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

 

Date:

Time:

Meeting Room:

Venue:

 

Monday, 23 August 2021

2.00pm

This meeting will be held remotely and a recording of the meeting will be available on the Auckland Council website:

https://www.aucklandcouncil.govt.nz/about-auckland-council/how-auckland-council-works/meetings-council-bodies/Pages/webcasts-council-meetings.aspx

 

 

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

 

17 August 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.

 

 

 

Code of conduct

 

For information relating to Auckland Council’s elected members code of conduct, please refer to this link on the Auckland Council website - https://www.aucklandcouncil.govt.nz/about-auckland-council/how-auckland-council-works/elected-members-remuneration-declarations-interest/Pages/elected-members-code-conduct.aspx

 


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

23 August 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

5.1     Report on investigation into certain complaints re West Park Marina               9

6          Local Board Input                                               10

7          Extraordinary Business                                     10

8          Forward Work Programme                                11

9          Treaty Audit Monitoring Update                        17

10        City Rail Link regular risk and assurance update                                                                  23

11        The Auditor-General's report to management on the interim audit for the year ended 30 June 2021                                                                      31

12        Audit Management Report on the Audit of the Long-term Plan 2021-2031                                 55

13        Assurance Strategy 2019-22, Assurance Plan 2021-22 and Assurance Charter                        75

14        Auckland Council Group's NZX preliminary announcement and financial results to 30 June 2021                                                                      95

15        Consideration of Extraordinary Items

PUBLIC EXCLUDED

16        Procedural Motion to Exclude the Public                         101

C1       CONFIDENTIAL: Council-controlled organisations' quarterly risk update - August 2021                                                                    101

C2       CONFIDENTIAL: Council Group Post Insurance Renewal Update                              101

C3       CONFIDENTIAL: Assurance Services Activity Update                                                                102

C4       CONFIDENTIAL: Auckland Council Group's NZX preliminary announcement and financial results to 30 June 2021                                    102

C5       CONFIDENTIAL: Office of the Auditor-General and Audit New Zealand Briefing                     102


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 Tuesday, 18 May 2021 and the extraordinary minutes of its meeting, held on Tuesday, 22 June 2021, including the confidential sections, as true and correct records.

 

 

4          Petitions

 

At the close of the agenda no requests to present petitions had been received.

 

 

5          Public Input

 

Standing Order 7.7 provides for Public Input.  Applications to speak must be made to the Governance Advisor, in writing, no later than one (1) clear working day prior to the meeting and must include the subject matter.  The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.  A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

 

 

5.1       Report on investigation into certain complaints re West Park Marina

Te take mō te pūrongo

Purpose of the report

1.       Richard Steel, on behalf Auckland Marina Users Association Inc and June Kearney, on behalf of West Harbour Residents Group will address the committee on the investigation into certain complaints re West Park Marina.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      thank Richard Steel and June Kearney for their presentation.

 

 


 

 

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

23 August 2021

 

Forward Work Programme

File No.: CP2021/11501

 

  

 

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.       The following items have been added to today’s meeting:

·    The OAG management report on the 2021-2031 Long Term Plan

·    Workshop items on Project and Programme Benefits Management, and assessment of future Options for Insurance Arrangements

4.       The timing of the following items in the work programme have been changed:

·    The City Rail Link update report, which was deferred from the May 2021 meeting has been tabled at today’s meeting

·    The first full reporting from Ports of Auckland Limited will occur at the September 2021 meeting

·    The Health, Safety and Wellbeing (HSW) report is being deferred to the September 2021 meeting

·    The workshop scheduled for the August meeting on Climate Change has been moved to the September 2021 meeting.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee approve the forward work programme noting:

a)      the addition to the August 2021 meeting of items relating to the OAG management report on the 2021-2031 Long Term Plan and the City Rail Link update

b)      the deferral to the September 2021 meeting of the Health, Safety and Wellbeing (HSW) update

c)       that the first full reporting from Ports of Auckland Limited will commence in September 2021

d)        workshop items on Project and Programme benefit management, and the assessment of future Options for Insurance Arrangements have been included in August 2021

e)      the workshop item on Climate Change has been moved to September 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 & CCO Partnerships

 


 

 

 

 

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

Link to decision

 

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

Link to decision

 

 

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

Link to decision - confidential

 

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, Ports of Auckland

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 – this item was withdrawn and will be presented on 23 August 2021

 

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

Link to decision

Auckland Council Hauora / Wellbeing Review

Link to decision

 

Health, safety and wellbeing update

 

Health, safety and wellbeing update

Legal Risk

General Counsel

 

Legal Risk report

Link to decision - confidential

 

 

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

Link to decision - confidential

 

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

Link to decision

 

 

 

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)

Link to decision

Link to decision - confidential

 

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.

Link to decision

 

 

. 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 Amendment (draft)/ 2022-2023 Annual Plan (draft)

External Audit

Office of Auditor-General (OAG)

Briefing paper provided

Link to decision - confidential

Briefing paper provided

Link to decision - confidential

 

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

23 August 2021

 

Treaty Audit Monitoring Update

File No.: CP2021/11503

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       This report provides an update on:

·    the ongoing monitoring of the council’s Te Tiriti o Waitangi Audit Response Programme (Treaty Audit Response Programme) to implement the recommendations contained in Te Tiriti o Waitangi Audits (Treaty Audits) of the council

·    the fourth Treaty Audit, which is currently in progress. The Treaty Audits are commissioned by the Independent Māori Statutory Board every three years

·    progress in strengthening the alignment of Maori Responsiveness Plans (MRP’s) to Kia Ora Tāmaki Makaurau with monitoring and reporting frameworks in place aligned to the Integrated Performance Framework. 

Whakarāpopototanga matua

Executive summary

2.       In the past six months four Treaty Audit recommendations have been closed. Of the original 80 recommendations five recommendations remain open. All have project plans in place.

3.       One recommendation (recommendation 10 – Relationship Agreements Framework) will be closed after being presented at the 20 September 2021 hui of the Governing Body and Independent Maori Statutory Board.

4.       The final report resulting from the fourth Treaty Audit will be presented to the 20 September 2021 hui of the Governing Body and Independent Maori Statutory Board.

5.       Council directorates, and council-controlled organisations (CCOs) have been progressing towards having a Māori Responsiveness Plan aligned to Kia Ora Tāmaki Makaurau with a monitoring and reporting framework in place aligned to the Integrated Performance Framework. 

6.       All Council directorates are on track to have aligned MRP’s and monitoring and reporting frameworks in place by 31 October. CCOs are at various stages of progress.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      receive the update on the monitoring and progress of the Treaty Audit Response Programme

b)      note the oversight and monitoring that has been performed by the Risk and Assurance department in relation to the Treaty Audit Response Programme

c)       note that the Risk and Assurance department will continue to report on a six-monthly basis on progress against the Treaty Audit Response Programme to this committee.

 

Horopaki

Context

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

8.       The third treaty audit was completed and received by the Finance and Performance Committee in July 2018, and by the Audit and Risk Committee in September 2018.

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

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

11.     The Treaty Audit Response Programme is the basis for the Risk and Assurance department’s monitoring and reporting to the Audit and Risk Committee.

12.     The fourth Te Tiriti o Waitangi audit is currently in progress.

13.     This monitoring report covers the period from February 2021 to August 2021.

 

Tātaritanga me ngā tohutohu

Analysis and advice

The Waharoa group

14.     The Waharoa group comprises representatives from the Risk and Assurance department, Nga Mātārae and the Independent Māori Statutory Board Secretariat.

15.     The Waharoa group provides oversight of the Treaty Audit Response Programme, including monitoring, guidance and support to action owners and their executives, and agrees closure of recommendations. The Risk and Assurance department provides independent oversight and reporting of progress. 

