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

 

Date:

Time:

Meeting Room:

Venue:

 

Tuesday, 7 December 2021

2.00pm

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

 

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

 

1 December 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

07 December 2021

 

ITEM   TABLE OF CONTENTS            PAGE

1          Apologies                                                                                 9

2          Declaration of Interest                                          9

3          Confirmation of Minutes                                                         9

4          Petitions                                                                 9  

5          Public Input                                                           9

6          Local Board Input                                                 9

7          Extraordinary Business                                     10

8          Forward Work Programme                                11

9          Health, Safety and Wellbeing Report               19

10        Enterprise Risk Update - December 2021        41

11        Final Office of the Auditor-General report to governors for the year ended 30 June 2021    67

12        Approval of the draft Office of the Auditor-General Interim Review Engagement Letter for the six months ended 31 December 2021      111

13        Preparation of the interim report and NZX release for the six months ending 31 December 2021                                                 135

14        Annual Report on the Performance of the Audit and Risk Committee                                         141

15        Consideration of Extraordinary Items

PUBLIC EXCLUDED

16        Procedural Motion to Exclude the Public      147

C1       CONFIDENTIAL: Council-controlled organisations' quarterly risk update - December 2021                                                 147

C2       CONFIDENTIAL: Legal Risk Update               147

C3       CONFIDENTIAL: Assurance Services Activity Update                                                                148

C4       CONFIDENTIAL: Interim report and NZX release for the six months ending 31 December 2021                                                 148

C5       CONFIDENTIAL: Office of the Auditor-General and Audit New Zealand Briefing                     149


1          Apologies

 

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

 

 

2          Declaration of Interest

 

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

 

 

3          Confirmation of Minutes

 

That the Audit and Risk Committee:

a)          confirm the ordinary minutes of its meeting, held on Monday, 13 September 2021, including the confidential section, as a true and correct record.

 

 

4          Petitions

 

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

 

 

5          Public Input

 

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

 

At the close of the agenda no requests for public input had been received.

 

 

6          Local Board Input

 

Standing Order 6.2 provides for Local Board Input.  The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time.  The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give one (1) day’s notice of their wish to speak.  The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

 

This right is in addition to the right under Standing Order 6.1 to speak to matters on the agenda.

 

At the close of the agenda no requests for local board input had been received.

 


 

7          Extraordinary Business

 

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

 

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

 

(a)        The local  authority by resolution so decides; and

 

(b)        The presiding member explains at the meeting, at a time when it is open to the public,-

 

(i)         The reason why the item is not on the agenda; and

 

(ii)        The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

 

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

 

“Where an item is not on the agenda for a meeting,-

 

(a)        That item may be discussed at that meeting if-

 

(i)         That item is a minor matter relating to the general business of the local authority; and

 

(ii)        the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

 

(b)        no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”


Audit and Risk Committee

07 December 2021

 

Forward Work Programme

File No.: CP2021/18022

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To review and approve remaining elements of the Audit and Risk Committee’s 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.       Risk reporting from Ports of Auckland Limited is being incorporated into the forward work programme from February 2022.

4.       The audit arrangements letter with respect to the 30 June 2022 annual audit was scheduled to be received at today’s meeting. It has been deferred until the February 2022 meeting.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee

a)          approve the forward work programme noting:

i)           the inclusion of regular risk reporting from Ports of Auckland Limited as from February 2022

ii)          the deferral of the audit arrangements letter with respect to the 30 June 2022 annual audit to February 2022.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Forward Work Programme

13

      

Ngā kaihaina

Signatories

Author

Mark Maloney - General Manager Risk and Assurance

Authoriser

Phil Wilson - Director, Governance & CCO Partnerships

 



Audit and Risk Committee

07 December 2021

 

 

 

 

 

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

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

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

 

 

 

 

 

Area of work and lead

 

Expected reporting 2021

22 Feb

18 May

22 June (extraordinary meeting)

23 Aug

13 Sep

7 Dec

Audit and Risk Committee

GM Risk and Assurance

 

Work programme

Link to decision

Work programme

Link to decision

 

Work programme

Link to decision

Work programme

Link to decision

Work programme

Committee’s Annual performance report

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

Link to decision – confidential

 

Assurance Services performance against 2019-2022 Strategy, approval of annual assurance plan, and approval of Assurance Services Charter

Link to decision

 

 

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

Link to decision

 

 

Enterprise Risk

Risk Services

 

 

 

Enterprise Risk Update

Link to decision

 

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

Link to decision - confidential

CCO and POAL 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 and Ports of Auckland

Link to decision – confidential CCO

Link to decision – confidential POAL

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

Link to decision

 

 

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

Link to decision

Hauora (Wellbeing) Review – Wellbeing Programme Update

Link to decision

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

Link to decision - confidential

 

 

 

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

Link to decision

Link to decision - confidential

Audit New Zealand Interim audit management report 30 June 2021

Link to decision

 

30 June 2021 Annual Report

Link to decision

Link to decision - confidential

 

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

Link to decision - confidential

 

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

Link to decision

Audit NZ Final Report on 2021-2031 LTP

Link to decision

 

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

Link to decision - confidential

Briefing paper provided

Link to decision - confidential

Briefing paper provided

Link to decision - confidential

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

22 Feb

17 May

23 Aug

13 Sep

TBC

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 and POAL Risk management

Risk Services

CCO quarterly risk report

Attendance by Auckland Transport

Attendance by POAL

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

30 June 2022 Arrangements (extended audit plan)

 

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

07 December 2021

 

Health, Safety and Wellbeing Report

File No.: CP2021/17914

 

  

 

Te take mō te pūrongo

Purpose of the report

1.   To provide the committee with the information needed to understand the progress of initiatives underway to improve health, safety and wellbeing, as well as the current state of selected key performance indicators covering the period August 2021 to October 2021.

Whakarāpopototanga matua

Executive summary

2.   There are a number of projects and initiatives currently underway across council to improve the health, safety and wellbeing of workers and to deliver on the recommendations of the hauora (wellbeing) review. These are broadly on track and progressing well.

3.   The COVID-19 Delta outbreak is continuing to result in significant refocussing of resources to support the health, safety and wellbeing of our people.

4.   Key performance indicators are provided in Attachment A, covering the period from August 2021 through to October 2021. This report provides further information relating to the analysis of these key indicators, and so should be read in conjunction with this attachment.

5.   Lost Time Injury Frequency Rate has dropped from 7.5 to 4.7 in the past 12 months due to the impact of COVID-19 on the activities undertaken by council.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the information in this report and associated health, safety and wellbeing indicators

b)      refer this report to the Governing Body along with any commentary that the committee deems appropriate

c)       forward this report to Local Boards for their information.

Horopaki

Context

6.   This report provides commentary and a range of indicators on the performance of health, safety and wellbeing to enable the committee to provide objective advice and recommendations to the Governing Body on the adequacy and functioning of the council’s health, safety and wellbeing risk management system and associated programmes. Health, safety and wellbeing key performance indicators are in Attachment A.

