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

 

Date:

Time:

Meeting Room:

Venue:

 

Monday, 12 September 2022

2.00pm

Reception Lounge
Level 2
Auckland Town Hall
305 Queen Street
Auckland

 

Kōmiti 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

 

 

Member Paul Conder, CA

 

 

Cr Shane Henderson

 

 

Member 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

 

6 September 2022

 

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

12 September 2022

A picture containing logo

Description automatically generated

 

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          City Rail Link risk update                                                                                            15

10        Preparation of Auckland Council Group's draft annual report 2021/2022 and draft summary annual report 2021/2022                                                                            23

11        Annual report on the performance of the Audit and Risk Committee                   29

12        Consideration of Extraordinary Items

PUBLIC EXCLUDED

13        Procedural Motion to Exclude the Public                                                                 35

C1       CONFIDENTIAL: Council-controlled organisations' audit and risk updates        35

C2       CONFIDENTIAL: Ports of Auckland Limited audit and risk update                       36

C3       CONFIDENTIAL: Assurance Services Activity Update                                           36

C4       CONFIDENTIAL: Draft Annual Green Bond Report June 2022                              37

C5       CONFIDENTIAL: Recommendation of Auckland Council's draft annual report 2021/2022 and summary annual report 2021/2022                                                   37

C6       CONFIDENTIAL: Office of the Auditor-General and Audit New Zealand Briefing 37


1          Apologies

 

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

 

 

2          Declaration of Interest

 

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

 

 

3          Confirmation of Minutes

 

That the Audit and Risk Committee:

a)         confirm the ordinary minutes of its meeting, held on Tuesday, 23 August 2022, 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

12 September 2022

 

Forward Work Programme

File No.: CP2022/11575

 

  

 

Te take mō te pūrongo

Purpose of the report

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

Whakarāpopototanga matua

Executive summary

2.       In accordance with best practice, the Committee reviews the forward work programme at each meeting to ensure it can be adapted to Council’s risk profile and that it remains relevant for the Committee.

3.       The following changes have been made to the work programme:

·    the Committee’s Annual Performance report is being presented in this September meeting

·    the Assurance Charter and 2022-2023 Audit Plan will be presented at the first meeting of the new term for Council.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)         approve the forward work programme noting:

i)          the Committee’s Annual Performance report is being presented in this September meeting

ii)         the Assurance Charter and 2022-2023 Audit Plan will be presented at the first meeting of the new term for Council.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Forward Work Programme

13

      

Ngā kaihaina

Signatories

Author

Alana Pribicevich - Risk Advisor

Authorisers

Emma Burke - General Manager Risk and Assurance

Phil Wilson - Director, Governance & CCO Partnerships

 

 



Audit and Risk Committee

12 September 2022

 

 


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

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

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

 

 

 

Area of work and lead

Expected reporting 2022 (dates TBC)

22 Feb

17 May

23 Aug

12 Sep

TBA

Forward work programme

GM Risk and Assurance

Work programme

Link to decision

Work programme

Link to decision

Work programme

Link to decision

Work programme

Committee’s Annual performance report

Work programme

 

Assurance

GM Risk and Assurance

 

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

Audit Programme reporting – updated plan and audits completed

Link to decision - confidential

Assurance Charter and interim audit plan

Link to decision

Assurance activities update (fraud and integrity, internal audits, reviews and speak up)

 

Assurance Charter and 2022-2023 Audit Plan

Independent Maori Statutory Board - Treaty Audit

GM Risk and Assurance

Treaty Audit Monitoring update

Link to decision

 

Treaty Audit Monitoring update

Link to decision

 

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

Enterprise Risk

Risk Team

Enterprise Risk Update

Link to decision

 

Enterprise Risk Update

Link to decision

 

Enterprise Risk Update

 

CCO Risk management

Risk Team

CCO quarterly risk report

Attendance by Auckland Transport

Link to decision - confidential

CCO quarterly risk report

Attendance by Eke Panuku

Link to decision - confidential

CCO quarterly risk report

Attendance by Auckland Unlimited

Link to decision - confidential

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

Attendance by Auckland Transport, Auckland Unlimited, Eke Panuku and Watercare

CCO quarterly risk report

Attendance by Watercare

Ports of Auckland Limited (POAL) Risk management

Risk Team

 

Ports of Auckland Audit and Risk Activity Update May 2022

Link to decision

POAL risk update

Attendance by POAL

Link to decision - confidential

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

Attendance by POAL

 

Auckland Council partner/ shareholder risk management

Director Infrastructure and Environmental Services & CCO/ External Partnerships Dept

Chief of Strategy

 

 

 

City Rail Link

 

 

 

Three Waters Reform update

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

Health, safety and wellbeing 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

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 2021 Interim Report NZX Announcement clearance

Link to decision - confidential

Audit New Zealand Review engagement management report 31 December 2021

Link to decision

 

 

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)

Link to decision

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

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

Link to decision

Link to decision - confidential

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

Link to decision

Link to decision - confidential

Audit New Zealand Interim audit management report 30 June 2022

Link to decision

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

 

Annual Budget 2022/2023

GM Financial Strategy and Planning

 

Risk management approach for the Annual Budget 2022/2023

Link to decision

 

 

 

Annual Green Bond Report

 

Process for Annual Green Bond Report 30 June 2022.