Te Tiriti Audit Response Programme

16.     In February 2020 we reported that the strengthened process for monitoring the delivery of the work programme had enabled an increase in the rate of closure of audit recommendations. Improved documentation of the work plans to respond to each recommendation and clearer tracking documents have been implemented.

17.     The following four recommendation has been closed in this reporting period:

·    Recommendation 34 and 58B Mana Whenua Participation in Resource Consents

·    Recommendation 31 Contract Management

·    Recommendation 1 Closure Criteria for all Open Recommendations.

18.     All of the five remaining open audit recommendations have approved project plans in place which are being monitored by the Waharoa group.

19.     Recommendation 10 (relationship agreements framework) will be discussed at the 20 September 2021 hui of the Governing Body and Independent Maori Statutory Board and is anticipated to be closed following that discussion.

 

20.     The current status of recommendations is:

 

Audit Year

Total No of Recommendations

Closed September Feb 2021 – Aug 2021

Total Open

Aug 2021

Project Plan Status

 

2012 and 2015

 

67

 

3[1]

 

2[2] (Feb 5)

 

2 monitored

 

2018

 

13

 

1[3]

 

3[4] (Feb 4)

 

3 monitored

Māori Responsiveness Plans (MRP’s)

21.     The implementation of council’s Māori Outcomes Framework represents a step change and strengthening in the mechanism through which MRP initiatives are delivered and reported on. Key MRP initiatives will be reflected in, and delivered through departmental, divisional, and CCO business plans. Reporting on progress on the achievement of Māori Outcomes will occur through regular business plan reporting. This will be overseen and guided by Māori Outcome Leads who are key staff within the divisions of council. Māori Outcome Leads will help ensure that initiatives are aligned to the Māori Outcomes Framework. This mechanism  mitigates the key risks of lack of capability and resource devoted to MRP initiatives, and misalignment with the Māori Outcomes Framework.

22.     The focus of the work performed is to ensure all council directorates, and CCOs have in place a Māori Responsiveness Plan aligned to Kia Ora Tāmaki Makaurau with a monitoring and reporting framework in place aligned to the Integrated Performance Framework. 

23.     At the time of writing this report:

·    council’s Group Services, Regulatory Services and Customer Services directorates have approved MRP’s in place.

·    council’s Governance and Infrastructure and Environmental Services directorates have draft MRP’s in place that are due to be approved by 30 August 2021

·    council’s Chief Planning Office and Finance directorates are working towards having MRP’s approved by 31 October 2021

·    Watercare has adopted an MRP which is aligned to Kia Ora Tāmaki Makaurau. The monitoring and reporting framework is still to be addressed

·    Auckland Unlimited Ltd has an MRP in draft which will be aligned to Kia Ora Tāmaki Makaurau. This is scheduled to be completed and adopted in September 2021

·    Eke Panuku has in place an Implementation Plan aligned to their Mana Whenua Outcomes Framework. The monitoring and reporting framework  that supports implementation shows clear alignment to Kia Ora Tāmaki Makaurau outcomes

·    Auckland Transport has in place an MRP aligned to the previous Māori Responsiveness Framework.

Status of the Fourth Treaty Audit

24.     The audit fieldwork is complete. The final report will be presented to the 20 September 2021 hui of the Governing Body and Independent Maori Statutory Board.

Tauākī whakaaweawe āhuarangi

Climate impact statement

25.     There are no impacts on climate from this report.  However, the Māori Outcomes Framework is based on wellbeing and includes environmental wellbeing.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

26.     The Treaty Audit Response Programme work enables the council group to strengthen responsiveness to Māori through targeted actions and improvements described in Auckland Council’s Māori Outcomes Framework. The Māori Outcomes Framework is intended to provide clarity and guidance to the council group.

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

Local impacts and local board views

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

Tauākī whakaaweawe Māori

Māori impact statement

28.     The Treaty Audit Response Programme enables the council group to strengthen responsiveness to Māori through targeted actions and improvements described in the Māori Outcomes Framework.

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

30.     Key risks to achieving completion of the Treaty Audit Response Programme are

·    lack of resources and capability

·    lack of oversight and monitoring of the work programme.

31.     This risk is heightened in the Covid-19 environment.

The independent oversight and monitoring by the Risk and Assurance department, membership of the Waharoa group and six-monthly reporting to the Audit and Risk Committee are key mitigations of these risks.

Ngā koringa ā-muri

Next steps

32.     The Risk and Assurance department will continue to attend the Waharoa group and monitor the Treaty Audit Response Programme and report to the Audit and Risk Committee in accordance with the Assurance plan, and the committee’s forward work programme.

33.     The fourth Te Tiriti o Waitangi audit will be presented to the 20 September 2021 Governing Body Independent Maori Statutory Board Hui.

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Author

Mark Maloney - General Manager Risk and Assurance

Authoriser

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

23 August 2021

 

City Rail Link regular risk and assurance update

File No.: CP2021/07026

 

  

Te take mō te pūrongo

Purpose of the report

1.       To update the committee on the City Rail Link (CRL) project, including key risks and how they are being managed.

Whakarāpopototanga matua

Executive summary

2.       Auckland Council is one of the joint Project Sponsors of CRL along with the Crown. Staff last reported formally to the committee in September 2020, but also by way of an information memorandum in May 2021. 

3.       Sponsor risk monitoring and oversight is led by the Sponsor Assurance Manager, TSA Management (TSA) – formerly Advisian.  TSA’s role is not to provide assurance that the project will finish on time and on budget, but to assure Sponsors that City Rail Link Limited (CRLL) has systems in place to appropriately monitor progress of the project - though TSA does highlight cost, programme or risk issues as appropriate.

4.       The project itself has significantly advanced, with C1 (Britomart station) largely complete (decommissioning of the temporary station continues), C2 (Albert St) in final construction stages, and construction completion of C8 Otahuhu (the station is now open). With the award of the C5 and C7 contracts in 2020 and their incorporation into the Link Alliance, the major elements of contracting are now in place, meaning that risks around procurement processes are now reduced. Critical construction milestones have been reached.  Tunnelling at Mt Eden has begun. Mining of Karangahape Rd station is meeting critical milestones, and Aotea is also progressing well. 

5.       Since the September 2020 report to this committee, a number of important risk management activities have taken place, which are outlined in this report. These include:

·    two Sponsors risk management reviews (November 2020 and May 2021), at which the Sponsor risk dashboard and the Sponsors Risk Treatment and Actions register are updated. At present, seven key risk categories are identified

·    CRLL’s pre-tunnelling review, one of three major reviews during the project, which are mandated by the Project Delivery Agreement.  This has also been reviewed for Sponsors by TSA.

·    CRLL Board review has been undertaken, resulting in a recommendation for an additional board member to be appointed.

·    Treasury’s latest Gateway Review report on the project has been completed, with the project being given ‘amber’ status (if risks are managed appropriately, good confidence that the project will be completed on time/budget)

·    Office of Auditor-General’s draft report on the CRL project/programme has been provided to Sponsors. Sponsors are yet to receive the final report, which is anticipated in September 2021.

6.       These specific activities are in addition to those undertaken on a day-to-day and month-to-month basis through normal governance channels and monitoring activities.  These include reporting such as CRLL’s monthly assessment of programme delivery. 


 

 

7.       Overall, Sponsors are confident that risks with the project and the wider programme are being managed well, and that should specific issues arise, these can be identified early and appropriate controls put in place (if they have not already been).  Construction in particular is at a critical phase at present, with consequent uncertainty remaining about cost and schedule. 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the update on Sponsor risk management activity relating to City Rail Link.