Tātaritanga me ngā tohutohu

Analysis and advice

COVID-19

7.   The ongoing outbreak of the Delta COVID-19 variant continues to have an impact on the activities delivered by Auckland Council. Currently at Alert Level 3 step 2, with limited services able to operate, council is undertaking preparation efforts to reopen an expanded level of services once Auckland enters into the COVID-19 Protection Framework in early December 2021. These preparations involve a number of teams from across council, collaborating to deliver a consistent and appropriate approach to reopening safely.

8.   At the time of preparing this report, the council is currently finalising engagement and development on policies for COVID-19 vaccinations to be a requirement for staff and other workers, volunteers, and certain contractors. Guidelines are also being prepared for elected members. These are on the basis of a robust risk assessment that considered the risk that these workers would be exposed to without vaccination, and the impact of vaccination on the residual risk levels. The government-mandated vaccination requirement for certain roles, including teachers, has also been implemented, and preparations are being made for when vaccine passes become a requirement under the protection framework. A further update can be provided verbally at the committee meeting.

Project Hīra

9.   Project Hīra is a programme of work that is underway to improve the management of health, safety and wellbeing through the replacement of Risk Manager (our current health and safety reporting system).

10. This programme includes the procurement and platform configuration elements of the project, alongside change management, process improvement, people leader training and an awareness campaign. This is intended to ensure that any changes are cooperatively designed, value-adding, and sustainable.

11. A preferred vendor has been selected and security and privacy testing is now underway prior to contract negotiation.

12. New processes are being designed and change management activities are currently underway. Configuration workshops are in the process of being designed to ensure that the configuration of the platform meets the needs of our staff, people leaders and health, safety and wellbeing staff.

ACC Accredited Employer Programme (AEP) Audit

13. The ACC Accredited Employers Programme audit is scheduled to take place from late November. This was delayed in consultation with ACC and the auditor due to the impacts of COVID-19 restrictions. The audit will be taking place virtually, with a virtual site visit (walkthrough) of the Henderson office building to be scheduled once restrictions allow. It is expected that ACC will make a decision on accreditation in late December 2021 or January 2022 on the basis of the report received from the auditor.

Refresh of Safe365

14. Safe365 is council’s health and safety assurance system. It is a platform that the council uses to undertake assurance activity for health and safety, with verifications conducted at an operational level on a range of health and safety elements. Elements assessed include emergency management, reporting, culture and behaviours. An aggregated score is then provided for each department and directorate and for the council as a whole.

15. When Auckland went into COVID-19 restrictions in August 2021, a decision was made to review and rescope the refresh project. This placed more focus on resolving platform changes needed as a result of restructures, while delaying the face-to-face training.

16. All system changes have now been completed within the platform to reflect current structures across council. Those directorates and departments impacted by the changes are now undertaking new baseline assessments to support updated aggregated scores.

17. Face-to-face training for senior leaders is planned once COVID-19 restrictions ease, and staff can return to the office.

Hauora Review Recommendation: Speak Up

18. A procurement process is currently being concluded which will strengthen the independence of the system and increase trust and confidence in the process for raising confidential and sensitive issues and complaints. Vendors have been interviewed, and a preferred vendor is in the process of being identified. Implementation of the new process and channel is planned for early 2022.

19. Further work is being undertaken to ensure that the Speak Up programme is a safe and secure channel for disclosures, and to ensure our peoples voices are heard. This includes reviewing and improving exit interview programmes, and ensuring that internal intranet (Kotahi) pages are optimised to ensure easy and visible access to appropriate channels.

Hauora Review Recommendation: No Excuse for Abuse

20. An initial launch of the No Excuse for Abuse campaign was undertaken immediately prior to the COVID-19 outbreak, and all external engagement was paused until restrictions eased to the extent that permitted utilising the channels planned.

21. The campaign has now been launched externally, commencing in mid-October 2021, with billboards, Adshel placement, and social media posts by the Chief Executive all in place and achieving high levels of engagement.

22. Related work to strengthen support structures, lift capability, and improve onboarding is being planned to support the key messages behind No Excuse for Abuse.

Wellbeing

23. Mental Health Awareness Week was successfully completed in early October, with significant engagement across council to lift understanding of mental health issues, normalise mental health conversations, and to train over 320 people leaders in how to have simple conversations about mental health with staff.

24. Long-term planning for a strategic view to improve wellbeing has commenced, with an approach and methodology now agreed by health, safety and wellbeing staff and the Wellbeing Challenger Group. This planning will commence in late 2021 and early 2022.

Lost Time Frequency Rates

25. Injury frequency rates relating to ‘Lost Time Injury Frequency Rates’ have dropped from 5.9 at the end of August 2021 to 4.7 at the end of October 2021. This is primarily due to the effect of COVID-19 on service levels and the reduction in risk as a result of restrictions requiring staff to stay home.

26. It is expected that frequency rates will remain low for some time, dropping for the remainder of 2021 before potentially increasing slightly in 2022 as more staff return to their workplaces.

Incident Numbers and Mechanisms

27. The number of health and safety incidents reported increased from 42 in September 2021 to 78 in October 2021. This is an increase of 86 per cent and is due to an increase in council activities following the easing of Alert Level 3 restrictions in early October 2021.

28. The primary risk mechanism of these incidents were slips/trips/falls, workplace violence and aggression, being in or near water, manual handling, and animal/biological.

Risk Manager Incident Closure

29. Closure rates for Risk Manager incidents have reduced, with 66 per cent of incidents closed by the due date. This is down from 77 per cent at the end of July 2021.

30. An analysis of the incidents that were not closed on time has been undertaken through interviews with people leaders who were assigned this task. This has showed that there are a variety of systemic issues that have prevented closure from occurring, along with some challenges with developing and maintaining competency on the current system. There have also been some people leaders who have been assigned this action who have subsequently left Auckland Council.

31. It has also been identified by the Health, Safety and Wellbeing team that closure of the incident does not add additional value, as corrective actions associated with the incidents are being completed. The closure of the incident is then an additional administrative task that people leaders are not appreciating the reasons for. It is intended that with Project Hīra there will be an opportunity to automate this workflow step.

Tauākī whakaaweawe āhuarangi

Climate impact statement

32. There are no specific climate impacts to note in this report

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

33. This report is based on Auckland Council organisation activities only, and does not provide a group-wide view.

34. Health, Safety and Wellbeing teams across the council group do collaborate on common health, safety and wellbeing issues, such as ensuring visibility of approaches on COVID-19 policy development.

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

Local impacts and local board views

35. Like governing body members, local board members are ‘officers’ under the Health and Safety at Work Act 2015 and must exercise a duty of due diligence in a way that reflects the nature and responsibility of their role.