Link to decision

 

Annual Green Bonds Report 30 June 2022.

 

Long Term Plan 2021/2031

Annual Plan

GM Financial Strategy and Planning

 

 

 

 

2023/24 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

 

Briefing paper provided

 

 


Audit and Risk Committee

12 September 2022

 

City Rail Link risk update

File No.: CP2022/12670

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide an update on sponsor risks in relation to the city rail link project.

Whakarāpopototanga matua

Executive summary

2.       This report provides an update on sponsor risks in relation to the city rail link project. This follows the workshop presentation provided by staff on 23 August 2022.

3.       The report provides a brief summary of the current project status, noting that the successful civil construction phase is drawing to a close, and the shift to installation of systems. This is accompanied by planning for operationalisation of the railway and a focus on delivering the customer experience.

4.       A description of the report by the Office of Auditor-General on the governance of city rail link project is included, along with the response by staff to this.

5.       The key risks identified in the most recent Sponsor Risk Workshop (March 2022) and controls in place are described. Some key themes of this workshop include:

·    managing the impacts of Covid-19 and the likelihood of financial claims by the Link Alliance as a result of this. The associated process being developed by Sponsors to manage these risks is described.

·    a focus on the day 1/day 90 customer experience and ensuring that all the partner entities are aligned and have clarity about what needs to be delivered.

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note the City Rail Link project risk and assurance update.

 

Horopaki

Context

6.       Auckland Council is one of the joint Project Sponsors of CRL along with the Crown. Staff last reported formally to the committee in August 2021, but also by way of workshops on 22 February and 23 August 2022. 

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

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

Tātaritanga me ngā tohutohu

Analysis and advice

Project status

9.       The Audit and Risk Committee (the Committee) will recall that the initial focus of the Link Alliance has been delivery of the civil infrastructure (tunnels and stations) for the project. These works have progressed significantly since the last report to the Committee, and the breakthrough of the second tunnel at Te Wai Horotiu (Aotea) station is expected shortly (September/October 2022). Additionally, significant progress has been completed on excavation and mining of all of the new or upgraded stations. As a consequence, the risk profile of the project is now reducing in terms of aspects such as unforeseen ground conditions.

10.     The project is now rapidly approaching a change in focus from the civil infrastructure to the systems, control, integration, testing and commissioning phase. While the visible infrastructure will appear substantially complete to the public, the experience of rail projects overseas has demonstrated that the project is still probably at around the halfway stage in terms of what remains to deliver an operational railway that meets customer expectations. More information about the key risks in this next phase, and how this part of the project will be managed by Sponsors is provided later in this report. 

Office of Auditor-General report

11.     In June 2022 the Office of Auditor-General (OAG) supplied its final report Governance of the City Rail Link project. The final report was the result of a series of interactions over a two-year period since OAG initiated the work. OAG appeared at Parliament’s Transport and Infrastructure select committee on 25 August 2022 to speak about the report. 

12.     The aim of OAG’s audit was to find out whether the governance and accountability arrangements for the City Rail Link (CRL) project are fit for purpose and whether the arrangements are consistent with good practice. OAG’s main audit question was: ‘Is the governance of the city rail link project effective and likely to support the successful delivery of the programme?’ The Auditor General concluded in the draft report that:

The governance arrangements for the project have evolved over time. We found that many aspects of the governance arrangements appear to be working well. However, I consider that further refinements are needed to ensure that the project is successfully completed, and the City Rail Link delivers the intended benefits.

 

13.     There were four key recommendations set out in the final report and overall, we consider them to be relevant, reasonable, practical, and consistent with steps already being taken in response to our other assurance processes (such as Treasury’s gateway reviews and the recommendations of TSA).  

14.     Recommendation 1 was about the need for a better system of tracking recommendations from TSA’s assurance reviews. This is both about improved record-keeping and also more systematic responses to recommendations and is being implemented by the Joint Sponsor Team. 