 

Horopaki

Context

8.       Construction of the City Rail Link (CRL) is being jointly funded on an equal basis by the Crown and Auckland Council (Project Sponsors). City Rail Link Limited, a Crown company, was established on 1 July 2017 and has full governance, operational and financial responsibility for CRL, with delivery targets and performance expectations.

9.       Sponsors’ risk management responsibilities are led by the CRL Sponsors’ Assurance Manager, TSA. In particular, TSA leads the twice-yearly risk review workshops for Sponsors, as well as providing assurance to Sponsors on the status of CRLL’s risk management processes.  TSA maintains the Sponsor risk dashboard, which is referred to in this report.

Tātaritanga me ngā tohutohu

Analysis and advice

Project progress

10.     The project has an extensive system of governance and monitoring, as set out in the Project Delivery Agreement.  This mandates a number of groups to receive reports and monitor CRLL activity, to which Sponsors have added additional layers, particularly to ensure the coordination of activity with the delivery partners, Auckland Transport and Kiwirail.  In addition to this are the formal governance mechanisms which exist through the Crown Entities Act (e.g. Statements of Intent and Performance Expectation).  Sponsors receive monthly updates from CRLL, as well as holding monthly meetings at management level. Ministers and Councillors also receive (approximately) twice-yearly verbal briefings from CRLL Board and management.

11.     The most recent CRLL monthly report discusses the development of the latest versions of ‘The Alliance Programme’ (TAP). TAP5 (to be delivered October 2021) and TAP6 (first quarter 2022) will provide the certainty for CRLL the Sponsors about costs, budgets, logistics and resources, and ultimately whether the major project elements can be delivered on time. 

12.     The Link Alliance delivering contracts C3, C5 and C7 (tunnels, stations and rail systems) is currently embarking on the major civil works for the project.  At present, Karangahape Road is meeting critical milestones, while there have been some delays in the Aotea Station build, though these are not reported as being on the project’s critical path.  Similarly, there is pressure on North Auckland Line works at Mt Eden, and the initial stages of the tunnel boring machine drive has suffered delays.  CRLL is aware of these issues and is working through them with the Link Alliance to ensure the critical works during the ‘block of line’ (shutdown) around Christmas 2021 is not impacted. 


 

 

 

13.     Link Alliance has also reported an increasing trend of health and safety incidents.  While this is partly attributable to an increase in risky activity with the commencement of major civil construction, CRLL is of the view that safety capability is variable across the Alliance.  It has taken steps to initiate a re-set of expectations in July 2021 in this area, which Sponsors have reinforced as a priority. 

14.     Three particular issues were noted by CRLL as ones they are continuing to monitor closely:

·    CRLL has asked Link Alliance to undertake an assessment of commercial impact of Covid, so as to ensure it can differentiate Covid impacts from general performance of the Alliance.  CRLL has formed its own commercial team to make similar assessment. 

·    The C9 Britomart contract is still to be procured.  This contract relates to works at the eastern end of Britomart station to ensure trackwork and systems can cope with the increased services.  CRLL has decided not to use Link Alliance for the C9 contract so that the Alliance can focus on its main tasks. CRLL will work with AT and Kiwirail to find alternative contractors.

·    The programme more generally needs to confirm the longer-term plan for a day 1 timetable, and a plan for upgrade of level crossings (especially Western Line).

15.     Sponsors are keeping in close contact with CRLL about the issues raised in its monthly report and consider that appropriate mechanisms and forums exist through which to resolve the concerns raised. 

Sponsor risk management process

16.     In addition to the regular governance and monitoring processes mentioned above, Sponsors undertake twice-yearly risk management reviews to update the detailed risk register (with treatment and actions), and the higher-level risk dashboard. 

17.     Since we last reported to the committee, two such reviews have taken place, in November 2020 and May 2021.  At present, the Sponsor risk dashboard identifies eight key risk categories.  Covid risks were added in 2020, and a new category (Health and Safety) was added in May 2021, reflecting the importance which Sponsors place on managing these risks, particularly in failures in other areas (Ports), contrasted with the success which have been achieved despite major construction work (e.g. waterfront developments). 

18.     One element which continues to be a risk for Sponsors is the effect of project works on businesses adjacent to the construction sites.  Sponsors will consider how to address this issue before the end of 2021. 

19.     Similarly, Covid impacts are still being felt, and their consequences for schedules are not yet known.  This particularly impacts materials supply chains, and retention of some of the highly specialised staff which are required for a project of this nature.

 

Risk category

Key controls

Cost and /or schedule overrun

Project Delivery Agreement (PDA) processes; ongoing re-baselining of programme and value management activity; ongoing management of Covid risks.

May 2021 workshop noted improvement in CRLL reporting.

 

 

Failure to meet project objectives

Delivery Partnering Agreements in place (AT and Kiwirail); Link Alliance in place with agreements in the Alliance Agreement about relationships between parties; high-level governance by Sponsors including clear escalation procedures for issues; interface management plan (CRLL).

May 2021 workshop noted that Treasury continues to monitor ATAP funding and sequencing and its relationship with the project. 

CRLL obligation not met

Regular meetings, reporting; assurance processes; mandatory review points (PDA)

Inadequate sponsor oversight

Develop single integrated Sponsor work programme; regular Joint Sponsor meetings; actively applying governance arrangements

Inadequate services at day 1

Develop single integrated programme; delivery partners to develop single master scope; Deliver Partnering Agreement (CRLL, AT, Kiwirail)

Damaged reputation

Enhanced engagement by CRLL and ongoing active management by Sponsors and CRLL; hardship fund in place and additional consideration being given to extension of this (upcoming)

Covid excessive impacts

Existing process (eg. business continuity plans); consultation and communication with Sponsors; Sponsor involvement in funding and personnel (immigration); discussions with Government as necessary

Health and safety

Most controls sit with CRLL and Alliance contractors, however:

-     Established CRLL reporting processes, and Sponsor monitoring

-     CRLL vigilance and active engagement between Sponsors/CRLL.

 

Pre-tunnelling review (CRLL and TSA)

20.     The PDA (paragraph 2.2.3) requires CRLL to undertake a number of reviews at discrete and strategic points to satisfy Sponsors that CRLL has capacity and capability to deliver and complete the CRL project.  These are the:

·    original review

·    pre-tunnelling review

·    completion review.

21.     The pre-tunnelling review was completed in April 2021 and identified no issues which would prevent the commencement of tunnelling.  The review covers the status of property and consent matters, cost, schedule, risk, and interface issues. The review has itself been reviewed for Sponsors by TSA.

22.     The key points from the pre-tunnelling review are:

Property – there are no outstanding issues relating to tunnelling. No significant risks exist in relation to consents for architectural designs and public realm. However, further discussion of property valuation (particularly below ground) is required. 

Costs – these remain forecasted to complete within overall P50 budget. While there has been drawdown in the management reserve, this corresponds to a matching reduction in the risk profile of the project. Further certainty will be provided when TAP5 and TAP6 are delivered by Link Alliance.

Programme – this remains aligned with PDA (Dec 2024). CRLL notes that the critical path for the project goes through Contracts 3, 5 and 7 and also potentially C9. As with costs, the next 9 months and delivery of TAP5 and TAP6 will be critical to confirm expectations. 

Risk – four layers of risk are identified (Sponsor, CRLL enterprise, CRLL retained from Alliance; contractor/project risks) and their current level and method of control identified. 

Interface – the key interface risk is the handover to AT and Kiwirail at project completion, with this being controlled by the delivery partner agreements and AT and Kiwirail being part of the Project Alliance Board. 