36. It is recommended that this report is referred to Governing Body and (as with previous health, safety and wellbeing reports) that Governing Body forward the report to Local Boards for their information.

Tauākī whakaaweawe Māori

Māori impact statement

37. The information in this report has a similar impact on Māori staff as to all staff.

Ngā ritenga ā-pūtea

Financial implications

38. The work in this report is being managed within current budgets and there are no additional financial implications to report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

39. The risk of non-compliance with health and safety is recorded in the council’s top risk register. This risk register entry details the controls and mitigations in place.

Ngā koringa ā-muri

Next steps

40. The following actions will be undertaken:

·    The Health, Safety and Wellbeing team will review and (in consultation with stakeholders) improve processes for the closure of incidents.


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Health, Safety and Wellbeing Performance Report - November 2021

25

     

Ngā kaihaina

Signatories

Author

Paul Robertson – General Manager Health Safety and Wellbeing

Authorisers

Patricia Reade - Deputy Chief Executive

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

07 December 2021

 

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Audit and Risk Committee

07 December 2021

 

Enterprise Risk Update - December 2021

File No.: CP2021/18811

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To update the Audit and Risk Committee on:

i)       the status of and any changes to the Auckland Council top risks assessed and evaluated in the period September to November 2021

ii)       risk management activities since the last report to this committee in September 2021

iii)      priorities for the next quarter.

 

Whakarāpopototanga matua

Executive summary

2.       Auckland Council’s top risk profile remains stable. No new significant risks have emerged since the last enterprise risk update report to this committee. Risk and Assurance has observed the heightening of three risk drivers in the past quarter:

·        impact of central government reforms

·        workforce challenges

·        challenges posed by Covid-19.

Details are provided in paragraph 11 to 14 of the report.

3.       The heightened risk drivers have had the following impacts which are being responded to by management:

·        financial pressures

·        consenting performance challenges

·        return to work challenges

·        heightened importance of business continuity planning

·        risk of sub optimal investment in assets.

Details are provided in paragraph 15 of this report.

4.       We have continued to provide risk advice and support in a range of areas including:

·    Auckland Council’s response to the Climate Change Disclosures which the Auckland Council group is required to report on from 2023/2024, as required by the Taskforce on Climate Related Financial Disclosures. This work will be a focus area for the next 18 months

·    the on-going Covid-19 lockdown challenges for Auckland Council regarding staff, customers and the community

·    a range of top risks, divisional risk profiles, departmental risk registers and capability building by hosting Risk Kōrero. This advice also includes:

presenting Executive Leadership Team (ELT) with a draft risk dashboard showing risks, trends, issues and exceptions in risk management

supporting the Enterprise Portfolio Management Office | Te Tari Whakahaere Kōpaki ā-Hinonga with the key projects listed in paragraph 20.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the Enterprise Risk Update – December 2021 report

b)      refer the Enterprise Risk Update – December 2021 report to the Governing Body for information.

 

Horopaki

Context

5.       This report provides an update on Auckland Council’s top risks, risk activities and risk management for the period ending November 2021.

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

7.       The content of this report reflects the views of Risk & Assurance after considering the views of risk owners, ELT members and risk champions on risk-related data and developments.

Tātaritanga me ngā tohutohu

Analysis and advice

8.       Auckland Council’s top risk profile remains stable. No new significant risks have emerged to require a recommendation to add any new risks. (Attachment A page 2 and pages 8 to 19)

9.       Risk and Assurance continues to work with the owners of actions to improve top risk mitigations to progress with the actions assigned to them.

Emerging risks and heightening risk drivers

10.     There are no new emerging risks identified in this quarter.

11.     The heightened risk drivers that were consistently identified and emphasised by risk leads, risk champions and senior managers across all directorates during the quarterly risk reviews, are:

·    the impact of central government regulatory reforms.

·    increasing workforce challenges being experienced across Auckland Council.

·    the emergence of the Covid-19 Delta variant in New Zealand and specifically Tāmaki Makaurau / Auckland.

12.     Central government regulatory reforms have a medium- to long-term impact. The Three Waters reform, Resource Management Act review and Urban Development Bill will all impact on Auckland Council’s objectives, structures, strategy, and processes. These will continue to be monitored and assessed.

13.     Workforce challenges (in particular retaining and attracting talented staff in the current environment) impact on all the top risks. There are strategic initiatives being implemented (e.g., remuneration policy review) to respond to this challenge.

14.     The impact of Covid-19 and lockdown remain prominent, especially the Health, Safety and Wellbeing impacts and financial implications placing increasing budgetary pressure in terms of financial performance and next year’s annual plan.

15.     Common themes emerging from the heightened risk drivers and divisional risk profiles that are being monitored and responded to by management include:

·    financial pressures: The impact of Covid-19 heightened the challenges ELT faces to balance the combined impact of inflation, wage inflation, growth pressures, cost escalation of major capex projects including the delays caused by Covid-19

·    consenting performance: The challenges to attract and retain skilled employees combined with the changes, recent and upcoming, of resource and building regulations and obligations effect Auckland Council’s ability to maintain agreed performance standards

·    return to work dynamics and challenges for Aucklanders and Auckland Council staff due to evolving Covid-19 risk landscape and government mandates

·    business continuity risks: A potential wide-spread impact of Covid-19 may impact Auckland Council’s ability to deliver essential services, heightening the importance of effective business continuity plans

·    risk of sub-optimal investment in assets because of supply chain constraints and critical skills shortages.

Other risk activity

16.     Risk and Assurance have provided ongoing risk advice and support in the following areas:

·    development and maintenance of divisional risk profiles and departmental risk registers

·    increasing risk capability through the quarterly risk kōrero. The last kōrero was held virtually on 7 November 2021. This kōrero focused on fraud & corruption and participants gained an increased awareness of what constitutes fraud and corruption and how it can potentially be present in many areas of the Auckland Council Group. A cross-section of more than 50 people attended including risk champions, subject matter experts, ELT members, General Managers and representatives from the CCOs and the Independent Māori Statutory Board attended

·    support to Ngā Mātārae on their guide on the risk assessments of Māori Outcome Plans

17.     Risk and Assurance is actively integrating their Risk and Assurance business plans and activities to formalise risk-based assurance. This will enable the individual teams within Risk and Assurance to leverage off each team’s knowledge and observations, form a joined-up view and engage jointly with divisions.

18.     Risk and Assurance presented a draft risk dashboard to the ELT. It contains risks, trends, issues and exceptions of the Auckland Council Group. It also covers external or global developments. The draft risk dashboard is provided as Attachment A page 3 and 4.

19.     Risk and Assurance noted the Independent Māori Statutory Board’s feedback on the Auckland Council top risk for Māori Outcomes and this feedback has been reviewed with Ngā Mātārae.