15.     Recommendation 2 concerned the completion of an agreed comprehensive benefits realisation plan. This is currently under development, led by Ministry of Transport. The benefits realization plan will be critical not only for measuring the success of the project against projected benefits, but also for guiding the sequencing of investments that need to be made to maximise outcomes from the project.


 

16.     Recommendation 3 related to governance arrangements and alignment between the Boards of CRLL, Auckland Transport and KiwiRail. We agree with this recommendation and that the project would benefit from the deeper engagement of the KiwiRail and Auckland Transport Boards. ‘Day 1’ readiness is a key focus for Sponsors’ officials at present, and this matter is under active discussion with the delivery partners as to how to increase visibility and ensure that the boards of Auckland Transport and Kiwirail are adequately engaged. 

17.     Recommendation 4 related to improved reporting by officials to Sponsors. Although we do not believe the way reporting has been undertaken has led to adverse outcomes, we accept that clear and reliable records, regularity, and maximum possible transparency is important for accountability and will seek to continuously improve in this area.

Sponsor risk dashboard (March 2022)

18.     The most recent Sponsor risk workshop was held in March 2022. We expect the next one to be held in November 2022. 

19.     The current Sponsor dashboard identifies six top Sponsor risks. These are:

·    Cost/schedule overrun

·    Failure to meet project objectives

·    CRLL obligations not met

·    Inadequate Sponsor oversight

·    Inadequate services at Day 1

·    Covid-19 excessive disruption.

20.     A summary of these risks, their causes, and the controls currently in place is provided in the attachment to this report.

21.     Of these risks, the ones relating to project objectives, CRLL obligations, Sponsor oversight and the potential for ongoing Covid disruption are largely being managed through business-as-usual risk management practices that are built into the project through the Project Delivery Agreement and other structures. 

22.     More detail about how the cost and day 1 risks are currently being managed by Sponsors is provided below.

Covid claims and commercial pressures

23.     As discussed in the workshop with the Committee on 23 August 2022, Sponsors are anticipating receipt of a further funding request from City Rail Link Limited in November 2022. Covid-related cost increases (materials, personnel, delays) will be a key component of this claim but will also include costs related to the final scoping of sub-projects such as the Henderson turn-back facility and future-proofing of the Britomart east tunnel area. Both of these works packages will be important components of allowing the Auckland metro rail environment to sustain the anticipated growth in services expected post-opening of CRL. 

24.     CRLL is closely managing this process within the structure of the Link Alliance and has engaged with Sponsors to map out the process towards decisions by Sponsors after the claim is submitted in November. A key risk in this process is that if the focus remains on commercial negotiations for too long, then the focus of Link Alliance as contractors will be diverted from delivery. Therefore, a joint team of Sponsors, CRLL, delivery partners, and Sponsor Assurance manager will ensure that all the relevant information required to make a timely decision is supplied by CRLL, and that it can be interrogated and tested prior to advice being provided to Sponsors.

25.     This process will result in increased certainty about final costs and schedule for delivery of the project infrastructure. 

Day 1 Operational Readiness

26.     Practical completion of the defined scope of project infrastructure is not the point at which the upgraded railway can be opened for public use. To achieve this, a range of processes need to be completed. These include:

·    Successful testing and commissioning of new infrastructure

·    Dynamic testing of the railway, stations and tunnels

·    Independent reliability assessment

·    Emergency trials

·    Driver familiarisation

·    Approval of rail safety cases (regulator within Waka Kotahi)

·    Related infrastructure upgrades (crossings, more trains, stabling, etc).

27.     City Rail Link will be a novel element in the New Zealand rail environment, given it is partially underground, and provides an upgrade to a ‘metro’ level of frequency and capacity of services. In the same way that a railway like Crossrail in London integrated new infrastructure with existing lines, City Rail Link will provide challenges of linking existing systems with the new environment.

28.     This interface represents a major risk to delivery of the project. This is well recognised, and as noted above has been commented on extensively by Office of Auditor-General, and also through other assurance processes. In response, Sponsors’ efforts at this time are predominantly geared towards managing these risks and ensuring that customer expectations of the performance of the railway are met.

29.     In the first instance, we are engaged with all the organisations involved in the City Rail Link project, to establish a system for coherent and unified oversight of delivery of day 1 operations. This group will build on the already existing and successful Delivery Partner Steering Committee, but take a more high-level oversight role in ensuring that sufficient resources are directed to the right areas. Consideration will be given to options for co-location or other kinds of integration of personnel. 

30.     This group will also consider the longer-term programme to deliver the customer experience beyond the initial opening (“day 90”/beyond). This will include ongoing upgrades to meet patronage increases, and other programmes to build an efficient transport network in Auckland, including how the rail environment interacts with roads (particularly crossings) and other public transport networks. 