23.     Overall, the pre-tunnelling review by CRLL is that there were no issues to prevent commencement of the tunnel boring machine’s drive.  However, a full understanding of the project’s status cannot be given with confidence until Link Alliance has delivered its update of the programme as part of TAP6. CRLL cites the biggest risk as being increases in the final outcome cost, because this could drive perverse Alliance behaviour to maximise profit. 

24.     As noted above, TSA reviewed CRLL’s pre-tunnelling review for Sponsors.  This included site visits in late July 2021.  A key conclusion TSA reached was that “the quality of personnel on this project is high and that the systems and processes developed by both CRLL and its contractors is generally robust and well developed.”

25.     TSA identified three main challenges in the risk profile:

1.   Design development and therefore scope definition

2.   Station building and fits out (including mechanical and electrical fitouts in tunnels)

3.   Handover/commissioning to rail operators.

26.     TSA noted that the full details of risk for items 2 and 3 are yet to be understood.  It considered that with civil construction proceeding well through the ‘learning phase’, this should provide assistance and some certainty ahead of the risks inherent with the major tunnelling work.  It thought that the Aotea site in particular seemed well managed and tidy, which was a good indicator for TSA of high standards being maintained. 

27.     TSA considered that the most important thing for CRLL and the project teams was to confirm and commit to dates for delivery of the revised programme documents (TAP 5 and 6).  Apart from providing certainty around cost and schedule, this would also allow Sponsors to be confident in their messaging with stakeholders and the community about completion of the project.  TSA also made some specific recommendations, such as that CRLL and the Alliance undertake a holistic review of project risk registers, with a view to removing any gaps (or duplication), and also to encourage consideration of opportunities for enhancing value rather than just mitigating risk. 

 

CRLL Board Review

28.     The CRLL Board undertook a review in March 2021, which was prepared by Propero.  Key recommendations were:

·        CRLL has a high performing board, with a strong focus on its core purpose

·        to add one member to the board to provide extra support in the area of programme delivery and systems integration

·        that if possible all directors be retained through to the completion of the project

·        a focus on relationships with partner organisations should be maintained, and a greater focus could be given to wider stakeholders including the community and iwi.

29.     In response to this, shareholders passed a resolution in May 2021 altering CRLL’s constitution to allow for an additional board member, reflecting this review.  Appointment processes will proceed during 2021, including for potentially reappointing existing directors.

Other reviews

30.     Treasury’s latest Gateway Review report on the project was provided to Sponsors in February 2021, with the project being given ‘amber’ status (if risks are managed appropriately, good confidence that the project will be completed on time/budget).

31.     Similarly, the Office of Auditor-General’s draft report on the CRL project/programme was provided to Sponsors in December 2020, although Sponsors are yet to receive the final report, which has been delayed. It is not clear how the recommendations may be different given the elapsed time between the draft and the upcoming final report. 

32.     Both reports had one key theme in common, which relates to managing and monitoring the realisation of the benefits from the wider CRL programme.  This is not so much about a backward-looking assessment of what has been delivered, but instead a forward-looking view of what additional investments may be needed on the rail, bus, and road networks to ensure that in the long-term (30-50 years), CRL delivers the benefits predicted for it as a key component of the Auckland transport network. 

33.     In response, Sponsors are beginning a process to develop a benefits realisation plan, including considering who is primarily responsible for delivering the benefits. This piece of work will build on the fact that newer parts of the governance arrangements for the progamme – such as the Delivery Partners Steering Committee and the Project Control Group, which manage respectively the relationships with Auckland Transport and Kiwirail, and design process decisions – are now maturing and becoming accepted as important forums for resolving difficult issues. 

Summary

34.     There has been significant progress in risk monitoring, oversight and management since the last reporting period.  Increased focus continues to be given by both project participants and external assurance advisers to the risks inherent in the transition from procurement to construction in the project, and from a focus on the project to a future focus on the programme more widely. 

35.     Sponsors are confident that the combination of statutory governance and monitoring, mandated project structures, and CRLL’s processes and participation in the Alliance mean that risks are well described and controlled at this time.  As is the case with any major construction project with associated wider programme elements, there remain significant unknown elements given the project phase (early stages of major construction). However, these are anticipated to reach a greater level of certainty within the next 9-12 months, with appropriate mechanisms in place to deal with issues if they emerge.

36.     It is important to reiterate that the impacts of Covid are still being seen.  This is particularly affecting supply chains and the retention of key people on the project.  These risks and their possible impact on the project schedule are being actively monitored by CRLL and Sponsors and are noted in the risk dashboard discussed above. 

Tauākī whakaaweawe āhuarangi

Climate impact statement

37.     This report is about updated risk assessments for the City Rail Link project.  It therefore has no specific impacts on climate change. Climate change impacts themselves are factored into the design considerations and risk assessments of the project, but are considered well-controlled by those delivering the project and are not a particular focus for Sponsors at this time. 

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

38.     Auckland Transport has an integral role in the delivery of an operationally successful rail link.  To that end, it has a formal role in the project as one of the ‘delivery partners’ (along with Kiwirail).

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

Local impacts and local board views

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

Tauākī whakaaweawe Māori

Māori impact statement

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

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

42.     This report is about the management of Auckland Council’s Sponsors risk in the CRL project.

Ngā koringa ā-muri

Next steps

43.     The following activities will be undertaken by Sponsors in the next period:

·    continued focus on regular governance and monitoring processes, including maintaining Sponsor risk registers/dashboard

·    receiving from CRLL confirmation of the Alliance programme updates as referred to above

·    responding to the recommendations of the Treasury Gateway Review and once delivered, the Office of Auditor-General review of the programme

·    concluding appointment processes for CRLL directors

·    considering policy decisions on an extension of the hardship fund for businesses affected by the C3 works.

 

 

 

 

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Author

Edward Siddle - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson – Director, Governance & CCO Partnerships

 


Audit and Risk Committee

23 August 2021

 

The Auditor-General's report to management on the interim audit for the year ended 30 June 2021

File No.: CP2021/11627

 

  

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 interim audit for the year ended 30 June 2021 and outline how Auckland Council is addressing the matters.

Whakarāpopototanga matua

Executive summary

2.       The Deputy Auditor-General has issued his report to management following the completion of the interim audit. The report outlines areas in which internal controls and financial disclosures can be improved.

3.       There is one new recommendation in the report, being that the council develops a policy in relation to the termination or cancellation of financial instruments.

4.       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 interim audit report to management, for the year ended 30 June 2021, and management’s responses.

Horopaki

Context

5.       The Deputy Auditor-General is Auckland Council and Auckland Council Group’s external auditor, appointed by the Auditor-General to conduct the audit 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.

6.       On completion of the interim audit, the Deputy Auditor-General provides a report to management which outlines areas in which internal controls and financial disclosures can be improved. The issued report, following completion of the 30 June 2021 interim audit of the group’s interim report, is attached (Attachment A).

7.       This report summarises the matters identified by Audit New Zealand (on behalf of the Deputy Auditor-General) during their interim audit for the year ended 30 June 2021 and outlines how management is addressing the matters.

Tātaritanga me ngā tohutohu

Analysis and advice

8.       Audit New Zealand completed their second interim audit visit in April and May 2021. Their focus was on:

·   updating their understanding of the council’s systems and controls that support financial and service performance information

·   assessing the effectiveness of those controls and of the overall control environment.

9.       Key messages relate to improvements required in the control environment and service performance of building and resource consents.

10.     There is one new recommendation in the report: that the council develops a policy in relation to the termination or cancellation of financial instruments. This recommendation is considered necessary by Audit New Zealand i.e. should be addressed at the earliest reasonable opportunity, generally within six months.