20.     Risk and Assurance has been supporting the Enterprise Portfolio Management Office | Te Tari Whakahaere Kōpaki ā-Hinonga and the Enterprise Change team to grow the risk capability of project managers by supporting the application of consistent risk methodology tools and advice to key strategic projects, amongst others:

·    the Operating Model review to align with new Auckland Council strategic framework, Whanake Ora

·    HĪRA: The future Health, Safety and Wellbeing enablement solution being implemented

·    FutureFit: The online carbon footprint tool that guides individuals to make choices to lighten their impact on Papatūānuku (Earth Mother)

·    the Rates Rating Revaluations for 2021 

·    the 2022/2023 Annual Plan

·    Project Whakapai: The project to start the sale (or divestment) process for Amenities and Infrastructure Maintenance Services.

Activity planned for the next quarter (January to March 2022)

21.     The following are the focus areas for risk management activity in the next quarter:

·    continuing focus on monitoring emerging risks, heightened risk drivers and the impacts of these

·    ongoing risk support to Auckland Council’s Covid-19 response

·    refreshing the Auckland Council Risk Appetite Statements with the ELT

·    building risk management knowledge and skills through training programmes

·    assessing Independence and conflict of interest at Auckland Council and addressing any identified issues

·    ongoing risk support for key strategic projects

·    development of divisional risk profiles for the remaining divisions and risk registers for departments and identifying common risk themes across the divisions

·    continued monitoring of Auckland Council’s top risks and work with action owners to progress with risk mitigations

·    on-going monitoring of the implementation of the recommendations of the review of Auckland Council-controlled organisations (CCO) that are relevant to risk. Specifically, Climate Change Disclosures required by the Taskforce on Climate Related Financial Disclosures and Auckland Council Group reporting.

Tauākī whakaaweawe āhuarangi

Climate impact statement

22.     Climate change and its impacts remain as a top risk for Auckland Council. The drivers, impacts and control effectiveness and progress of actions to mitigate this risk are part of the quarterly top risk review.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

23.     Risk and Assurance works alongside key risk staff at CCOs to align our approach to group risk management.

24.     Staff are working with CCOs to improve monitoring and reporting on risks and risk mitigation measures following the recent CCO review. There is an action that Auckland Council reviews the way it requires CCOs to monitor and report on risks and risk mitigation measures. Auckland Council Group risk managers met in the past quarter to share observations concerning risk and align strategies and action plans.

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

Local impacts and local board views

25.     The top risks impact local boards indirectly as they represent impacts to Auckland Council.


 

Tauākī whakaaweawe Māori

Māori impact statement

26.     The delivery of Māori outcomes is a key strategic priority for Auckland Council.

27.     Risk and Assurance is actively supporting the delivery of Māori Outcomes and will engage with the newly appointed Herewini Te Koha as Tumuaki Huanga Māori (Director Ngā Mātārae - Māori Outcomes) to ensure activities remain aligned.

28.     Risk and Assurance is partnering with Ngā Mātārae and Māori Outcomes representatives at a divisional level to support them in achieving their objectives at a divisional level.

Ngā ritenga ā-pūtea

Financial implications

29.     Financial management continues to be a top risk for Auckland Council, and the risk team closely monitor the drivers and impacts associated with this risk.

30.     There are no financial costs associated with the committee receiving this report on enterprise risk management activities, and there are no funding decisions required.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

31.     The top risks and mitigations for Auckland Council are discussed within the main body of this report and within the attachments.

32.     Risk and Assurance regularly reviews the external and internal environment to identify emerging or heightened risks and trends.

Ngā koringa ā-muri

Next steps

33.     This report is to be referred to the next meeting of the Governing Body for its information.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Enterprise Risk Update

47

     

Ngā kaihaina

Signatories

Authors

Andre de Wet - Senior Risk Advisor

Ann Brown - Senior Risk Advisor

Gemma Wensor - Risk Advisor

Matthew Kerly - Risk Advisor

Authorisers

Mark Maloney - General Manager Risk and Assurance

Phil Wilson - Director, Governance & CCO Partnerships

 

 


Audit and Risk Committee

07 December 2021

 

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Audit and Risk Committee

07 December 2021

 

Final Office of the Auditor-General report to governors for the year ended 30 June 2021

File No.: CP2021/17474

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide committee members with an overview of the internal control and financial/non-financial reporting matters identified by the Office of the Auditor-General during the final audit for the year ended 30 June 2021 and outline how Auckland Council is addressing the matters.

Whakarāpopototanga matua

Executive summary

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

3.       Following the completion of the final audit, a report has been issued which outlines issues identified and makes recommendations for significant items that need to be addressed. This year, the report includes priority ratings for recommendations, being urgent, necessary and beneficial. The report is provided as Attachment A.

4.       The service performance of non-notified resource consents continues to be highlighted as an area for improvement, specifically regarding processes, systems and controls to accurately record resource consent processing times.

5.       There is one new recommendation: valuation of operational, restricted and infrastructure assets. It has a rating of necessary.

6.       The report also includes an update on prior year recommendations which are either in progress or have been resolved. Issues in progress are:

Matter

Priority rating

Building and resource consent processing times

Urgent

Accounting treatment of COVID-19 costs

Necessary

Valuation of investment properties

Necessary

Climate change

Necessary

AC 36 asset handover

Necessary

Review of Delegated Financial Authority Policy and SAP delegation

Necessary

Portfolio, programme and project management – Gateway reviews

Necessary

Consenting and service performance reporting

Necessary

Project management − project closure and benefits measurement

Beneficial

 

7.       Two of the 11 outstanding matters raised in previous reports have been resolved. These are detailed in Appendix 3 of Attachment A under the heading “Matters that have been addressed during the year”.

8.       The council accepts the Office of the Auditor-General’s recommendations and has provided a response outlining actions being taken to address each issue.

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the matters identified by the Office of the Auditor-General in its report to governors at 30 June 2021, and Auckland Council’s responses to those matters.

Horopaki

Context

9.       This report summarises the matters identified by the Office of the Auditor-General during the final audit for the year ended 30 June 2021 and outlines how the council is addressing the matters raised.

10.     The Office of the Auditor-General issued their audit report on the Auckland Council Group Annual Report 2020/2021 on 27 September 2021. As part of the audit process, the auditors evaluate the council’s systems, processes and controls that have an impact on the annual report. Matters identified during the audit are reported to the council. The council responds to the matters raised and describes the actions that will be undertaken to resolve them.

Tātaritanga me ngā tohutohu

Analysis and advice

11.     The following matter was a new matter raised, with management’s response:

Matter

Priority rating

Management’s response

Valuation of operational, restricted and infrastructure assets

Valuers should consider the “chance of change” approach for restricted land, and valuation reports should include supporting data e.g. values used.

Necessary

We concur and going forward we will ensure that valuers address these recommendations.

 

12.     Updates were provided on previous recommendations:

Matter

Priority rating

Management’s response

Building and resource consent processing times

 

Urgent

Under-resourcing in the resource consents department is being addressed which will improve processing times.