Tauākī whakaaweawe āhuarangi

Climate impact statement

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

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

32.     Auckland Transport has an integral role in the delivery of an operationally successful rail link, as described in this report. It has a formal role in the project as one of the ‘delivery partners’ (along with Kiwirail) and is integrally involved in the oversight mechanisms established to deliver ‘day 1’ operations. 

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

Local impacts and local board views

33.     Local Board views were not required for this report.

Tauākī whakaaweawe Māori

Māori impact statement

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

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

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

Ngā koringa ā-muri

Next steps

37.     As described in this report, Sponsors activity is primarily directed towards the management of project risks at this time. Over the next period, the following activities will be critical:

·    Continued focus on regular governance, monitoring, and assurance processes, taking on board some of the recommendations of the Office of Auditor-General report about improved systems for responding to assurance recommendations

·    Sponsor risk workshop, November 2022

·    Establishment of Day 1 oversight group, September 2022

·    Covid Claims process, August to December 2022.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Summary of Sponsor Risk Dashboard, March 2022

21

     

Ngā kaihaina

Signatories

Author

Edward Siddle - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Director, Governance & CCO Partnerships

 

 


Audit and Risk Committee

12 September 2022

 

Graphical user interface, application, table

Description automatically generated

Graphical user interface, text, application, Word, email

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Audit and Risk Committee

12 September 2022

 

Preparation of Auckland Council Group's draft annual report 2021/2022 and draft summary annual report 2021/2022

File No.: CP2022/12760

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To inform the Audit and Risk Committee of the process followed to prepare the draft Auckland Council Annual Report 2021/2022 and the draft Auckland Council Summary Annual Report 2021/2022 (together referred to as the annual reports).

Whakarāpopototanga matua

Executive summary

2.       On 29 September 2022, the Governing Body will be asked to adopt the annual reports. Preparing and publishing these annual reports is a legislative requirement and ensures that we are transparent about our operations with investors and ratepayers.

3.       The annual reports cover the 12 months to 30 June 2022 They have been prepared by council staff and audited by Audit New Zealand on behalf of the Auditor-General. The annual reports compare and comment on the performance of the group and the council against the budgets and performance targets set in the 10-year Budget 2021-2031 (Our Recovery Budget).

4.       The Deputy Auditor-General will attend this meeting and comment later in confidence on the:

·   audit process

·   draft representation letter

·   draft proposed audit opinion, including commentary on the key audit matters

·   status of the annual reports.

5.       At the time of writing this report there is one outstanding process issue relating to the audit of Auckland Council’s Scope 1 and 2 greenhouse gas emissions. We expect to have this matter resolved before the annual reports are approved by the Governing Body.

 

 

Ngā tūtohunga

Recommendation/s

That the Audit and Risk Committee:

a)      note that there are no significant outstanding issues relating to the process for the preparation of the draft Auckland Council Annual Report 2021/2022 and the draft Auckland Council Summary Annual Report 2021/2022

b)      note the draft Auckland Council Annual Report 2021/2022 and the draft Auckland Council Summary Annual Report 2021/2022 will be discussed later in this meeting in confidence.

 

Horopaki

Context

6.       The Audit and Risk Committee reviews the quality of the annual reports and the processes followed to prepare them.

7.       The Audit and Risk Committee liaises with Audit New Zealand to ensure a robust audit of the group.

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

9.       This report, in conjunction with the associated confidential item, and comments from the Deputy Auditor-General at this meeting and his report, assist the Audit and Risk Committee to fulfil its duty as noted above.

10.     Audit New Zealand will comment on any significant matters arising from the audit that they intend to include in their final report to those charged with governance following adoption of the annual reports by the Governing Body in the confidential item.

Tātaritanga me ngā tohutohu

Analysis and advice

11.     The draft reports referred to in the following sections are attached to the related confidential report on today’s agenda.

Draft Annual Report 2021/2022 Volume 1:  Overview and Service Performance

12.     Volume 1 provides an overview of the financial and non-financial performance of the group.

13.     It reports on the performance of each of Auckland Council’s groups of activities, noting that the funding impact statements have moved to Volume 3 this year.

14.     For each of the activities delivered by the group, Volume 1 describes the group’s performance, and reports the associated performance measures against the targets set in the Recovery Budget.

Draft Annual Report 2021/2022 Volume 2:  Local Boards

15.     The council has a legislative requirement to report each local board’s service performance results and their funding impact statements. Local board performance is measured against the Recovery Budget.

16.     The draft local board reports were presented to each local board for review. Their feedback has been incorporated where appropriate, and the reports have been approved by the respective local board chairs.