11.     Management has referred Audit New Zealand to the Treasury Operating Manual which contains details of delegations and oversight of the termination or cancellation of financial instruments. Subsequent to the transactions in 2020, the Treasury Operating Manual was updated to make it explicit that the ‘close out’ of basis swaps requires group chief financial officer approval.

12.     Updates were also provided on the following previously raised recommendations that are still in progress:

 

Recommendation

Management’s response

Valuation of investment properties

Valuations should include supporting calculations and other information used in determining the value of each asset.

Following expiry of our three year valuer contract this year, management will include these requirements in the valuers’ contracts from 2021/2022 onwards.

AC 36 asset handover

Council should complete its plan for managing the final stage of the project to ensure handover is well-managed and documentation is finalised and appropriately stored.

The ongoing asset management planning and maintenance is in place with final documentation expected to be completed in November 2021.

Review of Delegated Financial Authority (DFA) Policy and SAP delegation

Management should review identified breaches and if necessary, ensure these breaches are regularised. Changes to DFAs should be property authorised and updated in SAP.

Breaches have been reviewed by the Risk and Assurance department. An audit is ongoing which is identifying whether any breaches of legal authority have occurred.

 

The Risk and Assurance department has taken responsibility for leading the review of the Chief Executives Delegation Register (including SAP DFA’s). This is a key deliverable for the 2021/2022 year. Legal Services, Insurance and operational departments will be involved in this review.

Portfolio, Programme and Project Management - Gateway reviews

Gateway reviews need to be applied consistently to ensure they are effective.

The Enterprise Project Management Office (ePMO) has a programme in place to review governance/gating processes. In addition, sponsor training is being developed and will be trialled by 30 September 2021.

Consenting and service performance reporting

This is an ongoing recommendation for the improvements in the recording and reporting of compliance with statutory timeframes for the processing of resource consents.

 

Controls are in place to ensure the accuracy of data, and these continue to be reviewed and improvements made.

Approvals of the Chief Executive and Mayor

One-up approval is recommended.

The chair of the Audit and Risk Committee already reviews the Mayor and Deputy Mayor’s expenditure.

The council will implement the recommendation for the Mayor to approve the Chief Executive’s expenditure.

Project management, project closure and benefits measurement

All projects should have stated benefits and a benefits realisation exercise should be conducted during project closure.

The ePMO acknowledge they have work to do in the benefits space but are confident benefits are embedded into the Investment Delivery Framework (IDF) templates and captured in Sentient. The focus on benefits is also a significant area of focus for the Executive Leadership Team and remains a high priority.

 

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 council-controlled organisations which use our SAP platform have been alerted to the matter related to DFAs in SAP. Their structures tend to be simpler than the council’s, however they have been going through restructures so will need to consider the impact on their DFAs in SAP.

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 group’s contributions towards Māori outcomes. The group’s contributions to Māori outcomes are reported in the annual report, and there have been no recommendations in relation to that disclosure.

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.     The council is actively addressing the issues raised. Apart from the matter related to building and resource consents, management has assessed that the matters will not impact on the audit opinion of the Auckland Council Group’s 2020/2021 annual report. Work is ongoing to assess the effect of the control gaps in the consenting area on the audit opinion.

Ngā koringa ā-muri

Next steps

19.     Management will continue to follow up on its commitments to address the matters raised in the audit report to management.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Interim report to management 30 June 2021

35

     

Ngā kaihaina

Signatories

Authors

Tracy Gers - Group Accounting & Reporting Manager

Francis Caetano - Group Financial Controller

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

23 August 2021

 

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Audit and Risk Committee

23 August 2021

 

Audit Management Report on the Audit of the Long-term Plan 2021-2031

File No.: CP2021/11690

 

  

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) and outlines how Auckland Council is addressing the matters raised.

Whakarāpopototanga matua

Executive summary

2.       The OAG issued an unmodified audit opinion on the 10-year budget on 29 June 2021.

3.       They have issued a management report that summarises opportunities for improvement identified during the audit that should be addressed by council prior to the next LTP.

4.       They have recommended that council should:

·    satisfy itself that it has systems in place to appropriately measure and report actual performance for the new climate change measures included in the 10-year budget

·    continue to include the two mandatory measures when reporting performance in the 2020/2021 annual report (the average quality of ride on a sealed local road network, measured by smooth travel exposure; and the change from the previous financial year in the number of fatalities and serious injury crashes on the local road network, expressed as a number)

·    consider how the readability of volume 2 of the 10-year budget can be improved

·    review the financial model used to calculate development contributions charges

·    ensure we have a clear roadmap to enable compliance with the National Policy Statement on Urban Development.

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.

 

Horopaki

Context

6.       This report summarises the matters identified by the OAG during their audit, that should be addressed by council prior to commencing the next 10-year budget, 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 10-year budget on 29 June 2021.

8.       This meant they were satisfied:

·    the 10-year budget provides for long-term, integrated decision-making and co‑ordination of the council’s resources; and provides a reasonable basis for accountability of the council to the community

·    the underlying information and assumptions underlying the forecast information in the 10-year budget are reasonable

·    the disclosures included in the 10-year budget represent a complete list of the disclosures required by Part 2 of the Local Government (Financial Reporting and Prudence) Regulations 2014 (the Regulations) and accurately reflect the information drawn from the 10-year budget.

9.       In forming their opinion, they included ‘emphasis of matter paragraphs’ in the audit report highlighting the uncertainties relating to significant assumptions. These paragraphs are consistent with those included in the audit report on the Consultation Document. They draw 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.     When forming their view about the uncertainty over forecast funding, they specifically considered the impact of reduced funding from Waka Kotahi. This reduction resulted in the Waka Kotahi funding assumption in the 10-year budget being $129 million more than the indicative funding announced by Waka Kotahi. However, because of a clear commitment from the Crown to the overall funding package agreed through the Auckland Transport Alignment Project (ATAP) they were satisfied that the funding assumption and disclosures about funding uncertainties were reasonable.

11.     The OAG have identified opportunities for improvement and included recommendations to be considered in preparation for the next 10-year budget. They have recommended that council should:

·    satisfy itself that it has systems in place to appropriately measure and report actual performance for the new climate change measures included in the 10-year budget

·    continue to include the two mandatory measures when reporting performance in the 2020/2021 annual report (the average quality of ride on a sealed local road network, measured by smooth travel exposure; and the change from the previous financial year in the number of fatalities and serious injury crashes on the local road network, expressed as a number)

·    consider how the readability of volume 2 of the 10-year budget can be improved

·    review the financial model used to calculate development contributions charges

·    ensure council has a clear roadmap to enable compliance with the National Policy Statement on Urban Development.

12.     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).

Tauākī whakaaweawe āhuarangi

Climate impact statement

13.     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

14.     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

15.     The 10-year Budget 2021-2031 includes the Auckland Council group’s planning and reporting at a local board level. Local boards can recommend any local matter 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

16.     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

17.     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

18.     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

19.     Council staff are actively addressing the matters raised by the OAG.

 


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Report to the Council on the audit of Auckland Council Group's long-term plan for 2021-2031

59

     

Ngā kaihaina

Signatories

Authors

Mark Maloney - General Manager Risk and Assurance

Michael Burns - Manager Financial Strategy

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

23 August 2021

 

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Audit and Risk Committee

23 August 2021

 

Assurance Strategy 2019-22, Assurance Plan 2021-22 and Assurance Charter

File No.: CP2021/11719

 

  

Te take mō te pūrongo

Purpose of the report

1.    To brief the committee and seek feedback on:

·    progress against the 2019-2022 Assurance Strategy

·    the draft 2021-2022 Assurance Plan.