Accounting treatment of COVID-19 costs

Necessary

Management will review the nature of these costs especially in light of the recent COVID-19 Alert Level 4 lockdown.

Valuation of investment properties

Necessary

We will ensure that future contracts with valuers stipulate the requirement for more information to be contained in their reports.

Climate change

Necessary

We will continue to evolve our climate disclosure and implement the recommended disclosures of the Taskforce for Climate-related Financial Disclosures framework. In calendar year 2022, we will complete a climate change risk assessment and identify an approach for how we manage climate risk across the group.

AC 36 – Asset handover

Necessary

The final documentation is expected to be completed following the conclusion of the defects liability period in November 2021.

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

Necessary

The review of DFAs is included in the 2021/2022 Risk and Assurance work programme.

Portfolio, Programme and Project Management – Gateway reviews

Necessary

To ensure a review of governance/gating process, the EPMO are establishing a “hub and spoke” model in December 2021.

Sentient is being upgraded to provide better visibility of each project.

Sponsor training has been developed on topics such as governance and gating.

Consenting and service performance reporting

Necessary

Under-resourcing in the resource consents department is being addressed which will improve processing times.

Project management − project closure and benefits measurement

Beneficial

An ELT Portfolio Delivery Board (PDB) has been established. They will review benefits realisation.

By June 2022, management plans to deliver a benefits framework, transparent reporting of benefits to the ELT, targeted audits on larger programmes and a library of benefits with quality measures as exemplars.

Tauākī whakaaweawe āhuarangi

Climate impact statement

13.     There are no items covered by this agenda item that impact climate change although there is an audit recommendation regarding climate change financial disclosures in the 2020/2021 annual report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

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

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

Local impacts and local board views

15.     There are no local impacts from the audit report or 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 or reporting on Auckland Council’s or the Auckland Council Group’s contributions towards Māori outcomes. The council’s contributions to Māori outcomes are reported in the annual report.

Ngā ritenga ā-pūtea

Financial implications

17.     While this report is for information only, should management change its accounting policy for COVID-19 Alert Level 4 “tools down” costs to align with Audit New Zealand’s view, this would put pressure on the group’s operating budget and impact the group’s financial performance by approximately $44 million.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

18.     There is a risk that actions undertaken by management to address internal control deficiencies may not be considered sufficient or appropriate to address Audit New Zealand’s concerns. In order to mitigate this risk, the financial control and risk teams have regular open discussions with Audit New Zealand to ensure that matters are being progressed to Audit New Zealand’s satisfaction.

Ngā koringa ā-muri

Next steps

19.     Auckland Council will continue to work on resolving and clearing the outstanding issues.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Auditor-General's Report to governors for the year ended 30 June 2021

71

     

Ngā kaihaina

Signatories

Author

Tracy Gers - Group Accounting & Reporting Manager

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

07 December 2021

 

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Audit and Risk Committee

07 December 2021

 

Approval of the draft Office of the Auditor-General Interim Review Engagement Letter for the six months ended 31 December 2021

File No.: CP2021/17495

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To review and endorse the draft Office of the Auditor-General Interim Review Engagement Letter for the six months ending 31 December 2021 (Attachment A).

Whakarāpopototanga matua

Executive summary

2.       Audit New Zealand has provided the Office of the Auditor-General’s draft interim review engagement letter for the six months ending 31 December 2021 (the draft letter).

3.       The draft letter outlines the scope of responsibilities, group entities subject to review, areas of review focus and administration matters such as proposed fee, logistics and timetables.

4.       The draft letter is substantially the same as in prior years with the addition of:

·   three waters reforms

·   configuration and customisation costs of Software-as-a service (SaaS)

·   central government funding.

5.       The Audit and Risk Committee have responsibility for approving the draft letter before Audit New Zealand issues the final letter for approval by the mayor and chief executive.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      review and endorse Audit New Zealand’s draft interim review engagement letter, including the proposed review engagement fee

b)      request Audit New Zealand issue the final interim review audit engagement letter

c)       recommend the mayor and chief executive sign the final interim review audit engagement letter.

 

Horopaki

Context

6.       Management have reviewed the draft letter and provided feedback to Audit New Zealand, which has been incorporated.

7.       A review engagement provides readers with a moderate level of assurance that nothing has come to the auditor’s attention that causes the auditor to believe that the interim financial statements do not fairly reflect the Auckland Council Group’s financial position, performance and cash flows for the period. This moderate level of assurance (known as negative assurance) is a lower level of assurance than that of an audit and is our usual process for interim reporting.

8.       The review is performed in accordance with the review standards issued by the External Reporting Board. It primarily involves enquiry, analytical procedures, the obtaining of representations and reconciliation of the financial statements to underlying accounting records.

9.       The draft letter outlines the scope of responsibilities, group entities subject to review, areas of review focus and administration matters such as logistics, proposed fee and timetables. It is substantially the same as in prior years.

10.     The Audit and Risk Committee have responsibility for approving the draft letter before Audit New Zealand issues the final letter for approval by the mayor and chief executive.

Tātaritanga me ngā tohutohu

Analysis and advice

11.     The draft letter outlines the:

·   scope of the Audit New Zealand and the Auditor-General’s responsibilities

·   scope of the Governing Body and management’s responsibilities

·   areas of the review focus

·   engagement logistics, proposed fee and timelines.

12.     This draft letter includes areas of focus which are similar to the prior year with the removal of business combination/early adoption of accounting standards, and the addition of three waters reforms, configuration and customization costs of Software-as-a service (SaaS) and central government funding. The areas of focus are summarised as follows:

·   Valuation of property, plant and equipment

o Fair value assessment of fixed assets and investment property – consideration of significant changes in fair value which might require an independent valuation to be carried out

o Accounting for capitalisation and impairment of work in progress – work in progress on projects that span an extended period should be assessed for impairment

·   Valuation and disclosure of derivatives – derivatives should be appropriately valued, and fair value movements should be clearly explained in the financial statements

·   Provisions – the weathertightness provision should be re-assessed

·   City Rail Link Limited (CRLL) – the council’s investment in CRLL and asset transfers by CRLL should be appropriately accounted for and disclosed

·   Three waters reforms – there should be sufficient disclosure about the impact of the reforms

·   Configuration and customisation costs of SaaS - costs relating to SaaS should be correctly accounted for and the interim financial statements should include appropriate disclosures

·   Central government funding – any funding agreements should be fairly reflected in the interim financial statements

·   COVID-19 risks – consider the risks of restrictions on the interim report

·   Management override of controls – Audit New Zealand will maintain an awareness of the risk of management override of controls as they perform their review procedures

·   Rates revenue recognition – annual rates revenue should be recognised in full, from the beginning of the financial year, and appropriately discounted for rates yet to be received in accordance with PBE IPSAS 23

·   Legislative compliance – all reporting should continue to undergo a thorough legal review to ensure compliance with legislation and NZX listing rules.