Draft Annual Report 2021/2022 Volume 3:  Financial Statements

17.     Volume 3 includes the group and council’s statutory financial statements, the group funding impact statement and the funding impact statements of the council’s groups of activities.

18.     The financial statements also contain disclosures required by financial reporting standards, Local Government (Financial Reporting and Prudence) Regulations 2014 and the Local Government Act 2002.

19.     The format and accounting policies of the funding impact statements are prescribed by the Local Government Act 2002. The regulations require us to compare actual activities and actual performance against the most recently published plan at balance date; being the Recovery Budget. The group funding impact statement is reported against the annual budget, which this year is the same as year 1 of the Recovery Budget.

20.     The Audit and Risk Committee approved the pro forma statutory financial statements subject to any updates identified during the year-end close and audit process at its meeting on 17 May 2022.

21.     A financial statement disclosure checklist has been completed and will be available for inspection during the confidential part of this meeting.

Draft Annual Report 2021/2022 Volume 4: Climate Change Risk

22.     Volume 4 was prepared through collaboration with the Financial Control team, the Chief Sustainability Office and sustainability officers at the council-controlled organisations and Ports of Auckland Limited.

23.     It is a summary of the group’s response to climate-related risks and opportunities. It describes the group’s governance of climate change risk, its risk management approach, how climate risk is integrated into strategy and outlines the group’s climate change metrics and targets using the Task Force on Climate-related Financial Disclosures (TCFD) framework.

24.     This is the group’s fourth disclosure in accordance with the TCFD. Management continues to acknowledge that as the group’s understanding of and responses to climate change mature, so will the disclosure.

25.     The External Reporting Board (XRB) recently issued exposure drafts of their climate statements. These statements are similar to the TCFD framework. Management has not yet adjusted climate risk disclosures to reflect any new requirements arising from the XRB’s exposure drafts.

Draft Summary Annual Report 2021/2022

26.     The draft Auckland Council Summary Annual Report 2021/2022 is an abridged version of the four annual report volumes and provides highlights, performance information and information about the group including governance, community engagement and the group’s commitment to sustainability.

Open items

27.     Audit New Zealand extended their audit work in relation to Auckland Council’s scope 1 and 2 greenhouse gas emissions (GHG) and determined that a GHG measure is material to their audit opinion. This has presented timing challenges and, as a result, Audit New Zealand has been unable to provide clearance on these measures at the time of writing this report.

28.     Management is working with Audit New Zealand to finalise the audit of these measures and the group financial controller will update the committee on progress at this meeting.

Tauākī whakaaweawe āhuarangi

Climate impact statement

29.       This committee paper relates to financial and non-financial statutory reporting. No decision is sought in this paper that has a direct impact on the group’s greenhouse gas emissions nor the group’s approach to preparing for climate change.

30.     However, it is acknowledged that the activities undertaken by the group and reported on within the annual report have the potential to be impacted by climate change and can also reinforce or weaken our climate action response.

31.     Climate risk disclosures included in Volume 4 play a key role in how external organisations direct capital flow towards climate positive solutions and investments. Reporting of the group’s response to climate change risk holds the group publicly accountable, and ensures the business maintains their focus on addressing climate change risk at all levels across the group.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

32.     The annual reports reflect the results of the group for the year ended 30 June 2022. The council-controlled organisations are involved in the preparation of this information. No decision is sought that would directly impact the group.

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

Local impacts and local board views

33.     Volume 2 of the annual report includes a section featuring the achievements in each local board area. Local boards were engaged to collect and review this information and each local board chair has prepared a message which is included in their respective report. No decision is sought that would impact local boards.

Tauākī whakaaweawe Māori

Māori impact statement

34.     The annual reports cover all aspects of the group’s governance and public accountability. Although the annual reports include commentary on the group’s contribution to outcomes for Māori, as well as the role of the Independent Māori Statutory Board and the council’s Ngā Mātārae – Māori Outcomes department, no decision is sought in this paper that has a direct impact on Māori.

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

Risk of error, omission or non-compliance in preparation of the annual report and summary annual report

36.     There is a risk that errors or non-compliance with legislation and accounting standards could occur in the preparation of the annual reports. To mitigate this risk, quality assurance reviews were performed on the consolidated results and commentary and the year-end reports. The reviews focused on accuracy, completeness and reasonableness of disclosures, legislative compliance and adherence to the council’s communications standards.

37.     There is also a risk that the annual reports present a biased view of the performance of the group. A trust lens reviewer was used to review the annual reports to ensure that we are telling a fair and balanced story, that good news stories are truthful and accurate and the poor performance stories are honest and transparent. They review the overall story for consistency through all volumes.