2.    To approve the draft 2021-2022 Assurance Plan, and the Assurance Services Charter.

Whakarāpopototanga matua

Executive summary

3.    This committee approved the 2019-2022 Assurance Strategy in August 2019. The Strategy is attached at Attachment A.

4.    Each year the committee approves a detailed programme of audits and reviews, to be carried out in that year. This is known as the Assurance Plan.

5.    The 2019-2020 Assurance Plan was refocussed in April 2020 to respond to the heightened risk of control breakdown as a result of the COVID-19 pandemic. This refocused plan (the Covid-19 Assurance programme) has continued to be a heavy feature of the work of Assurance Services through the 2020-2021 year.

6.    The continued focus on providing continuous assurance that core internal controls are continuing to operate effectively, together with several unplanned assurance requests from management in the last year has resulted in some planned work being deferred to the 2021-2022 year.

7.    The approach to the fraud and integrity risk mitigation strategy has been executed as planned.

8.    A draft 2021-2022 Assurance Plan has been provided for the committee’s review and feedback (Attachment B). The assurance plan contains a rolling schedule of audits and reviews to assess the effectiveness of key controls and processes that manage council’s top risks, core business processes and high priority issues. The refocussed COVID-19 Assurance programme will remain a primary feature of the programme into the foreseeable future. The 2021-2022 Assurance Plan includes those audits that were deferred from 2020-2021.

9.    Responsibility for ‘Speak Up’ ownership and governance has been assigned to the Risk and Assurance department. The General Manager of the Risk and Assurance department now has the responsibility for overseeing and ensuring appropriate planning and delivery of a programme of initiatives (the Speak Up Improvement Plan) that addresses the findings from the recent Hauora Wellbeing Review. The delivery of these initiatives will be a heavy focus for the Assurance function over the next year.

10.  On 1 December 2020 the Risk and Assurance departments merged.

11.  The focus up until the merger has been on a coordinated, risk-focused, tailored response that draws on all the assurance disciplines – integrity, audit, probity and elected member advice. Since the merger the Assurance function has been working closely with the Risk function as appropriate to specific engagements (e.g., the integrated risk and assurance approach that has been applied to the 2021-2031 Long Term Plan, Rates Setting and Rating Properties Revaluation Project and Assurance over COVID-19 Tracing Systems processes).

12.  The Assurance function is now providing independent assurance over risk mitigations for most of Auckland Council’s Top Risks.

13.  The Assurance Services Charter (the Charter) (Attachment C) establishes the mandate, scope of work, independence and accountabilities of the Assurance function of the Risk and Assurance department.  It is a requirement of the Institute of Internal Audit (IIA) International Professional Practices Framework that the committee approve this charter annually.  

14.  There are no substantive changes to the Charter, which was last approved in September 2020, other than to reflect the merger of the Risk and Assurance departments, and the establishment of Auckland Unlimited.

15.  Given the fact that the Risk and Assurance department now consists of a mix of second line (Risk and Insurance), and third line (Internal Audit, Probity, Integrity and Elected Member Advice), of defence functions, the public endorsement and approval of the Charter by this committee is important in both mandating the authority and scope of the assurance function, as well as preserving its independence.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note progress against the 2019-2022 Assurance Strategy

b)      note and approve the draft 2021-2022 Assurance Plan 

c)       approve the Auckland Council Assurance Services Charter.

Horopaki

Context

16.  The committee approved the 2019-2022 Assurance Strategy in August 2019. It is attached at Appendix A.

17.  The 2019-2022 Assurance Strategy represents the first refresh of the Assurance Strategy since 2015.

18.  Since 2015 the Assurance Services department (the department) has focussed on progressively moving the mix of assurance work from low level compliance assurance work to ‘real-time’ advice including:

·    the provision of assurance on whether controls are ‘fit for purpose’ and operating effectively (getting the basics right)

·    continuing to align its programme with council’s risk framework and prioritisation

·    continuing the focus on education, training and awareness raising - in particular in the fraud and integrity areas, and advice on governance and internal control matters

·    the provision of timely advice on probity (procurement and projects), management of conflicts, integrity and internal control

·    aligning the work of the department to the key pillars of Our Charter which was endorsed by the Governing Body in March 2018, and the Speak Up initiative which is core to the success of Our Charter

·    providing governance support, training and advice to elected members – in particular around appropriate management of conflicts of interests. Our Charter has been integrated into the delivery of ongoing education, training and support to elected members.

19. The Assurance and Risk departments merged on 1 December 2020.

 

20. The 2019-2022 Assurance Strategy does not radically alter the general direction and foundation set by the previous strategy.  However, the department has been leveraging a new Assurance Services structure to embed an integrated and agile approach that draws on all the assurance disciplines and targets the best resources and skills depending on the issue.  This has been further reinforced with the merger of the Risk and Insurance department, where risk resources and skills are being drawn and applied in an integrated fashion, with the resources and skills of Assurance as appropriate to the issue at hand.

21. The following six strategic objectives are reflected in the 2019-2022 Assurance Strategy:

a)       embedding Our Charter and Speak Up

b)      strengthening culture and capability - balance reactive and proactive/preventative activities  

c)      making the most of expertise and resources - implement integrated ways of working to deliver probity, integrity, audit and elected member support – optimising the use of external resources for additional investigation and specialist advisor work

d)      maintaining and building visibility, trust and confidence in the team and council – communications, transparency and proactive reporting

e)      maximising efficiency in detection and response and enable continuous improvement across the council through expanded use of data analytics

f)       building strong alignment, close collaboration and coordination with the Risk and Insurance, Health, Safety and Wellbeing, Financial Control, Nga Mātārae, and Privacy/ Local Government Official Information and Meetings Act teams.

Tātaritanga me ngā tohutohu

Analysis and advice

Progress against the 2019-2022 Assurance Strategy

22.  The department has made good progress against the 2019-2022 Assurance Strategy.

23.  However there has been reprioritisation of work and deferral of certain specific planned initiatives as a result of a combination of a:

·    continued heavy focus on continuous monitoring of core internal control in response to the disruption from COVID-19, and subsequent organisational changes in response to that disruption

·    significant quantum of unplanned assurance work from management

·    number of staff movements during the year.

24.  The audits deferred have been reported separately to this committee in the Assurance Services activity update.

25.  The unplanned assurance work included:

·    financial audit work (focusing on the completeness and accuracy of expenditure, accruals, fleet, and property, plant and equipment) on the Amenities and Infrastructure Maintenance Services (AIMS) business unit in support of the AIMS divestment process

·    extended assurance work over procurement card expenditure and approval processes

·    extended quality assurance work over resource consents to support the annual audit process

·    investigations work in response to complaints

·    review of the legal compliance framework departmental frameworks

·    review of payment to iwi processes

·    quality assurance over the 2021-2031 Consultation Document, Long Term Plan and supporting documents

·    quality assurance over the 2021-2022 rates setting process, and the rating properties rates revaluation.

26.  The deferral of certain aspects of the 2019-2022 Assurance Strategy and 2020-2021 Assurance Plan will not impact on the delivery of the Strategy.

27.  The following is a summary of progress against the key pillars of the 2019-2022 Assurance Strategy:

Develop and implement whole of assurance services response approach / Develop a Strategic Assurance Services Plan

28.       The focus over the past two years has been on a applying coordinated, risk-focused, tailored response that draws on all the assurance disciplines – integrity, audit, probity, elected member advice. Since the merger of the Risk and Assurance departments the assurance function has been working closely with the risk function as appropriate to specific engagements (e.g., the integrated risk and assurance approach to the 2021-2031 Long Term Plan, Rates Setting and Rating Properties Revaluation Project; Assurance over COVID-19 Tracing Systems processes.