13.     All accounting matters will be subject to formal accounting analysis by the Financial Control team.

14.     The proposed fee for the review engagement is $126,266 plus disbursements. This is approximately 10 per cent of the 30 June 2021 audit fee and represents an increase of 1.9 per cent on the fee charged for the same engagement last year.

15.     We consider the areas of review focus and the proposed fee are appropriate, given the size and complexity of the review engagement.

16.     The acting group financial controller will present any amendments to this draft letter at the committee meeting.

17.     Audit New Zealand Audit Director Athol Graham will be in attendance to answer any questions the committee may have in relation to the draft letter.

Tauākī whakaaweawe āhuarangi

Climate impact statement

18.     This report relates to financial reporting and as such has no climate implications.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

19.     This report is about the engagement of Audit New Zealand for the Auckland Council Group as a whole. Accordingly, the group impacts are outlined in the body of this document.

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

Local impacts and local board views

20.     This report is about engagement of Audit New Zealand for the Auckland Council Group as a whole, with no impact at a local board level.

Tauākī whakaaweawe Māori

Māori impact statement

21.     The report is about engagement of Audit New Zealand for the Auckland Council Group as a whole, with no impact specific to Māori.

Ngā ritenga ā-pūtea

Financial implications

22.     The proposed fee for the review engagement is $126,266 plus disbursements which is an increase of 1.9 per cent on the fee charged for the same engagement last year. This is provided for within existing budgets.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

23.     There is a risk of a potential increase in the auditor’s fees. This could occur if there is a significant increase in the review scope which would require extra audit effort, or if Audit New Zealand engages experts (e.g. valuers).

24.     To mitigate this risk, Audit New Zealand and Auckland Council staff meet fortnightly to discuss audit issues to ensure they are managed and resolved efficiently. 


 

Ngā koringa ā-muri

Next steps

25.     Following the approval of the draft letter by the committee, Audit New Zealand will issue the letter in its final form for the mayor and chief executive to sign. Auckland Council staff will also confirm and finalise the council and Audit New Zealand’s delivery timelines, to ensure a timely and efficient review process.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

OAG Draft review engagement letter 31 December 2021

115

     

Ngā kaihaina

Signatories

Author

Tracy Gers - Group Accounting & Reporting Manager

Authorisers

John Bishop - Group Treasurer

Peter Gudsell - Group Chief Financial Officer

Phil Wilson - Director, Governance & CCO Partnerships

 


Audit and Risk Committee

07 December 2021

 

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Audit and Risk Committee

07 December 2021

 

Preparation of the interim report and NZX release for the six months ending 31 December 2021

File No.: CP2021/17336

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide the Audit and Risk Committee with an update on the status of financial processes for the preparation of the interim report and the NZX release for the six months ending 31 December 2021.

Whakarāpopototanga matua

Executive summary

2.       On 22 February 2022, the Audit and Risk Committee will be asked to recommend that the chair and deputy chair of the Finance and Performance Committee approve, and recommend to the mayor and chief executive that they approve, the following documents for release to the NZX on 28 February 2022:

·   NZX announcement

·   associated media release 

·   interim report for the six months ending 31 December 2021.

3.       This report assists the committee in the review of the quality of the interim report documents and processes undertaken to prepare them, for the six months ending 31 December 2021, including:

·   key audit matters for the review engagement at 31 December 2021

·   review engagement milestones

·   quality assurance and compliance sign-off processes

·   management representation letters and management confirmations

·   the Audit and Risk Committee’s oversight of the management of fraud.

4.       To encourage transparency in our committee reporting, we have endeavoured to discuss as much information as possible about the half year reporting and audit review requirements in this report. However, there is some information which cannot be released to the public due to disclosure requirements of the NZX. Instead, updates on key areas of judgement, estimates and assumptions, and on issues and risks will be presented to the committee in the confidential report at this meeting “Confidential: Interim report and NZX release for the six months ending 31 December 2021”.

5.       Additionally, five documents will be provided in the confidential item relating to the preparation of the reporting for the six months ending 31 December 2021:

·   draft NZX announcement

·   draft memo to the mayor and chief executive (based on prior year)

·   draft letter of representation for the group interim report (based on prior year)

·   draft fraud questionnaire

·   pro forma interim report for the six months ending 31 December 2021 (for approval).


 

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the information contained in this financial process status update for the Auckland Council Group NZX announcement and interim report for the six months ending 31 December 2021

b)      note that an update on the confidential matters and confidential draft documents related to the interim report and NZX release will be discussed later in this meeting in confidence.

 

Horopaki

Context

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

7.       Under NZX listing rules, the group must release financial information within 60 days after the six months ending 31 December 2021.

8.       The release to the NZX (‘NZX release’) includes the following documents:

·   results announcement

·   media release

·   interim report for the six months ending 31 December 2021.

9.       The Audit and Risk Committee will review the NZX release and the processes used to prepare the documents. The chair and deputy chair of the Finance and Performance Committee will review and enquire into the financial and operational performance of the group.

10.     Audit New Zealand will attend the Audit and Risk Committee meeting on 22 February 2022 to enable the committee to liaise with Audit New Zealand to ensure that a robust financial review of the group has occurred.

11.     In fulfilment of its terms of reference, on 22 February 2022 the Audit and Risk Committee will be asked to make the following recommendations to the chair and deputy chair of the Finance and Performance Committee:

·   recommend the chair and deputy chair of the Finance and Performance Committee approve the half year NZX release for the six months ended 31 December 2021.

·   recommend that the chair and deputy chair of the Finance and Performance Committee authorise the mayor and the chief executive to approve and release the half year NZX release on 28 February 2022.

Tātaritanga me ngā tohutohu

Analysis and advice

12.     Audit New Zealand’s key review matters for the review engagement at 31 December 2021 are:

·   internal control matters:

o treasury and funding management controls

o management override of controls

o legislative compliance

·   accounting matters:

o valuation of property, plant and equipment including:

-    fair value assessment

-    accounting for impairment and capitalisation of work in progress

o valuation of investment properties

o valuation and disclosure of derivatives

o valuation of the provision for weathertightness and associated building defect claims

o rates revenue recognition

o City Rail Link Limited

o impact of COVID-19

o three waters reforms

o configuration and customisation costs for Software-as-a-service (SaaS)

o government stimulus funding.

