to this report in the confidential section of this meeting under the report “CONFIDENTIAL: Auckland Council Group’s 30 June 2021 year end reporting and audit considerations”.


 

57.     The following diagram summarises the steps towards finalisation of the annual reports:

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Authors

Tracy Gers - Group Accounting & Reporting Manager

Maria Marin Godoy - Financial Accounting Manager

Francis Caetano - Group Financial Controller

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson – Director, Governance and CCO Partnerships

 


Audit and Risk Committee

18 May 2021

 

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       CONFIDENTIAL: Council-controlled organisations' quarterly risk update - May 2021

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.

In particular, the report contains risk reporting and detailed top risks confidential to the
council-controlled organisations' Boards or Audit and Risk Committees. The council-controlled organisations have provided their risk repors for the council's Audit and Risk
Committee 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       CONFIDENTIAL: Insurance Report

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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 costs are being sought 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.

 

C3       CONFIDENTIAL: Legal Risk 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)(g) - The withholding of the information is necessary to maintain legal professional privilege.

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

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

In particular, the report contains legally privileged and commercially sensitive information.

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       CONFIDENTIAL: Auckland Council Group's 30 June 2021 year end reporting and audit considerations

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 may not be released to the public before it is released on the NZX.

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       CONFIDENTIAL: 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)(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 regarding the financial results of the Auckland Council Group which cannot be made public until it is released to the NZX.

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.