29.       This integrated approach has been strongly reflected in execution of the COVID-19 refocused Assurance Programme.

30.       The assurance function is now increasingly proving independent assurance over risk mitigations for a number of Auckland Council’s Top Risks e.g., Fraud, Enterprise IT Security Failure (including Cyber), Financial Management, Māori Outcomes, Climate Change, Service Delivery and Asset Deterioration.

31.       In 2019-2020 we implemented for the first time on a systematic basis the integration of data analytics as a means to identify and test higher risk transactions. The use of data to identify risk and focus assurance work has now become embedded in all assurance engagements through 2020-2021.

Audit and Probity

32.       We have reported against the Assurance Plan 2020-2021 separately to this committee. Certain audits were deferred to the 2021-2022 year for the reasons outlined in paragraph 23 above.

33.       However, a significant number of as requested assurance engagements, in addition to the approved plan have been completed as detailed in paragraph 25 above.

34.       With respect to the 2020-2021 Assurance Plan, those audits that focused on core financial and operational controls have been delivered e.g., probity assurance over significant procurement, treasury, payroll, direct procurement.

Integrity

35.       The gift register has continued to be published on the Auckland Council website and updated quarterly. This is a good practice initiative instigated by the Integrity function in the 2019-2020 year.

36.       The conflict-of-interest declaration process for all staff was implemented in September 2019. All staff have been through at least one annual cycle and the process is now embedded.  Auckland Unlimited are using this declaration process while Eke Panuku have started using this approach and plan to roll it out to all staff from 1 September 2021. This initiative represents a significant improvement in conflict-of-interest management.

37.       Integrity e-learning has been delivered. The roll out of the integrity online training module for staff started in August 2019. As of 31 July 2021, 5,356, staff have completed this training.

38.       The 0800 INTEGRITY line and speak up channel has been maintained.

Elected Members Advice

39.       There has been a consistent number of requests for personalised interest management advice from elected local board members. This advice has included advice regarding managing the perception of predetermination, as well as financial conflict of interest management.

40.       The Assurance Services department have continued to work alongside council’s legal team and the Auditor-General Office to ensure that all elected members are compliant with the Local Government Members Interest Act 1968 disqualification rule.

41.       Delivery was impacted between March and June due to staff movement. This has now been rectified.

Pilot departmental “assurance checkup” approach

42.       In 2019-2020 the Assurance Services department partnered with Infrastructure and Environmental Services to identify needs and deliver tailored support – education, process audit, probity, integrity – applying a whole team approach.

43.       Due to competing priorities, this was not delivered during 2020-2021. In 2021-2022 we will be delivering this assurance approach across the Customer and Community Services Directorate.

Fraud and Integrity risk mitigation

44.       The approach to fraud and integrity risk mitigation has been executed as planned.

45.       This has been achieved by:

an overriding ethos and recognition that fraud and integrity risk is real

oversight by this committee of Fraud and Integrity risks and mitigations as a Top Risk

the provision of dedicated resource

continuous monitoring of system and process controls as part of the COVID-19 assurance programme:

·    budget setting and monitoring, delegations of financial authority, segregation of duties, vendor and payroll master file controls, robust internal and external recruitment processes

·    physical security, ICT security controls, SAP profile set up, procurement processes, anti-money laundering framework

conflict of interest declarations reminders for all staff and public publishing of the Gift Register

speak up framework – with a number of options for staff to Speak Up including the 0800INTEGRITY line

execution of the 2020-2021 Assurance Plan including the use of data analytics integrated into the Audit and Probity work programme.

46.       The fraud gap assessment has commenced. It will be completed by the end of quarter two 2021. It will be used to inform the mitigations for the Fraud Top Risk.

Maintain Profile and Reputation with Organisational and Outside Stakeholders

47.       We have well established and mature relationships with

the Executive Leadership Team and across the Executive Leadership Group

a range of external stakeholders including the Office of the Auditor General, Audit New Zealand, the Serious Fraud Office, Transparency International, and the Institute of Internal Auditors.

Review and Refresh Training and Capability Initiatives

48.       Due to budgetary constraints, training and capability budgets were cut back in 2020-2021. These budgets have now been reinstated in 2021-2022

49.       All staff have refreshed their development plans, with targeted training as appropriate.

Develop Training and Capability Toolkit / Empower Departments to do the right thing

50.       Good practice guidance has been refreshed and published on an ongoing basis. It is recognised that this needs to be developed into a god practice resource that can be used by the organisation. This has been carried forward into the work programme for 2021-2022, including the Speak Up Improvement initiative.

Improve the Visibility of what we do

51.       Council’s Kotahi (intranet) pages were refreshed during the year, to coincide with the newly merged Risk and Assurance department.

52.       Good relationships are in place across the organisation. In addition, we frequently meet with lead teams as part of our day-to-day work, on a range of issues.

Review and Assess our Conflict-of-Interest Processes

53.       Council’s conflict-of-interest processes are subject to continual review. The online declaration process was subject to review during the year.

Assurance Plan 2021-2022

54.       The Assurance Services department provides independent assurance that council’s system of internal controls is designed appropriately and operating as intended.

55.       The attached draft 2021-2022 Assurance Plan adopts a rolling approach to plan and deliver reviews through three phases: scoping/planning, fieldwork and reporting. (Attachment B)

56.       Audits deferred from 2020-2021 have been included in the plan including audits of Business Continuity Planning, Physical Security and SAP Profiles.

Auckland Council Assurance Services Charter

57.       This committee reviews and approves the Assurance Services Charter annually. This charter establishes the assurance functions mandate, scope of work, independence and accountabilities.

58.       It is a requirement of the internal audit professional standards that the committee approve this Charter annually.   There are no substantive changes to the Charter, which was last approved in September 2020, other than to reflect the merger of the Assurance department with the Risk department that occurred on 1 October 2020, and the establishment of Auckland Unlimited. (Attachment C)

59.       The Charter is an important affirmation of the independence, scope and mandate for the “third line of defence” assurance function.

Tauākī whakaaweawe āhuarangi

Climate impact statement

60.       There are no climate change impacts arising from this report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

61.       The 2019-2022 Assurance Strategy and draft 2021-2022 Assurance Plan is primarily for council.  However, the Our Charter and Speak Up advisory and support activities and any audits of council systems and services that are used or shared by council and council-controlled organisations will benefit the council group.

62.       Panuku Development Auckland Limited and Auckland Unlimited use the 0800INTEGRITY line and the dedicated confidential integrity email address. The Assurance Services department are called on to respond to Speak Ups, undertake independent investigations and provide advice and assurance by these organisations.

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

Local impacts and local board views

63.       The views of local boards have not been sought in this report, or in the drafting of the Assurance Strategy 2019-2022 and the draft Assurance Plan 2021-2022.

Tauākī whakaaweawe Māori

Māori impact statement

64.       The Assurance Strategy 2019-2022 and draft Assurance Plan 2021-2022 cover matters associated with council’s obligations under the Treaty of Waitangi.

65.       A key ongoing responsibility for the general manager of the Risk and Assurance department is as a member of the Waharoa Group which is responsible for monitoring and reporting progress of council’s activities and projects in the Treaty Audit Response workstream.

66.       Council’s obligations to Māori and the Treaty of Waitangi are a core part of Our Charter.  The Assurance Services department may investigate and support staff who have spoken up about issues where decisions and behaviours do not align with the principles in Our Charter.

Ngā ritenga ā-pūtea

Financial implications

67.       There are no financial implications as a result of this report.  All activity associated with drafting the Assurance Strategy 2019-2022 and Assurance Plan 2021-2022 have been met from within the Assurance Services department budget.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

68.       The provision of the Assurance Strategy 2019-2022 and draft Assurance Plan 2021-2022 is important to ensure council has an appropriate and effective controls assurance function and effective probity, fraud and integrity prevention processes and systems.