Key milestones

13.     The key milestones for the NZX release and interim report are:


 

Quality assurance and compliance approvals

14.     Quality assurance reviews will be performed on the consolidated results and commentary of the NZX release documents. The reviews will focus on accuracy, completeness and reasonableness of disclosures, legislative compliance and adherence to council communications standards. A summary of the reviews are as follows:

Reviewer

Consolidated results and commentary

Interim report

NZX release

Media release

Group chief financial officer*

 

ü

ü

ü

Group treasurer*

ü

ü

ü

ü

GM financial strategy and planning

 

ü

ü

ü

GM financial and business performance*

 

ü

ü

ü

Group financial controller*

ü

ü

ü

ü

Manager group accounting and reporting*

ü

ü

ü

ü

Senior group reporting technical accountant*

ü

ü

ü

ü

Financial accounting manager*

ü

ü

ü

ü

Head of group financial planning*

 

ü

ü

ü

Senior specialist corporate communications

 

 

ü

ü

Senior solicitor and Mayne Wetherell

 

ü

ü

ü

 

15.     All the quality assurance reviewers performing technical reviews (denoted with *) are Chartered Accountant (CA) or equivalent and have the appropriate technical accounting skills and knowledge.

Management representation letters and management confirmations

16.     Audit New Zealand will require the mayor and chief executive to sign a letter providing assurance that the control environment adequately supports the validity, accuracy and completeness of financial reporting, and that the financial statements comply with applicable standards and regulations. 

17.     To support the mayor and the chief executive’s representations, the group chief financial officer, group treasurer and the group financial controller will sign a back-to-back representation letter.

18.     A draft copy of the representations, based on the prior year, is included in the confidential report at this meeting titled “Confidential: Interim report and NZX release for the six months ending 31 December 2021”.


 

Draft representation on fraud and fraud questionnaire

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

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

21.     A copy of the draft fraud questionnaire is included in the confidential report at this meeting titled “Confidential: Interim report and NZX release for the six months ending 31 December 2021”.

Other matters

22.     The group financial controller will communicate any significant risks or material judgements that arise between committee meetings to the chair of the committee, along with any unresolved significant disagreements between Auckland Council management and Audit New Zealand.

Tauākī whakaaweawe āhuarangi

Climate impact statement

23.     This report relates to a financial reporting process only and as such has no climate implications. Auckland Council Group’s climate impact will be included in the annual report and summary annual report. No decision is sought in this paper that has an impact on greenhouse gas emissions and the council’s approach to reduce emissions.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

24.     Feedback will be sought from substantive council-controlled organisations to ensure that any matters that apply to them have been considered in preparation for the 31 December 2021 interim report. All matters have been incorporated into the work plan.

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

Local impacts and local board views

25.     This report relates to the financial reporting of the Auckland Council Group, which does not include reporting at a local board level. No decision is sought that would impact local boards, accordingly the views of the local boards have not been sought.

Tauākī whakaaweawe Māori

Māori impact statement

26.     This report relates to the approval of financial reporting of the Auckland Council Group, which does not affect the achievement or reporting of the council’s contributions to Māori outcomes. The group’s contributions to Māori outcomes will be reported in the 30 June 2022 Annual Report. No decision is sought in this paper that has a direct impact on Māori.

Ngā ritenga ā-pūtea

Financial implications

27.     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

28.     No risks have been identified related to the information provided in this report.

29.     Any risks and mitigations relating to the key judgements and assumptions will be outlined in the confidential section of this meeting under the report “Confidential: Interim report and NZX release for the six months ending 31 December 2021”.

Ngā koringa ā-muri

Next steps

30.     The committee will review the confidential key judgements, estimates and assumptions and attachments relating to this report in the confidential section of this meeting under the report “Confidential: Interim report and NZX release for the six months ending 31 December 2021”.

31.     The Auckland Council Group NZX announcement, media release and interim report for the six months ending 31 December 2021 will be presented to the Audit and Risk Committee on 22 February 2021 for review and approval.

 

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

07 December 2021

 

Annual Report on the Performance of the Audit and Risk Committee

File No.: CP2021/17999

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       This purpose of this report is to review and summarise the activities of the Audit and Risk Committee in 2021.

Whakarāpopototanga matua

Executive summary

2.       The committee’s responsibilities are set out in its Terms of Reference.

3.       The Terms of Reference provide that 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.

4.       It is good practice that the Audit and Risk Committee should review their performance on an annual basis.

5.       This report summarises the key actions performed by the committee, in response to the committee’s responsibilities as contained in the committee’s Terms of Reference.

6.       This report is the second report for this term of council. The report covers the activity of this committee from December 2020 to present.

7.       In 2021 there has been a particular focus by the Committee on being briefed, having oversight of, and providing direction on:

·    the ongoing impact of Covid-19 (including appropriate management of the Covid-19 risks and impacts; assurance that key internal control has continued to operate, and the appropriate accounting of the impact on operations)

·    the Consultation Document and Long-Term Plan (LTP) 2021-2031

·    Health Safety and Wellbeing (noting an improvement in the quality of key reporting to the Committee)

·    Alignment of risk reporting by substantive council-controlled organisations

·    the introduction of Ports of Auckland Limited into the Committee’s forward work plan

·    a change in the group insurance strategy to move towards a greater focus on self-insurance

·    the reset of council’s ”top risks” to reflect the organisational response to the disruption caused by the Covid-19 pandemic.

8.       The committee has discharged its responsibilities as contained in its Terms of Reference.

9.       The relationship that the committee has with the mayor, elected members, the chief executive, management, the Office of the Auditor-General and Audit New Zealand is pitched at the right level, achieving a productive working relationship, whilst maintaining an independent oversight of key organisational risks and the management of those risks.


 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      receive this annual report on the Performance of the Audit and Risk Committee

b)      recommend that the chief executive place the report on the next available agenda of the Governing Body.

 

Horopaki

Context

10.     The Audit and Risk Committee makes a valuable contribution to improving the governance and performance of council. The role and purpose of the committee is unique and different to most other committees. It is advisory in nature. In summary, it acts as an independent check on council’s systems of governance and internal control. It provides assurance to council that key organisational risks are being identified and appropriately managed.

11.     The Terms of Reference of the committee are based on good practice – focusing on governance, enterprise risk management and internal control.

12.     The Terms of Reference require the chair of the committee to 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.

13.     The committee is chaired by an independent Chairperson, Sue Sheldon CNZM.

14.     A three-year forward work programme was developed and approved by the committee in December 2019.

15.     In the last term of Council, the committee focussed on the development of a healthy and productive relationship with the Office of the Auditor-General and Audit New Zealand, and on supporting senior management’s development of Enterprise Risk Management across Council. It provided guidance and stretch to ensure the continuing advancement of capability.

Tātaritanga me ngā tohutohu

Analysis and advice

Areas of focus in 2021

16.     In 2021 there has been a particular focus by the Committee on being briefed, having oversight of, and providing direction on:

·    the ongoing impact of Covid-19

·    the Consultation Document and Long-Term Plan (LTP) 2021-2031

·    Health Safety and Wellbeing

·    the introduction of Ports of Auckland Limited into the Committee’s forward work plan

·    alignment of risk reporting by substantive council controlled organisations

·    a change in the group insurance strategy to move towards a greater focus on self-insurance

·    the reset of council’s ”top risks”.