Compliance reviews

38.     Auckland Council’s Legal Services department reviews the summary annual report and volumes 1-3 of the annual report for compliance with local government legislation.

39.     The Chief Sustainability Office reviews volume 4 of the annual report for compliance with the Taskforce on Climate-related Financial Disclosures (TCFD).

40.     Mayne Wetherell also reviews Volume 1 to 3 for compliance with NZX listing rules, the Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013.


 

Reviews of accuracy, completeness and fairness

41.     Several reviews of the annual reports take place by people with differing levels and areas of involvement in financial reporting. A summary of the reviews is as follows:

Reviewer

Volume 1

Volume 2

Volume 3

Volume 4

Summary Annual Report

Group chief financial officer

ü

ü

ü

ü

ü

Group treasurer

ü

ü

ü

ü

ü

General manager financial strategy and planning

ü

ü

ü

ü

ü

General manager financial & business performance

 

 

ü

 

 

Group financial controller

ü

ü

ü

ü

ü

Manager group performance reporting

ü

ü

 

 

ü

Manager group accounting and reporting

 

 

ü

ü

ü

Manager financial stakeholder relations

ü

 

 

 

ü

Senior group reporting technical accountant

 

 

ü

 

ü

Financial accounting manager

 

 

ü

 

ü

Trust lens reviewer

ü

ü

ü

ü

ü

Legal services

ü

ü

ü

 

ü

Chief Sustainability Office

 

 

 

ü

 

Mayne Wetherell

ü

ü

ü

 

ü

 

42.     In addition to these reviews, the council’s Financial Control team completes a detailed reporting checklist to ensure all financial reporting and disclosure requirements have been met. The group financial controller will have an annual report checklist and sign-off document available at this meeting, providing assurance that reporting and disclosure requirements have been complied with.

43.     A trust lens reviewer provided feedback on the financial statements. The reviewer is not within the council’s finance division and was not involved in the preparation of the annual reports.

44.     All the technical quality assurance reviewers who perform reviews from a financial perspective are Chartered Accountant qualified or equivalent and have the appropriate technical accounting skills and knowledge.

Disclosures from council-controlled organisations, City Rail Link Limited and Ports of Auckland Limited

45.     There is a risk that significant matters that affect the financial performance, financial position or cash flows of council-controlled organisations, City Rail Link Limited or Ports of Auckland Limited may not be adequately disclosed.

46.     To mitigate this risk, each substantive council-controlled organisation, City Rail Link Limited and Ports of Auckland Limited provide an audited financial reporting pack, based on a standardised pack issued by the council’s Financial Control team. This audited financial information is consolidated to form the group’s financial statements.

47.     The group financial controller obtains short and long-form representation letters from the respective chief financial officers (CFOs)/chief executives and/or audit committee chairs/boards which cover the completeness, accuracy and adequacy of disclosures provided in their financial reporting packs. In addition, the group financial controller will obtain updates from the respective CFOs/delegate just prior to the Governing Body meeting at which the annual reports are adopted, to ensure nothing else has arisen since the representation letters were signed that could materially affect their financial reporting disclosures.

Delay in Audit New Zealand’s final clearance

48.     There is a risk of delay in Audit New Zealand’s final clearance due to unresolved technical matters.

49.     The Financial Control team has been working with Audit New Zealand to address technical issues early, however there is a risk that matters could arise that cannot be cleared by Audit New Zealand until they have audited the relevant information.

Ngā koringa ā-muri

Next steps

50.     The Audit and Risk Committee will discuss the annual reports in confidence with staff and the Deputy Auditor-General and Audit New Zealand, after which it will recommend the annual reports’ adoption to the Governing Body. The committee will then have completed its responsibilities for the annual reports.

 

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

Alvin Ang - Senior Group Reporting Technical Accountant

Karuna Dahya - Manager Group Performance Reporting

Authorisers

John Bishop – Acting Group Chief Financial Officer

Phil Wilson - Director, Governance & CCO Partnerships

 

 


Audit and Risk Committee

12 September 2022

 

Annual report on the performance of the Audit and Risk Committee

File No.: CP2022/13201

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide a review and summary of the activities of the Audit and Risk Committee in 2022, as required by the committee’s Terms of Reference.

Whakarāpopototanga matua

Executive summary

2.       The Audit and Risk Committee assists and advises the Governing Body in discharging its responsibility and ownership of governance, risk management, and internal control.

3.       The committee makes a valuable contribution to governance and performance of the council, provides an independent check on the council’s systems of governance and internal control, and provides assurance to the council that key risks are being identified and managed appropriately.

4.       The committee’s responsibilities are set out in its Terms of Reference, which also 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.