69.       The Assurance Strategy 2019-2022 is aligned to the council’s corporate strategy and Our Charter and is informed by the top risk register to ensure it is focused on the priority areas.

70.       The proposed direction set for assurance and audit activity is subject to feedback from both the elected and independent members of this committee and from the Executive Leadership Team of council.

Ngā koringa ā-muri

Next steps

71.       The 2019-2022 Assurance Strategy, and the draft 2021-2022 Assurance Plan is being executed. Progress against both the Strategy and Plan will be reported to this committee in accordance with the committee’s forward work programme.

 


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

2019-2022 Assurance Strategy

83

b

Draft 2021-2022 Assurance Plan

87

c

Assurance Services Charter

91

     

Ngā kaihaina

Signatories

Author

Mark Maloney - General Manager Risk and Assurance

Authoriser

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

23 August 2021

 

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Audit and Risk Committee

23 August 2021

 

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23 August 2021

 

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Audit and Risk Committee

23 August 2021

 

Auckland Council Group's NZX preliminary announcement and financial results to 30 June 2021

File No.: CP2021/11408

 

  

Te take mō te pūrongo

Purpose of the report

1.       To inform the Audit and Risk Committee of the process followed to prepare the draft NZX announcement (including the group’s primary financial statements and notes) and media release for the financial year ending 30 June 2021.

Whakarāpopototanga matua

Executive summary

2.       The draft Auckland Council Group NZX preliminary announcement (which includes the group’s primary financial statements and notes) and media release (collectively called the “draft 2021 NZX release”) have been prepared for the financial year ended 30 June 2021.

3.       This report confirms the quality assurance processes undertaken in preparation of the draft 2021 NZX release.

4.       The 2021 NZX preliminary announcement will be released to the NZX on Friday 27 August 2021.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note that there are no significant outstanding issues relating to the process for the preparation of the draft 2021 NZX release

b)      note the draft 2021 NZX release will be discussed later in this meeting in confidence.

 

Horopaki

Context

5.       The Audit and Risk Committee reviews the quality of the annual reports and the processes followed to prepare them. It liaises with Audit New Zealand to ensure a robust audit of the Auckland Council Group.

6.       The Finance and Performance Committee reviews the financial and service performance of the group. 

7.       This report, the associated confidential item, comments from the Deputy Auditor-General at this meeting and his briefing paper, assists the Audit and Risk Committee to fulfil its duty as noted above.

8.       Audit New Zealand will report on any matters arising from the audit in their final report, to those charged with governance, in the confidential item with the same name.

9.       In accordance with the NZX listing rules, the group must lodge a results announcement with the NZX within 60 days of the financial year-end.

10.     The NZX release is required to comply with Appendix 2 of the NZX Listing Rules. Information required includes:

·   a statement of financial performance

·   a statement of financial position

·   a statement of cash flows

·   a statement of movements in equity

·   commentary on the results for the period, sufficient for a user to be able to compare the results with the prior period

·   a statement as to whether the financial statement are audited, in the process of being audited or not yet audited and details of any (likely) qualifications

·   a statement of accounting policies critical to the portrayal of the group’s financial condition and results and required judgements and estimates about uncertain matters

·   the impact of any changes in accounting policies.

11.     The draft 2021 NZX release is materially based on consolidated information obtained from the council, council-controlled organisations and Ports of Auckland Limited reporting packs. Reporting packs have been supported by assurances obtained in representation letters which were signed by their respective CFOs and chairs of their audit committees.

12.     At this meeting, Audit New Zealand, on behalf of the Auditor-General as the group’s auditor, will confirm clearance on the draft 2021 NZX release pursuant to the issue of their opinion on the group’s annual report in September 2021.

Tātaritanga me ngā tohutohu

Analysis and advice

13.     The draft 2021 NZX release will be presented in the confidential NZX agenda item later in this meeting.

14.     The following reporting milestones provide an outline of the process underway to prepare, review and issue the audited financial results for year ended 30 June 2021.

Tauākī whakaaweawe āhuarangi

Climate impact statement

15.     This report relates to the group’s financial statements only and as such has no climate implications. Information relating to the group’s climate impact 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

16.     The draft 2021 NZX release consolidates financial information provided by the substantive council-controlled organisations and Ports of Auckland Limited.

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

Local impacts and local board views

17.     The draft 2021 NZX release relates to reporting at a group level. Accordingly, the views of the local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

18.     The report does not affect the achievement or reporting on the council or 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

19.     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

Risk of error, omission or non-compliance in preparation of the draft 2021 NZX release

20.     There is a risk that errors or inaccuracies could occur in the preparation of the draft 2021 NZX release. To mitigate this risk, quality assurance reviews were performed on the consolidated results and commentary and the year-end reports. The reviews focused 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

Group chief financial officer

 

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Group treasurer

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Group financial controller

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Manager group accounting and reporting

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Senior group reporting technical accountant

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Financial accounting manager

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General manager financial strategy and planning

 

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Manager group financial planning and analysis

 

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Manager corporate performance

 

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Senior specialist corporate communications and media

 

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Senior solicitor and Mayne Wetherell

 

 

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21.     All the quality assurance reviewers who performed reviews from a technical financial perspective are Chartered Accountant (CA) qualified or equivalent and have the appropriate technical accounting skills and knowledge.

22.     There is a risk that significant matters that affect the financial performance, financial position or cash flows of council-controlled entities or Ports of Auckland Limited may not be adequately disclosed. To mitigate this risk, the group financial controller has obtained short and long-form representation letters from the respective chief financial officer/chief executive officers and chairs of their audit committee/boards which cover the completeness, accuracy and adequacy of disclosures provided in their reporting. In addition, the group financial controller will obtain updates from the respective chief financial officers just prior to the release to the NZX to ensure nothing else has arisen since the representation letters were signed, that could materially affect their financial reporting disclosures.

Ngā koringa ā-muri

Next steps

23.     The draft 2021 NZX release will be presented to the chair and deputy chair of the Finance and Performance Committee on 25 August 2021 to recommend the mayor and chief executive approve the documents be released on 27 August 2021.

24.     The draft 2021 NZX release will then be presented to the mayor and chief executive on 26 August 2021 for approval before release on 27 August 2021.


 

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Authors

Tracy Gers - Group Accounting & Reporting Manager

Francis Caetano - Group Financial Controller

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

23 August 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 - August 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 substantive council-controlled organisations' Boards or Audit and Risk Committees. The council-controlled organisations have provided their risk reports 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: Council Group Post Insurance Renewal 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)(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 confidential information with respect to the outcome of 2021/2022 Insurance renewal , including loss limits and premiums.

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: Assurance Services Activity Update

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

s7(2)(c)(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 information which if released would jeopardise the effective delivery of assurance services.

s48(1)(a)

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

C4       CONFIDENTIAL: Auckland Council Group's NZX preliminary announcement and financial results to 30 June 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)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains information that will be included in the annual report for the year ended 30 June 2021 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.

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 Auckland Council Group which cannot be made public until the group results are 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.

 



[1] Recommendation 34 and 58B Mana Whenua Participation in Resource Consents

   Recommendation 31 Contract Management

[2] Recommendation 12 Taonga Management Policy

   Recommendation 13 Protection of Sensitive Expenditure

[3] Recommendation 1 Closure Criteria for all Open Recommendations

[4] Recommendations 6 and 7 Evolution of Maori Responsiveness Plans

   Recommendation 10 Relationship Agreement Framework