 

Impact of Covid-19

17.     In April 2020 the committee’s forward work programme was amended to respond to the risks, issues and themes that have emerged during the Covid-19 pandemic. The Committee has continued this focus during 2021 in the following areas:

·    Covid-19 risks are being appropriately identified and responded to, and reported on through the Enterprise Risk management framework

·    A continued focus on assurance that key internal controls over financial systems are continuing to operate effectively (oversight of the Covid-19 assurance programme)

·    Covid-19 accounting issues are being appropriately reflected and disclosed in Council’s interim and annual financial statements e.g. accounting for “down-tools” expenditure.

Long Term Plan 2021-2031

18.     In 2020, the committee was called upon to take a role in the development of Council’s response to Covid-19. Elected members of Council found it helpful to hear the committee’s view on the robustness of process supporting management’s recommendations with respect to the Emergency Budget.

19.     In 2021 the committee continued this focus, maintaining oversight of the identification and management of risk, and providing direction in the preparation of the 2021-2031 Consultation Document and Long- Term Plan.

Health, Safety and Wellbeing

20.     In 2021 the committee has received regular briefings on:

·    Critical Health, Safety and Wellbeing risks and mitigations strategies

·    The findings and implementation of recommendations with respect to the Hauora (Wellbeing) review.

21.     The Committee has observed the improvement in the quality of reporting on Health, Safety and Wellbeing indicators.

Ports of Auckland Limited

22.     In 2021 the management of enterprise risk at Ports of Auckland limited (POAL) was introduced into the Committee’s forward work programme. Two briefings were received during the year on the management of, and assurance over, top risks at POAL. Moving forward, POAL will report on its top risks in a similar fashion to the four substantive Council Controlled Organisations.

Insurance Strategy

23.     The committee reviewed and provided guidance on the refreshed group Insurance Strategy. This included oversight of, and guidance on the options work performed on the evaluation of alternative insurance arrangements. This culminated in the approval by the Finance and Performance Committee in October to approve the establishment of a self-insurance fund as from 1 July 2021.

Top Risk Reset

24.     The Auckland Council top risks were reviewed and reset in accordance with the council’s Risk Management Framework in the second quarter of 2020/2021. The reset was to ensure the top risk profile reflected the organisations response to the impact on Council of the Covid-19 pandemic. The risk reset process has resulted in a deeper and more mature understanding of the top risks that builds on the work completed in the last three years. 


 

The Forward Work Programme

25.     The three-year forward work programme is reviewed at every meeting of the Committee. This has provided for in-depth sessions in either workshops, or in the meeting proper for the committee to be briefed on, have oversight of, and provide direction on:

·    the Enterprise Risk Management, and Assurance Services work programme. This has included oversight and direction of both programmes in response to the risks, issues and themes that have emerged during the COVID-19 pandemic

·    quarterly updates on council-controlled organisation risk management

·    six-monthly updates on legal risk

·    six monthly updates 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

·    updates on health, safety and wellbeing performance information – to discharge the committee’s due diligence responsibilities under the Health and Safety at Work Act 2015

·    governance over the Americas Cup Programme, and the City Rail Link project

·    the 2021/22 Insurance Renewal.

26.     The committee has regularly reviewed the Enterprise Risk Management work programme. This has included:

·    reviewing the council’s ‘Top Risks’ and risk mitigations

·    monitoring the implementation of the Enterprise Risk Management Strategy and Plan

·    receiving and reviewing risk updates from council’s substantive council-controlled organisations

·    meeting with senior management and board representatives from substantive council-controlled organisations to better understand their risk management processes, especially at board level.

27.     The committee has reviewed on a regular basis through the period, the Assurance Services work programme. This has included:

·    approving the Assurance Services Charter, which establishes the independence, mandate, scope, and authority of the Assurance Services department

·    reviewing, approving, and monitoring the implementation of the Assurance Services three-year strategy

·    reviewing, approving, and monitoring the implementation of the detailed annual Assurance Services programme

·    reviewing the status of outstanding audit recommendations.

28.     The committee has reviewed the key professional judgements, assumptions, and management assertions with respect to the:

·    announcement to the New Zealand Stock Exchange (NZX) for the release of financial information for:

the six months ended 31 December 2020

the 12-month period ended 30 June 2021

·    the interim financial statements for the six months ended 31 December 2020

·    the Annual Report (including financial statements) for the year ended 30 June 2021.

29.     The Chair of the committee continued her role at management’s request as a member of the internal Continuing Disclosure Committee, which met a number of times to test the appropriateness of disclosures to the NZX and the public.

30.     The committee has placed particular emphasis on maintaining a productive working relationship with the Office of the Auditor-General and Audit New Zealand. This has included:

·    reviewing the areas of audit focus as contained in the Arrangements letter for the Audit of the 2021-31 Long-term Plan (including Consultation Document), the Annual Audit Arrangements letter (audit of annual report) and the Interim Financial Statements Review Engagement letter (review of six-month interim group financial statements)

·    reviewing the interim and final management reports with respect to each engagement

·    reviewing the status of outstanding external audit recommendations (including management responses to these recommendations).

31.     Regular committee-only sessions have been held with the Office of the Auditor-General and Audit New Zealand

Conclusions

32.     The committee has discharged its responsibilities under its Terms of Reference.

33.     The relationship that the committee has with the mayor, elected members, the chief executive, management, the Office of the Auditor-General and Audit New Zealand is pitched at an appropriate level, achieving a productive working relationship, whilst retaining independence.

Tauākī whakaaweawe āhuarangi

Climate impact statement

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

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

35.     The committee has oversight of and receives regular reporting on the risk and assurance activities of Council-Controlled Organisations. 

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

Local impacts and local board views

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

Tauākī whakaaweawe Māori

Māori impact statement

37.     The committee has responsibility for oversight of progress in implementing audit recommendations arising from the Te Tiriti o Waitangi audit. This is included in the committees forward work programme. The committee receives six monthly reports on progress.

Ngā ritenga ā-pūtea

Financial implications

38.     There are no financial implications arising from the recommendations for this report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

39.     There are no risks arising from the recommendations for this report.

Ngā koringa ā-muri

Next steps

40.     This report is to be placed on the agenda of the next available meeting of the Governing Body.

Ngā tāpirihanga

Attachments

There are no attachments for this report.    

Ngā kaihaina

Signatories

Author

Sue Sheldon, CNZM

 


Audit and Risk Committee

07 December 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 - December 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: Legal Risk Update

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

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

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

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

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

s48(1)(a)

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

 

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 the Assurance Services work programme.

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: Interim report and NZX release for the six months ending 31 December 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 and attachments contain information regarding the interim report and financial results of Auckland Council Group as at 31 December 31 which cannot be made public until 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 from the Office of the Auditor-General and Audit New Zealand contains information regarding the interim report and financial results of Auckland Council Group as at 31 December 2021 which cannot be made public until 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.