5.       This report summarises the key actions performed by the committee in response to its responsibilities over the period from December 2021 to the present.

6.       In 2022 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

·    Ports of Auckland Limited risk management process, which is now included in the committee’s forward work programme

·    City Rail Link Limited risk identification and management

·    health, safety, and wellbeing

·    the risk management approach for the annual budget

·    insurance renewal and the move to self-insurance.

7.       The report concludes that the committee has discharged its responsibilities under its Terms of Reference.

8.       The committee continues to have a relationship with the mayor, other elected members, the chief executive and management, the Office of the Auditor-General and Audit New Zealand that is pitched at an appropriate level and achieves a productive working relationship whilst retaining independence.

 

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

9.       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.

10.     The committee’s membership includes three external members, with an external member, Sue Sheldon CNZM, as chair of the committee, which is in line with best practice as recommended by the Auditor-General, PwC, the New Zealand Stock Exchange (NZX) and the Institute of Directors.

11.     The committee makes a valuable contribution to governance and performance of the council and provides an independent check on the council’s systems of governance and internal control. The committee’s oversight provides assurance to the council that key risks are being identified and managed appropriately.

12.     The committee’s review and recommendations relating to the council’s audit and risk work is appreciated and valued by the Governing Body and relevant committees.

13.     The committee’s responsibilities are set out in its Terms of Reference, which, in line with good practice, also 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.

14.     This report summarises the key actions performed by the committee in response to its responsibilities.

15.     This is the third report in this term of the council and covers the period from December 2021 to the present.

Tātaritanga me ngā tohutohu

Analysis and advice

Areas of focus in 2022

16.     In 2022 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

·    Ports of Auckland Limited risk management process, which is now included in the committee’s forward work programme

·    City Rail Link Limited risk identification and management

·    health, safety, and wellbeing

·    the risk management approach for the annual budget

·    insurance renewal and the move to self-insurance.

Impact of COVID-19

17.     Since April 2020, the committee’s forward work programme has included work responding to the risks and issues that have emerged during the COVID-19 pandemic. In 2022, the committee has continued to provide oversight and direction on risks related to the impact of COVID-19, including:

·    risks arising from ongoing budgetary pressure

·    heightened risk from the emergence of the COVID-19 Omicron variant on business continuity.


 

Ports of Auckland Limited

18.     In 2022, Ports of Auckland Limited began reporting to the committee on its top risks in a similar fashion to the substantive council-controlled organisations, enabling the committee to have oversight of management and assurance of risks at Ports of Auckland Limited.

City Rail Link Limited

19.     During 2022 the committee has continued its focus on understanding the approach to risk management processes within City Rail Link Limited allowing the committee to have oversight of identification, management and assurance of risk.

Governance

20.     The committee notes that its ability to report directly to the governing body throughout this elective term has been beneficial to both elected members and management. With this direct reporting line the committee is able to work directly with elected members during periods of significant intensity such as the emergency budget and subsequent annual budgets. The committee is also able to work within appropriate boundaries of responsibility with respect to CCOs, Ports of Auckland Limited and City Rail Link Limited recognising that the Finance and Performance Committee and the Council Controlled Organisation Oversight Committee as well as the governing body itself have roles in the governance of these subsidiaries.

Health, Safety and Wellbeing

21.     In 2022, the committee received regular reporting on the projects and initiatives underway to improve the health, safety and wellbeing of council staff and deliver on the recommendations of the council’s hauora (wellbeing) review. Reporting included commentary and a range of indicators that enabled the committee to provide objective advice and recommendations to the Governing Body on the council’s health, safety, and wellbeing risk management.

Annual Budget

22.     In 2022, the committee reviewed the risk management approach for the Annual Budget 2022/2023, which reflects key financial risks due to impacts of COVID-19, rising inflation and interest rates, and labour and supply chain constraints. The committee agreed to advise the Governing Body that the approach being taken was appropriate, provided that the Governing Body was able to reach agreement on a budget that addressed the financial pressures in a sustainable and financially prudent manner.

Insurance activity

23.     The Committee provided oversight and review of the work being undertaken on the council’s 2022/2023 insurance renewal (endorsing the indicative programme to the Finance and Performance Committee), the cumulative loss modelling study, and the establishment of the self-insurance fund, which was implemented on 1 July 2022.

Forward Work Programme

24.     The committee agreed a forward work programme and reviews the work programme at each meeting to ensure it remains relevant and adapts to any changes in the council’s risk profile.

25.     The committee’s work programme consists of in-depth briefings in workshops, or reports to committee meetings. These briefings and reports enable the committee to be updated and provide oversight or direction on:

·    enterprise risk management

·    assurance work

·    six-monthly updates on the ongoing monitoring of the council’s Te Tiriti o Waitangi Audit Response Programme to implement the recommendations contained in Te Tiriti o Waitangi audit recommendations

·    quarterly updates on council-controlled organisation risk management

 

 

·    Ports of Auckland Limited risk management

·    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

·    six-monthly updates on legal risk

·    governance over the City Rail Link project (on the agenda of this September Committee meeting)

·    updates on insurance activity

·    interim and annual report

·    annual budget

·    annual green bond report

·    external audit briefings.

26.     The committee has regularly reviewed the Enterprise Risk Management work programme, including:

·    reviewing the council’s top risks and mitigations, and the refreshed risk appetite statements

·    monitoring of group risks (including climate risks) and management’s response

·    receiving and reviewing risk updates from the council’s substantive council-controlled organisations and Ports of Auckland Limited, and meeting with their senior management and board representatives

·    oversight of other risk activity including support and advice in response to COVID-19 challenges, and updates on legal risks

·    receiving updates on work underway for the council to be ready for its first mandatory Taskforce for Climate Related Financial Disclosures in the 2023/2024 Annual Report, in response to the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act

·    receiving updates on work underway to review the legislative framework applying to the council and the underlying compliance plans.

27.     The committee has reviewed the assurance work programme, including:

·    activities undertaken to progress the Assurance Plan 2021/2022, which reflects areas of focus for year two of the 2019-2022 Assurance Strategy and covers fraud and integrity, elected members, internal audits and reviews, and Speak Up

·    progress on development of the 2023-2025 Assurance Strategy and updates to the Assurance Charter

·    approving the continued use of the current Assurance Charter until its revision in December 2022

·    approving the interim 2022/2023 Internal Audit Plan.


 

 

28.     The committee has reviewed the key changes in accounting policies, professional judgements, assumptions, estimates 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 2021

the 12-month period ended 30 June 2022

·    the interim financial statements for the six months ended 31 December 2021

·    the Annual Report (including financial statements) for the year ended 30 June 2022 (at this meeting).

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.     At its 23 August 2022 meeting, the committee reviewed the draft response to Audit New Zealand’s fraud enquiries of the Audit and Risk Committee, and will consider (at this September meeting), recommending that management provide the updated fraud questionnaire responses to Audit New Zealand.

31.     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 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).

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

Conclusions

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

34.     The committee continues to have a relationship with the mayor, other elected members, the chief executive and management, the Office of the Auditor-General and Audit New Zealand that is pitched at an appropriate level and achieves a productive working relationship whilst maintaining an independent oversight of key organisational risks and the management of those risks.

35.     The committee recommends that it continue to report directly to the governing body of Council.

Tauākī whakaaweawe āhuarangi

Climate impact statement

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

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

37.     The committee has oversight of and receives regular reporting on the risk and assurance activities of the council parent and council-controlled organisations. 

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

Local impacts and local board views

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

Tauākī whakaaweawe Māori

Māori impact statement

39.     The committee has responsibility for oversight of progress in implementing audit recommendations arising from Te Tiriti o Waitangi audits. Six-monthly progress reports are included in the committee’s forward work programme.

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

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

Ngā koringa ā-muri

Next steps

42.     This report will 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 - Chairperson

 


Audit and Risk Committee

12 September 2022

A picture containing logo

Description automatically generated

 

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' audit and risk updates

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

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

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

In particular, the report contains risk reporting and detailed top risks reported confidentially to the council-controlled organisations' board or Audit and Risk Committee. The council-controlled organisations have provided their risk report to Auckland 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: Ports of Auckland Limited audit and 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)(c)(i) - The withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information or information from the same source and it is in the public interest that such information should continue to be supplied.

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

In particular, the report contains risk reporting and detailed top risks reported confidentially to the Ports of Auckland Limited's board or Audit and Risk Committee. Ports of Auckland Limited have provided their risk report to Auckland 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.

 

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.

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

In particular, the report contains information which if released would jeopardise the effective delivery of assurance services.

s48(1)(a)

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

 


 

C4       CONFIDENTIAL: Draft Annual Green Bond Report June 2022

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

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

In particular, the report contains financial and performance information that can only be made public following the release of the Annual Green Bond Report 2022 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: Recommendation of Auckland Council's draft annual report 2021/2022 and summary annual report 2021/2022

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

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

In particular, the report contains financial informaton that forms part of the Auckland Council Group Annual Report 2021/2022 and can only be made public following the release of the annual report to the NZX on 30 September 2022.

s48(1)(a)

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

 

C6       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 annual report and financial results of Auckland Council Group and Auckland Council as at 30 June 2022 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.